Buy - Sell

·         TAVHL TI (BUY, TP TRY13.80); THYAO TI (BUY, TP TRY7.30): Reportedly, 3rd Istanbul airport tender (BOT) is awaiting approval of High Planning Board (headed by PM Erdogan). Acc. to news, tender (initially aimed for Sep’12) has been delayed bcs of a govt review of its obligations re existing concession @ Ist Ataturk. Reportedly, KCHOL (nr) & SAHOL (nr) => among possible interested parties. News reports 3rd airport is now exp to be operational earliest by 2017, should the tender be concluded in 2013 & adds Ist Ataturk will be serving @ much smaller capacity & might be shut down after. Comment: 1^st time gov sources admit 3rd airport would be operational by 2017 (previous 2015/16) => overall +VE for TAVHL we believe: risks to profits from concession @ Ist Ataturk (ends 2021) is further diminished & gov seemingly admits importance of its obligations to TAVHL. We maintain our view that TAVHL is by far most likely candidate to win given its long-standing experience, know-how & gov’s aggressive completion schedule & gov’s obligation for Istanbul Ataturk airport. Postponements re completion of 3rd airport is -VE for THYAO => capacity limits are likely to be reached by 2015.

 

·         ENKAI (BUY; TP TL5.60) > ENKAI will acquire a 20% stake in Moskva Krasnye Holmy (owner of Riverside Towers & a hotel) for $92m from the municipality => its stake in MKH will incr from 56% to 76%  => implied value for MKH @ $463m => close to independent val as of Dec’11 => $367m for office + c.$100m for hotel => below our val of $687m. NET/NET: Val might look disappointing to some extent; however, given the tender was for a minority stake, we believe it is not fully indicative of fair value. MKH (pre-transaction) accounts for 4% of Enka’s NAV according to our estimates.

 

·         ENERGY SECTOR > The PA will hold an auction for the Seyitomer lignite fired power plant (Aegean Region – Mid/West Anatolia) and the operating licenses of lignite mines feeding the power plant, today. With 600 MW installed capacity, the plant produces 3.6m KWh electricity, generating $310m rev pa, according to rough estimates. We exp the price to be in the $1.2-1.5bn range. Sixteen groups, including Park Holding, Dogan Enerji (DOHOL, NR), D Enerji (Dogus), Altek Alarko Elektrik (ALARK, NR),  Aksa Enerji (AKSEN, HOLD) and Ayen Enerji (AYEN, NR) will participate in the tender.