· Volatility continues > Risk sentiment remains weak, despite some short-covering yesterday, with concerns over global growth outlook on disappointing China data. At home, October unemployment rate will be released.
· Big deterioration in inflation expectations > In CBRT's monthly survey, expected inflation after 12 and 24 months surged 36bp and 26bp m/m to 7.92% and 7.12% in Jan. Normally this should put tightening pressure on CBRT at its MPC next Tuesday. However, the govt already revised its inflation forecast for this year to 7.5% in MTP from 6.5% => CBRT is less likely to react to this deterioration. We think this risks further bear steepening of the curve and weaker TRY.
· Some inflow into bonds > In the first week of the new year, ending Jan 8, there was USD 0.3bn inflow into bonds, excluding repos and local banks’ branches abroad => first inflow after 5 weeks of uninterrupted outflows and the highest weekly inflow in last 25 weeks => suggests some investor interest building, as 5y bond yield rose to as high as 11.5%, its peak attained both in 2014 and 2015. Eurobonds attracted a minor USD 0.1bn while equity portfolio of foreign investors dropped by a further USD 0.2bn.
· EKGYO (BUY, TP:TRY3.50) > Dec’15 pre-sales data > sold 1K units (-31% y/y) and generated TRY630m revenue (+21% y/y) => Batisehir RSM project accounted for 49% of total unit sales and 54% of total rev in Dec. Avg. price per unit( APU) @ TRY627k (+8% y-y, +8% m-m) on higher contribution from RSM projects. In FY15, unit sales reached 10.4K (+5% y/y), generating rev. of TRY6.3bn (+22% y/y) and APU @ TRY604k (16% y/y). The co. fell short of its FY15 unit sales (12K) and revenue (TRY6.76b) guidance by 13% and 7%. Units sales to foreigners up 25% to 1.3K units and accounted for 17% of presales revenue. We find FY15 numbers satisfactory, as the co. almost met its revenue guidance in an environment where we had two elections. : & . (+20% y/y) & NI @ TRY1.5b (vs. our exp of TRY1.58b)
· TRGYO (BUY, TP:TRY4.80) > ann’d its recent portfolio table. Total port value increased 26% y/y to , mainly on 85% surge in Torun Center Project’s value & 25% jump in Mall of Istanbul’s value => account for 18% & 19% of total portfolio respectively. Note, TRGYO did not include 5th Levent project (has TRY729 appraisal value) as yet. Based on liabilities, according to 9M15 financials, TRGYO’s NAV is TRY5.3b ( The co.’s ) => 34% increase.NAV discount widened to from 54%. Mkt impact should be +VE.
· AEFES (HOLD; TP: TRY20.4) > 4Q15 sales volume > Domestic sales vols declined by on higher prices & competition pressures from Tuborg. (vs our -8%) in 4Q15FY15 unit sales declined by 6.3% y/y. Int’l vols declined (vs our est. of -15%) on adverse market conditions in Ukraine and Russia. FY15 unit sales declined by 19% y/y (excluding Ukraine -% 9.4% y/y). Weak consumption attributed to poor consumer sentiment, economic activity and adverse market conditions in Russia despite enhanced presence in key accounts and traditional channels. –VE.
· SAHOL (BUY, TP:TRY10.70) > Sabanci Holding ann’d Exsa bought an add 1.39m shrs on Jan 14 @ btw TRY7.98 and TRY8.01/share => Exsa's shareholding in Sabanci Holding has increased 0.07ppt to 0.51% (12.43m shares) with this purchase. Sl. +VE for SAHOL. This was the ninth purchase since the holding announced a 40m share-purchase program on Dec 29 to last until the next shareholders meeting which is usually held in late March.
· KRDMD (BUY, TRY:TRY1.59) > ann'd that acc. to an appraisal report prepared by independent consultants, the fair value of lands owned by the co. & its participations is TRY1.45b. We are not exactly sure why Kardemir ordered such a report. Might be used to bolster its borrowing capabilities. The value of land & land improvements are at c.TRY170m in Kardemir's 9M15 financials. Neutral.
· AKBNK (BUY, TP:TRY8.06) > Court rejects suit filed by the bank against a competition board fine re promotions to payroll accounts dated 2011 => amount in question only TRY11m and already paid. Neutral.