top story weekly - millenniumbcp 2.6 3.1 3.5-12 -7 -2 3 bes portucel bpi sonaecom edp renováveis...

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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

Equity Analyst

+351 21 003 7826

[email protected]

TOP STORY

Banking sector – Based on our monthly report that aggregates key banking data (namely the evolution of

volumes and pricing for loans and deposits and also overdue loan ratios), we consider that profitability

continues to be the main problem for banks operating in Portugal. In April, loan yields continued to drop,

which confirms our expectations that there is no further scope for repricing and deposits rates increased

slightly mom (however falling yoy). Simultaneously, overdue loans ratio for corporate reached another

peak in April, which suggest that non-performing loans may continue to rise. (page 4).

OUT THIS WEEK

Earnings Comment – Inditex

Price Target/Recommendation Changes – BPI, Inditex

Other News – Banking sector, BES, Utilities sector

WEEK AHEAD

Nothing to register

PORTFOLIOS This week, Mib Aggressive Portfolio went up 0.76%, outperforming the PSI20 by 2.03pp. Excluding

Sonaecom, all stocks contributed for this outperformance (page 8).

This week, Mib Liquidity Portfolio went up 0.76%, outperforming the PSI20 by 2.03pp. Excluding

Sonaecom, all stocks contributed for this outperformance (page 9).

Stock Market Last 1W YTD 2013 Daily Vol. (€mn) 1W 1M 6M 2013

PSI 20 7,254 -1.3% 10.60% 15.98% PSI 20 160 166 148 108

IBEX 35 11,089 0.2% 11.82% 21.42% IBEX 35 2,927 2,987 2,945 2,570

Euro Stoxx 50 3,284 -0.3% 5.64% 17.95% Euro Stoxx 50 8,628 8,150 8,407 7,456

Forex Rates Last 1W YTD 2013 Interest Rates Last 1W Chg YE13

EUR/USD 1.35 -0.8% -1.91% 4.46% Euribor 6m 0.33% 0.36% -2bp 0.38%

EUR/GBP 0.80 -0.9% -3.57% 2.49% 10Y Bond PT 3.35% 3.52% -16bp 5.66%

EUR/BRL 3.03 -1.3% -7.10% 20.33% 10Y Bond SP 2.70% 2.64% 6bp 3.90%

-29.4

-12.0

-8.2

-7.1

-5.2

36.4

36.9

38.1

39.7

51.3

-45 -20 5 30 55

Sonaecom

Jerónimo Martins

Portugal Telecom

Inditex

Zon Optimus

Semapa

EDP

CTT

BPI

Novabase

Best & Worse Performers - YTD (%)

-6.7

-6.6

-3.8

-3.1

-1.6

2.3

2.4

2.6

3.1

3.5

-12 -7 -2 3

BES

Portucel

BPI

Sonaecom

EDP Renováveis

Portugal Telecom

Galp Energia

Zon Optimus

Altri

Inditex

Best & Worse Performers -1 Week (%)

IBERIA

June 12 2014

WEEKLY

EQUITY RESEARCH

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Millennium investment banking Weekly June 12 , 2014

CHANGES

Rating Target Rating Target

BPI Neutral 1.70 Reduce 1.70 Price Performance

Inditex Neutral 120.00 Buy 120.00 Price Performance

MotivePreviousNew

EARNINGS

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DIVIDENDS

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FINANCIALS

Banking Sector

Overdue loans ratio for corporate reached another peak Vanda Mesquita;

Equity Analyst

In April corporate loans fell by 7.9% yoy and individual loans dropped by 4.2% yoy. Deposits in

March rose by 3.2% yoy for corporates and by 0.3% yoy for individuals.

The annualized agreed rate for corporate dropped by 55 bps yoy to 5.27% and for mortgages it went

up by 11 bps yoy to 3.31%. Deposit rates for corporate companies dropped by 64 bps yoy to 1.24%,

but rose slightly by 9 bps mom. Deposit rates for individuals dropped by 56 bps yoy to 1.82%, but

went up slightly by 4 bps mom.

