Tuesday, February 02, 2021 | periodical publication Monthly Market Outlook: February 2021 Equity Market, Macroeconomics

Equity Markets EU Indices Value 1M chng YTD chng We see improving Covid news ahead, alongside a slow economic reopening. WIG 5 7 ,4 6 5 +0 .8 % +1 % Predictions of economic recovery, monetary and fiscal stimulus, and rising ATX 2 ,9 3 1 +5 .4 % +5 % equity prices, remain intact. Expect a fresh round of cyclical rotation. BUX 4 3 ,7 0 4 +3 .9 % +4 % PX 1 ,0 2 8 +0 .3 % +0 % Sector Outlook WSE WIG Ind. Value 1M YTD Financials WI G2 0 1 ,9 6 8 -0 .8 % -1 % Bank stocks registered a pullback in the latter part of January that we see as mWI G4 0 4 ,1 2 4 +3 .8 % +4 % a temporary setback and a brief pause in rotation to value. Our strategy for s WI G8 0 1 6 ,9 1 8 +5 .1 % +5 % February is to remain overweight but selective on financials. We expect Banking 4 ,9 1 9 +3 .2 % +3 % more weakness in early days, especially after the first banks release their Basic Materials 6 ,0 8 5 +8 .2 % +8 % 2020 Q4 results, which we would use to increase positions for the long term. C hemic als 7 ,9 4 8 +4 .0 % +4 %

Chemicals C lothes 4 ,8 7 5 -5 .5 % -6 % Both Grupa Azoty and Ciech are expected to report shrinking EBITDA in Q4 Construction 3 ,9 1 3 +6 .8 % +7 % 2020. Of the two, Grupa Azoty has the worse outlook for the year ahead as E nergy 2 ,1 3 4 +4 .6 % +5 % the one more affected by soaring prices of gas, coal, and emissions. Food 4 ,1 6 7 +1 4 .4 % +1 4 % Gaming 2 9 ,6 5 0 +2 .7 % +3 % Mining IT 3 ,8 7 4 +0 .3 % +0 % JSW did not have the best quarter in Q4 2020 in terms of profit generation, M edia 5 ,8 9 2 -2 .5 % -2 % but its prospects have improved significantly since. At KGHM we expect O il & Gas 4 ,9 7 9 +0 .5 % +0 % fourth-quarter EBITDA to be twice the amount posted the year before. T elec om 971 -0 .6 % -1 % Sentiment for metals has been dampened by reduced economic activity in Top 5 / Worst 5 1M YTD China during the Lunar Year holiday season as the country deals with rising coronavirus cases. We would increase shares in KGH on any weakness. Serinus Energy 1 .1 6 +3 6 7 .7 % +3 6 8 % Energoinstal 1 .2 5 +7 2 .0 % +7 2 % Oil & Gas Agroton Public Ltd 7 .4 0 +6 8 .9 % +6 9 % Our February strategy for the refining sector (LTS/MOL/PKN) would be to KSG A gro 4 .2 6 +5 9 .0 % +5 9 % proceed with caution while profits remain squeezed by strong oil prices. We Rons on 2 .0 3 +5 6 .2 % +5 6 % still favor PGN as it continues to thrive amid rallying gas prices and higher BAH 0 .6 7 -9 .9 % -1 0 % sales volumes. Getin Holding 0 .7 2 -1 2 .7 % -1 3 %

Mercator Medical 3 6 9 .0 0 -1 4 .2 % -1 4 % Utilities A llegro 7 2 .0 0 -1 5 .0 % -1 5 % Investors watching for swift progress in Poland’s coal phase-out might be setting themselves up for a disappointment. The Czech generator CEZ offers Getin Noble Bank 0 .1 8 -1 9 .1 % -1 9 % the best exposure to rising emission prices and dividends. Rating & 9M TP Changes as of 2 February Telecoms, Media, IT Name Rating 9M TP The announcement by Amazon that it was launching its Polish marketplace CCC accumulate ▼ 89.00 PLN ► will most likely exert a downward pull in Allegro. In IT, we are anticipating a CD Projekt sell ▼ 232.00 PLN ► strong 2020 Q4 reporting season with Asseco Poland as the likely earnings Komercni Banka hold ▼ 682.02 CZK ► leader. In Media, we maintain positive view on Wirtualna Polska. ▲ Kruk hold ▼ 174.96 PLN ► Gaming LPP accumulate ▼ 8500 PLN ► CD Projekt stock has recovered since a drop in short interest. Ten Square MOL accumulate ▼ 2379.00 HUF ► ► Games remains our top gaming pick for February, and we see more upside OTP Bank hold ▼ 13800 HUF ► in PlayWay provided by planned new game releases. ▼ PGNiG accumulate ▼ 6.39 PLN ► Industrials 71% of rated industrials most likely improved 2020 Q4 results compared to the same period a year earlier – the highest proportion in two years. When it comes to positive surprises, watch out for AST, FMF, KER, MBR, STP, and TIM. High industrial production and a weak zloty continue to serve as upside catalysts for Polish manufacturers.

Retail Shopping mall stores reopened for business on February 1st, and this is good news for the first-quarter revenues of CCC, LPP, and VRG. In the month ahead we would favor clothing and footwear retailers over grocery chains, DNP, EUR, and JMT, on which we have neutral calls.

Key Ratings Positive: AC, Asseco Poland, Astarta, Atende, CCC, CEZ, Cognor, Eurocash, Famur, Jeronimo Martins, JSW, Kernel, LPP, Lotos, Mo-BRUK, Mangata, MOL, Pekao, Polenergia, PGNiG, PZU, Sygnity, Stalprodukt, Ten Square Games, TIM, VRG, Wirtualna Polska Negative: Allegro, CD Projekt, Grupa Azoty, Kruszwica

Investing Outlook The ‘January effect’ did not manifest itself this The ECB is also sending dovish signals, although in this case January, which was a volatile month on the stock the goal is to try to weaken the euro, which is becoming a market, underpinned by extended lockdowns, the problem for the European economy. Dovish statements emergence of new Covid strains, disrupted vaccine suggest that, contrary to the general consensus, the ECB supplies, and an unprecedented amount of speculation does not rule out further cuts in interest rates. In our by retail investors. After the rally of the final weeks of opinion, this is an unlikely scenario, but short term the 2020, it looks like we are dealing with a downward uncertainty might have had a negative impact on sentiment correction triggered by temporary factors. towards the financial sector. In this context, a correction in bank shares is a buying opportunity in the longer term. The service sector might become ready to reopen in the weeks ahead with the rollout of vaccination Macro Prints Come Out Better than Expected programs and as hospitalizations decrease. The Restrictions related to the epidemic are affecting the US and impulse to save among consumers, which increased in Europe to varying degrees. It is well shown by leading line with Covid infections, is likely to weaken going indicators. In the US January prints surprised investors forward in favor of increased spending that will help positively, both regarding manufacturing (ISM: 58.7) and fuel an economic recovery. In the US, the latest services (57.5 points) – despite the still high number of daily economic prints give reasons to be positive despite a new Covid cases. This positive picture was slightly blurred by continued virus spread, and a new stimulus package is a weaker retail sales print for December (-0.7% m/m), but forthcoming. The monetary stance of central banks this is the result of lockdowns and delays in fiscal transfers, remains dovish contrary to fears, and the measures which will change for the better in the coming weeks. Hard implemented in 2020 continue to support growth (M2 data confirm the upward trend in production. This picture of in the US: +27% y/y). As Covid-related risks dissipate, the American economy on the eve of entry into force of the reassured by strong 2020 Q4 results of the finance stimulus package and the opening of the economy getting sector, commodity producers, and media, investors closer (vaccines) makes it possible to look with optimism at will resume capital rotation into pro-cyclical stocks. this year’s economic recovery scenario, and, in consequence, at company earnings and market sentiment. Led by positive global cues, Polish stocks are also on track to get back onto an upward path. An important In Europe, the overall picture is less optimistic (based on event coming on March 25th is a clarification from PMI). Although in industrial production we see stabilization of Poland’s Supreme Court for lower courts on how to the economic situation at a relatively high level (54.7 points), proceed with cases brought by Swiss franc- services (45.0 points) are affected by longer-lasting and denominated loan holders against banks more severe Covid restrictions. Compared to our expectations in December, when we published our equity US Extends Fiscal and Monetary Stimulus strategy for 2021, this state of affairs indicates a delayed After several weeks of anticipation and negotiations, the new timing and scale of the expected economic rebound. We are US administration finally presented a fiscal package worth a facing high volatility in macro data. In our opinion, not until total of US$ 1.9 trillion, of which: i) US$ 1 trillion for EU economies reopen will the actual pace of recovery in households (an increase in direct grants from US$ 600 to services become apparent (in this case we are optimistic). US$ 2,000, an increase in benefits from US$ 300 to US$ 400, an increase in the Federal minimum wage from US$ 7.5 to The developments in macro scenarios for 2021 are well US$ 15), ii) US$ 400 billion earmarked for combating reflected in the latest forecast of the IMF. In the report, the Covid-19 (healthcare, vaccines), iii) US$ 440 billion for GDP growth forecast for the global economy was increased to support for small businesses. The package has not yet been 5.5% (previously 5.2%), with changes varying across voted on by the Senate, where Democrats have only a particular economic areas. For the US, the forecast increased minimum majority and need 60 votes (in the adopted from 3.1% to 5.1%, while expectations for Europe were legislative path). It can be expected that the final amount of reduced to 4.1% from 5.1% previously. support will be reduced, especially in the area of direct consumer support. As of today, investors’ expectations about Covid-19 – Mutations, Vaccines, Lockdowns the final amount oscillate between US$ 1 trillion and Maintaining or even tightening the restrictions in most US$ 1.2 trillion. This is even more than the US$ 750 billion European countries is proven to result in fewer infections. expected last December. The Senate should approve the However, the number of new cases in countries such as package by mid-March at the latest, when the benefit France, the Czech Republic, the Netherlands, and UK is so subsidy schemes expire. In February, President Biden will high that the process of easing the restrictions is slower than present another fiscal package that will focus on the expected in December, which naturally has its consequences implementation of a long-term strategy, including in downgraded macro forecasts for Europe. Nevertheless, infrastructure and environmental protection (positive impact looking at the performance of US markets, where on investor sentiment). approximately 140 thousand cases are still recorded per day, the cause of weak sentiment in Europe is different. Despite the concerns of some investors, the US Federal Reserve has clearly declared that the current scale of Namely, after a euphoric December, investors are monetary stimulus will not change quickly. If this were to disappointed by the sluggishness of the vaccination process. happen, the Fed will inform the markets in advance. Jerome This is mainly due to reduced availability of vaccines from Powell has confirmed that the Fed expects and accepts an Pfizer and AstraZeneca in relation to the volume ordered by increase in inflation once the economy opens post-Covid. He the EU. In January, the media reported that in the case of sees such an increase as temporary and not necessarily AstraZeneca of the 400 million doses orders, up to 60% less requiring change in monetary policy. In our opinion, in the than the adopted schedule (31 vs 80 million) would reach scenario of a strong rebound and an accompanying surge in Europe in Q1. Shortages are also visible in Poland, where inflation, a lack of rate hikes by the Fed would not slow down both Pfizer and Moderna are delaying deliveries. It is worth a rise in market rates – it may at most reduce them slightly noting that the supply process is carried out without delays (in any case, the markets’ response will be negative). both in the US and in the UK - its most significant geopolitical

2 partner. Apart from availability, in the case of the At the moment, Tesla’s market cap is 26 times 2020 AstraZeneca vaccine, there is also disappointment over its revenue, roughly equivalent to all OEMs combined, with effectiveness in people aged over 65, which hampered its Boeing and Airbus thrown in for good measure. approval in the EU. Finally, a great deal of uncertainty is caused by new virus mutations (in the UK, South Africa), We see such massively overvalued stocks as a risk factor for despite reassurance from some manufactures (Moderna) that the whole market. If we consider the ease with which their existing vaccines are effective against these strains. individual investors can communicate with each other via social networks, and how, untroubled by SEC, they can band In our opinion, in the coming weeks the information that will together to trade against specific hedge funds, bringing be received regarding Covid and the vaccines will provide a them on the verge of bankruptcy, and considering the more optimistic picture. The latest information from vaccine resources that retail traders can deploy, this could have manufacturers shows that the concerns in January consequences of unknown proportions for stock markets and (concerning future deliveries, the problems of past weeks are for economic stability. The hope is that market regulators will a fact) were exaggerated and that, in the case of both come up with a solution soon to this new kind of threat. companies, deliveries will be increased (AstraZeneca will increase delivery in Q1 by 9 million to 40 million). Another Warsaw Trails in January vaccine will appear on the market, manufactured by In Poland, like in the rest of Europe, in January extended Johnson&Johnson. Its effectiveness is lower than in the case lockdown restrictions stoked fears over slow economic of those of other manufacturers (78% in the US, after taking recovery, and cyclical stocks on the WSE took a hit after two into account the new Covid strains in South Africa and South months of gains registered in the two final months of 2020. America its effectiveness falls to 66%); however, it has Looking ahead, with the pandemic being brought slowly significant advantages in terms of mass availability. The under control, we expect cyclical sectors to resume their vaccine is administered as a single dose and does not require upward march and regain their relative strength versus other storage in a frozen state. Its effectiveness in the case of sectors – a reiteration of a view first proposed in our 2021 reducing serious cases of the disease is estimated at 85%. Equity Strategy. It is worth noting that the slide in cyclical Even such imperfect products will decrease the number of stocks is a worldwide trend fueled by Covid fears. In the US, hospitalizations and deaths, which will allow for a gradual the financial sector so far has had the most positive surprises opening of economies and abrupt increase in sales in the for market analysts this new reporting season – an important service area (additional demand). case for rotating into cyclical sectors for the long term.

