Credit Suisse, which was on the verge of bankruptcy and transferred to its Swiss rival UBS in the past months, has published a new report on publicly traded Turkish retail companies. . In the report, price estimates for Turkish retail companies and detailed information about the popular companies were shared.
In the report, Credit Suisse analysts, who mentioned the increased unit cost, energy and labor expenses especially for Bim, Şok and Migros in the first quarter of 2023, predicted that the outlook in these expenses may be more positive for the second half of 2023.
It was pointed out that food inflation in Turkey was seen as “shelf inflation” in retail companies, and it was stated that the upward trend in this inflation would balance the margins that were expected to be weak in July.
Underlining that BİM and Şok Markets, which sell in discount retail concept, will come to the fore in this period, analysts stated that the stocks of these companies are moving in line with the quarterly margin trends, while Migros shares have been in a more correlation with interest/foreign exchange rates in the recent period.
It is stated that food retail is one of the sectors most affected by the increase in minimum wages, and its pressure on EBITDA margins is expected to continue until the end of the year.
Migros
It was stated that share prices were more affected by the net profit margin and interest rate due to Migros’ high debt in the past, while attention was drawn to the company’s debt reduction move.
Analysts, who expect a significant improvement in the profit margins of the company in the future, stated that the reduction in Competition Authority fines and the insurance revenues that can be obtained for Migros’s stores damaged in the earthquake area may lead the improvement on the margins. In addition, it was stated that the company sold an immovable property in Bayrampaşa and a profit of 244 million TL due to this would be recorded in the company’s household.
The target price of Credit Suisse’s MGROS stocks was revised from the previous 140.60 TL to 174.70 TL. However, the opinion for the stock was stated as “underperforming”.
Contrary to the expected improvement in Migros’ profit margins for 2023 in the upcoming period, Credit Susise’s forecast for Migros’ intra-year EBITDA margin is 7.15 percent, which expects a decline in 2023.
bim
Increasing the price target for Bim from 192.20 TL to 223.40 TL, Credit Suisse wrote in its report that Bim leads the Turkish retail sector with its discount sales concept. Analysts, who also stated that the leadership position had an effect on stock prices, also suggested “increase weight” for Bim shares in addition to their price suggestions. The discount of BIMAS stock price according to Credit Suisse’s target price is at the level of 21 percent. BİM, which stands out especially among investors with its stable appearance, has made a profit of 42 percent for its investors in the last 6 months, while its 1-year return has been 120 percent.
Analysts, drawing attention to the one-time costs with the earthquake effect, wrote that this effect will disappear in the next quarter. It was stated that after the earthquake effect, which will start to lose its effect as of the next quarter, items such as the increase in wages paid to employees and falling energy costs will begin to have an impact on profit margins, while it is estimated that the EBITDA margin will be between 7 and 7.75 percent.
Shock Markets
Clear signs that high inflation expectations are opening up space for Turkish retailers also explain Credit Suisse’s expectations on Şok Marketler. According to what is stated in the published report, the target price of the bank for Şok Marketler is 46.70 TL.
The Bank’s EBITDA margin estimate for Şok Markets is 7.2 percent. The reason for the expected positive effect on margins is the expectation that Şok will slow down in store openings this year. However, it is also among the expectations that inflation may cause a partial swelling on inventories.
It is stated that the wages, which stand out as a common expense item in the retail sector in general, will have a narrowing effect on the margins for Şok Marketler, while the insurance revenues that can be obtained from the damages in the earthquake zone are expected to have a positive effect.
SOKM, which was traded at a price of 38.32 TL as of July 10, has a discount of 21 percent compared to the target price of 46.70 TL specified by Credit Suisse.
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