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.

Buy - Sell

·         TREASURY AUCTIONS > Treasury borrowed TRY5.2bn from mkt yesterday through 5y fixed-coupon and 10y CPI-linker bonds. Will issue 10y and 2y fixed coupon bonds today. Aims to borrow TRY 10.1bn from the mkt this month, including 12m bond auction next week. This means that even a limited TRY 3bn sale in the auctions would be enough. CBT’s corridor hike signal seem to have eased further TRY depreciation. As a result, 2y bond yield declined by 18bps to 8.95% and 10y yield by 36bps to 9.0%, with some flattening bias on tightening signals.

·         TURKISH BANKS - 2Q13 EARNINGS PREVIEW > 2Q13 earnings season expected to start July 25. We expect the banks to contract 9% q-q. Key items => 1) rise in general provisioning exp due to strong loan growth of over 10% q-q, 2) melt down in m-t-m gains lowering equity due to rise in rates, 3) pull back in CARs by around 150bp for our coverage due to strong loan growth and decline in m-t-m gains, and 4) some pressure on NIM due to slight deterioration in L/D spread and lower on CPI linkers yield due to seasonality.

·         TKFEN (BUY, TP TL7.7) TO PARTICIPATE IN TOROS TARIM CAPITAL INCREASE > Decided to participate in the paid-in capital increase of its 99.98% subsidiary Toros Agriculture from TL430.5m to TL530.5m and to facilitate resources as advance paid-in capital. Accordingly, there will be TL99.98m cash outflow from TEKFN.   

Buy - Sell

·         TTKOM (NR)> 2Q13 results Wednesday. Cons est: Net sales: TL3.3bn, EBITDA: TL1.21bn, NI: TL260mn. 2Q13E NI indicates 51% q/q and 59% y/y declines mainly due to F/X losses recorded over TL5.4bn F/X short position.

 

·         TCELL (BUY, TP 13.56) > 2Q13 results on Thursday. Cons est: Net Sales: TL2.82bn, EBITDA: TL853mn, NI: TL557mn. Our est: Net Sales: TL2.81bn, EBITDA: TL863mn, NI: TL580mn. Main theme is easing price competition, which we think is already included in the cons est. Our est differs at NI level due to our higher net financial income expectation. We do not expect the co to record F/X losses in 2Q13 despite a consolidated short F/X position of TL1.2bn, since it has a slightly long F/X position in TR and its short positions are in Ukraine and Belarus, whose currencies have not depreciated against hard currencies materially.

 

·         DOAS (HOLD, TP TL10.7) > To become exclusive importer of VW and Audi brands in Iraq. DOAS will set-up a subsidiary based in Erbil for start-up capital of 150m Iraqi Dinar ($130k). Iraq market is attractive with low auto penetration levels (~5% compared to 17% in Turkey), and +30m population, however it has security risks as well. We believe DOAS might initially focus on Northern Iraq, which offers a more secure environment. We forecast the initial capital will be used to cover only initial start-up costs, and there might be further capital injection for capital expenditures soon. Our view: We view Iraqi expansion as +VE for the option value it offers, however we do not see it as a major short-term profit driver.

 

·         EREGL (BUY, TP TL2.53) > Union at EREGL’s Iskenderun plant is expected to launch a strike today after failing to reach agreement re 2013/14 collective work agreement, as announced before. We do not know yet how significant the strike may turn out to be. Given EREGL has not announced a lock-out at the plant, however, suggests the mgmt does not expect a high level of participation. 51% and 42% of EREGL’s 13,045 employees worked at its Eregli and Iskenderun plants, respectively, as of YE12. Iskenderun plant represents about 60% of Erdemir’s liquid steel capacity. Everything else being the same we est every 1% increase in labour costs amounts to ~0.8% -VE impact on EREGL’s EBITDA.

