IBERIA. Thursday Iberdrola s 4Q11 Earnings Indra s 4Q11 Earnings Friday Telefónica s 4Q11 Earnings. Best & Worse Performers -1 Week (%) 11,7 8,3

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1 W E E K L Y 17 February 2012 EQUITY RESEARCH IBERIA TOP STORIES Banking Sector - EBA s president is open to the possibility of a reduction of the amount of capital cushion that European banks have to have until the end of June (9% CT1), if some of the political solutions to the crisis that have emerged are confirmed. (page 4). OUT THIS WEEK Earnings Comment Media Capital Snapshots / Company Reports Iberdrola, EDP, Cimpor Price Target / Recommendation Changes Media Capital, Iberdrola Other News Banking Sector, Bankinter, Telefónica, Portugal Telecom, Zon Multimedia, Media Sector, EDP, REN, Brisa, Sonae Capital, Retail Sector, Altri, Portucel, Galp WEEK AHEAD Thursday Iberdrola s 4Q11 Earnings Indra s 4Q11 Earnings Friday Telefónica s 4Q11 Earnings PORTFOLIOS This week, Mib Aggressive Portfolio went up 0,07%, outperforming the PSI20 by 0,14pp. Only Sonae Indústria contributed for this outperformance (page 13). This week, Mib Liquidity Portfolio went up 1,73%, outperforming the PSI20 by 1,80pp. Only Portugal Telecom and Bes contributed for this outperformance (page 14). Stock Market Last 1W YTD 2011 Daily Vol. ( mn) 1W 1M 6M 2011 PSI ,08% 2,22% -27,60% PSI IBEX ,59% 1,06% -13,11% IBEX Euro Stoxx ,59% 8,80% -5,56% Euro Stoxx António Seladas, CFA antonio.seladas@millenniumbcp.pt Av. José Malhoa, Lote Lisboa Tel / Fax: / 09 Forex Rates Last 1W YTD 2011 Interest Rates Last 1W Chg YE11 EUR/USD 1,32-0,23% 1,70% -3,17% Euribor 6m 1,33% 1,37% -3bp 1,62% EUR/GBP 0,83-0,62% -0,50% -2,96% 10Y Bond PT 12,33% 12,48% -15bp 13,36% EUR/BRL 2,25-0,91% -6,63% 8,86% 10Y Bond SP 5,26% 5,30% -5bp 5,09% Impresa Sonae Industria Bankinter EDP Renováveis Sonae Capital Banco Popular -10,1 Best & Worse Performers -1 Week (%) BES BPI Indra Cofina -7,7-3,7-3,7-4,3 3,6 3,1 5,1 8,3 11,7 BES BCP BPI Mota-Engil Galp Energia EDP Banco Popular EDP Renováveis Sonae Capital Best & Worse Performers - YTD (%) -18,5 Cofina -21,1-8,8-9,7-6,5 12,1 17,7 26,5 23,7 27, 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. Page 1 of 17

2 CHANGES New Previous Motive Rating Target Rating Target Iberdrola Buy Initiating coverage Media Capital - - Buy 2.7 Under revision EARNINGS Company 4Q2011 1Q2012 2Q2012 3Q2012 Investor Day Jerónimo Martins * AM n.a. n.a. n.a. Bankinter BM n.a. n.a. n.a. Sonae * n.a. n.a. n.a. Galp Energia ** BM BM BM BM Portucel AM AM AM AM Banco Popular BM n.a. n.a. n.a. BPI AM n.a. n.a. n.a. Novabase AM AM AM AM BCP AM AM AM AM BES AM AM AM AM Semapa AM AM AM AM Galp Energia BM BM BM BM Media Capital AM n.a. n.a. n.a. Iberdrola BM BM BM BM Indra AM n.a. n.a. n.a. Telefónica BM BM BM BM Cimpor BM BM BM BM Sonae Indústria AM EDP Renováveis BM n.a. n.a. n.a. Sonae Capital AM AM AM AM Martifer AM n.a. n.a. n.a. Zon Multimedia BM BM n.a. n.a. REN AM n.a. n.a. n.a. Jerónimo Martins n.a. n.a. n.a. Brisa AM AM AM AM Sonaecom AM n.a. n.a. n.a. EDP AM n.a. n.a. n.a. Mota-Engil AM n.a. n.a. n.a. Sonae n.a. n.a. n.a. Impresa AM n.a. n.a. n.a. Portugal Telecom BM BM BM BM Glintt n.a. n.a. n.a. n.a. Altri n.a. n.a. n.a. n.a. Cofina n.a. n.a. n.a. n.a. Sonae Sierra n.a. n.a. n.a. n.a. Ibersol n.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. ESFG n.a. n.a. n.a. n.a. AM - After market; BM - Before market; n.a. - Not available; (e) Expected; *Trading Statement 2011 FY DIVIDENDS Gross Payment Ex-Div Last Year Company AGM Obs DPS Date Date Pay Date Gross DPS Portugal Telecom May-11 4-Jan Dec-11 Approved Approved: Dividend already approved by AGM Page 2 of 17

