Market Watch (Şeker Yatırım)

Market Watch - Thursday, November 7, 2024

Outlook:
 
The BIST100 Index started Wednesday positively, maintained its positive course throughout the day and closed at 8,862.32, up 2.83%. The Industrial Index rose 2.18% and the Banking Index gained 2.15%. Yesterday, global markets rose as uncertainty over the U.S. elections ended, with expectations that Trump's would be a market-friendly presidency; the BIST accompanied this rise. As Trump pricing continues in global markets, the BIST may be positively affected by this movement. However, risks for the BIST, such as high domestic inflation and postponement of the CBRT's interest rate cut expectations, remain valid. On the global side, yesterday the Asian stock markets were mixed and the European stock markets were sold, while the U.S. stock markets closed with an increase of up to 3.6%. This morning, while the U.S. futures and most Asian stock markets remain positively priced, the German DAX future maintains its bearish trend. Today, global markets will follow the meetings of the Fed and the Bank of England. Both banks are expected to continue the monetary easing process with a 25 bps interest rate cut each. The statements of Central Bank Governors after the meetings will also be followed. We especially expect President Powell's speech after the Fed meeting to guide the markets. The VIOP30 Index gained 0.30% in the evening session. Locally, we expect the Benchmark Index to start Thursday flat, and to continue its upward movement thereafter if any profit sales are met with purchases. SUPPORT: 8,750 - 8,650 RESISTANCE: 9,100 - 9,200.
Money Market:
The Lira was positive yesterday, gaining 0.26% against the USD to close at 34.2238. The currency also appreciated by 1.05% against a basket of $0.50 and €0.50. Meanwhile, the local fixed income markets were positive. The ten-year benchmark bond yield fluctuated between a range of 30.93%-31.18%, closing the day at 31.02%, down 21 bps from the previous close.
Company News:
According to Aksa Energy's financials with inflation accounting (TMS-29 effect), net profit decreased by 18% on an annual basis to TL661 million (3Q23: TL805 million) in 3Q24. The Company's decreased net sales revenues due to domestic electricity generation market conditions and the reduction in energy trading activities in 3Q24, including the TMS-29 effect, the decline EBITDA to TL1,715 million (3Q23: TL2,699 million), net financing income of TL236 million in the 3Q23 period, and net financing expense due to the increased exchange rate difference in 3Q24 suppressed profitability. On the other hand, net other income realized at TL53 million (3Q23: TL10 million) in 3Q24, the decrease in net monetary loss position and net tax expense in 3Q24 were the developments supporting profitability. The Company's total electricity sales volume (excluding Africa and Asia) decreased by 26% yoy to 4,473 Gwh in 3Q24, while average spot electricity prices decreased by 27% yoy to 2,520 TL/Mws in 3Q24 (3Q23: 2,078 TL/Mws). The Company's net sales revenues decreased by 28% yoy to 8,200 million TL in 3Q24 due to decreasing spot electricity prices and energy trading activities - including the impact of TAS-29. The Company'sdomestic sales revenues decreased by 26% yoy to TL6,409 million in 3Q24, while the total sales revenues of its overseas power plants (Africa and Uzbekistan) decreased by 36% yoy to 1,790 million TL. Decreased operational profitability in parallel with decreasing sales revenues has suppressed margins. The Company's total EBITDA figure decreased by 37% YoY to TL1,715 million in parallel with the decline in net sales revenues. Gross and EBITDA margins, which were 22.4% and 23.7% in 3Q23, decreased to 19.5% and 20.9% in 3Q24, respectively. The net debt position increased to TL23,710 million in 9M24 (1H24 including TMS-29 impact: TL22,895 million, Thus, the net debt/EBITDA ratio was 3.55x in 9M24. Due to the Company's weak operational performance in 3Q24 in parallel with the decline in sales revenues, the market's short-term reaction to the results may be negative compared to the same period of the previous year. However, we believe that the increase in new installed capacity abroad in the medium and long term may have a catalytic effect on operational profitability.