Overdue loans ratio (> 30 days) for corporate reached another peak (13.9%, +2.4pp yoy and +0.6pp

mom). For individuals, overdue loans stood at 4.7% in April, +0.5pp yoy and +0.1pp mom.

To sum up, the Portuguese Banking System is still deleveraging. Overdue loans ratio for corporate

reached another peak in April, which suggest that non-performing loans may continue to rise. Loan

yields continue to drop, which confirms our expectations that there is no more scope for repricing and

deposits rates continue its falling trend comparing to the same period of the previous year (however

deposit rates increased slightly mom).

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

BES Buy – High Risk (Target YE14: €1.25)

Rights issue was fully subscribed Vanda Mesquita

Equity Analyst

BES announced that the rights issue was fully subscribed. The financial settlement should occur on June

16 and the expected date for commencement of trading of the new shares is June 17. We remind that on

May 15, BES announced a capital increase of up to 1,607 shares, at a subscription price of €0.65 per

share, implying up to €1,045mn cash-in.

Following the completion of this rights issue, BES’s solvency ratios would become stronger. In addition,

the bank is in a better position to face the stress tests in October this year. In its last earnings

presentation, BES mentioned that its expects CET1 fully loaded pro forma (after rights issue) to reach

9.6% (8% before the rights issue at 1Q14) and CET1 phase-in pro forma to reach 11.4% (9.8% before

the rights issue at 1Q14).

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UTILITIES

Utilities Sector

Electricity consumption resumed its growth trend Vanda Mesquita,

Equity Analyst

Following two months of consecutive drops, monthly electricity consumption (adjusted for temperature

and working days) went up by 0.4% YoY in Portugal in May. In Spain, monthly electricity consumption

went up by 1.6% YoY.

-12%

-8%

-4%

0%

4%

8%

Jan-09

May-09

Sept-09

Jan-10

May-10

Sept-10

Jan-11

May-11

Sept-11

Jan-12

May-12

Sept-12

Jan-13

Mai-13

Set-13

Jan-14

May-14

Electricity Consumption YoY adjusted to temperature and working days

Portugal Spain

Source: REN (Rede Eléctrica Nacional), REE (Red Electrica España)

In the case of EDP, earnings from the distribution business in Portugal are not significantly affected by

the changes in volumes (as the bulk of the distribution model has a fixed component), meaning that the

aforesaid increase does not have a very meaningful impact. At the same time, in terms of liberalized

activities, the effect of those increases is minimized, since liberalized activities in Iberia only accounted

for 10% of 2013 EBITDA.

In the case of Iberdrola, given the aforesaid increase in consumption in Span, we do not expect a

meaningful impact (Spanish liberalized activities represented about 19% of 2013 EBITDA).

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

RETAIL

Inditex Neutral – Medium Risk (Target YE14: €120.00)

1Q14 Earnings Highlights - Positive numbers João Flores,

Equity Analyst

� Inditex (ITX) published its 1Q14 figures (01 Feb 2014 to 30 Apr 2014). Overall, numbers were

slightly higher than our estimates, while company showed confidence on Outlook. Furthermore,

stock split 5-1 is a positive surprise. A conference call was held, today at 8:00 am, Lisbon and UK

time.

� Sales rose 4% YoY to €3.748mn (vs €3.792mn estimated). Currency effect penalized sales (strong

Euro) by 6% (in line with our estimates). We highlight the consolidation of Tempe S.A. according to

the equity method reduced reported sales by 1%. (Tempe S.A is a supplier of shoes and

accessories for Inditex in which Inditex has a 50% interest). Oysho, Uterque, Massimo Dutti and

Zara Homes sales were above average while Berska sales performed below average.

� Store sales and online sales in local currencies have increased by 11% from 01 February to 08 June

2014. Recall in 1Q14 store and online sales in local currencies increased by 11%, thus sales growth

in current quarter kept the same pace.

� Gross Margin reached 58.9% in 1Q14 (-0.6pp YoY; +1.0pp QoQ), above estimated 58.6%.

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� EBITDA reached €732mn (-2% YoY) slightly higher than estimated (€721mn).

� EBIT was €530mn -5% YoY (vs €506mn estimated).

