CELEBI HAVA SERVISI A.S. Outperform

CELEBI HAVA SERVISI A.S.
Initiation of Coverage
Outperform
CELEBI HAVA SERVISI A.S.
Current/ 2008-end Target Price: YTL 7.35/ 14.2
YTL
23.0
19.0
15.0
11.0
7.0
3.0
01/07
02/07
03/07
04/07
05/07
STOCK MARKET DATA (3 July 2008)
Bloomberg/Reuters
06/07
Relative Performance
CLEBI.TI/CLEBI.IS
1 mth 3 mth 12mth
12% 28% -21%
52 Week Range (YTL): 6.05-13.6
Market Cap (YTLmn): 179
Average Daily Vol (YTLmn) 3 mth: 2.0
YTD YTL Return (%): -23%
Shares Outstanding (mn): 24.3
Free Float: 22%
The Company in Brief: Celebi Hava Servisi A.S. offers ground
services to domestic, foreign and charter airlines in Turkey. Celebi’s
70% subsidiary Celebi GH Hungary operates at Budapest Ferihegy
Airport in Hungary. Celebi’s 50% JV operates Antalya Airport’s
Terminal 2, while this concession ends in September 2009. Meanwhile,
Celebi Guvenlik, Celebi’s 95% subsidairy, provides security services at
airports in Turkey and Antalya Port.
Share Structure
Shareholder Stake
Celebi Holding 53%
Celebioglu Family 25%
Free Float 22%
Celebi (2007-2008)
07/07
CLEBI
08/07
09/07
10/07
11/07
12/07
01/08
02/08
ISE-100
03/08
04/08
05/08
06/08
Subsidiaries
Company
Stake
Celebi Guvenlik 94.8%
Celebi-IC Antalya 49.99%
Celebi GH Hungary 70%
Down to earth in price and in nature...
We initiate our coverage for Celebi Hava Servisi
A.S. with an “Outperform” recommendation. Our
2008-end target share price of YTL14.2 offers an
attractive 94% upside potential over the current
price. Celebi came under pressure in 2007, mainly
due to loss of Antalya operations and tenders
abroad. We believe Celebi does not deserve its
current discount given its stable cash generation
with its current operations and mid term prospects.
• An attractive M&A target. The Turkish ground
handling sector is shared by Celebi and HAVAS.
We believe a strategic partner may be attracted to
Celebi’s know how in the business and its stable
cash generation. The aviation sectors in both Turkey
and Hungary offer strong growth potential and
Celebi offers exposure without the risk to high oil
prices.
• Planned IPO of HAVAS in 4Q08 may positively
affect Celebi shares. During a share transfer in
2007, HAVAS was valued at an EV/EBITDA of 10x
while Celebi is trading at a 3x EV/EBITDA based on
its 2008E prospective earnings.
• Newsflow will keep shares hot. New additions to
the portfolio may be announced soon; Celebi is
working on new deals, potentially extending the
scope of its ground handling services. Celebi is actively
pursuing tenders in the Middle East, India and
Europe, where the Governments are planning to
privatize airport operations.
• Stable dividends. Celebi distributed 70% of its net
profit in the past 3 years while producing a gross
dividend yield of 14% this year. We expect the stable
dividend distribution to continue going forward.
• Margins to remain strong. Celebi’s revenues are
mostly € based. We expect Celebi’s revenues to
reach YTL311mn this year, while the Company
generates an EBITDA of YTL90mn in 2008 and an
EBITDA margin of 29%, marking an improvement
of 1.1pp YoY.
FIGURES & FORECASTS
Net Sales
(YTLmn)
EBITDA
(YTLmn)
Net Profit
(YTLmn)
EBITDA
Margin
P/E
(YTL,x)
EV/ Sales
(YTL,x)
EV/ EBITDA
(YTL,x)
2006 232 70 22 30.2% 8.0 1.1 3.5
2007 276 77 26 27.9% 6.8 0.9 3.2
2008F 311 90 34 29.0% 5.3 0.8 2.7
2009F 332 94 38 28.3% 4.7 0.7 2.6
Research: +90 (212) 318 2730
Sales: +90 (212) 318 2741

