Market Watch (Şeker Yatırım)

Market Watch - Wednesday, November 6, 2024

Outlook:

The BIST 100 Index started Tuesday on a positive note but encountered sales at the opening. The Benchmark Index attempted a recovery later, but closed the day at 8,618.57, down 0.52%. While the Industrial Index lost 0.33% of its value, the Banking Index continued its negative divergence, down 1.56%. The BIST100 tested its new low of the past 8 months yesterday, and the technical outlook is gradually weakening. The postponement of interest rate cut expectations to 2025 after the latest inflation print, and expectations that the negative effects of the high interest rate environment may continue, are pressuring the BIST. The high return potential of alternative income instruments also weakens interest in the bourse. With the US elections being followed in global markets, the U.S. stock markets closed the day with increases of over 1% yesterday, while European stock markets were mixed. Although the counting continues, unofficial results indicate that Donald Trump has won, and the markets have begun to price-in a Trump victory. This morning, the U.S. futures are positive, German DAX futures are negative, and Asian stock markets are mixed. We expect election developments to continue impacting pricing. The VIOP30 Index gained 0.32% in the evening session. Locally, we expect the Benchmark Index to start Wednesday on an uptrend with reaction purchases, but to continue its downward fluctuating course thereafter if selling pressure is not met with purchases. SUPPORT: 8,500 - 8,400 RESISTANCE: 8,750 - 8,850.
Money Market:
The Lira was positive yesterday, gaining 0.10% against the USD to close at 34.3125. The currency also appreciated by 0.08% against a basket of $0.50 and €0.50. Meanwhile, the local fixed income markets were negative. The ten-year benchmark bond yield fluctuated between a range of 31.10%-31.25%, closing the day at 31.23%, up 20 bps from the previous close.
Company News:
Aksa Energy (AKSEN.TI; OP) is set to announce its 3Q24 financials today after the market close.
Within the scope of the share buyback program, Alarko Holding (ALARK.TI; N/C) has announced that 179,500 shares were bought back within a price range of TRY 84,00 - TRY 81,75 (weighted average TRY 83,51) per share on 05 November 2024 whereby ALARK shares owned by the Company have reached 8,226,343 TL (1.891% of total share capital).
Within the scope of the share buyback program, Bim (BIMAS.TI; OP) has announced that 100,000 shares were bought back on 05 November 2024 whereby BIMAS shares owned by the Company have reached 10,717,000 units (1.7650% of total share capital) (Positive).

According to inflation accounting provisions (IAS-29), Ford Otosan (FROTO.TI; OP) announced a net profit of TRY 8,562mn for 3Q24, marking a substantial 57.4% YoY decline (3Q23: TRY 20,116mn). The primary drivers behind this significant drop in profitability compared to the same period last year are as follows: o Relatively stagnant EUR/TRY exchange rate, o Decline in domestic sales volumes, o Rising production cost pressures attributable to an inflationary environment, o Escalating finance expenses stemming from deferred purchases, o Increased interest and FX rate expenses, leading to a considerable rise in net financial costs (3Q23: TRY -938.6mn, 3Q24: TRY -5,106mn). Notably, a monetary gain of TRY 5,329mn, (3Q23: TRY 39mn), along with income generated from investment activities, served as positive factors bolstering net profit in 3Q24.
Ford Otosan's total sales units in 3Q24 rose by 13% YoY and reached 161,290 units (3Q23: 143,254 units). Domestic sales revenue, however, declined by 24% YoY to TRY 29,572mn in 3Q24 (3Q23: TRY 39,162mn) due to a contraction in domestic LCV, and PC sales coupled with pricing pressures within the market. Domestic sales volumes also saw a YoY decrease of 15%, reaching 25,789 units (3Q23: 30,360 units), impacted by sustained competitive pricing, delays in the production transition of new Courier models, and reduced LCV & HCV sales. In contrast, export volumes rose by 20% YoY, totaling 135,501 units in 3Q24 (3Q23: 112,894 units). Despite a stable FX, the positive product mix, support from Craiova Plant's international sales, and accelerated export shipments of renewed models contributed to a 15% YoY increase in export revenue, which reached TRY 112,157mn in 3Q24 (3Q23: TRY 97,933mn). Consequently, the company's overall sales revenue grew by 3% YoY to TRY 141,729mn in 3Q24.

