CEE Equity Monthly - A Data Proreports.aiidatapro.com/...11-07_CEE_Equity_Monthly.pdf · Albalact 0.2 0.3 Buy 64.8% ... Erste Group Research – CEE Equity Monthly Page 5 Changes

Erste Group Research – CEE Equity Monthly Page 1

Erste Group Research CEE Equity Monthly | Equity | CEE November 2011

CEE Equity Monthly Uncertainty remains the main element, but getting back on track to finding solutions, the idea of realizing the upside from an “oversold” situation remains intact.

Henning Eßkuchen [email protected]

Uncertainty and angst remain the main market steering element. While the relief after wrapping up the rescue package has demonstrated that there is indeed some immediate upside potential as soon as fear fades out, Mr. Papandreou’s unexpected maneuvering has put us more or less back to where we were before. Financials should remain the area with the highest sensitivity to this. In the event of no further disturbance and with some help from an unexpected ECB rate cut, we still see a chance for reasonable 4Q performance, as mentioned in our CEE Strategy report.

Earnings revisions and further reduced growth outlook put low valuations on a relative scale, admittedly, but still remain in a scenario of markets being somewhat “oversold”, with the respective recovery potential. Equity risk premia remain at high levels of above 600bp for the region.

Interestingly, economic expectations for the CEE region were reported as recovering by the latest ZEW survey. Most currencies are seen as appreciating, which should help Poland and Turkey in particular. We see some support for our generally positive view on Romania from the latest rate cut surprise. Also, along with Serbia, having the IMF as an anchor for financial prudence should be seen as positive. Hungary remains a difficult territory. Fund flows, however, are still not positive for emerging markets overall. The only good news so far is the decelerating pace of outflows.

Basically, we stick to our country allocation as presented for 4Q. However, Turkey might be seen a bit more moderate with macro news in particular on the C/A account and inflation front being a bit worrying again and the banking sector losing some of its flavor again.

While the expected slowdown in growth might not be the best argument for industrials, we still like Polytec and BWT on fundamentals and valuation. Also AMAG remains a top pick within basic materials. Cimsa and Akcansa offer reasonable upside here as well and RHI also looks interesting chart-wise. Most charts for cyclicals look like something like a bottom is forming and in terms of relative performance against defensives they are gaining back territory. Among IT, we stick to our previous ideas. As mentioned, we would remain cautious with financials (or at least very selective), but VIG might be worth a look. Among defensives, Egis and Richter have done reasonably well, while Krka was still held back by its listing in thinly traded Slovenia. For the food section, we would stick to Astarta as well as to Sojaprotein, both of course with frontier market status. Finally, in real estate we continue to see the highest upside for Immofinanz.



Table of contents Highest upside potential 3 Changes in Estimates 4 Changes in Ratings 4 Changes in Target Prices 5 One Month Performance 5 Top 20 Dividend Yield 6 Top 20 P/E 6 Top 20 by Turnover 7 Stock Market Performances 8 Sector Performance 9

Macroeconomy 12 Real Economy 12 Interest Rates and Currencies 14 Special Events 15

Sector Insight 16 Automobile & Parts 16 Banks 21 Basic Resources 38 Chemicals 45 Construction 52 Food & Beverages 61 Healthcare 67 Industrial Goods & Services 75 Insurance 83 Media 88 Oil & Gas 95 Personal & Household Goods 104 Real Estate 108 Retail & Distribution 115 Romanian Funds & other Holdings 121 Technology 124 Telecom 130 Travel & Tourism 137 Utilities 141

Looking Ahead 147 Disclosures 151 Contacts 153

Share prices are as of November 3, 2011All prices are those current at the end of the previous trading session unless otherwise indicated and are sourced from local exchanges via Reuters, Bloomberg and other vendors.

Source for all charts and tables is Erste Group, Bloomberg, Factset. Consensus data are taken from Factset- Excel-Connect. In the sector insights the companies’ relative valuation multiples are comparisons to those for their CEE sectors. All aggregate measures are calculated as a median.



Highest upside potential / top picks Current price (LC) Target price (LC) Recommendation Upside

Astarta Holding NV 62.5 139.2 Buy 122.8%AT&S 9.2 19.0 Buy 106.7%ACE 6.0 12.2 Buy 104.1%Vistula Group 1.0 2.0 Buy 100.0%Polytec 6.6 13.0 Buy 95.6%PannErgy 630.0 1,228.0 Buy 94.9%BWT 14.0 26.8 Buy 91.5%RHI 15.6 27.5 Buy 76.3%Petrom 0.3 0.5 Buy 67.6%Sinpas REIT 1.2 2.0 Buy 65.3%Albalact 0.2 0.3 Buy 64.8%Krka 52.1 84.5 Buy 62.2%Allami Nyomda 633.0 1,010.0 Buy 59.6%Isbank 4.2 6.3 Buy 50.0%AMAG 16.1 24.0 Buy 49.2%Asseco Poland 49.4 72.8 Buy 47.4%Kapsch TrafficCom 53.0 78.0 Buy 47.2%Neuca 68.0 100.0 Buy 47.1%Yapi Kredi Bank 3.3 4.9 Buy 46.7%Turkiye Sinai Kalkinma Bankas 2.0 2.9 Buy 45.7%Immofinanz 2.4 3.5 Buy 44.6%Aselsan 7.7 11.1 Buy 44.2%Lenzing 72.9 104.9 Buy 44.0%Apator 17.2 24.7 Buy 43.4%Albaraka Turk 1.9 2.7 Buy 42.9%Anadolu Sigorta 0.8 1.2 Buy 42.9%Cinema City 28.4 40.0 Buy 40.7%CNG 2.1 3.0 Buy 40.3%CME 10.7 15.0 Buy 39.9%voestalpine 25.1 35.0 Buy 39.4%DO & CO 28.9 40.0 Buy 38.4%Action SA 17.6 24.0 Buy 36.4%Gubre Fabrikalari 12.1 16.3 Buy 35.3%OMV 25.2 34.0 Buy 35.1%Vienna Insurance Group 29.7 40.0 Buy 34.7%Halkbank 11.4 15.3 Buy 34.2%Garanti Bank 6.4 8.6 Buy 34.0%Park Elektrik 3.9 5.2 Buy 33.8%Turk Telekomunikasyon AS 7.5 10.0 Buy 33.7%Arcelik 6.7 8.9 Buy 33.2%Turcas Petrol AS 2.9 3.9 Buy 33.2%austriamicrosystems 39.0 51.7 Buy 32.5%Cyfrowy Polsat 14.4 19.0 Buy 31.9%Sojaprotein AD 553.0 723.0 Buy 30.7%Anadolu Hayat 3.0 3.9 Buy 30.0%Cimsa 8.0 10.3 Buy 29.4%Akcansa 7.1 9.0 Buy 27.5%Agora 15.8 20.0 Buy 26.7%Jeronimo Martins SGPS 12.8 16.0 Buy 25.2%Tofas 6.8 8.5 Buy 24.3%Richter Gedeon 35,300.0 43,865.0 Buy 24.3%NG2 45.3 56.0 Buy 23.6%Emlak Konut REIT 2.4 2.9 Buy 22.4%S Immo 4.3 5.2 Buy 22.4%GTC 11.3 13.6 Buy 20.4%



Changes in estimates Changes inforecasts

2011e 2012e 2013e 2011e 2012e 2013eAgrana 7.577 7.539 8.068 7.063Akbank 0.665 0.708 0.820 0.685 0.773 0.898Albaraka Turk 0.257 0.318 0.386 0.289 0.375 0.499Arcelik 0.798 0.886 1.003 0.667 0.933 1.061austriamicrosystems 3.855 5.063 5.271 2.881 3.153 3.149Aygaz 1.658 1.129 1.150 1.231 0.821 0.848Bank Asya 0.256 0.304 0.341 0.272 0.278 0.291CA IMMO 0.888 1.221 1.068 0.570 0.552 0.671Cimsa 0.791 0.893 0.979 0.864 0.935 0.973conwert 0.482 0.611 0.697 0.354 0.539 0.621Egis 1995.65 1981.57 2134.19 1843.31 1931.58 2031.68Garanti Bank 0.691 0.722 0.809 0.736 0.824 0.975GTC 0.639 0.669 -0.067 0.136 0.706Halkbank 1.559 1.614 1.852 1.633 1.891 2.122Immofinanz 0.318 0.349 0.374 0.318 0.241 0.294Isbank 0.549 0.575 0.635 0.687 0.746 0.830Orco 1.726 1.935 -0.330 0.110 1.173S Immo 0.275 0.608 0.812 0.272 0.302 0.397Sekerbank 0.15 0.16 0.20 0.12 0.19 0.23Turkiye Sinai Kalkinma Banka 0.341 0.382 0.294 0.313 0.378Vakifbank 0.485 0.523 0.573 0.479 0.559 0.63Vestel 0.271 0.377 0.417 0.148 0.327 0.360Yapi Kredi Bank 0.476 0.565 0.582 0.448 0.504 0.577ZA Pulawy S.A. 4.170 4.764 6.968 15.514 10.124 10.354Andritz 3.850 3.703 4.175 3.922 3.713 4.424Aygaz 1.658 1.129 1.150 1.231 0.821 0.848BWT 1.066 1.117 1.316 1.045 1.124 1.324CAToil 0.371 0.604 0.671 0.336 0.484 0.605Palf inger 1.469 2.000 2.427 1.281 1.205 1.483Polytec 1.418 1.261 1.314 1.475 1.139 1.251PZU 34.354 35.612 36.223 31.005 35.407 36.003

PreviousEPS (local currency)

CurrentEPS (local currency)

Changes in Ratings Changes in Previous Current Date of recommendation change

Agrana Accumulate Hold 17-Oct-11Albaraka Turk Accumulate Buy 03-Oct-11Cimsa Accumulate Buy 17-Oct-11conwert Hold Accumulate 03-Oct-11Egis Buy Accumulate 02-Nov-11Garanti Bank Hold Buy 03-Oct-11GTC Hold Buy 03-Oct-11Isbank Accumulate Buy 03-Oct-11Jeronimo Martins SGPS initiated with Buy 14-Oct-11Orco Accumulate Hold 03-Oct-11Palf inger Hold Accumulate 04-Nov-11Sekerbank Hold Reduce 03-Oct-11Teraplast Accumulate Under review 27-Oct-11Trakcja Polska Buy Under review 18-Oct-11Vestel Hold Accumulate 03-Oct-11Wolford Buy Accumulate 12-Oct-11Yapi Kredi Bank Hold Buy 03-Oct-11



Changes in Target Prices Changes in Previous Current Date of target price (local currency) (local currency) change

Agrana 93.00 88.00 17-Oct-11Akbank 7.90 7.50 03-Oct-11Albaraka Turk 2.30 2.70 03-Oct-11Andritz 72.40 70.10 04-Nov-11Arcelik 9.90 8.90 03-Oct-11austriamicrosystems 49.50 42.19 25-Oct-11Aygaz 11.80 11.40 03-Nov-11Bank Asya 2.70 2.10 03-Oct-11BWT 28.20 26.80 04-Nov-11CA IMMO 15.00 11.00 03-Oct-11CAToil 6.40 5.30 04-Nov-11Cimsa 11.90 10.30 17-Oct-11conwert 12.40 11.00 03-Oct-11Egis 22,000.00 21,500.00 02-Nov-11Garanti Bank 8.10 8.60 03-Oct-11GTC 5.84 3.10 03-Oct-11Halkbank 14.70 15.30 03-Oct-11Immofinanz 4.00 3.50 03-Oct-11Isbank 5.70 6.30 03-Oct-11Jeronimo Martins SGPS initiated with 16.00 14-Oct-11New World Resources 11.94 under review 27-Oct-11Orco 8.20 4.30 03-Oct-11Palf inger 30.50 17.20 04-Nov-11Polytec 13.50 13.00 04-Nov-11Raiffeisen Bank International 55.00 under review 27-Oct-11S Immo 6.30 5.20 03-Oct-11SBO 58.10 59.30 04-Nov-11Sekerbank 1.05 0.90 03-Oct-11Teraplast 0.52 under review 27-Oct-11Trakcja Polska 5.15 under review 18-Oct-11Vakifbank 3.70 4.00 03-Oct-11Vestel 3.50 2.40 03-Oct-11Yapi Kredi Bank 4.30 4.90 03-Oct-11ZA Pulawy S.A. 70.07 92.47 20-Oct-11

One Month Performance (in EUR terms) Outperformer 1M YTD Underperformer 1M YTD

FX Energy 61.5% 2.0% E-Star -17.4% -33.6%CME 54.1% -47.3% TVN -16.1% -28.1%PBG S.A. 45.5% -60.1% Yapi Kredi Bank -16.0% -31.3%Park Elektrik 39.1% -1.3% Sinpas REIT -14.1% -30.2%Vistula Group 29.3% -52.6% Allami Nyomda -13.2% -13.9%KGHM 27.5% -9.4% Vakifbank -12.5% -20.2%Polytec 27.1% 45.1% Danubius Hotels -11.9% -35.6%Kulczyk Oil Ventures 24.6% -30.4% Institut IGH -10.0% -46.5%ACE 23.5% -33.3% Atlantska plovidba -9.9% -47.9%Sygnity 22.5% 25.9% Halkbank -9.8% -13.0%



Top 20 Dividend Yield 2010 2011e 2012e

PKN Orlen 0.0% 16.8% 5.6%Transgaz 10.4% 13.5% 6.6%New World Resources 13.4% 11.9%Petrom 5.3% 10.9% 9.9%Magyar Telekom 9.8% 10.7% 9.6%Transelectrica 0.6% 10.6% 11.2%Bagfas 13.6% 9.7% 9.5%Telefónica CR 10.4% 9.4% 9.2%Ford Otosan 9.0% 9.3% 9.6%Cimsa 6.3% 9.2% 8.7%TPSA 9.1% 9.2% 8.6%Telekom Austria 7.1% 9.2% 9.2%T-Hrvatski Telekom 8.0% 9.1% 8.6%Gubre Fabrikalari 0.0% 8.7% 7.4%Turk Telekomunikasyon AS 10.2% 8.5% 10.2%Allami Nyomda 0.0% 8.4% 7.7%Philip Morris CR 7.6% 8.2% 6.8%PZU 7.3% 8.1% 7.6%

Top 20 P/E 2010 2011e 2012e

KGHM 7.8 3.1 9.1Raiffeisen Bank Internationa 9.0 3.3 2.7PKN Orlen 7.8 3.4 8.1Sinpas REIT 16.5 3.6 3.2New World Resources 3.7 5.1Lotos Group 7.0 3.9 3.5Trakcja Polska 7.7 4.3 4.2Polytec 4.1 4.5 5.8Petrom 6.9 4.6 5.1OTP 11.2 4.8 3.7ZCh Police S.A. 7.8 5.2 12.6Synthos 8.6 5.3 4.7Astarta Holding NV 7.2 5.5 3.3Farmacol 13.2 5.8 6.1Isbank 8.0 5.8 5.6Sojaprotein AD 9.7 5.9 4.7Turkish Airlines 10.6 6.0 4.1PBG S.A. 13.7 6.0 8.9Teraplast nm 6.0 3.7



Top 20 by Turnover

Average turnover (EUR)* Average volume (pieces)

Garanti Bank 214,739,946 79,371,836Isbank 79,757,875 43,408,292KGHM 44,533,409 1,268,526Halkbank 36,016,983 7,715,109OTP 33,121,616 2,726,062Yapi Kredi Bank 29,707,847 20,074,769PKO BP 29,631,171 3,785,711Akbank 28,937,524 10,577,582Emlak Konut REIT 27,767,639 29,314,785PZU 23,922,491 312,512Vakifbank 22,909,811 16,813,047CEZ 20,351,653 680,163Bank Pekao 19,418,595 611,072Tupras 16,796,974 1,132,265Komercni banka 16,243,598 121,211Turkish Airlines 14,771,102 13,834,364voestalpine 13,931,198 575,493OMV 13,792,275 558,256PKN Orlen 12,804,705 1,497,496Jeronimo Martins SGPS 12,629,310 1,011,700

* Average turnover is based on 3M daily average volume multipled with 3M average share price in EUR Source: for all charts& tables above Factset, Erste Group Research



