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Love it 👍🏻

business looks great. however, I am not sure about the potential upside. I see Monish talking a lot about the duty free model, but that accounts at the moment for only 5% of the entire revenue, so it doesn't look like much to me, even though the model appears to be profitable. Currently the stock sits at a PE of 8 and a 1Y forward PE of 10, while the Turkish market avg is about 7. According to management guidance they expect a 10-14% CAGR revenue growth, with an EBITDA growth at slightly higher, 12-18% 2022-2025. Net profit seems to be 16.8% at the moment, and not 20% as you calculated in the bear case. I would love to know your thoughts on a valuation for this company, because there is not a ton of information to build upon for more than 2-3 years ahead. And if we look at just 2-3y ahead, I fail to see a huge upside. I am probably missing something, maybe some other multiples should be used to look at this, but at the moment it doesn't look cheap to me based on PE, nor does it look to have some huge upside based on management guidance for 2022-2025. thanks!

@lunchinvesting

3 ай бұрын

Thank you for your insightful comment. Here's my perspective: The bull case, as I see it, revolves around the completion of the CAPEX in Almaty, which is poised to generate approximately $200 million in profit for TAV. Notably, Almaty is a significant asset owned outright by TAV, not merely a concession. Considering the strategic importance of airports, especially in a growing, landlocked country like Kazakhstan, where competition is limited, Almaty's value could command a multiple of 20 if it were to be put on the market. This estimation aligns with what I believe Mohnish also sees. Thus, the valuation of Almaty alone could reach $4 billion. Moreover, it's essential to consider TAV's other major airports, such as Antalya, further bolstering its value proposition. With a current market capitalization of $1.7 billion, there appears to be substantial upside potential. Additionally, TAV's minimal exchange rate risk, thanks to its revenue being predominantly fixed in euros and dollars, adds another layer of stability to its valuation. In summary, while considering the factors outlined above, TAV's current valuation may indeed appear reasonable. However, the strategic assets it holds and the growth potential in emerging markets like Kazakhstan could offer significant upside in the long term. If you found this analysis valuable, I'd appreciate a like, and feel free to explore my other content as well. Thank you! Disclaimer: Please note that this response is not intended as investment advice.

@valentinpal

3 ай бұрын

@@lunchinvesting Do you think that Almaty will generate 200mil NET profit or EBITDA in 2025 or 2026? I was wondering why price it at 20x the multiple of the profits that will be obtained 3y from now? I mean, if it is a company that is growing today and for the next 3y, then it is likely worth a higher multiple compared to a non growing, and less profitable business (let's say twice the average Turkey multiple of 7-8x, although almaty is not in turkey per se). but that would imply a 20x multiple of the CURRENT year profits which are about 100mil for Almaty (which is 2bn in value for just Almaty). if in 2-3y it will get to 200m (EBITDA or Net profit?) and from then onwards it will grow just marginally, then I would think it will be a business worth 10x the net profit from 2025-2026 which is again 2bn, not 4bn. Of course, there is also the rest of the business which is growing and probably worth some more. Am I missing something? Thanks!

I like the post, there is only one major problem retail investors in Europe are unable to buy Turkish listed shares

@lunchinvesting

Жыл бұрын

Thanks for commenting. Fidelity works for US investors, but I unfortunately don’t know about Europe.

@vetricara1149

Жыл бұрын

@@lunchinvesting I dont think there is any broker to invest in turkey

Thanks for making this video. Curious to hear wear you found the Almaty historical financials. I found an article which reports a $3 mln dollar net income in 2020 and states this 7.2 times lower that 2019. So in 2019 was around $21 mln. Significantly lower than the numbers you found.

@lunchinvesting

11 ай бұрын

I took everything from TAV's reports. You can check their investor relations page. Also, if you like the content please subscribe and leave a like :)

Great video mate. Are you planning an updated video on #doas?

@lunchinvesting

Жыл бұрын

Thank you for your comment, I appreciate your feedback. DOAS bought DGGYO, which is Dogus’s REIT. The market didn’t like this deal and the stock price fell by almost 40%. I’m not worried about this deal because I think they paid a fair price. The stock is now trading at 3.70 times its 2022 earnings, which is very cheap in my view. I think the stock will recover and get a higher valuation in the next few years. However, I wanted to consolidate my positions in Turkey, so I sold my Dogus shares before the DGGYO deal and invested more in Reysaş and TAV. I did the same thing with the coke bottler CCI. I know that Guy Spier and Mohnish Pabrai visited Turkey recently. If they invested in Dogus, I might make another video about it. But for now, I have no plans to do that.

@RockyP-xw8rd

Жыл бұрын

@@lunchinvesting Well thank you again for your video. I much appreciate your thoughts and analysis. Personally, I have added substantially to my DOAS position since the DGGYO purchase, as I think the market price reduction was fairly emblematic of the trading that occurs in Turkiye (i.e. very emotional and unmoored from fundamentals). Even if it is a wash, I do not think that the DGGYO purchase negatively alters the long term prospects or DOAS. I think the governance of the company leaves something to be desired, though I do think they will utilize the DGGYO properties in some fashion for DOAS (i.e. charging stations, which Porsche / VW already has a leg up on in Turkiye). I admire Pabrai very much, and I'm sure this TAV investment will work well, but I can't seem to get it out of the "too hard" pile for me, and (perhaps this is an investment weakness I need to work on) I really do not like the debt pile. Even if the cash flows can cover it, there are so many moving parts, dealings with foreign governments, etc. that makes me nervous about it.

Hello, first of all it is a very informative video. I would like to ask above where I can open a brokerage account to invest in Turkish stocks. I actually live in Germany. I would be very grateful for it.

@lunchinvesting

8 ай бұрын

Unfortunately I don't know any broker in Europe that allows Turkish stocks. Only Fidelity in US too.

tav or rysas?

@lunchinvesting

Жыл бұрын

Thank you for your question. Both TAV and Reysaş are great stocks to invest in, but they have different strengths and risks. Reysaş has a much lower market cap than TAV, which means it has more room to grow in the future. However, it also depends heavily on the Turkish market, which can be volatile and unpredictable. TAV, on the other hand, has a more diversified portfolio of businesses across different countries and regions. This makes it more stable and resilient to market fluctuations. I personally own both stocks and I’m optimistic about their performance, but I would say that Reysaş offers more potential returns while TAV offers more security. Also please note that this is not financial advice. I’m just sharing my personal opinion and experience. Please do your own research before making any investment decisions.

@Nik-up5kg

Жыл бұрын

Nice video. On the US stock market the symbol is TAVHY ?

@lunchinvesting

Жыл бұрын

@@Nik-up5kg TAV trades on Turkish stock market. You can use Fidelity to buy it if you want, assuming you are in the US.

@Nik-up5kg

Жыл бұрын

@@lunchinvesting it’s also on interactive brokers . Is TAVHY the symbol ?

@lunchinvesting

Жыл бұрын

@@Nik-up5kg Yahoo shows TAVHY is the ticker for TAV Airports as well but I'm not sure honestly. 99% it is.