Park Elektrik-120215 (1)

8172019 Park Elektrik-120215 (1)

httpslidepdfcomreaderfullpark-elektrik-120215-1 19

PREPARED AND PUBLISHED BY NON-US BROKER-DEALER(S) TEB INVESTMENT IT IS BEING DISTRIBUTED IN TURKEY BY TEB INVESTMENT AND OUTSIDE TURKEY JOINTLY BY TEBINVESTMENT AND BNP PARIBAS THIS MATERIAL HAS BEEN APPROVED FOR US DISTRIBUTION ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES CAN BE FOUND AT

APPENDIX ON PAGE 6

At good price to play on copper

Sharp decline in share price after the collapse of merger

Should the merger have taken place PRKMErsquos minority

shareholders would have been able to swap their shares with the

shares of a highly valuable company at the attractive price implied by

the swap ratio or sell their shares at TRY420 each

Sharp decline in copper prices should undermine the recovery

The companyrsquos operating performance has been very weak due to

the low grades at the Madenkoy copper mine in 2014 Despite an

expected recovery in grade levels the sharp decline in copper prices

(19) in January should undermine the recovery in profitability on

higher grade levels

We cut our forecasts on weak copper prices

We cut our 2015 and 2016 copper price estimates by 14 to

USD6000ton (compared with the current USD5700ton) As a

result we reduce the companyrsquos 2015E and 2016E revenues and net

income by 13 and 41 We expect recovery in grade level to

improve gradually from 125 in 2014 to 15 in 2015 and 175 in

2016

Cutting TP by 31 Maintain BUY

We derive our target price from a blended valuation with 5050

weights given to our DCF and to peers We do not include non-core

assets or real estate

Share price and copper prices

Source Bloomberg

0

50

100

150

200250

S e p - 1 0

D e c - 1 0

M a r - 1 1

J u n - 1 1

S e p - 1 1

D e c - 1 1

M a r - 1 2

J u n - 1 2

S e p - 1 2

D e c - 1 2

M a r - 1 3

J u n - 1 3

S e p - 1 3

D e c - 1 3

M a r - 1 4

J u n - 1 4

S e p - 1 4

D e c - 1 4

() PRKME TI vs copper prices Average

12 FEBRUARY 2015

TURKEY METALS amp MINING

PARK ELEKTRIK MADENCILIK PRKME TI

BUYUNCHANGED

TARGET PRICE TRY380

CLOSE TRY323

UPDOWNSIDE +176

PRIOR TP TRY550

CHANGE IN TP -308

HOW WE DIFFER FROM CONSENSUS MARKET RECS

TARGET PRICE () (218) POSITIVE 4

EPS 2014 () NM NEUTRAL 1

EPS 2015 () (884) NEGATIVE 1

Kenan CosgunerKenancosgunertebcomtr

+90 216 6364531

Our research is available on Thomson One Bloomberg TheMarketscom Factset and on httpeqresearchbnpparibascomindex Please contact your salesperson forauthorisation Please see the important notice on the back page

KEY STOCK DATA

YE Dec (TRY m) 2013A 2014E 2015E 2016E

Revenue 261 226 235 282

Rec net profit 63 (10) 10 37

Recurring EPS (TRY) 042 (007) 007 025

Prior rec EPS (TRY) 042 002 0117 041

Chg In EPS est () 00 nm (406) (409)

EPS growth () (412) nm nm 2533

Recurring PE (x) 77 neg 470 133

Dividend yield () 134 36 00 05

EVEBITDA (x) 46 44 42 32

Pricebook (x) 09 10 10 09

Net debtEquity () 01 (30) (67) (127)

ROE () 130 (20) 21 70

Mkt cap (USD m) 194 194 194 194

Share price performance 1 Month 3 Month 12 Month

Absolute () (199) (185) (336)

Relative to country () (151) (250) (635)

Next results March 2015

Mkt cap (USD m) 194

3m avg daily turnover (USD m) 10

Free float () 314

Major shareholder Park Holding (61)

12m highlow (TRY) 503286

3m historic vol () 334

ADR ticker -

ADR closing price (USD) -

Issued shares (m) 149

Sources Bloomberg consensus TEB InvestmentBNP Paribasestimates

(54)

(44)

(34)

(24)

(14)

(4)

293

343

393

443493

543

Feb-14 May-14 Aug-14 Nov-14 Feb-15

()(TRY) Park Elektrik Madencilik Rel to ISE National 100

8172019 Park Elektrik-120215 (1)


Park Elektrik Madencilik PRKME TI Kenan Cosguner

2 BNP PARIBAS 12 FEBRUARY 2015

Investment thesis

In our view even at currently low copper prices with thehelp of higher grades the companyrsquos profitability shouldrecover remarkably over the next two years (2015 and2016) We believe that a weak TRY against the USD willsupport profitability Once grade levels recover above the15 level (currently 125) we believe Madenkoy offers

decent profitability and relatively cost-efficient open pitmining

The company has a strong cash position and valuablenon-core and real-estate assets The company has asignificant cash position (TRY217m) a 10 stake in ParkTermik which we value at USD60m even on conservativeestimates and real estate worth USD38m according toour estimates Hence its current cash position and non-core assets are almost on par with the companyrsquos currentmarket value

Catalyst

Recovery in copper prices andor grade level shouldaccelerate the recovery in earnings

Disposal of non-core assets or licences received forelectricity-generation assets

