Earnings Report /
Turkey

Dogus Otomotiv: Tax income leads to higher-than-expected results

  • Dogus Otomotiv posted TL2,698mn net income which is 62% higher than our est and 61% higher than consensus est.

  • The company recorded TL2,378mn EBITDA which was 13% higher than our est and 13% higher than the cons in 3Q22.

  • In 3Q22, EBITDA margin was 20.1% which is 215bps higher than our estimates of 17.9% (Consensus: 18.2%).

Zeynep Erman
Zeynep Erman

Equity Research Analyst

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Cemal Demirtas
Cemal Demirtas

Head of Research

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ATA Invest
10 November 2022
Published byATA Invest
  • Dogus Otomotiv posted TL2,698mn net income which is 62% higher than our estimate of TL1,671mn and 61% higher than consensus estimate of TL1,674mn in 3Q22. Higher than expected deferred tax income and EBIT led to higher than expected net income in 3Q22.

  • The company recorded TL2,378mn EBITDA which was 13% higher than our estimate of TL2,104mn and 13% higher than the consensus estimates of TL2,108mn in 3Q22. In 3Q22, EBITDA margin was 20.1% which is 215bps higher than our estimates of 17.9% (Consensus: 18.2%).

  • Based on our 2023E estimates, DOAS is currently trading at 4.1x EV/EBITDA, implying 24% discount to its 5-yr historic average of 5.4x.

Total wholesale volume including Skoda increased by 19% y/y to 23.7K units in 3Q22. Total wholesale volume excluding Skoda increased by 25% y/y to 20.5K in 3Q22. Commercial vehicle (CV) price in terms of EUR was up by 51% y/y to EUR38.4K in 3Q22 which was 37% higher than our estimate, whereas Passenger Car (PC) price in terms of EUR was up by 9% y/y which was 5% lower than our estimate. The company’s light vehicle (P. Cars and LCV) market share decreased by 165bps y/y and 104bps q/q to 13.5% in 3Q22. PC revenues increased by 165% y/y while CV revenues increased by 121% y/y in 3Q22. Dogus Otomotiv’s revenue was up by 145% y/y to TL11,858, which is 1% higher than our estimate of TL11,747mn (Consensus: TL11,606mn) in 3Q22.

EBITDA was up by 313% y/y. Gross margin was up by 760bps y/y to 22.6% in 3Q22 which was 223ps higher than our estimate of 21.4%. Opex/net sales ratio of 4.2% was in-line with our estimate of 4.1%. Thus, EBITDA margin was 20.1%, 215bps higher than our estimates of 17.9%.

DOAS management revised down its 2022E sales volume excluding Skoda guidance by 6%. The company revised up its 2022E total motor vehicle (PC&LCV&HCV) market guidance to 800K from 790K units, implying 4% y/y increase (ATA Est.: 791K).  DOAS revised down its 2022E sales volume excluding Skoda guidance to 80K from 85K, implying 16% y/y decline (ATA Est.: 88K).  The company revised up its CAPEX guidance to TL1.4bn from TL430mn for 2022E (ATA Est.: TL512mn).

The company decided to pay TL4.09/shr advance dividend from its 9M22 net income, implying 3.2% dividend yield. This advance dividend implies TL900mn cash outflow and 16.5% dividend pay-out ratio from its 9M22 net income. Please note that, the company distributed TL1.3bn cash dividend from its 2021 net income, implying 53% pay-out ratio in April’22. The company aims to distribute advance dividend in 14 Nov’22.

The company tuned into TL2.0bn net cash in 3Q22 from TL305mn net debt in 2Q22.  NWC need declined by TL794mn q/q in 3Q22. Receivable and inventory days declined by 6-day and 6-day q/q, respectively while payable days declined by 1-days q/q in 3Q22. As a result, cash conversion cycle declined by 7-days q/q in 3Q22. Dogus Otomotiv’s net FX long position increased to TL3,702mn in 3Q22 from TL1,420mn in 2Q22.

DOAS will hold a teleconference today at 13:30 IST time.