Stock market Performances – CEE in Comparison (EUR terms) 1M 3M 6M 12M YTDNew Europe Blue Chip Index 7.2% -18.0% -28.9% -22.6% -24.2%ATX (Austria) 4.7% -18.7% -31.5% -26.4% -32.2%BELEX 15 (Serbia) 0.0% -24.5% -29.2% -10.3% -13.8%BET (Romania) 5.2% -15.8% -25.5% -15.3% -17.1%BUX (Hungary) 4.7% -27.1% -38.8% -35.3% -28.5%CROBEX (Croatia) 0.4% -15.5% -18.4% -5.1% -15.0%PX (Czech Republic) 0.1% -21.7% -29.2% -22.5% -24.3%SBI TOP (Slovenia) 3.2% -13.9% -19.6% -27.8% -26.0%PFTS (Ukraine) 0.0% 0.0% -2.2% 28.3% -3.9%WIG (Poland) 10.7% -14.0% -25.5% -19.6% -20.8%WIG 20 (Poland) 12.6% -13.9% -25.7% -18.9% -20.5%ISE 100 (Turkey) -2.2% -7.4% -24.2% -32.8% -27.1%IRTS (Russia) 15.3% -15.7% -15.7% -1.9% -14.9%MSCI Emerging Asia 8.5% -9.8% -11.8% -12.2% -16.8%MSCI Emerging Europe 13.5% -12.9% -19.2% -11.6% -17.1%MSCI Emerging Latin America 15.0% -2.6% -7.5% -14.6% -18.9%MSCI Emerging World 10.4% -8.1% -11.3% -12.3% -17.4%MSCI World Index 8.4% -0.6% -5.8% -0.3% -8.0%DJ EURO STOXX Automobiles & Parts 21.0% -12.0% -20.3% -7.6% -15.8%DJ EURO STOXX 50 9.8% -6.0% -21.7% -17.0% -15.9%DJ EURO STOXX Banks 1.4% -20.3% -40.6% -42.4% -36.0%DJ EURO STOXX Basic Resources 17.0% -17.6% -35.8% -29.8% -39.0%DJ EURO STOXX Chemicals 14.6% -7.4% -18.7% -4.8% -10.7%DJ EURO STOXX Construction & Material 12.2% -4.2% -25.0% -10.4% -17.2%DJ EURO STOXX Food & Beverage 3.8% 1.2% -3.3% 2.1% -1.9%DJ EURO STOXX Health Care 3.4% -2.0% -4.6% 6.3% 8.7%DJ EURO STOXX Industrial Goods & Services 11.1% -7.3% -22.3% -12.1% -18.6%DJ EURO STOXX Insurance 12.3% -4.8% -24.7% -15.5% -12.6%DJ EURO STOXX Media 8.0% -1.0% -16.6% -16.5% -16.5%DJ EURO STOXX Oil & Gas 17.0% 3.1% -13.2% -3.5% -6.3%DJ EURO STOXX Personal & Household Goods 13.9% -2.0% -7.5% -6.4% -9.0%DJ EURO STOXX Retail 10.2% 2.9% -12.7% -16.2% -11.9%DJ EURO STOXX Technology 15.8% 7.5% -14.2% -3.5% -9.1%DJ EURO STOXX Telecommunications 5.3% -3.7% -17.3% -21.1% -12.0%DJ EURO STOXX Travel & Leisure 7.3% -6.8% -18.3% -20.2% -22.1%DJ EURO STOXX Utilities 1.6% -7.7% -25.5% -22.1% -20.8%S&P 500 10.8% 4.1% 0.4% 7.4% -2.1%DAX 14.1% -7.6% -18.2% -7.3% -11.3%

1M 3M 6M 12M YTDCurrenciesRSD -1.2% 0.3% -2.3% 4.9% -RON -0.8% -2.7% -5.8% -1.5% -HUF -2.0% -11.4% -15.3% -10.9% -HRK 0.0% -0.6% -1.5% -2.0% -CZK -0.5% -3.2% -3.7% -1.7% -UAH -3.6% 2.8% 4.8% 0.4% -PLN 1.4% -7.7% -10.6% -10.6% -TRY 3.9% 1.6% -8.9% -23.6% -

Indices in local currencyBELEX 15 (Serbia) 0.2% -24.7% -27.6% -15.0% -17.2%BET (Romania) 5.5% -14.0% -22.3% -14.4% -15.1%BUX (Hungary) 7.7% -18.6% -29.8% -27.6% -21.7%CROBEX (Croatia) 0.2% -15.1% -17.2% -2.9% -13.8%PX (Czech Republic) 0.6% -19.4% -26.9% -21.0% -24.6%SBI TOP (Slovenia) 3.2% 0.0% 0.0% 0.0% 0.0%PFTS (Ukraine) 0.0% 0.0% -8.9% 26.7% -0.9%WIG (Poland) 9.8% -7.2% -17.6% -11.0% -13.0%WIG 20 (Poland) 11.7% -7.0% -17.9% -10.2% -12.6%ISE 100 (Turkey) -4.9% -7.8% -19.3% -17.6% -14.4%Source: Factset



Sector Performance (EUR terms)Sector* 1M 3M 6M 12M

Automobiles & Parts 2.8% 1.8% -16.8% -1.3%Telecom 0.3% 1.2% -5.8% -5.9%Retail & Distribution 9.9% -3.4% 3.0% 8.2%Personal & Household Goods -2.4% -3.7% -11.7% -10.4%Construct ion & Materials 5.1% -4.1% -25.6% -21.3%Technology 10.4% -4.7% -21.4% -5.3%Industrial Goods & Services 9.1% -6.7% -20.4% 1.0%Oil & Gas 8.4% -7.5% -22.2% 2.5%Real Estate 4.1% -8.1% -26.2% -11.3%Erste Universe 2.9% -9.5% -19.4% -14.5%Healthcare 9.4% -9.7% -14.6% -30.4%Media 1.1% -12.0% -24.2% -20.7%Chemicals 2.5% -12.4% -18.1% 19.2%Travel & Tourism -2.8% -12.7% -26.4% -35.0%Banks -3.5% -12.7% -23.6% -27.4%Insurance 8.2% -13.0% -19.0% -17.6%Utilities 5.1% -13.5% -20.8% -11.6%Food & Beverage -0.2% -14.6% -9.3% -5.1%Basic Resources 20.2% -15.8% -25.7% -8.0%*based on Erste Group Research Coverage

Erste Coverage Universe Sector Automobiles & Parts

Sector Banks Sector Basic Resources

1,0001,1001,2001,3001,4001,5001,6001,7001,8001,900

Nov

-10

Dec

-10

Jan-

11

Feb-

11

Mar

-11

Apr-1

1

May

-11

Jun-

11

Jul-1

1

Aug-

11

Sep-

11

Oct

-11

Nov

-11

1,1001,2001,3001,4001,5001,6001,7001,8001,9002,0002,100

Nov-10

Dec-10

Jan-1

1

Feb-1

1

Mar-11

Apr-11

May-11

Jun-1

1Ju

l-11

Aug-1

1

Sep-11

Oct-11

Nov-11

1,6001,8002,0002,2002,4002,6002,8003,0003,2003,4003,600

Nov-10

Dec-10

Jan-1

1

Feb-1

1

Mar-11

Apr-11

May-11

Jun-1

1Ju

l-11

Aug-11

Sep-11

Oct-11

Nov-11

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

Nov

-10

Dec

-10

Jan-

11

Feb-

11

Mar

-11

Apr-1

1

May

-11

Jun-

11

Jul-1

1

Aug-

11

Sep-

11

Oct

-11

Nov

-11



Sector Chemicals Sector Construction & Materials

Sector Food & Beverages Sector Health Care

Sector Industrial Goods & Services Sector Insurance

Sector Media Sector Oil & Gas

200250300350400450500550600

Nov-10

Dec-10

Jan-1

1

Feb-1

1

Mar-11

Apr-1

1

May-11

Jun-1

1Ju

l-11

Aug-11

Sep-11

Oct-11

Nov-11

300

350

400

450

500

550

600

Nov-10

Dec-10

Jan-1

1

Feb-1

1

Mar-11

Apr-11

May-11

Jun-1

1Ju

l-11

Aug-11

Sep-11

Oct-11

Nov-11

1,000

1,100

1,200

1,300

1,400

1,500

1,600

Nov-1

0

Dec-1

0

Jan-11

Feb-11

Mar-11

Apr-11

May-11

Jun-11

Jul-1

1

Aug-1

1

Sep-11

Oct-11

Nov-11

700

800

900

1,000

1,100

1,200

1,300

1,400

Nov-10

Dec-10

Jan-1

1

Feb-11

Mar-11

Apr-11

May-11

Jun-1

1Ju

l-11

Aug-11

Sep-11

Oct-11

Nov-11

1,4001,6001,8002,0002,2002,4002,6002,8003,0003,2003,400

Nov-10

Dec-10

Jan-1

1

Feb-11

Mar-11

Apr-11

May-11

Jun-

11Ju

l-11

Aug-11

Sep-11

Oct-11

Nov-11

1,500

1,700

1,900

2,100

2,300

2,500

2,700

Nov-10

Dec-10

Jan-1

1

Feb-1

1

Mar-11

Apr-11

May-11

Jun-1

1Ju

l-11

Aug-11

Sep-11

Oct-11

Nov-11

800850900950

1,0001,0501,1001,1501,2001,2501,300

Nov-10

Dec-10

Jan-1

1

Feb-11

Mar-11

Apr-11

May-11

Jun-1

1Ju

l-11

Aug-11

Sep-11

Oct-11

Nov-11

1,3001,4001,5001,6001,7001,8001,9002,0002,1002,200

Nov-10

Dec-10

Jan-1

1

Feb-11

Mar-11

Apr-11

May-11

Jun-1

1Ju

l-11

Aug-11

Sep-11

Oct-11

Nov-11



Sector Personal & Household Goods Sector Real Estate

Sector Retail & Distribution Sector Technology

Sector Telecom Sector Travel & Tourism

Sector Utilities

500

600

700

800

900

1,000

Nov-10

Dec-10

Jan-1

1

Feb-11

Mar-11

Apr-11

May-11

Jun-1

1Ju

l-11

Aug-11

Sep-11

Oct-11

Nov-11

600650700750800850900950

1,0001,050

Nov-10

Dec-10

Jan-1

1

Feb-11

Mar-11

Apr-11

May-11

Jun-

11Ju

l-11

Aug-11

Sep-11

Oct-11

Nov-11

7,000

8,000

9,000

10,000

11,000

12,000

13,000

Nov

-10

Dec

-10

Jan-

11

Feb-

11

Mar

-11

Apr

-11

May

-11

Jun-

11

Jul-1

1

Aug-

11

Sep-

11

Oct

-11

Nov

-11

1,2001,3001,4001,5001,6001,7001,8001,9002,0002,1002,200

Nov-10

Dec-10

Jan-1

1

Feb-11

Mar-11

Apr-11

May-11

Jun-1

1Ju

l-11

Aug-11

Sep-11

Oct-11

Nov-11

1,150

1,250

1,350

1,450

1,550

1,650

1,750

1,850

Nov-10

Dec-10

Jan-1

1

Feb-11

Mar-11

Apr-11

May-11

Jun-1

1Ju

l-11

Aug-11

Sep-11

Oct-11

Nov-11

350400450500550600650700750800850

Nov-10

Dec-10

Jan-1

1

Feb-11

Mar-11

Apr-11

May-11

Jun-1

1Ju

l-11

Aug-11

Sep-11

Oct-11

Nov-11

6,5007,0007,5008,0008,5009,0009,500

10,00010,50011,000

Nov

-10

Dec

-10

Jan-

11

Feb-

11

Mar

-11

Apr

-11

May

-11

Jun-

11

Jul-1

1

Aug-

11

Sep

-11

Oct

-11

Nov

-11

Source: Factset, Erste Group Research Based on Erste Group Research Sector Aggregates. Prices for aggregates are based on d/d performance for each individual stock within the respective aggregate, which are then weighted by market capitalization to form a weighted average. For composition of aggregate see sector part of this report.



Macroeconomy

Real Economy

GDP growth (%) 2010 2011f 2012f 2013f Ind. production growth (%) 2010 2011f 2012f 2013fAustria 2.3 3.0 1.3 2.2 Austria 7.2 8.0 1.0 n.a.Croatia -1.2 0.7 1.0 2.0 Croatia -1.5 -1.0 -2.0 1.5Czech Republic 2.2 1.9 1.6 3.0 Czech Republic 10.1 7.5 5.5 6.5Hungary 1.2 1.7 0.9 2.6 Hungary 10.5 6.0 4.7 6.3Poland 3.8 3.7 3.1 3.4 Poland 6.1 6.4 5.2 5.8Romania -1.3 1.4 1.9 2.8 Romania 5.5 3.2 2.5 3.0Turkey 8.9 5.0 3.5 5.0 Turkey 13.1 6.2 4.6 0.0Serbia 1.0 2.4 3.0 3.5 Serbia 2.9 2.0 3.5 5.0Ukraine 4.2 4.9 5.0 5.0 Ukraine 11.0 9.0 11.0 11.0

C/A (% of GDP) 2010 2011f 2012f 2013f CPI (%) 2010 2011f 2012f 2013fAustria 2.7 2.8 2.8 n.a. Austria 1.9 3.2 2.1 1.8Croatia -1.1 -1.4 -1.5 -1.8 Croatia 1.1 2.3 2.5 2.5Czech Republic -3.2 -2.4 -3.8 -3.4 Czech Republic 1.5 1.8 2.6 1.3Hungary 2.0 2.8 3.7 3.3 Hungary 4.9 3.8 4.4 3.0Poland -3.4 -4.4 -4.5 -4.9 Poland 2.6 4.0 2.7 2.6Romania -4.1 -4.4 -4.6 -4.7 Romania 6.1 5.8 3.3 3.9Serbia -7.2 -7.0 -7.5 -7.5 Serbia 6.1 11.4 5.7 5.0Turkey -6.6 -9.5 -8.0 -6.5 Turkey 8.6 6.1 8.8 5.5Ukraine -1.9 -2.2 -3.0 -4.5 Ukraine 9.4 8.9 8.7 7.5

Eurozone politicians are heading towards a solution for the debt crisis and the decisions – on the recapitalization of banks, the haircut for Greece and the leveraging of the EFSF – taken on October 26 point in the right direction. Central and Eastern European countries are feeling the relief in the markets, but the focus will soon return to the importance of their own fundamentals. In terms of growth, the Czech Republic, Hungary, Poland, Slovakia and Turkey will see lower growth in 2012 than this year, whereas those countries which saw a late recovery from the 2009 downturn will still see accelerating growth in 2012 (base effect). However, even in these countries the recovery is lukewarm, as can be seen from Romania, which will grow by only 1.9% next year. What matters most now – apart from the ongoing crisis resolution in the Eurozone – is politics and fiscal prudence. On the political side, negative news is still coming out of Hungary, whereas the newly-elected Polish government can be expected to embark on a path of fiscal consolidation. As for fiscal prudence, Romania and Serbia are using the IMF as a policy anchor, whereas Hungary and Ukraine, which got rid of the IMF, are incurring high risks in their economic policy making. In Turkey, the central bank has started tightening monetary policy, but the risks of a hard landing are still high.



Real GDP growth (y/y) CPI (y/y)

Sources: Central statistical offices. Ifo’s business sentiment index (right scale).

Retail sales (y/y) Industrial production (y/y)

Inflation rates started coming down in summer and will continue to do so in most countries in the region due to a lack of demand-side pressures. September inflation rates showed the most dramatic improvement in Romania and Ukraine, the result of a good harvest season in agriculture. Although yearly inflation rates in Turkey also moderated over the summer, the end-of-year inflation rate is now forecast at 9% due to the depreciation of the currency and increases in some excise taxes. As for monetary policy, central banks in the region are in “wait-and-see” mode, as international sentiment, which impacts local currencies, is still weak and does not allow centrals banks to go for monetary easing, in spite of slowing inflation and sluggish growth.

