Position closed on 13 May 2025, at a loss of 1.4%.
Orge Enerji Elektrik Taahhüt Anonim Sirketi (IST:ORGE, ₺108.20/share) is a compelling investment opportunity within the Turkish electrical contracting and renewable energy sectors. Orge Enerji earns a very attractive rating according to my stock rating methodology, thanks to its ability to grow revenue and profitability at quite astonishing rates, in fairly competitive markets, a feat made possible by its competitive advantages.
A Moderately Competitive Industry
The Turkish construction market, within which the electrical contracting industry operates, is characterized by a high degree of competition, with numerous companies vying for projects across various sectors. However, at the electrical installation industry level, the degree of competition appears to be more constrained. Similarly, the electrical equipment manufacturing sector in Türkiye also exhibits a moderate level of competition. Several major players dominate the electrical contracting market in Türkiye, including well-established conglomerates such as Girisim Elektrik Sanayi Taahhüt ve Ticaret A.S. (IST:GESAN), Astor Enerji A.S. (IST:ASTOR), and Kontrolmatik Teknoloji Enerji ve Muhendislik A.Ş. (IST:KONTR). While precise market share data for the electrical contracting industry is not readily available, the presence of these multiple established companies suggests a market that is relatively fragmented rather than dominated by a few major players. Over the last five to six years, the Turkish energy sector has witnessed a notable increase in the participation of private sector entities, signaling a continued liberalization of the market.
In the rapidly expanding renewable energy sector in Türkiye, Orge Enerji’s major direct competitors include firms such as Margün Enerji Üretim Sanayi ve Ticaret A.Ş. (IST:MAGEN), Mogan Enerji Yatirim Holding Anonim Sirketi (IST:MOGAN), and A1 Yenilenebilir Enerji Üretim A.S. (IST:A1YEN). And İnşaat Ticaret A.Ş.’s direct competitors incude firms such as Enka Insaat ve Sanayi A.S. (IST:ENKAI), Tekfen Holding Anonim Sirketi (IST:TKFEN), and Gulermak Aglr Sanayi Insaat ve Taahhut A.S. (IST:GLRMK). This further adds to the view that the company is engaged in fairly competitive markets.
One of the most significant findings in finance is that low asset growth firms outperform high asset growth firms, with investments destroying rather than creating value. Resisting the gravitational pull of the asset growth effect is extremely difficult. A sign of the competitiveness of the market and Orge Enerji’s need to compete through investments is that its total assets compounded by 67.24% a year since 2019, while the firm burnt through -₺42.42 million in free cash flow (FCF) in the same time. Yet, Orge Enerji has created ₺1.94 billion in economic profits, as economic profit margins have fattened. Orge Enerji has indeed been able to defy the gravitational pull of the asset growth effect.
Powering Türkiye’s Future
Orge Enerji is primarily engaged in electricity contracting, offering comprehensive, turnkey services encompassing the design, installation, and maintenance of medium voltage, low voltage, and weak current electrical systems for residential and commercial construction buildings.
The Turkish electrical contracting industry is closely linked to the overall health and growth of the nation’s construction market. This construction market demonstrates promising growth prospects, with expectations of a 3.0% annual increase in 2025 and a compound annual growth rate (CAGR) of 2.5% projected for the period between 2025 and 2029. In terms of market size, the construction sector in Türkiye is substantial, estimated at $173.56 billion in 2025, with a projected CAGR of 5.75% from 2025 to 2030. Within this broader construction landscape, the electrical installation market in Türkiye holds significant value, estimated at €6.6 billion in 2025.
Several key factors drive the growth of this industry, including a steadily increasing demand for energy fueled by Türkiye’s growing population, rapid urbanization, and ongoing industrial expansion. Moreover, the need to upgrade and modernize existing infrastructure across various sectors further bolsters the demand for electrical contracting services.
The Turkish government is actively investing in a wide range of infrastructure projects, encompassing transportation networks, industrial facilities, and a significant push towards renewable energy development, all of which necessitate robust electrical contracting services. The nation’s commitment to increasing the share of renewable energy in its electricity generation mix serves as a particularly strong growth driver for electrical contractors specializing in this area. Consequently, Orge Enerji has expanded into renewable energy, where it provides turnkey installation services for solar power plants, catering to various deployment methods including roof-mounted, facade-integrated, ground-mounted, and agricultural installations, as well as wind power plants. Their renewable energy service extends beyond initial installation to include post-installation warranty support, ongoing maintenance, operational services, and round-the-clock remote monitoring, ensuring the longevity and efficiency of these renewable energy assets.
Orge Enerji also operates a trade division that focuses on the sales, marketing, and trading of a comprehensive range of electrical supplies, materials, and equipment, with a particular emphasis on electrical cables. This trading arm serves both Orge Enerji’s internal project needs and external clients, providing an additional revenue stream and potentially enhancing supply chain efficiencies.
Orge Enerji’s wholly-owned construction-contracting subsidiary, And İnşaat Ticaret A.Ş, was formed in 1985 to meet rising residential and workplace demand on İstanbul’s Anatolian side, and specializes in urban‑transformation feasibility studies,and turnkey construction projects, and has delivered multiple landmark sites.
Reducing Transaction Costs for Clients
As a turnkey contractor, Orge Enerji assumes responsibility for the entire project lifecycle, offering clients a comprehensive suite of services from the initial design and engineering phases through the procurement of necessary materials and equipment, the physical installation of electrical systems and renewable energy infrastructure, the critical commissioning process to ensure operational readiness, and finally, ongoing maintenance and support services. This end-to-end approach simplifies project execution for clients, allowing them to rely on a single, experienced partner for all their electrical and renewable energy needs. As aforementioned, Orge Enerji also actively engages in the trading of a wide range of electrical materials and equipment. This division ensures a reliable supply of quality materials for Orge Enerji’s own projects while also catering to the needs of other businesses and clients in the broader market. This integrated approach, encompassing both contracting and trading, enhances Orge Enerji’s operational efficiency and reduces client costs.