3 NEXT WEEK RESULTS Telefónica Buy Medium Risk (Target YE12: 21.00) 4Q11 Earnings Preview Alexandra Delgado, CFA Sales YoY OIBDA YoY Op. Income YoY Net Profit YoY 16, % 5, % 2, % 1, % Telefónica will release 4Q11 Earnings next Friday, February 24th, before the market opening. A conference call will be held that day, at 3.00 pm (GMT). We estimate 16,253 mn revenues in the quarter, a 1.2% decrease vs. 4Q10. Revenue decline is explained by unfavourable exchange rate movements denting Latin America growth, by a deceleration in commercial activity in Europe and by pressured revenues in Spain due to economic context and increased competition. We estimate OIBDA (Operating Income before Depreciation and Amortization) in the quarter of 5,282 million Euros, and a margin of 32.6% (minus 0.3pp YoY). Finally, we estimate Net profit to reach 1,311 mn. Indra Buy High Risk (TargetYE12: 13.90) 4Q11 Earnings Preview Alexandra Delgado, CFA Sales YoY EBITDA YoY EBIT YoY Net Profit YoY % % % % Indra will disclose its 4Q11 Earnings next Thursday, February 23rd 2012, after the market close. We estimate revenues to grow by 9.6% in the quarter, meaning 1.5% organic growth if we exclude acquisitions (Galyleo and Politec) consolidation. We believe the trends will remain broadly the same: revenue growth will be achieved on the back of services growth w hile the Solutions segment will remain pressured. In terms of geographies, we expect growth to be driven by international revenues, mainly Latin America, while Spain performance should deteriorate vs. previous quarters. In what vertical markets is concerned, we anticipate Public Administration (Balloting) and Financial Services to deliver a good quarter, while Telecom & Media and Transport & Traffic should slowdown vs. previous quarters. We forecast EBIT margin in 4Q11 to drop by 2.9pp YoY to 8.8%, impacted by the consolidation of lower margin acquisitions. Iberdrola Buy Low Risk (Target YE12: 5.90) 4Q11 Earnings Preview Vanda Mesquita, Gross Profit YoY EBITDA YoY EBIT YoY Net Profit YoY 3, % 2, % 1, % % IBE will release 4th quarter earnings on February 23rd, before the markets opens. We expect EBITDA to post a growth of 7.7% YoY, with regulated activities being the most important contributor (EBITDA from these activities should account for 48% of the EBITDA for the quarter). Net profit should drop 6.2% YoY, as in the last quarter of the previous year the company recorded gains related to the divesture of non-recurring assets amounting to 184mn. If we were to exclude these gains, net profit should rise 22% YoY. Page 3 of 17

4 FINANCIALS Banking Sector EBA could allow a reduction of the capital buffer and flexible the deadline Rita Silva; EBA s president is open to the possibility of a reduction of the amount of capital cushion that European banks have to have until the end of June (9% CT1), if some of the political solutions to the crisis that have emerged are confirmed. He also said that June 30 remains the deadline, but some flexibility can take place so that banks are not forced to sell assets in a rush. Impact: Positive. The reduction of the capital buffer related to the sovereign debt exposure will reduce both the amount that banks will issue in hybrid instruments (CoCo), which cost is not yet defined, as well as eventual capital increases. Bankinter Neutral High Risk (Target YE12: 5.10) Bankinter and Mapfre create an insurance JV Rita Silva, Bankinter and Mapfre finalized the agreement for the creation of a new insurance company - Bankinter Seguros Generales - a joint venture that will commercialize a new line of insurance policies to companies and individuals, such as life and health insurance, third parties and management responsibility and payment protection. This operation had been announced last December when it signed a letter of intent in which Mapfre took a 10% stake in the new entity and committed itself to purchase an additional 40.1%. In the end, the new entity will be controlled by Mapfre with a stake of 50.1%, while Bankinter will be responsible for the commercial management, by which the products will be exclusively distributed by its network. We consider this deal to be potentially positive and one that fits in Bankinter's strategy of diversifying its sources of revenue to the area of insurance, in which it has strong skills through Linea Direct, online insurance 100% owned by the bank, currently market leader. Furthermore, there is no overlapping between the new line of products that will be sold and Linea Directa s insurances. TELECOMS Portugal Telecom Telefónica Buy Medium Risk (Target YE12: 6.30) Buy Medium Risk (Target YE12: 21.00) Brazilian Mobile Market MoM Momentum continues Alexandra Delgado, CFA The Brazilian regulator released this week January mobile subscribers numbers. The Brazilian mobile market reached million clients in January 2012, which stands for 125.3% penetration of the population. Net additions during the month were 2,948 k, which compares to 2,207k net adds in January 2011 (+33.6%) showed record-breaking growth and momentum doesn t slowdown: in the last 12 months the number of mobile subscribers in Brazil grew by 19.6%. Vivo's monthly share of net additions was 45.2% in January, leading to the 0.2pp gain in market share (to 29.7%). Vivo has gained 0.1pp subscribers market share in the last 12 months and moreover, it continues to deliver growing revenue market share (+0.8pp YoY in 9M11, to 34.3%). Oi registered only 5.8% of monthly net adds, which resulted in the loss of 0.2pp market share, to 18.6%. Oi has lost 0.7pp subscribers market share in the last 12 months and continues to show decreasing revenue market share (-0.7p share YoY in 9M11, to 18.8%). (For further details, please refer to our snapshot out this week) Page 4 of 17

