WEEKLY EUR/BRL 2.53 0.11% 4.63% 8.86% 10Y Bond SP 6.22% 6.53% -31Bp 5.09%
IBERIA
EQUITY RESEARCH 8 June 2012
TOP STORIES
BPI - Impacts of BPI’s recapitalization plan are neutral valuation wise. Following the capital increase, the adjusted price-target would stand at €0.55 (vs. current €0.95), assuming a 40% discount to 5/6/2012 closing price (page 4).
OUT THIS WEEK Other Snapshots / Company Reports – BPI, Media Sector, Sector Overview, Jerónimo Martins, BPI Other News – Jerónimo Martins, Portugal Telecom, Zon Multimedia
WEEK AHEAD Monday - Semapa dividend payment
PORTFOLIOS
This week, Mib Aggressive Portfolio went up 6.99%, outperforming the PSI20 by 5.28pp. All stocks contributed for this outperformance (page 10).
This week, Mib Liquidity Portfolio went up 5.87%, outperforming the PSI20 by 4.16pp. All stocks contributed for this outperformance (page 11).
Stock Market Last 1W YTD 2011 Daily Vol. (€mn) 1W 1M 6M 2011
PSI 20 4,529 1.71% -17.56% -27.60% PSI 20 99 83 69 148 IBEX 35 6,552 8.03% -23.51% -13.11% IBEX 35 1,735 2,606 2,775 4,925 Euro Stoxx 50 2,144 3.64% -7.45% -5.56% Euro Stoxx 50 7,578 8,299 8,423 14,831
Forex Rates Last 1W YTD 2011 Interest Rates Last 1W Chg YE11
EUR/USD 1.25 1.18% -3.64% -3.17% Euribor 6m 0.94% 0.94% 0bp 1.62% EUR/GBP 0.81 0.37% -3.27% -2.96% 10Y Bond PT 11.06% 11.97% -91bp 13.36% WEEKLY EUR/BRL 2.53 0.11% 4.63% 8.86% 10Y Bond SP 6.22% 6.53% -31bp 5.09%
Best & Worse Performers -1 Week (%) Be s t & Wor s e Pe r forme r s - YTD (%) António Seladas, CFA Cofina 16.7 Jerónimo Martins 9.0 +351 21 003 7826 BES 16.1 Cimpor 3.6
[email protected] BPI 11.3 Ibersol 0.0 Sonae Industria 10.3 Portucel 0.0 Iberdrola 9.3 Brisa -2.5 Novabase -2.0 EDP Renováveis -38.4
REN -2.0 Martifer -43.5 Av. José Malhoa, Lote 27 Mota-Engil -2.9 Bankinter -47.6 Impresa -6.1 B anc o Po pul a r -51.0 1099-010 Lisboa BCP -16.0 Cofin a -53.9 Tel / Fax: +351 21 003 7800 / 09 -25 -15 -5 5 15 25 -80 -60 -40 -20 0 20
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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 8 June 2012
EARNINGS
Company 2Q2012 3Q2012 Investor Day
Galp Energia ** 13-07 BM 12-10 BM Portucel 19-07 AM 22-10 AM Impresa 23-07 AM31-10AM BPI 25-07 AM24-10AM Jerónimo Martins 25-07 BM 25-10 BM Iberdrola 25-07 BM 25-10 BM Novabase 26-07 AM 30-10 AM Sonae Indústria 26-07 AM08-11AM Indra 26-07 AM15-11AM Telefónica 26-07 BM 07-11 BM Galp Energia 27-07 BM 26-10 BM 06-03-2012 Brisa 27-07 AM31-10AM23-11-2012 BCP 27-07 AM 05-11 AM Glintt 27-07 13-11 BES 30-07 AM 06-11 AM Cimpor 31-07 BM 13-11 BM Sonae Sierra 01-08 AM06-11AM REN 01-08 AM 12-11 AM Portugal Telecom 02-08 BM 08-11 BM Mart if er 02-08 AM15-11AM Sonae Capital 21-08 AM 15-11 AM Sonae 23-08 AM14-11AM Alt ri 29-08 AM07-11AM Cofina 30-08 AM 08-11 AM Ibersol 30-08 AM19-11AM Semapa 30-08 AM 30-10 AM Mota-Engil 31-08 AM21-11AM Bankinter n.a. n.a. Banco Popular n.a. n.a. Sonaecom n.a. n.a. 15-06-2012 EDP Renováveis n.a. n.a. 24-05-2012 Zon Multimedia n.a. n.a. ESFG n.a. n.a. EDP n.a. n.a. 25-05-2012 Media Capital n.a. n.a. SAG n.a. n.a. Jerónimo Martins * n.a. n.a. Sonae * n.a. n.a. Soares da Costa n.a. n.a. AM - After market; BM - Before market; n.a. - Not available; (e) Expected; ** Trading update
