EPS misses estimates on higher financial expense
Bizim Toptan reported TRY7.4m net earnings in 3Q12, up 11% y-y and 50% q-q. Net income came 13% lower than our estimate (8% below CNBC-e consensus) on higher-than-expected financial expenses. Operating performance was broadly in line with expectations. Revenue performance has improved remarkably (+17% y-y) thanks mainly to Ramadan impact.
Revenue performance has improved
Revenue growth in main categories in 3Q12 was impressive at 20% y-y (like-for-like: 16%) while tobacco sales remained relatively strong at 9%. Gross margin was seasonally low in 3Q but showed 30bp improvement y-y thanks to higher share of HORECA and corporate segments. 3Q12 EBITDA grew by 24% to TRY18.8m in 3Q12 at a 20bp higher margin.
Bizim Toptan reported TRY7.4m net earnings in 3Q12, up 11% y-y and 50% q-q. Net income came 13% lower than our estimate (8% below CNBC-e consensus) on higher-than-expected financial expenses. Operating performance was broadly in line with expectations. Revenue performance has improved remarkably (+17% y-y) thanks mainly to Ramadan impact.
Revenue performance has improved
Revenue growth in main categories in 3Q12 was impressive at 20% y-y (like-for-like: 16%) while tobacco sales remained relatively strong at 9%. Gross margin was seasonally low in 3Q but showed 30bp improvement y-y thanks to higher share of HORECA and corporate segments. 3Q12 EBITDA grew by 24% to TRY18.8m in 3Q12 at a 20bp higher margin.
HOLD maintained
While we broadly maintain our estimates at the operating level, we lower our EPS estimates on higher financial expenses. That, coupled with a lower risk-free-rate, leads to a 2% increase in our target price. We maintain our HOLD rating. Management execution is the key driver of the share-price performance. Better-than-expected revenue is an upside risk.
Focus on HORECA and corporate segments pays off
Compared to year-end guidance of an around 138-139 store number, the company has reached 128 stores with three new stores in 3Q12. On top of 3Q12, the company has added four more stores in October. It is encouraging that shares of HORECA and corporate segments reached 22% in total sales (surpassing the year-end target of 20%) with a positive implication for gross margin. Operating expenses were broadly in line with our estimates. Interest expense remained high at TRY2.9m (2Q12: TRY2.8m) while we had estimated TRY1.5m. Net working capital has decreased 14% q-q to TRY48m as receivables and payables increased by TRY36.3m and TRY41.4m, respectively, while inventory was stable.
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