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Global Expansion And Online Advances Will Strengthen Future Market Position

WA
Consensus Narrative from 6 Analysts

Published

February 08 2025

Updated

February 08 2025

Narratives are currently in beta

Key Takeaways

  • Mavi's global recognition and strategic initiatives could lead to increased international revenue and enhanced domestic market share.
  • Investments in infrastructure and management enhancements aim to counteract sales contraction, driving operational efficiency and revenue growth.
  • Economic challenges in Turkey and Europe, along with inventory and margin pressures, threaten Mavi's revenue growth and profitability.

Catalysts

About Mavi Giyim Sanayi ve Ticaret
    Engages in the wholesale and retail sale of ready-to-wear denim apparel for men, women, and children.
What are the underlying business or industry changes driving this perspective?
  • Mavi's ranking as a leading company on TIME's World’s Best Companies Sustainable Growth 2025 list suggests enhanced global recognition and positioning, potentially leading to increased international revenue and market share.
  • Despite macroeconomic challenges, Mavi is expanding its market share in Turkiye, which may translate into improved revenue growth and customer base in the domestic market.
  • Mavi's strategic initiatives, including online sales and the MENA online operation, are growing and could continue to boost revenue and margins.
  • Planned investments in store expansions and infrastructure in North America and Europe aim to counteract international sales contraction, potentially driving revenue growth and operational efficiency.
  • Management restructuring and enhancements, such as SAP transformations, present an opportunity to improve operational efficiencies and net margins in the medium to long term.

Mavi Giyim Sanayi ve Ticaret Earnings and Revenue Growth

Mavi Giyim Sanayi ve Ticaret Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?
  • Analysts are assuming Mavi Giyim Sanayi ve Ticaret's revenue will grow by 41.3% annually over the next 3 years.
  • Analysts assume that profit margins will increase from 7.0% today to 7.4% in 3 years time.
  • Analysts expect earnings to reach TRY 5.7 billion (and earnings per share of TRY 20.32) by about February 2028, up from TRY 1.9 billion today. The analysts are largely in agreement about this estimate.
  • In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 20.5x on those 2028 earnings, up from 14.9x today. This future PE is lower than the current PE for the TR Luxury industry at 22.8x.
  • Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
  • To value all of this in today's terms, we will use a discount rate of 32.73%, as per the Simply Wall St company report.

Mavi Giyim Sanayi ve Ticaret Future Earnings Per Share Growth

Mavi Giyim Sanayi ve Ticaret Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?
  • The economic slowdown in Turkey, coupled with government anti-inflationary measures, has resulted in reduced purchasing power and softer consumer demand, potentially impacting Mavi's future revenues and net margins.
  • International sales showed a slight improvement, yet there is a 4.6% contraction over nine months due to macroeconomic demand weaknesses and operational challenges in Europe, which could hinder overall revenue growth.
  • Declining gross and EBITDA margins, including a 140 basis point decrease in gross margin and increased operational expenses, suggest ongoing margin pressure that might affect profitability.
  • The influence of inflation accounting is diminishing but still negatively impacts net income due to monetary losses from the balance sheet, which could complicate future financial stability.
  • Increased inventory levels driven by mid-season product drops and weather-related issues may lead to larger markdowns, thus reducing potential profit margins and impacting earnings.

Valuation

How have all the factors above been brought together to estimate a fair value?
  • The analysts have a consensus price target of TRY126.593 for Mavi Giyim Sanayi ve Ticaret based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of TRY138.0, and the most bearish reporting a price target of just TRY111.0.
  • In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be TRY77.4 billion, earnings will come to TRY5.7 billion, and it would be trading on a PE ratio of 20.5x, assuming you use a discount rate of 32.7%.
  • Given the current share price of TRY71.65, the analyst price target of TRY126.59 is 43.4% higher.
  • We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

How well do narratives help inform your perspective?

Disclaimer

Warren A.I. is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by Warren A.I. are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that Warren A.I.'s analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Read more narratives

Fair Value
₺126.6
43.3% undervalued intrinsic discount
Analyst Price Target Fair Value
Future estimation in
PastFuture077b20152017201920212023202520272028Revenue ₺77.4bEarnings ₺5.7b
% p.a.
Decrease
Increase
Current revenue growth rate
33.01%
Luxury revenue growth rate
0.26%