top stories weekly - particulares - millenniumbcp · oi’s reduction of shareholder remuneration...

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

António Seladas, CFA

+351 21 003 7826

[email protected]

Av. José Malhoa, Lote 27

1099-010 Lisboa

Tel / Fax: +351 21 003 7800 / 09

TOP STORIES

Portugal Telecom dropped 9% this week. PT’s 2Q performance in the domestic market was ok, but Oi’s

earnings were disappointing. PT also announced a dividend cut, to €0.10/ share from €0.325, following

Oi’s reduction of shareholder remuneration to c. R$0.5 bn from R$2.0 bn. The market already anticipated a

dividend cut, but a reduction to €0.10 is more aggressive than we expected (page 4).

OUT THIS WEEK Snapshots/Company Reports – Portugal Telecom, Sonae

Price Target / Recommendation Changes – Sonae, Altri

WEEK AHEAD

Wednesday – Sonae’s 2Q13 Earnings

PORTFOLIOS

This week, Mib Aggressive Portfolio went up 4.77%, outperforming the PSI20 by 3.85pp. BES and

Novabase were the main contributors for this outperformance (page 8).

This week, Mib Liquidity Portfolio went up 0.9%, underperforming the PSI20 by 0.01pp. Portugal

Telecom was the main contributor for this underperformance (page 9).

Stock Market Last 1W YTD 2012 Daily Vol. (€mn) 1W 1M 6M 2012

PSI 20 6,021 0.9% 6.47% 2.93% PSI 20 127 103 105 66

IBEX 35 8,821 1.0% 8.00% -4.66% IBEX 35 1,509 1,828 2,436 2,578

Euro Stoxx 50 2,854 1.0% 8.28% 13.79% Euro Stoxx 50 5,276 6,101 7,648 7,867

Forex Rates Last 1W YTD 2012 Interest Rates Last 1W Chg YE12

EUR/USD 1.33 -0.2% 1.11% 1.97% Euribor 6m 0.34% 0.34% 0bp 0.32%

EUR/GBP 0.85 -0.9% 4.55% -2.30% 10Y Bond PT 6.37% 6.57% -20bp 7.01%

EUR/BRL 3.15 3.8% 16.39% -10.68% 10Y Bond SP 4.36% 4.50% -14bp 5.26%

-24.7

-22.2

-9.8

-2.6

-2.5

42.7

49.3

50.0

73.6

109.7

-60 -20 20 60 100 140

Portugal Telecom

Cofina

Cimpor

Inditex

EDP Renováveis

BCP

Zon Multimedia

Sonae Capital

Mota-Engil

Impresa

Best & Worse Performers - YTD (%)

-9.0

-2.7

-1.7

-0.9

-0.8

2.6

4.4

7.0

7.1

12.9

-15 -10 -5 0 5 10 15

Portugal Telecom

Sonaecom

Altri

Portucel

Sonae

BPI

Indra

BCP

Novabase

BES

Best & Worse Performers -1 Week (%)

IBERIA

16 Aug

ust 2

013

WEEKLY

EQUITY RESEARCH

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Millennium investment banking Weekly 16 Augus t 2013

CHANGES

EARNINGS

Rating Target Rating Target

Sonae Buy 1.15 Buy 1.00 Valuation Update

Altri Reduce 1.75 Sell 1.75 Price performance

MotivePreviousNew

Galp Energia * 15-07 BM 14-10 BM

Portucel 19-07 AM 21-10 AM

Media Capital 23-07 AM n.a.

BPI 24-07 AM 22-10 AM

Iberdrola 24-07 BM 23-10 BM 23-10-2013

EDP Renováveis 24-07 BM 30-11 BM

Zon Multimedia 24-07 BM 30-10 BM

Sonaecom 24-07 AM n.a.

Telefónica 25-07 BM 08-11 BM

Indra 25-07 AM n.a.

EDP 25-07 AM n.a.

Glintt 26-07 12-11

BES 26-07 AM 28-10 AM

Galp Energia 29-07 BM 28-10 BM 05-03-2013

BCP 29-07 AM 04-11 AM

Impresa 29-07 AM 28-10 AM

Novabase 29-07 AM 07-11 AM

Sonae Capital 30-07 AM 20-11 AM

Sonae Indústria 31-07 AM 14-11 AM

Jerónimo Martins 31-07 BM 31-10 BM

REN 01-08 AM 06-11 AM

Martifer 01-08 AM 07-11 AM

Altri 01-08 AM n.a.

Cofina 01-08 AM n.a.

Sonae Sierra 08-08 AM 07-11 AM

Reditus 08-08 28-11

Portugal Telecom 14-08 BM 14-11 BM

Soares da Costa 14-08 AM n.a.

ESFG 16-08 BM n.a.

