Buy - Sell

·         MGROS (BUY; TP TL22.28) > According to an article in FT, Walmart is in talks to buy a controlling stake in Migros  for more than $4bn including debt => $3.2bn Mcap and TRY32.6/shr) => vs current mcap is @ $2.3bn, implying 44% upside potential according to the suggested price tag. We believe the implied valuation is stretched => 2013E EV/SALES, EV/EBITDA and PE (adj’d for FX gains/losses) multiples of 1.0x, 16.6x and 35.4x respectively. BC Partners is the major shareholder w 64.1% stake. Dea Capital and a number of TR private equity funds hold 13.8% and 2.6% stakes respectively => all under the parent company MH Perakendecilik claiming 80.5% of Migros. Stake sale by BC Partners (and potentially others mentioned abv) would trigger a tender call. The article also mentions Carrefour and Tesco as other interested parties. We think a strategic investor would be positive for Mgros in terms of operational synergies and mgmt approach.

 

·         BANKING LICENSES => The BRSA head denied reports that they aim to increase the number of banks to 60 from the current 49, according to local dailies. Says the BRSA is looking at two applications for banking licenses from Intesa and Mitsubishi. Already known.

 

·         TAVHL (BUY, TP TL13.15) => The transportation minister mentioned in a press interview that the tender for the third Istanbul airport would be launched this month. Comment => If true, would be +ve for TAVHL we think, as it would partly clear out uncertainty re prospects of the co’s existing business at Istanbul Ataturk. It may also help us better assess the probability of the company winning the third airport tender. Recall that the minister has reportedly previously said a few times since August that the tender would be launched in a month’s time, but no action was taken.

 

• CCOLA (BUY, TP TL40.46) => Upgraded to BUY on strong pricing and rising scale of global ops, higher free cash flow on strong earnings growth and lower capex, and an attractive consumer story for 2013. Raised TP by 13% on higher premium to peers and higher OPCF. Raise EBITDA and NI forecasts by 5% for 2013 and 7% for 2014. We believe CCI deserves to trade at a higher premium to peers, as we expect CCI’s earnings growth differential with its peers to widen by 2ppt to 6%. While we keep our profit margin estimates flat for 2013, the risk is to the upside. Worse-than-expected weather conditions and sharp increase in commodity prices are downside risks to our investment view.