Koc`s underlying businesses are poised for better profitability in a low
inflation rate environment
Koc Holding is the best exposure to Turkey`s buoyant consumer goods
and automotive industries. Koc Holding`s underlying businesses are
industrial companies that will benefit from Turkey`s declining inflation
rates.
Koc Holding`s main subsidiaries have bright growth prospects both in
2000 and in 2001: Ford Otosan, Tofas and Arcelik will all report strong
sales and earnings growth in IAS29 format. This will translate into a 17%
revenue growth and a stellar 7-fold earnings growth for Koc Holding in
2000.
Koc Holding`s financial services businesses have substantial room
for growth: Kocbank, Koc-Allianz Insurance and Kocfinans Consumer Finance
Company will capitalise on strong brand names in Turkey`s low interest
rate environment. Hiring of Burhan Karacam, ex-CEO of Yapi Kredi Bank,
should help Kocbank develop a strong retail banking franchise.
Koc Holding will likely become a major player in Turkey`s energy
sector. Aygaz may acquire BOTAS` natural gas distribution business while
Zinerji has projects to provide 10% of Turkey`s electricity.
Koc Holding trades at an 8% discount to current NAV. In our view,underlying businesses will be re-rated in a low interest rate environment,
resulting in a strong share price performance for Koc Holding.