Turk Traktor recorded TL492mn net income in 4Q21, 12% above the consensus estimate of TL441mn and 30% above our estimate of TL380mn. Despite higher than expected other expenses, the positive impact of TL34mn higher than expected net financial income and TL96mn higher than expected tax income resulted in TL112mn higher than expected net income.
The company posted TL541mn EBITDA, 10% above our estimate of TL491mn and 6% above the consensus estimate of TL509mn in 4Q21. EBITDA margin of 15.0% was 164bps higher than our estimate of 13.4% (Consensus: 14.3%).
Based on our 2022E estimates, the company trades at 4.6x EV/EBITDA and 6.6x P/E, compared to its 5-year average 6.6x EV/EBITDA and 8.9x P/E multiple.
Total sales volume increased by 4% y/y in 4Q21. Domestic sales volume declined by 8% y/y in 4Q21, 1% higher than our estimates whereas export sales volume was up by 35% y/y in line with our estimate, during the same period. Consolidated revenue was up by 48% y/y to TL3,601mn which was 2% below our estimate of TL3,674mn.
EBITDA margin declined by 409bps y/y to 15.0% in 4Q21. The company’s EBITDA was up by 16% y/y to TL541mn in 4Q21. The company’s gross margin declined by 399bps y/y to 19.2% which was 183bps higher than our estimate.
TTRAK announced its guidance for 2022E. The company expects 53K-59K domestic farm tractor market volume, implying 8-17% y/y decline in 2022E (ATA Est.: 61.4K). The company expects 26.5K-30.0K domestic tractor sales volume, implying 9-20% y/y decline in 2022E (ATA Est.: 31.0K). TTRAK expects 16.5K-18.5K export sales volume, implying 2-14% y/y increase in 2022E (ATA Est.: 17.0K). The company guides TL450-600mn CAPEX in 2022E (ATA Est.: TL482mn).
Board proposed TL22.48 dividend per share, implying a 10.3% dividend yield. This cash dividend implies TL1.2bn cash outflow and a 90.8% dividend payout ratio (ATA Est.: 90% payout & TL20.41 DPS). The company plans to distribute its dividend on 28 March 2022.
The company turned into TL432mn net cash in 4Q21 from TL21mn net debt in 3Q21. The main reason for the increase in net cash is the TL35mn q/q decline in NWC requirement in 4Q21 and strong cash flow from operations. The company’s receivable days were q/q flat in 4Q21. Inventory days declined by 6-days in 4Q21, while payable days increased by 5-days in the same period which declined the cash conversion cycle by 10-days q/q in 4Q21. Net long FX position increased to TL959mn in 4Q21 versus TL315mn net long position in 3Q21.