Buy - Sell

·         SEPTEMBER IP +3.9% MoM after -2% in Aug (Ramadan); annualised +6.2% vs consensus @ 2%. Recovery broad based. Pickup on durables + intermediate goods (sounds familiar).

 

·         PENSION REGULATION => Regulations re private pension system will lower cap on mgmt fees to 2% from 8% and fund mgmt fees to 1.09-2.28% from 3.65% (sector avgs @ ~3.7% and 2.4%). Entrance fee to be lowered to 10% of monthly min wage, down from 50%. Regulation published in the official gazette today and in-line with previous news reports. Note that ANHYT mgmt has been guiding towards this change in regulation while fee ratios were expected to gradually come down going forward as assets under management grow. Nevertheless, the initial impact could be negative.

 

·         AKBNK (HOLD; TP TL9.40) => 3Q12 NI @ TL779m vs our TL797m and TL766m CNBC-e cons est. Downgrading to HOLD on valuation while raising TP (to TL9.40 from TL8.80) and earnings (2013 net profit +11%). 3Q12 ROE of 16% in line with expectations but asset quality and costs are two areas to watch out for (opex +25% y/y). CPI-linked bond adjustment in 3Q12 means NIM expansion was limited to 19bp q-q, but the widening in loan-deposit spread exceeded our forecast @ 48bp. Loan growth @ 7% q-q, while the bank replaced TRY securities with Eurobonds. TL493m of MTM gains => BV grew TL1.3b or 7% q-q. CAR +1% to 17.1% after Basel-II. Fees +13% y-y, vs our 8% expectation. We closed our long AKBNK and short ISCTR trade idea, which we recommended on Oct 2 after +13%.

 

·         TOASO (BUY; TP TL9.25) > NI @ TL100m => weaker (-24% y-y; our est: TL112m, cons: TL105m). Rev @ TL1,537m => in-line (-8% y-y: -1% domestic & -7% exports; our est of TL1,529m, cons: TRY1,601m). EBITDA @ TL190m => weaker (-8% y-y, our est: TL212m cons: TL199m). We think competition in 3Q12 played some role behind the EBITDA miss, along with deviation in take-or-pay bookings vs. our est. Analyst meeting today @ 10.30 local. Adj’d net cash declined from TL370m in Jun-12 to TL342m in Sep-12. Recall that, Tofas utilized factoring on receivables amid an arbitrage opportunity in 2Q12. We will check whether there was similar financing in 3Q12. FY capex guidance is €142m incl Doblo US project, (€62m excl) => YTD Capex €69m, hinting the company might be progressing with the project (not in our model).

 

·         AKCNS (BUY; TP TL10.73) > NI @ TL33m => weaker (-3% y-y and -28%q-q our est: TL35.6m, cons: TL39.6) <= weaker oper perf w EBITDA @ TL61m => 4% below our and 9% below cons est. Domestic activity stagnant w flat y-y rev @ TL230m while export sales +12% y-y to TL50m (revival in Russia might have helped). EBITDA margin -100bp y-y (we had est 50bp contraction) to 22% due mainly to higher electricity prices. Yet, YTD margins proved stronger than we had originally estimated. Net/Net: Maintain BUY rating. Raising our TP by 9% to TL10.73 from TL9.80 => incorporating strong recovery in margins since 2Q12 => we now est 2012/13 EBITDA margin @ 21.3%/21.4%, up from 18.7%/20.5%. 2012/13 revenue, EBITDA and NI est are raised 3%/1%, 17%/6% and 30%/11% respectively.

 

·         TKFEN (BUY; TP TL 8.18) => 3Q12 NI @ TL49m (-10% y-y) in-line with our est but below cons (TL58m). EBITDA @ TL66m lagged on back of a miss in agri segment while lower-than-expected tax expenses compensated for operating weakness. 2012/13 EBITDA revised down est by 5%/7%, 2012 EPS raised 3% on revised financing income/tax exp. SoTP-TP revised down to TL8.18 from TL8.45. BUY maintained on val, planned increase in vertical integration in agri segment, and prospect of large scale projects in 2013. Progress on Libyan issues, and new project additions can be among positive triggers. We now believe downside risk to the USD2b YE backlog target is limited.

 

·         AKSEN (HOLD; TP TL4.1) => AKSEN will resume selling electricity to Syria in next 24 hours, according to daily Haber Turk. Recall that Syria stopped buying electricity from AKSEN in early October. Note that AKSEN has a 1-year electricity accord with Syria, which started in late September. Electricity sales to Syria accounts for 20% of total revenues of AKSEN. 

 

 

EARNINGS TODAY

 

·         VAKBN (HOLD; TP TL4.42) > TEB-BNPP NI @ TL277m, Cons @ TL262m. We expect VAKBN to maintain mrkt share in loans but lose in deposits. Forecast loan-deposit spread +31bps q-q and NIM +28bp q-q, sharp deterioration in net cost of risk to 55bp from 17bp in 2Q12. We est fees to come down by 28% y-y with the bank being hit the most by the accrual-based accounting. Even adj fee performance to lag the sector avg. Opex growth likely to gain pace to 18% y/y from 14% in 1H12. We forecast net income -3% q-q for an 11% ROE.

 

·         ASYAB (HOLD; TP TL2.04) > TEB-BNPP NI @ TL43m, Cons @ TL45m. We expect ASYAB to gain market share in both loans and deposits in 3Q12 which should grow strongly by 5% and 7% q-q, respectively. We estimate a c25bp q-q expansion in margins to lead to 12% higher adjusted NII on a q-q basis. NPL coverage ratio to rise c5ppt q-q to 60% and NPL inflows continuing. Forecast NPL ratio to rise 5bp q-q despite further write-offs, fee generation improvement @ 14% y-y, but gains to be wiped away by 25% y-y rise in opex. Net profit to decline sharply by 21% q-q and 29% y-y => ROE 8%.

 

·         KOZAL (BUY; TP TL45.03) => TEB-BNPP NI & EBITDA @ TL153m & TL193m, Cons @ TL150m & TL192m. We expect EBITDA margin to decline 1.0pp q-q to 77.7% in 3Q12, as cash costs incr slightly, the grade level and prod vols declined. We expect KOZAL to sell 82.7Koz of gold in 3Q12, down 5.2% q-q. Note avg gold prices +2.3% q-q to $1,653/oz, while the average USD/TRY parity was almost flat q-q at 1.80.

 

·        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 revenue growth and low EBITDA margin (due to relatively low oper leverage). Accordingly, we f/cast revenues @ TL2,636m (+22% y-y). In the absence of one-off items in opex, we est EBITDA margin at 4.6%, 30bp up q-q (50bp down y-y).