Koc Holding 2Q’26 First Take - Refining-led earnings, exporter headwinds and portfolio leverage keep the discount elevated

Research evidence excerpt

J P M O R G A N

CEEMEA Equity Research

05 August 2026

Koc Holding

2Q’26 First Take - Refining-led earnings, exporter

headwinds and portfolio leverage keep the discount

elevated

Overweight

KCHOL.IS, KCHOL TI

Price (05 Aug 26):TL206.00

Price Target (Dec-27):TL333.00

Our Take: Koc Holding reported TL19.7bn consolidated net income in Q2, nearly

doubling y/y, beating consensus by a wide margin, driven mainly by strong refining

results. Exporters remain pressured as the lira outpaces inflation, while weak

discretionary demand in Türkiye continues to weigh on appliances and autos. Key

negatives are elevated leverage at Arçelik and Otokar, though Otokar has been

supported by a recent capital injection and management believes Arçelik can

reduce leverage to covenant levels by year-end and sees a low near-term risk of

needing support. Koç remains a cash generator with US$989m solo net cash, with

liquidity likely to improve further from potential second-tranche dividends from

Tüpraş (EYAS) and Ford Otosan, plus Q3 proceeds from the Koç Finans stake sale

to Ford Otosan. Shares are up ~10% in USD YTD (in line with the index), while

the NAV discount widened to 32%, largely due to Tüpraş’s strong performance

(+48% in USD). Given the challenging macro for exporters and ongoing leverage

risks at a few subsidiaries, we expect the discount to remain around current levels

near term.

Turkey (ex-Financials)

Hanzade Kilickiran AC

(44 20) 7742 0014

J.P. Morgan Securities plc

Portfolio Performance: Below is a summary of performance from each sector

based on inflation-adjusted financials.

Energy segment was the largest contributor to consolidated net

income this quarter, with its net income growing nearly four times y/y

to TL 19,008mn. Tüpraş was the main engine, driven by strong net

refining margins of US$21.4/bbl (vs US$9.4/bbl in 1Q26).

Management upgraded its FY26 net refining margin to US$13–15/bbl

(from US$6–7/bl), while holding CUR at 95–100%.

Automotive segment slipped to the second largest contributor to Koc's

earnings this quarter, with its net income falling 70% y/y to TL

1,696mn. Performance was mixed across the brands amid a strong TL,

tight pricing and soft demand.…