Sonae 21-08 AM 13-11 AM

Cimpor 26-08 AM 25-11 AM

Mota-Engil 29-08 AM 21-11 AM

Ibersol 30-08 AM 19-11 AM

Semapa 30-08 AM 01-11 AM

SAG 30-08 n.a.

AM - After market; BM - Before market; n.a. - Not available; (e) Expected;

Company Investor Day2Q2013 3Q2013

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DIVIDENDS

Gross Payment Ex-Div Last Year

DPS Date Date Pay Date Gross DPS

Corticeira amorim 0.100 4-Apr-13 30-Apr-13 25-Apr-13 Approved - 0.000

Media Capital 0.134 29-Apr-13 May-13 - Approved 19-Apr-12 0.069

Cofina 0.010 18-Apr-13 8-May-13 3-May-13 Approved 11-May-12 0.010

J. Martins 0.295 10-Apr-13 8-May-13 3-May-13 Approved 30-Apr-12 0.275

F Ramada 0.090 18-Apr-13 9-May-13 6-May-13 Approved 25-May-12 0.080

Galp Energia** 0.120 22-Apr-13 16-May-13 13-May-13 Approved 24-May-12 0.200

Portugal Telecom 0.325 19-Apr-13 17-May-13 14-May-13 Approved 25-May-12 0.435

Altri 0.025 18-Apr-13 17-May-13 14-May-13 Approved 25-May-12 0.020

Sonaecom 0.120 24-Apr-13 22-May-13 17-May-13 Approved 24-May-12 0.070

EDP 0.185 6-May-13 23-May-13 20-May-13 Approved 16-May-12 0.185

EDP Renováveis 0.040 23-Apr-13 23-May-13 20-May-13 Approved - 0.000

Zon Multimedia 0.120 24-Apr-13 24-May-13 21-May-13 Approved 25-May-12 0.160

Mota-Engil 0.110 24-Apr-13 24-May-13 21-May-13 Approved 17-May-12 0.110

REN 0.170 30-Apr-13 27-May-13 22-May-13 Approved 20-Apr-12 0.169

Sonae 0.033 30-Apr-13 30-May-13 27-May-13 Approved 30-May-12 0.033

Novabase 0.100 2-May-13 3-Jun-13 29-May-13 Approved 4-Jun-12 0.030

Ibersol 0.055 6-May-13 5-Jun-13 31-May-13 Approved 11-May-12 0.055

Portucel 0.160 21-May-13 6-Jun-13 3-Jun-13 Approved 20-Apr-12 0.221

Semapa 0.255 31-May-13 14-Jun-13 11-Jun-13 Approved 11-Jun-12 0.255

Teixeira Duarte 0.015 25-May-13 18-Jun-13 13-Jun-13 Approved - 0.000

Cimpor 0.016 23-May-13 24-Jun-13 19-Jun-13 Approved 3-Aug-12 0.166

Iberdrola* 0.030 22-Mar-12 3-Jul-13 3-Jul-13 Approved 23-Jul-12 0.160

Indra 0.340 26-Jun-13 9-Jul-13 9-Jul-13 Approved 4-Jul-12 0.680

Iberdrola* 0.130 - 22-Jul-13 22-Jul-13 Approved 0-Jan-00 0.000

Galp Energia** 0.144 - 1-Sep-13 - Estimated 18-Sep-12 0.120

Novabase**** 0.500 25-Sep-13 1-Oct-13 - Proposed - 0.000

Telefónica** 0.350 30-May-13 1-Nov-13 - Approved - 0.000

BCP *** - 20-May-13 - - - - 0.000

BES 0.000 27-Mar-13 - - Approved - 0.000

BPI *** - 24-Apr-13 - - - - 0.000

Banif 0.000 - - - - - 0.000

ESFG 0.000 26-Apr-13 - - Approved - 0.000

Telefónica** 0.000 30-May-13 - - Approved 18-May-12 0.530

Impresa 0.000 23-Apr-13 - - Approved - 0.000

Glintt 0.000 23-May-13 - - Approved - 0.000

Brisa 0.000 19-Mar-13 - - Approved - 0.000

Inapa 0.000 10-Apr-13 - - Approved - -

Sonae Industria 0.000 12-Apr-13 - - Approved - 0.000

Sonae Capital 0.000 18-Mar-13 - - Approved - 0.000

Soares da Costa - 30-May-13 - - - - 0.000

Martifer 0.000 10-Apr-13 - - Approved - 0.000

SAG 0.000 6-May-13 - - Approved - 0.000

Reditus 0.000 31-May-13 - - Approved - 0.000

na - Not available

Estimate: Estimated by the Millennium investment banking

Proposed: Announced by the company to be proposed in AGM

Approved: Dividend already approved by AGM

* Company pays dividends twice a year (the 1st one already paid in January)

** Company pays dividends twice a year.

*** The banks that have resquested COCO's are restrained from paying dividends

**** Extraordinary dividend

Company AGM Obs

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NEXT WEEK RESULTS

Sonae Buy – Medium Risk (Target YE13: €1.15)

2Q13 Earnings Preview João Flores

Equity Analyst

Sonae will disclose its 2Q13 Earnings on August 21st (after market close).

