Emlak Konut GYO - Splash

Transcription

3 JULY 2014
INITIATION
24TURKEY
TURKEY / REAL ESTATE
EMLAK KONUT GYO
BUY
EKGYO TI
TARGET PRICE
TRY3.44
CLOSE
TRY2.66
UP/DOWNSIDE
+29.3%
TRY
%
HOW WE DIFFER FROM CONSENSUS
MARKET RECS
TARGET PRICE (%)
3
POSITIVE
16
EPS 2014 (%)
(30)
NEUTRAL
6
EPS 2015 (%)
50
NEGATIVE
0
KEY STOCK DATA
Carry me home
n
n
n
YE Dec (TRY m)
Well positioned for a market recovery
We initiate coverage of Emlak Konut GYO with a BUY rating and 12month target price of TRY3.44 per share, implying c30% potential
upside. Through its 27 RSM (17 of which are under construction and
the rest have been tendered) and nine turn-key projects, we believe
Emlak Konut is well positioned for a market recovery.
Declining mortgage rates should help home sales
Mortgage rates have declined c150bp QTD and a further slide is on
the cards due to global liquidity conditions and widely expected
CBRT rate cuts. Mortgage use rose by 5ppt m-m to 33% in May,
thanks to declining rates, but is yet to catch up with the 2013 average
of 40%.
SPO proceeds turned into land
The company recently bought TRY3.6b worth of land, thereby
completing the investment of all SPO proceeds. Total appraisal value
of the land bank reached to cTRY5.4b following these acquisitions.
Management has already started the tender process for some of this
land, which we expect will unlock further hidden value.
2013A
2014E
2015E
2016E
Revenue
2,331
1,252
3,089
3,005
Rec. net profit
1,061
762
1,658
1,694
Recurring EPS (TRY)
0.39
0.20
0.44
0.45
EPS growth (%)
87.7
(48.9)
117.6
2.1
Recurring P/E (x)
6.8
13.3
6.1
6.0
Dividend yield (%)
2.0
4.6
3.0
6.6
EV/EBITDA (x)
5.6
10.9
4.4
2.7
Price/book (x)
Net debt/Equity (%)
ROE (%)
Jun-13
3.00
Sep-13
1.2
1.1
0.9
0.8
(56.0)
(28.2)
(45.1)
(63.4)
16.6
8.8
16.8
14.7
Dec-13
Attractive valuation metrics
Emlak Konut trades at a 25% discount to its NAV, versus its historical
discount average of 15%. We do not consider 6.1x FY15E P/E and
4.4x FY15E EV/EBITDA demanding. Our TRY3.44 per share TP is
based on a SoTP model, using DCF for ongoing projects.
Jun-14
2.80
0
2.60
(10)
2.40
(20)
2.20
(30)
2.00
(TRY)
Emlak Konut GYO
Share price performance
Absolute (%)
n
Mar-14
Relative to country (%)
Next results
(40)
(%)
Rel to ISE National 100
1 Month
3 Month
12 Month
(0.8)
13.7
(2.2)
0.3
0.1
(5.1)
August 2014
Mkt cap (USD m)
4,749
3m avg daily turnover (USD m)
38.4
Free float (%)
Presales vs mortgage rates
(units)
Major shareholder
Pre-sales (LHS)
(%)
Mortgage rates (Avg, RHS)
12m high/low (TRY)
51
TOKI (49%)
2.89/2.05
3m historic vol. (%)
3,000
2,000
1,000
ADR ticker
12
ADR closing price (USD)
10
Issued shares (m)
May-14
Mar-14
Jan-14
Nov-13
Sep-13
Jul-13
May-13
Mar-13
Jan-13
Nov-12
Sep-12
Jul-12
May-12
Mar-12
8
Jan-12
0
14
30.0
3,800
Sources: Bloomberg consensus; TEB Investment/BNP Paribas
estimates
Sources: Emlak Konut; CBRT
Emre Yuzbasioglu
Mete Yuksel
[email protected]
+90-216-636-4535
[email protected]
+90 216 636 4536
Our research is available on Thomson One, Bloomberg, TheMarkets.com, Factset and on http://eqresearch.bnpparibas.com/index. Please contact your salesperson for
authorisation. Please see the important notice on the back page.
PREPARED BY NON-US BROKER-DEALER(S): TEB INVESTMENT. IT IS BEING DISTRIBUTED IN TURKEY BY TEB INVESTMENT AND OUTSIDE TURKEY JOINTLY BY TEB INVESTMENT AND
BNP PARIBAS. THIS MATERIAL HAS BEEN APPROVED FOR U.S DISTRIBUTION. ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES CAN BE FOUND AT APPENDIX ON PAGE 24
Emlak Konut GYO
EKGYO TI
Emre Yuzbasioglu
Investment thesis
Catalyst
We think Emlak Konut is well positioned in Turkey’s
metropolitan cities to benefit from increased demand for
housing. Its revenue-sharing model limits exposure to market
fluctuations by taking guaranteed minimum revenue from
contractors, while its valuable and large-scale land bank lures
developers to its tenders.
Mortgage rates have declined c150bp QTD and we think
they will continue to decline in the coming months due to
realised and expected CBRT rate cuts.
Population growth of 1.2% is projected to come down to 1%
pa until 2023, and is expected to follow a downward path
after 2050, according to Turkstat estimates. As of end-2013,
55% of the population is aged 20 to 60, and this proportion is
expected to rise to 56% in 2023. According to GYODER
estimates, Turkey’s urbanisation rate was c77% in 2013 and
will reach 84% by 2023. The average household size is
around 4.0 people, and is expected to fall to 3.8 by 2023,
compared with the current EU average of around 2.5. All in
all, Turkey needs 410k new urban homes per annum to
match population growth and developments in urbanisation.
Mortgage penetration was c6.7% of GDP at the end of 2013
much below the EU average of c42%. Turkey has scope to
increase mortgage penetration as real rates come down,
which in turn should support growth of the real estate market.
Company background
The consumer confidence index hit 74 in June after falling to
69.2 in February. A recovery in consumer sentiment should
be reflected in home sales figures in the coming months.
Also, the probability of buying or building a home in the next
12 months, a sub-index of the consumer confidence index,
rose to 12.6% in May, its highest reading since the
beginning of 2012, then fell to 12.1% in June.
Contractor interest in Emlak’s tenders remains high in 2014.
Developers are bidding more aggressively than they did in
previous years by increasing the base-value to tender-value
multiples, which increases Emlak’s minimum guaranteed
revenues and limits risk.
Risks to our call
Any tightening in global and local liquidity conditions is the
main risk for Emlak Konut, in our view. Also, deterioration in
the macro-economic outlook, an increase in total stocks in
the sector, and political tensions ahead of the presidential
elections, pose a risk for the company.
Key assumptions
Emlak Konut, with its controlling shareholder TOKI (Housing
Development Administration of Turkey), is the largest REIT in
Turkey by market value, property portfolio and size of land
bank. The companies' business involves the purchase of land
and the developement, marketing and sale of residential real
estate in Turkey with a focus on the upper-middle and middle
income class. Emlak Konut also develops mixed-use real
estate projects that include both commercial and residential
units as well as public buildings.
2014E
House price inflation
CPI
2015E
2016E
2017E
2018E
2019E
(%)
(%)
(%)
(%)
(%)
(%)
11.6
10.4
9.0
7.4
5.9
4.2
8.6
7.4
6.0
5.4
4.9
4.2
Source: TEB Investment/BNP Paribas estimates
Principal activities, revenue split FY13
Earnings sensitivity
Change in net income estimates
Turn-key
project and
stock sale
revenues
32.2%
RSM
revenues
45.3%
2014E
2015E
2016E
(%)
(%)
(%)
-100bp change in house price inflation
(0.2)
(0.3)
(1.0)
+100bp change in house price inflation
0.2
0.3
1.0
Land sales
22.4%
Key executives
Age
Since
Title
Murat Kurum
38
2009
CEO
Hakan Akbulut
48
2009
CFO
Hasan Vehbi Arslanturk
44
2010
Head of IR
http://www.emlakkonut.com.tr
2
Declining mortgage rates due to global liquidity conditions
and widely-expected CBRT rate cuts are the potential
main catalyst for the sector.
Probability of buying a home, a sub-index of consumer
confidence index, remains at high levels, which supports
our investment thesis.
10k units presale target can only be achieved by
launching new turn-key projects, in our view.
BNP PARIBAS
3 JULY 2014
Emlak Konut GYO
EKGYO TI
Emre Yuzbasioglu
CONTENTS
Investment positives _________________________________________________________________________ 4
Investment negatives ________________________________________________________________________10
Valuation __________________________________________________________________________________11
NAV analysis _______________________________________________________________________________12
Business overview___________________________________________________________________________14
The Turkish real estate market ________________________________________________________________16
Sector overview_____________________________________________________________________________18
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3
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TEB INVESTMENT/BNP PARIBAS
3 JULY 2014
Emlak Konut GYO
EKGYO TI
Emre Yuzbasioglu
Investment positives
Easing interest rates should support home sales
Emlak Konut (EKGYO) had a rough start to the year in terms of presales
performance, mainly resulting from a decline in consumer confidence and an
increase in mortgage loan rates. However this picture started to change in 2Q14.
CBRT cut its weekly repo rates by 50bp in May and another 75bp in June. We
believe the CBRT’s easing cycle and will continue as long as local currency provides
room. Elsewhere, the ECB announced its targeted LTRO programme, with a high
likelihood that a QE programme will follow. As a result, low interest rates should
continue in the developed markets and in Turkey. We expect mortgage interest rates
to continue sliding down for the rest of the year.
Emlak Konut management guides for 10k units in presales in 2014, which is lower
than the previous years’ 15,147 units. In 5M14, the company sold 2,970 units, 55%
lower than in the previous year. We expect EKGYO to sell 8,152 units from its
ongoing projects and building stocks in 2014. To reach its 10k goal, the company has
to launch one or two turn-key projects, in our view.
EXHIBIT 1: Pre-sales vs mortgage rates (monthly)
EXHIBIT 2: Pre-sales vs mortgage rates (yearly)
Pre-sales (LHS)
14
14,000
2,500
12
12,000
2,000
10
10,000
1,500
8
8,000
6,000
6
4,000
4
2,000
Sources: Emlak Konut; CBRT; Turkstat
2014 YtD
2013 YtD
2013
2012
2011
2010
2009
2008
2004
0
May-14
Jan-14
Mar-14
Nov-13
Jul-13
Sep-13
Mar-13
May-13
Jan-13
Nov-12
Jul-12
0
Sep-12
0
May-12
2
Jan-12
500
2007
1,000
Mar-12
(%)
28
26
24
22
20
18
16
14
12
10
8
16,000
2006
3,000
Pre-sales (LHS)
(units)
(%)
Real mortgage rates w CPI (RHS)
2005
(units)
Sources: Emlak Konut; CBRT
Recovering consumer confidence should help presales
The consumer confidence index fell to 69.2 in February, its lowest reading since the
beginning of 2012, and hovered at 74 in June, offering room for improvement.
