IBERIA. Best & Worse Performers -1 Week (%) 3.9 Semapa Impresa 1.9 REN BCP

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1 EQUITY RESEARCH TOP STORIES IBERIA 4 February 01 WEEKLY António Seladas, CFA antonio.seladas@millenniumbcp.pt Dividends at risk on the Portuguese stocks - The Portuguese Republic was downgraded by the rating agencies several times in the last quarters and is now Ba3 by Moody s and BB by S&P. This evolution has several consequences, not just directly on the spreads of the Republic but at company level, namely also through an increase on the credit spreads. Still, taking in consideration the low level of the rating of Republic it could mean in some cases that companies are not able to pay dividends and in other cases we believe lenders will demand financial structures pretty strong to provide the money. So as banks did last year our best guess is that most companies will reinforce the financial structures not just by reducing capex, but also by implementing pretty conservative dividend policies, which in some cases would mean no dividend payment at all. OUT THIS WEEK Earnings Comment Telefónica, Indra, Iberdrola Other Snapshots / Company Reports EDP Renováveis Price Target / Recommendation Changes Brisa Other News Industrials Sector, Media Sector, Retail Sector, Banking Sector, Telecom Sector, Telefónica, EDP, Brisa, Mota-Engil, Galp Energia WEEK AHEAD Tuesday Cimpor s 4Q11 Earnings Wednesday Sonae Industria s 4Q11 Earnings; EDPR s 4Q11 Earnings; Sonae Capital s 4Q11 Earnings Thursday Martifer s 4Q11 Earnings; REN s 4Q11 Earnings; Zon Multimedia s 4Q11 Earnings PORTFOLIOS This week, Mib Aggressive Portfolio went down 1.36%, underperforming the PSI0 by - 0.3pp. Excluding Novabase, all stocks contributed for this underperformance (page 16). This week, Mib Liquidity Portfolio went down 1.86%, underperforming the PSI0 by - 0.8pp. Excluding Semapa, all stocks contributed for this underperformance (page 17). Stock Market Last 1W YTD 011 Daily Vol. ( mn) 1 W 1M 6M 011 PSI 0 5, % 1.1 6% -7.60% PSI IBEX 35 8, % -0.45% % IBEX 35,36,164,745 4,95 Euro St oxx 50, % 8.9 4% -5.56% Euro Stoxx 5 0 7,73 7,73 8,511 14,831 Forex Rates Last 1W YTD 011 In terest Rates Last 1W Chg YE11 EUR/USD % 3.6 6% -3.17% Eurib or 6m 1.30% 1.33% -3bp 1.6% EUR/GBP % 1.5 4% -.96% 10 Y Bo nd PT 1.77% 1.7% 50bp 13.36% EUR/BRL.30.0% % 8.86% 10 Y Bo nd SP 5.04% 5.5% -1bp 5.09% Av. José Malhoa, Lote Lisboa Tel / Fax: / 09 Best & Worse Performers -1 Week (%) Galp Energia 3.9 Semapa 3.0 Jerónimo M artins.6 Impresa 1.9 REN 1. Portugal Telecom -5.4 EDP Renováveis -5.6 BCP -6.4 BPI -7. Cofina Best & Worse Performers - YTD (%) BES.1 BCP 18.4 Galp Energia 16.5 Mota-Engil 15.5 BP I 14.8 Portugal Telecom Banco Popular EDP Renováveis Sonae Capital Cofina Page 1 of 0 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.

2 CHANGES New Previous Rating Target Rating Target Motive Brisa Buy 3.15 Buy 3.35 Company Update EARNINGS Company 4Q011 1Q01 Q01 3Q01 Investor Day Jerónimo Martins * AM n.a. n.a. n.a. Bankinter BM n.a. n.a. n.a. Sonae * 5-01 n.a. n.a. n.a. Galp Energia ** 7-01 BM BM BM 1-10 BM Portucel AM 3-04 AM AM -10 AM Banco Popular 01-0 BM n.a. n.a. n.a. BPI 0-0 AM n.a. n.a. n.a. Novabase 0-0 AM AM 6-07 AM 30-10AM BCP 03-0 AM AM 5-07 AM AM BES 03-0 AM AM AM AM Semapa 07-0 AM AM AM AM Galp Energia 10-0 BM 7-04 BM 7-07 BM 6-10 BM Media Capital 14-0 AM n.a. n.a. n.a. Iberdrola 3-0 BM 6-04 BM 5-07 BM 5-10 BM Indra 3-0 AM n.a. n.a. n.a. Telefónica 4-0 BM BM 6-07 BM BM Cimpor 8-0 BM BM BM BM Sonae Indústria 9-0 AM EDP Renováveis 9-0 BM n.a. n.a. n.a. Sonae Capital 9-0 AM 4-05 AM 1-08 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 7-07 AM AM Sonaecom AM n.a. n.a. n.a. EDP AM n.a. n.a. n.a. Mota-Engil AM 3-05 AM AM 1-11 AM Sonae n.a. n.a. n.a. Impresa AM n.a. n.a. n.a. Portugal Telecom BM BM 0-08 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 011 FY ** Trading update Page of 0