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Millennium investment banking Weekly 8 June 2012
DIVIDENDS Gross Payment Ex-Div Last Year Company AGM Obs DPS Date Date Pay Date Gross DPS Banco Popular* (1) - 11-Jun-12 - - - 11-Oct-11 0.050 ---- -21-Jul-111x78 ---- -6-May-111x85 ---- -12-Jan-110.050 Bankinter * 0.048 - - 7-Jan-12 Approved 28-Sep-11 0.052 0.039 - - 7-Apr-12 Approved 2-Jul-11 0.052 ---- -1-Jan-110.048 BCP 0.000 31-May-12 - - - - - BES 0.000 22-Mar-12 - - Approved 11-Apr-11 0.126 BPI 0.000 31-May-12--Estimate-- Banif 0.000 22-Mar-12 - - - - 0.020 ESFG 0.000 31-May-12 - - - 3-Jun-11 0.280 Portugal Telecom** 0.435 27-Apr-12 25-May-12 22-May-12 Approved 3-Jun-11 0.650 0.215 - - - Estimate 4-Jan-12 0.215 Sonaecom 0.070 27-Apr-12 24-May-12 21-May-12 Approved 25-May-11 0.050 Zon Multimedia 0.160 27-Apr-12 25-May-12 22-May-12 Approved 6-May-11 0.160 Telefónica** 0.530 13-May-12 18-May-12 18-May-12 Approved 6-May-11 0.750 0.700 - - - Estimate 7-Nov-11 0.770 Impresa 0.000 24-Apr-12 - - Approved - 0.000 Media Capital 0.069 21-Mar-12 19-Apr-12 16-Apr-12 Approved 15-Apr-11 0.074 Cofina 0.010 12-Apr-12 11-May-12 8-May-12 Approv ed 21-Jun-11 0.010 Indra 0.680 20-Jun-12 - - Proposed 4-Jul-11 0.680 Novabase 0.030 3-May-12 4-Jun-12 30-May-12 Approved 6-Jun-11 0.130 ---- -13-Jul-100.180 Glintt 0.000 22-May-12 - - Approved - - Iberdrola** 0.150 22-Jun-12 - - Estimate 5-Aug-11 0.150 0.030 22-Jun-12 - - Estimate 13-Jul-11 0.030 EDP 0.185 17-Apr-12 16-May-12 11-May-12 Approved 13-May-11 0.170 EDP Renováveis 0.000 12-Apr-12 - - Approved - 0.000 REN 0.169 27-Mar-12 20-Apr-12 17-Apr-12 Approved 12-May-11 0.168 Brisa 0.310 2-Apr-12 - - Rejected 5-May-11 0.310 Sonae 0.033 30-Apr-12 30-May-12 25-May-12 Approved 27-May-11 0.033 J. Martins 0.275 30-Mar-12 30-Apr-12 25-Apr-12 Approved - 0.000 Portucel 0.221 4-Apr-12 20-Apr-12 17-Apr-12 Approved - - Altri 0.020 26-Apr-12 25-May-12 22-May-12 Approved 21-Jun-11 0.020 F Ramada ---- -21-Jun-110.070 Inapa ------0.000 Sonae Industria 0.000 29-Mar-12 - - Approved - 0.000 Sonae Capital 0.000 30-Mar-12 - - Approved - 0.000 Cimpor - 20-Apr-12 - - - 6-May-11 0.205 0.166 6-Jul-12 - - Proposed - - Semapa0.25518-May-12 11-Jun-12 6-Jun-12 Approved - 0.000 Mota-Engil 0.110 17-Apr-12 17-May-12 14-May-12 Approved 13-May-11 0.110 Soares da Costa 0.000 24-May-12 - - Approved 13-Jun-11 0.022 Teixeira Duarte 0.000 17-May-12 - - Approved 16-Jun-11 0.015 Martifer 0.000 11-Apr-12 - - Approved - 0.000 Galp Energia 0.200 7-May-12 24-May-12 21-May-12 Approved 30-May-11 0.140 ---- -23-Sep-100.060 Ibersol 0.055 13-Apr-12 11-May-12 8-May-12 Approved 11-May-10 0.055 SAG 0.000 30-Apr-11 - - Approved - 0.000 na - Not available Estimate: Estimated by the Millennium investment banking Proposed: Announced by the company to be proposed in AGM Approved: Dividend already approved by AGM (1) Due to the merger with Banco Pastor, the second dividend relative to 2011 accounts was not paid in January as usual and should occur in 1Q12 * Company pays dividends four times a year ** Company pays dividends twice a year. (1) Remuneration system, which allows choosing between new, shares or cash. Cash dividend: the price at which Banco Popular will purchase rights is 0.05€. Scrip dividend: one new share for every eighty-five rights.
