Koc Holding (KCHOL TI)-N: Setting its own NAV standard


FIG
Conglomerates
Company report
Equity – Turkey
Koc Holding (KCHOL TI)
N: Setting its own NAV standard
Neutral
Target price (TRY)
Share price (TRY)
Potential return (%)
13.75
12.50
10
Note: Potential return equals the percentage
difference between the current share price and
the target price
Dec
HSBC EPS
HSBC PE
2013 a 2014 e
1.06
11.8
2015 e
1.12
11.2
1.21
10.3
Performance
1M
3M
12M
Absolute (%)
Relative^ (%)
10.1
3.0
13.1
6.1
31.0
15.2
Note: (V) = volatile (please see disclosure appendix)
2 December 2014
Cenk Orcan*
Analyst
HSBC Yatırım Menkul Değerler A.Ş.
+90 212 3764614
[email protected]
View HSBC Global Research at:
http://www.research.hsbc.com
*Employed by a non-US affiliate of
HSBC Securities (USA) Inc, and is not
registered/qualified pursuant to FINRA
regulations
Issuer of report: HSBC Yatirim Menkul
Degerler A.S.
Disclaimer &
Disclosures
This report must be read
with the disclosures and
the analyst certifications in
the Disclosure appendix,
and with the Disclaimer,
which forms part of it
 Koc’s conglomerate discount has narrowed down
consistently over years arguing for removal of the 5%
discount we apply on target NAV in setting our target price
 The stock’s strong proxy for Turkish market and notable
improvement in upstream dividends in 2016-17e are the key
positives justifying trade at par to NAV
 Remain Neutral; raise target price to TRY13.75 (from
TRY10.6); 2015e P/BV of 1.4x vs ROE of 14% also points to
fair valuation
Setting its own NAV standards. Koc Holding’s discount to NAV has been narrowing
down consistently over the past years; from an average discount of 5% in the last 5 years
to a discount of merely 2% over the last 12 months. At present, our calculations suggest it
is trading at a 5.5% premium to its current NAV while at a 9% discount to its target NAV.
The current NAV premium might be pointing to one of the richest valuations in recent
years but we think that the credentials are in place to justify at least at par trade to future
(target) NAV. We believe Koc is one of the best strong single-stock Turkish market
proxies offering a high-return/well-balanced portfolio, ample trading volume outside the
banks’ universe and high corporate governance standards. It now also offers potential
doubling of upstream dividends from group companies by year 2017e with completion of
heavy investments (such as at Tupras, Ford Otosan, Tofas), improving the already healthy
cash position of the holding company. We believe the prospect of embarking on new
business ventures (creating scarcity value) may come into scene post-2015, when we see
dividends from Tupras mostly flow directly into Koc Holding as opposed to being used to
pay down debt.
We remove conglomerate discount, raise TP to TRY13.7 and remain N. These
strengths along with NAV trends urge us to remove the 5% “fair conglomerate discount”
we apply on our calculated target NAV in setting our target price. This and valuation
changes for the individual parts since our last update on Koc result in new NAV based
target price of TRY13.75 from TRY10.6. Based on the 10% potential return we remain
Neutral. We think that Koc’s 2015e P/BV multiple of 1.4x is consistent with its forecast
ROE of 14%, also indicative of a close to fair valuation.
