Turk Traktor - Well positioned in promising tractor market, May 14, 2020
This analysis by GLOBAL Securities is presented to you by Raiffeisen Centrobank AG. Raiffeisen Centrobank AG acts solely as a distributor of this analysis and has not introduced any material changes to the content of this analysis or any recommendation included herein.Turk Traktor - Well positioned in promising tractor market, May 14, 2020
Turk Traktor is the largest player in Turkish tractor market with a 45% market share in 2019. Through its dealer and after-sales network, Turk Traktor maintains its strong positioning for many years. Despite of weak domestic sales performance in last two years, Turk Traktor's operations started to recover in 4Q19 boosted by pent-up demand. Following strong 1Q20 results, Turk Traktor management kept its domestic volume guidance at 12.5-15k units despite of Covid-19 pandemic. On top of improving operational performance, Turk Traktor continues to improve indebtedness as its net debt to EBITDA declined to 0.9x from 3.3x a year ago, the lowest one in last 5y. The strong recovery in domestic market and improvement in EBITDA margin as well as improving indebtedness are the key drivers for Turk Traktor, while it is trading with a 1y fwd EV/EBITDA multiple of 6.8x, with a 20% discount to its 5y median.
Turk Traktor Ve Ziraat Makineleri is engaged in the manufacturing of agricultural machinery, such as tractors, harvesting machinery and earth moving machinery, and its allied parts, including gearboxes, transmission boxes, engine blocks, cylinder heads and hydraulic lifters. Co. sells New Holland and Case IH branded vehicles and equipments. Co. exports its products to over 50 countries.
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