EBITDA beats our and
consensus estimates
Ford Otosan reported net income of TRY199m in 4Q12 (+28% y-y, our estimate: TRY192m, CNBC-e consensus: TRY166m). EBITDA was TRY220m (+18% y-y, our estimate: TRY204m, consensus: TRY203m). The overshoot was driven by slightly better domestic pricing (as was hinted at by Tofas’ (TOASO TI) 4Q12 results) and mostly one-off items at the opex level.
Employee expense capitalization positive, R&D increase negative
SG&A employee expenses were just TRY2.5m (4Q11: TRY16m) as the company capitalized personnel expenses related to new investments. R&D/revenue ratio increased from 0.7ppt in 4Q11 to 1.3ppt in 4Q12 (a TRY14m increase). At the net level opex was TRY10m below our estimate. Ford Otosan reported TRY10m tax income (our estimate: TRY18m).
Maintain HOLD, TRY21.30 target price
We fine tune our target price to TRY21.30. Downside risks are: 1) limited market share gains with new LCV, and 2) sharper than expected declines in the LCV market in Europe in 2013. The key upside challenges are: 1) more significant market-share gains with the new Transit and LCV than we estimate, and 2) further expansion in new markets.
Ford Otosan reported net income of TRY199m in 4Q12 (+28% y-y, our estimate: TRY192m, CNBC-e consensus: TRY166m). EBITDA was TRY220m (+18% y-y, our estimate: TRY204m, consensus: TRY203m). The overshoot was driven by slightly better domestic pricing (as was hinted at by Tofas’ (TOASO TI) 4Q12 results) and mostly one-off items at the opex level.
Employee expense capitalization positive, R&D increase negative
SG&A employee expenses were just TRY2.5m (4Q11: TRY16m) as the company capitalized personnel expenses related to new investments. R&D/revenue ratio increased from 0.7ppt in 4Q11 to 1.3ppt in 4Q12 (a TRY14m increase). At the net level opex was TRY10m below our estimate. Ford Otosan reported TRY10m tax income (our estimate: TRY18m).
Maintain HOLD, TRY21.30 target price
We fine tune our target price to TRY21.30. Downside risks are: 1) limited market share gains with new LCV, and 2) sharper than expected declines in the LCV market in Europe in 2013. The key upside challenges are: 1) more significant market-share gains with the new Transit and LCV than we estimate, and 2) further expansion in new markets.
Margins to remain subdued until the launch of new products
We expect the operating margins to remain subdued until 2014, when the LCV portfolio will be fully renewed. The Bloomberg 2013 consensus EBITDA margin estimate is 8.5% (Our estimate: 7.8%; 2012 actual: 7.7%). Towards 2H13; we believe the risk/reward profile will improve. The biggest upside risk is new export mandates, such as a possible export of the Custom and the new Courier models to the US or Russia. We forecast a DPS of TRY1.38 in 2013 (yield: 7.1%), but based on tax-purpose financials, there could be some downside risk if the company does not utilize its reserves. Ford Otosan will hold an analyst meeting on 1 March to discuss 2012 results and 2013 expectations.
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