Buy - Sell

·         BANKS > Gov’t plans to double deposit guarantee to TL100k per depositor => the first rise in deposit guarantee level since 2004 . +VE, as it will encourage savings and help increase deposit duration to some extent. However, burden of increased insurance premium paid to the Savings Deposit Insurance Fund by banks is likely to be around ~3% of NI. Among banks under coverage, VAKBN likely to most affected while GARAN the least.

 

·         THYAO (BUY, TP TL8.50) / TAHVL (BUY, TP TL14.6) > Gov’t reportedly plans to grant exclusive rights for 70 new domestic routes to airlines that promise to fly the routes at least three times weekly, to incentivize flights to cities currently getting too little air travel service.  Comment: Slightly +ve for THYAO and TAVHL and good to see the gov’t still trying to take measures to expand domestic air travel (650% growth between 2002 and 2012). Supply might create its own demand, but we are not sure if this incentive will be enough and we presume THYAO will not come under any significant political pressure to start new routes and incur any additional losses. We estimate THYAO is at best breaking even in its domestic business

 

·         TOASO (HOLD; TP: TRY11.5) > CEO announced they were working on 2 new PC projects for domestic & export markets => targeted launch time 2015YE => a sedan car B sgmnt (might be replacement of Albea) & other might be a model relocated from Italy or brand new model (low cost PC like Renault’s Dacia). It will own patent rights for both cars. He refrained from further details, hopes to disclose more details before July. We had been noting new PC mandate as an upside risk. This is the 1st official announcement => co assigns high chance to realization of projects. Val impact => critical unknowns such as sales vols & investment figures. We believe it might receive less attractive terms for new PC mandate than contract terms for LCVs (lower vol security, lower mrgs etc). Track record of sedan PC export to EU is limited. Nevertheless, new PC mandates would reduce question marks on L/T prospects (especially after 2015, when current take-or-pay contracts for Minicargo will expire).

 

·         TTRAK (HOLD; TP: TL46.60) > CEO Mr. Votta told press that govt’s planned monetary incentives (potentially scrap) for farmers to buy tractors would be an important catalyst for market growth. Hence, incentives should be well planned => should not support cheap tractor imports that would hurt small local players or the sector overall. In our view, Turk Traktor is hoping for the introduction of scrap incentive in 2014, when the gov plans to enforce Euro-4 emission standards for tractor engines. Euro-4 will incr the cost of engines sharply and lead to a 15% incr in prices => this will hurt the purchasing power of farmers who will need support from the govt. Hence, an incentive scheme planned for 2014 would help competitiveness of the sector.

 

·         TCELL > Published 4Q12 est survey > net sales: TL2,672m (TEB-BNPP: TL 2,684m), EBITDA: TL786m (TEB-BNPP: TL 790m) NI: TL465m (TEB-BNPP: TL 472m). 4Q12 due 21/02/13.