Market Watch Monday, March 01, 2021 Agenda

Market Watch Monday, March 01, 2021 www.sekeryatirim.com.tr Agenda

01 M onday 02 Tuesday 03 Wednesday 04 Thursday 05 Friday  Turkstat, 4Q20 GDP Growth  Germany, January  TurkStat, February inflation  CBRT, February  Germany, Janu- retail sales inflation assess- ary factory orders  China, February Caixin non-mfg.  China, February Caixin mfg. PMI ment  Germany, February PMI  U.S., February  Germany and Eurozone, Febru- unemployment data  U.S., jobless non-farm payrolls ary Markit mfg. PMI  Germany and Eurozone, Febru- ary Markit non-mfg. PMI claims and unemploy-  Eurozone, February ment rate  Germany, February CPI CPI  Eurozone, February PPI  U.S., January factory orders  U.S., February  U.S., February Markit mfg. PMI  U.S., February ADP employment average hourly change earnings  U.S., February ISM manufacturing index  U.S., February Markit non-mfg.

PMI  U.S., January construction  U.S., February ISM non- spending manufacturing index

Outlook Major global stock markets closed lower on Friday, amid the rise in US Treasury yields, which has increased concerns over rising inflation and the Fed derailing its currently accommodative policy. Global risk appetite has Volume (mn TRY) BIST 100 relatively weakened, despite Fed Chair Powell’s statements suggesting that inflation was likely to remain below the targeted value, and that the 1.551 major central bank would maintain its current policy. Having moved in 1.518 1.488 parallel to the course of major international stock markets, the BIST100 48.000 1.483 1.471 1.600 also shed 1.13% to close at 1,471.39 on Friday, after a volatile day in 40.000 1.500 trading. The banking sector index diverged negatively, having declined by 1.73%. The TRY continued to depreciate and diverge negatively, ending 32.000 1.400 the week with a c.7% depreciation against the US$. Turkey’s 5-year CDS 24.000 34.193 29.159 30.099 27.426 1.300 premium has reached c.319bps levels, suggesting that risk appetite to- 16.000 wards TRY-based assets has relatively weakened. Risk appetite may be 8.000 16.950 1.200 disturbed further should this premium rise above 340bps levels. On the 0 1.100 other hand, the VIX, a gauge of volatility expectation in the US markets 22-Feb 23-Feb 24-Feb 25-Feb 26-Feb was around 28 on Friday, suggesting that volatility and selling pressure in the US markets is likely to continue in the near term. Selling pressure could increase should this index rise further to above 31 levels. We expect Indices (TRY) Previous Last Chg. YTD a risk-off mode and profit taking to prevail amid volatile trading in the glob- BIST 100 1.488 1.471 -1,13% -0,36% al stock markets this