Buy - Sell Report

·         YKBNK (BUY; TP TL5.85) & YKSGR (NR) > Hurriyet quotes Generali’s CEO as saying that they are in talks to buy Yapi Kredi Insurance and a deal “could be reached soon.” Generali operates in the Turkish non-life insurance market with a mkt share in premiums of only 0.5% as at Oct 2012 vs. Yapi Kredi Insurance has 7%. Recall that the spin-off process of the pension and life arm under Yapi Kredi Insurance started at end of last year. We believe the sale of the non-life insurance business could provide c.40bp boost to YKB’s CAR.

 

·         NATURAL GAS/ELECTRICITY> Reportedly, Botas reversed the entire price incr that took place late Nov’12 => +37% on NG sold to state owned/contracted power plants (TL1400-1427/000CM almost x2 price of NG sold to private sector). With the price incr Botas had aimed essentially to shift its loses to its electricity production entity (EUAS) & TETAS. NET/NET: If true, will also help electricity prices, as state entities (EUAS) & TETAS would pass on cost pressures to consumers by incr’g regulated price tariffs => electricity price incr is less likely in s/t (good for infl) => +VE for cement sector, electricity is c35% of COGS.

 

·         ARCLK (HOLD, TP TL11.00) > Sellers of white goods may have to start purchasing back old white goods from consumers for as much as TL60/piece starting June 2013 as part of new recycling rules according to local dailies. Comment => Can be both +ve/-ve, as we do not know exactly how the system would work. If consumers are incentivized enough, expansion of recycling rules likely to increase demand. However, may have unfavourable cost implications for white goods companies. Will look into more detail and discuss with ARCLK mgmt.