Buy - Sell

Banking sector > BRSA granted Bank of Tokyo-Mitsubishi a deposit banking license, fully in line with expectations as it was very recently mentioned by the head of the BRSA. According to local dailies, the bank plans to do mainly corporate banking in Istanbul headquarters and is not interested in retail banking.

 

YKBNK (BUY; TP TL5.85) & YKSGR (NR) > YK Insurance announced that its 100% subsidiary Yapi Kredi Emeklilik, the pension and life arm, will be spin-off. Recall that YKB is in the market for the sale of these insurance businesses and apparently decided that it would be easier and possibly more profitable to sell the assets separately. While the eventual sale may be somewhat delayed with the additional procedures, the announcement indicates that the sale process is advancing. As a reminder, sale of these assets at a total valuation of USD1b would provide c.70bp boost to YKB’s CAR.

 

TKFEN (BUY; TP TL8.45) > Tekfen Holding announced that it closed the sale of its 29.26% stake in Eurobank Tekfen for TL344m (USD192m). The company will report TL128m profit from the transaction. The close of transaction in 2012 increases the prospects of dividends for 2013. We f/cast TL0.33 DPS for 2013 (TRY124m, 4.6% yield); however, we believe there could be some upside risk to our est.

 

TRCELL (BUY; TP TL12.17) > Turktell Bilisim Servisleri, 100% subsidiary of Turkcell, decided to increase its paid-in-capital by TL346m (31%) to TL1,458m. The majority of the capital increase is related to Turkcell Superonline’s investments in the past period and does not imply a cash-out-flow from the group.

 

Tablet Tender > Omer Dincer, the minister of Education, stated that a tender will be held for the production of 11m tablets => to be integrated to the Turkish education system. The Ministry already finalized a previous tender for 40K tablets, and another tender for 50K tablets is about to be finalized => Such a huge tender should favor telecom operators as it should support broadband penetration in Turkey. Indeed, limited PC penetration has been a constraint in Turkey and the tender is a major development in this respect. That said, the timing of the implications is not clear as the time-frame concerning the distribution of 11m tablets was not revealed => we expect the distribution to be spread over years.

 

VESTL (NR) & ARCLK (HOLD; TP TL11.0) > Vestel Elektronik and Arcelik are among the potential candidates for entering the tablet tender. Vestel had submitted the winning bid for the smart boards during the first pilot tender and the winning bid for tablets during the second pilot tender. Arcelik was also int’d in the project; however, did not submit a bid during the second tender. We exp the margins for the tablet/smart board project to be relatively thin for the manufacturers. We believe the incremental value for Vestel Elektronik would be higher as the company already commands relatively lower margins compared to Arcelik. Nevertheless, the project award would be a +VE trigger for both companies.

 

AEFES (HOLD; TP TL26.50) > Anadolu Efes and Heineken decided to end their partnerships in Kazakhstan and Serbia. According to the agreement, both companies will transfer their minority cross-holdings to each other. Efes Kazakhstan currently has a 54.3% market share in Kazakhstan and accounts for 9% of EBI’s total unit volumes. To acquire Heineken’s 28% stake in Efes Kazakhstan EBI will transfer its 28% stake in the Central Europe Operations, the holding company of Serbia operation, and pay an extra USD161m to Heineken => The amount to be paid is above our exp of USD100-120m; however, the impact on Anadolu Efes’ valuation is marginal.