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 Reports

GASOLINE PRICES > According to local dailies, EMRA warned fuel distributer Co’s to cut gasoline, diesel and LPG prices by TL 0.08-0.16 until 7-Aug. If not complied, EMRA will consider introducing price ceiling for gasoline prices.

 

TR BANKS: CAP RATE ON CREDIT CARD LOANS > The CBT was enabled by law to determine the cap rate on corporate & commercial credit card loans starting from 5^th of Aug. The CBT announced that the bank will apply 2.12% monthly cap rate on corporate & commercial loan credit card interest rates; the same rate on individual credit card interest rates. Corporate & commercial credit card loans comprise 1.0% of the total loan book of the banks that we cover. Assuming for 5.25% monthly interest rate and 12.5% roll-over ratio, we exp the total -VE impact on annualized NII at 0.55% & on annualized pre-tax income by 1.11% (see attached file). Among the banks that we cover Yapi Kredi Bank (YKB) has the highest exposure to corporate & commercial credit cards => 2.6% of total loans. -VE impact on YKB’s annualized NII to be 1.36% & YKB’s annualized pre-tax inc to be 2.43%. Comment: Regulatory chng has been awaited; hence we think it has been broadly priced in.

 

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

·         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

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

·         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

·         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

·         YKBNK (BUY TP: TRY6.41) CEO does not expect a fine from the Competition Board, according to dailies Sabah/Zaman and local newswires. Forecasts earnings growth at 10%-15% y-y in FY13; loan growth of 15% y-y.

 

·         HALKB (HOLD; TP: TL18.72) and VAKBN (BUY, TP: TL6.72), according to Hurriyet, might get licenses to operate in the participation (Islamic) banking sector. This would help develop participation banking in Turkey, the news adds. We agree. We do not foresee a major threat to existing participation banks. Sl positive for HALKB and VAKBN but neutral for ASYAB (HOLD, TP: TRY2.18) and ALBRK (BUY, TP: TRY2.50).

 

·         THYAO TI (BUY, TP TRY8.46)/ TAVHL TI (BUY, TP TRY15.61) > THY chairman says despite further measures to be taken at Istanbul Ataturk airport, the airport was unlikely to be able to accommodate THY’s growth until the new Istanbul airport opens earliest by 2017. Adds, construction for the new airport was unlikely to start this year given the likely postponement in the bidding deadline of May 3. THY’s shifting of many flights from Istanbul Ataturk to other airports in Istanbul or Turkey would not be wise given its hub strategy and would hurt margins. Comments for Istanbul Ataturk airport is somewhat good news for TAV Airports as it implies the govt might be forced to consider some physical capacity expansion at the airport providing TAV Airports more than expected growth (and somewhat bad news for THY unless such action is taken).

 

·         BIZIM (NR) 4Q12 review > NI @ TL6.7m (-36% y-y; cons: TL9.3m) => results slightly better than what was hinted by tax purpose financials. Rev @ TL527m (+17.9% y-y; cons: TRY526m). Gross margin @ 8.7% (-0.5ppt y-y) due to one-off inventory tobacco gains recorded in 4Q11. Note that one-off tobacco inventory gains will be realized in 1Q13. EBITDA @ TL18.6m (unchanged y-y; cons: TL19,1m). Deviation in NI from cons est stemmed from financing exps => 4Q12: TL7.2m, 3Q12: TL6,7m, 4Q11: TL3.3m. The independent appraisal value of “Sok Marketler” (recorded under financial assets in BIZIM’s B/S) incr’d from TL24.4m in Dec-11 to TL34.7m in Dec-12. The Co will hold a conf call tdy @ 18:00 local time to discuss 2012 results, and 2013 guidance.

Buy - Sell

·         CAPACITY UTIL RATE (FEB) > 14:30 TR; No cons. Jan @ 72.4%

 

·         CONSUMER LOANS +24.5% > the 13-week trend growth rate of consumer loans strengthened for the 4^thconsecutive week to 24.9% as of Feb 15 => much above the 15% year-end growth target. Seasonal pattern suggests further acceleration in 2Q. We think current growth pace means further RRR hikes in the upcoming MPC meetings.

 