Consumer sentiment is key to home sales, and a possible recovery in consumer
confidence would suggest a better presales outlook for the coming months.
EXHIBIT 3: Pre-sales vs consumer confidence index
Pre-sales (LHS)
(units)
3,000
Consumer confidence (RHS)
(index)
81
Jun-14
May-14
Apr-14
Mar-14
Feb-14
Jan-14
Dec-13
Nov-13
Oct-13
Sep-13
Aug-13
Jul-13
Jun-13
May-13
Apr-13
Mar-13
Feb-13
Jan-13
Dec-12
69
Nov-12
0
Oct-12
71
Sep-12
500
Aug-12
73
Jul-12
1,000
Jun-12
75
May-12
1,500
Apr-12
77
Mar-12
2,000
Feb-12
79
Jan-12
2,500
Sources: Emlak Konut; Turkstat
4
BNP PARIBAS
3 JULY 2014
Emlak Konut GYO
EKGYO TI
Emre Yuzbasioglu
Probability of buying or building a home in the next 12 months, a sub-index of the
consumer confidence index, rose from 8.6% in February to 12.1% in June, while the
consumer confidence index climbed by 4.5pp in that four-month period, up to 73.7%
in June. While longer-term trends of the two indicators move parallel to each other,
we face countermoves for the short run, such as the divergence of the last two
months, as seen in the chart below, which suggest that consumer appetite for buying
a home remains temporarily elevated, even though the overall confidence index
declined heavily. We think that consumer confidence will be catching up with the
elevated home buying appetite in the months ahead, rather than the other way
around.
EXHIBIT 4: Consumer confidence vs probability of buying a home
(index)
Consumer confidence (LHS)
(%)
Probability of buying a home (RHS)
81
13
79
12
77
11
75
10
73
9
71
Jun-14
May-14
Apr-14
Mar-14
Feb-14
Jan-14
Dec-13
Nov-13
Oct-13
Sep-13
Aug-13
Jul-13
Jun-13
May-13
Apr-13
Mar-13
Feb-13
Jan-13
Dec-12
Nov-12
Oct-12
Sep-12
Aug-12
Jul-12
Jun-12
May-12
Apr-12
Mar-12
Feb-12
8
Jan-12
69
Source: Turkstat
Consumers tend to wait until trough of rate cycle before purchasing a house. The
probability of buying a home increases after interest rates bottom out and start to
rise.
EXHIBIT 5: Mortgage rates vs probability of buying a home
(%)
Mortgage rates (Avg, LHS)
(%)
15
13
14
12
13
12
11
11
10
10
9
9
8
Jun-14
May-14
Apr-14
Mar-14
Feb-14
Jan-14
Dec-13
Nov-13
Oct-13
Sep-13
Aug-13
Jul-13
Jun-13
May-13
Apr-13
Mar-13
Feb-13
Jan-13
Dec-12
Nov-12
Oct-12
Sep-12
Aug-12
Jul-12
Jun-12
May-12
Apr-12
Mar-12
Feb-12
8
Jan-12
7
Sources: CBRT; Turkstat
5
BNP PARIBAS
3 JULY 2014
Emlak Konut GYO
EKGYO TI
Emre Yuzbasioglu
EXHIBIT 6: Probability of buying a home vs pre-sales
(units)
Pre-sales (LHS)
(%)
3,000
13
2,500
12
2,000
11
1,500
10
1,000
9
500
Jun-14
May-14
Apr-14
Mar-14
Feb-14
Jan-14
Dec-13
Nov-13
Oct-13
Sep-13
Aug-13
Jul-13
Jun-13
May-13
Apr-13
Mar-13
Feb-13
Jan-13
Dec-12
Nov-12
Oct-12
Sep-12
Aug-12
Jul-12
Jun-12
May-12
Apr-12
Mar-12
Feb-12
8
Jan-12
0
Sources: Emlak Konut; Turkstat
EXHIBIT 7: Home sales vs consumer confidence (monthly)
Monthly Home Sales (LHS)
(units)
Consumer Confidence (RHS)
(index)
120,000
115,000
110,000
105,000
100,000
95,000
90,000
85,000
80,000
75,000
70,000
79
EXHIBIT 8: Home sales vs consumer confidence (quarterly)
Quarterly Home Sales (LHS)
Consumer confidence (RHS)
(units)
(index)
85
290,000
80
77
240,000
75
75
70
190,000
73
65
71
140,000
60
Sources: Turkstat; CBRT
1Q14
3Q13
1Q13
3Q12
1Q12
3Q11
1Q11
3Q10
1Q10
3Q09
1Q09
55
3Q08
90,000
1Q08
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
69
It’s time to start projects on ready-to-tender land purchases
Emlak completed the SPO on 13 November 2013 at TRY2.5 per share. As of 26 May
2014, the company has now finished turning the SPO proceeds of TRY3.25b into
land. Management started spending money after the local elections, and concluded
the process in three tranches. Unlike in previous instances, Emlak Konut bought land
from TOKI at appraisal value with no discount. However, some of this land is readyto-tender, unlike the previous purchases, and the company has already started
divesting Ankara and Kocaeli land that it bought on 3 April 2014. We think these
ready-to-tender land purchases will affect Emlak’s valuation and NAV positively. We
have calculated IRR under two scenarios and assumed an appraisal value-to-tender
value multiple of 2x, and appraisal value of the land of TRY1m. Under scenario-1, the
company buys land at appraisal value and launches it in two years. In scenario-2, the
company buys land at a 10% discount; however it starts projects in three years.
According to our analysis, IRR would be around 19% higher in scenario-1 than in
scenario-2.
EXHIBIT 9: IRR calculations under different scenarios
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
IRR
(TRY)
(TRY)
(TRY)
(TRY)
(TRY)
(TRY)
(%)
Scenario 1
(1,000,000)
-
666,667
666,667
666,667
-
27
Scenario 2
(900,000)
-
-
666,667
666,667
666,667
23
6
BNP PARIBAS
3 JULY 2014
Emlak Konut GYO
EKGYO TI
Emre Yuzbasioglu
Recent land purchases cost EKGYO cTRY3.6b, a little more than the SPO proceeds,
where cTRY2.4b was spent in Istanbul and TRY1.1b in Ankara, and the rest in other
cities. We perceive the company’s recent addition of land in Ankara (in addition to its
current Ankara portfolio) as positive because it diversifies the business and reduces
exposure to Istanbul. Also, in June the company held two tenders in Ankara and one
tender in Kocaeli, worth total of cTRY720m in land value that it bought in April.
EXHIBIT 10: SPO proceeds spending schedule
Date
Seller
Location
Size
Cost
Appraisal value
03-Apr-14
TOKI
Istanbul
(‘000 sqm)
(TRY m)
(TRY m)
547
372
372
03-Apr-14
TOKI
03-Apr-14
TOKI
Ankara
93
1,089
1,089
Kocaeli
73
70
70
15-May-14
Privatisation Administration
Istanbul
153
1,005
1,062
26-May-14
TOKI
Istanbul
258
965
965
26-May-14
TOKI
Bursa
58
27
27
26-May-14
TOKI
Balikesir
50
44
44
26-May-14
TOKI
Eskisehir
24
5
5
Source: Emlak Konut
EXHIBIT 11: Landbank distribution – by appraisal value
EXHIBIT 12: Landbank distribution – by site area
Other
6.3%
Other
13.2%
Ankara
14.9%
Ankara
23.8%
Istanbul
63.0%
Istanbul
78.7%
Sources: Emlak Konut; TEB Investment/BNP Paribas
Robust RSM tender multiples guarantee revenues and eliminate surprises
Contractor interest in Emlak’s tenders remains high in 2014, with six successful
tenders so far. The Zeytinburnu land tender was the biggest in Emlak Konut’s history
and was concluded in January 2014, during a period of high political tension,
resulting in TRY1.57b CSTR for Emlak Konut, where base value of the land was
TRY726m at the time of tender, implying a 2.16x tender multiple. In addition to the
Zeytinburnu tender, Emlak Konut has concluded two more RSM tenders in 2014 to
date, namely Kayabasi 4th stage (CSTR: TRY420m, tender multiple: 3.37x) and
Hosdere 3rd stage (CSTR: TRY156.5m, tender multiple: 2.46x) in Istanbul. Also, the
company tendered Ankara-Etimesgut (CSTR: TRY54m, tender multiple: 1.48x),
Kocaeli-Derince (CSTR: TRY83.2m, tender multiple: 1.2x) and Ankara-Yenimahalle
(CSTR: TRY825m, tender multiple: 1.33x), the land for which the company acquired
from TOKI in April 2014. In 2014, the base-value to tender-value multiple was
realised at 1.89x, a little below the 2013 average, but if we exclude the recent tender
in Ankara-Yenimahalle, a large-scale commercial project, this multiple rises to 2.23x,
which is significantly above the 2013 average.
7
BNP PARIBAS
3 JULY 2014
Emlak Konut GYO
EKGYO TI
Emre Yuzbasioglu
EXHIBIT 13: Base value-to-tender value multiple evolution
EXHIBIT 14: Base value-to-recognised value multiples for
completed projects (2002-2014)
(x)
2.2
(x)
2.3
2.23
2.05
2.0
2.1
2.03
1.8
1.89
1.9
1.75
1.6
1.45
1.41
1.4
1.76
1.7
1.2
1.0
Base value-to-tender
value multiple
1.5
Pre-2012
2012
2013
2014
2014(exc
Ankara)
Tender value-torecognized value
multiple
Base value-torecognized value
multiple
Source: Emlak Konut
We think that contractors bid aggressively for Emlak Konut’s land, relying on its past
project performance. In 2013, base value-to-tender value multiples reached past
projects’ base value-to-recognised value multiples and passed them in 2014. We
think such high RSM tender multiples, which guarantee higher profitability and higher
NAV for EKGYO, also eliminate any positive surprises from project sales but on the
whole give a better outlook for future net income figures.
Sizeable share buyback programme as a life jacket
Management deployed a share buyback programme at the turn of the year, to
support the shares on Borsa Istanbul following corruption allegations against some
executives. Management bought back c104m shares at an average price of
TRY2.14/share (min: TRY2.01, max: TRY2.25) between 23 December 2013 to 30
January 2014. The company stopped the programme after the court case involving
the company officials was dropped.
According to CMB rules, a company can keep its shares on balance sheet unless the
number of shares surpasses 10% of the total. Emlak Konut is below this threshold
and we would not expect management to take any action regarding these shares
anytime soon.