-10

-8

-6

-4

-2

0

2

4

6

Q2

2009

Q3

2009

Q4

2009

Q1

2010

Q2

2010

Q3

2010

Q4

2010

Q1

2011

Czech Republic HungaryPoland Romania

0

1

2

3

4

5

6

7

8

9

May

-10

Jun-

10

Jul-1

0

Aug

-10

Sep

-10

Oct

-10

Nov

-10

Dec

-10

Jan-

11

Feb-

11

Mar

-11

Apr

-11

May

-11

Jun-

11

Jul-1

1

Aug

-11

Sep

-11


-10

-5

0

5

10

15

20

May

-10

Jun-

10

Jul-1

0

Aug

-10

Sep

-10

Oct

-10

Nov

-10

Dec

-10

Jan-

11

Feb-

11

Mar

-11

Apr

-11

May

-11

Jun-

11

Jul-1

1

Aug

-11

Sep

-11

Poland Czech RepublicHungary Romania

-3

2

7

12

17

22

May

-10

Jun-

10

Jul-1

0

Aug

-10

Sep

-10

Oct

-10

Nov

-10

Dec

-10

Jan-

11

Feb-

11

Mar

-11

Apr

-11

May

-11

Jun-

11

Jul-1

1

Aug

-11

Sep-

11




Interest Rates & Currencies Currency/EUR (avg.) 2010 2011f 2012f 2013f Currency/USD (avg.) 2010 2011f 2012f 2013fCroatia 7.28 7.44 7.50 7.47 Austria 1.32 1.42 1.35 n.a.Czech Republic 25.3 24.4 23.7 23.7 Croatia 5.50 5.24 5.55 5.98Hungary 275 276 280 265 Czech Republic 19.1 17.5 17.6 17.0Poland 4.00 4.05 3.95 3.81 Hungary 208 194 207 204Romania 4.21 4.22 4.21 4.17 Poland 3.03 2.93 2.98 2.82Serbia 103.1 102.0 105.0 108.0 Romania 3.18 2.97 3.12 0.00Turkey 1.99 2.33 2.43 2.36 Turkey 1.50 1.66 1.74 1.81Ukraine 10.51 11.36 10.8 10.4 Serbia 77.9 71.8 77.8 86.4

Ukraine 7.95 8.00 8.00 8.00

3M interest rate (%) 2010 2011f 2012f 2013f 10Y interest rate (%) 2010 2011f 2012f 2013fAustria 0.8 1.4 1.5 n.a. Austria 3.21 3.40 3.20 n.a.Croatia 2.4 3.3 5.0 4.0 Croatia 6.40 6.50 6.75 6.25Czech Republic 1.3 1.2 1.3 2.0 Czech Republic 3.87 3.65 3.60 4.00Hungary 5.5 6.1 6.0 5.6 Hungary 7.30 7.52 7.45 6.75Poland 3.8 4.5 4.8 5.3 Poland 5.40 5.35 5.50 5.70Romania 6.8 5.8 6.1 5.9Serbia 10.8 12.8 10.0 8.8Ukraine 7.7 4.3 6.0 5.5

In October, the Ukrainian hryvnia and the Hungarian forint weakened vis-à-vis the euro, whereas other currencies in the region were flat or showed minor improvements. Poland saw a bigger appreciation after the elections and the Turkish lira strengthened due to interventions. Yields generally pointed in an upward direction, with the exception of Poland, which saw the 10y government yield fall by 23bp in the last month. In contrast to this, the 5Y CDS spreads of the region were easing strongly, where a large part of the movement happened in the last week as a consequence of the result of the Eurozone summit. However, as said above, country-specific fundamentals will again come to the fore; thus, countries like Hungary may fail to see further tightening of CDS spreads, in view of the threat of a downgrade to junk status by one of the rating agencies.



Exchange Rates & Interest Rates

Source: Bloomberg

100

150

200

250

300

350

Oct Nov Dec Jan Mar Apr May Jun Jul Aug Sep Oct0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

HUF/EURHUF/USD3m interbank rate, r.s.

Hungary

2.0

2.5

3.0

3.5

4.0

4.5

5.0


2.5

3.0

3.5

4.0

4.5

5.0

PLN/EURPLN/USD3m interbank rate, r.s.

Poland

10

12

14

16

18

20

22

24

26

28


1.12

1.14

1.16

1.18

1.20

1.22

1.24

CZK/EURCZK/USD3m interbank rate, r.s.

Czech Republic

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct

HRK/EURHRK/USD

Croatia

1.0

1.2

1.4

1.6

1.8

2.0

2.2

2.4

2.6

2.8


5.0

6.0

7.0

8.0

9.0

10.0

11.0

TRY/EURTRY/USD3m interbank rate, r.s.

Turkey



Sector Insight Automobiles & Parts

– Turkish auto sector: 6% y/y drop in domestic auto sales in September – Special consumption tax increased for vehicles depending on engine size – Ford Otosan: New Transit to be produced in US (in addition to Turkey) from 2013

According to the Automotive Distributors Association, Turkey's domestic auto sales (passenger car and light commercial vehicle sales) declined 6% y/y to 59,990 in September 2011. Passenger car sales were down 5.9% y/y to 39,964, while LCV sales declined by 6.14% y/y to 20,026 units. YTD light vehicle sales figure came in at 602,228 units, marking a 29.5% y/y increase.

For vehicles with engine volumes of between 1,600cc and 2,000cc (approximately 9% of the passenger car market as of 9M11) the special consumption tax (SCT) increased to 80% from 60% (implies a 12.5% price increase) and for vehicles with engine volumes above 2,000cc (approximately 2% of the PC market) it increased to 130% from 84% (implies 25% price increase). However, for vehicles with engine volumes below 1,600cc (approximately 89% of the PC market) it remains at 37%. On the other hand, for commercial vehicles used for freight business (combo LCVs, which are approximately 51% of the LCV market as of 9M11), it increased to 15% from 10% (implies a 4.5% price increase).

The average tax burden in Turkey is almost 50% higher than the EU average. On top of 18% VAT, Turkish passenger car consumers pay a special consumption tax (SCT) varying between 37% and 130% for passenger cars and between 4% and 15% for commercial vehicles, depending on engine size.

We maintain our expectation of a 35% y/y contraction in the light vehicle market in the last three months of the year on the back of (i) a high base effect (ii) upcoming price hikes due to SCT increases and TRY depreciation, (iii) declining consumer sentiment amid economic uncertainty, and (iv) higher cost of auto credits. We thus expect the market to close the year on total light vehicle sales of 795k and mere 4.5% growth, following 37% growth in 2010. Note that the average tax burden in Turkey is almost 50% higher than the EU average.



According to a report in daily Hurriyet, Ford Motor Company agreed with the United Auto Workers (UAW) in the US on the production of the new Transit commercial vehicle model in the US, in addition to Turkey, from 2013. According to the report, Ford Otosan’s plan to export the new Transit to the US is thus cancelled. Following the news in local media, Ford Otosan announced that their initial plans to increase production capacity to 400k (from 330k per year) prior to the initiation of a new Transit model (expected in 2013) do not include potential exports to the US market.

Higher than expected 3Q11 net profit, due to high financial income and FX gain. Ford Otosan reported TRY 174.7mn in net profit for 3Q11 (up 56% y/y, down 7% q/q), exceeding our expectation of TRY 144mn and the consensus estimate of TRY 135mn. Although the operational side is very much in line with our expectations, deviation between the announced net profit and our forecast stemmed from higher than expected financial income and FX gain (net TRY 11mn FX gain in 3Q11). We maintain our target price of TRY 14.8 and Accumulate recommendation. Ford Otosan distributed a total cash dividend of TRY 217.2mn (gross TRY 0.619 per share) on October 27. The cash dividend amount implies a 4.5% dividend yield. The company distributed a TRY 302mn (TRY 0.86 per share) cash dividend in April 2011 as the initial installment. With the second payment, the total cash dividend amount implies an overall 103% payout ratio and an 11% dividend yield for 2011, thus marking one of the highest yields among companies listed on the ISE.



Company Curr. Mcap (EURmn) 2010 2011e 2012e 2013e 2010 2011e 2012e 2013e 1M 3M 6M 12M

ACE EUR 29 6.7% 8.7% 10.5% 11.5% 10.8% 10.5% 10.8% 10.5% 23.5% -22.8% -34.1% -43.0%Ford Otosan TRY 1,882 31.2% 34.5% 28.0% 25.6% 9.8% 9.5% 9.5% 9.5% 2.1% 2.0% -21.2% -13.1%Inter Cars PLN 272 12.2% 18.9% 17.5% 14.9% 6.2% 7.5% 7.6% 7.4% 1.6% -4.2% -13.9% 9.3%Tofas TRY 1,411 25.9% 19.4% 22.3% 23.3% 9.6% 9.5% 9.5% 9.5% 9.0% 4.4% -24.2% -30.2%Polytec EUR 148 35.4% 33.0% 20.5% 19.7% 7.1% 10.6% 10.3% 10.7% 27.1% -11.4% -18.3% 40.0%Median - - 19% 19% 20% 19% 10% 10% 10% 10% - - - -Median Autos developed - 276,399 10.9% 9.6% 11.1% 11.7% 10.0% 10.1% 10.4% 11.1% - - - -Median Autos emerging - 33,542 22.1% 22.1% 22.3% 22.6% 13.5% 12.8% 12.7% 12.2% - - - -Median Parts - 11,727 14.2% 17.7% 15.7% 15.9% 11.9% 12.2% 12.5% 12.3% - - - -Median Total - 321,668 13.8% 15.5% 14.4% 14.3% 14.9% 14.2% 14.9% 15.4% - - - -EuroStoxx Basic Resources 194,324 12.8% 14.1% 13.0% 13.2% 12% 12% 12% 12% 21.0% -12.0% -20.3% -7.6%CEE to Peer, Prem/Disc - 38% 23% 39% 34% -35% -33% -36% -38% - - - -

ROE EBITDA margin Performance (EUR terms)

2010 2011e 2012e 2013e 2010 2011e 2012e 2013e 2010 2011e 2012e 2013eACE 19.0 8.4 6.5 5.5 6.2 3.1 2.7 2.5 1.2 0.7 0.7 0.6Ford Otosan 8.8 6.5 7.7 8.0 6.3 5.3 5.7 5.2 2.6 2.3 2.1 2.0Inter Cars 16.0 9.8 9.2 9.2 10.3 7.1 6.9 6.9 1.8 1.8 1.5 1.3Tofas 10.0 9.2 8.1 7.1 5.7 5.1 4.9 4.6 2.3 1.9 1.7 1.6Polytec 4.1 4.5 5.8 5.3 2.1 3.1 3.5 3.2 1.2 1.3 1.1 1.0Median CEE 13.0 8.8 7.9 7.6 6.3 5.2 5.3 4.9 2.1 1.8 1.6 1.4Median Autos developed 8.6 7.3 7.1 6.3 4.5 4.2 4.1 3.7 0.9 0.9 0.9 0.8Median Autos emerging 14.8 16.9 13.9 11.5 11.2 13.2 11.0 9.4 3.5 3.2 2.6 2.2Median Parts 15.3 9.4 8.8 6.9 5.2 4.2 4.0 3.8 1.6 1.5 1.2 1.1Median Total 11.0 8.8 8.1 6.4 4.9 4.9 4.4 4.0 1.5 1.4 1.2 1.1EuroStoxx Basic Resources 8.6 7.0 7.1 6.1 4.3 3.8 3.7 3.4 1.1 1.0 0.9 0.8CEE to Peer, Prem/Disc 18% 1% -2% 18% 28% 6% 21% 24% 38% 35% 34% 36%

2010 2011e 2012e 2013e 2010 2011e 2012e 2013eACE 0.6 0.3 0.3 0.2 5.4 2.9 2.5 2.0Ford Otosan 0.6 0.5 0.6 0.6 6.1 5.0 6.2 6.3Inter Cars 0.6 0.5 0.5 0.5 9.6 7.1 6.7 6.3Tofas 0.7 0.5 0.5 0.4 7.4 5.7 5.2 4.5Polytec 0.2 0.2 0.3 0.3 2.9 2.3 2.9 2.5Median CEE 0.6 0.5 0.5 0.4 6.8 5.4 5.7 5.4Median Autos developed 0.4 0.3 0.2 0.2 3.9 2.6 2.5 2.0Median Autos emerging 1.5 1.3 1.1 0.9 10.9 10.5 8.3 7.1Median Parts 0.7 0.5 0.4 0.4 5.8 5.2 4.0 3.6Median Total 0.6 0.5 0.4 0.4 5.8 4.0 3.4 2.9EuroStoxx Basic Resources 0.5 0.3 0.3 0.2 4.2 2.7 2.5 2.1CEE to Peer, Prem/Disc -2% 7% 21% 20% 16% 35% 70% 89%

P/CE P/BV

EV/Sales EV/EBITDA

P/E

Source: JCF Quant, Erste Group Research



ACE Buy Target price PLN 12.2Price (PLN) 6.0 ROCE 2010 5.9% 10p 11e 12e 13eMcap (PLN mn) 29 ROE 2010 6.7% Sales (EUR mn) 86.3 103.5 110.9 122.7Mcap (EUR mn) 29 Net debt (EURmn, 10) 2.7 EBITDA margin 10.85% 10.52% 10.84% 10.53%Free float (%) 88.6% Gearing (2010) 7% EBIT margin 4.07% 4.80% 5.26% 5.42%Free float (EUR mn) 26 Sales CAGR 10-13e 12.3% Net profit margin 2.94% 3.35% 4.06% 4.34%Shares outst. (mn) 21.2 EPS CAGR 10-13e 28.8% EPS (EUR) 0.12 0.16 0.21 0.25

Dividend/share (EUR) 0.05 0.05 0.06 0.07EV/sales 0.59 0.31 0.28 0.21EV/EBITDA 5.44 2.91 2.54 1.99P/E 18.99 8.44 6.50 5.49P/CE 6.23 3.13 2.73 2.52P/BV 1.24 0.71 0.66 0.61Dividend yield 2.20% 3.92% 4.15% 5.39%EV/EBITDA rel. 0.5 0.6 0.6 0.4P/E rel. 1.2 1.3 1.0 0.8

Performance 1M 3M 6M 12MAbsolute (PLN terms) 22.4% -16.7% -27.2% -36.9%Rel. to sector (EUR, ppt) 20.7 -24.6 -17.3 -41.7Rel. to universe (EUR, ppt) 20.6 -13.3 -14.7 -28.5

Ford Otosan Accumulate Target price TRY 14.8Price (TRY) 13.0 ROCE 2010 25.6% 10f 11e 12e 13eMcap (TRY mn) 4,562 ROE 2010 31.2% Sales (p mn) 7,649.4 9,732.5 9,775.9 10,562.5Mcap (EUR mn) 1,882 Net debt (EURmn, 10) 84.4 EBITDA margin 9.81% 9.50% 9.50% 9.50%Free float (%) 17.9% Gearing (2010) 10% EBIT margin 7.52% 8.00% 7.33% 6.59%Free float (EUR mn) 337 Sales CAGR 10-13e 17.3% Net profit margin 6.60% 6.92% 6.03% 5.37%Shares outst. (mn) 350.9 EPS CAGR 10-13e 14.2% EPS (p) 1.44 1.92 1.68 1.62

Dividend/share (p) 1.14 1.15 1.25 1.43EV/sales 0.60 0.48 0.59 0.60EV/EBITDA 6.13 5.05 6.16 6.29P/E 8.78 6.46 7.74 8.04P/CE 6.30 5.29 5.66 5.20P/BV 2.61 2.25 2.09 2.03Dividend yield 9.03% 9.27% 9.60% 10.99%EV/EBITDA rel. 0.6 1.1 1.3 1.4P/E rel. 0.6 1.0 1.1 1.1

Performance 1M 3M 6M 12MAbsolute (TRY terms) -0.8% 1.6% -16.1% 6.6%Rel. to sector (EUR, ppt) -0.7 0.2 -4.3 -11.7Rel. to universe (EUR, ppt) -0.8 11.5 -1.7 1.5