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Millennium investment banking Weekly 8 June 2012
SECTOR OVERVIEW Sector Overview Spotting turning points - Future of Eurozone weighs heavily on markets . The possibility of Greece leaving the Euro, of Spain reaching out for international aid and cooling signs from China have led to a negative month of May for equity markets. MSCI World Index fell 9% in May. While bank troubles in Spain have driven banking shares down (Eurostoxx Bank -15%) and banking CDS up (+60bp to 300bp), cooling signs from China led to lower energy prices (RJ/CRB commodity price index -11%). . Cement consumption in Portugal fell 29% YoY in April and 41.4% in Spain. These accelerating falls in consumption in Iberia point to a YoY decline in the FY12, exceeding 15% for Portugal and 30% for Spain. Cement consumption in Brazil reached 10.6% YoY increase in January. . In May, monthly electricity consumption (adjusted for temperature and working days) dropped by 3% YoY in Portugal and decreased by 3.2% YoY in Spain. In Portugal the pace of drop seems to be stabilizing vis-à-vis the values recorded in the beginning of the year (- 7% YoY in January and approximately -5% YoY in February and March). (For further details, please refer to our report out this week)
FINANCIALS BPI Buy – High Risk (Target YE12: €0.95) Rita Silva, Recapitalization plan - Too much money Equity Analyst . Impacts of BPI’s recapitalization plan are neutral valuation wise. Following the capital increase, the adjusted price-target would stand at €0.55 (vs. current €0.95), assuming a 40% discount to 5/6/2012 closing price. . The recapitalization plan includes: (i) the issuance of €1.5bn in CoCo's + (ii) €200mn capital increase. As soon as the capital increase is completed (30 September), its proceeds will be used to reimburse the CoCo's, whose value will be reduced to €1.3bn. . We conclude that regulators demanded capital cushions that were built based on the MtM values of 30 September (as originally required by EBA), regardless of part of these assets longer exist on 30 June. On the other hand, the capital increase is related to the fact that part of the capital requirements are not strictly related to temporary needs (filled by CoCo's), as is the case of costs with the transfer of the pension fund. In our opinion, it does not make much sense to require a capital buffer to fill shortages of assets that no longer exist. It is therefore our understanding that authorities made a prudential stance by addressing the possibility of future asset depreciation, adding to the lack of confidence on the real value of the banking system’s assets. . We assume that the CoCo’s proceeds will be invested in Portuguese short term (2 year) T-bonds that currently yield about 9%. We further assume that CoCo’s costs with be of 8.5% / year and that BPI will partially redeem the outstanding amount until it has no hybrids by YE17 (please refer to tables inside). CT1 (including CoCo’s) is expected to reach 15% in YE12 and 11.4% by YE17, with the entire CoCo’s repaid by then. The increase of its exposure to Portuguese debt would rise total exposure to €5bn, reinforcing inexorably its links to the Portuguese economy, becoming an even better proxy of it. BPI has also an underlying problem related to the weight of retail mortgage, difficult to reprice due to the long term nature of the contracts. (For further details, please refer to our snapshot out this week)
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Millennium investment banking Weekly 8 June 2012
TELECOMS Portugal Telecom Buy – Medium Risk (Target YE12: €6.30) Alexandra Delgado, CFA Portugal Telecom reached triple-play market leadership Equity Analyst Portugal Telecom has announced Monday that its brand Meo achieved leadership in the triple- play market (customers that subscribe to fixed voice, fixed broadband and pay-TV through a single operator) by the end of the first quarter 2012, with 728 thousand customers vs. Zon’s 716 thousand customers. PT highlighted the success of Meo offering in only four years, success that has been boosted by the investment in a Fibre-to-the-Home network. This information on triple play clients is not new and was already known since first quarter results were published. PT had by the end of 1Q12 1,111k Pay TV clients and Zon had 1,587k clients; PT has circa 37% of market share and Zon has 52%.
Zon Multimedia Buy – Medium Risk (Target YE12: €3.05) Alexandra Delgado, CFA Isabel dos Santos increases stake in Zon to 17.84% Equity Analyst Zon Multimedia has disclosed this week that Cinvest sold its stake (2.82%) in Zon at a price of €2.5, in an over the counter deal done on the 4 of June. It was rumoured during the week that Angolan businesswoman Isabel dos Santos was the acquirer even that up to now, it was not confirmed however it seems quite probable, taking in consideration the several recent press comments. So the Angolan businesswoman should have now 17.84%. We remind that last week Portuguese daily Diário Económico reported that Isabel dos Santos was looking to increase its stake to 20-25% in Zon through the negotiation with small shareholders. The price, €2.5 per share after the dividend was higher than the price at which Isabel dos Santos bought Telefónica’s stake in Zon one month ago (€2.34/ share before dividend). We also remind that state-bank CGD wants to sell its stake in Zon (10.9%) in the next weeks and that according to news in the press, Isabel dos Santos has also made an offer to acquire this shareholding. Recent news also say that the Altice group is interested in acquiring not only CGD, but also BES stakes in Zon (that total 22% of capital). Both banks have voiced their decision to sell their shareholdings. Isabel dos Santos was a potential buyer but now it cannot buy both shareholdings without surpassing the threshold at which a bidder is required under Portuguese law to offer to buy all of the shares. This means that a new investor must appear. Altice group has stakes in other cable companies and therefore knows the sector well; however, as it controls Cabovisão (second largest cable operator) in Portugal, this means a significant investment in Zon will face regulatory scrutiny. We remind that Altice Group bought Cabovisão (Portuguese cable operator) from Canadian operator Cogeco Cable for €45 million in the beginning of March. Cabovisão has struggled in the market in the last years, on the back of a weak economy and increased competition. Cabovisão had by the end of 2011 circa 256k Pay TV clients (8.6% market share) and circa 162k clients of Broadband (7.2% market share). Altice Group has stakes in media and telecom companies. It holds a 30% stake in main French cable operator Numericable that has over 3.5 mn Pay TV subscribers and over 1 million Broadband subscribers. Altice Group also controls Hot Telecommunications Systems (64.7% stake), leading cable operator in Israel.