EXHIBIT 15: Share buyback programme
Date
# of shares
(nos)
Total
-------- Price range -------Low
High
(TRY)
(TRY)
Cost
----- Share in capital (daily) -----
(TRY)
------- Share in capital (cumulative) -------
Total
Free float
Total
Free float
(%)
(%)
(%)
(%)
103,887,318
2.01
2.25
223,013,007
-
-
2.73
5.43
23/12/2013
16,500,000
2.14
2.15
35,437,500
0.43
0.86
0.43
0.86
24/12/2013
14,200,000
2.22
2.25
31,734,838
0.37
0.74
0.81
1.60
25/12/2013
15,000,000
2.12
2.15
31,962,500
0.39
0.78
1.20
2.39
26/12/2013
16,000,000
2.11
2.15
34,045,000
0.42
0.84
1.62
3.22
27/12/2013
3,000,000
2.01
2.05
6,127,445
0.08
0.16
1.70
3.38
07/01/2014
10,000,000
2.20
2.21
22,070,000
0.26
0.52
1.97
3.90
27/01/2014
14,187,318
2.10
2.16
29,821,858
0.37
0.74
2.34
4.65
30/01/2014
15,000,000
2.11
2.13
31,813,866
0.39
0.78
2.73
5.43
Source: Emlak Konut
This year the company also announced a share buyback programme for the next
three years. Accordingly, management is allowed to buy back shares up to
TRY4.0/share with a budget of TRY1.5b.
8
BNP PARIBAS
3 JULY 2014
Emlak Konut GYO
EKGYO TI
Emre Yuzbasioglu
Reciprocity law
A law was changed, removing barriers that had previously prevented foreign citizens,
from countries in which Turkish citizens could not own property, from buying property
in Turkey. In return, Turkish citizens could then purchase property in those countries.
Accordingly, any foreigner who wants to purchase real estate in Turkey can do so
without problem and will be granted a one-year resident permit. Following this law
change, Turkish real estate developers, especially high-end developers, increased
activities in foreign countries by joining sector exhibitions and opening sale offices.
Most of the efforts concentrated on rich Gulf-region countries. Foreigners’ interest in
Turkey is mainly focused in Istanbul and the southern regions, for tourism purposes.
In our view, this new law will generate additional and sustainable demand for Turkish
real estate. In times of crisis, when the Turkish lira depreciates against foreign
currencies and local consumer confidence declines, the Turkish market might lure
foreign investors for the same reasons.
EXHIBIT 16: Monthly home sales and share of foreign buyers
EXHIBIT 17: Real estate sales provide FX inflow
Real estate sales to foreigners (LHS)
As a % of CAD (RHS)
(%)
(%)
(USD m)
2.0
3,100
16
110,000
1.8
2,900
14
105,000
1.6
2,700
12
2,500
10
2,300
8
2,100
6
1,900
4
1,700
2
Monthly Home Sales (LHS)
Share of Foreigners (RHS)
(units)
120,000
115,000
100,000
95,000
1.4
90,000
85,000
1.2
80,000
1.0
75,000
0.8
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
70,000
Source: Turkstat
1,500
0
2006
2007
2008
2009
2010
2011
2012
2013
Source: Ministry of Economy
VAT changes might have a positive impact
The government changed VAT rules for housing units to increase tax revenues and
base taxation according to land value. Previously, VAT was based solely on unit
sizes, where it applied 18% if a housing unit was larger than 150 sq m and 1%
otherwise. The new law takes both size and land value into consideration: if a
housing unit is larger than 150 sq m VAT is 18%; if the unit size smaller than 150 sq
m there are three different VAT brackets, depending on tax value of the land. If the
tax value of the land is less than TRY500/sq m VAT is 1%; if the tax value of the land
is between TRY500 and TRY1,000/sq m VAT is 8%; anything above TRY1,000/sq m,
VAT is 18%. However, new city project areas and urban transformation projects are
exempt from this new application.
Emlak Konut has sizable exposure to new city projects, of a total of c.5.4m sq m,
which is 57% of its landbank. Moreover, we think that most of the land might be
considered urban transformation, as it was used previously for different purposes.
We haven’t seen a project under the new VAT rule in 2013 and 2014 so far. We think
Emlak’s landbank and its relationships with government bodies will benefit the
company in the new VAT environment.
9
BNP PARIBAS
3 JULY 2014
Emlak Konut GYO
EKGYO TI
Emre Yuzbasioglu
Investment negatives
Oversupply in the sector might turn into a serious problem
After the recent slowdown, some news articles have claimed that oversupply in the
sector could reach 1m-1.5m units (see Alarm Over Istanbul’s Building Boom, [New
York Times, 20 May, English] or 1 milyon konut alıcı bekliyor, [Hurriyet, 26 May,
Turkish]). There is no solid data on this issue, but stocks have been around 600,000800,000 units historically, according to GYODER announcements (see 800bin konut
stoku Türkiye için fazla değil [Zaman, 27 Dec 2012, Turkish]). We think that stocks
are higher than historical averages at present, but we also believe that the 1.5m
number is too high for current stocks. If mortgage rates stay at current levels and the
sector’s slowdown continues, we think that the valuation and NAV of Emlak Konut
will be affected negatively due to delays in tender processes and lower tender
multiples. Also, this is the main risk for the overall real estate sector in Turkey, in our
view.
TOKI and political relationships
Emlak Konut was one of the stocks in the BIST100 index to be hit hardest by
corruption allegations on 17 December, 2013. During this period, some of Emlak
Konut’s managers and one of the biggest contractors were taken into custody, then
released before the court case involving company officials was dropped in March.
Emlak’s relations with the government have come into question and investors have
started to fear a break in its relationship with TOKI. We believe there is no reason for
a break in the relationship between Emlak and TOKI, but such an event would lead
us to question the sustainability of Emlak’s business model.
Delays in projects
According to construction completion levels, we think that all of the RSM projects
which were supposed to be delivered in 2014 will be delayed at least a quarter. This
will delay around TRY1b of 2014 revenues into 2015. Half of these delayed revenues
will come from the Quasar Istanbul Project, which developers have bought in its
entirety for themselves. Emlak Konut will levy a fine on developers because of the
delay, but if delays become general practise, customers could start questioning
Emlak Konut’s brand with regard to future projects.
10
BNP PARIBAS
3 JULY 2014
Emlak Konut GYO
EKGYO TI
Emre Yuzbasioglu
Valuation
We use a DCF valuation for tendered land, RSM and turn-key projects with a WACC
of 13.9%. We multiply the appraisal value of the landbank by 1.13x because we think
Emlak Konut can turn its landbank into projects in six years, with an average 1.75x
project multiple. Then we add the appraisal value of the building stocks to project
and landbank values to reach the real-estate portfolio value. The company has
around TRY1.3b of in-house financing receivables from previously sold units, which
creates stable cash inflow, and we use a DCF valuation to uncover the value of these
receivables.
EXHIBIT 18: Valuation summary
Sum of total parts valuation
Method
Fair value
(TRY m)
Tendered land
DCF
2,896
RSM projects
DCF
1,879
Turn-key projects
Landbank
DCF
272
App. value @ 1.13x
5,389
Buildings
App. value
Total real estate
385
10,825
Net cash (2Q14E)
343
In-house financing receivables
DCF
817
NPV of opex
DCF
(508)
Treasury shares
Market price
276
Total fair value
11,685
12-m-fwd target value
13,309
Current market cap
10,108
Current share price (TRY)
2.66
12-month forward target price (TRY)
3.44
Sources: Emlak Konut; TEB Investment/BNP Paribas estimates
EXHIBIT 19: Landbank valuation sensitivity
Turnover period
3-years
4-years
5-years
6-years
7-years
x1.25
0.97
0.91
0.86
0.81
0.77
x1.50
1.16
1.09
1.03
0.97
0.92
x1.75
1.36
1.28
1.20
1.13
1.08
x2.00
1.55
1.46
1.38
1.30
1.23
Tender multiple
EXHIBIT 20: WACC calculation
WACC Component
Value
Risk free rate (TRY, %)
9.5
Equity risk premium (TRY, %)
4.5
Unlevered beta
1.0
Debt / (Equity + Debt) (%)
10
Tax rate (%)
0.0
Geared beta
1.1
Cost of equity (TRY, %)
14.5
Cost of debt (TRY, %)
9.0
WACC (%)
13.9
11
BNP PARIBAS
3 JULY 2014
Emlak Konut GYO
EKGYO TI
Emre Yuzbasioglu
NAV analysis
How does NAV increase?
NAV increases in three different ways:1) If the company buys land cheaper than its
appraisal value; 2) If the company tenders land higher than its appraisal value; 3) If a
contractor in an RSM project increases its minimum guaranteed revenue from project
sales.
EXHIBIT 21: NAV premium/discount chart with key events
(%)
30
NAV Pre/(Disc)
Avg Pre/(Disc)
20
RSM, Istmarina
10
SPO finalized at
TRY2.5/share
Cash dividend,
TRY 200m
Second
announcement
of SPO
Cash dividend,
TRY 467.8m
0
RSM,
Kayabasi 4th
(10)
(20)
(30)
RSM, Koy
(40)
Dec-10
Mar-11
Jun-11
Sep-11
Dec-11
Mar-12
SPO
cancelled
First
announcem
ent of SPO
Jun-12
Sep-12
Dec-12
RSM,
Zeytinburnu
Mar-13
Jun-13
Sep-13
RSM,
Y.mahalle
Dec-13
Mar-14
Jun-14
Exhibit 21 shows the historical NAV premium/discount with the events that affected
NAV more than TRY200m. The historical average NAV discount stands at 15% and
the current NAV discount stands at 25%, which we believe provides a good entry
point.
EXHIBIT 22: NAV breakdown
NAV component
RSM projects*
Turn-key projects
Landbank*
Stocks
Cash*
Value
Share of NAV
(TRY m)
(%)
8,752
65
542
4
4,769
35
268
2
1,391
10
Treasury shares
276
2
Other net assets
(2,479)
(18)
NAV
13,520
# of shares (m)
3,800
NAV per share (TRY)
3.56
Price per share (TRY)
2.66
NAV Premium/(Discount)
(25)
*Adjusted for events after 1Q14A.
12
BNP PARIBAS
3 JULY 2014
Emlak Konut GYO
EKGYO TI
Emre Yuzbasioglu
EXHIBIT 23: NAV premium/discount vs mortgage rates
(%)
NAV Pre/(Disc) (LHS)
Avg Pre/(Disc) (LHS)
(%)
Mortgage rates (RHS)
30
15
20
14
10
13
0
12
(10)
11
(20)
10
(30)
9
(40)
Dec-10
8
Mar-11
Jun-11
Sep-11
Dec-11
Mar-12
Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Sources: Emlak Konut; CBRT; TEB Investment/BNP Paribas estimates
Emlak Konut’s NAV premium/discount is correlated with interest rates, except during
the first SPO process, which took place between January 2013 and June 2013. We
believe that the CBRT has entered a rate-cut cycle (125bp cuts to the policy rate in
the last two meetings) and we expect this will continue as long as the TRY allows it
to do so. As a result, we expect mortgage rates to come down, especially in 2H14,
and the NAV discount to narrow.