Geopolitical Update – US Still on Collision Course The Polish government has lifted some restrictions effective After the first weeks of the new administration in the US, February 1st, and it has kept others in place until the 14th. there is no indication of a change of policy in relations with Shopping mall stores are among the businesses that could China. The new Secretary of State (Antony Blinken) made reopen on Monday under strict Covid protocols, and with this clear during his first meeting with the media, describing footfall hopefully returning this will be reflected in domestic the relationship with China as “competitive and hostile”. retail sales data for February. Places that have to stay closed Roughly at the same time, an aircraft carrier group led by the for two more weeks include restaurants, hotels, cinemas, and USS Roosevelt entered the South China Sea, which in turn gyms – here no noticeable improvement can be expected coincided with further US declarations of support for Taiwan’s until the second quarter of the year drive for independence. It did not take long for China to react firmly. According to Taiwan, Chinese military has violated A factor which, via banks, negatively impacted Polish equities Taiwan’s airspace zone 20 times since the beginning of this at the turn of the year, were quotes from Poland’s central year alone. We still believe that the conflict between the two bank head mentioning further reductions in interest rates, superpowers poses a threat of further escalation and is one accompanied by statements to the same effect from of the main – and difficult to predict in time – risk factors in representatives of the European Central Bank. Today it is this year. clear that what policymakers were really aiming for with all this rate talk was to keep the zloty from gaining relative to Chinese declarations that “any attempts to restrain China are the euro. At the last policy meeting in January, NBP Chief unrealistic” are supported by its economic growth, which is Glapiński was heard as saying that rates would most likely already visible in the macro data for 2020. In Q4, the GDP in not change (specifically they will definitely not increase) until China increased above expectations, i.e. by 6.5% y/y (vs. the end of the monetary council’s term in mid-2022. The expectations of 6.1%), resulting in full-year economic growth next milestone for the financial sector (and hence by of over 2%. With a near 5% GDP contraction in the US, this extension the whole Polish stock market) will come with the translates into a reduction in the GDP gap between the two Supreme Court’s decision on the handling of franc loan cases countries by US$ 1 trillion. This results in predictions that, in on 25th March. There are not many clues about what the terms of GDP value, China will overtake the US as early as judges might decide, but our best guess is that they will heed 2028. China is great at using economic weapons to weaken the call by the KNF to nudge banks into settling disputes with the position of the US as a global power. The best example in borrowers out of court (our bank sector analysts have more the recent weeks is the conclusion of a bilateral trade on this on the next page). agreement with New Zealand, which as a member of the Five Eyes is one of the key allies of the US. The exemplary Michał Marczak “punishing” of Australia by China played a role. tel. +48 22 438 24 01 michal.marczak@mbank.pl

Frenzied Trading Inflicts Pain on Hedge Funds The pandemic has given rise to increased activity in stock markets by individual investors. In recent months retail trading has taken a new turn, showing how the emergence of new trading platforms can cause the market to spiral out of control. Tesla is one example, with its value pumped up to a bigger amount than the combined worth of a group of the world’s leading automakers, including producers like GM that already use advanced technology to make electric vehicles.

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Sector Strategies Financials Chemicals

■ Polish financial stocks ended January lower amid negative ■ The defensive nature of the commodities offered by Ciech sentiment triggered by extended lockdown restrictions, a and Grupa Azoty (respectively soda ash and fertilizer) slower-than-hoped vaccine rollout, brief uncertainty about suggest that these companies might not benefit as much interest rates, and reports of large reserves set up by as others from the economic recovery. Moreover, the lenders to shield against future losses on franc- FY2021 prospects of both firms are undercut by higher denominated loans. Further, Poland 10Y bond yields again costs of natural gas and coking coal feedstocks, coupled slipped to rock-bottom levels, and although Treasury with rising prices of emission allowances. We remain yields are not a strong predictor of WIG-Banks underweight Polish Chemicals and we favor internationals performance, in the short term they might affect finance like Covestro and Fuchs Petrolub over Polish equities. stocks. The downward pressure will probably continue ■ In the 2020 fourth-quarter reporting season, we expect to through early weeks of February but in the latter part see EBITDA shrinkage at both Ciech and Grupa Azoty. Of WIG-Banks should resume the upward trend seen in the two, Grupa Azoty has the worse outlook for the year November and December 2020 as uncertainty gets ahead looking at soaring gas and emission prices. resolved by fourth-quarter earnings reports. ■ Key Ratings: ATT (sell) ■ The crucial fourth-quarter earnings season in 2020 was Mining marked by a host of one-time events. Weighing on the quarterly results aside from the usual end-of-year ■ Market sentiment for industrial metals has soured in adjustments are reserves for franc loans losses and fees anticipation of reduced economic activity in China as the refunded to early loan payers, on top of ECL provisioning country prepares for the Lunar Year holiday season as it and restructuring charges. With these items stripped out, grapples with a rise in coronavirus infections. Sentiment we expect to see growth in the recurring Q4 2020 will most likely remain muted in February in the face of revenues of banks compared to the previous quarter, rising inventories, potentially creating an opportunity to supported by tight cost management and relatively good increase investment in KGHM as a play on stronger quality of assets. During earnings calls, we will be copper demand in the latter part of the year driven by listening for each bank’s outlook on 2021 risk costs and, global infrastructure projects, new renewable energy where applicable, for their take on the latest bid by the capacity, and electric vehicles. financial regulator, KNF, who would like lenders to try and ■ Prices of Australian coking coal have risen to $160/t, led settle franc loan cases out of court (we suspect we will by increasing prices of steel and supply fears stroked by get very different takes from each bank). cyclone forecasts in the Australia region. Atlantic coking ■ When it comes to the size of franc loan losses booked in coal is reported to have reached $160 as well, and Q4 2020, we see a potential split among exposed lenders European steel producers are paying upwards of $150 for into 1) those that have a capital surplus large enough to a tonne of feedstock. Prices of coke are also surging with convert all CHF facilities to zloty in one go and be left with Russian coke in the Baltic region sold for €320-330/t excess capital still to finance growth and dividend compared to €220 last November and €250 in December. payments, and 2) those that do not have the money for The strong demand for coking coal and coke is fueled by out-of-court settlements and those that do but will have restarted steel capacity in Spain and Italy to capitalize on to subsequently curb lending for a time after their capital soaring prices that have reached 10-year highs. ratios fall to just within adequacy requirements. If this is ■ All this benefits the rated met coal producer JSW, which accurate, we continue to favor Pekao, Santander, and might announce a positive guidance for FY2021 at the PKO BP over ING BSK, which is overvalued, and next earnings call. JSW did not have the best quarter in Millennium, where the potential franc loan reserves Q4 2020 in terms of profit generation, but its prospects exceed the capital surplus. have improved significantly since. ■ For rated banks outside of Poland, we also expect 2020 ■ For KGHM, we have an expectation of a 32% year-over- Q4 results to be less than impressive after large one-time year rebound in the revenue for 2020 Q4 to PLN 7.7bn, charges, except maybe for Moneta Money Bank, which accompanied by a 100% increase in EBITDA to might be on track to beating its own quarterly targets. At PLN 2,238m and a net profit coming in at a positive Erste Group, there is anticipation over whether the bank PLN 1,241m versus a net loss of PLN 243m registered in can pay the €0.75 per share dividend declared for 2019 in Q4 2019. Higher zloty sales prices contributed to the February in the face of the EBA’s unchanged robust growth, with copper up 18% on the comparable recommendation against such payouts. year-ago period, accompanied by a 38% surge in the ■ The Czech National Bank has signaled it might raise price of silver and a 23% rise in gold. interest rates some time late this year, and in the mean ■ Key Ratings: JSW (buy) time Czech banks have to continue to navigate persistent pandemic and economic uncertainty and volatility. Oil & Gas

■ The European Central Bank can be expected to keep ■ Oil is back to trading at pre-pandemic levels and markets making dovish comments that are designed to keep the are pricing the return of normal demand in the coming euro in check more than they serve to signal further rate quarters. The positive sentiment is supported by rotation cuts. Our top foreign picks for February are Moneta Money effects, a weaker dollar, and inflation expectations, but Bank in the Czech Republic and Erste Group in Austria. the main confidence booster is the expected drop in ■ Without changing the target prices, at the current levels global petroleum reserves (production cuts in Saudi we downgrade our recommendations for Komercni Banka Arabia, increasing demand). In our view, the current oil (hold), Kruk (hold), and OTP Bank (hold). shortfall stands on fragile footing and spare capacity as ■ Key Ratings: PEO (buy), PZU (buy), MONET (buy), large as 7 mbpd will put a lid on prices, which we still EBS (buy) expect to average $50 this year. Saudi Arabia remains a major source of uncertainty in terms of its production plans, and it might reemerge as an issue in the context of new predictions about the return of shale projects in the US next year.

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■ At the current level, the high costs of crude inputs keep circumstances, at the moment we favor Enea as the one putting downward pressure on refinery profits, and with with the most upside potential still left after the margins likely to remain squeezed for the foreseeable decarbonization rally. future (a prediction supported among others by the slow ■ Key Ratings: CEZ (buy), PEP (buy) pace of global vaccinations) companies are not likely to Telecoms, Media, IT deliver growth in the first half of 2021. Compounding the pressure is a tight Urals/Brent differential, which got ■ Amazon in January announced plans to launch amazon.pl, squashed by a reduced supply of heavy Saudi Arabian its online marketplace in Poland, thus confirming our crude coinciding with lower exports of Urals rerouted to November 2020 prediction. Amazon has an extensive domestic Russian refineries. fulfillment network, its marketplace features millions of ■ When it comes to profits from fuel retailing, after a record items, and it offers streaming entertainment via Amazon 2020, facilitated by cheap oil, sales margins will most Prime. In order to compete with the global giant, Poland’s likely eventually normalize at lower levels, but not until current e-Commerce leader, Allegro, has to increase the the latter part of the year. loyalty of its customers, among others by shouldering the ■ Petrochemical profits keep reaching better-than-expected costs of a wider range of free shipping options. values, thanks mainly to increased demand from China Unfortunately, we currently do not see the Polish retailer and the loss of competitive edge by the coal-to-olefins as accomplishing the two major deliverables that are process since coal prices shifted upwards. The global baked into its share price: market share growth and petchem sector is seeing more tailwinds ahead in Q1 sustained profit margins. That is why we stand by our 2021, especially in polyethylene. negative call on ALE. ■ Natural gas in EU markets is currently trading at over ■ In telco, Poland is aiming to award 5G spectrum in the €20/MWh for month-ahead deliveries and above €16 for 3.6 GHz band in early 2021. The digitization ministry has the year forward. This compares to our 2021 average admitted that the asking price in the original auction (PLN price estimate of €12.9 and a long-term forecast of €16. 1.9bn), canceled due to the coronavirus outbreak, was EU gas reserves are depleted below 5-year averages amid "relatively steep,” but it is keeping mum on whether the strong demand driven by cold weather. Supporting a new asking price will change and how. Our valuation bullish outlook for gas are increasing prices of emission models for Orange Polska and Cyfrowy Polsat assume the allowances coupled with strong demand in Asia, where telecoms will spend PLN 550m each on one-fourth of the prices on the spot market at times reach double those available frequency. quoted in Europe. ■ Orange France has agreed to sell FTTx infrastructure for ■ Against this backdrop, we maintain a positive outlook for more than €1.3bn. The buyers are a consortium of PGNiG (high gas prices and tariffs, strong sales in Q1, Banque des Territoires CNP Assurances, and EDF Invest, re-rating of the “utility” business) however at the current acquiring a 50% stake in Orange Concessions, an price level we are prompted to lower our call for the stock investment vehicle that will own part of the fiber assets, to accumulate. Worthwhile bets outside of Poland with including 4.5+ million connections located in rural areas. positive gas exposures include EQT Corporaton and EOG It is expected that the transaction will be closed this year. Resources. ■ Plus, the mobile operator owned by the listed media and ■ On the downside, the outlook for oil refiners remains telco group Cyfrowy Polsat, has launched revamped 5G bleak amid low cracking margins and high costs of crude plans. According to our calculations, the cheapest of the inputs, gas, and emissions, and so in the near term we three new plans will become the second-cheapest monthly recommend a cautious approach to LTS/MOL/PKN even if 5G plan in the Polish market after Play’s, and the they display upside potential. At the current price level we cheapest in per-1GB terms. Plus is also offering two more downgrade our call for MOL to accumulate. expensive plans which at PLN 90zł and PLN 120 ■ Key Ratings: LTS (buy), MOL (accumulate), respectively a month look quite steep compared to the PGN (accumulate) competition, but they also offer larger data volumes

Power Utilities (100 GB and 150 GB, respectively, compared to 70 GB at most offered by Play and Orange). Note also that, unlike ■ Sentiment for coal-based generators turned more bullish rivals Orange, T-Mobile, and Play, whose ‘5G’ services on recently with an unexpected sharp upturn in prices of the 2,100MHz spectrum are more of a marketing ploy, electricity and carbon emissions that indicates potential Plus can offer actual 5G in the 2600 MHz spectrum. We for upward EBITDA revisions. Attractive dividend yields see the 5G plan rollout as a step in the right direction and are also helping as the payout season approaches, and a way for Plus to stay ahead of the curve by setting the with this in mind we reiterate our positive view on the 5G pricing rules for the competition. If the rule is to offer Czech generator CEZ. large data allowances for high prices, if others follow suit, ■ In Poland, the power market has so far only adjusted for 5G in the 3.6 GHz band can end up being offered at much more expensive EUAs, which means clean-dark spreads more expensive rates than LTE – a positive scenario for remain tight. The lower power prices are not a question of the Polish telco sector. weak demand; rather, they reflect expectations of an ■ Polish advertising expenses fell 9.3% in 2020 compared upcoming increase in supply after existing coal-fueled to the year before, and by medium despite a 1.1% y/y installations return from upgrades and two new power decrease television received the most marketing money stations get up and running, combined with an increasing last year at an estimated PLN 20bn. Advertisers in 2020 number of solar plants and competition from abroad increased expenses on radio commercials by 4.2% to coming in via Polish interconnectors. PLN 8.7bn, but otherwise budgets were cut across most ■ Poland’s decarbonization efforts are moving slower than outlets: print magazines -29.3% to PLN 3.4bn, dailies hoped, with no proposals yet for a coal asset carve out -14.4% to PLN 1.2bn, OOH -35.9% to PLN 1.1bn. put forward by the government, and no compromise Cinemas were hit the hardest by marketing budget cuts in reached in talks with miner unions. Moreover, when it 2020, suffering a 75.4% drop in ad receipts to PLN 481m. comes to how the planned reforms may go down with the ■ In IT, The WIG-Info index did not move much in January EU, France’s uphill battle with the European Commission but with Polish tech companies set to deliver good 2020 over the division of EDF might be a good indicator. That fourth-quarter results we are overweight the IT sector, being said, we see 2022 as a more realistic date for the and within it our top picks are ACP, CMR, ASE, ATD, SGN. announcement of the coal phase-out reform, preceded by ■ Key Ratings: SGN (buy), ACP (buy), WPL (accumulate), months of discussion and changing ideas. Under these ALE (sell)

