Morning Note /
Turkey

Turkey: We expect a strong opening in BIST

  • Earnings season continues and AKBNK and TAVHL 2Q results were better than expectations

  • Eyes will be on GARAN and FROTO 2Q results which will be announced after market closing today

  • Daily resistance levels are 2.570 2.600 2.690.

ATA Invest
28 July 2022
Published byATA Invest

Thanks to the messages given by FED yesterday on slow pace of monetary tightening going forward, US equities rallied which is also followed by Asian markets. Today we expect strong opening in BIST as well. Earnings season continues and AKBNK and TAVHL 2Q results were better than expectations and are likely to outperform the index today. Eyes will be on GARAN and FROTO 2Q results which will be announced after market closing today. Daily resistance levels are 2.570 2.600 2.690.

Company news:

*AKBNK TI> Akbank reported 2Q21 net income of TL13,107mn (+63% q/q and +306% y/y), 9% higher than our and 13% higher than consensus estimate. The key highlights of 2Q22 were 1) 2Q ROE improved to 54.2% from just 36.6% in 1Q21, while 1H21 ROE was only 12.9% 2) Core revenues were up 54% q/q to TL17.6bn driven by higher CPI linker income (+71% and well contained swap costs(-20%) 3) Quarterly swap adjusted NIM improved 211bps q/q helped by benign funding costs and help by the CPI linker portfolio(185bps of the improvement comes from CPI Linkers) 4) Net Fees& Commissions were up 26% q/q, while Opex as up 13%, as fee coverage of opex declined to 60% in 1H22 from 65% in 1H21. 5) Akbank’s net NPL creation remained muted with strong collection performance (only TL95mn net NPL creation in 2Q), while the bank wrote off TL422mn of loans this quarter. Quarterly Net cost of risk(excluding currency impact) declined to 51bps from 72bps in 1Q22.

Management has changed its 2022 guidance on some key metrics 

  1. TL loan growth expectation has been increased to >50% from 30% previously(1H growth was already 39.4% y/y), while the bank now expects a shrinkage in FX-loans(previously flat and -4.3%in 1H)

  2. Revised NIM now stands at 7% compared to 150bps improvement before

  3. Fee & Commission growth is now expected 65% compared to 35%, while opex growth is expected to be in line with average CPI

  4. ROE is expected to be around 50% compared to 30%:

Akbank shares currently trade at and 0.5x 2022E P/B and 1x 2022E P/E. Akbank’s discount to its 5-year average P/B has widened to 13%.

*TAVHL TI>2Q22 Review: Better than expected results. TAV Holding posted EUR52mn net income in 2Q22, higher than our estimate of EUR33mn and consensus of EUR30mn net income. Deviation was mainly due to EUR24mn higher than expected revenue and EBITDA. The company reported EUR96mn EBITDA, 14% higher than our estimate of EUR85mn and 27% higher than consensus estimate of EUR76mn. According to the CEO Kaptan’s statement, Almaty, which had a stellar second quarter due to increased traffic resulting from the geopolitical challenges was an important factor in their excellent results. However, the company expect a more normalized financial performance from Almaty in the coming quarters. Throughout the year, Russian traffic has improved materially and the latest weekly recovery level is now at 49% for TAV and 55% for Antalya compared to 2019 levels. The company have also observed that the loss of Russian and Ukrainian traffic has been partially compensated with very strong traffic from the UK, Germany, Poland, Kazakhstan, Israel and the rest of Europe. With these developments, Antalya reached 80% of 2019 international traffic level during the month of June. After 2Q22 results the company management revized its guidance. The comapny management revised up its renevue guidance to EUR900-940mn from EUR717-745mn for 2022E (ATA Est.: EUR833.3mn). The company management revised up its EBITDA guidance to EUR252-291 from EUR229-261mn for 2022E (ATA Est.: EUR277.2mn). Management management revised down its EBITDA margin guidance to 28-31% from 32-35% for 2022E (ATA Est.: 33.3%).Management maintained its PAX guidance at 71-76mn for 2022E (ATA Est.: 73.4mn). The company guides >EUR50mn net income for 2022E (ATA Est: EUR82.1mn)

*MPARK TI> bought back 14K shares at an average price of TL41.51 on 27 July 2022. Since 25 May 2022, the total number of shares bought back reached 1.9mn at an average price of TL35.07.

*ARCLK TI> bought back 500K shares at an average price of TL63.98 on 27 July 2022. Since 02 July 2021, the total number of shares bought back reached 68.1mn at an average price of TL44.70.

*SISE TI> bought back 1,779k shares at an average price of TL21.13 on 27 July 2022. Since February, 26 2021, the total number of shares bought back reached 95.811mn at an average price of TL14.60.

Weekly Agenda:

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