IBERIA

3 January 2014 EQUITY RESEARCH

TOP STORIES

Sonae rose 4.0% this week. We believe Portuguese Prime Minister decision not to increase VAT rates (which was widely expected) as a “Plan B” to court rejection of government plans to converge state and private sector pensions it`s potentially positive to stocks (page 5). Telecom went up 9.1% in today’s session, after an Italian newspaper reported Telefónica was close to a joint offer together with rivals Claro and Oi to acquire TIM Brasil and then break up the Telecom Italia unit between the three players. Oi is the largest beneficiary from a TIM Brasil break-up: as the

smallest mobile player, it should secure the largest part of TIM Brasil assets (page 4).

OUT THIS WEEK

Snapshots/Company Reports – PT & TEF, Retail Sector

Price Target / Recommendation Changes – BES, Zon Optimus, , Sonae Industria

Other News – Telecom Sector, PT & Zon Optimus, Sonae, Utilities Sector, Retail Sector

WEEK AHEAD

Nothing to register

PORTFOLIOS This week, Mib Aggressive Portfolio went up 0.62%%, underperforming the PSI20 by 1.25pp.

Excluding Sonae, all stocks contributed for this underperformance (page 10).

This week, Mib Liquidity Portfolio went up 1.18%, underperforming the PSI20 by 0.69pp. Excluding Sonae and BPI, all stocks contributed for this underperformance (page 11).

Stock Market Last 1W YTD 2013 Daily Vol. (€mn) 1W 1M 6M 2013 PSI 20 6,769 1.9% 3.20% 15.98% PSI 20 93 106 105 108 IBEX 35 9,798 -1.0% -1.20% 21.42% IBEX 35 1,824 2,942 2,671 2,570 WEEKLY Euro Stoxx 50 3,074 -1.2% -1.11% 17.95% Euro Stox x 50 5,150 7,338 7,308 7,456

Forex Rates Last 1W YTD 2013 Interest Rates Last 1W Chg YE13 EUR/USD 1.36 -1.3% -1.14% 4.46% Euribor 6m 0.38% 0.39% -1bp 0.38%

EUR/GBP 0.83 -0.7% -0.39% 2.49% 10Y Bond PT 5.66% 6.02% -37bp 5.66% EUR/BRL 3.24 0.4% -0.56% 20.33% 10Y Bond SP 3.88% 4.23% -35bp 3.90%

Best & Worse Performers -1 Week (%) Best & Worse Performers - YTD (%)

BES 8.3 Sonae Industria 9.6

Sonae Industria 6.6 BES 9.0

Semapa 6.5 Novabase 8.8

Portugal Telecom 6.3 Portugal Telecom 7.9 Mota-Engil 5.0 Semapa 7.8 Novabase -0.7 -0.4 Telefónica -1.2 Iberdrola -0.5 Cofina -1.9 Inditex -0.8

Indra -2.1 Telefónica -1.3 António Seladas, CFA BCP -3.9 Indra -1.6 +351 21 003 7826 -10 0 10 -5 0 5 10 15

[email protected]

Page 1 of 14

All prices are those of the end of the trading session unless otherwise indicated. For important Disclosure and Disclaimer go to the second last page.

