HSBC: Turkish Consumer Companies Deploy Adaptive Growth strategies

Finetuning growth strategies: Under challenging macroeconomic conditions and consumer pressure, companies are resorting to adaptive growth strategies, focusing on available opportunities. We see a strategic change in growth direction for food retailers, with focus on the supermarket segment (BIM) and grocery home delivery (Migros), while space expansion slows down in general. Turkish beverage companies target high-growth international markets while trying to preserve market shares in still-challenging economies. CCI has been deploying profitable product strategies and driving favourable mix to improve margins recently. We expect similar strategies to continue in 2026, with the aim of gaining market share, with slight margin recovery.

Less opex pressure, but gross margin challenges exist for food retailers: We think wage pressure is likely to continue in 2026, but to ease versus the past two years. Türkiye’s minimum wage increase of 27% yoy for 2026 implies a support to consumption at least for the first half of the year. We expect the consumer trading environment to improve gradually, with less inflation (gradually declining) and a more stable spending outlook. Gross margins are likely to continue to reflect pressure from a higher share of promotions and falling inflation; however, operational leverage should emerge in the second half of the year.

Re-rating potential hinges on economic policy staying the course: A market- wide re-rating is a key theme for Turkish stocks, given the macroeconomic backdrop continues to gravitate towards stable and sustainable trends. In such an environment, we expect potential catalysts to emerge with controlled inflation, lower interest rates, and more long-term investment themes, supporting market share gains, better margins, and/or a deeper competitive moat. Turkish consumer companies under our coverage are trading at a c30% discount to their 10-year historical average PE multiples, with the discount having narrowed by c10% YTD. Investor confidence in macroeconomic reforms appears positive and potential catalysts could emerge if the current economic policy stays the course in 2026. We like BIM and Mavi, both Buy: We like BIM as it is focusing on a multi-format approach, accelerating expansion of FILE (supermarket), which supports its long- term growth outlook and serves as a base for its e-grocery foray. We also like Mavi (Buy) for its competitive position in the market, strong sourcing advantage and ongoing store expansion