Morning Note /
Global

Turkey: Unstoppable rally continues in BIST

  • While everybody is scared of a sharp correction the buy-side flow is still very strong

  • Daily profit-taking sales are likely yet unless major support levels would be broken down the rally can continue

  • Today eyes will be on US inflation figures

ATA Invest
13 September 2022
Published byATA Invest

Unstoppable rally continues in BIST. While everybody is scared of a sharp correction the buy side flow is still very strong. Daily profit-taking sales are likely yet unless major support levels would be broken down the rally can continue. Today eyes will be on US inflation figures.

Today we expect another strong opening towards 3.675 and 3.700. We like TOASO, THYAO ASELS ENKAI PGSUS TAVHL technically. 

Macro news:

Current account (C/A) deficit realised as US$4.01bn in Jul’22. (Bloomberg Cons: US$3.70bn) In Jul’22, there was a net outflow of US$0.6bn to portfolio investments (Jun’22: US$1.61bn). 12M Trailing Current Account Deficit realised as US$36.6bn in Jul’22. 12M Trailing Current Account Deficit/GDP ratio realised as 4.4% in Jul’22. We expect Current Account Deficit (C/A) and CAD/GDP to be US$58bn and 7.2%, respectively in 2022.

Company news:

PGSUS TI> Total pax was up by 15.9% y/y in August 2022, which was at 98% of its 2019 level…On a segmental basis, domestic Pax was down 21.0% y/y in August 2022, which was at 80.1% of its 2019 level. International Pax increased by 63.3% y/y in August 2022 which was 113.6% of its 2019 level. The share of International in total ASK increased to 83.2% in August 2022 from 70.5% a year ago.Total load factor (LF) was up 722bps y/y to 88.8% in August 2022. International load factor was up 11.83pts y/y to 86.9% in August 2022 which was 267bps below August 2019’s level. Although load factor in August 2022 is 89.8%, when we adjust this KPI for aircrafts on the ground by dividing PAX in August 2022 to seats of August 2019, we find a load factor of 89.9%. Total load factor (LF) was up 731bps y/y to 87.9% in July 2022 due to 1,284bps increase in international load factor and 470bps increase in domestic load factor.International Pax was up 128% y/y in 8M22 whereas domestic Pax was down 6.6% y/y during the same period. Total load factor was up 540bps to 82.5% y/y in 8M22 due to 237bps increase in domestic and 1,154bps increase in international load factor.

* MPARK TI> bought back 70K shares at an average price of TL46.37 on 12 September 2022. Since 25 May 2022, the total number of shares bought back reached 3.5mn at an average price of TL38.11.

*Turkish Autos: Monthly Exports, Production and Domestic Sales August 2022: Exports declined by 21.9% y/y to 64.5K units… On a segmental basis, passenger car (PC) exports declined by 3.1% y/y to 41K units in Aug’22, whereas LCV exports declined 44.7% y/y to 21K units during the same period. HCV exports were up by 25.1% y/y to 2.1K units in Aug’22. Tofas’ export volume declined by 8.9% y/y to 5.7K units in August 2022 whereas Ford Otosan’s export sales volume declined by 46.5% y/y to 18.1K units during the same period. Between 2015-2021, Tofas 8M export units were on average 64% of its full year exports. If we make an estimate based on the assumption that 8M exports consititute 64% of total exports in 2022E, we calculate 114K export sales units for Tofas which is 4% higher than its lower band of export guidance and 8% lower than its upper band of export guidance of 110-125K (ATA Est.: 122K). Between 2015-2021, Ford Otosan 8M export units were on average 62% of its total year export sales units. If we assume the same trend for 2022E, we calculate 312K units export volume which is 5-8% lower than its export guidance of 330-340K (ATA Est.: 339K). After 2Q22 results, both Tofas and Ford Otosan had revised down its export guidance for 2022E. Tofas had revised down its exports sales volume guidance to 110K-125K from 125K-140K, implying 2% y/y decline and 11% y/y increase for 2022E (ATA Est: 122K). Ford Otosan had revised down its export sales volume guidance to 330K-340K from 350K-360K, implying 14-18% y/y increase in 2022E (ATA Est: 339K). Total motor vehicle production in Turkey declined by 13.3% y/y to 92.6K in August 2022, driven by 41.5% y/y decline in LCV production to 25.9K units. PC production and HCV production was up by 5.1% and 36.5% y/y to 62.6K and 4.2K units, respectively. Domestic HCV sales increased by 85.0% y/y to 3.9K units in August 2022.

Weekly Agenda:

Sep, 13: July Industrial production index prior 1.3%

Sep, 15: August Home sales statistics prior 93.9k

Sep, 15: BRSA Weekly Banking sector data

Sep, 16: Sep CBRT Survey of participants