Türkiye Revisited: Thoughts and recommendations after a week in Istanbul

Research evidence excerpt

Türkiye Revisited: Thoughts and recommendations after a week in Istanbul

now declining. The new housing

program (500k social housing units to be constructed) by the government as well infrastructure

projects could bolster domestic demand. Cement prices remain firm in the meanwhile, and this

should support earnings. Cimko appears to be pole-positioned as the beneficiary of Syrian

demand. Limak is expected to start generating meaningful FCF next year and add to its cash pile,

as capex declines sharply.

Consumer – upgrade Ulker to OW, maintain Neutral Anadolu Efes and Coca Cola Icecek:

Previously rock-solid domestic plays have been facing a variety of headwinds, most recently the

sharp consumer slowdown. We upgrade Ulker to OW on the recent underperformance of the

bonds. This remains one of the highest quality credits from Türkiye – with no significant debt

maturity until 2030. AEFES has struggled with persistent loss of market share to Tuborg, loss

of its Russian business and more recently, weak consumer purchasing power. The credit, though,

benefits from the ownership of Coca Cola Icecek stake and should be able to refinance the bonds

next year, in our view. Given the likelihood of a below market tender, we reamain N. Coca Cola

Icecek’s volumes are no longer declining on the back of the American-brand boycott with strong

Central Asian performance providing some growth. Bonds, though, are fully valued we believe

and hence we maintain Neutral.

Exporters – downgrade Arcelik and Sisecam to UW, maintain Neutral Ford Otosan: We

expect no respite from margin erosion for exporters, who estimate that the cost of production in

Türkiye is now similar to Romania’s. The Chinese, with lower production costs and cheap