Torunlar Gayrimenkul Yatirim (TRGYO TI) - Backed by FX gains; decent EBITDA: Upgrading to Buy
Torunlar REIC has announced a 3Q19 net profit of TRY136m (2Q19: TRY54m loss; 3Q18: TRY974m loss), in line with both our estimate (TRY140m net profit) and the RT consensus (TRY139m net profit). After five quarters of sequential losses, net income eventually turned profitable thanks to FX gains driven by stable currency and a decline in short FX position despite high financial expenses. EBITDA was strong on higher rental income and improved deliveries from the 5th Levent and Torun Centre projects. As a result, EBITDA margin rose to 64% from 59% in 3Q18. We expect deliveries to be even stronger in 4Q, backed especially by sales to overseas buyers. TRGYO’s net debt position went down by TRY100m q-q and TRY351m y-y to TRY4.1b in 3Q. Further deleveraging of debt is a major catalyst for the stock, in our view.
We raise our target price by 17% to TRY2.43 per share. TRGYO trades attractively at a 77% discount to its NAV vs its 5-year discount of 59%. We upgrade the stock to BUY from Hold.
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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