5 Feb -01 Feb -03 Feb -05 Feb -07 Feb -09 Feb -11 Feb -13 Feb -15 Feb -17 Feb -19 Feb -21 Feb -23 Feb -25 Feb -27 Feb -29 Millennium investment banking Weekly 1 7 F e b r u a r y Zon Multimedia Buy Medium Risk (Target YE12: 3.70) Zon Multimédia secures 100mn commercial paper program Alexandra Delgado, CFA Zon Multimédia disclosed on Monday it secured a fully underwritten commercial paper program with Caixa Geral de Depósitos of 100 mn maturing in With this new credit facility and an improved cash flow generation, Zon projects it won t have refinancing needs until the end of This is positive as it increases Zon s average maturity and postpones refinancing to MEDIA Media Sector TV Audience Shares Feb12 (Mtd): Cable kept 1 st place João Flores; Cable channels and TVI/Media Capital slightly increased last week while SIC/Impresa declined. Cable channels led gains both on a monthly and annual basis State-owned RTP1 kept unchanged, showing lackluster audience shares (close to 20%) RTP Informação returned to 2 nd place in cable news channels (TVI24 is back to 3 rd place in early February). All-Day SIC TVI RTP1 2: Others Mtd Fev12* 22.8% 25.9% 20.1% 3.7% 27.4% Jan % 26.6% 19.8% 3.8% 26.9% Chg (pp) MoM -0.2pp -0.7pp 0.3pp -0.1pp 0.5pp Feb % 26.9% 22.9% 3.9% 23.4% Chg (pp) YoY -0.1pp -1.0pp -2.8pp -0.2pp 4.0pp *last data February 16th Source: Marktest; numbers are simple average of monthly data 34% Audience Share - all-day (daily) 30% 26% 22% 18% 14% Wkds SIC TVI RTP1 Others Source: Millennium investment banking Page 5 of 17

6 Media Capital 4Q11 Earnings Comment Under Revision Under revision João Flores, Equity analyst Media Capital disclosed 4Q11 earnings last Tuesday after the market close. Numbers were below our estimates, penalized by an increasing tough advertising market, staff curta ilment costs (- 2.2mn) and goodwill impairments (- 9.8mn). Overall we consider MC showed a negative set of results, thus we decided to place the stock under revision as we need to adjust our estimates. Revenues declined 25% (YoY) to 57.1mn (vs 73.0mn estimated). Entertainment revenues plunged (-65% YoY) while TV declined 13% YoY. We highlight TV advertising revenues accelerated pace of decline (-11% in 3Q11; -18% in 4Q11). According to MC, FTA market should have decreased by 18% in 4Q11. MC estimates that the advertising market should have decreased by c12% in Consolidated costs reached 55.7mn (-13% YoY) vs estimated 51mn. Excluding staff curtailment costs ( 2.2mn: TV 1.0mn + Audiovisual 0.5mn + Entertainment 0.5mn + Other 0.1mn) and goodwill ( 9.8mn, penalized by updated cash generation estimates in Audiovisual unit) costs were down 24% YoY, reflecting lower activity and efficiency gains. EBITDA felt 89% YoY to 1.4mn (vs estimated 22mn). We highlight EBITDA adjusted for staff curtailment and goodwill declined 27% YoY to 13.4mn (vs estimated 22mn). Adjusted EBITDA margin reached 23.5%, below estimated 30.2%. Below operational numbers, D&A were in line with estimates (- 3.0mn vs estimated - 3.2mn) while net financials reached minus 2mn, penalized by higher interest costs. Net income reached minus 8.0mn (below 11.5mn estimated), penalized by lower operational numbers and non-recurring costs. Total financial net debt was up 18%, reaching 105.9mn (above estimated c 70mn). (For further details, please refer to our snapshot out this week) UTILITIES Iberdrola Buy Low Risk (Target YE12: 5.90) Company Report: Iberdrola - A story of networks and renewable energy Vanda Mesquita, We have initiated Iberdrola (IBE) coverage with a price target of 5.90 per share (YE12), thus leading to a Buy (Low Risk) recommendation. IBE is in our view a defensive stock, as the bulk of EBITDA comes from regulated and renewable businesses (more stable and low risk). IBE is a Spanish utility company with a strong presence in the renewable energy and regulated business. Over the last decade, IBE has been building a story of growth by strongly betting on international expansion. There were two clear cycles of investment in the last decade. The first cycle (from 2001 to 2006) was based on the growth of renewable energies and generation and Spain, Mexico and Brazil were elected the main markets to invest. The second cycle of growth (beginning in 2007) was based on internationalization, with the acquisition of Energy East and Scottish Power being the major milestones and also on the strengthening of its worldwide leadership in renewable energies. This decade, IBE Page 6 of 17

