Morning Note /
Turkey

Turkey: All eyes will be on US NFP data today

  • Earnings season continues till 9 November

  • The buying and positive sentiment continues in Turkish equities

  • We expect BIST 100 to test 1,590 strong historical resistance today

Batuhan Ozsahin
ATA Invest
5 November 2021
Published by

On the last trading day of the week global markets are quiet and eyes will be on US NFP data today. Earnings season continues till Nov,9. The buying and positive sentiment continues in Turkish equities. We expect BIST 100 to test 1,590 strong historical resistance today. In case broken up 1,610 will be the new resistance level. We have two open short term trading ideas; TOASO and MGROS. 

Macro news:

Real Effective Exchange Rate (REER) declined by 4.1% m/m to 60.37 in Oct’21 (Sep’21: 62.93). FX basket which is calculated as an average of Euro and US$ appreciated 6.6% m/m in Oct’21 (Sep’21: 0.8%).

Company news:

*AEFES: 3Q21 Results: Anadolu Efes posted TL556mn net income in 3Q21, 6% higher than our estimate of TL526mn. Despite TL81mn lower than expected operating profit and TL211mn lower than expected investment income, TL60mn higher than expected equity pickup profits, TL177mn lower than expected tax expense and TL137mn lower than expected minority shares led to TL30mn higher than expected net income. In 3Q21, EBITDA increased by 12% y/y to TL2,323mn which was 1% lower than our estimate. Both Beer Group and Soft Drinks Group contributed to EBITDA performance. Beer Group and Soft Drinks Group EBITDA increased by 7% and 14% y/y respectively. In 3Q21, consolidated EBITDA margin decreased by 408bps y/y to 19.7% which was 114bps lower than our estimate. Decline in EBITDA margin was mainly due to higher y/y commodity prices, depreciation of TL and increase in Soft Drinks Group’s direct marketing expenses. We rate Beer Group results as “Slightly Positive” whereas we rate Soft Drinks Group results as “Positive ”.

*TCELL: 3Q21 Earnings Review: Better than expected operating performance…Turkcell recorded TL1,429mn net income in 3Q21, better than consensus est. of TL1,278mn but in line with our estimate of TL1,421mn. Revenues were 3.0% above our estimates and EBITDA of TL4,030mn was 2.4% above our estimates. The company management revised up its topline growth guidance to c.20% from c.18% and EBITDA guidance to c.TL14.5bn from TL14.3bn.

*ULKER: 3Q21 Results: Weaker than exected bottomline…Realised TL2mn net income, falling short of our estimate of TL38mn and consensus estimate of TL32mn net income. Deviation from our estimates could be attributed mostly to higher than expected financial expenses. Topline growth of 29.9% was 1.55% above of our estimates. EBITDA margin of 16.9% was 60bps above our estimates and 40bps above consensus. Onem Gıda acquisition had -TL3.7bn negative net equity impact. In our view, this acquisition had dilutive impact on Ulker’s valuation considering the acquisition price. However, we believe that most of the negatives priced into the share price but still lacks a catalyst.

*TUPRS: 3Q21: Strong improvement in product cracks…Tupras posted TL988mn net income in 3Q21, slightly lower than the consensus estimate of TL1,120mn. Tupras recorded TL2,472mn EBITDA, which is higher than Consensus Est of TL2,265mn in 3Q21 thanks to better product cracks and higher capacity utilization rate in 3Q21. Based on Bloomberg consensus estimates, Tupras trades at 5.32x 2021E EV/EBITDA multiple, implying %18 discounts compared to its 5-yr historic multiple of 6.48x. TUPRS remains in our tactical buy call list, considering the ongoing improvement in product cracks.

*AYGAZ: Aygaz posted TL336mn net income in 3Q21, 42% above the consensus estimate of TL236mn. The company’s net sales increased by 57% y/y to TL4,768mn in 3Q21 thanks higher sales volume, higher LPG prices and depreciation of TL. Aygaz total LPG sales increased by 15% y/y to 712K tons thanks to 28% y/y higher international, wholesale and trading LPG sales volume. Autogas sales increased by 3% y/y to 222K tons while cylinder sales volume declined by 3% to 81K tons. According to Aug’21 EMRA report, Aygaz cylinder market shares increased by 10bps y/y to 41.6% in Aug-21 from 41.5% in Aug-20 while autogas market shares increased by 20bps y/y to 21.7% in Aug-21 from 21.5% in Aug-21. Sonatrach LPG price increased to 661US$/ton in Sep’21 from Jun’21: 493 US$/ton in Jun2’1 and the company recorded TL52mn inventory gain in 3Q21. The company’s EBITDA increased by 16% y/y to TL241mn in 3Q21. The company’s EBITDA margin declined by 176bps to 5.1% in 3Q21. The company’s net income increased to TL336mn in 3Q21 from TL83mn in 3Q20 thanks to high contribution coming from EYAS (“Enerji Yatırımları A.S.”). The company maintained its cylinder sales volume guidance as 285-295K ton, implying 1-4% y/y decrease while the company revised down its autogas sales volume to 670- 700K tons from 690-720K tons, implying 1-5% y/y increase in 2021. The company guides 41.0-43.0% autogas and 21.5-22.5% cylinder market share for 2021.

