Financial Performance Analysis-Doğuş Oto (Tacirler Yatırım )

Despite a decline on an annual basis, we view the better-than-expected
quarterly profitability performance and satisfactory dividend performance
as positive for DOAS. In line with our updated forecasts, we have revised our
12-month target price for DOAS to TL259.00 from TL253.00 per share. The
revised target price, indicating a 36% upside potential, is in line with our
index expectations and reflects our view that margin recovery across the
sector will be gradual. Accordingly, we reiterate our 'HOLD'
recommendation. Based on our 2025 projections, the stock is trading at a
P/E ratio of 3.7x and an EV/EBITDA multiple of 1.3x.
Declining on an annual basis, yet outperforming expectations in net
profitability... DOAS released a net profit of TL1,250mn for 4Q24, indicating a
74% decrease YoY. Our institutional estimate was TL554 million, while the average
market consensus was TL637 million in net income. The better-than-expected net
profitability was primarily driven by the volume increase in the last quarter and
the positive contribution of pricing to operational revenues. Additionally, the
positive turnaround in the contribution from affiliates during the final quarter and
the relatively controlled impact of one-off expenses were other key factors
supporting net profitability. As a result, while the net profit for the last quarter
showed a significant improvement compared to the TL298 million recorded in the
previous quarter, it still remained weak on an annual basis. Despite the weakness
throughout the year, sales in the last quarter held up in real terms. The
company’s net sales for 4Q24 reached TL60.2 billion, indicating an 8% real growth
YoY while the full year completed with a 13% decline to TL188.4 billion. On the
operational profitability front, both the pressure on gross profit margins and high
costs continued to exert downward pressure. EBITDA, which came in at TL2,780
million, above market expectations, recorded a 33% decrease YoY. The EBITDA
margin for 4Q24 fell to 4.6%, compared to 7.4% in 4Q23 and 5.8% in 3Q24. For
the full year 2024, the company’s total EBITDA decreased by 53% YoY, reaching
TL16,740mn, with an EBITDA margin of 8.9%.
The contribution of affiliates to net profit turned positive again in the last
quarter... In 4Q24, the net profit contribution from affiliates amounted to TL272
million, while the total contribution for 2024 decreased to TL878 million due to
the weak performance in the first nine months of the year. The decline in affiliate
profitability for the year was mainly driven by the poor performance of VDF Servis
and Yüce Oto. TÜVTÜRK’s contribution to net profit for 2024 decreased by 12%
YoY, reaching TL830 million. Additionally, we have removed the impact of
TÜVTÜRK's valuation on our model for 2027 and beyond.
2025 Outlook… The company anticipates the total domestic vehicle market,
which closed 2024 at 1.28mn units, to contract to c.1mn units in 2025 (Tacirler
Investment estimate: 1.09mn units). Doğuş Otomotiv’s sales, excluding Skoda,
are expected to reach 115,000 units (Tacirler Investment estimate: 135,000
units). We project DOAS's 2025 revenues to increase by a nominal 36%, reaching
TL218.4 billion, while EBITDA is forecasted to generate TL20.5 billion with a 9.4%
margin. The company is expected to close 2024 with a net profit of TL7.6 billion,
and we forecast a net profit of TL11.3 billion for 2025

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