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􀂃 Re-Initiating Coverage of Tofas and Ford Otosan with “BUY” Ratings -- We like both
stocks without a strong preference for either at current prices. Both have robust business models,
while current prices present good entry points for both, especially for Tofas.
􀂃 Both Have High Export Leverage with Long-Term Euro-Based Cost-Plus Contracts --
Exports, the vast majority of which are generated through these contracts, account for about twothirds
of their revenues. These exports shield both auto-makers from margin volatility in the
European automotive market due to demand or cost-related issues.
􀂃 Beneficiary of Favourable Long-Term Trends In Industry -- Turkish automotive market is
expected to grow at least by as much as the overall economy, as road vehicle ownership in Turkey
is low, even after taking into account the modest income per capita. Global OEMs are shifting their
production to developing countries in order to improve their cost competitiveness and better supply
the faster increasing demand in emerging markets. Proximity to Europe; well-developed supplier
base; low-cost and loyal labour force; and the government’s willingness to support the industry
through R&D incentives are the major positives for Turkey, as well as for Tofas and Ford Otosan.
􀂃 Domestic Market To Recover In 2009 -- We have drastically reduced our growth forecast for
2008 for the domestic automotive market from 18% to neg. 1%, mostly due to unfavourable
conditions for automotive demand, such as a weakening currency and rising rates. However, we
have raised our growth forecasts thereafter and now expect c.10% p.a. growth in 2009 and 2010.
􀂃 Ford Otosan Offers Strong Free Cash Flow Generation Until 2010 and Steady Growth --
Ford Otosan stock boasts a double-digit dividend yield due to its strong free cash flow generation.
We expect this situation to continue until 2010, during which time the Company is expected to start
increasing its investment spending very significantly, in order to develop new Transit and Transit
Connect models. Revenue and EBITDA growth are forecast at 16% and 14% p.a. in TRY,
respectively, over the next three years, while earnings are expected to grow by 20% p.a.
􀂃 Tofas To Post Front-Loaded Major Revenue and Earnings Growth -- Tofas is to post more
than 100% EBITDA growth in 2008 on revenue growth of approx. 70%, mainly on new exports.
Revenue and EBITDA growth are expected to continue at 12% p.a. and more than 20% p.a.,
respectively, between 2008 and 2010. Despite the near-certain growth, the stock has weakened by
nearly 25% from its peak in 2007, while underperforming the market by 15%. The current price
presents a solid entry point for investors that missed the rally in the stock over the past two years.
􀂃 Attractive Upside and Significant Peer Discount -- Based on DCF and peer-multiple based
valuation, Ford Otosan offers c.60% 12-month target upside, while Tofas has c.50% 12-month
target upside. Both stocks have their 2009E EV/EBITDA at a 30% discount to international peers.

TABLE OF CONTENTS
INVESTMENT CASE.............................................................................3
AUTOMOTIVE MARKETS..................................................................5
TURKISH AUTOMOTIVE MARKET......................................................................................................................5
EUROPEAN AUTOMOTIVE MARKET................................................................................................................11
AUTOMOTIVE RAW MATERIAL COSTS.....................................14
FORD OTOSAN....................................................................................17
INVESTMENT CASE...........................................................................19
VALUATION.........................................................................................22
DISCOUNTED CASH FLOW....................................................................................................................................... 23
MULTIPLE COMPARISON ......................................................................................................................................... 25
MAJOR PROJECTS AND RECENT ISSUES ..................................26
FORECASTS .........................................................................................32
VOLUMES................................................................................................................................................................ 32
FINANCIALS ............................................................................................................................................................ 34
FINANCIALS ........................................................................................36
BACKGROUND....................................................................................39
TURKISH MACROECONOMIC DATA...........................................40
TOFAS ...................................................................................................41
INVESTMENT CASE...........................................................................43
VALUATION.........................................................................................46
DISCOUNTED CASH FLOW....................................................................................................................................... 47
MULTIPLE COMPARISON ......................................................................................................................................... 49
UPDATES ON MAJOR PROJECTS AND RECENT ISSUES .......50
FORECASTS .........................................................................................54
VOLUMES................................................................................................................................................................ 54
SUMMARY FINANCIALS........................................................................................................................................... 56
FINANCIALS ........................................................................................58
BACKGROUND....................................................................................61
TURKISH MACROECONOMIC DATA...........................................62