Turkish Airlines (THYAO TI) - Operationally in-line: Maintain Buy
Turkish Airlines reported 3Q19 net income of TRY3.7b, which was slightly higher than BNPPe of TRY3.4b but in-line with RT estimate of TRY3.6b. The divergence was due to the lower than expected effective tax rate of 18% (vs. BNPPe: 22%) and non-operating gain of TRY108m. Operationally, EBITDA of TRY5.8b stood in-line with our estimate of TRY5.8b but lower than RT estimate of TRY6.2b.
We expect cash generation to continue to wane on lacklustre yield outlook and high unit costs. We maintain our BUY rating on the stock on attractive upside. At current levels, the stock trades at 5.0x 2019E EV/EBITDAR, implying 11% discount to its emerging peers. Our DCF-based TP is pegged at TRY15.87.
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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