Millennium investment banking Weekly 3 January 2014

CHANGES

EARNINGS

Company 4Q2013 1Q2014 2Q2014 3Q2014 Investor Day

Jerónimo Martins * 13-01 AM n.a. n.a. n.a. Galp Energia * 27-01 BM 15-04 BM 14-07 BM 13-10 BM BCP 03-02 AM 05-05 AM 28-07 AM 03-05 AM Novabase 06-02 AM 08-05 AM 30-07 AM 06-11 AM Galp Energia 10-02 BM 29-04 BM 28-07 BM 27-10 BM 04-03-2014 Jerónimo Martins 26-02 BM 30-04 BM 30-07 BM 30-10 BM EDP 27-02 AM n.a. n.a. n.a. Telefónica 27-02 BM 09-05 BM 31-07 BM 06-11 BM Glintt 27-03 27-05 31-07 20-11 Portucel n.a. n.a. n.a. n.a. Media Capital n.a. n.a. n.a. n.a. Iberdrola n.a. n.a. n.a. n.a. BES n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.n.a.n.a.n.a. BPI n.a. n.a. n.a. n.a. EDP Renováveis n.a. n.a. n.a. n.a. Cofina n.a. n.a. n.a. n.a. Indra n.a. n.a. n.a. n.a. Semapa n.a. n.a. n.a. n.a. REN n.a.n.a.n.a.n.a. Martifer n.a. n.a. n.a. n.a. Sonae Sierra n.a. n.a. n.a. n.a. Portugal Telecom n.a. n.a. n.a. n.a. Zon Optimusn.a.n.a.n.a.n.a. Sonae Indústria n.a. n.a. n.a. n.a. Sonaecom n.a. n.a. n.a. n.a. Sonae n.a.n.a.n.a.n.a. Ibersol n.a. n.a. n.a. n.a. Sonae Capital n.a. n.a. n.a. n.a. Mota-Engil n.a. n.a. n.a. n.a. Cimpor n.a. n.a. n.a. n.a. Reditusn.a.n.a.n.a.n.a. SAG n.a. n.a. n.a. n.a. Soares da Costa n.a. n.a. n.a. n.a. Inditex n.a. n.a. n.a. n.a. ESFG n.a.n.a.n.a.n.a. AM - After market; BM - Before market; n.a. - Not available; (e) Expected; *Trading Statement

Page 2 of 14

Millennium investment banking Weekly 3 January 2014

TELECOMS Telecom Sector Alexandra Delgado, CFA Telecom Sector – Government backs down on the Cinema Law Equity Analyst The Portuguese Government has backed down on the Cinema Law. We remind this Law established an annual tax applied to Pay TV operators: €3.50 per Pay TV client, growing yearly by 10% until it reached €5.00 per client; the money raised by this tax will be used to support the film sector. Yesterday, the government approved that the tax will stabilize at €3.5 per subscriber and that it will be supported by both Pay TV operators and by Anacom starting this year. In 2014, Pay TV operators will pay €1.75 per subscriber and Anacom will pay €1.75; the operators’ contribution will increase until it reaches €2.00, meaning Anacom will contribute with €1.50. The €3.5 per subscriber related to 2013 will be fully paid by operators. Last September, Portugal's Cinema and Audiovisual Institute (ICA) had started an official settlement procedure against the five major Portuguese Pay-TV operators, as these refused to pay about €12.5 million due under the Law on Cinema and the Audiovisual Sector. The new Cinema Law was published in the Diário da República (Official State Gazette) on September 6th 2012. The deadline for payment expired on July 31st 2013; Zon failed to pay €6.3 million, Portugal Telecom (Meo) €4.7 million, Cabovisão owes €1 million, while Vodafone and Optimus owe €166,000 and €148,000, respectively. This decision is obviously positive for telcos, as it entails a 60% reduction over the fees approved in 2012. Assuming Zon Optimus will maintain its 1.56 mn Pay TV customers, then it could expected to pay a maximum of €7.8 mn in fees in some years (€5.00 per subscriber), now it will pay a maximum of €3.1 mn (€2.00 per subscriber). Assuming PT will maintain its 1.3 mn Pay TV customers, then it was expected to pay a maximum of €6.5 mn in fees (€5.00 per subscriber); now that turns to €2.6 mn (€2.00 per subscriber).

Portugal Telecom Buy – Medium Risk (Target YE14: €3.80) Telefónica Buy – Medium Risk (Target YE14: €14.40) Brazilian Mobile Market MoM – Slow month; post-paid continues Alexandra Delgado, CFA strong Equity Analyst . The Brazilian regulator released Tuesday November mobile subscribers’ numbers. . The Brazilian mobile market reached 270.5 million clients in November 2013, which stands for 136.2% penetration of the population. Net additions during the month were 595k, which compares to 746k in November 2012 (-64%). . Subscriber growth in the Brazilian market has decelerated significantly on the back of higher penetration. First eleven months of 2013 registered net adds 51% lower than the same period of 2012. . Post-paid net adds continue strong: 681k in November; +24% YoY accumulated net adds up to November. . Vivo added 286k subscribers, broadly maintaining its 28.7% market share. It is worth mentioning that Vivo has gained 0.3pp post-paid market share in November, ending the month with 39.6% (+2.7pp accum. 2013). . Oi added 70k subscribers during the month, broadly keeping its market share at 18.55%. Positive net adds in pre-paid more than offset losses in post-paid (-52k subs). Oi lost post-paid market share for the ninth month in a row (-0.2pp in November, to 14.3%; -1.5pp accum. 2013). Oi’s strategy is now to grow in pre-paid, after tightening credit requirements for new post-paid customers as a means to control bad debt provisions. (For further details, please refer to our snapshot out this week)

