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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

Portugal Telecom - America Movil offered €2.6 bn this week to increase its stake in Dutch operator KPN. This announcement supported PT’s performance in the week, as it draws attention to European incumbent operators, particularly those which are possible consolidation targets (page 6).

OUT THIS WEEK

Earnings Comment – Telefónica, Zon Multimedia, Media Capital, Cofina, Indra, Novabase, EDP, EDP Renováveis, Sonae Sierra, Sonae Industria, Altri

Price Target / Recommendation Changes – Semapa, Jerónimo Martins, Altri

Other News – Telefónica, Zon Multimedia, Bankinter, Banking Sector, EDP, Mota-Engil, Galp Energia, Sonae, Jerónimo Martins, Portugal Telecom

WEEK AHEAD

Monday – Oi’s 1Q12 Earnings; REN’s 1Q12 Earnings Tuesday – BES’ 1Q12 Earnings

Thursday – Portugal Telecom’s 1Q12 Earnings Friday – Semapa’s AGM

During the week – Brazilian mobile subscribers by the end of April (Anatel)

PORTFOLIOS

This week, Mib Aggressive Portfolio went up 1.97%, outperforming the PSI20 by 1.72pp.

Excluding Sonae Industria and Novabase, all stocks contributed for this outperformance (page 19).

This week, Mib Liquidity Portfolio went up 1.88%, outperforming the PSI20 by 1.63pp.

Excluding Indra and Galp Energia, all stocks contributed for this outperformance (page 20).

Stock Market Last 1W YTD 2011 Daily Vol. (€mn) 1W 1M 6M 2011

PSI 20 5,179 0.25% -5.74% -27.60% PSI 20 78 81 82 148

IBEX 35 6,996 1.74% -18.34% -13.11% IBEX 35 3,647 3,249 2,697 4,925

Euro Stoxx 50 2,255 0.28% -2.68% -5.56% Euro Stoxx 50 9,475 9,041 8,153 14,831

Forex Rates Last 1W YTD 2011 Interest Rates Last 1W Chg YE11

EUR/USD 1.29 -1.43% 0.04% -3.17% Euribor 6m 0.98% 0.99% -1bp 1.62%

EUR/GBP 0.80 -1.07% -3.83% -2.96% 10Y Bond PT 10.94% 11.10% -16bp 13.36%

EUR/BRL 2.51 -0.03% 4.08% 8.86% 10Y Bond SP 6.01% 5.73% 27bp 5.09%

-51.3 -39.5

-34.0 -28.1 -27.5

3.3 3.3 9.5 9.8

18.4

-70 -50 -30 -10 10 30 Cofina

Banco Popular Impresa Bankinter Iberdrola Portucel Novabase Jerónimo Martins Zon Multimedia Mota-Engil

Best & Worse Performers - YTD (%)

-8.8 -6.5

-5.4 -4.1

-1.9

4.6 4.6 5.3 5.5 5.7

-15 -5 5

Impresa Banco Popular Martifer EDP Sonae Industria Sonae Bankinter Sonae Capital EDP Renováveis Cofina

Best & Worse Performers -1 Week (%)

WEEKLY

EQUITY RESEARCH

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CHANGES

EARNINGS

Rating Target Rating Target

Semapa Neutral 5.75 Under Revision Valuation Update

Jerónimo Martins Buy 15.85 Buy 16.30 Valuation Update

Altri Sell 0.85 Neutral 1.20 Valuation Update

Motive Previous

New

Galp Energia ** 13-04 BM 13-07 BM 12-10 BM

BPI 20-04 AM 25-07 AM 24-10 AM

Portucel 23-04 AM 19-07 AM 22-10 AM

Impresa 23-04 AM 23-07 AM 31-10 AM

Bankinter 25-04 AM n.a. n.a.

Jerónimo Martins 26-04 BM 25-07 BM 25-10 BM

Galp Energia 27-04 BM 27-07 BM 26-10 BM 06-03-2012

Banco Popular 27-04 BM n.a. n.a.

Sonaecom 03-05 AM n.a. n.a.

Brisa 04-05 AM 27-07 AM 31-10 AM 23-11-2012

BCP 07-05 AM 27-07 AM 05-11 AM

Semapa 08-05 AM 30-08 AM 30-10 AM

Cimpor 08-05 BM 31-07 BM 13-11 BM

Sonae Sierra 08-05 AM 01-08 AM 06-11 AM

Novabase 09-05 AM 26-07 AM 30-10 AM

Sonae Indústria 09-05 AM 26-07 AM 08-11 AM

Altri 09-05 AM 29-08 AM 07-11 AM

EDP Renováveis 09-05 BM n.a. n.a. 24-05-2012

Zon Multimedia 10-05 BM n.a. n.a.

Iberdrola 10-05 BM 25-07 BM 25-10 BM

Indra 10-05 AM 26-07 AM 15-11 AM

Cofina 10-05 AM 30-08 AM 08-11 AM

ESFG 10-05 AM n.a. n.a.

EDP 10-05 AM n.a. n.a. 25-05-2012

Media Capital 10-05 AM n.a. n.a.

Telefónica 11-05 BM 26-07 BM 07-11 BM

REN 14-05 AM 01-08 AM 12-11 AM

BES 15-05 AM 30-07 AM 06-11 AM

Portugal Telecom 17-05 BM 02-08 BM 08-11 BM

Ibersol 21-05 AM 30-08 AM 19-11 AM

Martifer 22-05 AM 02-08 AM 15-11 AM

Mota-Engil 22-05 AM 31-08 AM 21-11 AM

Sonae 23-05 AM 23-08 AM 14-11 AM

Sonae Capital 24-05 AM 21-08 AM 15-11 AM

Glintt 29-05 27-07 13-11

SAG n.a. n.a. n.a.

Soares da Costa n.a. n.a. n.a.

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

** Trading update

Company 1Q2012 2Q2012 3Q2012 Investor Day

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DIVIDENDS

Gross Payment Ex-Div Last Year

DPS Date Date Pay Date Gross DPS

Banco Popular* (1) - 11-Jun-12 - - - 11-Oct-11 0.050

- - - - - 21-Jul-11 1x78

- - - - - 6-May-11 1x85

- - - - - 12-Jan-11 0.050

Bankinter * 0.048 - - 7-Jan-12 Approved 28-Sep-11 0.052

0.039 - - 7-Apr-12 Approved 2-Jul-11 0.052

- - - - - 1-Jan-11 0.048

BCP 0.000 31-May-12 - - - - -

BES 0.000 22-Mar-12 - - Approved 11-Apr-11 0.126

BPI 0.000 31-May-12 - - Estimate - -

Banif 0.000 22-Mar-12 - - - - 0.020

ESFG 0.000 31-May-12 - - - 3-Jun-11 0.280

Portugal Telecom** 0.435 27-Apr-12 25-May-12 22-May-12 Approved 3-Jun-11 0.650

0.215 - - - Estimate 4-Jan-12 0.215

Sonaecom 0.070 27-Apr-12 24-May-12 21-May-12 Approved 25-May-11 0.050 Zon Multimedia 0.160 27-Apr-12 25-May-12 22-May-12 Approved 6-May-11 0.160 Telefónica** 0.530 13-May-12 18-May-12 18-May-12 Proposed 6-May-11 0.750

