HSBC  equity research: Türkiye Sigorta (TURSG TI)– Buy: Another Goldilocks year

Shares have yet to price in robust earnings outlook for 2024:

We raise our  FY24e and FY25e earnings for Türkiye Sigorta by 58% and 72%, respectively, given:

1) a faster shift away from loss-making traffic policies;

2)  favourable regulatory  changes; and

3) higher returns on the investment portfolio.


Our FY24e earnings of  TRY13bn correspond to 106% YoY growth and are 25% above BBG consensus.

Moreover, they imply a 2024e PE of 3.8x, which is close to the bottom of the last  three-year trading range, notwithstanding the stock’s c225% appreciation in 2023.

Owing to strong earnings momentum, potential for consensus earnings upgrades and  an attractive valuation, we raise our TP by 75% to TRY59.50 (from TRY34.00) and  reiterate our Buy rating. We expect the stock to come on to the radar of foreign investors in 2024, with more frequent company attendance at investor events abroad.

Decisive reduction in MTPL market share is helping operational profitability:

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We expect the combined ratio to stay at 100% in FY24, with risks to the positive side as:

1) the company gradually substitutes loss making MTPL (motor third-party  liability) business with profitable MOD (motor own damage);

2) slower growth in  MTPL could release some unexpired risks reserves;

3) recent increase in the  regulatory price cap for MTPL policies should alleviate losses in the segment;

4) real  appreciation of the currency could help with claims inflation in the motor segment, where spare parts are mostly imported; and

5) the regulator may increase the  discount rate (currently 28%) used in actuarial calculations, which could result in  provision releases. Note that Türkiye Sigorta’s combined ratio is below 100% in all  segments except for MTPL.


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Investment income boost amid high interest rates:

As of 3Q23, Türkiye Sigorta’s  investment portfolio was generating TRY1bn income per month. Allowing for higher  interest rates, compounding of the portfolio and further growth from new business underwriting, FY24e investment income should be ahead of TRY12bn. Moreover, our  100% combined ratio projection (ie, breakeven at the operational level) means that investment income will trickle down to the bottom line. As such, we expect Türkiye  Sigorta to report TRY13bn earnings in FY24e, 106% above last year.

Shares look undervalued despite re-rating:

Türkiye Sigorta’s share price more than tripled last year, but its 12m forward PE multiple is still a very undemanding 3.8x for its robust earnings growth. Türkiye Sigorta’s valuation hasn’t  fallen below 6.0x on a sustainable basis since 2020.


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Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and and has contributed to the financial daily Referans and the liberal daily Radikal.