3 NEXT WEEK RESULTS Zon Multimedia Buy Medium Risk (Target YE1: 3.70) 4Q11 Earnings Preview Alexandra Delgado, CFA Sales YoY EBITDA YoY EBIT YoY Net Profit YoY % % %.7-30% Zon Multimedia will release 4Q11 Earnings next Thursday, March 1st, before the market opening. We anticipate 4Q11 will show same trends observed in recent quarters. Triple play revenue should continue to be pressured on the back of lower premium subscriptions. On the other hand, core triple play service should maintain some resilience as in previous quarters. Pay TV subs figures will be good, as already disclosed by Anacom, with Zon benefiting from analogue switch off. We forecast triple play revenue to decline by 3.6% YoY in the quarter. The audiovisuals segment should also post YoY revenue decline as in previous quarter. We expect lower commercial activity and increased efficiency to continue to boost consolidated margin: we forecast EBITDA margin should advance.0pp on a YoY basis, reaching 35.1% in the quarter. Net profit should decrease YoY on the back of higher financial expenses. EDP Renováveis Buy Low Risk (Target YE1: 6.00) 4Q11 Earnings Preview Vanda Mesquita, Gross Profit YoY EBITDA YoY EBIT YoY Net Profit YoY 319 1% 38-1% % 47-7% EDPR will release its 4Q11 earnings on February, 9th before market opening. According to our expectations, EBITDA for 4Q11 should decrease by 1% YoY, basically due to a lower resource of wind in the quarter (as a reminder, load factor for 4Q11 stood at 3%, -pp YoY) and also due to lower prices in the US market. This quarter, D&A should be lower than the figure in the same period of the previous year, as useful life of the wind farms were extended to 5 years from 0 years and financial costs should rise mainly due to a higher level of debt. Net income for the 4Q11 should decrease by 6% YoY. Sonae Capital Buy High Risk (Target YE1: 0.8) 4Q11 Earnings Preview António Seladas, CFA; Sales YoY EBITDA YoY EBIT YoY Net Profit YoY 38-1% 0.0 nm -3.7 nm -5.0 nm Sonae Capital should release 4Q11 earnings Wednesday, 9 of February, after the market close. The environment is pretty difficult so the performance should continue to be poor. The execution regarding the hotels business should be interesting to monitor to better perceived how the company has been dealing with this business area, namely in Troia. We are not expecting any sales at Troia Resort. Page 3 of 0

4 REN Buy Low Risk (Target YE1:.40) João Mateus, 4Q11 Earnings Preview Vanda Mesquita s Sales YoY EBITDA YoY EBIT YoY Net Profit YoY % % % % The 4Q11 will still reflect the former regulatory system, with the rate of return for electricity and gas linked to the Portuguese 10-year sovereign rate. Gas assets should have been subject to limited capex, while in electricity, capex for the FY11 should have still come slightly lower YoY. We estimated financial costs to have come in line on QoQ terms, and an added 15mn to provisions to cope with the Galp dividend process. We maintain our valuation of REN at.40 per share, for the YE1, with a buy, low risk recommendation. Sonae Industria Buy High Risk (Target YE1: 1.95) 4Q11 Earnings Preview João Mateus, Sales YoY EBITDA YoY EBIT YoY Net Profit YoY % % % % EBITDA should have improved in YoY terms mostly on the recovery of Central Europe in margin and at the top line. The QoQ fall in margin should have come on the back of seasonal weakness in Europe and North America, not offset by the improvement in South Africa, though the top-line should have increased in all regions. We maintain our valuation of Sonae Industria at 1.95 per share, for the YE1, with a buy, high risk recommendation. Cimpor Buy Medium Risk (TargetYE1: 6.10) 4Q11 Earnings Preview João Mateus, Sales YoY EBITDA YoY EBIT YoY Net Profit YoY % % % % EBITDA should have come more than 10% lower QoQ mainly on increased weakness in Portugal, energy costs in Egypt, operational problems in China and seasonality in Turkey. Currency devaluation in Egypt and Turkey should have contributed to the YoY and QoQ revenue falls with direct impact in EBITDA. Operative restructuring in Spain should have on the back of local margin recovery, without offsetting the impact of lower volumes sold, while in Portugal, volume resilience from export sales impacted negatively the countries margin resulting from a lower price mix. We maintain our valuation of Cimpor at 6.10 per share, for the YE1, with a buy, medium risk recommendation. Page 4 of 0