Improvement in dividend policy

Depreciation of TRY against USD

Risks to our call

Major downside risk to our estimates is from a potentialdecline in copper prices as the stock is highly levered tocopper prices A 10 decreaseincrease in copper pricesrelative to our base case would yield a 25decreaseincrease in the valuation of the company

There is a major risk of value destruction and change ininvestment theme with expansion into electricitygeneration

Company background Key assumptions

Park Elektrik engages in copper mining operations in Turkey 2014E 2015E 2016E

Copper production (lsquo000 tonnes) 82 92 107

Copper price (USDtonne) 7000 6000 6000

Copper cash costs (USDtonne) 3508 3064 2934

Copper all-in costs (USDtonne) 6850 5622 4978

Source TEB InvestmentBNP Paribas estimates

Principal activities (revenue) Earnings sensitivity

Change in copper prices () (10) 00 10

Change in revenues () (12) 00 12

Change in EBITDA () (13) 00 13

Change in net income () (41) 00 41

Key executives Source TEB InvestmentBNP Paribas estimates

Age Joined Title

Nalan Erkarakas 51 2001 Chairwoman

Ramazan Yon 40 2005 CEO

Tacigul Erdem 58 1997 CFO

httpwwwparkelektrikcomtrenindexphp

Current mine life is 22 years as of end-2014

We do not expect a major change in costs as we expect

grade levels to remain stable across our forecast horizon

We assume copper prices recover to USD6500tonne in

2017 and USD6750tonne in 2018

Copper mining100

8172019 Park Elektrik-120215 (1)




EXHIBIT 1 Valuation summary

Method Valuation Weight

() ()

Discounted cash flow 5253 500 2627

Peer group multiples 4610 500 2305

Estimated fair value 4931

Issued shares 1489

Current price (TRYshare) 323

12-month target price (TRYshare) 380

Upside () 176


EXHIBIT 2 Changes in forecasts

---------------------- 2014E ---------------------- ----------------------- 2015E ----------------------- ----------------------- 2016E -----------------------

Old New Change Old New Change Old New Change

(TRY m) (TRY m) () (TRY m) (TRY m) () (TRY m) (TRY m) ()

Revenues 250 226 (9) 271 235 (13) 325 282 (13)

CoGs 215 205 (5) 229 204 (11) 225 213 (5)

Gross profit 35 21 (39) 42 31 (27) 100 69 (31)

Operating expenses 42 41 (2) 43 40 (5) 46 47 1

Operating profit (7) (20) 180 (0) (10) nm 54 22 (59)

EBITDA 119 106 (11) 116 107 (8) 165 134 (19)

Other income net (5) (5) 0 5 5 0 5 5 0

Net financial income 1 1 0 17 17 0 19 19 0

Profit before taxes (11) (23) 118 22 13 (42) 77 46 (41)

Tax expense 13 13 0 (4) (3) (42) (15) (9) (41)

Net income 2 (10) nm 17 10 (41) 62 37 (41)


8172019 Park Elektrik-120215 (1)




Financial statementsPark Elektrik Madencilik

Profit and Loss (TRY m) Year Ending Dec 2012A 2013A 2014E 2015E 2016E

Revenue 265 261 226 235 282

Cost of sales ex depreciation (73) (139) (76) (84) (98)

Gross profit ex depreciation 192 122 150 150 184

Other operating income 0 0 0 0 0

Operating costs (33) (38) (41) (40) (47)

Operating EBITDA 159 84 109 110 137

Depreciation (57) (49) (129) (120) (115)

Goodwill amortisation 0 0 0 0 0

Operating EBIT 102 34 (20) (10) 22

Net financing costs 23 (1) 1 17 19

Associates 0 0 0 0 0

Recurring non operating income 8 27 (5) 5 5

Non recurring items 0 0 0 0 0

Profit before tax 133 61 (23) 13 46

Tax (26) 2 13 (2) (9)

Profit after tax 107 63 (10) 10 37

Minority interests 0 0 0 0 0

Preferred dividends 0 0 0 0 0

Other items 0 0 0 0 0

Reported net profit 107 63 (10) 10 37

Non recurring items amp goodwill (net) 0 0 0 0 0

Recurring net profit 107 63 (10) 10 37

Per share (TRY)

Recurring EPS 072 042 (007) 007 025

Reported EPS 072 042 (007) 007 025

DPS 067 044 012 000 002

Growth

Revenue () 535 (15) (133) 37 201

Operating EBITDA () 584 (474) 308 05 244

Operating EBIT () 264 (664) (1573) (513) (3300)

Recurring EPS () 64 (412) nm nm 2533

Reported EPS () 64 (412) (1164) (2002) 2533

Operating performance

Gross margin inc depreciation () 507 278 95 131 245

Operating EBITDA margin () 601 321 484 469 485

Operating EBIT margin () 384 131 (87) (41) 78

Net margin () 405 242 (46) 44 130

Effective tax rate () 194 (39) - 180 200

Dividend payout on recurring profit () 932 1030 - 00 71

Interest cover (x) - 673 - - -

Inventory days 2033 889 1051 879 848

Debtor days 186 342 482 433 404

Creditor days 1101 708 1386 1159 1119Operating ROIC () 379 105 (46) (24) 55

ROIC () 330 152 (47) (09) 55

ROE () 240 130 (20) 21 70

ROA () 170 118 (20) (12) 31

Pre exceptional pre-goodwill and fully diluted

Sources Park Elektrik Madencilik TEB InvestmentBNP Paribas estimates

8172019 Park Elektrik-120215 (1)





Cash Flow (TRY m) Year Ending Dec 2012A 2013A 2014E 2015E 2016E


Depreciation 57 49 129 120 115

Associates amp minorities 0 0 0 0 0

Other non-cash items 0 0 0 0 0

Recurring cash flow 165 113 119 130 151

Change in working capital 153 (213) 24 (1) (4)