week, although the US Treasury yields have BIST 30 1.574 1.556 -1,15% -4,89% been weakening somewhat. The BIST is expected to move in parallel to BIST-Financial 1.555 1.528 -1,76% -2,40% the performance of major international stock markets, where selling pres- BIST-Industrial 2.569 2.549 -0,78% 8,91% sure is likely to continue. Possible reactionary buying at the BIST may BIST-Services 1.172 1.169 -0,31% -2,02% remain weak, as suggested by the decline in non-residents’ holdings over the past 5 weeks, and may be utilized for profit taking, as the benchmark Advances Declines Most Active index seeks its new near-term low. Investors will today follow Turkey’s Stocks (%) Stocks (%) Stocks Vol (TR) 4Q20 GDP growth data to be announced by TurkStat, where we expect MARTI 10,00 ISATR -10,00 THYAO 2.491.241.238 growth of 6.2% and the market average expectation is at 7.0%. The US SUMAS 10,00 MERIT -9,98 GARAN 1.939.966.521 and German futures have been slightly advancing and the Asian markets ARTI 10,00 YESIL -9,95 KOZAL 1.851.960.698 have been trading positively today. We expect the BIST to open with reac- TMPOL 10,00 AYEN -9,91 PETKM 1.301.092.003 tionary buying, which may continue during the day, although we caution CASA 9,99 VAKFN -9,55 PGSUS 1.106.584.369 that this may be utilized for profit taking. SUPPORT: 1.467 - 1.456 RE- SISTANCE: 1.487 - 1.502 Money Market Previous Last Pr. Mn YTD O/N Repo (%) 16,75 18,11 17,35 18,49 Money Market: Bond (Benchmark, %) 14,89 14,92 14,67 14,96 The Lira was negative on Friday, weakening 2.38% against the USD to close at 7.4176. Additionally, the currency depreciated by 1.92% against Currency Previous Last Chg. YTD the basket composed of $0.50 and €0.50. Meanwhile, the local fixed in- US$ 7,4339 7,4267 -0,10% -0,17% come markets were negative. The ten-year benchmark bond was traded Euro 8,973715 8,97099 -0,03% -1,77% within a range of 13.39%-13.53%, ending the day at a low of 13.39%, 12 Euro/Dolar 1,2071 1,20768 0,05% -1,32% bps above its previous close. Commodity Previous Last Chg. YTD Domestic Headlines: Oil (Brent spot, $) 65,9 64,3 -2,34% 24,80% Δ Today, Turkey's 2020 growth data will be released. The market expecta- Oil (NYMEX future, $) 63,5 61,7 -2,94% 27,34% tion is for Gross Domestic Product to grow 7% in the last quarter (2020 Gold (Ounce, $) 1.734,1 1.734,6 0,03% -8,63% growth 2.3%). As Seker Invest, we estimate that the economy will grow by Silver (XAG, $) 27,4 26,7 -2,56% 0,93% 6.2% in the last quarter of 2020 and by 1.87% in 2020 on average. Şeker Funds Previous Last* Chg. YTD Fiba Portfoy Şekerbank Money 1,965606 1,968252 0,13% 2,55% Fiba Portfoy Şekerbank Short T. 0,022931 0,022961 0,13% 2,38%