5 FINANCIALS Banking Sector Rita Silva; Loan to deposit ratio of 10% in 016? António Seladas, CFA Today s press considers the possibility of a relaxation of some of the rules that had been imposed on banks by Troika, including the possibility of postponing the implementation of a 10% loan to deposit ratio from 014 to 016. This measure, if confirmed, along with the extra 3yrs liquidity program provided the ECB may ease the process of deleveraging. Impact: neutral / positive. The consequences of this postponement would be less pressure for deposit gathering, increased lending and a reduction of the need for asset sales, often made at a discount. All these effects would have a positive effect on net interest income over the next years. However, we reinforce the idea that banks with loan to deposit ratios near (or below) 100% benefit from less exposure to the wholesale market (closed since the outbreak of the crisis), and therefore have less pressure on deposits and less pressure to reduce loan portfolios. TELECOMS Telecom Sector Alexandra Delgado, CFA Anacom discloses Mobile subscribers by the end of 4Q11 The Portuguese Mobile market reached 16,794k active accesses in the end of 4Q11, growing 1.9% vs. 4Q10. Number of accesses effectively used in the quarter dropped 0.5% YoY. Number of active accesses increased by 16k in the quarter and number of accesses effectively used grew 74k. Regarding Mobile Broadband, there were 1,134 active datacards by the end of 4Q11, 10.7% of the population. The number of active datacards shrunk for the fifth quarter in a row (-11.3% YoY), on the back of terminating E-escolas contracts. Voice traffic (in minutes) grew 1.6% YoY in 4Q11, with on-net minutes growth offsetting lower off-net minutes and lower mobile-fixed call minutes. Number of voice calls has decreased.4% YoY in 4Q11, while SMS have increased 5.0% YoY in the quarter. Portugal Telecom ended 011 with a 4.9% market share of accesses effectively used (-1.0pp YoY), Vodafone with 40.6% (+1.3% YoY) and Optimus with 15.3% (-0.4pp YoY). 4Q10 1Q11 Q11 3Q11 4Q11 k accesses Mobile accesses 16,474 16,454 16,318 16,631 16,794 Post-paid 4,594 4,639 4,661 4,711 4,79 Pre-paid 11,880 11,816 11,658 11,90 1,065 Mobile accesses w/ effective usage 13,489 13,64 13,141 13,344 13,418 Datacards 1,79 1,3 1,181 1,145 1,134 YoY growth Mobile accesses 3.4% 4.0%.8% 3.0% 1.9% Post-paid 5.8% 3.% 4.4% 3.9%.9% Pre-paid.5% 4.3%.%.7% 1.6% Mobile accesses w/ effective usage - 1.4% 0.9% 1.1% -0.5% Datacards 3.% -4.4% -7.0% -11.0% -11.3% Source: Anacom, Millennium investment banking Page 5 of 0

6 16% 14% 1% 10% 8% 6% 4% % 0% 160% 145% 130% 115% 100% 1 Q09 Q09 3 Q09 4 Q09 1 Q10 Q10 Q Q10 1 Q11 Q11 3 Q11 Q11 4 Mobile subs growth (lhs) Mobile penetration rate (rhs) Source: Anacom, Millennium investment banking Telefónica Buy Medium Risk (Target YE1: 1.00) Alexandra Delgado, CFA Telefónica sells 13.3% stake in satellite company Hispasat Telefónica announced this week the sale of its 13.3% stake in Spanish satellite company Hispasat to Abertis for 14 mn in cash. This deal is dependent on approval from the Spanish Council of Ministers. Abertis will hold circa 47% of Hispasat s capital after this acquisition. This sale fitstelefónica s strategy to sell non-core assets in order to realize cash and alleviate debt burden; individually the deal has no significant impact on FCF and net debt. We were including stake in Hispasat at carrying amount ( 65 mn YE10) in our valuation, so the sale of the stake at 14 mn has a positive, though residual impact on our valuation. 4Q11 Earnings Highlights - Pressure on Spain, but better FCF Telefónica announced this morning its 4Q11 earnings, with OIBDA above our estimates. Revenues, OIBDA and Net Income reached 16,165 mn, 5,960 mn and minus,670 mn in the quarter, respectively. Net income was above our estimates on the back of higher OIBDA and a 95 mn reversal of deferred tax liabilities. Revenue in 4Q11 dropped 1.8% in 4Q11. Latin America growth (+1.3% YoY) could not offset Spain weakness (-9.5% YoY). Revenue in FY11 grew 3.5%, to 6.837mn; in organic terms (constant exchange rate and exc. changes in perimeter) revenues were flat, in the lower end of full year guidance (growth up to %). Consolidated OIBDA in organic terms in FY11 dropped 5.1% YoY. OIBDA margin dropped.0pp to 36.1%, broadly in line with upper 30s margin guidance. In Spain, revenues dropped by 9.5% YoY in 4Q11 (-7.6% YoY in FY11). In mobile, customer revenue trend (-11.9% YoY) has worsened in the quarter due to intense competition and tariffs cut. OIBDA margin dropped.pp YoY in FY11 (organic), to 44.3%. Europe revenue dropped 1.6% YoY in FY11 in organic terms, impacted by MTRs cut in the UK and weakness in Czech Republic and Ireland. Revenue decline accelerated in 4Q11. OIBDA margin in the region dropped 0.3pp in FY11 (organic), to 7.%. In Latin America, revenues increased in FY11 by 5.3% in organic terms, showing a slight acceleration in 4Q. OIBDA margin in the region was 37.4% in FY11, down.4pp (organic). Telefónica disclosed guidance for 01: revenue growth >1% at current exchange rates, lower OIBDA margin decline than in 011 (-.0pp) and similar capex/sales as in 011. Guidance shows Spain will continue to drag performance and lack of visibility going forward. In summary, revenue figures reflect mainly tough environment in Spain, but on a positive note, FCF in FY11 was better than we expected (due to WC management and sale of assets), so Net Debt + Page 6 of 0

