TFG Istanbul Morning Report (TFG Istanbul Menkul Değerler )

" The BIST continued its gains from the previous day, by adding another 1.66% to close at 6856, with a handsome turnover of TRY 145bn, led by the gains in the Banks, Transportation and REITs. The Banks outperformed their peers, encouraged by the results from AKBNK, as well as the reactionary gains in YKBNK after the previous day's sales due to the parent company KCHOL's discounted stake sale. Today, we expect a positive opening at the BIST.
" AKBNK, TCELL and GARAN were the most bought blue-chips, whereas KOZAA, KOZAL and ASELS faced profit-takings. We also observed the continued profit-taking in the Energy stocks, especially renewables, however, we may soon see the exodus create a new potential for new entrants.
" As of yesterday's close, the TRY is trading flat at 26.96 against the USD, but weaker against the Euro at 26.96, whereas the DXY is higher as of print at 101.76.
" On the Bonds' side, both the 2yr and 10yr rates rose by 37bps and 131bps to 16.21% and 18.58%, respectively.
" We think the CBRT Governor Gaye Erkan had an outstanding performance in yesterday's Inflation Report meeting. She had strong eye contact with the audience, she thinks fast, answers flawlessly and in-all she had full dominance in the room. Confronting the reality was relieving as one should accept the problems to bring solutions. Inflation forecasts have been upped from 22% to 58% for 2023, from 8.8% to 33% for 2024 and from a mere 5% to 15% for 2025. The Governor stated that their decisions will be driven by science and rate hikes as well as quantitative tightening will prevail. The most important point was her comments on dynamic optimization and binding constraint. The Governor mentioned TRY deposit rates as the binding constraint. Interest rates can be controlled simply by pulling down the deposit rates. While she seemed to be happy for discovering this binding constraint and aims to build a strategy around it, we think it should be more profoundly evaluated. Causing a slide in TRY deposit rates that hover around 30% could be counterproductive especially when inflation forecasts are upped to as high as 60% at the peak by the Central Bank for this year. Households and corporates would be unwilling to convert their under-the-mattress FX holdings to TRY deposits at negative interest rates. The CBRT also announced the appointment of 3 new assistant Governors, which we deem is in-line with the normalization of the economic policies.
" The ECB raised it policy rate by 25bps to 3.75%, adding that inflation is set to remain "too high for too long." Though it did not share any forward guidance about its next moves, it did raise the possibility of a pause in rate hikes in September, thus leading to the depreciation of the Euro against the major currencies.
For the week ending on July 21st
Foreign investors purchased US$128.4mn of equities during the week ending on July 21st. This has been the seventh consecutive week with net inflows summing up to a total of US$1.61bn triggered by rational policy rhetoric of the new economy administration. The foreign share in the BIST free float has been experiencing a rebound after elections; however it went down to 29.4% from 29.5% a week earlier. Though it still has a long way to go to what it was three years ago. Bond side on the other hand tells a totally different story. Non-residents sold US$6.8mn of TRY bonds in the same week, pulling down the foreign share in bond market to 0.63% from 0.68% a week ago.
AGENDA:
" On the local front, the Trade Balance and Economic Confidence Level will be released, whereas the BOJ is the last of the major CBs to announce it policy rate today, and elsewhere, Germany will release its CPI figures, and the US will release its core PCE numbers for June.

COMPANY NEWS:
" GARAN: Positive - Even higher than our competition topping TRY17.05bn net profit expectation and 15% above the TRY16bn consensus, Garanti posted an outstanding TRY18.5bn bottom-line in its 2Q23 financials. We attribute the divergence from our forecast as stronger recoveries. More so than that is the bank has managed to deliver a solid 43% quarterly annualized ROE despite keeping its CPI base for linkers stable at 35% (Akbank recorded the best earnings evolution as it has upped its CPI assumption from 35% to 40%). A major indicator that impressed us about Garanti is the TRY core spread which is still not in the red. Garanti could be the only bank out there with a positive TRY loan-deposit spread for this quarter. The core spread has slipped 1.7pp, which is fairly limited as compared to over 3pp shrinkages of YKBNK and AKBNK, down to +2.4%. Given that the worst is over on the spread side of the story, Garanti is likely to pass this depressed-margin era with no major damage.
" FROTO: Neutral - The company posted positive results for the quarter with EBITDA exceeding expectations by 7% at TRY8.5bn and net profit 5% above forecasted at TRY6.7bn. Net sales however stood in line with consensus at TRY73.6bn. 2Q23 EBITDA margin was also 11.5% vs estimated 10.7% .
" TATGD: Negative - The company posted disappointing 2Q23 financials, Net sales stood at TRY1.0bn, 8% below consensus. EBITDA and net profit also lagged expectation by 34% and 12% respectively. EBITDA stood at TRY88.7mn while net profit stood at TRY76.1mn. EBITDA margin was 8.8% vs estimated 12.2%.
" TTRAK: Positive - 2Q23 financial results came out positive thanks to top-line growth along with improved margins. EBITDA and net profit exceeded expectations and net sales in line with forecasts. Net sales stood at TRY10.8bn while EBITDA and net profit came out at TRY2.69bn and TRY2.18bn respectively. EBITDA and net profit exceeded consensus by 31% and 27% respectively. EBITDA margin also came in 551bps higher than forecasted at 24.92%.
" NETAS: The Company has received an order of US$ 2.87mn for HGW Wifi5 and US$ 2.67mn for VDSL Wifi5 modem from Türk Telekomünikasyon A.Ş. The amount corresponds to 12.7% of the revenue of its latest financials.
" SUNTK: Application has been made to the Capital Markets Board yesterday for the approval of the Issuance Document regarding the250% rate of bonus issue with a nominal value of TRY339mn due to the increase of the Company's issued capital from TRY135.6mn to TRY474.6mn within the registered capital ceiling of TRY600mn by covering TRY339mn from the Emission Premium account.


 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.