Buy - Sell

·         INSURANCE POLICY PRICING REGULATION > Property insurance companies will be allowed to change traffic insurance policy pricing (motor third party liability) whenever they wish starting in 2014, according to daily Hurriyet.  Segment accounts for ~22% of total gross premium generation. Recall two weeks ago new Treasury legislation allowed insurers to renew traffic insurance policy price on a monthly basis instead of twice a year, as previously required. Property insurers will also be able to vary pricing among policy holders according to risk factors, which we expect will further improve technical profitability of compulsory traffic insurance. We expect news to have +VE impact on ANSGR, AKGRT and GUSGR.

 

·         TCELL (BUY, TP TL14.71)> A bundled bill draft which will give authorization to the Investor Indemnification Center (IIC) to convene a General Assembly for companies whose BoD members have been appointed by CMB will reportedly be sent to Parliament on Wed. If approved will be sent to Presidency for approval. TCELL’s GA couldn’t convene on both May 22 & June 24 due to absence of required majority. This new bill can solve TCELL's GA deadlock => needs to be solved to become compliant with corporate governance rules. Whether IIC will enable distribution of blocked divi of est. TL3bn remains a question. NET/NET slightly +VE.

 

·         TOURISM UNDERSECRETARY ON TURKEY TOURISM DATA > The number of int’l arrivals at Istanbul Ataturk Airport was reportedly up 7.8% y-y in the first 19 days of June and int’l arrivals to Antalya Airport up 6.9% y-y. Undersecretary says hotels around Beyoglu, Besiktas and Sisli in Istanbul were affected the most –VELy, but bookings already started picking up. Congress tourism in Istanbul was also significantly -VEly affected but tourism activities on coastal areas were affected to very limited extent. Int’l arrivals at Istanbul Ataturk and Antalya airports were up 20% and 9% y-y in first five months of 2013. Comment: Numbers seem to support our latest assessment that TAVHL (BUY, TP TL15.81) is likely to grow by high single digits to low teens y-y and THYAO (BUY, TP TL9.69) at low to high teens y-y by number of passengers in June 2013.

 

·         TOASO (HOLD, TP TL12.5) REPORTEDLY RECEIVED APPROVAL FOR NEW MODEL > Received approval for production of a B-Sedan model from Fiat, and is waiting for approval for a C-Compact model, according to daily Hurriyet (no sources cited). We already include a new model to our ests and assume a launch in 2016 (30k units annual export vol, mrkt share gain to 10% from 8%). Realization of a new production mandate would be taken +VEly by the market. But vol expectations and CAPEX important for us when/if the new investment is announced. Update/color on Minicargo contract-terms following the expiry of current take-or-pay agreement would be critical to assess long term prospects of TOASO, but we attach little chance to an update on Minicargo deal soon.

 

·         FROTO (HOLD, TP TL25.7) REPORTED $100M ECOTORQ MOTOR INVESTMENT > Will carry out $100m investment for its Ecotorq motors used in Heavy Commercial Vehicles, according to local dailies. We understand that the investment targets to widen the engine offering, and make engines compatible with Euro6 standards. Expects to receive investment incentives for the investment. We have not incorporated for the investment in our assumptions, however considering the relatively small size and the high probability for investment incentives, we view the news as neutral.

 

·         ANACM (NR)> Decided to halt production in two of its Russia furnaces for at least 6m, reducing capacity by 9.1% from 2.2m tpa to 2.0m tpa (RU capacity will be reduced by 17% to 1mn tpa) => due to  restructuring of subsidiaries by a merger & sales will be realized from inventories & therefore, will not be materially impacted. Reopening time of the furnaces tbd according to demand conditions. Recall that share of beer bottle in ANACM’s RU sales volume is still @ 60-70%. There has been significant contraction in beer demand in RU due to gov limitations on beer consumption & further declines are expected due to ban on beer adds since 2H12. 36% of 2012 revs were from Russia. –VE.

 

·         TRGYO (NR) SIGNS UNIT SHARING AGREEMENT WITH KIPTAS > Signed an unit sharing agreement with KIPTAS for 2^nd stage of Finanskent. Project will be developed by TRGYO and the co will give 45.7% of units to KIPTAS in return for the land. Remaining units will belong to company. Project will be built on 515k sqm land, total sellable area will be 578k sqm.  +VE for TRGYO

 

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