Morning Note /

Turkey's Q1 earnings seasons opens next week

  • CBRT kept the policy rate at 19%, in line with expectations

  • Initial negative reaction from lira, but currency strengthened in light of global weakness in USD and US yields

  • We will continue to trade between 1350-1450 in the absence of any positive/negative shocks

ATA Invest
16 April 2021
Published byATA Invest

CBRT kept the policy rate at 19%, in line with expectations, however, the monetary policy committee decision had 2 important changes, removing 2 forward guidance remarks 1) additional monetary tightening will be delivered if needed 2) continuation of tight stance for a long period of time. The lira first gave a negative reaction to this but as the global weakness in USD and US yields helped the lira. The banks rallied hard led by Garanti, as we believe there was some short covering..

 We will continue to trade between 1350-1450 in the absence of any positive/negative shocks, as 1Q earnings seasons opens up next week. 1Q has been a great quarter for most companies and we will see strong results from steel, auto, food retailers and other domestic consumption plays. For other small/midcap companies that we do not cover, we believe Yatas (home furniture), Medikal Park(hospital chain) and Bagfas( fertilizer) could post very strong y/y and q/q earning growths.

 Macro news:

 Budget balance posted a surplus of TL23.8bn in March with a strong increase in tax revenues and transfer of CBRT’s 2020 profit. So the budget posted a surplus of TL22.8bn and a primary surplus of TL 71.7bn in 1Q21. Budget revenues increased in March by TL87.5bn y/y to TL134.9 bn, TL40.5bn coming from higher tax revenues and TL36bn from higher property income. Budget revenues increased by 34.6% annually in the 1Q to TL344bn. Central government budget expenditures increased by 22% annually in March, reaching TL111.2bn, while the increase is 12.6% in 1Q.

Company news:

Odas <ODAS TI> IPO process for Can-2 approved by the Capital Markets Board

CMB has approved the IPO of Can-2 Termik A.S., wholly owned subsidiary of Odas. Through the IPO process Can-2’s paid in capital will be increased from TL 252,410,000 to TL 320,000,000. If there is demand 6,759,000 shares owned by Odas will be sold through the additional sale process. IPO price is set at TL 3.90/share. Cash infusion to Can-2 will be TL264mn. Possible additional sale proceeds to Odas will be TL 26.4mn. Cash obtained from the IPO is set to be used to pay debts owed to banks.

Turkish Airlines <THYAO TI> announced revisions in fleet plan. <Positive>

 Previously in 2013, Turkish Airlines announced purchasing of 75 Boeing 737-MAX. Due to Coronavirus (COVID-19) the Company reached an agreement with Boeing. According to the agreement, 10 of the 75 Boeing 737-MAX aircraft will be cancelled and 40 aircraft will be converted into options until December 21, 2021. At the same time, the delivery dates of currently undelivered 13 Boeing 737-MAX aircraft, have been rescheduled in line with the operational and financial capacity of Turkish Airlines.