Koza Altin

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THIS REPORT IS PREPARED BY TEB INVESTMENT. IT IS BEING DISTRIBUTED IN TURKEY BY TEBINVESTMENT AND OUTSIDE TURKEY JOINTLY BY TEB INVESTMENT AND BNP PARIBAS

EQUITIES RESEARCH

KOZAL TI

KOZA ALTIN ISLETMELERITURKEY / METALS & MINING

HOW WE DIFFER FROM THE STREET

BNPP Consensus % Diff

Target Price (TRY) 45.03 38.3 17.6

EPS 2012 (TRY) 4.45 4.10 8.5

EPS 2013 (TRY) 6.24 4.33 44.1

Positive Neutral Negative

Market Recs 14 5 0

BUY

TARGET

CLOSE

UP/DOWNSIDE

TRY45.03

TRY32.90

+36.9%

INDUSTRY OUTLOOK

Strong results

RESULTS REVIEWStrong results on higher-than-expected gold production

Koza posted TRY190m net income, way above our estimate of TRY137m

due to higher-than-expected gold production and lower-than-expectedcash costs. Hence, posted EBITDA (TRY244m) was higher than ourestimate (TRY190m). Cash costs also declined remarkably thanks mainly

to the high grade of ores that reduced mining and processing costs.

SUMMARYWe expect production growth to moderate in the rest of 2012

We expect total production to remain below 350,000 oz with the pace of production slowing to 83,000 oz per quarter from the current 97,000 ozlevel. We also forecast an increase in cash costs from the currentUSD308/oz level to USD350/oz in the rest of 2012. Hence, we maintainour forecasts for the company.

VALUATIONOffers decent upside despite weak gold prices

Despite weakness in gold prices, we remain positive on the company aswe project a 21% increase in gold production to 369,000 oz by 2013 and a urther 31% increase to 483,000 oz by 2015 thanks two new mine projects

(Diyadin and Himmetdede), which will become fully operational in 2013and 2015.We derive our TP using a blended valuation, assigning 75:25 weights toDCF method and peer comparables. Apart from risks arising from the gold

price and the USD/TRY rate, operational and regulatory risks aresignificantly high in the mining industry.

RESULTS FLASH

Kenan [email protected]

+90 216 636 4531

BNP Paribas Securities (Asia) Ltd research is available on Thomson One, Bloomberg, TheMarkets.com, Factset and on http://eqresearch.bnpparibas.com/index . Please contact our salesperson for authorisation. Please see the important notice on the back page.

17 MAY 2012

KEY STOCK DATA

YE Dec (TRY m) 2012E 2013E 2014E

Revenue 1,121 1,511 1,427

Rec. net profit 679 951 835

Recurring EPS (TRY) 4.45 6.24 5.48

EPS growth (%) 47.3 40.2 (12.2)

Recurring P/E (x) 7.4 5.3 6.0

Dividend yield (%) 2.8 4.1 7.6

EV/EBITDA (x) 4.7 3.0 2.9

Price/book (x) 3.6 2.3 1.9

Net debt/Equity (%) (70.4) (75.3) (76.5)

ROE (%) 59.5 53.3 35.0

Mkt cap (USD m) 2,748 2,748 2,748

Share price performance 1 Month 3 Month 12 Month

Absolute (%) (1.8) (3.0) 48.5

Relative to country (%) 8.1 10.3 67.5

Mkt cap (USD m) 2,748

3m avg daily turnover (USD m) 6.7

Free float (%) 30

Major shareholder ATP Construction (45%)

12m high/low (TRY) 38.00/20.80

3m historic vol. (%) 38.7

ADR ticker -

ADR closing price (USD; Date) -

Issued shares (m) 153

Sources: Bloomberg consensus; TEB Investment/BNP Paribasestimates

(8)

12

32

52

72

92

15

20

25

30

35

40

May-11 Aug-11 Nov-11 Feb-12 May-12

(%)(TRY) Koza Altin Isletmeleri Rel to MSCI EM Index

http://equities.bnpparibas.com/

http://equities.bnpparibas.com/



Koza Altin Isletmeleri Kenan Cosguner

2 BNP PARIBAS 17 MAY 2012

EXHIBIT 1: Income statement forecasts

FY10 FY11 Change 1Q11 4Q11 1Q12 --------- Change ---------

(TRY m) (TRY m) (y-y %) (TRY m) (TRY m) (TRY m) (y-y ) (q-q )