Ford Otosan reported an EBITDA of TRY 10,370mn in 3Q24, reflecting a 55% YoY decline (3Q23: TRY 23,170mn). Due to lower domestic sales and heightened CoGS, the GP margin contracted by 11.0 pp to 9.5%. Likewise, the EBITDA margin fell by 9.6 pp from 3Q23, standing at 7.3% in 3Q24 due to reduced operational profitability.
FY2024 expectations: Ford Otosan has raised its 2024 domestic retail market forecast to a range of 1,100-1,200k units (Previous: 1,000-1,100k). The company now expects domestic retail sales volumes in the range of 105-115k units (Previous: 100-110k). Its export volume forecast has been revised to 530-580k units (Previous: 560-610k) (Romania: 210-230k units, Turkey: 320-350k units (Previous: 350-380k)). For wholesale volume in 2024, Ford Otosan anticipates a range of 635-695k units (Previous: 660-720k). The company's total production forecast has also been revised to 630-680k units (Previous: 650-700k) (Romania plant production forecast: 250-270k units, Turkey: 380-410k units (Previous: 400-430k)). Additionally, the company has adjusted its 2024 CapEx target to EUR 700-800mn (Previous: EUR 900-1,000mn), with allocations for General Investments at EUR 130-150mn (Previous: EUR 170-190mn) and Product Related Investments at EUR 570-650mn (Previous: EUR 730-810mn) (Slightly Negative).
Migros (MGROS.TI; OP) is to distribute advance gross dividends of TL 520,000,000 to be fully paid in cash from the net profit for the interim period 01.01.2024-30.09.2024 according to the Company's consolidated financial statements, after allocating legal reserves. The Company is to pay an advance dividend of TL 2.8720676 gross=net for shares at the nominal value of TL 1 for shareholders who are full taxpayer institutions, or limited taxpayer institutions obtaining dividends through a workplace or permanent representatives in Turkey, and pay an advance gross dividend of TL 2.8720676 and net dividend of TL 2.5848608 (by deducting 10% withholding tax) cash for shares at the nominal value of TL 1 for its other shareholders. The advance dividend distribution commences on 13 November 2024. Migros's Board of Directors has also decided to offset the advance dividends to be distributed from those resources that can be subject to dividend distribution in the annual financial statements for the fiscal year 2024 in case of insufficient profit or loss recorded at the end of the fiscal year 2024. Based on the closing price as of November 05, 2024, the cash dividend per share implies a gross dividend yield of 0.7%.
Migros (MGROS.TI; OP) has announced a net profit of TRY 3,157mn for 3Q24, including IAS-29 inflation accounting effects (3Q23: TRY 5,059mn net profit). Despite the monetary gains of 3Q24, the operating loss resulting from rising operating expenses, declining monetary gains compared to 3Q24, and high interest expense on term purchases led to a quarterly net profit of TRY 3,157, down 37.6% YoY.
On the sales revenue side, the Company saw 12% YoY top-line growth (Inc. IAS 29) and TRY 74,487mn of net sales in 3Q24 (3Q23: TRY 66,322mn). In 3Q24, with the rising number of stores & growth of sales area, and the positive contribution of online sales channels (share of total sales (exc. tobacco & alcohol) in 3Q24: 18.2%), net sales revenue rose by 12% YoY. With growth in online sales channels, the number of online stores (9M24: 1,053 stores, +236 YoY) and successful store operations, 3Q24's net sales revenue grew 12% YoY.
Considering the Company's FMCG market share development; in the modern FMCG market, it had a 16.9% (9M23: 16.3%) market share in 9M24, and 9.8% (9M23: 9.4%) of the total FMCG market thanks to price investments, and its omni & multi format growth strategy. In addition, its store number rose by 345 compared to 9M23 to 3,550 stores in total in 9M24. Sales area rose by 5.7% YoY.
The Company announced an EBITDA (Inc. IAS 29) of TRY 5,685mn, up 693% YoY in 3Q24 (3Q23: TRY 717mn). The EBITDA margin rose from 1.1% to 7.6% in 3Q24. The Company's gross profit margin reached 24.1% in 3Q24.
FY2024 expectations: The Company has revised up its 2024 guidance. Migros expects the net sales growth estimate of 10-12% (Previous: ~10%) (Inc. IAS 29), and it expects its EBITDA margin around 5.0% (Previous: 4.5%-5.0%). At the same time, it targets opening new stores to ~350 overall by the end of 2024, and plans for TRY 8,000mn of investment expenditure. The Company also expects its net sales growth estimate of +76-78% (Previous: +75%) (Exc. IAS 29), and it expects its EBITDA margin growth estimate of ~9.0% (Previous: ~8.0%-8.5%) (Positive).
