Sok Markets Tacirler Investment Company Report

Safe harbor in high food inflation…

We are increasing our target price for SOKM from TL 35.00 per share to TL 106.00 considering the strong 2Q23 operational performance and high food inflation theme. Our 12M target price corresponds to %71 return potential and we remain our BUY recommendation. High food inflation and consumers' increasing demand for discount products support SOK's LFL growth by contributing to its operational performance. We expect SOKM will continue to grow with new store rollouts, and operational margins will improve thanks to effective control over costs and a strategy of focusing on store efficiencies. All in all, we expect SOKM to raise its net income by 67% y/y in 2023E and 37% y/y in 2024E. SOKM trades at 9.3x P/E in our 2023E forecasts and 6.8x in our 2024E forecasts.