We expect consolidated sales will slightly decline 1.2% YoY, penalized by specialized retail (non-food unit

will keep facing a tough scenario both in Portugal and Spain) and an unfavourable comparison basis

(Ester effect: Ester day was on April 08th last year while it was on March 31st in 2013). We estimate

EBITDA will increase 0.3% YoY while EBITDA margin is expected to increase 0.2pp YoY to 11.9% (flat

growth in Food and Specialized retail). Below operational numbers, indirect results (from Sonae Sierra)

will penalized Sonae`s numbers. Recall Sonae Sioerra and Sonaecom already disclosed 2Q13 Earnings,

thus attentions will be focused on retail.

TELECOMS

Portugal Telecom Buy – Medium Risk (Target YE13: €4.00)

2Q13 Earnings Comment – Domestic performance ok, but disappointing

Brazil; dividend cut to €0.10/ share

Alexandra Delgado, CFA

Equity Analyst

� PT announced this morning its 2Q13 Earnings. Revenues, EBITDA (exc. PRBs) and net income

reached €1,540 mn, €491 mn and €257 mn in the quarter, respectively. Net income benefited from

the capital gain derived from the sale of CTM (€310 mn). EBITDA was 6% below our estimate due to

a low EBITDA delivered by Brazilian Oi.

� Revenues in Portugal dropped 4.8% YoY in 2Q13, showing improvement vs. previous quarter (-6.8%

YoY). Service revenues in the residential segment advanced only 0.5% in 2Q13, much lower than

previous quarter (+4.1% YoY). Pay TV and BB net adds decelerated significantly. On a positive note,

service revenue in the personal segment continues to improve (-10.0% YoY in 2Q13 vs. -11.4% YoY

in 1Q13) and post-paid net adds continue strong thanks to 4play adoption. EBITDA in Portugal

declined 9.7% in 2Q13, but was still 2% above our estimate.

� Oi reported its 2Q earnings yesterday after market closing. Oi’s mobile revenue evolution was

disappointing, EBITDA was quite low, and FCF in 1H13 was extremely negative. Dividend cut (to

R$0.5 bn per year) ends uncertainty on this topic, but concerns on operational performance remain.

� PT announced it will cut its dividend to €0.10/ share in fiscal years 2013 & 2014, from previous

€0.325/ share. We were estimating PT would cut its dividend to €0.20/ share, so this was more

aggressive than we thought. This follows Oi’s dividend cut.

� The CFO clarified that since Oi will be paying R$500 mn as interim dividends in October 2013, there

is no issue with TmarPart servicing its debt in the short term. PT will in the meantime discuss this

issue with partners in Oi. PT’s share of TmarPart net debt is c. €250mn.

� The CFO said that out of the $280 mn dividends pending from Angola (Unitel), $94 mn were already

approved by Bank of Angola.

� In summary, performance in the domestic market was ok but Oi’s earnings were disappointing. For

now, we maintain the price target for Portugal Telecom at €4.00 (YE13), with a Buy, Medium Risk

recommendation.

Sales YoY EBITDA YoY EBIT YoY Net Profit YoY

1,275 -1% 152 0% 59 -5% 16 -8%

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(For further details, please refer to our snapshot out this week)

Oi’s 2Q13 Earnings Comment – Dividend cut as expected; low EBITDA on bad debt and salaries

increase

� Oi reported yesterday its 2Q13 earnings. Consolidated Net Revenues in the quarter reached R$7,073

mn, which represents a 2.4% YoY increase (+3.5% YoY in 1Q13).

� Residential revenue grew 4.5% YoY in 2Q13, slightly below 1Q13 trend (+5.2% YoY). Personal

mobility revenue grew only 1.2% YoY (vs. 10.0% in 1Q13 & 14.6% in 4Q12) and MTRs decrease

only partially explains the deceleration. Business/ corporate revenues grew 4.1% YoY in 2Q13, much

better than in 1Q13 (-1.5% YoY). But performance in mobile was disappointing: mobile service

revenue (personal plus corporate & SMEs) dropped 1.6% YoY in 2Q13 (+0.8% in 1H13), worse than

market average.

� EBITDA was R$1,797mn, 18% below our estimates, impacted by higher bad debt provisions and

increased personnel expenses. EBITDA margin was 25.4% in the quarter, -5.7pp YoY.