Capital Expenditure (68) (109) (110) (110) (110)

Free cash flow to equity 249 (210) 33 19 37

Net acquisitions amp disposals 0 0 0 0 0

Dividends paid (100) (65) (17) 0 (3)

Non recurring cash flows (208) (6) 0 0 0

Net cash flow (59) (281) 15 19 34

Equity finance 0 0 0 0 0

Debt finance (3) 3 0 0 0

Movement in cash (61) (278) 15 19 34

Other Adjustments 214 76 0 0 0

Change in Cash amp Cash Equivalents 153 (202) 15 19 34

Per share (TRY)

Recurring cash flow per share 111 076 080 087 102

FCF to equity per share 167 (141) 022 013 025

Balance Sheet (TRY m) Year Ending Dec 2012A 2013A 2014E 2015E 2016E

Working capital assets 92 313 284 286 296

Working capital liabilities (32) (40) (35) (36) (41)

Net working capital 60 273 249 250 254

Tangible fixed assets 143 179 160 150 145

Operating invested capital 203 452 409 400 400

Goodwill 0 0 0 0 0

Other intangible assets 0 0 0 0 0

Investments 10 10 10 10 10

Other assets 54 80 80 80 80

Invested capital 267 542 499 491 490

Cash amp equivalents (204) (2) (17) (37) (71)

Short term debt 0 3 3 3 3

Long term debt 0 0 0 0 0

Net debt (204) 1 (15) (34) (68)

Deferred tax 0 0 0 0 0

Other liabilities 21 22 22 22 22

Total equity 450 520 493 503 537



includes convertibles and preferred stock which is being treated as debt

Per share (TRY)

Book value per share 303 349 331 338 361

Tangible book value per share 303 349 331 338 361

Financial strength

Net debtequity () (454) 01 (30) (67) (127)

Net debttotal assets () (406) 01 (27) (60) (113)

Current ratio (x) 92 74 81 84 84

CF interest cover (x) - (1088) - - -

Valuation 2012A 2013A 2014E 2015E 2016E

Recurring PE (x) 45 77 neg 470 133

Recurring PE target price (x) 53 90 neg 548 155

Reported PE (x) 45 77 neg 470 133

Dividend yield () 206 134 36 00 05

PCF (x) 29 43 41 37 32

PFCF (x) 19 (23) 148 254 132

Pricebook (x) 11 09 10 10 09

Pricetangible book (x) 11 09 10 10 09

EVEBITDA (x) 21 35 46 40 31

EVEBITDA target price (x) 26 42 54 47 36

EVinvested capital (x) 11 09 09 09 09

Pre exceptional pre-goodwill and fully diluted EBITDA includes associate income and recurring non-operating income


8172019 Park Elektrik-120215 (1)




Disclaimers and Disclosures

APPENDIX

DISCLAIMERS AND DISCLOSURES APPLICABLE TO NON-US BROKER-DEALER(S) TEB Investment BNP Paribas JV

ANALYST(S) CERTIFICATION

Kenan Cosguner TEB Investment BNP Paribas JV +90 216 6364531 Kenancosgunertebcomtr

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 accuratelyreflect 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 partof the compensation of the analyst(s) was is or will be directly or indirectly related to the specific recommendations or views expressed by the researchanalyst 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 NYSEandor FINRA regulations

IMPORTANT DISCLOSURES REQUIRED IN THE UNITED STATES BY FINRA RULES AND OTHER JURISDICTIONSBNP Paribasrdquo is the marketing name for the global banking and markets business of BNP Paribas Group No portion of this report was prepared by BNPParibas Securities Corp (US) personnel and it is considered Third-Party Affiliate research under NASD Rule 2711 The following disclosures relate torelationships between companies covered in this research report and the BNP entity identified on the cover of this report BNP Securities Corp and otherentities 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 andor recommended in thisreport

Company Ticker Disclosure (as applicable)

NA NA NA

BNP Paribas represents that1 Within the past year it has managed or co-managed a public offering for this company for which it received fees2 It had an investment banking relationship with this company in the last 12 months3 It received compensation for investment banking services from this company in the last 12 months4 It expects to receive or intends to seek compensation for investment banking services from the subject companyies in the next 3 months5 It beneficially owns 1 or more of any class of common equity securities of the subject company6 It makes a market in securities in respect of this company7 The analyst(s) or an individual who assisted in the preparation of this report (or a member of hisher 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 noted8 The analyst (or a member of hisher household) is an officer director or advisory board member of this company or has received compensation from the

company

IMPORTANT DISCLOSURES REQUIRED IN KOREAThe disclosure column in the following table lists the important disclosures applicable to each Korea listed company that has been rated andorrecommended in this report

Company Ticker Price (as of 11-Feb-2015 closing price) Interest

NA NA NA NA

1 The performance of obligations of the Company is directly or indirectly guaranteed by BNP Paribas Securities Korea Co Ltd (ldquoBNPPSKrdquo) by means ofpayment guarantees endorsements and provision of collaterals andor taking over the obligations