13
BNP PARIBAS
3 JULY 2014
Emlak Konut GYO
EKGYO TI
Emre Yuzbasioglu
Business overview
Emlak Konut in a nutshell
Emlak Konut is the largest real-estate investment company (REIC) in Turkey, with
TRY3.8b of paid-in-capital and more than TRY10b in market capitalisation. The
company was established in 1953 and became a REIC in 2002. It is mainly a
residential developer but also develops some mixed-use projects, which involve both
commercial and residential units as well as public buildings. Emlak Konut buys its
land from its main shareholder TOKI (the Housing Development Administration of
Turkey) and, to a limited extent, from third parties. In 2010, the company went public
with a 25% free float as a regulatory requirement to keep its REIC status. In 2013, it
made a secondary public offering, to create funding for new land purchases and
concluded its SPO process in November 2013 by creating TRY3.25b of resources for
new land purchases. Emlak Konut’s free float rose to 50.6% after SPO. Main
shareholder TOKI, with its 49.4% stake, has privilege to appoint four out of seven
board members.
EXHIBIT 24: Shareholder structure
Shareholder
Type
Total nominal value
Ratio
(TRY)
(%)
TOKI
A
253,369,919
6.7
TOKI
B
1,621,539,997
42.7
Free float
B
1,821,202,765
47.9
Treasury shares
B
103,887,318
2.7
3,800,000,000
100.0
Total
The TOKI-Emlak Konut relationship
TOKI, established in 1984, is a public entity working under the Prime Ministry, whose
role is to develop both low income housing units and public building. TOKI has a
massive land stock which has been acquired from the Treasury or other government
entities in return for services such as building schools or hospitals rather than cash
payment. TOKI sells its land to Emlak Konut and other third-parties in return for cash
to develop its projects. Emlak Konut has a priority agreement with TOKI, whereby the
company can buy any land plot any time it wants from TOKI at appraisal value. With
this agreement Emlak Konut buys attractive land plots from TOKI without facing any
competition and TOKI prefers to sell its land plots to Emlak because the company
pays it in cash and makes sizeable purchases. This is a crucial factor for TOKI to
continue its projects. We think that this agreement gives Emlak Konut a competitive
advantage against other companies in the sector.
RSM and turn-key projects
In revenue-sharing-model (RSM) projects, the contractor proposes a revenue
share ratio (CRSR) together with estimated total revenues from the project during the
tender process, and the highest bidder wins the tender. The company’s share in total
revenues (CSTR) is guaranteed minimum revenue (which is equal to or higher than
the appraisal value of the land at the time of tender) for Emlak Konut and the
contractor is obligated to pay it even when the project generates less than the value
estimated in the tender process. If a project generates more revenues than
anticipated Emlak Konut and the contractor share excess revenues according to the
CRSR, which they agree in the tender process. The contractor develops the projects
and is responsible for the whole process from financing to sales and pricing, which is
subject to Emlak Konut’s approval. In the meantime, Emlak Konut is responsible for
approval of the project by government bodies and technical control of the project.
Also, in an RSM project, Emlak Konut controls the cash flow, whereby the contractor
only uses the presale revenues according to construction completion and presale
percentages. This way the company carries a very low risk in the case of contractor
failure. In this type of project, Emlak Konut takes limited financing and development
risk. Principally, only the land contribution is done by Emlak Konut and the risk is the
possible unsold units.
14
BNP PARIBAS
3 JULY 2014
Emlak Konut GYO
EKGYO TI
Emre Yuzbasioglu
In the turn-key project model, Emlak Konut designs the project, tenders out the
construction work to the lowest bidder, is solely responsible for sale and pricing, and
revenues from the project are fully attributable to the company. Cash flow is
controlled by Emlak Konut and progress payments to the contractor are based on
physical development of the project. In this type of project, EKGYO bears all the risks
and responsibilities associated with financing, development and sales.
In-house financing
The company offers in-house financing for its turn-key projects and stock sales,
which generates stable cash flow during construction and attracts more buyers. In
October 2013, the company received 25,000 applications for its 1,000 units in the
Kayabasi region and had to use a lottery method to determine the allocation. Inhouse financing is commonly used in the Turkish real estate market in the
construction period, but Emlak’s strong net cash position allows the financing period
to extend for longer than its peers.
15
BNP PARIBAS
3 JULY 2014
Emlak Konut GYO
EKGYO TI
Emre Yuzbasioglu
The Turkish real estate market
Urban transformation remains the largest “mega project”, but there are others
Turkey is located in a highly active earthquake zone, and in the last 15 years has
faced seven major earthquakes above 6 on the Richter scale, with a loss of around
20,000 lives. After the Izmit earthquake in 1999, where 18,000 people died, Turkey
changed its construction legislation, with the result that buildings built before that
legislation could be considered as weak. In 2012, the government passed the Urban
Transformation and Renovation Law, which eases the restrictions on demolition and
re-construction of vulnerable structures. Accordingly, if 51% of the owners agree on
demolition, the remaining 49% cannot change the decision. Before the law changed,
such a decision had to be taken unanimously. The government also supports owners
who decide to demolish vulnerable buildings by increasing construction permits,
giving rental support for the re-construction period, and subsidising 3-4ppt of interest
cost, depending on duration. Total building stock is estimated at around 20m units in
Turkey according to Turkstat’s housing research, and 7m are considered vulnerable
units. The government wants to finish re-construction of these vulnerable units in 20
years (350,000 units/year). In 2013, the government started urban transformation
activities at 253,000 units and plans to demolish 400,000 units in 2014, according to
the Minister of Environment and Urbanisation at the ministry’s website. GYODER
(the REIT Association of Turkey) forecast 200,000 units per year in a report in May
2012.
We think that Emlak Konut is the only company that can participate in large-scale
urban transformation projects thanks to its strong balance sheet and experience in
large-scale projects. The company also has an agreement with TOKI and the
Ministry of Environment and Urbanisation. According to the agreement, TOKI, the
ministry and the municipality will get the consent of owners, and invite Emlak to build
the projects. This agreement gives Emlak Konut a competitive edge over other
companies. It has started to build a project in the Esenler region (the European side
of Istanbul) in accordance with this agreement. Emlak Konut is going to produce
1,435 units for the owners and 970 units for itself, in order to finance other units.
1.5% of the estimated total revenues of these 970 units is guaranteed minimum
revenue from this project. Also, EKGYO will receive 40% of the total profit from this
project. This project will not have a major impact on Emlak’s valuation and
profitability, in our view. Therefore, we prefer to keep this project out of our model
until the company starts presale activities for these financing-purpose units.
However, this is the first urban transformation project in which Emlak has participated
and it might encourage other municipalities to develop similar projects. Therefore, we
are positive on Emlak’s involvement in this project, even though we keep it outside of
our valuation for now.
The government’s main focus remains Istanbul, and they are working on a few mega
projects, some of which will literally change the landscape in Istanbul: Canal Istanbul,
the third airport in Istanbul, a third bridge on the Bosphorus, “New Cities” in Istanbul,
and the Istanbul Finance Center. As can be seen on the project map, most of the
projects are tied to each other and failure of one might create a domino effect for the
others.
“New Cities” in Istanbul
The government plans to build two new cities in Istanbul and will subsidise
residential construction by applying a 1% VAT rate for units smaller than 150sqm.
The government announced a project site on the European side and expects the
population to be more than 1m in this new project zone. Canal Istanbul will pass
through this project site and the third airport will be built on the north side of the “new
city” project site. Emlak Konut has around 5.4m sq m in the new city site. We view
Emlak Konut’s exposure to the “new city” as a positive catalyst.
16
BNP PARIBAS
3 JULY 2014
Emlak Konut GYO
EKGYO TI
Emre Yuzbasioglu
EXHIBIT 25: Project map
Sources: www.megaprojeleristanbul.com; TEB Investment/BNP Paribas
Canal Istanbul
Canal Istanbul is a waterway plan for Istanbul. The project was first announced in
2011 by PM Recep Tayyip Erdogan. The project’s main aim is to divert especially
hazardous traffic from the Bosphorus to the new canal and also to use its excavation
residues in the earth moving process for third airport construction in Istanbul.
Therefore Canal Istanbul carries extra importance for the government. The
government will finance this project through land sales around the canal and the
contractor will build luxury residences and few marinas in the region, according to
news in local media. The canal will be 40-45km long, 145-150m wide on the surface
and 120-125m wide on the base and the depth of the water will be 25m. Istanbul will
have two new peninsulas and the old city will become an island with the completion
of the project.
Istanbul Finance Center
Istanbul Finance Center’s (IFC) main purpose is to transform Istanbul into a financial
hub, especially for Islamic Finance. The project will have a 2.5m sq m site area and
there will be around 600,000 sq m offices, 90k sq m retail, 70k sq m hotels, 60k sq m
housing and a culture and congress center with 2,000-people capacity on the Asian
side. The banks that will have a place in the Finance Center are Halkbank,
Vakıfbank, and Ziraatbank. The Capital Markets Board of Turkey, the Banking
Regulation and Supervision Agency of Turkey, and the Central Bank of Turkey will
also have places in the Finance Center project. The government plans to start
construction on this project at the beginning of 2015 and plans to finish it around 4Q
2016. This is a very ambitious target – we believe the project will become operational
by end-2017.
Third Airport in Istanbul
This project takes place in the north of the European side of Istanbul with a planned
capacity of 90m passengers per annum. The first phase of the third Istanbul airport
will be opened at end-2017, according PM Erdogan’s announcement at the groundbreaking ceremony. The project consists of four phases, and with the completion of
all of them in 2023 according to plans, the new airport will have capacity of 150m
passengers per annum and will become one of the biggest airports in the world. The
project will be connected to the North Marmara Highway and the third bridge on
Canal Istanbul, and will take place at the north end of a new city project on the
European side of Istanbul.
Third Bridge on the Bosphorus and the North Marmara Highway
The Northern Marmara Highway project aims to decrease heavy vehicle traffic in
Istanbul and will connect the east and west sides of the city by passing through the
northern side of the city. Connection roads to the city are planned to be around
260km long and the third bridge on the Bosphorus (the Yavuz Sultan Selim Bridge)
will be the eighth-longest suspension bridge in the world when it is completed on 29
May, 2015. The Northern Marmara Highway Project passes through the third airport
in Istanbul and the new city project on the European side of the city.
17
BNP PARIBAS
3 JULY 2014
Emlak Konut GYO
EKGYO TI
Emre Yuzbasioglu
Sector overview
Urbanisation to increase
In the first years of the Republic of Turkey, the urbanisation rate was a mere 25%. It
increased to 77% in 2013 and continues to rise. GYODER estimates that the
urbanisation rate will reach 84% by 2023. Population growth and net internal
migration to cities plays an important role.