7 commitments was below our estimate, at mn (.6x OIBDA). (For further details, please refer to our snapshot out today) MEDIA Media Sector João Flores; TV Audience Shares Feb1 (Mtd): Cable increased gap to nd place Cable channels slightly rose while TVI declined, reflecting Mardi Gras school holidays. SIC/Impresa and state-owned RTP1 kept unchanged RTP Informação returned to nd place in cable news channels (TVI4 is back to 3 rd place in early February). All-Day SIC TVI RTP1 : Others Mtd Fev1*.8% 5.7% 0.1% 3.7% 7.7% Jan-1 3.0% 6.6% 19.8% 3.8% 6.9% Chg (pp) MoM -0.pp -0.9pp 0.3pp -0.1pp 0.8pp Feb-11.9% 6.9%.9% 3.9% 3.4% Chg (pp) YoY -0.1pp -1.pp -.8pp -0.pp 4.3pp *last data February 3th Source: Marktest; numbers are simple average of monthly data 34% Audience Share - all-day (daily) 30% 6% % 18% 14% Feb -01 Feb -03 Feb -05 Feb -07 Feb -09 Feb -11 Feb -13 Feb -15 Feb -17 Feb -19 Feb -1 Feb -3 Feb -5 Feb -7 Feb -9 Wkds SIC TVI RTP1 Others Source: Millennium investment banking Media Capital Under Revision João Flores, Pais do Amaral did not exercise the option to increase stake in MCP? According to the news, Miguel Pais do Amaral did not exercise the option to purchase an additional 19.69% stake in Media Capital, a possibility that negotiated a year ago when bought a 10% stake for 35mn. The buyer had the option to purchase an additional 19.69% stake at the same price, 4.14/share, within a year. The period of 1 months for the manager to get that additional position ended yesterday and there has been no communication to the market or any change in its shareholding. Recall next year, Prisa may exercise the right to repurchase the 10% stake of Media Capital acquired by Pais do Amaral in February last year. It`s not a surprise given very tough environment in Media sector. We belive the strike price had to be lower than one year ago to be an interesting deal. Page 7 of 0

8 TECHNOLOGY Indra Buy High Risk (TargetYE1: 13.90) Alexandra Delgado, CFA 4Q11 Earnings Comment - FY11 in line, guidance adds visibility Indra disclosed its 4Q11 earnings this week. 4Q11 earnings were broadly in line with our estimates. Revenue growth and EBIT margin in FY11 are in line with company s guidance for the full year. Revenues in the full year stood at,688.5mn, growing.7% YoY excluding acquisitions impact. EBIT reached 67.8mn in FY11 and recurrent EBIT margin dropped 1.pp YoY to 10.0%, on the back of increased pricing pressure, increased weight of Services and lower margins driven by acquired companies. Net profit reached 181.0mn in the year (-4.0% YoY, +1.3% YoY excluding acquisitions impact). Tough conditions remain in Spain with revenues falling 5% in H after being flat in 1H11. The company is undertaking several initiatives to increase efficiency in the domestic market. Sales growth is mostly driven by Latin America and Asia Pacific region. International markets grew 11.1% YoY in FY11 (organic growth). Net Working Capital has increased in the year on the back of a tough environment in Spain, reaching 98 days of revenues but still below guidance due to some unexpected revenues collection by year end. Higher working capital, acquisitions and capex are placing pressure over Net Debt (at 1.5x 011 EBITDA). Indra disclosed guidance for the next years: revenue growth between 6.5% and 7.5% in 01 (% organic); recurrent EBIT margin between 8% and 9% in 01, recovering progressively to around 10% in 014; extraordinary costs of around 1% of revenues in 01 and 0.5% in 013. FY1 revenue guidance tops our expectations, while margin should be more depressed than we anticipated in On a positive note, Indra expects margin recovery to be faster than we expect. In addition, lower level of capex in the years ahead boosts cash generation. All in all, we remain comfortable with our valuation and maintain the price target for Indra at (YE1), with a Buy, High Risk recommendation. (For further details, please refer to our snapshot out this week) UTILITIES Iberdrola Buy Low Risk (Target YE1: 5.90) 4Q11 Earnings Comment Liberalized and renewable businesses worse than our expectations Vanda Mesquita, Iberdrola disclosed its 4Q11 earnings this week, followed by a conference call. All in all, earnings came below our expectations, with liberalized and renewable business posting a worse performance than our expectations. Gross profit for 4Q11 went up 8% YoY (1% below our estimates). By business, regulated activities remained unstable YoY (-1% below our estimates), liberalized activities went up 16% YoY (10% below our estimates mainly due to lower margins) and renewable business dropped by % YoY (4% above our estimates as we were less upbeat in terms of prices). EBITDA for 4Q11 went up 5% YoY (% below our estimates). By business area, while regulated (+9% YoY; 3% below our estimates) and liberalized activities (+6% YoY; 11% below our estimates) gave a boost to earnings, renewable business (-14% YoY; 11% below our estimates) deteriorated them. Comparing to our estimates, we were more optimistic regarding liberalized business and renewable business. While the former business was affected by higher taxes (in Spain and in the UK), the latter was affected by a higher amount of operating costs related with the merger and also to the cancelation of some maintenance contracts. Below the EBITDA line, D&A and provisions for 4Q11 were higher than our expectations mainly due to the assets impairments recognized in the quarter (in the UK cancelation of Carbon capture and Page 8 of 0