Page 3 of 14

Millennium investment banking Weekly 3 January 2014

Italian newspaper says Telefónica is close to joint offer to acquire TIM Brasil Italian newspaper Il Sole 24 Ore said today Telefónica was close to defining a financial vehicle together with rivals Claro (America Movil) and Oi to acquire TIM Brasil and then break up the Telecom Italia unit between the three players. This possibility has been advanced numerous times in the past months and is definitely the ideal scenario for Telefónica: it solves TEF issues with the Brazilian antitrust agency (Cade gave Telefónica 18 months to decrease control over the mobile business in Brazil), while assuring a 3-player mobile market vs. current 4 (TEF controls leader mobile player Vivo). Meantime, Bloomberg reported that some Telecom Italia Board members are proposing a motion setting that any potential offer for the Brazil unit should be scrutinized by a special independent committee, in order to safeguard the Italian operator’s interests. We remind that Telefónica holds a 15% indirect stake in Telecom Italia, through holding Telco; Telco appoints 6 out of 11 Telecom Italia Board members. We do not believe such an operation will happen in the short term, as the green light from the Brazilian watchdog must be assured. Convincing the Telecom Italia shareholders won’t be easy either, and will probably require a rich price. Finally, Oi is currently involved in a merger project with Portugal Telecom and is therefore tied up for some months. Portugal Telecom went up 9.1% in today’s session, since Oi is the largest beneficiary from a TIM Brasil break-up: Oi is the smallest mobile player, so it should secure the largest part of TIM Brasil assets.

Portugal Telecom Buy – Medium Risk (Target YE14: €3.80) Zon Optimus Reduce – Medium Risk (Target YE14: €5.30) Alexandra Delgado, CFA Vice-CEO Luís Lopes resigns Equity Analyst Zon Optimus announced in the last day of the year that Luís lopes has resigned as member of the Board of Directors of Zon Optimus. According to the press, he will be joining Vodafone Internacional in early February. We remind that Luis Lopes was Zon Multimédia’s COO, therefore in charge of the cable operators’ network. Last October, after the completion of the merger between Zon Multimédia and Optimus, Luís Lopes was elected vice-CEO of Zon Optimus. The departure of such a high-profile executive, only a few months after merger completion, may raise some concerns among investors that the integration is not going as smoothly as expected. His replacement hasn’t been announced yet.

UTILITIES Utilities Sector Vanda Mesquita, Electricity consumption remained stable YoY in Portugal Equity Analyst Monthly electricity consumption (adjusted for temperature and working days) went up by 0.8% YoY in Portugal in December (please see Iberian indicators table presented below). In Spain, monthly electricity consumption broke its downward trend by rising 1.5% YoY. Consumption in 2013 remained stable YoY in Portugal and dropped by 2.2% in Spain.

Page 4 of 14

Millennium investment banking Weekly 3 January 2014

In the case of EDP, earnings from the distribution business are not significantly affected by the changes in volumes (as the bulk of the distribution model has a fixed component), meaning that the aforesaid increase does not have a meaningful impact. At the same time, the positive effect of the aforesaid increases is minimized, since liberalized activities in Iberia only accounted for 8.7% of 2012 EBITDA. In the case of Iberdrola, given the aforesaid increase in consumption in Span, we do not expect a meaningful impact (Spanish liberalized activities represented about 20% of 2012).

*Light vehicle sales; **Electricity Consumption adjusted to temperature and working days (in GWh); ***Retail trade turnover index (seasonally adjusted and at constant prices). Source: ACAP, Anfac, REN, REE, INE, European Commission, DGE, DGGE, Mib CONGLOMERATE Sonae Buy – Medium Risk (Target YE14: €1.35) João Flores; Government decided not to increase VAT rates Equity Analyst We believe Portuguese Prime Minister decision not to increase VAT rates (which was widely expected) as a “Plan B” to court rejection of government plans to converge state and private sector pensions helped Sonae stock (and it`s potentially positive to retail stocks).To meet 2014 deficit targets Government will propose measures that aim to “recalibrate” extraordinary solidarity contribution charged on pensions while also plans to “accelerate” process of self-financing for ADSE health system.

