Elections were held in Turkey, interest rates were increased, fiscal policy began to tighten…
All of these developments have not yet been qualified as a return to an ‘orthodox’ economy by foreign investors. The foreign investor is still not sure whether the economy under Mehmet Şimşek’s management has deviated from the ‘return to rationality’ path. There is no consensus on this issue. As we have already shared with you, dear Cryptocoin readers, the stranger seems a little confused. It is possible to understand this from some reports that have been published and have different opinions.
In an economy where, of course, not all arrows point to a return to rational policies, uncertainty causes the fingers to turn to inflation immediately. As a matter of fact, it happened. All foreign banks that are currently reporting on Turkey, without exception, all anticipate that inflation will be higher than it is at the end of the year.
This situation also highlights retail companies. The consecutive reports published by HSBC and Credit Suisse analysts highlight Borsa İstanbul companies engaged in retail, especially food retail business. BİM, Şok Marketler, Migros… All of them stand out as prominent companies in Turkey, where foreign investors seek the opportunity to return.
HSBC
In a report on the Turkish retail sector dated July 10, HSBC wrote that the second minimum wage increase will support consumer demand and this will strengthen the stable growth in Turkish retail companies.
While it was stated in the report that the increasing effect of increasing wages on the demand side would be an important catalyst on the inflationary side, the shares of BİMAS and SOKM, operating with the discounted price concept, were highlighted.
Credit Suisse
According to a report released yesterday by the Swiss-based bank, there is still room for investment in Turkey, especially on the food retail side. Covering the losses incurred by retailers due to high inflation and earthquakes with insurance may lead to higher valuations for these companies.
In the report, Credit Suisse analysts, who mentioned the increased unit cost, energy and labor expenses especially for Bim, Şok and Migros in the first quarter of 2023, predicted that the outlook in these expenses may be more positive for the second half of 2023.
It was pointed out that food inflation in Turkey was seen as “shelf inflation” in retail companies, and it was stated that the upward trend in this inflation would balance the margins that were expected to be weak in July.
bim
Increasing the price target for Bim from 192.20 TL to 223.40 TL, Credit Suisse wrote in its report that Bim leads the Turkish retail sector with its discount sales concept. Analysts, who also stated that the leadership position had an effect on stock prices, also suggested “increase weight” for Bim shares in addition to their price suggestions.
Migros
Analysts, who expect a significant improvement in the profit margins of the company in the future, stated that the reduction in Competition Authority fines and the insurance revenues that can be obtained for Migros’s stores damaged in the earthquake area may lead the improvement on the margins.
The target price of Credit Suisse’s MGROS stocks was revised from the previous 140.60 TL to 174.70 TL. However, the opinion for the stock was stated as “underperforming”.
Shock Markets
Clear signs that high inflation expectations are opening up space for Turkish retailers also explain Credit Suisse’s expectations on Şok Marketler. According to what is stated in the published report, the target price of the bank for Şok Marketler is 46.70 TL.
It is stated that the wages, which stand out as a common expense item in the retail sector in general, will have a narrowing effect on the margins for Şok Marketler, while the insurance revenues that can be obtained from the damages in the earthquake zone are expected to have a positive effect.
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