Kartonsan Karton Sanayi ve Ticaret A.S. produces and trades in coated cardboards in Turkey. It offers normprint, exprint, and luxtriplex multi-coated cardboards from recycled paper. The company's products are used for the packaging of food, pharmaceuticals, detergents, matches, perfumery, cosmetics, textiles, stationary, glassware, small white goods, book and notebook containers, and corrugated lamination. It also exports its products to approximately 20 countries, including Bulgaria, Greece, Spain, Portugal, Romania, Israel, and Egypt. The company was incorporated in 1967 and is headquartered in Istanbul, Turkey.

Turkey

Kartonsan Karton Sanayi ve Ticaret A.S.

Basic Materials

The company pays dividends from time to time. It has paid dividends in less than half the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has barely been above zero and was substantially below that of its peers. On average, the company pays dividends annually. 

KARTN.IS reported revenue of TRY 3 621mn in the last 12 months, up 46% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 30% from FY23 to TRY -7.84.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Over the past six months the stock has exceeded the performance of this peer group by 17ppts and its growth decelerated by 13ppts in the past month. There is a distinction between the stock's performance and that of its peers from the same country and industry. Over six months its performance trailed that of this peer group by 12ppts and its growth decelerated by 9ppts in the previous month. Given the stock's valuation versus its peers, its total price movement is neither favourable nor unfavourable.

The company has reported very poor EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to -1.9% in the last 12 months, up from -41.8% in FY23. 

Historically, KARTN.IS has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -16.2%, a growth from -34.1% in FY23. 

Kartonsan Karton Sanayi ve Ticaret A.S. reported a return on equity (RoE) of -22.8% in the last 12 months, up from -44.6% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to -16.9% in the last 12 months, an increase from -35.1% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to -22.0%, below the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -0.8 in the past several years. This ratio implies a fragile shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are acceptable. In combination with good business standards, shareholder rights are protected.

KARTN.IS has below average trading liquidity. The average private investor can sell his common position in the stock in a single trading day. Liquidity is usually stable and remains favourable on the days with the lowest activity. However, please consider that under highly turbulent market conditions, the trading volume tends to decrease significantly. The stock has a very small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is high. Among the negative credit factors, we point to weak positions in its industry, bleak profitability, negligible return on capital, and poor working capital management. We note resilient historical revenue growth, low margin volatility, strong debt servicing capacity, adequate interest coverage, solid cash flow generation, and an favourable capital structure, among the positive credit factors. 

In highly turbulent market conditions, KARTN.IS is as volatile as an index. In other words, the stock will move with the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be limited. 

In normal market circumstances, KARTN.IS is volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will move much wider than the index. The stock's losses on its worst days (less than 1-5% of the time) will range from moderate to notable. We would also like to highlight the notable intraday volatility of the instrument. 

Based on key historical and expected multiples, the stock is overvalued relative to its peers. 

Kartonsan Karton Sanayi ve Ticaret A.S.

TRY 87.35

2

Kartonsan Karton Sanayi ve Ticaret A.S.

TRY 87.35

2

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

TRY 87.35

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