� Below EBIT we highlight net financials better than expected (+€2mn vs estimated €-10mn).

� Net Income was €406mn -7% YoY (vs €375mn estimated).

� Inditex sees sharp drop in currency translations. Furthermore, company wants to compensate Fx

depreciations with more sales. The negative impact from Fx will slow during the rest of the year and

will probably disappear in the 4Q14. According to Inditex, Fx annual impact will be c-3% in FY2014.

� Inditex’s Board of Directors has proposed a 5-for-1 stock split to the General Shareholders Meeting

to be held on 15 July 2014. If approved each Inditex shareholder on record at the close of business

on 25 July 2014 will receive 5 new shares for every existing share held on the record date. Trading

of the new shares would begin on 28 July 2014.

Outlook:

� Store sales and online sales in local currencies have increased by 11% from 01 February to 08 June

2014. Recall In 1Q14 store and online sales in local currencies increased by 11%, thus sales growth

in current quarter kept the same pace.

� Space growth for FY2014 is on track. In 1Q2014 new stores were opened in 26 markets.

� Global online sales launches are on track. Zara plans to launch online sales in South Korea and

Mexico in September 2014 (was expected to be in Autumn/Winter 2014) taking the total for Inditex

to 27 markets. Zara also plans to open in Tmall in China over the Autumn/Winter season. Inditex

sees stable gross margin for rest of 2014 (unchanged guidance).

� The tax rate for 1Q14 (23.3%) is the best estimate for FY2014 according to Inditex (we estimate

24%).

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

SECTOR PERFORMANCE

* includes Jeronimo Martins and Sonae

-9.8

-2.7

6.0

11.6

24.5

24.9

36.0

10.6

-30 -10 10 30

Telecoms & IT

Retail *

Financials

Oil & Gas

Industrials & Other

Media

Electric Utilities

PSI20

Sector Performance - YTD (%)

-0.2

0.1

0.6

1.1

2.5

2.5

-1.3

-5 -1 3 7 11 15

Financials

Industrials & Other

Electric Utilities

Media

Retail *

Oil & Gas

Telecoms & IT

PSI20

Sector Performance -1 Week (%)

-9.8

-2.7

6.0

11.6

24.5

24.9

36.0

10.6

-20 -5 10 25 40

Telecoms & IT

Retail *

Financials

Oil & Gas

Industrials & Other

Media

Electric Utilities

PSI20

Sector Performance - YTD (%)

-8.2

-0.2

0.1

0.6

1.1

2.5

2.5

-1.3

-10 -5 0 5 10

Financials

Industrials & Other

Electric Utilities

Media

Retail *

Oil & Gas

Telecoms & IT

PSI20

Sector Performance -1 Week (%)

� This week, the PSI20 went down 1.3%. The best performing sector were Telecoms & IT and

Oil & Gas, plus 2.5% and the worst was Financials, minus 8.2%.

� On a Ytd basis, the PSI20 went up 10.6%. The best performing sector was Electric Utilities,

plus 36.0% and the worst was Telecoms & IT, minus 9.8%.

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AGGRESSIVE PORTFOLIO

� This week, Mib Aggressive Portfolio went up 0.76%, outperforming the PSI20 by 2.03pp.

Excluding Sonaecom, 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 0.76%, outperforming the PSI20 by 2.03pp.

Excluding Sonaecom, all stocks contributed for this outperformance

� We highlight that the portfolio is composed by the five stocks with the highest upside

potential of our coverage universe, excluding the less liquid stocks. It is equal weighted and

rebalanced on a weekly basis.