� Net Debt was R$29.5 bn by the end of 1H13 vs. R$25.1 bn by YE12. Net debt increase results from:

negative FCF (-R$4.5 bn), dividend payment (-R$1.0 bn) and asset sales (+R$1.1 bn).

� Oi announced the revision of its shareholder remuneration policy: Oi will pay c. R$500mn for fiscal

years 2013 to 2016 vs. previous R$2bn per year.

� Oi is focused on improving cash flow generation. The CEO said they will continue to push for revenue

growth, but want to grow with profitability. Will focus on reducing current bad debt levels to half. On

the cost front, the company has several ongoing initiatives to increase productivity. Finally, Oi wants

to improve capex management, aligning it to the company’s CF generation. The CEO expects capex

to be below R$6bn in the next years.

� In summary, revenue growth is slowing and performance on mobile is disappointing; EBITDA was

quite low. More, FCF generation in 1H13 was extremely negative. Dividend cut brought definition on

the shareholder remuneration topic and increased financial flexibility is positive. However, concerns

on operational performance remain.

(For further details, please refer to our snapshot out this week)

CONGLOMERATE

Sonae Buy – Medium Risk (Target YE13: €1.15)

Update Valuation – From Holding to Retailer? João Flores;

Equity Analyst

� We fine-tuned our Sonae`s estimates based on latest data and updated WACC. Our price target

was revised upwards to €1.15 YE13from €1.00 YE13, while recommendation was kept unchanged

at Buy (Medium Risk), with a 34% upside vs current price. Upwards revision strongly benefited from

updated WACC (and food retail numbers) which offset negative effect from updated specialized

retail and retail properties estimates.

� We believe current stock price makes Sonae an attractive stock, since company keeps showing

strong resilience in Portugal while rethinking international expansion (focused on capital

light/franchising while slowdown stores openings in Spain). Furthermore, company keeps showing

debt reduction while is concluding long awaited M&A in telecoms.

� Updated valuation: i) updated estimates had a €0.05 negative effect on price target since upwards

revision in Sonae MC (higher top line and EBITDA margin) was offset by downwards revisions in

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Sonae SR and Sonae RP. Consolidated Sales in 2013 were slightly revised downwards (from

€5.304Bn to €5.314Bn); Food retail upwards revised (from €3.287Bn to €3.315Bn: EBITDA margin

to 7.7% from 7.2%), Specialized retail downwards revised (from €1.167Bn to €1.141Bn: EBITDA

margin to -2.0% from -0.5%); ii) Sonaecom updated valuation (from €2.40 YE13 to €2.20 YE13) had

a €0.05 negative effect on Sonae`s price target; iii) updated WACC (Portugal sovereign yield was

revised to 7% from 10%) had a €0.25 positive effect on Sonae`s price target.

� Using Sonaecom current stock price (€1.762/share) and applying a 20% discount on Sonae Sierra

NAV (we are using 10%), Sonae`s price target would decline to €1.10 (28% upside).

� Overall, company is benefiting from food retail strong numbers while is fine-tuning its specialized

retail brands (Sportzone, Modalfa, Zippy) in order to leverage sales, since opening new (own) stores

is not an option at moment. Following the merger between Zon and Optimus and assuming Sonae

will exercise the option to buy Orange 20% stake in Sonaecom (increasing its stake to 74%) we

believe Sonae will try to simplify its holding structure (take over and spin-off of Sonaecom?) to focus

on retail and remove holding discount (we are using 10%). Furthermore, Sonae would be easily

compared to its retail peers. Excluding Holding discount, Sonae`s price target would rise to €1.25.

� Strategy based on Spain (and Angola) will not definitely be a growth driver for the next years.

Operational numbers in food retail keep showing positive surprises, reflecting a management

increasingly focused on a successful business model. Sonae is fine-tuning its specialized retail

brands (Sportzone, Modalfa, Zippy, Well`s) in order to leverage sales, since opening new (own)

stores is not an option at moment.

(For further details, please refer to our company report out this week)

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SECTOR PERFORMANCE

� This week, the PSI20 went up 0.9%. The best performing sector was Financials, plus 8% and

the worst was Telecoms & IT, minus 6.3%.

� On a Ytd basis, the PSI20 went up 6.5%. The best performing sector was Industrials & Other,

plus 23.5% and the worst was Media, minus 22.2%.

AGGRESSIVE PORTFOLIO

� This week, Mib Aggressive Portfolio went up 4.77%, outperforming the PSI20 by 3.85pp. BES

and Novabase were the main contributors 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 0.9%, underperforming the PSI20 by 0.01pp.

Portugal Telecom was the main contributor 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.