CELEBI HAVA SERVISI A.S.
INVESTMENT CASE
Attractive price. Our 2008-end target share price of YTL14.2 based on
DCF analysis offers an attractive 94% upside potential over the current
price. We value Celebi only with its current operations, which may appear
conservative given the potential tenders in the sector. Celebi
came under pressure in 2007, mainly due to loss of Antalya operations
and tenders abroad. We believe Celebi does not deserve its current
discount given its stable cash generation with its current operations and
mid term prospects.
Margins to remain strong. We expect Celebi’s margins to remain
strong this year as € denominated revenues account for approximately
70% of the total revenues, with US$ denominated revenues comprising
a 19% share and a 12% share for YTL revenues. Meanwhile, 75% of
the expenses are based in YTL terms. The improvement in the air traffic
and passenger numbers this year coupled with strong € will positively
affect profitability. We expect Celebi’s revenues to reach
YTL311mn in 2008, with an EBITDA of YTL90mn and EBITDA margin
of 29%, marking an improvement of 1pp over the 2007 performance.
The aviation sectors in both Turkey and Hungary, where Celebi
operates, offer strong growth potential. The passenger traffic grew
by a CAGR of 14.2% between 2003-2007 in spite of shocks such as
the Iraq war, the SARS virus in Turkey and a terrorist attack in the
south coast of Turkey. The deregulation of the aviation sector at the
end of 2003, spawning new airlines, boosted domestic passenger traffic.
In 2007, passenger traffic reached 66.5mn, an increase of 13.1%
YoY. This number remains quite low considering the country’s 70mn
population. According to forecasts compiled by IATA and Eurocontrol,
Turkey and Hungary are expected to maintain growth of 5-8% going
forward. Celebi offers exposure to this growth potential without the risk
to high oil prices. Celebi serves in 25 airports in Turkey which represent
93% of commercial flights and passenger traffic.
The high bids in tenders in 2007 for operating rights of Turkish airport
terminals confirm positive growth expectations. In April 2007, the
consortium of Fraport and Ictas won the auction for the right to operate
Antalya Airport's three terminals for 17 years with a US$3,196mn bid.
In October 2007, the Limak - GMR Infrastructure Ltd.- Malaysia Airport
Holding Berhad Consortium won the auction for the right to operate
Istanbul’s Sabiha Gokcen Airport for 20 years with a €1,932mn bid.
Including the VAT and the investment requirement, the total amount
reaches approximately US$3.5bn.
2

CELEBI HAVA SERVISI A.S.
An attractive M&A target. There are high barriers to enter the ground
handling sector as the law requires 51% local ownership. Celebi and
HAVAS are the only companies with an “A” group license, necessary to
operate in ground handling sector in Turkey. To obtain an “A” group
license, a company should operate at least in three international airports,
have a paid in capital of at least US$3mn and meet minimum
personnel and equipment requirements as required by the law.
We believe a strategic partner may be attracted to Celebi’s know how
in the business and its stable cash generation. Celebi’s main shareholder
is Celebi Holding with 53% stake at the end of 1Q08 while members
of the Celebioglu family hold a 25% stake. The remaining 22% is
freely floated on the stock market. In March 2006, Celebioglu family
members sold a 6% stake where the 100% of the Company was valued
at US$335mn. A strategic partner may also strengthen Celebi’s competitive
positioning in the domestic and neighbouring markets.
In addition, planned IPO of HAVAS in 4Q08 may positively affect
Celebi shares. In February, the CEO of TAV Airports, the parent company
of HAVAS, stated that TAV was seeking a strategic partner for
HAVAS and HAVAS might go public in 4Q08 or early 2009. TAV Airports
paid US$115mn for a 40% stake in HAVAS and increased its
stake to 100% in 2007. The transaction implies a valuation of 10x EV/
EBITDA for HAVAS while Celebi is trading at a 3x EV/EBITDA based
on its 2008E prospective earnings. HAVAS may even be valued more
generously in a prospective IPO, positively affecting Celebi shares.
Newsflow will keep shares hot. Celebi is actively pursuing tenders
abroad; especially in India. In India, the Government plans to allow
more private players into the booming aviation industry. According to
Airports Authority of India (AAI) data, passenger traffic during 2007-08
has crossed 100 million mark and reached to 116.87 million, up by
21.2% YoY. Thus India has become 9th biggest Aviation market in the
world. India’s position has improved from 11th during the year 2006 to
9th during 2007. Meanwhile, the total aircraft movements witnessed an
increase of 21.3% YoY, from 1,078 thousand movements to 1,308
thousand movements during the period April-March 2007-08 as compared
to the aircraft movement handled during April-March 2006-07.
Celebi submitted expression of Interest to AAI to participate in ground
handling works at metro airports in India. Celebi also submitted Expression
of Interest to GVK to participate in ground handling works tender in
CSIA, Mumbai. Thanks to the operations in Hungary, Celebi also
gained the know how to navigate abroad.
Risks… Apart from industry specific risks, such as slowdown in air/
passenger traffic and terrorist activities, Celebi is vulnerable to Turkey’s
political & macro economic risks. Meanwhile, since revenues are
mostly fx based, while costs are in local currencies, strengthening in
YTL and HUF would negatively affect margins.
3