Sabanci Holding (SAHOL.TI; OP) has booked a TRY 3,156mn consolidated loss in 3Q24, according to inflation accounting provisions (IAS-29).
In this quarter, the building materials, energy and financial services segments contributed positively to net income. However, primarily the banking segment with a TRY 2.833mn loss position; the mobility solutions business line and the digital line, among other segments, contributed to the consolidated loss. Sabanci Holding printed TRY 215,375mn of revenues (including the banking) in 3Q24. The Holding recorded quarterly EBITDA of TRY 12,302mn. The solo net cash position has slightly increased to TRY 12.2bn from TRY 12bn at the end of 2Q24. Net Debt/EBITDA was 1.1x, well below the Holding's mid-term target of a maximum 2.0x.
In line with the Holding's 3Q24 financial results, we maintain our 12-month target price for SAHOL at TRY 146.55/share. Our target price has 76% upside potential compared to the stock's closing price on November 6, 2024. We maintain our OUTPERFORM recommendation.

According to inflation accounting provisions (IAS-29), Turk Telekom (TTKOM.TI; OP) printed a net profit of TRY 1,145mn in 3Q24. (3Q23: TRY 3,0,42mn net profit). Our expectation was for net profit of TRY 1,943mn, while the market expectation was for TRY 2,513mn. A lower-than-expected monetary gain (TRY 3,946mn) and higher-than-expected tax expenses (TRY 2,189mn) led to deviation from our net profit expectation. In this quarter, TRY 6,405mn of net financial expenses suppressed net profit.
The company booked a net sales revenue of TRY 40,353mn adjusted for the IAS-29 effect somewhat above our TRY 39,090mn expectation and the market's TRY 38,224mn expectation. The strong subscriber acquisition, along with robust ARPU performance across business lines, was the main driver behind the acceleration in revenue growth. ARPU has increased 21.2% YoY in the fixed broadband segment and 17.5% YoY in the mobile blended and supported the revenues. In 3Q24, subscribers increased by 59k in fixed broadband and 651k in the mobile segment. Total subscribers increased to 53.2mn with a gain of 800k in 2Q24.
Operational profitability was robust with control of costs and operational expenses. The gross margin was at 34.2% (3Q23: 22.2%) in 3Q24. EBITDA came in at TRY 16,469mn, up 31% YoY, including the effect of IAS-29, above our TRY 15,321mn and the market's TRY 14,909mn expectations. The EBITDA margin was at 40.8% in 3Q24 (3Q23: 36.2%).
Net debt increased... At the end of 2024/09, the company's net debt position slightly rose to 53.8bn from TRY 51bn.
2024 EBITDA margin guidance revised up: The company has revised it's EBITDA margin expectation of 36-38% to 38%. Expectations of revenues rising 11-13% and capex/sales of 27-28% in 2024 are maintained. (The company has determined its targets with the assumption of annual CPI at 42% by the end of 2024.)
With competitive pricing adjustments taken in the fixed broadband segment and shorter contract period applications, ARPU has started to gain momentum. We expect the fixed broadband segment to continue making a strong contribution to revenues over the coming quarters. We expect telecommunications to remain among the sheltered sectors during the inflationary process, and to grow above inflation as the increases come into effect with contract renewals, even if disinflation begins (POSITIVE).
TSKB (TSKB.TI; OP) has sold 0.5mn of TSKB REIT (TSGYO.TI; N/C) shares in TRY11.53-12.44 /share price range and reduced its stake to 88.61% (Neutral).
VakifBank (VAKBN.TI; MP) posted a TRY8,023mn net income (+12% QoQ) in its 3Q24 bank-only financial statements. This is 1% below our TRY8,081mn call and 2% above the TRY7,896mn RT consensus. 9M profit of TRY19,192mn jumped 81% YoY, beating the average 14% YoY growth of state deposit banks. This performance also marks the best growth rate among the banks that have announced 3Q financials so far. 9M ROAE declined to 19.5% from 21.2% in 6M24, vs. the budgeted low 20%'s.
The main drivers of deviation from the estimated figures are: a positive surprise in core banking revenues and other income and a negative surprise in ECLs.

Contrary to the trend among other banks, NII rose by 6.2% quarterly. The limited rise in OPEX and TRY453mn trading gain offset the sharp 31% quarterly rise in loan provisions. The bank management has revised down its 30% ROAE guidance for FY24 to low 20s% due to pressure on margins. There should be no major market reaction to the results. Our target price of TRY26.43 offers 39% upside. We model 105% YoY earnings growth for the bank in 2024. We maintain our "Market Perform" recommendation. The bank is trading at a 2025E P/E of 3.2x and P/BV of 0.69x (6% discount to domestic peers) with a 24.5% ROAE.


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