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Gaming ■ We currently have the following top picks in Industrials: AC is expected to generate positive surprises in 2H’21 ■ We maintain a neutral stance on the gaming sector. amid recovering demand for cars and parts, and a Stocks in TEN registered a decline in recent weeks which growing solar energy business). Astarta is on course to we would use as an opportunity to increase positions, and generate record earnings in 2021 thanks to rallying prices for CDR we see a selling opportunity after a short squeeze of sugar, grains, and milk. Cognor is expected to post sent the stock higher at the end of January. higher results in 1H’21 after a rebound in steel and rebar ■ CD Projekt has not achieved the desired success with prices at the end of 2020. Famur receives more Cyberpunk 2077. The game has seen falling user equipment bookings from coal producers in Russia, engagement, with players not coming back after short Mongolia, and Indonesia thanks to the China-Australia play time. Moreover, the game’s Steam rating has not trade impasse. Kernel is likely to report significantly improved with a 78% positive review score right now and better results in 2020/21 with higher probability of a 76% average for the last thirty days. Finally, the game dividend increase. Mo-BRUK offers strong 2021 earnings has received a steep price discount on Amazon that might prospects, high dividends, ESG points, and it is in line to make it miss the market’s average price prediction for join the mWIG midcap index. Mangata benefits from 2021. We downgrade CDR to sell after the recent gains. recovering car sales, a weak zloty, a streamlined business ■ PlayWay has a busy period ahead with many new after 2021 cost cuts, and a low valuation compared to releases lined up, but the resulting growth in profits peers Alumetal and Boryszew. Stalprodukt enjoys higher seems priced in at the current level. February premieres margins on electrical sheets and zinc, with chances of include Rustler from Games Operators and Lust From declaring higher dividends in 2021. TIM continues to rake Beyond from Movie Games. The game producers in in robust sales, offers high dividends, and its 4Q’20 PlayWay’s portfolio might be worth individual results are expected to be stellar. We would avoid consideration as potential investments. Kruszwica, which we view as underweight. ■ 11 bit studios has noting major planned for February, ■ On 29 January we revised our financial outlook for but it is expected to announce a more ambitious 2021 Alumetal to reflect likely 40% growth in 2021 in net debt release schedule at the closest earnings conference. connected with investment in additional aluminum ■ Lead shareholders have sold some of their equity in Ten recycling capacity. We also raised our 2021 EBITDA Square Games, putting an end to downside uncertainty. forecast for Forte by 16% after better-than-expected The Company received Sensor Tower’s estimates of 2020 Q4 results. January app downloads and revenues that showed further ■ Key Ratings: AC (overweight), AST (overweight), gains for Hunting Clash and flat sales for Fishing Clash on COG (buy), FMF (buy), KER (buy), KRS (underweight), a month-on-month basis. We expect TEN to increase STP (buy), TIM (overweight) marketing for its games from February with a view to boosting sales. We also see Hunting Clash as helping to Retail diversify the Company’s business model and drive its ■ Poland has lifted restrictions on shopping malls from valuation higher towards peer averages. TEN will most February, and assuming stores are allowed to stay open likely deliver strong Q4 2020 results in March. fashion retailers might be able to deliver higher sales in ■ We are not changing the target price for CDR despite the Q1 2021 than in the same period a year earlier. Clothing downgrade to sell to reflect the recent price gains. and footwear companies launch spring lines at full prices ■ Key Ratings: CDR (sell), TEN (buy) in mid-February through April, and last year the first Industrials lockdown was introduced in mid-March and lasted all through April. This suggests positive base effects for first- ■ Germany’s latest manufacturing PMI at 57 is firmly in quarter sales. expansion territory, and combined with the zloty’s ■ We have a bullish view on CCC, LPP and VRG in weakness relative to the euro this makes a favorable anticipation of a momentum reversal in 2021 first-half environment for Polish exporters. We remain overweight profits. The lockdown-induced weak results of the fourth Industrials. quarter of 2020 are already priced into CCC and LPP, with ■ 71% of our industrial universe most likely improved 2020 investors looking ahead at their prospects for 2021. Q4 results compared to the same period a year earlier, Nevertheless at the current price levels we are prompted the highest proportion in two years. When it comes to to downgrade both CCC and LPP from buy to positive surprises, watch out for beats from Astarta, accumulate. without changing target prices. Famur, Kernel, Mo-BRUK, Stalprodukt and TIM. Heading ■ Among grocery retailers, we are anticipating another into 2021, we see Amica and PKP Cargo as facing bleaker strong quarter in Q4 2020 from Dino against year-over- prospects than the rest of our line-up. year EBITDA declines at Eurocash and Jeronimo ■ In December 2020, passenger car registrations in EU Martins, which, however, are both set to get back on posted a 3% year-over-year decline after a 10% rebound track with profits during 2021. We see DNP as fairly in Germany, fueled in part by government stimulus. By valued at the current price level relative to medium-term make, the most registered brands for the month were VW growth prospects. (+8%), Toyota (+21%), and FCA (+8%). We see ■ Key Ratings: CCC (accumulate), EUR (buy), tailwinds ahead for VW, Daimler, and Stellantis of JMT (accumulate), LPP (accumulate), VRG (buy) traditional automakers, trading at low 2022E valuations compared to 10Y avg./DAX/Tesla/EVs as they embark on a positive momentum supported by positive base effects.

Quarterly Earnings Surprises and YoY Growth Reported By Rated Companies 17 2018 2019 2020 17 2018 2019 2020 Beat/Miss +/= YoY +/= 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q miss 15 8 11 14 24 12 14 16 21 23 9 8 175 miss 26 27 20 19 24 25 29 25 23 34 41 32 32 357 in-line 21 33 20 23 20 28 26 28 15 14 17 25 270 in-line 1 8 11 10 6 9 11 6 9 9 5 9 3 97 beat 21 18 29 24 19 24 25 23 31 30 41 37 322 beat 41 35 40 42 41 37 31 40 39 28 25 30 31 460 Σ companies 57 59 60 61 63 64 65 67 67 67 67 70 767 Σ companies 68 70 71 71 71 71 71 71 71 71 71 71 66 914 miss (%) 26 14 18 23 38 19 22 24 31 34 13 11 23 miss (%) 38 39 28 27 34 35 41 35 32 48 58 45 48 39 beat (%) 37 31 48 39 30 38 38 34 46 45 61 53 42 beat (%) 60 50 56 59 58 52 44 56 55 39 35 42 47 50 Source: Companies, Bloomberg, PAP, mBank; 4Q’20 YoY is mBank estimate

6 mBank Sentiment Watch (next 30 days, by sector)

Sector Poland US Europe SENTIMENT BULLISH BULLISH BULLISH FIS US, PYPL US, Stocks To Own PEO, PZU, PKO MONET CP, EBS AV BAC US, BLK US Financials Stocks To Avoid rotation to value, chance of less Strong 4Q, direct beneficiary of rotation to value, quarterly Key Catalysts uncertainty regarding CHF loans reflationary environment results SENTIMENT BEARISH BULLISH BULLISH Stocks To Own APD US, AVTR US FPE GY, 1COV GY Chemicals Stocks To Avoid ATT, CIE YAR NO Strong 4Q, expected Expected results rebound in '21 Key Catalysts Cost pressure continuation in '21 on inventory rebuild SENTIMENT NEUTRAL NEUTRAL NEUTRAL Stocks To Own JSW HCC US, TECK US AI FP Mining Stocks To Avoid KGH

Key Catalysts Chinese New Year celebrations dampen sentiment towards metals but coking coal prices on the rise

SENTIMENT NEUTRAL NEUTRAL NEUTRAL CVX US, COP US, EOG US, Stocks To Own PGN EQT US, BKR US, HAL US, Oil&Gas, SLB US, VAL US, PSX US Refining Stocks To Avoid PKN Hydrocarbon prices and low Favorable rotation, YoY increase in crude/gas/margins vs Key Catalysts refining margins unfavorable secular sector trends SENTIMENT BEARISH BEARISH BEARISH RWE GY, ENR GY, Stocks To Own CEZ, PEP EOAN GY, EDPR PL Utilities FORTUM FH, Stocks To Avoid TPE HE US, AWR US ORSTED DC, VER AV Delayed decarbonization of Unfavorable rotation, negative correlation with yields. Pure RES Key Catalysts Polish utilities, CO2 prices exposures an exception SENTIMENT NEUTRAL NEUTRAL NEUTRAL Stocks To Own OPL CMCSA US, TMUS US Stocks To Avoid Telecoms Rising prices of mobile plans, Unfavorable rotation for Support from ongoing infrastructure transactions and Key Catalysts defensives, support in the US infrastructure spin-offs vs better KPIs (+), risk of 5G from media exposure unfavorable rotation auction (-) SENTIMENT NEUTRAL BULLISH BULLISH Stocks To Own WPL DIS US, FB US, GOOGL US Media Stocks To Avoid G24 GY, EVD GY Strong 4Q, continuation of stronger results in FY'21, favorable Key Catalysts Rebound in advertising spend rotation SENTIMENT BULLISH NEUTRAL NEUTRAL AAPL US, ADI US, MSFT US, Stocks To Own ACP, CMR, ASE, ATD, SGN DOCU US, CSCO US, ASML NA, IFX GY IT NVDA US, APH US Stocks To Avoid BC8 GY Key Catalysts Good 4Q'20 results expected Strong cash flow and EPS dynamics; muted reaction to 4Q beats SENTIMENT NEUTRAL NEUTRAL NEUTRAL Stocks To Own TEN TTWO US, ATVI US Gaming Stocks To Avoid CDR EA US Key Catalysts Growing market but with strong 2020 base and facing rotation headwinds in '21 SENTIMENT BULLISH NEUTRAL NEUTRAL ACG, AST, COG, FMF, MBR, CAT US, PH US, Stocks To Own MGT, KER, STP, TIM CMI US, DE US Industrials Stocks To Avoid VOE AV, KNEB FV, MT NA Mediocre 4Q, segment still under pressure from air transport and Key Catalysts Good PMIs, weak PLN manufacturing; mild downward revisions to '21 estimates SENTIMENT BULLISH BULLISH BULLISH Stocks To Own MGT GM US DAI GY, VOW3 GY, STLA IM Automotive Stocks To Avoid BRS 8TRA GY, BMW GY Key Catalysts Expected rise in auto sales in 2021, accelerating EV penetration SENTIMENT BULLISH NEUTRAL NEUTRAL Stocks To Own CCC, LPP, VRG NKE US ADS GY, ZAL GY, DHER GY Consumer Stocks To Avoid ALE M US BOSS GY Loosening of restrictions, return Pent-up demand from lockdowns, relatively high savings vs Key Catalysts to results improvement y/y "underperformance" from staples

