We downgrade our rating on Turkish hard discount food retailer BIM to Sell from Neutral with a new price target of TRY90 (from TRY91.5), which implies 3% downside vs. average upside for our Turkish non-financials coverage of c.40%. While we like the defensive nature of BIM’s operating environment and financial structure (no debt and no FX exposure), and see it as a key driver of the stock’s outperformance since the start of macro volatility in Turkey, we find this to be priced in with the market not yet reflecting operational headwinds this year.
(1) Full valuation; at a large premium to peers: BIM has outperformed the Turkish main benchmark, BIST-100, by 29% since the start of 2018 and now trades at a c.17% premium to its 3-year history on 12m fwd EV/EBITDA of 13.4x (vs. average 18% discount to history for the rest of our Turkish consumer coverage). BIM’s premium to CEEMEA food retail peers has expanded to c.68% on 12m fwd EV/EBITDA and 35% on P/E. We note that BIM’s premium to key peer Sok (Not Covered) is now c.71% vs. 38% on average since Sok’s IPO in May 2018.