Market Watch (Şeker Yatırım)

The BIST-100 Index started Wednesday on a positive trend, testing its new historical peak of 4,426, and returning its gains with profit sales to close the day at 4,360.96, up 0.02%. The Banking Index diverged negatively, down 1.17%. While recovery in global risk-taking appetite lost momentum, global stock markets closed the day down in general amid rising sales after the BIST close. In the short term, even though the uptrend in global stock markets continues, it is expected to present a selling opportunity, and the downtrend seems set to continue in the medium term due to recession concerns. The VIX Index is hovering above 26 indicating that volatility in the U.S. Stock Markets has risen again and that selling pressure will gain strength. While the BIST is testing new peak levels after strong balance sheet announcements, we expect profit sales due to the conclusion of the balance sheet period. However, the uptrend should continue with decreases presenting buying opportunities, since the BIST is currently the only alternative among TRY-based assets in a high inflation environment. If the CPI inflation data to be announced in the USA today surpasses expectations, it may cause strong sales in stock markets and risky assets with the expectation that the Fed will continue to increase interest rates strongly, and for longer. After the data emerges, volatility in global markets is likely to increase. The VIOP-30 Index closed the evening session down 0.60%. Relative to the BIST close, the U.S. futures were observing decreases of between 1-1.5%, while German futures were slightly negative. Asian Stock Exchanges have a selling trend in parallel with the U.S. Stock Markets. Locally, the BIST-100 Index is expected to start with a negative trend that may continue throughout the day. SUPPORT: 4,331 - 4,297 RESISTANCE: 4,426 - 4,471.
Money Market:
The Lira was positive yesterday, gaining 0.02% compared to the USD to close to 18.5897. In addition, the currency appreciated by 0.20% against the basket composed of $0.50 and €0.50. Meanwhile, the local fixed income markets were negative. The ten-year benchmark bond was traded within a tight range of 12.33%-12.42%, ending the day at a high of 12.42%, 14 bps above its previous closing.
Headlines:
On the macroeconomic data front, labor force statistics for September will be announced today. We expect a gradual reflection of slowing economic activity on the labor market, and a rise in the unemployment rate. Our detailed analysis after the data emerges will be published within the day.
Company News:
Dogus Otomotiv (DOAS.TI; MP) has disclosed a net profit of TRY 2,698mn in 3Q22 (3Q21: TRY 370mn net profit), above the market expectation of TRY 1,681mn and our expectation of a TRY 1,751mn net profit, up 629.3% YoY. In this period, the Company announced a strong net profit figure with the positive effect of higher operational profitability, successful pricing strategy and a TRY 162mn gain written by equity participations from affiliates. In 3Q22, the Company's net finance expenses slightly decreased to TRY 146,4mn despite the negative impact of currency fluctuations on funding costs (3Q21: TRY -159.3mn, -8% YoY). On the other hand, current period tax expenses in this quarter were the factor that put downward pressure on profitability (3Q22: TRY -548mn TL, 3Q21: TRY -115.6mn TL, +374% YoY).
The Company's wholesale volume rose 19.4% YoY in 3Q22 (3Q21: 19,881 units, 3Q22: 23,736 units). Passenger vehicle sales under the Skoda brand slightly decreased by 2.7% YoY to 3,321 units. Doğuş Otomotiv was able to increase its net sales revenues in 3Q22 with the rise in wholesale vehicle sales, due to the positive effect of the prices increases; it announced a net sales figure of TRY 11,858mn (3Q21: TRY 4,846mn), up 144.7% YoY, above the market expectation of TRY 11,513mn & our expectation of TRY 11,583mn.
Dogus Otomotiv posted a 23.6% GP margin in 3Q22, up 7.6 pp from 3Q21’s 16.0%. Despite the cost pressure caused by rising EUR/TRY parity, supply chain problems, and the negative effect of falling sales revenues, gross profit rose 261% YoY (3Q21: TRY 776mn, 3Q22: TRY 2,800mn).
The EBITDA margin rose 8.2pp YoY to 20.1%. Dogus Otomotiv announced TRY 2,378mn EBITDA (3Q21: TRY 576mn), above the market estimate of TRY 2,105mn (Seker Invest: TRY 2,152mn). The positive reflection of solid operational income, which saw a strong rise in this quarter, significantly supported quarterly EBITDA, resulting in a quarterly rise.
FY22 Expectations: The Company foresees an 800k unit (Previous: 790k units) total automotive market (PC + LCV + HCV) with Dogus Automotive branded-vehicle sales of +80,000 units (except Skoda) (Previous: 85,000 units) for FY22. The FY22 CapEx target is TRY 1.4bn (Previous: TRY 430mn) (Positive).
