YATAS TI: 1Q23 Review (Oyak Yatırım)

Headwinds from financial expenses
YATAS posted a net profit of TL105mn (21% y/y, -27% q/q) in 1Q23, below market consensus (TL145mn) and our estimate (TL122mn). We believe that high financial expenses caused the deviation from market consensus estimates. EBITDA came in at TL259mn, increased by 71% y/y, but decreased 28% q/q. EBITDA was in-line with market consensus (TL261mn), and our estimate (TL259mn). Revenues were TL2.04bn in 1Q23, up by 80% y/y, yet down by 7% q/q, and were in-line with market consensus (TL1.97bn) and our estimate (TL1.99nn). Net debt increased by 29% q/q to TL1,40bn, due to increasing net working capital requirement. Accordingly, net debt/EBITDA increased to 1.3X (2022: 1.1X).

Sales improved, total store number increased… February sales were low due to the earthquake, in our view. We expect lagged demand to contribute 2Q sales. As for the new stores, the Company opened 1 official Enza Home store, but closed 3 official Bedding stores, 11 franchise stores were opened, (+1 Enza Home, +5 Yatas Bedding, +5 Divanev) along with 10 international franchise stores. Total sale points reached 928 stores from 910 stores with a total m2 of 928k (2022: 910k m2). Revenue TL/m2 realized at TL2,201, (4Q22: TL3,078). Sales composition of Enza, Yatas Bedding, Divanev and Puffy in total sales was 39.2%, 46.5%, 10.2%, and 4.1%, respectively. Divanev brand sales increased by 2.5 times y/y, and Puffy sales increased 2 times y/y. Online sales were also increased by 2.5 times y/y.
 
Margin deteriorated due shrinkage in February sales… We believe that the Company was exposed to full cost burden, while February sales were declining y/y due to earthquake. Accordingly, gross margin was 32.45% (4Q22: 34.10%, 1Q22: 31.33%), OPEX-to-sales ratio was 22.0% (4Q22: 21.7%, 1Q22: 20.3%) and EBITDA margin was 12.7% (4Q22: 16.3%, 1Q22: 13.1%).

Net debt increased…
The Company’s net debt increased 29% to TL1,40bn (2022: TL1.09bn), and net debt / EBITDA increased to 1.1x from 1.3x a quarter ago.
 
Outperform rating, TP and 23E estimates maintained…
We keep our 23E estimates unchanged for YATAS as TL TL32.9bn revenue, TL1.3bn EBITDA, and TL673mn net income. Our target price of TL45.36/sh offers 46% upside potential from current market levels. We maintain our Outperform rating. The stock trades at 4.4x EV/EBITDA and 6.2x P/E multiples on our 2023 forecasts.


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