Morning Note /
Global

Turkey: Earning season continues

  • BIST 100 keep testing new record highs and tested 2,800 resistance level and closed slightly below this level

  • Risk off mode may occur gradually prior US inflation figure which will be out tomorrow

  • 2,775 and 2,750 are daily support levels

ATA Invest
9 August 2022
Published byATA Invest

BIST 100 keeps testing new record highs and tested 2,800 resistance level and closed slightly below this level. Risk-off mode may occur gradually prior US inflation figure which will be out tomorrow. 2,775 and 2,750 are daily support levels. But we keep our positive expectations for the mid term.

Earning season continues and ISCTR VAKBN and TTKOM 2Q financials were out yesterday. KCHOL, ALARK are the technically open ideas and we remain very positive on THYAO TAVHL and TUPRS. The recovery on EREGL was eye-catching yesterday and may be strong before 2Q announcement tomorrow.

Company news:

ISCTR TI> reported 2Q22 net income of TL14,540mn (+72% q/q), 2% higher than our and consensus estimate. The key highlights of 2Q22 were 1) 2Q ROATE improved to 49.6% from 41.3% in 1Q21 2) Core revenues were up 50% q/q(YKBNK 61%, Akbank 54%) to TL19.6bn driven by higher net interest income(+52.7% q/q), 3) Quarterly swap adjusted NIM improved 191bps q/q to 7.2% helped by the 156 bps boost from Interest Earning Assets 4) Net Fees& Commissions were up 42,9% q/q, while Opex as up 50%. Fee coverage of opex (excluding pension fund contribution) declined to 51% in 1Q22 from 58% in 1Q21. 5) Isbank’s net NPL creation remained muted with strong collection performance(negative TL882mn net NPL creation in 2Q) Quarterly Net cost of risk(excluding currency impact) increased to negative 1bps from negative 6bps in 1Q. With strong profitability, Isbank set aside TL2,150m free provision in 2Q and increased its stock of free provisions to TL6,475

Management has changed its 2022 guidance on some key metrics > * TL loan growth expectation has been increased to 45% from 25% previously(1H growth was already 36% y/y)

Swap adjusted NIM guidance is revised up to over 5% for 2022 from 3.8-4% previously Fee & Commission growth is now expected >80% compared to 30%, while opex growth is expected to be in line with average CPI *Return on Average Tangible Equity is expected to be over 40% compared to over 20 previously%

Isbank shares currently trade at and 0.7x 2022E P/B and 1.3x 2022E P/E. Isbank shares are up 103% ytd compared to a 53% increase in the BIST banking index and a 51% increase in BIST-100.

*TTKOM TI> 2Q22 Earnings Review: Higher deferred taxes led to strong bottomline. Turk Telekom recorded TL1,392mn net income in 2Q22, far better than consensus est. of TL713mn and our est. of TL831mn. Despite higher than expected financial expenses, higher than expected deferred tax income led to strong net income. Turk Telekom’s EBITDA increased by 9.5% y/y to TL4.40bn in 2Q22, broadly in line with our estimate of TL4.38bn but lower than consensus of TL4.65bn. Including IFRIC 12, revenues increased by 31.2% y/y to TL10.73bn, beating our estimates by 0.5%. Management revised up its 2022E guidance: 1) Topline growth guidance (exc-IFRIC12) of c.33% from 23-25% versus our estimate of 32% (2) EBITDA guidance of c.TL18.5 from TL17.5-18.3bn versus our estimate of TL18.5bn and (3) Capex guidance to c.TL13bn from c.TL12.5bn versus our estimate of TL12.7bn.