7 reinforced its internationalization path by buying Elektro. IBE is undoubtedly an example of an impressive growth story. The pace of earnings growth has been quite remarkable, with a gross margin CAGR and an EBITDA CAGR of approximately 17% in both cases. Growth has been financed not only with equity (through the issue of new shares), but also with debt. In spite of the increase in debt (CAGR of approximately 15%), net profit has shown a strong increase (CAGR of approximately 16%). Recent measures taken by several utilities companies made it clear that deleveraging i s a trend that is here to stay. In line with other utilities, we see IBE very focused on controlling its leverage ratios, as we consider that the company has been taken some important measures, namely the implementation of a flexible dividend policy (the s hareholder could choose the payment of dividends in cash or shares), a lower capex plan (last year IBR cut investments by reducing the amount of investment in renewable business) and the improvement of the efficiency levels. The late developments under the securitization program of the Spanish tariff deficit have helped IBE to achieve a lower level of debt.. (For further details, please refer to our Company Report out this week) EDP Buy Low Risk (Target YE12: 3.05) EDP 4Q11 Operating Data Comment - More liberalized generation Vanda Mesquita, EDP disclosed its 4Q11 operational data this week after market closing. We would like to highlight that, like in previous quarters, electricity distribution volumes in Portugal continue its downward trend, dropping by 5.4% YoY. Generation wise, EDP added 437MW more to its liberalized installed capacity (repowering works at hydro plants in Portugal) and that production in the liberalized market dropped by 24% YoY. As a reminder, this quarter wind resource was weaker than in the previous year (-2pp in terms of load factor) - please refer to our Snapshot EDPR - Annual target of installations accomplished on February, 2. Concerning electricity distribution in Portugal in 4Q11, volumes dropped by 5,4% YoY due to lower demand. We believe that residential consumers and lighting public segment a re cutting consumption as a way to compensate for the rise of VAT on electricity (from 6% to 23%) applied since October, 1st. Earnings in the Portuguese distribution business are not very much affected by volumes variation. In Spain, in the quarter there w as a similar trend, with volumes dropping by 7.6%YoY. Liberalized generation dropped by 24% YoY to GWh mainly justified by the poor use of CCGTs (-50% YoY) and by the weak hydro resources (-39% YoY). Conversely, coal was more used (+28% YoY) due to the implementation of Royal Decree 1221/2010 (Spanish legislation to boost the use of coal) and also due to the rise of gas costs. Installed capacity wise, EDP added 437MW (Picote and Bemposta, both of them related to repowering works at hydro plants) to its installed capacity in Portugal. Volumes of electricity supplied to liberalized customers rose by 1,7% to GWh. Bearing the liberalized production (GWh) in mind, EDP's liberalized generation represents approximately 46% of the volumes supplied to liberalized customers, which means that the company bought the bulk of the electricity supplied to liberalized and produced 46% of the supplied energy. We would like to highlight that despite this provisional volumes statement being quite important, it is more difficult to interpret, as the bulk of EDP's EBITDA is regulated. EDP's full 4Q11 results will be released on March, 8th after the market closes. (For further details, please refer to our snapshot out this week) Page 7 of 17

8 Moody s revised EDP s rating to Ba1 (speculative grade) Moody s announced that it has revised EDP s rating to Baa3 from Ba1, giving a negative outlook. This downward revision follows the downward revision of the Portuguese State s rating to Ba3 recently done. Following this revision EDP s rating by Moody s stand two notches above the Republic of Portugal. As previously clarified by Moody s, as far as infrastructures and utilities companies are concerned, this rating agency does not expect them to have a rating more than one or two notches higher than the country, in which companies concentrate the bulk of its activity. Finally, we would like to highlight that this downward revision to speculative grade has a negative impact on financing costs. However, we consider that the impact will not be very strong in the coming years, as EDP s financing needs are assured until mid REN Buy Low Risk (Target YE12: 2.40) Moody's left the rating of REN at Ba1 João Mateus, Vanda Mesquita s Moody's left the rating of REN at Ba1, despite the downgrade applied to the Portuguese Republic. At February 13, the rating of the Republic was cut to Ba3, two notches under the rating kept for REN. The agency said to be evaluating the rating of REN and that any eventual downgrade must be limited to one "notch". The final outcome of the review will depend on the conditions of the credit line of a billion Euro, included in the proposal of State Grid, for the acquisition of a 25% stake in REN. According to Moody s, this credit line may determine a lower degree of dependency between the risk of REN and of the Portuguese Republic, help lowering refinancing risk and increase the liquidity of the company. We note that a downward revision in the rating of REN may trigger any credit covenants and increase interest rates charged. According to the latest company report of REN, the company s debt is subject to "covenants" of various kinds, among which "gearing" clauses that will be triggered at a certain rating level. However, neither that rating level was disclosed nor the respective minimum gearing requirements. We maintain our valuation of REN at 2.40 per share, for the YE12, with a buy, medium risk recommendation. MOTORWAYS Brisa Buy - Low Risk (Target YE12: 3.35) Moodys s downgrades BCR to Ba1 António Seladas, CFA; Brisa informed yesterday morning that the rating agency Moodys s reviewed downwards one notch to Ba2 (negative outlook) the Debt Program of Brisa Concessões Rodoviárias (BCR). This downgrade was triggered by the downgrade of the Portuguese Republic to Ba3. Moodys s has accepted up to notches above the Republic for infrastructure companies, however in the case o f BCR it is just one notch above. On the press release of November, Brisa mentioned that the downgrade to Ba1, triggered several covenants, namely the increase on the spreads by 25bp, meaning plus 6Mn/year on the financial costs and a lock-up in the distribution of BCR dividends, this fact was already known by the market, namely for the next 2 years. On the current press release Brisa did not mention anything regarding the covenants however it is quite obvious the management is pressed to improve the financial structure of BCR, meaning a change on Brisa s dividend policy after Page 8 of 17

