Otokar (OTKAR TI) - Strong beat on buoyant profitability: Maintain Buy
Otokar’s 3Q19 net income of TRY102m stood much higher than our estimate of TRY52m, but was in line with the RT consensus of TRY103m. The deviation in bottom line came from the higher than expected operating profitability. EBITDA of TRY141m surpassed our estimate of TRY87m and RT consensus of TRY121m. The 3Q19 result was impressive which was supported by strong armoured vehicle shipments and lower than expected marketing expenses.
As we factor in the decline in operating expenses in 3Q19, EBITDA/NI forecasts stand higher by 3%/4% for 2019. We believe that Otokar will further penetrate the global armoured vehicles market, supported by its know-how and expanded defence portfolio. As Otokar’s product mix shifts towards the defence segment, we expect cash generation to remain strong over the next three years at least. Maintain BUY with TP of TRY170 (from TRY165).
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.
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