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bne Turkey Daily ListExecutive Summary:
This is bne's Turkey daily newsletter, a list of the top stories in the country this morning. To manage your delivery options: click here: | ||
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| 1. Turkey and Bangladesh aim to boost ties |
| bne |
| April 16, 2012 Turkey aims to increase trade volume with Bangladesh to $3bn by 2015, said Turkey's Prime Minister Recep Tayyip Erdogan on 12 April during a joint press conference with Bangladeshi Prime Minister Sheikh Hasina Wajed in Ankara, reports World Bulletin. Turkey could have joint ventures with Bangladesh in several sectors such as the energy sector and defense industry, said Erdogan. Hasina urged Erdogan to form a Free Trade Agreement (FTA) between the two countries. The countries wish to deepen ties in trade and commerce as well as agriculture. The countries also decided to work together at different international forums for the mutual benefits. Erdogan praised Bangladesh government's accomplishments in promoting education, rule of law, and democracy. Bangladesh is hopefully a middle-income country by 2015, he added. Bangladesh and Turkey signed three agreements, two memorandums of understanding, a letter of intent and a protocol to further bolster cooperation in economic, cultural, agricultural, and other fields. "We are happy by the fact that our trade volume with Turkey would reach 3 billion USD by 2015. Bangladesh is pleased to welcome Turkish businesspeople and investors. We especially expect investments in the energy sector. We are pleased to receive investments in transportation, food, carpets and other fields," Premier Sheikh Hasina said at the Thursday press conference. |
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| 2. Turkey happy over UN's Syria resolution |
| bne |
| April 16, 2012 Turkey is pleased by UN Security Council Resolution 2042, adopted on April 14, that allows the deployment of 30 unarmed observers to Syria to oversee the cease-fire in the war-ridden country, a Turkish Foreign Ministry statement said, according to Today's Zaman. "We are pleased with the resolution on Syria approved by the UN Security Council on April 14. This resolution is an important message that the UN Security Council has responded to the situation in Syria with a single voice. However, it does not completely meet our expectations, but is a positive step," the statement reads. The statement also confirmed Turkey's support for UN-Arab League special envoy Kofi Annan's six-point peace plan. The resolution adopted by the UN Security Council on Saturday, which gives permission for unarmed observers to travel to Syria, was a good first step towards the right direction, says Turkey's permanent representative at the United Nations, Ambassador Ertugrul Apakan. Deputy undersecretary at the Turkish Foreign Ministry Naci Koru agreed with Apaka. "This resolution was an important step to show the unity of the international community against the Syrian regime for the first time," he said. "If there is a request from the United Nations to add Turkish observers, we will evaluate it," he added. |
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| 3. Turkish labour force participation increased by 0.1% in January |
| Turkstat |
| April 16, 2012 Working age population increased by 1 million 232 thousand in the period of January 2012 compared to the same period of the previous year While non-institutional population increased by 1 million 357 thousand persons and has reached to 73 million 174 thousand persons, non-institutional working age population has increased by 1 million 232 thousand and has reached to 54 million 283 thousand persons in the period of January 2012. Labour force participation rate was 48,2 % in the period of January 2012 Labour force participation rate (LFPR) realized as 48,2 % with 0.1 percentage points increase compared to the same period of the previous year for Turkey in January 2012 period. LFPR was realized as 69,7 % with 0,6 percentage points decrease for male compared to the same period of the previous year and realized as 27,2 % with 0,6 percentage points increase for female. As for the distribution of labour force by education and age group; - 16 % of the total labour force were comprised of persons within the 15-24 age group. - Labour force participation rate of persons having education below high school was 67,4 % for male while it was 22,8 % for female. - Labour force participation rate of persons with higher education was 85,8 % for male, while it was 70,3 % for female. |
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| 4. Turkey hopeful about outcome of Iran talks |
| bne |
