WOOD Flash – Yapi Kredi: our three scenarios on UCG exit
According to a Reuters article this weekend, UniCredit Group (UCG) has reached an agreement with Koc Holding to reduce its exposure to Yapi Kredi. Koc made a statement this morning (25 November), saying that the talks are ongoing, and ruled out acquiring more than 50% of the bank. We believe there are three possible scenarios. The market seems jittery about UCG placing a 32% Yapi Kredi stake on the market. Although such a divestment does not sound ideal at all, it is possible if UCG just wants out. However, we also look at it from the brighter side and argue that the fluidity of the situation could bring in a new buyer that could buy out both UCG and KOC, introducing a potentially lucrative tender call for the minorities. From an operational or strategic perspective, we do not see significant downside for Yapi Kredi from UCG’s exit. We rate Yapi Kredi a BUY, with a TRY 2.95/share price target (PT). The stock trades at 3.4x P/E and 0.46x P/TBV, on our 2020E numbers.Yapi Ve Kredi Bankasi is a financial services group. Co. serves its customers through its retail banking segment comprising of individual banking, Small and Medium Size Enterprises banking and card payment systems, corporate and commercial banking as well as private banking and wealth management segments. Co.'s operations are supported by domestic subsidiaries in asset management, brokerage, leasing and factoring as well as international banking subsidiaries in the Netherlands, Russia and Azerbaijan. As of Dec 31 2014, Co. had total assets of TL194.96 billion and total deposits of TL107.63 billion.
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