Market Watch Wednesday, September 20, 2017 Agenda

Market Watch Wednesday, September 20, 2017 www.sekeryatirim.com.tr Agenda

18 Monday 19 Tuesday 20 Wednesday 21 Thursday 22 Friday  N/A  Treasury auction  U.S., August existing  BoJ announcement  N/A  Germany, September home sales  U.S., jobless claims ZEW survey  U.S., Fed FOMC  U.S., September Philadelphia  U.S., August housing announcement Fed business outlook starts and building permits

Outlook: Global stock markets continued to edge up higher on Tuesday as well, as Volume (mn TRY) BIST 100 investors have been waiting for today’s key US Fed policy meeting. Having started the day rather flattish, the BIST100 closed 1.5% lower at 104,918, 112.000 decoupling negatively from its peers attributable to rising geopolitical risk in 8.000 Northern Iraq. Total trading volume in the market was at TRY 6.7bn. Mar- 110.000 kets will remain focused on the Fed’s policy decision today, where no 6.000 108.156 108.244 107.742 change is expected. However, Chairperson Yellen’s remarks following the 106.535 108.000

meeting, and the dot plots, are expected to help investors determine a new 4.000 5.570 5.986 104.918 106.000

direction for the markets. Before this announcement, markets will follow 5.639 4.704

August existing home sales data from the US. Locally, geopolitical news 2.000 4.340 104.000 flow will remain relevant. Asian markets have been advancing today, ex- cepting Japan, while European markets seem set to open amid some sell- 0 102.000 ing. We expect the BIST to open with some reactionary buying today. RE- 13-Sep 14-Sep 15-Sep 18-Sep 19-Sep SISTANCE LEVELS: 106,000 / 106,900 / SUPPORT LEVELS: 104,900 / 104,200. Indices (TRY) Previous Last Chg. YTD Money Market: BIST 100 106.535 107.742 1,13% 37,89% The Lira was negative yesterday, weakening 0.75% against the USD to BIST 30 130.596 131.862 0,97% 38,08% close at 3.4965. Additionally, the currency depreciated by 0.83% against BIST-Financial 133.659 135.069 1,06% 30,38% the basket composed of $0.50 and €0.50. The local fixed income markets BIST-Industrial 118.388 120.090 1,44% 43,67% were relatively flat. The two-year benchmark bond was traded within a tight BIST-Services 69.049 69.727 0,98% 40,51% range of 11.67-%-11.69%, ending the day at a high of 11.69%, 2 bps above its previous close. Advances Declines Most Active Stocks (%) Stocks (%) Stocks Vol (TR) BMEKS 18,60 AKPAZ -5,41 THYAO 650.937.986 Company News: BANVT 11,45 HURGZ -5,38 GARAN 259.168.957 TAV Airports Holding (TAVHL. TI; OP) - New shareholder structure: EGCYH 9,09 MAALT -4,24 IPEKE 246.216.255 Upon completion of the share transfer