Buy - Sell

TTKOM 3Q12 review (HOLD, TP: TL7.44) – Broadly in line: NI @ TL636m (+77% y-y & 1% q-q) => 1% below Co’s analyst survey. Strong y-y EPS growth <= low base-effect (had substantial FX losses in 3Q11). Operating => consol’d EBITDA flat y-y (fxd-line EBITDA: -1% y-y, mobile EBITDA: +12% y-y). Fxd-line sgmnt remained sluggish => PSTN rev -6% y-y to TL957m <= lower usage & ongoing subscr base contraction. DSL subscr base => flat @ 7.0m for 3rd consecutive Q while ARPL +3% y-y to TL37.1 <= crowding-out effect of growing 3G subscr base main reason behind stagnant fxd-line broadband sub-base. Mobile => better than our exp on growth (rev +11% y-y) & mrgs (EBITDA mrg flat @ 14%) => major +VE surprise was prepaid mobile ARPU @ TL13 (BNPP est: TRY12.2) => 17% y-y & 7% q-q growth => data growth & incr’g incoming traffic were key drivers of ARPU growth in general. D/s risks mostly on fxd-line sgmnt as both PSTN & DSL subscr base trends remain sluggish. On the other hand, amid some signs of price stabilisation, sooner than exp rationalisation in mobile market is up/s risk to our est.

TCELL 3Q12 tdy (BUY; TP TL11.11) => We expect fairly strong top-line growth in 3Q12 => 300k net subscriber additions and 8% y-y revenue growth (TL2,720m rev). We est EBITDA margin (TL862m EBITDA) @ 31.7% implying 2.8pps y-y contraction due to: 1) increasing off-net traffic; and 2) cost inflation running above price adjustments. We exp NI @ TL579m (cons: TL576) implying 8% growth on y-y and q-q terms.

EREGL 3Q12 tdy (HOLD; TP TL2.04) => We est TL2,160m rev (-12% y-y), TL248m EBITDA (-65%) and TL103m NI (-13%) vs cons NI @TL 120m. We forecast volumes to rise slightly y-y in 3Q12 on higher production and demand.We exp lower flat steel prices y-y and q-q along with relatively stong raw material costs to continue taking a significant toll on Erdemir's margins in 3Q12. However, we do not foresee a sequential decline in margins, because lower raw material costs are forecast to offset the –VE impact of lower steel prices.

HURGZ (N/R) => agreed to sell a plot of land for TL50m. The Co will recognize TL29.1m income from the sale of the asset on its tax purpose statements. As the Co has net financial debt of TL410m, the sale of the real estate asset should support the B/S of the Co.

SELEC (N/R): Gov is revising its ceiling in the global budget of pharmaceutical expenses. Based on current & forecasted infl deflators => plans to incr current pharma expenditure ceiling of TL16.7b in 2012 to TL18.2b in 2013 & TL19.6b in 2014 => pharma producers are asking for the ceiling to be raised @ least to TL20b as TL deprec’d 10% against euro in the last 3yrs. Final decision is due soon. We view any revision above TL18b to be +VE.

DOHOL (N/R) => Board member of Full (fuel distribution co of which DOHOL acq 60% stake recently) => told press they aim to incr mkt shr from 2% to 6% by incr’g its no. of fuel distributor stations from 54 (21 owned) to 500 over the nxt 3yrs. Board member also signalled a chng in strategy => will not pursue aggressive price cutting going fwd. Currently Full gives up on its retail mrg in order to offer lower fuel prices & incr throughput rates. Full commands a throughput rate higher than 3x the avg of its peers but lower margins. Based on combined sales of fuel stations, Full generated TL649m in 1H12.