CELEBI HAVA SERVISI A.S.
The Company in Brief
Celebi Hava Servisi A.S. (Celebi, The Company) offers ground services
to domestic, foreign and charter airlines in Turkey. Celebi was established
at Ankara Esenboga Airport by a Turkish Air Force pilot, Ali
Cevat Celebioglu in 1958 as the first private ground services company.
Today, Celebi serves in 25 airports handling 93% of commercial flights
and passenger traffic in Turkey.
Celebi’s main shareholder is Celebi Holding with 53% stake at the end
of 1Q08 while members of the Celebioglu family hold a 25% stake. The
remaining 22% is freely floated on the stock market. Celebi is the flagship
of Celebi Holding. Celebi Holding also operates in the Fast Food,
Tourism and Transportation Services and Sea Port Management segments.
Celebi Ground Services has 3 subsidiaries; Celebi Security Systems
and Consultancy (in which it holds a 94.8% stake), Celebi Ground
Handling Hungary (70% stake) and Celebi-IC Antalya (49.99% stake).
Celebi employed 4,153 people as of 31 March 2008.
VALUATION
Our US$256mn target Mcap for Celebi is based on DCF analysis, assuming
a 1% terminal growth rate. We applied the yield on the 10-year
Eurobond as the risk free rate in our model, while assuming a market
risk premium of 9% in calculating the cost of equity. Accordingly, we
assume a 11% WACC for Celebi, gradually increasing to 14%. In our
valuation, we value Celebi only with its current operations, which may
appear conservative given the potential tenders in the sector.
Assumptions and Results (US$mn)
Weight of equity 60% PV of FCF 224
Cost of Equity 15% PV of Terminal Value 102
Beta 0.9 Implied Firm Value 326
Risk free rate 6% Net Cash -50
Market Risk Premium 9% Minority stake -20
Cost of Debt (after tax) 7% Target Mcap 256
Tax rate 20% Current Mcap 143
WACC 2008 11% Upside Potential 79%
Terminal Value Growth 1%
Celebi Current Share Price (YTL) 7.35
Celebi 2008-end Target Share Price (YTL), YTL/$ 2008E-end parity 1.35 14.2
YTL Upside Potential 94%
Source: Garanti Securities Estimates
4