of Tepe Insaat’s 3.0% stake and GENTS 8,90 DOHOL -3,92 AKBNK 156.505.839 Sera Yapı’s 0.76% stake in TAV Airports on September 12, 2017, TAV METRO 6,86 HATEK -3,61 HALKB 140.634.884 Airports Holding has shared its new shareholder structure as follows: Groupe ADP (through Tank OWA, a wholly-owned subsidiary of Groupe Money Market Previous Last Pr. Mn YE15 ADP): 46.12% (unch.); Tepe Insaat: 5.06% (prev: 5.06%); Sera Yapi: O/N Repo (%) 12,40 11,81 11,79 9,50 1.29% (prev.: 2.05%); other, non-floating: 3.20% (prev.: 3.27%); other, free Euro Bond (30 year, $) 162,13 160,23 160,13 147,10 Bond (Benchmark, %) 11,67 11,69 11,69 10,94 float: 44.33% (prev.: 40.50%). We do not expect this announcement alone to have a significant impact on the group’s short-term shares performance, Currency Previous Last Chg. YTD as its new shareholder structure was formerly implied in its previous com- US$ 3,4705 3,4965 0,75% -1,16% Euro 4,1485 4,1855 0,89% 12,95% munication regarding the said parties’ stake sale. The completion of the Euro/Dolar 1,1994 1,20121 0,15% 14,62% sale process may eliminate pressure on the group shares given the lock up period of 270 days; we call attention to our OP rating - TAV Airports Hold- Commodity Previous Last Chg. YTD ing’s shares have been under pressure since the announcement of these Oil (Brent spot, $) 55,4 55,3 -0,16% -2,56% stake sales, attributable to the group’s increasing free float, previously at Oil (NYMEX future, $) 49,9 50,2 0,62% -6,83% 40.50%, and increased to 44.33% after the sale. We evaluate the group’s Gold (Ounce, $) 1.311,2 1.312,9 0,13% 14,02% simplification of its shareholder structure as constructive, and would like to Silver (XAG, $) 17,3 17,3 -0,02% 8,70% remind that there is a lock-up period of 270 days (9 months, i.e., until June Şeker Funds Previous Last* Chg. YTD 2018) for Tepe Insaat and Sera Yapı not to sell any further shares in TAV Şeker Portfoy Equity Fund 0,447714 0,441267 -1,44% 30,38% Airports Holding, and that we understand that currently Tepe Insaat and Şeker Portfoy Debt Instruments 0,026277 0,026260 -0,06% 6,99% Sera Yapı are likely to maintain their stakes in the group as suggested by Şeker Portfoy Money Market 1,189212 1,189578 0,03% 7,55% the lock-up period. Hence, we should also point out that similar to Turkcell, Şeker Portfoy Mix Fund 0,022642 0,022523 -0,53% 14,41% the completion of the sale process could eliminate pressure on the group Şeker Portfoy Gold Fund 0,022344 0,022468 0,55% 9,40% shares for the short-to-medium run, which have underperformed >>> Şeker Portfoy Short T. Debt 0,014205 0,014209 0,03% 7,27% * Prices as of 20-Sep-17