9 storage projects and a carbon floor that reduces the future spreads and makes the extension of the useful life more difficult and in renewable the recognition of an impairment of developments costs due to the cancelation of wind projects in the US) and incomes taxes lower than our expectations due to one-offs (positive effect related to the additional reduction of % in UK taxes and reversion of tax provisions due to tax agreements in the US). Net income for 4Q11 decreased 18% YoY (1% below our estimates). Net debt at YE11 stood at 31.7bn (in line with our estimates of 3bn) and Capex for YE11 amounted to 4bn (in line with our estimates of 3.9bn) Dividend wise, IBE will propose to the General Shareholders meeting a dividend of at least 3.6 cents (part of the amount was already paid in January), in line with the dividend paid in 010 and broadly in line with the dividend included in our valuation 33 cents. Finally we would like to mention that the bulk of the presentation was devoted to the explanation of the generation of the Spanish tariff deficit and also about the likely solutions to solve that problem. This is clearly one of the main topics to be followed in the near future that may affect IBE s earnings in the coming years. (For further details, please refer to our snapshot out this week) EDP Buy Low Risk (Target YE1: 3.05) Vanda Mesquita, US regulator approved the entry of China Three Gorges in EDP According to the economic press, the US regulator approved the entry of China Three Gorges in EDP, imposing the compliance of eight terms and conditions (which were not disclosed). Any change to the imposed conditions must be notified to the regulator. As a reminder, the US regulators had refused to issue a decision about the entry of China Three Gorges before EDP s General Shareholders meeting (on February 0). The US regulators had 180 days to rule on this matter (deadline on 17 July). It seems that the closing of the privatization process is well underway, which is positive. General shareholders meeting on February, 0 This week, EDP hold a general shareholders meeting on February, 0 to decide the election of the members of EDP s general and supervisory board for the three-year period from 01 to 014, the election of the members of EDP s executive board of directors for the three-year period from 01 to 014, the extension of the voting rights limit from 0% to 5% and also to change its bylaws in order to consider China Three Gorges as a non-competitor company. All the points included in the agenda were approved. From this general shareholders meeting, we would like to highlight the reelection of EDP's CEO with 99.8% of positive votes and also the fact that the extension of the voting rights to 5% from 0% seems to be the first step to sell the remaining Portuguese State's stake (4% that is still under convertible bonds) to China Three Gorges (1.35% stake in EDP after the close of the operation). EDP Renováveis Buy Low Risk (Target YE1: 6.00) Vanda Mesquita, Valuation Update Growth is becoming scarce Following the release of operational data (YE11), we fine-tuned our estimates. We value EDPR at 6.00 per share (YE1), keeping our previous target and our buy recommendation (Low risk) unchanged. Changes in our price target came from the update of exchange rate USD/EUR rate (+5 cents) and from the fine-tuning of our estimates (-35 cents). We also updated some WACC parameters (+10 cents) namely the risk free rate for the Euro-zone (German 10-year sovereign yield) to.5% from Page 9 of 0

10 3%, the risk free rate for the USD-zone (US 10-year sovereign yield) to.5% from 3% and the Portuguese 10-year Sovereign yield to 11% from 10%. We still believe that the pace of new investments will be substantially reduced vis-à-vis the historical data. Valuation wise, we consider that EDPR will deploy on average 0.4GW per year from 01 to 00 (vs our previous target of 0.5GW), meaning a CAGR 10-0E of 5.56% (vs our previous CAGR 10-0E of 6.3%). If we were to exclude growth, our price target drops to In our opinion it makes sense to lower growth, as cost of capital is still high and good opportunities are becoming scarce. Some countries, such as Portugal and Spain, are taking some measures to halt the development of renewable energies (both countries are on track to accomplish their EU 00 targets of renewable energy, as the weight of renewable is quite meaningful and the wind energy represents approximately 0% of the whole system). Regarding the US, we still believe that the US congress will approve the extension of the PTC s, however, we consider that the time of the approval could be delayed due to the United States presidential election in November 01. Growth included in our valuation (0.4GW per year from 01 to 00) is concentrated on the Rest of Europe and in the US. As far as a likely buyout from EDP is concerned, we considered several scenarios in order to assess whether the deal is dilutive for EDP s shareholders. According to our estimates, the amount of net profit generated by EDPR is not enough to create value in terms of EDP s EPS in the years to come. A neutral deal in terms of earnings (from EDP s shareholders point of view) would have to have an exchange ratio of 0.66 (i.e EDP shares in exchange for each EDPR share). We consider that these prices are so far from reality, that the likelihood for this operation to happen in the near future is small. If the deal were to happen, we consider that it would make more sense to exchange shares together with the payment of a special dividend (50% of the buyout price) at EDPR level. According to our calculations, if we were to consider a buyout price of 5.7, implying a.5% premium (average premium of similar transactions) over EDPR s last 6-month average trading, the deal would be EPS accretive in a more consistent way from 015 onwards. (For further details, please refer to our Company Update out today) MOTORWAYS Brisa Buy - Low Risk (Target YE1: 3.15) António Seladas, CFA; Company Update Lowering traffic assumptions We updated Brisa s valuation, reducing the price target, by 0cents, from 3.35YE11 to 3.15YE1, keeping the buy recommendation, low risk profile. The major effect was the change in the estimates, minus 18 cents, mainly related with BCR. Regarding the COE, minus cents, we kept our model assuming three valuation periods instead of two, allowing the model to smooth the convergence period even that we assumed that current sovereign yields spreads will be kept until year end 015; between 016 and 00 a convergence period will start and in 01 historical average sovereign yield spreads will be reached; Concerning the traffic performance, namely in BCR, we assumed minus 3%, - 7.% and -.% in 011, 01 and 013 respectively, vs. -1.9%; -3.4% and -1.8% before. We are also less upbeat now regarding the decade 00/30; we reduced the traffic cagr from 3% to.5%. This is mainly related with the huge liabilities assumed by the Portuguese Republic not just the current ones, namely the level of debt but also the liabilities assumed with the social security; The link between the rating of the Portuguese Republic and the rating of the companies will limit the dividend payment. Unless the performance of the Republic improves dramatically in the next two years, dividend policies should change and start being pretty conservative. So Brisa should be able to keep the dividend of 31 cents in the current year and in 013 but we are skeptical afterwards; Brisa should release 4Q11 earnings on the 7 of March. We are assuming traffic revenues to drop by almost 7% YoY. However taking in consideration the abrupt slowdown in several discretionary items Page 10 of 0

