Turkish Food Retailers: entering a new era (BIM and Migros stay BUY, Sok Marketler downgraded to HOLD)
After riding the high inflation wave, the investment case of the Turkish food retailers is changing as inflation declines. The key challenge ahead is finding the right balance between revenue growth and rising costs, which will shape operating margins. Although we have better visibility for the revenue growth outlook, we expect that operating cost growth will be monitored closely by investors. We believe that food retailers with lower operating costs are poised to weather this transition with less impact. We forecast nominal revenue growth to decelerate from 72% yoy in 2024E to 46% in 2025E, translating into 9% and 8% yoy on an inflation-adjusted basis (IAS 29). Coming off a low base, we expect the adjusted EBITDA margin to improve by 163bps yoy to 3.9%, on average, in 2025E. On valuation grounds, the current valuation of the Turkish food retailers, at 6.2x 2025E adjusted EV/EBITDA, indicates a 26% discount to their EM peers. We maintain our BUYs on BIM (new price target (PT) TRY 660) and Migros (new PT TRY 657), and we downgrade Sok Marketler to HOLD (new PT TRY 58.00).Bim Birlesik Magazalar is engaged in operating retail stores through its retail shops throughout Turkey, which sell an assortment of approx. 600 items, including a number of private labels. Co.'s object is to offer consumers basic food items and consumer goods at discount prices with quality. Co.'s private labels provides its consumers with quality tasting sausage, salami and similar meat products while at the same time being suitable to the consumers family budget. Products include meat products, breakfast and dairy products, beverages, legumes and bakery, snacks and sweets, fruits and vegetables, frozen foods, and non-food items - cleaning supplies.
Migros Ticaret is a retailing group based in Turkey. Co. offers spacious stores in a wide range of formats and locations whose vast selection of stationery, glass and kitchenware, appliance, book, clothing, and other items along with groceries and other necessities. Co. maintains a store network of 1,004 national and international locations with a national presence in 70 provinces in Turkey's seven geographical regions. Store brand names include M, MM, MMM, 5M, MigroJet, Tansas, Macrocenter and Ramstores. Co. also provides customers alternatives such as internet, call centers, kiosks, catalogues, and mobile shopping networks.
Sok Marketler Ticaret AS. Sok Marketler Ticaret AS, located in Istanbul, Turkey, owns and operates grocery stores. It sells Amigo, Crown, Deren, Evin, Karmen, Lio, Peki, Piyale and Tempo brands. The Company was founded in 1995.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.