Market Watch (Şeker Yatırım)

Market Watch - Friday, August 18, 2023
Outlook:
The BIST100 Index started Thursday on a positive trend, fluctuating throughout the day to close at 7,764.47, up 1.33%. The Banking Index rose by 1.39% and the Industrial Index gained 1.70%. Since we have reached the end of the 2Q period for BIST-listed companies, and as the BIST-100 has recorded a sharp rise of nearly 70% without significant correction since the elections, periodic profit-taking is quite normal. However, factors such as gradual normalization, continuation of the negative real interest rate policy, and strong foreign inflows continue to support the BIST. The rising trend will be maintained with any sharp pullbacks presenting buying opportunities for the medium term. In major global stock markets, concerns over the Fed's rate hike and weak economic developments from China continue to suppress risk appetite. The U.S. futures, German DAX futures and Asian Stock Markets, excluding the Dow Jones, have followed a selling course this morning. The VIX index trading at 17 indicates increased selling pressure and volatility in the U.S. Stock Markets. If the VIX rises above 20 selling pressure may deepen. The VIOP30 Index closed the evening session down 0.25%. Locally, we expect the Benchmark Index to start Friday on a positive trend. The fluctuating weak course will continue as possible rises give way to profit-taking. SUPPORT: 7,690 - 7,588 RESISTANCE: 7,795 - 7,878.
Money Market:
The Lira was negative yesterday, weakening 0.13% compared to the USD to close to 27.0986. In addition, the currency depreciated by 0.08% against the basket composed of $0.50 and €0.50. Meanwhile, the local fixed income markets were relatively flat. The ten-year benchmark bond ending at 19.28%, unchanged from its previous closing.
Sector News:
BRSA weekly: USD1.7bn and 0.9% weekly rise in FC deposits (triggered by commercial institutions deposits). According to the weekly BRSA data dated August 11, 2023, the sector's FC deposits (in $ terms) rose by $1.7bn on a weekly basis and by 0.9% WoW to USD200.2bn.
There was a 1.1% and 1.8% rise in FC deposits (in $ terms) WoW at state and foreign deposit banks, respectively. For private deposit banks FC deposits fell 0.1% WoW. The share of FC deposits in total deposits fell by 40bps weekly to 41.9%.
Decelerated growth in Currency-protected deposits. The weekly rate of growth in total TRY volume eased to 2.3% from 4.8%. The total balance rose by TRY75bn on a weekly basis to TRY3.36 trillion. In dollar terms, it was up by 2.1% weekly to USD124.4bn. The growth in dollar terms over the past 6 weeks has reached a solid USD18.7bn. Currency-protected deposits represent 62.3% of FC deposits.
Steep rise in Commercial institutions FC deposits. Individual FC deposits (in $ terms) rose by USD82bn and 0.1% on a weekly basis. Commercial institutions FC deposits (in $ terms) rose sharply by USD1.7bn, and 2.5% WoW. Lastly, official and other institutions' FC deposits rose by USD33mn and 0.7% WoW.
Strong TRY deposit growth. Total TRY deposit growth accelerated to 2.7% WoW from 1.2% in the previous week. Individual deposits rose by TRY45bn and 1.1% while those of commercial institutions rose by TRY68bn (+2.9%) WoW. Other institutions' TRY deposits rose sharply by TRY86bn and 13.3% WoW.
Continued recovery in commercial loan rates, which are 263 basis points higher than 3M deposit rates on the TRY side. On the funding side, the weighted average interest rate on TRY deposits with maturities of up to 3 months rose by 129bps WoW to 29.06%. The weighted average interest rate of commercial loans (excluding overdraft and corporate credit cards) rose by a further 89bps WoW to 31.69%. Thus, the spread between TRY commercial loan rates and 3M TRY deposit rates eased to 263 basis points from 303bps.
New record high FC long position of state deposit banks. According to weekly BRSA data dated August 11, 2023, the sector's FC long position rose by 8% on a weekly basis to $4,821 million.
State deposit banks' long position rose by 12% on a weekly basis, reaching a new record high $1,760 million. On the other hand, foreign deposit banks' long position rose 5% to $1,447 million weekly. At private deposit banks it rose by 9% to $1,381 million.
