A T - A G L A N C E October 25, 2010

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1 A T - A G L A N C E ober 25, 1 Market Comment Wide Range... We expect the positive mood in local equities to continue. In a slightly broader perspective, it is clear to see that the market is trading in a range of ~-25 ISE points. Hence, a wide-range-bound trading pattern remains in evidence. We expect a balanced opening in the first trading day of the new week, which is likely to be followed by a positive bias. Market Data Indices Daily Weekly YTD Last Vol. * Mcap ** ISE 1.8% 1.3% 34.4% 71,7 2, ISE 3.8% 1.1% 35.% 9,456 1, Financials 1.% 1.5% 39.5% 111,299 1, Industrials.3%.3% 34.1% 5,837 1,81 1 Banking 1.3% 1.4% 4.% 167, Currency Wars, G and Lira... Macro News Most Active Perf. Vol. * Best Worst GARAN 2.2% 221 FORTS 7.7% DYHOL -4.5% ISCTR -.7% 129 ASELS 6.1% METRO -2.4% VAKBN 1.7% 116 CLEBI 5.8% TTKOM -2.1% PETKM 3.3% 114 GUBRF 4.2% ITTFH -1.7% HALKB -1.3% 15 ALARK 3.9% IPMAT -1.6% * in TLmn,, ** in TLbn Sector News Gazprom and Bulgaria sign South Stream NG pipeline agreement Key Valuation Parametrics Multiples ** 9 1E 11E Growth 1E P/E Net Earnings 13% EV/EBITDA EBITDA 13% EV/Sales Sales 14% P/BV(Banks) BV 13% ** in TL, based on AtaInvest Coverage (c.82% of ISE MCap) Turkish gas investment in Iraq...Enerjisa`s 9MWe Bandirma-1 NGPP to start generation North Marmara Highway Project tender to kick-off Participation banks outpace banking sector in growth 72, 7, 68, 66, 64, ISE-1 Close & Volume (bn TL) TL Bn Company News Akfen Holding <AKFEN TI> to increase paid-in-capital by 29% via rights issue... 62, Volume - RHS % 25 Fixed Income Close Sale of Yapi Kredi Sigorta reportedly to resume when company completes spin-off of its pension subsidiary... 4 Dogan Holding <DOHOL TI> Selling its stake in Petrol Ofisi <PTOFS TI>, OMV gaining full control...(positive for both stocks) Agenda 25.1 Capacity Utilization Rate for ober Real Sector Confidence Index for Tourism Statistics for 3Q # of Arriving- Departing Foreigners and Citizens for September Inflation Report (1-IV) Zero Coupon Bond Auction Erdemir <EREGL TI> 3Q1 Earnings Ata Est. 3Q1: TL 18 mn 27.1 Foreign Trade Statistics for September Domestic Debt Service of TL 1.9 bn 28.1 Non-residents' Holdings of Securities for Week of.22 Domestic Borrowing Strategy for November-January 1.11 CNBC-e Consumer Confidence Index for ober ICC Price Indices for ober TEA Export Figures for ober Zero and Floating Coupon Bond Auctions Benchmark (Compounded) Policy Rate* (simple) XU1 (inverted) (RHS) *Borrowing rate until May 1, then one-week repo rate. Futures VIX3121 VUSD121 (RHS) 2.6 Currency US$/TL EUR/TL