 

Buy - Sell

·         JUNE FOREIGN TRANSACTIONS, $1.2B NET OUTFLOW > Inflows $8.8b/Outflows $10b. Top inflows: AKSA $7.9m, TTRAK $7.4m, NTHOL $6.9m, BRISA $5.9m, DOHOL $5.8m, TKFEN $4.9m, TAVHL $4.7m, AEFES $4.6m,TTKOM $4.2m Top outflows: HALKB $219m, ISCTR $203m, YKBNK $115m, VAKBN $93m, GARAN $74m, SAHOL $55m, AKBNK $46m.  YTD net outflow @$559m.

 

·         ENKAI (BUY, TP TL5.5) > The Montenegrin govt ranked first the Chinese contractor CCCC’s bid for the 44km Smokovac-Matesevo section of the Bar-Boljare motorway, according to Intellinews. The govt will now seek parliamentary approval. The bid was EUR810m, and China’s Eximbank will offer financing for 85% of the project. Enka-Bechtel consortium’s bid was over EUR1b. Our view: We were expecting the Chinese bid to be competitive. However, we were still assigning some probability for Enka-Bechtel to submit a winning bid. Nevertheless, we expect ENKAI activity in Iraq to increase going forward, which is a major growth market.

 

·         EKGYO (NR) > Held an open auction for its Bakirkoy land with a revenue-sharing-model. Highest bid came from Akzirve-Ege Yapi-OzKar consortium @ TL1.2b total revenues where Emlak’s share is 45.9% (TL553.1m). Appraisal value of the land is TL196m. +VE for EKGYO.

Buy - Sell

·         CPI (JUNE) @ 10AM > TEB-BNPP & Cons @ +0.1% and +0.15%, respectively. If in line with TEB est, annual inflation rises to 7.5% vs. 6.51% in May. The spike in CPI has been well flagged by the CBRT due to food price increases and a strong base effect.

 

·         BIZIM (d/grd to HOLD fr BUY; TP to TL31.70 fr TL36.30) > on CoE revision & share outperformance (since the 1Q13 results release, o/perf’d the BIST100 by 20%) => i) increase our RfR assumption from 7% to 8.5%, and revise EPS estimates, ii) lower our 2013E EPS by 7% & 2013 EBITDA margin est fr 3.8% to 3.6%, due to Bizim’s on-going investments on pricing, but incr our revenue f/cast by 2%.Trades @ 2015E P/E of 23x vs peer avg of 19.8x, and iii) trim our terminal EBITDA margin est fr 4.9% to 4.7% (2012A: 3.5%). Bizim will need to be aggressive on pricing to incr penetration in the C&C segment. So, net impact of improving customer/product mix on margins might be more limited than we previously exp’d. Metro Group might integrate Real (12 stores) to C&C in TR => we think low probability that all stores can be integrated (some are located close to Metro C&C stores). Nonetheless, rapid expansion in Metro C&C’s coverage could be a competitive threat. Opex mgmt amid a shift of customer mix towards more service-intensive-end, financing exp mgmt, perf of new stores & faster-than-exp’d growth in organised retail trade are the main risks. Faster growth in the share of private labels is a key upside risk.

Buy - Sell

·        OPPOSITION MP REPORTEDLY FILED FOR CANCELLATION OF NEW AIRPORT TENDER > Opposition CHP MP reportedly filed for cancellation of new Istanbul airport tender with Council of State. MP cited problems with environmental assessment report and changes to tender procedures as reasons for filing. Comment: Given importance gov’t attaches to this project and amount of preparation behind the tender, we think cancellation is unlikely. In case the project is slowed down at some point because of an injunction or cancellation, it could be somewhat good news for TAVHL (BUY, TP TL15.81) and bad news for THYAO (BUY, TP TL9.69) depending on extent of delay.

 

·        BASEL-III TO COME INTO EFFECT JAN 1 2014> BRSA announced that BASEL-III will become applicable starting from Jan 1, 2014. One of the major changes => 100% of unrealized m-t-m gains to be considered in calculation of CAR instead of currently used 45%. Attached pls find our findings according to 1Q13 results, however, given the rise in i/r, the +VE impact is expected to be smaller vs attached. NET/NET> YKBNK will be most +VE’ly impacted followed by ISCTR.

