We finally saw some strength and appetite for equities yesterday with both strong buying in aviation and banking stocks. The number of Covid cases declined to 26K from a peak of 62K two weeks ago and we will probably see numbers decline to below 10K as full lockdown measures restrict mobility and spread of the virus. We are seeing a sectoral rotation towards a bigger opening of economies globally, as aviation stocks are seeing some attraction, while food retailers who benefited greatly over the last year are finding it hard to perform as higher levels of vaccination will help to normalization of economies.
Speed of vaccination in Turkey, which has stalled recently due to supply problems from China, should be picking up from the second half of May, as new supplies of both Biontech and Sinovac vaccines will be arriving, while also Russian Sputnik supplies will be available as a third alternative.
Although the current operating environment is still not extremely profitable, we believe Tupras will be a key beneficiary especially in 2H as global travel picks up.
Macro news:
According to Ministry of Trade, foreign trade deficit declined by 31.9% y/y to US$3.12bn in Apr’21. Proportion of imports covered by exports increased by 1,953bps y/y to 85.7% in Apr’21.Exports increased by 109.9% y/y to US$18.77bn while imports increased by 61.4% to US$21.89bn inApr’21. Foreign trade deficit declined by 19.2% y/y to US$14.16bn in 4M21.
Company news:
*THYAO: 1Q21 Review: Better than expected results... Turkish Airlines posted US$61mn net income in 1Q21, better than our estimate of US$41mn net income and consensus estimate of US$32mn net loss. Positive impact of US$122mn higher than expected EBIT and US$36mn higher than expected tax income offset by the negative impact of US$156mn lower than expected net financial income. Deviation was mainly due to US26mn higher than expected investment income and US$8mn lower than expected equity pickup profit. The company recorded US$348mn EBITDA which was 48% above our expectation of US$235mn but 11% below the consensus estimate of US$391mn in 1Q21. The company’s net debt decreased by 4% q/q to US$14.2bn, implying 10.4x Net Debt/EBITDA in 1Q21 compared to 13.2x in 4Q20.
GWIND/DOHOL: Dogan Holding bght 1.3 mn shares of GWIND within TL 4.83-5.05 band
Weekly Agenda:
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 6: MPARK NI estimate ATA: TL 66 mn Consensus TL 59 mn
May 7: BIZIM NI estimate ATA: TL4 mn Consensus: TL 7mn