7

Quarterly Earnings Surprises and YoY Growth Reported By Rated Companies 17 2018 2019 2020 17 2018 2019 2020 Beat/Miss +/= YoY +/= 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Financials Financials A lior Bank + = + = = = - + - + - + 75% A lior Bank - + + - + ------+ 31% BNP Paribas + 100% BNP Paribas + + + + - + + - + - = + + 77% H andlowy = + + - - - - - + - + + 50% H andlowy + + + - - - - - + - - = - 38% I N G BSK = = - = + + + - - + + + 75% I N G BSK + + = = + = + + = - - + - 77% M illennium = + + = + + + + - - + - 75% M illennium + + + + + = - = - - - - - 54% P ekao + = = + + = = = + + + = 100% P ekao + + = + - - + + = - - - - 54% P KO BP = + = = = = + = + + + = 100% P KO BP + + + + + + + + - - - - - 62% Santander BP = = + = - = - = + - = + 75% Santander BP + = = - + - - + - - - - - 38% Komerc ni + + + + + = + = = + - - 83% Komerc ni + - + + + + + ------46% M oneta + = + - + 80% M oneta - + - + + - + + = + - - - 54% Erste Group + + + + + + + = + - - + 83% Erste Group + + + + + + - + = - - - - 62% RBI + = + + + + 100% RBI + + = + - - = - + - - - 50% O T P Bank + + + + = = + + + - + + 92% O T P Bank + + + + + + + + + - - - - 69% PZU + + = + = + = = + - + + 92% PZU + - + + = + - - + - - = 58% Kruk - + + + - + - + - - + = 58% Kruk - - = + + + ------+ 38% Skarbiec + + = + - + + = + - + + 83% Skarbiec + - - - - + + - + - + + 50% GPW = + = - - = = + - = = = 75% GPW + - + - - - - + - + + - + 46% Chemicals Chemicals C iec h + = + = - = = = + - + + 83% C iec h + - = - - - = + + - + + - 54% Grupa A zoty - = - - + + = + = + = = 75% Grupa A zoty + - - - - + + + = - + - - 46% Mining Mining JSW - = + = - + + + + - = = 75% JSW + - = = - - = ------31% KGHM + = + - - + = + - - + = 67% KGHM - - + - = + - + - - + + + 54% Oil & Gas Oil & Gas Lotos = - + = - = = - - - + + 58% Lotos - - + = + + = = - + - - - 54% MOL = = = + + = + = + + + + 100% MOL + - - + + - = = - + - - - 46% P GN iG = - + - - = + - + + = + 67% P GN iG = - + + - - - - + + + + + 62% P KN O rlen = = - = + = + = - + = + 83% P KN O rlen - - - - + = + + - + - - + 46% Utilities Utilities CEZ + = - + = = + - + + + = 83% CEZ - - - + = + + = + + - = - 62% E nea = = - = = + + + + + + + 92% E nea - = - = - + + + + + + - - 62% E nerga - = = - - - - = - - = = 42% E nerga - + + - - - = + - - - = + 46% PGE = = = - - - = = + = = + 75% PGE - + + = - - - + + = - = - 54% P olenergia = 100% P olenergia - - - + + + + + + + + - - 62% T auron = = + + = + = + + + + + 100% T auron - = - - - + - + + = + + + 62% Telecoms Telecoms C yfrowy = + ======100% C yfrowy - = - ======- + + 77% N etia + = = = = = + = = = = = 100% N etia - = ------+ = = - = 38% O range P L = = + + + = = = + + + = 100% O range P L + = - + + = = + + + = = = 92% Media Media A gora + = + + = + - + = + = + 92% A gora + - - + + + - + + + - - 58% Wirtualna ======- = + 92% Wirtualna + + + + + + + + + - - - + 77% IT IT A illeron + = = - - + - = - - + - 50% A illeron + = + - - + - - + - + + + 62% A llegro = 100% A llegro + - 50% A s s ec o BS + = = + + = = + + = + = 100% A s s ec o BS + + + + + + - + + = = = + 92% A s s ec o P L - + + + = + = + = + + + 92% A s s ec o P L - + + + + + - + - + + + + 77% A s s ec o SE E = = = + = + = + + + + = 100% A s s ec o SE E + + + + + + + + + + + + + 100% A tende + = - + - + - = = = + = 75% A tende + - - + - + - - + - + + + 54% C omarc h - + + + + + - + - + - = 67% C omarc h - = + + + + - + + + + = 83% Sygnity Sygnity + + + + + + - + + + + 91% Gaming Gaming 11 bit studios = - = + - - - + + + + 64% 11 bit studios + + - + + + - - + + + + - 69% C D P rojekt + = = - - + + + + + - + 75% C D P rojekt ------+ - + + + + + 46% P layWay = = = + + + - - + - 70% P layWay + + + - + + + + + - - 73% Ten Square G - - - = = + - = = 56% Ten Square G + + + + + + + + + + + + 100% Industrials Industrials AC = = - + + = = = 88% AC - + + + + + - + - - - - - 46% A lumetal = = + = - - = = = + + + 83% A lumetal + + + + - - - - = + - + + 62% A mic a + - + + + = = + = + = + 92% A mic a - - + + + = + + + - + + + 77% A pator - = + = + = = + - = + = 83% A pator - - + = + + - - - = = + + 62% A s tarta - + + - + 60% A s tarta + - - - - - + - + + - + + 46% Borys zew - - = - - - = - - - = - 25% Borys zew + ------+ - - - - - 15% C ognor + + = - - + - - + + + 64% C ognor + + + + - - - - - + - + + 54% Famur + + + + + + + - - = + + 83% Famur + + + + + + + ------54% Forte - = + - - + - + + + + + 67% Forte - - + - + + - + + + - + + 62% Grupa Kęty - = + = = = = = + + + = 92% Grupa Kęty + + + + + = + + + + + + + 100% Kernel + = - + + - = + + + + + 83% Kernel - - + + + - + = - + + + + 69% Krus zwic a - + + + + + + - + = = - 75% Krus zwic a + + + + + + + - + = - - + 77% M angata - + + + - + = = + - + - 67% M angata + + + + = + = - = - - - = 69% M o-BRU K M o-BRU K + + + + + + + + + + + + + 100% P KP C argo - = + + - = - - - - + = 50% P KP C argo - + + + + + ------38% Stalprodukt - - - - = + + 43% Stalprodukt ------= - - + + 25% TIM + + + - = = + + 88% TIM + + + + + + + + + + + + + 100% Retail Retail A mRes t + - - = + - + = - - + - 50% A mRes t - + = + + + + + - - - - - 54% CCC ------+ - - - - + 17% CCC ------+ ------8% Dino + + = = = = + = = + + + 100% Dino + + + + + + + + + + + + + 100% E uroc as h - = = - - = = = + = + = 75% E uroc as h - + = = + - = + + = - = - 69% Jeronimo ======- - + 83% Jeronimo + + = = = = + + + = - + - 85% LPP = - + + = = + - - = + + 75% LPP + - + + + = = + + - - - - 62% VRG = - - ======+ + = 83% VRG + + = = + - + + + - - + - 69% '+' = positive surprise, '-' = negative surprise, '=' = in-line results vis-à-vis consensus expectations; *The column shows the sum of 'in-line' or 'beat quarters' in the last three years as a percentage of all quarters. Source: Companies, Bloomberg, PAP, mBank; 4Q’20 YoY is mBank estimate

8

Quarterly Surprise Charts For Our Coverage Universe (Aggregate and Selected Sector Statistics) Earnings Surprise YoY Growth 100% 100%

90% 90%

80% 80% 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20%

10% 10% All Rated All Companies 0% Rated All Companies 0%

negative neutral positive negative neutral positive Earnings Surprise YoY Growth 100% 100%

80% 80%

60% 60%

40% 40%

20% 20%

Financials Financials 0% 0%

100% 100%

80% 80%

60% 60%

40% 40%

20% 20%

Utilities Utilities

0% 0%

100% 100%

80% 80%

60% 60%

40% 40%

TMT TMT 20% 20%

0% 0%

100% 100%

80% 80%

60% 60%

40% 40%

20% 20% Industrials Industrials 0% 0%

100% 100%

80% 80%

60% 60%

40% 40% Retail Retail 20% 20%

0% 0%

Source: Companies, Bloomberg, PAP, mBank; 4Q’20 YoY is mBank estimate

9

Revisions To FY2020 Earnings Forecasts For WIG30 Companies

WIG30 Financials Oil & Gas Utilities Retail TMT Chemicals Commodities Jan-20=0 Cons. mBank Cons. mBank Cons. mBank Cons. mBank Cons. mBank Cons. mBank Cons. mBank Cons. mBank Feb-20 -5% -1% -2% -0% -7% +0% -21% +0% -4% -1% -1% +0% +83% +23% -5% -20% Mar-20 -17% -35% -11% -33% -26% -64% -21% +0% -5% -62% -7% -7% +124% +23% -64% -92% Apr-20 -37% -48% -42% -46% -42% -80% -26% -28% -30% -75% +0% -9% +74% -3% -79% -92% May-20 -38% -45% -43% -49% -49% -80% -30% -28% -30% -66% +6% +6% +71% -3% -72% -41% Jun-20 -38% -17% -44% -49% -44% +84% -28% -28% -49% -66% +4% +6% +71% -20% -60% -41% Jul-20 -35% -12% -52% -49% -7% +89% -36% -28% -98% -63% +5% +10% +45% -20% -46% +17% Aug-20 -35% -20% -52% -49% -5% +48% -42% -28% -91% -63% +6% +1% +45% -39% -40% +20% Sep-20 -36% -21% -52% -51% -2% +47% -40% -28% - -63% -1% +1% +45% -39% -37% +22% Oct-20 -45% -28% -59% -51% -16% +47% -56% -28% - -54% -6% -32% +35% -39% -35% -48% Nov-20 -40% -33% -53% -43% +8% +52% -71% -94% - -99% -13% -21% +35% +6% -46% -64% Dec-20 -44% -35% -51% -43% -3% +52% -89% -94% - -99% -20% -34% +95% +6% -58% -64% Jan-21 -42% -35% -52% -43% +10% +52% -95% -94% - -99% -20% -34% +95% +6% -53% -64% Source: "Cons." - Bloomberg consensus forecasts, "mBank" - estimates by mBank, provided ex. mBank. Not all WIG30 companies have received revisions to reflect the changed economic environment and earenings prospects – current recommendations and forecasts, together with revision dates, are listed here. The percentages indicate changes between the dates of this Monthly Outlook and the previous Monthly Outlook.

FWD 12M P/E Ratios For MSCI Poland & Emerging Markets (left), PL-EM Premium/Discount (right) 16 10%

15 5%

14 0%

13 -5% 12 -10% 11 -15% 10 -20% 9 -25%

-30%

Feb-16 Feb-17 Feb-18 Feb-19 Feb-20

Aug-16 Aug-17 Aug-18 Aug-19 Aug-20

Nov-16 Nov-17 Nov-18 Nov-19 Nov-20

May-16 May-17 May-18 May-19 May-20 MSCI Poland P/E 12M fwd (=13.4x) -35% MSCI Poland P/E 12M fwd 5Y avg (=11.7x)

MSCI EM P/E 12M fwd (=15.7x)

Feb-16 Feb-17 Feb-18 Feb-19 Feb-20

Aug-17 Aug-18 Aug-19 Aug-20 Aug-16

Nov-16 Nov-17 Nov-18 Nov-19 Nov-20

May-17 May-18 May-19 May-20 MSCI EM P/E 12M fwd 5Y avg (=12.4x) May-16 Source: Bloomberg, mBank Source: Bloomberg, mBank

FWD 12M EPS Growth (WIG30 vs. ATX, BUX, PX) Estimated Sector Upside Potential* 10% 15% 11% 10% 0% 8% 10% 4% 5% -10%

-20%

-30% -9% -11% -40% -19%

-50% -20%

Jul-20

Jan-21 Jan-20

Oct-20

Jun-20

Apr-20

Feb-20

Mar-20

Dec-20

Sep-20

Aug-20

Nov-20 May-20

WIG30 ATX BUX PX Source: Bloomberg, mBank Source: mBank; *To mBank price targets

Expected YoY Change in FY2020-2021E Sector Earnings* 2020 2021

53% 41% 32% 24% 20% 17% 16% 12% 8% 4% 2% 2% 367% 3%

-1% -3% -5% -13% -15% -12%

-32% -39%

Source: mBank; *Net Income for Financials, EBITDA for the remaining sectors

10

Divergence of mBank Estimates From Consensus Estimates mBank mBank 2 BBG mBank v. mBank v. BBG Earnings mBank v. BBG EBITDA Analyst Sector/Name BBG Ratings Rating TP1 ▲ ► ▼ TP3 BBG TP 2020E 2021E 2022E 2020E 2021E 2022E Count4 Financials Alior Bank accumulate 18,78 6 7 2 18,22 +3,1% - +104% +26% 13 BNP Paribas Polska accumulate 64,45 4 4 0 62,26 +3,5% -5% +17% +17% 5 Handlowy hold 36,45 3 6 3 36,72 -0,7% +47% +5% +8% 10 ING BSK reduce 143,10 7 4 2 176,85 -19,1% +0% -8% -16% 10 Millennium hold 2,88 4 7 3 3,54 -18,7% +446% - - 2 Pekao buy 75,93 14 5 1 71,77 +5,8% +2% +14% +8% 14 PKO BP buy 32,40 12 6 2 31,77 +2,0% +2% +3% -33% 15 Santander Bank Polska buy 238,14 7 9 1 200,70 +18,7% +5% +3% -6% 14 Komercni Banka hold 682,02 10 6 3 703,04 -3,0% +12% +6% +11% 13 Moneta Money Bank buy 82,70 12 1 0 85,87 -3,7% +5% +4% +3% 7 Erste Group buy 30,58 19 5 1 30,14 +1,5% +18% +32% +23% 14 RBI accumulate 18,22 13 6 3 19,45 -6,3% +5% +10% -6% 12 OTP Bank hold 13 800 11 5 0 13 444 +2,6% -1% +12% - 12 PZU buy 39,33 6 6 0 35,59 +10,5% +11% +6% +14% 5 Kruk hold 174,96 4 1 2 158,34 +10,5% +8% +9% +18% 3 Skarbiec Holding buy 30,74 2 0 0 30,74 +0,0% +60% -0% +0% 2 GPW reduce 40,60 0 4 2 45,90 -11,5% -1% +4% +7% 4/4 Chemicals Ciech hold 32,59 7 2 0 37,52 -13,1% -21% -15% -14% +1% -2% -4% 6/5 Grupa Azoty sell 23,65 1 3 3 27,11 -12,8% -0% +2% -88% -5% -10% -23% 2/4 Mining JSW buy 36,58 2 3 3 22,46 +62,9% - - +34% - +40% +13% 7/6 KGHM hold 152,27 7 5 3 190,62 -20,1% -18% -28% -25% +0% -22% -16% 10/10 Oil & Gas Lotos buy 49,01 7 5 1 46,71 +4,9% - -10% -30% - -0% -19% 9/8 MOL accumulate 2 379,0 9 4 1 2 387,2 -0,3% - -24% -32% -0% -5% -10% 10/9 PGNiG accumulate 6,39 6 4 0 6,01 +6,3% +6% +16% +20% +12% +6% +11% 5/5 PKN Orlen hold 58,40 8 5 4 60,86 -4,0% -3% -24% -43% -1% -5% -13% 13/13 Utilities CEZ buy 601,40 10 5 1 582,37 +3,3% -43% -5% -17% +2% -5% -12% 6/8 Enea suspended - 4 3 1 8,86 - -10% +27% +37% +3% +7% +13% 6/6 Energa suspended - 1 4 0 9,20 - - +17% +8% -2% -1% -3% 2/2 PGE suspended - 6 4 2 7,79 - - +46% +36% +4% +11% +13% 5/7 Polenergia buy 62,99 4 2 0 62,55 +0,7% +5% +2% -40% +5% +3% -15% 3/3 Tauron suspended - 8 1 0 3,58 - +12% +2% -12% -0% +0% -3% 5/7 Telecoms Cyfrowy Polsat hold 27,90 9 4 1 30,62 -8,9% -1% -1% +0% -0% -1% -1% 9/8 Netia hold 4,70 2 4 0 4,87 -3,5% +4% +3% -1% +2% +1% +0% 6/6 Orange Polska buy 8,20 8 6 1 7,39 +10,9% +61% +49% +28% +10% +12% +12% 8/10 Media Agora accumulate 7,60 1 0 0 7,60 +0,0% - - - +26% +13% +4% 2/2 Wirtualna Polska accumulate 93,00 9 0 0 92,78 +0,2% +7% +9% +4% -0% +5% +0% 6/6 IT Ailleron neutral - 0 1 0 ------0/0 Allegro sell 54,00 4 7 3 86,40 -37,5% -11% -3% -10% -2% -3% -9% 11/10 Asseco BS neutral - 0 3 0 40,20 - -2% +1% - +0% +2% - 3/2 Asseco Poland buy 80,70 6 3 0 74,52 +8,3% -5% -3% -2% +2% +6% +2% 5/4 Asseco SEE overweight - 2 2 0 46,17 - +1% +5% - -1% +3% - 4/4 Atende overweight - 1 0 0 - - -0% +0% -0% +0% -0% -0% 1/1 Comarch buy 247,60 5 2 0 228,80 +8,2% +2% -5% -10% -1% -2% -5% 4/4 Sygnity buy 10,70 1 0 0 - - -0% - - +0% - - 1/1 Gaming 11 bit studios hold 493,00 6 2 0 555,75 -11,3% +15% +33% +272% +4% +27% +213% 4/3 CD Projekt sell 232,00 8 6 10 296,60 -21,8% -18% +5% -9% -8% +2% -17% 18/18 PlayWay hold 590,00 4 2 0 646,06 -8,7% +47% +19% +0% -8% +41% +22% 5/5 Ten Square Games buy 724,00 10 0 0 728,84 -0,7% -1% +9% -1% -1% +12% +2% 7/7 Industrials AC overweight - 2 1 0 45,00 - +3% +4% +9% +3% +1% +5% 2/2 Alumetal neutral - 2 2 1 51,30 - +3% +15% +12% +3% +9% +8% 4/4 Amica neutral - 2 1 0 180,50 - +4% -2% -2% +1% -6% -6% 3/3 Apator neutral - 0 2 0 21,50 - +3% +6% -0% +4% +8% -0% 2/2 Astarta overweight - 1 2 0 22,40 - - +54% +50% -8% +23% +14% 3/3 Boryszew neutral - 0 1 0 - - - +99% +51% -0% +7% +9% 2/2 Cognor buy 2,29 1 0 0 2,29 +0,0% -7% -23% -29% -5% -15% -20% 2/2 Famur buy 3,30 3 2 0 4,05 -18,5% -5% +0% +10% -4% +4% +7% 6/5 Forte neutral - 2 2 0 40,45 - +113% +25% +20% +22% +17% +13% 4/4 Grupa Kęty hold 472,99 6 3 0 529,03 -10,6% +7% -2% -7% +3% -2% -8% 7/7 Kernel buy 62,93 4 1 0 63,48 -0,9% +6% +6% +5% +16% -9% -1% 4/3 Kruszwica underweight - 0 0 1 - - +0% +0% +0% -0% -0% -0% 1/1 Mangata overweight - 2 0 0 87,00 - +1% +3% -6% -1% +1% -5% 3/3 Mo-BRUK buy 387,49 2 0 0 398,75 -2,8% +0% +2% -0% +2% +3% +1% 2/2 PKP Cargo hold 13,97 1 2 1 12,58 +11,0% - - - +1% +4% +9% 3/3 Stalprodukt buy 370,99 3 0 0 382,00 -2,9% +29% -6% +12% +0% +1% +8% 3/2 TIM overweight - 1 0 0 - - +0% -0% +0% -0% +0% -0% 1/1 Retail AmRest suspended - 2 4 1 29,33 ------7/6 CCC accumulate 89,00 7 8 2 81,17 +9,7% - +79% +36% +1% +1% +8% 11/10 Dino hold 263,10 7 5 6 264,19 -0,4% +4% +7% +5% +3% +4% +2% 15/15 Eurocash buy 19,90 10 7 0 18,89 +5,4% +105% +92% +64% -37% -37% -30% 12/9 Jeronimo Martins accumulate 15,30 15 10 2 15,68 -2,4% -10% -4% -9% -20% -14% -14% 19/20 LPP accumulate 8 500,0 8 4 3 7 545,7 +12,6% - +10% +18% -44% -42% -36% 4/3 VRG buy 3,14 3 1 0 2,75 +14,4% - -34% -10% -69% -63% -54% 3/3 Source: Bloomberg (BBG), mBank; 1Target Price issued by mBank; 2Positive/Neutral/Negative ratings count comprising the Bloomberg Consensus; 3Average of all analyst target prices; 4Number of analysts participating in the consensus (of EPS/EBITDA)