 

Buy - Sell

·         INSURANCE POLICY PRICING REGULATION > Property insurance companies will be allowed to change traffic insurance policy pricing (motor third party liability) whenever they wish starting in 2014, according to daily Hurriyet.  Segment accounts for ~22% of total gross premium generation. Recall two weeks ago new Treasury legislation allowed insurers to renew traffic insurance policy price on a monthly basis instead of twice a year, as previously required. Property insurers will also be able to vary pricing among policy holders according to risk factors, which we expect will further improve technical profitability of compulsory traffic insurance. We expect news to have +VE impact on ANSGR, AKGRT and GUSGR.

 

·         TCELL (BUY, TP TL14.71)> A bundled bill draft which will give authorization to the Investor Indemnification Center (IIC) to convene a General Assembly for companies whose BoD members have been appointed by CMB will reportedly be sent to Parliament on Wed. If approved will be sent to Presidency for approval. TCELL’s GA couldn’t convene on both May 22 & June 24 due to absence of required majority. This new bill can solve TCELL's GA deadlock => needs to be solved to become compliant with corporate governance rules. Whether IIC will enable distribution of blocked divi of est. TL3bn remains a question. NET/NET slightly +VE.

 

Buy - Sell

·         EKGYO (NR) > tendered its Bakirkoy land (revenue sharing model). 22 bidders => strong demand considering there were only 3-5 bidders for the previous tender in 2013. Highest bid was from Kuzu Insaat @ TL700m where Emlak’s share is 30% (TL 210m). Appraisal value of land TL114m. There will be a 2nd phase of the tender in the near future where Emlak will proceed with an open auction.

 click here for details

·         TEKFEN (HOLD, TP TL7.9) > TEKFEN INSAAT RECIEVES LOI FOR $136M BTC CONTRACT> TKFEN’s subsidiary Tekfen Insaat received a letter of intent for a $136m contract for BTC (Baku-Tiflis-Ceyhan) pipeline. Contract will be signed on July 1. Project includes maintenance and improvement work for existing pipeline. Project duration 36 months.  Not cost-plus but mgmt notes the project is low risk. Tekfen’s backlog as of March 2013 was $2.39bn. Comment > Not among the potential projects on our watch list so slightly +VE. TKFEN  also announced that Petrol Is Union and Kiplas (union of chemical, petroleum, rubber and plastic sector employers) reached an agreement during collective bargaining. No details on agreed wage increase. TKFEN does not expect a major impact on financials. Employee costs account for <5% of total cost of Toros Tarim (33% of Tekfen Holding’s NAV); Neutral.

click here for details 

·         YKBNK (BUY, TP TL7.15 ) SIGNED $505M SECURITIZATION LOAN > Signed $505m securitization loan with 5 to 13 years maturity. The deal is backed by the bank’s foreign currency denominated receivables. The securitization loan accounts 0.8% of bank’s total assets as of 1Q13. Although the size is small, we expect slight +VE impact due to long term financing.

 

Buy - Sell

·         Normal? Extraordinary? CBRT announced yesterday it would sell at least $150m through daily auctions (on “normal” days i.e.), even during days when they provide repo funding at the policy rate. This means that they will sell at least $3bn till the next MPC meeting on 23 July.

 

·         TCELL (BUY, TP: TL4.71) Surprise MTR Cut, effective July 1^st> Telecom Regulator cut both MTRs & TCELL’s on-net price limit (mid-Mar Regulator had incr’d it by 70% to Kr5.35 – to be effective July 1^st) by 20%. TCELL will receive Kr2.50/min vs Kr3.13/min (was stable since May’10) for incoming calls. MTRs paid by TCELL to VOD & Avea also declined to Kr2.58/min & Kr2.96/min, resp, from Kr3.23/min & Kr3.70/min. Min on-net price limit for TCELL will be Kr4.28/min vs Kr5.35/min. COMMENT: No material direct impact on TCELL’s EBITDA from the chg in interconnect rev & costs (similar amounts). Reduction of min on-net price limit by 20% will enable TCELL reprice its related sub base more easily, limiting churn. More aggressive pricing from other operators can be experienced due to lower MTRs. NET/NET we believe this reduces TCELL’s relative competitive disadvantage re min on-net price incr but nets off part of +VE impact of the avg price incr in the market. We give higher emphasis to TCELL’s repricing becoming easier 1) VOD & Avea were expected to follow TCELL in raising prices in May-June instead of trying to attract more subs 2) nominal MTR cut amount small (Kr0.63/min vs. approx. Kr3/min in prev cuts) lmtd impact on sub preference => sl +VE for TCELL & -VE for Avea  & slightly –VE for TTKOM (NR).