Net sales 472.1 805.8 70.7 140.0 309.0 303.6 117 (2)

Gross profit 330.7 613.8 85.6 103.0 233.2 248.8 142 7

Operating expenses (48.8) (71.7) 47.0 (13.9) (25.7) (20.8) 50 (19)

Operating profit 281.9 542.2 92.3 89.1 207.6 228.0 156 10

EBITDA 348.1 618.2 77.6 101.1 230.2 244.3 142 6

Net Other income 0.6 (15.6) n.m. 0.2 (9.6) (1.7) n.m. (83)

Financial inc. (exp) 5.8 33.1 471.8 3.9 10.7 11.9 206 11

PBT 288.3 559.6 94.1 93.2 208.7 238.2 156 14

Taxation (52.8) (99.2) 87.9 (12.5) (41.9) (47.8) 283 14

Minority interest 0.0 0.0 n.m. 0.0 0.0 0.0 n.m. n.m.

Net Income 235.6 460.5 95.5 80.7 166.8 190.4 136 14

Operating ratios

Gross margin (%) 70.0 76.2 73.5 75.5 81.9

EBITDA margin (%) 73.7 76.7 72.2 74.5 80.5

Net margin (%) 49.9 57.1 57.7 54.0 62.7

Balance sheet data

Cash & equivalents 196.7 579.4 195 254.7 579.4 756.9 197 31

S/T Fin. debt 12.0 18.1 51 12.0 18.1 15.8 31 (13)

L/T Fin. debt 17.8 7.3 (59) 14.9 7.3 3.4 (77) (53)

Net debt (cash) (166.8) (553.9) 232 (227.8) (553.9) (737.7) 224 33

Working capital 27.9 34.6 24 28.0 34.6 41.6 49 20

Book value 438.6 869.5 98 521.8 869.5 948.3 82 9

Total assets 545.8 1,062.7 95 628.9 1,062.7 1,234.6 96 16

Net debt (cash) / equity (%) (38) (64) (44) (64) (78)

Sources: Koza Altin Isletmeleri; TEB Investment/BNP Paribas estimates





Financial statementsKoza Altin Isletmeleri

Profit and Loss (TRY m) Year Ending Dec 2010A 2011A 2012E 2013E 2014E

Revenue 472 806 1,121 1,511 1,427

Cost of sales ex depreciation (75) (113) (141) (158) (200)

Gross profit ex depreciation 397 693 980 1,353 1,227

Other operating income 1 (16) 1 1 1

Operating costs (49) (72) (86) (105) (112)

Operating EBITDA 349 605 895 1,249 1,116

Depreciation (66) (79) (80) (93) (105)

Goodwill amortisation 0 0 0 0 0

Operating EBIT 283 527 815 1,156 1,011

Net financing costs 6 33 33 33 33

Associates 0 0 0 0 0

Recurring non operating income 0 0 0 0 0

Non recurring items 0 0 0 0 0

Profit before tax 288 560 848 1,189 1,044

Tax (53) (99) (170) (238) (209)

Profit after tax 236 460 679 951 835

Minority interests 0 0 0 0 0

Preferred dividends 0 0 0 0 0Other items 0 0 0 0 0

Reported net profit 236 460 679 951 835

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

Recurring net profit 236 460 679 951 835

Per share (TRY)

Recurring EPS * 1.54 3.02 4.45 6.24 5.48

Reported EPS 1.54 3.02 4.45 6.24 5.48

DPS 0.00 0.13 0.91 1.33 2.49

Growth

Revenue (%) 37.9 70.7 39.1 34.8 (5.5)

Operating EBITDA (%) 34.8 73.6 47.8 39.5 (10.6)

Operating EBIT (%) 53.8 86.4 54.8 41.8 (12.5)Recurring EPS (%) 60.4 95.5 47.3 40.2 (12.2)

Reported EPS (%) 60.4 95.5 47.3 40.2 (12.2)

