top stories weekly - particulares - millenniumbcp · banks are now required to increase specific...
Post on 31-Aug-2019
3 Views
Preview:
TRANSCRIPT
Page 1 of 20
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.
António Seladas, CFA
+351 21 003 7826
antonio.seladas@millenniumbcp.pt
Av. José Malhoa, Lote 27
1099-010 Lisboa
Tel / Fax: +351 21 003 7800 / 09
TOP STORIES
Banking Sector - The ECB decided to adopt additional temporary measures relating refinancing
operations and eligibility of collateral which will widen the scope of credit claims to be accepted as
collateral. Although the broadening of collaterals comes as no surprise, it is a positive piece of news as
banks will now have the ability to tap for a bigger amount of fresh money at the next ECB’s LTRO on the
29th February (page 4).
Bank of Portugal (BoP) has approved recapitalization plans that banks have presented as a solution to fill
in for EBA’s capital shortfalls. These plans should not be known until the end of March/beginning of April.
Although the remuneration for these instruments is not yet known, we believe that 8% is the most likely
scenario (page 5).
OUT THIS WEEK � Earnings Comment – BES, Semapa, Galp Energia
� Snapshots / Company Reports – Sector Overview, Model Portfolio
� Price Target / Recommendation Changes – Semapa, Jerónimo Martins
� Other News – Telefónica, Telecom Sector, Bankinter, Banking Sector, BES, Portugal
Telecom, Retail Sector, Media Sector, Sonae
WEEK AHEAD � Tuesday – Media Capital’s 4Q11 Earnings
PORTFOLIOS
� This week, Mib Aggressive Portfolio went up 5.08%, outperforming the PSI20 by 2.72pp.
All stocks contributed for this outperformance (page 16).
� This week, Mib Liquidity Portfolio went up 6.01%, outperforming the PSI20 by 3.64pp.
Excluding Telefónica, all stocks contributed for this outperformance (page 17).
Stock Market Last 1W YTD 2 011 Daily Vol. (€mn) 1W 1M 6M 2011
PSI 20 5,6 20 2.36% 2.3 0% -27.60% PSI 20 146 96 84 148
IBEX 35 8,7 97 -0.72% 2.6 9% -13.11% IBEX 35 2,270 2,497 2,809 4,925
Euro St oxx 50 2,4 81 -1.37% 7.0 9% -5.56% Euro Stoxx 5 0 8,189 8,617 8,903 14,831
Forex Rates Last 1W YTD 2 011 In terest Rates Last 1W Chg YE11
EUR/USD 1 .32 0.22% 1.9 3% -3.17% Eurib or 6m 1.37% 1. 40% -3bp 1.62%
EUR/GBP 0 .84 0.49% 0.1 2% -2.96% 10Y Bo nd PT 12.48% 13. 43% -94bp 13.36%
EUR/BRL 2 .28 0.86% -5.6 9% 8.86% 10Y Bo nd SP 5.30% 4. 99% 32bp 5.09%
-14.8
-14.5
-6 .6
-6 .3
-6 .2
12.6
14.1
17.2
17.7
30.9
-30 -20 -10 0 10 20 30 40
Sonae Cap i ta l
Cofina
EDP
Portugal Te lecom
EDP Renováveis
Zon Multimedia
BES
Mota-Eng il
BP I
BCP
Best & Worse Performers - YTD (%)
-3 .3
-2.8
-2.6
-2.3
-2.2
7.0
9.6
15.8
19.2
25.4
-15 - 5 5 15 25
Galp E nerg ia
Mota-E ng i l
Bankinter
T elefónica
Br isa
Portucel
S emapa
BES
BPI
BCP
Best & Worse Per formers -1 Week (%)
IBERIA
10 February 20
12
WEEKLY
EQUITY RESEARCH
Page 2 of 20
Millennium investment banking Weekly 10 February 2012
CHANGES
Rating Target Rating Target
Semapa Buy 8.80 Buy 9.35 Valuation Update
Jerónimo Martins Buy 15.10 Buy 15.85 Valuation Update
MotivePreviousNew
EARNINGS
Jerónimo Martins * 10-01 AM n.a. n.a. n.a.
Bankinter 19-01 BM n.a. n.a. n.a.
Sonae * 25-01 n.a. n.a. n.a.Galp Energia ** 27-01 BM 13-04 BM 13-07 BM 12-10 BM
Portucel 30-01 AM 23-04 AM 19-07 AM 22-10 AM
Banco Popular 01-02 BM n.a. n.a. n.a.
BPI 02-02 AM n.a. n.a. n.a.
Novabase 02-02 AM 09-05 AM 26-07 AM 30-10 AMBCP 03-02 AM 01-05 AM 25-07 AM 31-10 AM
BES 03-02 AM 03-05 AM 30-07 AM 06-11 AM
Semapa 07-02 AM 08-05 AM 30-08 AM 30-10 AM
Galp Energia 10-02 BM 27-04 BM 27-07 BM 26-10 BM 06-03-2012
Media Capital 14-02 AM n.a. n.a. n.a.
Indra 23-02 AM n.a. n.a. n.a.Telefónica 24-02 BM 11-05 BM 26-07 BM 07-11 BM
Cimpor 28-02 08-05 31-07 13-11
Sonae Indústria 29-02 09-05 26-07 08-11
EDP Renováveis 29-02 BM n.a. n.a. n.a.
Sonae Capital 29-02 AM 24-05 AM 21-08 AM 15-11 AMMartifer 01-03 AM n.a. n.a. n.a.
Zon Multimedia 01-03 BM 08-05 BM n.a. n.a.
REN 01-03 AM n.a. n.a. n.a.
Jerónimo Martins 07-03 n.a. n.a. n.a.
Brisa 07-03 AM 04-05 AM 27-07 AM 31-10 AM 23-11-2012
Sonaecom 07-03 AM n.a. n.a. n.a.EDP 08-03 AM n.a. n.a. n.a.
Mota-Engil 14-03 AM n.a. n.a. n.a.
Sonae 14-03 n.a. n.a. n.a.
Impresa 14-03 AM n.a. n.a. n.a.
Portugal Telecom 22-03 BM 10-05 BM 02-08 BM 08-11 BMGlintt 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
** Trading update
Company 4Q2011 1Q2012 2Q2012 3Q2012 Investor Day
Page 3 of 20
Millennium investment banking Weekly 10 February 2012
DIVIDENDS
Gross Payment Ex-Div Last Year
DPS Date Date Pay Date Gross DPS
Portugal Telecom 0.215 6-May-11 4-Jan-12 30-Dec-11 Approved - 0.000
Approved: Dividend already approved by AGM
Company AGM Obs
NEXT WEEK RESULTS
Media Capital No recommendation (Target YE12: €2.70)
4Q11 Earnings Preview João Flores,
Equity Analyst
Sales YoY EBITDA YoY EBIT YoY Net Profit YoY
73.0 -4% 22.0 nm 18.9 nm 11.5 nm
Media Capital will release its 4Q11 Earnings on February 14 (Tuesday), after market close.