 

Buy - Sell

·         TREASURY AUCTIONS > Treasury holds 2 auctions today and 3 tomorrow ahead of its TL13.6bn redemption on Wednesday. Today 5-yr fixed coupon and tomorrow 10-yr CPI linker; Tomorrow 10y and 2y fixed coupon bonds and 7y FRN.

 

·         TCELL (BUY; TP TL14.71) > General Assembly meeting scheduled for tdy => Recall: on May 22, the GA could not convene due to the absence of the "51% TCELL Holding" representative (<= election of which is only possible with the consent of two disputed major shareholders, Cukurova and Alfa). Expect the same for tdy’s meeting. Recall: the new bundle bill has not passed through the Parliament yet => the bill grants authorization of the GA to Investor Indemnification Center (IIC) for companies whose BoD members are appointed by the CMB.

 

·         ASYAB (HOLD, TP: TL2.15) > sold an NPL portfolio worth TL140m @  TL8.2m => TL102.5m of the sold portfolio was already written-off. Sale is expected to bring down NPL ratio to 4.43% from 4.63% @ 1Q13 ceteris paribus. Comment: Slight positive as this is the 1st time a participation bank has sold a NPL portfolio (prev’ly they had been saying that sale of NPLs wasn’t sharia compliant) => might mean NPL inflow has been continuing (supported by BRSA’s sector data). Guidance 1) max 4.5% NPL ratio & 2) 60%-65% NPL provisioning ratio, which make us to believe NPL inflow is likely in rest of 2013. Read across to conventional banks not positive as participation banks recognize NPLs quicker.

Buy - Sell

The market fell 1.4% yesterday, dragged down largely by the banking index, which closed the day down 2.2% on the back of weakness in HALKB (-3.7%), YKBNK (-3.4%) and VAKBN (-3.2%). Today we expect the weakness and slight underperformance to continue. We’ll be keeping an eye on the ECB rate decision and Erdogan’s speech upon his return from abroad. 78K and 80.5K are support and resistance levels for today.

 

MAY FOREIGN TRANSACTIONS, $174M NET INFLOW > Inflows $8.31b/Outflows $8.14b. Top inflows: SAHOL $289m, TCELL $173m, SISE $48m, THYAO $41m, MGROS $39m, EREGL $30.5m, AKSA $15.5m, PGSUS $13.2m,HALKB $13.2 Top outflows: GARAN $112m, VAKBN $109m, AKBNK $84m, KRDMD $49m, ASYAB $28.9m, KCHOL $28.8m, AKSEN $26.3m.

 

CONSUMER DRAFT LAW > The draft Consumer Law brought to parliament extends the scope for early payment of consumer loans from mortgage loans only to auto loans and other general consumer loans. The early payment penalty for loans due less than 1 year will be at most 0.5% of the remaining loan amount and for loans due over 1 year will be at most 1.0% of the remaining loan amount. According to the existing legislation just mortgage loans can be subject to early payment with 2.0% early payment penalty. Comment: Refinancing/early payment have already taken place widely since the beginning of the year. Therefore we do expect the +VE impact to be limited.