Also, population per household will decrease as a result of urbanisation. Turkey’s
population per household is around 4.1 as of end-2012, while the EU average is
around 2.4.
EXHIBIT 26: Urbanisation rate in Turkey
(%)
Urban
EXHIBIT 27: Net internal migration rate
(%)
Rural
80
12.0
70
10.0
60
8.0
50
6.0
40
Ankara
İstanbul
İzmir
2009
2010
2011
4.0
30
2.0
0.0
2008
2012
Source: Turkstat
Source: Turkstat
EXHIBIT 28: Urbanisation rate in other countries – 2012
EXHIBIT 29: Population per household – Europe
Source: Worldbank
18
France
Denmark
Austria
Italy
Czech Rep.
Portugal
Hungary
Spain
Greece
Poland
Slovakia
Cyprus
South Africa
Estonia
Ukraine
Turkey
European Union
Spain
Germany
OECD members
Saudi Arabia
North America
United States
Netherlands
Chile
France
Argentina
Qatar
Belgium
Singapore
60
Croatia
70
Bulgaria
80
Romania
90
(person)
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Turkey
(%)
100
UK
1927
1935
1940
1945
1950
1955
1960
1965
1970
1975
1980
1985
1990
2000
2007
2008
2009
2010
2011
2012
20
Source: Eurostat
BNP PARIBAS
3 JULY 2014
Emlak Konut GYO
EKGYO TI
Emre Yuzbasioglu
Young and developing population supports future growth
At around 1% population growth per annum, Turkey’s young population will increase
every year and the need for housing will continue. According to Turkstat estimates,
the population will grow at a slowing pace until 2050, then it will start to contract.
55.7% of the total population is between the ages of 20 and 60 and this ratio will
reach 56.5% in 2023. This age class is the main customer for future housing in
Turkey.
EXHIBIT 30: Population growth will continue
EXHIBIT 31: Young population will remain
Avg population (LHS)
Avg growth (RHS)
(m)
95
70
45
2065E-2075E
2055E-2064E
2045E-2054E
2035E-2044E
2025E-2034E
2015E-2024E
2005-2014
1995-2004
1985-1994
1975-1984
1965-1974
20
1955-1964
(%)
(%)
%
3.0
Source: Turkstat
0-19
20-39
40-59
+60
100
2.5
%
90
2.0
%
80
1.5
%
70
1.0
%
60
0.5
%
50
0.0
%
40
(0.5)
%
30
%
20
%
10
%
8.6
12.6
25.3
17.8
22.0
25.0
24.8
25.6
23.1
25.2
24.1
20.1
0
2013
2023
2050
Source: Turkstat
All in all, still a big overall need for housing in Turkey
According to GYODER’s study in May 2012, if we consider all factors such as the
increase in overall population, the rising urbanisation rate, the decrease in population
per household and urban transformation, Turkey will need around 660,000 new
urban houses per annum until 2023.
EXHIBIT 32: Turkey’s housing needs
No of urban
households
Increase in urban
households
Urban
transformation
Total urban new
house demand
(m)
(‘000)
(‘000)
(‘000)
4.1
14.99
358
250
608
79.2
4.0
15.39
400
250
650
79.8
4.0
15.80
406
250
656
80.05
80.4
4.0
16.21
412
250
662
80.87
81.0
3.9
16.63
413
250
663
2019
81.67
81.6
3.9
17.04
419
250
669
2020
82.46
82.2
3.9
17.47
426
250
676
2021
83.24
82.8
3.9
17.90
431
250
681
2022
83.99
83.4
3.8
18.34
437
250
687
2023
84.69
84.0
3.8
18.77
433
250
683
Population
Urbanisation rate
(m)
(%)
2014
77.45
78.6
2015
78.33
2016
79.20
2017
2018
Population per
household
Source: GYODER (May-2012)
Underpenetrated mortgage market
Banks first started providing mortgage loans in 2002 in Turkey, and its mortgage
loan/GDP ratio is well below other countries’. Banks offer up to 10-year maturities for
now, except for a few banks that offers 30-year maturities. The mortgage loan/GDP
ratio is around 6.7% at the end of 2013 and we believe this will increase going
forward. Mortgage usage for house purchases is highly correlated with interest rates,
and has hovered between 20% and 45% in the last 1.5 years. Consumers tend to
wait until interest rates bottom out to kick in their real estate purchases. So, demand
is likely to visibly pick up as rates trough in late 2014.
19
BNP PARIBAS
3 JULY 2014
Emlak Konut GYO
EKGYO TI
Emre Yuzbasioglu
EXHIBIT 33: Mortgage loans/GDP - Turkey
EXHIBIT 34: Mortgage loans/GDP - where Turkey stands
(%)
8
140
7
120
6
100
5
80
(%)
60
4
40
3
20
2
Denmark
Cyprus
UK
Sweden
Netherlands
Portugal
Spain
France
Germany
Greece
S. Africa
Austria
Belgium
Italy
Slovak Rep.
Poland
Czech Rep.
Slovenia
Bulgaria
Hungary
Turkey
Romania
0
1
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
0
Sources: Turkstat; BRSA
Sources: ECB; Resbank; BRSA
Also, mortgage usage in home purchases rose to 33% in May after falling to 28% in
April as a result of a decline in interest rates; but it is still below the 2013 average of
39%. We believe that declining mortgage rates will push mortgage usage higher and
will make home purchases easier.
EXHIBIT 35: Mortgage usage vs loan rates (monthly)
(%)
EXHIBIT 36: Mortgage usage vs loan rates (quarterly)
Share of mortage in total sales (LHS)
45
(%)
(%)
14
50
13
45
13
12
40
12
11
35
11
30
10
25
9
20
8
40
(%)
Share of mortgage in total sales (LHS)
14
1Q14
4Q13
3Q13
2Q13
1Q13
4Q12
3Q12
2Q12
1Q12
4Q11
3Q11
2Q11
Apr-14
May-14
Mar-14
Jan-14
Feb-14
Dec-13
Nov-13
Oct-13
Sep-13
Jul-13
Aug-13
Jun-13
Apr-13
May-13
Mar-13
Jan-13
8
Feb-13
20
1Q11
9
4Q10
25
3Q10
10
2Q10
30
1Q10
35
EXHIBIT 37: Mortgage rates vs mortgage loans
EXHIBIT 38: Mortgage loan growth vs change in loan rates
Interest rates (LHS)
(%)
60
(TRY m)
120,000
Mortgage loans (RHS)
Mortgage loan growth (LHS)
(y-y %)
45
50
100,000
40
80,000
30
60,000
(y-y %)
Change in mortgage loan rates (RHS)
6
40
4
35
30
2
25
0
20
20
40,000
10
20,000
15
(2)
10
(4)
5
Sources: CBRT; BRSA
20
Apr-14
Jan-14
Oct-13
Jul-13
Apr-13
Jan-13
Oct-12
Jul-12
Apr-12
Jan-12
Oct-11
Jul-11
(6)
Apr-11
0
Jan-11
Dec-13
Dec-12
Dec-11
Dec-10
Dec-09
Dec-08
Dec-07
Dec-06
Dec-05
Dec-04
Dec-03
0
Dec-02
0
Sources: CBRT; BRSA
BNP PARIBAS
3 JULY 2014
Emlak Konut GYO
EKGYO TI
Emre Yuzbasioglu
EXHIBIT 39: Home sales vs mortgage rates (monthly)
EXHIBIT 40: Home sales vs mortgage rates (quarterly)
Monthly home sales (LHS)
(units)
120,000
115,000
110,000
105,000
100,000
95,000
90,000
85,000
80,000
75,000
70,000
(%)
14
(%)
Quarterly home sales (LHS)
22
290,000
20
13
12
11
240,000
18
16
190,000
14
10
9
12
140,000
10
1Q14
3Q13
1Q13
3Q12
1Q12
3Q11
1Q11
3Q10
1Q10
3Q09
1Q09
8
3Q08
90,000
1Q08
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
8
21
(units)
BNP PARIBAS
3 JULY 2014
Emlak Konut GYO
EKGYO TI
Emre Yuzbasioglu
Financial statements
Emlak Konut GYO
Profit and Loss (TRY m) Year Ending Dec
2012A
2013A
2014E
2015E
Revenue
1,005
2,331
1,252
3,089
2016E
3,005
Cost of sales ex depreciation
(552)
(1,311)
(681)
(1,605)
(1,569)
Gross profit ex depreciation
453
1,020
570
1,484
1,436
Other operating income
134
97
84
48
32
Operating costs
(57)
(112)
(83)
(128)
(130)
Operating EBITDA
530
1,004
571
1,404
1,338
Depreciation
0
0
0
0
0
Goodwill amortisation
0
0
0
0
0
Operating EBIT
530
1,004
571
1,404
1,338
Net financing costs
(39)
19
168
193
296
0
0
0
0
0
33
37
23
62
60
Associates
Recurring non operating income
Non recurring items
Profit before tax
0
0
0
0
0
523
1,061
762
1,658
1,694
Tax
0
0
0
0
0
523
1,061
762
1,658
1,694
Minority interests
0
0
0
0
0
Preferred dividends
0
0
0
0
0
Other items
0
0
0
0
0
523
1,061
762
1,658
1,694
Profit after tax
Reported net profit
Non recurring items & goodwill (net)
0
0
0
0
0
523
1,061
762
1,658
1,694
Recurring EPS *
0.21
0.39
0.20
0.44
0.45
Reported EPS
0.21
0.39
0.20
0.44
0.45
DPS
0.05
0.05
0.12
0.08
0.17
Recurring net profit
Per share (TRY)
Growth
Revenue (%)
40.2
132.1
(46.3)
146.8
(2.7)
Operating EBITDA (%)
166.3
89.6
(43.1)
145.7
(4.7)
Operating EBIT (%)
166.3
89.6
(43.1)
145.7
(4.7)
Recurring EPS (%)
129.2
87.7
(48.9)
117.6
2.1
Reported EPS (%)
129.2
87.7
(48.9)
117.6
2.1
Gross margin inc depreciation (%)
45.1
43.7
45.6
48.0
47.8
Operating EBITDA margin (%)
52.7
43.1
45.6
45.5
44.5
Operating EBIT margin (%)
52.7
43.1
45.6
45.5
44.5
Net margin (%)
52.1
45.5
60.9
53.7
56.4
0.0
0.0
0.0
0.0
0.0
Dividend payout on recurring profit (%)
22.7
13.4
61.4
18.4
39.2
Interest cover (x)
14.5
-
-
-
-
0.0
0.0
0.0
0.0
0.0
Operating performance
Effective tax rate (%)
Inventory days
Debtor days
147.9
86.8
185.7
125.5
181.0
Creditor days
279.0
158.0
262.8
142.5
202.3
Operating ROIC (%)
(61.9)
(58.2)
(22.7)
(65.3)
(79.5)
ROIC (%)
14.2
26.5
11.5
23.3
26.3
ROE (%)
12.5
16.6
8.8
16.8
14.7
ROA (%)
6.9
9.4
4.3
9.8
8.6
*Pre exceptional, pre-goodwill and fully diluted
22
BNP PARIBAS
3 JULY 2014
Emlak Konut GYO
EKGYO TI
Emre Yuzbasioglu
Financial statements
Emlak Konut GYO
Cash Flow (TRY m) Year Ending Dec
2012A
2013A
2014E
2015E
2016E
523
1,061
762
1,658
1,694
Depreciation
0
0
0
0
0
Associates & minorities
0
0
0
0
0
Other non-cash items
(564)
3,144
(2,139)
(489)
2,067
Recurring cash flow
(40)
4,205
(1,377)
1,170
3,761
Change in working capital
293
294
(283)
1,405
(61)
Capex - maintenance
0
0
0
0
0
Capex - new investment
0
0
0
0
0
252
4,499
(1,660)
2,574
3,700
Recurring net profit
Free cash flow to equity
Net acquisitions & disposals
Dividends paid
0
0
0
0
0
(119)
(200)
(468)
(305)
(663)
Non recurring cash flows
Net cash flow
0
0
0
0
0
134
4,299
(2,128)
2,270
3,037
Equity finance
0
0
0
0
0
(173)
(157)
(216)
0
(120)
(40)
4,142
(2,343)
2,270
2,917
(0.02)
1.56
(0.36)
0.31
0.99
0.10
1.67
(0.44)
0.68
0.97
2012A
2013A
2014E
2015E
2016E
2,204
1,765
2,019
2,617
2,284
(3,185)
(4,242)
(4,584)
(4,362)
(3,917)
Net working capital
(982)
(2,477)
(2,565)
(1,745)
(1,633)
