Buy - Sell

·         JUNE FOREIGN TRANSACTIONS, $1.2B NET OUTFLOW > Inflows $8.8b/Outflows $10b. Top inflows: AKSA $7.9m, TTRAK $7.4m, NTHOL $6.9m, BRISA $5.9m, DOHOL $5.8m, TKFEN $4.9m, TAVHL $4.7m, AEFES $4.6m,TTKOM $4.2m Top outflows: HALKB $219m, ISCTR $203m, YKBNK $115m, VAKBN $93m, GARAN $74m, SAHOL $55m, AKBNK $46m.  YTD net outflow @$559m.

 

·         ENKAI (BUY, TP TL5.5) > The Montenegrin govt ranked first the Chinese contractor CCCC’s bid for the 44km Smokovac-Matesevo section of the Bar-Boljare motorway, according to Intellinews. The govt will now seek parliamentary approval. The bid was EUR810m, and China’s Eximbank will offer financing for 85% of the project. Enka-Bechtel consortium’s bid was over EUR1b. Our view: We were expecting the Chinese bid to be competitive. However, we were still assigning some probability for Enka-Bechtel to submit a winning bid. Nevertheless, we expect ENKAI activity in Iraq to increase going forward, which is a major growth market.

 

·         EKGYO (NR) > Held an open auction for its Bakirkoy land with a revenue-sharing-model. Highest bid came from Akzirve-Ege Yapi-OzKar consortium @ TL1.2b total revenues where Emlak’s share is 45.9% (TL553.1m). Appraisal value of the land is TL196m. +VE for EKGYO.

 

·         TCELL (BUY, TP TL13.56) > CEO Sureyya Cİliv said operations have not been affected from the conflict between shareholders. Said he hopes the three shareholders can reach an agreement. Also said the company will be evaluating opportunities in and outside of TR, although given difficulties in earning cash, the co will be vigilant and invest carefully.

 

·         TTKOM (NR) > Industry sources agreed that TTKOM would be the “best buyer” for GTS Central Europe, the enterprise-focused fixed-line operator, according to merger market. TTKOM is said to be the best buyer, as they would build nicely on their Pantel acquisition (2008 wholesale fiber acquisition at an EV of €221mn). TTKOM International CEO Cengiz Oztelcan confirmed the company’s interest in GTS, but declined to comment on whether any talks are underway. GTS is looking for 7x to 8x EBITDA sale price, but may only be able to fetch 5.0x to 5.5x EBITDA, as reported. It posted EUR 103m EBITDA in 2012. If it fails to secure an adequate bid, private equity owners will instead pursue a high-yield bond issue.

 

·         EREGL (BUY, TP TL2.32) > Announced that Celik-Is, the union at its Iskenderun plant, has decided to launch a strike starting July 15 as part of the collective work agreement bargaining covering 2013 and 2014. The union’s decision to strike had been previously announced but without a date. Comment: We attach a low probability of a strike and the expect the parties to agree to wage increases roughly in line with inflation. Everything else being the same, every 1% increase in labor has about 0.8% negative impact on EREGL’s EBITDA with labor costs accounting for about 16% of EREGL’s cash costs.