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Turkey: US inflation data has shaken EM currencies

  • Lira has shaken a little more than others as usual as fragility post 19 March continues
  • The hard lockdown that started on 29 April is ending today
  • The market will be closed on Wednesday 19 May due to National Holiday

US inflation data has shaken EM currencies but Lira has shaken a little more than others as usual as fragility post March 19 continues. The hard lockdown that started on April 29th is ending today and there is gradual opening schedule with curfews that will continue from 9pm to 5am and full-day curfew on Sundays, and there will be more relaxation gradually. Restaurants and cafes still can't accept sit-in customers until June 1. The market will be closed on Wednesday 19 May due to National Holiday.

Company news

ODAS TI: 1Q21 Review: Weak bottom-line as expected. Odas posted a net loss of TL191mn in 1Q21. Our net loss estimate for Odas’ bottom-line was TL247mn. Lower than expected financial expenses led to a marginally better bottom line compared to our forecast. Revenues came at TL277mn (up 42% y/y) in 4Q20, thanks to a higher CUR ratio in Can power plant due to the electricity market environment favoring electricity generators using fossil fuels. CUR in Can power plant averaged 75.0% in 1Q21 (1Q20 CUR: 54.5%). On the operational side, we see that Odas’ gross margin increased from 21% to 25% on a y/y basis. EBITDA increased by %70 y/y to TL78mn in 1Q21 mainly thanks to higher electricity production. Net debt remained flat q/q in €-terms at €237mn which implies 7.4x net debt / EBITDA ratio (1Q21: 7.3x). Odas’s net F/X short position was €171mn, which implies a minimal decrease from 4Q20’s €173mn.

ALARK TI: 1Q21 Results: Despite FX exposure Alarko manages to end up in black Alarko posts TL43mn net income in 1Q21, implying 146% y/y growth. The main highlight of the past quarter was the FX-related financial loss in Alarko’s unconsolidated energy joint venture Alcen (Alark share: 49.96%), as expected. We estimate that if TL was stable in 1Q21 Alarko’s net income would have been approximately TL135mn higher than the reported figure. Alarko’s revenues increased by 4% y/y to TL241mn in 1Q21 and its EBITDA decreased by 56% y/y to TL32mn during the same period. The weakness of Alarko’s consolidated EBITDA can be attributed to severe droughts that effectively eliminated any contribution from hydroelectric production plant Karakuz. Please note that revenue and EBITDA figures have secondary importance for Alarko since over 85% of its combined revenues are from unconsolidated assets. Meram, Alarko’s unconsolidated electricity distribution subsidiary owned through Alcen, posted an EBITDA margin of 7.7%, down 640 bps y/y. Alcen’s power plant Cenal’s EBITDA margin came at 33.3% down 620bps y/y, mostly due to coal prices exceeding US$70 in 1Q21. Alcen’s net debt has decreased to TL4.5bn, down 4% on a q/q basis. We calculate Alcen’s Net Debt/EBITDA multiple as 1.6x. Up-to-date currency breakdown of Alcen’s debt will be a point to keep an eye on when the earnings presentation is shared today. As of 1Q21, we estimate Alarko’s FX-short position to be around US$135mn. Alarko has announced its 2021 net profit guidance as TL950-1050mn in March. Barring any rapid depreciation of TL, we believe guidance is well in reach regarding increasing electricity prices. Alarko will hold a webinar at 5 p.m. Istanbul time to discuss further on the earnings release.

SAHOL: Helikon Investments bought 2.1 mn shares of SAHOL within TL8.36-8.54 band raising their stake to 5.06%

KLKIM: New IPO will start trading in BIST on May, 18th with a reference price of TL 14.75

PENTA: New IPO will start trading in BIST on May, 17th with a reference price of TL 32

Macro Agenda

May 17: April central government budget balance

May 20: May consumer confidence( April 80.2)

May 25: May capacity utilisation(April 75.9%)

May 25: May real sector confidence (April 107.4)

May 28: April trade balance (MArch -USD 4.65bn)


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