Buy - Sell

·         NPLs RISE UNABATED: NPLs are up 2.2% QTD vs a mere 0.1% loan growth as of Nov 6. NPL ratio +6bp since end-Sep to 2.97%. NPLs up by a massive 14% in 3Q12 (Ziraat +4pp contribution) vs 2.5% loan growth in the quarter. As we draw closer to the end of the year we expect loan growth to speed up and the gradual slide in lending rates to improve debt servicing capacity of companies. We expect NPL concerns to ease further in 2013, as the expected 5% GDP growth is set to provide further relief.

 

·         CCOLA (HOLD; TP TL34.29) => 3Q12 NI @ TL193.6m, slightly above our est of TL185.5m on higher-than-expected FX income. Both Turkish and int’l ops benefited from lower input costs and higher pricing environment. EBITDA margins up sharply in int’tl ops thanks to economies of scale. Raised our EBITDA & NI est by 4% for 2013 and 3% for 2014, as current pricing environment should allow AEFES to maintain profit mrgns. TP raised by 15% to TL34.29 on favourable peer vals and lower cost of debt.

 

·         BIMAS (BUY; TP TL83.82) > TL86m NI, up 11% y-y and 25% q-q. The bottom-line falls btw the cons est of TL89m and our est of TL82m. Further moderation of rev growth to 18% y-y (2Q: 22%, 1Q: 29%) was the most eye-catching part. EBITDA grew by 13% to TL124m, 3% below cons. But EBITDA margin recovered to 4.9% => improving 54bps q-q (vs our exp of 30bps) to 4.9% (yet, down 21bps y-y). The absence of one-offs partly explains the q-q improvement. 12bps q-q gross margin incr and better opex management have also driven margin perf. NWC trends were in line. Net/Net: Currently, we maintain our estimates and BUY rating for the stock. Further slowdown in revenue growth was discouraging (BNPP and cons exp’d 22% and 20% y-y growth, resp’ly) => crucial to understand the dynamics behind for our perception. Revenue perf is the key d/side risk to our est in the medium term.

 

·         HURGZ (NR) 3Q Operating Beat: NI @ TL5.9m, higher than cons est @ TL0.2m net loss thanks to strong operating performance => decline in newsprint & personnel costs helped. EBITDA @ TL26.4m vs consensus TL21.8m.   

 

 

EARNINGS TODAY

·         YKBNK (BUY; TP TL4.85) > TEB-BNPP 3Q12 NI est @ TL444m vs.TL450m cons est => We expect YKBNK to lose some mkt share in loans & deposit. Loan growth concentrated on GPLs and credit cards, and composition of deposits shifted to TRY. We forecast 29bp q-q loan-deposit spread expansion but CPI-linked bonds and derivative losses to pressure NIMs (est down c20bp q-q when adjusted for security impairments). We forecast slightly worse-than-sector 30bp rise in NPL ratio, gross cost of risk down c30bp q-q to 130bp and improving trends in both fees (-3% y-y from -6% y-y in 1H12) and opex (+7% y-y from +11% y-y in 1H12). With lower effective tax rate of 22% vs 26% in 2Q12, 3Q12 NI should improve by 26% q-q for a ROTE of 14%

 

·         ENKAI (BUY, TP: TL5.41) 3Q due today: We exp Rev, EBITDA & NI @ $1.384bn, $210m & $149m, respectively. We forecast 30% y-y growth in USD based construction rev & growth momentum in construction segment to accelerate in 4Q12. We forecast USD based EBITDA +26% q-q (7% y-y) from low base of 2Q12 as one-offs & start-up costs of 2Q12 are eliminated. 55% y-y (29% q-q) improvement in NI is mostly attributable to our est of net financial inc in 3Q12 vs net financial exp in 3Q11.

 

·         AEFES (HOLD; TP TL25.52) > We f/cast TL2.06b revenues, TL475m EBITDA and TL265m NI (cons: TL2.02b, TL447m and TL270m resp’ly). We exp a 2% decline in local unit sales and a 1% (organic basis) decline in int’l beer unit sales in 3Q12. However, we exp TR beer and int’l beer revenues to incr by 15.9% and 54.0% resp’ly => Major drivers: Price hikes in local beer and inorganic growth (acquisition of SAB Miller’s Russian and Ukraine operations) in int’l beer. We exp 1.6% ppt improvement in EBITDA margin on i) strong operating perf of soft drink operations and ii) latest acquisition in int’l beer operation. Strong TL must have supported the bottom-line.