Operating performance

Gross margin inc depreciation (%) 70.0 76.2 80.3 83.4 78.6

Operating EBITDA margin (%) 73.9 75.1 79.8 82.6 78.2

Operating EBIT margin (%) 59.8 65.3 72.7 76.5 70.8

Net margin (%) 49.9 57.1 60.5 63.0 58.5

Effective tax rate (%) 18.3 17.7 20.0 20.0 20.0

Dividend payout on recurring profit (%) 0.0 4.2 20.4 21.4 45.5

Interest cover (x) - - - - -

Inventory days 238.5 165.0 175.8 214.3 188.3

Debtor days 13.5 2.3 4.0 4.0 4.7

Creditor days 91.2 80.6 100.0 121.9 107.2Operating ROIC (%) 107.7 171.8 206.6 229.9 168.4

Operating ROIC - WACC (%) - - - - -

ROIC (%) 99.7 157.1 192.9 217.8 160.9

ROIC - WACC (%) - - - - -

ROE (%) 70.4 70.4 59.5 53.3 35.0

ROA (%) 52.1 53.1 48.2 46.0 30.8

*Pre exceptional, pre-goodwill and fully diluted

Sources: Koza Altin Isletmeleri; Bloomberg consensus; TEB Investment/BNP Paribas estimates





Koza Altin Isletmeleri

Cash Flow (TRY m) Year Ending Dec 2010A 2011A 2012E 2013E 2014E

Recurring net profit 236 460 679 951 835

Depreciation 66 79 80 93 105

Associates & minorities 0 0 0 0 0

Other non-cash items 0 0 0 0 0

Recurring cash flow 302 539 758 1,044 941

Change in working capital 48 30 (14) (17) 4

Capital Expenditure (128) (181) (168) (190) (190)

Free cash flow to equity 222 389 576 837 754Net acquisitions & disposals 0 0 0 0 0

Dividends paid 0 0 (138) (204) (380)

Non recurring cash flows (7) 20 0 0 0

Net cash flow 215 409 438 633 373

Equity finance 0 0 0 0 0

Debt finance (8) (4) 0 0 0

Movement in cash 207 405 438 633 373

Other Adjustments (31) (22) 0 0 0

Change in Cash & Cash Equivalents 176 383 438 633 373

Per share (TRY)

Recurring cash flow per share 1.98 3.54 4.97 6.85 6.17

FCF to equity per share 1.46 2.55 3.78 5.49 4.94

Balance Sheet (TRY m) Year Ending Dec 2010A 2011A 2012E 2013E 2014E

Working capital assets 57 88 114 147 140

Working capital liabilities (50) (112) (124) (140) (137)

Net working capital 7 (24) (10) 7 3

Tangible fixed assets 262 367 456 553 638

Operating invested capital 269 343 446 560 641

Goodwill 0 0 0 0 0

Other intangible assets 0 0 0 0 0

Investments 0 0 0 0 0

Other assets 30 28 28 28 28

Invested capital 299 371 473 588 669

Cash & equivalents (197) (579) (1,018) (1,651) (2,024)

Short term debt 12 18 18 18 18

Long term debt * 18 7 7 7 7Net debt (167) (554) (992) (1,626) (1,999)

Deferred tax 0 0 0 0 0

Other liabilities 27 56 56 56 56

Total equity 439 869 1,410 2,157 2,612

Minority interests 0 0 0 0 0

Invested capital 299 371 473 588 669

* includes convertibles and preferred stock which is being treated as debt

Per share (TRY)

Book value per share 2.88 5.70 9.24 14.15 17.13

Tangible book value per share 2.88 5.70 9.24 14.15 17.13

Financial strength

Net debt/equity (%) (38.0) (63.7) (70.4) (75.3) (76.5)

Net debt/total assets (%) (30.6) (52.1) (61.4) (68.3) (70.6)

Current ratio (x) 4.1 5.1 7.9 11.4 14.0

CF interest cover (x) - - - - -

Valuation 2010A 2011A 2012E 2013E 2014E

Recurring P/E (x) * 21.3 10.9 7.4 5.3 6.0

Recurring P/E @ target price (x) * 29.2 14.9 10.1 7.2 8.2

Reported P/E (x) 21.3 10.9 7.4 5.3 6.0

Dividend yield (%) 0.0 0.4 2.8 4.1 7.6

P/CF (x) 16.6 9.3 6.6 4.8 5.3

P/FCF (x) 22.6 12.9 8.7 6.0 6.7

Price/book (x) 11.4 5.8 3.6 2.3 1.9

Price/tangible book (x) 11.4 5.8 3.6 2.3 1.9

EV/EBITDA (x) ** 14.2 7.7 4.7 3.0 2.9

EV/EBITDA @ target price (x) ** 19.5 10.7 6.8 4.5 4.5

EV/invested capital (x) 16.2 12.0 8.5 5.8 4.5

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

Sources: Koza Altin Isletmeleri; Bloomberg consensus; TEB Investment/BNP Paribas estimates





