Tax assault weighs on Doğan shares
Hurriyet Daily News with wires
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Shares of Doğan Holding, Doğan Media Group, Hürriyet and Doğan Gazetecilik, along with other publicly traded companies, dove Wednesday.
Market analysts told the Daily News the shares may be under significant pressure until the outcome of a possible appeal against the $490 million levy, while some said the group might opt for arbitration, accepting to pay maybe a fraction of the original levy. Doğan officials have said they reject any kind of arbitration and will seek nothing short of full exoneration.
Doğan Holding shares lost 14 percent Wednesday, while losses at Doğan Media Group, or DMG, Hürriyet Gazetesi and Doğan Gazetecilik stood at 17.7, 12.1 and 6.7 percent, respectively. Doğan Holding fell to 0.54 lira, while DMG, Hürriyet and Doğan Gazetecilik shares closed yesterday at 0.51, 0.51 and 1.25 liras, respectively. The daily loss of Doğan Holding was 1.8 percent yesterday, while DMG and Hürriyet stayed the same. Doğan Gazetecilik gained 0.8 percent.
The latest decline has presented a big discount for investors, according to Haydar Acun of Sardis Securities. Speaking to the Daily News yesterday, Acun said the tension between the government and DMG would not last forever. "This tension has made Doğan Holding shares those with the biggest discount among holding companies," he said. Acun has "buy" recommendations for Hürriyet, DMG and Doğan Holding.
Risk for investors:
A lawsuit may be launched against the levy. "The lawsuit may last a long time," said Önder Zorba, of Ata Investment, who has a "neutral" rating on Doğan Holding. Zorba rates DMG as "under performance" and Hürriyet as "market performance."
"Foreign investors especially would not want to invest in this great risk," Sinan Gökşen of Ekspresinvest told the Daily News.
"These events are beyond us," Analyst Ayşe Kanıöz Moroz of Eczacıbaşı Securities told the Daily News. "We will not have a healthy evaluation until the judiciary process ends. As tension continues, the risk level for investors is rising. Still, the company is extremely strong," said Moroz, who has a "market performance" rating on Doğan Holding.
Meanwhile, DMG shares were rated "sell" in new coverage at BGC Partners in Istanbul yesterday. Analyst Berna Kurbay set a 12-month price estimate for DMG shares of 0.49 Turkish Liras in a report to investors, reported Bloomberg.
The levy, which DMG labeled as an attack against press freedom, ordered the group to pay 826.3 million liras to the Treasury. The bill included 132.9 million liras in tax and 693.4 million liras in fines for the period between 2004 and 2006.
The levy is the latest episode in the government's "siege" against the DMG. In September, the prime minister accused Doğan outlets of falsely linking his party with a scandal involving misuse of money collected for a charity.