2 BNPPSK owns 1100 or more of the total outstanding shares issued by the Company3 The Company is an affiliate of BNPPSK as prescribed by Item 3 Article 2 of the Monopoly Regulation and Fair Trade Act4 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 5100 of the total asset of the Company or the total number of outstanding shares5 BNPPSK has taken financial advisory service regarding listing to the Company within the past 1 year6 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 provisionshall 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 enteringinto 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 Regulation9 The Company is recognized as having considerable interests with BNPPSK in relation to No1 to No 810 The analyst or hisher 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 ldquoSecurities etcrdquo in this Article) regardless of whose name is used in the trading1) Stocks bond with stock certificate and certificate of pre-emptive rights issued by the Company whose securities dealings are being solicited2) Stock options of the Company whose securities dealings are being solicited3) Individual stock future stock option and warrants that use the stocks specified in Item 1) as underlying

8172019 Park Elektrik-120215 (1)




History of change in investment rating andor target price

Park Elektrik Madencilik (PRKME TI)

Kenan Cosguner started covering this stock from 30-Oct-2013Price and TP are in local currency

Valuation and risks Downside risks to our estimates include lower copper prices as well as strong TRY

Sources Bloomberg TEB InvestmentBNP Paribas

GENERAL DISCLAIMERThis report was produced by TEB Investment BNP Paribas JV member company(ies) of the BNP Paribas GroupThis 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 withoutour prior written consent By accepting this report the recipient agrees to be bound by the terms and limitations set forth hereinThis report does not constitute a personal recommendation or take into account the particular investment objectives financial situations or needs ofindividual clients Customers are advised to use the information contained herein as just one of many inputs and considerations prior to engaging in anytrading activity This report does not constitute a prospectus or other offering document or an offer or solicitation to buy or sell any securities or otherinvestments This report is not intended to provide the sole basis of any evaluation of the subject securities and companies mentioned in this reportInformation and opinions contained in this report are published for reference of the recipients and are not to be relied upon as authoritative or without therecipientrsquos own independent verification or taken in substitution for the exercise of judgment by the recipient Additionally the products mentioned in thisreport 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 andinternal guidelines You should be aware however that BNP Paribas may engage in transactions in a manner inconsistent with the views expressed in thisdocument 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 StreetSydney NSW 2000 BNP Paribas Sydney Branch is licensed under the Banking Act 1959 and the holder of Australian Financial Services Licence no 238043 andtherefore subject to regulation by the Australian Securities amp 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 financialservices which are delivered solely to wholesale clients (in terms of the Corporations Act 2001 sections 761G and 761GA Corporations Regulations 2001division 2 reg 7118 amp 7119) andor 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 anoffer to sell securities described herein or solicitation of an offer to buy securities described herein in Canada or any province or territory thereof Any offeror sale of the securities described herein in Canada will be made only under an exemption from the requirements to file a prospectus with the relevantCanadian securities regulators and only by a dealer properly registered under applicable securities laws or alternatively pursuant to an exemption from thedealer registration requirement in the relevant province or territory of Canada in which such offer or sale is made The information contained herein is underno 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 extentthat the information contained herein references securities of an issuer incorporated formed or created under the laws of Canada or a province or territoryof Canada any trades in such securities must be conducted through a dealer registered in Canada No securities commission or similar regulatory authority inCanada has reviewed or in any way passed judgment upon these materials the information contained herein or the merits of the securities described hereinand 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 whosebusiness involves the acquisition disposal or holding of securities whether as principal or agent BNP Paribas Securities (Asia) Limited a subsidiary of BNPParibas is regulated by the Securities and Futures Commission for the conduct of dealing in securities advising on securities providing automated tradingservices 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 5 th floor BNP ParibasHouse 1 North Avenue Maker Maxity Bandra Kurla Complex Bandra (East) Mumbai 400 051 INDIA (Tel no +91 22 3370 4000 6196 4000 Fax no +91 226196 4363) BNPPSIPL is registered with the Securities and Exchange Board of India (ldquoSEBIrdquo) as a stockbroker in the Equities and the Futures amp Optionssegments of National Stock Exchange of India Ltd and BSE Ltd (SEBI Regn Nos INBINF231474835 INBINF011474831 CIN U74920MH2008FTC182807Website wwwbnpparibascoin)

Indonesia This report is being distributed by PT BNP Paribas Securities Indonesia and is delivered by its licensed employee(s) including marketingsalesperson to its client PT BNP Paribas Securities Indonesia having its registered office at Menara BCA 35th floor Grand Indonesia JL MH Thamrin No1 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 andunderwriter licenses issued by the Capital Market and Financial Institution Supervisory Agency (now Otoritas Jasa KeuanganOJK) PT BNP Paribas SecuritiesIndonesia is also a member of Indonesia Stock Exchange and supervised by Otoritas Jasa Keuangan (OJK) Neither this report nor any copy hereof may bedistributed in Indonesia or to any Indonesian citizens except in compliance with applicable Indonesian capital market laws and regulations This report is not

an offer of securities in Indonesia and may not be distributed within the territory of the Republic of Indonesia or to Indonesian citizens in circumstance whichconstitutes an offering 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 notregistered as a financial instruments firm in Japan to certain financial institutions defined by article 17-3 item 1 of the Financial Instruments and ExchangeLaw Enforcement Order BNP Paribas Securities (Japan) Limited is a financial instruments firm registered according to the Financial Instruments andExchange Law of Japan and a member of the Japan Securities Dealers Association the Financial Futures Association of Japan and the Type II Financial