Attentions will be focused on advertising market (pace of decline in 4Q11), given MCP`s low free
float.
SECTOR OVERVIEW
Sector Overview
Spotting turning points - Indicators heading north
� US economic data has proven so far to be quite resilient and the equity market has built
upon these encouraging signs (S&P500 +7% YtD; EuroStoxx +9% YtD). Also, since the end
of September, small caps (Russell 2000) have over performed big caps (S&P500) while
Value stocks have over performed Growth stocks. Coincidently the economic activity,
measured by the ISM’s, has also registered a pickup during this last quarter. The US
earnings season has, however, not been very positive thus far.
� About half of S&P’s companies have posted their quarterly results. S&P 500 earnings have
grown 23.5% by 4Q11 slightly below the 24% value indicated by the end of 3Q11, before
companies began to report their quarterly earnings, which translates into a negative surprise
level of 0.5pb. However, 1Q12 quarterly earnings growth has been revised downwards
(58pb), to 2.4% YoY (vs. 10.2% estimated in early October) as well as 2Q12 earnings down
by 44pb to 9.1% YoY.
� Cement sales in Portugal came 19% lower YoY in December and 15.6% lower YoY in the
FY11, the fourth consecutive YoY fall since 2008. Cement consumption in Spain also
continued falling to a 21.9% YoY lower December, reaching a 17.5% YoY fall in the FY11.
For the FY12, we estimate further 8% and 9% YoY falls in Portugal and Spain.
� The Portuguese Pay TV market reached 2,976k subscribers in the end of 4Q11, with 69k
net adds in the quarter. By the end of 4Q11 circa 51.7% of households had Pay TV service.
Growth has accelerated in 4Q11 (+7.2% YoY) despite challenging macroeconomic
environment, reversing the slowdown trend we had been observing since 3Q10. This
reflects the impact of the analogue switch-off happening in January in some regions which
led some households to opt for Pay TV services. FTTH was the technology adding more
new clients (+41k), followed by cable (+15k) and DTH (+13k).
� Retail sales in Portugal kept negative trend in December, reflecting an increasing tough
environment. We highlight decline in food retail is closing to high single digit numbers.
Retail sales (overall) declined an annual 10.3% YoY, after dropped 9.2% YoY in November.
On a monthly basis, sales were up 2.3% YoY, benefiting from Xmas effect (-2.6% in
Page 4 of 20
Millennium investment banking Weekly 10 February 2012
November).
� Monthly electricity consumption (adjusted for temperature and working days) in Iberia has
been decreasing in recent months. In January, monthly electricity consumption in Portugal
dropped by 7% YoY (Source: Rede Eléctrica Nacional) and in Spain it decreased by 2.4%
YoY .
(For further details, please refer to our report out this week)
FINANCIALS
Banking Sector
New measures for the Spanish Banking System
Rita Silva;
António Seladas, CFA
Equity Analyst
As part of the Spanish financial reform, banks have to increase provisions against real estate exposures
and build a capital buffer against capital ratios. The new measures are designed to clean up institutions’
problematic exposures to construction and real estate developers from their balance sheets as well as to
consider potential migrations from normal to problematic portfolios. The impact of the measures is a one-
off: the objective is to eliminate uncertainty regarding banks’ balance sheets, and particularly the value of
land related assets value. In our opinion, the increased clarity and reinforcement of provisions regarding
RE assets should be viewed as positive news.
Banks are now required to increase specific provision coverage (substandard, NPL and foreclosed) plus
a capital buffer that add up to 80%, 65% and 35% to land, assets under construction and finished
building respectively. Regarding performing loans from real estate developers, a 7% generic provision
will be demanded that can be build up through retained earnings, capital increases or debt conversion.
FROB can provide funds to facilitate the processes: the new law opens the possibility for the FROB to
instrument the funds through Cocos convertible in shares in 5 years. Banks have to comply with new
rules by YE 2012. Exception made for banks that are merging that will have an extra year until YE2013.
New rules:
Current
coverage
Additional
provisionsTotal (P&L)
Capital buffer
(Equity)
Total including
buffer
Troubled assets
Land 31% 29% 60% 20% 80%
Housing under development 27% 23% 50% 15% 65%
Other than the above 25% 10% 35% 0% 35%
Performing loans
Construction and RE developers 7% 0% 7%
Source: Banco de España, Ministerio de Economia Y Competitividad, Mib
Broader collaterals for ECB’s liquidity programs
The ECB decided to adopt additional temporary measures relating refinancing operations and eligibility of
collateral which will widen the scope of credit claims to be accepted as collateral. In Portugal the new
pool of assets that are accepted include: (1) individual credit claims with a probability of default not
exceeding 1.5%; (2) portfolios of credit claims relating to mortgage-backed loans to households;
consumer credit to households; and loans to enterprises other than financial corporations. In Spain,
Banco de España will accept performing corporate and Public Sector Entity credit claims, other than
mortgages and whose estimated credit risk has a probability of default equal to or lower than 1%.
Although the broadening of collaterals comes as no surprise, it is a positive piece of news as banks will
now have the ability to tap for a bigger amount of fresh money at the next ECB’s LTRO on the 29th
February.
Page 5 of 20
Millennium investment banking Weekly 10 February 2012
What will banks do under EBA and Bank of Portugal (BoP)
Bank of Portugal (BoP) has approved recapitalization plans that banks have presented as a solution to fill
in for EBA’s capital shortfalls. These plans should not be known until the end of March/beginning of April.
Until June 2012 banks have to comply with a 9% CT1 in which a mark to market of sovereign debt (as of
30 Sep. 11) is mandatory. Alternatives include capital increases, dividend payout reduction/elimination
and issuance of CoCo’s (that are eligible for BoP purposes since Jan 2012). For EBA capital
requirements banks may draw on the Bank Solvency Support Facility (BSSF - total amount under this
program currently stands at €12bn). Although the remuneration for these instruments is not yet known
(as it has not been approved by regulators) the whisper number points to a figure of about 8% - a number
that makes sense considering comments of the Portuguese Finance Minister that costs should not be
inferior to what the State is paying under Troika’s help (between 3.5%-4%) and to what is considered to
be an informal rule of not being above twice this value. All in all, we believe that 8% is the most likely
scenario. This is also consistent with what Spanish banks pay for FROB Securities set at a minimum of
7.75%.
There is also some uncertainty regarding the use of the €12bn government life line as it is not known if it
can be used towards the reinforcement of capital ratios also under BoP rules that demand a 10% CT1
until YE12 (Basel 2 rues meaning that no MtM of sovereign debt is needed). If not, undercapitalized
banks will have to raise capital by other means, such as preference shares (probably much more
expensive – remuneration cannot be inferior to 5yrs treasury bonds+ CDS for subordinated debt +300bp
– as laid down in the decision passed by the European Commission in Mar 2010) or capital increases
that are potentially dilutive for shareholders.