 

Buy - Sell

Howdy doody folks! As an old cowboy sayin’ goes: “The quickest way to double your money is to fold it over and put it back into your pocket.” Wisdom that might come in handy over the next few months y’all. The recent correction is perhaps just a glimpse of more to come, courtesy the US rate scare; making what transpired over the last few days look like child’s play. Not the time to be dipping in your toes, ladies and germs. Resist temptation! Any hint the Fed is looking to scale down its funny-money printing scheme is likely to bamboozle consensus.

·         GARAN (HOLD, TP TL10.80) > Customers pulled TL35-40m of deposits and cancelled 1,500 credit so far, CEO of GARAN said in a newspaper interview. Dogus Holding is GARAN’s parent company. Comment > Given the TL95b deposit and the 8.5m credit cards, the withdrawn amount and number of cancelled credit cards is negligible. Although some may follow in the coming days, we do not expect a major -VE impact on GARAN financials.

 

·         BIMAS > Abdulrahman El Kheiriji registered 1.518m BIMAS shares to the central custody (1% of paid in capital). Kheiriji owns 4.5% of BIMAS shares. Possible share sale by Kheiriji can create some pressure on the price, but we do not expect the impact to be long lived.

Buy - Sell

·         HALKB (HOLD; TP TL20.00) 1Q > TL713m bank-only net profit (+31% y-y, -4% q-q) vs our TL681m est and TRY678m consensus on trading gains. We revise up our FY13 and FY14 earnings est by 2% on avg due to sl improvement in NII. Opex +39% y-y in 1Q13. Although the bank guides for 20% y-y growth in FY13, we remain cautious given the 19% y-y rise in per head HR costs in 1Q13 and high mkt exp rel to the new credit card. Growth in lucrative loan segments (GPLs/housing) might result in better L/D spread in coming quarters. TP revised upward a bit to TRY20.00. Reiterate HOLD due to limited upside. We forecast a slight earnings contraction in FY13, which curtails the relatively attractive price multiples of Halkbank.(Detailed note to follow).

 

·         AKBNK (HOLD; TP TL10.20) 1Q > TL868m bank-only net profit (+56% y-y, -20% q-q), below our TL904m est and TL884m consensus on higher provisioning and low dividend income. Security portfolio contracted 12% q-q in 1Q13 bringing down the security portfolio to assets ratio 370bp q-q to 25.9%, which might enable Akbank to shift to higher yielding loans faster than initially expected. Although strong NFI growth rate should normalize, we expect 24% y-y NFI growth in FY13. Potential trading income might surprise on the upside given the recent decline in interest rates and the bank’s TRY1.1b m-t-m gains booked under equity. HOLD reiterated. Main upside risks to our HOLD recommendation is a further drop in cost-of-funding and higher trading income. Whereas the main downside risk is the NPL threat especially from the sharp growth in the credit card segment.

 

Buy - Sell

·         TREASURY AUTCTIONS > Sold 5Y fxd coupon bond yesterday, bid-cover 3.3x (quite high), despite higher-than-expected issuance of TL 3.1bn. Treasury had TL 6bn borrowing left for this wk, in order to complete the borrowing plan of TL12bn from mkt (excluding public sector) this month. This leaves TL2.9bn borrowing (from mkt) via 2y fxd-coupon & 10y CPI linker today. If Treasury sticks to target, it will likely to lead to further decline in 2Y yields, but it is more likely that Treasury exceeds its borrowing plan & sells TL 2-2.5bn of bonds in each auction.

 

·         VAKBN (BUY, TP TL6.72) $600M EUROBOND ISSUE > 5-yr Eurobond @ mid swap +300bp. 3 times over-sub. Although amount is small (~1.0% of total assets) the issue diversifies funding sources while enhancing duration. Slight +VE impact on financials. Also mandated group of int’l banks to refinance ~$925m syndication loan maturing in April. We expect roll-over ratio above 100% and spread over Libor/Euribor @ 100bp.