Page 5 of 14

Millennium investment banking Weekly 3 January 2014

Semapa Reduce – High Risk (Target YE14: €8.70) António Seladas, CFA; Update Valuation – Financial leveraged! For good or for bad... Equity Analyst . We updated Semapa’s valuation changing the price target from 6.50YE13 to 8.70YE14, Neutral recommendation, high-risk. The year-end rollover justified €168cents, while the change in estimates added €52cents. By business areas Portucel was the most relevant as it added €120cents (Portucel’s valuation is €2.75YE14), the cement business added €51cents and the debt at the Holding level also added €62cents. Having said that and while Semapa’s valuation moved upwards by almost 35%, the EV went up by just 9%, this is mainly due to Semapa’s financial leverage, as debt, for good or for bad, was roughly 60% of the EV; . Regarding the cement business, we were slightly more conservative in terms of revenues for the explicit period as we reduced the cagr 2012/23 from 7.5% to 6.2%, however and concerning Portugal, after several years of declining, we assumed a positive growth in 2014, plus 3%. Even that we do not reach a positive figure in 2014, the worst seems clearly behind us and margins should expand, we now expect 24% in Portugal over the long run vs. 22% before and at consolidated level 25% vs. 24% before. In what concerns the other regions, we were slightly more conservative in terms of volumes and margins. (For further details, please refer to our company update out this week)

RETAIL Retail Sector João Flores, Retail Sales Nov13 - Strong numbers in Portugal Equity Analyst . Overall, we believe retail sales numbers are potentially positive to Retail Sector. We highlight Portugal showed strong numbers in November, reflecting a more dynamic domestic demand: i) retail sales accelerated; ii) economic climate indicator close to -1% in November; iii) strong increase in VAT revenues both in October (+19.9% YoY) and November (+8.8% YoY). Jerónimo Martins (Rating: Buy; Target YE14: €17.10, Medium Risk); Sonae (Rating Buy; Target YE14: €1.35; Medium Risk); Inditex (Rating Reduce; Target YE14: €112.60; Medium Risk). . Portuguese retail sales (disclosed on December 31th) rose 3.6% YoY in November from 0.4% YoY in October. On a monthly basis, sales were up 3.1% YoY (-0.6% YoY in October). Food Retail sales rose 4.8% YoY in November (1.1% YoY in October). Non-food Retail returned to positive numbers since January 2010: +2.7% YoY in November (-0.1% YoY in October). Recall INE (Statistics Portugal) changed in October its methodology to calculate Portuguese retail sales, thus a new database from January 2010 was disclosed. Our tables already show retail sales under new methodology. According to ACAP (Portuguese Automobile Trade Association) light-vehicle sales rose 23.1% YoY in November (8.784 vehicles), following a 22.8% YoY increase in October. Sales also rose 9.3% Ytd (+8.1% Ytd-October), benefiting from strong 3Q13 sales numbers. We highlight mainstream brands sales showed strong numbers (Seat +121% YoY; Toyota +94% YoY; Renault +55% YoY; Citroen +40% YoY,…) reflecting increasing consumer`s confidence and economic recovery. Recall we estimate in 2013: JM: Estimated LfL Sales Portugal 1.0%; Estimated Total Sales Portugal +3.7% Sonae MC (Food): Estimated LfL Sales +1.3%; Estimated Total Sales +3.7% 2013

Page 6 of 14

Millennium investment banking Weekly 3 January 2014

Sonae SR (Non-Food): Estimated LfL sales -0.8% 2013; Estimated Total Sales -3.1% 2013 . Spanish retail sales (disclosed on December 30th) returned to positive territory in November, following an unfavorable comparison basis (VAT rate increased from Sep 2012) in October. Retail sales rose 2.0% in November (from -0.5% in October) while Non-food Retail sales rose 4.3% YoY in November (-0.5% YoY in October). . Polish retail-sales (disclosed on December 23rd) rose 3.8% YoY on an annual basis in November (above 3.2% YoY consensus), higher than the 3.2% YoY increase seen in October. On a monthly basis, retail sales declined 5.8% MoM (-6.1% MoM consensus), following a 3.6% MoM increase in October. There was a 5.2% YoY increase in Food retail sales (from 5.3% YoY in October). Recall we estimate Biedronka`s LFL sales will reach 4.7% YoY in 2013. We highlight Unemployment rate slightly rose to 13.2% in November from 13.0% in October (13.2% estimated). Recall new car sales in Poland rose 4.4% YoY in November to 28.038 registrations, following a 20.7% YoY increase in October 2013. This brings the year-to-date total to 300.671 units, up 4.8% on 2013 (from +4.8% YTD end-October). . Retail sales in Colombia (disclosed on December 19th) rose 6.6% YoY in October (vs 4.7% YoY consensus), following +2.4% YoY increase in September. (For further details, please refer to our snapshot out this week)

December new car sales in Iberia at top speed Overall, numbers are potentially positive to our retail valuations, suggesting December retail sales will show encouraging numbers.