0.700 - - - Estimate 7-Nov-11 0.770

Impresa 0.000 24-Apr-12 - - Approved - 0.000

Media Capital 0.069 21-Mar-12 19-Apr-12 16-Apr-12 Approved 15-Apr-11 0.074

Cofina 0.010 12-Apr-12 11-May-12 8-May-12 Approved 21-Jun-11 0.010

Indra 0.680 21-Jun-12 - - Proposed 4-Jul-11 0.680

Novabase 0.030 3-May-12 4-Jun-12 30-May-12 Approved 6-Jun-11 0.130

- - - - - 13-Jul-10 0.180

Glintt 0.000 22-May-12 - - Proposed - -

Iberdrola** 0.150 - - - Estimate 5-Aug-11 0.150

0.030 - - - Estimate 13-Jul-11 0.030

EDP 0.185 17-Apr-12 16-May-12 11-May-12 Approved 13-May-11 0.170

EDP Renováveis 0.000 12-Apr-12 - - Approved - 0.000

REN 0.169 27-Mar-12 20-Apr-12 17-Apr-12 Approved 12-May-11 0.168

Brisa 0.310 2-Apr-12 - - Rejected 5-May-11 0.310

Sonae 0.033 30-Apr-12 - - Approved 27-May-11 0.033

J. Martins 0.275 30-Mar-12 30-Apr-12 25-Apr-12 Approved - 0.000

Portucel 0.221 4-Apr-12 20-Apr-12 17-Apr-12 Approved - -

Altri 0.020 26-Apr-12 25-May-12 22-May-12 Approved 21-Jun-11 0.020

F Ramada - - - - - 21-Jun-11 0.070

Inapa - - - - - - 0.000

Sonae Industria 0.000 29-Mar-12 - - Approved - 0.000

Sonae Capital 0.000 30-Mar-12 - - Approved - 0.000

Cimpor - 20-Apr-12 - - - 6-May-11 0.205

0.166 6-Jul-12 - - Proposed - -

Semapa 0.255 18-May-12 18-Jun-12 13-Jun-12 Proposed - 0.000

Mota-Engil 0.110 17-Apr-12 17-May-12 14-May-12 Approved 13-May-11 0.110

Soares da Costa 0.000 24-May-12 - - Proposed 13-Jun-11 0.022

Teixeira Duarte 0.000 17-May-12 - - Proposed 16-Jun-11 0.015

Martifer 0.000 11-Apr-12 - - Approved - 0.000

Galp Energia 0.200 7-May-12 24-May-12 21-May-12 Approved 30-May-11 0.140

- - - - - 23-Sep-10 0.060

Ibersol 0.055 13-Apr-12 11-May-12 8-May-12 Approved 11-May-10 0.055

SAG 0.000 30-Apr-11 - - 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

(1) Due to the merger with Banco Pastor, the second dividend relative to 2011 accounts was not paid in January as usual and should occur in 1Q12

* Company pays dividends four times a year

** Company pays dividends twice a year.

(1) Remuneration system, which allows choosing between new, shares or cash. Cash dividend: the price at which Banco Popular will purchase rights is 0.05€. Scrip dividend: one new share for every eighty-five rights.

Company AGM Obs

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NEXT WEEK RESULTS

Portugal Telecom

Buy – Medium Risk (Target YE12: €6.30)

1Q12 Earnings Preview Alexandra Delgado, CFA

Equity Analyst

Portugal Telecom will release 1Q12 Earnings next Thursday, May 17th, before the market opening. A conference call will be held that day, at 2.00 pm (GMT). We estimate €1,601 mn revenues in the quarter and an EBITDA excluding PRBs of 555 million Euros. We estimate revenues in Portugal should fall 5.5%

YoY in the quarter, with a growing residential segment not offsetting the weakness in the personal, enterprise and wholesale segments. We estimate EBITDA margin in Portugal to be broadly flat vs. 1Q11 at 46% (-0.1pp), leading EBITDA to drop 5.8%. Oi should continue to post declining revenue in local currency (-3.5% YoY) since mobile growth does not offset wireline challenging trends. We estimate Oi to deliver 30.6% EBITDA margin in 1Q12, +2.0pp vs. 1Q11. In terms of consolidated net income we expect the company to reach €57 mn in the quarter.

REN

Buy – Low Risk (Target YE12: €2.40)

1Q12 Earnings Preview

João Mateus, Vanda Mesquita

Equity Analysts

REN will release the 1Q12 earnings next Monday, 14 May, and will hold a conference call in 15 May at 3:30pm, Lisbon / London time.. We expect EBITDAP to come relatively in line YoY with an assumed return on electricity under 10% for old assets, near 11.3% for new assets and on gas assets at 8%. Capex for electricity should have come under €70mn, considering that the average RAB for electricity will be over €2250mn and for gas around €1050. The top line, despite less relevant for REN’s valuation and more unpredictable, may come over €180mn. Net financials should have come close to €30mn on interest rate increases.

FINANCIALS Banking Sector

Real estate with new rules in Spain Rita Silva;

Equity Analyst The Spanish Government has announced new measures for the strengthening of the financial system by demanding banks to set aside an extra €30bn to reinforce provisions related to performing real estate assets, that represents an increase from the current 7% level to 30% (from 7% to 52% for land, to 29%

for developers and unfinished buildings and to 14% to finished buildings, although this breakdown is still not confirmed). This will result in a global impact of €30bn rising coverage to 45%. As we have said, although this measure has a negative impact both in earnings and CT1, it is a step that adds to clarity in the Spanish financial system. Banks will be given 15 days to submit their plans on how they intend to enforce these rules. Banks that do not have own funds may access state funding, through contingent liabilities (CoCo's) with an associated yield of 10% and a 5 year maturity or through equity. Additionally, banks will have to transfer their real estate assets to a “bad bank” valued at book value less provisions required by the Decree 02/2012 (which had already demanded new rules for the provision of real estate assets) and the new effort announced today, meaning that they will be transferred 45% below their book

Sales YoY EBITDA YoY EBIT YoY Net Profit YoY

1,601 83.8% 555 60.6% 97 -51.0% 57 -56%

Sales YoY EBITDA YoY EBIT YoY Net Profit YoY

188.0 -4.2% 115.8 0.3% 68.4 -2.3% 28.9 -16.0%

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value. It not yet clear how banks will participate in these new vehicles. After fully applying new rules, the level of coverage for “troubled assets” will increase 27% (assuming the full application of DL 02/2012) to 45%.

