Buy - Sell

 

·         HALKB (BUY, TP TL18.72) => Book-building in SPO to take place on Nov 14-15-16. Price range => TL13.80/shr ($2.3bn)-15.90/shr ($2.7bn). Shares closed to trading as of today. Trading will resume on Nov 21 following completion of the sale @ wholesale mkt on Nov 20. Recall 20.8% is being offered + 3.12% green-shoe for total offering of $2.7b @ Friday’s close price. Allocation 80% foreign institutional investors, 10% domestic retail, 10% domestic institutional. With 90%+ foreign ownership in the stock, demand should be strong.

 

·         VAKBN (BUY, TP TL4.86) => 3Q12 NI @ TL305m, 11.5% ROE on higher-than-expected loan growth @ 4% q-q and NIM expansion of 43bp, partly offset by higher-than-expected provisions. Loan-deposit spread improvement impressive @ 55bp, net CoR rose to 53bp, as we had expected. Equity +8% q-q on MTM gains of TL521m from shift of Eurobonds to AFS from HTM => CAR +25bp to 13.7%. Upgrading to BUY on increased EPS forecasts and target price. 2012 and 2013 NI forecasts +7% and 6% respectively. Raise TP by 10% to TL4.86. We expect improvement in ROE from 11.5% in 3Q12 to 14% in 2013 on continued shift in loan mix and strong fee growth, as the -ve impact of accrual accounting fades. We expect stronger profitability once the Treasury takes over as the majority shareholder. Key downside risks: lower-than-forecast asset quality and higher mrgn pressure.

 

·         ASYAB (HOLD, TP TL2.04) =>3Q12 NI @ TL50m; better than our TL43m and TL45m CNBC-e cons estimates. Beat on lower opex and non-loan-provision. Loans and deposits +4% and +8% q-q, respectively, as expected. Fully-adjusted NIM improved beyond our forecast @ 55bp. Net oper inc before specific and general provisions +49% y-y. ROE down to 9%, Basel-II CAR @ 13.8%. We reiterate HOLD, as NPL clean-up and pick-up in profitability to take time. Key downside risk is a rapid decline in interest rates. Main upside risk is a faster and milder-than-expected end to the NPL clean-up process.

 

·         KOZAL (BUY, TP: TL47.97 upped from TL45.03, due to TVM & better cash cost) 3Q Weak oper => low production: NI @ TL139.3m, below our est (TL152.6m) & cons (TL150.4m) => weaker than exp oper perfor. EBITDA @ TL 177.5m (TL192.1m) => below our est (TL192.6m) => lower-than-exp production due to decline in grade of processed ore. Cash costs remained @ $350/oz (we exp $380/oz 3Q; FY @ $350 vs our exp @ $370) ) thanks to low exploration costs (-67% q-q) => EBITDA mrg +0.6ppt q-q to 79.3%. We exp total prod vol to remain @ 335k ounces => below our initial 345k oz est. We cut our prod est by 2% for 2013 & 2014. NI & EBITDA ’13 no chng & -2% for ‘14. We remain +VE => project CAGR of 11% in gold prod to 502k oz by 2016 => 3 new mine projects (Diyadin, Himmetdede & Sogut), which will become fully operational in 2014, 2015 & 2016, resp.

 

·         DOAS (BUY, TP: TRY6.98): Chairman says 2012 rev likely to be b/w TL5-5.5b (latest official guidance: TL4.8b- 4.9b). We believe actual 2012 print likely to be on lower end of new range => still beats our forecast TL4.7b & cons TRY4.8b (+VE) => mrg would be critical as well. Results Nov 15. Analyst meeting Nov 19.

 

·         TELCO: TCELL (BUY; TP TL11.11), TTKOM (HOLD; TP TL7.44) > CMB reportedly suggests Atilla Koc, as one of the independent members of Turkcell’s Board. Atilla Koc was the ex-minister of Tourism. He worked in the AKP cabinet btw 2005-2007. Separately, the telecom regulator has fined TTKOM for a miniscule amount of TL370K for not submitting certain documents on time.

 

·         THYAO (HOLD, TP TL4.35)=> To start flying to Caracas, Mexico City, Havana, Boston, San Francisco and Montreal depending on availability of aircraft and permissions by related regulators. Sl +ve for LT growth but unlikely to significantly impact ST. Implies co taking action to increase traffic especially through transfer traffic and increase mtk share further. We would be concerned that growth through transfer traffic may continue to pressure THYAO yields and mrgns. In other news, PA denied speculation that it was getting ready to further privatise THYAO soon. We think speculation is likely to continue until the PA/gov announces what they exactly plan to do with their 49% stake. Given near doubling of share price since beginning of the year and the govs efforts to increase budget revs, speculation is unlikely to stop.

 

EARNINGS TODAY

 

·         BIMAS (BUY; TP TL83.82) > We exp TL82m NI (+5% y-y) vs. TL89m cons est => exp BIM to perform similarly to 2Q12 w moderate rev growth and low EBITDA margin (due to relatively low oper leverage). We f/cast rev @ TL2,636m (+22% y-y). In the absence of one-off items in opex, we est EBITDA margin at 4.6%, +30bp q-q (-50bp y-y).

 

·         CCOLA (HOLD; TP TL34.60) > We exp TL1.46bn revenues, TL285m EBITDA and TL185m NI vs cons est of TL1418m, TL271m and TL167m resp => Local and int’l unit sales to grow 5% y-y & 25% y-y. We f/cast => 23% y-y incr in revenues and 39% in EBITDA thanks to increasing profitability of: i) Turkish ops on better pricing environment & ii) int’l operations on lower commodity costs/increasing economies of scale. The strong lira in 3Q12 should have also continued to help the bottom line.