Turkish Automotive: Great expectations (transfer of coverage – Ford Otosan and Tofas – BUYs; Dogus Otomotiv – HOLD)
In this report, we transfer coverage and revisit the investment cases of Ford Otosan, Tofas and Dogus Otomotiv. Despite the headwinds related to the chip supply issues, resulting in lower vehicle availability, and the weaker TRY, which resulted in sharp increases in vehicle prices, the Turkish automotive sector has held up strongly, by registering 5% yoy growth in both domestic light vehicle sales and exports in January-October 2021. We believe that the short-term performance of the Turkish automotive companies should be shaped by the developments related to the chip supply issues and, in the medium term, we argue that that the details of the new vehicle projects will be the main differentiating factors for Ford Otosan and Tofas. We rate Ford Otosan and Tofas BUYs, with price targets (PTs) of TRY 265.20 and TRY 78.60, respectively; and Dogus Otomotiv a HOLD, with a PT of TRY 47.00.Dogus Otomotiv Servis Ve Ticaret is an automotive importer and distributor in Turkey. Co. represents 14 international brands each of which is engaged in the following sectors: Passenger cars, Light commercial vehicles, Heavy commercial vehicles, Industrial and marine engines, and Cooling systems.Co. provides its individual and corporate customers with a portfolio of more than 80 models. Co. competes in the industrial and marine engines market by representing the brand Scania Engines and in the cooling systems market representing Thermo King brand. Co.'s sales and service network is comprised of over 500 contact points.
Ford Otomotiv Sanayi is an automobile manufacturing company based in Turkey. Co. operates as a joint venture between Ford Motor Company and the Koc Group of Companies. Co. is engaged in manufacturing, assembling and selling motor vehicles, primarily commercial vehicles, imports and sells passenger cars and manufactures and imports and sells spare parts of those vehicles. Co. has two plants located in Kocaeli and Eskisehir, has a spare part distribution warehouse in Kartal, Istanbul and a branch in Tubitak Marmara Research Centre, Gebze Campus Technological Free Zone (TEKSEB).
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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