Turkish Equities: Fourth Quarter 2022 Earnings Preview (Gedik Yatırım)

Industrials: Amongst the industrials, we have a strong expectation for Tupras due
to strong mid-distillate product margins. In addition, we expect Enka Insaat to
announce strong financials thanks to its Eurobond portfolio, which had a negative
impact on the financials in the past quarters. Last but not least, despite of the lack
of real economic growth in Turkcell; we expect stronger results compared to
previous quarters, due to better operational margins thanks to pricing adjustments
on contract renewals and new customer additions on top of asset revaluations,
which should result in a strong net income growth. Food retailers should also have
a decent quarter thanks to strong top line activity, and all should generate free cash.
Amongst the firm Şok should particularly stand out due to its low multiples, along
with Migros thanks to its cash generation, and another company with low multiples
whose cash build up re-rating is not yet priced in the stock. In the automotive
sector, we expect strong EBITDA and net earnings growth in Dogus Otomotiv and
Turk Traktor due to the solid local demand. In the cement sector, we foresee
Cimsa’s YoY growth figures to be limited due to the asset sell-off of some of its grey
cement production facilities, while we expect Akcansa to post double-digit growth
figures backed by positive weather conditions. In the consumer durables sector,
we forecast strong YoY growth figures in Arcelik due to its acquisitions, while we
believe its margins might be lower. Indeks Bilgisayar post strong results as a
relatively stable Turkish Lira has resulted with increased demand. We expect a
particularly strong topline along with stable margins QoQ. The stock has reflected
Q4 expectations apparent from the uptrend that started in early October’22. Mobil
segment should lead topline growth.
On the weaker side, Eregli, Kardemir and Petkim, could disappoint due to the fact
that product sales prices did not recover on weak demand conditions and increased
production costs. Logo Software should also post soft results as we expect a less
favorable cost environment for the firm in masse on top of expected Q4 seasonality.
EBITDA ought to be pressured downward due to these reasons in the interim. Market
pricing seems to reflect these factors and the equity is fairly priced in retrospect to
our expectations. Finally, in Kordsa rising costs should reflect as lower margins for
the business along with macro uncertainty in the operating environment due to
globally distributed operations.
Banks should report strong results - Isbank, TSKB, Akbank among private
banks and Vakıfbank among state banks should lead: Despite our expectation of
a decline in TL core spreads due to recent regulations, profits should be largely
driven by core banking revenues thanks to strong gains from CPI linkers and strong
fee income. We believe Akbank and Vakıfbank should be reporting the best blend
of operating results, thanks to the added boost on the strong support from core
revenues. Despite the fact that Isbank's CPI linker yields were flat this quarter due
to the bank's CPI accounting policy, we expect the bank to stand out from its private
peers due to its strong participations income. With CPI linker portfolio contribution,
strong participation income and normalised provision expenses, we expect TSKB to
follow Isbank. On the other hand, we expect Yapı Kredi's strong CPI linker yields to
offset higher operating costs and provision expenses, which should be higher than
the sector, and that Yapı Kredi to have a softer bottom-line quarter.

 Gedik Yatırım Menkul Değerler A.Ş.
 www.gedik.com

                                     ***
                               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.