Index^
Index level
RIC
Bloomberg
Source: HSBC
ISTANBUL COMP
86,169
KCHOL.IS
KCHOL TI
Enterprise value (TRYm)
Free float (%)
Market cap (USDm)
Market cap (TRYm)
Source: HSBC
29,510
20
14,298
31,699
abc
Koc Holding (KCHOL TI)
Conglomerates
2 December 2014
Financials & valuation
Financial statements
Year to
Key forecast drivers
12/2013a
12/2014e
12/2015e
12/2016e
Profit & loss summary (TRYm)
Revenue
EBITDA
Depreciation & amortisation
Operating profit/EBIT
Net interest
PBT
HSBC PBT
Taxation
Net profit
HSBC net profit
66,182
2,946
-871
1,711
-726
3,055
3,055
945
2,680
2,680
71,107
3,113
-950
2,163
-534
3,613
3,613
885
2,834
2,834
79,861
4,288
-1,280
3,008
-606
4,434
4,434
443
3,073
3,073
88,751
4,814
-1,334
3,479
-551
5,374
5,374
0
3,386
3,386
-441
-3,959
-3,508
-474
2,927
-4,090
3,497
-4,380
-3,833
-407
898
-1,242
2,313
-4,587
-4,128
-567
1,003
-2,318
2,374
-4,749
-4,274
-615
856
-2,375
Cash flow summary (TRYm)
Cash flow from operations
Capex
Cash flow from investment
Dividends
Change in net debt
FCF equity
Turkish GDP Growth (%)
USD/TRY (Average)
USD/TRY (Year-end)
Inflation (year-end CPI)
4,274
18,394
25,857
8,897
58,790
15,194
17,081
8,184
18,035
24,433
4,274
22,141
27,440
10,092
65,126
16,291
19,174
9,082
20,302
27,473
4,274
26,146
29,423
10,047
71,114
18,098
20,132
10,085
22,760
31,698
4,274
30,300
31,658
10,198
77,502
20,030
21,139
10,941
25,469
36,004
Year to
EV/sales
EV/EBITDA
EV/IC
PE*
P/Book value
FCF yield (%)
Dividend yield (%)
12/2013a
12/2014e
12/2015e
12/2016e
0.8
-33.2
-55.1
-19.1
15.3
7.4
5.7
26.5
18.3
5.7
12.3
37.7
39.0
22.7
8.4
11.1
12.3
15.7
21.2
10.2
2.9
12.0
15.6
16.6
4.5
2.6
4.1
31.2
2.8
2.7
10.4
14.8
9.5
4.4
3.0
5.8
31.0
2.9
38.5
2.7
11.2
14.3
9.1
5.4
3.8
7.1
30.9
2.4
22.9
2.6
10.3
14.0
8.8
5.4
3.9
8.7
30.3
2.3
21.7
1.06
1.06
0.19
7.11
1.12
1.12
0.16
8.01
1.21
1.21
0.22
8.98
1.34
1.34
0.24
10.04
Y-o-y % change
Ratios (%)
Revenue/IC (x)
ROIC
ROE
ROA
EBITDA margin
Operating profit margin
EBITDA/net interest (x)
Net debt/equity
Net debt/EBITDA (x)
CF from operations/net debt
Per share data (TRY)
EPS reported (fully diluted)
HSBC EPS (fully diluted)
DPS
Book value
2
12/2015e
12/2016e
4.0%
1.902
2.130
7.4%
3.2%
2.190
2.250
9.3%
2.7%
2.293
2.337
7.7%
4.0%
2.375
2.413
6.3%
12/2013a
12/2014e
12/2015e
12/2016e
0.4
10.1
1.2
11.8
1.8
-19.1
1.5
0.4
9.5
1.1
11.2
1.6
-6.1
1.3
0.4
7.1
1.0
10.3
1.4
-11.3
1.8
0.4
6.5
0.9
9.4
1.2
-11.6
1.9
Note: * = Based on HSBC EPS (fully diluted)
14
13
12
11
10
9
8
7
6
5
4
2012
Source: HSBC
Ratio, growth and per share analysis
Revenue
EBITDA
Operating profit
PBT
HSBC EPS
12/2014e
Valuation data
2013
Koc Holding
Year to
12/2013a
Price relative
Balance sheet summary (TRYm)
Intangible fixed assets
Tangible fixed assets
Current assets
Cash & others
Total assets
Operating liabilities
Gross debt
Net debt
Shareholders funds
Invested capital
Year to
Note: price at close of 28 Nov 2014
2014
Rel to ISTANBUL COMP
14
13
12
11
10
9
8
7
6
5
4
2015
abc
Koc Holding (KCHOL TI)
Conglomerates
2 December 2014
Sets its own NAV standard
 We calculate Koc shares trades at a 5.5% premium to its current
NAV and a 9% discount to its target NAV
 Current NAV premium represents in our view the stock’s best
market proxy status in a re-rating environment and future strong
cash flow generation for holding company from upstream dividends
 We eliminate the 5% conglomerate discount on target NAV, raise
TP to TRY13.75 and remain Neutral
Current NAV looks stretched but credentials justify it
Koc Holding’s NAV discount averaged 11% in the last 8 years, 5% in the last 5 years and 2% in the past
one year, steadily narrowing over years. We calculate that it is now trading at 5% premium to its current
NAV and a 9% discount to target NAV where we use our target prices for the covered parts. The current
NAV premium may look stretched arguing for a correction but we see no reason for Koc to consistently
underperform its sum-of-the-parts despite the fact that c90% of the portfolio is listed. Apart from Koc’s
traditional offering of being a strong Turkish market proxy, time has come closer in our view when the
holding company will start reaping the benefits of major investments at various group companies in the
form of notably higher upstream dividends in 2016-17e.