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Millennium investment banking Weekly 8 June 2012
MEDIA Media Sector Audience Shares May12 – SIC/Impresa penalized by fine-tuning in João Flores; households panel? Equity Analyst . SIC/Impresa showed lackluster numbers in May: i) change from Marktest to GfK last March benefited SIC, thus fine-tuning in GfK households panel could partially explain numbers; ii) audience shares from daily prime-time soap and weekly reality television singing competition “Idolos “ are below expected. . Cable channels kept 1st place in audience shares as expected, increasing gap to 2nd place (TVI/Media Capital). . TVI /Media Capital kept 2nd place in audience shares. All-Day 24.6% (+0.5pp MoM, -1.3pp YoY) and prime-time 28.8% (+0.9pp MoM, -0.6pp YoY). . SIC/Impresa kept 3rd place: All-day 21.3% (-1.3pp MoM, -2.7pp YoY); Prime-time: 23.7% (- 2.0pp MoM, -3.2pp YoY). . State-owned RTP1 kept negative numbers (audience shares below 15%). . Audience shares in cable: Disney Channel kept1st place in audience shares while former leader SIC Noticias (in Marktest ranking) kept 5th place. . We have a YE12 price target of €0.31 for Impresa (Reduce, High Risk), a YE12 price target of €2.10 for Media Capital (no recommendation) and a YE12 price target of €0.49 for Cofina (Buy, High Risk). (For further details, please refer to our snapshot out this week)
UTILITIES Utilities Sector Vanda Mesquita, Drop of electricity consumption in Iberia Equity nalyst Monthly electricity consumption (adjusted for temperature and working days) dropped by 3% YoY (Source: Rede Eléctrica Nacional) in Portugal and decreased by 3.2% YoY (Source: Red Electrica de España) in Spain. In Portugal the pace of drop seems to be stabilizing vis-à-vis the values recorded in the beginning of the year (-7% YoY in January and approximately -5% YoY in February and March). In terms of accumulated values, in Portugal there has been a sharper drop (-4.6% YoY) than the one recorded in Spain (-2.1% YoY).
8%
4%
0%
-4%
-8%
-12% Jul-09 Jul-10 Jul-11 Oct-09 Apr-09 Apr-10 Apr-11 Abr-12 Jan-09 Jan-10 Out-10 Jan-11 Out-11 Jan-12 Portugal Spain
Source: Rede Eléctrica Nacional, Red Electrica de España
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Millennium investment banking Weekly 8 June 2012
YoY (%) Accum 2012 May-12 Apr-12 Mar-12 Feb-12 Jan-12 YE2011 May-11 Consumption in Portugal -4,60% -3,00% -2,00% -5,20% -5,10% -7,00% -2,30% -0,80% Consumption in Spain -2,10% -3,20% -1,00% -2,30% -1,20% -2,40% -1,20% 0,20% Source: Rede Eléctrica Nacional, Red Electrica de España
As far as EDP is concerned, the distribution earnings are not very much affected by the drop in volumes (the bulk of the model has a fixed component) and in the case of liberalized activities we expect 2012 EBITDA to drop by 9.2% drop (these activities accounted for 10% of EBITDA at YE11). With respect to Iberdrola, this year we expect EBITDA to drop by 5% (these activities represented about 20% of EBITDA at the YE2011).
RETAIL Retail Sector João Flores, Portugal light vehicles sales reduced pace of decline in May Equity Analyst Car sales in Portugal reduced pace of decline in May. Portugal light vehicles sales declined 27.5% in May (10.668 vehicles) following 41.7% decline in April (-43.0% YTD). According to ACAP (Portuguese Automobile Trade Association) encouraging numbers are partially explained by strong seasonally effects from rent-a-car sales. Including light commercials, sales declined 32.3% YoY in May (49% 1Q12).
Jerónimo Martins Buy – Medium Risk (Target YE12: €15.85) João Flores, New promotion Equity Analyst JM is offering (from yesterday until Sunday) an immediately 50% cash discount on a few Portuguese products in all its Pingo Doce stores. Clients will have to purchase a minimum of €25 on other products. New campaign in order to boost sales it’s not a surprise, following similar recent campaigns and statements from company (1Q12 Earnings CC; analysts meeting held this week): i) we believe cost associated to prices campaigns will be partially shared with suppliers (scale benefits), which explains discounts are limited to a few selected products (suppliers accepted conditions) and not to all (ex: Portuguese wines are not included in campaign); ii) company said it will step up promotional campaigns (the costs to recover market share are higher than to defend current market share). Recall we recently (please see Snapshot Jerónimo Martins - Valuation Update - Bullet proof to
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Millennium investment banking Weekly 8 June 2012
war prices in Portugal, that was published on May 09th) downwards revised JM`s margins in Portugal (from 6.6% to 5.8%) in order to reflect a tough scenario.