| April 16, 2012 Turkey hosted talks between world powers and Iran in Istanbul over the weekend. Turkey is hopeful that the talks were useful and constructive. However, the United States remain skeptical over the result of the talks, reports Hurriyet Daily News. "I don't want to raise anybody's expectations that all of a sudden large steps will get taken ... We have not seen them address the concerns of the international community. We have seen instead, them proceed forward with their nuclear program in ways that increase the concern of the international community," a senior U.S. administration official told reporters at a briefing following Saturday's talks. "One only expects to look at the issue when there are sufficient concrete steps taken," the official added. For the first time in 15 months top Western officials met with senior Iranians for talks over Tehran's nuclear program in Istanbul on Saturday. The two parties agreed to meet again for more in-depth talks on May 23 in Baghdad. The atmosphere at the talks was positive, but there is urgent need for concrete progress to be made in order to gain international confidence, the U.S. official said. "We want to move to a sustained process of serious dialogue, where we can take urgent practical steps to build confidence and lead on to compliance by Iran with all its international obligations," Catherine Ashton, the European Union's foreign policy chief who headed negotiations for the six international powers, said in a news conference after talks in Istanbul on April 14. "In our efforts to do so, we will be guided by the principle of the step-by-step approach and reciprocity," she added. Next time the talks should aim to arrage measures to build mutual confidence, Saeed Jalili, the chief Iranian nuclear negotiator, said at the same news conference. He expressed Iran's hope that sanctions against the country would be lifted. "The lifting of the sanctions is one of the demands [given] by the Iranian nation," he said. The Nuclear Nonproliferation Treaty must be the "key basis" for future talks, the parties agreed. |
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| 5. CEE Insights |
| Erste |
| April 16, 2012 Rising concerns over Spain significantly shook CEE currencies on Tuesday, but the shock was short-lived and the currencies ended the week almost flat w/w. The Hungarian forint reached 299.75 EUR/HUF on Tuesday (-1.5% d/d), demonstrating high forint vulnerability and a desperate need to calm the uncertainty surrounding the start of talks with the IMF. The letter of reply from the European Commission regarding infringement procedures (which have to be solved as a prerequisite for the start of talks with the IMF) is expected to arrive in the coming weeks. The new Convergence Program, which has to be submitted to the EC by the Hungarian side within the next two weeks, will shed more light on the Hungarian fiscal situation and concrete measures. The Polish government has finally reached agreement on pension reform and could inspire some other countries in the region to do so as well. The retirement age will be unified at 67 years, from the current 60 for women and 65 for men. Next week, the Croatian government will try to issue its long-awaited 5Y Eurobond on the US market. We expect that the MoF will achieve its USD 1.5bn issuance target, while the pricing could come close to a 6.5% yield. On political front, the Romanian opposition warned that they are planning another no-confidence vote; however, this time the vote could be very tight because of the unclear position of independent MPs. We lean towards the scenario that the government will survive. The Turkish central bank will decide on rates on Wednesday. While we do not expect any change in rates, the asset structure of reserve requirements could be changed in favor of a higher limit for gold. How much of the move in yields experienced in recent weeks do you see as permanent, and is the trend set to continue? Croatia: Since the beginning of March, bond yields performed robustly on all fronts, with the exception of USD-denominated ones (as investors are anticipating increased supply from coming issuance) and yields were down 50-70bp. The accommodative HRK liquidity outlook should still provide support to HRK yields, while USD-denominated yields could post some convergence after the bond auction. As domestic factors played out supportively, the major upside risks for yield level stem from the potential renewal of global market jitters in the months ahead. Czech Republic: Czech 10Y bonds rose some 30bp since the last ECB LTRO (at the end of February), and are now trading at 3.6%. The spread widened to around 180bp because German yields dropped at the same time as the debt crisis came back with a vengeance (see Spanish yields over the last few weeks). What happens next is pretty much a function of bunds we think that there is no justification for such a wide spread and we should