TFG Istanbul Morning Report (TFG Istanbul Menkul Değerler )

• The election’s overhang continued at the BIST on the opening of the new week as well, causing the gauge to close 2.42% lower at 4506, with a low turnover of TRY 40.6bn.
• AKSEN-thanks to its share buyback program, SASA and GARAN, managed to close the day in the positive territory, whereas ODAS, KRDMD and KOZAL were the most sold.
• Today, we expect a positive opening at the BIST.
• As of yesterday’s close, the TRY is trading flat at 19.47 against the USD, but has weakened to 21.47 against the Euro, and the DXY is flat at 101.72. On the Bonds’ side, the 2yr rates fell by a drastic 506bps to single digits at 8.51%, whereas the 10 yr. rates fell by a modest 2bps to 12.87%.
• On the commodity front, Brent is trading slightly lower at USD 75.20, whereas ounce and gram GOLD have lost some of their shimmer from yesterday, trading lower at USD 2015 and TRY 2015, respectively, ahead of tonight’s FOMC meeting, where the consensus is for a 25bps rate hike, but Powell’s post-decision speech will certainly carry more weight as to the future course of the FOMC.
• Türkiye April manufacturing PMI came in at 51.5, from the previous month’s reading of 50.9.
• Yesterday, President Erdogan announced the discovery of a new oil site near the border of Iraq, with a daily potential capacity of 100k barrels/day.
1Q23 FINANCIAL RESULTS:
• **STOCK OF THE DAY** EREGL: POSITIVE: Positive: Massive EBITDA beat + posted net profit vs loss expectation. 1Q23 Net sales and EBITDA stood at TRY26.3bn and TRY1.4bn, exceeding forecasts by 7.5% and 188%. The company posted a net profit of TRY90.3mn while the market expected a net loss of TRY16mn. EBITDA margin stood at 5.3% vs 2% consensus. We deem 1Q23 results positive.
• VESBE: POSITIVE: VESBE’s Q123 earnings report came as a pleasant surprise, with the company posting a net profit of TRY414mn, which is a staggering 111% above market expectations. The company's EBITDA also exceeded expectations, coming in at TRY792mn, which is 27% above expectations, and its EBITDA margin was realized at 8.1%, which is 90bp above expectations. These impressive figures show that Vesbe has turned a corner from its poor results in Q4 and is now in full bloom with a 156% q-q EBITDA growth.
• ISMEN: POSITIVE: ISMEN boasted a net profit of TRY1.4bn that exceeded market expectations by 38%, but yet implies 39% q-q decline.
• TURSG: POSITIVE: TURSG has exceeded market expectations with a net profit of TRY537mn, representing an increase of 53% over the mean market estimation. The company has also shown impressive growth, with net profit increasing by 27% q-q and 75% y-y.
• CCOLA: SLIGHTLY POSITIVE: CCOLA posted TRY1bn net profit in the first quarter, 7.5% above expectations. EBITDA was realized as TRY2.8bn, 6.9% above expectations, while EBITDA margin was realized as 18.7%, 1.4pp above market expectations. The EBITDA margin was down by 203bps to 18.7% in 1Q23, mainly due to the cycling of the favorable raw material cost base, higher energy and natural gas prices, and increased transportation expenses. However, resilient consumer demand in int markets and better pricing helped to offset the margin contraction partially. Volume in Turkey declined by 8.3%, offset by a 14.7% increase in international operations. We deem the results slightly positive due to better than expected margins.
• AKSA: NEUTRAL: AKSA unveiled a TRY570mn net gain in the primary quarter, exceeding expectations by a noteworthy 12%. EBITDA witnessed a decrease of 7% q-q, totaling TRY778mn, which is right on the money with the projected estimates. We expect that market's response will be relatively subdued, as the operational figures fall in line with expectations.
• KCHOL: NEUTRAL: Koc Holding's earnings shows a net profit of TRY16.7bn, consistent with the mean market estimation. Despite the net profit growing an impressive 150% y-y, it has witnessed a 40% decrease q-q. It is worth noting that the holding trades at a substantial 32% discount to its listed companies, compared to a 26% discount at the end of 2022.
• ISGYO: NEUTRAL: ISGYO's Q1 earnings report is right on the money, with the company posting a net profit of TRY13mn, in line with market expectations. On the other hand, the company's EBITDA has taken a leap forward, growing by an 12% q-q to reach TRY123mn, right on the nose with projections.
• YYLGD: NEUTRAL: The company delivered a net profit of 208mn, exceeding market expectations by 15%. EBITDA amounted to TRY320mn, meeting the consensus estimate. However, the EBITDA margin was a mere 8%, missing the mark by 90bps.
• AGESA:NEUTRAL: Agesa posted TRY204mn net profit, 10% below expectations. The performance resulted in a net income increase of %15 q-q.
• YKSLN: NEGATIVE: Owing to weak demand in the sector, downward pressure on sales prices, rise in production costs and wage hike Yukselen posted disappointing financials. Revenue was in line with our forecast at TRY328mn while EBITDA and net profit were below our expectations at TRY 33mn and TRY21mn respectively. Our expectations for net sales, EBITDA and net profit were TRY320mn, TRY50mn and TRY40mn respectively. EBITDA margin stood at 10% vs 16% estimate. We deem 1Q23 results as negative however considering the weak sector dynamics at the moment we consider the quarter as a survivor as it shows recovery compared to 3Q22. We expect improvement 3Q23 onwards as the company’s shift in product portfolio materializes, with completion of dilovasi steel center and recovery in the sector dynamics post-election.
• ANSGR: NEGATIVE: ANSGR's Q1 earnings report came as a disappointment, with the company posting a net loss of TRY117mn, which was a stark contrast to market expectations of a TRY28mn net profit. This underperformance resulted in a net income decline of 118% q-q and a staggering 160% decline y-y.
• KOZAL: NEGATIVE: Kozal reported a first-quarter net profit of TRY1.38bn, which surpassed market expectations by 19%. The company's real estate sales income and mutual fund valuation income did provide a glimmer of hope, but the EBITDA of TRY352mn was a bitter pill to swallow, failing to meet market projections by a staggering 58%. The EBITDA margin of 21.6% was simply a drop in the ocean compared to the expected 47.2%. We expect negative market reaction due to not up to par financial results.
NEWS FLOW:
• HALKB (POSITIVE): Disclosed that the Court of Appeals in the US has ruled in favour of the Bank, and has dropped the civil lawsuit demanding compensation, in line with the April 19th decision of the US Supreme Court, and that the legal process regarding the criminal case will continue at the Court of Appeals.
• TKNSA: Disclosed that it has been fined TRY 38.2mn by the Competition Board.
AGENDA:
• On the local front today, the April CPI figures will be released (EST: 2.60% mm/44.10% yy), whereas on the US front, the FOMC will be releasing its interest rate decision, as well as the ADP employment change and April ISM figures.
 
 TFG Istanbul Menkul Değerler A.Ş.
  www.tfgistanbul.com/arastirma-raporlar
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