Research Procedures

The Procedure About the Preparation of Research Reports and Analysts

1 Purpose, Scope and Legal Basis

1.1. Purpose

The purpose of this directive is to establish the principles (sector principles) and minimum standards and the report format regarding the procedures, rules and contents of the research and analysis reports prepared by the Research and Contents Management Department of Tacirler Yatırım Menkul Değerler A.Ş. for the purpose of reviewing the companies and sectors (and including them into the scope of research) and providing information to investors within the framework of the fundamental financial principles, when the investors make investment decisions about the companies, whose stocks are traded in the stocks market.

1.2. Scope

This directive covers the research and analysis reports to be prepared by the Research and Contents Management Department for the purpose of reviewing the companies, whose stocks are traded in the stocks market of Borsa İstanbul A.Ş. according to the relevant operating permit issued by the Capital Markets Board (and including them into the scope of research). Public offering price determination reports, analysis and assessment reports regarding the public offering price determination report, updating and visit reports, profit (expectation /realization /analysis) reports, periodic newsletters, other reports published under various names as well as provision of technical analysis are beyond the scope of this directive.

1.3. Legal Basis

The legal basis of this directive is the Circular of the Turkish Capital Markets Association (TCMA) "About the Directive of TCMA Regarding the Research and Analysis Reports Principles" dated 08.02.2021 and numbered 44 and the sub-paragraphs (c) and (g) of the first paragraph in the Article 7 of the Bylaw of the Turkish Capital Markets Association as published in the Official Journal dated 02.04.2014 and numbered 28960.

2 PRINCIPLES ABOUT THE RESEARCH AND CONTENTS MANAGEMENT DEPARTMENT

The Research Specialists, managers and all analysts working in the department prepare their reports under the supervision of the manager of the Research and Contents Management Department operating under the management of Tacirler Investment.

2.1. Research and Contents Management Department:

Within the framework of the fundamental financial principles, providing information to all relevant parties constitutes the core of all operations of the Research and Contents Management Department. Such provision of information consists of presenting written and verbal opinions formed based on the sources believed to be reliable (balance sheets, financial statements, notifications made to the Public Disclosure Platform, information received from the authorized officers of the company, etc.) as well as the analysis made by using various financial instruments through a wide range of tools and channels.

The Research and Contents Management Department creates all its opinions and analysis independently, by taking the interests of its clients into consideration, in full compliance with the procedures of Tacirler Investment and professionally-recognized general ethical principles. Department employees share their analysis based on objective and reliable sources in a way that reflects their actual views.

It is mandatory to ensure full compliance with the relevant regulations of the Capital Markets Board and the Turkish Capital Markets Association in the internal and external communications and interactions of the Research and Contents Management Department. The employees of the Research and Contents Management Department operate and determine the contents of the research reports prepared by them, verbal contents and comments based on legal regulations.

Department employees may not use the research results that may affect the investment decisions of investors in favor of themselves or third parties before communicating them to investors.

Department employees are responsible for keeping their studies and analysis confidential during the preparation of the reports to be shared from the corporate account of Tacirler Investment, and the reports that contain their conclusions are shared with all clients simultaneously.

2.2. Principles about the Analysts

Analysts working at Tacirler Investment pay maximum attention to the following principles in the reports to be prepared by them:

• Although the reports prepared regarding the stocks of companies may differ in terms of detailed contents and there is no definitive sector standard for sharing these reports with the public, they should have common characteristics that a comprehensive and efficient report should have, they should be assessed as a general acceptance and the report of the analysts should be prepared according to these principles. International Valuation Standards are taken into consideration when determining the application rules regarding the reporting and valuation approaches.
• The analyst prepares his/her report in accordance with the economic conjuncture and is well aware of the fact that periods of financial fluctuation may affect the activities of the company and thus the trading volume, price and liquidity. By considering that the value of the stocks of a company in actual circulation may differ significantly from their total market value, the report particularly includes the information about the ratio of stocks in actual circulation and the market values.
• While conducting a competitive analysis in the report, an analyst identifies similar companies as much as possible from the publicly available information in terms of financial size, field of activity, sector, geography and operations. Within the framework of verifiable/referable information; the report includes significant matters such as production capacity, service diversity and depth, pricing conditions, distribution, logistics channels and stability of the market share.
• It is considered that the company might have different paths to achieve success and these may include brand power, cost advantages and access to registered technological and/or natural resources, and the company might position itself competitively based on these factors.
• Stock valuation models can derive absolute or relative values. Absolute valuation models derive the intrinsic value of an asset by usually using the discounted cash flow models, while relative share valuation models may determine the value of one share relative to another share. While doing this valuation, several different criteria such as price-sales, price-revenue, price-cash flow and price-book value, net asset value can be taken as basis according to the sector. Since the model outputs may vary, more than one valuation model may be used in the report. If more than one valuation model is used, it is explained which valuation model and why such model has been used, and how the valuation models will be weighted.
• The financial modeling of the future financial results may help to measure the impacts of the changes in certain inputs on various financial statements. However, analysts pay particular attention to accurately predicting the past trends towards the future. The changes that occur in the factors that result in the past trends and their impacts are taken into consideration.
• As part of the financial analysis, verifiable/referable financial ratios specific to the sector where the company operates are used in the assessment of the company subject to the report.
• Company risks might be related to the issues such as operational, financial or legal transactions. Although companies are often required to mention the risks in their legal disclosures, risks are generally subjective and difficult to measure. Accordingly, making a disclosure about the “conditional opinions” of auditors and “significant weakness in internal control over financial reporting” is recognized as automatic red flags for analysts. An analyst measures and assesses the risk by using all kinds of information disclosed to the public, and shares his/her assessment results with investors together with the justifications.
• In line with the information disclosed to the public by the company; the report includes information about the economic aspect of the company as well as the issues such as taking environmental and social factors into consideration in corporate governance principles, company operations and decision-making mechanisms and efficiently managing the risks associated with these factors.