It is also possible that BoP could postpone this deadline for an extra year allowing banks for more time to
cover any capital shortfalls through retained earnings. However, we consider this unlikely as it could
create a wrong message to the market of a more permissive regulator on a matter that has been
recurrently prioritized as essential.
For now, one thing is certain: the use of this facility to comply with EBA’s shortfalls will have to be made
directly by banks and not by financial holdings, which would mean, for example, that ESFG would not
draw on BSSF but BES could.
According to our estimates BES’s CT1 would stand at 8.8% after deducting for pension fund effects,
Troika’s provisions and MtM of sovereign debt, i.e., a €137mn shortfall to achieve 9% EBA’s target by
June 2012. Furthermore, the capital shortfall to achieve the 10% CT1 demanded by BoP would be
€570mn. As such, we believe that if BoP does not postpone its 10% CT1 target by 2012 and if the
issuance of “cheap” CoCo’s is not permitted, BES will probably increase its capital until the end of the
year.
Bankinter Reduce – High Risk (Target YE12: €5.10)
Bankinter’s impact of the new RE provisioning law
António Seladas, CFA
Rita Silva,
Equity Analysts
Bankinter’s impact of the new RE provisioning law stands at €146mn, of which €56mn correspond to the
generic provision that is required for developers (performing loans) and the remaining €90mn are specific
provisions related to asset quality. Bankinter stated that the amount of provisions now required will be
totally covered by expected earnings (before provisions) in 2012. Our valuation incorporates generics of
€50mn and specif provisions (and others) of €188mn - values that we consider appropriate in light of the
new legislation. Additionally, Bankinter has a generic cushion of €115mn that can be used to absorb
some of the impacts of the extraordinary provisions now required. Bankinter also notes that the impact of
the law in CT1 ratio is 16bp - a relatively low ratio compared to the CT1 at the end of 2011, which stood
at 9.2%.
Page 6 of 20
Millennium investment banking Weekly 10 February 2012
BES Buy - High Risk (Target YE12: €2.25)
4Q11 Earnings Highlights – One-offs hampered earnings
Rita Silva;
António Seladas, CFA
Equity Analysts
� BES disclosed its quarterly earnings this week. No major surprises at an operational level
(ex-trading). Domestic NII deteriorated above our expectations as asset repricing was not
able to compensate for higher deposit costs. NIM fell from 1.88% to 1.71% (-17bp since last
quarter). We liked commission’s positive trend as well as cost containment (domestic).
Several one-off charges led to a negative NI (€280mn) related to: (1) transfer of the pension
fund to social security €107mn; (2) BES Vida goodwill impairment €193mn; (3) sale of
international portfolio at discount €78mn; (4) Troika’s extra provisioning €43mn. Both (1)
and (3) had a negative impact on trading income.
� Consolidated NII came in line with our estimates (worst on domestic activity and better at an
international level). On an annual basis, it is noteworthy that NIM improved by 7bp as asset
repricing efforts took place (BES benefits from the fact that 2/3 of its portfolio are
corporate). In our opinion, this effort along with possible ECB carry trade opportunities and
swapping more expensive liabilities by ECB funding should help to support margins in the
future despite the high deposit spreads. Domestic staff costs fell 6% in 2011 (please see
footnote inside) which we consider to be positive.
� NPL ratio increased from 2.6% to 2.74% and cost at risk from 6.2% to 6.6%. However,
excluding Troika’s €43mn, credit provisioning improved (excluding that effect, cost of credit
risk would fall to 82bp (vs. 114bp in 3Q11). However, in our opinion this quarterly
improvement should not be seen with great optimism as 2012 will most likely surprise on the
downside rather than on the upside in what economic growth and unemployment are
concerned.
� LtD ratio improved from 147% to 143%. Deposits +1% (qoq), +11% yoy, while loans to
customers -2% qoq, -4% yoy. CT1 improved to 9.2% driven by (1) debt to equity swaps, (2)
RWA (-2% qoq) – deleveraging at banking book+trading book, (3) DTA due to the
recognition of negative actuarial deviations. ECB funding decreased €600mn to €8.7bn in
spite of having tapped for ECB funds in December’s 3yr LTRO. BES eligible assets eligible
for rediscount stands at €18.9bn. Debt maturing in 2012 stands at €3.6bn totally covered by
assets ECB eligible. BES does not intend to use the State’s recapitalization program – also
not a surprise.
� Following this earnings season, we continue to feel comfortable with our Buy (high risk)
recommendation.
(For further details, please refer to our snapshot out this week)
4Q11 Earnings Comment – One-offs hampered earnings (II)
� Following BES’s 4Q11 CC we highlight the outlook for 2012:
- NII - management believes it will be a year very similar to 2011 (vs. our estimates
of +2% growth);
- Cost of credit risk also similar to 2011, i.e., 117bp (vs. our estimates of 110bp);
plans to continue with cost cutting program;
- Angola: focus will be on reducing LtD ratio rather than growing its loan portfolio;
- 120% LtD ratio by 2014, in line with our expectations.
� CT1 improved to 9.2% by YE11. According to our estimates CT1 would stand at 8.8% after
deducting for pension fund effects, Troika’s provisions and MtM of sovereign debt, i.e., a
€137mn shortfall to achieve 9% EBA’s target by June 2012. Furthermore, by YE12 BoP
demands a 10% CT1. According to our estimates, the capital shortfall in this case would be
€570mn. BES has stated that any capital shortfalls will be filled by “market approach, i.e.,
Page 7 of 20
Millennium investment banking Weekly 10 February 2012
deleveraging and capital increase and not by the use of the government lines”. If we assume
that 25% exchange of hybrid instruments, a capital call of €500mn would still be needed.
Additionally, if deleveraging is more aggressive than our expectations (by €1.5bn) the
amount of a capital call would be reduced to €370mn. RWA would have to fall by 8% to
make a capital call unnecessary. As such, we believe that if BoP does not postpone its 10%
CT1 target by 2012, BES will probably increase its capital until the end of the year.
(For further details, please refer to our snapshot out this week)
BES signs a cooperation agreement with China Development Bank
According to the press, BES and China Development Bank signed a cooperation agreement which
defines some common principles, in particular as regards to the establishment of lines of credit,
exchange and training of staff and support of mutual interest projects. Impact: neutral / positive as it fits
BES’s geographical diversification strategy.
TELECOMS
Telecom Sector
France Telecom sells stake in Orange Austria Alexandra Delgado, CFA
Equity Analyst
Hutchison Whampoa agreed to buy Orange Austria for €1.3 bn. Orange Austria is held by private equity
firm Mid Europa Partners (65%) and by France Telecom (35%). Orange Austria is the third-largest mobile
operator in the country with circa 20% market share. Operator “3” held by Hutchison Whampoa has circa
2% of market share. Hutchison Whampoa estimates this deal will generate circa €500 mn in synergies
(cost and capex) and also announced that it will divest assets to Telekom Austria for €390 mn
(frequencies, base station sites and discount operator Yesss!). This deal values Orange Austria at a 6.9x
EV/EBITDA 2011 multiple.
