Buy - Sell

·         TCELL (BUY; TP: TL 12.17): According to website Finansgundem, Alfa Group is in talks with Cukurova to sell its 13.2% stake in TCELL => acc. to news, Alfa group predicts it would lose its case against Cukurova based on the recent decision of the Privy Council in May, which was in favour of Cukurova. Hence, the speculation is that Alfa would exit TCELL since the existing shareholder structure will prevent a resolution on the current problems. COMMENT: Pure speculation for now => we believe this is just one of the possible outcomes. If Cukurova indeed wins the case against Alfa => should motivate Alfa Group to compromise to resolve problems (clear the way for dividends) or exit the company.

 

·         DURABLE SALES (NOVEMBER) WEAK => White good shipments (ex-manufacturers) +0.4% y-y in Nov, sl weaker than our est. Imports +20.1% y-y partially due to low base. Domestic sales -0.5% y-y in 11M12. Exports +19.5% in Nov, 13.3% y-y in 11M12, partly driven by base impact but strong export demand continues. Neutral for ARCLK (HOLD, TP TL11.0) but the pace of imports needs to be monitored.

 

·         NEW ELECTRICITY LAW => Companies that produce electricity for their own use (auto-producers) will not allowed to sell electricity to the national grid, according to the proposed new electricity law. If an auto-producer sells excess electricity production to the grid, it also has to buy its entire electricity consumption from the grid and pay distribution fees and taxes (will cost ~30% more than the current cost of production). This would have a -ve impact on auto-producers’ electricity production. Impact on IPPs (independent power producers) like AKENR, AKSEN, ZOREN would be marginal, as the share of auto-producers in total electricity generation is around 5%.

 

·         THYAO (BUY, TP TL6.14) =>  Pegasus Airlines, a Turkish low cost carrier, will order 100 new aircraft (58 320neos, 17 A321neos, plus an option for 25 more) between 2015 and 2022. Reportedly, the co will also gradually return/sell most or all of the 42 Boeings (B737s) in its fleet after delivery of new aircraft start. Comment: While the news on the exit of B737s in the medium term is not confirmed, it makes operational sense. The planned expansion does not seem to be too aggressive nor does it constitute a significant threat for THYAO. 6% to 9% per annum growth by number of aircraft in the long-term by Pegasus would be in line/slightly higher than the likely growth in Turkish aviation industry in the next decade.