TFG Istanbul Morning Report (TFG Istanbul Menkul Değerler )

AVIATION STOCKS LIFT BIST HIGHER
" The BIST100 closed yesterday on a gain of 0.94% at 7470, but on a relatively lower turnover of TRY 126bn, as it appears that some investors are becoming increasingly nervous of the sharp rise since the May elections and feel that a strong correction is right around the corner. However, as the saying goes "If it ain't broke, don't fix it," and until there is an alternative to the high-return BIST, think everyone knows what the other alternative could be as everyone on the street is talking about its possibility, yes the "Super-Bond," we still feel that the BIST has room to go upwards, especially in light of the increasing inflation rate, which also increases stock target prices, and thus to the BIST. Yesterday, the Transportation stocks were the most bought, rising by 7.35% whereas the Banks took a breather and lagged the benchmark, and the Energy stocks faced profit-taking, falling by 1.27%. Now have a look at our Movers & Shakers list, PGSUS, THYAO and PETKM were the most bought, whereas SASA was punished by investors for its lacklustre quarterly results and was followed by HEKTS and ODAS.
" Today, we expect to see a slightly positive opening.
" As of yesterday's close, the TRY is trading a tad weaker against the USD at 27.02, but flat against the Euro at 29.69, against the Euro, whereas the DXY is higher at 102.28. The 2yr Bond rates rose by 39bps to 16.05%, however the 10yr yields went southwards by 16 bps to 18.43%. On the Commodity front, Brent is trading slightly lower at USD 85.23, and ounce and gram GOLD prices are slightly lower at USD 1934 and TRY 1680, respectively. New York Fed President, John Williams stated yesterday that he sees the need to keep US monetary policy restrictive for some time and said interest rate cuts may be warranted next year if inflation slows.
" Italy has agreed to impose a 40% tax for 2023 only on the profits on Banks.
AGENDA:
" There are no major macro news flow on the local front, whereas Germany will be releasing its PPI and CPI figures today.
CORPORATE NEWS:
" ISCTR - NEGATIVE: Isbank recorded TRY18.6bn net income for 2Q23, well above market expectations of TRY13.2bn and TFG Istanbul estimate of TRY14bn. Increase in net profit was 44% q-q and 28%y-y. Higher earnings solely stem from the TRY11bn subsidiary income that doubled our expectation. Net operating income before subsidiary gains on the other hand, lagged our forecast by 10%. The TRY loan-deposit spread of the banked plunged by 5.7pp, which is the steepest slide among peers for 2Q23, down to -1.1%. Net interest income went down by 24% q-q and 19% y-y mainly due to worsening TRY core spread. Net interest margin adjusted for swap cost decreased to 4.3% in the last quarter from 6.4% a quarter earlier. Net fees and commissions went yp by 94% y-y, while opex incereased by 80%. The Bank's return on equity stood at 31.7% and the target for the end of 2023 is maintained at the level of 30%. Adjusted for the Bank's free provision balance of TRY6.5bn, return on equity stood at 33.6% as of the end of 1H2023. The Bank's target for the net interest margin is to maintain it at 5 percent the end of 2023. The target of 80% increase in net fees and commissions income and in operating expenses were both updated to around 100%.
" DESA - NEUTRAL: In 2Q23 DESA posted revenue of TRY430mn, the same amount posted in 1Q23, with a y-y increase of 59%. The Company reached TRY98mn EBITDA up by 71% y-y. EBITDA margin in 2Q23 realized as 22.8% which is 150bp higher that that of 2Q22. 2Q23 top-line and EBITDA are 18% and 38% below our forecasts of TRY508mn and TRY135mn; however net income beats out expectation by 21% predominantly on higher-than-expected net financial income thanks to the Company's FX denominated deposits appreciation against TRY. Improvement in gross margin to 45.9% vs. 38.8% a year earlier was mainly driven by the Company's ability to reflect the increase in COGS to consumers. On the other hand, during the compared periods opex went up more than sales and limited EBITDA margin improvement. We expect the 2H23 to show considerable recovery in terms of profitability as prices adjust to costs and sales volume increases and maintain our 1 year forward looking target price of TRY21.44.
" ENJSA: NEGATIVE: The company posted 2Q23 net sales and and EBITDA of TRY29.5bn and TRY3.9bn respectively, net sales were 7% below expectations while EBITDA came out disappointingly 18% below consensus. Net Profit exceeded estimated by 38% at TRY2bn. EBITDA margin stood at 13.1% vs 14.9% estimated.
" KMPR: POSITIVE: The company posted positive 2Q23 financials with net sales, EBITDA and net profit exceeding expectations by 8%, 41% and 78% respectively. EBITDA margin for the quarter stood at 17.7% vs 13.5% estimated margin. Net sales and EBITDA came out at TRY2bn and TRY350mn respectively while net profit for the quarter stood at TRY447mn.
" CCOLA: POSITIVE - 2Q23 financials came out positive with EBITDA and net profit exceeding expectations by 5% and 16% at TRY5bn and TRY2.4bn respectively. Net sales stood in line with forecasted at TRY23.3bn. EBITDA margin also came out above consensus at 21.5% vs forecasted was 20%.
" AGESA - NEUTRAL: Net income of TRY550mn is in line with analyst expectations and up by 170% q-q and 155% y-y.
" AKGRT- NEUTRAL: Net income of TRY454mn is 6% lower than analyst expectations and up by 246% q-q.
" AKCNS - POSITIVE: Akcansa reported TRY3.32bn revenue, pretty much inline with analyst expectations with significant improvement in EBITDA margin from 21% in 1Q23 and 18.6% 2Q22 to 29.5%. The Company reported net income of TRY885mn 11.7% higher than analyst expectations. Besides EBITDA imropvement thanks to FX gainz increase in net income realized as up by 284% y-y and 32% q-q.
" BRISA - POSITIVE: Brisa's TRY603mn net profit and TRY988mn EBITDA surpassed the consensus by 8% and 5% respectively. The 22% EBITDA margin is the highest ever while being 5pp higher as compared to the same period of last year and 110bp better than expectations. 7.7x current EV/EBITDA for a company expanding its operational earnings above inflation looks appealing to us.
" CIMSA - POSITIVE: Cimsa reported TRY3.05bn revenue, pretty much inline with analyst expectations with significant improvement in EBITDA margin from 13% in 2Q22 and 21.2% 1Q23 to 24.3%. The Company reported net income of TRY1bn 63% higher than analyst expectations. Besides EBITDA improvement, increase in net income realized as up by 17.3% y-y and 300% q-q thanks to hard currency appreciation.
" KORDS - NEUTRAL/NEGATIVE: While Kordsa's 2Q23 EBITDA came in at TRY378mn that is parallel to expectations, the TRY83mn net loss vs +TRY38mn consensus was totally unexpected. Although the pre-tax profit was a satisfactory TRY81mn, sizeable tax burden of TRY121mn boosted by deferred tax expenses pulled down the bottom-line into the red. Still it is worth to note that the EBITDA margin of 7.9%, while being in-line with expectations is the lowest figure since 2013. All key P/L indicators including revenues, operational earnings and bottom-line are substantially lower both q-q and y-y. We did not like the results. KORDS valuation looks stretched at 39x P/E and 18x EV/EBITDA.
" ARCLK: The penalty of TRY365.4mn given by the Competition Authority to The Company's 100% subsidiary Arçelik Pazarlama, will be paid with 25% discount for early payment as TRY274mn.


 TFG Istanbul Menkul Değerler A.Ş.
  www.tfgistanbul.com/arastirma-raporlar
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