Datagate Bilgisayar (DGATE TI) - New region, new growth story…: Upgrading to Buy
Datagate has announced its long-awaited region expansion with the addition of new cities including Ankara, Bursa, EskiÅŸehir, Çanakkale, Balıkesir, Bilecik, Yalova and Kütahya ve Kırıkkale. Operations have started as of 1 April.
Following addition of the new cities on top of the ongoing distributorship business, Datagate’s market share will leap to 43% in 2019 from the current 23%, according to management.
We expect region expansion to boost Datagate’s top-line by 36% y-y in 2019. However, we foresee much higher EBITDA (+178% y-y) and net profit (+132% y-y) growth thanks to declining share of low-margin Apple sales and only 31% increase in opex. In all, we forecast revenue/EBITDA/net profit CAGR of 23%/58%/50% over 2019-21.
Post incorporating our revised estimates to our valuation, our target price stands higher by 140% to TRY12.25, which translates into attractive 60% upside potential from current levels. Hence, we upgrade to BUY from Hold.
Datagate Bilgisayar Malzemeleri Ticaret AS. Datagate Bilgisayar Malzemeleri Ticaret AS is a Turkey-based computer and computer peripherals distributor. The Company distributes, markets and offers logistics and after-sale services for more than 1,000 computers and computer accessories of international brands, such as Seagate, Intel, Acer, Fujitsu, Belkin, Sapphire, Vestel, genius, Samsung and Transcend, among others. The Company's product portfolio includes microprocessors, hard discs, memory units, optical units, motherboards, tapes, video accelerator cards, monitors and various types of hardware supporting software. The Company distributes its products to wholesale companies and retailers. As of December 31, 2011, its main shareholder was Indeks Bilg. A.S. (59.24%).
TEB Investment equity research analysts and strategist team consists of 8 analysts with an average finance sector experience of 15 years and special focus on international investors.
With our 6 equity research analysts we cover 93 companies across 21 sectors, reflecting 80% of the total market capitalization of all BIST companies and 86% of the BIST100 companies. Our strategy team provides in depth top-down and bottom-up market views with insight on FX and bond markets by publishing sectoral and strategic reports both in English and Turkish.
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