Inter Cars Accumulate Target price PLN 93.0Price (PLN) 83.5 ROCE 2010 9.9% 10 11e 12e 13eMcap (PLN mn) 1,183 ROE 2010 12.2% Sales (PLN mn) 2,413.0 2,812.4 3,041.4 3,037.6Mcap (EUR mn) 272 Net debt (EURmn, 10) 106.0 EBITDA margin 6.24% 7.47% 7.60% 7.40%Free float (%) 56.4% Gearing (2010) 75% EBIT margin 4.78% 5.96% 6.19% 5.97%Free float (EUR mn) 153 Sales CAGR 10-13e 10.1% Net profit margin 2.64% 3.91% 4.23% 4.24%Shares outst. (mn) 14.2 EPS CAGR 10-13e 17% EPS (PLN) 4.54 7.95 9.08 9.08

Dividend/share (PLN) 0.00 0.00 0.00 0.00EV/sales 0.60 0.53 0.51 0.47EV/EBITDA 9.57 7.09 6.70 6.30P/E 15.96 9.78 9.20 9.19P/CE 10.27 7.10 6.90 6.89P/BV 1.81 1.76 1.48 1.28Dividend yield 0.00% 0.00% 0.00% 0.00%EV/EBITDA rel. 1.0 1.5 1.4 1.4P/E rel. 1.0 1.5 1.3 1.3

Performance 1M 3M 6M 12MAbsolute (PLN terms) 0.7% 3.4% -4.8% 21.0%Rel. to sector (EUR, ppt) -1.3 -6.0 2.9 10.6Rel. to universe (EUR, ppt) -1.3 5.3 5.5 23.8

52 weeks

456789

10111213

ACEWIG (Rebased)DJ EURO STOXX Automobiles & Parts (Rebased)

52 weeks

50556065707580859095

Inter Cars WIG 20 (Rebased) DJ EURO STOXX Retail (Rebased)

52 w eeks

8

9

10

11

12

13

14

15

16

Fo rd O tosanIS E 1 0 0 (R e ba s ed)D J E UR O S TOX X Au to mo bile s & P a rts (R eba se d)



Tofas Buy Target price TRY 8.5Price (TRY) 6.8 ROCE 2010 14.3% 10f 11e 12e 13eMcap (TRY mn) 3,420 ROE 2010 25.9% Sales (TRY mn) 6,410.2 7,716.9 8,121.4 8,417.1Mcap (EUR mn) 1,411 Net debt (EURmn, 10) 356.2 EBITDA margin 9.6% 9.5% 9.5% 9.5%Free f loat (%) 24.3% Gearing (2010) 43% EBIT margin 5.5% 5.9% 6.2% 6.5%Free f loat (EUR mn) 343 Sales CAGR 10-13e 13.3% Net profit margin 6.0% 4.6% 5.2% 5.7%Shares outst. (mn) 500.0 EPS CAGR 10-13e 7% EPS (TRY) 0.77 0.71 0.84 0.96

Dividend/share (TRY) 0.26 0.50 0.53 0.59EV/sales 0.71 0.55 0.50 0.43EV/EBITDA 7.41 5.74 5.22 4.54P/E 10.02 9.23 8.11 7.13P/CE 5.68 5.10 4.91 4.63P/BV 2.33 1.89 1.74 1.59Dividend yield 3.38% 7.66% 7.75% 8.63%EV/EBITDA rel. 0.7 1.2 1.1 1.0P/E rel. 0.7 1.4 1.2 1.0

Performance 1M 3M 6M 12MAbsolute (TRY terms) 5.9% 4.0% -19.3% -14.5%Rel. to sector (EUR, ppt) 6.1 2.6 -7.4 -28.9Rel. to universe (EUR, ppt) 6.0 13.9 -4.8 -15.7

Polytec Buy Target price EUR 13.0Price (EUR) 6.6 ROCE 2010 20.7% 10 7716.8631 8121.448 8417.099Mcap (EUR mn) 148 ROE 2010 35.4% Sales (EUR mn) 770.1 635.2 508.3 526.8Mcap (EUR mn) 148 Net debt (EURmn, 10) 50.4 EBITDA margin 7.1% 10.6% 10.3% 10.7%Free f loat (%) 57.0% Gearing (2010) 58% EBIT margin 3.6% 7.1% 6.9% 7.2%Free f loat (EUR mn) 85 Sales CAGR 10-13e -3.5% Net profit margin 3.4% 5.3% 5.1% 5.4%Shares outst. (mn) 22.3 EPS CAGR 10-13e - EPS (EUR) 1.12 1.48 1.14 1.25


Performance 1M 3M 6M 12MAbsolute (EUR terms) 27.1% -11.4% -18.3% 40.0%Rel. to sector (EUR, ppt) 24.3 -13.2 -1.5 41.3Rel. to universe (EUR, ppt) 24.2 -1.8 1.1 54.5


52 weeks

5,05,56,06,57,07,58,08,59,09,5

10,0

TofasISE 100 (Rebased)DJ EURO STOXX Automobiles & Parts (Rebased)

52 weeks

3

4

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Polytec ATX (Rebased) DJ STOXX Automobiles & Parts (Rebased)



Sector Insight Banks

– BRE, BZ WBK, Millennium and Handlowy reported slightly better than expected 3Q11 numbers – 3Q11 preview: 3Q profits might be the peak for the next few quarters due to economic slowdown – Asset quality: Hungary’s very special act to trigger extra provisions but core CE stable – Outlook: Economic slowdown, Euro debt crisis, bank capitalization to drive remainder of the year – Top picks: RBI (Buy), PKO BP (Accumulate) – Rate decisions cast again a spell on Turkish margins – maturity mismatch remains an issue

Capitalization issues triggered by euro debt crisis to remain in focus for remainder of year. The European banking sector is still driven by the euro debt crisis and its implications for the banks’ regulatory capital. With politicians and central bankers presenting new ideas for supporting European banks almost on a daily basis (e.g. enforced capitalization, extra capital buffers), not taking into account the current share price lows, a sustainable solution seems still far away. Therefore, we expect the sovereign debt and bank capital needs topic, as well as the economic slowdown, to remain in investors’ focus for the remainder of the year. Concerning CEE banks’ exposure to Greece we still feel quite comfortable. Only Komercni banka has significant sovereign exposure of EUR 288mn on its books, all others negligible.

3Q11 results to be of minor importance for share price development. In our view, the CEE banks’ 3Q11 reporting season may only impact share prices for a very short period of time. Much more important than 3Q11 numbers will be the first indications of the economic slowdown and the management outlook. The key drivers for CEE bank stocks in the next couple of months should be asset quality and loan demand in a weakening economic environment, the behavior of Swiss franc mortgage holders following the weakening of local currencies and the status of bank levy discussions.

Poland: Loan volumes jump via CHF appreciation, but demand might have peaked. Following the strong 2Q11 performance, which was better than expected at Pekao and BZ WBK and in line with our expectations at PKO BP and BRE Bank, we expect the bottom line of Polish banks to further improve in 3Q11. This is mainly due to 1H11 rate hikes showing full effects, the ongoing demand for corporate and retail loans (except consumer loans), as well as stable asset quality, with only a slightly higher cost of risk compared to 2Q11. Moreover, bonus accruals might further increase operating costs and higher deposit pricing might put some pressure on margins. After the Swiss franc appreciation vs. the zloty of 5.5% q/q in 2Q11 (as per end of quarter), we have observed another 12% q/q increase in 3Q11, which will boost FX mortgage loan volumes. The NBP data (as of August 31) showed slightly weaker loan growth dynamics in 3Q11 vs. 2Q11, with customer loans up 3% QTD (quarter to date), based on 3.8% QTD retail loan growth and 2.4% QTD corporate loan growth. Consumer loans were up 1.4% QTD and housing loan growth dynamics were still strong with 5.5% QTD (vs. 6.7% q/q in 2Q11), helped by the 9% QTD appreciation of the Swiss franc vs. the zloty. On the funding side, customer deposits were up 1.4% QTD.

Hungary: Big bang FX mortgage repayment act. The new Hungarian act came into force on 29 September and allows FX mortgage loan holders the final loan repayment at fixed rates for CHF (180), EUR (250) and JPY (200) vs. the Forint. All costs of such transactions should be absorbed by banks, including the loss stemming from the mismatch between the book value of the loans registered at market FX rate and the lower amount of the repayment implied by the fixed rate. If the FX borrower meets the eligibility criteria stipulated by the law, banks cannot reject the application, and shall prepare the closure of the loan contract within 60 days (application period open until 30 December 2011). To reduce the significant weakening of the forint, the National Bank of Hungary will provide the banks with FX liquidity necessary for the final repayment of FX debts from its FX reserves. Moreover, the law limits lending rates above 30% p.a. which affects several retail consumer loan products. Additionally, any costs arising in forint with respect to banks’ FX lending may be charged only in forint. And last but not least, banks are required to apply more transparent benchmark-linked interest rate on FX loans. All in all, the first point concerning the early repayment of FX mortgage loans at fixed rates may affect the Hungarian banks the most.

BRE Bank’s 3Q11 profit above expectations on higher trading result, lower provisions. BRE Bank reported a net profit of PLN 307mn (-2% q/q, +49% y/y) for 3Q11 which is 16% above our forecasts and 13% above consensus estimates. The main divergence to our estimates came from a 15% higher than expected trading result (+5% q/q, +26% y/y) as well as 6% lower than expected net provisions (-21% q/q adjusted, -13% y/y). The major



income lines met our expectations, with net interest income up by 1% q/q (+14% y/y) driven by 7% q/q higher gross loans (+17% y/y) and net F&C income up by 5% q/q (10% y/y). Operating costs (+3% q/q, +4% y/y) were fully in line with expectations.

In our view, BRE again reported good results which were better than we and consensus had expected. Based on good asset quality net provisions decreased 21% q/q (2Q11 adjusted for the sale of an NPL portfolio). Moreover, the trading result was clearly better than expected. The sustainable income sources as well as operating costs were fully in line with our expectations.

Komercni banka 3Q11e: Another impairment on Greek bonds expected. Following KB’s 2Q11 results, which were hit by impairments on Greek bonds, we expect another impairment to be booked in 3Q11. A further 29% write-down of Greek bonds would cost CZK 1.9bn, bringing 3Q11 net profit down to CZK 1.9bn (-7% q/q, -44% y/y). Adjusted for this, we would expect KB’s bottom line to be flat vs. 2Q11 and 3% above 3Q10. The main drivers might be 8% annual top line growth (+2% q/q), based on 10% y/y higher loan volumes (+1% q/q), mainly caused by ongoing mortgage loan demand, after the strong sales numbers seen in H11. While loan margins should remain rather stable, deposit margins will further decline, due to competition (e.g. Raiffeisen’s direct banking operation ZUNO started in July). Net F&C income is foreseen to be flat q/q (-2% y/y), mainly due to the introduction of a new client reward scheme offering cash discounts for utilizing more services. Net provisions for loan losses are to stay on the 2Q11 level of around CZK 490mn, mainly due to the stable asset quality and lack of single corporate cases. As a result, the cost of risk should be flat at 50bp (excluding impairments for Greek bonds). Following the 2-3% wage increase starting from 2Q11, we foresee flat operating costs q/q (+8% y/y). The 3Q11 results will be released on November 8 at around 8:00 am CET.

OTP 3Q11e: Taking some one-off charge for early FX loan repayment. We expect OTP to take some 50% of one-off charge for early FX loan repayments already in 3Q11. As per 30.9.11 the 50% charge at a 25% take-up ratio would mean HUF -26.8bn (after tax). The net profit adjusted for the one-off charge and the special tax is expected at HUF 41.8bn (-6% q/q, -8% y/y) and the reported net profit might come in at HUF 7.7bn. Net interest income is foreseen to be flat q/q, based on 1% sequential loan growth and stable margins. Net F&C income might go down 5% q/q on lower client activity. Cost of risk is expected to go up to 3.1% (vs. 2.86% in 2Q11) mainly due to deteriorating asset quality in Bulgaria and a higher NPLs coverage target for Hungary (in Hungary it stood at 77% in 2Q11). OTP will publish its 3Q11 figures on November 18.

Pekao 3Q11e: Safe has become attractive again. We expect Bank Pekao’s 3Q11 bottom line to grow 10% y/y (+1.3% q/q), mainly driven by sustainable income sources. Good corporate demand and strong retail demand might result in 9% annual loan volume growth (+2% q/q), which is not driven by the CHF appreciation vs. the zloty (due to Pekao’s very low FX exposure). Based on unchanged pressure on loan spreads, as well as higher deposit prices, we foresee net interest income to grow 12% y/y (+3% q/q). The cost of risk is seen flat q/q at 68bp, due to the stable asset quality, both in the corporate and retail segments. Operating costs are expected to further grow below the inflation rate at 1% y/y (+2% q/q). Pekao’s 3Q11 report is to be released on November 14.

PKO BP: 3Q11 results in line with expectations helped by strong trading result. PKO BP came in with a 3Q11 net profit of PLN 1,016.7mn (+20% y/y, +5% q/q), which is fully in line with our and consensus expectations and for the first time above the 1bn zloty barrier. The main divergence to our estimates came from a very strong FX result (+100% q/q, -9% y/y) and 4% higher than expected net provisions (-13% y/y, +10% q/q). The latter was mainly due to 50bp q/q increased NPL ratio of 8.1% as a consequence of stricter credit quality assessment criteria. Top line was fully in line with our forecast. The main NII drivers were 3% sequential loan growth (+10% y/y) as well as higher deposits (+3.5% q/q, +9.4% y/y). Net F&C income was 3% below our expectations (-4.5% q/q, -3.7% y/y) mainly due to lower loan insurance sales based on weaker demand for consumer loans. Operating costs (+3.1% q/q, +4.3% y/y) were also fully in line with our estimates.

In our view, the 3Q11results are fully in line with both our and consensus expectations. Top line was in line with forecasts but net F&C income was slightly disappointing due to weaker consumer finance. The quality of the results is slightly worse than in 2Q11, due to the strong FX result. The operating cost side was fully in line with our expectations. However, the NPL ratio increase of 50bp q/q was responsible for higher than expected cost of risk (1.42% vs. 1.32% in 2Q11).



Raiffeisen Bank International 3Q11e: After the profit peak. We expect RBI to report a significantly lower profit of EUR 89mn (-71% y/y, -74% q/q) in 3Q11. This is mainly due to EUR 200mn higher cost of risk vs. 2Q11 based on extra provisions for Hungary’s FX repayment act (EUR 50mn, i.e. 50% of expected loss) and extra provisions for Russia, Belarus and SEE (EUR 150mn). Based on 2.5% sequential loan and 3.7% q/q deposit growth we might see a flat top line and 3.6% q/q lower net F&C income due to seasonality lower client activity. Operating costs are expected to be up 2.5% q/q and 7% y/y, which prolongs the 1H11 dynamics. From financial investments and derivatives we expect a loss of EUR 41mn in 3Q11, mainly due to lower market values of the portfolios. RBI will report 3Q11 results on November 24.

NIBENS story still casts shadow over AIK Banka. Although the representatives of troubled road construction company NIBENS Group, the government and commercial banks in September reached a deal under which the five subsidiaries’ accounts will be unfrozen as soon as courts receive their individual restructuring programs, the share price of AIK Banka is still under pressure, due to its EUR 54mn exposure (according to the last management statement) to NIBENS. Workers are still on strike and it is ever-more frequently mentioned that the privatization of the four largest parts will be cancelled and that the group will undergo a ‘limited’ bankruptcy.

Is worst over? According to AIK Banka representatives, they still feel very comfortable with their position in the whole process, as they have excellent collaterals and allegedly already managed to recover a ‘certain part’ of the exposure. Nevertheless, they claim that the total provision is already made and that no further major impacts on their results are expected. Bank revises YE estimates, to repurchase up to 5% of shares. Meanwhile, at the EGM held on October 11, shareholders of AIK Banka decided to revise the 2011 estimated results and launch a share repurchase program. The plan for 2011 was made with an assumption of the EUR/RSD exchange rate at 115 and it has been revised with a rate of 100 dinars per euro, lowering the growth of total assets and revaluation income. Furthermore, due to unfavorable developments on the real estate market, the bank will also record lesser income from the sale of collaterals. The revision leads to a cut in net profit estimates by more than 40% to EUR 40mn for the end of 2011.

The repurchase program envisages allocation of RSD 756.5mn of retained earnings for the potential acquisition of up to 5% of common shares (437,971 shares) on the open market. This decision has been made in order to prevent ‘damage for the bank and its shareholders by supporting the share price at least at its face value of RSD 1,900.00.’ It is expected that the share repurchase program will be approved by the central bank and the Serbian SEC in the next couple of days, after which we can expect the first ‘interventions’.

