Buy - Sell

·     CBT REGULATIONS ON BANKING SECTOR > Details of CBT’s new leverage-based RRR policy were published in the official gazette. Accordingly, the add RR (if leverage ratio is below a certain threshold) will be applied to TL and FX liabilities of all maturities => The threshold will start at 3.5% as of 4Q13 and will gradually incr to 5% by 4Q15. The leverage ratio is calculated as core capital (Tier-I) divided by the sum of: 1) total liabilities, 2) non-cash loans, 3) irrevocable commitments, 4) 10% of revocable commitments and 5) derivative financial instruments multiplied by a credit conversion ratio. As at 2Q12, TR banks have an avg 7.6% leverage ratio with only three banks below 5% (none of the banks under our coverage). Comment: Under a base scenario of annual 10% core equity growth and 15% on- and off-B/S asset growth, the CBT does not expect the leverage ratio of the sector to go below 6.5% by end-2015. Hence, this new regulation is not more restrictive for banks than the 12% CAR requirement already being imposed by the BRSA.

 

·         KRDMD (BUY; TP TL1.55) > Kardemir announced its sales program for 1Q13, implying a max total of 472k tonnes of steel => +12% y-y and q-q. According to add info we received from mgmt, a similar sales program is exp’d to be maintained for the rest of 2013. The enabler for the incr is the new billet casting plant invest which is about to be completed according to mgmt. Comment: +VE. Confirms our 1.6m tonnes unit sales est, +8% y-y, for Kardemir in 2013. Indicates the Co will have completed another important part of its invest programme and utilise it as much effectively as possible given the constraints from other important investments such as the fifth blast furnace to be completed by early 2014.

 

·         TOASO (HOLD; TP TL10.9) will shut down production for maintenance and inventory count purposes between 26 Dec and 7 Jan. The company had a similar shut down in YE11; but this one is longer, hinting the company expects a weak start to 2013.

 

·         EKGYO (NR) > Agaoglu-Dap consortium gave the highest offer @ TL1,335m and a 40% revenue-sharing agreement with Emlak Konut (corresponds to a min of TL534m revenue) in EKGYO’s Kartal land tender. The appraisal value of Kartal is TL207m => implies a 2.58 tender-value to base-value multiplier. Note the avg of ongoing projects tender-value to base-value multiplier is 1.61 and average of the completed projects project-end to base-value multiplier is 2.53.