9 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Millennium investment banking Weekly 1 7 F e b r u a r y CONGLOMERATE Sonae Capital Buy High Risk (Target YE12: 0.28) António Seladas, CFA; Total revenues and overnight stays in the Tourism sector The INE, the Portuguese Statistic Institute, released recently the number of overnight stays in tourism accommodation and the revenues from the activity, regarding the month of December (please see the table below). All the figures were negative but the total revenues in Alentejo region. However Residents and Non-Residents contributed to this poor performance. The regions of North and Alentejo where Sonae Capital has their sites showed negative performances of -8% and +1.5% respectively. Our estimates for Sonae Capital for 4Q11 are -30% even that the universe is not exactly the same. So we are probably too conservative, however the trend is clearly negative and the Non-residents performance is worrisome. Overnight Stays and Tourism Revenues 2011 Y-o-Y Dec Nov Oct Sept Aug July June M ay April M arc h Feb Jan Total Revenues ( 10^3) 5,7% -7,7% -4,1% 4,7% 8,5% 6,2% 11,1% 14,1% 7,3% 10,9% 5,4% -6,9% -6,8% 2,0% Alentejo 6,4% 1,5% -6,8% -5,0% 14,8% 15,1% 15,3% 17,0% -4,7% -2,1% 12,5% 10,5% 1,0% -0,7% Norte 3,0% -8,0% -9,0% 0,7% 1,3% 9,6% 6,5% 21,2% 2,3% 7,9% 3,8% -1,3% -1,6% 4,8% Algarve 6,1% -9,9% -0,1% 3,8% -6,1% 7,3% 11,2% 5,7% 2,6% 28,1% 1,0% -3,5% -10,9% 3,7% Overnight Stays (10^3) 5,9% -4,0% -3,4% 2,4% 4,1% 6,3% 8,8% 12,5% 7,1% 17,9% 5,5% -1,4% 0,7% 2,6% Residents -1,9% -3,9% -12,3% -6,0% -5,6% 0,3% 0,5% 4,1% -10,6% 5,7% 4,8% -4,3% -3,0% 4,1% Non-Residents 10,4% -4,0% 2,0% 6,0% 8,9% 10,7% 13,6% 17,4% 16,1% 25,2% 5,9% 0,3% 3,4% 1,7% Source: INE, Mib RETAIL Retail Sector Retail Sales in Poland Increasing confidence João Flores, 30% 25% 20% 15% 10% 5% 0% -5% -10% Retail Sales YoY Retail Food YoY Source: Source: Bloomberg, Millennium investment banking Page 9 of 17

10 Survey January* Dec-11 Nov-11 Jan-11 Chg MoM Chg YoY MoM -25.0% 20.8% -5.5% -28.6% 26.3pp 49.4pp YoY 13.8% 8.6% 12.6% 5.8% -4.0pp 2.8pp Food MoM na 30.6% -6.9% -31.1% 37.5pp 61.7pp YoY na 1.7% 4.1% 0.0% -2.4pp 1.7pp *Bloomberg Source: Source: Bloomberg, Millennium investment banking Bloomberg`s estimated Polish retail sales were revised upwards to 13.8% YoY from 12.7% YoY in early estimates. Recall Polish retail sales will be disclosed on February 23th (09 am). INDUSTRIALS Altri Portucel Neutral High Risk (Target YE12: 1.20) Buy Medium Risk (Target YE12: 2.45) The Portuguese government may propose a 15% cut in the regulatory return of cogeneration plants. João Mateus; The Portuguese business newspaper Jornal de Negócios reported today that the Portuguese government may propose a 15% cut in the regulatory return of cogeneration plants. This proposal would be a first approach to the need to reduce the cost of the electric system and respective tariff deficit, one of the important goals of the agreement signed between Portugal and the troika that granted financial aid to the country. This adjustment in regulated tariffs would spare about 40mn per year to the system and consequently to the consumer. This cut in regulated tariffs would affect specially the two pulp and paper companies in our coverage universe, namely Portucel and Altri. The two cement players Cimpor and Secil (Semapa) should not be affected by this measure, since both producers do not have cogeneration plants selling electricity, at regulated tariffs in Portugal. Similarly, this measure will not have a relevant impact in our valuations for Galp and EDP. As previously calculated and published in our reports on the pulp and paper compani es, regulated tariffs for cogeneration have different weights in our valuations for Portucel and Altri. Cogeneration tariffs are worth 0.50 per share in our price target of 2.45 for Portucel and are worth 1.00 per share in our price target of 1.20 for Altri, for the YE12. These weights refer to the differential worth of special tariffs for cogeneration, against a scenario of self -consumption and market tariffs. The said 15% cut in tariffs would be a partial suppression of the benefit granted through special tariffs and thus would have softer impacts in our valuations for these two companies though until the final format of these cuts will be disclosed, it will not be possible to calculate a more precise impact in these companies. Cimpor Buy Medium Risk (TargetYE12: 6.10) Shareholder Structure - Status-quo, break-up and shareholders interests João Mateus, The shareholder structure of Cimpor will most probably not be altered after tomorrow Thursday, 16 February, the exercise date for a call of Investifino over the 9.6% stake in Cimpor held by the Portuguese State s bank Caixa Geral de Depósitos (CGD). Both Votorantim and Camargo are bounded by agreements that limit their capacity to break up and Page 10 of 17

