Rattibha

Turkey investor trip – what we learned
A week ago, a group of 15 intrepid Undervalued Shares readers visited Istanbul. An intense three days of nonstop fact-finding!
How did it all go, and what were our key learnings?

1/ What are the Turkish companies worth taking a closer look? Our visit entailed meetings with publicly listed companies across a range of industries. The personal presentations by C-suite executives proved hugely informative!

2/ MLP Care / MLP Saglik Hizmetleri is Turkey's largest private hospital group. @mlpcare has an asset-light model, low treatment costs, and a fast break-even for new hospitals. With private care only comprising 25% of Turkey's healthcare sector, $MPARK should have room to grow.

3/ @Akbank is one of Turkey's largest banks. Despite a 44% p.a. inflation rate, $AKBNK seems to thrive, with a recent inflation-adjusted return on equity in the high single digits. The stock is trading for a p/e of between 1-2 (see table) or 3-4 (more conservative estimate).

4/ Mavi Giyim Sanayi Ve Ticaret is the #1 jeans brand in Turkey. @mavi has evolved from a manufacturer for other brands into a successful, modern retailer, which helped increase its margins significantly. With 85n consumers in Turkey alone, $MAVI is an interesting play.

5/ ÜNLÜ & Co. is Turkey's leading provider of investment advisory and asset management products. @unlucocould benefit significantly if or when foreign money returns to Turkey in force. @pia_piri, its trading app for Turkish investors, could become a game changer for $UNLU.

6/ TOFAŞ is a Turkish automobile manufacturer and joint venture of @kocholding $KCHOL and @stellantis. As a highly profitable, balanced business, $TOASO could attract new investors once the agreed consolidation of $STLA's commercial activities in Turkey under TOFAŞ is in place.

7/ Coca-Cola İçecek is a beverages company that produces Coca-Cola for 11 countries in the region (totalling 430m consumers). @CocaColaIcecek $CCOLA will suit investors who want exposure to these growth markets in a way that also gives them the safety of the Coca-Cola brand.

8/ Migros Ticaret is Turkey's leading supermarket chain. @Migros_Turkiye has a net cash position, no hard currency debt, and just started paying a dividend for the first time in 14 years. $MGROS may just be the right way to play the rise of the Turkish consumer.

9/ Sabancı Holding is one of Turkey's leading holding companies. Despite growing its US dollar-based NAV over the past years, @SabanciHolding $SAHOL stock is currently trading at a material discount to its historical p/e multiples.

10/ How does it all stack up from the perspective of foreign investors? For once, Turkish stocks are very difficult to access; once it becomes easier to trade them, the market could see additional investment flow into some of these companies.

11/ While some Turkish stocks are cheap, are they cheap enough? Group participants had mixed thoughts, and of course, any provision of more than an initial commentary on any of the companies named above would require a proper deep-dive first.

12/ Recent political developments also need to be considered. Does president Erdoğan intend to return to a more orthodox policy now that he has secured power for another five years, and could he even change course? There is a huge range of potential outcomes.

13/ Overall, the trip certainly was a mind-expanding experience, and fun as well! Everyone made valuable new professional contacts, and new friends. With a bit of luck, another such trip could be pulled together before year-end. DM if you want to help map out next steps!