KOC NAV discount
5%
11-2014
07-2014
03-2014
11-2013
07-2013
03-2013
11-2012
07-2012
03-2012
11-2011
07-2011
03-2011
11-2010
07-2010
03-2010
11-2009
07-2009
03-2009
11-2008
07-2008
-10%
03-2008
-5%
11-2007
0%
-15%
-20%
-25%
-30%
-35%
-40%
Source: Thomson Reuters Datastream, HSBC estimates
3
abc
Koc Holding (KCHOL TI)
Conglomerates
2 December 2014
With the pending completion of investments at particularly Tupras and Ford Otosan, we see the upstream
dividend flow into the holding company rising notably starting 2016 and nearly doubling by 2017 vs
today. This has two implications in our view; 1) a rise in also the dividends paid out by Koc and 2)
stronger internal cash generation at holding company level, increasing the appetite for opportunistic buy
outs or new business ventures on which fronts Koc has not been very active in recent years. We believe
that the second option is more viable as we believe Koc would rather seek to enhance inorganic growth
before spending most of its cash generations in the form of higher dividend pay-out.
Coupled with the stock’s ample daily trading liquidity (USD20-25m), high corporate governance
standards, we believe that its well balanced and high return portfolio (making it a good market proxy) and
the cash generation outlook have been major reasons for a narrowing valuation discount.
KOC NAV discount
5%
1%
0%
-2%
-3%
-3%
-4%
-5%
-7%
-11%
Last 8yr
Last 7yr
Last 6yr
Last 5yr
Last 4yr
Last 3yr
Last 2yr
Last 1yr
Last 6m
Last 3m
-9%
Current
6%
4%
2%
0%
-2%
-4%
-6%
-8%
-10%
-12%
Source: HSBC estimates
KOC discount to listed parts
25%
20%
19%
16%
15%
14%
11%
10%
7%
5%
5%
3%
1%
0%
Source: HSBC estimates
4
-4%
-8%
Last 8yr
Last 6yr
Last 5yr
Last 4yr
Last 3yr
Last 2yr
Last 1yr
Last 6m
Last 3m
Current
-10%
Last 7yr
-1%
-5%
abc
Koc Holding (KCHOL TI)
Conglomerates
2 December 2014
Koc Holding - Dividends (TRYm)
1,600
1,400
1,200
1,000
800
600
400
200
0
2009
2010
2011
2012
2013
2014
2015e
Dividends received (tax)
2016e
2017e
Dividends paid
Source: Company data, HSBC estimates
Forecast changes
We have reviewed our forecasts in the light of 9M results of the group, the revisions since our last update
on covered listed parts and changes in the macro parameters since then. Other than slight changes in our
adjusted EBITDA forecasts (a 4% cut for 2014e, but 3% rise for 2015e) the major change worth noting
has been the upward revision to our consolidated net profit forecasts given tax incentives at investing
group companies and benefits in the form of deferred tax income. As a result, we have raised our 2014e
net profit by 20% and that for 2015e by 9%, now expecting 6% and 8% y-o-y growth, respectively.
Forecast changes
(Consolidated IFRS11)
TRYm
Revenue
EBITDA
EBITDA (adjusted)*
margin (adj)
Net profit
_____________ 2014e ___________ _____________ 2015e ____________ _____________ 2016e ____________
old*
new* old/new yoy chg.
old*
new* old/new yoy chg.
old*
new* old/new yoy chg.
72,595
5,208
3,246
4.5%
2,357
71,107
4,622
3,113
4.4%
2,834
-2%
-11%
-4%
-0.1%
20%
7%
1%
6%
-0.1%
6%
78,083
6,898
4,165
5.3%
2,819
79,861
6,270
4,288
5.4%
3,073
2%
-9%
3%
0.0%
9%
12%
36%
38%
1.0%
8%
81,208
7,665
4,437
5.5%
2,992
88,751
7,210
4,814
5.4%
3,386
9%
-6%
8%
0.0%
13%
11%
15%
12%
0.1%
10%
Source: Company data, HSBC estimates * Adjusted with net other operating income/expense and JV profits
Consolidated summary financials
TRYbn
2012
2013
chg.
