Morning Note /

Turkey: 1Q22 earnings season will be completed as of today

  • Turkish equities have been resilient and decoupling despite the selloff in global markets

  • But the weakness in TL started yesterday

  • Although we expect a positive opening in BIST 100 towards 2,490 resistance level, eyes will be again on TL/USD

Batuhan Ozsahin
ATA Invest
10 May 2022
Published by

Turkish equities have been resilient and decoupling despite the selloff in global markets. But the weakness in TL which started yesterday and the breach of TL/USD above the 15 level ruined sentiment in the market.

Although we expect a positive opening in BIST 100 towards the 2,490 resistance level, eyes will be again on TL/USD.

1Q22 earnings season will be completed as of today and so far we saw many strong financials which are likely to continue outperforming the market.

Company news:

* ISCTR TI > Isbank reported 1Q22 net income of TL8,432mn (+31% q/q and 354% y/y), 5% lower than our and 4% higher consensus estimate. The key highlights of 1Q22 were 1) ROE improved to 40.3% from just 11.5% in 1Q21 2) Core revenues are up 180% y/y to TL13bn driven by higher CPI linker income and lower swap costs 3) Net provisioning costs are flat 66% y/y with lower net NPL inflow and strong collections performance and the bank added TL250mn of free provisions, bringing the stock to TL4.3bn. Isbank shares are up 56% year-to-date compared to a 32% increase in the BIST banking index and a 33% increase in BIST-100. Isbank is trading at 1.6x 22E P/E and 0.5x 22E P/B, 39% discount to its 5-year averages.

*AKSEN TI> 1Q22 Results: Aksa Energy posted TL1,176mn net income in 1Q22, higher than the consensus estimate of TL788mn. (not rated, positive) Thanks to strong growth in Turkey region, consolidated revenues increased by 175% y/y to TL5,892mn, but fell 9% short of consensus estimate of TL6,495mn. African revenue was up by 96% y/y to TL710mn in 1Q22 whereas revenues from Turkey increased by 182% y/y to TL5,023mn during the same period. Aksa Enerji’s EBITDA increased by 468% y/y to TL1637mn in 1Q22, 49% above the consensus estimate of TL788mn.Aksa Enerji’s EBITDA margin increased by 481bps y/y to 27.8%, 747bps higher than the consensus estimates of 20.3% in 1Q22. Net debt increased by 34% q/q to TL6.07bn in 1Q22. The company’s net debt / EBITDA ratio declined to 1.68x in 1Q22 from 1.84x in 4Q21.

*ENKAI TI> 1Q22 Results: Enka posted TL491mn net loss in 1Q22 which was significantly lower than consensus estimate of TL2,050mn net income in 1Q22. (not rated) Enka’s revenues increased by 220% y/y to TL11.47bn in 1Q22 which was 10% below the consensus estimate of TL12.72bn. Contracting revenues increased by 122% y/y to TL5.40bn in 1Q22 whereas the real estate revenue increased by 79% y/y to TL1,020mn during the same period. Trade revenues increased by 22% y/y to TL551mn in 1Q22. Enka’s EBITDA came at TL2,642mn which was 12% higher than consensus estimate of TL2,363mn in 1Q22. Contracting EBITDA increased by 30% to TL1,461mn in 1Q22 while real estate EBITDA increased 85% y/y to TL582mn during same period. Energy EBITDA decreased by 12% q/q to TL536mn. The company generated 23.0% EBITDA margin compared to consensus estimate of 18.6%. Despite higher than expected operating performance, significant losses from investment activities and tax expenses led to net losses at the bottom-line. Enka’s net cash improved by 3.7% q/q to TL70.5bn, implying 8.81x net cash/ EBITDA in 1Q22.

*AKSA TI> 1Q22 Results: Aksa Akrilik posted TL625mn net income in 1Q22, higher than consensus estimate of TL504mn (not rated).Aksa’s revenues increased by 197% y/y to TL3,915mn in 1Q22 which was 2% higher than consensus (Estimate of TL3,849mn). Aksa’s EBITDA increased by 403% y/y to TL922mn in 1Q22, 11% above estimates. EBITDA margin increased by 962bps y/y to 23.6% in 1Q22 which was 197bps above consensus estimate of 21.6%. The company’s net debt increased to TL1,435mn in 1Q22 from TL1,139mn in 4Q21. The company’s net debt / EBITDA ratio increased to 0.59x in 1Q22 from 0.08x in 4Q21. Aksa management guides a capacity utilization rate of 95% in 2022E vs 89% in 2021. The company also guide an EBITDA margin of 18-25% in 2022 versus US$71mn in 2021. CAPEX guidance for 2022 stand at US$85mn versus US$71mb in 2021.

*MGROS TI> 1Q22 Review: Slightly higher than expected net income. Migros realised TL82mn net income in 1Q22, better than our estimate of TL63mn and consensus estimate of TL27mn. Slightly higher than expected EBITDA and lower than expected tax expenses were the reasons behind higher than expected net income. The management revised its 2022E (1) topline growth guidance to “55-60%” from “40-45%” versus our estimate of 54.1% (2) new store openings guidance to 250+ from 200+ new stores (3) capex guidance to c.TL1,500mn from c.TL1,200 while maintaining (4) its EBITDA margin guidance at “8-8.5%” versus our estimate of 8.4%.