 

·         GOV’T TO ACTIVELY REGULATE SUGAR MKT, CCOLA (BUY, TP TL48.8), ULKER (HOLD, TP TL11.00) > Gov’t prepared draft law to form a supervisory body to more actively regulate the sugar mkt. Aims to reduce sugar imports by supporting local sugar production, according to dailies. Sugar imports constitute fraction of total demand but are significantly cheaper than local prices and help production costs of soft drink producers. As the gov’t plans to increase sugar production, it might eliminate imports completely, resulting in a slight increase in the production costs of CCOLA and ULKER . Note that sugar accounts for 19-20 of total production costs of CCOLA’s TR operations (57% of consolidated revs and 55% of EBITDA) and 15% of ULKER’s.  CCOLA (BUY, TP TL48.8) $300M BOND ISSUE > Completed $300m bond issue private placement. Raised $100m (5 year maturity, 3.42% coupon) $80m (7 year maturity, 3.38% coupon) and $120m (10 year maturity, 4.44% coupon)

 

Buy - Sell

·         CONSUMER LOANS ACCELERATE > We calculate the 13-week trend growth rate of consumer loans @ 27.4% (March 8 week), up 1.8pp from the previous week. Increases the chances of a RR hike in the MPC meeting on 26 March.

 

·         THYAO (BUY, TP TLY8.46) MISSES ON POOR PRICING POWER > Adjusted NI TL15m (-94% y-y from adj. NI TL232m 4Q11, BNPP: TL217m, Cons: TL222m); EBITDAR TL413m (-39% y-y, BNPP: TL726m, Cons: TL723m) and Revs TL3.74b (+17% y-y, BNPP: TL4.06b, Cons: TL3.92b). 4Q12 headline NI TL265m vs. TL97m net loss in 4Q11. Announced cash divi TL0.1444/share (TL173m, 2.0% yield) payable on May 31 and bonus divi of 15% (TL180m). Comment > Results weaker than our est on weaker revs. Our first impression is that this is due to seasonality (i.e. trouble selling significantly increased capacities in low season), not beginning of a new downward trend on yields/margins. We will reassess our ests but note that traffic growth is faster than expected so far in 2013. Other news > Lufthansa’s CFO reportedly said there were no concrete projects on the table in discussions with THYAO. We are not surprised and think THYAO might be better off without deeper cooperation with Lufthansa. But mkt expectations were that something concrete might come out of discussions, significantly improving THYAO’s prospects.

 

Buy - Sell

·         THYAO TI (BUY, TP TL8.46) > 4Q12 results today. We expect EBITDAR TL726m & NI TL217m (close to cons). We expect strong top line (+27% y-y) and EBITDAR (+30% y-y) on +26% growth in passenger travel unit sales (as measured by RPK) and 4.5ppt y-y improvement in the passenger load factor. We estimate EBITDAR mrgn expansion will slow to less than 1ppt, from 6ppt in first 9 months, given sharp mrgn recovery already realized in 4Q11. Announcing YE12 financials earlier than usual, as it plans to hold annual shareholders meeting end-March to make changes to co’s charter, as required by new commercial code and capital markets rules.

 

·         TR Food retail sector > UCZ discount markets (80% owned by Ciner Group) targets continued aggressive growth => has reached 860 stores since start of operations in Apr’12 & aims to reach 2,000 stores by YE13. The Co has 350 SKUs in its product portfolio (compared to +600 of BIM –BIMAS-). Comment: Need to follow UCZ’s aggressive growth closely with regards to its implications for BIM. BIM had 3,655 stores, as of YE12 and plans to open 350-400 stores in 2013. We believe it is becoming critical for BIM to accelerate store openings. However, the Co does not plan to do so at least in the ST, believing it would compromise its strong execution capability.

 

·         DYHOL (HOLD, TP TL0.83) / HURGZ (HOLD, TP TL0.94) > Advertising spending +8% y/y to TL4.65bn in 2012 (in line with our est), according to the Advertising Assoc. Expects 12% growth in 2013 on domestic economic recovery vs. our expectation of a 7% increase. Better growth in advertising spending would be an upside risk to our ests for DYHOL and HURGZ.      