11

Current Recommendations of mBank Price At Target Current Upside/ P/E EV/EBITDA Company Recommendation Issued On Reco. Price Price Downside 2020 2021 2020 2021 Financials +12,6% 12,9 10,5 Alior Bank accumulate 2020-11-19 17,50 18,78 17,20 +9,2% - 10,0 BNP Paribas Polska accumulate 2020-12-08 55,00 64,45 62,00 +4,0% 12,8 10,2 Handlowy hold 2020-11-19 35,60 36,45 38,80 -6,1% 16,9 16,3 ING BSK reduce 2020-11-19 155,20 143,10 171,00 -16,3% 15,8 16,6 Millennium hold 2020-11-19 2,93 2,88 3,94 -26,8% 19,1 - Pekao buy 2020-11-19 57,94 75,93 64,08 +18,5% 12,9 10,2 PKO BP buy 2020-11-19 27,23 32,40 29,15 +11,1% 12,8 12,2 Santander Bank Polska buy 2020-11-19 175,20 238,14 181,40 +31,3% 13,9 13,4 Komercni Banka hold 2021-02-02 659,00 682,02 CZK 659,00 +3,5% 14,0 13,1 Moneta Money Bank buy 2020-12-08 67,00 82,70 CZK 73,00 +13,3% 14,9 12,8 Erste Group buy 2020-12-08 24,95 30,58 EUR 25,25 +21,1% 12,5 8,5 RBI accumulate 2020-12-08 16,69 18,22 EUR 16,44 +10,8% 7,8 7,2 OTP Bank hold 2021-02-02 13 500 13 800 HUF 13 500 +2,2% 12,7 9,2 PZU buy 2020-12-03 26,45 39,33 29,87 +31,7% 12,4 9,0 Kruk hold 2021-02-02 168,30 174,96 168,30 +4,0% 39,4 10,9 Skarbiec Holding buy 2020-12-08 24,80 30,74 29,20 +5,3% 5,1 7,4 GPW reduce 2020-12-08 43,00 40,60 43,85 -7,4% 12,3 14,0 Chemicals -9,0% 15,2 17,6 6,0 6,6 Ciech hold 2020-12-08 30,35 32,59 31,35 +4,0% 18,0 11,0 5,8 5,2 Grupa Azoty sell 2021-01-14 28,95 23,65 29,00 -18,4% 12,4 24,3 6,2 8,0 Mining -18,7% 21,1 15,3 7,6 4,3 JSW buy 2020-12-08 25,53 36,58 34,90 +4,8% - 18,9 - 2,6 KGHM hold 2020-12-08 177,20 152,27 195,20 -22,0% 21,1 11,6 7,6 6,1 Oil & Gas +9,6% 6,8 11,9 5,3 5,1 Lotos buy 2020-12-08 37,30 49,01 40,25 +21,8% - 12,9 - 5,3 MOL accumulate 2021-02-02 2 220 2 379 HUF 2 220 +7,2% - 12,6 5,3 4,9 PGNiG accumulate 2021-02-02 5,72 6,39 5,72 +11,8% 4,5 10,5 2,3 3,8 PKN Orlen hold 2020-12-08 59,60 58,40 56,02 +4,2% 9,1 11,2 5,6 5,5 Power Utilities +15,3% 23,9 7,0 4,8 4,9 CEZ buy 2020-11-20 468,00 601,40 CZK 521,00 +15,4% 23,8 14,5 6,7 6,9 Enea suspended 2020-12-08 5,60 - 7,01 - 18,6 2,5 2,8 2,5 Energa suspended 2020-12-08 7,80 - 7,81 - - 6,6 4,8 4,6 PGE suspended 2020-12-08 5,77 - 6,54 - - 7,3 3,8 3,1 Polenergia buy 2020-10-30 42,60 62,99 56,00 +12,5% 24,1 23,5 11,2 11,6 Tauron suspended 2020-12-08 2,17 - 2,81 - 25,9 4,9 4,8 5,3 Telecoms +4,3% 34,6 28,8 5,3 5,1 Cyfrowy Polsat hold 2020-12-08 27,84 27,90 30,14 -7,4% 15,8 12,9 7,6 7,3 Netia hold 2020-12-08 4,50 4,70 5,38 -12,6% 34,6 31,3 5,3 5,1 Orange Polska buy 2020-12-08 6,52 8,20 6,49 +26,3% 60,2 28,8 4,7 4,5 Media +5,3% 33,3 20,6 15,4 10,2 Agora accumulate 2020-12-08 6,96 7,60 6,70 +13,4% - - 15,6 9,0 Wirtualna Polska accumulate 2020-12-08 82,00 93,00 89,20 +4,3% 33,3 20,6 15,1 11,5 IT -20,1% 17,5 15,7 8,1 7,1 Ailleron neutral 2020-05-05 6,26 - 12,00 - 23,9 18,6 7,9 6,6 Allegro sell 2020-11-18 67,89 54,00 73,50 -26,5% - 69,7 49,4 39,3 Asseco BS neutral 2020-09-02 36,00 - 38,80 - 17,6 16,8 11,5 10,9 Asseco Poland buy 2020-09-02 70,20 80,70 68,40 +18,0% 15,6 14,3 4,8 4,6 Asseco SEE overweight 2020-08-07 43,70 - 39,00 - 17,5 15,4 8,8 7,8 Atende overweight 2020-11-27 3,44 - 4,70 - 17,6 15,9 8,3 7,6 Comarch buy 2020-09-29 204,00 247,60 195,00 +27,0% 16,8 14,8 6,4 6,1 Sygnity buy 2020-09-01 7,20 10,70 9,60 +11,5% 8,6 7,8 5,3 4,7 Gaming -11,4% 25,0 22,6 19,5 14,9 11 bit studios hold 2020-09-02 482,00 493,00 486,50 +1,3% 30,5 48,6 20,4 29,6 CD Projekt sell 2021-02-02 305,80 232,00 305,80 -24,1% 27,3 22,8 18,6 16,6 PlayWay hold 2020-12-08 599,00 590,00 659,00 -10,5% 22,8 22,3 33,5 13,1 Ten Square Games buy 2020-12-08 525,00 724,00 515,00 +40,6% 21,0 14,3 17,7 11,7 Industrials +12,7% 11,9 10,6 7,1 6,4 AC overweight 2020-12-08 36,40 - 35,00 - 10,9 10,2 7,5 6,8 Alumetal neutral 2021-01-29 53,20 - 55,00 - 17,1 12,8 9,8 8,0 Amica neutral 2021-01-18 145,80 - 148,00 - 7,6 10,1 4,5 5,9 Apator neutral 2020-12-08 22,40 - 23,30 - 12,5 12,0 7,1 6,9 Astarta overweight 2021-01-28 36,20 - 39,30 - - 2,6 4,1 2,2 Boryszew neutral 2020-12-08 2,87 - 2,96 - - 23,7 10,8 7,2 Cognor buy 2020-12-08 1,25 2,29 1,74 +31,6% 11,3 8,3 5,1 4,6 Famur buy 2020-12-08 1,90 3,30 2,60 +26,9% 8,1 10,0 2,9 3,1 Forte neutral 2021-01-29 43,50 - 44,95 - 14,2 10,0 7,0 6,5 Grupa Kęty hold 2020-12-08 449,50 472,99 485,00 -2,5% 11,2 13,4 8,1 9,1 Kernel buy 2021-01-27 54,50 62,93 55,40 +13,6% 10,6 4,5 5,1 4,4 Kruszwica underweight 2021-01-12 66,00 - 65,00 - 16,6 13,3 9,4 7,7 Mangata overweight 2020-12-08 55,50 - 62,50 - 13,2 10,7 7,7 6,4 Mo-BRUK buy 2021-01-11 246,00 387,49 290,00 +33,6% 13,5 11,0 9,9 7,8 PKP Cargo hold 2020-12-08 13,20 13,97 13,80 +1,2% - - 4,9 4,7 Stalprodukt buy 2020-12-08 210,50 370,99 318,00 +16,7% 11,1 11,0 4,1 3,9 TIM overweight 2020-12-08 18,90 - 18,80 - 13,2 10,5 7,2 6,4 Retail +9,8% 58,2 27,8 18,5 8,2 AmRest suspended 2020-12-08 25,80 - 28,10 - - - - - CCC accumulate 2021-02-02 85,70 89,00 85,70 +3,9% - 38,4 23,0 5,8 Dino hold 2020-12-08 269,80 263,10 262,80 +0,1% 39,9 30,2 25,0 19,2 Eurocash buy 2020-07-02 17,34 19,90 13,71 +45,1% - 88,1 5,0 4,7 Jeronimo Martins accumulate 2020-08-04 14,29 15,30 EUR 13,48 +13,5% 25,6 20,7 8,1 6,9 LPP accumulate 2021-02-02 7 700,00 8 500,00 7 690,00 +10,5% 81,0 25,3 19,7 11,0 VRG buy 2020-09-23 2,51 3,14 2,60 +20,8% 76,5 21,0 17,3 9,5

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Stocks Re-Rated as of 2 February 2021

Company Rating Previous Rating Target Price Issued on CCC accumulate buy 89.00 PLN 2021-02-02 CD Projekt sell reduce 232.00 PLN 2021-02-02 Komercni Banka hold accumulate 682.02 CZK 2021-02-02 Kruk hold buy 174.96 PLN 2021-02-02 LPP accumulate buy 8500.00 PLN 2021-02-02 MOL accumulate buy 2379.00 HUF 2021-02-02 OTP Bank hold accumulate 13800.00 HUF 2021-02-02 PGNiG accumulate buy 6.39 PLN 2021-02-02

Recommendations Issued in the Past Month Company Rating Previous Rating Target Price Issued on Alumetal neutral neutral - PLN 2021-01-15 Alumetal neutral neutral - - 2021-01-29 Amica neutral neutral - - 2021-01-18 Astarta overweight overweight - - 2021-01-28 Forte neutral neutral - - 2021-01-29 Grupa Azoty sell hold 23.65 PLN 2021-01-14 Kernel buy buy 62.93 PLN 2021-01-27 Kruszwica underweight neutral - - 2021-01-12 Mo-BRUK buy 387.49 PLN 2021-01-11

Recommendation Statistics For Issuers Who Are Clients of All Recommendation Biuro maklerskie mBanku Count As pct. of total Count As pct. of total sell 3 4.5% 1 4.2% reduce 2 3.0% 2 8.3% underweight 1 1.5% 0 0.0% hold 15 22.4% 5 20.8% neutral 7 10.4% 2 8.3% accumulate 10 14.9% 4 16.7% buy 23 34.3% 9 37.5% overweight 6 9.0% 1 4.2%

