Market Watch (Şeker Yatırım)

Market Watch - Tuesday, August 15, 2023
Outlook:
The BIST100 Index started Monday on a positive trend, peaking at a record 7,868. The benchmark index closed the day at 7,737.38, up 0.30%. While the Industrial Index rose by 0.71%, the Banking Index decreased by 0.69%. Factors such as gradual normalization, the ongoing negative real interest rate policy and increasing foreign interest continue to support the BIST. However, as the balance sheet period is approaching the end, the BIST-100, which recorded a sharp rise of nearly 70% in the post-election period without significant corrections, may experience occasional adjustments with profit-taking. Major global stock markets have followed a mixed course. The U.S. and European Stock Markets ended yesterday positively, while the U.S. and German DAX futures maintain their positive outlook this morning. In Asia, indices are mixed after the Chinese Central Bank's interest rate cut following weak economic data. Domestically, Central Government Budget data for July emerges today. Despite a partial recovery with the effect of the corporate tax rise, our expectation of a deterioration in the budget balance continues. The VIOP30 Index closed the evening session up 0.06%. Locally, we expect the Benchmark Index to start Tuesday positively. A fluctuating weak course will make for a profit-taking opportunity. SUPPORT: 7,680 - 7,560 RESISTANCE: 7,766 - 7,878.
Money Market:
The Lira was negative yesterday, weakening 0.01% compared to the USD to close to 27.0518. In addition, the currency appreciated by 0.15% against the basket composed of $0.50 and €0.50. Meanwhile, the local fixed income markets were negative. The ten-year benchmark bond was traded within a range of 18.44%-18.93%, ending the day at a high of 18.93%, 49 bps above its previous closing.
Headlines:
Central Government Budget Statistics for July will be published today. Although there has been a partial recovery with the effect of corporate tax, our expectation of a deterioration in the budget balance continues. And while the increase in tax rates has recovered budget revenues, it seems that deterioration in current transfers will continue for a while in the post-earthquake period. We will publish our detailed analysis after the data emerges within the day.
Company News:
Aselsan (ASELS.TI; OP) is to announce its 2Q23 financials today. We expect a 2Q23 net profit of TRY 3,680mn, while the market average expectation is for a TRY 4,426mn net profit. We expect 2Q23 net sales revenues and EBITDA to reach TRY 9,876mn and TRY 2,450mn, respectively. The market's respective expectations for these items are TRY 10,249mn and TRY 2,489mn.
Pegasus (PGSUS.TI; OP) reported a net profit of TRY 1,925mn in 2Q23 (2Q22: TRY -791mn), above the market average net profit expectation of TRY 1,263mn and our estimate of TRY 1,351mn. Pegasus' total PAX rose by 20.6% YoY in 2Q23 thanks to high passenger demand; quarterly revenues thus improved by 81% YoY in TRY terms to TRY 15,109mn, slightly above the market average estimate of TRY 14,737mn, and our estimate of TRY 14,851mn for the period. The carrier has printed TRY 4,748mn EBITDA according to its CMB financials in 2Q23, above the market average expectation of TRY 3,933mn and our estimate of TRY 3,932mn.
Pegasus has maintained its expectations for 2023. The Company plans for 20% higher total ASK in 2023, vs. 2022. In addition, with the order delivery plan for its aircraft fleet, Pegasus plans for a total fleet size of 104 aircraft by the end of 2023. In 2023, the Company has stated that 10 A321NEOs will be received; 6 B737-800s and 1 A320-200 are to be removed from the fleet. The company also expects the average seat number to increase from 191 in 2021 to 218 in 2029 (Positive).
Turk Telekom (TTKOM.TI; OP) printed a net loss of TRY 601mn in 2Q23, in parallel with our expectation of TRY 599mn and below the market expectation of TRY 1,142mn. TRY 5,474mn of net financial expenses suppressed net profit. However, TRY 1,258mn of deferred tax income supported it.
Revenues rose by 67% YoY to TRY 17,947mn in 2Q23, thanks to successful price adjustments and more moderate subscriber losses in the wake of February's earthquakes. Our expectation was for TRY 16,555mn and the market expectation was TRY 17,181mn. In 2Q23, total subscribers decreased by 105k due to a continued fall in fixed voice subscribers and limited new subscribers in other segments. ARPU has increased 73% in mobile blended and 42% in the broadband segment, yearly.
With the help of cost control the gross profit margin rose to 38.7% in 2Q23 from 35.7% at 1Q23. EBITDA at TRY 6,036mn, up 37% YoY... The figure was above our TRY 5,637mn estimate and the market expectation of TRY 5,403mn. The EBITDA margin was at 33.6% in 2Q23 (1Q23: 31%, 2Q22: 41%).
Net debt increased... In 2Q23, the company's net debt position increased to TRY 44,519mn from TRY 36,221mn at the end of 1Q23. The net debt/EBITDA ratio rose to 2.2x from 2x due to higher debt and limited EBITDA growth.
2023 guidance has revised... The company expects revenues to rise by 67-70% (Previous: 52-55%), EBITDA in the vicinity of TRY 25-27bn (Previous: TRY 23-25bn), and consolidated capex of approximately TRY 19-21bn (Previous: 17-19bn) in 2023.
Turk Telekom has revised it's 2023 guidance as its expectation of a decrease has changed to one of a better performance for fixed broadband subscribers. Additionally, the company has pursued price hikes in both wholesale and retail segments. On the mobile side, we anticipate an increase in data usage and subscribers thanks to the tourism season. Gradual hikes will continue to support ARPU. However, we expect pressure from OPEX and CAPEX to continue due to earthquake-related damage. We anticipate financial expense pressure persisting in light of of FX debts.

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