2014e
chg.
2015e
chg.
2016e
chg.
Revenue
EBITDA (adj)
EBIT (bef JV profits)
Profit/loss from JVs
EBIT (after JV profits)
Net financial & other income
PBT
Tax
Net profit (bef minority)
Net profit (after minority)
65.67
2.93
2.33
1.49
3.81
-0.03
3.78
-0.03
3.74
2.32
66.18
2.95
1.71
2.02
3.73
-0.67
3.06
0.95
4.00
2.68
1%
1%
-26%
36%
-2%
1949%
-19%
-2885%
7%
15%
71.11
3.11
2.16
1.51
3.67
-0.06
3.61
0.89
4.50
2.83
7%
6%
26%
-25%
-1%
-91%
18%
-6%
12%
6%
79.86
4.29
3.01
1.98
4.99
-0.56
4.43
0.44
4.88
3.07
12%
38%
39%
31%
36%
840%
23%
-50%
8%
8%
88.75
4.81
3.48
2.40
5.88
-0.50
5.37
0.00
5.37
3.39
11%
12%
16%
21%
18%
-10%
21%
-100%
10%
10%
Source: Company data, HSBC estimates
5
abc
Koc Holding (KCHOL TI)
Conglomerates
2 December 2014
Combined operational performance
TRYbn
Combined revenues
Automotive
Consumer durable
Finance
Energy
Other
Combined Adj. EBITDA
Automotive
Consumer durable
Finance
Energy
Other
Combined EBIT
Automotive
Consumer durable
Finance
Energy
Other
2012
2013
chg.
2014e
chg.
2015e
chg.
2016e
chg.
116.59
22.17
11.19
12.99
63.23
7.01
9.43
2.14
1.06
4.19
1.81
0.23
7.03
1.65
0.74
2.83
1.67
0.14
123.48
25.11
11.81
13.83
65.46
7.27
10.03
2.25
1.21
4.70
1.69
0.19
6.76
1.71
1.16
3.31
0.45
0.13
6%
13%
5%
7%
4%
4%
6%
5%
14%
12%
-7%
-19%
-4%
3%
56%
17%
-73%
-5%
135.23
25.97
13.28
16.56
71.36
8.06
11.11
2.53
1.42
5.30
1.61
0.25
6.78
1.59
1.08
2.95
1.02
0.14
10%
3%
12%
20%
9%
11%
11%
12%
18%
13%
-4%
35%
0%
-7%
-7%
-11%
126%
5%
151.65
29.79
14.28
18.34
80.69
8.55
13.52
3.11
1.54
5.86
2.74
0.28
8.54
2.08
1.20
3.30
1.81
0.15
12%
15%
8%
11%
13%
6%
22%
23%
8%
11%
69%
10%
26%
31%
11%
12%
77%
12%
169.59
34.28
15.33
21.04
89.87
9.06
15.46
3.58
1.63
6.84
3.11
0.29
9.93
2.41
1.31
3.89
2.15
0.16
12%
15%
7%
15%
11%
6%
14%
15%
6%
17%
14%
7%
16%
16%
10%
18%
19%
6%
Source: Company data, HSBC estimates
Valuation and risks
We value Koc Holding based on our NAV model. We eliminate the 5% discount to our target NAV
forecast (i.e. “fair conglomerate discount”), taking into account the NAV trend (narrowing of the
discount) over years. We have revisited our NAV model to reflect changes in our valuation of the
underlying assets, as shown in the table below, incorporating the market recovery since our previous
update. Applying no conglomerate discount to our forecast NAV gives us a new target price of
TRY13.75, up from TRY10.6.
Under our research model, for non-volatile Turkish stocks, the Neutral band is 5ppt above and below the
hurdle rate of 12.5%. Our target price implies a potential return of 10%, which is within the Neutral band;
therefore, we maintain our Neutral rating. Potential return equals the percentage difference between the
current share price and the target price, including the forecast dividend yield when indicated.
We believe that Koc’s 2015e P/BV multiple of 1.4x is consistent with its forecast ROE of 14%, also
indicative of a close to fair valuation.