France Telecom announced last year the intention to divest from some European markets and focus on
Africa and the Middle East. The French telco sold in December 2011 Swiss unit Orange Switzerland to
private equity firm Apax Partners for €1.6 bn (6.5x EV/EBITDA 2011).
France Telecom said numerous times it wants to sell the 20% stake in Portuguese operator Sonaecom.
Considering the 6.9x EV/EBITDA 2011 multiple we obtain a value of €2.60 per Sonaecom share. This
compares with our €2.10 price target for Sonaecom (6.0x EV/EBITDA 2011). Given it will be difficult to
find a buyer for the 20% stake in Sonaecom on current context, we believe France Telecom will wait for
the possible merger between Sonaecom and Zon Multimédia and divest from Portugal only afterwards.
Vodafone announces fourth quarter 2011 results
Vodafone group disclosed today third quarter 2011/2012 results, which stands for the fourth
quarter of 2011 (calendar year).
Vodafone added 133k new clients in Spain during the quarter and 38k in Portugal. ARPU
(average revenue per user) trend in Portugal has worsened this quarter (-9.2% YoY in 4Q vs. -
6.7% YoY in 3Q, -7.4% YoY in 2Q and -12.0% in 1Q). ARPU trend in Spain improved slightly vs.
previous quarter (-11.8% YoY in 4Q vs. -12.7% YoY in 3Q, -12.8% YoY in 2Q and -10.1% in 1Q).
Vodafone registered in 4Q an ARPU of €13.9 in Portugal and €21.6 in Spain. Given ARPU’s
evolution in the quarter, service revenue in Portugal (in Euros) dropped 6.0% YoY while in Spain
service revenue fell 8.5% YoY in Spain.
Vodafone abandons Greek merger plans
Vodafone said in a statement this week that it terminated discussions with Wind Hellas relating to a
potential merger. We remind that Vodafone is second-largest mobile player in Greece and that Wind
Hellas is third-largest, and that the two operators were in talks over a merger of their Greek units since
Page 8 of 20
Millennium investment banking Weekly 10 February 2012
last September. This business was being followed closely since it would create the first duopoly in a
European mobile market. We remind that the Swiss Watchdog rejected the merger between Orange
Switzerland and Sunrise (second and third mobile player) back in 2010.
Vodafone and Wind Hellas did not justify the end of the discussions, but the two players probably came
to the conclusion they could not get regulation approval. Vodafone and Wind Hellas may now seek other
ways to cooperate and achieve cost cutting like for example through mobile network sharing agreements.
Telefónica Buy – Medium Risk (Target YE12: €21.00)
Spanish watchdog accelerates MTRs decline Alexandra Delgado, CFA
Equity Analyst
CMT, Spanish telecom watchdog, has announced its final decision on mobile termination rates glide
path: rates will decline to €1.09 cents/ minute in January 2014 (preliminary decision set October 2014)
from current €4 cents/ minute, i.e. a 73% drop in two years. CMT also approved the end in one year and
a half of the asymmetry enjoyed by operator Yoigo, meaning Yoigo will receive the same tariff as other
operators in October 2013 (preliminary decision set April 2013). CMT’s final decision maintains target
price (€1.09 cents/ minute), but anticipates by 9 months the moment that rate will be reached and
postpones the end of the asymmetry that favours Yoigo by 6 months.
The MTRs decline impact on Telefónica is not materially relevant because it benefits from being an
integrated player (wireline+ mobile): lower mobile revenue is compensated by lower interconnection
costs in mobile and in wireline.
Mobile termination rates’ cut is expected in every European country; the EU Commission recommends
that a cost model is used as the basis for mobile termination rate calculation. The usage of cost models
has resulted in the following MTRs in other European countries: €1.20 cents in the Netherlands, €1.08
cents in Belgium, €0.80 cents in France, €0.81 cents in the UK and €0.98 cents in Italy.
We remind that Portuguese watchdog Anacom disclosed in the beginning of October its preliminary
decision on mobile termination rates glide path, proposing a drop to €1.25 cents / minute in November
2012, from current €3.5 cents/ minute. This stands for a 64% drop in little over a year. Anacom’s
preliminary decision was open for public consultation until November 22nd, but no final decision emerged
from Anacom.
The €1.25 cents rate in Portugal is in line with values by countries with similar size, but implementation
timeline is shorter. Anacom’s preliminary decision set the rate should decline to €2.75 cents/ minute on
February 1st; as the final decision has been delayed, so should the beginning of the glide path
implementation.
Telefónica issues €1,500 mn bonds
Telefónica announced this week the issuance of €1,500 mn in bonds, maturing in February 2018 (6
years), with a spread of 300bp over Mid-swap and a coupon of 4.797%.
Last bond issue from Telefónica was in October, in the amount of €1,000 mn, with a maturity of 4
years, spread of 296bp over Mid-swap and a coupon of 4.967%.
Telefónica has followed several Spanish banks (Santander, Sabadell, BBVA and Banesto) that
have taken advantage of the market improvement in the last few days to issue debt.
Portugal Telecom Buy – Medium Risk (Target YE12: €6.30)
Portugal Telecom launches new service, Meo Kanal Alexandra Delgado, CFA
Equity Analyst
Portugal Telecom has launched a new service for the subscribers of Pay TV service Meo (on IPTV
platform), Meo Kanal. This new service allows clients to produce and share multimedia content via TV,
thus creating a television-based social network. The channels created by customers can be public or
private; if they’re private they can only be viewed by users that the client chooses.
Page 9 of 20
Millennium investment banking Weekly 10 February 2012
This service differentiates PT’s offer from the others in the market, which is positive. It creates a
community among Meo clients which leverages the network effect that already exists in mobile service.
For now the service targets residential customers, but the company admits that it can evolve to a
business model at the service of corporations and brands.
Anacom publishes preliminary decision on fibre broadband access
Anacom, the Portuguese regulator, has published this week a preliminary decision on wholesale access
to fixed network and wholesale broadband access. This goal is to update decision approved on January
2009. The project will be on public consultation in the next 30 weekdays.
In January 2009, Anacom has defined that the fixed broadband access market was divided into
competitive areas and non-competitive areas. Competitive areas were defined as areas where there is at
least one alternative operator installed and at least one cable operator. These competitive areas defined
by the regulator included at the time 47% of telephone and 61% of Broadband accesses and PT had
26% of market share in these areas combined. Back in 2009 it was decided that in competitive areas,
where the regulator considered having sufficient competition, PT would no longer have to obey regulatory
ruling on broadband wholesale offering and pricing. This decision was obviously positive for Portugal
telecom that gained broadband pricing flexibility in a significant part of its network and could increase its
commercial aggressiveness in those areas.
The preliminary decision published this week by Anacom applies a similar methodology to fibre. Instead
of using the geographic segmentation between competitive and non-competitive areas, Anacom chose
17 municipalities where the market is competitive; in the remaining districts PT will have to guarantee
virtual access to fibre (bitstreaming). Fibre unbundling is not requested because the regulator concluded
it would not be technically possible. The remaining obligations pertaining access to conducts and copper
unbundled local loop were maintained.
