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)

 

·         TAVHL (BUY, TP TL15.61) MARCH PAX > # of terminal passengers at TAV Airports rose 22% y-y to 6.1m passengers in Mar-13 (25% y-y in Feb-13 & 22% y-y YTD). LFL growth @ 19% y-y (same ytd). Comment: There seems to be some upside risk to our FY13E 15% y-y growth (in # of terminal passengers). Strong growth continues to be driven by growth @ Istanbul Ataturk (up also 22% y-y) => Ataturk’s terminal passengers account for about two-thirds of overall # of terminal passengers of TAV. c.3ppt of growth from Medina operations (started in July 2012).

 

·         THYAO TI (BUY, TP: TL8.47) > will reportedly stop offering comfort class (only available on B777s, 5% of fleet) in its flights to make its product offerings more consistent => transfer customers who are unable to find the same class in all legs of their flights have started complaining. It offers 3 classes in its flights: economy, comfort & business. No details on timing. Comment: Good that they are taking action in order to make product offering more consistent. However, slightly negative in net, as comfort class is popular with passengers, which enabled 34% y-y growth in premium no. of passengers in 2012, outperforming the 20% overall passengers growth for THY.

 

·         TCELL (BUY, TP TL13.75) 1Q13 ESIMATES > 1Q13 survey: Revs: TL2.65bn, EBITDA TL784m, NI TL475m. Our forecasts: Revs TL2.7bn, EBITDA TL782m, NI TL471m. Usually announces beginning of May. Separately, according to Hurriyet, Tcell’s GM stated that the company is interested in the privatization of the National Lottery. TCELL has TL4bn net cash. It already owns sports lottery games company Inteltek together with Greek Intralot. Generated TL159m revenues in 2012 from these operations (1.5% of total revenues).

 

·         EREGL (BUY, TP TL2.63) BONUS ISSUE > 13.3% bonus issue date announced as April 12, dividend date not announced yet

 

·         AYGAZ (BUY, TP TL11.37) DIVIDEND > Cash dividend TL1.0/share due today, adj. closing price TL9.85

 

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