Dogus Otomotiv: stellar performance to normalise in 2023E (stays HOLD)

We have updated our model for Dogus Otomotiv (Dogus), incorporating our revised domestic market estimates and macroeconomic forecasts, as well as its recent results. Despite the headwinds related to vehicle availability, Dogus has navigated the challenging conditions well and benefited from its strong pricing power, as the demand for Volkswagen Group vehicles has remained relatively strong. Strong pricing power and a disciplined approach to cost management have resulted in a solid operating performance, with 205% yoy EBITDA growth and an 847bps EBITDA margin improvement in 9M22. As we anticipate the vehicle availability issues to persist until the end of 1H23E, we expect Dogus’ operating performance to remain strong in 1H23E and normalise in 2H23E. Our revised estimates indicate 43% yoy growth in revenues and 15% growth in the EBITDA for 2023E. Coming off the high base foreseen in 2022E, stemming from its exceptional operating performance and the low effective tax rates, we estimate 6% yoy net profit growth in 2023E and a 9% CAGR over 2023-26E. On valuation grounds, we have raised our price target (PT) to TRY 178.00, from TRY 73, and we reiterate our HOLD rating on the stock.