Morning Note /

Turkey: All eyes will be on US CPI data

  • Equity trading volumes have come down about 20% in September from August so far

  • We expect narrow range band trading until CBRT’s rate decision but pick up in volumes should come in mid October

  • Tupras is one name we continue to like ahead of the 3Q results

ATA Invest
14 September 2021
Published byATA Invest

All eyes will be on US CPI data to take a clue from recent trends of inflation and whether that would be of any influence on the timing of The Fed’s tapering. Normally, it should not as tapering has been very well communicated unlike 2013.

It is more the direction of DXY that will impact the course of EMFX and other risk assets globally.

Equity trading volumes have come down about 20% in September from August so far, as August saw the highest foreign investor net buying in 8 months.

We expect narrow range band trading until CBRT’s rate decision but pick up in volumes should come in mid October when 3Q results start coming.

Tupras is one name we continue to like ahead of the 3Q results, while Coca Cola should also post very strong 3Q results with a good tourism season.

Macro news:

*Current account (C/A) deficit realised as US$683mn in Jul’21. (Bloomberg Cons: US$530mn) In Jul’21, there was a net inflow of US$1.9bn to portfolio investments (Jun’21:US$3.0bn). 12M Trailing Current Account Deficit realised as US$27.83bn in Jul’21. 12M Trailing Current Account Deficit/GDP ratio realised as 3.6% in Jul’21. We expect Current Account Deficit (C/A) and CAD/GDP to be US$24bn and 3.2%, respectively in 2021

Industrial Production (IP) declined by 4.2% m/m in Jul'21 (8.1% y/y). Industrial production increased by 8.1% y/y in Jul’21 (Jun’21: 23.8% y/y) . Industrial production increased by 22.4% y/y in 7M21.

Company news:

*ENKAI: Chairman Sinan Tara bought 176K shares at TL 10.45 raising his stake to 0,348%

*INDES: bought back 53.493 shares within TL 6.23-6.627 band. Company holds 948.958 shares in total after this transaction.

*CCOLA: sold a land owned in Istanbul for TL153.3mn. The land owned by CCOLA in Yenibosna, Bahçelievler District of Istanbul was sold to Altur Turizm Servis ve Tic. Ltd. Sti. and Altur Otomotiv San. ve Tic. A.Ş. for a price of TL153.3mn. The sale proceeds will be utilized in company's operations. The ratio of sale proceeds to 2Q21 total assets is 0.6%.

*SISE: decided to carry out two new line investments which will increase production capacity in Turkey to 2.6mn ton… SISE Board of Directors meeting dated 13 September 2021, in line with the Company's goal of meeting rapidly growing glass demand in Turkey and creating sustainable value for all its stakeholders, it was decided to carry out two new float line investments exceeding TL4bn in architectural glass and automotive industry-dedicated glass production. Upon the completion of the investments, SISE’s annual flat glass production capacity located in Turkey will increase by 30% to 2.6mn tons per year.

*ASELS: acquired TL379mn (US$45mn) project from a domestic client regarding the smart cities.

The project is scheduled to be delivered in 2022. The acquired project accounts for 0.5% of US$9.2bn backlog (as of 2Q21-end). We consider that the contribution of the additional project will be slightly positive.

Turkish Autos: August 2021: Motor vehicle exports increased by 93% y/y…On a segmental basis, passenger car (PC) exports increased by 60% y/y to 42K units in August 2021 whereas LCV exports increased by 157% y/y to 39K units during the same period. HCV exports were up by 15% y/y to 1.7K units in August 2021. Historically, August was the maintenance month for Turkish automakers. In 2021E, due to semiconductor shortage, Turkish automakers pulled back their maintenance schedule to earlier months which enabled them to produce and sell more in August 2021. Tofas’ export volume was up by 12% y/y to 6K units in August 2021. Ford Otosan’s export sales volume was up by 167% y/y to 34K units during the same period. Tofas and Ford Otosan has announced their guidance with 2Q21 results. Tofas lowered their upper band for export sales volume expectations for 2021E to 150-160K units from 150-165K units. We expect Tofas export sales to increase by 28% y/y to 151K units in 2021E. Ford Otosan kept its guidance at 315-325K higher than our estimate of 305K units. Between 2015-2019, Tofas 8M export units were on average 66% of its full year exports. If we make an estimate based on 66% 8M exports to total exports in 2021E, we calculate 108K export sales units for Tofas which is 28-32% less than its export guidance. Between 2015-2019, Ford Otosan 8M export units were on average 64% of its total year export sales units. If we assume the same trend for 2021E, we calculate 286K units export volume which is 9-12% below their export guidance. Motor vehicle production in Turkey increased by 42% y/y to 107K in August 2021 mainly driven by 61% y/y increase in LCV production to 44K units. HCV production was up by 13% y/y to 3.1K units in August 2021. Domestic HCV (Heavy Commercial Vehicle) sales increased by 1% y/y to 2.1K units in August 2021

Weekly Agenda:

Sept 15: August Central government budget balance Sept 17: September CBRT expectation survey