·         TCELL > OPERATING BETTER, GUIDANCE CAUTIOUS > 4Q12 NI TL459m +38% y-y- in line; adj for TL106m one-off exp, NI @ TL565m, beating est significantly (cons: TL465m) => +29% yoy vs adj 4Q11 (TL105m one-off expense). Beat due to better than exp oper perf. 4Q12 revenues @ TL2,807m => +15% y-y. Data rev +47% y-y & Superonline rev +35% y-y & voice ARPU +9% y-y in 4Q12. Vodafone & Avea’s voice ARPU in 4Q12 @ +6% & +5% y-y, resp. TCELL’s blended ARPU @ TL21 => +10% y-y in 4Q12. Sub base -50K to 35.1m vs Vodafone & Avea +215K & +300K, resp. Continued shift from pre-paid to post-paid (37.5% of total sub base from 36.7% in 3Q & 33.8% in 4Q11) => helped ARPU. 4Q12 EBITDA @ TL848m; +22% yoy=> better. EBITDA mrg @ 30.2% vs 28.4% in 4Q11 => FY2012 @ 30.9% (FY2011’s 31.1%). EBITDA mrg expansion due to lower S&M expense/sales due to lower subs additions. GUIDANCE: Mgmt believes voice, mobile broadband & incr’d contribution of subsidiaries should continue to be growth drivers. Rev guidance: TL11.2bn-11.4bn (7-9% y-y) & consolidated EBITDA @ TL3.3bn–TL3.5bn (2-8% y-y). Capex guidance @ 15% of revenues. Mgmt guidance reflects cautious view both @ rev & costs with mid-range EBITDA mrg @ 30.1% (30.9% @ 2012). Both TCELL’s & Avea’s guidance of mobile price rationalization in the last couple of Qs has NOT become a trend yet. Teleconference @ 5.30pm local. COURT CASE > Separately, the SDIF filed a case demanding compensation for alleged TL131.9m loss due to TCELL’s termination of contracts with A-tel on Aug 1, 2012. A-tel is a 50/50 JV between TCELL and SDIF and is in charge of distribution and sales of pre-paid cards in TR. Compensation amount corresponds to 6% of 2012 NI (0.5% of MCAP) => could be provisioned for in the following periods.

Buy - Sell

·         MOODY’S > Moody’s reportedly says Turkey’s investment grade “depends on structural improvement in current account deficit and more economic resilience to external shocks”. Says its “opinion has not changed after the C/A gap update”. We think this is as good as it gets for the current account deficit going forward.

 

·         VAKBN (BUY; TP: TL 6.72) Stronger-than-exp top-line (NII+Fees) > 4Q12 bank-only NI @ TL451m (+48% q-q & +72% y-y), 10% above our est & beating even highest mkt exp. FY12 NI @ TL1,460m (+19% y-y) & yielded 13.9% ROE (4Q12: 15.7%). Trading income compensated for provisions. NFI -30% y-y in 9M12, +15% y-y in 4Q12 => we exp further pickup in FY13 & conservatively pencil in 40% y-y. Loans +5.8% q-q (7.3% q-q on TL) => retail, commercial & installment loans => supported fees. Core spread +90bp q-q on TRY & +20bp q-q on FX. Deposit +8.5% q-q TL (120bp q-q lower cost) => supported +100bp q-q NIM (+60bp q-q adj. for ex-CPI linkers). Per-head HR costs -3.8% y-y in FY12. TL164m security portfolio trading gain & more may come in FY13 due to TL1,450m MTM gains being booked under equity. Asset quality strong => +5% q-q restructured loans. CoR +60bp q-q to 174bp due to ageing NPLs. CAR +240bp to 16.1%. NET/NET: 4Q12 oper performance strong & we exp this to be carried into 2013. We exp +16.4% y-y EPS in FY13 (outpacing sector avg), improving ROE & multiples attractive @ 2013E P/E & P/BV of 7.9x & 1.1x & ROE of 13.9%, maintain BUY.

Buy - Sell

·         INDUSTRIAL PRODUCTION (DEC) @ 10AM > Non cons. Nov @ 3.1% y/y and 1.5% m/m.

·         LOAN GROWTH 21% > During the week ending Feb 1, consumer loan growth reached 21% (19.5% the previous week), on a week/week annualised 13-week moving avg basis. Seasonal pattern suggests further acceleration in 2Q. We believe further RR hikes are likely at the next MPC meeting.

·         TTKOM  > 2013 guidance: Rev growth @ 5-7% y/y (TL13.3bn-13.6bn, 1-3% above cons), EBITDA @ TL5.1bn-5.3bn (0-4% y/y growth, upper-end in line with TL5.3bn cons), CAPEX @ TL2.2bn (sl below TL2.4bn 2012 figure and TL2.3bn cons). Other key points from conf call > 2013 strategy to add new rev sources/products over existing access lines, focus on ADSL subscriber base expansion, and cost cutting efforts. Expects to reap benefits of sales channel consolidation efforts through more efficient upselling, cross-selling, bundling activities. Mgmt said price rationalization in mobile market not a trend yet.

·         THYAO (BUY, TP TL14.60) > Will station additional 15 aircraft at Sabiha Gokcen Airport to overcome capacity limits at Istanbul Ataturk, CEO reportedly said. Added that the co will fly to 250 cities by end 2013 (up from 217 by end 2012). Comment > Somewhat -ve for THYAO which planned to increase fleet to 226 aircraft by end 2013 from 200 by end 2012. We est THYAO currently has 5-10 aircraft at Sabiha. Aircraft to be stationed at Sabiha and associated flights might have lower pax load factors vs Istanbul Ataturk due to lack of transfer traffic and given Sabiha is less popular. Also slightly -ve for TAVHL, as co would not benefit from growth to be provided by these aircraft. Impact might be less than the number of aircraft suggests, as they are likely to be narrow bodies flying to relatively nearby destinations.