11 dismantle Cimpor, while Brazilian authorities are seemingly actively watching possible concentration actions between Votorantim, Camargo and Cimpor in that country. Moreover, the increase in the stake of Investifino or the possible entrance of Semapa in Cimpor s capital could actually accelerate and facilitate that break-up. The maintenance of the shareholder status-quo, with respective agreements in force, especially the shareholder agreement between CGD and Votorantim, are the strongest guarantees to prevent the break-up. Anyway, as long as the two Brazilian shareholders maintain their interest and participation in the group s capital, there will be a potential for the delisting and break-up of Cimpor. A possible alternative for both Votorantim and Camargo would be investing in a control price for Cimpor s shares, namely at 6.50 per share, the price Camargo paid to Teixeira Duarte and Bipadosa in February This price could possibly free Votorantim from the restraining agreement with CGD and be fairly interesting for the rest of the shareholders. We maintain our valuation of Cimpor at 6.10 per share, for the YE12, with a buy, medium risk recommendation (For further details, please refer to our snapshot out this week) OIL & GAS Galp Energia Buy High Risk (Target YE12: 18.15) Vanda Mesquita, ENI said that it intends to sell Galp s stake at market prices In the ENI s 4Q11 earnings Conference Call, Paolo Scaroni (ENI s CEO) said that it is ready to sell its 33 percent holding in Portugal s Galp Energia, mentioning that as far as price is concerned, we would consider a price which takes into account the market of course and will not be ready to sell below the market price. Indeed, this is not a piece of news, as ENI is known to be trying to sell this stake for a long time. The only new is that ENI said that it is ready to sell at a price close to the current market prices. As a reminder, last year in January, Petrobras announced that it was studying the buying of ENI s stake in Galp. By that time the share price was approximately 14 (now it trades at a lower price). Later on, in February, Petrobras announced that the negotiations had failed. By that time, ENI s CEO said that it was not in a rush to sell the stake and that it would continue to analyze the opportunities. He added that it would only sell if it received a proposal according to its expectations. As a reminder, Sonangol is said to be one of the interested parties in buying a stake in Galp and that under the shareholders agreement valid until 2014 ENI could only sell its stake as long as the sale is done in a block. Concerning this sale, we believe that if the Portuguese economic situation in improves, the sale process will be easier. Gas discovery in Mozambique revised 33% upwards Galp has announced that the consortium formed to explore Area 4 in Rovuma Basin (off shore) in Mozambique found another pool containing 7.5 Tcf, meaning that the gas discovery in this area is revised up to 30 Tcf (on the 27th October the consortium said that the accumulated discovery amounted to 22.5Tcf). This new data was released following drilling activity in Mamba North (the first well was drilled in Mamba South). As a reminder, this consortium is formed by ENI (70%), Kogas (10%), ENH (10%) and by Galp (10%). The consortium also announced that it plans to drill further 5 wells in 2012 in order to assess the potential of this area. In the last conference call, the company said that results from Mamba South were being analyzed before being released. Additionally, the company mentioned that production in that area should only begin in The company should give more details related to Mozambique in its Capital Page 11 of 17

12 Markets Day in London on March, 6th. Galp s proportional part in this new discovery amounts to 135 million barrels of oil equivalent, which means that after this new discovery resources increase by 33% to 540 million barrels of oil equivalent (Galp s proportional part in the discovery announced on October, 20th and on October, 27th amounted to 405 million barrels of oil equivalent). This information is scarce, but if we were to apply an 80% recovery factor and consider $2 per barrel, our price target would ri se by approximately 18 cents. This is once again a piece of good news for this company. As previously mentioned, Mozambique is becoming one of the most important driver for this share. SECTOR PERFORMANCE Sector Performance -1 Week (%) Sector Performance - YTD (%) PSI20-0,1 PSI20 2,2 Financials 4,2 Financials 25,4 Motorways 1,4 Oil & Gas 12,1 Oil & Gas 0,3 Industrials & Other 2,5 Telecoms 0,1 Retail * 0,5 Industrials & Other -0,6 Telecoms -2,2 Electric Utilities -0,9 Motorways -3,6 Retail * -1,7 Electric Utilities -6, * includes Jeronimo Martins and Sonae This week, the PSI20 went down 0.1%. The best performing sector was Financials with a 4.2% growth and the worst was Retail with a 1.7% fall. On a Ytd basis, the PSI20 went up 2.2%. The best performing sector was Financials with a 25.4% growth and the worst was Electric Utilities with a 6.9% fall. AGGRESSIVE PORTFOLIO This week, Mib Aggressive Portfolio went up 0,07%, outperforming the PSI20 by 0,14pp. Only Sonae Indústria contributed for this outperformance (page 13). 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 1,73%, outperforming the PSI20 by 1,80pp. Only Portugal Telecom and Bes contributed for this outperformance (page 14). 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 12 of 17

13 Millennium investment banking Weekly 17 February 2012 Page 13 of 17

14 Millennium investment banking Weekly 17 February ,0 104,0 102,0 100,0 98,0 96,0 30-Dec-11 Ytd Return (since inception) Portfolio PSI20 Mib LIQUIDITY PORTFOLIO Portfolio weekly return Company Risk Market Price Upside Weekly Performance Rating Price ( ) Target ( ) Potential Return Contribution Deviation Sonae Medium 0,46 0,92 103% -0,7% -0,13pp -0,10pp Telefónica Medium 13,05 21,00 61% -0,8% -0,16pp -0,14pp Portugal Telecom Medium 4,21 6,30 50% 0,9% 0,17pp 0,09pp Semapa High 5,73 8,80 54% -2,5% -0,49pp -0,44pp BES High 1,72 2,25 31% 11,7% 2,34pp 2,35pp Portfolio 1,73% PSI 20-0,08% Gain/loss 1,80pp Explained by the portfolio 0,17pp Explained by being underweight in the remaining PSI20 stocks 1,64pp Next week Portfolio Changes in Portfolio Company Risk Market Price Upside Rating Price ( ) Target ( ) Potential In Out Sonae Medium 0,46 0,92 102% - - Telefónica Medium 13,16 21,00 60% Portugal Telecom Medium 4,17 6,30 51% Semapa High 5,88 8,80 50% BES High 1,54 2,25 46% Return vs. PSI YTD 1 Month 1 Week Portfolio - 6,0% - 1,7% PSI20-27,6% 2,2% - -0,1% Gain/loss - - 3,7pp - 1,8pp 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. Page 14 of 17