Market Watch Wednesday, September 20, 2017 www.sekeryatirim.com.tr

>>> the BIST100 by 2.2% since the stake sale. We maintain our OP rating World Indices on TAV Airports Holding shares, which continue to trade at a wide discount America Previous Last Chg. YTD of 54% compared to peers on 2017E EV/EBITDA; our TP of TRY 23.10/sh Dow Jones (US) 22.331 22.371 0,18% 13,20% for group shares, currently suggests an upside potential of ca.24%. Nasdaq (US) 6.455 6.461 0,10% 20,03%

S&P 500 (US) 2.504 2.507 0,11% 11,96% Turkcell (TCELL TI, OP) Sonera Holding yesterday announced that the group has agreed to sell its 153.5mn shares in Turkcell, corresponding to Bovespa (Brasil) 75.990 75.974 -0,02% 26,15% ca.7% of the company's share capital (ca.14% of its free floating shares), at Europe Previous Last Chg. YTD a price of TRY 11.60/sh. The share price agreed for the sale at the time of Dax (Germany) 12.559 12.562 0,02% 9,41% the announcement was ca.4% below Turkcell shares' market price. The FTSE 100 (UK) 7.253 7.275 0,30% 1,85% development may create short-term pressure on Turkcell shares. The CAC 40 (France) 5.237 5.237 0,00% 7,72% transaction is expected to settle on 21 September, 2017. Telia Company MIB30 (Italy) 22.425 22.425 0,00% 16,59% will then retain its 24.0% percent indirect stake in Turkcell. The group shares had outperformed the BIST100 merely by ca.1.7% since the an- PSI20 (Portugal) 5.303 5.303 0,00% 13,33% nouncement of the first tranche (155mn) of Sonera Holding's stake sale in ASE (Greece) 761 763 0,27% 18,52% May 2017, despite its strong operational (revenues:+27.1% YoY, EBITDA: RTSI (Rusia) 1.119 1.109 -0,93% -3,79% +41.4% YoY) and financial performance in 1H17 (NI: +18.7% YoY). We Asia Previous Last Chg. YTD believe the completion of the sales process should remove previous over- Nikkei (Japan) 19.275 20.299 5,32% 6,20% hang concerns, and Turkcell’s increasing free float is likely to increase its Hang Seng (Hong Kong) 27.668 28.051 1,38% 27,50% weighting in the MSCI index in the future as well, supporting demand for Shanghai Comp. (China) 3.365 3.357 -0,25% 8,16% the group shares. Turkcell also plans to pay the last instalment (TRY 1bn) of its TRY 3.0bn dividends on December 15, 2017. We reiterate our OP KOSPI (South Korea) 2.344 2.416 3,09% 19,23% recommendation on the company shares that are currently trading at Sensex (India) 31.688 32.402 2,26% 21,69% 2017E EV/EBITDA of 5.7x by our estimates, at a ca.12% discount to inter- Turkdex (Set. Price) Previous Last Chg. YTD national peers. INX30 (OCTOBER 17) 132,500 130,425 -1,57% 35,47% USD (OCTOBER 17) 3,5268 3,533 0,18% -0,91% Kardemir (KRDMD.TI; OP) has shared a new price list with an incre- EURO (OCTOBER 17) 4,2265 4,242 0,37% 12,56% mental ca.1% increase in its rebar prices, along with an average 6% in- GOLD (OCTOBER 17) 148,64 149,17 0,36% 11,91% crease in billet prices. The prices of all other products were maintained unchanged. The price action indicates continuing resilience in the compa- Portfolio Inclusio Inclusio Last Chg. BIST Recommend. Date Price Close (%) Relative ny’s product prices, and hence may create short-term slightly positive senti- Tofaş 30.01.17 25,84 31,80 23,1% -4,3% ment around its shares. TAV Airports Holding 02.08.17 20,60 19,04 -7,6% -8,6% Migros 09.11.15 19,05 27,50 44,4% 9,8% Kardemir (KRDMD TI, MP) The Competition Board has decided in favour Turk Telekom 02.08.17 7,08 6,56 -7,3% -8,3% of Kardemir and Yolbulan family companies Yolbulan Demir, Yolbulan Turkcell 22.02.17 11,80 12,29 4,2% -14,0% Portfolio Yield (yoy) 48,4% 8,5% Freight, Cag Celik Demir & Celsentas, as per the complaint by Kaptan Portfolio Yield (mom) -6,9% -5,2% Çelik. The Competition Board has decided that these companies did not engage in trading practices violating the competition law >>> *Starting date of portfolio 30/11/2004

>>> and therefore will not be fined. The development is likely to have a moderately positive impact on Kardemir shares short-term performance, easing any concerns on corporate governance.

Petkim (PETKM.TI; OP) According to newswires, three further investments are expected to be included in the government’s “project - based support” investment incentive scheme. And although Minister of Economy Mr. Zeybekci did not mention any specific company/project names, according to Turkish daily Dunya, Socar’s vision for investing further (ca.US$3bn) in petrochemicals production on the Aliaga peninsula, where Petkim is localted, could be among the projects to receive government support. It is as yet unclear whether the investment will be under- taken by Petkim per se. Nonetheless, news flow on the prospect might create positive sentiment around the company stocks.

Arçelik (ARCLK.TI; MP) According to TURKBESD (Turkish White Goods Manufacturers Association) data, Turkish white goods sales growth has decelerated to +10.8% in August 2017 (July 2017: +25% YoY). Growth in the country's exports has also decelerated to +7.6% YoY (July 2017: 22% YoY). We believe a slowdown in Turkish white goods market growth has been widely expected, due to a strong base in 2016. Hence, we do not expect the data announcement, indicating double-digit, yet decelerating home market growth, to have a major negative impact on the home appliance producers' share performances in the market.