* includes Jeronimo Martins and Sonae

-22.2

-9.4

6.6

6.8

8.8

12.8

23.5

6.5

-35 -25 -15 -5 5 15 25

Media

Telecoms & IT

Oil & Gas

Financials

Retail *

Electric Utilities

Industrials & Other

PSI20

Sector Performance - YTD (%)

-6.3

-0.7

0.0

0.0

0.0

0.3

8.0

0.9

-10 -8 -6 -4 -2 0 2 4 6 8 10

Telecoms & IT

Oil & Gas

Industrials & Other

Retail *

Media

Electric Utilities

Financials

PSI20

Sector Performance -1 Week (%)

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Millennium investment banking Weekly 16 August 2013

8 3 4 13 8

Portfolio weekly return

Performance

Contribution Deviation

Novabase High 2.85 4.20 47% 7.1% 1.43pp 1.25pp

Sonae Industria High 0.50 0.77 54% 2.4% 0.49pp 0.31pp

EDP Renováveis Low 3.89 5.45 40% 1.1% 0.22pp 0.03pp

Telefónica Medium 10.99 14.60 33% 0.2% 0.05pp -0.14pp

BES High 0.91 1.05 16% 12.9% 2.58pp 2.40pp

Portfolio 4.77%

PSI 20 0.91%

Gain/loss 3.85pp

Explained by the portfolio 3.84pp

Explained by being underweight in the remaining PSI20 stocks 0.01pp

Next week Portfolio Changes in Portfolio

CompanyRisk

Rating

Market

Price (€)

Price

Target (€)

Upside

PotentialIn Out

Sonae Industria High 0.50 0.77 54% PT Telefónica

Novabase High 2.85 4.20 47% Sonae BES

Portugal Telecom Medium 2.82 4.00 42%

EDP Renováveis Low 3.89 5.45 40%

Sonae Medium 0.85 1.15 35%

Return vs. PSI 20

2009 2010 2011 2012 YTD 1 Month 1 Week

Portfolio 71.9% -7.30% -36.6% 22.1% 27.6% 18.0% 4.8%

PSI20 33.5% -10.30% -27.6% 2.9% 6.5% 9.0% 0.9%

Gain/loss 38.5pp 3.0pp -9.0pp 19.2pp 21.1pp 9.0pp 3.9pp

Source: Bloomberg; Millennium investment banking

"Mib Aggressive Portfolio" is composed by the five stocks with a higher upside potential of our coverage universe.

"Mib Aggressive Portfolio" is equal-weighted and its composition changes at the end of the last trading day of each week.

The portfolio YTD return was recalculated on the week of March 15.

Upside

Potential

Weekly

ReturnCompany

Risk

Rating

Market

Price (€)

Price

Target (€)

Mib AGGRESSIVE PORTFOLIO

90.0

100.0

110.0

120.0

130.0

31/Dec 14/Mar 26/May 07/Aug

Ytd Return

Portfolio PSI20

50.0

100.0

150.0

200.0

250.0

300.0

23/Jul 24/Jan 28/Jul 28/Jan 01/Aug 02/Feb 05/Aug

Return since inception (30th July 2004)

Portfolio PSI20

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8 3 4 13 8

Portfolio weekly return

Performance

Contribution Deviation

EDP Renováveis Low 3.89 5.45 40% 1.1% 0.22pp 0.03pp

Telefónica Medium 10.99 14.60 33% 0.2% 0.05pp -0.14pp

BES High 0.91 1.05 16% 12.9% 2.58pp 2.40pp

Portugal Telecom Medium 2.82 4.00 42% -9.0% -1.81pp -1.13pp

Galp Energia High 12.54 16.20 29% -0.7% -0.13pp -0.08pp

Portfolio 0.90%

PSI 20 0.91%

Gain/loss -0.01pp

Explained by the portfolio 3.84pp

Explained by being underweight in the remaining PSI20 stocks -3.86pp

Next week Portfolio Changes in Portfolio

CompanyRisk

RatingMarket Price (€)

Price

Target (€)

Upside

PotentialIn Out

Portugal Telecom Medium 2.82 4.00 42% Sonae BES

EDP Renováveis Low 3.89 5.45 40%

Sonae Medium 0.85 1.15 35%

Telefónica Medium 10.99 14.60 33%

Galp Energia High 12.54 16.20 29%

Return vs. PSI 20

2011 2012 YTD 1 Month 1 Week

Portfolio - 22.6% 19.1% 13.7% 0.9%

PSI20 -27.62% 2.9% 6.5% 9.0% 0.9%

Gain/loss - 19.7pp 12.6pp 4.7pp 0.0pp

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.

The portfolio YTD return was recalculated on the week of March 15.