11 by the end of the year, the figures could surprise on the downside. (For further details, please refer to our Company Update out this week) Car fuel consumption and Oil tax revenues in December and January The DGO, the Portuguese Department in charge of the Budget, released during the week several data regarding the month of January, namely the Value Added Tax (VAT) and the oil Tax (ISP) revenues. The ISP revenues went down in January by 9.3%. So the downtrend was maintained and actually accelerated being more difficult to foresee its end. Regarding the VAT revenue it performed better than in December as the change was positive, despite benefitting from an increase on energy VAT rates. Meanwhile the DGEG (the Department in charge of the Energy) also released the domestic car fuel consumption in December, which went down 8.% YoY. The fall also accelerated, meaning that any trend reversion is difficult to predict. Our assumptions regarding traffic in Brisa Concessões Rodoviárias are -7%; -7.% and -.% in 4Q11; 01 and 013 respectively. The company s guidance is -5% regarding 01. Our assumptions despite had been reviewed recently could be at risk of being optimistic, taken in consideration the data released, namely the 4Q YoY Jan 011 Dec Nov Oct Sept Aug July June May April March Feb Jan 010 IVA (Value added Tax) 5,7% 7,0% -8,7% -0,4% 15,9% -,%,6% -1,1% 16,5% -,8% 8% 54% 14,% 7,9% 11,6% ISP (Oil products tax) -9,3% -4,0% -7,5% -6,3% -5,8% -,% -6,6% -4,1% -,7% -9,0% -,9% 0,0% -1,1% 1,0% -1,% Dom Car Fuel Consumption(10^3 ton) na -,8% -8,% -5,3% -4,4% -3,9% -3,3% -,6% -,1% -1,7% -1,3% -0,7% -0,% -0,% 0,0% Petrol (IO95 price change per liter) na 1,3% 5,5% 10,1% 13,0% 14,9% 1,6% 13,9% 11,4% 13,8% 13,9% 1,7% 13,5% 13,3% 11,0% Diesel (price change per liter) na 18,8% 13,9% 19,% 19,1% 18,0% 15,5% 17,3% 15,% 16,9% 0,7% 4,% 5,0% 1,3% 14,8% Source: DGO, DGEG, Mib RETAIL Retail Sector Retail Sales in Poland Positive numbers as expected 30% 5% 0% 15% 10% 5% 0% -5% -10% Feb-07 Jun-07 Oct-07 Feb-08 Jun-08 Oct-08 Feb-09 Jun-09 Oct-09 Feb-10 Jun-10 Oct-10 Feb-11 Jun-11 Oct-11 João Flores, Retail Sales YoY Retail Food YoY Source: Source: Bloomberg, Millennium investment banking Page 11 of 0

