Turkish Airlines (THYAO TI) - Waiting for high season: Maintain Buy
Turkish Airlines’ 1Q19 net loss of TRY1.3b in 1Q19 was worse than our net loss estimate of TRY679m and Research Turkey loss estimate of TRY662m due to slightly lower cargo revenues, TRY148m one-off loss on aircraft sales and higher amortization expenses of TRY1.9b (vs. BNPPe: TRY1.7b) on IFRS 16 adoption. 1Q19 EBITDA of TRY830m came 13% lower than our estimate of TRY954m and 8% weaker than market estimate of TRY1.6b.
We adjust our forecasts for IFRS16 compliance and cut our TP by 3% to TRY18.34 mainly on weaker cargo revenues and weaker TRY against USD forecasts. The stock trades at 5.0x 2019E EV/EBITDAR, a 5% discount to its emerging market peers. We expect a strong earnings recovery with the approaching high season, especially 3Q19.
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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