Komercijalna Banka expects very good 2011. According to a statement released on the Belgrade Stock Exchange website, Komercijalna Banka is on track to finish 2011 with an excellent result. Total assets are expected to increase 11% y/y to RSD 284.4bn, while the loan book should rise by 11% y/y to RSD 167.2bn and deposits should record a 5% y/y increase to RSD 208.7bn. Net interest income is planned at RSD 10.1bn, up 36% compared to the 2010 figure, while fees & commissions should increase 10.2% to RSD 4.3bn and net profit is estimated to jump a staggering 28% to RSD 3.6bn.

Convertible shares keep investors on sidelines. Despite this announcement, investors are still cautious on the share, as a potential 35% dilution effect could be expected in January 2013. Four international financial institutions (EBRD, IFC, DEG and SwedFund) hold 100% of preferred convertible shares, which can be converted after the above-mentioned date. Nevertheless, we believe that the share is in a good position to benefit from any change in the currently neutral sentiment towards the Serbian equity market.

FHB: FX loan final repayment weighs on profit and balance sheet. The decision of the government on FX loan final repayments significantly affects the operations of FHB. The company has mortgage loans of some CHF 850mn and EUR 30mn, while it did not sell any JPY loans. The present state of final repayment activity of households indicates that 15-30% of loan holders will pay back their CHF-based loans from their own cash or from HUF-denominated loans. At the present FX rates, the total theoretical loss might reach the value of the total equity of the company. The 15% of FX mortgage loan holder clients causes a loss of some HUF 8.9bn, around three times the expected annual profit. This clearly shows that FHB could be one of the banks most affected by the FX mortgage loan repayment. On the other hand, the business is expected to continue in a weak economic environment, but with relatively stable cash generation. Although the business is stable and the NPL ratio is



attractive and relatively low, the final repayment will cause huge losses in 4Q, as the company does not have any provisioning for the amount for 3Q. Turkish banking sector

3Q11: Quarter of normalization. The earnings season for Turkish banks commences in the final week of October and is expected to be finalized by November 11. Overall, the 3Q11 earnings are estimated to contract by 26% q/q, following strong bottom lines in 2Q11. Weak earnings momentum can be blamed for the lack of NPL collections and dividend income, as well as for trading losses and lower income on CPI linkers. Private banks are likely to be hurt more than their state counterparts by the negative impact of trading losses, according to the BRSA’s monthly sector figures. Among the tier-I banks, Vakifbank reported quarterly growth in net earnings; among the second tier banks, Albaraka, Bank Asya & Sekerbank seem set to do so. Overall, we think that our forecasts may deviate from the actual figures for trading losses and provisions, as these are difficult to predict.

Key points of the quarter:

1) Volume growth decelerated. Sector data released by the BRSA covering September indicates 7.4% q/q loan growth, carrying YTD growth to 25.4%. Among the large-scale banks, Garanti is expected to achieve one of the strongest loan growths, followed by Halkbank, which we assume grabbed market share in the quarter.

2) Spreads are improving, but CPI linkers may hurt margins. Since the end of June 2011, TRY loan yields have increased, while deposit costs have remained almost flat. This should enable most of the banks to see a margin improvement, unless they do not hold CPI-linked government bonds. Meanwhile, we think that the spreads bottomed out in 3Q11 and that, starting from 4Q11, we will see margin improvement.

3) NPL collections to normalize: Since 2009, Turkish banks have been benefitting from declining loan loss provisions and NPL collection, lifting the bottom line. However, as we have been highlighting for a while, starting from this quarter, we expect the banking sector to have reached the end of the NPL reversal/collection cycle. In this context, we foresee a 42% contraction in other income for the banks under our coverage. In addition, due to the change to provisioning introduced by the BRSA in June 2011, overall provisioning expenses are expected to increase across the board.

4) Other P&L items are hurting as well. Other than top line profitability and provisions, the net earnings of Turkish banks will be hurt by the absence of dividend income and losses arising from FX and derivative transactions in 3Q11.

3Q11 Net Earnings Forecasts

Expected release date 3Q11E q/q y/y Comment

Akbank Nov 1 - 11 552 -13.8% 25.7% Higher trading losses & general provisionsGaranti Nov 3 461 -51.1% -11.7% Trading losses, lower yield on CPI linkers & lack of one-off itemsHalkbank Nov 1 - 4 492 -3.9% 3.4% Lower yields on CPI linkers, higher provisionsIsbank Nov 11 356 -56.0% -38.4% Lack of dividend income, higher trading loss & provisionsVakifbank Nov 2 282 17.3% 25.2% NIM expansion & low baseYKB Nov 3 412 -6.8% -30.1% Higher provisionsTSKB Nov 3 56 -12.5% 21.7% Lack of dividend incomeAlbaraka Oct 31 42 38.7% 26.1% Improvement in the top line & colume growthBank Asya Nov 10-11 63 14.9% -4.2% NIM improvementSekerbank Nov 1 - 11 31 290.0% -10.9% Low base & decline in provisionsSource: Erste Group research



Turkish Banking Sector- Income Statement, TRY mnTRY mnIncome Statement 08 10 07 11 08 11 m/m y/y 08 10 08 11 y/yInterest Income 6,091 8,162 7,203 -11.7% 18.3% 51,142 55,225 8.0%Interest Expense 3,368 4,431 4,526 2.1% 34.4% 25,381 30,731 21.1%Net Interest Income 2,724 3,732 2,678 -28.2% -1.7% 25,761 24,494 -4.9%Special Provisions for Non-performing Loans 339 365 308 -15.5% -9.1% 3,598 2,562 -28.8%Net Interest Income after Provisions 2,384 3,367 2,369 -29.6% -0.6% 22,163 21,932 -1.0%Non-Interest Income 1,589 2,005 2,056 2.5% 29.3% 15,141 17,663 16.7%Non-Interest Expense 2,440 3,074 3,068 -0.2% 25.7% 19,477 23,263 19.4%Other Non-Interest Income/Expense 208 -278 -340 22.6% n.m. 610 -284 -146.5%Profit/Loss before Tax 1,742 2,021 1,017 -49.7% -41.6% 18,437 16,048 -13.0%Provision for Taxes 333 433 259 -40.3% -22.3% 3,481 3,329 -4.4%Net Income 1,409 1,588 758 -52.2% -46.2% 14,956 12,719 -15.0%

Monthly Cumulative

Source: BRSA, Erste Group research

What to expect from 4Q and beyond?

Earnings downgrades likely after 3Q11 results. After a three-month period of positive CBT actions, the Turkish banking sector has once again entered into a challenging period, following the bank’s recent policy decisions. The CBT widened the interest corridor by raising O/N lending rates from 9% to 12.5% last week. Additionally, the rates at which primary dealers can borrow from the repo market via open market operations also increased from 8% to 12%, while the late liquidity window for O/N lending rates (open 16:00-17:00) is raised from 12% to 15.5%. Consequently, T-bill rates have risen by almost 100bp, while deposit rates have jumped by 50-75bp since then; this leads to an increase in the overall funding costs of the banking system. More importantly, concerns over higher than expected inflation and the possibility of a rate hike decision have intensified in the market.

We calculate net income impact of around 4%. As a result, the market has once again started wondering about the system’s margin outlook. We have conducted a sensitivity analysis for a better understanding of the potential impact. According to our analysis, the impact of the recent hike would erode 4% of the banking sector’s 2012e net income; Vakifbank is the most vulnerable, due to its high exposure to TRY deposits and repo funding. Meanwhile, a 1% rise in T-bills may result in 3% erosion of the total equity of the banking system, with Akbank likely to be hurt the most, due to its high exposure to government securities. However, Akbank may limit the potential impact with its sizeable CPI linkers, of which yields are likely to increase.

Mind the ‘GAP’. As interest rates rise, those banks with a higher TRY deposit base are the most affected, leading to margin contraction. Additionally, the maturity structure of the total funding base and securities are also important in covering the margin decline. One of the main structural deficiencies of the banking sector has been the historical maturity mismatch between assets and liabilities. Although banks have been issuing corporate bonds since 2H10, with security redemptions used as an alternative funding source, deposits still make up 61% of the sector’s total funding base. Yet, the average duration of the deposit base is two months (which is very low compared to the EU average of 145 days), while the average duration of lending is around one year – the duration gap, which should not be overlooked.

The potential impact of rate hikes will differ from bank to bank. Technically, banks that have less reliance on TRY deposits, a lower FRN security book, and which sit on higher free equity and a shorter maturity mismatch are likely to be hit less. In this context, Akbank and Garanti are better positioned. Meanwhile, banks that have a higher TRY funding base, such as Halkbank and Isbank, are negatively affected the most during any potential rise in interest rates. On the other hand, banks with higher exposure to CPI-linked government bonds will benefit from rising inflation and their NIM contraction will be relatively lower.

Banks are restructuring their balance sheets in order to safeguard against potential rises in interest rates.In an environment of low interest rates, they aim to position as much as possible of their longer maturity liabilities



towards fixed rates, and their assets towards floating rates, especially loans and securities. It should be highlighted that, during past rate hike cycles experienced in 2006, the sector’s NIM dropped by 75bp, once rates had risen to 17% (from 13.5%), and recovered within the subsequent three months, thanks to the duration mismatch between assets and liabilities. However, banks are not as comfortable as they once were, given that retail exposure has increased, with loans having a longer duration. This time, therefore, it may take longer for margins to recover.

Repo costs have risen, too. As a result of the rising deposit costs, Turkish banks have very often resorted to repo funding to limit margin erosion since the beginning of the year. The share of repo funding in the total funding base has risen from 5% to 9%, as of September 2011. A possible 100bp increase in repo rates would lower the NIM by 50bp, on average; Vakifbank, with 11% exposure, would be affected the most.

Impact of rising funding costs & potential rate hike

Akbank Garanti Halkbank Vakifbank Isbank YKBImpact of 100bps increase in repo costs

Share of TRY repo funding (%) 8.0% 7.8% 10.5% 11.4% 8.3% 5.0%Potential decline in the NIM (bps) 7.40 7.00 11.00 12.20 8.00 4.50

Impact of 100bps increase in deposit costsShare of TRY deposits (%) 28.0% 26.0% 36.0% 38.0% 32.0% 26.0%Potential decline in the NIM (bps) 28 22 32 37 35 24

Impact of 100bps increase in bond ratesShare of TRY securities (%) 88.0% 80.0% 86.0% 79.0% 78.0% 54.0%% of Equity 4.1% 3.6% 2.4% 2.8% 3.0% 1.5%

Impact of 100bps rate hike *Potential decline in the NIM (bps) 16 15 21 18 16 19% of Net Income 6.0% 5.0% 6.7% 8.9% 5.2% 6.5%

* Assuming the hike to be reflected in asset yields. Source: Company Data, Erste Group Research

CPI linkers may benefit, thanks to rising inflation. An upward movement in inflation beyond our forecasts would result in TRY weakness and could trigger an earlier than expected rate hike from the CBT. Meanwhile, we expect a 75bp rate hike towards the end of the year. But more importantly, inflation is expected at around 9% by end-2011 and 7.0% in 2012. Any rise in inflation would be beneficial for those banks with a sizeable CPI linker portfolio, such as Akbank and Garanti.

Sensitivity to CPI linkers

TRY mn% of TRY

Security BookPotential Impact of 1%

rise in inflation% of Net Earnings

Akbank 38% 160 5.0%Garanti 32% 100 3.8%Halkbank 13% 30 1.5%Isbank 30% 112 3.7%Vakifbank 9% 18 1.1%YapiKredi 4% 7 0.1%

Source: Company Data, Erste Group Research




Aik Banka AD RSD 170 13.2% 13.3% 14.3% 14.8% 4.4% 4.5% 5.3% 5.7% -5.4% -34.4% -52.4% -38.6%Akbank TRY 10,955 18.9% 14.6% 15.7% 16.4% 2.9% 2.2% 2.3% 2.3% -5.1% -9.2% -22.2% -40.7%Albaraka Turk TRY 420 18.1% 15.9% 16.5% 16.7% 1.9% 1.7% 2.0% 2.2% 2.9% -14.5% -30.1% -48.6%Banca Transilvania RON 333 6.9% 8.2% 11.0% 15.2% 0.7% 0.8% 1.1% 1.6% 6.4% -16.5% -27.2% -11.4%Bank Asya TRY 705 15.0% 11.4% 10.8% 10.2% 2.1% 1.5% 1.4% 1.3% 0.8% -21.2% -40.5% -56.5%Bank Pekao PLN 9,217 13.3% 15.4% 16.9% 16.5% 1.9% 2.3% 2.4% 2.2% 14.2% -4.9% -21.7% -27.3%BRD-Group SG RON 1,745 19.4% 18.5% 21.0% 18.0% 2.1% 2.3% 2.8% 2.6% 0.1% -21.5% -30.0% -11.1%BRE Bank PLN 2,619 11.4% 13.2% 15.7% 17.4% 0.8% 1.0% 1.2% 1.3% 14.7% -18.3% -29.0% -15.0%BZ WBK PLN 3,820 15.5% 18.9% 19.7% 1.7% 2.2% 2.3% 3.1% -8.5% -12.4% -2.2%FHB HUF 105 21.0% 5.3% 5.2% 6.7% 1.3% 0.4% 0.4% 0.5% -4.7% -44.2% -58.3% -62.1%Garanti Bank TRY 11,122 22.2% 17.1% 17.4% 18.6% 2.9% 2.1% 2.0% 2.1% -7.2% -14.3% -26.2% -39.1%Halkbank TRY 5,878 32.0% 24.5% 25.1% 24.1% 3.2% 2.5% 2.6% 2.6% -9.8% -3.4% -20.9% -38.4%Isbank TRY 7,796 20.6% 16.7% 17.1% 17.3% 2.6% 2.1% 2.1% 2.1% -9.0% -15.1% -28.0% -46.8%Komercija lna Banka RSD 258 8.0% 6.3% 8.2% 13.8% 1.2% 1.0% 1.1% 1.9% 1.8% -32.4% -43.1% -22.1%Komercni banka CZK 5,264 19.0% 19.1% 20.7% 21.6% 2.0% 2.1% 2.2% 2.3% 0.1% -8.8% -22.1% -17.2%OTP HUF 2,986 9.4% 12.5% 14.9% 15.6% 1.2% 1.7% 2.1% 2.3% 3.4% -39.9% -54.4% -49.5%PKO BP PLN 10,328 15.5% 18.6% 19.6% 21.6% 2.0% 2.4% 2.5% 2.7% 13.6% -12.8% -28.5% -28.9%Raiffeisen Bank InternaEUR 3,806 14.0% 16.3% 17.8% 20.2% 0.8% 1.1% 1.2% 1.5% -4.6% -39.4% -48.0% -51.7%Sekerbank TRY 204 13.5% 7.5% 10.6% 10.9% 1.8% 0.9% 1.2% 1.2% 8.4% 1.5% -29.5% -41.1%Turkiye Sinai Kalkinma TRY 492 19.3% 17.4% 16.3% 15.5% 3.0% 2.7% 2.6% 2.7% 2.4% -9.6% -19.6% -18.4%Vakifbank TRY 3,217 15.3% 12.7% 13.5% 13.2% 1.8% 1.4% 1.5% 1.5% -12.5% -12.5% -28.5% -43.8%Yapi Kredi Bank TRY 5,989 23.3% 16.5% 16.4% 16.6% 2.9% 2.0% 2.1% 2.1% -16.0% -17.8% -35.6% -50.1%Median - - 15.5% 15.6% 16.3% 16.5% 1.9% 2.0% 2.1% 2.1% - - - -UniCredit S.p.A. EUR - 16,061 2.9% 3.5% 4.3% 5.4% - - - - 6.9% -27.5% -51.8% -53.9%KBC Group N.V. EUR - 5,247 15% 13% 15.2% 14.2% - - - - -8.2% -34.8% -46.4% -51.6%Svenska HandelsbankeSEK - 12,535 12.2% 12.8% 12.3% 12.1% - - - - 4.9% -2.9% -13.7% -13.3%Erste Group Bank AG EUR - 5,633 7.6% 5.7% 7.8% 9.4% - - - - -17.3% -50.9% -57.3% -54.8%Societe Generale S.A. EUR - 14,447 9.2% 8.0% 8.3% 8.6% - - - - -1.9% -37.1% -59.2% -56.6%Median - - 9.2% 8.0% 8.3% 9.4% - - - - - - - -Euro Stoxx Banks 285,821 6% 5.2% 5.7% 6.9% - - - - 17.0% -17.6% -35.8% -29.8%CEE to Peer, Prem/Disc - 68% 96% 96% 75% - - - - - - - -

