Buy - Sell

·         OCT FOREIGN TRADE => TEB-BNPP @ $7.4bn, if in line 12-month cumulative @ $86.6bn. Correction to continue but at a slower pace.

 

·         FINANCIAL STABILITY REPORT => CBRT unveiled new macro prudential measure to be used from 2014 onwards in its bi-annual stability report. Will require banks with low Basel III leverage ratios (basically: equity/(assets+off.bs)) to set aside additional reserve requirements of 1-2ppt. CBRT wants a 3% leverage ratio for 2014 to be gradually increased to 5% in 2016. Currently no bank under our coverage is even close to the limits (average @ 7.2%). We estimate YKBNK has the lowest ratio @ 5.7% which still allows for 3x faster growth than our forecast for the bank until 2014 with current level of core capital. Even if the rule were restrictive, note that every 1ppt additional reserve requirement pulls down annual earnings by only c.1.5ppt.

 

·         ELECTRICITY PRICE HIKES => Reportedly, the gov’t will likely increase electricity tariffs by 5% in early Dec after loss-making Botas hiked the price of natural gas sold to state-owned generation companies by 37% yesterday. In our view, the gov’t will increase NG prices as well, as Botas’ losses mainly stem from the low NG prices sold to the private sector and households.

 

·         ISCTR (HOLD; TP TL6.01) > sold a TL285m NPL portfolio for TL50m (18 cents on the dollar). The portfolio amounts to 13% of total NPLs, as at 3Q12 and the sale will lower the bank's NPL ratio of 2.1% as at 3Q12 by 28bp to 1.8% (ceteris paribus) while boosting the bank’s 4Q12 NI by TL40m.

 

·         UYUM (HOLD; TP TL3.45) > Uyum announced that Makromarket (a supermarket chain with 167 stores in Turkey) reached an agreement with the shareholders of the company to acquire 47.3% of UYUM at TL2.88/share (4% higher than the current price of TL2.77/shr) valuing the entire Co @ TL172.8m (current Mcap @ TL166.2m). The Co stated that the transaction does not require a tender call and that the deal will be completed upon approval of the Competition Board. The deal implies 0.6x and 0.4x EV/Sales multiples on our 2012 and 2013 estimates, respectively. Note that we estimate UYUM to generate negative EBITDA and EPS of TL2m and TL15m respectively in 2012. We forecast TL4m EBITDA and a loss of TL14m in 2013.