Da te Reco TP

30-Oct-13 BUY 730

293

393

493

593

693

793

Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Feb-15

(TRY) Park Target Price

8172019 Park Elektrik-120215 (1)




Instruments Firms Association BNP Paribas Securities (Japan) Limited accepts responsibility for the content of a report prepared by another non-Japanaffiliate only when distributed to Japanese based firms by BNP Paribas Securities (Japan) Limited Some of the foreign securities stated on this report are notdisclosed 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 ofthe 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 researchreport This publication is strictly confidential and is for private circulation only to clients of BNP Paribas Capital (Malaysia) Sdn Bhd This publication isbeing provided to you strictly on the basis that it will remain confidential No part of this material may be (i) copied photocopied duplicated stored orreproduced 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 purposewithout 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 headoffice is in Paris France BNP Paribas Manila OBU is registered as an offshore banking unit under Presidential Decree No 1034 (PD 1034) and regulated bythe 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 itsentirety 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) ofSingapore as amended from time to time In relation to the distribution to such categories of investors BNPPSSL and its representatives are exempted underRegulation 35 of the FAR from the requirements in Section 36 of the Financial Advisers Act of Singapore regarding the disclosure of certain interests in orcertain interests in the acquisition or disposal of securities referred to in this report For Institutional and Accredited Investors in Singapore please contactBNP Paribas Securities (Singapore) Ptd Ltd (company registration number 199801966C address 10 Collyer Quay 34F Ocean Financial Centre Singapore049315 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 ldquoBNPP Cadizrdquo)are licensed members of Johannesburg Stock Exchange and are authorised Financial Services Providers and subject to regulation by the Financial ServicesBoard BNPP Cadiz does not expressly or by implication represent recommend or propose that the financial products referred to in this report areappropriate to the particular investment objectives financial situation or particular needs of the recipient

South Korea BNP Paribas Securities Korea is registered as a Licensed Financial Investment Business Entity under the FINANCIAL INVESTMENT SERVICES ANDCAPITAL MARKETS ACT and regulated by the Financial Supervisory Service and Financial Services Commission This document does not constitute an offer to

sell to or the solicitation of an offer to buy from any person any financial products where it is unlawful to make the offer or solicitation in South KoreaSwitzerland This report is intended solely for customers who are ldquoQualified Investorsrdquo as defined in article 10 paragraphs 3 and 4 of the Swiss Federal Acton Collective Investment Schemes of 23 June 2006 (CISA) and the relevant provisions of the Swiss Federal Ordinance on Collective Investment Schemes of 22November 2006 (CISO) ldquoQualified Investorsrdquo includes among others regulated financial intermediaries such as banks securities dealers fund managementcompanies and asset managers of collective investment schemes regulated insurance companies as well as pension funds and companies with professionaltreasury operations This document may not be suitable for customers who are not Qualified Investors and should only be used and passed on to QualifiedInvestors For specification purposes a ldquoSwiss Corporate Customerrdquo is a Client which is a corporate entity incorporated and existing under the laws ofSwitzerland and which qualifies as ldquoQualified Investorrdquo as defined above BNP Paribas (Suisse) SA is authorised as bank and as securities dealer by the SwissFederal Market Supervisory Authority FINMA BNP Paribas (Suisse) SA is registered at the Geneva commercial register under No CH-270-3000542-1 BNPParibas (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 onlyThe reader should independently evaluate the investment risks and is solely responsible for their investment decision Information on securities that do nottrade 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 ParibasSecurities (Taiwan) Co Ltd may not execute transactions for clients in these securities This publication may not be distributed to the public media orquoted 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 (ldquoBNPPrdquo) and Finansia

Syrus Securities Public Company Limited (ldquoFSSrdquo) FSS International Investment Advisory Securities Co Ltd (ldquoFSSIArdquo) prepares and distributes research underthe brand name ldquoBNP PARIBASFSSrdquo BNPP is not an affiliate of FSSIA or FSS FSS also publishes a different research product under the brand nameldquoFINANSIA SYRUSrdquo which is prepared by research analysts who are not part of FSSIA and who may cover the same securities issuers or industries that arethe subject of this report The ratings recommendations and views expressed in this report may differ from the ratings recommendations and viewsexpressed 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 AS Teb Kampus D Blok Saray Mah Kucuksu CadSokullu Sok No7 34768 Umraniye Istanbul Turkey Trade register number 358354 wwwtebyatirimcomtr) and outside Turkey jointly by TEB Investmentand BNP Paribas Information comments and suggestions on investment given in this material are not within the scope of investment consulting Theinvestment consulting services are rendered tailor made for individuals by competent authorities considering the individuals 991257 risk and return preferencesHowever the comments and recommendations herein are based on general principles These opinions may not be consistent with your financial status aswell as your risk and return preferences Therefore making an investment decision only based on the information provided herein may not bearconsequences in parallel with your expectations This material issued by TEB Yat

