Morning Note /
Global

Turkey: We have April CPI data

  • Thanks to a dovish Fed, risks assets have recovered and after being closed for 3 days

  • Turkish equities could have continued to drag down lower but we are up for a positive start

  • Tupras should be a strong starter today with record cracks in April continuing

Batuhan Ozsahin
ATA Invest
5 May 2022
Published by

Thanks to a dovish Fed, risks assets have recovered and after being closed for 3 days, Turkish equities could have continued to drag down lower but we are up for a positive start.

We have April CPI data at 10am and we expect annual inflation to climb to 68.4% (CB’s report last week showed the CPI to peak at 75% in 2022, so it means we have more to come in May). Equities have been supported by the inflationary environment so far this year, as all other Lira investment vehicles offer deep negative returns.

Tupras should be a strong starter today with record cracks in April continuing. The company has not reported 1Q results yet but 2Q results should be extraordinary.

 Company News

 Tupras’ crack spreads skyrocketed in April( Very Positive)

  • Med Complex Gasoline cracks averaged US$24.7/bbl,vs. US$12.5/bbl a month ago.

  • Med Complex Diesel cracks averaged US$44.2/bbl,vs. US$31.6/bbl a month ago.

  • Med Complex Jet Fuel cracks averaged US$45.2/bbl,vs. US$24.0/bbl a month ago.

  • Med Complex Fuel Oil cracks averaged minus US$20.2/bbl,vs. minus US$26.5/bbl a month ago.

Diesel, jet fuel and  gasoline sales constitute ~73% of Tupras’ volume. Since diesel, jet fuel and gasoline cracks skyrocketed by 40%, 88% and 98% m/m in April’22, we expect this trend to have positive impact on profitability of the company.

Yapi Kredi <YKBNK TI> reported 1Q22 net income (bank only) of TL7,258mn (+104% q/q and 400% y/y), 13% higher than our and 19% higher consensus estimate.

The key highlights of 1Q22 were 1) ROTE improved to 42.2% from just 24.7% in 4Q21 2) Core revenues are up 39% q/q to TL11.2bn driven by higher CPI linker income and lower swap costs 3) Net provisioning costs are down 66% q/q with lower net NPL inflow and strong collections performance

Yapı Kredi shares are up 44% year-to-date compared to a 32% increase in the BIST banking index and a 31% increase in BIST-100. YKB is trading at 1.5x 22E P/E and 0.5x 22E P/B, 42% discount to its 5-year averages. We continue to favor Yapı Kredi as one of our top banking choices along with Garanti.  

TSKB <TSKB TI> reported 1Q22 net income of TL605mn (+92% q/q and 168% y/y), in line with our and consensus estimate.

The key highlights of 1Q22 were 1) Annualized NIM is up to 5.24% from 3.94% in 4Q21, with core NIM increasing 35bps 2) CPI linker valuation is based on 49% Oct-Oct inflation 3) Net provisioning costs are down 26% q/q with lower net NPL inflow and strong collections performance, while the banks added TL215mn of free provisions( total reached to TL655mn) 4) ROE climbed to 33.4%(36% if adjusted for free provisions).

Arcelik <ARCLK TI> bought back 238K shares at an average price of TL67.15 on 29 April 2022.

Since 02 July 2021, the total number of shares bought back reached 61.4mn at an average price of TL42.09.

Sabancı Holding <SAHOL TI> bought back 1,320K shares at an average price of TL19.95 on 29 Apr 2022.

Since 09 Nov 2021, the total number of shares bought back reached 43.4mn at an average price of TL15.89.

Bim <BIMAS TI> bought back 50K shares at an average price of TL83.89 on 29 April 2022.

Since 6 Dec 2021, the total number of shares bought back reached 3.5mn at an average price of TL70.72.

Sisecam <SISE TI> bought back 585k shares at an average price of TL17.79 on 29 April 2022.

Since February 26 2021, the total number of shares bought back reached 65.3mn at an average price of TL12.03.