Ford Otosan: bright expectations are mostly priced in (downgraded to HOLD)
We maintain our positive view on Ford Otosan (FROTO) on a fundamental basis. FROTO should be one of the main beneficiaries of the ongoing structural transformation in the European automotive market, by capitalising on its next-generation vehicle portfolio with a potentially-higher share of electric vehicles (EVs) in its sales volumes. In tandem with our expectation of higher volumes, and the completion of the major investment cycle, we foresee a significant pick-up in free cash flow generation starting in 2025E. In the short term, we expect FROTO to benefit from potential weakness in the TRY, as the company generates more than 75% of its revenues from its international operations. Despite our positive outlook for the company, we believe that these strong prospects are largely priced in, as our revised price target (PT) of TRY 905.5 offers only a 9% return potential. Hence, we downgrade our rating on the stock to HOLD from Buy, solely on valuation grounds.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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