983345

r983345

m Menkul Değ

erler AŞ

for information purposes only and may bechanged without any prior notification All rights reserved No part of this material may be copied or reproduced in any manner without the written consentof TEB Yat983345 r 983345 m Menkul De ğ erler AŞ Although TEB Yat 983345 r 983345 m Menkul De ğ erler AŞ gathers the presented material that is current as possible it does notundertake that all the information is accurate or complete nor should it be relied upon as such TEB Yat 983345 r983345 m Menkul De ğ erler AŞ assumes no responsibilitywhatsoever in respect of or arising out or in connection with the content of this material to third parties If any third party chooses to use the content of this

material as reference heshe accepts and approves to do so entirely at hisher own risk United States This report may be distributed in the United States only to US Persons who are ldquomajor US institutional investorsrdquo (as such term is defined inRule 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 ldquomajor USinstitutional investorrdquo US persons who wish to effect transactions in securities discussed herein must do so through BNP Paribas Securities Corp a US-registered 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 andprofessional clients and is not intended for and should not be circulated to retail clients (as such terms are defined in the Markets in Financial InstrumentsDirective 200439EC (ldquoMiFIDrdquo)) This document will have been approved for publication and distribution in the United Kingdom by BNP Paribas LondonBranch 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 registeredoffice 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 lead supervised by the European Central Bank (ECB) and the Autoriteacute de Controcircle Prudentiel et de Reacutesolution (ACPR) BNP ParibasLondon Branch is authorised by the ACPR and the Prudential Regulation Authority (PRA) and subject to limited regulation by the Financial Conduct Authorityand PRA Details about the extent of our authorisation and regulation by the PRA and regulation by the Financial Conduct Authority are available from us onrequest This report has been approved for publication in France by BNP Paribas a credit institution licensed as an investment services provider by the ACPRwhose head office is 16 Boulevard des Italiens 75009 Paris France This report is being distributed in Germany either by BNP Paribas London Branch or byBNP Paribas Niederlassung Frankfurt am Main regulated by the Bundesanstalt fuumlr 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 intowhose possession this report comes should inform themselves about and observe any such restrictions By accepting this report you agree to be bound bythe 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 orlocated in any locality state country or other jurisdiction where such distribution publication availability or use would be contrary to law or regulation

8172019 Park Elektrik-120215 (1)



All research reports are disseminated and available to all clients simultaneously through our internal client websites For all research available on aparticular stock please contact the relevant BNP Paribas research team or the author(s) of this report

Additional DisclosuresTarget price history stock price charts valuation and risk details and equity rating histories applicable to each company rated in this report is available inour most recently published reports available on our website httpeqresearchbnpparibascom or you can contact the analyst named on the front of thisnote or your BNP Paribas representative

All share prices are as at market close on 11 February 2015 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 priceBUY (B) The upside is 10 or moreHOLD (H) The upside or downside is less than 10REDUCE (R) The downside is 10 or moreUnless otherwise specified these recommendations are set with a 12-month horizon Thus it is possible that future price volatility may cause atemporary mismatch between upsidedownside for a stock based on market price and the formal recommendation In most cases the target price will equal the analysts assessment of the current fair value of the stock However if the analyst doesnt 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 RecommendationsImproving ( ) The analyst expects the fundamental conditions of the sector to be positive over the next 12 monthsStable (previously known as Neutral) ( ) The analyst expects the fundamental conditions of the sector to be maintained over the next 12monthsDeteriorating ( ) The analyst expects the fundamental conditions of the sector to be negative over the next 12 monthsCountry (Strategy) RecommendationsOverweight (O) Over the next 12 months the analyst expects the market to score positively on two or more of the criteria used to determinemarket 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 equityNeutral (N) Over the next 12 months the analyst expects the market to score positively on one of the criteria used to determine marketrecommendations index returns relative to the regional benchmark index sharpe ratio relative to the regional benchmark and index returnsrelative to the market cost of equityUnderweight (U) Over the next 12 months the analyst does not expect the market to score positively on any of the criteria used to determinemarket recommendations index returns relative to the regional benchmark index sharpe ratio relative to the regional benchmark and indexreturns relative to the market cost of equity

RATING DISTRIBUTION (as at 12 February 2015)

Total BNP Paribas coverage universe 684 Investment Banking Relationship ()

Buy 345 Buy 870

Hold 259 Hold 460

Reduce 80 Reduce 120

Should you require additional information concerning this report please contact the relevant BNP Paribas research team or the author(s) of this report

copy 2015 BNP Paribas Group

8172019 Park Elektrik-120215 (1)




Investment thesis

In our view even at currently low copper prices with thehelp of higher grades the companyrsquos profitability shouldrecover remarkably over the next two years (2015 and2016) We believe that a weak TRY against the USD willsupport profitability Once grade levels recover above the15 level (currently 125) we believe Madenkoy offers

decent profitability and relatively cost-efficient open pitmining

The company has a strong cash position and valuablenon-core and real-estate assets The company has asignificant cash position (TRY217m) a 10 stake in ParkTermik which we value at USD60m even on conservativeestimates and real estate worth USD38m according toour estimates Hence its current cash position and non-core assets are almost on par with the companyrsquos currentmarket value

Catalyst

Recovery in copper prices andor grade level shouldaccelerate the recovery in earnings

Disposal of non-core assets or licences received forelectricity-generation assets

Improvement in dividend policy

Depreciation of TRY against USD

Risks to our call

Major downside risk to our estimates is from a potentialdecline in copper prices as the stock is highly levered tocopper prices A 10 decreaseincrease in copper pricesrelative to our base case would yield a 25decreaseincrease in the valuation of the company

There is a major risk of value destruction and change ininvestment theme with expansion into electricitygeneration