ROE ROA Performance (EUR terms)



2010 2011e 2012e 2013e 2010 2011e 2012e 2013e 2010 2011e 2012e 2013eAik Banka AD 5.5 2.8 2.3 1.9 0.0% 1.8% 2.3% 2.7% 0.7 0.3 0.3 0.3Akbank 11.6 9.3 8.6 7.4 0.0% 3.2% 3.5% 4.1% 2.0 1.4 1.3 1.1Albaraka Turk 10.5 6.2 5.0 3.8 0.0% 5.6% 7.0% 9.2% 1.7 1.0 0.7 0.6Banca Transilvania 10.7 9.3 6.8 3.7 0.0% 1.5% 2.2% 4.1% 0.7 0.8 0.7 0.5Bank Asya 9.5 6.7 6.8 6.5 0.0% 3.8% 3.7% 3.8% 1.3 0.8 0.7 0.6Bank Pekao 18.7 12.2 11.2 10.9 3.8% 4.9% 6.2% 6.4% 2.3 1.9 1.8 1.8BRD-Group SG 7.3 6.6 5.0 5.2 1.7% 2.6% 7.9% 7.6% 1.3 1.1 1.0 0.9BRE Bank 14.2 11.9 9.5 7.8 1.0% 2.1% 4.2% 5.1% 1.6 1.6 1.4 1.3BZ WBK 16.6 13.3 12.1 3.0% 3.8% 4.1% 2.5 2.5 2.3 FHB 5.5 9.6 9.6 7.1 0.0% 0.0% 0.0% 2.8% 1.1 0.5 0.5 0.5Garanti Bank 10.1 8.3 7.8 6.6 0.0% 3.0% 3.2% 3.8% 2.0 1.5 1.3 1.2Halkbank 7.9 6.7 6.0 5.4 3.2% 5.3% 5.8% 6.5% 2.2 1.6 1.4 1.2Isbank 8.0 5.8 5.6 5.1 0.0% 5.1% 5.3% 5.9% 1.5 1.0 0.9 0.8Komercijalna Banka 10.1 9.6 6.8 3.6 0.0% 0.0% 0.0% 0.0% 0.8 0.6 0.5 0.5Komercni banka 12.7 9.0 7.7 6.8 6.0% 6.7% 7.8% 8.8% 2.3 1.7 1.5 1.4OTP 11.2 4.8 3.7 3.2 1.6% 4.2% 5.4% 9.4% 1.0 0.6 0.5 0.5PKO BP 15.2 10.0 8.7 7.0 2.5% 4.0% 4.6% 5.7% 2.5 1.8 1.6 1.4Raiffeisen Bank International 9.0 3.3 2.7 2.1 2.6% 6.1% 7.4% 9.7% 1.2 0.5 0.5 0.4Sekerbank 5.7 8.0 5.2 4.4 0.0% 1.9% 3.9% 4.6% 0.7 0.6 0.5 0.4Turkiye Sinai Kalkinma Banka 6.4 6.5 6.4 5.3 0.0% 2.3% 2.4% 2.8% 1.1 1.2 0.9 0.7Vakifbank 8.2 6.2 5.6 5.0 0.0% 4.0% 4.5% 5.0% 1.1 0.8 0.7 0.6Yapi Kredi Bank 9.9 7.1 6.6 5.8 0.0% 3.5% 3.8% 4.3% 2.0 1.2 1.0 0.9Median CEE 10.0 7.5 6.7 5.3 0.0% 3.6% 4.2% 5.0% 1.4 1.1 0.9 0.7UniCredit S.p.A. 8.7 6.9 5.5 4.2 3.6% 3.8% 5.0% 7.2% 0.5 0.2 0.2 0.2KBC Group N.V. 3.1 3.4 2.8 2.7 5.1% 5.1% 5.1% 6.7% 0.8 0.5 0.4 0.4Svenska Handelsbanken A 10.4 9.4 9.2 8.8 5.0% 5.5% 5.7% 6.1% 1.5 1.2 1.1 1.1Erste Group Bank AG 6.3 8.2 5.5 4.2 4.7% 0.0% 4.4% 5.4% 1.1 0.5 0.4 0.4Societe Generale S.A. (France 3.8 4.1 3.7 3.3 9.4% 7.8% 9.1% 9.8% 0.7 0.3 0.3 0.3Median 6.3 6.9 5.5 4.2 5.0% 5.1% 5.1% 6.7% 0.8 0.5 0.4 0.4Euro Stoxx Banks 13.0 8.0 6.6 5.1 2.8% 3.8% 4.4% 5.9% 0.7 0.4 0.3 0.3CEE to Peer, Prem/Disc 59% 9% 23% 27% -100% -29% -19% -25% 79% 135% 118% 92%

P/E Div yield P/BV




2010 2011e 2012e 2013e 2010 2011e 2012e 2013e 2010 2011e 2012e 2013eAik Banka AD 23.0% 21.9% 21.8% 21.5% 5.2% 5.8% 6.0% 6.0% 110% 119% 126% 134%Akbank 37.1% 38.2% 39.8% 38.2% 4.3% 3.3% 3.5% 3.5% 74% 100% 100% 104%Albaraka Turk 42.7% 40.6% 36.8% 33.6% 4.5% 4.0% 4.9% 4.9% 89% 100% 103% 109%Banca Transilvania 48.1% 59.5% 60.6% 61.1% 4.9% 3.9% 3.8% 3.8% 84% 82% 82% 82%Bank Asya 51.9% 52.6% 60.5% 60.5% 4.8% 3.8% 3.9% 3.7% 95% 118% 121% 127%Bank Pekao 51.1% 48.0% 47.7% 48.9% 3.1% 3.3% 3.2% 3.2% 86% 85% 84% 84%BRD-Group SG 42.4% 47.9% 49.8% 53.2% 4.8% 4.9% 4.8% 4.9% 118% 113% 115% 114%BRE Bank 55.4% 53.6% 53.4% 54.1% 2.2% 2.4% 2.4% 2.3% 127% 128% 129% 130%BZ WBK 51.0% 48.6% 49.7% 3.2% 2.8% 2.9% 87% 83% 83% FHB 60.2% 73.6% 76.7% 74.8% 3.1% 2.9% 2.8% 2.8% nm nm nm nmGaranti Bank 40.1% 39.6% 39.5% 38.1% 4.4% 3.3% 3.3% 3.4% 82% 101% 105% 108%Halkbank 33.5% 36.4% 35.7% 34.8% 5.0% 3.6% 4.4% 4.5% 77% 92% 97% 100%Isbank 40.6% 42.8% 43.3% 42.6% 3.9% 3.4% 3.7% 3.6% 71% 95% 98% 102%Komercijalna Banka 66.6% 60.3% 58.1% 52.2% 3.4% 3.5% 3.5% 4.0% 78% 77% 78% 81%Komercni banka 41.4% 41.7% 40.5% 40.2% 3.1% 3.2% 3.4% 3.4% 70% 73% 75% 76%OTP 49.4% 53.3% 55.6% 55.8% 6.3% 6.5% 5.9% 5.7% 121% 128% 128% 129%PKO BP 43.3% 40.8% 40.6% 38.9% 4.0% 4.2% 3.9% 3.9% 96% 98% 99% 99%Raiffeisen Bank International 61.9% 51.1% 52.4% 53.8% 2.6% 2.9% 2.9% 3.1% 135% 133% 133% 132%Sekerbank 57.6% 60.0% 64.5% 62.3% 5.8% 4.2% 4.1% 4.1% 86% 106% 109% 114%Turkiye Sinai Kalkinma Banka 17.6% 16.1% 17.1% 15.2% 4.2% 3.8% 3.7% 3.7% nm nm nm nmVakifbank 41.0% 41.7% 41.2% 39.8% 4.1% 3.6% 3.9% 4.0% 82% 110% 114% 118%Yapi Kredi Bank 40.9% 43.0% 42.6% 41.5% 4.5% 3.5% 3.6% 3.8% 98% 123% 128% 133%Median CEE 43.0% 45.4% 45.5% 42.6% 4.3% 3.6% 3.7% 3.8% 86.4% 100.6% 104% 109%UniCredit S.p.A. - - - - 1.7% 1.7% 1.7% 1.8% - - - -KBC Group N.V. - - - - 1.7% 1.7% 1.7% 1.6% - - - -Svenska Handelsbanken A - - - - 1.1% 1.0% 1.0% 1.0% - - - -Erste Group Bank AG - - - - 2.7% 2.6% 2.6% 2.5% - - - -Societe Generale S.A. (France - - - - 1.1% 1.0% 1.0% 1.0% - - - -Median - - - - 1.7% 1.7% 1.7% 1.6% - - - -Euro Stoxx Banks - - - - 1.5% 1.6% 1.6% 1.6% - - - -CEE to Peer, ppt - - - - 2.58 1.87 1.99 2.19 - - - -

Cost/income ratio Net interest margin Loans/deposits ratio




Aik Banka AD Under review Target price RSD Price (RSD) 1,802.0 CIR (2010) 23% 10 11e 12e 13eMcap (RSD mn) 17,292 ROE (2010) 13.2% Total assets (RSD mn) 141,583 137,214 150,935 166,028Mcap (EUR mn) 170 L/D ratio (2010) 110% Total income (RSD mn) 10,604.0 11,411.2 12,400.2 13,612.0Free float (%) 79.2% Equity ratio (2010) 31.2% Net interest income (RSD mn) 6,641.7 7,858.6 8,644.5 9,508.9Free float (EUR mn) 134 BVPS CAGR 10-13e 13.9% Risk provisions (RSD mn) -1,968.0 -2,107.3 -1,219.4 -639.3Shares outst. (mn) 9.6 EPS CAGR 10-13e 10.6% Tot. equity/Tot. assets 31.20% 36.36% 37.91% 39.70%

EPS (RSD) 582.61 641.53 799.92 947.69BVPS (RSD) 4,602.68 5,198.93 5,962.85 6,867.89Net interest margin 5.21% 5.76% 6.00% 6.00%Cost/income ratio 22.99% 21.92% 21.77% 21.48%P/BV 0.72 0.35 0.30 0.26P/E 5.54 2.81 2.25 1.90Dividend yield 0.00% 1.84% 2.30% 2.72%P/BV rel. 0.5 0.3 0.3 0.4P/E rel. - - 0.3 0.4

Performance 1M 3M 6M 12MAbsolute (RSD terms) -5.2% -34.5% -51.3% -41.8%Rel. to sector (EUR, ppt) -1.8 -21.7 -28.8 -11.2Rel. to universe (EUR, ppt) -8.3 -24.8 -33.0 -24.1

Akbank Hold Target price TRY 7.5Price (TRY) 6.640 CIR (2010) 37% 10 11e 12e 13eMcap (TRY mn) 26,560 ROE (2010) 18.9% Total assets (TRY mn) 113,183 125,990 144,518 163,339Mcap (EUR mn) 10,955 L/D ratio (2010) 74% Total income (TRY mn) 6,509.6 6,493.9 7,120.7 8,039.1Free float (%) 10.3% Equity ratio (2010) 15.5% Net interest income (TRY mn) 4,276.8 4,021.8 4,788.4 5,445.9Free float (EUR mn) 1,128 BVPS CAGR 10-13e 5.2% Risk provisions (TRY mn) -518.8 -610.2 -421.9 -478.1Shares outst. (mn) 4,000 EPS CAGR 10-13e -0.3% Tot. equity/Tot. assets 15.52% 14.87% 14.31% 14.18%

EPS (TRY) 0.71 0.68 0.77 0.90BVPS (TRY) 4.39 4.68 5.17 5.79Net interest margin 4.32% 3.26% 3.54% 3.54%Cost/income ratio 37.13% 38.16% 39.82% 38.22%P/BV 1.95 1.42 1.28 1.15P/E 11.63 9.26 8.59 7.40Dividend yield 0.00% 3.24% 3.49% 4.06%P/BV rel. 1.4 1.3 1.4 1.6P/E rel. 1.2 1.2 1.3 1.4

Performance 1M 3M 6M 12MAbsolute (TRY terms) -7.8% -9.5% -17.2% -27.4%Rel. to sector (EUR, ppt) -1.6 3.5 1.4 -13.3Rel. to universe (EUR, ppt) -8.0 0.4 -2.8 -26.2

Albaraka Turk Buy Target price TRY 2.7Price (TRY) 1.9 CIR (2010) 43% 10 11e 12e 13eMcap (TRY mn) 1,019 ROE (2010) 18.1% Total assets (TRY mn) 8,406 9,407 11,066 12,960Mcap (EUR mn) 420 L/D ratio (2010) 89% Total income (TRY mn) 472.3 568.5 688.7 819.1Free float (%) 22.2% Equity ratio (2010) 10.1% Net interest income (TRY mn) 316.2 365.6 499.6 590.4Free float (EUR mn) 93 BVPS CAGR 10-13e 26.6% Risk provisions (TRY mn) -105.1 -141.7 -182.1 -207.7Shares outst. (mn) 539 EPS CAGR 10-13e 26.5% Tot. equity/Tot. assets 10.14% 11.18% 12.59% 14.08%


Performance 1M 3M 6M 12MAbsolute (TRY terms) 0.0% -14.9% -25.6% -37.0%Rel. to sector (EUR, ppt) 6.4 -1.8 -6.5 -21.2Rel. to universe (EUR, ppt) 0.0 -5.0 -10.6 -34.1

52 weeks

1.500

2.000

2.500

3.000

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Aik Banka ADBELEX 15 (Rebased)DJ EURO STOXX Banks (Rebased)

52 weeks

4

5

6

7

8

9

10

11

Akbank ISE 100 (Rebased) DJ EURO STOXX Banks (Rebased)

52 weeks

1,41,61,82,02,22,42,62,83,03,23,4

Albaraka TurkISE 100 (Rebased)DJ EURO STOXX Banks (Rebased)



Banca Transilvania Hold Target price RON 1.3Price (RON) 1.0 CIR (2010) 48% 10 11e 12e 13eMcap (RON mn) 1,448 ROE (2010) 6.9% Total assets (RON mn) 21,730 22,035 23,798 25,940Mcap (EUR mn) 333 L/D ratio (2010) 84% Total income (RON mn) 1,541.9 1,377.1 1,489.0 1,619.1Free float (%) 85.4% Equity ratio (2010) 9.6% Net interest income (RON mn) 996.3 831.3 870.8 945.0Free float (EUR mn) 284 BVPS CAGR 10-13e 11.0% Risk provisions (RON mn) -647.0 -327.6 -246.8 -106.1Shares outst. (mn) 1,478 EPS CAGR 10-13e 29.3% Tot. equity/Tot. assets 9.61% 10.07% 10.24% 10.69%

EPS (RON) 0.10 0.10 0.14 0.27BVPS (RON) 1.41 1.25 1.37 1.88Net interest margin 4.85% 3.87% 3.80% 3.80%Cost/income ratio 48.07% 59.47% 60.56% 61.07%P/BV 0.72 0.78 0.71 0.52P/E 10.69 9.31 6.78 3.67Dividend yield 0.00% 1.55% 2.21% 4.09%P/BV rel. 0.5 0.7 0.8 0.7P/E rel. 1.1 1.2 1.0 0.7

Performance 1M 3M 6M 12MAbsolute (RON terms) 7.3% -14.1% -22.9% -10.2%Rel. to sector (EUR, ppt) 10.0 -3.8 -3.6 16.0Rel. to universe (EUR, ppt) 3.5 -7.0 -7.8 3.1