History of change in investment rating and/or target price

Koza Altin Isletmeleri (KOZAL TI)

Kenan Cosguner started covering this stock from 29-Mar-2012Price and TP are in local currency

Valuation and risks: Key downside risks to our DCF and peer-comparable-based TP include a fall in the gold price, the USD/TRY rate, and operational and regulatory risks.

Sources: Bloomberg consensus; TEB Investment/BNP Paribas

Date Reco TP

28-Mar-12 BUY 39.60

11.06

16.06

21.06

26.06

31.06

36.06

41.06

Feb-10 Aug-10 Feb-11 Aug-11 Feb-12

(TRY) Koza Altin Is letmeler i Target Pr ice





Disclaimers and Disclosures

ANALYST(S) CERTIFICATION Kenan Cosguner, TEB Investment, BNP Paribas JV, +90 216 636 4531, [email protected].

The analyst(s) or strategist(s) herein each referred to as analyst(s) named in this report certifies that (i) all views expressed in this report accurately reflectthe personal view of the analyst(s) with regard to any and all of the subject securities, companies or issuers mentioned in this report; (ii) no part of thecompensation of the analyst(s) was, is , or will be, directly or indirectly, relate to the specific recommendation or views expressed herein; and (iii) is notaware of any other actual or material conflicts of interest concerning any of the subject securities, companies or issuers referenced herein as of the time of this certification.

Analysts mentioned in this disclaimer are employed by a non-US affiliate of BNP Paribas Securities Corp., and are not registered/ qualified pursuant to

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Company Disclosure (as applicable)

- -

BNP Paribas represents that:1. Within the past year, it has managed or co-managed a public offering for this company, for which it received fees.2. It had an investment banking relationship with this company in the last 12 months.3. It received compensation for investment banking services from this company in the last 12 months. 4. It beneficially owns 1% or more or the market capitalization of this company. 5. It makes a market in securities issued in respect of this company.6. The analyst(s) or an individual who assisted in the preparation of this report (or a member of his/her household) has a financial interest position in

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All share prices are as at market close on 16 May 2012 unless otherwise stated.




RECOMMENDATION STRUCTURE

Stock RatingsStock ratings are based on absolute upside or downside, which we define as (target price* - current price) / current price.BUY (B). The upside is 10% or more.HOLD (H). The upside or downside is less than 10%.REDUCE (R). The downside is 10% or more.

Unless otherwise specified, these recommendations are set with a 12-month horizon. Thus, it is possible that future price volatility may cause a temporary mismatch between upside/downside for a stock based on market price and the formal recommendation.

* In most cases, the target price will equal the analyst's assessment of the current fair value of the stock. However, if the analyst doesn't think the market will reassess the stock over the specified time horizon due to a lack of events or catalysts, then the target price may differ from fair value. In most cases, therefore, our

recommendation is an assessment of the mismatch between current market price and our assessment of current fair value.

Industry RecommendationsImproving ( ): The analyst expects the fundamental conditions of the sector to be positive over the next 12 months.Neutral ( ): The analyst expects the fundamental conditions of the sector to be maintained over the next 12 months.Deteriorating ( ): The analyst expects the fundamental conditions of the sector to be negative over the next 12 months.

Country (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 indexreturns relative to the market cost of equity.

Neutral (N). Over the next 12 months, the analyst expects the market to score positively on one of the criteria used to determine marketrecommendations: index returns relative to the regional benchmark, index sharpe ratio relative to the regional benchmark and index returnsrelative to the market cost of equity.

Underweight (U). Over the next 12 months, the analyst does not expect the market to score positively on any of the criteria used to 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 17 May 2012) Total BNP Paribas coverage universe 569 Investment Banking Relationship (%)

Buy 324 Buy 4.94

Hold 182 Hold 2.20

Reduce 63 Reduce 3.17

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

© 2012 TEB Investment BNP Paribas

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