Bankinter

Buy – High Risk (Target YE12: €5.10) Real estate with new rules in Spain: Impact for Bankinter Rita Silva, Eq ity Analyst For Bankinter, the overall impact should be of around €160mn, or €66mn (net) compared to the previous rules (please note that the bank had fully booked the 7% previously required, i.e., €58mn in 1Q12). The impact on the CT1 would be 20bp and 20c/share evaluation wise. At the end of 1Q12, CT1 stood at 9.44%.

TELECOMS

Telefónica

Buy – Medium Risk (Target YE12: €21.00) Argentina fines Telefónica €32.5 million Alexandra Delgado, CFA Equity Analyst Argentina’s government announced Tuesday that it will fine Telefónica’s subsidiary in the country due to the blackout on April 2nd that left 18 million clients without mobile service for several hours. The fine is €32.5 million and is divided between €31.5 million to be returned to clients (10 ARS / €1.70 per client) and an additional fine of €1 million.

The fine levied on Telefónica is circa 0.9% of revenues generated in Argentina in 2011 and 3%

of OIBDA (operating income before depreciation and amortization). Argentina’s weight in Telefónica was 5.1% of consolidated revenue and 4.7% of adjusted OIBDA last year. The fine has no impact on our valuation.

After the expropriation of 51% of YPF, the Argentine energy company 57.43%-owned by Spain's Repsol, there is the concern that other nationalizations mat follow, and Spanish companies appear to be more vulnerable. Risk in Argentina has increased substantially, but we’re not anticipating for now the nationalization of Telefónica’s unit. Nevertheless, this is a topic that has to be closely watched in the short/ medium term.

1Q12 Earnings Comment - Weak start to a tough year

 Telefónica announced today its 1Q12 earnings, with OIBDA below our estimates.

 Revenue in 1Q12 grew 0.5% in 1Q12, slightly better than we expected. We register as positive the acceleration of revenue growth in Latin America: + 7.8% in organic terms in 1Q12, which compares to +5.3% organic growth in 4Q11.

 Consolidated OIBDA dropped 8.8% YoY in 1Q12. OIBDA margin dropped 3.4pp to 32.8%, worse than guidance for the full-year (lower margin decline than the 2.0pp registered in 2011).

 OIBDA sharp decline is mainly due to Spain (-13.6%) and the UK (-31.7%). In Spain, OIBDA is impacted by severe pressure on revenues coming from intense competition and new tariffs adoption. In the UK, increased commercial activity to regain competitiveness let to a significant growth of commercial costs.

 EBITDA in Brazil was penalized by commercial effort and inflation cost. Company expects these trends to ease as the year progresses. In addition, benefits from integration should be highly visible in the second half.

 Telefónica disclosed that in what debt is concerned, total 2012 maturities (€7.1 bn) are refinanced and 40% of 2013 maturities (€7.7 bn) are prefinanced. Telefónica said it will step up actions to cut debt: it plans to raise more than €1.5 bn in non-strategic assets sale, in excess to what it has already achieved. Assets that should be monetized are: Atento, stake in PT, Rumbo, non-strategic towers.

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 In summary, revenue figures were slightly better with Latin America showing accelerated growth.

However, OIBDA was quite disappointing due to Spain and the UK, which raises questions on whether margin guidance will be achieved.

 We maintain the price target for Telefónica at €21.00 (YE12), with a Buy, Medium Risk recommendation.

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

Portugal Telecom

Buy – Medium Risk (Target YE12: €6.30) America Movil offers €2.6 bn to increase stake in KPN Alexandra Delgado, CFA Equity Analyst America Movil offered €2.6 bn this week to increase its stake in Dutch operator KPN to 28% from current 4.8%. It offered €8/ share, which represents a 24% premium to KPN’s closing price last Monday.

This deal is the first major investment by America Movil outside America and follows previous attempts to enter Spain and Italy (in 2007 it tried to buy together with AT&T a stake in a company that controlled Telecom Italia).

The rationale for this offer is clearly to take advantage of KPN’s low valuation to enter the European market. Before the offer, KPN had one of the worst performances among European telcos since the beginning of the year (-30%).

America Movil hasn’t held discussions with KPN prior to the offer and sees the stake as a long- term strategic investment. It also added that it has no plan to fully take over KPN.

America Movil’s CFO said in a conference call that it was too early to say if they would do any other deals in Europe, and that KPN would allow increasing their knowledge on the European market: "The company (KPN) is a solid company (which offers) in the long term a good return on investment. This is a market we do not know. Being closer to the action through the likes of KPN can give a better view for us."

The price of this transaction (€8/ share) entails a 5.3x EV/EBITDA multiple; if we apply this multiple to PT, we arrive to a price of €4.65/ share, circa 13% above Monday’s closing price.

Monday’s announcement of this deal supported PT’s performance in the rest of the week (+2.4%). This deal has drawn attention to European incumbent operators in general, particularly those who trade at depressed multiples like KPN, and those which are possible consolidation targets rather than consolidators in the sector; this is the case of Portugal Telecom.

Zon Multimedia

Buy – Medium Risk (Target YE12: €3.05) Isabel dos Santos increases stake in Zon to 15% Alexandra Delgado, CFA Equity Analyst Zon Multimedia has disclosed Tuesday that Angolan businesswoman Isabel dos Santos signed a sale and purchase agreement of 15,200,427 shares (4.918% of Zon’s share capital and voting rights), thus the qualified stake attributable to Isabel dos Santos is now 14,918% of Zon’s capital, which makes her the top shareholder of the Portuguese cable company. Isabel dos Santos bought these shares from Telefónica, which has been selling non-core assets. According to news reports, the transaction price was €2.50/ share, which compares to Tuesday’s closing price of €2.574.

We remind that shareholders approved an alteration to article 9 of Zon’s Articles of Association, in the last Annual General Meeting held on April 27th. This article defines that shareholders that hold 10% or more of competing companies cannot hold more than 10% of Zon’s capital. The alteration changed the text that defines competing business to

“Competing business is the activity truly carried out in the same market and in relation to the same services provided by the subsidiaries or affiliates in the company”. The new text clarifies

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that Isabel dos Santos does not hold significant stakes in competing businesses, and has therefore paved the way for the stake increase.

We also remind that bank CGD wants to sell its stake in Zon (10.9%) as well as bank BES (10.8%). According to news reports last couple of months, CGD and BES may sell their stakes in Zon at the same time with the goal to maximize the value they can obtain from their shareholdings in the cable operator. Since Isabel dos Santos has now 15% this means it cannot buy combined holding of 22% from CGD and BES without having to launch a public offering. This means that if there isn’t any other entity interested in entering Zon’s capital, than one or both of these banks might have to postpone the divestment in Zon.

We continue to believe that an increasing stake in Zon by Isabel dos Santos increases the probability of a merger with Sonaecom.

1Q12 Earnings Comment - Resilient domestic EBITDA

 Zon Multimédia disclosed its 1Q12 earnings this week. Revenues and EBITDA were broadly in line with our estimates.

 Top line in Portugal remains pressured due to challenging macro environment (-3.0% YoY), but EBITDA keeps resilient. Triple Play revenue trend improved (-1.9% YoY), with analogue switch-off partially offsetting premium revenues weakness.

