Market Watch Friday, July 29, 2016 www.sekeryatirim.com.tr Agenda

25 Monday 26 Tuesday 27 Wednesday 28 Thursday 29 Friday  CBRT, July real sector  U.S., May Case-Shiller  U.S., June durable goods  U.S., jobless claims  Germany, June retail confidence index and CUR home price index orders sales  Germany, July IFO survey  U.S., June new home sales  U.S., Fed-FOMC  U.S., 2Q16 GDP  U.S., July CB consumer announcement  U.S., July Chicago PMI confidence  U.S., July Michigan senti- ment

Outlook: Volume (mn TRY) BIST 100 Global stock markets were headed lower on Thursday in the wake of disap- pointing US and European corporate results; meanwhile the US$ continued to decline. The BIST100 moved slightly upward by 0.2%, led by the 1.0% 8.000 84.000 average rise among industrial stocks. Total trading volume was at TRY 82.000 3.2bn. The much-awaited BoJ announcement has revealed a rather mod- 6.000 80.000 est expansion of its monetary easing program, refraining from expansion of 71.738 74.174 78.000 its bond purchases, or a cutting of interest rates. Instead, the bank has 4.000 73.689 75.076 expanded its ETF purchases and doubled the size of a US$ lending pro- 75.244 76.000 gram. There are no major local data announcements due out today. Ra- 2.000 74.000

ther, we will be following the June retail sales from Germany, and 2Q16 4.289 3.135

3.536 72.000 3.319 GDP, July Chicago PMI, and Michigan sentiment index figures from the 0 3.119 70.000 US. Asian equity markets were broadly lower, somewhat disappointed by 22-Jul 25-Jul 26-Jul 27-Jul 28-Jul the BoJ decision; Europe is expected to open lower, too. And meanwhile, we expect a slightly positive opening at the BIST today. RESISTANCE Indices (TRY) Previous Last Chg. YTD LEVELS: 76,000 – 76,600/SUPPORT LEVELS: 75,000 – 74,200. BIST 100 75.076 75.244 0,22% 4,90% BIST 30 92.120 92.216 0,10% 5,48% Money Market: BIST-Financial 96.888 96.860 -0,03% 2,74% The Lira was positive yesterday, gaining 0.50% against the USD to close at BIST-Industrial 79.606 80.397 0,99% 10,78% 3.0125. Additionally, the currency appreciated by 0.08% against the basket BIST-Services 52.039 51.894 -0,28% -0,79% composed of $0.50 and €0.50. The local fixed income markets were posi- tive. The two-year benchmark bond ended at 9.28%, 12 Bps below its pre- Advances Declines Most Active vious close. Stocks (%) Stocks (%) Stocks Vol (TR) ATEKS 19,92 MIPAZ -6,15 GARAN 648.087.365 Company News: KENT 11,48 DGZTE -5,81 HALKB 329.659.773 TSKB (TSKB.TI; OP) has announced 2Q16 net income of TRY 117mn (- ROYAL 10,90 USAS -4,08 AKBNK 276.734.393 12% QoQ, -21% QoQ div. adj., cum. +19% YoY), thus in line with our EUHOL 8,33 MNDRS -3,57 THYAO 199.594.736 forecast (TRY 116mn) and the market consensus (TRY 117mn). Seasonal- IHLAS 6,45 BRKO -3,41 VAKBN 124.849.836 ly lower CPI-linker revenues and the absence of any offsetting revenues, in response, despite a dividend income of TRY 21mn, explain the quarterly Money Market Previous Last Pr. Mn YE15 drop in earnings. Core revenues contracted 10% QoQ on decreased securi- O/N Repo (%) 8,80 8,10 8,58 10,28 ties yields (-2.3pp QoQ) and a contracted loan-to-borrowing spread (-13bps Euro Bond (30 year, $) 168,88 169,28 171,78 163,66 QoQ) coupled with lower fees. As a result, the NIM shed 50bps QoQ. Trad- Bond (Benchmark, %) 9,4 9,28 8,98 11,09 ing losses continued to weigh negatively on earnings. Asset quality, on the Currency Previous Last Chg. YTD other hand, was intact resulting in declined provisioning costs, while opex US$ 3,0275 3,0125 -0,50% 3,33% delivered a 14% hike on non-HR related costs. In light of the 2Q results, we Euro 3,3305 3,3405 0,30% 5,53% maintain our 16E and 17E earnings forecasts at TRY 437mn (+7% YoY) Euro/Dolar 1,1078 1,10789 0,00% 1,40% and TRY 507mn (+16% YoY), respectively. TSKB currently trades at a 31% premium and a 10% discount to Tier-I banks on 16E P/BV of 1.0x and P/E Commodity Previous Last Chg. YTD of 6.0x, respectively, while 16E ROE is at 17% (Tier-I banks: 12%) and the Oil (Brent spot, $) 43,2 43,1 -0,01% 15,73% 2014-17E EPS CAGR at 11% (Tier-I banks: 10%). We have an Oil (NYMEX future, $) 41,1 41,0 -0,32% 10,39% ‘Outperform’ rating for the stock with a GGM based 12M TP of TRY Gold (Ounce, $) 1.335,6 1.335,2 -0,03% 24,44% 1.72/sh., implying a 36% upside potential. Silver (XAG, $) 20,2 20,2 0,09% 44,26%