Analysts meeting - Kept confidence on a tough environment . JM held this morning an analysts meeting in Lisbon. Company did not disclose any relevant news since we believe meeting was to: i) increase visibility of recent CFO Mr. Alan Johnson which replaced charismatic Mr. Palha da Silva; ii) showing the company is aware of the increasing risks both in Portugal and Poland. . Overall, company keeps showing confidence (reiterated low double digit LfL sales growth in Poland) although environment is getting tougher. Following analysts meeting, we keep our valuation unchanged at €15.85 YE12 keeping in mind that if company misses LfL sales growth target in Poland (low double digit vs our estimate 10%) stock could be over penalized vs the actual impact on our px target (for example: 9.0% LfL impacts minus €0.20 on px target). . Portugal: environment more difficult than expected in September/October last year. Company will not replicate aggressive immediately 50% cash discount. Cost associated to prices campaigns will be partially shared with suppliers since benefited from scale benefits. JM has 3 objectives in Portugal: i) no reduce workforce (will do it if new prices strategy does not work); ii) step up promotional campaigns (the costs to recover market share are higher than to defend current market share); iii) help perishable suppliers (recall JM decided to step up payments to fresh food suppliers). . Poland: Biedronka has room to grow (new stores openings) beyond 2015. Company will diversify its portfolio (drugstores, …) in order to capitalize its know-how. Non-aggressive strategy from main competitors is a surprise to JM (LIDL only opened 35 stores last year and 7/8 stores this year). . No further news from Colombia. First stores could be opened later this year or beginning of next year. According to JM, there are no negative surprises which mean business plans is well done. . Ahold and JM had two meetings recently and Ahold fully supports the actions taken by JM (price promotions), thus Ahold selling its minority stake in JMR (49%) apparently it’s a non-issue. From a strategic point of view, we would not appreciate JM buying the minority stake in JMR (non-growth market). . JM agrees there`s room to pay a special dividend, even considering an accelerated expansion plan in Colombia. No decision has been taken and company does not want to take a commitment. (For further details, please refer to our snapshot out this week)
CONSTRUCTION
Mota-Engil Buy – High Risk (TargetYE12: €1.25)
António Seladas, CFA Mota Engil Africa’s holding Equity Analyst According to the press, Mota Engil should create a new holding that aggregates African interests, namely in Angola, Mozambique, São Tomé, Cape Verde, Malawi, Zimbabwe and South Africa. This statement was done according to the press by the CFO Mr. Gonçalo Moura Martins. Still according to the CFO this reorganization targets the access to the local credit markets and should increase the visibility of the African assets. This statement is not new as the company had already announced that will consolidate the businesses by regions instead of sectors. Actually, 1Q12 earnings were already presented on the new format. We believe that it will be easier to raise cash abroad aggregating the businesses by regions, however foreign credit entities are usually more demanding, regarding debt metrics meaning that for instance net debt to ebitda should be lower than 3X. This means that domestic credit measures will suffer at a time that domestic banks are undercapitalized. Despite that, the reorganization makes sense from the point of view of asking for money abroad, however it removes the focus from the construction business, replacing it by holdings which could be Page 8 of 14
Millennium investment banking Weekly 8 June 2012
prejudicial, in the medium term.
SECTOR PERFORMANCE
Sector Performance -1 Week (%) Sector Performance - YTD (%)
PSI20 1.7 PSI20 -17.6
Electric Utilities 4.6 Retail * 5.6
Telecoms 3.8 Industrials & Other -0.5
Industrials & Other 2.2 Motorways -3.4
Motorways 0.9 Oil & Gas -20.2
Oil & Gas 0.6 Telecoms -23.2
Retail * -0.5 Electric Utilities -28.4
Financials -1.9 Financials -29.6
-5 -3 -1 1 3 5 7 -40 -20 0
* includes Jeronimo Martins and Sonae
. This week, the PSI20 went up 1.7%. The best performing sector was Electric Utilities with a 4.6% growth and the worst was Financials with a 1.9% fall. . On a Ytd basis, the PSI20 went down 17.6%. The best performing sector was Retail with a 5.6% growth and the worst was Financials with a 29.6% fall.
AGGRESSIVE PORTFOLIO . This week, Mib Aggressive Portfolio went up 6.99%, outperforming the PSI20 by 5.28pp. All stocks contributed for this outperformance . 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 5.87%, outperforming the PSI20 by 4.16pp. All stocks contributed for this outperformance . 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
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Millennium investment banking Weekly 8 June 2012
Mib AGGRESSIVE PORTFOLIO 834 13 8 Portfolio weekly return 300 Return since inception (27Jul04) Company Risk Market Price Upside Weekly Performance 270 Rating Pr ice (€) Target (€) Potential Return Contribution Deviation Por tfolio PSI20 Sonae Industria High 0.43 1.60 272% 10.3% 2.05pp 1.71pp 240 BPI High 0.42 0.95 124% 11.3% 2.26pp 1.91pp 210 Sonae Medium 0.38 0.87 131% 1.9% 0.38pp 0.03pp 180 Telefónica Medium 9.79 21.00 115% 8.7% 1.73pp 1.39pp 150 Bankinter High 2.49 5.10 105% 2.9% 0.57pp 0.23pp Portfolio 6.99% 120 PSI 20 1.71% 90 Gain/loss 5.28pp 60 Explained by the portfolio 5.27pp 23/07/04 31/10/05 08/02/07 18/05/08 26/08/09 04/12/10 13/03/12 Explained by being underweight in the remaining PSI20 stocks 0.00pp
Next week Portfolio Changes in Portfolio Ytd Return Risk Market Price Upside 110.0 Company In Out Rating Pr ice (€) Target (€) Potential 105.0 Sonae Industria High 0.43 1.60 272% -- 100.0 Sonae Medium 0.38 0.87 131% BPI High 0.42 0.95 124% 95.0 Telefónica Medium 9.79 21.00 115% 90.0 Bankinter High 2.49 5.10 105% 85.0 80.0 Return vs. PSI 20 Portfolio PSI20 75.0 2007 2008 2009 2010 2011 YTD 1 Month 1 Week 30/12/ 11 05/02/12 13/03/12 19/04/12 26/ 05/12 Portfolio -2.4% -43.6% 71. 9% -7. 30% -36.6% -16.7% -9.2% 7.0% PSI20 16.3% -51.3% 33.5% -10.30% -27.6% -17.6% -12.5% 1.7% Gain/loss -18.7pp 7.7pp 38.5pp 3.0pp -9.0pp 0.9pp 3.4pp 5.3pp
Source: Bloomberg; Millennium investment banking "Mib Aggressive Portfolio" is composed by the five stocks with a higher upside potential of our coverage universe. "Mib Aggressive Portfolio" is equal-weighted and its composition changes at the end of the last trading day of each week.