see some contraction this year. Now, this could either be via higher German yields or lower Czech ones. Since there is limited space for growth in German yields this year and since local developments are favorable (better than expected 2011 deficit, 3.1% of GDP, large share of 2012 financing needs already covered, fiscal measures over 2013-15 to further reduce the deficit, etc.), we are inclined to see the current levels as close to this year's peak and say that stability or a small drop from current levels is much more likely than a further increase. Hungary: Recent increases in yield levels could be permanent as long as there are no clear signs that the IMF/EU deal will be reached soon. The current 10Y levels are at around 8.9-9.0%, while similar maturity USD- denominated Eurobonds trade at around 7.7%. These levels are clearly not sustainable in the longer run. It would thus be necessary for Hungary to demonstrate increased credibility in its economic policy, which is unlikely to be achieved without an agreement with the international institutions. In light of the recent negative developments regarding the IMF/EU talks, further yield increases cannot be excluded. However, due to the above, we also think that there is no real alternative to a deal and one will most likely be reached sometime in 3Q12. After that, yields may decline, in our view, and we therefore maintain our 7.9% 10Y yield forecast for end-2012. Poland: There was, in fact, no significant move in yields during the last month. The 10Y was moving around 5.55% without any noticeable trend. More interesting was the development of the spread to bunds. It has widened somewhat from its one-year low of 340bp in the middle of March to the current 375bp. This move was predominantly driven by the fall of German yields, as a result of growing nervousness on the European sovereign bond market. Romania: We think that 5Y Romanian government bonds could fall to 6% in June, due to the government's adherence to the fiscal consolidation program agreed with the IMF and EU and the NBR's monetary easing cycle. It seems that the Romanian fixed income market remained immune to the recent increase in borrowing costs in peripheral Eurozone countries. Slovakia: Slovak bonds have recently been heavily influenced by external factors. External factors (mainly the 3Y LTROs) were more important than local factors. Yields on 8Y bonds surged from 4.5% to 6% in late 2011 and during the last three months compressed below 4%. With such swift and large moves, persistence at the current low levels cannot be guaranteed; this would be especially true should the debt problems in Europe resurface. The sensitivity of Slovak bonds to the external environment was somewhat reduced by the heavy issuance by the Slovak debt agency, which issued almost two thirds of the required gross issuance for 2012. We see a fair level of yields at around 4% if the situation in Europe remains stable. Turkey: Bond yields in the last couple of weeks moved mainly in line with shifts in monetary policy and they are likely to continue to do so going forward. They swing between 9.2% and 9.7% as the CBT tightens and loosens the monetary policy by adjusting average funding costs. We expect it to be permanent at least until the last quarter of the year, as no considerable improvement on inflation front is likely until then. Ukraine: Government bond yields declined by nearly 100bp and may well fall by the same amount before prices stabilize. The government now borrows at 14% for 1Y and is trying to decrease borrowing costs further. The downward trend will last at best for the next three months. Afterwards, we should see yields rise on the back of a worsening of the balance of payments. |
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| 6. Protecting the International Financial System: Ministers to Renew the FATF Mandate |
| OECD |
| April 16, 2012 Ministers from Financial Action Task Force (FATF) member countries will meet in Washington DC on 20 April to extend the FATF mandate for another 8 years, continuing to safeguard the integrity of the international financial system. The FATF Ministerial Meeting will take place in the margins of the 2012 IMF / World Bank Spring Meetings. It follows on the recent publication of the revised FATF 40 Recommendations, the international standard for combating money laundering and the financing of terrorism and weapons of mass destruction. The renewed mandate will allow the FATF through its global network of 187 partner countries to ensure that all are doing their part to make the international financial system off-limits to criminals, terrorists and others threats to financial stability. The final FATF Ministerial Declaration and Mandate for 2012-2020 will be published on the FATF website on 21 April 2012, from 9:00 a.m. CET. FATF officials will be available to respond to media queries in Washington DC on 20 and 21 April 2012. |