Arcelik (ARCLK.TI; MP) is expected to announce its 2Q16 results today. Şeker Funds Previous Last* Chg. YTD We estimate the company having generated TRY 3,943mn in revenues, Şeker Portfoy Equity Fund 0,321665 0,321990 0,10% 7,50% TRY 405mn of EBITDA, and TRY 555mn net income. The market average Şeker Portfoy Debt Instruments 0,024006 0,024077 0,30% 6,82% expectation is at TRY 3,881mn for revenues, TRY 419mn for EBITDA and Şeker Portfoy Money Market 1,074469 1,074628 0,01% 5,00% TRY 581mn for net income. Şeker Portfoy Mix Fund 0,018599 0,018606 0,04% 4,65% We expect Yapi Kredi (YKBNK.TI; MP) to announce its 2Q financials today. Şeker Portfoy Gold Fund 0,020357 0,020518 0,79% 26,67% (SekerE: TRY 830mn, Cons: TRY 825mn) Şeker Portfoy Short T. Debt 0,012819 0,012821 0,02% 4,82% * Prices as of 29-Jul-16

Market Watch Friday, July 29, 2016 www.sekeryatirim.com.tr

Anadolu Sigorta (ANSGR.TI; OP) has announced a 2Q16 net profit of World Indices TRY 44mn (SekerE: TRY 44mn, Cons: TRY 37mn) and a cumulative America Previous Last Chg. YTD TRY 47mn for 1H16, delivering a significant rise from 1Q16’s TRY 2mn Dow Jones (US) 18.472 18.456 -0,09% 5,92% and 1H15’s TRY 36mn net earnings. The recent regulation allowing the Nasdaq (US) 5.140 5.155 0,30% 2,95% discounting of the IBNR deficit is behind this good set of operational results S&P 500 (US) 2.167 2.170 0,16% 6,17% in 2Q. On top of that, motor segment, both in MTPL and MOD, performed Bovespa (Brasil) 56.853 56.667 -0,33% 30,72% better than the previous quarter as high prices reflected positively on oper- Merval (Argentina) 15.699 15.455 -1,55% 32,38% ating margins. We expect to see some slow-down in earnings momentum Mexico Bolsa (Mexico) 46.812 46.834 0,05% 8,97% in 2H linked to the onset of downward pricing trend in MTPL policies. In Europe Previous Last Chg. YTD light of the quarterly results, we maintain our 16E earnings forecast of TRY Dax (Germany) 10.320 10.275 -0,43% -4,36% 80mn and 17E of TRY 67mn. The technical line is forecast remaining in the FTSE 100 (UK) 6.750 6.721 -0,44% 7,67% red in the medium term as it takes some time to absorb the impact of the CAC 40 (France) 4.447 4.421 -0,59% -4,67% min. wage increase and heavy provisioning in 2015. Yet, investment reve- WSE WIG (Poland) 46.804 46.719 -0,18% 0,54% nues are expected to be supportive. A long-term combined ratio of an aver- age 107% is penciled in during our forecast period (2016-24E). Anadolu Prague (Czech Republic) 892 887 -0,50% -7,22% Sigorta trades on our 16E P/E of 10.6x and P/BV of 0.7x, respectively, Budapest (Hungary) 27.780 27.628 -0,55% 15,50% while 3Y EPS CAGR (2014-17E) stands at -2% and 16E ROE at 7%. We RTSI (Rusya) 922 923 0,19% 21,97% maintain our ‘Outperform’ rating for the stock with a 12M TP of TRY Asia Previous Last Chg. YTD 2.03/sh., implying no upside. Nikkei (Japan) 16.665 16.477 -1,13% -13,43% Hang Seng (Hong Kong) 22.219 22.174 -0,20% 1,19% Garanti (GARAN.TI; OP) has announced a 2Q16 net income of TRY Shanghai Comp. (China) 2.992 2.994 0,08% -15,40% 1,540mn (+48% QoQ, +28% QoQ one-off adj., cum. +33% YoY), thus KOSPI (South Korea) 2.025 2.021 -0,20% 3,05% above both the market consensus (TRY 1,298mn) and our estimate (TRY ASX 100 Index (Australia) 5.615 5.637 0,39% 6,44% 1,302mn). Higher-than-expected other income on the back of proceeds Turkdex (Set. Price) Previous Last Chg. YTD from the Visa merger (TRY 265mn) and some provisioning reversals INX30 (AUGUST 16) 92,850 92,850 0,00% 4,24% caused the main deviation from our estimate. Core revenues (in-line) USD (AUGUST 16) 3,0513 3,038 -0,44% 2,61% scaled up 7% QoQ thanks to a widened core spread and stable CPI-linker EURO (AUGUST 16) 3,3662 3,3771 0,32% 4,71% revenues, despite seasonally lower fee income. Trading losses due to high GOLD (AUGUST 16) 130,14 130,60 0,35% 28,03% swap utilization and volatile swap costs, on the other hand, continued to weigh negatively on earnings. Opex retreated on declined fee rebates and Portfolio Inclusio Inclusio Last Chg. BIST well-behaved currency, and provisioning costs declined with retreated CoR. Recommend. Date Price Close (%) Relative Garanti Bank 26.01.16 7,11 7,29 2,5% -3,9% In light of the 2Q results, we maintain our 16E and 17E net earnings fore- Trakya Cam 30.05.16 2,22 2,41 8,6% 12,6% casts, which indicate 26% and 22% YoY growth, respectively. Garanti Is Bankasi 26.07.16 4,42 4,57 3,4% 1,3% trades at 24% and 4% premia to Tier-I private peers on 16E P/BV of 1.0x 30.05.16 4,25 4,15 -2,4% 1,3% and P/E of 7.8x, respectively, while 16E ROE is at 13% (peers 11%) and 09.11.15 19,05 16,00 -16,0% -8,5% the 2014-17E EPS CAGR at 12% (peers 9%). We maintain our TAV Airports Holding 30.05.16 15,01 11,00 -26,7% -24,0% ‘Outperform’ rating for Garanti with a GGM based 12M TP of TRY Dogus Otomotiv 26.01.16 10,98 10,50 -4,4% -10,4% 10.26/sh, implying a 41% upside potential. Portfolio Yield (yoy) -16,3% -13,0% Portfolio Yield (mom) 0,6% 0,5%

This document has been prepared by the Equity Research Department of Şeker Invest. The information and data used in this report 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 herein. 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 / Tel: (+90) 212 334 33 33 Pbx, Fax: (+90) 212 334 33 34, [email protected]