*VAKBN TI> reported 2Q22 net income of TL7,016mn (+133% q/q), 5% higher than our and 7% higher than consensus estimate. The key highlights of 2Q22 were 1) 2Q ROAE improved to 18.9% from 6.4% in 1Q21 2) Core revenues were up 67% q/q (YKBNK 61%, Akbank 54%, Isbank 50% ) to TL19.6bn driven by higher net interest income(+173% q/q), 3) Quarterly swap adjusted NIM improved 190bps q/q to 5.6% 4) Net Fees& Commissions were up 37% q/q, while Opex as up 25%. Fee coverage of opex improved to 62% in 2Q22 from 57% in 1Q21. 5) Vakıfbank’s NPL creation remained high while strong collection performance(negative TL556mn net NPL creation in 2Q) and TL,1,437mn NPL write-off. Quarterly Net cost of risk(excluding currency impact) declined to 205bps from 241bps in 1Q. With strong profitability, Vakıfbank set aside TL2bn free provision in 2Q Vakıfbank shares currently trade at and 0.6x 2022E P/B and 1.3x 2022E P/E. Vakıfbank shares are up 17% year-to-date compared to a 53% increase in the BIST banking index and a 51% increase in BIST-100.

* MPARK TI> bought back 30K shares at an average price of TL40.89 on 08 August 2022. Since 25 May 2022, the total number of shares bought back reached 2.0mn at an average price of TL35.58.

*TAVHL TI> Total PAX in TAV airports increased to 10.3mn in July, reaching 90.0% of its 2019 level... <Slightly Positive for TAVHL> Domestic PAX in Tav airports increased to 2.80mn in July which is 89.0% of its 2019 level. Considering domestic PAX in TAV was 2.63mn in June, there is a m/m increase in domestic PAX trend. International PAX increased to 7.5mn in June which is 90% of its 2019 level. Considering international PAX in Turkey was 5.85mn in June, there is a m/m rise in international PAX trend in Tav Airports. Total pax also increased to 733K in July which is 105% of its 2019 level in Almaty.

*TAVHL TI> Highlights of TAV Airports Jan-July’22 – Jan-June’21 Traffic Results: Total number of passengers served in 7M22 at TAV operated airports is 90% above 7M21. International passengers served in 7M22 is 141% above 7M21 and 18% below 7M19.

Total passenger number in Turkey’s airports was up by 25% y/y in July 2022... <Slightly Positive for THYAO, PGSUS and TAVHL> Domesic pax in Turkey decreased by 7.9% y/y in July 2022 to 8.04mn which was at 87.8% of its 2019 level. However, International pax in Turkey increased by 58.8% y/y in July 2022 to 13.3mn which was at 99.7% of its 2019 level. Istanbul airport’s, main hub of Turkish Airlines, total pax increased by 61% y/y in July 2022. Considering 61% y/y increased in passenger vs. 41% y/y increase in ATM per day in the same period, THYAO’s load factor is likely to increase y/y in July 2022. Total PAX in İstanbul airport was 6.76mn in July 2022 which was at 105% of its 2019 level. Total pax in Sabiha Gokcen, main hub of Pegasus, increased by 1% y/y in July 2022. Domestic pax decreased by 23.6% y/y in July 2022 to 1.53mn which was at 77.2% of its 2019 level. International pax increased by 51% y/y to 1.45mn in July 2022 which was at 107% of its 2019 level.

Weekly Agenda:

Aug 9: MGROS 2Q cons NI: TL 190 mn ATA TL 213 mn

Aug 9: CCOLA 2Q cons NI: TL 1,211 mn ATA TL 1,229 mn

Aug 9: EREGL 2Q cons NI: TL 6,743 mn ATA TL 6,743 mn

Aug 10: June Unemployment rate

Aug 10: AEFES 2Q cons NI: TL 924 mn

Aug 10: THYAO 2Q cons NI: TL 6.859 mn ATA TL 7,019 mn

Aug 11: June CAD

Aug 11: MPARK 2Q cons NI: TL 843 mn

Aug 11: AKSA 2Q cons NI: TL 509 mn

Aug 11: TKFEN 2Q cons NI: TL 700 mn ATA TL 669mn

Aug 11: ASELS 2Q cons TL 1,745 ATA 1,463 mn

Aug 12: June Industrial production Index