Tangible fixed assets
5
5
5
5
5
(977)
(2,472)
(2,560)
(1,740)
(1,628)
Goodwill
0
0
0
0
0
Other intangible assets
1
2
2
2
2
Investments
0
0
0
0
0
Other assets
5,063
6,250
9,158
7,727
6,272
Debt finance
Movement in cash
Per share (TRY)
Recurring cash flow per share
FCF to equity per share
Balance Sheet (TRY m) Year Ending Dec
Working capital assets
Working capital liabilities
Operating invested capital
Invested capital
4,087
3,781
6,600
5,989
4,646
(1,306)
(5,448)
(3,105)
(5,375)
(8,292)
Short term debt
172
176
0
120
220
Long term debt *
754
594
554
434
214
(380)
(4,679)
(2,551)
(4,821)
(7,858)
0
0
0
0
0
10
9
14
14
14
12,384
Cash & equivalents
Net debt
Deferred tax
Other liabilities
Total equity
4,392
8,354
9,032
10,691
Minority interests
0
0
0
0
0
Invested capital
4,087
3,781
6,600
5,989
4,646
* includes convertibles and preferred stock which is being treated as debt
Per share (TRY)
Book value per share
1.76
2.20
2.38
2.81
3.26
Tangible book value per share
1.76
2.20
2.38
2.81
3.26
Financial strength
Net debt/equity (%)
(8.7)
(56.0)
(28.2)
(45.1)
(63.4)
Net debt/total assets (%)
(4.4)
(34.7)
(17.9)
(30.7)
(46.6)
Current ratio (x)
1.0
1.6
1.1
1.8
2.6
CF interest cover (x)
7.5
-
-
-
-
2012A
2013A
2014E
2015E
2016E
6.0
Valuation
Recurring P/E (x) *
12.7
6.8
13.3
6.1
Recurring P/E @ target price (x) *
16.4
8.8
17.1
7.9
7.7
Reported P/E (x)
12.7
6.8
13.3
6.1
6.0
Dividend yield (%)
P/CF (x)
P/FCF (x)
1.8
2.0
4.6
3.0
6.6
(164.6)
1.7
(7.3)
8.6
2.7
26.4
1.6
(6.1)
3.9
2.7
Price/book (x)
1.5
1.2
1.1
0.9
0.8
Price/tangible book (x)
1.5
1.2
1.1
0.9
0.8
EV/EBITDA (x) **
11.3
5.6
10.9
4.4
2.7
EV/EBITDA @ target price (x) **
14.7
8.0
15.9
6.4
4.8
1.5
1.4
1.1
0.9
0.5
EV/invested capital (x)
* Pre exceptional, pre-goodwill and fully diluted
** EBITDA includes associate income and recurring non-operating income
23
BNP PARIBAS
3 JULY 2014
Emlak Konut GYO
EKGYO TI
Emre Yuzbasioglu
Disclaimers and Disclosures
APPENDIX
DISCLAIMERS AND DISCLOSURES APPLICABLE TO NON-US BROKER-DEALER(S): TEB Investment, BNP Paribas JV
ANALYST(S) CERTIFICATION
Emre Yuzbasioglu, TEB Investment, BNP Paribas JV, +90-216-636-4535, [email protected].
Mete Yuksel, TEB Investment, BNP Paribas JV, +90 216 636 4536, [email protected].
The analyst(s) or strategist(s) herein each referred to as analyst(s) named in this report certify(ies) that (i) all views expressed in this report accurately
reflect the personal view of the analyst(s) with regard to any and all of the subject securities, companies or issuers mentioned in this report; and (ii) no part
of the compensation of the analyst(s) was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the research
analyst herein.
Analysts mentioned in this disclaimer are employed by a non-US affiliate of BNP Paribas Securities Corp., and are not registered/ qualified pursuant to NYSE
and/or FINRA regulations.
IMPORTANT DISCLOSURES REQUIRED IN THE UNITED STATES BY FINRA RULES AND OTHER JURISDICTIONS
"BNP Paribas” is the marketing name for the global banking and markets business of BNP Paribas Group. No portion of this report was prepared by BNP
Paribas Securities Corp (US) personnel, and it is considered Third-Party Affiliate research under NASD Rule 2711. The following disclosures relate to
relationships between companies covered in this research report and the BNP entity identified on the cover of this report, BNP Securities Corp., and other
entities within the BNP Paribas Group (collectively, "BNP Paribas").
The disclosure column in the following table lists the important disclosures applicable to each company that has been rated and/or recommended in this
report:
Company
Ticker
N/A
N/A
Disclosure (as applicable)
N/A
BNP Paribas represents that:
1. Within the past year, it has managed or co-managed a public offering for this company, for which it received fees.
2. It had an investment banking relationship with this company in the last 12 months.
3. It received compensation for investment banking services from this company in the last 12 months.
4. It expects to receive or intends to seek compensation for investment banking services from the subject company/ies in the next 3 months.
5. It beneficially owns 1% or more of any class of common equity securities of the subject company.
6. It makes a market in securities in respect of this company.
7. The analyst(s) or an individual who assisted in the preparation of this report (or a member of his/her household) has a financial interest position in
securities issued by this company. The financial interest is in the common stock of the subject company, unless otherwise noted.
8. The analyst (or a member of his/her household) is an officer, director, or advisory board member of this company or has received compensation from the
company.
IMPORTANT DISCLOSURES REQUIRED IN KOREA
The disclosure column in the following table lists the important disclosures applicable to each Korea listed company that has been rated and/or
recommended in this report:
Company
Emlak Konut GYO
Ticker
EKGYO TI
Price (as of 30-Jun-2014 closing price)
TRY2.63
Interest
N/A
1.
The performance of obligations of the Company is directly or indirectly guaranteed by BNP Paribas Securities Korea Co. Ltd (“BNPPSK”) by means of
payment guarantees, endorsements, and provision of collaterals and/or taking over the obligations.
2. BNPPSK owns 1/100 or more of the total outstanding shares issued by the Company.
3. The Company is an affiliate of BNPPSK as prescribed by Item 3, Article 2 of the Monopoly Regulation and Fair Trade Act.
4. BNPPSK is the financial advisory agent of the Company for the Merger and Acquisition transaction or of the Target Company whereby the size of the
transaction does not exceed 5/100 of the total asset of the Company or the total number of outstanding shares.
5. BNPPSK has taken financial advisory service regarding listing to the Company within the past 1 year.
6. With regards to the tender offer initiated by the Company based on Item 2, Article 133 of the Financial Investment Services and Capital Market Act,
BNPPSK acts in the capacity of the agent for the tender offer designated either by the Company or by the target company, provided that this provision
shall apply only where tender offer has not expired.
7. The listed company which issued the stocks in question in case where 40 days has not passed since the new shares were listed from the date of entering
into arrangement for public offering or underwriting-related agreement for issuance of stocks
8. The Company that has signed a nominated advisor contract with BNPPSK as defined in Item 2 of Article 8 of the KONEX Market Listing Regulation.
9. The Company is recognized as having considerable interests with BNPPSK in relation to No.1 to No. 8.
10. The analyst or his/her spouse owns (including delivery claims of marketable securities based on legal regulations and trading and misc. contracts) the
following securities or rights (hereinafter referred to as “Securities, etc.” in this Article) regardless of whose name is used in the trading.
1) Stocks, bond with stock certificate, and certificate of pre-emptive rights issued by the Company whose securities dealings are being solicited.
2) Stock options of the Company whose securities dealings are being solicited.
3) Individual stock future, stock option, and warrants that use the stocks specified in Item 1) as underlying.
GENERAL DISCLAIMER
This report was produced by TEB Investment, BNP Paribas JV, member company(ies) of the BNP Paribas Group.
This report is for the use of intended recipients only and may not be reproduced (in whole or in part) or delivered or transmitted to any other person without
our prior written consent. By accepting this report, the recipient agrees to be bound by the terms and limitations set forth herein.
This report does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of
individual clients. Customers are advised to use the information contained herein as just one of many inputs and considerations prior to engaging in any
24
BNP PARIBAS
3 JULY 2014
Emlak Konut GYO
EKGYO TI
Emre Yuzbasioglu
trading activity. This report does not constitute a prospectus or other offering document or an offer or solicitation to buy or sell any securities or other
investments. This report is not intended to provide the sole basis of any evaluation of the subject securities and companies mentioned in this report.
Information and opinions contained in this report are published for reference of the recipients and are not to be relied upon as authoritative or without the
recipient’s own independent verification, or taken in substitution for the exercise of judgment by the recipient. Additionally, the products mentioned in this
report may not be available for sale in certain jurisdictions.
As an investment bank with a wide range of activities, BNP Paribas may face conflicts of interest, which are resolved under applicable legal provisions and
internal guidelines. You should be aware, however, that BNP Paribas may engage in transactions in a manner inconsistent with the views expressed in this
document, either for its own account or for the account of its clients.