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Millennium investment banking Weekly June 12, 2014

8 3 4 13 8

Portfolio weekly return

Performance

Contribution Deviation

Sonaecom High 1.81 2.80 54% -3.1% -0.62pp -0.37pp

Portugal Telecom Medium 2.90 3.80 31% 2.3% 0.47pp 0.45pp

Jerónimo Martins Medium 12.51 16.45 31% 1.1% 0.21pp 0.46pp

Sonae Medium 1.29 1.55 20% 1.1% 0.22pp 0.37pp

Galp Energia High 13.26 15.60 18% 2.4% 0.49pp 0.23pp

Portfolio 0.76%

PSI 20 -1.27%

Gain/loss 2.03pp

Explained by the portfolio 1.15pp

Explained by being underweight in the remaining PSI20 stocks 0.88pp

Next week Portfolio Changes in Portfolio

CompanyRisk

Rating

Market

Price (€)

Price

Target (€)

Upside

PotentialIn Out

Sonaecom High 1.81 2.80 54% BES Galp

Jerónimo Martins Medium 12.51 16.45 31%

Portugal Telecom Medium 2.90 3.80 31%

BES High 1.03 1.25 22%

Sonae Medium 1.29 1.55 20%

Return vs. PSI 20

2008 2009 2010 2011 2012 2013 YTD 1 Month 1 Week

Portfolio -43.6% 71.9% -7.30% -36.6% 22.1% 47.1% 20.4% 7.2% 0.8%

PSI20 -51.3% 33.5% -10.30% -27.6% 2.9% 16.0% 10.6% 5.2% -1.3%

Gain/loss 7.7pp 38.5pp 3.0pp -9.0pp 19.2pp 31.1pp 9.8pp 2.1pp 2.0pp

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

100.00

102.00

104.00

106.00

108.00

110.00

112.00

114.00

116.00

118.00

120.00

122.00

31/Dec 22/Jan 13/Feb 07/Mar 29/Mar 20/Apr 12/May 03/Jun

Ytd Return

Portfolio PSI20

50.00

100.00

150.00

200.00

250.00

300.00

23/Jul 15/Mar 05/Nov 27/Jun 17/Feb 09/Oct 01/Jun

Return since inception (30th July 2004)

Portfolio PSI20

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8 3 4 13 8

Portfolio weekly return

Performance

Contribution Deviation

Sonaecom High 1.81 2.80 54% -3.1% -0.62pp -0.37pp

Portugal Telecom Medium 2.90 3.80 31% 2.3% 0.47pp 0.45pp

Jerónimo Martins Medium 12.51 16.45 31% 1.1% 0.21pp 0.46pp

Sonae Medium 1.29 1.55 20% 1.1% 0.22pp 0.37pp

Galp Energia High 13.26 15.60 18% 2.4% 0.49pp 0.23pp

Portfolio 0.76%

PSI 20 -1.27%

Gain/loss 2.03pp

Explained by the portfolio 1.15pp

Explained by being underweight in the remaining PSI20 stocks 0.88pp

Next week Portfolio Changes in Portfolio

CompanyRisk

RatingMarket Price (€)

Price

Target (€)

Upside

PotentialIn Out

Jerónimo Martins Medium 12.51 16.45 31% BES Sonaecom

Portugal Telecom Medium 2.90 3.80 31%

BES High 1.03 1.25 22%

Sonae Medium 1.29 1.55 20%

Galp Energia High 13.26 15.60 18%

Return vs. PSI 20

2011 2012 2013 YTD 1 Month 1 Week

Portfolio - 22.6% 41.2% 11.4% 5.6% 0.8%

PSI20 - 2.9% 16.0% 10.6% 5.2% -1.3%

Gain/loss - 19.7pp 25.2pp 0.8pp 0.4pp 2.0pp

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

100.00

102.00

104.00

106.00

108.00

110.00

112.00

114.00

116.00

118.00

31/Dec 22/Jan 13/Feb 07/Mar 29/Mar 20/Apr 12/May 03/Jun

Ytd Return

Portfolio PSI20

75.00

95.00

115.00

135.00

155.00

175.00

195.00

30/Dec 26/May 21/Oct 18/Mar 13/Aug 08/Jan 05/Jun

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 1M 3M 12M YTD 2012 2013E 2014E 2012 2013E 2014E 2012 2013E 2014E 2012 2013E 2014E 2012 2013E 2013E

PSI 20 7,254 - - 66,612 -1.3 -0.9 -3.5 25.8 10.6

IBEX 11,089 - - 575,756 0.2 4.7 10.1 36.5 11.8

Financials 182.0 194.7 11,668 -7.8 -7.5 -16.8 67.5 13.8 - - - - - - - - - - - - - - -

