BIM-1Q23-Earnings Review (TFG Istanbul Menkul Değerler )

In-line operational performance
BIMAS’s 1Q23 top-line and EBITDA are in line with the forecasts, but the net profit missed the consensus by 21% predominantly on higher than expected net financial expenses and higher effective tax rate. The contraction in net margin to 2.6% vs 4.9% a year earlier was mainly driven by EBITDA margin contraction to historic lows on higher operational expenses and earthquake related costs.

One off negative effects to disappear going forward
Owing to the one off effects of earthquake and early retirement scheme higher operational expenses the company posted EBITDA margin of 6.1%, in line with market consensus and our forecast. EBITDA margin contracted by 57 bps due to the earthquake and by 18 bps due to the early retirement scheme. One negative effect on EBITDA margin was 75 bps. Net profit came out 21% below consensus and 24% below our expectation at TRY1.35bn. One off negative effect on net margin was of 92 bps including effect of earthquake early retirement scheme and impact of EGP depreciation. Excluding one off effects, EBITDA margin and net margin would be 6.9% and 3.6% respectively.

Bottom line was under pressure during 1Q23
Like for Like (LFL) sales grew by 79% to TRY29.3mn and LFL basket size grew 86% to TRY51.72 driving sales for 1Q23 up by 88% yoy. 1Q23 net sales came out at TRY51.33bn (up 13 qoq), in line with market expectations and our forecast of TRY49.8mn. 1Q23 EBITDA was also in line with market expectation at TRY3.14bn, up by 36% yoy however contracted 21% qoq. Qoq contraction for the quarter was expected because of the earthquakes and early retirement scheme. Additionally, higher overhead costs and minimum wage hike pressured margins negatively in the first quarter. Operating expenses as a percentage of sales was up to 13.7% vs 11.4% of 4Q22. Owing to earthquake linked damage, number of BIM stores during the quarter was down by 9 to 10,563 stores (207 new stores vs 225 closed) while 24 new stores opened in the international segment (14 in Morocco and 10 in Egypt).

We maintain Buy
We maintain our buy call on the company with our 1 year forward looking target price of TRY271.04. We expect the 2Q23 and onwards to show considerable recovery in terms of profitability as prices adjust to costs and effect of 1Q one offs fade.


 TFG Istanbul Menkul Değerler A.Ş.
  www.tfgistanbul.com/arastirma-raporlar
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