Risks
Key upside risks: value-accretive acquisitions at the parent level; better-than-expected economic growth
and domestic consumption; stronger-than-expected refinery and banking margins
Key downside risks: any acquisition and/or new business initiative deemed value-dilutive; sustained
weakness in refinery and banking margins; any unexpected unfavourable regulatory change that would
lower the profitability in operating segments; and any decision by family members to sell shares, creating
an overhang risk
6
abc
Koc Holding (KCHOL TI)
Conglomerates
2 December 2014
Koc Holding - ROE vs P/BV
2.0
16%
16%
1.8
1.8
16%
1.6
1.6
1.4
1.4
15%
1.2
15%
1.0
15%
0.8
14%
0.6
0.4
14%
0.2
0.0
14%
2013
2014e
2015e
Kchol-ROE Koc Holding - overall
Kchol-P/BV
Source: Company data, HSBC estimates
ROE - Koc Holding and major business lines
35%
31%
2012
29% 28% 29%
30%
2013
2014e
2015e
26%
25%
19%
20%
15%
14%
20% 20%
15% 14% 15%
13%
15% 16% 15%
12%
11%
14%
12%
10%
5%
0%
Cons Durable (Arcelik)
Automotive
Energy
Finance (YKB)
Koc Holding - overall
Source: Company data, HSBC estimates
7
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Koc Holding (KCHOL TI)
Conglomerates
2 December 2014
Koc Holding - NAV
Segment
Finance
YKB (via KFS)
Koc Finans
Automotive
Ford Otosan
Tofas
Turk Traktor
Otokar
Otokoc
Consumer Durables
Arcelik
Arcelik-LG Klima
Energy
Tupras (via SPV Enerji
Yat.)
Aygaz
AES-Entek
Food & Retail
Tat Konserve
Koctas
Other
Cesme Altinyunus
Marmaris Altinyunus
Setur
Zer
Other
TOTAL SOP
Source: Company data, HSBC estimates
8
Stake
Valuation
Method
Current
Value
(USDm)
Stake
Value
(USDm)
Current
NAV %
10,534
10,417
116
11,023
4,726
3,559
1,678
672
388
4,501
4,322
178
7,245
5,651
3,252
3,200
52
4,459
1,818
1,338
629
300
374
1,760
1,751
9
2,890
2,219
24.0%
23.6%
0.4%
32.9%
13.4%
9.9%
4.6%
2.2%
2.8%
13.0%
12.9%
0.1%
21.3%
16.4%
1,342
252
546
125
4.0%
0.9%
479
213
266
873
43
35
196
211
192
93
99
404
13
13
47
82
1.4%
0.7%
0.7%
3.0%
0.1%
0.1%
0.3%
0.6%
388
34,654
249
12,956
1.8%
95.7%
Total Listed
Total unlisted
Net Cash (Koc Holding)
Net Cash (SPV/Enerji Yat.)
Current NAV
Current MCAP
Prem./(Disc.)
11,920
1,037
770
-188
13,539
14,279
5.5%
88.0%
7.7%
5.7%
-1.4%
100.0%
30.7% Market value
44.5%
P/BV
38.5%
37.6%
37.5%
44.7%
96.3%
Market value
Market value
Market value
Market value
Peer comp.
40.5% Market value
5.0% Peer comp.
39.3% Market value
40.7% Market value
49.6% Transaction
value
43.7% Market value
37.1% Peer comp.
30.0% Market value
36.8% Market value
24.1% Peer comp.
39.0% BV & stake
value
Book/appraisal value
Valuation
Target
Stake
Method Value (USDm Value (USDm
Target
NAV %
11,904
11,787
116
12,723
5,577
4,072
2,014
672
388
5,111
4,933
178
9,102
7,051
3,672
3,621
52
5,105
2,145
1,531
755
300
374
2,007
1,998
9
3,626
2,769
23.4%
23.1%
0.3%
32.5%
13.7%
9.7%
4.8%
1.9%
2.4%
12.8%
12.7%
0.1%
23.1%
17.6%
1,799
252
732
125
4.7%
0.8%
490
223
266
873
43
35
196
211
196
98
99
404
13
13
47
82
1.3%
0.6%
0.6%
3.0%
0.1%
0.1%
0.3%
0.5%
388
40,203
249
15,011
1.6%
95.6%
Total Listed
Total unlisted
Net Cash (Koc Holding)
Net Cash (SPV/Enerji Yat.)
Target NAV
Current MCAP
Prem./(Disc.)