15 Millennium investment banking Weekly 17 February /02/17 Latest Pr ( ) Target YE12 Upsd Rating Risk Trnvr ( mn) M Cap Change (%) EPS P / E EV / Sales EV / EBITDA Div Yield P/BV Rating 3m 6m ( mn) Week 1M 3M 12M YTD E 2012E E 2012E E 2012E E 2012E E 2011E PSI ,08 3,9 3,2-30,9 2,2 Financials 51,8 46, ,9 6,3 19,3-42,6 5, Banco Popular (3) 3, ,4 19, ,1-6,8 7,0-30,9-8,8 0,41 0,35 0,31 9, ,9% - - Bankinter 5,00 5,10 2,0% Neutral High 6,9 6, ,7 2,4 22,2 0,0 5,3 0,32 0,38 0,30 13,1 12,7 17, ,0% 3,2% 0,8 BCP (1) 0, ,0 12, ,4 24,6 52,2-70,7 26, BES 1,72 2,25 30,8% Buy High 9,0 6, ,7 32,3 39,6-46,3 27,4 0,41-0,06 0,14 7,0 loss 10, ,4% 0,0% 0,5 BPI (3) 0, ,6 0, ,1 16,2 38,7-54,7 23,7 0,19 0,13 0,15 6, ,0% - - Telecoms 528,1 747, ,7-1,4-5,4-30,6-2, ,4 14,1 8,9 2,6 2,2 2,1 7,2 7,0 6,1 8,7% 10,0% 2,4 Telefónica 13,05 21,00 60,9% Buy Medium 514,6 734, ,8-1,7-5,4-29,3-2,5 2,25 0,90 1,50 7,5 14,9 8,8 2,6 2,2 2,2 7,3 7,3 6,3 8,3% 9,7% 2,7 Portugal Telecom 4,21 6,30 49,8% Buy Medium 12,2 11, ,9 2,1-12,8-47,5-5,5 6,60 0,51 0,44 1,2 8,7 9,4 2,7 2,0 1,8 6,9 5,6 5,3 16,5% 14,6% 1,0 Zon Multimedia 2,55 3,70 45,2% Buy Medium 1,0 1, ,5-2,7 35,7-32,5 9,8 0,12 0,10 0,10 28,9 23,1 27,0 2,2 1,9 1,9 6,3 5,2 5,0 4,7% 6,9% 3,5 Sonaecom 1,28 2,10 64,2% Buy High 0,2 0, ,3 0,7 4,9-6,6 5,3 0,11 0,17 0,13 12,0 7,3 10,0 0,9 1,0 1,0 4,3 4,3 4,1 3,7% 4,8% 0,5 Media 0,0 0, ,6-9,7 16,5-49,9-10, ,4 5,4 5,3 1,7 1,0 0,9 11,0 5,6 5,3 1,1% 7,1% 0,8 Impresa 0,52 0,38-27,0% Sell High 0,0 0,0 87 8,3 4,0 26,8-48,5 10, Media Capital (2) (3) 1, ,0 0, ,0-17,0 2,2-60,9-17,0 0, , , , ,9% - - Cofina 0,60 0,48-20,4% Sell High 0,0 0,0 62-7,7-11,8 36,4-1,6-21,1 0,05 0,09 0,07 14,1 6,5 8,9 1,6 1,2 1,2 9,6 7,3 8,6 1,4% 3,9% 3,9 Technology Indra 10,88 13,90 27,8% Buy High 10,2 10, ,1 4,9 3,3-24,2 10,6 1,15 1,13 1,10 11,1 nm 9,6 0,9 0,9 0,8 7,4 7,5 7,0 5,3% 5,7% 1,7 Novabase 2,16 4,10 89,8% Buy High 0,0 0,0 68-0,5 8,0 15,5-31,4 3,3 0,42 0,05 0,20 7,0 nm 10,6 0,3 0,2 0,2 3,6 3,7 3,2 4,5% 3,8% 0,7 Utilities 188,8 200, ,5 0,9-2,1-25,2-4, ,8 9,7 9,7-2,5 2,4 2,3 8,5 8,1 7,6-5,0% 5,8% 0,9 Iberdrola 4,66 5,90 26,6% Buy Low 172,4 182, ,2 2,0-2,4-28,0-3,7 0,44 0,49 0,50 13,05 10,0 9,3 2,1 1,9 1,7 8,5 7,8 7,0 5,8% 6,8% 0,9 EDP 2,24 3,05 36,4% Buy Low 13,6 14, ,1-1,5-3,2-23,2-6,5 0,28 0,30 0,29 8,87 8,0 7,8 2,0 2,0 1,8 8,0 7,7 7,3 6,9% 7,7% 1,0 EDP Renováveis 4,27 6,00 40,5% Buy Low 2,5 2, ,7-2,3 0,7-6,2-9,7 0,09 0,14 0,18 47,2 33,1 24,4 8,2 7,4 6,5 11,0 10,3 8,9 0,0% 0,0% 0,7 REN 2,10 2,40 14,3% Buy Low 0,3 0, ,7 1,5 5,0-18,2-0,5 0,21 0,23 0,27 12,5 9,3 8,0 3,7 3,7 4,4 8,3 7,7 7,6 6,5% 6,4% 1,1 Motorways Brisa 2,45 3,35 36,3% Buy Low 2,5 2, ,4-5,2 5,4-53,0-3,6 1,30 0,24 0,20 4,0 10,6 12,3 8,1 5,8 5,9 11,5 8,4 8,4 5,4% 10,2% 0,7 Conglomerates 1,2 1, ,4 3,8-1, Sonae 0,46 0,92 102,8% Buy Medium 0,8 0, ,7 1,3-6,2-44,5-0,7 0,08 0,05 0,05 9,3 8,7 8,8 0,9 0,7 0,7 11,1 9,2 6,2 4,2% 7,2% 0,6 Semapa 5,73 8,80 53,6% Buy High 0,3 0, ,5 7,4 4,4-37,7 6,7 1,07 1,02 1,00 7,7 5,2 5,9 1,6 1,1 1,0 5,8 4,7 4,2 3,0% 4,6% 0,6 Sonae Capital 0,22 0,28 27,3% Buy High 0,0 0,0 55-4,3-4,3 4,8-48,8-18,5-0,02 0,03-0,07 loss 8,0 loss 2,1 2,2 2,3 60,0 601,3 loss 0,0% 0,0% 0,2 Retail Jerónimo Martins 12,88 15,10 17,2% Buy Medium 7,3 9, ,9 3,7 0,5 4,8 0,7 0,47 0,56 0,62 4,8 23,0 21,1 0,9 0,9 0,8 12,6 12,5 11,0 0,0% 2,2% 7,7 Industrials 1,7 2, ,2 3,1 5,2-9,5-0, ,4% - - Sonae Industria 0,70 1,95 178,6% Buy High 0,1 0,1 98 3,6 5,4 27,3-62,7 10,2-0,53-0,50-0,29 loss loss loss 0,8 0,6 0,7 14,6 12,7 8,9 0,0% 0,0% 0,4 Altri 1,15 1,20 4,4% Neutral High 0,1 0, ,9 0,6-1, ,3 0,65 0,12 0,04 2,6 10,3 30,6 2,2 2,0 2,3 6,8 8,4 9,7 0,0% 1,7% 1,7 Portucel 2,02 2,45 21,6% Buy Medium 0,4 0, ,3 8,6 14,1-21,4 9,6 0,27 0,24 0,25 8,3 7,6 8,2 1,8 1,4 1,3 6,3 5,6 5,1 6,9% 7,8% 1,0 Cimpor 5,08 6,10 20,1% Buy Medium 1,1 1, ,0 0,4 1,2 3,6-4,5 0,36 0,33 0,33 13,9 16,2 15,2 2,3 2,2 2,2 8,2 8,5 8,0 4,1% 3,8% 1,5 Construction 0,2 0, ,3 9,3 11,7-36,4 11, Mota-Engil 1,22 1,45 19,1% Buy High 0,2 0, ,4 17,1 17,1-40,9 17,7 0,18 0,16 0,15 9,7 6,5 8,3 0,8 0,8 0,8 8,2 6,7 6,5 6,0% 7,7% 0,5 Martifer (3) 1, ,0 0, ,8-5,3 0,9-22,9 0,0-0, loss - - 1, , ,0% - - Oil & Gas Galp Energia 12,76 18,15 42,2% Buy High 15,2 17, ,3 4,8 2,9-16,3 12,1 0,37 0,27 0,36 38,9 42,3 35,3 1,1 1,0 0,8 17,4 18,2 13,3 1,4% 1,8% 3,9 (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) Under Revision Page 15 of 17