Company background Key assumptions

Park Elektrik engages in copper mining operations in Turkey 2014E 2015E 2016E

Copper production (lsquo000 tonnes) 82 92 107

Copper price (USDtonne) 7000 6000 6000

Copper cash costs (USDtonne) 3508 3064 2934

Copper all-in costs (USDtonne) 6850 5622 4978


Principal activities (revenue) Earnings sensitivity

Change in copper prices () (10) 00 10

Change in revenues () (12) 00 12

Change in EBITDA () (13) 00 13

Change in net income () (41) 00 41

Key executives Source TEB InvestmentBNP Paribas estimates

Age Joined Title

Nalan Erkarakas 51 2001 Chairwoman

Ramazan Yon 40 2005 CEO

Tacigul Erdem 58 1997 CFO

httpwwwparkelektrikcomtrenindexphp

Current mine life is 22 years as of end-2014

We do not expect a major change in costs as we expect

grade levels to remain stable across our forecast horizon

We assume copper prices recover to USD6500tonne in

2017 and USD6750tonne in 2018

Copper mining100

8172019 Park Elektrik-120215 (1)






() ()




Issued shares 1489



Upside () 176



---------------------- 2014E ---------------------- ----------------------- 2015E ----------------------- ----------------------- 2016E -----------------------



Revenues 250 226 (9) 271 235 (13) 325 282 (13)

CoGs 215 205 (5) 229 204 (11) 225 213 (5)

Gross profit 35 21 (39) 42 31 (27) 100 69 (31)



EBITDA 119 106 (11) 116 107 (8) 165 134 (19)

Other income net (5) (5) 0 5 5 0 5 5 0



Tax expense 13 13 0 (4) (3) (42) (15) (9) (41)

Net income 2 (10) nm 17 10 (41) 62 37 (41)


8172019 Park Elektrik-120215 (1)






Revenue 265 261 226 235 282




Operating costs (33) (38) (41) (40) (47)


Depreciation (57) (49) (129) (120) (115)


Operating EBIT 102 34 (20) (10) 22






Tax (26) 2 13 (2) (9)








Per share (TRY)

Recurring EPS 072 042 (007) 007 025

Reported EPS 072 042 (007) 007 025

DPS 067 044 012 000 002

Growth

Revenue () 535 (15) (133) 37 201


Operating EBIT () 264 (664) (1573) (513) (3300)


Reported EPS () 64 (412) (1164) (2002) 2533





Net margin () 405 242 (46) 44 130




Inventory days 2033 889 1051 879 848

Debtor days 186 342 482 433 404


ROIC () 330 152 (47) (09) 55

ROE () 240 130 (20) 21 70

ROA () 170 118 (20) (12) 31



8172019 Park Elektrik-120215 (1)















Dividends paid (100) (65) (17) 0 (3)


Net cash flow (59) (281) 15 19 34



Movement in cash (61) (278) 15 19 34



Per share (TRY)









Goodwill 0 0 0 0 0








Net debt (204) 1 (15) (34) (68)



Total equity 450 520 493 503 537




Per share (TRY)



Financial strength

Net debtequity () (454) 01 (30) (67) (127)




Valuation 2012A 2013A 2014E 2015E 2016E




Dividend yield () 206 134 36 00 05

PCF (x) 29 43 41 37 32

PFCF (x) 19 (23) 148 254 132

Pricebook (x) 11 09 10 10 09


EVEBITDA (x) 21 35 46 40 31





8172019 Park Elektrik-120215 (1)





APPENDIX








NA NA NA



company



NA NA NA NA








8172019 Park Elektrik-120215 (1)

















Da te Reco TP

30-Oct-13 BUY 730

293

393

493

593

693

793



8172019 Park Elektrik-120215 (1)















983345

r983345

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8172019 Park Elektrik-120215 (1)







Stock Ratings






Buy 345 Buy 870

Hold 259 Hold 460




8172019 Park Elektrik-120215 (1)






() ()




Issued shares 1489



Upside () 176



---------------------- 2014E ---------------------- ----------------------- 2015E ----------------------- ----------------------- 2016E -----------------------



Revenues 250 226 (9) 271 235 (13) 325 282 (13)

CoGs 215 205 (5) 229 204 (11) 225 213 (5)

Gross profit 35 21 (39) 42 31 (27) 100 69 (31)



EBITDA 119 106 (11) 116 107 (8) 165 134 (19)

Other income net (5) (5) 0 5 5 0 5 5 0



Tax expense 13 13 0 (4) (3) (42) (15) (9) (41)

Net income 2 (10) nm 17 10 (41) 62 37 (41)


8172019 Park Elektrik-120215 (1)






Revenue 265 261 226 235 282




Operating costs (33) (38) (41) (40) (47)


Depreciation (57) (49) (129) (120) (115)


Operating EBIT 102 34 (20) (10) 22






Tax (26) 2 13 (2) (9)








Per share (TRY)

Recurring EPS 072 042 (007) 007 025

Reported EPS 072 042 (007) 007 025

DPS 067 044 012 000 002

Growth

Revenue () 535 (15) (133) 37 201


Operating EBIT () 264 (664) (1573) (513) (3300)


Reported EPS () 64 (412) (1164) (2002) 2533





Net margin () 405 242 (46) 44 130




Inventory days 2033 889 1051 879 848

Debtor days 186 342 482 433 404


ROIC () 330 152 (47) (09) 55

ROE () 240 130 (20) 21 70

ROA () 170 118 (20) (12) 31



8172019 Park Elektrik-120215 (1)















Dividends paid (100) (65) (17) 0 (3)


Net cash flow (59) (281) 15 19 34



Movement in cash (61) (278) 15 19 34



Per share (TRY)









Goodwill 0 0 0 0 0








Net debt (204) 1 (15) (34) (68)



Total equity 450 520 493 503 537




Per share (TRY)