13,974
1,037
770
-75
15,706
14,279
-9.1%
89.0%
6.6%
4.9%
-0.5%
100.0%
Setting our target price
Targ. NAV @ 0% discount
TP in USD per share
TP in TRY per share
Current price
Upside %
15,706
6.19
13.75
12.50
10.0%
DCF
P/BV
DCF
DCF
DCF
Market value
Peer comp.
DCF
Peer comp.
DCF & Peer
comp.
SOTP, DCF
Transaction
value
DCF
Peer comp.
Market value
Market value
Peer comp.
BV & stake
value
Book/appraisal value
abc
Koc Holding (KCHOL TI)
Conglomerates
2 December 2014
NAV changes (TRYm)
Business
Finance
Automotive
Consumer Durables
Energy
Other
Total Participation value
Holding cash (net)
Target NAV
Current Market cap
Premium (discount) to NAV
Holding discount
NAV per share (USD)
12m NAV per share (TRY)
Current price (TRY)
Potential return
Koc Holding stake value - Old
Koc Holding stake value - New
2,717
4,166
1,863
2,888
405
12,039
794
12,833
11,215
-13%
5%
4.81
10.60
3,672
5,105
2,007
3,626
600
15,011
695
15,706
14,279
-9%
0%
6.19
13.75
12.50
10.0%
Source: HSBC estimates
9
Koc Holding (KCHOL TI)
Conglomerates
2 December 2014
abc
Disclosure appendix
Analyst Certification
The following analyst(s), economist(s), and/or strategist(s) who is(are) primarily responsible for this report, certifies(y) that the
opinion(s) on the subject security(ies) or issuer(s) and/or any other views or forecasts expressed herein accurately reflect their
personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific
recommendation(s) or views contained in this research report: Cenk Orcan
Important disclosures
Equities: Stock ratings and basis for financial analysis
HSBC believes that investors utilise various disciplines and investment horizons when making investment decisions, which
depend largely on individual circumstances such as the investor's existing holdings, risk tolerance and other considerations.
Given these differences, HSBC has two principal aims in its equity research: 1) to identify long-term investment opportunities
based on particular themes or ideas that may affect the future earnings or cash flows of companies on a 12 month time horizon;
and 2) from time to time to identify short-term investment opportunities that are derived from fundamental, quantitative,
technical or event-driven techniques on a 0-3 month time horizon and which may differ from our long-term investment rating.
HSBC has assigned ratings for its long-term investment opportunities as described below.
This report addresses only the long-term investment opportunities of the companies referred to in the report. As and when
HSBC publishes a short-term trading idea the stocks to which these relate are identified on the website at
www.hsbcnet.com/research. Details of these short-term investment opportunities can be found under the Reports section of this
website.
HSBC believes an investor's decision to buy or sell a stock should depend on individual circumstances such as the investor's
existing holdings and other considerations. Different securities firms use a variety of ratings terms as well as different rating
systems to describe their recommendations. Investors should carefully read the definitions of the ratings used in each research
report. In addition, because research reports contain more complete information concerning the analysts' views, investors
should carefully read the entire research report and should not infer its contents from the rating. In any case, ratings should not
be used or relied on in isolation as investment advice.
Rating definitions for long-term investment opportunities
Stock ratings
HSBC assigns ratings to its stocks in this sector on the following basis:
For each stock we set a required rate of return calculated from the cost of equity for that stock’s domestic or, as appropriate,
regional market established by our strategy team. The price target for a stock represents the value the analyst expects the stock
to reach over our performance horizon. The performance horizon is 12 months. For a stock to be classified as Overweight, the
potential return, which equals the percentage difference between the current share price and the target price, including the
forecast dividend yield when indicated, must exceed the required return by at least 5 percentage points over the next 12 months
(or 10 percentage points for a stock classified as Volatile*). For a stock to be classified as Underweight, the stock must be
expected to underperform its required return by at least 5 percentage points over the next 12 months (or 10 percentage points
for a stock classified as Volatile*). Stocks between these bands are classified as Neutral.
Our ratings are re-calibrated against these bands at the time of any 'material change' (initiation of coverage, change of volatility
status or change in price target). Notwithstanding this, and although ratings are subject to ongoing management review,
expected returns will be permitted to move outside the bands as a result of normal share price fluctuations without necessarily
triggering a rating change.
