Torunlar Gayrimenkul Yatirim (TRGYO TI) - Backed by revaluation gains: Maintain Hold
TRGYO reported a solid 4Q18 net income of TRY2.3b beating ours and RT consensus estimates. Adjusted for one-offs, the net income of TRY652m was still better than our estimates. However, we expect 2019 revenues to drop 45% on potentially weak deliveries at 5th Levent project and Torun Centre. We see a 77% drop in office and residential sales (67% of 2018 sales) and a 25% y-y growth in rental sales (27% of sales). We think in 2019, TRGYO will focus on completing the MOI 2nd phase hotel, convention centre and the adjacent residential project. Destocking residences and leasing select offices and retail areas at Torun Centre will also be on TRGYO’s agenda.
We raise our 2019-20E EPS as we raise our non-operating income forecasts. Our SoTP based TP goes up to TRY2.07 as we update fair values of its real estate portfolio in-line with TRGYO’s asset revaluation. However, we retain HOLD given limited upside from current levels. TRGYO trades at a 74% discount to its NAV compared to its 5-year average historical discount of 55%.
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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