Turkish Report Daily

·        CBRT to announce 2014 Monetary & Exchange Rate Policy @ 10am local> Key will be its game plan against depreciation on the ccy. CBRT had said it would peg the 1-wk repo auction to TRY liabilities => details? => CBRT will likely limit cheaper funding for every bank to a certain ratio of their TRY liabilities. Currently CBRT provides a total TL 6bn of the 1wk repo. Meanwhile, the CBRT sticks to its min FX sale auction> After selling $400m last Friday & total $ 930m for the whole wk, CBRT stuck to its prev’ly announced min FX auction size of $250m y’day. Min auction size is also @ same lvl today but will decline to $ 50m tmrw (insert hair pulling scene). TRY u/p peer EMs by 2.6% over the last wk. If the CBRT gov repeats earlier rhetoric = “The Committee assessed that the current stance of the monetary policy => appropriate to contain inflationary risks,” then expect to see further pressure on ccy & rates.  

 

·        EKGYO (NR) > Bought back 16.5m shrs (0.086% of free float, last 3m avg daily trading vol 76.7m shrs) @ TL 2.14-2.15. Total cost @ TL 35.44m.

 

·        TOASO (Hold, TP: TL12.1)> will have a shut down for maintenance & inventory count purposes b/w Dec 26 – Jan 5 => had similar shut down in YE11 & YE12.  Neutral.

 

·        KCHOL (HOLD, TP TL8.80); TUPRS (HOLD, TP TL50.70) > Koc Holding announced it would buy Shell’s 2% stake in Enerji Yatirimlari (Tupras SPV) for USD50.6m. Koc Holding will make half of the payment at the time of the share transfer & the rest 12 months after the first pmt. Koc Holding’s direct and effective stakes in EY will increase to 77% and 85.7% after the transaction is completed. EY owns 51% of Tupras. Comment: Neutral for Koc Holding & Tupras. The implied valuation for EY from this deal is about USD2.5b => only 10% above the implied valuation of $2.25b based on Tupras’s latest Mcap (USD5.1b) & latest net debt (USD330m).

 

·        BIZIM (REDUCE, TP TL22.40) > According to Yeni Safak  newspaper, the govt continues to ask for a reversal of price cuts by tobacco producers => which was made in Nov on low/mid-priced products & warns producers that otherwise there could be hike in tax rates on tobacco. Bizim Toptan might record one-off inventory gains in 1Q14; yet, we believe signs of a sustainable leap in operating performance is still missing. BIZIM enjoyed c.0.2% +VE impact on EBITDA margin when gov hiked tax rates on tobacco products back in Dec-12. We expect any +VE gains in 2014 to be more limited.

 

·        ISCTR (BUY, TP TL6.74) > Isbank obtained around $300m securitization loan. The tranches as follows => $50m with 5 years, EUR135m with 5 years, EUR50m with 12 years.  Comment: The total outstanding securitization loans of Isbank reached around $1.2b => funding c.1.2% of total assets according to 3Q13 financials. The size of the borrowing is small compared to Isbank’s scale, but the news might be slightly +VE => exp’d to have some +VE impact on cost-of-funding & duration mismatch.

 

·        ASELS (NR) > Received $168.4m contract from the Undersectretariat of Defense =>  will be delivered until 2019. Aselsan’s backlog stood @ $3.8bn as of 3Q13.