* Prices as of 01-Mar-21

Market Watch Monday, March 01, 2021 www.sekeryatirim.com.tr

Δ According to foreign trade data; exports increased by 2.3% to 15 World Indices billion 45 million dollars in January 2021 compared to the same month of America Previous Last Chg. YTD the previous year, and imports decreased by 5.9% to 18 billion 79 million Dow Jones (US) 31.402 30.932 -1,50% 1,06% dollars. With these data, while the foreign trade deficit was 3,03 billion dol- Nasdaq (US) 13.119 13.192 0,56% 2,36% lars, the ratio of exports to imports rose to 83.2%. While the share of the S&P 500 (US) 3.829 3.811 -0,48% 1,47% manufacturing industry in exports was 93.8% (previous 94%), the share of Europe Previous Last Chg. YTD intermediate goods in imports continues to decline (current 76.3%, previ- Dax (Germany) 13.879 13.786 -0,67% 0,49% ous 78.1%). When the import and export status of our trade partners are FTSE 100 (UK) 6.652 6.483 -2,53% 0,35% examined, Germany takes the first place in exports with a share of 9.7%, CAC 40 (France) 5.784 5.703 -1,39% 2,73% while China has the largest share in imports with 12.2%. PSI20 (Portugal) 4.787 4.702 -1,78% -4,00% RTSI (Rusia) 1.450 1.412 -2,65% 1,76% While the recovery in the foreign trade deficit in January is encouraging Asia Previous Last Chg. YTD about the current account deficit data, it also brings to mind the slowdown in the production rate in the economy. Especially the decrease in the share Nikkei (Japan) 30.168 28.966 -3,99% 5,55% of intermediate goods in imports indicates that consumption products are Hang Seng (Hong Kong) 30.074 28.980 -3,64% 6,42% preferred over production. Despite the appreciation of the Turkish Lira Shanghai Comp. (China) 3.585 3.509 -2,12% 1,04% (relatively cheap import opportunity), the decrease in the amount of imports KOSPI (South Korea) 3.100 3.013 -2,80% 4,85% signals that there will be a slowdown in the rate of returning production / Sensex (India) 51.039 49.100 -3,80% 2,57% investment to its former level due to the concerns about the epidemic Turkdex (Set. Price) Previous Last Chg. YTD measures in the economy. If the existing data are supported by the data in INX30 (December 20) 1.577 1.555 -1,40% -6,24% the service sector, the improvement in the current account balance will USD (December 20) 7,2161 7,378 2,24% -2,72% begin as of January. EURO (December 20) 8,8175 8,950 1,50% -4,12% Sector New s: GOLD (December 20) 411,69 413,39 0,41% -11,33% Portfolio Inclusion Inclusion Last Chg. BIST Δ Fitch Ratings has revised the outlooks on 13 Turkish banks' support- Recommend. Date Price Close (%) Relative driven Long-Term Foreign-Currency (LTFC) and Long-Term Local- Tofas 06/09/19 18,98 34,66 82,6% 22,9% Currency (LTLC) Issuer Default Ratings (IDRs) to 'Stable' from negative. Şişecam 18/01/21 7,82 7,13 -8,8% -5,5% The rating agency has also affirmed the ratings of those banks' subsidiar- Erdemir 18/01/21 15,19 14,59 -3,9% -0,5% ies, revising their outlooks to 'Stable.' Fitch has also revised the outlooks on Akbank 18/01/21 6,91 6,06 -12,3% -9,1% the LTLC IDRs of a further seven Turkish banks and their non-bank finan- Arcelik 07/12/20 27,98 33,18 18,6% 7,2% cial subsidiaries, to 'Stable' from Negative. The rating actions follow the Yapi Kredi Bank 18/01/21 3,14 2,65 -15,6% -12,6% revision of the Outlook on Turkey's Long-Term IDRs to 'Stable' from Nega- Turkcell 01/11/18 11,93 15,85 32,9% -16,6% tive. This action has been driven by Turkey's return to a more consistent and orthodox policy mix under its new economic team, including the imple- Garanti Bank 17/01/19 9,25 8,92 -3,6% 3,4% mentation of a tighter monetary policy. Portfolio Yield (yoy) 56,9% 13,1% Portfolio Yield (mom) -4,3% -2,5%

Δ BOTAS has increased the price of natural by 1%, effective as of March 01, 2021 - Natural gas prices tariffs for residential, industrial and business subscriber groups have increased by 1% effective as of March 01, 2021. (Slightly negative for glass, cement and ceramic sector com- panies). Δ The CBRT has changed the Communiqué on fees that can be collected from commercial clients by banks. Accordingly, banks must a ccept the early payment request of the borrower for the entire loan granted as of March, 1, 2021. Accordingly there will be a 2% fe e for the early payment for those loans with a remaining maturity of less than 24 months. For those loans with more than 24 months maturity remaining, there will be an additional 1% annual fee for each year in the exceeding part. Periods exceeding 24 months of the remaining term are completed to the year. For foreign currency or foreign currency indexed loans, fees wıll be 1% above those fees to be applied for Turkish lira loans.