Portugal light-vehicle sales rose 35.4% in December

Source: Company data and Millennium investment banking

. According to ACAP (Portuguese Automobile Trade Association) light-vehicle sales rose 35.4% YoY in December (8.612 vehicles), following a 23.1% YoY increase in November. Sales also rose 11.1% in 2013 (declined 37.9% in 2012). . We believe strong numbers reflected: i) increasing consumer`s confidence and economic recovery: ii) favorable comparison basis (sales accelerated decline in December 2012 to -43% YoY); iii) a VAT rate hike was widely expected to happen in 2014, thus consumers `reaction was to bring their shopping forward.

Page 7 of 14

Millennium investment banking Weekly 3 January 2014

Spain: Car sales rose 18.2% YoY in December

Source: Company data and Millennium investment banking

. Spanish new car sales rose 18.2% YoY in December (60.513 vehicles) following a 15.1% increase in November. We highlight sales rose 3.3% in 2013, reaching positive numbers for the first time since 2010. . Car sales to families rose 35.9% YoY in December (+32% in November; +18% in 2013)

Retail Calendar: January 13rd – JM Preliminary Sales 2013 January – Sonae Preliminary Sales 2013

Page 8 of 14

Millennium investment banking Weekly 3 January 2014

SECTOR PERFORMANCE

. This week, the PSI20 went up 1.9%. The best performing sector was Telecoms & IT, plus 5.6% and the worst was Media, minus 1.9%. . On a Ytd basis, the PSI20 went up 3.2%. The best performing sector was Financials, plus 6.2% and the worst was Oil & Gas, minus 0.4%.

AGGRESSIVE PORTFOLIO . This week, Mib Aggressive Portfolio went up 0.62%%, underperforming the PSI20 by 1.25pp. Excluding Sonae, all stocks contributed for this underperformance. . We highlight that the portfolio is composed by the five stocks with the highest upside potential of our coverage universe. It is equal weighted and rebalanced on a weekly basis.

LIQUIDITY PORTFOLIO . This week, Mib Liquidity Portfolio went up 1.18%, underperforming the PSI20 by 0.69pp. Excluding Sonae and BPI, all stocks contributed for this underperformance. . We highlight that the portfolio is composed by the five stocks with the highest upside potential of our coverage universe, excluding the less liquid stocks. It is equal weighted and rebalanced on a weekly basis.

