Buy - Sell

·         ITO INFLATION (Dec) > +0.36% m/m; +7.94 y/y. Food prices remain subdued.

 

·         CIGARETTE TAX HIKE > Hiked less than expected and direct tax impact @ cTL0.15-0.20, which would have a TL0.5 increase in mid-level cigarette prices. Expected to have +0.4% impact on CPI. More in a detailed note later.

 

·         NEW REAL ESTATE TAX > No change in 18% tax on homes larger than 150sqm. Smaller than 150sqm => 3 different tax segments according to value of land/sqm: TL0-500 @ 1%,  TL500-1k @ 8% & TL1,000+ @ 18%. Urban transformation & reserve areas are exempt (no chng in tax regime). Previously => houses bigger than 150sqm were taxed @ 18% VAT vs below 150sqm @ 1%. COMMENT: Will delay new launches & bring some extra demand to existing new house stock => cost of new houses may incr up to c.20% in big cities & have -VE impact on REITs & real estate sector.

 

·         ISCTR (HOLD; TP TL6.44) > Announces authorities might impose a fine of up to TL68m re backtaxes on past payments to bank’s pension fund => Isbank will appeal. The potential fine amounts to 2.1% of 2013E NI & 0.3% of equity as of 3Q12. Could be perceived slightly –VE.

 

·         TOASO (HOLD; TP TL10.90) > Tofas announced that it would switch to two-shift production system from current three due to ongoing weak outlook in European markets => we believe this is a rational decision, as a recovery in European markets is not expected in 2013. Overall negative but sl. positive for cost containment.