Upside

Potential

Weekly

ReturnCompany

Risk

RatingMarket Price (€)

Price

Target (€)

Mib LIQUIDITY PORTFOLIO

94.0

99.0

104.0

109.0

114.0

119.0

124.0

31/Dec 12/Feb 27/Mar 09/May 21/Jun 03/Aug

Ytd Return

Portfolio PSI20

75.0

85.0

95.0

105.0

115.0

125.0

135.0

145.0

155.0

30/Dec 25/Apr 20/Aug 15/Dec 11/Apr 06/Aug

Return since inception (31th December 2011)

Portfolio PSI20

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Risk Trnvr (€mn) M Cap EPS P / E EV / Sales P/BV

Rating 3m 6m (€ mn)Week ago Week 1M 3M 12M YTD 2012 2013E 2014E 2012 2013E 2014E 2012 2013E 2014E 2012 2013E 2014E 2012 2013E 2013E

PSI 20 6,021 - - 53,518 0.91 10.6 -0.7 24.2 6.5

Financials 103.8 97.7 18,670 6.1 38.9 20.7 25.3 30.8 - - - - - - - - - - - - - - -

BCP (1) 0.11 - - - - 9.7 12.5 2,109 7.0 20.2 0.9 76.6 42.7 - - - - - - - - - - - - - - -

BES 0.91 1.05 15.5% Buy High 12.4 15.2 3,652 12.9 49.8 16.2 71.5 1.6 0.03 -0.02 0.03 31.9 loss 31.3 - - - - - - 0.0% 0.0% 0.4

BPI 1.04 1.25 20.7% Buy High 1.4 1.6 1,440 2.6 13.3 -3.5 88.4 9.9 0.18 0.05 0.03 5.3 22.8 29.9 - - - - - - 0.0% 0.0% 0.7

Telecoms 275.7 322.2 54,534 -0.3 11.9 -2.2 5.2 6.5 - - - 12.0 13.7 13.7 1.8 2.0 2.0 5.5 6.0 6.1 0.7% 6.7% 1.9

Telefónica 10.99 14.60 32.9% Buy Medium 251.9 300.1 49,993 0.2 12.5 -1.7 5.1 7.8 0.87 0.78 0.82 11.7 14.1 13.4 1.9 2.0 2.1 5.5 6.1 6.2 0.1% 6.8% 2.2

Portugal Telecom 2.82 4.00 41.6% Buy Medium 19.6 19.0 2,532 -9.0 1.4 -20.2 -20.1 -24.7 0.27 0.42 0.12 14.0 6.8 24.0 1.8 1.8 1.8 5.4 5.4 5.3 8.7% 7.1% 1.0

Zon Multimedia (3) 4.44 4.30 -3.0% Reduce Medium 3.6 2.4 1,371 -0.6 15.5 27.8 113.6 49.3 0.12 0.15 0.18 24.8 28.8 24.3 2.0 1.6 2.1 5.4 4.6 6.0 4.0% 2.7% 1.1

Sonaecom 1.74 2.20 26.1% Buy High 0.7 0.8 639 -2.7 5.7 -0.2 41.7 17.8 0.21 0.14 0.15 7.2 12.3 11.6 1.1 1.3 1.2 3.7 4.4 4.1 7.9% 5.0% 0.6

Media 0.1 0.1 241 0.0 5.0 -6.6 15.4 22.2 - - - 10.9 1.1 - - 8.0 - - 4.8% - -

Impresa (2) 0.65 - - - - 0.0 0.0 109 0.0 0.0 3.2 85.7 109.7 0.01 - - 27.8 - - 1.2 - - 13.4 - - 0.0% - -

Media Capital (2) 1.00 - - - - 0.0 0.0 85 0.0 9.9 -16.7 -26.5 0.0 0.12 - - 8.3 - - 0.9 - - 4.5 - - 9.7% - -

Cofina (2) 0.46 - - - - 0.1 0.1 47 0.0 9.0 -6.9 34.7 -22.2 0.06 - - 10.1 - - 1.3 - - 9.3 - - 2.2% - -

Technology

Indra 11.90 12.35 3.8% Neutral High 16.2 12.1 1,953 4.4 17.6 10.7 50.0 18.8 1.00 0.93 0.88 10.0 12.8 13.6 0.8 0.8 0.8 7.7 8.9 8.6 3.4% 2.9% 1.6

Novabase 2.85 4.20 47.4% Buy High 0.1 0.1 89 7.1 18.8 -1.6 41.8 23.9 0.25 0.19 0.20 9.1 14.6 14.6 0.2 0.3 0.3 2.5 4.0 3.9 4.3% 2.8% 0.8

Utilities 232.0 210.0 41,242 0.7 11.1 3.3 36.2 7.7 - - - 9.4 10.9 9.8- 1.9 1.9 1.8 7.7 7.7 7.1 3.7% 4.3% 0.7

