Morning Note /
Turkey

Turkey: We expect a positive opening

  • BIST 100 closed slightly above the daily support of 2.535 yesterday

  • YKBNK and TOASO 2Q results are slightly better than expectations

  • ARCLK posted worse than expected financials which was guided by the company before

ATA Invest
27 July 2022
Published byATA Invest

Although global markets closed in red, futures recovered with resilient earnings and FED expectations which signals a positive opening in BIST as well. BIST 100 closed slightly above the daily support of 2.535 yesterday and buying is likely to continue towards 2.570 critical resistance. YKBNK and TOASO 2Q results are slightly better than expectations yet ARCLK posted worse than expected financials which was guided by the company before. Today TAVHL and AKBNK will post 2Q financials where we expect TL 563 mn and TL 12.073 mn NI respectively.

Company news:

*YKBNK TI> Yapi Kredi reported 2Q21 net income (bank only) of TL 11,922mn (+64% q/q and +434% y/y), 14% higher than our and 12% higher than consensus estimate. The key highlights of 2Q22 were 1) 2Q ROTE improved to 56.7% from just 42.3% in 1Q21, while 1H ROTE stood at 49.9% vs. 15.4% in 1H21 2) Core revenues were up 61% q/q to TL18.15bn driven by higher CPI linker income(+74% and well contained swap costs(-61%) 2) Net Fees& Commissions were up 76% y/y, while Opex as up 70%, as fee coverage of opex climbed to 79%in 1H22 from 74% in 2021. % 3) We have seen the highest quarterly gross NPL inflows in 2 years, driven by a pick-up in commercial loan NPLs. Quarterly Net cost of risk climbed to 139bps from 39bps in 1Q21. Yapi Kredi shares currently trade at and 0.5x 2022E P/B and 1x 2022E P/E. YKBNK’s discount to its 5-year average P/B has widened to 12%.

*ARCLK TI> 2Q22 Review: Weaker than expected results..Arcelik realised TL259mn net income in 2Q22, lower than our estimate of TL513mn and consensus of TL487mn. Topline was inline with our estimates but EBITDA margin of 7.5% was 23bps below our estimates. Lower than expected EBITDA and higher than expected financial expenses were the major reasons behind lower than expected net income of TL259mn. Consolidated revenue guidance for 2022 is revised up to “>90%”, driven by “c.70%” (prev. 60%) growth in Turkey (in TL) and “>20%” growth international revenues (prev. c.25%) (in FX). EBITDA guidance revised down by 50bps to c.10.0%. NWC/Sales guidance of c.25% and Capex of €220mn are maintained. Considering steep TL depreciation, high inflation and half-year inorganic growth prospects, we foresee 100.3% topline growth and 9.5% EBITDA margin for 2022E.

*TOASO TI> 2Q22 Review: Better than expected results...Tofas recorded TL1,876mn net income, 12% higher than our estimate of TL1,670mn and 14% higher than consensus estimate of TL1,650mn in 2Q22. Despite higher than expected net other operating expense, TL232mn higher than expected EBIT and TL100mn lower than expected tax expenses led to better than expected bottom line.The company reported TL2,571mn EBITDA, 9% higher than our estimate of TL2,354mn and 9% higher than consensus estimate of TL2,354mn. EBITDA margin of 16.4% was 170bps higher than our estimate of 14.7% and 135bps higher than consensus estimate of 15.0%.Based on our 2022E estimates, the company trades at 4.5x EV/EBITDA and 5.9x P/E compared to its 5-year average multiples of 5.3x and 5.8x, respectively.

*TOASO TI> announced production halt during Aug 8th-21th, 2022 in TOASO’s Bursa factory due to planned annual leave and periodic maintenance-repair works. (neutral)

*ALARK TI> bought back 132K shares at an average price of TL37.01 on 26 July 2022. Since March’18 2022, the total number of shares bought back reached 881K at an average price of TL32.21.

*FROTO TI> announced production halt in Aug due to factory maintenance and annual leave (neutral). Production will be suspended during Aug 1 - Aug 15, 2022 in Gölcük Transit Line and Eskisehir Plants. Production in Gölcük Custom Line will be suspended during Aug 1 - Aug 12, 2022 and production in Yeniköy Plant will be suspended during Aug 1 - Aug 15, 2022. According to the company’s announcement production halt will not affect sales and production unit forecasts for 2022.

*SISE TI> bought back 1,704k shares at an average price of TL21.01 on 26 July 2022. Since February, 26 2021, the total number of shares bought back reached 94.0mn at an average price of TL14.47.

*MPARK TI> bought back 31K shares at an average price of TL39.95 on 26 July 2022.Since 25 May 2022, the total number of shares bought back reached 1.8mn at an average price of TL35.02.

*SAHOL TI> bought back 100K shares at an average price of TL19.65 on 26 July 2022.Since 09 Nov 2021, the total number of shares bought back reached 56.8mn at an average price of TL16.74.

Weekly Agenda:

July 27: TAVHL 2Q22 cons NI TI 502 mn ATA: 563 mn

July 27 AKBNK 2Q22 cons NI TI 11,544 mn ATA: 12,078 mn

July 28: GARAN 2Q22 cons NI TI 11,568 mn ATA: 11,885 mn

July 28: FROTO 2Q22 cons NI TI 3,183 mn ATA: 3,162 mn

July 28: July Economic confidence

July 28: CBT inflation outlook

July 29: Trade Balance

July 29: Foreign Tourist Arrivals