Page 9 of 14

Millennium investment banking Weekly 3 January 2014

Page 10 of 14

Millennium investment banking Weekly 3 January 2014

Page 11 of 14

Millennium investment banking Weekly 3 January 2014

Latest Target Risk Trnvr (€mn) M CapChange (%) EPS P / E EV / SalesEV / EBITDA Div Yield P/BV 2014-01-03 Upsd Rating Pr (€) YE14 Rating 3m 6m (€ mn)o Week 1M 3M 12M YTD 2012 2013E 2014E 2012 2013E 2014E 2012 2013E 2014E 2012 2013E 2014E 2012 2013E 2013E PSI 20 6,769 - - 57,189 1.87 5.5 12.9 15.4 3.2 IBEX 9,798 - - 508,158 -1.03 2.7 5.4 16.6 -1.2 Financials 137.5 134.2 9,775 2.6 17.6 48.3 43.6 6.9 ------BCP (1) 0.18 - - - - 18.1 13.4 3,461 -3.9 27.8 84.8 128.1 5.5 ------BES 1.13 1.20 5.9% Neutral High 18.0 15.5 4,552 8.3 14.7 34.4 16.8 9.0 0.03 -0.12 0.00 31.9 loss 472.5 ------0.0% 0.0% 0.6 BPI 1.27 1.50 18.3% Buy High 1.9 1.7 1,763 2.1 8.0 32.2 26.7 4.3 0.18 0.05 0.10 5.3 23.8 13.1 ------0.0% 0.0% 0.9 Telecoms 771.8 512.5 59,998 -0.5 0.3 0.0 12.9 -0.7 - - - 11.7 12.6 16.2 1.8 2.1 2.2 5.4 6.3 6.8 0.7% 6.0% 2.0 Telefónica 11.68 14.40 23.3% Buy Medium 745.7 488.1 53,156 -1.2 0.0 -1.0 11.7 -1.3 0.87 0.92 0.78 11.7 12.7 15.0 1.9 2.1 2.2 5.5 6.3 6.7 0.1% 6.4% 2.1 Portugal Telecom 3.41 3.80 11.4% Buy Medium 20.7 19.5 3,057 6.3 4.6 -2.1 -11.4 7.9 0.27 0.55 0.01 14.0 6.2 429.3 1.8 1.8 2.0 5.4 5.4 6.3 8.7% 2.9% 0.9 Zon Optimus 5.50 5.30 -3.6% Reduce Medium 4.1 3.8 2,833 5.0 2.5 17.5 78.6 1.9 0.24 0.19 0.23 12.2 29.7 23.5 1.3 2.6 2.6 3.7 7.7 7.4 4.0% 3.5% 2.2 Sonaecom (3) 2.60 2.45 -5.7% Reduce High 1.3 1.1 952 3.0 2.0 20.9 75.5 1.1 0.21 0.24 0.14 7.2 10.9 19.2 1.1 6.9 6.7 3.7 80.4 73.3 7.9% 3.4% 2.7 Media 0.4 0.3 350 1.9 6.3 34.2 75.9 5.2 - - - 10.9 1.1 - - 8.0 - - 4.8% - - Impresa (2) 1.13 - - - - 0.0 0.0 190 0.0 1.8 61.4 253.1 3.7 0.01 - - 27.8 - - 1.2 - - 13.4 - - 0.0% - - Media Capital (2) 1.25 - - - - 0.0 0.0 106 7.8 20.2 9.6 25.0 7.8 0.12 - - 8.3 - - 0.9 - - 4.5 - - 9.7% - - Cofina (2) 0.53 - - - - 0.4 0.3 54 -1.9 -0.9 16.2 -10.3 5.8 0.06 - - 10.1 - - 1.3 - - 9.3 - - 2.2% - - Technology Indra 11.97 13.70 14.5% Buy High 12.5 14.4 1,964 -2.1 9.5 2.0 14.2 -1.6 1.00 0.93 0.87 10.0 12.8 13.7 0.8 0.9 0.9 7.7 9.2 8.7 3.4% 2.8% 1.7 Novabase 2.84 4.00 40.8% Buy High 0.1 0.1 89 -0.7 0.0 -6.9 22.9 8.8 0.25 0.19 0.19 9.1 14.8 14.7 0.2 0.4 0.4 2.5 5.3 5.3 25.5% 2.6% 0.9 Utilities 167.6 167.3 43,193 0.2 1.7 5.1 13.4 -0.1 - - - 9.4 11.2 14.0- 1.9 1.8 1.9 7.7 8.0 8.6 3.8% 4.0% 0.8 Iberdrola 4.61 4.80 4.1% Neutral Low 150.9 