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Millennium investment banking Weekly 8 June 2012
Mib LIQUIDITY PORTFOLIO 834138 Ytd Return (since inception) Portfolio weekly return 110.0 Risk Price Upside Weekly Performance Company Market Price (€) Rating Target (€) Potential Return Contribution Deviation 105.0 BPI High 0.42 0.95 124% 11.3% 2.26pp 1.91pp Sonae Medium 0.38 0.87 131% 1.9% 0.38pp 0.03pp 100.0 Telefónica Medium 9.79 21.00 115% 8.7% 1.73pp 1.39pp 95.0 Bankinter High 2.49 5.10 105% 2.9% 0.57pp 0.23pp Portugal Telecom Medium 3.27 6.30 92% 4.7% 0.93pp 0.13pp 90.0 Portfolio 5.87% PSI 20 1.71% 85.0 Portfolio PSI20 Gain/loss 4.16pp 80.0 Explained by the portfolio 5.27pp Explained by being underweight in the remaining PSI20 stocks -1.11pp 75.0 30/12/11 05/02/12 13/03/12 19/04/12 26/05/12 Next week Portfolio Changes in Portfolio Risk Price Upside Company Market Price (€) In Out Rating Target (€) Potential Sonae Medium 0.38 0.87 131% Galp Energia PT BPI High 0.42 0.95 124% Telefónica Medium 9.79 21.00 115% Bankinter High 2.49 5.10 105% Galp Energia High 9.15 18.30 100%
Return vs. PSI 20
2011 YTD 1 Month 1 Week Portfolio - -18.5% -5.9% 5.9% PSI20 -27.6% -17.6% -12.5% 1.7% Gain/loss - - -0.9pp 6.7pp 4.2pp
Source: Bloomberg; Millennium investment banking "Mib Liquidity Portfolio" is composed by the five stocks with a higher upside potential, excluding less liquid stocks. "Mib Liquidity Portfolio" is equal-weighted and its composition changes at the end of the last trading day of each week.
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Millennium investment banking Weekly 8 June 2012
Latest Target Risk Trnvr (€mn) M CapChange (%) EPS P / E EV / SalesEV / EBITDA Div Yield P/BV 2012/06/08 Upsd Rating Pr (€) YE12 Rating 3m 6m (€ mn) Week 1M 3M 12M YTD 2010 2011E 2012E 2010 2011E 2012E 2010 2011E 2012E 2010 2011E 2012E 2010 2011E 2011E PSI 20 4,529 - - 42,946 1.71 -13.2 -19.1 -38.7 -17.6 Financials 57.4 57.3 8,614 5.1 -16.4 -39.5 -62.4 -41.5 ------Banco Popular 1.72 1.95 13.1% Buy High 30.1 27.1 3,127 5.7 -19.9 -40.8 -55.5 -51.0 0.31 0.25 0.13 12.4 14.4 12.8 ------3.0% 0.6% 0.4 Bankinter 2.49 5.10 105.1% Buy High 12.3 10.2 1,334 2.9 -23.1 -45.2 -43.6 -47.6 0.32 0.38 0.30 13.1 12.7 8.2 ------3.0% 3.2% 0.4 BCP (1) 0.08 - - - - 6.2 10.7 605 -16.0 -18.4 -48.5 -81.2 -38.2 ------BES (3) 0.51 - - - - 8.4 8.6 2,061 16.1 -15.3 -43.5 -67.8 -37.0 0.41 - - 4.3 ------7.3% - - BPI 0.42 0.95 124.1% Buy High 0.2 0.4 420 11.3 1.7 -22.3 -59.7 -11.9 0.19 0.13 0.15 6.7 3.6 2.8 ------0.0% 0.0% 0.4 Telecoms 743.2 604.5 48,532 8.2 -11.9 -21.6 -41.3 -26.5 - - - 5.4 10.8 6.7 2.6 1.9 1.8 7.2 6.1 5.3 8.7% 13.3% 1.9 Telefónica 9.79 21.00 114.6% Buy Medium 727.7 590.2 44,532 8.7 -11.0 -22.2 -40.2 -26.9 2.25 0.90 1.50 7.5 14.9 6.5 2.6 1.9 1.9 7.3 6.2 5.4 8.3% 9.7% 2.1 Portugal Telecom 3.27 6.30 92.4% Buy Medium 14.4 13.2 2,935 4.7 -22.6 -16.6 -55.2 -26.4 6.60 0.42 0.44 1.2 10.6 7.4 2.7 1.8 1.7 6.9 5.2 4.9 16.5% 14.6% 1.0 Zon Multimedia 2.05 3.05 48.7% Buy Medium 0.8 0.8 