Morning Note /
Turkey

Turkey: We are starting the week with CPI data

  • We have the CBRT meeting for the monetary policy decision

  • The most critical set of data and set of policy action will continue to be inflation

  • 1Q results continue beat estimates, as all Yapı Kredi, Ford Otosan, Sise Cam and Turkcell reported good set of results.

ATA Invest
3 May 2021
Published byATA Invest

In the first week of the full lockdown, we are starting the week with CPI data, for which both the consensus and our estimate is 1.8% m/m increase, that will carry annual inflation to 17.3%. Then on Thursday, we have the CBRT meeting for the monetary policy decision, for which both us and consensus expects the bank to remain on hold at 19%. The most critical set of data and set of policy action will continue to be inflation and corresponding monetary policy action from CBRT for the remainder of the year. Although the new governor tried to re-assure tight stance as long as needed and a positive real yield on top of both current and expected inflation, the removal of additional tightening if necessary statement in the 1Q inflation report once again raised questions on the path of monetary policy. 

1Q results continue beat estimates, as Yapı Kredi, Ford Otosan, Sise Cam and Turkcell all reported good sets of results. However, stocks have a hard time reacting to the strong beats in the absence of international investors who have drawn US$2bn for equities year-to-date, while roughly US$1bn have been raised through IPOs and rights issues. Hence without a new macro story and question marks about the soundness of macro framework (further inflationary pressures from global factors, lack of tourism revenues pressuring current account balance further) could only make individual equity stories work while the market drifts down.

Company news:

YKBNK: Yapi Kredi 1Q21 Results: Stronger than expected results… Yapi Kredi reported 1Q21 net income (bank only) of TL1,453mn (-42% q/q and -30% y/y), 5% higher than our and 9% higher consensus estimate in 3Q20. The key highlights of 1Q21 were 1) ROTE improved to 12.3% from just 6.8% in 4Q 2) Core revenues were down 26% q/q to TL4bn driven by lower CPI linker income and higher swap costs(core revenues -10% q/q for Garanti & -17% for Akbank) 3) Fees & Commission income have surged by 24% q/q following the fading negative impact of regulatory changes in 2020. Yapı Kredi shares are down 30% year-to-date compared to a 29% decline in the BIST banking index and a 5% decline in BIST-100. YKB is trading at 2.9x 21E P/E and 0.3x 21E P/B, 28% discount to its 5-year averages. Despite attractive valuations, macro uncertainty is weighing down on performance of banking stocks, as the recent positive trend in asset quality might easily reverse in 2H21.

SISE: Sisecam reported TL1,348mn net income in 1Q21 which was 19% above our estimate of TL1,130mn and 12% above consensus estimate of TL1,205mn. Deviation from our estimate was mainly due to TL112mn better than expected net investing income and TL79mn better than expected net financial income as well as TL72mn higher than expected EBITDA. The company’s EBITDA surged by 35% y/y to TL1,334mn in 1Q21, which was 6% higher than our estimate of TL1,262mn and 4% higher than consensus estimate of TL1,288mn. The company generated 23.5% EBITDA margin in 1Q21, 134bps higher than our estimate of 22.1% (Rasyonet Consensus: 22.4%). Based on 21E, the company currently trades at 4.5x EV/EBITDA and 6.3x P/E multiple. 5Y median EV/EBITDA and P/E ratio are 5.8x and 8.1x.

TCELL: Turkcell recorded TL1,105mn net income in 1Q21, slighlty better than consensus est. of TL1,098mn and our est. of TL1,079mn mainly due to slightly higher than expected EBITDA.. Revenues were 0.5% above our estimates and EBITDA of TL3,307mn was 1.2% above our estimates. Overall, other revenues were the major driver behind topline growth but Turkcell Turkey revenue growth was not impressive.

FROTO: Ford Otosan posted TL1.819mn net income in 1Q21, 18% above our estimate of TL1.546mn and 20% above consensus estimate of TL1.514mn. Deviation is mainly due to TL125mn higher than expected net financial income and TL112mn higher than expected EBIT. Ford Otosan’s EBITDA surged by 102% y/y to TL1.812mn, 14% above our estimate of TL1.589mn and 8% above consensus estimate of TL1.670mn in 1Q21. EBITDA margin of 11.1% was 105bps higher than our estimate of 10.1%. Based on our current estimates, the company trades at 21E 10.0x EV/EBITDA and 8.6x P/E compared to its 5-year historical multiples of 8.0x and 9.7x, respectively.

BOTAS increases natural gas prices for electricity production by 12% - POSITIVE for non-natural gas fueled electricity producers. BOTAS published natural gas prices for May on its website. Natural gas price for electricity production was set at TL1632 per one cubic meter, a 12% increase compared to the previous level. This increase was expected by market participants since natural gas prices have shown an increase over %70 in US$ terms from its post-pandemic trough in the global market. Company-wise, Alarko and Odas will gain competitiveness since their functioning capacity is installed at coal-fueled thermal plants. Other companies with electricity generation assets may also be affected positively if this increase is reflected in electricity prices. From our coverage only Aksa Energy maintains functioning natural gas-fueled capacity but has plans to relocate in more lucrative underserved markets.

GWIND / DOHOL: Dogan Holidng bght 1.5 mn shares of GWIND within TL 4.76-4.80 band raising their stake to 70.69%.

Weekly Macro Agenda:

May 3: April PMI(No consensus March 52.6)

May 3: THYAO NI estimate ATA: TL304 mn Consensus: TL -235mn

May 3: April CPI( Consensus 1.8%, Ata 1.8%, implied y/y 17.3%)

May 4: April REER (previous 65.70)

May 5: May CBT Survey of expectations

May 5: MGROS NI estimate ATA: TL37 mn Consensus: TL 16mn

May 5: TTKOM NI estimate ATA: TL1,043 mn Consensus: TL 1,096mn

May 5: TUPRS NI estimate ATA: TL -703mn Consensus: TL -822mn

May 6: CBRT one-week repo policy rate decision( Consensus- keep it at 19%)

May 6: ULKER NI estimate ATA: TL314 mn Consensus: TL 335mn

May 6: BIMAS NI estimate ATA: TL612 mn Consensus: TL 625mn

May 6: AKSA NI estimate ATA: TL225 mn

May 6: VAKBN NI estimate ATA: TL777 mn Consensus: TL 732mn

May 7: BIZIM NI estimate ATA: TL4 mn Consensus: TL 7mn