PT has invested in the last years in its FTTH network (circa 1.6 mn houses passed); houses passed with
fibre are located in the vast majority in the municipalities defined by Anacom, so there should not be a
material number of houses PT will have to open access to competitors.
MEDIA
Media Sector
TV Audience Shares Feb12 (Mtd): Cable kept 1st place João Flores;
Equity Analyst
Cable channels kept 1st place in audience shares as expected, increasing gap to 2nd place
(TVI/Media Capital).
� State-owned RTP1 shows lacklustre audience shares (close to 20%) while showing a small
recovery.
� RTP Informação returned to 2nd place in cable news channels (TVI24 is back to 3rd place in
early February).
All-Day SIC TVI RTP1 2: Others
Mtd Fev12* 22.9% 25.8% 20.2% 3.9% 27.3%Jan-12 23.0% 26.6% 19.8% 3.8% 26.9%Chg (pp) MoM -0.1pp -0.8pp 0.4pp 0.1pp 0.4pp
Feb-11 22.9% 26.9% 22.9% 3.9% 23.4%Chg (pp) YoY 0.0pp -1.1pp -2.7pp 0.0pp 3.9pp
*last data February 09th
Source: Marktest; numbers are simple average of monthly data
Page 10 of 20
Millennium investment banking Weekly 10 February 2012
14%
18%
22%
26%
30%
34%
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
Audience Share - all-day (daily)
Wkds SIC TVI RTP1 Others
Source: Millennium investment banking
Increasing difficulties in Media Sector
According to the news, Portuguese Media Groups are postponing/cancelling reality shows next
season, following strong declines in advertising market: i) TVI/Media Capital reality show “Secret
Story” return was postponed from March to September, and now company does not know if it will
return; ii) SIC/Impresa apparently cancelled “The Biggest Loser” 3rd season; iii) state-owned
RTP1 cancelled “MasterChef” 2nd season.
CONGLOMERATE
Sonae Buy – Medium Risk (Target YE12: €0.92)
Sonae targets long term in Spain João Flores;
Equity Analyst
According Sonae`s SR CEO, Mr. Miguel Mota Freitas in an interview to the Spanish press (Cinco
Dias), company targets long term in the Spanish market, thus current tough environment will not
make Sonae SR leaving the country.
Highlights:
i) Openings in 2011: 8 SportZone; 17 Zippy.
ii) Total 124 stores by YE11.
iii) Reached Top3 in Spanish consumer electronics
iv) SR Spanish sales above €300mn in 2011, thus reached 25% (from 20% in
2010) of total SR sales (€1.235mn). Recall SR International (including
sales to franchisees) reached €321mn in 2011.
v) Growing options: Organic; M&A or franchising
vi) Difficult to estimate store openings in 2012
No surprises from SR CEO statements, since company disclosed 2011 Preliminary retail sales
on January 25th. We appreciate Sonae kept focused on Spanish market while increasing scale.
Page 11 of 20
Millennium investment banking Weekly 10 February 2012
Number of Stores
2008 2009 2010 2011Net
Openings2011E Dev. 2012E
Food Retail 290 378 415 432 17 439 -7 460
Continente 37 39 40 40 0 40 0 41Modelo 117 125 130 131 1 133 -2 138Health Area 88 115 133 138 5 143 -5 150Bombocado 43 80 87 96 9 97 -1 103Book.it 4 14 17 18 1 20 -2 22Outlet 1 5 8 9 1 6 3 6Specialized Retail 389 454 498 541 43 550 -9 588
Worten Portugal 125 132 132 134 2 135 -1 138Worten Spain 10 14 25 40 15 37 3 42Vobis 20 17 9 6 -3 6 0 6Worten Mobile 41 48 47 47 0 48 -1 50Sportzone Portugal 66 75 74 74 0 77 -3 81Sportzone Spain 6 14 28 36 8 36 0 43Modalfa 87 99 105 107 2 109 -2 113Zippy Portugal 29 34 36 40 4 40 0 44Zippy Spain 0 10 31 45 14 49 -4 56Loop 5 11 11 10 -1 12 -2 14Food + Specialized Retail 679 832 913 973 60 989 -16 1048
Source: Company data and Millennium investment banking
Sales Area (`000 m2)
2008 2009 2010 2011Net sales
area2011E Dev. 2012E
Food Retail 491 528 544 547 3 552 -5 562
Continente 273 284 288 288 0 288 0 288Modelo 206 218 228 230 2 234 -4 242Health Area 7 11 12 12 0 13 -1 14Bombocado 3 4 5 5 0 5 0 5Book.it 1 5 5 6 1 6 0 7Outlet 2 5 6 6 0 5 1 5Specialized Retail 248 304 362 415 53 422 -7 461
Worten 124 147 181 214 33 215 -1 230Vobis 9 8 5 4 -1 3 1 3Worten Mobile 1 1 1 2 1 1 1 2Sportzone 60 78 94 108 14 112 -4 128Modalfa 41 51 55 58 3 57 1 59Zippy 11 16 24 29 5 33 -4 37Loop 1 2 2 1 -1 2 -1 3Food + Specialized Retail 739 832 907 962 55 974 -12 1,023
Source: Company data and Millennium investment banking
Semapa Buy – High Risk (Target YE12: €8.80)
Valuation Update - Latest figures on Portucel, cement consumption and
country risks
João Mateus;
Equity Analyst
� We updated our valuation from €9.35 to €8.80 per share, for the YE12, with a recommendation of
Buy, High Risk. We included our updated estimates of Portucel, our latest estimates for cement
consumption in Portugal and updated country risk and risk free rates on latest sovereign rate
developments. The group will release the 4Q11 earnings later today, after the market close.
� EBITDAP of Semapa in the 4Q11 may have come 10.4% lower YoY and 4.1% higher QoQ, on the
shown YoY fall and QoQ increase in Portucel. Secil’s EBITDAP should have followed the direction
and relative size of the YoY fall in Portucel, but on a QoQ basis, seasonality added to the negative
trend in cement consumption in Portugal and must have partially offset the positive impact of
Portucel. The over 3pp YoY fall in margin may have been mostly influenced by the increase in
Portucel’s operating costs, but also by the efficiency loss of lower operating rates in cement
production. On a QoQ basis, EBITDAP margin may remain relatively in line. All in all, we believe
that consolidated EBITDAP margin has room to increase about 3pp in the coming years, as long as
Page 12 of 20
Millennium investment banking Weekly 10 February 2012
special tariffs for cogeneration are maintained.
� Latest figures on cement consumption in Portugal show a 15.6% YoY fall in domestic sales of
Cimpor and Secil (GPEARI) in the FY11. We expect a further fall of 8% for 2012. With this, our
estimated reductions for the top-line of Secil are of 4% YoY and 13% QoQ in the 4Q11, not enough
to offset increases in Portucel resulting in an almost 2% YoY increase and an over 5.5% QoQ
increase at the consolidated level. Our estimates update had a positive impact of €0.15 per share in
our valuation, especially driven by Portucel.
