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Deniz Invest selects best stocks for June

Model Portfolio Update Including Akbank (AKBNK TI), while removing Vakifbank (VAKBN TI) from our Model Portfolio   Adding Akbank (AKBNK…

Deniz Invest selects best stocks for June

Model Portfolio Update

Including Akbank (AKBNK TI), while removing Vakifbank (VAKBN TI) from our Model Portfolio

 

Adding Akbank (AKBNK TI) to our model portfolio

We include Akbank (AKBNK TI) in our Model Portfolio based on following fundamentals:

■    Akbank completed its capital injection early this year while some of its peers may come to the market going forward.

■    Akbank’s CAR and CET1 ratios were read at 17.40% and 14.91% respectively as of 1Q19. Both CAR and CET1 ratios of Akbank are well above the Basel 3 minimum required levels of 12.57% and 10.57% respectively.

■    The bank continued to have 101% total coverage for its NPLs, excluding the TRY650 mln free provision, TRY100 mln of which was allocated in 1Q19.

■    Akbank’s duration mismatch is relatively shorter than the sector average, so that a possible NIM tightening in the coming days is supposed to take shorter compared to the sector average.

■    89% of the total securities portfolio is composed of floating rate notes providing Akbank with a defensive shield against interest rate and inflation increase . 55% of the total securities portfolio is FX denominated and CPI linkers compose ~28% of total securities portfolio.

■    Akbank has good cost control to support the profitability during the remainder of the year.

Akbank trades at 4.78x of 1-year earnings, 0.56x of 1-year book value and 12.4% RoE. The respective numbers for the sector are 3.74x, 0.42x and 11.9%.

 

Removing Vakifbank (VAKBN TI) from our model portfolio

We remove Vakifbank (VAKBN TI) from our Model Portfolio as the stock performance could not meet desired performance. Given the weaker than private banks earnings performance in state banks (April BRSA data was out yesterday) we would rather prefer to exclude Vakifbank out of our Model Portfolio for the time being.

 

Note: Additions will have an estimated weight of 10% within the Model Porftolio. Entry and exit prices will be based on May 31, 2019 PM session weighted average share prices.

 

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