Earnings Report /
Turkey

Tofas: Better than expected results

  • Tofas recorded TL1,129mn net income, 13% higher than our estimate of TL1,001mn in 1Q22

  • The company reported TL1,738mn EBITDA, 15% higher than our estimate of TL1,509mn

  • EBITDA margin of 15.9% was 125bps higher than our estimate of 14.7% but 52bps lower than consensus estimate of 16.5%

Zeynep Erman
Zeynep Erman

Equity Research Analyst

Cemal Demirtas
Cemal Demirtas

Head of Research

ATA Invest
28 April 2022
Published by

Tofas recorded TL1,129mn net income, 13% higher than our estimate of TL1,001mn and 6% higher than the consensus estimate of TL1,064mn in 1Q22. Despite higher than expected net other operating expense& financial expense, TL319mn higher than expected EBIT led to a better than expected bottom line.

The company reported TL1,738mn EBITDA, 15% higher than our estimate of TL1,509mn and 9% higher than the consensus estimate of TL1,597mn. EBITDA margin of 15.9% was 125bps higher than our estimate of 14.7% but 52bps lower than the consensus estimate of 16.5%.

Based on our 2022E estimates, the company trades at 5.7x EV/EBITDA and 7.2x P/E compared to its 5-year average multiples of 6.1x and 6.1x, respectively.

Total sales volume was down by 17% y/y to 51.1K units in 1Q22. On a regional basis, export volume decreased by 16% y/y to 27.8K units in 1Q22, whereas domestic sales volume decreased by 19% y/y to 23.3K units during the same period. The company’s domestic LV market share increased by 41bps y/y whereas declined by 304bps q/q to 15.2% in 1Q22. Average domestic unit prices increased by 99% y/y in TL terms, 8% higher than our estimate whereas average export unit price increased by 13% y/y in EUR terms, 3% higher than our estimate.

Tofas maintained its 2022E guidance. Tofas maintained its domestic LV market guidance at 700K-750K, implying 5% decline in the lower band and 2% increase in the upper band for 2022E (ATA Est: 754K). Tofas maintained its domestic retail sales guidance at 125K-140K (2-14% y/y increase) which implies 16.7-20.0% market share in 2022E (ATA Est: 129K, 17.1%). The company maintained its exports sales volume guidance at 125K-140K, implying 11-24% y/y increase in 2022E (ATA Est: 125K). Tofas maintained its CAPEX guidance at EUR100mn, in line with our estimate.

Despite the strong cash flow from operations, Net debt was up by 29% q/q to TL4.6bn due to cash dividend outflow. The company’s Net Debt/EBITDA increased to 0.69x in 1Q22 from 0.61x in 4Q22. The company’s NWC need declined by TL727mn q/q in 1Q22. The company’s cash conversion cycle increased by 2.7- days q/q to -12 days from -14 days. In 1Q22, receivable and payable days decreased by 1- and 2- days q/q while inventory days increased by 2-days q/q. The company has Adj-FX long position of TL74mn in 1Q22 compared to a long position of TL235mn in 4Q21.

The company will hold a teleconference on Thursday, April 28th 2022, at 17:00 Istanbul Time (15:00 UK time).