Earnings Report /
Turkey

Bizim Toptan: Broadly in line with our estimates

  • We received positive signals from 3Q21 results and we believe that downside risks are diminishing at current valuations

  • Bizim Toptan recorded TL15.1mn net income in 3Q21, in line with our estimate of TL15.0mn

  • 2021 guidance maintained

Cemal Demirtas
Cemal Demirtas

Head of Research

ATA Invest
10 November 2021
Published by

·        Bizim Toptan recorded TL15.1mn net income in 3Q21, in line with our estimate of TL15.0mn but higher than consensus of TL11.5mn.

·        EBITDA of TL102.0mn was higher than our estimate of TL92.1mn. Adjusted for net financial expenses related to operations, adj-EBITDA of TL58.4mn was broadly in line with our est. of TL57.7mn.

·        2021 Guidance maintained: (1) Topline growth of 23-25% (excl tobacco &sugar) vs our est. of 24.5%, (2) EBITDA margin of 4.8% vs our estimate of 5.0% and (3) net income of TL43mn vs our est. of TL41mn

Topline was 4.5% above our estimates. Consolidated revenues increased by 34.8% y/y to TL1,861mn, supported by growth in both main category and tobacco. In 3Q21, tobacco revenues were up by 37.38% y/y to TL431mn whereas main category revenues were up by 34.4% to TL1,449mn during the same period.  Excluding the revenue impact from franchising operations, consolidated revenue growth increased to 27.2% y/y in 3Q21 from 13.5% y/y in 2Q21. 

1 store opened. In 3Q21, the number of cash& carry stores increased to 173. Within franchising operations, 84 net new stores were added to the network and total number of franchisees reached 1,644 as of 3Q21-end. Revenue from franchise operations increased by 56.2% y/y to TL375mn in 3Q21, constituting 20.2% of the company’s consolidated revenues. Capex spending in 3Q21 was TL21.7mn in line with annual plans of the company.

EBITDA (incl. IFRS 16) margin of 5.5% was 31bps above our estimate of 5.2%.  The company recorded 11.5% gross margin, 17bps higher than our estimates. Opex/Net sales ratio of 7.3% was 9bps below our estimates. Adj-EBITDA (including net fin. expenses related to operations and after IFRS-16) of 3.1% in 3Q21 was above our estimate of 3.2% and 2.2% realised in 2Q21. 

The company’s net cash increased by TL126mn q/q to TL347mn in 3Q21 mainly due to increase in trade payables net of inventories. Despite negative NWC needs and net cash position, the company continued to record interest expenses on term purchases as well as financial expenses. Higher than expected EBIT was offset by higher than expected financial expenses and net income of TL15.1mn was in line with our estimates. Net margin of 0.8% in 3Q21 looks encouraging. If the company stabilizes its net margin at around 1.0-1.5% while sustaining its top line growth in the following years, we will become more positive about the success of its business strategy. 

We will further review our estimates for 2021 after receiving more details about its growth prospects during the analyst teleconference to be held today (15:00 Ist time).