� We increased the country risk of Portugal, following the increase in expected sovereign debt, from
10% to 11% and reduced the risk free from 3% to 2.5%, implying a reduction of 0.5pp in expected
long term inflation. These changes had a negative impact of €0.70 per share in our valuation, also
specially driven by the change in Portucel.
� Semapa should continue to keep an acceptable leverage level at expected 2.6x and 2.15x net-debt-
to-EBITDA ratios, respectively for the YE11 and YE12.
(For further details, please refer to our Company Update out this week)
Earnings Highlights - All hopes on emerging markets in cement
� Semapa released this week the 4Q11 earnings. We maintain our valuation of Semapa at €8.80 per
share for the YE12, with a buy, high-risk recommendation.
� EBITDAP came slightly over our estimate (+1.7%) for the 4Q11, 8.9% lower YoY and 5.9% higher
QoQ. The YoY reduction came on lower margins in both Portucel and Secil (-4.4pp and –1.6pp).
The YoY fall in the cement business (-16%) came mainly on lower sales in Portugal and Tunisia,
higher energy costs, lower exports to Líbia and higher low margin exports from Portugal. The QoQ
improvement followed growth in Portucel, hampered but not offset by the strong reduction in Secil’s
EBITDAP (-17%). To the YoY margin reduction contributed lower operating rates, higher energy
costs, higher low margin exports (from Portugal) and lower high margin exports (to Líbia).
� The top line came broadly in line with our estimate (-0.6%) for the 4Q11. Revenues came 1.1%
higher YoY, in the 4Q11, mainly following growth in Portucel (+2.7%) but hampered by the 9.8% fall
in Secil. In the FY11, cement sales in Portugal decreased 5.4% YoY, in Tunisia decreased 14%, in
Lebanon increased 5.2% and in Angola grew 9.6%, despite the plunge in prices. Despite lower
activity in the market, the top-line of ETSA grew 13.2% YoY, but fell 13% QoQ, in the 4Q11.
� The next quarters of Secil will depend on the development of energy costs and cement markets
mainly in Portugal and Tunisia. While the negative demand trend in Portugal continues into 2012,
the situation in Tunisia may bring some positive surprises. Domestic demand strength in Angola
may continue to offset competition from Chinese imports. We still do not consider any cement
capacity increase in this country, since stated investments remain delayed.
� Net financial costs decreased 22% YoY and 60% QoQ, in the 4Q11, on Net Debt reduction,
improved returns on cash invested, and other effects, despite the increase in interest rates. All in
all, stated consolidated Net Debt decreased 15% YoY and Net Debt to EBITDA will be at
comfortable 2.5x at the YE11 and 2x at the YE12.
(For further details, please refer to our Company Update out this week)
Page 13 of 20
Millennium investment banking Weekly 10 February 2012
RETAIL
Retail Sector
Retail Sales in Poland João Flores,
Equity Analyst
Expected positive numbers
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
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
Retail Sales YoY Retail Food YoY
Source: Source: Bloomberg, Millennium investment banking
Survey January* Dec-11 Nov-11 Jan-11 Chg MoM Chg YoY
MoM -24.9% 20.8% -5.5% -28.6% 26.3pp 49.4pp
YoY 12.7% 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
According to Bloomberg`s early estimates, Polish Retail Sales are expected to rise 12.7% YoY in
January 2012, following 8.6% YoY increase in December 2011.
Recall retail sales increased 5.8% YoY In January 2011, penalized by decline in Motor vehicles
& Parts (-4.1% YoY) and lackluster number in Food retail (0% YoY).
Polish retail sales will be disclosed on February 23th (09 am).
Jerónimo Martins Buy – Medium Risk (Target YE12: €15.10)
Valuation Update - Room to pay a special dividend João Flores,
Equity Analyst
� We updated our JM`s valuation. Our price target YE12 was revised downwards to €15.10 from
€15.85, while recommendation kept unchanged Buy (Medium Risk), meaning a 17% upside vs
current price. Changes in Polish estimates had a €0.90 negative effect while changes in Portuguese
estimates had a €0.20 positive effect, reflecting fine-tune in Capex (upwards revised in Poland /
downwards revised in Portugal). We fine-tuned overall sales numbers (revised downwards both
Poland and Portugal) and EBITDA margins (Poland kept unchanged / revised downwards
Portugal). Changes in Euro/Zloty Fx rate (from 4.48 to 4.46) had a minor €0.05 positive effect.
Changes in WACC (Por) had a €0.10 negative effect.
Page 14 of 20
Millennium investment banking Weekly 10 February 2012
� We highlight JM kept trading at premium compared to Europeans mature peers, but we believe it’s
justifiable given Biedronka`s growth potential, strong cash flow generation and solid strategy
(consistent business plan: growing in Poland, resilience in Portugal, starting in Colombia). Company
keep showing strong fundamentals (could improve shareholders return), however it increased its
risk profile: i) unknown effects from changes in management (replacing Chairman and declining role
from Mr. Palha da Sillva), given its responsibility in JM`s recovery from difficult times in early century
and strong charisma in stock market; ii) returning to South America, Colombia (following exit from
Brazil some years ago) is an opportunity to grow in a non-mature market with riskier profile
� JM shows a strong balance (net Debt/EBITDA multiple 0.3x, including Colombia conservative
investment program) which allows company to pay a special dividend in 2013 (scenario: payout
150%, DPS €0.88) even considering investment needed to reach Top 3 in Colombia`s retail market
(€400mn + €400mn). The reason not to do it would be cash need for a possible M&A in Colombia
(which seems likely in order to reach Top 3 in Colombia`s food retail market) or a sharp worsening
of Portuguese and/or Polish environment.
� JM will disclose its 4Q11 Earnings on March 7th (BM). Sales numbers were already disclosed, thus
attentions will be focused on EBITDA (estimated 7.8%).
(For further details, please refer to our Company Update out this week)
OIL & GAS
Galp Energia Buy – High Risk (Target YE12: €18.15)
4Q11 Earnings Highlights - Earnings hampered by R&M Vanda Mesquita,
Equity Analyst
� Galp disclosed its 4Q11 earnings today, before the market opening. A conference call will be
held today at 14:00, Lisbon and UK Time. All in all, the results surprised on the upside due
to the better-than expected performance from G&P business, however the weak
performance from R&M (worse-than expected) offset part of that positive effect. Contrary to
the usual, Galp did not announce the revision of its reserves and contingent resources,
which should be announced in its Capital Markets Day on March 6th 2012 in London. � Adjusted EBITDA for 4Q11 rose by 20% YoY (4% below our estimates) benefiting from a
better performance in the E&P and G&P businesses, but impacted by a more difficult
environment in the R&M business.
� Regarding E&P, rising oil prices helped boost Adjusted EBITDA E&P by 17% YoY. Figures
came 16% below our estimates, as we were more upbeat on net entitlement production for
this quarter. This quarter, production from Brazil accounted for 50% of the net entitlement
production, meaning that rising production from Brazil is offsetting the production drop from
Angola.