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| 7. Renewed concern over developments in eurozone |
| TEB |
| April 16, 2012 Renewed concern about developments in the eurozone and the poor US non-farm payrolls weighed on emerging markets early in week. But the soft patch was short lived and emerging markets rebounded on better data and comforting remarks from the ECB. - The emerging-market monetary-policy bias remains varied. The central banks of India and Brazil are likely to cut rates next week. The MAS has surprised by tightening its policy bias, and we think the Polish central bank may hike as soon as May due to persistently high inflation. - In China, stronger export and loan data were offset by disappointing Q1 GDP data, giving an inconsistent picture of Chinese economic activity. Even if growth slows further, we think China has the firepower to support growth, and talk of a RRR cut is likely to resurface. Even if China's policymakers were politically motivated to fix the CNY at a stronger rate ahead of the US Treasury report on currency manipulation, the offshore CNY may not benefit. - Inflation concerns about Israel and South Africa are still valid. For this reason, we are hesitant to establish receivers at the front end of the ZAR IRS curve and prefer the long end of the SAGB curve. Russian data, meanwhile, will be watched for confirmation of the state of the economy. - In Latam, the massive MXN sell-off is overdone, in our view, and we remain positive on the currency. On the rates front, next week will be very important for both Chile and Brazil and, in particular, we will be paying close attention to the statements accompanying the rate decisions. We like receiving real rates in Brazil (2y IPCA swap). |
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| 8. Russia's Sberbank prepares Baltic expansion |
| bne |
| April 16, 2012 Russian banking giant Sberbank is preparing to expand into the markets of the Baltic states, bne can reveal, with the first step being its Belarus subsidiary BPS-Sberbank opening a subsidiary in Latvia. The move would follow Sberbank's first foreign foray when in February it acquired for €505m the Emerging European arm of Austria's Oesterreichische Volksbanken, Volksbank International, which operates in Bosnia-Herzegovina, Croatia, the Czech Republic, Hungary, Romania, Serbia, Slovakia, Slovenia and Ukraine. "We are discussing plans to open a subsidiary in Riga and will soon submit these plans to the supervisory board of BPS-Sberbank," BPS-Sberbank CEO Vasily Matyushevsky tells bne. "BPS-Sberbank is following its customers to the Baltic market. Most Belarusian cargos are trans-shipped through Lithuanian and Latvian seaports. Therefore, we would like to accompany our Belarusian customers, give them all-round support and make their business more efficient," Matyushevsky explains, adding that the subsidiary in Riga is scheduled to open in 2012. As for a possible expansion of Sberbank to Poland, the situation is less certain, Matyushevsky says. "You have to wait. I think there will have to be a decision of the Sberbank Group on this issue, and we will inform the media." Click to read more |
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| 9. BOSPORUS BLOG: Keep Chinese goods away from the Iraq bazaar! |
| bne |
| April 16, 2012 On April 5, the Turkish government revealed details of a highly anticipated manufacturing incentive package for the country, which includes policies to attract new investments to 15 of Turkey's less-developed eastern provinces. Is this just more talk or something more substantive? "The new package is doubtless the most comprehensive and detailed of its type in the history of the republic, and it is clear that much work was put in to refine the stimulus for greater investment techniques," wrote Turkish columnist Cengiz Aktar on April 11. "What's more, it is clear that some lessons have been learned from previous exercises." As with recent moves to manage energy prices, the incentive package is aimed at taming Turkey's massive current account deficit, which currently comes in at about 10% of the country's GDP. With the incentive package, the fourth since it came to power in 2002, the government aims to reduce imports on intermediary goods. Incentives will be offered to increase the production capacity and competition of sectors the government believed to be most responsible for the current account deficit: iron and steel production, the automotive sector, machines and manufacturing, chemical production and textiles, and food production and agriculture. Raising the level of education and skills around the country is still needed to produce qualified workers for further research and development, but the government is taking steps to change the types of products that are made in Turkey, Aktar says. Click to read more |
