Earnings Report /
Turkey

Turk Traktor: 2Q22 earnings in line with our expectations

  • Turk Traktor recorded TL483mn net income in 2Q22, 2% above consensus estimate and 2% above our estimate.

  • The company posted TL731mn EBITDA, 6% above our estimate and 6% above consensus estimate

  • EBITDA margin of 14.9% was 46ps higher than our estimate of 14.5%

Zeynep Erman
Zeynep Erman

Equity Research Analyst

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ATA Invest
5 August 2022
Published byATA Invest

Turk Traktor recorded TL483mn net income in 2Q22, 2% above consensus estimate of TL474mn and 2% above our estimate of TL474mn. Positive impact of higher than expected EBIT and lower than expected financial expense were offset by higher than expected other expenses.

The company posted TL731mn EBITDA, 6% above our estimate of TL692mn and 6% above consensus estimate of TL690mn in 2Q22. EBITDA margin of 14.9% was 46ps higher than our estimate of 14.5% (Consensus: 14.4%).

Based on our 2022E estimates, the company trades at 5.2x EV/EBITDA and 6.9x P/E, compared to its 5-year average 6.4x EV/EBITDA and 7.5x P/E multiple.

Total sales volume declined by 14% y/y in 2Q22. Domestic sales volume declined by 19% y/y in 2Q22, 1% higher than our estimates whereas export sales volume was down by 6% y/y in line with our estimate, during the same period. Consolidated revenue was up by 69% y/y to TL4,893mn which was 2% above our estimate of TL4,775mn.

EBITDA margin declined by 31bps y/y to 14.9% in 2Q22. The company’s EBITDA was up by 66% y/y to TL731mn in 2Q22. The company’s gross margin increased by 19bps y/y to 18.6% which was 43bps higher than our estimate.

Except for CAPEX, no change in 2022E guidance. Domestic farm tractor market volume guidance is maintained at 53K-59K, implying 8-17% y/y decline in 2022E (ATA Est.: 53.0K). TTRAK domestic sales volume guidance is maintained at 26.5-30.0K, implying 6-17% y/y decline in 2022E (ATA Est.: 27.2K units). TTRAK export sales volume guidance is maintained at 16.5K-18.5K, implying 2-14% y/y increase in 2022E (ATA Est.: 17.5K). The company revised up its CAPEX guidance to TL600-800mn from TL450-600mn CAPEX in 2022E (ATA Est.: TL573mn).

The company’s net debt increased to TL1.6bn in 2Q22 from TL757mn in 1Q22. The main reason behind increase in net debt was TL960mn q/q increase in NWC requirement in 2Q22. The company’s receivable and inventory days increased by 4-days and 1-days in 2Q22, respectively, while payable days declined by 11-days in the same period which increased cash conversion cycle by 16-days q/q in 2Q22. Net long FX position declined to TL200mn in 2Q22 versus TL362mn net long position in 1Q22.