CELEBI HAVA SERVISI A.S.
Celebi Ground Handling - Free Cash Flow Projections (US$mn)
Turkey Ground Handling 2008F 2009F 2010F 2011F 2012F 2017F
Number of Planes (000 planes) 151 159 170 181 193 267
Growth % 4.6% 5.6% 6.6% 6.6% 6.6% 6.7%
Unit Revenue € 663 647 631 615 599 584
% change -1.5% -2.5% -2.5% -2.5% -2.5% 0.0%
Revenues € 100 103 107 111 116 156
Revenues US$ 153 149 145 150 156 211
EBIT US$ 18 19 21 23 25 42
EBIT Margin 12% 13% 15% 15% 16% 20%
Budapest Ground Handling 2008F 2009F 2010F 2011F 2012F 2017F
Number of Planes (000 planes) 24 26 28 31 33 43
Growth % 9.2% 8.0% 8.0% 8.0% 7.0% 5.0%
Unit Revenue € 1080 1059 1037 1017 996 901
% change 0% -2% -2% -2% -2% -2%
Revenues € 26 28 29 31 33 39
Revenues US$ 40 40 40 42 44 53
EBIT $ 4.0 4.8 6.0 6.3 7.1 9.0
EBIT Margin 10.0% 12.0% 15.0% 15.0% 16.0% 17.0%
Antalya Terminal 2 2008F 2009F
Guaranteed Passenger (000) 2,416 2,489
Passenger Fee $ 15 15
Pax Revenues $ 36 37
Other Revenues $ 6 6
Revenues US$ 42 43
EBIT $ 16 16
EBIT Margin 38% 37%
Other Revenues - Security $ 4 4 4 5 5 6
Net Sales 239 236 190 197 205 270
Operating Profit 38 40 27 29 32 51
Taxes -8 -8 -5 -6 -6 -10
NOPLAT 31 32 22 23 26 41
Depreciation 30 26 16 11 11 11
Severance 1 1 1 1 1 1
Gross Cash Flow 62 59 39 35 37 53
Change in WCR -4 -4 -3 -2 -2 -3
Capex -10 -9 -7 -8 -8 -11
Free Cash Flow 48 46 29 25 28 39
EBITDA 69 67 44 41 44 63
EBITDA Margin 29.0% 28.3% 23.4% 20.6% 21.4% 23.3%
Source: Garanti Securities Estimates
5

MAIN ASSUMPTIONS & FORECASTS
Revenues
CELEBI HAVA SERVISI A.S.
Celebi’s revenue segments are ground handling services, terminal operations
and security services. We forecast Celebi’s consolidated revenues
to reach YTL311mn in 2008, up by 13% YoY.
Ground Handling Services…
IATA and Eurocontrol
forecast that Turkey and
Hungary will sustain 5-8%
growth going forward.
Celebi provides ground services both in Turkey and Hungary. The
Company serves 25 airports in Turkey and Budapest Airport in Hungary.
The deregulation of the aviation sector in Turkey at the end of
2003, which spawned a wave of new airlines, boosted domestic passenger
traffic. According to forecasts compiled by IATA and Eurocontrol,
Turkey and Hungary are expected to maintain growth of 5-8% going
forward, and we have based our projections on their forecasts.
Flights Served by Celebi 2000-2008E
200,000
150,000
2000-2007 CAGR: %26.9
138,040
166,328 175,025
100,000
50,000
31,310 41,004 45,638 44,963 69,704
96,037
0
2000 2001 2002 2003 2004 2005 2006 2007 2008E
Source: The Company
We project that Celebi
will service 151,000
flights in Turkey and
24,000 flights in Hungary
in 2008.
Celebi carries out the ground handling services for Turkish Airlines
(THY) at 14 different airports. Apart from the high organic growth,
THY’s strategy to outsource ramp services to third party ground handlers
has bolstered Celebi’s revenues and contributed significantly to
its capacity utilization ratio. Celebi provided ground handling services to
44,794 THY domestic and international flights during 2007. In 2008,
Turkish Airlines reached an agreement with Celebi to carry out ground
services operations at Trabzon, Van, Diyarbakır, Erzurum, Malatya,
Samsun, Mardin, Erzincan, Hatay, Kahramanmaras and Denizli airports
for a period of 3 years. The agreement may be extended up to 5
years. Celebi is expected to serve 12,000 THY flights during 2008 in
these respective airports. Overall, we expect Celebi to service 151,000
flights in Turkey in 2008.
6

CELEBI HAVA SERVISI A.S.
Breakdown of Services 2007- Turkey
Other
20%
Adana
Dalaman
5%
4%
İzmir
12%
İstanbul
24%
Antalya
22%
Ankara
13%
Source: The Company
Cargo and antrepo
revenues to increase in
2008-2009.
Celebi also generates revenues from cargo and antrepo/ warehousing
services, accounted under ground handling services. This segment of
the business recorded a stable performance in 2006-2007, despite the
effects of the fire at Istanbul Ataturk Airport. Celebi has a 5,000 m 2
warehouse in Istanbul’s Ataturk Airport and 6,750 m 2 area, also in
Gunesli, Istanbul - close to Ataturk Airport. Celebi completed the construction
of the bonded warehouse in Izmir with 2,500 m 2 and operations
will get underway in the second half of 2008. Celebi plans to build
a fourth bonded warehouse in Ankara in 2009.
Ground Handling Breakdown of Sales 2007 - Turkey
Kargo/Ordino De-icing,
Antrepo, Serv ices, 0.38%
7.85% 4.00%
Other, 0.41%
Fuel Sale
Commisions,
0.24%
Domestic
Flights,
21.57%
International
Flights,
65.70%
Source: The Company
7