 Zon started to consolidate its 30% stake in Angolan Zap: €6.4 mn in revenues and €0.2 mn in EBITDA. Zap is bringing more revenue than we forecasted and already a positive EBITDA.

Contribution to net income was -€1.3 mn.

 Capex was €29.6 mn in 1Q12, in line with company guidance. Operating cash flow (EBITDA minus capex) grew 23% YoY. Free cash flow was €16.3 mn in the quarter, showing that cash generation boost is on the way.

 Zap should reach net income and free cash flow break-even by the end of this year/ beginning of next year. Zon management expects Zap to reach EBITDA margin around 35% in 3 years. It was highlighted the low capital-intensive nature of operation in Angola (contribution to consolidated capex in 1Q12 was €0.3 mn).

 Management believes the company will be able to maintain EBITDA in 2012 through cost control.

Capex will come down by €25 mn and Long Term contracts by another €25 mn. So assuming EBITDA stability, free cash flow should be circa €100 mn. With dividends of €50 mn, reduction of net debt (excluding proportional consolidation of Zap’s Net Debt) should be around €50 mn this year.

 We maintain the price target for Zon Multimédia at €3.05 (YE12), with a Buy, Medium Risk recommendation.

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

MEDIA

Media Capital

Unrated (Target YE12: €2.10)

1Q12 Earnings Comment - Strong decline in costs helped operational numbers

João Flores, Equity Analyst

 Media Capital disclosed 1Q12 earnings this week.

 Overall, increasing tough environment (declining numbers, lower activity) penalized operational numbers higher than estimated. We highlight strong decline in costs (-23% YoY) helped operational numbers.

 Revenues declined 25% YoY to €40.0mn (vs €43.2mn estimated) penalized by strong negative trend in advertising. Lower than expected numbers in TV offset positive numbers in Audiovisual and Radio.

 We highlight TV advertising revenues declined 22% YoY to €21.8mn (vs estimated €23.7mn).

According to MC, FTA market should have decreased by 23%.

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 Radio advertising revenues kept unchanged €2.8mn (above estimated €2.6mn).

 Costs were lower than estimated (declined 23% YoY to €35.8mn) vs estimated €38.5mn), reflecting cost cutting measures and lower activity in Audiovisual and Entertainment.

 EBITDA declined 38% YoY to €4.2mn (vs estimated €4.7mn), penalized by numbers in TV, while EBITDA Margin declined to 10.5% (-2.2pp YoY) below estimated 10.9%.

 Below operational numbers, D&A were in line with estimates (-€2.8mn vs estimated -€2.9mn) while net financials showed a negative surprise (-€2.6mn vs -€1.4mn estimated, penalized by higher interest costs and mark-to-market of the interest rate swap). Minority interests reached €0, since company changed consolidation perimeter in small operations.

 Net income reached minus €1.0mn (slightly below €0.6mn estimated), penalized by lower operational numbers and higher financial costs.

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

Cofina

Buy – High Risk (TargetYE12: €0.49)

1Q12 Earnings Comment - Starting negative trend in newspapers circulation? João Flores, Equity Analyst

 Cofina disclosed 1Q12 earnings this week.

 Circulation and advertising revenues increased pace of decline while alternative products were the positive surprise.

 We highlight market is increasing tough, thus risks of further declines in margins are arising.

 Revenues declined 11% YoY to €26.4mn (€27.3mn estimated), penalized by strong decline in advertising revenues both in Newspapers and Magazines. Costs declined by 8% YoY to €23.2mn (vs estimated €23.5mn). EBITDA declined 25% to €3.2mn (below estimated €3.8mn) penalized by newspapers, while margin declined to 12.2% (-2.3pp YoY) below estimated 14.0%.

 Newspapers revenues declined 10% YoY to €20.5mn (vs €21.1mn estimated), reflecting strong decline in advertising (-18% YoY). We highlight negative numbers from circulation: dropped 5% YoY to €11.3mn (below estimated €11.9mn). Costs were slightly lower than estimated (decreased 6%

YoY to €16.8mn vs estimated €17.0mn) thus operational numbers were lower than expected (€3.6mn -24% YoY vs €4.2mn). EBITDA margin declined to 17.7% (-3.3pp) below estimated 19.7

 Magazines revenues declined by 14% YoY to €5.9mn (below estimated €6.1mn). Advertising declined 18% to €1.9mn as expected while circulation was a negative surprise (-13% YoY to

€€3.5mn ve estimated €3.9mn). Costs reduction strategy implemented was more efficient than estimated (€6.3mn vs €6.5mn), thus EBITDA was in line with estimates, reaching negative numbers (minus €0.4mn). EBITDA margin slightly recovered to minus 6.9% (minus 5.9% estimated).

 Below EBITDA, D&A (-0.8mn vs -€0.9mn), financials (-€1.1mn vs -€1.3mn) and taxes (-1.1mn vs -

€1.9mn) were lower than estimated, which helped Net income to reach positive numbers: €0.3mn, above minus €0.3mn estimated.

 Net debt reached €81.3mn (€79.8mn by YE11).

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

TECHNOLOGY

Indra

Buy – High Risk (TargetYE12: €13.90)

1Q12 Earnings Comment - In line; weaker Spain offset by Latin America

Alexandra Delgado, CFA Equity Analyst

 Indra disclosed its 1Q12 earnings this week. Earnings were broadly neutral. Revenue growth and EBIT margin are in line with company’s guidance for the full year.

 Revenues in 1Q12 stood at €714.3mn, growing 8.6% YoY (1% excluding acquisitions’ impact).

Recurrent EBIT was €59.7mn, declining 13.3% YoY on the back of increased pricing pressure in

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Spain and lower margins driven by acquired companies. Recurrent EBIT margin dropped 2.1pp YoY to 8.4% in 1Q12 (in line with full-year guidance: 8% - 9%).

 Net profit reached €32.0mn in the quarter (-17.7% YoY), on the back of lower EBIT and higher financial expenses.

 Revenues in Spain fell 8.1% in the quarter, reflecting a worsening business environment (-2.6% YoY in FY11). Revenue decreased in all vertical markets but Financial Services. Weakness affects particularly markets with higher weight of institutional clients (Security & Defence, Transport &

Traffic and Public Administration).

 Tough outlook for Spain is offset by international growth, mainly Latin America (+30% YoY organic growth). Revenues from international markets grew 32.6% YoY in 1Q12 (+14% excluding acquisitions). International markets have accounted for 50% of revenue in 1Q12 and the company expects to increase this figure by year end.

 Net Working Capital has increased in the year on the back of a tough environment in Spain, reaching 106 days of revenue (guidance is between 110 and 100 Days of revenues). Net Debt reached €549 mn, 2x Long Term recurrent EBITDA; Indra expects to maintain this ratio by year end.

 The company has reiterated its 2012 guidance.

