Morning Note /
Turkey

Turkey waits for a correction

  • Waiting for a correction in Turkish equities has been like waiting for Godot and it has not arrived

  • State banks and aviation stocks have been the stars of this week, while BIM is finally making a slow but sure comeback

  • UST10s have come from 1.51% in early January to 2.93% and it really has made a big dent in stocks globally

Batuhan Ozsahin
ATA Invest
22 April 2022
Published by

Waiting for a correction in Turkish equities has been like waiting for Godot and it has not arrived. Very little foreign participation(only USD26mn net inflow last week). State banks and aviation stocks have been the stars of this week, while BIM is finally making a slow but sure comeback. UST10s have come from 1.51% in early January to 2.93% and it really has made a big dent in stocks globally. Whether there is big complacency all around the world or risk appetite remains high after investors see stocks as safe haven asset class cause all the returns in the past decade has been made from equities(except for crypto). Turk Traktor 1Q results were in line expectations, while one of last year’s IPO Kale Kim(Construction chemicals producer) reported a 192% y/y increase in net profits, as revenues were up 113%. The impact of inflation and higher average FX rates will be visible in all 1Q results and as we are not applying inflation accounting this year, looking at inflated profits without details might be misleading

Macro news:

Consumer Confidence Index* (CCI) declined by 7.3% m/m to 67.3 in Apr’22 (-16.1% y/y).

  • Financial situation expectation of households* declined by 8.5% m/m to 63.9 in Apr’22.

  • General economic situation expectation* declined by 7.2% m/m to 67.3.

  • Number of people unemployed expectations* declined by 4.5% m/m to 66.5 in Apr’22.

  • Probability of savings* declined by 2.5% m/m to 27.8 in Apr’22.

Company news:

*TTRAK TI> 1Q22 Results: In-line with our expectations...Turk Traktor recorded TL572mn net income in 1Q22, 5% above consensus estimate of TL452mn and 5% above our estimate of TL454mn. Despite higher than expected other expenses, positive impact of TL26.5mn higher than expected EBIT and TL23.3mn higher than expected financial income resulted in TL23.2mn higher than expected net income. The company posted TL572mn EBITDA, 4% above our estimate of TL550mn and 3% above consensus estimate of TL553mn in 1Q22. EBITDA margin of 14.3% was 44bps higher than our estimate of 13.9% (Consensus: 14.0%). Based on our 2022E estimates, the company trades at 5.8x EV/EBITDA and 6.6x P/E, compared to its 5-year average 6.7x EV/EBITDA and 8.0x P/E multiple.

*SAHOL TI> bought back 210K shares at an average price of TL20.71 on 21 Apr 2022. Since 09 Nov 2021, the total number of shares bought back reached 41.0mn at an average price of TL15.65.

*AEFES TI> AB InBev has started active negotiations regarding the sale of its minority shares in Russia and Ukraine to Anadolu Efes. Anadolu Efes today announced that in light of the developments in Russia and Ukraine, Anadolu Efes and Anheuser Busch InBev SA/NV (“AB InBev”) started active discussions regarding the sale of AB InBev’s non-controlling interest in AB InBev Efes NV to Anadolu Efes. AB InBev’s request for suspension of the production and sale of Bud in Russia will also be a part of the transaction. Both Anadolu Efes and AB InBev will work towards agreeing on sale terms and binding transaction documents in due course and further announcements will be made as the process progresses.

Weekly Agenda:

22 April SARKY cash dividend payment TL 0.30 /share The reference price will be TL 19.72

22 April ARCLK 1Q22 results ATA TL 1,290 mn cons TL 1,147 mn