634 -0.1 -21.4 -10.5 -41.5 -11.7 0.12 0.11 0.11 28.9 20.4 19.2 2.2 1.7 1.6 6.2 4.6 4.5 4.7% 6.9% 2.8 Sonaecom 1.18 2.00 70.1% Buy High 0.3 0.3 431 2.7 -3.8 -5.9 -21.8 -3.2 0.11 0.17 0.13 12.0 7.1 9.1 0.9 0.8 1.0 4.3 3.5 3.7 3.6% 5.6% 0.4 Media 0.0 0.0 196 -2.9 -5.3 -26.3 -51.6 -33.8 - - - 23.4 loss 10.9 1.7 1.0 1.1 11.7 8.2 7.5 1.1% 4.0% 0.7 Impresa 0.31 0.31 -0.7% Reduce High 0.0 0.0 52 -6.1 -6.1 -41.5 -55.1 -34.0 0.06 -0.17 0.01 23.4 loss 51.6 1.7 1.1 1.2 13.8 11.3 11.9 0.0% 0.0% - Media Capital (2) 1.28 2.10 64.1% - - 0.0 0.0 108 -6.6 -6.6 -14.7 -54.3 -22.4 0.15 0.01 0.12 27.3 99.4 11.3 1.8 0.9 1.0 11.1 6.8 5.2 1.9% 5.0% - Cofina 0.35 0.49 40.0% Buy High 0.0 0.0 36 16.7 0.0 -28.6 -31.4 -53.9 0.05 0.08 0.07 14.1 4.3 5.3 1.6 1.0 1.0 9.6 6.3 6.6 1.4% 5.8% 2.5 Technology Indra 7.30 13.90 90.4% Buy High 13.5 12.2 1,198 2.6 -4.4 -24.0 -47.1 -25.8 1.15 1.10 1.10 11.1 nm 6.6 0.9 0.6 0.6 7.4 5.5 5.2 5.3% 6.9% 1.1 Novabase 2.00 4.00 100.0% Buy High 0.1 0.0 63 -2.0 -7.0 -7.4 -23.1 -4.3 0.42 0.05 0.22 7.0 nm 9.3 0.3 0.3 0.2 3.6 4.1 3.3 4.5% 1.4% 0.7 Utilities 192.2 189.1 30,196 7.6 -7.6 -22.3 -40.6 -29.6 - - - 11.8 7.6 7.5- 2.5 2.1 2.0 8.5 7.2 6.9 - 5.9% 7.7% 0.7 Iberdrola 3.38 5.90 74.6% Buy Low 173.3 171.0 20,182 9.3 -1.1 -22.6 -44.4 -30.2 0.44 0.49 0.50 13.05 10.0 6.7 2.1 1.7 1.5 8.5 6.8 6.1 5.8% 6.8% 0.6 EDP 1.76 2.85 61.9% Buy Low 13.2 13.6 6,436 6.0 -21.6 -22.0 -30.5 -26.4 0.28 0.30 0.29 8.87 7.9 6.1 2.0 1.7 1.6 8.0 6.9 6.8 8.4% 7.8% 0.8 EDP Renováveis 2.91 5.30 81.9% Buy Low 3.8 3.3 2,542 2.6 -15.5 -24.7 -36.4 -38.4 0.09 0.10 0.16 47.2 46.6 18.4 8.3 6.5 5.7 11.1 8.7 7.9 0.0% 0.0% 0.5 REN 1.94 2.60 34.0% Buy Low 2.0 1.2 1,036 -2.0 -2.8 -11.4 -21.1 -8.1 0.21 0.23 0.28 12.5 9.3 6.9 3.7 3.7 3.9 8.3 7.3 6.3 6.5% 8.0% 1.0 Motorways Brisa (3) 2.48 - - - - 2.8 2.6 1,489 0.9 -4.6 4.1 -43.5 -2.5 1.30 - - 4.0 - - 8.1 - - 11.5 - - 5.5% - - Conglomerates 1.2 1.1 1,404 1.8 -5.4 -9.8 ------Sonae 0.38 0.87 130.7% Buy Medium 0.8 0.7 754 1.9 -5.8 -14.5 -48.8 -17.9 0.08 0.05 0.06 9.3 8.9 6.4 0.9 0.7 0.7 11.1 8.4 5.4 4.2% 7.2% 0.6 Semapa 5.13 5.75 12.1% Buy High 0.4 0.4 607 1.7 -5.0 -3.2 -32.0 -4.5 1.07 1.05 1.11 7.7 5.1 4.6 1.6 1.1 1.2 5.8 4.7 5.1 3.0% 4.5% 0.6 Sonae Capital 0.17 0.23 35.4% Buy High 0.0 0.0 43 0.0 -10.5 -19.0 -45.2 -37.0 -0.02 0.01 -0.06 loss 22.5 loss 2.5 2.2 2.3 134.7 loss loss 0.0% 0.0% 0.1 Retail Jerónimo Martins 13.94 15.85 13.7% Buy Medium 9.1 8.3 8,769 -0.7 -1.2 1.4 5.6 9.0 0.47 0.56 0.62 4.8 22.7 22.5 0.9 1.0 0.9 12.6 13.3 12.0 0.0% 2.1% 7.8 Industrials 4.1 2.8 5,401 2.1 -1.4 5.3 -7.8 1.5 ------4.4% - - Sonae Industria 0.43 1.60 272.1% Buy High 0.1 0.1 60 10.3 -25.3 -37.4 -68.1 -32.3 -0.53 -0.41 -0.23 loss loss loss 0.8 0.6 0.6 14.6 10.7 7.8 0.0% 0.0% 0.3 Altri 1.03 0.85 -17.5% Sell High 0.1 0.1 211 4.8 -5.7 -8.6 -34 -14.2 0.60 0.12 0.10 2.8 9.8 9.8 2.2 1.9 1.7 6.8 8.4 7.2 0.0% 1.7% 1.5 Portucel 1.84 2.25 22.3% Buy Medium 0.4 0.4 1,411 6.9 -3.9 -7.6 -20.1 0.0 0.27 0.26 0.27 8.3 7.2 6.8 1.8 1.3 1.2 6.3 5.0 4.6 6.9% 11.7% 1.0 Cimpor (3) 5.51 - - - - 