The 2014 Emerging EMEA Research Team: Turkey Equity Strategy, No. 3: Ali Riza İncekara & team

Ali Riza İncekara & team
BGC Partners

First-place appearances: 0

Total appearances: 2

Team debut: 2013

After debuting on this list as a runner-up in 2013, Ali Riza İncekara and his eight-strong group at BGC Partners in Istanbul step up to third place. “BGC covers more stocks and has better on-the-ground knowledge than the global banks, which don’t pay attention to the second-tier names,” one supporter contends. “By digging a little deeper, they can tell you what’s really going on in the markets.” One of the strategists’ top names this year is Türkiye İş Bankası, preferred thanks to its “strong deposit franchise and relationship with corporates,” says İncekara, as well as a loan portfolio that is less targeted toward consumers, which will continue to drive superior margins. In addition, management continues to improve efficiency by adding fees and restraining employee head count. During first-quarter 2014, İşbank beat consensus by suppressing deposit costs, “which led to a strong, 50 basis point improvement in the bank’s lira quarter-over-quarter loan-deposit spread and 33 basis point expansion in net interest margins,” the team leader notes. Moreover, management has been cleaning up its noncore subsidiaries’ operations, which could mean “positive catalysts in the near future,” İncekara believes. These inputs contribute to earnings estimates 10 percent higher than consensus for this year and next, he adds. BGC’s target price for İşbank’s stock is 6.15 lira; it was trading at 5.97 lira in late May. The researchers are less enthusiastic about services provider Türk Telekomunikasyon. In counseling a short position, they cite a litany of downside risks, including a slowdown in the telephone segment, a stagnant Internet DSL business and thorny regulatory issues. Management, moreover, last month revised downward by 24 percent its dividends on 2013 net earnings, to 912 million lira ($436 million), owing to “lower-than-expected profitability and increases in its investment program,” İncekara reports.

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