TFG Istanbul Morning Report (TFG Istanbul Menkul Değerler )

Argentine Rate Hike and Russia Central Bank Calls for Emergency Meeting
" Despite a strong opening to the week, peaking at 7869, the BIST faced profit-takings towards the end of the day, closing just 0.30% higher at 7737, with a turnover of TRY 169bn, primarily after the shock win in Argentina by the far-right libertarian Javier Milei, who wants to axe the central banks and dollarize the economy, coupled with the US 10yr rates jumping over the 4.20 level.
" Accordingly, Argentina's central bank stated that it will raise the benchmark interests to 118% from the previous 97%, adding that the country's currency will be devalued to 350 pesos per dollar in the aftermath of the shock election results. This move, despite scaring the markets, is indeed positive in the wake of the 116% inflation rate, as it will offer real interest rate gains to investors. No impact on TRY.
" The cherry on the cake came shortly afterwards, after the Russian central banks called for an emergency meeting after the recent slump of the Ruble to a near 17-month low, past the 100 level.
" The Iron & Steel stocks levied the BIST higher, whereas the Banks and the Transportation stocks diverged negatively from their peers. Thus, KRDMD, TAVHL and EREGL were the most bought blue chip stocks, as opposed to TOASO, SASA and KOZAA/KOZAL.
" The TRY is currently trading a tad weaker at 27.06 against the USD but continuing to trade flat against the Euro at 29.51, as the DXY is trading above the 103 level at 103.12, as of print. And on the Bonds' side, both the 2yr and 10yr yields closed 22bps and 49bps higher to 17.30% and 18.93%, respectively.
" On the commodity front, Brent is trading at USD 85.81, while ounce and gram GOLD are USD 1909 and TRY 1660, respectively.
" The Government has raised the price of sugar by 30%, which may reflect positively onto KAYSE and KTSKR.
" Today, Vice President Cevdet Yilmaz will be hearing presentations from the various economic groups regarding ways to improve investments at the Investment Improvement and Enhancement Coordination Meeting.
" We expect a positive opening at the BIST, parallel to the global markets amid China's lowering of its interest rates.
AGENDA:
" On the local front, Home Sales figures will be announced, Prev. 83.6k y/y and -44.4% y/y, whereas our international colleagues will be following the China July IP figures, the ZEW Index from Germany, and the US July Retail Sales figures.
2Q23 FINANCIAL RESULTS
" PGSUS: POSITIVE: Pegasus's EBITDA and net profit for 2Q23 surpassed analyst expectations by 21% and 52% respectively. The 31% EBITDA margin (excl. adjustments) surpassed the forecasts by 4pp and points to the highest ever for 2Q. Pegasus' domestic market share in terms of pax came down from 28% to 25% y-y, higher margin international passengers' mshare on the other hand climbed from 15% to 17%. Ancillary revenue (in-flight meal etc) per passenger jumped from Eur19.5 to Eur26.2 in 2Q, y-y. The company which was planning to hedge 29% of fuel costs for 2023, currently opts to hedge 48% corresponding to Brent price equivalent range of US$64-84. As for the guidances: The company envisages slower growth for 2H23 due to base effect, while maintaining the 30% EBITDA margin guidance. We expect strong opening followed by profit taking for Pegasus shares. Trailing P/E and EV/EBITDA are both at around 9x.
" TTKOM: POSITIVE: Turk Telekom posted strong numbers with 10% higher than expected EBITDA at TRY5.96bn and a loss that is half that of consensus at -TRY601mn. The 33% EBITDA margin surpassed the forecast by 2pp. We expect a positive reaction on the stock. Yet, it is worth mentioning that the positive surprise on the bottom-line stemmed from deferred tax reversal, without which the net loss could have been deeper than expected TRY1.86bn due to a surge in financial expenses driven by FX losses. The net debt jumped 23% q-q to TRY45bn, while the net debt/EBITDA of 2.2x hovers around all time high levels. The stock trades at 5.8x trailing EV/EBITDA, which is not demanding.
" KLMSN: SLIGHTLY NEGATIVE: Klimasan's TRY92mn EBITDA shows a major improvement as compared to the 1Q23 EBITDA loss of TRY2mn. The TRY69mn net profit also shows a big jump vs TRY4mn a quarter earlier. Yet EBITDA was 31% lower than our more upbeat estimate whereas EBITDA margin of 10.4% however came out in line with our forecast. The bottom-line could have been TRY92mn instead of the actual TRY69mn without deferred tax expenses. We expect a somewhat negative reaction to these numbers.
" IZENR: Shares will start trading at the BIST as of 16 August, 2023.
CORPORATE NEWS:
" ANHYT: Disclosed that its 7mth premiums rose by 119% to TRY 3.5bn.

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