3 MINIMUM STANDARDS FOR RESEARCH REPORTS

Research reports must fulfill the following minimum standards.

1. The opinions, recommendations and expectations contained in the report must be based on reliable information and verifiable/testable data. Data and/or information about the sources used in the preparation of the report should be disclosed.
2. Basic information about the company and the capital markets such as stock code and symbol of the Company, the market where the stocks are traded, important trading rules that are specific to this market and that the investor should pay attention, primary sector and industry where the company operates, current stock price and market value as of the date of report and recommended target stock price, as well as summary information on important announcements/decisions that are directly or indirectly related to the company and that might affect the investment decisions of investors and previously published by the Board in its weekly newsletter and disclosed to the Public Disclosure Platform by the Stock Exchange should be provided in the beginning of the research report.
3. The report should include a brief introduction of the Company, its remarkable developments over the last three years, profit forecast of the analyst, a summary of the Company's stock valuation and investment/general investment recommendations.
4. The report should contain a precise opinion of the analyst regarding the activity of the company, including a discussion of the key factors that affect the incomes and costs of the company subject to the report. The exact data used in the report and the predictions/recommendations obtained based on such data will be clearly separated.
5. Report should include a general assessment of the dynamics of the sector where the company operates according to the information obtained from the publicly available information.
6. The recommendations, assessments or price target contained in the report should rely upon on a reasonable, meaningful and understandable basis.
7. The report should include a comprehensive valuation analysis regarding the valuation of the company, and contain clear and exact information about the valuation models and assumptions used.
8. The report should include an analysis of the financial performance of the company over the last three years and a future performance forecast.
9. The report should include the potentially negative developments about the sector and company, which are considered to pose a risk in terms of a decision to make an investment in the company subject to the report, and the sources such as news or reports that could be used as a basis for these developments, if any.

4 FORMAT OF RESEARCH REPORTS

The reports to be published by Tacirler Investment will, as a minimum, have the following topics and contents.

Basic Information of the Report

• Date of the Report,
• Type of the Report,
• Name of the Company Subject to the Report,
• An introduction of the Company Subject to the Report (main and other fields of activity, products and services, sector and/or market size of the company, etc.)
• Basic Information about the Company Subject to the Report for the Stocks Market (as of the date of the report; stock code, information about the market where the stocks are traded and controlling shareholders, ratio of stocks in actual circulation, market value, trading volume, market liquidity, current stock price, domestic and foreign investor ratio and recommended target share price),
• Information about the Organization and the Analyst that Has Prepared the Report, Summary of the Report – Investment Summary
• Price Forecast and Company Stock Valuation by the Analyst,
• Summary Information about the Date of Valuation of the Stocks of the Company and the Methods and Data Used,
• Investment / General Investment Recommendation

Valuation

• Information about the Criteria and Models Used and the Assumptions Used,
• Inputs and Findings,

Financial Analysis

• Past Financial Performance Analysis of the Company,
• Future Financial Performance Forecast of the Company,
• Financial Performance Analysis and Forecasting Methods and Tools.

Investment Risks

• Potential Investment Risks and Reasons.

Conclusion

• Final Conclusions Reached in the Report,
• Foresight and Opinion of the Analyst,
• Summary Table and/or Graphs Regarding the Analysis and Assessments Used in the Report,
• Statement to confirm that the data and methods used in the report are reliable, fair, suitable and reasonable.

Sources

• Information about the data and/or sources used in the preparation of the report.

5 PUBLICATIONS AND REPORTS PUBLISHED BY THE RESEARCH AND CONTENTS MANAGEMENT DEPARTMENT

Daily Publications / Reports

• Daily Futures and Options Market Newsletter
• Technical Analysis Newsletter
• Daily Newsletter
• Global Markets Newsletter
• Periodical Profit Statements
• Publication summarizing the developments in the EM currencies

Weekly

• Weekly Technical Analysis Newsletter
• Weekly Data Calendar Newsletter
• Weekly foreign portfolio movements and money & bank statistics

Monthly

• Global Inflation Dynamics

Periodical publications within the year

• Macroeconomic Outlook Reports

Studies published after obtaining data

• Short Term Investment Recommendations
• Company Reports
• Economic Data Analysis
• Breaking news / data: Short notes with important news or some different data analysis
• Sector-Related Reports
• Publication containing market expectations and possible scenario analysis before the key meetings such as ECB, FED, OPEC etc.
• Snapshots - Sharing important graphics with important comments within the day.
• Monitoring and publishing treasury tenders.

6 SHARING GENERAL INVESTMENT RECOMMENDATIONS ON THE INTERNET

The information prepared within the scope of general investment recommendations and presented to clients or distribution channels can be shared with the client one-on-one, provided that such information is not intended to a specific person or a group having similar financial conditions, risks and revenue preferences. As the website and social media accounts of Tacirler Investment are also within the scope of distribution channels, the recommendations shared in these platforms should be referred as stated in the report and should never be personalized.

7 RETENTION OF THE REPORTS

The reports prepared by the Research and Contents Management Department are primarily uploaded and shared by the research department at the website www.tacirler.com.tr to enable the clients of Tacirler Investment to view these reports. Then general information is also provided via e-mail, application etc. It is the duty of the Research and Contents Management Department to transfer and to retain the original copies of the reports prepared by the research department in the database of Tacirler Investment and to keep the corporate archives related to the Research and Contents Management Department up to date. The Information Technologies and Process Development Department is responsible for technological issues such as ensuring the security and continuity of the database.