2 AT-A GLANCE ober 25, 1 What the Day Heralds Gazprom and Bulgaria sign South Stream NG pipeline agreement Gazprom and the Bulgarian Energy Holding have signed an agreement regarding the execution of the technology and economy valuation of the South Stream`s section corresponding to Bulgarian territory, according to Bulgarian sources. Gazprom officials expressed their expectation of speedy progress for the project. Recall that in ober, Gazprom signed an agreement with Romania pertaining to the possibility of construction of the South Stream pipeline in Romania. In related news, Russian Deputy Prime Minister Igor Sechin, has downplayed the Nabucco pipeline project, saying the project has no future, basing his claims on the expected completion of the South Stream project by the time Nabucco comes online. The South Stream project is perceived as a rival project to the Nabucco pipeline project. Comment: The agreement appears to be an extension of talks held between Gazprom and Bulgarian officials held in previous weeks, where the establishment of a South Stream JV between the two parties by November 15th, 1, as well as the construction and utilization of the pipeline in Bulgaria was discussed. Gazprom and Russian officials appear to have upped their efforts more visibly during past months pertaining to the South Stream project. The South Stream gas transit pipeline is expected to be completed by 15 with an investment of c. EUR 23 bn. The pipeline is to transport 63 bn m3 of NG annually, corresponding to 35% of Russia's total annual natural gas exports to Europe. Enerjisa`s 9MWe Bandirma-1 NGPP to start generation Enerjisa, a subsidiary of Sabanci Holding <SAHOL TI>, has officially opened its 9MWe combined cycle natural gas based generation plant, dubbed Bandirma -1, located in Northwestern Turkey. The power plant, with a 59% conversion rate, has been completed in 2 years with a EUR 55mn investment. It is set to generate 7bn kwh, corresponding to c.3% of Turkey`s cumulative generation. With the completion of the Bandirma-1 NGPP, Enerjisa has reached a total installed generation capacity of 1,375MWe, of which 94% is natural gas based generation. Guler Sabanci, Chairwoman of Sabanci Holding, has reiterated that by 15 EnerjiSa is expected to have reached an installed capacity of 5,Mwe on the generation side and 6mn subscribers on the distribution side. Recall that in earlier news, It was pointed out that Enerjisa could be IPOed over the coming years, as its business & prospects become more established. Meanwhile, the Company is to bid in the upcoming Toroslar, Akdeniz and Ayedas electricity distribution company tenders. Directorate is currently waiting for permission from the Supreme Planning Board to proceed. Participation banks outpace banking sector in growth The President of the Participation Banks Association of Turkey, Mr. Fahrettin Yahsi, expects participation banks to grow by around -25% next year, and the banking sector to grow by 12%. He also expects participation banks to increase their share of the total banking sector in 11. This is also in line with our forecasts, and we expect participation banks to increase their share to 6-7% over the coming years from the current 5%. Currency Wars, G and Lira... The weekend G Summit in Seoul seemed set to become the battlefield for a currency war as the US was expected to use G to pressure China for faster currency appreciation. Major deficit countries (US, UK and most Euro zone economies excluding Germany) were expected to support the US view and demand substantial appreciation of currencies in major surplus economies like China, Japan, Germany, as well as oil exporting countries, in order to correct global imbalances. The US pushed surplus countries like Germany and Japan, while China unexpectedly sided with the US. Japan was not expected to pressure China, since it benefits from the latter s economic boom. In addition, Korea, also expected to be in the surplus club, and therefore to reject the US view and side with Japan and Germany, surprisingly also supported US view at the G. The Case for Turkey Turkey is a deficit country and is hurt by both dollar and Yuan weakness. As per the first half of the year, CAD/GDP is at around 6%. In order for the ratio to correct to 4% levels, Lira has to depreciate against the US$. Weak US dollar is negative for Turkey, since Turkey is an oil importer, and the weak dollar policy of the US results in rising oil prices, and thus a rising oil bill for Turkey, widening Turkish CAD. Weak Yuan is also negative for Turkey, since it cannot compete with cheap Asian labor supported by the cheap Yuan. Subsequently, Turkish imports are being Asianised. Weak growth expectations and fiscal problems in the EU zone narrow trade opportunities for Turkey. The US crisis and cheap dollar results in hot money flows into Turkey, leading to asset price inflation and bubles in asset markets. The truth is that currency wars are driven by political considerations more than economic factors. Turkish manufacturing sector needs to be redesigned in accord with comparative advantage of the country to yield economic benefits along with weakening Lira. (A Detailed note will follow). North Marmara Highway Project tender to kick-off The tender of the North Marmara Highway Project, which includes the 3rd bridge across Bosporus, is likely to be held by the end of 1 according to the General Directorate of Highways. The 2

