Market Watch (Şeker Yatırım)

Market Watch - Thursday, May 23, 2024

Outlook:

The BIST100 Index started Wednesday on a positive trend but then followed a fluctuating course, closing the day at 10,899.28, up 0.04%. While AKBNK, SAHOL and ISCTR made the strongest negative contribution to the Index, the Industrial Index rose 0.77% and the Banking Index lost 1.26%. The direction of banking stocks continues to guide the Benchmark Index. We expect the Index to continue its uptrend, led by the banks, amid expectations that macro rebalancing and foreign investor inflows will increase. While following the minutes of the last Fed meeting on the global side yesterday, it was noted that Fed members were concerned over inflation and lacked sufficient confidence to merit interest rate cuts. The U.S. Stock Markets duly closed the day with declines. Nvidia's balance sheet, released after yesterday's close, exceeded expectations and hence supports risk appetite. This morning, the U.S. futures and German DAX futures are positive while Asian Stock Markets are mixed. We think that global risk appetite will remain strong as macroeconomic data supports interest rate cuts. Global PMI data will be followed today. The Central Bank's interest rate decision will be announced today, and both the market and our expectations are for no change in the rates. The VIOP30 Index completed the evening session down 0.48%. Locally, we expect the Benchmark Index to start Thursday with a limited positive trend and seek to continue its rise despite any intraday profit-taking. SUPPORT: 10,750 - 10,500 RESISTANCE: 11,000 - 11,200.
Money Market:
The Lira was negative yesterday, weakening 0.05% against the USD to close at 32.2113. The currency also appreciated by 0.04% against a basket of $0.50 and €0.50. Meanwhile, the local fixed income markets were negative. The ten-year benchmark bond yield fluctuated between a range of 27.29%-27.61%, closing the day at 27.55%, up 21 bps from the previous close.
Headlines:
The Central Bank interest rate decision will be announced today. Both the market and our expectations are that interest rates will remain unchanged. In the details of the decision, the recent developments regarding inflation and macro projections will be closely monitored. We will publish our detailed analysis during the day.
Company News:
HalkBank (HALKB.TI; MP) has updated the tradesman loan interest rates to be effective as of May 1, 2024, and the revision has not been applied retroactively. Although the new interest rates reflected on tradesmen vary between 17% and 29%, the bulk of the rise is applied for the lowest interest rate band of 17%. As is known, 50% of the interest on tradesman loans is covered by the Ministry of Treasury and Finance. According to CBRT data as of May 10, the average interest rate for TL Commercial Loans (Excluding Overdraft and Corporate Credit Cards) in the market is 65.3%, which is well above the rates applied by HalkBank.
Coca Cola Icecek (CCOLA.TI; OP) posted a consolidated net profit of TRY 2,716mn, down 14.6%, in 1Q24 (1Q23: TRY 3,247mn net profit) according to its financials with inflation accounting (TAS-29 effect). The gain of TRY 2,537mn arising from the monetary gain/loss item supported net profit while the rise in net financing expenses (1Q24: TRY -1,145mn, 1Q23: TRY -766mn) due to higher interest expenses, and current period tax expenses pressured 1Q24 net profit.
CCI's consolidated sales volume fell 3.2% YoY in 1Q24 to 341 million-unit cases. The Company's Türkiye, Uzbekistan, and Iraq operations achieved a volume increase of 5.4%, 22.5% and 10.7% YoY in 1Q24, respectively. Pakistan and Kazakhstan operations decreased the consolidated volume performance, down 22.8%, and 10.8% YoY, respectively, in 1Q24. The sales volume share of international operations shrank 7.2% YoY to 223 million-unit cases in 1Q24. A sharp contraction occurred in Pakistan operations in 1Q24 due to the continuing negative effects of ongoing macroeconomic problems and the high base effect of last year. The sales volume of Türkiye operations rose 5.4% YoY in 1Q24, reaching 118 million-unit cases, due to the positive effect of Ramadan falling in March, the low base effect created by the earthquake , and the improved purchasing power of Turkish consumers thanks to salary adjustments made in January.