CELEBI HAVA SERVISI A.S.
Celebi Ground Handling Hungary was taken over by Celebi in October
2006. Celebi paid €25.6mn for the shares and €7.3mn for the machinery.
In 2007, Celebi Ground Handling Hungary provided services to
22,273 flights, marking 25% YoY growth with the addition of Lufthansa
to its flights. Lufthansa represents around 8% of air traffic in Budapest
Ferihegy Airport. We expect a 10% growth in flights served in Hungary
in 2008, thus increasing the number of flights served to around 24,000.
Ground Handling Breakdown of Sales 2007 - Hungary
Catering,
0.90%
Lounge, 1.88%
Check-in
Ticketing,
6.05%
Cargo, 11.37%
De-icing,
11.66%
Other, 0.17%
International
Flights,
75.97%
Source: The Company
Celebi’s ground services
revenues are mainly Euro
denominated.
Ground services revenues are mainly € denominated. In our projections,
unit revenue in Turkey is lower than in Hungary, as THY and domestic
flights’ charges are lower when compared to international flights.
We expect a higher growth rate in domestic sector, which will result in a
decrease in unit revenue in the medium term. Meanwhile, we also expect
a decline in unit revenues as airlines become more aggressive in
their negotiations due to the rise in oil prices.
Breakdown of Flights Served by Celebi 2003-2008E
200,000
138.0k
166.3k 175.0k
22,273
24,320
150,000
100,000
50,000
0
96.0k 2,640
69.7k
41,651
44,794 47,275
6,102
44.7k
15,683
31,307 42,799 41,910 44,019
44,709 54,021 58,628 50,950 57,351 59,411
2003 2004 2005 2006 2007 2008E
International Domestic THY Budapest
Source: The Company
8

CELEBI HAVA SERVISI A.S.
Terminal Operations…
Celebi’s 50% subsidary Celebi-IC Antalya currently operates Terminal-
2 at Antalya International Airport. Celebi signed the BOT contract in
2004 and completed the construction in the space of 11 months. The
General Directorate of Airports (DHMI) has guaranteed passenger
numbers for Antalya as 2.2mn in 2005, with 3% growth thereafter. The
passenger service fee is set at US$15. The concession ends in September
2009.
Antalya Terminal-2 Traffic Highlights
2005 2006 2007
# of Passenger 8,318,294 6,062,870 7,368,927
Growth -27% 22%
# of Flights 54,505 40,601 53,822
Growth -26% 33%
Source: The Company
Celebi also generates revenues from other aviation services such as
bridge, Gpu (ground power units) and trade revenues such as rental
revenues from retail spaces, advertising, and commission revenues. In
2006, DHMI allocated passenger/flight traffic on a 40/60 share to International
terminals No:1 and No:2, respectively. Also in 2006, the SARS
virus and a terrorist attack on Turkey’s south coast negatively affected
the tourism sector. A considerable improvement in tourism numbers in
2007 compared to 2006 offset the decline in 2006. Growth for 2008 is
expected to be in line with 2007. We expect Celebi to generate
US$42mn revenues from terminal operations in 2008.
Security…
Finally, Celebi’s 95% subsidiary Celebi Guvenlik provides security services.
Celebi Guvenlik is one of the 2 companies licensed to operate at
Turkish airports. Celebi Security serves 28 airlines including THY,
Aeroflot, Lufthansa, KLM and CSA Chech Airlines. Celebi Guvenlik has
operated at Antalya International Airport Terminal-2 since 2005. In addition,
Celebi Guvenlik provides cargo and bonded warehouse services
for Celebi and provides security for Atlasjet’s facilities. Celebi Guvenlik
has also been providing security services at Antalya Port since May
2007. Throughout our projection period, we estimate security revenues
will grow in line with GDP growth. We estimate US$4mn in revenues
from security services in 2008.
9

