Strategy & Top picks (December 2022 Model Portfolio) (Oyak Yatırım)

We foresee the year 2023 to bring in lower inflation and milder growth for Turkey… Global growth is expected to decline to 2.2% in 2023 from 2.9% in 2022 according to consensus estimates with the tightening steps taken by developed countries' central banks in order to fight against high inflation. As for the Turkish economy, the leading indicators of production and investment, such as manufacturing PMI and real sector confidence indices have started to lose momentum for a while. Given that global PMI data has started to weaken and central banks’ tightening continues, we foresee that external demand will also be softer in 4Q22 and 2023. Thus, we expect Turkey’s GDP growth to be 5.2% in 2022 (vs 6.2% in 9M22), falling to 3.5% in 2023 assuming some weakening in 2H23 after the elections. In terms of inflation, we expect CPI to close 2022 with 67%, before declining to around 35% in 2023.
   
Meanwhile, BIST continues to attract significant attention especially from local investors… The negative real interest rate environment, resilient TL against hard currencies, saturation in housing prices following the steep rise, as well as the increasing volatility in crypto currencies and commodity prices continues to drive local investors to raise their exposure in BIST with a motivation to earn real returns. Thus, according to November figures, number of local investors rose by 650k in the last two months to 3.3mn. In opposite, foreign investors’ share in free float which started to fall from its 65% levels in 2019, continued with its decline and reached the current %30 level, which limits further outflow potential in our view. Despite its positive decoupling recently, BIST still trades at around 65% discount to its peers on 12-month forward consensus forecasts.
  
We foresee a 6% y/y net profit decline in 2023 for our coverage… We have revised our estimates and target prices of the companies in our coverage. We foresee a 6% net profit contraction for our coverage in 2023, where financials (banking+insurance) are expected to post 22% decline, partially offset by an 8% rise in non-financials. We expect the highest earnings growth in construction (due to low base of Enka whose profit was hit by losses from investment activities in 2022), food and beverages, durable goods and insurance sectors, while anticipating lower earnings for banking, oil & gas, steel and conglomerates. With this report, we are upgrading our rating for ANSGR to Outperform. On the other hand, we downgrade TTRAK, ALKIM, TKFEN, AKSA and KRDMD to Marketperform as well as KOZAL and ASELS to Underperform. Finally, we also place ENKAI to Marketperform which was previously Under Review.

We have a relatively positive stance towards banks considering promising earnings outlook in the short term... We foresee an average 394% y/y earnings growth for banks under our coverage in 2022 and a 23% drop in 2023. We believe linker revenues and fees continue to support earnings in 2023, albeit at a lesser extent vs 2022. We think declining funding costs through CBRT’s monetary easing will help banks to protect spreads in 2023. However, regulatory pressures could bring some contraction in the short term through lower loan yields. Operating expenses are set to be the soft belly of banks in 2023 on high HR costs and currency impact.

Stock selection strategy has become more crucial than before, in our view… Our model portfolio has generated 228% absolute return year-to-date and outperformed the BIST-100 index by 17.5%. Considering the index’s strong performance since the beginning of the year, we think that stock selection has become more important than before, especially keeping in mind the possibility of higher market volatility ahead of the elections to be held in 2023. We focus on companies which either trade at attractive earnings multiples, have high dividend yield, generate FX revenues or benefit from a high inflationary environment. Our model portfolio consists of TUPRS, AKBNK, YKBNK, KCHOL, SISE, THYAO, DOAS, MAVI and AKGRT.

Please find detailed pdf report attached.


Oyak Yatırım Menkul Değerler A.Ş.
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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.