10
abc
Koc Holding (KCHOL TI)
Conglomerates
2 December 2014
*A stock will be classified as volatile if its historical volatility has exceeded 40%, if the stock has been listed for less than 12
months (unless it is in an industry or sector where volatility is low) or if the analyst expects significant volatility. However,
stocks which we do not consider volatile may in fact also behave in such a way. Historical volatility is defined as the past
month's average of the daily 365-day moving average volatilities. In order to avoid misleadingly frequent changes in rating,
however, volatility has to move 2.5 percentage points past the 40% benchmark in either direction for a stock's status to change.
Rating distribution for long-term investment opportunities
As of 01 December 2014, the distribution of all ratings published is as follows:
Overweight (Buy)
46%
(30% of these provided with Investment Banking Services)
Neutral (Hold)
37%
(27% of these provided with Investment Banking Services)
Underweight (Sell)
17%
(22% of these provided with Investment Banking Services)
Share price and rating changes for long-term investment opportunities
Koc Holding (KCHOL.IS) Share Price performance TRY Vs HSBC rating
Recommendation & price target history
history
From
Overweight (V)
Target Price
13
Price 1
Price 2
Price 3
Price 4
Price 5
Price 6
11
9
7
To
Date
Neutral
Value
07 April 2010
Date
7.76
6.95
9.15
12.70
9.30
10.60
07 February 2011
16 May 2012
23 November 2012
15 May 2013
14 March 2014
02 May 2014
Source: HSBC
5
3
Dec-14
Dec-13
Dec-12
Dec-11
Dec-10
Dec-09
1
Source: HSBC
11
abc
Koc Holding (KCHOL TI)
Conglomerates
2 December 2014
HSBC & Analyst disclosures
Disclosure checklist
Company
KOC HOLDING
Ticker
Recent price
Price Date
Disclosure
KCHOL.IS
12.50
28-Nov-2014
6, 7
Source: HSBC
1
2
3
4
5
6
7
8
9
10
11
HSBC has managed or co-managed a public offering of securities for this company within the past 12 months.
HSBC expects to receive or intends to seek compensation for investment banking services from this company in the next
3 months.
At the time of publication of this report, HSBC Securities (USA) Inc. is a Market Maker in securities issued by this
company.
As of 31 October 2014 HSBC beneficially owned 1% or more of a class of common equity securities of this company.
As of 31 October 2014, this company was a client of HSBC or had during the preceding 12 month period been a client of
and/or paid compensation to HSBC in respect of investment banking services.
As of 31 October 2014, this company was a client of HSBC or had during the preceding 12 month period been a client of
and/or paid compensation to HSBC in respect of non-investment banking securities-related services.
As of 31 October 2014, this company was a client of HSBC or had during the preceding 12 month period been a client of
and/or paid compensation to HSBC in respect of non-securities services.
A covering analyst/s has received compensation from this company in the past 12 months.
A covering analyst/s or a member of his/her household has a financial interest in the securities of this company, as
detailed below.
A covering analyst/s or a member of his/her household is an officer, director or supervisory board member of this
company, as detailed below.
At the time of publication of this report, HSBC is a non-US Market Maker in securities issued by this company and/or in
securities in respect of this company
HSBC and its affiliates will from time to time sell to and buy from customers the securities/instruments (including derivatives)
of companies covered in HSBC Research on a principal or agency basis.
Analysts, economists, and strategists are paid in part by reference to the profitability of HSBC which includes investment
banking revenues.
Whether, or in what time frame, an update of this analysis will be published is not determined in advance.
For disclosures in respect of any company mentioned in this report, please see the most recently published report on that
company available at www.hsbcnet.com/research.
Additional disclosures
1
2
3
12
This report is dated as at 02 December 2014.
All market data included in this report are dated as at close 28 November 2014, unless otherwise indicated in the report.
HSBC has procedures in place to identify and manage any potential conflicts of interest that arise in connection with its
Research business. HSBC's analysts and its other staff who are involved in the preparation and dissemination of Research
operate and have a management reporting line independent of HSBC's Investment Banking business. Information Barrier
procedures are in place between the Investment Banking and Research businesses to ensure that any confidential and/or
price sensitive information is handled in an appropriate manner.
Koc Holding (KCHOL TI)
Conglomerates
2 December 2014
abc
Disclaimer
* Legal entities as at 30 May 2014
Issuer of report
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