CELEBI HAVA SERVISI A.S.
Profitability - EBITDA
We expect Celebi’s EBITDA to reach YTL90mn this year with an
EBITDA margin of 29.0%, marking a YoY improvement 1.1pp. In terms
of currency breakdown, Celebi’s revenues are denominated in €, US$
and YTL terms, with € denominated revenues accounting for approximately
70% of the total revenues, with US$ denominated revenues
comprising a 19% share and a 12% share for YTL revenues. Meanwhile,
75% of the expenses are based in YTL terms. The strong Lira
and HUF squeezed profitability last year. In addition, the operations in
Budapest diluted profitability margins on a consolidated basis. Celebi’s
operating performance was also dented by the relatively mild winter,
and thus the substantial decrease in highly lucrative de-icing revenues.
In addition, costs related to new projects, such as appraisals of the
concession tenders for Antalya Airport and Sabiha Gokcen Airport,
have led to an increase in non operating expenses in 2007. However,
all in all, we expect the growth in the number of flights and passengers
to support profitability this year.
Despite improved efficiencies, we expect Celebi’s EBITDA margin to
decline in 2009 and especially in 2010 due to the end of the concession
of Antalya Airport Terminal 2. Yet, the decline will be limited in absolute
terms thanks to improved efficiencies and organic growth.
Breakdown of Sales, EBIT and EBITDA - 2007
Ground
Handling,
77%
SALES
Terminal,
20%
Security,
3%
Ground
Handling,
57%
EBIT
Terminal,
40%
Security 3%
Ground
Handling,
47%
Security 2%
EBITDA
Terminal,
51%
Source: The Company
Bottom line
The appreciation of local currencies has dented Celebi’s operating margins
but also reduced its financial expenses, which positively affected
the net profit last year despite one off expenses related to tenders. In
2008, we expect Celebi’s net profit to reach YTL34mn, with a net profit
margin of 10.8%, an improvement of 1.3pp when compared to 2007.
10

CELEBI HAVA SERVISI A.S.
Capital Expenditures
Celebi’s annual maintenance capex stands at around €3mn. The Company
plans an additional €4-5mn in capex for 2008 and 2009 for the
construction of warehouses in Izmir and Ankara.
1Q08 Financial Results
Celebi reported a net loss of €3mn in its 1Q08 consolidated income
statement. The first quarter of the year is generally the weakest quarter
for Celebi due to seasonality. The YTL was stronger against the € and
US$ in 1Q08 when compared to 1Q07, negatively affecting Celebi’s
margins given that Celebi’s revenues are mostly FX based, while expenses
are generally based in YTL. In addition, the depreciation of the
YTL at the end of the first quarter hit the bottom line, due to the higher
financial expenses written on the back of FX losses.
Celebi posted €29mn of consolidated net revenues in 1Q08, representing
an increase of 15% YoY. Celebi produced a gross margin of 11.1%
and an EBITDA margin of 12.7% in 1Q08. The Company reported a
loss at the operating level due to seasonality and depressed by higher
depreciation expenses, EBITDA jumped by 43% YoY to reach €4mn.
Celebi’s net debt position of €21mn at the end of 4Q07 increased to
€32mn at the end of 1Q08.
Summary Financials
% Change
(mn €) 1Q07 2Q07 3Q07 4Q07 1Q08 1Q08/1Q07 1Q08/4Q07
Net Sales 25 44 53 33 29 15% -13%
Gross Profit 2 16 22 5 3 49% -40%
Operating Profit* -2 n.v. n.v. n.v. -1 -67% n.m.
Operating Profit -3 9 15 -1 -2 -17% 182%
EBITDA 3 15 21 5 4 43% -26%
Financial Exp./Inc. (net)* 0 0 -1 -2 -3 n.m. 32%
Net Income -1 7 11 -2 -3 123% 16%
Net Cash -36 -48 -22 -21 -32
Ratios
Gross Margin 8.6% 35.8% 40.5% 16.3% 11.1% 2.6 pp -5.2 pp
Operating Margin* n.m. n.v. n.v. n.v. n.m. n.m. n.m.
Operating Margin n.m. 21.2% 28.8% n.m. n.m. n.m. n.m.
EBITDA Margin 10.2% 33.7% 39.5% 15.1% 12.7% 2.5 pp -2.4 pp
Net Profit Margin n.m. 15.6% 21.1% n.m. n.m. n.m. n.m.
* XI29
* Please note that the Company had previously announced financial statements according to the CMB25 vs. CMB29
standards in 1Q08. There are differences among the reporting procedures between the CMB29 and the CMB25 as the
Company reports income/expenses from other operations in operating expenses, which also affect financial expenses. The
figures marked “*” in the chart below denotes operating profit & financial Exp. /Inc. (net) according to the CMB29.
11

