Equity Analysis /
Turkey

Turk Traktor: In-line with our expectations

  • Turk Traktor recorded TL572mn net income in 1Q22, 5% above our estimate of TL454mn

  • The company posted TL572mn EBITDA, 4% above our estimate of TL550mn in 1Q22

  • EBITDA margin of 14.3% was 44bps higher than our estimate of 13.9% (Consensus: 14.0%)

Zeynep Erman
Zeynep Erman

Equity Research Analyst

Cemal Demirtas
Cemal Demirtas

Head of Research

ATA Invest
22 April 2022
Published by
  • Turk Traktor recorded TL572mn net income in 1Q22, 5% above consensus estimate of TL452mn and 5% above our estimate of TL454mn. Despite higher than expected other expenses, positive impact of TL26.5mn higher than expected EBIT and TL23.3mn higher than expected financial income resulted in TL23.2mn higher than expected net income.

  • The company posted TL572mn EBITDA, 4% above our estimate of TL550mn and 3% above consensus estimate of TL553mn in 1Q22. EBITDA margin of 14.3% was 44bps higher than our estimate of 13.9% (Consensus: 14.0%).

  • Based on our 2022E estimates, the company trades at 5.8x EV/EBITDA and 6.6x P/E, compared to its 5-year average 6.7x EV/EBITDA and 8.0x P/E multiple.

Total sales volume declined by 16% y/y in 1Q22. Domestic sales volume declined by 30% y/y in 1Q22, 1% lower than our estimates whereas export sales volume was up by 26% y/y in line with our estimate, during the same period. Consolidated revenue was up by 49% y/y to TL3,988mn which was 1% above our estimate of TL3,958mn.

EBITDA margin declined by 135bps y/y to 14.3% in 1Q22. The company’s EBITDA was up by 36% y/y to TL572mn in 1Q22. The company’s gross margin declined by 57bps y/y to 18.1% which was 42bps higher than our estimate.

TTRAK maintained its guidance for 2022E. Domestic farm tractor market volume guidance is maintained at 53K-59K, implying 8-17% y/y decline in 2022E (ATA Est.: 52.7K). 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.: 18.0K). The company guides TL450-600mn CAPEX in 2022E (ATA Est.: TL555mn).

The company turned into TL757mn net debt in 1Q22 from TL432mn net cash in 4Q21. The main reason of increase in net debt were TL1.2bn cash dividend outflow and TL240mn q/q increase in NWC requirement in 1Q22. The company’s receivable days declined by 2-days q/q in 1Q22. Inventory days increased by 16-days in 1Q22, while payable days increased by 8-days in the same period which increased cash conversion cycle by 6-days q/q in 1Q22. Net long FX position declined to TL362.2mn in 1Q22 versus TL959mn net long position in 4Q21.