Iberdrola 4.29 5.00 16.5% Buy Low 215.3 190.3 26,776 0.9 12.4 4.7 36.1 5.7 0.47 0.40 0.44 9.02 10.8 9.8 1.6 1.6 1.5 7.3 7.1 6.6 7.9% 7.7% 0.6

EDP 2.71 2.85 5.5% Neutral Low 13.3 15.3 9,895 0.1 11.9 3.8 37.0 18.2 0.28 0.27 0.27 8.29 10.1 9.9 1.9 2.1 2.0 8.4 8.8 8.4 8.1% 6.8% 1.1

EDP Renováveis 3.89 5.45 40.0% Buy Low 3.1 4.0 3,397 1.1 2.8 -4.1 47.1 -2.5 0.14 0.15 0.22 27.6 26.1 17.4 6.2 5.6 4.9 8.5 7.9 6.9 1.0% 1.1% 0.6

REN 2.20 2.45 11.4% Buy Low 0.3 0.3 1,175 0.9 1.4 -5.6 10.1 7.1 0.23 0.21 0.24 8.9 10.4 9.0 4.5 4.6 4.5 7.0 7.2 7.1 8.3% 7.8% 1.1

Conglomerates 2.3 2.0 2,573 0.1 14.4 6.9 - - - - - - - - - - - - - - - - -

Sonae 0.85 1.15 34.8% Buy Medium 2.0 1.6 1,706 -0.8 19.8 11.5 91.3 24.2 0.02 0.04 0.05 42.2 23.1 17.7 0.7 0.7 0.7 6.1 6.6 6.5 4.8% 3.9% 1.3

Semapa 6.89 6.50 -5.6% Reduce High 0.3 0.3 815 2.2 4.5 -1.5 33.7 21.0 1.07 0.53 0.60 5.3 12.9 11.4 1.3 1.5 1.4 5.6 6.8 6.5 10.4% 3.5% 1.0

Sonae Capital 0.21 0.22 4.8% Neutral High 0.0 0.0 53 0.0 31.3 23.5 16.7 50.0 -0.04 -0.04 -0.03 loss loss loss 2.3 2.7 2.6 loss 66.3 49.3 0.0% 0.0% 0.2

Retail 136.1 208.9 73,747.8 -0.2 3.3 -8.3 37.5 3.0 - - - 27.2 24.3 21.4- 2.7 2.4 2.1 15.3 13.7 11.9 1.7% 2.1% 6.7

Inditex 102.75 110.10 7.2% Neutral Medium 122.0 195.0 64,047 -0.4 4.8 0.0 19.0 -2.6 3.81 4.24 4.83 5.5 24.2 21.3 3.9 3.4 3.0 15.8 13.9 12.0 1.7% 2.1% 6.7

Jerónimo Martins 15.42 16.90 9.6% Neutral Medium 14.1 13.9 9,701 0.2 -1.6 -8.2 18.5 5.6 0.61 0.64 0.69 4.8 24.3 22.2 0.9 0.9 0.8 13.2 12.8 11.5 2.0% 2.0% 6.8

Industrials 1.4 1.5 4,631 -0.1 1.5 -4.3 7.2 3.6 - - - - - - - - - - - - 7.7% - -

Sonae Industria 0.50 0.77 53.8% Buy High 0.1 0.1 70 2.4 5.7 -5.8 -5.8 2.7 -0.62 -0.22 -0.04 loss loss loss 0.7 0.7 0.6 10.4 10.2 8.1 61.8% 27.2% 0.5

Altri 1.92 1.75 -8.9% Reduce High 0.5 0.6 394 -1.7 8.4 -1.6 69 20.8 0.25 0.28 0.28 6.2 6.9 6.7 1.9 1.9 1.7 7.3 6.6 6.0 1.5% 1.5% 1.7

Portucel 2.66 2.50 -5.9% Reduce Medium 0.7 0.7 2,043 -0.9 1.0 0.3 28.3 16.8 0.28 0.23 0.23 8.3 11.8 11.7 1.5 1.8 1.7 5.9 7.3 7.0 9.4% 8.1% 1.4

Cimpor (2) 3.12 - - - - 0.1 0.1 2,097 -0.3 -0.6 -9.8 -13.3 -9.8 - - - - - - - - - - - - - - -

Construction 0.8 0.7 612 0.3 6.9 20.1 129.2 62.4 - - - - - - - - - - - - - - -

Mota-Engil 2.72 2.20 -19.1% Sell High 0.8 0.7 557 -0.7 6.6 26.1 161.5 73.6 0.20 0.23 0.30 7.9 11.8 8.9 0.7 0.8 0.7 6.0 7.2 6.3 6.6% 4.0% 1.2

Oil & Gas

Galp Energia 12.54 16.20 29.2% Buy High 15.9 16.1 10,395 -0.7 8.0 0.7 7.2 6.6 0.43 0.42 0.39 27.1 30.1 32.2 0.7 0.8 0.7 13.6 13.0 12.8 2.0% 2.3% 1.9

(1) We do not have a recommendation on BCP, as Mib is a registered trademark of BCP; (2) Not Covered; (3) Zon Multimedia figures assume merger with Optimus

Change (%) EV / EBITDA Div Yield2013/08/16

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DISCLOSURES � This report has been prepared on behalf of Millennium investment banking (Mib), a registered trademark of Banco Comercial

Português, S.A. (Millennium bcp).