12 Survey* Jan-1 Dec-11 Jan-11 Chg MoM Chg YoY MoM -5.0% -4.9% 0.8% -8.6% -45.7pp 3.7pp YoY 13.8% 14.3% 8.6% 5.8% 5.7pp 8.5pp Food MoM na -5.0% 30.6% -31.1% -55.6pp 6.1pp YoY na 10.7% 1.7% 0.0% 9.0pp 10.7pp *Bloomberg Source: Source: Bloomberg, Millennium investment banking Polish retail-sales growth accelerated in January to the fastest pace in nine months, backing forecasts that European Union s largest eastern economy will resist a contraction in the euro area Sales growth rose to to 14.3% YoY compared with an 8.6% in December (above 13.8% percent Bloomberg`s estimates). Recall wage growth was higher than expected in January (8.1% YoY vs 4.8% estimated) and the minimum wage was increased at the beginning of this year. Retail sales slowed to 5.8% YoY In January 011, penalized by decline in Motor vehicles & Parts (-4.1% YoY) and lackluster number in Food retail (0% YoY). European Commission keeps Poland s GDP growth at.5% in 01 Poland will post the 7-nation bloc s fastest economic growth this year (.5%), driven by corporate investment,the European Commission said yesterday. Investment spending growth is expected to remain robust, supported by accelerating private investment, the commission said. The corporate sector is likely to continue to increase capacity, financed by intensifying inflows of foreign capital, retained earnings and growing corporate credit. We higligh the EU s forecast is in line with a prediction by Polish Prime Minister Donald Tusk s government Recall the commission kept Poland s growth estimate unchanged from its autumn forecasts. Retail Sales in Colombia Retail sales in Colombia rose to 7.5% in December (1.3% in November), above estimated 4.7%, fueled by footwear, vehicle sales and information equipment. Retail Sales in Portugal We highlight January retail sales in Portugal will be disclosed on March 1 st. INDUSTRIALS Industrials Sector Backlog in the Portuguese Public Works and Construction in 4Q11 António Seladas, CFA João Mateus, s The Portuguese Statistic Institute released Monday, 0 of February the evolution of the index of the Backlog of the Portuguese Public Works and Construction, regarding the 4Q11. The index reached a new lowest level on our data base of 1 years, with a correction of.5% YoY. The correction continues to accelerate. We should highlight that our estimates regarding the revenues of Mota Engil in the construction business in Portugal points to -15%; -15% and -4%, 01; 013 and 014 respectively. For the time being we feel comfortable with our estimates however 01 could record a sharp drop than our estimates. Page 1 of 0

13 Concerning the cement consumption estimates, we estimate -8% in 01 and flat consumption in 013 and 014. We are slightly less bearish on the cement consumption, as the current levels are the lowest for at least the last 0 years, however the risk is increasing Backlog in Portuguese Public Works & Const Backlog in Portuguese Public Works & Const 30 1Q00 1Q0 1Q04 1Q06 1Q08 1Q10 Source: INE CONSTRUCTION Mota-Engil Buy High Risk (TargetYE1: 1.45) António Seladas, CFA Building activity in Angola According to the Portuguese press, last week, the Regional Government of Luanda, organized a meeting with the main contractors, notifying that the works begun last year should be ready by the end of the first half 01 or they will lose the contracts. Still on the same article, it was informed that roughly 95% of the works in progress are on schedule and all were paid. This issue is related with the fact that 01 is an election year so the works should be done before elections. The same article mentioned that among several other companies, Mota Engil, Soares da Costa and Teixeira Duarte were present on the meeting. This behavior, is probably more common on emerging markets, namely in Africa and despite operating margins are usually higher than in developed markets the risk associated is, obviously higher. Having said that, companies operating on this environment should be aware of it and have the relevant skills or profitability would suffer. FEPICOP ask the Government to consider the Construction in restructuration FEPICOP, the Portuguese Contractors Organization asked the Government last January, 5, to consider the Construction Sector in restructuration. This statute will facilitate the restructuration of the sector namely through M&A and downsizing. It also accelerates the process as companies would be immediately eligible to restructuring. However the Trust is against it and is lobbying the Government to not adopt such measures. A favorable decision would be clearly positive for the Sector as the number of players will be reduced and the sector would regain the profitability earlier, however we will be surprised if the Government decides on it. We tend to believe that the Government will decide case by case, meaning that the adjustment process will be slower and the sector will remain depressed for many years. Page 13 of 0

14 OIL & GAS Galp Energia Buy High Risk (Target YE1: 18.15) Vanda Mesquita, Cove Energy Deal positive for Galp This week, Royal Dutch Shell said that it had bid for Cove Energy paying 195 pence per share, valuing the company at 95mn (equivalent to $1,56bn), meaning a 6% premium over the price of the day before the announcement of this tender offer and a 73% premium over the close of January, 4th (when the company announced that it has put itself for sale). Cove Energy s main asset is a 8.5% stake in a consortium (led by Anadarko) that explores Area 1 in Rovuma Basin, located in Mozambique. This area is estimated to contain up to 30 Tcf of natural gas resources. Besides this stake, the company has other assets in Tanzania and in Kenya. As a reminder, Galp is also present in Rovuma Basin, in Area 4 (an area close to Area 1), participating in a consortium with a 10% stake together with Eni (70%), Kogas (10%) and ENH (10%). We consider that this deal brings more visibility over gas assets in Mozambique, which is positive for Galp. Bearing in mind that Cove Energy holds other assets, we cannot calculate a direct multiple implied in this operation. As far as Galp s gas assets in Mozambique are concerned, we remind that part of these resources are not included in our valuation. However, as we have already estimated in our previous notes the impact of the inclusion of all assets would be approximately 3.3% in terms of our price target (assumptions: $ per barrel, 80% of recovery factor). We expect the company to unveil more details about Mozambique assets in its Capital Markets Day to be host on March, 6th in London. SECTOR PERFORMANCE Sector Performance -1 Week (%) Sector Performance - YTD (%) PSI0-1.0 PSI0 1. Oil & Gas 3.9 Financials 18.8 Retail *.1 Oil & Gas 16.5 Industrials & Other -0. Retail *.7 Electric Utilities -3.1 Industrials & Other.4 Motorways -4. Telecoms -6.8 Telecoms -4.6 Motorways -7.7 Financials -5.3 Electric Utilities * includes Jeronimo Martins and Sonae This week, the PSI0 went down 1.0%. The best performing sector was Oil & Gas with a 3.9% growth and the worst was Financials with a 5.3% fall. On a Ytd basis, the PSI0 went up 1.%. The best performing sector was Financials with a 18.8% growth and the worst was Electric Utilities with a 9.8% fall. Page 14 of 0

