Morning Note /
Turkey

Turkey: We expect a negative opening

  • If it was not for the higher than expected US CPI data, Turkish equities would have had a great day

  • Fortunately, Turkey is very under-owned by both international equity & bond investors

  • 4Q result season is underway and Eregli reported slightly better than expected results

ATA Invest
11 February 2022
Published byATA Invest

If it was not for the higher than expected US CPI data, Turkish equities were having a great day as both banks and all non-financials were joining the party that started on Monday. Thank God Turkey is very under-owned by both international equity & bond investors. The size of the local currency debt owned by foreign investors is down to US$4.5bn, while foreign ownership of equities is at a 20-year low. The swap position of foreign investors, which had reached to US$25bn last January is down to US$897mn as of last week. So, the possibility of strong outflows in this FED cycle is rather limited and the chances of anyone trying to short TRY is almost zero after being burnt in December.

4Q result season is underway and Eregli reported slightly better than expected results on both EBITDA/ton and bottom line and our expectation of TRY3.96/share dividend to be paid in March or April, implying a dividend yield of 13.4%.

Company news:

*EREGL TI> 4Q21 Review: Stay tuned... Another strong year is ahead... Erdemir realised a net income of TL4,723mn, higher than consensus of TL4,460mn and our estimate of TL4,437mn mainly due to higher than expected EBITDA. The company realised an EBITDA/ton of US$419 in 4Q21, beating our estimate of US$392 by 6.8%. Positive impact of higher than expected average prices (+13.9%) surpassed the negative impact of higher than expected cash cost/ton (+18.7%) and the company recorded EBITDA of TL9,719mn in 4Q21, 2.8% above our estimates and 5.5% above consensus. We currently have a 12-mnth TP of TL43/shr, implying 59% upside potential, including 13.4% cash dividend. Following the stronger than expected 4Q21 results, we will further review our estimates. 

*ARCLK TI> bought back 1,000K shares at an average price of TL54.02 on 10 Feb 2022. Since 02 July 2021, the total number of shares bought back reached 47.2mn at an average price of TL37.56.

Weekly Agenda:

Feb 11.: December Current Account Balance (Consensus -USD 4.25bn)

Feb 11: December Industrial Production (Consensus 0.3% m/m, 9.7% y/y)

Feb 11: Central Bank Expectations Survey