*ATATP TI> 1Q22 Earnings Review: ATP posted TL27mn net income in 1Q22, implying 154% y/y growth. The company’s net sales increased by 63% y/y to TL88mn in 1Q22. In regional basis, revenues from Turkey increased by 89% y/y to TL57mn in 1Q22 whereas revenues from Europe increased by 89% y/y to TL12mn in the same period. Revenues from China increased by 20% y/y to TL28mn in 1Q22.The company’s gross profit increased by 93% y/y to TL45mn 1Q22. In regional basis, ATP's Turkey gross profit increased by 87% y/y to TL33mn in 1Q22. The company’s China gross profit increased by 109% y/y to TL8mn in 1Q22. Europe gross profit increased to TL5mn in 1Q22 from TL3mn in 1Q21. Due to negative effect of Covid-19, the pace of new restaurant openings have slowed significantly and we believe that restaurant openings will gain momentum thanks to easing restriction & normalization in the world starting by the 2H22. We believe that the acceleration of new restaurant openings will support Zenia's expansions efforts and will have a positive impact on the company's future financial performance. The company’s EBITDA increased by 57% y/y to TL20mn in 1Q22 while the company’s EBITDA margin declined to 22.7% in 1Q22 from 23.6% in 1Q21. Note that, the company's IPO took place on 4 June 2021 with capital increase. The company raised TL180mn cash with capital increase in 2Q21. We expect global expansion plans of Zenia to gain momentum supported by cash injection obtained from IPO and easing restriction & normalization in the world. We believe we will receive more positive signal regarding growth in 2H22 on the back of growth in hospitality segment which had been under pressure.

*BIZIM TI> 1Q22 Review: Broadly in line with expectations... Bizim Toptan recorded TL25.0mn net income in 1Q22, broadly in line with our est. of TL26.5mn and consensus of TL24mn. Positive impact of slightly higher than expected EBIT was offset by higher than expected tax expenses. EBITDA of TL146.2mn was higher than our estimate of TL140.4mn. Adjusted for net financial expenses related to operations, adj-EBITDA of TL85.7mn was slightly fell short of our est. of TL87mn. 2022 Guidance is revised up: Topline growth guidance is revised up to 65% (+/- 5%) (excl tobacco &sugar) from 50% (+/-5%) vs our estimate of 55%.

*AEFES TI> posted TL132mn net loss in 1Q22, slightly better than the consensus estimates of TL182mn loss (not rated). Beer Group recorded 448mn TL net loss in 1Q22 (1Q21: +203mn TL) due to impairment losses which are related to Ukraine Beer Operations. Excluding the impact of impairment losses, net loss would have been TL 42.8mn in 1Q22.The company recorded TL2,037mn EBITDA, implying 211% y/y growth in 1Q22. Beer Group EBITDA increased toTL318mn in 1Q22 from -TL70mn in 1Q21. The company’s net sales increased by 124% y/y TL14bn in 1Q22. The increase in FX-neutral basis was 60.5% in 1Q22. The company’s consolidated sales volumes increased by 14.2% y/y to 26.5 mhl in 1Q22. Excluding Ukraine consolidated volume was up by 17.3% y/y in 1Q22. 2022 Guidance. Please note that the company had suspended its production in Ukraine on 24 Feb’22 due to increasing tension between Russia and Ukraine. After 1Q22 results, the company decided to maintain its guidance except for volumes. The company management revised down its beer group volume growth on a reported financials basis to “mid-teens digit decline” from “mid-single digit decline” including the Ukraine operations. Excluding the impact of Ukraine, the company maintain its volume decline expectation at mid-single digits. On a consolidated basis, the company maintained its consolidated volume guidance at “low-single digits decline”. Despite volume decline from Ukraine, the company maintained revenue and EBITDA margin guidance at low-thirties FX-Neutral net sales growth and 100bps contraction, as a result of higher price adjustments than previously planned.

*BIMAS TI> 1Q22 Review: Solid results and revisions to 2022 guidance...Bim realised TL1,342mn net income in 1Q21, broadly in line with our estimate of TL1,333mn but higher than consensus estimate of TL1,222mn. Slightly higher than expected financial expenses was offset by lower than expected tax expenses. Supported by stronger than expected LfL growth, net sales were 6.6% above both our estimates and consensus estimates. EBITDA margin of 8.4% was slightly lower than our estimate of 8.8% and consensus estimate of 8.7%. Significant upward revision to 2022E revenue guidance: (1) “75% (+/-5%)” topline growth guidance from “55% (+/-5%) vs our estimate of 64.0% and (2) EBITDA margin guidance is maintained at 8.5% (+-0.5pt) vs our estimate of 8.8%. Historically, Bim management has a strong track record of meeting their topline growth guidances. Considering the current inflation and upbeat management guidance, we see an upside risk to our growth estimates.

*ARCLK TI> bought back 779K shares at an average price of TL68.60 on 09 May 2022. Since 02 July 2021, the total number of shares bought back reached 63.0mn at an average price of TL42.71.

*SAHOL TI> bought back 300K shares at an average price of TL19.39 on 09 May 2022.

Since 09 Nov 2021, the total number of shares bought back reached 44.7mn at an average price of TL16.01.

Weekly Agenda:

May 10: March Unemployment data(February 10.7%)

May 10: VAKBN 1Q22 Cons TL 3,066 mn ATA 3,112 mn

May 10: PGSUS 1Q22

May 10: SAHOL 1Q22

May 10: MPARK 1Q22

May 10: DOAS 1Q22 Cons TL 908 mn ATA 874 mn

May 10: ULKER 1Q22 Cons TL -152mn ATA -47 mn

May 11: April Cash Budget Balance

May 13: March Industrial Production

May 16: March Current Account Balance