 All in all, we remain comfortable with our valuation and maintain the price target for Indra at €13.90 (YE12), with a Buy, High Risk recommendation.

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

Novabase

Buy – High Risk (TargetYE12: €4.00) 1Q12 Earnings Comment - Pressured topline, but positive EBITDA Alexandra Delgado, CFA Equity Analyst

 Novabase disclosed its 1Q12 earnings this week. 1Q12 Earnings showed significant pressure on topline, but EBITDA was significantly above our estimates.

 Revenues in 1Q12 stood at €53.7mn, falling 9.5% YoY due to the sharp contraction of product sales in Portugal as seen by IMS (-24.6%) and Digital TV (-16.0%) performance. Business Solutions performance was good, with revenues growing 7.1% YoY.

 Revenues in Portugal dropped 12.0% YoY in 1Q12. International business declined 1.2% YoY which is explained by the fact that 1Q11 was an extreme strong quarter and also because some contracts were delayed to 2Q12.

 EBITDA was €5.3mn, meaning a 9.8% margin (+1.6pp YoY). The positive performance in terms of EBITDA is a result of measures adopted in 4Q11 (restructuring in Portugal) and therefore sustainable ahead.

 Net profit reached €2.5mn in 1Q12 on the back of higher EBITDA. Working capital investment decreased in 1Q12 (by €1.8mn) and net cash grew to €17.1 mn from €11.1mn by the end of 2011.

 Management says they are comfortable in terms of 2Q12, but that visibility ahead is still low.

Pipeline is higher than the previous year, but it still too soon to know what will happen in 2H.

 The company has reiterated its guidance for 2012. Management has no doubts about reaching EBITDA guidance; revenue guidance is more challenging but still attainable.

 All in all, we remain comfortable with our estimates. We maintain the price target for Novabase at

€4.00 (YE12), with a Buy, High Risk recommendation.

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

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UTILITIES

Iberdrola

Buy – Low Risk (Target YE12: €5.90) 1Q12 Earnings Comment – Earnings sustained by international business Vanda Mesquita,

Equity Analyst

 Iberdrola disclosed its 1Q12 earnings this week. All in all, earnings were good, driven by international activities and came in line with our estimates. Gross profit went up 4% YoY (2% below our estimates), EBITDA rose by 4% YoY (in line with our estimates, due to better than expected operating costs) and net income increased by 1% YoY (in line with our estimates).

 EBITDA posted an increase of 4% YoY mainly due to the internationalization activities, as activities in Spain were under pressure in the quarter. In this country, EBITDA from regulated activities dropped by 15% YoY (following the cut of distribution revenues decided last March) and EBITDA from renewable business went down 10% YoY (wind production dipped 9% YoY due to a weak load factor in the quarter). On the contrary, EBITDA from liberalized activities remained stable YoY, benefiting from higher selling prices that helped to offset higher production costs (hydro production was abnormal due to the lack of rain) and also from a favorable decision from the Supreme Court concerning social tariffs.

 By business, Iberdrola did a reclassification of the US & Canada gas activities from renewable to liberalized business, meaning that figures are not directly comparable with our estimates. Bearing the restated data in mind, all the businesses contributed positively to earnings. In spite of the aforementioned cut of revenues, EBITDA from regulated business was mainly boosted by Brazil (due to the integration of Elektro that was not included in the 1Q11). Both liberalized and renewable activities posted similar increases (+3% YoY), with the former business benefiting from a recovery in the UK business and also from the aforesaid decision by the Supreme Court and the latter business benefiting from higher production, but simultaneously being hampered by lower prices.

 Net debt at 1Q12 stood at €31.6bn (vis-à-vis €31.7bn at YE11) and Capex for 1Q12 went down 10%

YoY to €746mn (accounts for 20% of our estimates for the full year).

 In the CC, IBE said that it intends to reduce debt and to maintain its dividend policy. Deleverage will be achieved through a lower capex plan (we are estimating an average of €4bn per year until 2015 vis-à-vis an average of €4.3bn per year in the last three years), through the improvement of efficiency levels and also through the selling of assets.

 Following 1Q12 earnings disclosure, we feel comfortable with our estimates.

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

EDP

Buy – Low Risk (Target YE12: €2.90)

Closing of privatization deal announced today Vanda Mesquita, Equity Analyst Today, CTG and Parpública announced the closing of the privatization deal, meaning that from now on Parpública’s stake in EDP is reduced to 4.14% (shares that are under an exchangeable bond issue maturing in 2014).

As a reminder, at the same time that the Portuguese State sold its stake to CTG, this Chinese company announced a partnership with EDP. Under this partnership, CTG said that it will acquire €2bn of minority stakes in wind parks and that it will support a €2bn firm commitment loan with a Chinese financial institution, with a maturity up to 20 years. Following the closing of this deal, we expect this partnership to start producing results, (namely to help EDP to improve its financial ratios and to assure its financial needs until mid-2015).

1Q12 Earnings Highlights – Liberalized activities still under pressure

 EDP disclosed its 1Q12 this week. All in all, we consider that this set of earnings came as no surprise. EBITDA for 1Q12 went down 3% YoY, surpassing our estimates by 2%, mainly due to

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lower than expected Opex, as gross profit came in below our estimates. By business, the good performance from wind energy was totally offset by the worst performance from all other activities, mainly from liberalized activities that continues to be depressed due to lower margins. Net debt remained stable and capex went down, as expected.

 Gross margin for 1Q12 remained flat YoY (2% below our estimates). Comparing to our estimates, main deviations come from liberalized activities (15% below our estimates) as we were more optimistic regarding unit margins. In spite of a higher average selling price, unit margin per MWh dipped 19% YoY mainly due to higher generation costs (as a consequence of a higher use of more expensive technologies, as hydro production was weak in the quarter) and also due to lower volumes (-8% YoY).

 Opex for 1Q12 came in better than our estimates. Comparing to our estimates, main differences came from lower costs from liberalized business (-8% YoY) mostly driven by the strict cost control and also by the drop of production.

 EBITDA went down 3% YoY, beating our estimates by 2%. By business, wind energy posted an impressive growth (+20% YoY; 3% above our estimates – please refer to our Snapshot: EDP Renováveis - 1Q12 Earnings Highlights - Earnings slightly higher than our expectations released on May, 9th) driven by higher production and higher prices and liberalized business (-22% YoY; 7%

below our estimates) posted the least interesting results for the aforesaid reasons.

 Net profit went down 2% YoY (19% above our estimates), benefiting from lower income taxes (due to one-offs), but being hampered by higher minority interests (following the reduction of the stake in Energias do Brazil from 64.8% to 51%).

 Net debt stood at €16.9bn, remaining almost flat comparing to YE11 figure and capex dropped by 17% YoY mainly due to the slowdown of deployments in wind (we are estimating a capex of €1.8bn this year, a slower figure comparing to the average of €2.8bn per year in the last three years).