The sector's FC net general position/regulatory capital ratio rose to 6.1% from 5.7% in the previous week. On a segmental basis, this ratio is 7.2% and 8.1% for state and foreign deposit banks, and 5.5% for private deposit banks.
Company News:
Bim (BIMAS.TI; OP) reported a net profit of TRY 2,845mn (2Q22: TRY 1,676mn) in 2Q23, above our expectation (TRY 2,541mn) and the RT market average expectation (TRY 2,424mn). Strong operating profit and a TRY 359mn one-off gain from restructuring of the Competition Authority penalty in the quarter were effective in the positive realization of net profit. The net profit margin was flat at 4.9% in 2Q23 compared to 2Q22. Net sales revenue was in line with expectations, thanks to a strong operational performance and solid store opening trend in 2Q23. Despite slowing customer traffic (2Q22: 14.1%, 3Q22: 8%, 4Q22: 1.1%, 2Q23: -1.7%), net sales revenues reached TRY 57,878mn in 2Q23 on a rise of 70% YoY due to greater basket size (2Q22: TRY 61.56, 2Q23: TRY 102.98) (+67.3%) and the positive effect of rising store number (number of stores at the end of 2Q22: 11,065 units, 2Q23: 11,818 - 259 new BIM Turkey store openings, 18 new BIM Morocco store openings, 8 new BIM Egypt store openings, and 8 new FILE store openings). Concluding this quarter with a 7.4% EBITDA margin, Bim registered operational improvement based on "Basket Size" / "Like-for-like sales" (2Q22: TRY 35,853, 2Q23: TRY 58,954, on a 64.4% rise YoY). Duly, the Company printed TRY 4,292mn EBITDA on a YoY rise of 52.6% (Seker Invest: TRY 4,447mn, Market Avg.: TRY 4,318mn). In addition to robust store openings, the Company continued its warehouse investments in this quarter. The cash position rose in 2Q23 (TRY 3,981mn) compared to 2Q22 (TRY 1,685mn) despite higher CapEx (2Q22: TRY 1,081mn, 2Q23: TRY 2,025mn), and dividend payment of TRY 1,251mn (Slightly Positive).
Turkcell (TCELL.TI; OP) achieved a net profit of TRY 3,161mn (70% up YoY), in parallel with our expectation of TRY 3,164mn and above the market expectation of TRY 2,955mn. TRY 11,242mn of net financial expenses guided net income negatively, while the control of operational expenses and other income from main activities and income from investment activities supported net profit.
Strong rise in ARPU and net subscriber adds support revenues... Thanks to successful price adjustments, and net a 234k subscriber adds the company booked TRY 21,651mn in revenues in parallel with our TRY 21,413mn estimate and the market's TRY 21,063mn estimate. ARPU has increased 82% YoY in the mobile segment. A net 404 thousand mobile postpaid subscribers were added in 2Q23. Average monthly data usage per user also rose by 17% YoY with 16.5GB.
With the help of better-than-expected cost control; EBITDA at TRY 9,523mn, up 89% YoY... The figure was above our TRY 8,689mn expectation and the market expectation of TRY 8,666mn. The EBITDA margin rose to 44% (1Q23: 39.1%, 2Q22: 40.3%).
Financial expenses remained a pressure point... In 2Q23, foreign exchange expenses continued to pressure net profit due to foreign currency-denominated debt. A total 11,242mn TL financial expense was realized. Nonetheless, Turkcell's net debt position rose to TRY 31,724mn in 2Q23 from TRY 26,067mn at 1Q23. On the other hand, net debt/EBITDA was at 1.1x, not indicating a serious debt issue thanks to strong EBITDA.
2023 guidance has revised... The company expects revenues to rise by 71% (Previous: 55-57%), EBITDA in the vicinity of TRY 37bn (Previous: TRY 34bn) and operational capex/sales of 22% in 2023.
We expect Turkcell, which fell behind in reflecting high inflation in prices due to its contracted product structure, to announce offensive financial results in 2023, reflecting strong price hikes. Meanwhile, 2023 is expected to be another robust year for tourism and mobility, which would provide support on the mobile side. As a result, we expect a strong contribution from the mobile segment.
The company announced that a donation of 3.5bn TL would be made for earthquake victims in the disaster area. We think that donation can be suppressive of cash flow if approved at the general assembly meeting to be held on September 13, 2023.
** We expect to see a POSITIVE market reaction to the 2Q23 results.

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