BCP (1) 0.18 - - - - 33.2 32.2 3,524 -11.9 -11.9 -20.3 80.6 7.5 - - - - - - - - - - - - - - -

BES 1.03 1.25 21.6% Buy High 23.3 24.1 5,782 -6.7 -6.8 -19.2 58.0 9.5 0.02 -0.13 -0.02 38.6 loss loss - - - - - - 0.0% 0.0% 0.6

BPI 1.70 1.70 0.1% Neutral High 3.9 3.6 2,362 -3.8 -1.9 -3.3 74.6 39.7 0.18 0.05 -0.08 5.3 35.4 loss - - - - - - 0.0% 0.0% 0.9

Telecoms 607.7 473.7 62,531 0.9 3.9 8.3 21.2 3.7 - - - 11.8 11.4 16.9 1.8 2.1 2.3 5.5 6.2 6.9 0.7% 5.9% 2.3

Telefónica 12.47 14.40 15.5% Buy Medium 580.9 449.4 56,729 0.8 4.6 10.6 22.2 5.3 0.87 1.02 0.78 11.7 12.3 15.9 1.9 2.1 2.3 5.5 6.2 7.0 0.1% 6.0% 2.5

Portugal Telecom 2.90 3.80 31.0% Buy Medium 22.8 19.3 2,600 2.3 -3.0 -10.2 -9.9 -8.2 0.27 0.55 0.01 14.0 5.3 365.1 1.8 1.8 1.9 5.4 5.4 6.0 8.7% 3.4% 0.9

Zon Optimus 5.12 5.65 10.4% Buy Medium 3.7 4.3 2,638 2.6 0.8 -6.6 45.5 -5.2 0.22 0.24 0.23 13.2 21.2 22.4 1.4 2.7 2.6 3.9 7.2 6.9 4.0% 2.3% 2.6

Sonaecom 1.81 2.80 54.4% Buy High 0.3 0.6 565 -3.1 -11.1 -21.5 17.2 -29.4 0.21 0.28 0.09 7.2 6.4 19.8 1.1 6.5 3.3 3.7 10.9 13.3 8.0% 0.0% 0.8

Media 0.6 1.1 563 0.2 -0.4 17.5 130.9 69.4 - - - 10.9 1.1 - - 8.0 - - 4.8% - -

Impresa (2) 1.71 - - - - 0.3 0.7 287 0.6 -2.3 5.6 175.8 56.9 0.01 - - 27.8 - - 1.2 - - 13.4 - - 0.0% - -

Media Capital (2) 2.54 - - - - 0.0 0.0 215 0.0 5.8 51.2 122.8 119.0 0.12 - - 8.3 - - 0.9 - - 4.5 - - 9.7% - -

Cofina (2) 0.60 - - - - 0.3 0.4 61 -1.3 -10.6 -5.8 41.3 19.6 0.06 - - 10.1 - - 1.3 - - 9.3 - - 2.2% - -

Technology

Indra 13.41 14.10 5.1% Neutral High 13.3 13.4 2,201 -1.1 -1.4 -1.8 27.1 10.3 1.00 0.88 0.81 10.0 15.3 16.6 0.8 0.9 1.0 7.7 9.5 10.0 3.4% 2.5% 1.8

Novabase 3.95 4.65 17.7% Buy High 0.1 0.1 124 -0.2 1.3 0.8 61.2 51.3 0.25 0.24 0.17 9.1 16.5 22.7 0.2 0.3 0.5 2.5 5.0 7.7 25.6% 5.0% 0.9

Utilities 239.5 213.6 54,043 0.8 4.7 11.8 38.2 23.2 - - - 9.4 11.2 16.7- 1.9 1.8 2.2 7.7 8.0 9.5 3.8% 4.0% 0.8

Iberdrola 5.44 4.80 -11.8% Sell Low 212.5 189.3 34,672 1.2 4.9 12.6 36.3 17.4 0.47 0.42 0.32 9.02 12.9 16.9 1.7 1.6 1.9 7.3 7.7 9.4 7.2% 5.5% 0.8

