UBS - BIM "Downgrade to Neutral on valuation" (Neutral)

Downgrade to Neutral on valuation

􀂄 Q4 results likely to be a repetition of strong Q3; We estimate TRY2.2bn revenues (+28% y/y), TRY116m EBITDA (+16% y/y) and; TRY78m net income (+20% y/y). Our estimates are above consensus: 5% on; revenues, 8% on EBITDA and 3% on net income. Our EBITDA estimate indicates; a 14bps quarterly improvement to 5.24%, on the back of strong like-for-like; momentum estimate of 14.2% (c10% basket and c4% traffic growth).;

􀂄 Less competition, more inflation beneficial to Bim; In Q4 results, we are looking for a confirmation our current sector view that the; deceleration in quarterly GDP growth has pushed food retail into a combination of; lower footprint expansion and less aggressive pricing and inflation uptick resulted; in margin improvement and higher like-for-like momentum for the key players.;

􀂄 Our above consensus 2012-13 estimates remain unchanged; Our positive sector view on Turkish food retail and Bim’s prospects are already; reflected in our 2012-2013 estimates for the company: we forecast 23% and 26%; EPS growth, respectively, based on 23-24% revenue growth and a robust average; EBITDA margin assumption of 5.4%. As such, we are 4% and 11% above; consensus on 2012-13E EPS, respectively.;

􀂄 Valuation: DCF based PT raised to TRY67.50; Bim shares re-rated 23% year-to-date and now trade at a 15% premium to two-year; 12M forward PE average of 22.6x. We downgrade to Neutral on limited potential; upside remaining to our revised PT.