THYAO - EKGYO - AEFES - AKSEN-ENKAI

·         THYAO (U/R) => Growth in 9M passenger travel unit sales (RPK) => +27.1% yoy for Sep vs. 27.4% y-y in the first eight months. 9-mth passenger load factor @ 77.9% (+5.3 ppt y-y) vs. 77.0% (+5.2 ppt y-y) in the first eight months. Comment: There is some slow down in yoy growth in the first nine months from the first eight months as expected, as August was boosted temporarily by Ramadan effect. The sl improvement in the passenger load factor is good news, assuming the company did not have to cut its fares further to achieve this.

 

·         EKGYO (NR), SNYGO (NR) => A draft law currently being discussed in parliament will require CMB approval for housing pre-sales based on models of the project, according to Haberturk. Positive for prominent REITs, as the law we think would impact the competitive landscape positively since some lower quality contractors might not qualify for presales. That said, the extent of the impact would depend on how strict CMB criteria is. Implications on EKGYO and SNGYO => neutral to +ve.

 

·         AEFES (HOLD, TP TL25.52) => Mandated banks for a planned bond sale of up to $500m with 5.7 or 10 year maturities. Investor meetings in Europe and USA commencing Oct 15. Although the company didn’t provide specific reasons behind the bond issue, other than favourable financing conditions, we believe it might be preparing for acquisitions in Eastern Europe.

 

·         AKSEN (HOLD; TP: 4.1) => Syria has stopped buying electricity from AKSEN due to problems in transmission lines, according to CEO Kazanci comments on local TV. Purchases are expected to resume later this month, as Syria is currently trying to repair faulty lines, according to Kazanci. Shares fell after the Energy Minister’s comments earlier in the day that Syria had stopped energy purchases last week. Marginally Negative. AKSEN said the 1-year electricity accord with Syria, which started a month ago, continues and there are no problem with payments. Electricity sales to Syria account for 20% of total revenues of Aksa Energy.

 

·         REPORT - ENKAI (upg to BUY, TP: TL5.41 (from TL4.87)): chng in peer val & lower holdco disc (from 15% to 10% => divestment of non-core assets). Stock was hit by weak 2Q12 results & Iraqi Gov decision (mid-Sept’12) to suspend new oper licence to foreigners until new procedures were in place; no impact on current projects. Keep in mind that contracting business is 18% of NAV & Iraq =34% of contracting backlog. Moreover, since 2Q12, insiders have been buying ENKAI. 1H12 weakness=> front-loaded expenses during start-up phase of new projects & one-offs in real-estate. 2H12 => we exp EBITDA to improve by 30% vs 1H12. Catalyst => odds for natural gas plant investment have incr’d, as hinted by restructuring of energy subsidiaries. Key d/s risks => sharp decline in oil price, lower-than-exp normalised contracting EBITDA mrg (our est: 14%) & -VE news flow from Iraq. Trading @ 12.4x 13e PE &  7.2x 13e EV/EBITDA.