Buy - Sell

·         WEAK TREASURY AUCTIONS > Yields at yesterday’s 5-year fixed coupon and 10-year CPI linker auctions were above market expectation. Bond yields rose 30bps on the news.

 

·         TUPRS (HOLD, TP TL50.70) > fuel distribution cos would need to cut their prices slightly further in order to make up for the TL0.07 difference between fuel distribution margins in TR and the nearby Mediterranean countries, Minister of Energy said yesterday. Did not mention LPG prices in his interview. Comment: Sl bad news for TURPS and the downstream oil industry overall. No direct pressure on TUPRS to cut its prices without a parallel decline in oil prices but i) c10% of profits come from Opet, KCHOL’s fuel distribution JV and ii) facing lower margins, fuel distribution companies may increase cheaper imports or put pressure on TURPS to share their sacrifices.

 

·         ULKER (U/grd to BUY fr HOLD; TP to TL13.90 fr TL12.80) STRONG OPER PERF in 2Q13 > NI @ TL46m => much higher than our TL38m & cons TL35m est. EBITDA @ TL80m => also higher than our TL68m) & cons TL64m ests. Rev +19% y-y <= 13% y-y growth in unit vols <= re-gained some mkt share lost in 2012. EBITDA margin +100bp y-y to 13.1% <= i) cost benefits fr merger of distribution arms, ii) new merchandising strategy focusing on “star” (high-turnover/high-margin) SKUs and eliminating poor performers => margin improvement + strong revenue growth => EBITDA up 29% y-y. Raising est => We raise our EBITDA & NI ests by 4ppt for 2014 &15. We raise our EBITDA est by 4% but cut our NI est by 7% for 2013 due to FX losses on weak TL. We raise 2013-15 EBITDA mrgn ests by 50 bps (1H13 11.8%, FY13E 11.3%). We do not exp major pressure on the cost side thanks to normalization in commodity prices (cacao, flour, palm oil etc.). We exp growth in unit sales to continue (consumption of biscuits & chocolate confectionery grew close to double digits in 1H213, according to our est). D/side risks to our ests incl rising competitive forces resulting in price cuts, rise in commodity prices & weaker TL.

 

·         TCELL (BUY, TP: TL13.56) > Fined TL 50.8m by Turkish Telecom Regulator due to incomplete payment of Treasury fees (15% of rev.) over 2009 rev. In 2010, the Regulator had fined TCELL with TL206m for Mar’06 – Dec’08 rev on same disagreement => no provision due to continuing int’l arbitration case & an injunction decision from local court. Accordingly, we don’t expect it to provision for the recent fine either.

 

·         DOCO (NR) > 1Q NI @ Eur 5.1m on Euro 161.9m of sales. No consensus.