EM CEEMEA CREDIT: Vestel Elektronik: Q3 25 – No recovery in sight
(VESTL: Caa1neg/-/B-neg)
- Vestel needs a longer-term solution, growth continues to be weak with low margins, minimal FCF and no imminent recovery. Given the significant amount of ST debt in addition to where the 9.75% MAY29s are quoted at 24% yield, the company may potentially need reorganising.
- Weak topline, revenues -21% y/y and -7% q/q. Both the Household appliance unit and Consumer units equally weak during the quarter, both -7% q/q, due to softer demand and pricing dynamics. Gross margins were flat in the Household Appliances unit q/q at 20.5% but improved c.10ppt to 12.8% in consumer business. EBITDA margins improved during the quarter to 2.3% from -1.5% in Q2.
- Cash flow details for the quarter were not given, just 9M25. Vestel continues to benefit hugely from working capital inflow, for 9M25 it was TRY19.5bn (1H25 inflow was TRY12bn), resulting in cash flow from operations of TRY6.28bn. Capex was around TRY6.2, resulting in FCF breakeven. Vestel continues to have a significant amount in ST loans TRY54bn and total debt of TRY83.7bn. Cash and equivalent was only TRY2bn, which would imply the company needs to raise fund for refinancing, particularly given the operational performance.
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EQUITY OPTIONS: Long Dated OTM Estoxx Put Spread
SX5E (19/12/31) 3000/2800ps, bought for 21 in 6k.
GILT TECHS: (Z5) Bullish Theme
- RES 4: 92.72 1.000 proj of the Sep 3 - 11 - 26 price swing
- RES 3: 92.37 High Aug 11 (cont)
- RES 2: 92.14 0.764 proj of the Sep 3 - 11 - 26 price swing
- RES 1: 92.06 High Aug 14
- PRICE: 91.93 @ 14:47 BST Oct 14
- SUP 1: 90.90 20-day EMA
- SUP 2: 90.26/89.94 Low Sep 26 / 76.4% of the Sep 3 - 11 correction
- SUP 3: 89.36 Low Sep 3 and a key support
- SUP 4: 89.00 Round number support
Gilt futures rallied sharply higher on Friday confirming a resumption of the recovery that started Sep 25. Today’s gap higher strengthens current conditions and price has cleared key resistance at 91.82, the Sep 24 high. The breach strengthens bullish conditions and opens 92.14 next, a Fibonacci projection. Price needs to trade below support at 90.26, the Sep 26 low, to reinstate a bearish theme. First support lies at 90.90, the 20-day EMA.
SILVER TECHS: Off Its Intraday High
- RES 4: $53.546 - Today’s intraday high
- RES 3: $52.821 - 76.4% retracement of the Oct 14 high-low range
- RES 2: $52.010 - 50.0% retracement of the Oct 14 high-low range
- RES 1: $51.199 - 23.6% retracement of the Oct 14 high-low range
- PRICE: $50.978 @ 14:48 BST Oct 14
- SUP 1: $49.677/46.791 - Low Oct 10 / 20-day EMA
- SUP 2: $43.308 - 50-day EMA
- SUP 3: $41.135 - Low Sep 17
- SUP 4: $40.404 - Low Sep 4
Trend signals in Silver remain bullish. The metal has traded to a fresh cycle high today, however, price action is volatile and silver is off its intraday high. Recent gains have resulted in a move above a major resistance area around the $49.00-$50.00 region. This marks a high point from Jan ‘80 and Apr ‘11 and $50.00 represents a key psychological level. A clear break of this zone strengthens a bull theme. Support to watch is $46.791, the 20-day EMA.
