TFG Istanbul Morning Report (TFG Istanbul Menkul Değerler )

• The losses at the BIST accrued to 7.10% yesterday, closing the day at 4186, and turnover of TRY 22.9bn, triggering double circuit breaks, and sending traders homes, all this before lunchtime! However, yesterday’s trades did not count!
• And due to the volatility and severe sell-offs at the BIST, accelerating especially in the wake of the devastating earthquake, that had many people ask- “Why did the stock-market even open?”
• The Borsa Istanbul announced that trading would be suspended for the next 4 days, and re-open to trading the day after Valentines, on February 15th, perhaps hoping that traders will bring back much need love and affection… As such, the BIST will open from the 4505 level, when trading resumes next week.
• Suspension of trading at the BIST last happened in 1999, due the catastrophic 7.4 earthquake that hit Istanbul, and trading re-opened 7 days later.
• As of yesterday’s close the TRY is trading flat against the USD at 18.83, and also flat against the Euro at 20.21, and the DXY is calm at 103.33. The 2yr rates fell slightly by 2bps to 10.87%, and the 10yr yields fell faster, by 26bps to 11.42%. The 5yr CDS rates rose by 2pts yesterday to 545.
• On the commodity front, Brent has risen to just above the 85 ticker, and both ounce and gram GOLD are trading flat at USD 1880 and TRY 1138, respectively.
• Federal Reserve Governor Christopher Waller said the US economy is adapting to higher interest rates, but more increases in borrowing costs are necessary to bring inflation back to the central bank’s 2% target.
• According to ECB Governing Council member Martins Kazaks, The Bank must lift interest rates to levels that “significantly” restrict the economy, who argued that hikes may need to persist beyond the next meeting in March, adding that there was no reason to pause or stop after March.
• Tech stocks in the U.S. plummeted yesterday as several Fed speakers opted on the hawkish side, stating that interest rates will need to keep rising as to quash inflation, with the Fed raising the interest rates up to 6%.
4Q22 FINANCIAL RESULTS:
• AYGAZ: Negative - We expect downbeat market reaction due to hefty EBITDA miss. posted TRY1901mn net profit, TRY25mn EBITDA and TRY11016mn sales in its 4Q22 financials. The net profit is 51% above the consensus mean thanks to EYAS and deferred tax gains, net sales is 10% above the consensus mean whereas the EBITDA is 75% below the expectations mainly due to higher than expected operating expenses which were up by 30% q/q and 115% y/y, related with the ramp-up period of Sendeo. Bulk gas sales volumes increased by 209% with the supplies made to industrial consumers.
• FROTO: Positive - Very strong operational numbers reflected all the way down to the bottom-line. FROTO posted TRY8290mn net profit, TRY7750mn EBITDA and TRY60939mn sales in its 4Q22 financials. The net profit is 43% above the consensus mean, net sales is in line with the consensus mean whereas the EBITDA is 22% above the consensus mean. The main reasons for the beat in net income were stronger than expected operating profit and higher than expected deferred tax income. Total sales volume increased by 54% y/y to around 150k units. The company announced 2023 guidance. Export expectation is 550-570k units (2022: 391k units), total production 630-660k units (2022: 466k units) and total sales 640-670k units (2022: 476k units). In addition, total auto market is expected to be 800-850k units (2022: 822kunits), Ford's domestic sales to be 90-100k units (2022: 85k units) and Capex target is EUR1-1.05bn (2022: EUR818mn). We think that stock will move positively due to better than expected overall performance.
• TATG: Negative - Disappointing margins, poor numbers both on EBITDA level and bottom-line. Tat Gida posted Net Profit of TRY67mn for 4Q22 which was 13% below expectation. EBITDA for 4Q22 was also 12% lower than consensus mean at TRY138mn while 4Q22 Net Sales of TRY1019mn exceeded forecasted mean by 3.2%. The EBITDA margin of 13.5% stood 2.4% lower than anticipated margin.
• TUPRS: Positive - Solid numbers despite slight top-line disappointment. The Company posted TRY17589mn net profit, TRY16636mn EBITDA and TRY116026mn sales in its 4Q22 financials. The net profit is 30% above the consensus mean to the higher than expected operating profit and deferred tax gains, net sales however is 9% below the expectations as volume was down by 9% y/y to 7.2mn tons due to lower fuel oil exports whereas the EBITDA is 9% above the consensus mean thanks to 2pp stronger than anticipated 14.3% EBITDA margin. Net refining margin jumped from USD9/bbl in 4Q21 to USD19/bbl in 4Q22.
NEWS FLOW:
• The Banking watchdog-BRSA, has warned Banks that “it would “not be beneficial” to pay dividends this year” despite the record breaking profits. However, the watchdog said it would consider individual requests from banks on payouts, depending on their capital adequacy ratio, allowing Banks to release 10-15% dividends. You can read our Bank dividend report at https://www.tfgistanbul.com/userfiles/files/Turkish%20Banks%20to%20Dividend%20it%20Out%20Even%20in%20a%20Storm%20-030223-TFG%20ISTANBUL.pdf
AGENDA:
• Please note that Trading in Turkish equities, futures and option contracts will resume on Feb. 15, thus we will not be publishing any new Morning Bulletins until the 15th, but some key headlines during our absence will be the Jobless Claims, ECB President Lagarde’s speech, BOE speech, University of Michigan consumer sentiment, and Fed’s Christopher Waller and Patrick Harker.

 TFG Istanbul Menkul Değerler A.Ş.
  www.tfgistanbul.com/arastirma-raporlar
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                  Yasal Uyarı
 
 Burada yer alan yatırım bilgi, yorum ve tavsiyeler yatırım danışmanlığı kapsamında değildir.Yatırım danışmanlığı hizmeti ; aracı kurumlar, portföy yönetim şirketleri, mevduat kabul etmeyen bankalar ile müşteri arasında imzalanacak yatırım danışmanlığı sözleşmesi çerçevesinde sunulmaktadır.Burada yer alan yorum ve tavsiyeler, yorum ve tavsiyede bulunanların kişisel görüşlerine dayanmaktadır.Bu görüşler mali durumunuz ile risk ve getiri tercihlerinize uygun olmayabılır.Bu nedenle, sadece burada yer alan bilgilere dayanılarak yatırım kararı verilmesi beklentilerinize uygun sonuçlar doğurmayabilir.