Buy - Sell

·        MOODYS TDAY @ 5pm > Teleconference on Turkey. Topics include: TR Corp bonds, banking sector and “shifting closer to an investment grade sovereign rating”.

 

·         ENERGY SECTOR > Shutdown of small to mid-scale inefficient NG-fired power plants has accelerated due to rising prices, and is an inevitable trend according to the president of EMSB. Gov’t does not provide any incentives for these investments, many of which have been cancelled because no longer feasible. Comment > Corroborates our view that players have to diversify away from NG fired power plants to other sources. As share of lignite power plants and renewables increase in total generation, we expect more pressure on electricity prices and profitability of independent power producers (AKSEN, ZOREN and AKENER).

 

·         TCELL > According to the Privy Council website, the “hand down date” for the dispute between Cukurova and Alfa re the ownership of the 13% Tcell stake is Jan 30. Pls note that the dividend payout decision could be contingent of the case’s resolution. Separately, MV Holding applied for registration of 26m Tcell shares on the ISE => 1.18% of paid-in capital and 3.4% of free float (mkt value of TL312mn vs TCELL’s total trading vol of TL824mn last week) => these were the remaining unlisted shares owned by MV Holding’s ownership. MV says the registration is part of its “long term strategic planning.” MV’s total stake in Turkcell was 2.56% as of end-June 12, including both listed and unlisted shares.

 

·         TAVHL (BUY; TP TL13.80) > The head of State Airports Authority reportedly said that Istanbul Ataturk Airport will be shut down for scheduled air travel services (domestic or international) once the third airport is opened. He added that the tender documents would be available to all potential bidders starting today. Comment: Given that TAV Airports will be fully compensated for all of its reduced profits, we think closure of Istanbul Ataturk Airport is good news, as it would strengthen the success case of the new airport.

 

·         KRDMD (BUY; TP TL1.67) > Reportedly, the Co will invest $120m to build steel railway car tires and other components => no further details about timing or financing. Comment: Mgmt had mentioned the Co’s intention to expand into railway components business; yet, this is the first time an investment amount has been mentioned. Although there are few details, we think the investment makes sense from a strategic point of view and is in line with Kardemir’s plans to diversify its business from commodity long steel. We estimate railway components should fetch significantly higher unit prices and margins.

 

·         THYAO (BUY, TP TL7.30) > Lufthansa’s Turkey GM says existing negotiations between Lufthansa and THYAO are likely to have an outcome, if any, by end Feb. Comment > In line with previous statements by co’s top mgmt who had said talks likely to be concluded in 1Q13

 

·         TATKS (HOLD, TP TL2.27) > Applied to CMB to issue TL100m corp bond in 2 tranches. First TL50m tranche: 2 years maturity, biannual coupons and offer 165 bps spread above 2-year Treasury bonds. Maturity and interest on remaining TL50m will depend on the mkt conditions.