Buy - Sell

·         GASOLINE PRICE upped by 8 TR cents. Impact on Jan inflation muted @ +0.03%.

 

·         TAVHL TI (BUY, TP TRY13.80) > Gov announced details for 3rd airport in Istanbul (BOT, 25yr concession post-construction) => will be built in 4 phases => 1^st phase capacity @ 90m pax/yr, 3 runways => expand to 150m in 4^th phase, 6 runways. Gov’t est cost @ €7b. Construction to take 42m. Companies will compete based on rents they would pay gov & gov will guarantee passenger fee payments for 342m passengers w/i 12 yrs after ops start. Winner will charge fxd EUR fee/psx over life of concession. Construction is expected to start 6m after tender w/o waiting for completion of financing. To ensure this, gov requires 20% equity financing for project. Tender to be launched today. Public competitive auction planned on May 3. Comment: We believe conditions of tender favour highly established players such as TAVHL => gives little time for preparation of tender & arrange financing. Required construction period is aggressive as well given size of project.

 

·         ENKA (BUY, TP: TRY5.60) > Acc. to Montenegrin govt website, Montenegro’s PM hosted the US Ambassador & rep of Bechtel-Enka consort to discuss cooperation b/w Montenegro & US. Recall news => Montenegro in talks with China’s Poly Group, Bechtel & EIB to build a 170-km highway in Montenegro. Using Romanian highway project of Enka as benchmark=>potential size €2.3b (€1b using Enka’s Kosova highway project as benchmark). Enka’s Backlog $3.3b. Comment: Supports our expectation Bechtel-Enka would take part in the potential project.

 

·         EKGYO (NR) > Held tender for its 436 unit Sultanbeyli project to be built by Public Procurement Model. => Emlak will bear all risks and responsibilities associated with the financing, development and sales of the project.

 

·         SISE (NR) > Preparing for Pasabahce Cam IPO in 2013. Decision likely to increase transparency of group and unlock any hidden value. Might create +ve momentum for SISE and its subsidiaries. Note that subsidiaries record the value of Pasabahce at cost to their balance sheet.

 

·         ENERGY SECTOR > EPDK reportedly getting ready to fine 20 fuel distribution companies TL600m in total due to delays in implementing automation-procedures for inventory and product flows, according to a local daily. These procedures are meant to help the regulator battle the black market. Comment > Opet in which TUPRS has a 40% stake is unlikely to be within this group we believe.

 

·         WHITE GOODS (DEC) > Domestic shipments +2.7 y/y, Import growth @ 26.9% y/y due to low base in Dec-11 and strong TRY. Domestic sales -0.2% y/y in 2012.  Exports +7.5% y-y in Dec and +12.8% y-y in 2012. Impact > 1.9% y-y growth in production in Dec may hint at weak start for 2013. Moreover, acceleration in growth of imports should remain on radar screens.

 

·         ARCLK  (HOLD, TP, TL11.0) > Announced plans to issue corporate bonds up to $1b (in USD or other foreign currencies). Will apply to CMB. We had been highlighting that ARCLK was likely to issue corporate bonds but size is above our expectations. We believe co could use a portion of the proceeds to finance acquisitive growth. A corporate bond issuance will provide funding diversification, might slightly decrease funding costs and increase investor interest in the stock. Net debt @ USD1.4b as of Sep-12.

 

·         KRDMD (BUY, TP TL1.67) > TP raised 8% to TL1.67 from TL1.55 on our updated val model with latest multiples for peers in the steel sector. 2013/14 P/E peers multiples expanded from 9.7x to 10.8x since our last report based on TEB-BNPP and BB consensus ests. Avg 2013E/2014E EV/EBITDA multiples have expanded from 6.7x to 7x. Key risks are execution of capacity-expansion plans and steel prices.

 

·         TUPRS (BUY; TP TL59.20) > Incr’d our TP by 4% on 40bps lower WACC est & earnings revisions => earnings est for 2012-2014 is down by 10% in 2012, 6% in 2013 and 3% in 2014, while our 2012 vol est also rises slightly. WACC est => TR L/T Eurobond yields stabilised @ c.4.5% (-50bp vs two months ago). Earnings est => notable deviation in product crack spreads from our est in 4Q12 and our assessment of sl lower domestic sales prices. We exp refining mrgns to remain higher in 2013 than those over 2009-12 => significant # of refinery closures in developed countries, especially in Europe over the last 4-yrs. Yet, we are unlikely to see any notable y-y imprv => recovery in refining mrgns in 2012 has partly reduced incentives for further ref closures and major supply discipline. Tupras trades @ a 30% prem to peers on avg 2012E-13E P/E, but we think this is deserved given its more robust mrgns, better growth prospects and high divi pymts. We lower our div est by less than our profit est, esp for 2013, as we think Tupras had room to incr its pay-out ratio. we est an 8% yield for 2013.