 

Buy - Sell

·         KCHOL (NR)  SCRAPS PLACEMENT> Placement of 100m KCHOL shares (3.94% of paid-in capital) was withdrawn, according to an official filing, citing unsatisfactory offers. Three family members had yesterday announced intention to sell 3.94% of KCHOL, reportedly at TL9.5/shr (vs TL10 current). The planned sale would have increased KCHOL’s free float from 22% to 26%. Subject stake was worth TL1b @ yesterday’s closing price and c30 days of daily trading vol. Family has said their intention was to increase the free float and meet their own financial needs (including for charity). Comment: News still likely to create overhang on the stock despite the withdrawal. Temel Ticaret, the family’s holding vehicle, owns 42.6% of KCHOL, while family members directly own 25.9% (before this cancelled sale) and the Koc Group related foundations own 9.1%.

 

·         TCELL (BUY, TP TL13.75)> New BoD will reportedly convene on March 20 following yesterday’s replacement of three board members by the CMB. While Cukurova and Teliasonera welcomed the CMB’s intervention, Alpha said the move was forced and temporary and were looking forward to the appointment of directors by shareholders once the dispute with Cukurova is resolved. We reiterate that the dividend decision needs to be approved by TCELL’s General Assembly. This rests on the election of the “51% TCELL Holding” representative which is only possible if a 4/5 quorum is reached at Cukurova Telecom Holding’s BoD, where Alfa and Cukurova are still in dispute. While the CMB’s intervention was required according to legislation, it does not ensure distribution of TCELL dividends.

 

Buy - Sell

·         CURRENT ACCOUNT (JAN) @ 10AM > TEB-BNPP & Cons -$5.3bn (Dec -$4.6bn). Recall adjusted tourism revenue calculations go into effect. Should bring last year’s CAD to $46.7bn (5.8% of GDP vs. unadjusted 6.1% of GDP).

 

·         BRSA DATA => LOAN GROWTH BRISK; DEPOSIT GROWTH STALLS; NPL VOLUME GROWTH EYE CATCHING => According to the BRSA data as March 1, loans grew 2.8% y-t-d (annualised 26%). Commercial & instalment loans (+7.8% y-t-d), housing loans (+4.5% y-t-d) and general purpose loans (+3.6% y-t-d). Loans/Deposits ratio has been on the rise since YE12 (101% sector avg vs 99% end-2012), as deposits grew by a mere 0.8% y-t-d (slower compared to loans). 5.5% y-t-d growth rate in shareholders’ equity signals further MTM gains. NPL ratio remained unchanged at 2.9%. However 7.7% y-t-d NPL volume growth is eye-catching (+TL1.7bn y-t-d). NPL vol growth +9.8% y-t-d  for pvt and +9.4% for participation banks. Supports positive core spread evolution so far in 1Q13, as there is almost no growth in deposits (read: no competitive pricing). On the asset quality side, the figure is gradually moving away from the trend. Although the NPL ratio and NPL provisioning ratio hover around 2.9% and 75% respectively, the NPL aging impact might be sever in 2Q13, lifting the specific cost-of-risk ratio towards 125-130bp vs 105bp in FY12.

Buy - Sell

·         COMPETITION AUTHORY SLAPS FINES ON 12 BANKS > Akbnk TL172m, GARAN TL213m, HALKB TL90m, ISCTR TL147m, VAKBN TL82m, YKBNK TL150m. The size of the fines (see attached file) are in line with our initial estimates, but higher than recent market speculation. Fines account for 0.5% of FY13E BV and 3.8% of FY13E earnings; and an avg 15.5% of 1Q13E earnings post a 25% early payment discount. We expect limited negative impact on valuations, as the fines are set to wipe away less than 1% of BVs. Some banks are likely to partially or fully compensate for this fine via their discretionary reserves. These fines will be reflected in 1Q13 earnings. All banks are likely to appeal. But we attach a low probability for success, as the decision was taken unanimously for all banks except Isbank.

 

·         REAL ESTATE > Gov’t reportedly working on new legislation which will raise duration of residence permits granted to foreigners who buy property in TR to 1 year from current 3 months. Slightly +VE for real estate mkt.