Page 9 - bne_March2019_20190306 magazine

bne March 2019 Companies & Markets I 9
metrics, it believes that there will be attractive trading opportunities for Turkish assets in 2019.
According to a separate research note on the Turkish energy industry published on February 20, VTB increased its 12-month target price for Tupras (Buy) to TRY 164 and lowered its target for Aygaz (Hold) to TRY12.3.
On February 21, Vladimir Bespalov of VTB Capital said in a research note on Turkish cementmaker Cimsa’s Q4 financials entitled “Weak financials support our cautious view” that VTB reiterates its Hold advise for Cimsa with a 12-month target price of TRY8.
Cimsa reported a net loss of TRY62mn for Q4 vs. the
TRY 11mn net profit suggested by the consensus. Although white cement exports provide a certain cushion, VTB believes that Cimsa faces strong headwinds domestically.
On February 21, Turkish statistical institute TUIK said that Turkey’s construction cost index fell, for the third consecutive month, to 25.65% in December from its peak of 39.66% in August. On February 19, TUIK said that number of buildings, floor area of buildings, value of buildings and number of dwelling units given construction permits in 2018 decreased by 36.7% y/y, 48.9% y/y, 35.8% y/y and 53.3% y/y, respectively. On February 18, TUIK said that the number of homes sold in Turkey declined by 25% y/y in January with mortgage sales shrinking 77% y/y. Also on February 18, the central bank said that home prices in Turkey rose by a limited 9.69% y/y in December versus a CPI inflation of 20.3% y/y.
On February 15, Bespalov said in a note on carmaker Tofas’ TRY1.6 per share dividend announcement, which implies a 9.5% yield, that VTB reiterated Buy advice with a 12-month target price of TRY30.
Tacirler Invest also maintains its BUY rating for Tofas, Ece Mandaci of Istanbul-based brokerage house said on February 19 in a research note.
Also on February 15, Bespalov said in an earning release on Turkish auto retailer Dogus Otomotiv entitled “4Q18; positive, but leverage and outlook remain a concern” that VTB reiterated its Hold advice on Dogus with a 12-month target price of TRY5.50.
Telecoms and retail cut to hold
On February 21, Ivan Kim of VTB Capital said in a research note on Turkey’s largest mobile operator Turkcell that VTB cut Turkcell to Hold from Buy, given a 12-month target price of TRY16.
Post the 48% dollar-terms gain since the beginning of 3Q18 (86% from early September), VTB believes that Turkcell might take a breather.
Turkcell is facing a more challenging year, the 4Q18 slowdown points to downside risks to mobile service revenue
performance in 2019, Kim said, adding that Turkcell’s balance sheet remains strong, with the net long FX position post
the Fintur sale.
Turkcell said on February 20 in a bourse filing that its net income rose by a limited 2% y/y to TRY2bn in 2018.
On February 21, Reuters reported that initial price guidance on Turk Telekom’s 6-year Eurobond issue stood at 7.375%. On February 14, Turkey’s largest telco said that its high-level management would carry out investor meetings arranged by mandated lenders Bank of America Merrill Lynch, Citi, ING, MUFG and Societe Generale in London, Boston and New York, starting from February 15 to issue $500mn worth of eurobonds with maturities between 5 and 7 years.
Currency rally running out of steam
The Russian investment bank expects a gradual weakening in Turkish lira toward 6.5 against USD by end-2019. The latest central bank survey predicted Turkish lira to stand at 6.2 against USD at end-2019 while Bloomberg consensus stands at 6.1.
On February 19, Jason Tuvey of Capital Economics said in a research note: “The improvement in Turkey’s current account position means the lira no longer looks fundamentally misaligned, but the recent period of stability won’t last. While a repeat of last year’s currency crisis is unlikely, the lira will
“VTB Capital downgraded Turkish equities to equal weight from overweight in emerging markets”
depreciate and it remains susceptible to a fresh bout of global risk aversion. This is a key reason why we think that interest rates won’t be lowered as far as the markets are pricing in.”
VTB also does not expect a major lira sell-off like in August 2018. However, it expects geopolitical tension to increase further in 2019.
BIST-100 versus USD/TRY
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