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| 10. Catholics hopeful over meeting on constitution in Turkey |
| Hurriyet Daily News |
| April 16, 2012 A Catholic Episcopalian spokesperson has expressed hope ahead of a groundbreaking meeting between representatives of Turkey's Catholic community and Parliament's Constitution Commission. "We have had problems with every government until the AKP [Justice and Development Party]," Rinaldo Marmara, the press spokesperson and cultural attache for the Catholic Episcopalian Council of Turkey, recently told the Hurriyet Daily News. "Everything was taken away from us, but now there is a favorable attitude. I believe our problems will be resolved. We were always perceived as foreigners. For that reason we never had the right to establish foundations like other minority communities." Click to read more |
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| 11. Turkey's gov't seeks formula for Kurdish class |
| Hurriyet Daily News |
| April 16, 2012 Education Minister Omer Dincer said they are looking for a formula for Kurdish to be offered as an elective course in schools. "Kurdish is not considered a 'foreign language,' so we are working on the legislation to see whether there is an obstacle to this or not," Dincer said in an interview with daily Aksam. "If there is an obstacle to Kurdish being offered as an elective course, then a formula could be found, because it is a government policy." Click to read more |
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| 12. Bahceli calls for widened coup probe in Turkey |
| Hurriyet Daily News |
| April 16, 2012 All military interventions in Turkey's history, including the e-memorandum of April 27, 2007, should be investigated, Nationalist Movement Party (MHP) leader Devlet Bahceli said April 14, questioning a potential agreement between the prime minister and the former army chief, Yasar Buyukanit. "Those who attempted a military coup or who prepared a plan or project for it should give an account before the court. Those who closed down the Parliament on Sept. 12 [1980], those who made balance adjustments on Feb. 28 [1997] or those who attempted to shape politics on April 27 [2007] should get the penalties they deserve," Bahceli said April 14 at a party meeting. Click to read more |
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| 13. Cicek urges commitment to new charter in Turkey |
| Hurriyet Daily News |
| April 16, 2012 Parliament Speaker Cemil Cicek warned all four political parties yesterday that failing to draft a new constitution would have very serious political results, while pointing out the hypocrisy behind the recent Feb. 28 post-modern coup probe. Cicek recalled that coups staged by the military in the past are now being prosecuted by the judiciary, especially 1980 coup where five generals overtook the administration, in his address to the Turkey Speaks platform held in Gaziantep as part of parliament's efforts to rewrite the constitution. Click to read more |
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| 14. Turkey's Gov't not sincere on Feb. 28 inquiry, says CHP |
| Hurriyet Daily News |
| April 16, 2012 Main opposition leader Kemal Kilicdaroglu slammed the government for using an intelligence report prepared by the so-called Western Working Group (BCG) during the pre-election period in 2011, stating that he was personally a victimized as a result. They're saying that they're going to settle accounts [with February 28], and yet they use reports done by pro-coup individuals during the elections. How do they expect me to believe the government's sincerity? asked the Republican People's Party (CHP) leader, daily Radikal reported yesterday. Click to read more |
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| 15. The three-term ban' scenario in Turkey's ruling AKP |
| Hurriyet Daily News |
| April 16, 2012 Deputies from the ruling Justice and Development Party (AKP) who had been elected for three consecutive terms had long been waiting in the throes of painful anticipation. They were involved in lobbying efforts with the expectation that they may not be able to run for office for another term and working on ways to find a way out. They argued the AKP's front-line ranks would run dry in the next general elections, and that figures who had taken up crucial tasks before would now have to sit back in their corner, and they thus pushed to amend the internal regulations. Click to read more |
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| 16. Land limit for foreigners in Turkey reinstated after objections |
| Hurriyet Daily News |