Bank Asya Hold Target price TRY 2.1Price (TRY) 1.9 CIR (2010) 52% 10 11e 12e 13eMcap (TRY mn) 1,710 ROE (2010) 15.0% Total assets (TRY mn) 14,513 16,635 18,559 21,276Mcap (EUR mn) 705 L/D ratio (2010) 95% Total income (TRY mn) 1,022.1 1,032.7 1,044.3 1,130.3Free float (%) 50.9% Equity ratio (2010) 13.4% Net interest income (TRY mn) 593.5 609.3 687.2 736.8Free float (EUR mn) 359 BVPS CAGR 10-13e 12.4% Risk provisions (TRY mn) -167.5 -182.6 -100.4 -118.8Shares outst. (mn) 900 EPS CAGR 10-13e -3.5% Tot. equity/Tot. assets 13.38% 13.30% 13.04% 12.82%


Performance 1M 3M 6M 12MAbsolute (TRY terms) -2.1% -21.5% -36.7% -46.6%Rel. to sector (EUR, ppt) 4.3 -8.5 -16.9 -29.1Rel. to universe (EUR, ppt) -2.1 -11.6 -21.0 -41.9

Bank Pekao Reduce Target price PLN 160.0Price (PLN) 153.0 CIR (2010) 51% 10 11e 12e 13eMcap (PLN mn) 40,137 ROE (2010) 13.3% Total assets (PLN mn) 134,090 146,871 160,090 179,300Mcap (EUR mn) 9,217 L/D ratio (2010) 86% Total income (PLN mn) 7,444.5 8,174.3 9,002.8 9,797.0Free float (%) 40.8% Equity ratio (2010) 15.0% Net interest income (PLN mn) 4,103.7 4,498.2 4,930.5 5,444.7Free float (EUR mn) 3,757 BVPS CAGR 10-13e 5.7% Risk provisions (PLN mn) -537.9 -439.2 -248.5 -360.7Shares outst. (mn) 262 EPS CAGR 10-13e 11.1% Tot. equity/Tot. assets 15.05% 14.15% 13.66% 12.81%

EPS (PLN) 9.63 11.70 13.68 14.01BVPS (PLN) 76.89 79.10 83.01 86.96Net interest margin 3.13% 3.28% 3.21% 3.21%Cost/income ratio 51.11% 48.04% 47.71% 48.92%P/BV 2.33 1.93 1.84 1.76P/E 18.73 12.18 11.19 10.92Dividend yield 3.77% 4.92% 6.25% 6.40%P/BV rel. 1.7 1.8 2.0 2.4P/E rel. 1.9 1.6 1.7 2.1Performance 1M 3M 6M 12MAbsolute (PLN terms) 13.2% 2.7% -13.5% -19.5%Rel. to sector (EUR, ppt) 17.7 7.8 1.8 0.1Rel. to universe (EUR, ppt) 11.3 4.7 -2.3 -12.8

52 weeks

0,5

0,6

0,7

0,8

0,9

1,0

1,1

1,2

1,3

Banca TransilvaniaBET (Rebased)DJ EURO STOXX Banks (Rebased)

52 weeks

1,5

2,0

2,5

3,0

3,5

4,0

Bank Asya ISE 100 (Rebased) DJ EURO STOXX Banks (Rebased)

52 weeks

80

100

120

140

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220

Bank PekaoW IG 20 (Rebased)DJ EURO STOXX Banks (Rebased)



BRD-Group SG Accumulate Target price RON 16.6Price (RON) 10.9 CIR (2010) 42% 10 11e 12e 13eMcap (RON mn) 7,596 ROE (2010) 19.4% Total assets (RON mn) 49,667 51,729 54,833 58,080Mcap (EUR mn) 1,745 L/D ratio (2010) 118% Total income (RON mn) 3,663.5 3,885.3 4,069.5 4,291.9Free float (%) 40.6% Equity ratio (2010) 11.5% Net interest income (RON mn) 2,319.7 2,486.0 2,557.5 2,740.5Free float (EUR mn) 709 BVPS CAGR 10-13e 14.9% Risk provisions (RON mn) -882.9 -613.2 -237.1 -268.1Shares outst. (mn) 697 EPS CAGR 10-13e 6.1% Tot. equity/Tot. assets 11.49% 13.01% 13.92% 14.70%

EPS (RON) 1.45 1.65 2.16 2.08BVPS (RON) 8.19 9.65 10.95 12.25Net interest margin 4.82% 4.90% 4.80% 4.85%Cost/income ratio 42.38% 47.90% 49.81% 53.22%P/BV 1.33 1.13 1.00 0.89P/E 7.30 6.61 5.04 5.23Dividend yield 1.70% 2.57% 7.94% 7.65%P/BV rel. 1.0 1.1 1.1 1.2P/E rel. 0.7 0.9 0.8 1.0

Performance 1M 3M 6M 12MAbsolute (RON terms) 0.9% -19.3% -25.9% -9.9%Rel. to sector (EUR, ppt) 3.6 -8.8 -6.4 16.3Rel. to universe (EUR, ppt) -2.9 -12.0 -10.6 3.4

BRE Bank Hold Target price PLN 340.0Price (PLN) 271.0 CIR (2010) 55% 10 11e 12e 13eMcap (PLN mn) 11,403 ROE (2010) 11.4% Total assets (PLN mn) 87,992 99,431 113,848 133,203Mcap (EUR mn) 2,619 L/D ratio (2010) 127% Total income (PLN mn) 3,333.9 3,803.7 4,352.8 4,873.1Free float (%) 30.1% Equity ratio (2010) 7.5% Net interest income (PLN mn) 1,818.8 2,175.9 2,569.4 2,792.7Free float (EUR mn) 789 BVPS CAGR 10-13e 11.0% Risk provisions (PLN mn) -652.8 -557.9 -390.5 -219.6Shares outst. (mn) 42.08 EPS CAGR 10-13e 68.3% Tot. equity/Tot. assets 7.51% 7.32% 7.02% 6.66%

EPS (PLN) 17.51 21.19 28.41 34.83BVPS (PLN) 157.03 172.92 189.97 210.86Net interest margin 2.17% 2.38% 2.41% 2.26%Cost/income ratio 55.40% 53.63% 53.37% 54.12%P/BV 1.57 1.57 1.43 1.29P/E 14.19 11.92 9.54 7.78Dividend yield 1.00% 2.10% 4.19% 5.14%P/BV rel. 1.1 1.5 1.5 1.8P/E rel. 1.4 1.6 1.4 1.5

Performance 1M 3M 6M 12MAbsolute (PLN terms) 13.7% -11.9% -21.4% -5.9%Rel. to sector (EUR, ppt) 18.2 -5.7 -5.4 12.4Rel. to universe (EUR, ppt) 11.8 -8.8 -9.5 -0.5

BZ WBK Hold Target price PLN 227.0Price (PLN) 228.0 CIR (2010) 51% 10 11e 12e 13eMcap (PLN mn) 16,635 ROE (2010) 15.5% Total assets (PLN mn) 60,753 66,828 76,853 Mcap (EUR mn) 3,820 L/D ratio (2010) 87% Total income (PLN mn) 3,498.1 3,714.5 4,293.6 Free float (%) 29.5% Equity ratio (2010) 10.0% Net interest income (PLN mn) 1,792.7 1,743.1 2,059.5Free float (EUR mn) 1,127 BVPS CAGR 10-13e #WERT! Risk provisions (PLN mn) -435.6 -217.1 -116.6Shares outst. (mn) 73 EPS CAGR 10-13e #WERT! Tot. equity/Tot. assets 10.00% 9.97% 9.56% #WERT!

EPS (PLN) 12.59 16.03 18.87 BVPS (PLN) 83.13 91.14 100.58 Net interest margin 3.15% 2.80% 2.87%Cost/income ratio 50.99% 48.57% 49.75%P/BV 2.50 2.50 2.27P/E 16.60 13.25 12.08 Dividend yield 2.97% 3.77% 4.14% P/BV rel. 1.8 2.3 2.5 #WERT!P/E rel. 1.7 1.8 1.8 #WERT!Performance 1M 3M 6M 12MAbsolute (PLN terms) 2.2% -1.3% -3.1% 8.3%Rel. to sector (EUR, ppt) 6.6 4.1 11.2 25.2Rel. to universe (EUR, ppt) 0.2 1.0 7.1 12.3

52 weeks

100

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BRE Bank WIG 20 (Rebased) DJ EURO STOXX Banks (Rebased)

52 weeks

100

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BZ WBK WIG 20 (Rebased) DJ EURO STOXX Banks (Rebased)

52 weeks

6789

10111213141516

BRD-Group SGBET (Rebased)DJ EURO STOXX Banks (Rebased)



FHB Hold Target price HUF 700.0Price (HUF) 486.0 CIR (2010) 60% 10 11e 12e 13eMcap (HUF bn) 32 ROE (2010) 21.0% Total assets (HUF mn) 873,520.5 842,947.3 872,450.4 911,710.7Mcap (EUR mn) 105 L/D ratio (2010) 951% Total income (HUF mn) 35,307.4 30,482.8 29,813.4 30,338.7Free float (%) 37.6% Equity ratio (2010) 6.8% Net interest income (HUF mn) 26,193.8 23,172.3 24,015.6 24,978.3Free float (EUR mn) 40 BVPS CAGR 10-13e 9.2% Risk provisions (HUF mn) -5,126.6 -3,740.6 -2,498.8 -1,686.4Shares outst. (mn) 66 EPS CAGR 10-13e -10.8% Tot. equity/Tot. assets 6.76% 7.36% 7.50% 7.57%

EPS (HUF) 170.60 45.68 50.65 68.05BVPS (HUF) 896.54 942.92 994.31 1,049.52Net interest margin 3.12% 2.86% 2.80% 2.80%Cost/income ratio 60.22% 73.63% 76.71% 74.78%P/BV 1.07 0.52 0.49 0.46P/E 5.54 9.57 9.60 7.14Dividend yield 0.00% 0.00% 0.00% 2.80%P/BV rel. 0.8 0.5 0.5 0.6P/E rel. 0.6 1.3 1.4 1.4

Performance 1M 3M 6M 12MAbsolute (HUF terms) -2.0% -37.7% -52.2% -57.6%Rel. to sector (EUR, ppt) -1.2 -31.5 -34.8 -34.7Rel. to universe (EUR, ppt) -7.7 -34.6 -38.9 -47.5

Garanti Bank Buy Target price TRY 8.6Price (TRY) 6.4 CIR (2010) 40% 10 11e 12e 13eMcap (TRY mn) 26,964 ROE (2010) 22.2% Total assets (TRY mn) 123,963 157,262 180,785 205,958Mcap (EUR mn) 11,122 L/D ratio (2010) 82% Total income (TRY mn) 7,577.5 7,799.5 8,729.3 10,028.4Free float (%) 48.6% Equity ratio (2010) 13.3% Net interest income (TRY mn) 4,754.7 4,714.7 5,498.3 6,558.1Free float (EUR mn) 5,409 BVPS CAGR 10-13e 14.4% Risk provisions (TRY mn) -584.3 -828.1 -955.5 -1,093.1Shares outst. (mn) 4,200 EPS CAGR 10-13e 8.4% Tot. equity/Tot. assets 13.29% 11.74% 11.74% 11.07%


Performance 1M 3M 6M 12MAbsolute (TRY terms) -9.8% -14.6% -21.5% -25.3%Rel. to sector (EUR, ppt) -3.7 -1.6 -2.7 -11.7Rel. to universe (EUR, ppt) -10.1 -4.7 -6.8 -24.6

Halkbank Buy Target price TRY 15.3Price (TRY) 11.4 CIR (2010) 34% 10 11e 12e 13eMcap (TRY mn) 14,250 ROE (2010) 32.0% Total assets (TRY mn) 72,942 88,118 96,698 109,888Mcap (EUR mn) 5,878 L/D ratio (2010) 77% Total income (TRY mn) 4,463.0 4,809.8 5,459.4 6,055.6Free float (%) 25.0% Equity ratio (2010) 10.2% Net interest income (TRY mn) 3,191.0 3,022.4 4,086.1 4,597.7Free float (EUR mn) 1,469 BVPS CAGR 10-13e 19.8% Risk provisions (TRY mn) -458.4 -506.6 -555.4 -632.9Shares outst. (mn) 1,250 EPS CAGR 10-13e 12.9% Tot. equity/Tot. assets 10.21% 9.91% 10.46% 10.81%


Performance 1M 3M 6M 12MAbsolute (TRY terms) -12.3% -3.8% -15.9% -24.5%Rel. to sector (EUR, ppt) -6.2 9.3 2.6 -11.0Rel. to universe (EUR, ppt) -12.7 6.1 -1.5 -23.9

52 weeks

400500600700800900

1.0001.1001.2001.300

FHB BUX (Rebased) DJ EURO STOXX Banks (Rebased)

52 weeks

4

5

6

7

8

9

10

Garanti BankISE 100 (Rebased)DJ EURO STOXX Banks (Rebased)

52 weeks

789

1011121314151617

Halkbank ISE 100 (Rebased) DJ EURO STOXX Banks (Rebased)



Isbank Buy Target price TRY 6.3Price (TRY) 4.2 CIR (2010) 41% 10 11e 12e 13eMcap (TRY mn) 18,900 ROE (2010) 20.6% Total assets (TRY mn) 131,796 148,939 165,256 187,006Mcap (EUR mn) 7,796 L/D ratio (2010) 71% Total income (TRY mn) 7,891.4 8,040.9 9,009.5 9,929.4Free float (%) 30.4% Equity ratio (2010) 12.9% Net interest income (TRY mn) 4,581.9 4,855.2 5,751.1 6,403.4Free float (EUR mn) 2,370 BVPS CAGR 10-13e 3.6% Risk provisions (TRY mn) -1,135.4 -815.4 -907.8 -1,032.9Shares outst. (mn) 4,500 EPS CAGR 10-13e 1.9% Tot. equity/Tot. assets 12.91% 12.60% 12.36% 12.16%



Komercijalna Banka Hold Target price RSD 3,100.0Price (RSD) 1,890.0 CIR (2010) 67% 10 11e 12e 13eMcap (RSD mn) 26,235 ROE (2010) 8.0% Total assets (RSD mn) 272,203 310,607 360,304 417,953Mcap (EUR mn) 258 L/D ratio (2010) 78% Total income (RSD mn) 14,241.4 17,545.6 20,267.2 25,216.4Free float (%) 32.4% Equity ratio (2010) 15.7% Net interest income (RSD mn) 8,372.8 10,042.1 11,740.9 15,565.1Free float (EUR mn) 83 BVPS CAGR 10-13e 6.6% Risk provisions (RSD mn) -1,581.3 -3,949.3 -4,226.4 -4,017.0Shares outst. (mn) 14 EPS CAGR 10-13e 26.6% Tot. equity/Tot. assets 15.70% 14.47% 13.54% 13.40%

EPS (RSD) 251.53 195.72 276.71 520.97BVPS (RSD) 3,078.71 3,238.22 3,514.92 4,035.85Net interest margin 3.35% 3.51% 3.50% 4.00%Cost/income ratio 66.63% 60.29% 58.09% 52.21%P/BV 0.85 0.58 0.54 0.47P/E 10.06 9.65 6.83 3.63Dividend yield 0.00% 0.00% 0.00% 0.00%P/BV rel. 0.6 0.5 0.6 0.6P/E rel. 1.0 1.3 1.0 0.7

Performance 1M 3M 6M 12MAbsolute (RSD terms) 1.9% -32.5% -41.8% -26.2%Rel. to sector (EUR, ppt) 5.3 -19.7 -19.6 5.3Rel. to universe (EUR, ppt) -1.1 -22.9 -23.7 -7.6

Komercni banka Hold Target price CZK 4,700.0Price (CZK) 3,460.0 CIR (2010) 41% 10 11e 12e 13eMcap (CZK mn) 131,514 ROE (2010) 19.0% Total assets (CZK mn) 698,014 742,006 801,366 865,476Mcap (EUR mn) 5,264 L/D ratio (2010) 70% Total income (CZK mn) 32,737.0 34,585.4 38,873.8 42,255.6Free float (%) 39.7% Equity ratio (2010) 10.7% Net interest income (CZK mn) 21,431.0 22,806.0 26,078.8 28,284.9Free float (EUR mn) 2,087 BVPS CAGR 10-13e 8.4% Risk provisions (CZK mn) -3,100.0 -2,372.5 -1,685.3 -988.7Shares outst. (mn) 38 EPS CAGR 10-13e 15.1% Tot. equity/Tot. assets 10.71% 10.63% 10.69% 10.79%

