Otokar (OTKAR TI) - Strong bottom line beat: Maintain Buy
Otokar reported impressive 2Q19 performance with net profit at TRY206m, beating both the TRY164m RT consensus and our TRY191m estimates. Better than expected bottom line came primarily owing to lower than expected tax expense (TRY3m vs our TRY33m est.) and higher than expected FX gain (TRY25m vs our TRY11m est.). Despite a more stable currency, FX gains increased compared to previous quarter due to an increase in FX denominated receivables with simultaneous fall in FX denominated debt. Revenue surged 267% y-y to TRY865m, beating both the TRY802m RT consensus and our TRY752m estimates.
Even as we make minimal changes to our unit sales assumptions, we raise our revenue and profit estimates for our forecast horizon as we increase our USD assumptions by c4%. Thus, our 12m DCF-based TP stands higher at TRY164 (from TRY142.19) and we maintain our BUY recommendation on the stock.
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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