| April 16, 2012 The ruling Justice and Development Party (AKP) has agreed to reinstate a 10 percent limit on foreign ownership of land in a single district, during discussions at Parliament's Justice Commission, retreating after opposition objections. A controversial bill easing restrictions on foreign purchases of real estate was amended at a commission meeting April 11 after a stormy debate. Under the amended draft, a foreign individual can buy a maximum of 30 hectares of land in Turkey, but the amount could be doubled by a government decision. The current limit is 2.5 hectares of land. Click to read more |
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| 17. Summit communique calls for new Silk Road |
| Hurriyet Daily News |
| April 16, 2012 Income disparity and unemployment rates are the single most important problems facing the world today, said attendees of the 15th Eurasian Economic Summit in a communiqu released April 14. The communique called for the historical Silk Road to be reinstated through roads and railways, with the participation and contribution of all developing countries in the region. Click to read more |
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| 18. Turkish Consumer Confidence Index increased in March 2012 |
| Turkstat |
| April 16, 2012 The Consumer Confidence Index, which was 93.2 in February 2012 increased by 0.7% compared to previous month and became 93.9 in March 2012. In monthly Consumer Tendency Survey, which was carried out with cooperation of Turkish Statistical Institute and Central Bank of the Republic of Turkey, consumers' assessments on current situation and their expectations for personal financial standing and general economic situation have been evaluated and their expenditure tendencies for near future have been measured. The consumer confidence index calculated from the survey results can take value between 0-200. It indicates an optimistic outlook when the index is above 100, but it gives a pessimistic outlook when it is below 100. The increase in the Consumer Confidence Index stemmed from the improvements in consumers' assessments concerning purchasing power in the present and next period, job opportunities in the next period and buying time condition of durable goods in the present period. |
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| 19. Turkish commerce missions visit two continents to back exports |
| Hurriyet Daily News |
| April 16, 2012 Turkish trade missions are on a crusade to prop up Turkish exports to and enhance business relations with Europe's Netherlands, North America and Asian export giant Japan. A trade mission of 100 Turkish businessmen, led by Rifat Hisarciklioglu, the head of the Union of Chambers and Commodity Exchanges, is heading to the Netherlands as part of President Abdullah Gul's official visit to mark the 400th anniversary of the establishment of Turkish-Dutch diplomatic relations between April 16 and 19. Click to read more |
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| 20. Turkey's Otokar mulls making of domestic 'electric tank' |
| Hurriyet Daily News |
| April 16, 2012 Otokar, a Turkish automotive manufacturer specializing in commercial and military vehicles, has signaled plans to move into the production of electric tanks. "We are thinking about producing electric tanks. This may play a significant role in the defense industry tactically in addition to being environmentally friendly," said Otokar General Manager Serdar Gorguc, daily Hurriyet reported yesterday. Click to read more |
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| 21. Turkish Akfen Holding signs contract to sell energy assets |
| Erste |
| April 16, 2012 Akfen Holding signed a contract with Aquila Hydropowerinvest to sell Ideal Enerji, which has the Karasu 1, 2, 4.2, 4.3 and 5 HPP plants with 139mn kWh capacity for EUR 86.2mn. The Share Purchase Agreement will be signed and executed by June 29, or the signing will be postponed to August 31, provided that 70% of the purchase price has been deposited in the escrow account by June 29. Aquila Hydropowerinvest will also have a call option for the acquisition of a 100% stake in Camlica Enerji, which has the Camlica 3 HPP and Saracbendi HPP projects with total 180.6mn kWh, for EUR 111.9mn EV, and a 100% stake in Beyobasi, which has the Sirma HPP, Otluca HPP and Sekiyaka II HPP projects with 251.1mn kWh for EUR 155.6mn EV. If all of the call option is exercised, the Share Purchase Agreement will be signed on December 28 at the latest and the share transfer will be completed by February 15, following the fulfillment of the conditions of the share transfer. The total transaction price will be EUR 353.8mn. Akfen Holding has successfully started to exit from its investment portfolio. The company aims to be aggressive in the upcoming toll road and bridge privatizations, as well as the Baskent natural gas distribution and Izmir port tenders. With the latest transactions, the company raised a substantial amount of equity for those tenders, which we deem as positive. |