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

1Q12 Earnings Comment – Liberalized activities still under pressure (II)

 In the CC, EDP mentioned that negotiations with the Portuguese government to reduce the overall cost of electricity are ongoing (they haven’t been finalized) and that news regarding this matter should be announced soon. The company will update this topic in its investor day.

 As a reminder, EDP will host an investor day on 22nd and 23rd, in which it will present the 2012- 2015 new business plan. As previously mentioned, we believe that this new business plan will have in mind not only the new partnership with CTG, but also a slower investment plan and a more conservative dividend policy (in which a scrip dividend could be included).

 Concerning the outlook for 2012, the company said that it maintains its view that EBITDA should post a middle single digit growth (we expect EBITDA to increase by 3% YoY).

 Following earnings disclose, we feel comfortable with our estimates, keeping our buy recommendation.

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

EDP Renováveis

Buy – Low Risk (Target YE12: €5.30) 1Q12 Earnings Highlights - Earnings slightly higher than our expectations Vanda Mesquita,

Equity Analyst

 EDPR disclosed its 1Q12 earnings this week. All in all, this set of earnings slightly beat our expectations, with EBITDA coming 3% above our estimates (mainly due to higher prices, as opex came out broadly in line) and Net profit 4% above our estimates.

 Gross profit for 1Q12 rose 22% YoY boosted by higher production (+18% YoY) and higher average selling prices (+4% YoY). Figures came out 2% above our estimates as we were less upbeat regarding prices. By country, gross profit came out better than expected in Spain (4% above), in

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Portugal (10% above) and in the Rest of Europe (10% above) and worse than expected in the US (3% below).

 EBITDA for 1Q12 went up 20% YoY (3% above our estimates). By country, figures came out better than expected in all countries/ geographies, with main differences coming from the Rest of Europe (15% above) and from Portugal (11% above).

 Net income for 1Q12 stood at €62mn, up 27% YoY (4% above our expectations), benefiting from lower D&A (-4% YoY mainly due the extension of the wind farm’s useful life to 25 years that only happened in the second quarter of the previous year), but at the same time being hampered by higher financial costs (+51% YoY because of higher debt).

 Net debt including institutional partnership at 1Q12 stood at €4.5bn (vis-à-vis €4.4 bn at the YE11).

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

1Q12 Earnings Comment - Earnings slightly higher than our expectations (II)

 All in all, there was no major news from this conference call. As a reminder, EDP will host an Investors’ Day on May 22nd and 23rd, in which a part will be devoted to the presentation of the EDPR’s new business plan (until 2015). As previously mentioned, we expect this event to give us a further insight of the partnership with China Three Gorges (namely the acquisition of minority stakes) and also, more details about the pace of annual deployments until 2015.

 Concerning short-term outlook, the company said that it keeps its annual target of installations (+500MW vs our estimates of 485MW) and that it still expects a sustainable improvement in terms of price. In spite of an impressive growth of production this quarter (+18% YoY), the company mentioned that it maintained its target of a single digit output growth (regarding this we are more upbeat, as we expect a 9% growth).

 Following earnings disclosure, we feel comfortable with our estimates, keeping our Buy recommendation.

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

CONGLOMERATE

Sonae

Buy – Medium Risk (Target YE12: €0.92) Sierra`s 1Q12 Earnings Highlights - Brazil drives growth João Flores;

Equity Analy t

 Sonae Sierra, the shopping malls segment of Sonae, disclosed today, after market close, its 1Q12 figures. Overall, company benefits from Brazil growth (sales rose 11.4% in Reais) while shows resilience and improves margins.

 NAV of Sonae Sierra declined by 2.9% YoY while increased 1.1% QoQ, reaching 36.47 (vs estimated 36.50).

 Revenues slightly rose 2% YoY to €52mn, reflecting increase in Investment Properties.

EBITDA increased 4% YoY to €30mn, thus margin improved to 57.9% from 57.0% in 1Q11, reflecting efficiency gains from the cost reduction efforts. Recall we estimate a slight increase (1.0%) both in revenues and margins in 2012, thus EBITDA margins unchanged at 54.4% on an annual basis.

 We highlight LfL tenant sales decreased by 0.8% YoY in 1Q12 (vs -0.2% in 2011/2010), keeping negative trend, penalized by numbers in Greece, Portugal and Spain.

 Global Occupancy Rate slightly declined to 96% (-0.7pp YoY, -0.8pp QoQ).

 We highlight company decided to change its valuation policy and move from quarterly valuations to half-yearly valuations given high level of uncertainty in what regards property values (very low levels of transactions that can serve as reference for value), thus indirect results will reflect changes in valuation (yields effect, transactions...) on a half-yearly basis.

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 Recall Sierra valuation in Sonae`s SoTP is done using a 5% discount over NAV estimated in YE12 (€36.50) given yield risks. Estimated NAV in Sonae`s SoTP is €34.68.

 Currently, Sonae Sierra has 51 (+2 QoQ) shopping centres in operation, 30 of which are located outside Portugal. The Company has 3 (5 YE11) Shopping Centres under construction, representing an investment of about €375mn: Germany (1) and Brazil (2).

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

Unibail-Rodamco in Portugal?

According to the news, Unibail-Rodamco (leading listed real estate company in Europe) plans to enter the Portuguese shopping-center market by purchasing two second-tier malls (Almada Forum and Forum Montijo from a fund controlled by Commerzbank) for about €500mn.

Apparently company is reinvesting the proceeds from disposals of smaller centers or malls with limited scope (raised €1.3bn from divestments last year).

We appreciate a major real estate company (portfolio reached €25.9bn YE11) showed interest in the Portuguese shopping-center market, thus we believe deal it’s positive news to Sonae and Portuguese shopping-centre market:

i) Unibail-Rodamco is focused on largest shopping centres in major European cities, thus we believe company could be interested in prime location shoppings in Portugal, which could be positive news to Sonae Sierra (selling some shoppings could be an option to Sonae Sierra in order to reduce exposition to Portugal. Currently, Sonae Sierra has 51 shopping centres in operation, 30 of which are located outside Portugal.

ii) increases visibility of Portuguese market, possibly attracting major real estate companies.

iii) increases transparency. Recall Sonae Sierra decided to change its valuation policy and move from quarterly valuations to half-yearly valuations given high level of uncertainty in what regards property values (very low levels of transactions that can serve as reference for value), thus Unibail-Rodamco deal is welcome to serve as reference.

Further details are unknown (companies declined to comment to the press; price its correct?

price includes debt? is there any option included in the price? risk of Portugal exiting Eurozone is considered in the deal? ) thus it’s difficult to compare with Sonae Shoppings valuations.

Despite being aware of difficulties, we decided to compare Sonaes shoppings valuations from C&W, and we realized deal price (if confirmed) is at premium to second tier shoppings, which increases confidence in Sonae Sierra valuations.

