Bim Birlesik Magazalar (BIMAS TI) Report

BIM posted 2Q15 net income of TRY150m, higher than our estimate (TRY130m) and Research Turkey’s consensus at TRY129m due to better than expected operating performance (EBITDA of TRY218m vs. our TRY197m and consensus of TRY193m). Top-line growth was almost in line with our and consensus (22%) on the back of new store openings, high basket inflation and LFL growth.
 
 

Strong revenue growth and increase in gross profit margin

The company accelerated new store openings (187 new stores, up 4.0% q/q and 11.0% y-y in 2Q15, and 320 new stores, up 7.1% YTD in 1H15). LFL was strong at 11.8% (+9.9% basket size and +1.7% traffic growth). Gross profit margin increased by 1.0 pp y/y to 5.0% and 0.4 pp q-q on easing processed food inflation.

EBITDA margin increased by 1 pp to 5.0%

Operating expenses remained flat y-y at 12.3% as a percentage of revenues. Personnel expenses increased by 23% y-y as headcount increased by 15%. Rent expenses increased by 21% y-y. Hence, EBITDA margin increased by 1 pp (in line with gross profit margin) to 5.0%.

Better results would pose upside risk to our estimates

We remain more conservative in our forecasts for the company. We expect a 4.6% EBITDA margin for the company; in 1H15, the company posted a 4.8% EBITDA margin. We maintain our estimates, TP and HOLD recommendation for the stock. Our TP is based on a weighted average of DCF (70%) and P/E-based peer comparison (30%).

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