3.5 2.3 3,703 -0.2 0.0 13.1 3.4 3.6 0.36 - - 13.9 - - 2.3 - - 8.2 - - 4.1% - - Construction 0.3 0.2 264 -2.3 -21.9 -21.0 -45.2 -17.6 ------Mota-Engil 0.99 1.25 26.3% Buy High 0.2 0.2 203 -2.9 -19.4 -13.3 -39.4 -4.3 0.18 0.16 0.20 9.7 6.3 4.9 0.8 0.7 0.7 8.2 6.4 5.8 6.0% 10.1% 0.5 Oil & Gas Galp Energia 9.15 18.30 100.0% Buy High 16.4 15.3 7,589 0.6 -14.3 -33.2 -36.8 -19.6 0.37 0.30 0.24 38.9 37.6 38.6 1.1 0.7 1.1 17.4 14.1 19.3 1.4% 1.8% 2.6 (1) We do not have a recommendation on BCP, as Mib is a registered trademark of BCP; (2) Unrated due to low free-float; (3) Restricted Page 12 of 14
Millennium investment banking Weekly 8 June 2012
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 6 and 18 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 has more than 2% of Cimpor. . BCP group has more than 2% of Sonaecom. . 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. . 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). . The management company of BCP Group Pension Fund informed of its decision to sell the 67 200 000 shares, representing the share capital of Cimpor, held by the Fund, following the Offers process initiated with the Tender Offer announced by Intercement, Austria holding GmBh. . Mib is part of a consortium, as a Co-Manager, of BES rights issue announced on 11 April 2012. . Recommendations on Millennium bcp covered companies (%) Recommendation May-12 Apr-12 Mar-12 Dec-11 Sep-11 Jun-11 Mar-11 Dec-10 Jun-10 Jan-10 Dec-09 Dec-08 Dec-07 Dec-06 Dec-05 Dec-04 Buy 79% 69% 72% 68% 93% 76% 79% 79% 77% 78% 63% 54% 41% 37% 30% 63% Neutral 0% 3% 7% 11% 0% 14% 14% 7% 7% 4% 15% 4% 27% 11% 40% 6% Reduce 4% 0% 3% 0% 0% 0% 0% 0% 0% 7% 7% 0% 0% 21% 5% 6% Sell 4% 3% 3% 7% 0% 0% 4% 4% 3% 0% 4% 0% 14% 16% 5% 0% Unrated/Under Revision 14% 24% 14% 14% 7% 10% 4% 11% 13% 11% 11% 42% 18% 16% 20% 25% Performance -14% -6% 1% -7% -20% -6% 2% 7% -11% -6% 33% -51% 16% 30% 13% na PSI 20 4,513 5,234 5,557 5,494 5,891 7,324 7,753 7,588 7,066 7,927 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.
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OFFICE LOCATIONS
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Equity Team Luis Feria (Head of Equities)
Equity Research +351 21 115 6220 António Seladas, CFA (Head) Fundamental Analysis Alexandra Delgado, CFA (Telecoms and IT) João Flores (Media and Retail) João Mateus (Industrials and Utilities) Rita Silva (Banks) Vanda Mesquita (Utilities and Oil&Gas) Market Analysis Ramiro Loureiro Sónia Martins Telma Santos Publishing Sónia Primo
Prime Brokerage +351 21 003 7855 Vitor Almeida (Head) Hugo Ferreira Pinto Paula Val
Institutional Equity Sales +351 21 115 6279 Karsten Sommer (Head) Manuel Lança Lopes Rodrigo Roque Pinho
Equity Trading +351 21 003 7850 Paulo Cruz (Head) Diogo Palma Gonçalo Lima Jorge Caldeira Nuno Sousa Paulo Sousa Pedro Ferreira Cruz Pedro Gonçalves Pedro Lalanda
Equity Derivatives +351 21 003 7890 Jorge Pina (Head) Ana Lagarelhos Diogo Justino Marco Barata
Maria Cardoso Baptista, CFA