Shoppings from Sonae Sierra portfolio

C&W valuation €`000* Stake 100% GLA sqm** €`000 / sqm €`000 / sqm ***

Prime Shoppings

Colombo 364,332 50% 728,664 111,585 6.53 5.85

Norte Shopping 188,051 50% 376,102 73,275 5.13 4.60

Cascais Shopping 160,225 50% 320,450 73,583 4.35 3.90

Vasco da Gama 148,705 50% 297,410 48,945 6.08 5.45

Second tier shoppings

Guimarães Shopping 56,569 100% 56,569 30,743 1.84 1.65

Gaia Shopping 75,268 50% 150,536 59,672 2.52 2.26

Maia Shopping 48,201 100% 48,201 28,906 1.67 1.49

Algarve Shopping 133,759 100% 133,759 42,535 3.14 2.82

Coimbra Shopping 22,571 100% 22,571 26,491 0.85 0.76

*Sonae Sierra 2009 Annual Report

** from Portuguese Association of Shopping Centers

*** applying the decline from the value of investment properties (-10.4%) from 2009 to 2011

Unibail-Rodamco deal

Deal px Stake 100% * GLA sqm*** €000 / sqm

Almada Forum 68,815

Forum Montijo 47,200

500,000 100% 500,000 116,015 4.31

* not considering minorities

** Portuguese Association of Shopping Centers, excluding c.10 00sqm from hypermarkets

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Value of investment properties

2009* 2011** %

Portugal 1,451,115 na

Spain 702,508 na

Portugal + Spain 2,153,623 1,930,202 -10.4%

*Sonae Sierra 2009 Annual Report

**Sonae Sierra 2011 Annual Report

Semapa

Neutral – Medium Risk (Target YE12: €5.75) Reinitiating Coverage - An expensive acquisition João Mateus;

Equity Analyst

 We reinitiate coverage of Semapa with a price target of €5.75 per share, for the YE12, with a neutral, high risk recommendation. We now consider the acquisition of the stake of CRH in Secil (49%) and of 50% of Supremo Cimentos, included the latest revision of Portucel, updated Secil’s estimates based on released figures in the FY11 company report and increased the country risk premium for the cement business in Portugal, Lebanon and Angola in perpetuity.

 The acquisition of the stake of CRH in Secil by Semapa will be effective in 15 May, at the established price of €574,28mn. This deal, together with the revision in the estimates of Portucel and Secil, impacted negatively our valuation in €1.80. We included the acquisition of 50% of the Brazilian Supremo Cimentos at €57.7mn with no impact in value for now.

 EBITDA in the 1Q12 may have come 5.7% lower YoY, mainly on the back of the fall in Portucel, despite YoY margin recovery in Secil. The top line may have come almost 4% lower YoY and 8.2%

lower QoQ, mainly on the reduction in Portucel. In the cement business, the situation in Tunisia may bring positive surprises in 2012, while domestic demand in Angola may continue offsetting competition from Chinese imports.

 We increased the country risk premium for the cement business in Portugal, Lebanon and Angola in perpetuity. For all these countries, the increase of 50bp in the spread between the local and the German (risk-free) sovereign yields resulted in an increase in the country risk premium of 100bp in perpetuity. This aggravation of country risks took €1.25 from our price target.

 Net financial costs must have come more than 20% lower YoY on non-recurrent costs in the 1Q11 in Portucel, but also on the reduction in Net Debt in both Portucel and Secil. Net Debt to EBITDA may come close to 3.3x at the YE12, but fall back to 2.6x at the YE13, still a low leverage multiple in both pulp and paper and cement sectors, even after the acquisition of the stake of CRH.

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

Sonae Capital

Buy – High Risk (Target YE12: €0.23) New campaign to promote Troia Resort António Seladas, CFA;

Equity Analyst Troia Resort belonging to Sonae Capital began a new campaign, where it advertises apartments in Troia Marina, namely one bedroom apartment, 77m2 at €252 000. The payment could be done in 24 months, 15% upfront, 85% in two years time and a monthly installment of €750 that will be deducted at the end.

It shows clearly the necessity to generate cash, however and despite being an interesting way to promote the apartments, we believe it is too timid and the risk is being short of the final objective. The sales price per sqm is roughly 5% above our estimates, so we feel comfortable enough with our estimates.

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RETAIL

Jerónimo Martins

Buy – Medium Risk (Target YE12: €15.85) Valuation Update - Bullet proof to war prices in Portugal João Flores, Equity Analyst

 Following 1Q12 Earnings and JM`s aggressive prices campaign in Portugal, we decided to fine-tune our JM`s valuation. Our price target YE12 was revised downwards to €15.85 from

€16.30 while kept unchanged Buy recommendation (Medium Risk), meaning a 12% upside vs current price. Changes in Portuguese estimates had a €0.30 negative effect (revised downwards margin) while changes in Polish estimated had a €0.15 negative effect (fine tune sales in Zlotys while margins were slightly revised upwards). Capex kept unchanged (only reflected Fx changes in Biedronka) while changes in Euro/Zloty Fx rate (from 4.26 to 4.27) had no effect.

 We revised downwards consolidated EBITDA margin in 2012 from 7.4% to 7.2%, since upwards revision in Poland (from 8.1% to 8.2%) was offset by strong downwards revision in Portugal (from 6.6% to 5.8%).

 Our valuation includes a special dividend in 2012 (to be paid in 2013, payout-ratio 150%) expecting company will increase payout-ratios.

 Recall we are not considering Colombia in our JM`s valuation since company will disclose further details on July 25th (2Q12 Earnings). We estimated Colombian unit EV valuation could reach c€1.2Bn, thus increasing JM`s price target from €15.85 to €17.70, keeping Buy recommendation (Medium Risk).

 We highlight Pingo Doce promotion shows a turnaround in JM`s strategy, since company marketing was focused on “everyday low prices” and not on specific campaigns (which are expected to keep on). We believe JM will consider other option to retain clients (loyalty cards, vouchers,…) otherwise clients will return to stores only on promotion`s days.

 Retailer Ahold has a 49% stake in its joint venture JMR (domestic retail), thus we believe Dutch retailer could be “pressed” to sell its stake if Portuguese environment further penalizes its valuation. Ahold it’s a silent partner and has no executive decision, thus we believe Ahold selling stake in JMR could be an option.

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

EU raised its economic-growth forecast for Poland to 2.7%

The European Commission raised its economic-growth forecast for Poland to 2.7% (from 2.5% in February outlook), citing domestic demand and public spending on the Euro 2012 soccer championship.

Recall EU`s forecast is above 2.5% estimated by Polish government.

Furthermore, commission estimates Poland will narrow budget deficit to 3%/GDP this year from 5.1% in 2011 on the back of the 2011 package of structural consolidation measures. Estimates 2.5% in 2013.

Overall, increasing optimism from EU its positive news to Poland, thus potentially positive news to Biedronka (benefiting from a growing economy).

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INDUSTRIALS

Sonae Industria

Buy – High Risk (Target YE12: €1.60)

1Q12 Earnings Comment - Efficiency on track … João Mateus,

Equity Analyst

 Sonae Industria (SI) released this week the 1Q12 earnings. We kept our estimates and our valuation at €1.60 per share, for the YE12, with a recommendation of Buy, High Risk.