Regulations Are Shaping a More Attractive Market
The regulatory environment governing the Turkish electricity market has undergone a significant transformation over the past two decades. Since 2001, the market has transitioned from a predominantly state-controlled system to one characterized by regulated competition, with the aim of enhancing efficiency and attracting private investment. The Energy Market Regulatory Authority (EMRA) plays a central role in overseeing the market, responsible for issuing licenses to market participants and ensuring fair competition within the sector. The structure of the Turkish electricity market covers various activities, including power generation, electricity transmission -which remains a state-owned monopoly operated by Türkiye Elektrik İletim A. Ş. (TEIAS)-, electricity distribution -which has been largely privatized with regional entities responsible for local networks-, wholesale electricity trading, and retail electricity sales.
Management-Shareholder Incentives are Aligned
Established in 1998, Orge Enerji grows and is built upon decades of family and founder expertise. Orge Enerji began trading publicly on the Istanbul Stock Exchange (IST) in 2012, and, while 52% of the company’s are publicly owned, the founding partner, chairman and CEO, Mr. Nevhan Gündüz, owns 17%, and co-founder and vice chairman, Mr. Orhan Gündüz, owns 31%.
Executive directors (Orhan Gündüz and Nevhan Gündüz) each receive a gross ₺30 000 monthly retainer; non‑executive directors receive ₺6 750 gross per month. The group of “Üst düzey yöneticiler” (the board plus the CEO) received ₺906 003 in benefits in 2024, and ₺3 052 969 in travel/representation expense reimbursements. Remuneration is not tied to financial or operational KPIs, nor are there disclosed stock‑option or bonus schemes. The primary mechanism for incentivising the Messrs. Nevhan and Orhan Gündüz are through their shareholding. As a founder-led, family owned business, management’s incentives are in harmony with those of the investing public.
An Experienced and Reputable Deliverer
Orge Enerji possesses a significant competitive advantage stemming from its extensive experience in the Turkish electrical contracting business. The company’s operational history spans over 25 years since its founding in 1998, but this is built upon an even longer legacy of 51 years of family and founder experience in the sector. This longevity has allowed Orge Enerji to cultivate a strong reputation in the market, known for its consistent track record of completing projects on time, adhering to high-quality standards, and offering optimal pricing that reflects the value and reliability of its services. Over its history, Orge Enerji has successfully delivered a multitude of major projects across a diverse range of sectors, including infrastructure, commercial, residential, and industrial developments. This proven ability to handle complex and large-scale projects enhances its credibility and makes it a preferred partner for clients seeking reliable electrical contracting solutions. The company’s long-standing presence and positive reputation serve as an intangible but significant barrier to entry for newer competitors and provide a solid foundation for continued success in the Turkish market.
An Elite Performer History of Profitability
Since 2019, Orge Enerji’s revenue has compounded by 72.46% a year, a 5-year sales CAGR that places the company among the top 1.3% of companies globally. In the same period, its net operating profit after tax (NOPAT) has compounded by 97.39% a year, from ₺55.68 million to ₺1.69 billion, while its NOPAT margin widened from 39.56% to 48.66%, while its invested capital turns nearly doubled from 0.87 to 1.66. As a result, the company’s return on invested capital (ROIC) has more than doubled, from 31.58% to 81%.
Orge Enerji Still Has Upside
Despite a 25.96% share price appreciation in the year-to-date (YTD), the company remains attractively valued. At the current price, of ₺108.20 per share, Orge Enerji trades at an attractive price-to-economic book value (PEBV) of 1.32. This ratio implies that the market expects Orge Enerji’s NOPAT will increase by just 32% from current levels. I used my reverse discounted cash flow (DCF) model to tease out the expectations for future growth in cash flows implied by various scenarios for Orge Enerji.
In the first, I quantified the expectations implied by the current price, wherein:
- NOPAT margin falls to 43%, and
- Revenue compounds by 89.38%, its 5-year average.
In this scenario, NOPAT rises by 67% in 2025, with a market-implied competitive advantage period (MICAP) of less than one, and the stock is worth ₺108.80, roughly equivalent to the current share price.
If, however,
- NOPAT margin remains at 2024 levels of 48.66%,
- While revenue compounds by 89.38%
The stock is worth ₺132.39, an upside of 21.6%.
If, on the other hand,
- Revenue compounds by the 3-year CAGR of 61.85%, its 3-year average, and,
- NOPAT margin remains at 48.66%.
Orge Enerji is worth ₺116.73, an upside of 7.2%.
Impact of Footnotes Adjustments and Forensic Accounting
Here below are details of accounting adjustments made to Orge Enerji’s’ 2024 annual report:
Income Statement: I made ₺1 billion in adjustments to calculate NOPAT, with the net effect of adding ₺977.31 million in non-operating expenses. The adjustments are equal to 144.85% of Ogre Enerji’s IFRS net income.
Balance Sheet: I made ₺973.89 million in adjustments to calculate invested capital with a net decrease of ₺955.24 million. One of the largest of these adjustments was ₺73.53 million in excess cash, an adjustment worth 1.9% of reported assets.
Valuation: I made ₺964.46 million in adjustments with a net effect of decreasing shareholder value by ₺325.82 million. The largest of these adjustments was 577.28 million in net deferred tax liabilities, representing nearly 7% of Ogre Enerji’s market cap.