� Adjusted EBITDA R&M dropped by 23%YoY mainly due to a lower refining margin per barrel
(close to zero in 4Q11 vis-à-vis to $2.3/bbl in 4Q10) and also lower volumes sold to direct
clients. Figures came 26% below our estimates, as we were more upbeat on crude
processed for the quarter, more optimistic regarding refining margin and refinery cash costs.
� G&P Adjusted EBITDA for 4Q11 rose by 74% YoY to €87mn (vs our estimates of €71mn)
mostly driven by better margins and higher volumes (+6% YoY).
� Adjusted Net income for 4Q11 jumped from €40mn to €79mn. Net income came substantially
higher than our estimates mainly due to lower figures of D&A (D&A from E&P business
dropped, as the rate for amortization assets in Angola was revised downwards) and taxes
paid.
� Capex in the YE11 amounted to € 1.000mn (vs our estimates of €1.284mn), 42% of which
was spent in the conversion of refineries (Matosinhos and Sines).
� Net debt by YE11 stood at €3.504 mn (vs our estimates of €3.800mn).
� Following this set of results, we feel comfortable with our estimates.
(For further details, please refer to our snapshot out today)
Page 15 of 20
Millennium investment banking Weekly 10 February 2012
SEC OR PERFORMANCE
* includes Jeronimo Martins and Sonae
-6.1
-4.3
-2.3
2.3
3.4
11.8
20.1
2.3
-15 -5 5 15 25
Electric Utilities
Motorways
Telecoms
Retail *
Industrials & Other
Oil & Gas
Financials
PSI20
Sector Performance - YTD (%)
-3.3
-1.6
0.4
1.4
3.3
3.9
19.7
2.4
-10 -5 0 5 10 15 20 25
Oil & Gas
Motorways
Retail *
Electric Utilities
Industrials & Other
Telecoms
Financials
PSI20
Sector Performance -1 Week (%)
� This week, the PSI20 went up 2.4%. The best performing sector was Financials with a
19.7% growth and the worst was Oil & Gas with a 3.3% fall.
� On a Ytd basis, the PSI20 went up 2.3%. The best performing sector was Financials with a
20.1% growth and the worst was Electric Utilities with a 6.1% fall.
AGGRESSIVE PORTFOLIO
� This week, Mib Aggressive Portfolio went up 5.08%, outperforming the PSI20 by 2.72pp. 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 6.01%, outperforming the PSI20 by 3.64pp.
Excluding Telefónica, 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
Page 16 of 20
Millennium investment banking Weekly 10 February 2012
Page 17 of 20
Millennium investment banking Weekly 10 February 2012
8 3 4 13 8
Portfolio weekly return
Performance
Contribution Deviation
Sonae Medium 0.46 0.92 102% 3.1% 0.63pp 0.14pp
BES High 1.54 2.25 46% 15.8% 3.16pp 2.69pp
Semapa High 5.88 8.80 50% 9.6% 1.92pp 1.32pp
Portugal Telecom Medium 4.17 6.30 51% 3.8% 0.77pp 0.14pp
Telefónica Medium 13.16 21.00 60% -2.3% -0.47pp -0.94pp
Portfolio 6.01%
PSI 20 2.36%
Gain/loss 3.64pp
Explained by the portfolio 2.56pp
Explained by being underweight in the remaining PSI20 stocks 1.09pp
Next week Portfolio Changes in Portfolio
CompanyRisk
Rating
Market
Pr ice (€)
Price
Target (€)
Upside
PotentialIn 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 20
2011 YTD 1 Month 1 Week
Portfolio - 4.2% - 6.0%
PSI20 -27.6% 2.3% - 2.4%
Gain/loss - - 1.9pp - 3.6pp
Source: Bloomberg; Millennium investment banking
"Mib Liqu idity Portfolio" is composed by the five stocks with a higher upside potential, excluding less liquid stocks.
"Mib Liqu idity Portfolio" is equal-weigh ted and its composition changes at the end o f the last t rading day of each week.
Upside
Potential
Weekly
ReturnCompany
Risk
Rating
Market
Pr ice (€)
Price
Target (€)
96.0
98.0
100.0
102.0
104.0
106.0
30-Dec-11 09-Jan-12 19-Jan-12 29-Jan-12 08-Feb-12
Ytd Return (since inception)
Por tfolio PSI20
Mib LIQUIDITY PORTFOLIO
Page 18 of 20
Millennium investment banking Weekly 10 February 2012
Risk Trnvr (€mn) M Cap EPS P / E EV / Sales P/BV
Rati ng 3m 6m (€ mn) Week 1M 3M 1 2M YTD 20 10 2 011E 2012E 2010 2011E 2012E 2010 2011E 2012E 2010 2 011E 2012E 201 0 2011E 201 1E
PSI 20 5,6 20 - - 50,30 0 2.36 2.0 -0 .5 -2 9.4 2.3
Financials 49.0 46.7 12,20 5 5.8 13.5 23 .1 -3 7.6 8.8 - - - - - - - - - - - - - - -
Banco Popular (3) 3 .57 - - - - 17.6 19.8 5,05 1 1.7 5.6 18 .8 -1 7.1 1.4 0. 41 0 .35 0.31 9.5 - - - - - - - - 3.9% - -
Bankinter 5 .19 5 .10 -1.7% Reduce H igh 6.1 6.4 2,47 5 -2.6 9.2 29 .3 1 1.9 9.3 0. 32 0 .38 0.30 13.1 12.7 17 .0 - - - - - - 3.0% 3.2% 0.8
BCP (1) 0 .18 - - - - 15.2 12.4 1,28 3 25.4 35.9 78 .0 -6 8.5 30.9 - - - - - - - - - - - - - - -
BES 1 .54 2 .25 46.1% Bu y H igh 8.6 6.8 2,25 0 15.8 29.4 23 .2 -4 9.0 14.1 0. 41 -0 .06 0.14 7.0 loss 10 .7 - - - - - - 4.4% 0.0% 0.4
BPI (3) 0 .57 - - - - 0.6 0.8 56 0 19.2 15.5 43 .3 -5 6.5 17.7 0. 19 0 .13 0.15 6.7 - - - - - - - - 0.0% - -
Telecoms 598.4 760.3 65,06 1 -1.9 -1.7 -5 .8 -3 0.0 -1.8 - - - 5.4 14.2 9 .0 2.6 2.2 2.2 7.2 7 .1 6.2 8.7% 9.9% 2.4
