Morning Note /
Turkey

Turkey: Postive mood continues

  • The market continuous to be strong with more interest in non-financials continuing

  • New US Treasury minister Yellen's messages were broadly in line with the expectations and supportive for the markets

  • DXY continues to retreat from its Friday high of 90.9 to 90.3 and TL is at 7.44 ahead of the CBT rate decision tomorrow

ATA Invest
20 January 2021
Published byATA Invest

The market continues to be strong with more interest in non-financials continuing. New US Treasury minister Yellen's messages were broadly in line with the expectations and supportive for the markets. DXY continues to retreat from its Friday high of 90.9 to 90.3 and lira is at 7.44 ahead of the CBRT rate decision tomorrow. We are starting the day in a positive mood and expect the market to test 1580.

Macro news

Turkey completed its first eurobond sale of the year, raising US$3.5bn via a 5 and 10-year offering of dollar-denominated securities. The 5-year bond was priced at 4.9% vs initial guidance of 5-5.125%, while the 10-year was priced at 5.95% vs initial guidance of 6-6.125%. The books were 3x oversubscribed.

Company news:

Migros(MGROS TI) According to Bloomberg, Kenan Investments decided to sell its remaining 11.77% stake in MGROS and an international investment bank has been mandated for the transaction. Transaction will be at a price of TL 44.15 per share which is on 5.46% discount to its closing price on January 19th, 2020. Following the sale, there will be no private equity stake left in Migros and free float will rise to 49%.

Tekfen <TKFEN TI> acquired additional US$185mn worth of project in Kazakhstan and the total contract size of the project reached to US$807mn. This additional project constitutes 12% of its existing backlog (US$1.6bn) as of 3Q20 end.

TURKISH AUTOS: December 2020: Exports were down 11% y/y to 95K units

Passenger Car (PC) exports were down 24% y/y to 54K units in December, whereas LCV exports were up 16% y/y to 38K units during the same period. HCV exports were up 28% y/y to 1.7K units in Dec2020. In 2020, PC exports were down %28 y/y to 597K units and LCV exports were down 24% y/y to 302K units. In the same period, HCV exports were down 29% y/y to 18K units.

Tofas’ export volume inched up 2% y/y to 10.9K units in Dec 2020. Ford Otosan’s export sales volume was up 8% y/y to 32K units during the same period. In 2020, Tofas’ export was down 39% y/y to 118K units and Ford Otosan’s export was down 24% y/y to 254K units.

Thanks to stronger than expected export volumes in Dec 2020, Ford Otosan realized 254K units of sales volume in 2020, beating our estimate of 244K units but in line with the company guidance of 250-260K units. Tofas’ exports were broadly in line with expectations in Dec 2020. Tofas realised 118K units of exports in 2020, broadly in line with our estimate of 119K units and closer to the lower end of guidance of 120-140K units.

Motor vehicle production in Turkey was up 10% y/y to 150K in Dec 2020 driven by 39% y/y increase in LCV production to 54K units. Passenger Car (PC) production inched down by 3% y/y to 92K units in Dec 2020. HCV production was up 70% y/y to 3.8K units in Dec 2020. Total motor vehicle production decreased by 11% y/y in 2020 to 1,298K units from 1,461K units.

Domestic HCV (Heavy Commercial Vehicle) sales skyrocketed by 54% y/y to 3.6K units in December. Higher HCV sales could be a signal for economic recovery.

In line with previously announced ODD figures (Automotive Distributors’ Association), domestic light vehicle sales increased by 15% y/y to 104K units in December. We forecast our 2021E LV market estimate at 877K units, implying 13% y/y increase.

Weekly Macro Agenda

Jan 21: January Consume confidence(December 80.1)

Jan 21: CBRT one week repo rate decision( Consensus no change at 17%)