Turkish Airlines (THYAO TI) - Healthy operations despite NI miss: Maintain Buy
Turkish Airlines reported a net loss of TRY38m in 4Q18, lower than our net income estimate of TRY178m and Research Turkey’s TRY162m. The divergence originated from higher-than-expected effective tax rate as it booked TRY383m of deferred tax expenses in the last quarter. 4Q18 EBITDA of TRY1.6b was slightly higher than our estimate of TRY1.4b, but in line with the market estimate of TRY1.6b. It reversed a TRY622m gain on the sale of financial investments during the last quarter.
We finetune our forecasts and cut our 12M TP by 3% to TRY18.76/share mainly on higher net debt forecasts. The stock trades at 5.0x 2019E EV/EBITDAR, a 13% discount to its emerging market peers. We still believe Turkish Airlines deserves to trade at a premium due to its superior cost structure and its appealing growth prospects. We expect a solid price recovery once its operations move to the Istanbul New Airport, which is planned for the beginning of April 2019, backed by higher visibility for forward bookings.
Turk Hava Yollari is engaged in the airline industry with the airline flying to 103 destinations, throughout Turkey and internationally. As of the year end, Co. maintains 66 aircrafts with a total seat capacity of 10,672, and leases a A300-200 cargo aircraft. Co. has various services for their customers which include: various ways of checking in and on-line ticket sales.
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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