13

Corporate Events Calendar For February

Date Time Company Event 2-Feb Millennium Q4'20 earnings announcement (preliminary) 2-Feb 2pm Millennium Management Board conference call (http://infostrefa.tv/millennium/en) 2-Feb 2pm Sescom.eu Management Board conference call 3-Feb Santander Q4'20 earnings announcement (preliminary) 4-Feb PKN Orlen Q4'20 earnings announcement 5-Feb Moneta Money Q4'20 earnings announcement 5-Feb RBI Q4'20 earnings announcement (preliminary) 9-Feb mBank Q4'20 earnings announcement (preliminary) 10-Feb Komercni Banka Q4'20 earnings announcement 11-Feb Citi Handlowy Q4'20 earnings announcement (preliminary) 12-Feb ING BSK Q4'20 earnings announcement (preliminary) 17-Feb PKO BP Q4'20 earnings announcement 22-Feb Millennium Q4'20 earnings announcement 23-Feb Orange Polska Q4'20 earnings announcement 23-Feb Santander Q4'20 earnings announcement 24-Feb Asseco SEE Q4'20 earnings announcement 24-Feb Orange Polska Management Board conference call 25-Feb Asseco BS Q4'20 earnings announcement 26-Feb Alior Bank Q4'20 earnings announcement 26-Feb Apator Q4'20 earnings announcement 26-Feb Erste Bank Q4'20 earnings announcement (preliminary) 26-Feb Kernel Q4'20 earnings announcement 26-Feb Stalprodukt Q4'20 earnings announcement 26-Feb Sygnity Q4'20 calendar earnings announcement 27-Feb Pekao Q4'20 earnings announcement

14

Macroeconomic Update Industrial Production Prices of healthcare returned to rising at a more normal pace Poland’s industrial production in December registered 11.2% in December. In transport, despite higher fuel costs, the y/y expansion from the same month a year earlier – a much price growth for the month was fairly slow at 2.1%, faster pace of growth than the 8.3% expected by analysts. indicating a deceleration in the upward trend in prices of There were many drivers behind the positive surprise, from services – given December volatility we cannot come up with favorable base and working-day effects to locked-down skiing an explanation for this other than slashed rates for domestic resorts and vacation destinations. Secondly, producers last and international flights. In telco, December brought reduced month were working overtime to compensate for pandemic- prices for both goods and services, which we see as a induced delays and build up reserves ahead of Brexit. Asa temporary fall before prices reembark on a steady upward matter of fact the pandemic does not seem to have affected trend through 2021, fueled by 5G rollout and Brexit. In the the manufacturing sector as much as it has other industries. category of “other” goods and services, there was a fall in Producers are able to operate at maximum capacity as December due most likely to a one-off decline in prices of employee absences due to health reasons or parental leaves motor insurance. become fewer. Further, global supply chains remain intact with manufacturing sites often spared from social distancing Average CPI inflation in 2020 will have come out at 3.4%. In restrictions. All this has helped bring Polish production back 2021 we are anticipating contraction at an annual rate of to pre-pandemic levels, however we see challenges ahead -2.8-2.9%. and we stand by our 2020 and 2021 growth predictions. Many of the economic prints for December are a product of Jobs temporary shifts, plus, the pandemic is far from over and the December job prints revealed a positive surprise with long-awaited vaccine supply timetable might have to be average employment down only 1.0% year-over-year vs. scrapped. consensus for a 1.2% fall, and with salaries showing a 6.6% rebound against an expected rise of 4.7%. We see this as a Retail Sales one-off surprise rather than the beginning of a trend, which, Retail sales rebounded in December after shopping mall however, can be expected to form in the second half of the stores had been allowed to reopen temporarily, showing a year. The 10,100 full-time jobs added in December most slower rate of fall than in November at -0.8% y/y, ahead of likely included extra hours worked by retail employees during the market’s -2.3% forecast. Our anticipation of an 0.8% rise the temporary mall reopening between two lockdowns, and proved slightly too optimistic. Aside from shopping to furloughed and scaled-back employees in other sectors compensate for the previous lockdown and the lockdown that reinstated to full-time hours. Moreover the number of was coming soon, December had an extra trading Sunday workers on parental leaves for the duration of school that will have contributed to higher footfall despite social lockdown is lower this time around than in spring 2020. distancing restrictions on shopper numbers. Sales of clothing Similar factors most likely contributed to the stronger rise in and footwear in December increased strongly relative to salaries registered in December: reopened shopping malls, a November, but relative to December 2019 they were still holiday shopping rush, and high industrial production might much lower. In fact, the only categories of goods that sold have required more paid overtime. faster last December than in the same month the year before were furniture, electronics, and appliances – a revival which Looking ahead, migrant workforce is back in Poland in we contribute to the reopening of mall appliance stores, numbers reminiscent of pre-pandemic levels, and overall helped probably to an extent by Cyber Monday shopping. absenteeism is down with fewer child care and sick leaves registered in the system. On the whole, retail sales are not back to pre-pandemic levels and going forward sales will remain constrained by lockdown restrictions and are not likely to rebound much mBank Research even with shopping mall stores allowed to reopen again from (M. Mazurek, M. Zdrolik, J. Kownacki) February 1st. Consumers at the moment are more wary of [email protected] spending after the larger shopping done in December, and their needs have shifted from wanting things to missing services, which they increasingly order online. Last but not least, a slower rise in wages can be expected to keep consumer spending subdued in the coming months.

Inflation CPI increased 2.4% in December after gaining 3% in November. The deceleration came as a negative surprise, and it was driven by lower prices of air travel, communications, and insurance, rather than being an effect of broad disinflationary pressures. In non-core sectors, prices of food stabilized in December while fuel prices grew 3%, accompanied by small hikes in household electricity rates. More interestingly, in core categories we saw further declines in prices of clothing and footwear and a slower climb in alcohol and tobacco. Costs of living continued their upward march at an annual rate of 6%. Notwithstanding rent and other admin, the rise of the home office means that cost of living is set to rise significantly going forward compared to what it was last year as a proportion of monthly household expenses.

15

List of abbreviations and ratios contained in the report: EV – net debt + market value (EV – economic value) EBIT – Earnings Before Interest and Taxes EBITDA – EBIT + Depreciation and Amortisation PBA – Profit on Banking Activity P/CE – price to earnings with amortisation MC/S – market capitalisation to sales EBIT/EV – operating profit to economic value P/E – (Price/Earnings) – price divided by annual net profit per share ROE – (Return on Equity) – annual net profit divided by average equity P/BV – (Price/Book Value) – price divided by book value per share Net debt – credits + debt papers + interest bearing loans – cash and cash equivalents EBITDA margin – EBITDA/Sales

OVERWEIGHT (OW) – a rating which indicates that we expect a stock to outperform the broad market NEUTRAL (N) – a rating which indicates that we expect the stock to perform in line with the broad market UNDERWEIGHT (UW) – a rating which indicates that we expect the stock to underperform the broad market

Recommendations of Biuro maklerskie mBanku: A recommendation is valid for a period of 6-9 months, unless a subsequent recommendation is issued within this period. Expected returns from individual recommendations are as follows: BUY – we expect that the rate of return from an investment will be at least 15% ACCUMULATE – we expect that the rate of return from an investment will range from 5% to 15% HOLD – we expect that the rate of return from an investment will range from -5% to +5% REDUCE – we expect that the rate of return from an investment will range from -5% to -15% SELL – we expect that an investment will bear a loss greater than 15% Recommendations are updated at least once every nine months. mBank S.A. with its registered office in Warsaw at Prosta 18 renders brokerage services via a dedicated organisational unit, the Brokerag Bureau, which uses the Polish name Biuro maklerskie mBanku. mBank S.A. as part of the Exchange's Analytical Coverage Support Programme (“Programme”, https://www.gpw.pl/eacsp) prepares analytical reports for the following companies: Cognor Holding, Comarch, Sygnity, VRG. These documents are prepared at the request of Giełda Papierów Wartościowych w Warszawie S.A. (‘WSE’), which is entitled to copyrights to these materials. mBank S.A. receives remuneration from the WSE for the preparation of the reports. All documents prepared for the Programme are available at: https://www.mdm.pl/ui-pub/site/market_and_analysis/analysis_and_recommendations/analytical_coverage_support_programme

This document has been created and published by Biuro maklerskie mBanku. The present report expresses the knowledge as well as opinions of the authors on day the report was prepared. The opinions and estimates contained herein constitute our best judgment at this date and time, and are subject to change without notice. The present report was prepared with due care and attention, observing principles of methodological correctness and objectivity, on the basis of sources available to the public, which Biuro maklerskie mBanku considers reliable, including information published by issuers, shares of which are subject to recommendations. However, Biuro maklerskie mBanku, in no case, guarantees the accuracy and completeness of the report, in particular should sources on the basis of which the report was prepared prove to be inaccurate, incomplete or not fully consistent with the facts. mBank S.A. bears no responsibility for investment decisions taken on the basis of the present report or for any damages incurred as a result of investment decisions taken on the basis of the present report.

This document does not constitute an offer or invitation to subscribe for or purchase any financial instruments and neither this document nor anything contained herein shall form the basis of any contract or commitment whatsoever. It is being furnished to you solely for your information and may not be reproduced or redistributed to any other person This document does not constitute investment, legal, accounting or other advice, and mBank is not liable for damages resulting from or related to the use of data provided in the documents. This document may not be copied, duplicated and/or be directly or indirectly distributed in the United States, Canada, Australia or Japan, nor transferred to citizens or residents of a state where its distribution may be legally restricted, which does not limit the possibility of publishing materials prepared for the Programme on Cognor Holding, Comarch, Sygnity, VRG, mBank or WSE websites. Persons who disseminate this document should be aware of the need to comply with such restrictions.

Recommendations are based on essential data from the entire history of a company being the subject of a recommendation, with particular emphasis on the period since the previous recommendation.

Investing in shares is connected with a number of risks including, but not limited to, the macroeconomic situation of the country, changes in legal regulations as well as changes on commodity markets. Full elimination of these risks is virtually impossible.

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Strong and weak points of valuation methods used in recommendations: DCF – acknowledged as the most methodologically correct method of valuation; it consists in discounting financial flows generated by a company; its weak point is the significant susceptibility to a change of forecast assumptions in the model. Comparative – based on a comparison of valuation multipliers of companies from a given sector; simple in construction, reflects the current state of the market better than DCF; weak points include substantial variability (fluctuations together with market indices) as well as difficulty in the selection of the group of comparable companies. Economic profits – discounting of future economic profits; the weak point is high sensitivity to changes in the assumptions made in the valuation model. Discounted Dividends (DDM) – discounting of future dividends; the weak point is high sensitivity to changes in the assumptions as to future dividends made in the valuation model. NAV - valuation based on equity value, one of the most frequently used method in case of developing companies; the weak point of the method is that it does not factor in future changes in revenue/profits of a company.

16

Comparable Companies Used In Relative Valuation Models

11 bit studios Activision, Blizzard, CAPCOM, Electronic Arts, Paradox Interactive, Take Two Interactive, Ubisoft Entertainment Agora Axel Springer, Cinemark Holdings, Cineworld, Daily Mail&General, IMAX Corp, JC Decaux, Lagardere, Sanoma, Schibsted, Stroeer Media Allegro Alibaba, Amazon, Asos, Boohoo, Ebay, Etsy, Global Fashion Group, Jd.Com, Lojas Americanas, Magazine Luiza, Mercadolibre, Overstock.Com, Via Varejo, Vipshop Holdings, Zalando, Zozo AmRest Alsea, Autogrill, Chipotle Mexican, Collins Foods, Jack In The Box, McDonalds, Mitchells & Butlers, Starbucks, Texas Roadhouse, Wendy's, Yum! Brands Asseco Poland Atos, CAP Gemini, Comarch, Computacenter, Fiserv, Indra Sistemas, Oracle, Sage Group, SAP, Software AG CCC Adidas, Asos, Boohoo.com, Caleries, Crocs, Foot Locker, Geox, Nike, Steven Madden, Tod's, Zalando CD Projekt Activision, Blizzard, CAPCOM, Electronic Arts, Take Two Interactive, Ubisoft Entertainment CEZ EDF, EDP, Endesa, Enea, Enel, Energa, EON, Innogy, PGE, RWE, Tauron Ciech Akzo Nobel, BASF, Bayer, Ciner Resources, GHCL, Hongda Xindye, Huntsman, ICI Pakistan, MISR Chemical, PCC Rokita, OCI, Qingdao, Sesoda, Shandong Haihua, Soda Samayii, Solvay, Tangshan Sanyou Chemical, Tata Chemicals, Tessenderlo Chemie, Wacker Chemie Cognor AK Steel, Alumetal, ArcelorMittal, Baoshan Iron & Steel, Commercial Metals, HeSteel, Hitachi Metals, Hyundai Steel, JFE Holdings, JSW Steel, Kloeckner & Co, Metalurgica Gerdau, Nippon Yakin Kogyo, Nucor, Olympic Steel, Outokumpu, POSCO, Salzgitter, SSAB, Steel Authority Of India, Steel Dynamics, Tata Steel, thyssenkrupp, United States Steel Corp, voestalpine

Comarch Asseco Poland, Atos, CAP Gemini, Computacenter, Fiserv INC, Indra Sistemas, Oracle Corp, Sage Group, SAP, Software AG, Tieto Cyfrowy Polsat BT Group, Comcast, Deutsche Telekom, Hellenic Telecom, Iliad, Koninklijke KPN, Magyar Telekom, Netia, O2 Czech, Orange, Orange Polska, Shaw Communications, Talktalk Telecom, Tele2, Telecom Italia, Telefonica, Telekom Austria, Telenor, Turk Telekomunikasyon, Turkcell Iletisim Hizmet, Vodafone Group