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| 22. Turkish Celebi Ground Handling 4Q11 results |
| Erste |
| April 16, 2012 Celebi Ground Handling (Celebi) announced TRY16mn net loss in its 4Q11 IFRS consolidated financials, considerably lower than our estimate and market consensus both of which were pointing TRY11mn net profit. The deviation at the bottom-line stemmed mainly from change in the company's accounting practices in its cargo operations in India. Please note that previous misinterpretation of concession agreement regarding New Delhi Cargo operations within the context of IFRS12 and IAS17 was corrected retrospectively in 2011. That correction necessitates restatement of 2009 and 2010 financials as well as a provision of TRY28mn in 2011 financials and following the restatement of previous years' financials, the company's equity declined to TRY39mn as of end-2011 from TRY103mn as of end-2010. On the other hand, auditors issued a qualified opinion report regarding the company's 2011 financials due to not fully finalizing the checking procedures of accounting recordings about Celebi Delhi Cargo after the fire that took place in Delhi terminal in the beginning of 2012. Due to aforementioned accounting practices, quarterly analysis is meaningless, thus we base our comments on annual figures. The company's revenues were up 35% y/y in TRY terms in 2011 thanks to (i) 17% increase in number of aircraft handled (ii) TRY weakness against hard currencies (iii) launch of cargo operations in Hungary and Germany. Celebi's top-line performance could have been better if it had not experienced 5% like-for-like volume contraction in its cargo operations. Announced top-line of TRY473mn is better than our estimate at TRY461mn. On the margin front, despite 257bps improvement on the domestic operations' gross margin, the Company experienced 542bps y/y contraction in its consolidated gross margin in 2011 due mainly to significant deterioration in its Indian operations' profitability and negative contribution from newly launched German operations. Around 15% y/y deterioration in the company's Indian operations stemmed from (i) accounting interpretation change mentioned earlier (ii) increase in minimum wage salaries in India which could not be reflected to the end-prices (iii) flat volume performance which prevents the company to enjoy operational leverage. TRY37mn net financial expense bulk of which arose due to FX losses was another reason behind the company's poor bottom-line performance. Consolidated net debt position of Celebi surged to TRY237mn as of end-2011 from TRY84mn as of end-2010, implying 6.0x net debt/equity and 3.0x net debt / EBITDA (4Q trailing). All in all, as mentioned earlier in our latest company report dated February 23, uncertainties in the company's Indian operations continue to negatively surprise the market and these unfavorable news overshadow the positive developments in the remaining operations. Furthermore, restatement of previous year's financials which reduce the retained earnings will likely to put a cap on the dividend performance of the company which has long been argued by us as one of the most important investment positives of Celebi. In light of the recent developments, and following to our talks with the management, we will go over our model assumptions and we will try to understand the details of restatement of previous years' financials. In the meantime, we are reviewing our Buy' rating and a cut our current 12M target price of TRY29/share is very likely due mainly to never-ending uncertainties regarding Indian operations. |
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| 23. Turkish Bizim Topta GM comments - press |
| Erste |
| April 16, 2012 According to daily Haberturk, Bizim Toptan GM Recep Ozalp reiterated the previously mentioned target of doubling the current revenues by 2015 and distributing half of the earnings as dividends to shareholders. However, Ozalp said that they might consider inorganic growth opportunities, although there is no concrete development in that respect. Lastly, in line with the new policy to focus more on the HoReCa segment, Bizim Toptan is planning to distribute 10K loyalty cards ('Bizim Kart') in 2012. The GM's comments are broadly in line with management's previously shared long-term guidance. Thus, we perceive the news as neutral and do not expect any material impact on the share price. On the other hand, the company has not announced its dividend from 2011 earnings formally yet. If the GM's 50% guidance is assumed to be valid for 2011, we calculate ~TRY 0.35/share dividend, implying an ~1.5% dividend yield. |
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