Buy - Sell

The market fell 1.4% yesterday, dragged down largely by the banking index, which closed the day down 2.2% on the back of weakness in HALKB (-3.7%), YKBNK (-3.4%) and VAKBN (-3.2%). Today we expect the weakness and slight underperformance to continue. We’ll be keeping an eye on the ECB rate decision and Erdogan’s speech upon his return from abroad. 78K and 80.5K are support and resistance levels for today.

 

MAY FOREIGN TRANSACTIONS, $174M NET INFLOW > Inflows $8.31b/Outflows $8.14b. Top inflows: SAHOL $289m, TCELL $173m, SISE $48m, THYAO $41m, MGROS $39m, EREGL $30.5m, AKSA $15.5m, PGSUS $13.2m,HALKB $13.2 Top outflows: GARAN $112m, VAKBN $109m, AKBNK $84m, KRDMD $49m, ASYAB $28.9m, KCHOL $28.8m, AKSEN $26.3m.

 

CONSUMER DRAFT LAW > The draft Consumer Law brought to parliament extends the scope for early payment of consumer loans from mortgage loans only to auto loans and other general consumer loans. The early payment penalty for loans due less than 1 year will be at most 0.5% of the remaining loan amount and for loans due over 1 year will be at most 1.0% of the remaining loan amount. According to the existing legislation just mortgage loans can be subject to early payment with 2.0% early payment penalty. Comment: Refinancing/early payment have already taken place widely since the beginning of the year. Therefore we do expect the +VE impact to be limited.

 

MAY’13 DOMESTIC AUTO SALES > broadly in-line w recent indicators => We f/cast 6.2% y-y growth in LV demand; however, 14% YTD growth highlights an upside risk to our est, unless 1) the gov imposes measures against the risk of incr’g CAD (unlikely on the way to 2014 elections though), 2) the consumer sentiment is -VELY impacted by the recent “Gezi Park” protests. LV retail sales @ 81.5k units (+15% y-y) => PC driven growth: deviation btw sales perf of PCs (+24% y-y) and LCVs (-6% y-y) cont’d. TOASO’s mkt shr incr’d by 1.8pp m-m to 14.2% (+0.4 pp y-y) <= 2.5pp mkt shr gain in the PC segment. Given the gaps in Tofas’ PC portfolio, the recovery in mkt shr is impressive (less so for mrgns if the gain was driven by a major fleet order). FROTO’s mkt shr up 1.5pp m-m to 13.7% (-2.6pp -y) <= gains in both PC and LCV segments. We still believe there is d/side risk to the Co’s guidance of flat EBITDA mrgn for 2013 y-y, as the Co shifts focus on mkt shr. DOAS mkt shr down 1.2pp m-m to 17.1% (+0.9pp  y-y), but still strong. We believe the decline may continue in June amid protests against Dogus Group COs, although we exp the impact to be temporary. Nevertheless, the risks look to be slightly on the d/side to our mkt shr est of 17.2% for 2013 (5M13A: 17.9%).

KOZAL (BUY; TP: TL42.0) INDIA RAISES TAX > India raised taxes on the gold purchases by 2 pp to 8% in order to reduce gold imports that surged after sharp decline in gold prices in last May, in an act to help curb its C/A deficit. Note that India had tripled taxes on gold purchases to 6% since January 2012, but had limited impact on demand because of the sharp decline in gold price. India is one of the two largest gold buyers with a 25% share in global consumption. Comment: Exp’d to have slightly –VE impact on gold prices, despite the ongoing strong physical demand. We maintain our BUY rec on KOZAL => our avg gold price assumption is @ $1400 for the foreseeable future.

TCELL (BUY, TP TL14.71) REDUCED CHANCES of SDIF’s SEIZURE > Digiturk’s American partner Providence is in talks with the SDIF to increase its stake in the Co @ an implied MCAP of $2.0bn, according to Vatan newspaper.. The sell-off proceeds are likely to cover Cukurova’s debt to the SDIF and therefore the transaction is likely to reduce the possibility of the seizure of TCELL stake. Meanwhile, in the same news, it is also reported that Show TV was sold to Ciner Group by Cukurova for US$402mn.