Australia: This report is being distributed in Australia by BNP Paribas Sydney Branch, registered in Australia as ABN 23 000 000 117 at 60 Castlereagh Street
Sydney NSW 2000. BNP Paribas Sydney Branch is licensed under the Banking Act 1959 and the holder of Australian Financial Services Licence no. 238043 and
therefore subject to regulation by the Australian Securities & Investments Commission in relation to delivery of financial services. By accepting this document
you agree to be bound by the foregoing limitations, and acknowledge that information and opinions in this document relate to financial products or financial
services which are delivered solely to wholesale clients (in terms of the Corporations Act 2001, sections 761G and 761GA; Corporations Regulations 2001,
division 2, reg. 7.1.18 & 7.1.19) and/or professional investors (as defined in section 9 of the Corporations Act 2001).
Canada: The information contained herein is not, and under no circumstances is to be construed as, a prospectus, an advertisement, a public offering, an
offer to sell securities described herein, or solicitation of an offer to buy securities described herein, in Canada or any province or territory thereof. Any offer
or sale of the securities described herein in Canada will be made only under an exemption from the requirements to file a prospectus with the relevant
Canadian securities regulators and only by a dealer properly registered under applicable securities laws or, alternatively, pursuant to an exemption from the
dealer registration requirement in the relevant province or territory of Canada in which such offer or sale is made. The information contained herein is under
no circumstances to be construed as investment advice in any province or territory of Canada and is not tailored to the needs of the recipient. To the extent
that the information contained herein references securities of an issuer incorporated, formed or created under the laws of Canada or a province or territory
of Canada, any trades in such securities must be conducted through a dealer registered in Canada. No securities commission or similar regulatory authority in
Canada has reviewed or in any way passed judgment upon these materials, the information contained herein or the merits of the securities described herein,
and any representation to the contrary is an offence.
Hong Kong: This report is prepared for professional investors and is being distributed in Hong Kong by BNP Paribas Securities (Asia) Limited to persons whose
business involves the acquisition, disposal or holding of securities, whether as principal or agent. BNP Paribas Securities (Asia) Limited, a subsidiary of BNP
Paribas, is regulated by the Securities and Futures Commission for the conduct of dealing in securities, advising on securities, providing automated trading
services, dealing in futures contacts and advising on corporate finance. For professional investors in Hong Kong, please contact BNP Paribas Securities (Asia)
Limited for all matters and queries relating to this report.
India: In India, this document is being distributed by BNP Paribas Securities India Pvt. Ltd. ("BNPPSIPL"), having its registered office at 5th floor, BNP Paribas
House, 1 North Avenue, Maker Maxity, Bandra Kurla Complex, Bandra (East), Mumbai 400 051 (Tel. no. +91 22 3370 4000 / 6196 4000 / Fax no. +91 22 3370
4363). BNPPSIPL is registered with the Securities and Exchange Board of India (“SEBI”) as a stockbroker in the Equities and the Futures & Options segments of
National Stock Exchange of India Ltd. and Bombay Stock Exchange Ltd. (SEBI Regn. Nos.: INB/INF231474835, INB/INF011474831; CIN:
U74920MH2008FTC182807; Website: www.bnpparibas.co.in).
Indonesia: This report is being distributed by PT BNP Paribas Securities Indonesia and is delivered by its licensed employee(s), including marketing/sales
person, to its client. PT BNP Paribas Securities Indonesia, having its registered office at Menara BCA, 35th floor, Grand Indonesia, JL. M.H. Thamrin No.1,
Jakarta 10310, Indonesia, is a subsidiary company of BNP Paribas SA and licensed under Capital Market Law no. 8 year 1995, a holder of broker-dealer and
underwriter licenses issued by the Capital Market and Financial Institution Supervisory Agency (now Otoritas Jasa Keuangan/OJK). PT BNP Paribas Securities
Indonesia is also a member of Indonesia Stock Exchange and supervised by Otoritas Jasa Keuangan (OJK). Neither this research publication nor any copy
hereof may be distributed in Indonesia or to any Indonesian citizens except in compliance with applicable Indonesian capital market laws and regulations.
This research publication is not an offer of securities in Indonesia. Some of the securities referred to in this research publication have not been registered
with the Otoritas Jasa Keuangan (OJK) pursuant to relevant capital market laws and regulations, and may not be offered or sold within the territory of the
Republic of Indonesia or to Indonesian citizens through a public offering or in circumstance which constitutes an offer within the meaning of Indonesian
capital market laws and regulations.
Japan: This report is being distributed to Japanese based firms by BNP Paribas Securities (Japan) Limited or by a subsidiary or affiliate of BNP Paribas not
registered as a financial instruments firm in Japan, to certain financial institutions defined by article 17-3, item 1 of the Financial Instruments and Exchange
Law Enforcement Order. BNP Paribas Securities (Japan) Limited is a financial instruments firm registered according to the Financial Instruments and
Exchange Law of Japan and a member of the Japan Securities Dealers Association, the Financial Futures Association of Japan and the Type II Financial
Instruments Firms Association. BNP Paribas Securities (Japan) Limited accepts responsibility for the content of a report prepared by another non-Japan
affiliate only when distributed to Japanese based firms by BNP Paribas Securities (Japan) Limited. Some of the foreign securities stated on this report are not
disclosed according to the Financial Instruments and Exchange Law of Japan.
Malaysia: This report is issued and distributed by BNP Paribas Capital (Malaysia) Sdn Bhd. The views and opinions in this research report are our own as of
the date hereof and are subject to change. BNP Paribas Capital (Malaysia) Sdn Bhd has no obligation to update its opinion or the information in this research
report. This publication is strictly confidential and is for private circulation only to clients of BNP Paribas Capital (Malaysia) Sdn Bhd. This publication is
being provided to you strictly on the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or
reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose
without the prior written consent of BNP Paribas Capital (Malaysia) Sdn Bhd.
Philippines: This report is being distributed in the Philippines by BNP Paribas Manila Branch, an Offshore Banking Unit (OBU) of BNP Paribas whose head
office is in Paris, France. BNP Paribas Manila OBU is registered as an offshore banking unit under Presidential Decree No. 1034 (PD 1034), and regulated by
the Bangko Sentral ng Pilipinas. This report is being distributed in the Philippines to qualified clients of OBUs as allowed under PD 1034, and is qualified in its
entirety to the products and services allowed under PD 1034.
Singapore: This report is distributed in Singapore by BNP Paribas Securities (Singapore) Pte Ltd ("BNPPSSL") and may be distributed in Singapore only to an
Accredited or Institutional Investor, each as defined under the Financial Advisers Regulations ("FAR") and the Securities and Futures Act (Chapter 289) of
Singapore, as amended from time to time. In relation to the distribution to such categories of investors, BNPPSSL and its representatives are exempted under
Regulation 35 of the FAR from the requirements in Section 36 of the Financial Advisers Act of Singapore, regarding the disclosure of certain interests in, or
certain interests in the acquisition or disposal of, securities referred to in this report. For Institutional and Accredited Investors in Singapore, please contact
BNP Paribas Securities (Singapore) Ptd Ltd (company registration number: 199801966C; address: 10 Collyer Quay, 34/F Ocean Financial Centre, Singapore
049315; tel: (65) 6210 1288; fax: (65) 6210 1980) for all matters and queries relating to this report.
South Africa: In South Africa, BNP Paribas Cadiz Securities (Pty) Ltd and BNP Paribas Cadiz Stock Broking (Pty) Ltd (hereinafter referred to as “BNPP Cadiz”)
are licensed members of Johannesburg Stock Exchange and are authorised Financial Services Providers and subject to regulation by the Financial Services
Board. BNPP Cadiz does not expressly or by implication represent, recommend or propose that the financial products referred to in this report are
appropriate to the particular investment objectives, financial situation or particular needs of the recipient.
Switzerland: This report is intended solely for customers who are “Qualified Investors” as defined in article 10 paragraphs 3 and 4 of the Swiss Federal Act
on Collective Investment Schemes of 23 June 2006 (CISA) and the relevant provisions of the Swiss Federal Ordinance on Collective Investment Schemes of 22
November 2006 (CISO). “Qualified Investors” includes, among others, regulated financial intermediaries such as banks, securities dealers, fund management
companies and asset managers of collective investment schemes, regulated insurance companies as well as pension funds and companies with professional
treasury operations. This document may not be suitable for customers who are not Qualified Investors and should only be used and passed on to Qualified
Investors. For specification purposes, a “Swiss Corporate Customer” is a Client which is a corporate entity, incorporated and existing under the laws of
Switzerland and which qualifies as “Qualified Investor” as defined above." BNP Paribas (Suisse) SA is authorised as bank and as securities dealer by the Swiss
Federal Market Supervisory Authority FINMA. BNP Paribas (Suisse) SA is registered at the Geneva commercial register under No. CH-270-3000542-1. BNP
25
BNP PARIBAS
3 JULY 2014
Emlak Konut GYO
EKGYO TI
Emre Yuzbasioglu
Paribas (Suisse) SA is incorporated in Switzerland with limited liability. Registered Office: 2 place de Hollande, CH-1204 Geneva.
Taiwan: Information on securities that trade in Taiwan is distributed by BNP Paribas Securities (Taiwan) Co., Ltd. Such information is for your reference only.
The reader should independently evaluate the investment risks and is solely responsible for their investment decision. Information on securities that do not
trade in Taiwan is for informational purposes only and is not to be construed as a recommendation or a solicitation to trade in such securities. BNP Paribas
Securities (Taiwan) Co., Ltd. may not execute transactions for clients in these securities. This publication may not be distributed to the public media or
quoted or used by the public media without the express written consent of BNP Paribas.
Thailand: Research relating to Thailand and Thailand based issuers is produced pursuant to an arrangement between BNP PARIBAS (“BNPP”) and Finansia
Syrus Securities Public Company Limited (“FSS”). FSS International Investment Advisory Securities Co Ltd (“FSSIA”) prepares and distributes research under
the brand name “BNP PARIBAS/FSS”. BNPP is not an affiliate of FSSIA or FSS. FSS also publishes a different research product under the brand name
“FINANSIA SYRUS,” which is prepared by research analysts who are not part of FSSIA and who may cover the same securities, issuers, or industries that are
the subject of this report. The ratings, recommendations, and views expressed in this report may differ from the ratings, recommendations, and views
expressed by other research analysts or research teams employed by FSS. This report is being distributed outside Thailand by members of BNP Paribas.
Turkey: This report is being distributed in Turkey by TEB Investment (TEB YATIRIM MENKUL DEGERLER A.S., Teb Kampus D Blok Saray Mah. Kucuksu Cad.