EDP 3.66 3.10 -15.2% Sell Low 22.7 20.2 13,365 1.0 4.8 11.9 45.0 36.9 0.28 0.27 0.26 8.29 13.6 14.2 1.9 1.9 2.2 8.4 8.8 10.0 8.1% 5.1% 1.1

EDP Renováveis 5.24 5.60 6.9% Neutral Low 2.9 3.1 4,571 -1.6 4.3 12.2 40.5 35.7 0.14 0.15 0.13 27.6 35.0 39.6 6.2 5.7 6.3 8.5 8.2 9.1 1.0% 0.9% 0.6

REN (3) 2.69 - - - - 1.5 1.0 1,436 -3.1 -1.3 -6.6 21.1 20.2 0.23 - - 8.9 - - 4.5 - - 7.0 - - 8.3% - -

Conglomerates 6.4 6.2 3,999 1.1 0.5 1.5 - - - - - - - - - - - - - - - - -

Sonae 1.29 1.55 20.1% Buy Medium 5.5 5.3 2,582 1.1 0.2 -1.1 69.2 23.1 0.02 0.16 0.06 42.2 8.1 21.4 0.7 0.8 0.9 10.8 11.6 11.8 4.8% 2.7% 1.3

Semapa 11.11 8.70 -21.6% Sell High 0.7 0.6 1,314 1.2 1.1 7.2 72.2 36.4 1.07 0.68 0.58 5.3 16.3 19.1 1.3 1.5 1.6 5.6 7.0 7.0 10.4% 2.2% 1.1

Sonae Capital 0.41 0.48 17.6% Buy High 0.2 0.3 103 -0.2 -6.4 -19.2 142.4 24.8 -0.04 -0.05 -0.02 loss loss loss 2.3 2.2 1.9 loss 70.2 16.0 0.0% 0.0% 0.3

Retail 254.9 197.0 77,218.0 4.5 3.2 14.6 -11.8 -19.1 - - - 27.2 30.3 27.1- 2.7 2.8 2.4 15.4 17.1 14.9 1.7% 1.9% 7.9

Inditex 111.25 120.00 7.9% Neutral Medium 243.4 184.9 69,346 3.5 3.4 7.6 10.1 -7.1 3.81 3.81 3.89 5.5 29.2 28.6 3.9 4.2 3.6 15.8 18.0 15.8 1.7% 2.0% 8.1

Jerónimo Martins 12.51 16.45 31.5% Buy Medium 11.5 12.0 7,872 1.1 -0.3 7.0 -21.9 -12.0 0.61 0.61 0.67 4.8 20.4 18.6 0.9 0.8 0.7 13.2 12.6 10.3 2.0% 2.4% 6.5

Industrials 7.3 2.4 4,476.6 -2.0 1.5 - - 25.2 - - - - - - - - - - - - - - -

CTT 7.72 7.95 3.0% Neutral Medium 4.9 - 1,158 0.9 3.0 - - 38.1 2.06 0.41 0.44 - 19.0 17.6 - 1.1 1.5 - 6.4 8.6 - 5.2% 3.1

Sonae Industria (3) 0.46 - - - - 0.3 0.5 65 -0.6 -1.9 -42.3 -11.7 -18.1 -0.71 - - loss - - 0.6 - - 9.7 - - 0.0% - -

Altri 2.34 2.25 -3.9% Reduce High 0.9 0.9 481 3.1 -3.8 -14.7 29 4.6 0.25 0.27 0.28 6.2 8.8 8.4 1.9 1.9 1.8 7.3 7.7 6.9 1.3% 1.1% 2.0

Portucel 3.51 2.75 -21.7% Sell Medium 1.2 1.0 2,697 -6.6 -0.8 10.9 52.2 22.6 0.28 0.26 0.22 8.3 13.7 15.8 1.5 1.8 2.1 5.8 7.8 9.0 9.4% 7.5% 1.5

Construction 4.6 3.7 1,297 - - - - - - - - - - - - - - -

Mota-Engil (3) 6.01 - - - - 4.6 3.6 1,230 1.8 17.1 14.2 170.8 39.0 0.20 - - 7.9 - - 0.7 - - 6.1 - - 6.6% - -

Oil & Gas .