Dino Carrefour, Eurocash, Jeronimo Martins, Magnit, Metro, O'Key Group, Tesco, X5 Eurocash Carrefour, Dino, Jeronimo Martins, Magnit, Metro, O'Key Group, Tesco, X5 Famur Caterpillar, Epiroc, Komatsu, Sandvik, Weir Group, Metso, Flsmidth Grupa Azoty Acron, Agrium, CF Industries, Israel Chemicals, K+S, Mosaic, Phosagro, Potash, Yara Jeronimo Martins BIM, Carrefour, Dino, Eurocash, Magnit, Metro, O'Key, Group, Tesco, X5 JSW Alliance Resource Partners, Arch Coal, Banpu Public, BHP Billiton, Bukin Asam, China Coal, Cloud Peak Energy, Cokal, Henan Shenhou, LW Bogdanka, Natural Resource Partners, Peabody Energy, Rio Tinto, Semirara Mining and Power, Shaanxi Heimao, Shanxi Xishan Coal & Elec, Shougang Fushan Resources, Stanmore Coal, Teck Resources, Terracom, Walter Energy, Warrior Met Coal, Yanzhou Coal Mining

Kernel ADM, Andersnons, Astarta, Avangard, Bunge, China Agri Industries, Felda Global, Golden Agri Resources, GrainCorp, IMC, MHP, Milkiland, Nisshin Oillio Group, Ovostar, Wilmar Kęty Alcoa, Alumetal, Amag, Amcor, Bemis, Century Aluminium, China Hongoiao, Constelium, Fuji Seal, Kaiser Aluminium, Mercor, Midas Holdings, Nippon Light Metal, Norsk Hydro, UACJ, United CO Rusal KGHM Anglo American, Antofagasta, BHP Billiton, Boliden, First Quantum Minerals, Freeport-McMoRan, Grupo Mexico, KAZ Minerals, Hudbay, Lundin, MMC Norilsk Nickel, OZ Minerals, Rio Tinto, Sandfire Resources, Southern Copper, Vedanta Resources Kruk Arrow Global, Collection House, Credit Corp, Encore Capital, Intrum, PRA Group Lotos, MOL Aker BP, Bashneft, BP, ENI, Gazpromneft, Hellenic, Lotos, Lukoil, MOL, Motor Oil, Neste, OMV, OMV Petrom, PKN, Repsol, Rosneft, Saras, Shell, Statoil, Total, Tullow Oil, Tupras LPP CCC, H&M, Hugo Boss, Inditex, Marks & Spencer, Next, Tom Tailor Mo-BRUK Advenced Disposla Services, Alumetal, Ambipar Participacoes, Asahi Holdings, Befesa, Biffa, Bingo Industries, Charah Solutions, China Resource and Enviro, Cleacaway Waste Management, Cognor, Comercial Metals, Daiseki, GFL Environmental, Insun, Lassila & Tikanoja, Renewi, Schnitzer Steel, Seche Environment, Sims Metal, Tervita, US Ecology, Waste Management, Wolverine Energy

Netia BT Group, Cyfrowy Polsat, Deutsche Telekom, Hellenic Telecom, Koninklijke KPN, Magyar Telekom, Mobile Telesystems, O2 Czech, Orange, Orange Polska, Rostelecom, Telecom Italia, Telefonica, Telekom Austria, Telenor, Turk Telekomunikasyon, Turkcell Iletisim Hizmet, Vodafone Group

Orange Polska BT Group, Cyfrowy Polsat, Deutsche Telekom, Hellenic Telecom, Koninklijke KPN, Magyar Telekom, Mobile Telesystems, Netia, O2 Czech, Orange, Rostelecom, Telecom Italia, Telefonica, Telekom Austria, Telenor, Turk Telekomunikasyon, Turkcell Iletisim Hizmet, Vodafone Group PGNiG A2A, BP, Centrica, Enagas, Endesa, Enea, Energa, Engie, ENI, EON, Galp Energia, Gas Natural, Gazprom, Hera, MOL, Novatek, OMV, Red Electrica, Romgaz, RWE, Shell, Snam, Statoil, Total PKN Orlen Braskem, Dow Chemical, Eastman, Formosa Plastics, Hellenic Petroleum, Huntsman, Lotos, Lotte, Lyondellbasell, Mitsubishi, Mitsui Chemicals, MOL, Motor Oil, Neste, OMV, OMV Petrom, Petronas, Saras, Tupras, Westlake Chemical PKP Cargo Aurizon Holdings, Canadian National Railway, Canadian Pacific Railway, Center for Cargo Container, China Railway Group, China Railway Tielong Container Logistics, CSX Corp, Daqin Railway, Global Ports Holding, Globaltrans Investment, Hamburger Hafen und Logistik, Hub Group, Kansas City Southern, Kuehne + Nagel International, Log-In Logistica Intermodal, Nikkon Holdings, Norfolk Southern Corp, Rumo, Tidewater Midstream, Union Pacific Corp

PlayWay Activision, Blizzard, CAPCOM, Electronic Arts, Hasbro, Konami, SEGA Sammy, Take Two Interactive, Ubisoft Entertainment, Gungho Online, Squasre Enix, Playtech, 11 bit studios Polenergia Abo Wind, Avangrid, Azure Power Global, Boralex, Cez, Clearway Energy, E.On, EdF, EDP, EDP Renovaveis, Elia Group, Encavis, Endesa, Enel, Engie, Eolus Vind, EVN, Falck Renewables, Fortum, Iberdrola, Iren, National Grid, Neoen, Orsted, PNE, Red Electrica, Redes Energeticas, Renova, RWE, Scatec Solar, Solaria Energia, SSE, Terna, Terna Energy, Tilt Renewables, Transalta Renewables, Xcel Energy

Skarbiec Holding Affilated Managers, AllianceBernstein, Ashmore Group, Blackrock, Brewin Dolphin, Eaton Vance Mgmt, Franklin Resources, GAM Holding, Invesco, Investec, Janus Henderson, Jupiter AM, Legg Mason, Liontrust AM, Och-Ziff Capital Mgmt., Schroders, Standard Life, T Rowe Price Stalprodukt Baoshan Iron and Steel, Befesa, Boliden, Cleveland Cliffs, Gem, Hinustan Zinc, Kloeckner, Korea Zinc, Material Technologies, Novolipetsk Steel, Nyrstar, Posco, Salgitter, SSAB, Tata Steel, ThyssenKrupp, Umicore, United States Steel, Vallourec, VoestAlpine, Yechiu Metal Recycling

Sygnity Ailleron, Asseco Business Solutions, Asseco Poland, Asseco South Eastern Europe, Atende, Comarch

Ten Square Games Nexon, NetEase, IGG, Gree, NHN, Naver, Koei, Wuhu, Tencent, Zynga

Wirtualna Polska eBay, Facebook, Google, Mail.ru, Sina, Yahoo Japan, Yandex

VRG CCC, Chow Sang, Chow Tai Fook, H&M, Hugo Boss, Inditex, Lao Fen Xiang, Lao Feng, LPP, Luk Fook, Marks & Spencer, Next, Pandora, Tiffany

17

Recommendations Issued In the 12 Months Prior To This Publication

11 bit studios Rating hold hold hold hold Rating date 2020-09-02 2020-06-03 2020-05-05 2020-02-05 Target price (PLN) 493.00 476.00 422.00 439.00 Price on rating day 482.00 475.00 408.50 440.00

AC Rating overweight neutral neutral neutral Rating date 2020-12-08 2020-06-29 2020-05-21 2020-04-01 Target price (PLN) - - - - Price on rating day 36.40 38.50 36.50 39.00

Agora Rating accumulate hold accumulate Rating date 2020-12-08 2020-06-03 2020-04-15 Target price (PLN) 7.60 8.60 8.60 Price on rating day 6.96 8.36 7.74

Ailleron Rating neutral neutral Rating date 2020-05-05 2020-02-28 Target price (PLN) - - Price on rating day 6.26 6.34

Alior Bank Rating accumulate accumulate hold buy buy buy Rating date 2020-11-19 2020-11-05 2020-06-03 2020-04-16 2020-03-30 2020-02-21 Target price (PLN) 18.78 14.98 14.98 21.00 24.72 30.50 Price on rating day 17.50 13.39 15.19 16.45 13.00 26.62

Allegro Rating sell Rating date 2020-11-18 Target price (PLN) 54.00 Price on rating day 67.89

Alumetal Rating neutral neutral neutral neutral underweight underweight neutral neutral neutral neutral Rating date 2021-01-29 2021-01-15 2020-12-08 2020-10-19 2020-09-30 2020-07-30 2020-06-29 2020-05-21 2020-04-01 2020-02-27 Target price (PLN) ------Price on rating day 53.20 52.00 44.50 36.00 35.90 38.00 40.10 37.00 34.60 43.50

Amica Rating neutral neutral overweight overweight neutral neutral Rating date 2021-01-18 2020-12-08 2020-09-30 2020-07-30 2020-06-29 2020-04-01 Target price (PLN) ------Price on rating day 145.80 149.60 136.60 145.00 120.00 84.30

AmRest Rating suspended hold Rating date 2020-12-08 2020-03-04 Target price (PLN) - 40.00 Price on rating day 25.80 39.55

Apator Rating neutral neutral neutral neutral neutral Rating date 2020-12-08 2020-09-30 2020-06-29 2020-04-01 2020-03-04 Target price (PLN) - - - - - Price on rating day 22.40 20.60 20.80 16.20 20.00

Asseco BS Rating neutral neutral neutral Rating date 2020-09-02 2020-05-05 2020-04-23 Target price (PLN) - - - Price on rating day 36.00 35.80 35.80

Asseco Poland Rating buy accumulate hold hold Rating date 2020-09-02 2020-08-04 2020-06-03 2020-05-05 Target price (PLN) 80.70 68.39 68.39 63.90 Price on rating day 70.20 66.50 72.60 64.70

Asseco SEE Rating overweight overweight overweight Rating date 2020-08-07 2020-05-05 2020-02-28 Target price (PLN) - - - Price on rating day 43.70 31.40 28.80

Astarta Rating overweight overweight overweight overweight overweight Rating date 2021-01-28 2020-12-08 2020-10-27 2020-05-11 2020-04-01 Target price (PLN) - - - - - Price on rating day 36.20 25.20 21.80 11.75 11.50

Atal Rating suspended accumulate Rating date 2020-04-02 2020-02-05 Target price (PLN) - 44.28 Price on rating day 24.40 39.80

Atende Rating overweight neutral Rating date 2020-11-27 2020-05-05 Target price (PLN) - - Price on rating day 3.44 2.94

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BNP Paribas Polska Rating accumulate buy Rating date 2020-12-08 2020-11-19 Target price (PLN) 64.45 64.45 Price on rating day 55.00 46.40

Boryszew Rating neutral neutral underweight underweight Rating date 2020-12-08 2020-09-09 2020-06-08 2020-04-01 Target price (PLN) - - - - Price on rating day 2.87 3.39 3.59 3.74

CCC Rating accumulate buy suspended buy Rating date 2021-02-02 2020-12-08 2020-03-19 2020-02-21 Target price (PLN) 89.00 89.00 - 135.00 Price on rating day 85.70 71.38 24.98 94.00

CD Projekt Rating sell reduce hold accumulate accumulate hold hold hold hold Rating date 2021-02-02 2020-12-23 2020-12-08 2020-11-05 2020-10-02 2020-09-02 2020-06-03 2020-05-05 2020-02-05 Target price (PLN) 232.00 232.00 445.10 421.60 429.10 429.10 388.10 342.50 284.20 Price on rating day 305.80 267.70 425.10 381.20 382.60 440.70 388.20 357.90 305.00

CEZ Rating buy buy accumulate accumulate buy Rating date 2020-11-20 2020-10-02 2020-06-03 2020-05-05 2020-02-20 Target price (CZK) 601.40 514.80 514.80 527.86 592.91 Price on rating day 468.00 438.00 489.00 451.00 503.00

Ciech Rating hold buy hold hold hold buy buy Rating date 2020-12-08 2020-11-05 2020-10-02 2020-07-02 2020-05-29 2020-04-14 2020-02-13 Target price (PLN) 32.59 34.27 30.10 34.09 38.94 45.14 47.46 Price on rating day 30.35 27.45 27.25 32.30 39.25 31.80 39.40

Cognor Rating buy buy buy hold Rating date 2020-12-08 2020-09-25 2020-08-04 2020-04-22 Target price (PLN) 2.29 2.03 1.98 0.94 Price on rating day 1.25 1.10 0.93 0.95

Comarch Rating buy hold Rating date 2020-09-29 2020-05-13 Target price (PLN) 247.60 220.30 Price on rating day 204.00 210.00

Cyfrowy Polsat Rating hold hold hold hold Rating date 2020-12-08 2020-09-02 2020-04-01 2020-03-04 Target price (PLN) 27.90 26.30 24.10 26.10 Price on rating day 27.84 26.92 23.82 26.24

Dino Rating hold sell reduce reduce hold reduce Rating date 2020-12-08 2020-07-02 2020-06-03 2020-05-05 2020-03-04 2020-02-05 Target price (PLN) 263.10 155.60 155.60 151.60 152.30 149.70 Price on rating day 269.80 199.10 185.70 173.70 155.00 164.70

Dom Development Rating suspended Rating date 2020-04-02 Target price (PLN) - Price on rating day 68.40

Enea Rating suspended suspended suspended Rating date 2020-12-08 2020-06-23 2020-02-27 Target price (PLN) - - - Price on rating day 5.60 7.90 6.00

Energa Rating suspended suspended suspended Rating date 2020-12-08 2020-06-03 2020-02-27 Target price (PLN) - - - Price on rating day 7.80 8.19 7.36

Erste Group Rating buy buy buy Rating date 2020-12-08 2020-08-10 2020-03-04 Target price (EUR) 30.58 26.00 36.61 Price on rating day 24.95 19.85 29.44

Eurocash Rating buy accumulate hold hold Rating date 2020-07-02 2020-06-03 2020-05-05 2020-02-05 Target price (PLN) 19.90 19.90 20.50 19.80 Price on rating day 17.34 18.50 21.10 19.94

Famur Rating buy buy hold buy Rating date 2020-12-08 2020-08-04 2020-04-30 2020-03-04 Target price (PLN) 3.30 2.86 2.20 4.58 Price on rating day 1.90 1.70 2.08 2.73

19

Forte Rating neutral neutral neutral overweight overweight neutral underweight underweight Rating date 2021-01-29 2020-12-08 2020-09-30 2020-08-28 2020-06-29 2020-05-21 2020-04-01 2020-03-20 Target price (PLN) ------Price on rating day 43.50 38.80 32.40 28.85 20.25 17.60 11.20 11.80