Sokullu Sok., No:7 34768 Umraniye, Istanbul, Turkey, Trade register number: 358354, www.tebyatirim.com.tr) and outside Turkey jointly by TEB Investment
and BNP Paribas. Notice Published in accordance with “Communiqué Regarding the Principles on Investment Consultancy Activities and the Investment
Consultancy Institutions” Series: V, No: 55 issued by the Capital Markets Board. The investment related information, commentary and recommendations
contained herein do not constitute investment consultancy services. Investment consultancy services are provided in accordance with investment
consultancy agreements executed between investors and brokerage companies or portfolio management companies or non-deposit accepting banks. The
commentary and recommendations contained herein are based on the personal views of the persons who have made such commentary and
recommendations. These views may not conform to your financial standing or to your risk and return preferences. Therefore, investment decisions based
solely on the information provided herein may fail to produce results in accordance with your expectations.
United States: This report may be distributed in the United States only to U.S. Persons who are “major U.S. institutional investors” (as such term is defined in
Rule 15a-6 under the Securities Exchange Act of 1934, as amended) and is not intended for the use of any person or entity that is not a “major U.S.
institutional investor”. U.S persons who wish to effect transactions in securities discussed herein must do so through BNP Paribas Securities Corp., a USregistered broker dealer and member of FINRA, SIPC, NFA, NYSE and other principal exchanges.
Certain countries within the European Economic Area: This document may only be distributed in the United Kingdom to eligible counterparties and
professional clients and is not intended for, and should not be circulated to, retail clients (as such terms are defined in the Markets in Financial Instruments
Directive 2004/39/EC (“MiFID”)). This document will have been approved for publication and distribution in the United Kingdom by BNP Paribas London
Branch, a branch of BNP Paribas SA whose head office is in Paris, France. BNP Paribas SA is incorporated in France with limited liability with its registered
office at 16 boulevard des Italiens, 75009 Paris. BNP Paribas London Branch (registered office: 10 Harewood Avenue, London NW1 6AA; tel: [44 20] 7595 2000;
fax: [44 20] 7595 2555) is authorised by the Autorité de Contrôle Prudentiel and the Prudential Regulation Authority and subject to limited regulation by the
Financial Conduct Authority and Prudential Regulation Authority. Details about the extent of our authorisation and regulation by the Prudential Regulation
Authority, and regulation by the Financial Conduct Authority are available from us on request.This report has been approved for publication in France by BNP
Paribas, a credit institution licensed as an investment services provider by the Autorité de Contrôle Prudentiel whose head office is 16, Boulevard des Italiens
75009 Paris, France. This report is being distributed in Germany either by BNP Paribas London Branch or by BNP Paribas Niederlassung Frankfurt am Main,
regulated by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin).
Other Jurisdictions: The distribution of this report in other jurisdictions or to residents of other jurisdictions may also be restricted by law, and persons into
whose possession this report comes should inform themselves about, and observe, any such restrictions. By accepting this report you agree to be bound by
the foregoing instructions. This report is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or
located in any locality, state, country, or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.
All research reports are disseminated and available to all clients simultaneously through our internal client websites. For all research available on a
particular stock, please contact the relevant BNP Paribas research team or the author(s) of this report.
Additional Disclosures
Target price history, stock price charts, valuation and risk details, and equity rating histories applicable to each company rated in this report is available in
our most recently published reports available on our website: http://eqresearch.bnpparibas.com, or you can contact the analyst named on the front of this
note or your BNP Paribas representative.
All share prices are as at market close on 30 June 2014 unless otherwise stated.
RECOMMENDATION STRUCTURE
Stock Ratings
Stock ratings are based on absolute upside or downside, which we define as (target price* - current price) / current price.
BUY (B). The upside is 10% or more.
HOLD (H). The upside or downside is less than 10%.
REDUCE (R). The downside is 10% or more.
Unless otherwise specified, these recommendations are set with a 12-month horizon. Thus, it is possible that future price volatility may cause a
temporary mismatch between upside/downside for a stock based on market price and the formal recommendation.
* In most cases, the target price will equal the analyst's assessment of the current fair value of the stock. However, if the analyst doesn't think the market will
reassess the stock over the specified time horizon due to a lack of events or catalysts, then the target price may differ from fair value. In most cases, therefore, our
recommendation is an assessment of the mismatch between current market price and our assessment of current fair value.
Industry Recommendations
Improving (é): The analyst expects the fundamental conditions of the sector to be positive over the next 12 months.
Stable (previously known as Neutral) (çè): The analyst expects the fundamental conditions of the sector to be maintained over the next 12
months.
Deteriorating (ê): The analyst expects the fundamental conditions of the sector to be negative over the next 12 months.
Country (Strategy) Recommendations
Overweight (O). Over the next 12 months, the analyst expects the market to score positively on two or more of the criteria used to determine
market recommendations: index returns relative to the regional benchmark, index sharpe ratio relative to the regional benchmark and index
returns relative to the market cost of equity.
Neutral (N). Over the next 12 months, the analyst expects the market to score positively on one of the criteria used to determine market
recommendations: index returns relative to the regional benchmark, index sharpe ratio relative to the regional benchmark and index returns
relative to the market cost of equity.
Underweight (U). Over the next 12 months, the analyst does not expect the market to score positively on any of the criteria used to determine
market recommendations: index returns relative to the regional benchmark, index sharpe ratio relative to the regional benchmark and index
returns relative to the market cost of equity.
26
BNP PARIBAS
3 JULY 2014
Emlak Konut GYO
EKGYO TI
Emre Yuzbasioglu
RATING DISTRIBUTION (as at 2 July 2014)
Total BNP Paribas coverage universe
659
Investment Banking Relationship
(%)
Buy
350
Buy
4.90
Hold
211
Hold
4.30
98
Reduce
3.10
Reduce
Should you require additional information concerning this report please contact the relevant BNP Paribas research team or the author(s) of this report.
© 2014 BNP Paribas Group
27
BNP PARIBAS
3 JULY 2014
HONG KONG
BEIJING
BANGKOK
BNP Paribas (China) Ltd
Beijing Branch
Room 2001, 20/F
China World Tower
1 Jianguomenwai Avenue
Beijing, China
Tel: +86-10-6535 0888
Fax: +86-10-6535 0883
BNP Paribas Equities (Asia) Ltd
Shanghai Representative Office
Room 2630, 26/F
Shanghai World Financial Center
100 Century Avenue
Shanghai 200120, China
Tel (86 21) 6096 9000
Fax (86 21) 6096 9018
JAKARTA
BNP Paribas Securities (Asia) Ltd
63/F, Two International Finance Centre
8 Finance Street, Central
Hong Kong SAR
China
Tel (852) 2825 1888
Fax (852) 2845 9411
(In cooperation with BNP Paribas)
FSS International Investment Advisory
Securities Co., Ltd
990 Abdulrahim Place, 12/F, Room 1210
Rama IV Road, Bangrak
Bangkok 10500
Thailand
Tel (66 2) 611 3500
Fax (66 2) 611 3551
PT BNP Paribas Securities Indonesia
Grand Indonesia, Menara BCA, 35/F
JI. M.H. Thamrin No. 1
Jakarta 10310
Indonesia
Tel (62 21) 2358 6586
Fax (62 21) 2358 7587
KUALA LUMPUR
MUMBAI
SHANGHAI
SEOUL
BNP Paribas Capital (Malaysia) Sdn Bhd
Vista Tower, Level 48C
The Intermark, 182 Jalan Tun Razak
50400 Kuala Lumpur
Malaysia
Tel (60 3) 2179 6222
Fax (60 3) 2179 6226
BNP Paribas Securities India Pvt Ltd
BNP Paribas House
1 North Avenue, Maker Maxity
Bandra Kurla Complex
Bandra East
Mumbai 400 051
Tel (91 22) 3370 4000
Fax (91 22) 3370 4386
SINGAPORE
TAIPEI
BNP Paribas Securities Korea Co Ltd
25/F, State Tower Namsan
100 Toegye-Ro
Jung-Gu, Seoul 100-052
Tel (82 2) 2125 0500
Fax (82 2) 2125 0593
BNP Paribas Securities
(Singapore) Pte Ltd
(Co. Reg. No. 199801966C)
10 Collyer Quay
34/F Ocean Financial Centre
Singapore 049315
Tel (65) 6210 1288
Fax (65) 6210 1980
BNP Paribas Securities
(Taiwan) Co Ltd
72/ F, Taipei 101
No. 7 Xin Yi Road, Sec. 5
Taipei, Taiwan
Tel (886 2) 8729 7000
Fax (886 2) 8101 2168
TOKYO
CAPE TOWN
ISTANBUL
NEW YORK
BASEL
TEB Investment
(A JV between TEB Bank and BNP Paribas)
TEB Kampus D7 Saray Mahallesi
Sokullu Sok No 7
Umraniye 34768 Istanbul
Turkey
Tel: (90 216) 636 44 44
Fax: (90 216) 631 44 00
BNP Paribas
The Equitable Tower
787 Seventh Avenue
New York
NY 10019, USA
Tel (1 212) 841 3800
Fax (1 212) 841 3810
BNP Paribas
Aeschengraben 26
CH 4002 Basel
Switzerland
Tel (41 61) 276 5555
Fax (41 61) 276 5514
BNP Paribas Securities (Japan) Ltd
GranTokyo North Tower
1-9-1 Marunouchi, Chiyoda-Ku
Tokyo 100-6740
Japan
Tel (81 3) 6377 2000
Fax (81 3) 5218 5970
BNP Paribas Cadiz Securities (Pty) Ltd
Ground floor, Fernwood House
The Oval, 1 Oakdale Road, Newlands
Cape Town
South Africa 7700
Tel (27 21) 657 8300
Fax (27 21) 657 8301
FRANKFURT
GENEVA
LONDON
MADRID
BNP Paribas
Mainzer Landstrasse 16
60325 Frankfurt
Germany
Tel (49 69) 7193 6637
Fax (49 69) 7193 2520
BNP Paribas
2 Place de Hollande
1211 Geneva 11
Switzerland
Tel (41 22) 787 7377
Fax (41 22) 787 8020
BNP Paribas
10 Harewood Avenue
London NW1 6AA
UK
Tel (44 20) 7595 2000
Fax (44 20) 7595 2555
MILAN
BNP Paribas SA, sucursal en Espana
Hermanos Becquer 3
PO Box 50784
28006 Madrid
Spain
Tel (34 91) 745 9000
Fax (34 91) 745 8888
BNP Paribas Equities Italia SIM SpA
Piazza San Fedele, 2
20121 Milan
Italy
Tel (39 02) 72 47 1
Fax (39 02) 72 47 6562
PARIS
ZURICH
MANAMA
BNP Paribas Equities France
Société de Bourse
20 boulevard des Italiens
75009 Paris
France
Tel (33 1) 4014 9673
Fax (33 1) 4014 0066
BNP Paribas
Talstrasse 41
8022 Zurich
Switzerland
Tel (41 1) 229 6891
Fax (41 1) 267 6813
BNP Paribas Bahrain
PO Box 5253
Manama
Bahrain
Tel (973) 53 3978
Fax (973) 53 1237
https://eqresearch.bnpparibas.com
.

Emlak Konut GYO - Splash

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