� Millennium bcp is regulated by Comissão de Mercado de Valores Mobiliários.

� Recommendations:

Buy means more than 10% absolute return;

Neutral means between 0% and +10% absolute return;

Reduce means between -10% and 0% absolute return;

Sell means less than -10% absolute return.

� Unless otherwise specified, the time frame for price targets included in this report is current year-end or next year-end.

� Risk is defined by the analyst’s view in a qualitative way (High, Medium, Low).

� Usually we update our models and price targets in between 3 and 9 months.

� Millennium bcp prohibits its analysts and members of their households to own any shares of the companies covered by them.

� BCP group may have business relationships with the companies mentioned in this report.

� Millennium bcp, expects to receive or intends to seek compensations for investment banking services from the companies

mentioned in this report.

� The views expressed above, accurately reflect personal views of the authors. They have not and will not receive any

compensation for providing a specific recommendation or view in this report. There were not any agreements between the

companies covered and the analysts regarding the recommendation.

� Analysts are paid in part based on the profitability of BCP group, which includes investment banking revenues.

� BCP group has more than 2% of EDP.

� BCP group was chosen to evaluate EDP regarding the 8th stage of the privatization process.

� BCP group was chosen to evaluate REN regarding the 2nd stage of the privatization process.

� A member of the Executive Board of Directors of Millennium bcp is member of the General and Supervisory Board of EDP -

Energias de Portugal, SA.

� Banco Millennium bcp Investimento, S.A. (merged into Millennium bcp) was chosen as a joint global coordinator of the Initial

Public Offering of EDP Renováveis.

� Banco Millennium bcp Investimento, S.A. (merged into Millennium bcp) was part of the consortium, as a Co-Leader, of BES rights

issue, done in April 2009.

� Millennium bcp was part of the consortium, as Co-Manager, of BES rights issue completed in May 2012.

� Millenniumbcp through its investment banking department is providing investment banking services to Tagus Holdings S.a.r.l.

(“Offeror” in the launch of a tender offer over Brisa - Autoestradas de Portugal, S.A. shares).

� Recommendations on Millennium bcp covered companies (%)

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.

Recommendation Jul-13 Jun-13 Mar-13 Dec-12 Jun-12 Dec-11 Dec-10 Dec-09 Dec-08 Dec-07 Dec-06 Dec-05 Dec-04

Buy 68% 77% 76% 77% 78% 68% 79% 63% 54% 41% 37% 30% 63%

Neutral 9% 9% 10% 12% 4% 11% 7% 15% 4% 27% 11% 40% 6%

Reduce 18% 14% 14% 4% 0% 0% 0% 7% 0% 0% 21% 5% 6%

Sell 5% 0% 0% 4% 7% 7% 4% 4% 0% 14% 16% 5% 0%

Unrated/Under Revision 0% 0% 0% 4% 11% 14% 11% 11% 42% 18% 16% 20% 25%

Performance 3.0% -4.6% 3.0% 20.4% -14% -28% -10% 33% -51% 16% 30% 13% na

PSI 20 5,721 5,557 5,822 5,655 4,698 5,494 7,588 8,464 6,341 13,019 11,198 8,619 7,600

OFFICE LOCATIONS

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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 21 003 7820

António Seladas, CFA - Head (Industrials and Small Caps)

Alexandra Delgado, CFA (Telecoms and IT)

João Flores (Media and Retail)

Vanda Mesquita (Banks, Utilities and Oil&Gas)

Ramiro Loureiro (Market Analysis)

Sónia Martins (Market Analysis)

Sónia Primo (Publishing)

Prime Brokerage +351 21 003 7855

Vitor Almeida

Equity Sales/Trading +351 21 003 7850

Paulo Cruz - Head

Gonçalo Lima

Jorge Caldeira

Nuno Sousa

Paulo Santos

Pedro Ferreira Cruz

Pedro Gonçalves

Pedro Lalanda

Equity Derivatives +351 21 003 7890 Jorge Pina - Head

Ana Lagarelhos

Diogo Justino

Marco Barata

Maria Cardoso Baptista, CFA

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