Buy - Sell

·         TAVHL TI (BUY, TP TRY15.61); ENKAI TI (BUY, TP TRY6.40); SAHOL TI (NR), FRA GR (NR) > TAVHL’s CEO, Mr. Sani Sener, according to Hurriyet, says they are ready to bid for the new Istanbul airport auction to be held on May 3. Also says completion of 1st phase (70mppa capacity) likely to take 7 yrs (after signing of agreement). The govt he believes is likely to continue investing in expanding apron & runway capacities at Istanbul Ataturk. Adds, cost for 150mppa capacity airport would exceed $10b & winner would need to finance initial construction activities itself (leveling of land), as creditors unlikely to take this part of construction risk. TAVHL, which will compete based on total rent it would promise to pay the govt over 25yrs after completion of the 1st phase, would not try to win the auction ‘at any price’. Comment: These comments incr’d our conviction i) TAVHL most likely winner given its know-how & integrated structure and ii) unlikely to overpay => well prepared given its focus/experience & unlikely to face too stiff competition, given list of likely bidders & auction date not being postponed despite the reported request from some potential bidders. Acc. to Reuters bidders are i) TAVHL (no partner), ii) Cengiz-Kolin-Limak-Mapa-Kalyon consortium, iii) IC Ictas - Fraport consortium & iv) Sabanci Holding - Enka Insaat consortium. 

 

·         FROTO (HOLD TP TL23.90) 1Q13 WEAK OPERATING PERFORMANCE > 1Q13 NI TL176m (+7% y-y, our est: TL165m, Cons: TL171m). Revs TL2.6bn (+7% y-y) in-line. EBITDA TL177m (-4% y-y, our est: TL197m, cons: TL200m). TL41m tax income was above our est, compensating for operating weakness. 1Q13 EBITDA mrgn declined 0.8pps y-y to 6.9% due an ageing LCV portfolio, and a more significant impact of discounts on 2012 modes vs our est. Net debt declined toTL807m in Mar-12 from TL958m in YE12 thanks to decline in working capital (despite increase in inventory levels). Extent of EBITDA mrgn recovery throughout 2013 might be limited. FROTO fell behind both VW and Renault in terms of market share in 1Q13 (targets to maintain market leadership in 2013). As such, there might be downside risk to our 2013E EBITDA mrgn est of 7.9%. Analyst meeting April 30.

 

·         TTRAK 1Q13 EBITDA MRGN STRONG ON HIGHER UNIT PRICES >  1Q13 NI TL60m (better than our est TL55.8m) thanks to better-than-expected operating performance on higher than expected unit prices. EBITDA TL76.5m was also above our TL69.3m est. Despite sharp 24% y-y decline in high margin local unit sales (including imports), the co was able to sustain its gross profit margin thanks to a 19% unit price increase according to our ests. Manufacturing costs increased significantly as production volumes declined and the size and complexity of models improved as well.

 

·         ADANA (BUY, TP TL5.50) 1Q13 review > NI @ TL9.3m; +36% y-y (TL5m for A-type shares only), abv cons est of TL7.8m, but slightly blw our TL10.5m est. EBITDA @ TL15.6m; +35% y-y, better than the cons est of TL13.8m and our est of TL14.7m. Revenues @ TL84m, ahead of our TL73m est and TL68mn cons est => domestic cement demand incr’d @ double digit rates y-y in 1Q13, due to favourable weather conditions. A better pricing environment also helped y-y revenue growth for the cement sector. Domestic revenues grew 24% y-y in line with our exp; however, exports @ TL21m more than doubled vs our TL10m f/cast. EBITDA margin contracted from 20.1% in 1Q12 to 18.6% in 1Q13 due to higher share of lower margin export sales in rev (incr’d from 12% to 25% y-y). TL0.2m loss from participations (consolidated through equity pick-up) vs our exp of a TL1.5m profit, explains the reason behind lower than exp’d bottom-line vs our est.