*VAKBN: Vakıfbank posted TL767mn 3Q21 net income (+16% q/q, versus our estimate of TL724mn and consensus estimate at TL718mn. The key highlights of the results are 1) 3Q21 ROAE of 6.4% is 90 bps better than 2Q but still way lower than private peers, 2) Vakıfbank posted TL,1845mn(TL3,815mn in 9M21) net trading loss in a quarter when all private banks posted strong gains, 3) Swap adjusted NIM improved 68bps q/q to 1.57% but still is a galaxy away from NIM performance of private peers. Vakıfbank is likely to post a very strong 4Q result with recovering NIM performance( the negative impact of low rate loans in 2020 will be at its lowest) and we expect trading loss to narrow as well. However, Turkey is again a rate cutting cycle and state banks are again pioneering the credit push so the same nightmare of post 1H20 can repeat if macro volatility continues

*MPARK: 3Q21 Earnings Review: Medicalpark posted TL18mn net income in 3Q21, lower than our estimate of TL33mn and consensus estimate of TL40mn… (not rated) Medicalpark recorded TL18mn net income, 47% lower than our estimate of TL18mn in 3Q21. Despite TL83mn higher than expected PBT, TL84mn higher than expected taxes led to lower than expected net income. The company’s consolidated revenue increased by 39% y/y to TL1.5bn thanks to strong domestic patient revenue growth and accelerated recovery of foreign medical tourism revenue in 3Q21. Thanks to SUT price revisions and the improvement in number of patients, domestic patient revenue increased by 35% y/y to TL1,232mn in 3Q21, 5% higher than our estimate of TL1,176mn. In segmental basis, the inpatient revenue increased by 31% y/y to TL706mn in 3Q21 while the outpatient revenue increased by 39% y/y to TL527mn in the same period. The foreign medical tourism revenue increased to TL207mn in 3Q21 from TL91mn in 3Q20 thanks to accelerated vaccination. Revenue from other ancillary business declined by 15% y/y to TL58mn in 3Q21 due to voluntary non-renewal of the tender for the laboratory business in line with the strategy to focus on core business. The company’s EBITDA increased by 47% to TL398mn in 3Q21, higher than our estimate of TL308mn and consensus estimate of TL310mn. The company’s EBITDA margin increased by 143bps y/y to 26.6% in 3Q21. The company’s net debt declined by 7% q/q to TL1.967mn in 3Q21. 12M-Trailing Net Debt/EBITDA declined to 1.55x in 3Q21 from 1.87x in 2Q21

*DARDL: 3Q21 Results: Dardanel posted TL31mn net income in 3Q21. Thanks to cash inflow from capital increased, Dardanel’s net debt declined to TL92mn in 3Q21 frm TL480mn in 2Q21. Bottomline turned to positive in 3Q21 but topline growth and EBITDA margin do not look impressive at all. According to the management, we understand that delay in some deliveries by c.TL70mn was the reason behind slightly lower than expected topline growth. EBITDA margin of 8.1% was down 465bps y/y and 305bps q/q.. Overall, we did not like 3Q21 results. But, the company looks committed to their growth plans in both Turkey and EU through its acquisiton in Greece. Dardanel’s balance sheet is also stronger and healthier balance sheet is likely to help the company to pursue its investment plans with lower financing costs.

*AKSA: 3Q21 Results: Aksa Akrilik posted TL344mn net income in 3Q21, higher than consensus estimate of TL286mn. (not rated). Aksa’s revenues increased by 102% y/y to TL2,233mn thanks to higher CUR in 3Q21. CUR came at 88% in 9M21 (9M20: 81%). Aksa’s EBITDA increased by 45% y/y to TL404mn in 3Q21, 10% higher than the consensus estimate of TL367mn from TL135mn in 3Q20. EBITDA margin declined by 712bps y/y to 18.1% in 3Q21. The company’s net debt declined by 1% q/q to TL1,157mn in 3Q21. The company’s net debt / EBITDA ratio declined to 0.86x in 3Q21 from 0.96x in 2Q21. The company maintained its 2021E (1) net sales guidance at US$850-900mn versus US$586mn net sales in 2020, (2) CUR guidance at 85-90% CUR during 2021, compared to 87% in 2020 and (3) CAPEX guidance at US$60-65mn for 2021, compared to US$58mn in 2020.

*AKSEN: 3Q21 Results: Aksa Energy posted TL325mn net income in 3Q21, lower than the consensus estimate of TL360mn (not rated). Consolidated revenues increased by 98% y/y to TL3,559mn, 21% above the consensus estimate, mostly thanks to strong growth in Turkey region. African revenue was up 18% y/y to TL399mn whereas revenues from Turkey increased by 116% y/y to TL3,160mn. Aksa Enerji’s EBITDA increased by 63% y/y to TL653mn in 3Q21, 5% below the consensus estimate of TL685mn. Regionally, Aksa Enerji's adjusted EBITDA from Turkey increased by 125% y/y to TL299mn in 3Q21 while its African division’s EBITDA increased by 39% y/y to TL346mn during the same period. Aksa Enerji’s EBITDA margin declined by 386bps y/y to 18.4%, 495bps lower than the consensus estimate of 23.3% in 3Q21. Net debt increased by 14% q/q to TL3.30bn in 3Q21. The company’s net debt / EBITDA ratio increased to 1.53x in 3Q21 from 1.51x in 2Q21.