 On the 1Q12, EBITDA came 26% over our estimate and 76% higher YoY, recovering from a negative -€2mn in the 4Q11 to €30mn in the 1Q12. The YoY growth came essentially on the recovery in Central Europe and in Iberia. The rest of the world supports the best EBITDA margins in the group but the difference for Europe has reduced with a 1.9pp YoY fall in margin.

 Net Financial costs came 25.6% higher YoY on the 1Q12 mainly on average interest rate increase and despite some reduction in Net Debt (-€18mn). On QoQ terms, net financial costs increased 8.5%, despite a stronger EBITDA that supported continued debt reduction.

As stated, working capital reduced €13mn YoY in the 1Q12, despite a €7mn seasonal increase on QoQ terms. Stated investment of €11mn is slowly increasing from previous years’ lower level towards expectable higher levels in the coming years. On annualized terms, the 1Q12 figure came out above the 3% to sales mark which is still under our estimated recurrent long term ratio (3.5%) .

 Net Debt to EBITDA may reach 7.3x at the YE12 and come down to under the 3x mark only around 2020. Higher efficiency levels and stronger resulting EBITDA levels help speeding up debt reduction though leverage will still remain excessive for too many years. We maintain our view that a capital increase would be a better solution for a company that continues to prove to be a good investment for present and prospect shareholders.

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

Altri

Sell – High Risk (Target YE12: €0.85

Earnings highlights and valuation update - Strong price mix recovery together with efficiency improvements

João Mateus, Equity Analyst

 Altri released the 1Q12 earnings this week. We reduced our price target from €1.20 per share to

€0.85, for the YE12, with a sell, high risk recommendation. We updated our estimates based on released figures, increased the country risk premium and reduced nominal growth in perpetuity.

 In the 1Q12, EBITDA margin came 0.8pp over our estimate, but EBITDA came 29% over, essentially on a bigger deviation at the top-line. EBITDA came 29.9% higher QoQ, despite having reduced 12% YoY, on a strong QoQ increase in average prices that have improved in both Europe and Asia. A higher proportion of sales to Europe where pulp prices are higher and a 3.5% increase in volumes helped the QoQ recovery. The 4.5pp recovery of margin was also affected by higher cost efficiencies, while the 16% higher average price of sales in the 1Q11 was mainly responsible for the 2.4pp YoY decrease in margin. On YoY terms, volume sales increased 22%. We expect the continuation of the recovery in pulp prices until the 3Q12 and a probable turn South already during the 4Q12.

 We updated assumed sovereign yields for Portugal and Germany resulting in an increase in the country risk premium (+2% in explicit period and +1% in perpetuity) and reduced our inflation assumption for perpetuity from 2% to 1.5%. These changes produced a negative impact of €0.45 per share in our price target.

 Net financial costs came more than 9.5% higher YoY and 12% lower QoQ. Net Debt increased 0.6%

QoQ on seasonal interest payments but we expect it to reduce more than 10% during 2012. Net Debt to EBITDA may come close to 5.85x at the YE12 and fall to 3.3x until the YE16, in what

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remains a high leverage multiple in the pulp and paper sector for the next 5 years.

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

CONSTRUCTION

Mota-Engil

Buy – High Risk (TargetYE12: €1.45)

Portuguese Construction Index António Seladas, CFA

Equity Analyst The Portuguese Statistician Institute (INE) released yesterday the Construction Production Index for March. The YoY change was -15.2%, being the worst negative change (YoY) for the last 6 years. Having said that, the index is showing some stabilization around current levels, actually the mom change was slightly positive.

We should highlight that our estimates for Mota Engil are pointing to a negative change of 15% in 2012 and 2013. We feel comfortable with our estimates, however a stabilization around current levels and assuming a small improvement in the 2H12, mainly due to favorable base effect and the annual figure could be slightly better than our estimates.

Source: INE, Mib

Spanish motorway went bankrupt

According to “Cinco dias”, the Spanish daily newspaper, the concessionaire of the motorway Madrid/Toledo, was declared bankrupted in a Spanish court. We should highlight this motorway was owned by ES Concessões, 15% and is in the process of being transferred to Ascendi (a Portuguese motorway holding company having stakes in several motorways and belonging to Mota Engil 55%/60%

and BES 45%/40%). The Madrid/Toledo motorway was not yet transferred to the new holding, which means that the provision will be created by BES and will be transferred at a residual value, without impact on Ascendi.

OIL & GAS

Galp Energia

Buy – High Risk (Target YE12: €18.30) Galp announced an agreement with ENI to acquire stakes in Setgas and

Lusitânia Gás

Vanda Mesquita, Equity Analyst Galp announced that it has signed an agreement with ENI to purchase a 21.9% stake in Setgás and a 10.6% stake in Lusitâniagás. These acquisitions will amount to €40.5mn. Both companies operate in the gas distribution business (regulated activities), with the former company operating in the South of Portugal and the latter operating in the Centre coast of Portugal. Following this

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acquisition, Galp’s stakes in Setgás and Lusitâniagás will increase to 66.9% and 96.3%

respectively. This operation needs approval from the competent authorities.

As a reminder, Galp had considered to sell minority stakes under the gas distribution business in order to finance its investment plan. However this possibility was ruled out, mainly due to the successful deal of the capital increase at the Brazilian subsidiary that allowed Galp to gather enough funds to finance its upstream activities. The reinforcement of the gas distribution activities is a clear sign that the company will continue to bet in this kind of activities. The gas distribution business does not have a very meaningful weight in our valuation, only accounting for 5.56% of our enterprise value.

SECTOR PERFORMANCE

* includes Jeronimo Martins and Sonae

-18.6 -15.2

-4.4 -2.9

0.6 3.8

7.3 -5.8

-30 -10 10

Financials Electric Utilities Oil & Gas Telecoms Motorways Industrials & Other Retail * PSI20

Sector Performance - YTD (%)

-1.7 -1.6 -1.5

0.2 0.4

0.6 3.6 0.2

-5 -3 -1 1 3 5

Electric Utilities Motorways Oil & Gas Retail * Industrials & Other Financials Telecoms PSI20

Sector Performance -1 Week (%)

 This week, the PSI20 went up 0.2%. The best performing sector was Telecoms with a 3.6%

growth and the worst was Electric Utilities with a 1.7% fall.

 On a Ytd basis, the PSI20 went down 5.8%. The best performing sector was Retail with a 7.3% growth and the worst was Financials with a 18.6% fall.

AGGRESSIVE PORTFOLIO

This week, Mib Aggressive Portfolio went up 1.97%, outperforming the PSI20 by 1.72pp.

Excluding Sonae Industria and Novabase, 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 1.88%, underperforming the PSI20 by 1.63pp.

Excluding Indra and Galp Energia, 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

References

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Other factors that favor good performance in adult cochlear implant candi- dates include lip-reading ability and residual hearing before implantation (patients with some hearing in