Datagate Bilgisayar (DGATE TI) - Tax increase on cell phones hurt: Downgrading to Hold
The special consumption tax increase on cellular phones and product price hikes after the surge in USD/TRY exchange rate caused a significant drop in cellular phone demand. The declining trend in cellular phone sales started since 2Q19 and we see no signs of a recovery so far. We were previously assuming regional expansion to boost net profit in 2019 but the special consumption tax ruined these expectations. Therefore, we cut our top-line, operating margin and net profit expectations significantly for 2019-21. Accordingly, we cut our target price by c49% to TRY6.3, which offers only 5.5% upside potential. Due to limited upside, we downgrade our rating to 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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