Otokar (OTKAR TI) - Roughly in-line operations: Maintain Buy
Roughly in-line operations
Factoring in the headwinds from the Covid-19 outbreak and our updated macro forecasts, we cut our 12M TP by c17% to TRY166.34. Despite resilient defence segment operations, we believe that the Covid-19 related weaknesses would result in a material decline in commercial segment shipments. Despite the short term weaknesses, we keep our positive stance on Otokar as we believe that it would penetrate further into the global armoured vehicle market in the long term, backed by its know-how accumulation and expanded defence portfolio.
Otokar reported net income of TRY22m in 1Q20, broadly in line with our estimate of TRY19m and the RT consensus of TRY21m. Operationally, 1Q20 EBITDA of TRY46m came slightly lower than our estimate of TRY53m, but in-line with the RT consensus of TRY43m. Despite slightly weaker than expected operating profitability, the bottom-line was boosted by TRY5m of deferred tax gain.
Otokar Otomotive Ve Savunma Sanavi is engaged in the import, manufacture, assembly, sale and export of bodies, engines, and all other components of all kinds of land, sea and air defense vehicles, as well as security vehicles, commercial buses, trucks, minibuses, midibuses, panel vans, cross-country vehicles, etc. Co.'s primary focus is on the production of Land Rover 4x4 and minibuses.
TEB Investment equity research analysts and strategist team consists of 8 analysts with an average finance sector experience of 15 years and special focus on international investors.
With our 6 equity research analysts we cover 93 companies across 21 sectors, reflecting 80% of the total market capitalization of all BIST companies and 86% of the BIST100 companies. Our strategy team provides in depth top-down and bottom-up market views with insight on FX and bond markets by publishing sectoral and strategic reports both in English and Turkish.
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