Morning Note /
Turkey

Turkey: We expect positive openings

  • Equities are having a hard time moving further up after their impressive rally

  • Tekfen again surprised on the downside with very weak results

  • The banking regulator keeps on bringing new macro-prudential adjustments to slow down credit growth

Batuhan Ozsahin
ATA Invest
29 April 2022
Published by

Equities are having a hard time moving further up after their impressive rally. Turk Telekom’s results were not liked by the market, while Tupras has been sliding since the announcement of Entek deal, while despite a good set of results and a better set of results expected in 2Q, profit taking has been the core sentiment on names that did well in the rally. Tekfen again surprised on the downside with very weak results, while Enerjisa(not covered) reported weaker than consensus results. We are closed for 3 days next week and will be open for trading on Thursday. Local investors will probably be on the cautious side not to the take the long break risk.

The banking regulator keeps on bringing new macro-prudential adjustments to slow down credit growth. The latest one is using 200% weight on the calculation for certain business loans in CAR calculation and using 31.12.2021 FX rate for FX loans on CAR instead of using the simple arithmetic average of 252 days. This is another step to encourage banks to lend in lira. The never ending regulatory increase in operations could tame the appetite for banking shares in the coming days but they will still book record profits for 2022

 Macro news:

Company news:

*TCELL TI> Board decided to propose TL0.5717/shr, implying 25% payout ratio and 2.5% dividend. (slightly negative) The company is expected to distributed cash dividend by 28 July and ex-dividend day will be 26 July. This cash dividend amount fell short of our DPS estimate of TL1.14 where we were expecting 50% payout.

 *BIMAS TI> bought back 60K shares at an average price of TL84.01 on 28 April 2022. Since 6 Dec 2021, the total number of shares bought back reached 3.5mn at an average price of TL70.53.

 *TURSG TI> goes ex-dividend today, paying TL0.46/shr (7.75% div. yield)

*TKFEN TI> 1Q22 Results: Another poor quarter…Tekfen reported TL105mn net income in 1Q22, compared to our estimate of TL616mn net income and consensus estimate of TL745mn. The deviation from our estimates could be attributed to TL521mn lower than expected EBIT which is impacted from contracting segment due to increasing project cost from Saudi Arabia. Due to time extensions originating from the employer, the ongoing Haradh Project in Saudi Arabia was extended until the end of 2022 and US$60mn was reflected in the financial statements as a loss regarding the time extension of project. According to the company, the negotiations for additional income demand continue within the scope of the contract signed with the client. The company posted TL127mn EBITDA in 1Q22, lower than our estimate of TL684mn (Ras. Cons: TL790mn). The company reported 2.4% EBITDA margin in 1Q22, much weaker than our estimate of 11.5% ant the consensus of 12.9%. We believe that the initial reaction to the results will be negative due to weak contacting segment performance in 1Q22.

Weekly Agenda:

Apr 29: March Trade Balance ( Consensus -USD8.2bn, February -USD7.88bn)

Apr,29: YKBNK 1Q22 financials cons TL 6,088 mn ATA TL 6,436 mn

Apr,29: TURSG dividend TL 0.46/share