Garanti Bank (GARAN.TI; MP) has announced that Chairman of the Board Mr. Ferit Faik Şahenk has resigned from the Board of Direc- tors of Bank and as Chairman of the same. The Board has resolved to appoint Mr. Süleyman Sözen as the new Chairman of the Board of Direc- tors (Neutral).

The BIST has announced that between 02.10.2017 - 29.12.2017, Sekerbank (SKBNK), Kiler GMYO (KLGYO), Anel Elektrik (ANELE) and ICBC Turkey Bank (ICBCT) would be included in the BIST-100 Index, while Logo Yazilim (LOGO), Torunlar GMYO (TRGYO), Kron Tele- kominikasyon (KRONT) and Vestel Beyaz Esya (VESBE) will be excluded from the BIST-100. Global Yatirim Holding (GLYHO), Ihlas Holding (IHLAS) and İpek Enerji (IPEKE) will be included in the BIST-50, while Turk Traktor (TTRAK), TSKB (TSKB) ve Fenerbahce (FENER) are excluded. Meanwhile, Koza Madencilik (KOZAA), Pegasus (PGSUS) and Eczacibasi Ilac (ECILC) will be included in the BIST- 30 Index Mavi (MAVI), Soda Sanayii (SODA) and Ülker Biskuvi (ULKER) excluded.

This document has been prepared by the Equity Research Department of Şeker Invest. The information and data used in this re- port have been obtained from public sources that are thought to be reliable and complete. However, Şeker Invest does not accept responsibility for any errors and omissions. This document should not be construed as a solicitation to buy or sell securities he- rein. This document is to be distributed to qualified emerging market investors only.

Şeker Yatırım Menkul Degerler A.S. - Buyukdere Cad. No:171 Metrocity A Blok Kat 4-5 SISLI /ISTANBUL Tel: (+90) 212 334 33 33 Pbx, Fax: (+90) 212 334 33 34, [email protected]

Market Watch Wednesday, September 20, 2017 www.sekeryatirim.com.tr

>>>Aygaz the (AYGAZ.TI;BIST-30 Index NC) Mavi has (MAVI) announced, Soda that Sanayii its 49.62% (SODA) subsidiary and Ülker Entek Biskuvi Elektrik (ULKER) Üretimi excluded. A.Ş. has submitted the highest offer of TRY 1,276mn for the privatization tender of the Menzelet and Kılavuzlu Hydroelectric Power Plants (Positive). Aygaz (AYGAZ.TI; NC) has announced that its 49.62% subsidiary Entek Elektrik Üretimi A.Ş. has submitted the highest offer of TRY 1,276mn İşfor Bankasıthe privatization (ISCTR) tender announced of the Menzeletthat the Bank and Kılavuzluprovided Hydroelectric367-days syndicated Power Plantsloan with (Positive). 352mn Dollars and 656mn Euro. The bank specified that the total cost of which will be used for high level of the loan in the financing of foreign trade by high level participated banks; Libor + 1.35% for the İşDollar Bankası slice and(ISCTR) Euribor announced + 1.25% that for the BankEuro providedslice. 367-days syndicated loan with 352mn Dollars and 656mn Euro. The bank should be able to use the high level of the loan to be used in the financing of foreign trade; the part of the participating bank; total cost; Libor + 1.35% for the Dollar slice and Euri- bor + 1.25% for the Euro slice.

Şeker Yatırım Menkul Degerler A.S. - Buyukdere Cad. No:171 Metrocity A Blok Kat 4-5 SISLI /ISTANBUL Tel: (+90) 212 334 33 33 Pbx, Fax: (+90) 212 334 33 34, [email protected]