151.5 28,773 -0.4 2.7 7.4 15.8 -0.5 0.47 0.42 0.32 9.02 10.9 14.4 1.7 1.6 1.7 7.3 7.7 8.5 7.2% 6.5% 0.8 EDP 2.68 2.90 8.2% Neutral Low 14.4 13.7 9,803 1.6 -1.0 -0.3 14.1 0.4 0.28 0.27 0.22 8.29 9.8 12.2 1.9 1.9 1.9 8.4 8.7 8.9 8.1% 6.9% 1.1 EDP Renováveis 3.90 5.40 38.5% Buy Low 1.9 1.8 3,400 1.4 1.2 2.9 -4.0 1.0 0.14 0.13 0.13 27.6 30.9 30.5 6.2 5.8 5.4 8.5 8.4 7.8 1.0% 1.0% 0.6 REN 2.28 2.45 7.5% Neutral Low 0.4 0.3 1,218 1.6 2.2 3.0 8.1 1.9 0.23 0.22 0.21 8.9 10.3 10.9 4.5 4.6 4.6 7.0 7.2 7.7 8.3% 7.5% 1.1 Conglomerates 4.3 3.5 3,302 4.8 4.8 19.0 ------Sonae 1.09 1.35 23.9% Buy Medium 3.6 2.9 2,180 4.0 2.6 16.1 50.6 3.9 0.02 0.16 0.03 42.2 6.8 32.1 0.7 0.8 0.8 10.8 11.8 11.3 4.8% 3.0% 1.3 Semapa 8.78 8.70 -0.9% Reduce High 0.5 0.5 1,039 6.5 9.7 25.7 47.8 7.8 1.07 0.68 0.58 5.3 12.9 15.1 1.3 1.5 1.5 5.6 7.0 6.5 10.4% 2.8% 1.1 Sonae Capital 0.33 0.37 10.8% Buy High 0.1 0.1 83 0.0 -5.7 22.2 135.7 0.0 -0.04 -0.07 -0.05 loss loss loss 2.3 2.3 2.1 loss 49.5 24.8 0.0% 0.0% 0.3 Retail 299.2 206.8 83,081.4 0.1 1.3 4.2 4.9 -0.5 - - - 27.2 28.6 25.0- 2.7 2.8 2.4 15.4 16.2 13.9 1.7% 1.9% 7.6 Inditex 118.90 112.60 -5.3% Reduce Medium 288.4 194.3 74,114 -0.1 2.7 5.5 10.9 -0.8 3.81 4.06 4.63 5.5 29.3 25.7 3.9 4.1 3.6 15.8 17.0 14.5 1.7% 1.8% 7.8 Jerónimo Martins 14.25 17.10 20.0% Buy Medium 10.8 12.5 8,967 0.2 -1.4 -1.3 -6.0 0.2 0.61 0.62 0.69 4.8 23.1 20.7 0.9 0.8 0.7 13.2 12.3 10.9 2.0% 2.1% 6.3 Industrials 2.3 1.8 2,892 4.3 2.1 18.2 33.3 4.3 ------8.0% - - Sonae Industria 0.62 0.66 6.2% Neutral High 0.4 0.3 86 6.6 1.1 11.0 24.1 9.6 -0.71 -0.55 -0.14 loss loss loss 0.6 0.7 0.7 9.8 13.9 11.8 81.3% loss 1.2 Altri 2.35 2.25 -4.0% Reduce High 1.2 1.0 481 2.9 -5.6 21.6 40 4.7 0.25 0.27 0.28 6.2 8.8 8.4 1.9 1.9 1.8 7.3 7.7 6.9 1.3% 1.1% 2.0 Portucel 2.98 2.75 -7.7% Reduce Medium 0.7 0.6 2,287 2.8 2.3 15.9 30.3 2.4 0.28 0.26 0.22 8.3 11.6 13.4 1.5 1.8 1.8 5.8 7.8 7.8 9.4% 8.8% 1.5 Construction 1.9 1.4 1,012 ------Mota-Engil 4.58 3.20 -30.0% Sell High 1.8 1.3 936 5.0 1.8 43.9 170.8 5.9 0.20 0.30 0.37 7.9 15.4 12.4 0.7 1.0 0.9 6.0 6.7 6.4 6.6% 2.4% 1.8 Oil & Gas Galp Energia 11.87 15.95 34.4% Buy High 14.0 14.9 9,839 -0.4 1.1 -3.3 -4.2 -0.4 0.43 0.35 0.41 27.1 33.6 29.1 0.7 0.9 0.8 13.6 12.9 11.3 2.0% 2.4% 1.8 (1) We do not have a recommendation on BCP, as Mib is a registered trademark of BCP; (2) Not Covered; (3) PT YE13: we did not move valuation to YE14 given ongoing offer of minorities that should be completed in January.