Sabanci Holding (SAHOL.TI; OP) is set to announce its 3Q24 financials today after the market close.
Within the scope of the share buyback program, TAB Gıda (TABGD.TI; N/C) has announced that 77,500 shares were bought back on 05 November 2024 whereby TABGD shares owned by the Company have reached 191,245 units (0.0732% of total share capital).
Within the scope of the share buyback program, Tekfen Holding (TKFEN.TI; N/C) has announced that 270,003 shares were bought back within a price range of TRY 72,55 - TRY 74,50 (weighted average TRY 73,56) per share on 05 November 2024, whereby TKFEN shares owned by the Company have reached 5,486,919 TL (1.4803% of total share capital).
According to its inflation-adjusted (IAS-29 impact) financials, Tupras achieved a net profit of TRY 7,744mn in 3Q24 (2Q23: TRY 9,903mn, -22%). Our expectation was TRY 6,681mn, and the market expectation was for a profit of TRY 6,235mn. Despite sales revenue printing below our expectation, lower-than-expected costs and expenses led to better operational profitability. The net profit was supported by TRY 2,451mn in net financial income, while a monetary loss of TRY 3,049mn was a pressure point. In 3Q24, a tax expense of TRY 3,609mn was recorded.
With the energy efficiency provided by the completion of RUP maintenance, the capacity utilization rate (CUR) reached 101%, the highest level since the 3Q of 2019 (3Q23: 99%), and production reached 7.3mn tons (3Q23: 7mn tons). This quarter saw the highest gasoline sales of all time in tonnage terms with the increase in domestic demand. Sales volume in 3Q24 was 8.1mn tons with a 4% decrease YoY. Including the IAS-29 impact, the company's net sales revenues were TRY 196,223mn in 3Q24, with a 33% decline compared to 3Q23, somewhat below our expectation of TRY 211,719mn and the market expectation of TRY 209,177mn.
Middle distillate product margins declined compared to last year due to high inventory levels linked to high capacity utilization in global refineries in 3Q24. The diesel margin was $15.7/bbl in 3Q24 (2Q24: $18.4; 3Q23: $31.5), while the jet fuel margin was $13.5/bbl (2Q24: $16.3; 3Q23: $29.9). The gasoline product margin fell to $14.1/bbl from $21.5/bbl in 2Q24 and $27.8/bbl in 3Q23. Meanwhile, FOEB product margins improved on a quarterly basis in 3Q24 to -$12.5/bbl (2Q24: -USD13.2; 3Q23: -USD8.2) due to ongoing supply constraints.
Including the TMS-29 impact, EBITDA reached TRY 14,560mn in 3Q24, exceeding our expectation of TRY 13,552mn and the market's expectation of TRY 13,097mn (3Q23: TRY 47,650mn, -69% YoY). The EBITDA margin was 7.4% (3Q23: 16.3%).
Strong net cash position... Despite the TRY 23bn dividend payment and the USD 700mn Eurobond payment made this quarter, Tupras's net cash position increased to TRY +58bn at the end of 3Q24 from TRY +55bn at the end of 2Q24. The company made a second dividend payment of net TRY 10.74 (gross TRY 11.94) per share on September 27, 2024, to be covered by previous years' profits. The dividend yield was 7.6%.
2024 expectations: Tupras maintained its Refining Margin expectation at approximately USD12/bbl for 2024. Additionally, it maintained expectations of an 85-90% capacity utilization rate, approximately 26mn tons of production, an approximately 30mn ton sales volume, and an expected Refining Investment Expenditure of approximately USD 400mn.

Turk Telekom (TTKOM.TI; OP) is set to announce its 3Q24 financials today after the market close. We anticipate quarterly net profit of TRY 1,943mn while the market expectation is for a TRY 2,513mn. We expect 3Q24 net sales revenues and EBITDA to reach TRY 39,090mn and TRY 15,321mn, respectively. The market's respective quarterly net sales and EBITDA average expectations are TRY 38,224mn and TRY 14,909mn.
VakifBank (VAKBN.TI; MP) is expected to announce its 3Q24 earnings results today after the market close. We expect the highest earnings growth for VakifBank (+12.7%) among coverage banks, with the support of a strong recovery in TL loan-deposit spreads. Our 3Q24 net income estimate is TRY8,081mn, up 13% QoQ, and down 15% YoY, and a quarterly ROAE of 17.6%. The Research Turkey market consensus is TRY7,896mn (Positive).



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