3 AT-A GLANCE ober 25, 1 Company News Akfen N/R Share Price: TL 13.2 AKFEN TI P/E: - Target Share Price: - Conglomerate EV/EBITDA: - Upside Potential: - Akfen Holding <AKFEN TI> to increase paid-in-capital by 29% via rights issue... Akfen Holding s BoD has decided to raise its paid in capital to TL mn, from TL mn, via restricting existing shareholders rights and selling the TL 33.1 mn nominal lots in the wholesale market of the ISE. The Holding applied to the CMB for a paid-in capital increase on 22, the date on which the lock-up period ended, following its IPO. Yapi Kredi Sigorta OUTPERFORM Share Price: TL 15 YKSGR TI P/E: 24.7x Target Share Price: TL Insurance EV/EBITDA: - Upside Potential: 6% Sale of Yapi Kredi Sigorta reportedly to resume when company completes spin-off of its pension subsidiary... According to Mergermarket, the sale of Yapi Kredi Sigorta will resume when the company completes the spin-off of its pension subsidiary, Yapi Kredi Emeklilik. Recall that Yapi Kredi Sigorta's 99.9% stake in Yapi Kredi Emeklilik would be organized under a new company based on the valuation of the target's assets as of 3 June 1. Shares in the newly-formed company will be distributed to Yapi Kredi Sigorta's shareholders in proportion to the shares they have in Yapi Kredi Sigorta. The spin-off will likely be completed before the end of the year, and yet it may overhang to next year as it is a new process for the market. The Mergermarket report also said that German insurer Allianz, Generali and Zurich Financial Services may also show interest to acquiring Yapı Kredi. Dogan Holding N/R Share Price: TL 1.5 DOHOL TI P/E: 26.6x Target Share Price: - Conglomerates EV/EBITDA: 4.9x Upside Potential: - Dogan Holding <DOHOL TI> Selling its stake in Petrol Ofisi <PTOFS TI>, OMV gaining full control...(positive for both stocks) Last things first, the deal implies 14% premium over Petrol Ofisi s dividend adjusted Mcap and 17.8% dividend yield. For Dogan Holding, there is a US$ 171 mn net gain, corresponding to 9% of the total Mcap. Immediately after the parties announced that they had re-initiated detailed negotiations regarding the share transfer, Dogan Holding agreed to sell its 54.17% stake in Petrol Ofisi (PO) for 1 bn (US$ 1,391 mn). Furthermore, the shareholders also agreed to distribute a US$ 489 mn dividend before the closing where Dogan Holding, OMV and minorities will receive US$ 265 mn, US$ 3 mn and US$ 21 mn, respectively. The closing of the transaction is expected within the next 3 months, and is subject to the approval of relevant authorities. Following the closure, OMV s stake in PO will increase from 41.58% to 95.75%, while the minorities in the market will continue to own 4.25% of the company. 2

4 AT-A GLANCE ober 25, 1 The main takeaways from the transaction are as follows: 14% premium over dividend adjusted Mcap: The transaction value of 1 bn translates into 1,846 mn or US$ 2,569 mn total value for PO. Adjusting the current Mcap for the dividend proposal (US$ 2,742 mn US$ 489= US$ 2,253 mn), the deal implies 14% premium over current valuation in the market. From a different perspective, if we add the dividend proposal on top of the transaction value, this brings the total valuation of PO to US$ 3,58 mn derived from the deal (12% higher than current Mcap). An attractive dividend yield of 17.8%: US$ 489 mn dividend (US$.85 per share) suggests a 17.8% dividend yield according to the latest closing (+) What is Dogan Holding s gain?: Dogan Holding trades at a 42% discount to its current NAV of US$ 3,117 mn. PO makes a US$ 1,485 mn contribution to Dogan Holding s CNAV based on the latest stock closing, accounting for 48% of the total. Out of the deal, Dogan Holding will receive US$ 1,391 mn in return for its 54.17% stake in addition to US$ 265 mn dividend in cash, bringing the total gains US$ 1,656 mn, implying US$ 171 mn net-to-net gain (9% of the total Mcap). This brings the CNAV to US$ 3,288 mn, with 45% discount to NAV. Historically, there is 34% 5-years average and 41% 3-years average discount. The deal supports Dogan Holding s cash position Dogan Holding already has US$ 429 mn net cash at the parent level (as of ober 5), and the deal will increase this to over US$ 2 bn (63% of the NAV). We deem the strengthening of the cash position positive, as uncertainty due to tax issues continue to surround media operations, although we think that the weight of net cash in NAV is higher than it should be. Will there be a tender call? We think, yes. The renewed CMB communiqué says that if a group gets the management control of the company through obtaining the shares, this will trigger a mandatory tender call. The takeover of the management control is defined by owning more than 5% of either the capital or voting rights solely, or with the group that they act together in. According to our understanding, the deal falls within this scope. We think that a dividend should be ignored in the calculation of the tender price as it will be paid before the closing of the deal. At the closing, OMV will pay the transaction amount ( 1 bn) in cash, half of which will be -denominated, with the remaining half in US$, where the /US$ parity for the conversion into US$ is fixed at the 1.39 level. With a fixed parity the tender price will be either 1,846 mn ( 3. per share) or US$ 2,569 mn (US$ 4.45 per share). We attach a higher probability to the call price being in -terms, as the deal is also - denominated, yet the final decision will be taken by the CMB. It is also worth mentioning that since less than 5% of the shares are held by minorities in the market, OMV could also initiate a de-listing process thereafter. 3

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