SAHOL (Long) / KCHOL (Short) - 27th Decembe

PAIR TRADE: SAHOL (Long) / KCHOL (Short)
 

Current Δ: TL0.60  

 

Target Δ: TL0.95 / Stop-loss Δ: TL0.31

Sabanci Holding and Koc Holding share prices have been correlated by a factor of 0.82x and 0.96x in the last one month and three months, respectively. The current price differential (Δ) between SAHOL and KCHOL is at TL0.60. This is 1.8x standard deviation lower than average last one month price differential of TL0.95, which suggests that KCHOL shares are relatively overvalued.  Our quantitative model suggests going long on SAHOL and short on KCHOL. We target TL0.95 price difference which offers 4% return, while our stop-loss level is at Δ: TL0.31 (1.5x standard deviation below the current level) implying 3% loss.          

KOC HOLDING (Outperform) - Resuming Coverage: Room for More

Resuming coverage with Outperform rating at PT of TL 8.47/share  

We resume our coverage on Koc Holding with Outperform rating on Price Target of TL8.47/share, implying 15% return potential. Our PT is driven from our Sum-of-The-Parts valuation, applying 5% conglomerate discount (in line with its 2010-to-date and YTD average NAV discount). We are relatively positive on the Koc’s main segments, especially Tupras (OP), Tofas (OP), Ford Otosan (OP), Turk Traktor (OP), Arcelik (OP) and YKB (MP, yet positive in the long term), backed by their business models, market positioning and growth & profitability outlook.