Galp Energia 13.26 15.60 17.7% Buy High 16.9 15.4 10,992 2.4 2.6 9.8 7.3 11.2 0.43 0.37 0.34 27.1 35.5 38.8 0.7 0.7 1.1 13.6 12.7 14.3 2.0% 2.2% 1.9

HealthCare

ES Saúde 3.91 3.85 -1.5% Reduce High - - 374 0.3 8.6 - - 22.2 -0.02 0.16 0.19 - - 20.1 - - 1.4 - - 9.0 - - -

(1) We do not have a recommendation on BCP, as Mib is a registered trademark of BCP; (2) Not Covered; (3) Restricted

Change (%) EV / EBITDA Div Yield12/06/2014

Latest

Pr (€)

Target

YE14RatingUpsd

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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 and supervised by Comissão do Mercado de Valores Mobiliários (CMVM).

� 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. This report did not have any specific recipient.

� Millennium BCP Analysts do not participate in meetings to prepare BCP’s involvement in placing or assisting in public offers of

securities issued by the company that is subject of the recommendation, except when disclosed in the report.

� 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.

� Millennium BCP 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).

� Banco Comercial Português, S.A. (also known as Millennium BCP) was chosen as a Co-leader of the Initial Public Offering of CTT,

that took place on December 2013.

� The Board of directors of Mota Engil has appointed Banco Comercial Português as joint-book runner concerning the offering of 34

300 000 ordinary shares of Mota Engil through an accelerated book building according to the announcement released on 25th of

February 2014.

� Banco Comercial Português, S.A. (also known as Millennium BCP) was chosen as a Co-leader of the Initial Public Offering of ES

Saúde, that took place on February 2014.

� Millennium investment banking acted as Joint Bookrunner in the private offering, launched by José de Mello SA, through an

accelerated bookbuilding, concerning the sale of 94 787 697 EDP shares, according to the announcement released on the 3rd of

April 2014.

� According to the announcement released on the 8th April 2014, Millennium BCP acted as Joint Bookrunner in the Eurobond “EDP

Finance BV 5-year” in the total amount of €650,000,000.

� Millennium BCP is involved in Sonae Industria capital increase announced at the beginning of May 2014.

� Millennium BCP is involved in Mota-Engil Africa IPO.

� Banco Comercial Português, S.A. (also known as Millennium BCP) was chosen as a Co-leader of the Public Offering of REN that is

taking place (June 2014).

� Recommendations on Millennium BCP covered companies (%)

Recommendation May-14 Apr-14 Mar-14 Dec-13 Sep-13 Jun-13 Dec-12 Dec-11 Dec-10 Dec-09 Dec-08 Dec-07 Dec-06 Dec-05 Dec-04

Buy 57% 38% 25% 55% 59% 77% 77% 68% 79% 63% 54% 41% 37% 30% 63%

Neutral 14% 29% 13% 23% 9% 9% 12% 11% 7% 15% 4% 27% 11% 40% 6%

Reduce 14% 13% 33% 18% 18% 14% 4% 0% 0% 7% 0% 0% 21% 5% 6%

Sell 14% 21% 29% 5% 14% 0% 4% 7% 4% 4% 0% 14% 16% 5% 0%

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

Performance -4.6% -2.0% 16.0% 10.2% 7.1% -1.7% 2.9% -28% -10% 33% -51% 16% 30% 13% na

PSI 20 7,113 7,457 7,608 6,559 5,954 5,557 5,655 5,494 7,588 8,464 6,341 13,019 11,198 8,619 7,600 � The Politics of Conflict of Interests Millennium BCP is available at www.millenniumbcp.pt or sent to customers when requested.

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. Prof. Dr. Cavaco Silva (Tagus Park)

Edif 2 - Piso 2 B

Porto Salvo

2744-002 Porto Salvo

Portugal

Telephone +351 21 113 2103

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 (Retail, Industrials and HealthCare)

Vanda Mesquita (Banks, Utilities and Oil&Gas)

Ramiro Loureiro (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 Maria Cardoso Baptista, CFA – Head

Ana Lagarelhos

Diogo Justino

Marco Barata

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