Turk Traktor recorded TL222mn net income in 3Q21, 6% above the consensus estimate of TL209mn and 8% above our estimate of TL206mn. Despite the negative impact of TL13mn less than expected EBIT, the positive impact of TL24mn higher than expected net financial income and TL3mn less than expected tax expense resulted in TL16mn higher than expected net income.
The company posted TL330mn EBITDA, 4% above our estimate of TL318mn and 5% above the consensus estimate of TL315mn in 3Q21. EBITDA margin of 13.4% was 9bps higher than our estimate of 13.3% (Consensus: 13.1%).
Based on our 2022E estimates, the company trades at 4.9x EV/EBITDA and 6.8x P/E, compared to its 5-year average 6.7x EV/EBITDA and 9.0x P/E multiple.
Total sales volume increased by 11% y/y in 3Q21. Domestic sales volume increased by 8% y/y in 3Q21, 5% higher than our estimates whereas export sales volume was up by 18% y/y in line with our estimate, during the same period. Consolidated revenue was up by 52% y/y to TL2,467mn which was 3% above our estimate of TL2,388mn.
EBITDA margin declined by 585bps y/y to 13.4% in 3Q21. The company’s EBITDA was up by 6% y/y to TL330mn in 3Q21. The company’s gross margin declined by 583bps y/y to 16.6% which was 45bps lower than our estimate. Decline margins are mainly due to holiday in July 2021 and maintenance stoppage in August 2021.
TTRAK upgraded its guidance for 2021E. Domestic farm tractor market volume guidance is increased to 62K-65K from 58-64K. TTRAK domestic sales volume guidance increased to 31.5K-33.5K from 29-32.5K. (ATA expectation: 30.7K units ~38% y/y growth). TTRAK export sales volume guidance increased to 15.5K-16.5K from 14.3-15.8K. (ATA expectation: 15.0K units ~19% y/y growth).
The company had a net debt position of TL21mn in 3Q21, compared to a net cash position of TL320mn in 2Q21. The main reason for the increase in net debt is TL331mn q/q increase in NWC requirement in 3Q21. The company’s receivable days were q/q flat in 3Q21. Inventory and payable days increased by 19- and 3- days q/q in 3Q21, which increased the cash conversion cycle by 17-days q/q in 3Q21. The net long FX position increased to TL315mn in 3Q21 versus TL319mn net long position in 2Q21.