Torunlar Gayrimenkul Yatirim (TRGYO TI) - Downgrade on full valuation: Downgrading to Hold
TRGYO has risen c26% in absolute terms and 21% relative to the main index (XU100) in the past two weeks. We think at current levels most of the positives for 4Q – margin expansion, higher sales revenue and FX gains – are priced in. After five quarters of sequential losses, the company eventually turned into black in 3Q19, despite high financial expenses, led by FX gains driven by a stable currency and decline in short FX position. EBITDA was strong on higher rental income and improved deliveries from 5th Levent and Torun Centre projects. TRGYO’s net debt position improved by TRY100m q-q and TRY351m y-y to TRY4.1b in 3Q19. Deleveraging is a major catalyst for the stock, in our view. Torunlar’s short FX position on the USD side fell by USD206m q-q to USD176m in 3Q19, while on the Euro front, EUR194m short position remained almost stable q-q.
Our TP of TRY2.43 implies a mere 3% upside. TRGYO currently trades at a 69% discount to its NAV vs. its five-year discount of 59%. We downgrade to HOLD on limited upside.
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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