Company News: Δ Aksa Energy (AKSEN.TI; OP) has announced its guidance for 2021- Aksa Energy expects sales revenue of TRY 7.750mn in YE21 (YE20: TRY 7.231mn), while targeting EBITDA of TRY 1.764mn for YE21 (YE20:TRY 1.497mn). The company’s sales revenue will be 73% domestic (Incl. Northern Cyprus) based and 27% foreign based for FY21, while on the EBITDA side, 73% foreign and 27% domestic for FY21. Meanwhile, the company budgets TRY 1.575mn capex (80% Uzbekistan- 14% Africa and 6% Turkey) for 2021. Δ Kardemir (KRDMD.TI; MP) is expected to submit its 4Q20 results this week. We estimate the Company’s quarterly sales volume having increased by c.4% YoY (-1% QoQ) to c.591k tons in 4Q20E. Thanks also to the rise in steel prices, we expect quarterly revenues up by c.49% YoY to TRY 2,226mn (market avg. est.: TRY 2,319mn) in 4Q20E. Steelmaking margins have recovered notably with the steep rise in steel prices in 4Q20, whereby we estimate EBITDA/ton improving significantly by c.5.4x YoY (+77% QoQ) to c.US$ 130/ton in 4Q20E. We thus estimate EBITDA increasing by 7.6x YoY (+90.2% QoQ) to TRY 603mn (market avg. est.: TRY 582mn) in 4Q20E. Thanks also to the recovery of the TRY by end-4Q20 (as compared to end-3Q20), we estimate the Company’s net FX translation losses (tied to its US$ 150mn and EUR 137mn short FX position incl. hedges) weighing less on its bottom line, and estimate the bottom line yielding a net income of TRY 408mn in 4Q20 (market avg. est.: TRY 470mn). This would bring the Company’s TRY 396mn net losses in 9M20 to an estimated net profit of c.TRY 11mn in 2020E. Δ Migros (MGROS.TI; OP) will announce its 4Q20 results after the close of the TR markets. In 4Q20, we expect net sales of TRY 7,577mn (Market expectation: TRY 7,580mn), rising 26% YoY. On the EBITDA side, the average market expectation is TRY 585mn, while our expectation is at TRY 581mn. As a result, we expect the Company to print a net profit of TRY 84mn (market expectation: TRY 36mn).

This document has been prepared by the Equity Research Department of Şeker Invest. The information and data used in this re- port have been obtained from public sources that are thought to be reliable and complete. However, Şeker Invest does not accept responsibility f or any errors and omissions. This document should not be construed as a solicitation to buy or sell securities he- rein. This document is to be distributed to qualified emerging market investors only.

Şeker Yatırım Menkul Degerler A.S. - Buyukdere Cad. No:171 Metrocity A Blok Kat 4-5 SISLI /ISTANBUL Tel: (+90) 212 334 33 33 Pbx, Fax: (+90) 212 334 33 34, [email protected]