Telefó nica 13 .16 21 .00 59.6% Bu y Med ium 585.5 747.2 60,03 9 -2.3 -1.7 -5 .6 -2 8.5 -1.7 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% 2.8
Portu gal Telecom 4 .17 6 .30 51.1% Bu y Med ium 11.8 11.8 3,73 8 3.8 -3.7 -14 .9 -4 8.8 -6.3 6. 60 0 .51 0.44 1.2 8.7 9 .4 2.7 2.0 1.8 6.9 5 .5 5.3 16.5% 14.6% 1.0
Zon Multim edia 2 .62 3 .70 41.5% Bu y Med ium 0.9 1.0 80 8 4.1 6.3 34 .3 -3 0.3 12.6 0. 12 0 .10 0.10 28.9 23.1 27 .0 2.2 1.9 1.9 6.3 5 .2 5.1 4.7% 6.9% 3.6
Sonaecom 1 .30 2 .10 62.0% Bu y H igh 0.2 0.3 47 5 4.9 2.0 2 .9 -5.1 6.7 0. 11 0 .17 0.13 12.0 7.3 10 .0 0.9 1.0 1.0 4.3 4 .4 4.2 3.7% 4.8% 0.5
Media 0.0 0.1 26 3 0.4 -14.6 16 .0 -5 0.1 -11.2 - - - 21.4 5.4 5 .3 1.7 1.0 0.9 11.0 5 .6 5.3 1.1% 7.2% 0.8
Impresa 0 .48 0 .38 -21.0% Sell H igh 0.0 0.0 8 1 0.0 -15.8 14 .3 -5 2.5 2.1 - - - - - - - - - - - - - - -
Media Cap ital (2) 1 .37 2 .70 97.1% - - 0.0 0.0 11 6 0.0 -17.0 2 .2 -6 0.9 -17.0 0. 15 0 .24 0.25 27.3 5.6 0 .0 1.8 0.8 0.7 11.1 3 .8 3.6 1.9% 14.3% 0.8
Cofina 0 .65 0 .48 -26.5% Sell H igh 0.0 0.0 6 7 1.6 -8.5 54 .8 8.3 -14.5 0. 05 0 .09 0.07 14.1 7.0 9 .6 1.6 1.2 1.2 9.6 7 .5 9.0 1.4% 3.6% 4.2
Technology
Indra 10 .55 13 .90 31.8% Bu y H igh 10.6 10.9 1,73 2 -0.9 4.4 -9 .1 -2 5.5 7.2 1. 15 1 .13 1.10 11.1 nm 9 .6 0.9 0.9 0.8 7.4 7 .3 6.8 5.3% 5.7% 1.6
Novabase 2 .17 4 .10 88.9% Bu y H igh 0.0 0.0 6 8 4.8 6.9 10 .7 -2 5.9 3.8 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 16.4 18.5 13,16 7 1.5 -4.1 -0 .7 -1 5.9 -5.9 - - - 11.8 9.8 9 .8- 2.5 2.4 2.3 8.5 8 .1 7.6 - 5.0% 5.7% 0.9
EDP 2 .23 3 .05 36.5% Bu y Low 13.6 15.7 8,16 9 1.1 -4.7 -2 .9 -2 1.2 -6.6 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 Re nováveis 4 .44 6 .00 35.3% Bu y Low 2.4 2.5 3,87 0 2.9 -4.5 2 .2 -1.4 -6.2 0. 09 0 .14 0.18 47.2 33.1 24 .4 8.2 7.5 6.6 11.0 10 .4 9.0 0.0% 0.0% 0.7
REN 2 .11 2 .40 13.5% Bu y Low 0.3 0.3 1,12 9 -0.7 2.4 5 .7 -1 7.3 0.2 0. 21 0 .23 0.27 12.5 9.3 8 .0 3.7 3.8 4.4 8.3 7 .7 7.6 6.5% 6.4% 1.1
Motorways
Brisa 2 .42 3 .35 38.2% Bu y Low 2.5 2.9 1,45 2 -2.2 -5.2 8 .0 -5 3.6 -4.9 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 1,67 1 5.8 5.1 -1 .2 - - - - - - - - - - - - - - - - -
Sonae 0 .46 0 .92 101.5% Bu y Med ium 0.8 0.9 91 8 3.1 0.4 -6 .5 -4 4.4 0.0 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 .88 8 .80 49.8% Bu y H igh 0.3 0.4 69 5 9.6 12.1 6 .7 -3 6.1 9.4 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% 0.7
Sonae Capita l 0 .23 0 .28 21.7% Bu y H igh 0.1 0.0 5 8 4.5 4.5 0 .0 -4 5.2 -14.8 -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 Ma rtins 13 .13 15 .10 15.0% Bu y Med ium 7.2 9.8 8,25 9 0.1 1.9 1 .9 1 3.4 2.6 0. 47 0 .56 0.62 4.8 23.0 21 .1 0.9 0.9 0.8 12.6 12 .7 11.2 0.0% 2.2% 7.8
Industrials 1.7 2.2 5,31 5 1.4 2.6 1 .6 -9.2 -0.1 - - - - - - - - - - - - 4.4% - -
Sonae Ind ustr ia 0 .68 1 .95 188.5% Bu y H igh 0.1 0.1 9 5 2.9 0.9 12 .5 -6 3.4 6.5 -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 .17 1 .20 2.5% Neutra l H igh 0.1 0.2 24 0 1.0 -0.4 -4 .4 -30 -2.4 0. 65 0 .12 0.04 2.6 10.3 30 .6 2.2 2.1 2.3 6.8 8 .4 9.8 0.0% 1.7% 1.7
Portu cel 2 .02 2 .45 21.2% Bu y Med ium 0.4 0.5 1,55 2 7.0 8.6 11 .7 -2 0.6 10.0 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% Bu y Med ium 1.1 1.4 3,41 2 -1.4 -0.1 -2 .7 3.5 -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
Cons truction 0.2 0.2 35 8 -2.0 10.3 12 .0 -3 6.5 12.0 - - - - - - - - - - - - - - -
Mota-Engil 1 .21 1 .45 19.6% Bu y H igh 0.2 0.2 24 8 -2.8 16.6 17 .2 -4 0.7 17.2 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 .10 - - - - 0.0 0.0 11 0 0.0 -1.8 1 .9 -2 4.1 1.9 -0. 55 - - loss - - 1.0 - - 10.0 - - 0.0% - -
Oil & Gas
Galp Energia 12 .72 18 .15 42.7% Bu y H igh 16.7 17.6 10,54 8 -3.3 2.0 -14 .3 -1 3.9 11.8 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 h ave a recommendat ion on BCP, as Mib is a registered trademark of BCP; (2) Un rated due to low free-flo at; (3) Under Revision
2012/02 /10Lates t
Pr (€ )
Targe t
YE12RatingUpsd
Change (%) EV / EB ITDA Di v Yield
Page 19 of 20
Millennium investment banking Weekly 10 Feb ruary 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.
� 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 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.
OFFICE LOCATIONS Millennium investment banking
Av. José Malhoa, Lote 27 - 5
1099-010 Lisboa
Portugal
Telephone +351 21 003 7811
Fax +351 21 003 7819 / 39
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
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
Rodrigo Roque Pinho
Equity Derivatives +351 21 003 7890 Jorge Pina (Head)
Ana Lagarelhos
Diogo Justino
Marco Barata
Maria Cardoso Baptista, CFA
top related