Is GYO (ISGYO.TI; N/C) is set to purchase Profilo Shopping Center, together with the adjacent real estate, from Isbank (ISCTR.TI; OP) for TRY989mn.
Selcuk Ecza Deposu’s (SELEC.TI; OP) net profit increased by 331% YoY to TRY 742mn in 3Q22, above the median consensus of TRY 542mn and our estimate of a TRY480mn net profit. Deviation from the estimates stemmed mainly from higher than expected top-line and EBITDA. Net sales revenue rose by 75% YoY to TRY 11,564mn (Seker: TRY 11,420mn; Cons: TRY 11,379mn) on higher drug prices. Recall that Turkish drug prices rose by 37% in Feb. 2022, and by 25% in July 2022. The pharmaceutical sector grew by 82% YoY to TRY 44.2bn in 3Q22 (68% growth YoY to TRY 111.8bn in 9M22). Selcuk Ecza’s market share in TRY terms slightly decreased to 39.44% in 9M22 from 40.26% in 9M21 (39.47% in 1H22 - 40.07% at YE21). EBITDA printed at TRY 963mn, up 338% YoY (Seker: TRY 580mn, Cons: TRY 661mn) due to an increased top-line with an EBITDA margin of 8.3% (+5.0ppt YoY). Meanwhile, the gross margin rose to 12.8% in 3Q22 from 7.0% in 3Q21 on lower COGS. Also, the Company has generated TRY 21mn from net other income in 3Q22 (vs. a net other loss of TRY 22mn in 3Q21) positively affecting the bottom-line. On the other hand, the company’s net financial expenses rose to TRY 45.2mn in 3Q22 from TRY 1.7mn in 3Q21 due to interest expenses of short-term loans. We expect the 25% rise in drug prices after the previous 37% rise to positively reflect on SELEC’s top-line and EBITDA for the rest of year. We foresee a positive market reaction as the bottom-line and operational results were above the market consensus. In light of the 3Q22 financials, we maintain our ‘Outperform’ rating with a new TP of TRY 30.50/shr (prev. TRY 20,90/shr). SELEC’s current price is TRY 25.28/shr, while our target value represents 21% upside potential. We note that SELEC shares have increased by 123%, despite underperforming the BIST-100 index by 5.1% since the start of 2022.
Pegasus (PGSUS.TI; OP) reported a net profit of TRY 4,838mn in 3Q22 (3Q21: TRY 593mn), above the market average net profit expectation of TRY 4,111mn and our estimate of TRY4,198mn. Pegasus’ total PAX rose by 17.4% YoY in 3Q22 over a weak base in 3Q21 & high leisure traffic thanks to the solid tourism activities; its quarterly revenues thus improved by 293% YoY in TRY terms to TRY 17,840mn, above the market average estimate of TRY 16,804mn, and our estimate of TRY 16,838mn for the period. The carrier has attained TRY 8,198mn EBITDA according to its CMB financials in 3Q22, above the market average expectation of TRY 7,839mn and our estimate of TRY 7,908mn.
Pegasus has also shared its outlook for 4Q22 & 2022. The Company plans its total ask to be 12%-15% higher in 4Q22 vs. 4Q19, and 7%-10% (Previous: 5%-10%) higher in 2022 vs. 2019. The Company expects 4Q22 EBITDA to stand notably above the 2019 levels, and 2022 EBITDA foreseen to surpass the 2019 figure with EBITDA margin reaching around 2019’s 33.3% level to stage a full recovery (Positive).
TAV Airports Holding (TAVHL.TI; MP) has released its traffic figures for October 2022. As expected, the figures indicate robust YoY growth of 18.0% in the Group’s PAX numbers over a weak base in October 2021. After the COVID-19-related flight restrictions, where the requirement of quarantine periods and negative test results unfavourably impacted the recovery of international travel demand, TAV Airports’ PAX numbers have recovered at a healthy pace thanks to strong tourism activities. This was also attributable to the Group’s traffic figures, now including Almaty Airport, which had been acquired by TAV Airports (85%) and VPE Capital (15%) as of end-April 2021. Hence, owing mainly to these two factors, TAV Airport’s total PAX grew by 18.0% to 8.49mn in October 2022, following 24.7% YoY growth in September 2022. Excluding Almaty Airport, the Group’s like-for-like PAX has also increased by 17.9% YoY to 7.80n in September 2022. Traffic data also indicates that total PAX has started to close on the figures of 2019 before the COVID-19 pandemic, thanks to the complete lifting of COVID-19-related restrictive measures in Turkey, and to quarantine-free travel to other countries. We thus reckon that the data announcement may have a slightly positive impact on the Group’s near-term share performance.

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