GPW Rating reduce reduce sell hold Rating date 2020-12-08 2020-11-05 2020-09-30 2020-05-20 Target price (PLN) 40.60 39.19 39.19 41.56 Price on rating day 43.00 44.80 47.10 40.00

Grupa Azoty Rating sell hold hold hold hold buy buy buy Rating date 2021-01-14 2020-12-08 2020-09-02 2020-07-02 2020-04-17 2020-03-04 2020-02-06 2020-02-05 Target price (PLN) 23.65 24.54 25.83 29.90 28.42 30.55 30.31 30.31 Price on rating day 28.95 26.85 25.30 30.45 28.00 22.24 27.50 26.10

Handlowy Rating hold buy hold hold hold accumulate Rating date 2020-11-19 2020-11-05 2020-06-03 2020-04-16 2020-03-30 2020-02-27 Target price (PLN) 36.45 37.64 37.64 39.86 45.66 63.46 Price on rating day 35.60 29.60 38.00 39.50 44.00 55.90

ING BSK Rating reduce hold sell sell sell sell Rating date 2020-11-19 2020-10-02 2020-06-03 2020-04-16 2020-03-30 2020-02-04 Target price (PLN) 143.10 117.78 117.78 114.14 126.36 170.00 Price on rating day 155.20 124.40 145.20 141.00 153.80 202.00

Jeronimo Martins Rating accumulate hold hold Rating date 2020-08-04 2020-06-03 2020-02-05 Target price (EUR) 15.30 15.30 16.30 Price on rating day 14.29 15.46 15.78

JSW Rating buy hold hold hold hold sell hold hold Rating date 2020-12-08 2020-11-05 2020-10-02 2020-09-02 2020-08-04 2020-03-27 2020-03-04 2020-02-05 Target price (PLN) 36.58 20.14 25.96 15.82 16.41 9.78 15.34 18.41 Price on rating day 25.53 18.20 25.00 15.18 17.40 12.85 15.15 19.78

Kernel Rating buy buy buy buy hold hold Rating date 2021-01-27 2020-12-08 2020-11-05 2020-09-23 2020-06-03 2020-02-05 Target price (PLN) 62.93 57.39 53.66 56.35 44.58 47.25 Price on rating day 54.50 46.75 39.00 39.90 43.80 47.20

Grupa Kęty Rating hold hold hold hold hold hold Rating date 2020-12-08 2020-11-05 2020-09-02 2020-06-25 2020-04-07 2020-03-04 Target price (PLN) 472.99 422.81 465.74 453.70 335.96 360.29 Price on rating day 449.50 410.00 482.50 432.00 339.00 381.00

KGHM Rating hold reduce hold sell sell reduce hold reduce Rating date 2020-12-08 2020-10-02 2020-07-29 2020-06-03 2020-05-05 2020-03-24 2020-03-04 2020-02-05 Target price (PLN) 152.27 103.84 124.67 62.94 46.83 46.83 76.92 86.33 Price on rating day 177.20 115.15 129.45 88.10 74.00 54.64 77.82 96.44

Komercni Banka Rating hold accumulate buy accumulate buy Rating date 2021-02-02 2020-12-08 2020-10-02 2020-09-02 2020-08-10 Target price (CZK) 682.02 682.02 618.97 618.97 618.97 Price on rating day 659.00 616.00 484.50 534.00 529.00

Kruk Rating hold buy buy Rating date 2021-02-02 2020-12-08 2020-09-03 Target price (PLN) 174.96 174.96 183.17 Price on rating day 168.30 142.30 156.70

Kruszwica Rating underweight neutral overweight neutral overweight overweight Rating date 2021-01-12 2020-12-08 2020-10-29 2020-06-29 2020-05-21 2020-05-13 Target price (PLN) ------Price on rating day 66.00 56.60 53.20 60.40 59.00 54.80

Lotos Rating buy buy accumulate hold hold reduce hold reduce Rating date 2020-12-08 2020-10-02 2020-09-02 2020-07-02 2020-06-03 2020-04-07 2020-03-04 2020-02-05 Target price (PLN) 49.01 47.09 47.09 55.87 60.39 59.22 67.19 68.47 Price on rating day 37.30 34.00 39.22 60.14 60.52 65.10 61.06 76.78

LPP Rating accumulate buy buy buy accumulate accumulate hold hold buy buy Rating date 2021-02-02 2020-12-08 2020-11-05 2020-10-02 2020-08-04 2020-07-02 2020-06-03 2020-05-05 2020-03-24 2020-02-05 Target price (PLN) 8,500.00 8,500.00 7,600.00 7,900.00 7,900.00 6,900.00 6,900.00 5,800.00 5,800.00 10,100.00 Price on rating day 7,700.00 7,285.00 5,995.00 6,800.00 7,105.00 6,110.00 6,980.00 6,075.00 4,902.00 8,610.00

Mangata Rating overweight neutral neutral neutral Rating date 2020-12-08 2020-09-30 2020-06-29 2020-04-01 Target price (PLN) - - - - Price on rating day 55.50 47.00 50.50 50.00

20

Millennium Rating hold buy hold buy hold reduce Rating date 2020-11-19 2020-06-03 2020-04-16 2020-03-30 2020-03-04 2020-02-05 Target price (PLN) 2.88 3.72 3.38 4.06 5.47 5.47 Price on rating day 2.93 2.64 3.28 3.30 5.06 5.91

Mo-BRUK Rating buy Rating date 2021-01-11 Target price (PLN) 387.49 Price on rating day 246.00

MOL Rating accumulate buy buy buy accumulate hold hold accumulate accumulate Rating date 2021-02-02 2020-12-08 2020-09-02 2020-08-04 2020-07-02 2020-06-03 2020-03-31 2020-03-04 2020-02-05 Target price (HUF) 2,379.00 2,379.00 1,976.00 2,158.00 2,158.00 2,072.00 1,927.00 2,726.00 2,816.00 Price on rating day 2,220.00 2,002.00 1,686.00 1,722.00 1,821.00 1,916.00 1,849.00 2,530.00 2,618.00

Moneta Money Bank Rating buy buy Rating date 2020-12-08 2020-08-10 Target price (CZK) 82.70 79.68 Price on rating day 67.00 54.20

Netia Rating hold hold accumulate Rating date 2020-12-08 2020-08-04 2020-05-05 Target price (PLN) 4.70 4.40 4.40 Price on rating day 4.50 4.46 3.91

Orange Polska Rating buy buy accumulate buy Rating date 2020-12-08 2020-07-30 2020-06-03 2020-03-27 Target price (PLN) 8.20 8.30 6.90 6.90 Price on rating day 6.52 7.07 6.49 5.88

OTP Bank Rating hold accumulate accumulate hold Rating date 2021-02-02 2020-12-08 2020-09-02 2020-08-10 Target price (HUF) 13,800.00 13,800.00 11,039.00 11,039.00 Price on rating day 13,500.00 12,000.00 9,950.00 10,430.00

Pekao Rating buy buy buy buy Rating date 2020-11-19 2020-06-03 2020-04-16 2020-03-30 Target price (PLN) 75.93 68.90 77.70 83.51 Price on rating day 57.94 52.40 54.30 55.32

PGE Rating suspended suspended suspended Rating date 2020-12-08 2020-04-27 2020-02-27 Target price (PLN) - - - Price on rating day 5.77 4.05 5.15

PGNiG Rating accumulate buy buy accumulate buy buy buy buy hold hold Rating date 2021-02-02 2020-12-08 2020-09-22 2020-09-02 2020-08-04 2020-07-02 2020-06-03 2020-04-07 2020-03-23 2020-03-04 Target price (PLN) 6.39 6.39 5.97 5.94 5.94 5.23 4.91 4.44 3.24 3.88 Price on rating day 5.72 5.21 4.56 5.15 5.10 4.63 4.31 3.48 3.14 3.20

PKN Orlen Rating hold hold hold hold hold accumulate hold reduce Rating date 2020-12-08 2020-09-02 2020-07-02 2020-06-03 2020-05-05 2020-03-23 2020-03-04 2020-02-03 Target price (PLN) 58.40 56.37 67.72 66.85 58.61 58.61 66.70 68.03 Price on rating day 59.60 50.32 63.28 67.80 59.52 52.58 62.26 75.66

PKO BP Rating buy accumulate hold accumulate buy buy accumulate Rating date 2020-11-19 2020-11-05 2020-06-03 2020-04-16 2020-03-30 2020-03-04 2020-02-05 Target price (PLN) 32.40 22.58 22.58 24.85 26.90 39.69 39.69 Price on rating day 27.23 20.44 22.06 22.14 22.75 33.10 36.00

PKP Cargo Rating hold hold reduce hold hold reduce Rating date 2020-12-08 2020-09-02 2020-07-02 2020-05-05 2020-02-26 2020-02-05 Target price (PLN) 13.97 12.80 12.37 12.37 13.89 16.40 Price on rating day 13.20 12.38 14.04 11.46 13.66 17.50

Play Rating suspended reduce buy accumulate buy buy accumulate Rating date 2020-12-08 2020-10-02 2020-09-18 2020-08-04 2020-05-15 2020-03-25 2020-02-05 Target price (PLN) - 35.20 35.20 35.70 35.70 33.50 36.00 Price on rating day 38.52 38.72 26.16 32.54 31.02 29.04 34.80

PlayWay Rating hold hold accumulate Rating date 2020-12-08 2020-10-02 2020-08-25 Target price (PLN) 590.00 549.00 549.00 Price on rating day 599.00 527.00 484.00

Polenergia Rating buy Rating date 2020-10-30 Target price (PLN) 62.99 Price on rating day 42.60

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Pozbud Rating suspended neutral neutral neutral Rating date 2020-12-08 2020-09-30 2020-06-29 2020-04-01 Target price (PLN) - - - - Price on rating day 1.91 1.65 1.70 0.81

PZU Rating buy buy buy hold Rating date 2020-12-03 2020-04-28 2020-03-04 2020-02-05 Target price (PLN) 39.33 35.93 41.91 41.91 Price on rating day 26.45 29.92 36.31 40.54

RBI Rating accumulate buy Rating date 2020-12-08 2020-08-10 Target price (EUR) 18.22 17.67 Price on rating day 16.69 15.20

Santander Bank Polska Rating buy buy hold accumulate buy buy hold Rating date 2020-11-19 2020-08-04 2020-07-02 2020-06-03 2020-04-16 2020-03-30 2020-02-05 Target price (PLN) 238.14 179.37 179.37 179.37 194.52 229.52 287.90 Price on rating day 175.20 152.50 174.50 163.60 160.70 173.90 304.00

Skarbiec Holding Rating buy accumulate hold accumulate buy Rating date 2020-12-08 2020-09-11 2020-07-02 2020-06-03 2020-03-04 Target price (PLN) 30.74 26.86 21.20 21.20 21.20 Price on rating day 24.80 24.70 21.40 19.05 18.80

Stalprodukt Rating buy buy Rating date 2020-12-08 2020-08-07 Target price (PLN) 370.99 336.15 Price on rating day 210.50 186.00

Stelmet Rating suspended buy accumulate Rating date 2020-07-02 2020-04-01 2020-02-05 Target price (PLN) - 9.04 8.92 Price on rating day 8.55 6.75 7.85

Sygnity Rating buy Rating date 2020-09-01 Target price (PLN) 10.70 Price on rating day 7.20

Tauron Rating suspended suspended suspended Rating date 2020-12-08 2020-05-05 2020-02-27 Target price (PLN) - - - Price on rating day 2.17 1.14 1.22

Ten Square Games Rating buy accumulate accumulate accumulate buy accumulate hold buy Rating date 2020-12-08 2020-11-05 2020-09-02 2020-07-02 2020-06-03 2020-05-26 2020-05-05 2020-04-23 Target price (PLN) 724.00 722.00 623.00 592.00 592.00 592.00 462.00 462.00 Price on rating day 525.00 640.00 548.00 548.00 505.00 539.00 450.00 371.00

TIM Rating overweight overweight overweight overweight Rating date 2020-12-08 2020-10-29 2020-06-29 2020-04-01 Target price (PLN) - - - - Price on rating day 18.90 13.70 10.90 9.20

VRG Rating buy accumulate hold hold buy Rating date 2020-09-23 2020-07-02 2020-06-03 2020-04-06 2020-02-05 Target price (PLN) 3.14 2.43 2.43 2.00 4.50 Price on rating day 2.51 2.33 2.40 1.94 3.93

Wirtualna Polska Rating accumulate reduce hold Rating date 2020-12-08 2020-04-20 2020-02-05 Target price (PLN) 93.00 63.10 79.70 Price on rating day 82.00 67.80 82.20

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mBank S.A. Prosta 18 00-850 Warszawa http://www.mbank.pl/

Research Department

Kamil Kliszcz Michał Marczak Michał Konarski director +48 22 438 24 01 +48 22 438 24 05 +48 22 438 24 02 [email protected] [email protected] [email protected] strategy banks, financials energy, power generation

Jakub Szkopek Paweł Szpigiel Piotr Bogusz +48 22 438 24 03 +48 22 438 24 06 +48 22 438 24 08 [email protected] [email protected] [email protected] industrials, chemicals, metals media, IT, telco retail, gaming

Aleksandra Szklarczyk Piotr Poniatowski Mikołaj Lemańczyk +48 22 438 24 04 +48 22 438 24 09 +48 22 438 24 07 [email protected] [email protected] [email protected] construction, real-estate development industrials financials

Sales and Trading

Traders

Piotr Gawron Krzysztof Bodek Tomasz Jakubiec director +48 22 697 48 89 +48 22 697 47 31 +48 22 697 48 95 [email protected] [email protected] [email protected]

Adam Prokop Magdalena Bernacik Andrzej Sychowski +48 22 697 47 90 +48 22 697 47 35 +48 22 697 48 46 [email protected] [email protected] [email protected]

Sales, Foreign Markets

Bartosz Orzechowski Jędrzej Łukomski +48 22 697 48 47 +48 22 697 49 85 [email protected] [email protected]

Private Client Sales

Kamil Szymański Jarosław Banasiak director deputy director +48 22 697 47 06 +48 22 697 48 70 [email protected] [email protected]

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