The Company's consolidated net sales revenue in 1Q24 rose 2.9% YoY to TRY 27,230mn with to the effect of TAS-29. The rise in net sales revenues was driven by the successful pricing strategy, expansion of traditional channel share among all operations, & the rise in net sales revenue per unit case in TR operations. The Company's GP margin rose 2.4pp YoY from 30.8% in 1Q23 to 33.2% in 1Q24 thanks to disciplined cost management in Türkiye, & Kazakhstan's flat cost base. CCI's consolidated EBITDA in 1Q24 rose 1.5% to TRY 4,464mn (1Q23: TRY 4,464mn). The consolidated EBITDA margin slightly declined 0.2 pp YoY to 16.4% in 1Q24 (Slightly Negative).
Gelecek Asset Management has won the tender for Is Bank's (ISCTR.TI; OP) NPL sale of 4 individual portfolios for TRY99mn, having submitted the highest bid. The total sales amount represents 0.4% of the bank's NPL book as of 1Q24, and should reduce the NPL ratio by 1bpt (Neutral).
Migros (MGROS.TI; OP) is set to announce its 1Q24 financials today after the market close.
According to inflation accounting provisions (IAS-29), Tupras (TUPRS.TI; MP) announced a TRY 320mn net profit in 1Q24 with an 89% decrease YoY (1Q23: TRY 2,811mn). Increased costs and operational expenses suppressed net profit. TRY 6,228mn expenses from main operations, a TRY 5,609mn monetary loss, and TRY 1,477mn tax expenses suppressed net profit while TRY 3,240mn net financial income was supportive.
Tupras booked a net sales revenue of TRY 165,473mn including the IAS-29 effect, up 3% compared to 1Q23. Total sales volume amounted to 7mn tons in 1Q24. Quarterly CUR was at 82% and total production amounted to 5.9mn tons. Despite the maintenance CUR was higher than last year.
Due to the low season and strong base of last year, cracks for gasoline, jet-fuel, and bitumen were down on a yearly basis, while HSFO cracks rose thanks to strong demand and OPEC's production cut decision.
In 1Q24, diesel crack was 26.5$/bbl (4Q23: 27.2, 1Q23: 30.8), and jet-fuel crack declined to 23.7$/bbl (4Q23: 27.9, 1Q23: 29.7) with the seasonal effect. The gasoline crack was up to 19.0$/bbl from 12.2 in 4Q23 (1Q23: 21.8) while the HSFO crack recovered to -16.2$/bbl (4Q23: -18.6, 1Q23: -26.1).
EBITDA came in at TRY 9,462mn, down 54% YoY, including the effect of IAS-29. The EBITDA margin was 5.7% in 1Q24 (1Q23: 12.9%).
Net cash position is maintained... Tupras' net cash position was down from TRY 63bn at the end of 2023 to TRY 51bn at the end of 1Q24.
2024 Guidance: The refiner expects a net refinery margin of 14 $/bbl. It expects CUR at between 85-90% and has a sales volume expectation of 26mn tons for 2024E, and a production volume of 30mn tons. The refiner has also stated its CapEx projection at around USD 500mn for 2024E.
We predict a NEGATIVE market reaction to the financials, due to the net profit suppressed by one-time expenses.
Turkish Airlines (THYAO.TI; OP) reported a net profit of US$ 226mn in 1Q24 (1Q23: US$ 233mn) (Seker: US$ 309mn, Market Avg.: US$ 213mn) for the period. Quarterly PAX recovered 8.4% YoY to 18.5mn in 1Q24. Supported by rising PAX volume, rising passenger revenues & surging cargo revenues thanks to solid e-commerce activity, the carrier's revenues rose 9.6% YoY in US$-terms to US$ 4,769mn in 1Q24 (Seker: US$ 4,739mn, Market Avg.: US$ 4,785mn). Quarterly EBITDA, on the other hand, slightly declined 3.4% YoY to US$ 626mn in 1Q24 (Seker: US$ 660mn, Market Avg.: US$ 690mn). We believe that the results may have a neutral impact on the stock's performance. The Company's operational results were slightly below expectations; on the other hand, deferred tax income and interest income from financial investments was able to relatively compensate for the negative impact of decreasing operating profitability due to rising operational and net financial expenses (Neutral).



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