Page 12 of 14

Millennium investment banking Weekly 3 January 2014

DISCLOSURES . This report has been prepared on behalf of Millennium investment banking (Mib), a registered trademark of Banco Comercial Português, S.A. (Millennium bcp). . Millennium bcp is regulated by Comissão de Mercado de Valores Mobiliários. . Recommendations: Buy means more than 10% absolute return; Neutral means between 0% and +10% absolute return; Reduce means between -10% and 0% absolute return; Sell means less than -10% absolute return. . Unless otherwise specified, the time frame for price targets included in this report is current year-end or next year-end. . Risk is defined by the analyst’s view in a qualitative way (High, Medium, Low). . Usually we update our models and price targets in between 3 and 9 months. . Millennium bcp prohibits its analysts and members of their households to own any shares of the companies covered by them. . BCP group may have business relationships with the companies mentioned in this report. . Millennium bcp, expects to receive or intends to seek compensations for investment banking services from the companies mentioned in this report. . The views expressed above, accurately reflect personal views of the authors. They have not and will not receive any compensation for providing a specific recommendation or view in this report. There were not any agreements between the companies covered and the analysts regarding the recommendation. . Analysts are paid in part based on the profitability of BCP group, which includes investment banking revenues. . BCP group has more than 2% of EDP. . BCP group was chosen to evaluate EDP regarding the 8th stage of the privatization process. . BCP group was chosen to evaluate REN regarding the 2nd stage of the privatization process. . A member of the Executive Board of Directors of Millennium bcp is member of the General and Supervisory Board of EDP - Energias de Portugal, SA. . Banco Millennium bcp Investimento, S.A. (merged into Millennium bcp) was chosen as a joint global coordinator of the Initial Public Offering of EDP Renováveis. . Banco Millennium bcp Investimento, S.A. (merged into Millennium bcp) was part of the consortium, as a Co-Leader, of BES rights issue, done in April 2009. . Millennium bcp was part of the consortium, as Co-Manager, of BES rights issue completed in May 2012. . Millenniumbcp through its investment banking department is providing investment banking services to Tagus Holdings S.a.r.l. (“Offeror” in the launch of a tender offer over Brisa - Autoestradas de Portugal, S.A. shares). . Recommendations on Millennium bcp covered companies (%) Recommendation Dec-13 Sep-13 Jun-13 Mar-13 Dec-12 Jun-12 Dec-11 Dec-10 Dec-09 Dec-08 Dec-07 Dec-06 Dec-05 Dec-04 Buy 55% 59% 77% 76% 77% 78% 68% 79% 63% 54% 41% 37% 30% 63% Neutral 23% 9% 9% 10% 12% 4% 11% 7% 15% 4% 27% 11% 40% 6% Reduce 18% 18% 14% 14% 4% 0% 0% 0% 7% 0% 0% 21% 5% 6% Sell 5% 14% 0% 0% 4% 7% 7% 4% 4% 0% 14% 16% 5% 0% Unrated/Under Revision 0% 0% 0% 0% 4% 11% 14% 11% 11% 42% 18% 16% 20% 25% Performance 10.2% 7.1% -4.6% 3.0% 20.4% -14% -28% -10% 33% -51% 16% 30% 13% na PSI 20 6,559 5,954 5,557 5,822 5,655 4,698 5,494 7,588 8,464 6,341 13,019 11,198 8,619 7,600

DISCLAIMER This information is not an offer to sell or a solicitation to enter into any particular deal or contract. It consists of data compiled by or of opinions or estimates from Banco Comercial Português, S.A. and no representation or warranty is made as to its accuracy or completeness. This information is merely an auxiliary means of analysis to be used by its recipients, who will be solely responsible for its use, including for any losses or damages that may, directly or indirectly, derive from it. Its reproduction is not allowed without permission from the BCP group. The data herein disclosed are merely indicative and reflect the market conditions prevailing on the date they have been collected. Thus, its accuracy and timing must absolutely be confirmed before its usage. Any alteration in the market conditions shall imply the introduction of changes in this report. This information / these opinions may be altered without prior notice and may differ or be contrary to opinions expressed by other business areas of BCP group as a result of using different assumptions and criteria. The analysis contained herein is based on numerous assumptions. Different assumptions could result in materially different results.

Page 13 of 14

OFFICE LOCATIONS

Millennium investment banking Av. Prof. Dr. Cavaco Silva (Tagus Park) Edif 2 - Piso 2 B Salvo 2744-002 Porto Salvo Portugal Telephone +351 21 003 7811 Fax +351 21 003 7819 / 39

Equity Team Luis Feria - Head of Equities

Equity Research +351 21 003 7820 António Seladas, CFA - Head (Industrials and Small Caps) Alexandra Delgado, CFA (Telecoms and IT) João Flores (Media and Retail) Vanda Mesquita (Banks, Utilities and Oil&Gas) Ramiro Loureiro (Market Analysis) Sónia Martins (Market Analysis) Sónia Primo (Publishing)

Prime Brokerage +351 21 003 7855 Vitor Almeida

Equity Sales/Trading +351 21 003 7850 Paulo Cruz - Head Gonçalo Lima Jorge Caldeira Nuno Sousa Paulo Santos Pedro Ferreira Cruz Pedro Gonçalves Pedro Lalanda

Equity Derivatives +351 21 003 7890 Maria Cardoso Baptista, CFA – Head Ana Lagarelhos Diogo Justino Marco Barata