 

·         BOLUC (BUY, TP TL2.43) 1Q13 review > NI @ TL3.2mn (1Q12 TL1.7mn loss), much better than our 0.1m loss est (no cons est for Bolu). Rev more than doubled y-y from TL23mn in 1Q12 to TL46mn in 1Q13 and significantly surpassed our TL30m est. Note that export exposure of Bolu is minimal, hence revenue growth was fuelled by domestic demand. Paralel to the top-line perf, EBITDA realization is TL6m vs our TL1.5m f/cast and 1Q12 figure of a -VE 0.4m, fully explaining our deviation at the bottom-line.

 

·         UNYEC (HOLD, TP TL5.15) 1Q13 review > NI @ TL6.2m; +12% y-y, in line with our TL6.1m est (no cons estimate for Unye). Rev @ TL46m; +12% y-y, in line with our exp. Export contribution is low at 7% in 1Q13 (1Q12: 5%). As Unye has been working with close to 100% CUR, the company can only benefit from price increases => therefore, revenue growth is milder when compared with other cement producers. EBITDA @ TL10.8m; +16% y-y, slightly abv our TL10m f/cast. EBITDA margin expanded slightly from 22.7% in 1Q12 to 23.5% in 1Q13.

 

·         MRDIN (HOLD, TP TL5.04) 1Q13 review > NI @ TL3.5m; - 47% y-y, below our est of TL6.2m and cons est of TL6.0m. EBITDA @ TL5.8m; - 35% y-y, significantly behind our TL10.1m est and TL9m cons est. Rev @ TL38m; +15% y-y. The share of exports remained almost the same y-y at 49%. Recall that incr’g capacity in Iraq and rising competition from Iran have led to mkt share loss and lower cement prices in Iraq. Lower exports to Iraq have also impacted domestic prices adversely in 2012. Therefore, the company’s EBITDA margin contracted significantly in 2012 to 26% from 40% in 2011. Despite revenue growth, 1Q13 EBITDA margin was at a record low of 15.5% vs 27.2% in 1Q12. We think that this is due to lower pricing in exports.

 

·         TCELL (BUY, TP: TL13.75), TTKOM (NR) - MOBILE PAYMENTS > Acc. to Hurriyet, the CB is prepared to take money movements & payments through mobile phones under guarantee via draft law. Mobile operators welcome the decision while banks are objecting. Till now, transactions were realized under a regulation of Telecom Regulator. This new draft law was needed since transactions have grown fast & have become complicated. Currently, the draft law is being inspected by the under BRSA, which has requested changes to some parts. Comment: +VE for TCELL and TTKOM’s Avea => +VE impact on mobile data revenues. Mobile data rev @ 10% of TCELL’s consolidated rev in 2012 & we exp 16% CAGR nx 5yrs.  

 

·         TUPRS (BUY, TP TL59.40) AGREES WITH UNION > Tupras and its union have reached an agreement re the collective bargaining covering 2013 & 2014. Employees will get an 8.2% incr for the first 6-mts of 2013 & increases in line with inflation every 6-mts for the rest of the 2-yrs period. We had forecast annual increases of 7.9% for 2013 & 2014 for Tupras’s unit labor costs. Agreed annualised increase seems slightly above our est => not a major concern on Tupras’ cost base in our view.

 

·         SAHOL > Reached a principle agreement to buy Carrefour’s stake in CarrefourSA, according to mergermarket, and will use the proceeds from the sale of DiaSA for the purchase. Mergermarket also reports that Carrefour is asking for TL360m for branding rights. In previous weeks, there were contradictory news that SAHOL was planning to divest its stake in CarrefourSA. 

 

·         MGROS (UR) > Anadolu Group is in talks to buy MGROS, according to mergermarket. According to the news, cash from the sale of Alternatif Bank will be used to fund the acquisition.  Similar newsflow/speculation on Anadolu Group’s interest in MGROS emerged before.

 

·         VAKBN (BUY, TP TL7.20) 1Q13 FINANCIALS ON MAY 3 > We expect TL515m bank-only NI, cons est TL518m