15 AGGRESSIVE PORTFOLIO This week, Mib Aggressive Portfolio went down 1.36%, underperforming the PSI0 by - 0.3pp. Excluding Novabase, 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 down 1.86%, underperforming the PSI0 by -0.8pp. Excluding Semapa, 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 15 of 0

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17 e c-1 Ḏ 3 0 Portfolio n Ja Ytd Return (since inception) n Ja PSI0 n-1 0 -Ja n-1 7 -Ja b-1 e 3-F 0 b-1 e 0-F 1 b-1 e 7-F 1 b-1 e 4-F Mib LIQUIDITY PORTFOLIO Portfolio weekly return Company Risk Market Price Upside Weekly Performance Rating Price ( ) Target ( ) Potential Return Contribution Deviation Sonae Medium % -1.3% -0.6pp -0.05pp Telefónica Medium % -1.5% -0.9pp -0.08pp Portugal Telecom Medium % -5.4% -1.07pp -0.41pp Semapa High % 3.0% 0.60pp 0.73pp BES High % -4.1% -0.83pp -0.6pp Po rtfolio -1.86% PSI % Gain/loss -0.8pp Explained by the portfolio -0.31pp Explained by being underweight in the remaining PSI0 stocks -0.51pp Next week Portfolio Changes in Portfolio Company Risk Market Price Upside Rating Price ( ) Target ( ) Potential In Out Sonae Medium % Zon Multimedia BES Telefónica Medium % Portugal Telecom Medium % Semapa High % Zon Multimedia Medium % Return vs. PSI YTD 1 Month 1 Week Portfolio - 4.0% % PSI0-7.6% 1.% % Gain/loss - -.8pp pp 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 17 of 0

18 01/0 /4 Latest Pr ( ) Target YE1 Upsd Rating Ris k Trnvr ( mn) M Cap Change (%) EPS P / E EV / Sales EV / EBITDA Div Yield P/BV Rating 3m 6m ( mn) Week 1M 3 M 1 M YTD E 01E E 0 1E E 01E E 01E E 01 1E PSI 0 5, , Financials , Banco Popular (3) , % - - Bankinter % Neutra l High , % 3. % 0.8 BCP (1) , BES % Bu y High , loss % 0.0 % 0.4 BPI (3) % - - Telecoms , % 10.%.4 Telefó nica % Bu y Med ium , % 9.7 %.7 Portu gal Telecom % Bu y Med ium , % 14.6 % 1.0 Zon Multim edia % Bu y Med ium % 6.9 % 3.5 Sonaecom % Bu y High % 4.8 % 0.5 Media % 7.% 0.8 Impresa % Sell High Media Cap ital () (3) % - - Cofina % Sell High % 4. % 3.6 Technology Indra % Bu y High , nm % 5.7 % 1.6 Novabase % Bu y High nm % 3.8 % 0.7 Utilities , % 5.9% 0.9 Iberdrola % Bu y Low , % 6.8 % 0.8 EDP % Bu y Low , % 7.7 % 1.0 EDP Re nová veis % Bu y Low.6.5 3, % 0.0 % 0.7 REN % Bu y Low , % 6.4 % 1.1 Motorways Brisa % Bu y Low.5.8 1, % 11. % 0.7 Conglomerates , Sonae % Bu y Med ium % 7. % 0.6 Semapa % Bu y High % 4.6 % 0.7 Sonae Capita l % Bu y High loss 8.0 loss loss 0.0% 0.0 % 0. Retail Jerónimo Ma rtins % Bu y Med ium , %. % 7.9 Industrials , % - - Sonae Ind ustria % Bu y High loss loss loss % 0.0 % 0.4 Altri % Neutra l High % 1.7 % 1.7 Portu cel % Bu y Med ium , % 7.8 % 1.0 Cimpor % Bu y Med ium , % 3.8 % 1.5 Cons truction Mota-Engil % Bu y High % 7.7 % 0.5 Martifer (3) loss % - - Oil & Gas Galp Energia % Bu y High , % 1.8 % 4.0 (1 ) We do not h ave a recommendation on BCP, as Mib is a registered tradem ark of BCP; () Un rated due to low free-flo at; (3) Under Revision Page 18 of 0

19 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 % of EDP. BCP group has more than % of Cimpor. BCP group has more than % 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 nd 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 009. Recommendations on Millennium bcp covered companies (%) Recommendation Jan-1 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% 7% 11% 40% 6% Reduce 4% 0% 0% 0% 0% 0% 0% 7% 7% 0% 0% 1% 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% 4% 18% 16% 0% 5% Performance -3% -7% -0% -6% % 7% -11% -6% 33% -51% 16% 30% 13% na PSI 0 5,35 5,494 5,891 7,34 7,753 7,588 7,066 7,97 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 19 of 0

20 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