Market Watch Monday, March 01, 2021 www.sekeryatirim.com.tr

Δ Petkim (PETKM.TI; MP) is expected to release its 4Q20 financial results on March 2nd, 2021, before the market opening. The Compa- ny will be holding a conference call on the same date at 16:00 IST time (GMT+3). Both ethylene and other petrochemical product prices have improved in 4Q20, and hence we expect to see Petkim’s quarterly revenues rising by c.34% YoY (+23.0% QoQ) to TRY 3,737mn (market average est.: TRY 3,735mn) in 4Q20E. Ethylene-naphtha spreads have recovered by c.22% YoY (+c.27% QoQ), having averaged at US$ 408/ton in 4Q20. Other petrochemical products prices, according to the Platts index, were also c.1% higher on average YoY (+c.14% QoQ), as compared to the c.26% YoY decline (+1.3% QoQ increase) in average naphtha prices in 4Q20. Hence, overall, we expect Petkim’s EBITDA to have increased by c.90% YoY (+c.19% QoQ) to TRY 593mn (market average est.: TRY 675mn) in 4Q20E. We estimate the petrochemical producer’s net profits increasing by 3.9x YoY over a weak base (+c.41% QoQ) to TRY 410mn (market average est.: TRY 386mn) in 4Q20E. Δ Sisecam (SISE.TI; OP) announced on February 26, 2021 the Board of Directors' decision to buy back up to 15bn (TRY 150mn nominal) company shares from the BIST using a fund amounting to TRY 1.2bn. It was stated that the said Board of Directors Resolut ion would be submitted for General Assembly approval. Δ TAV Airports Holding (TAVHL.TI; MP) has announced that w holly-owned subsidiary TAV Tunisia and its existing lender group have signed a restructuring agreement to amend the financing terms of TAV Tunisia’s financial debt, as anticipated. Accordingly, the gross senior debt of TAV Tunisia, at €371.0mn as of end-3Q20 will decline to €257.3mn (€233.6mn senior debt + €23.7mn participation right) as a result of related transactions. In depth, the senior debt (€371.0mn) and hedge accounts (€64.0mn) of TAV Tunisia totalling €435.1mn as of end-3Q20 have been convert- ed to i) a senior debt of €233.6mn, ii) a €76.0mn nominal worth participation right for lenders in excess cash flows of TAV Tunisia (after debt service), which corresponds to a participation right of 24.5% until par value is paid, and a participation right of 10% after pa r value is paid. This participation right instrument will be booked as a financial liability having a net present value of €23.7mn, and will be included in the net debt calcula- tion of TAV Tunisia and TAV Airports Holding ; iii) also, a €125mn financial liability is bought from lenders at a 72% discou nt at €35mn. These transactions are expected to have a c.€90mn or more positive impact on TAV Airports Holding ’s P&L in 1Q21E. TAV Tunisia had made a negative contribution to our SoTP valuation for TAV Airports Holding, due mainly to its above mentioned, sizable net debt, amid loss of passenger traffic subsequent to the Sousse terror attacks in 2015 and the COVID-19 pandemic since 2020. With this restructuring, TAV Tunisia’s negative contribution to our SoTP has declined by c14%. The debt restructuring of TAV Tunisia has also improved our 2021E net loss est imate for TAV Airports Holding to US$18.3mn from US$105.6mn previously. As a result, we have reached a new 12M TP of TRY 26.90/sh. for TAV Airports Holding shares through our valuation, which is a blend of the Group’s SoTP (60%) and relative valuation to its peers (40%), in which we utilize the 2020E & 2021E EV/Sales and EV/EBITDA multiples of its international peers. Δ Turkish Airlines (THYAO.TI; MP), Pegasus (PGSUS.TI; MP), TAV Airports Holding (TAVH.TI; MP) European Union leaders held a virtu- al summit last week, and discussed approaches to speed up the delivery of vaccines, the implementation and use of vaccine passports, and the potential for conflict arising from national border closings. Reportedly, the leaders have in principle agreed on the idea of a digital vaccination certificate, the technical framework of which could be available by summer. However, there has been some concern about discrimination and whether those people who have been vaccinated might still carry the virus. The anticipation on easing of travel restrictions, nevertheless, continues to create positive sentiment around aviation sector stocks. Δ Turkish Airlines (THYAO.TI; MP) plans to announce its 4Q20 results today. The Company w ill be holding a conference call tomorrow at 17:00 IST time (GMT+3) to discuss its financial results. Due to ongoing flight restrictions amid the COVID-19 pandemic, Turkish Airlines’ total passenger traffic had declined by 65% YoY to 6.3mn PAX and its cargo volume had retreated slightly by 2% YoY to 417k tons in 4Q20. Accord- ingly, supported by a milder decline in cargo volume and increased unit revenues in this segment, and the yearly depreciation of the TRY, we expect quarterly revenues to decline by c.32% YoY in TRY terms to c.TRY 12,885mn in 4Q20E. The market average expectation for revenues is at TRY 13,043mn, similar to our estimate for the period. On lower passenger volume and a 17.9 pp lower load factor YoY, we es timate EBITDA also declining by c.3% YoY in TRY terms by our own calculations (that exclude net other operating income, profits from invest ments accounted by the equity method & income from government incentives) to TRY 3,011mn in 4Q20E. The market average expectation for EBITDA is at TRY 3,152mn, also similar to our estimate for the period. We expect FX translation losses to weigh less heavily on Turkish Airlin es’ bottom line in 4Q20E, and estimate the carrier posting a quarterly net loss of TRY 43mn in 4Q20E, which is above the market average expectat ion of a net loss of TRY 348mn for 4Q20E.

Şeker Yatırım Menkul Degerler A.S. - Buyukdere Cad. No:171 Metrocity A Blok Kat 4-5 SISLI /ISTANBUL Tel: (+90) 212 334 33 33 Pbx, Fax: (+90) 212 334 33 34, [email protected]