Turk Traktor (TTRAK TI) - Cash flow recovery continues: Maintain Buy
Turk Traktor posted TRY22m net income in 3Q19, better than RT consensus of TRY20m but lower than our TRY25m estimate. Likewise, EBITDA was ahead of RT consensus but slightly lower than our estimate. In our view, the improvements in the Balance Sheet and Cash Flows were more attractive than that in Income Statement in 3Q19 as improving free cash flow lowered net debt in 3Q19.
Despite the downward revision in our net income estimates, better cash flow outlook with improved net working capital need has boosted our DCF-based fair value estimate. Thus, we have increased our 12M TP by 48% to TRY54 and maintain BUY on expected recovery in the Turkish farm tractor market in 2020, appealing cash dividend outlook and attractive valuation.
Turk Traktor Ve Ziraat Makineleri is engaged in the manufacturing of agricultural machinery, such as tractors, harvesting machinery and earth moving machinery, and its allied parts, including gearboxes, transmission boxes, engine blocks, cylinder heads and hydraulic lifters. Co. sells New Holland and Case IH branded vehicles and equipments. Co. exports its products to over 50 countries.
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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