CELEBI HAVA SERVISI A.S.
Summary Financials and Estimates
Balance Sheet (YTLmn) 2005 2006 2007
% Change
2007/2006 2008F 2009F
Current Assets 65 99 74 -9% 126 148
Cash and Near Cash 46 67 46 -17% 89 107
S/T Trade Receivables 11 16 18 41% 22 24
Inventories 2 3 4 57% 5 5
Other Current Assets 6 13 6 -45% 9 12
Long Term Assets 163 200 176 7% 190 204
Total Assets 228 298 250 2% 316 352
Current Liabilities 51 133 58 -47% 73 83
Financial Debt 36 92 33 -56% 43 50
Trade Payables 7 26 11 -49% 13 14
Other ST Payables 8 15 14 11% 18 18
Long Term Liabilities 75 48 69 75% 85 80
Financial Debt 60 33 49 79% 61 51
Other LT Payables 15 15 20 66% 24 29
Shareholders' Equity 102 113 120 29% 157 189
Total Liabilities & Sh. Equity 228 298 250 2% 316 352
Net Working Capital 4 -9 3 n.m. 6 8
Net Debt Position 50 58 36 -25% 15 -6
Income Statement (YTLmn) 2005 2006 2007
% Change
2007/2006 2008F 2009F
Net Sales 189 232 276 31% 311 332
Cost of Sales -134 -154 -197 41% -209 -220
Gross Profit 55 78 80 12% 102 111
Operating Expenses -23 -40 -43 17% -52 -55
Operating Profit/ (Loss) 32 38 37 7% 50 56
EBITDA 57 70 77 21% 90 94
Net Other Income 1 -4 0 -95% 0 0
Financial (Expenses)/ Income -4 -8 -6 -6% -8 -8
Tax 3 -5 -7 50% -8 -10
Net Profit / (Loss) 31 22 26 30% 34 38
Ratios(%) 2005 2006 2007 2008F 2009F
Gross Margin 29.2% 33.6% 28.8% 32.8% 33.6%
Operating Margin 16.9% 16.3% 13.3% 16.0% 17.0%
EBITDA Margin 29.8% 30.2% 27.9% 29.0% 28.3%
Net Margin 16.4% 9.6% 9.5% 10.8% 11.6%
Net Debt / Equity 49.0% 51.7% 30.2% 9.2% n.m.
Source: Celebi, Garanti Securities Estimates
12

CELEBI HAVA SERVISI A.S.
Definition of Stock Ratings
Stock Ratings
Previous Rating
OUTPERFORM (OP) The stock's total return is expected to exceed the return of the ISE-100 by more than 10% by the end of 2008. BUY
MARKET PERFORM (MP) The stock's total return is expected to be within 10% of the ISE-100 by the end of 2008.
UNDERPERFORM (UP) The stock's total return is expected to fall below the return of the ISE-100 by more than 10% by the end of 2008. SELL
Garanti Securities
Garanti Building Nispetiye Mah. Aytar Cad.
No.2/8 34340 Levent Istanbul Turkey
ICM Contact Information:
ICM: +90 212 318 27 32
Facsimile: +90 212 217 84 70
E-mail:
research@garanti.com.tr
HOLD
The information in this report has been obtained by Garanti Securities
Research Department from sources believed to be reliable. However,
Garanti Securities cannot guarantee the accuracy, adequacy, or completeness
of such information, and cannot be responsible for the results
of investment decisions made on account of this report. This
document is not a solicitation to buy or sell any of the securities mentioned.
All opinions and estimates included in this report constitute our
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judgment as of this date and are subject to change without notice.
This report is to be distributed to professional emerging markets investors
only.