16 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 reven ues. 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 Recommendations on Millennium bcp covered companies (%) Recommendation Jan-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 71% 68% 93% 76% 79% 79% 77% 78% 63% 54% 41% 37% 30% 63% Neutral 4% 11% 0% 14% 14% 7% 7% 4% 15% 4% 27% 11% 40% 6% Reduce 4% 0% 0% 0% 0% 0% 0% 7% 7% 0% 0% 21% 5% 6% Sell 7% 7% 0% 0% 4% 4% 3% 0% 4% 0% 14% 16% 5% 0% Unrated/Under Revision 14% 14% 7% 10% 4% 11% 13% 11% 11% 42% 18% 16% 20% 25% Performance -3% -7% -20% -6% 2% 7% -11% -6% 33% -51% 16% 30% 13% na PSI 20 5,325 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 t he BCP group. The data herein disclosed are merely indicative and reflect the market conditions prevailing on the date they ha ve been collected. Thus, its accuracy and timing must absolutely be confirmed before its usage. Any alteration in the market conditions shall imply the introductio n of changes in this report. This information / these opinions may be altered without prior n otice 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 o n numerous assumptions. Different assumptions could result in ma terially different results. Page 16 of 17

17 OFFICE LOCATIONS Millennium investment banking Av. José Malhoa, Lote Lisboa Portugal Telephone Fax / 39 Equity Team Luis Feria (Head of Equities) Equity Research 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 Vitor Almeida (Head) Hugo Ferreira Pinto Paula Val Institutional Equity Sales Karsten Sommer (Head) Manuel Lança Lopes Equity Trading Paulo Cruz (Head) Diogo Palma Gonçalo Lima Jorge Caldeira Nuno Sousa Paulo Sousa Pedro Ferreira Cruz Pedro Gonçalves Pedro Lalanda Rodrigo Roque Pinho Equity Derivatives Jorge Pina (Head) Ana Lagarelhos Diogo Justino Marco Barata Maria Cardoso Baptista, CFA