Bizim Toptan recorded TL30.6mn net income in 3Q22, slightly lower than our est. of TL33.6mn but higher than consensus of TL28.1mn.
EBITDA of TL179.4mn was lower than our estimate of TL211.4mn. Adjusted for net financial expenses related to operations, adj-EBITDA of TL100.5mn was also below our estimate of TL126.2mn.
2022 Guidance is revised up: Topline growth guidance is revised up to 95% (+/- 5%) (excl tobacco &sugar) from 75% (+/-5%) vs our estimate of 93%.
Topline was 1.8% above our estimates. Consolidated revenues increased by 106.7% y/y to TL3,848mn, supported by growth in main category. In 3Q22, tobacco revenues were up by 47.7% y/y to TL637mn whereas main category revenues were up by 137.9% to TL3,448mn during the same period. Excluding the revenue impact from franchising operations, consolidated revenue growth increased to 101.8% y/y in 3Q22 from 92.5% y/y in 2Q22.
3 stores opened. In 3Q22, the number of cash& carry stores reached 178. Within franchising operations, 173 net new stores were added to the network and total number of franchisees reached 2,206 as of 3Q22-end. Revenue from franchise operations increased by 126.3% y/y to TL848mn in 3Q22, constituting 22.0% of the company’s consolidated revenues. Capex spending in 3Q22 was TL23.1mn in line with annual plans of the company.
EBITDA (incl. IFRS 16) margin of 4.7% was 93bps below our estimate of 5.6%. The company recorded 13.1% gross margin, 130bps lower than our estimates. Opex/Net sales ratio of 9.3% was 27bps above below our estimates. Adj-EBITDA (including net fin. expenses related to operations and after IFRS-16) of 2.6% in 3Q22 was below our estimate of 3.3% and 3.1% realised in 3Q21.
The company’s net cash increased by TL142mn q/q to TL228n in 3Q22 mainly due to increase in trade payables net of inventories and trade receivables. Despite negative NWC needs and net cash position, the company continued to record interest expenses on term purchases as well as financial expenses. However, negative impact of lower than expected EBIT was surpassed by lower than expected financial expenses and taxes and bottomline came out TL3mn below our estimates. Net margin of 0.8% in 3Q22 does not look impressive. 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. Recall that the company board’s decision not to distribute cash dividend from 2021 was negative and the reasoning was not convincing.