HSBC, which is one of the brokerage houses where foreign investors trade, has made a proposal to “reduce” TUPRS share portfolios to investors despite the record profit figure announced by Tüpraş.
While most of the stock exchange companies are disappointed in profitability, some stocks are experiencing record profit increases. TUPRS was one of the shares that made a surprise profit announcement among the most recently announced balance sheets. TUPRS share price turned positive as the stock market fell, reacting to this surprise profitability figure.
However, the analysis that shocked the investors came from HSBC, which attracted attention with the reports it prepared for foreign investors. In the analysis report signed by Lidar Khaziev and Dhaval Popat, it was pointed out that the strong first quarter balance sheets announced by Tüpraş masked the threat of decreasing profit margins.
HSBC analysts Lidar Khaziev and Dhaval Popat
“Strong balance sheet performance masks weakening refinery margins”
In HSBC’s report, it was stated that the decline in refinery margins poses a risk to the future performance of the stock.
According to the analysis of HSBC, it was underlined that the refinery margin of Tüpraş, which was 20 dollars per barrel in January 2023, decreased to 13.8 dollars in March 2023 and to 8.4 dollars in April 2023.
The company management calculates according to 11-12 dollars, but
The management of the company was making its calculations for the whole of 2023 according to 11-12 dollars per barrel.
HSBC analysts believe the OECD’s weak diesel demand will be the key determinant of margins. On the supply side, the company’s new refinery capacity may also become a problem in this respect. If the current weak demand continues, it is underlined that the company’s margins may continue to remain under pressure in the 2023 half-term balance sheets.
In line with these expectations, HSBC analysts recommended investors to reduce the share of TUPRS in their portfolios. The target price for the TUPRS share proposal was also reduced from 51.43 TL to 51 TL.
TUPRS shares are still traded on Borsa Istanbul at 66.35 TL. This means that a target price has been set 23 percent lower than current prices.
In the analysis made by HSBC for the TUPRS share interpretation, 9.32 TL profit expectation per share for the end of 2023, 7.1 P/E, 3.3 Firm Value/EBITDA, 25.3 percent return on equity are also included.
These results announced by Tüpraş are of a nature that may cause concern especially for other listed companies operating in the petrochemical sector.
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