Buy - Sell

·         EREGL (HOLD; TP TL2.56) > Plans to invest $300m in 2013 ($250m in 2012) => second galvanization line investment is one of the major invest programs starting in 2013. The existing galvanization line, which has a capacity of 330k tonnes pa (vs 2012E 7.2m tons overall unit sales) is running @ full capacity. Co plans to incr sales especially to the auto industry with new capacity (to come on line in 2 -2.5 yrs). Comment: c.$60m (25%) higher invest guidance than our est => little impact on our f/casts & valuation. Higher sales to auto industry is good news, but we already assume gradual higher cold-rolled steel sales (incl’g galvanized flat steel) in the nx few yrs.

 

·         DOAS (BUY, TP TL9.86) > VW Group’s European sales declined 16% in Dec (2% decline in 2012). We believe VW might continue to be more aggressive in Turkey (given weakness in Europe) and might be the reason behind why DOAS has become more bullish re mkt share expectations for 2013. EU27 Pass Car registrations declined 16% y-y in Dec & 8% y-y in 2012 (Source: ACEA). Worsening outlook in pass car demand since Nov confirms recovery in 2013 is highly unlikely. Renault expects the mkt might shrink by 3% in 2013, Peugeot by as much as 5%, while Fiat sees 1-2% decline.

 

·         LIGNITE POWER PLANT TENDER > Today is the deadline to bid for the Kangal lignite power plant’s tender sale in Central Turkey, which was put up for sale by the PA last Dec. The sale will include the ownership of the plant and the operating licenses of lignite mines; 457 MW installed capacity, produces 2.5m KWh electricity, generating $210m rev/ annum, according to rough est. Recall that in for the Seyitomer lignite fired power plant tender in late Dec, sixteen parties including Park Holding, Dogan Enerji (DOHOL, NR), D Enerji (Dogus), Altek Alarko Elektrik (ALARK,NR), Aksa Enerji (AKSEN, Hold),  Ayen Enerji (AYEN, NR), Limak Insaat bid in the tender. We expect all those groups to bid for the Kangal power plant. Note also that Celikler Insaat won the Seyitomer tender with a bid of $2.25b; a price much above our est of $1.6b.

 

·         TTKOM & TCELL > Telco Regulator acc to Haber Turk will establish new tech-electronical infrastructure to check mobile subs’ mthly spend of minutes, tariffs & invoices. Previously such checks were done on demand. New infrastructure might bring pricing restriction for mobile telecom operators (TCELL, Avea & Vodafone).