Financial strength

Net debtequity () (454) 01 (30) (67) (127)




Valuation 2012A 2013A 2014E 2015E 2016E




Dividend yield () 206 134 36 00 05

PCF (x) 29 43 41 37 32

PFCF (x) 19 (23) 148 254 132

Pricebook (x) 11 09 10 10 09


EVEBITDA (x) 21 35 46 40 31





8172019 Park Elektrik-120215 (1)





APPENDIX








NA NA NA



company



NA NA NA NA








8172019 Park Elektrik-120215 (1)

















Da te Reco TP

30-Oct-13 BUY 730

293

393

493

593

693

793



8172019 Park Elektrik-120215 (1)















983345

r983345

m Menkul Değ

erler AŞ





8172019 Park Elektrik-120215 (1)







Stock Ratings






Buy 345 Buy 870

Hold 259 Hold 460




8172019 Park Elektrik-120215 (1)






Revenue 265 261 226 235 282




Operating costs (33) (38) (41) (40) (47)


Depreciation (57) (49) (129) (120) (115)


Operating EBIT 102 34 (20) (10) 22






Tax (26) 2 13 (2) (9)








Per share (TRY)

Recurring EPS 072 042 (007) 007 025

Reported EPS 072 042 (007) 007 025

DPS 067 044 012 000 002

Growth

Revenue () 535 (15) (133) 37 201


Operating EBIT () 264 (664) (1573) (513) (3300)


Reported EPS () 64 (412) (1164) (2002) 2533





Net margin () 405 242 (46) 44 130




Inventory days 2033 889 1051 879 848

Debtor days 186 342 482 433 404


ROIC () 330 152 (47) (09) 55

ROE () 240 130 (20) 21 70

ROA () 170 118 (20) (12) 31



8172019 Park Elektrik-120215 (1)















Dividends paid (100) (65) (17) 0 (3)


Net cash flow (59) (281) 15 19 34



Movement in cash (61) (278) 15 19 34



Per share (TRY)









Goodwill 0 0 0 0 0








Net debt (204) 1 (15) (34) (68)



Total equity 450 520 493 503 537




Per share (TRY)



Financial strength

Net debtequity () (454) 01 (30) (67) (127)




Valuation 2012A 2013A 2014E 2015E 2016E




Dividend yield () 206 134 36 00 05

PCF (x) 29 43 41 37 32

PFCF (x) 19 (23) 148 254 132

Pricebook (x) 11 09 10 10 09


EVEBITDA (x) 21 35 46 40 31





8172019 Park Elektrik-120215 (1)





APPENDIX








NA NA NA



company



NA NA NA NA








8172019 Park Elektrik-120215 (1)

















Da te Reco TP

30-Oct-13 BUY 730

293

393

493

593

693

793



8172019 Park Elektrik-120215 (1)















983345

r983345

m Menkul Değ

erler AŞ





8172019 Park Elektrik-120215 (1)







Stock Ratings






Buy 345 Buy 870

Hold 259 Hold 460




8172019 Park Elektrik-120215 (1)















Dividends paid (100) (65) (17) 0 (3)


Net cash flow (59) (281) 15 19 34



Movement in cash (61) (278) 15 19 34



Per share (TRY)









Goodwill 0 0 0 0 0








Net debt (204) 1 (15) (34) (68)



Total equity 450 520 493 503 537




Per share (TRY)



Financial strength

Net debtequity () (454) 01 (30) (67) (127)




Valuation 2012A 2013A 2014E 2015E 2016E




Dividend yield () 206 134 36 00 05

PCF (x) 29 43 41 37 32

PFCF (x) 19 (23) 148 254 132

Pricebook (x) 11 09 10 10 09


EVEBITDA (x) 21 35 46 40 31





8172019 Park Elektrik-120215 (1)





APPENDIX








NA NA NA



company



NA NA NA NA








8172019 Park Elektrik-120215 (1)

















Da te Reco TP

30-Oct-13 BUY 730

293

393

493

593

693

793



8172019 Park Elektrik-120215 (1)















983345

r983345

m Menkul Değ

erler AŞ





8172019 Park Elektrik-120215 (1)







Stock Ratings






Buy 345 Buy 870

Hold 259 Hold 460




8172019 Park Elektrik-120215 (1)





APPENDIX








NA NA NA



company



NA NA NA NA








8172019 Park Elektrik-120215 (1)

















Da te Reco TP

30-Oct-13 BUY 730

293

393

493

593

693

793



8172019 Park Elektrik-120215 (1)















983345

r983345

m Menkul Değ

erler AŞ





8172019 Park Elektrik-120215 (1)







Stock Ratings






Buy 345 Buy 870

Hold 259 Hold 460




8172019 Park Elektrik-120215 (1)

















Da te Reco TP

30-Oct-13 BUY 730

293

393

493

593

693

793



8172019 Park Elektrik-120215 (1)















983345

r983345

m Menkul Değ

erler AŞ





8172019 Park Elektrik-120215 (1)







Stock Ratings






Buy 345 Buy 870

Hold 259 Hold 460




8172019 Park Elektrik-120215 (1)















983345

r983345

m Menkul Değ

erler AŞ





8172019 Park Elektrik-120215 (1)







Stock Ratings






Buy 345 Buy 870

Hold 259 Hold 460




8172019 Park Elektrik-120215 (1)







Stock Ratings






Buy 345 Buy 870

Hold 259 Hold 460




Park Elektrik-120215 (1)

Documents

Transcript of Park Elektrik-120215 (1)