·         ARCLK (Hold, TP: TL12.20) > We forecast 4Q12 rev growth to slow vs 9M12 => slowdown in electronics segment & partial consolidation of Defy acq/4Q11. We exp EBITDA mrg to improve from 8.1% in 4Q11 to 10.1% => elimination of aggressive promotions based on energy-efficiency theme. Exp to incur one-offs in 4Q12 following bankruptcy of Comet=> size will be small relative to NI. Mgmt guided 10.5% EBITDA mrg for 2012FY after its 3Q12 => we exp 10.2% (incl. other income). NET/NET: We believe the downside risk to company’s guidance has already started to be priced in during the last few days.

Buy - Sell

·         TRADE DEFICIT (DEC) > TEB-BNPP and Cons @ -$9bn. If in-line 12-month cumulative @ -$53.2bn. We reckon adjustment in S/A terms has come or is close to an end.            

 

·         GARAN (HOLD, TP TL10.81) > 4Q12 results today. TEB-BNPP NI @ TL857m, Cons @ TL843m. We expect GARAN to lose mrkt share in loans and deposits but to post sector-best 70bp q/q improvement in loan-deposit spread. Spread improvement was postponed from 3Q12 for 4Q12 combined with strong CPI-linker contribution. For full earnings preview see page 3 of http://www.bnppresearch.com?E=cdjjgkbbbii

 

·         EKGYO > Emlak Konut tendered its Ayazma 3^rd stage project. There were only two bidders => indicating a rather weak demand when considered around 20 bidders in Kartal tender last year.  Highest bid came from Makro Construction @ TRY300m where Emlak’s share is 20% (TRY60m). There will be a second phase of the tender in the near future where Emlak will proceed with an open auction.

Buy - Sell

·         TK BANKS ‘NEUTRAL’ > Upg ISCTR (stronger ROEs in med-term, on further improvements in opex & fee-gen fronts & incr’d focus on depo cost controls) to BUY; D/G GARAN & HALKB to HOLD (mainly on val): We sl. raise our earnings est (1% for 12 & 13) for 10 banks we cover & raise our TPs 16% on avg due to: 1) lower CoE, as we lower our Rf assumption to 7.5% from 8.0%, 2) Stronger-than-forecast equity build-up during 4Q12 & 3) TVM. Peak L/D spreads to have supported 4Q12 => exp NI +17% q-q & 23% y-y in 4Q12, due to NII growth, led by c.50bp q-q expansion in L/D spreads & higher returns from CPI-linked bonds. Gains in NIM => offset by higher provisions in both specific & general, former due to a c.15bp q-q rise in NPL adj for portfolio sales & latter to higher q-q loan growth vs 3Q12. Spreads to stabilize in 1Q13 & steady decline thereafter due to d/w re-pricing on assets with limited room for funding costs to come down. We exp 11% y-y EPS growth in 2013 on avg => main downside risk  => macro-prudential measures, should there be acceleration in capital inflows & loan growth to undesirable levels.

 

·         CABINET RESHUFFLE > PM Erdogan reshuffled his Cabinet yday. Replaced Idris Naim Sahin with Muammer Guler at Interior Ministry, Omer Dincer with Nabi Avci at Education, Recep Akdag with Mehmet Muezzinoglu at Health, and Ertugrul Gunay with Omer Celik and Culture and Tourism.  Neutral.

 

·         TOASO (HOLD, TP10.90) > PSA-Opel announced further details on their planned strategic partnership. Plan does not include joint production in LCVs, according to the media reports. Even though the probability of commercial vehicle production was low, we take the news to be +VE for TOASO. Note that TOASO produces Nemo/Bipper models of PSA and Combo model of Doblo.

Buy - Sell

·         GASOLINE PRICE upped by 8 TR cents. Impact on Jan inflation muted @ +0.03%.

 

·         TAVHL TI (BUY, TP TRY13.80) > Gov announced details for 3rd airport in Istanbul (BOT, 25yr concession post-construction) => will be built in 4 phases => 1^st phase capacity @ 90m pax/yr, 3 runways => expand to 150m in 4^th phase, 6 runways. Gov’t est cost @ €7b. Construction to take 42m. Companies will compete based on rents they would pay gov & gov will guarantee passenger fee payments for 342m passengers w/i 12 yrs after ops start. Winner will charge fxd EUR fee/psx over life of concession. Construction is expected to start 6m after tender w/o waiting for completion of financing. To ensure this, gov requires 20% equity financing for project. Tender to be launched today. Public competitive auction planned on May 3. Comment: We believe conditions of tender favour highly established players such as TAVHL => gives little time for preparation of tender & arrange financing. Required construction period is aggressive as well given size of project.

 

·         ENKA (BUY, TP: TRY5.60) > Acc. to Montenegrin govt website, Montenegro’s PM hosted the US Ambassador & rep of Bechtel-Enka consort to discuss cooperation b/w Montenegro & US. Recall news => Montenegro in talks with China’s Poly Group, Bechtel & EIB to build a 170-km highway in Montenegro. Using Romanian highway project of Enka as benchmark=>potential size €2.3b (€1b using Enka’s Kosova highway project as benchmark). Enka’s Backlog $3.3b. Comment: Supports our expectation Bechtel-Enka would take part in the potential project.