EPS (CZK) 350.70 376.69 448.47 508.14BVPS (CZK) 1,967.36 2,074.61 2,254.00 2,457.26Net interest margin 3.13% 3.25% 3.38% 3.39%Cost/income ratio 41.43% 41.70% 40.49% 40.15%P/BV 2.25 1.67 1.54 1.41P/E 12.74 8.97 7.72 6.81Dividend yield 6.04% 6.69% 7.78% 8.81%P/BV rel. 1.6 1.6 1.7 1.9P/E rel. 1.3 1.2 1.2 1.3

Performance 1M 3M 6M 12MAbsolute (CZK terms) 0.6% -6.2% -19.5% -15.6%Rel. to sector (EUR, ppt) 3.6 3.8 1.5 10.2Rel. to universe (EUR, ppt) -2.8 0.7 -2.7 -2.7

52 weeks

1.000

1.500

2.000

2.500

3.000

3.500

Komercijalna BankaBELEX 15 (Rebased)DJ EURO STOXX Banks (Rebased)

52 weeks

2.000

2.500

3.000

3.500

4.000

4.500

5.000

Komercni banka PX (Rebased) DJ EURO STOXX Banks (Rebased)

52 weeks

3,03,54,04,55,05,56,06,57,07,5

Isbank ISE 100 (Rebased) DJ EURO STOXX Banks (Rebased)



OTP Accumulate Target price HUF 7,000.0Price (HUF) 3,250.0 CIR (2010) 49% 10 11e 12e 13eMcap (HUF mn) 910,000 ROE (2010) 9.4% Total assets (HUF bn) 9,781 10,290 10,945 11,914Mcap (EUR mn) 2,986 L/D ratio (2010) 121% Total income (HUF bn) 817.0 794.5 817.2 859.3Free float (%) 81.6% Equity ratio (2010) 13.3% Net interest income (HUF bn) 616.4 614.2 623.3 651.8Free float (EUR mn) 2,437 BVPS CAGR 10-13e 11.0% Risk provisions (HUF bn) -273.0 -179.1 -91.5 -62.0Shares outst. (mn) 280 EPS CAGR 10-13e 15.3% Tot. equity/Tot. assets 13.32% 13.91% 14.74% 15.11%

EPS (HUF) 442.61 614.53 871.10 1,019.67BVPS (HUF) 4,987.36 5,478.98 6,175.86 6,889.63Net interest margin 6.28% 6.50% 5.87% 5.70%Cost/income ratio 49.42% 53.34% 55.57% 55.78%P/BV 1.01 0.59 0.53 0.47P/E 11.22 4.76 3.73 3.19Dividend yield 1.55% 4.20% 5.36% 9.41%P/BV rel. 0.7 0.6 0.6 0.6P/E rel. 1.1 0.6 0.6 0.6

Performance 1M 3M 6M 12MAbsolute (HUF terms) 6.4% -33.0% -47.7% -43.5%Rel. to sector (EUR, ppt) 7.0 -27.3 -30.8 -22.1Rel. to universe (EUR, ppt) 0.5 -30.4 -34.9 -35.0

PKO BP Accumulate Target price PLN 50.0Price (PLN) 36.0 CIR (2010) 43% 10 11e 12e 13eMcap (PLN mn) 44,975 ROE (2010) 15.5% Total assets (PLN mn) 169,661 193,442 221,491 254,715Mcap (EUR mn) 10,328 L/D ratio (2010) 96% Total income (PLN mn) 10,490.5 12,131.0 13,226.1 15,007.8Free float (%) 48.8% Equity ratio (2010) 12.6% Net interest income (PLN mn) 6,516.2 7,511.1 8,096.5 9,297.6Free float (EUR mn) 5,036 BVPS CAGR 10-13e 11.7% Risk provisions (PLN mn) -1,868.4 -1,771.5 -1,163.3 -831.3Shares outst. (mn) 1,250 EPS CAGR 10-13e 25.8% Tot. equity/Tot. assets 12.59% 12.83% 12.61% 12.48%

EPS (PLN) 2.87 3.34 4.14 5.16BVPS (PLN) 17.09 19.86 22.34 25.43Net interest margin 4.03% 4.25% 3.90% 3.90%Cost/income ratio 43.30% 40.81% 40.58% 38.86%P/BV 2.54 1.81 1.61 1.41P/E 15.23 10.03 8.70 6.98Dividend yield 2.52% 3.99% 4.60% 5.73%P/BV rel. 1.8 1.7 1.7 1.9P/E rel. 1.5 1.3 1.3 1.3


Raiffeisen Bank InternationaBuy Target price EURPrice (EUR) 19.5 CIR (2010) 62% 10 11e 12e 13e

ROE (2010) 14.0% Total assets (EUR mn) 131,173 146,243 151,508 157,871Mcap (EUR mn) 3,806 L/D ratio (2010) 135% Total income (EUR mn) 6,502.5 6,044.2 6,378.4 6,959.7Free float (%) 21.5% Equity ratio (2010) 5.2% Net interest income (EUR mn) 3,578.2 4,004.3 4,262.8 4,719.6Free float (EUR mn) 818 BVPS CAGR 10-13e 14.1% Risk provisions (EUR mn) -1,194.1 -935.7 -763.0 -306.4Shares outst. (mn) 196 EPS CAGR 10-13e 65.7% Tot. equity/Tot. assets 5.21% 4.97% 5.54% 6.25%

EPS (EUR) 4.56 5.89 7.14 9.42BVPS (EUR) 35.15 37.39 43.14 50.72Net interest margin 2.57% 2.89% 2.86% 3.05%Cost/income ratio 61.91% 51.10% 52.38% 53.81%P/BV 1.17 0.52 0.45 0.38P/E 8.99 3.30 2.72 2.07Dividend yield 2.56% 6.09% 7.38% 9.73%P/BV rel. 0.8 0.5 0.5 0.5P/E rel. 0.9 0.4 0.4 0.4

Performance 1M 3M 6M 12MAbsolute (EUR terms) -4.6% -39.4% -48.0% -51.7%Rel. to sector (EUR, ppt) -1.0 -26.7 -24.4 -24.3Rel. to universe (EUR, ppt) -7.5 -29.9 -28.6 -37.2

52 weeks

2.5003.000

3.500

4.000

4.500

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6.000

6.500

OTP BUX (Rebased) DJ EURO STOXX Banks (Rebased)

52 weeks

20

25

30

35

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45

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55

PKO BP WIG 20 (Rebased) DJ EURO STOXX Banks (Rebased)

52 weeks

15

20

25

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35

40

45

50

Raiffeisen Bank InternationalATX (Rebased)DJ EURO STOXX Banks (Rebased)



Sekerbank Reduce Target price TRY 0.9Price (TRY) 1.0 CIR (2010) 58% 10 11e 12e 13eMcap (TRY mn) 495 ROE (2010) 13.5% Total assets (TRY mn) 11,369 15,230 17,535 19,903Mcap (EUR mn) 204 L/D ratio (2010) 86% Total income (TRY mn) 851.7 833.3 935.6 1,048.3Free float (%) 32.0% Equity ratio (2010) 12.3% Net interest income (TRY mn) 562.5 572.4 665.1 773.0Free float (EUR mn) 65 BVPS CAGR 10-13e -2.9% Risk provisions (TRY mn) -146.8 -173.1 -93.7 -111.8Shares outst. (mn) 500 EPS CAGR 10-13e -7.2% Tot. equity/Tot. assets 12.32% 11.07% 10.99% 11.17%


Performance 1M 3M 6M 12MAbsolute (TRY terms) 5.3% 1.0% -25.0% -27.9%Rel. to sector (EUR, ppt) 11.9 14.1 -5.9 -13.8Rel. to universe (EUR, ppt) 5.5 11.0 -10.1 -26.6

Turkiye Sinai Kalkinma BankBuy Target price TRY 2.9Price (TRY) 2.0 CIR (2010) 18% 10 11e 12e 13eMcap (TRY mn) 1,194 ROE (2010) 19.3% Total assets (TRY mn) 7,912 8,756 10,445 12,010Mcap (EUR mn) 492 L/D ratio (2010) nm Total income (TRY mn) 355.8 382.9 419.3 496.8Free float (%) 41.5% Equity ratio (2010) 16.0% Net interest income (TRY mn) 297.7 325.4 351.9 420.7Free float (EUR mn) 204 BVPS CAGR 10-13e 11.9% Risk provisions (TRY mn) -24.7 -30.0 -34.4 -43.6Shares outst. (mn) 600 EPS CAGR 10-13e 6.7% Tot. equity/Tot. assets 15.98% 15.46% 16.54% 18.10%


Performance 1M 3M 6M 12MAbsolute (TRY terms) -0.5% -10.0% -14.5% 0.0%Rel. to sector (EUR, ppt) 5.9 3.1 3.9 9.0Rel. to universe (EUR, ppt) -0.5 0.0 -0.2 -3.9

Vakifbank Hold Target price TRY 4.0Price (TRY) 3.1 CIR (2010) 41% 10 11e 12e 13eMcap (TRY mn) 7,800 ROE (2010) 15.3% Total assets (TRY mn) 73,962 87,157 101,026 115,160Mcap (EUR mn) 3,217 L/D ratio (2010) 82% Total income (TRY mn) 4,125.8 4,537.5 5,105.9 5,724.8Free float (%) 25.2% Equity ratio (2010) 11.6% Net interest income (TRY mn) 2,730.0 2,996.1 3,689.1 4,322.4Free float (EUR mn) 810 BVPS CAGR 10-13e 14.5% Risk provisions (TRY mn) -973.2 -1,136.4 -1,254.4 -1,482.6Shares outst. (mn) 2,500 EPS CAGR 10-13e 5.8% Tot. equity/Tot. assets 11.57% 11.18% 10.92% 11.02%


Performance 1M 3M 6M 12MAbsolute (TRY terms) -15.0% -12.8% -23.9% -31.1%Rel. to sector (EUR, ppt) -9.0 0.2 -4.9 -16.4Rel. to universe (EUR, ppt) -15.4 -3.0 -9.0 -29.3

52 weeks

0,60,70,80,91,01,11,21,31,41,51,6

Sekerbank ISE 100 (Rebased) DJ EURO STOXX Banks (Rebased)

52 weeks

2,0

2,5

3,0

3,5

4,0

4,5

5,0

Vakifbank ISE 100 (Rebased) DJ EURO STOXX Banks (Rebased)

52 weeks

0,81,01,21,41,61,82,02,22,42,62,8

Turkiye Sinai Kalkinma Bankas iISE 100 (Rebased)DJ EURO STOXX Banks (Rebased)



Yapi Kredi Bank Buy Target price TRY 4.9Price (TRY) 3.3 CIR (2010) 41% 10 11e 12e 13eMcap (TRY mn) 14,519 ROE (2010) 23.3% Total assets (TRY mn) 84,776 100,522 112,308 126,406Mcap (EUR mn) 5,989 L/D ratio (2010) 98% Total income (TRY mn) 6,091.2 6,271.8 6,960.4 7,748.7Free float (%) 18.2% Equity ratio (2010) 12.2% Net interest income (TRY mn) 3,199.6 3,306.0 3,807.7 4,526.4Free float (EUR mn) 1,090 BVPS CAGR 10-13e 18.3% Risk provisions (TRY mn) -1,083.0 -1,155.5 -1,260.7 -1,402.3Shares outst. (mn) 4,347 EPS CAGR 10-13e 16.6% Tot. equity/Tot. assets 12.17% 12.52% 12.56% 12.80%



52 weeks

2,5

3,0

3,5

4,0

4,5

5,0

5,5

6,0

Yapi Kredi BankISE 100 (Rebased)DJ EURO STOXX Banks (Rebased)



Sector Insight Basic Resources

– European thermal coal prices heading south, due to macro worries – Coking coal down 10% q/q in Asia, spot below quarterly contracts – ArcelorMittal to close one BF in Poland, no direct impact on NWR/JSW – NWR contracted 9% q/q lower prices, production mix set to improve – Pressure on steel mill margins results in significant number of shutdowns in 4Q – voestalpine Buy recommendation confirmed with lower target price EUR 35

European API2 thermal coal futures are down 4% m/m in USD (7% in EUR) due to overall negative sentiment in financial markets regarding the macroeconomic outlook in the EU. In contrast, thermal coal prices in Asia are down only 2%, which results in higher prices in Asia than in NW Europe for the first time since March. We believe that thermal coal prices in NW Europe cannot trade at a significant discount to prices in Asia in the long term, given the vast regional supply deficit and growing share of coal in power generation in Germany.

API2 steam coal

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Coal ARA 2012 in USD Coal ARA 2012 in EURSource: Bloomberg

The hard coking coal benchmark for 4Q11 was set at USD 285/t (down 10% q/q) in Asia at the end of September, which showed an accelerating decline in prices of the commodity. The spot hard coking coal benchmark is currently at levels of around USD 260/t. We believe that this price level could be at least a temporary floor, looking at the tight spread between domestic and imported prices in China. Low spreads could prompt Chinese mills to increase imports again.

ArcelorMittal will temporarily close one of two blast furnaces at its plant in Dabrowa Gornicza in Poland due to low order intake for the coming months. The blast furnace produces 2.2Mt of crude steel per year, which roughly translates to 1.4Mt of coking coal consumption. The blast furnace thus accounts for 5% of regional coking coal consumption. We believe that the lost demand will mostly come at the expense of imported coal and will not materially affect JSW or NWR. There is an approx. 35% supply deficit in the CE region, which should narrow to 30% after the announced closure.

NWR 3Q trading statement: NWR contracted coking coal prices for 4Q11 at EUR 171/t, down over 9% q/q and 3% below our estimates. We calculate that the achieved price translates to a 3% discount to markets in Asia using NWR’s 60/40 HCC/SCC mix and FX rates form September/October. This is down from a slight 3-5% premium in 3Q11 and reflects the significant deterioration of European steel markets during October. 3Q11 sales volumes showed the still low (40%) share of coking coal, which was partly offset by high sales volumes in thermal



coal (up 16% y/y). Coke sales were 43% below our estimates due to the slowdown in the car industry. We estimate that NWR will report some 13% y/y lower profits in 3Q11 due to low coke and coking coal volumes and y/y 15% higher mining costs.

On a positive note, NWR reiterated its full year 2011 coal production and sales targets. This implies a 57% share of coking coal on NWR’s 4Q11 sales volumes, or 61% including PCI coal. Such a sales split would mean that NWR is back to its traditional product mix. Also, the production volumes in 9M11 show that NWR will easily beat its 11Mt production target. Overall, NWR’s trading statement showed continued weakness in coking coal prices and an evaporating price premium to markets in Asia. We can thus imagine further weaknesses in NWR’s share price in the near term. However, we are comfortable with the production volume as well as product mix estimates for 2012 (we also already expected a significant drop in prices for 2012). We only have to increase our cost base estimates by some 10%. We estimate that NWR is now traded around 6.5x 2012e P/E and below 4x EV/EBITDA 2012e. We put our target price under review, due to the need to adjust the estimates.

Crude steel production in the EU27 advanced 4.4% y/y in September 2011, after growing 7.5% in 1Q11 and 1.6% in 2Q11. Worldwide crude steel capacity utilization was 79.1% in September 2011, 3.5 percentage points higher compared to September 2010, and 1.8 percentage points higher than in August 2011 – mainly seasonally. Weak macroeconomic data and leading indicators, however, point to a marked slowdown of economic growth, and consequently steel demand, in 4Q11 and 2012. After strong spot market steel price increases in calendar 1Q11 (raw material cost push and restocking), steel prices declined over the last months, while raw material prices remained comparably strong before also declining strongly in October. The profit margins of steel mills (especially those selling to the spot market) are therefore under considerable pressure in 2H11. European mills have already announced to shut down a significant number of blast furnaces in 4Q11 and 1Q12 – most temporarily but some permanently, such as the ArcelorMittal hot end operations in Liege, Belgium. The shutdowns are a sign that steel price declines are already cutting into the top-end of the cost curve. We believe that (at least) the whole of 4Q11 will be marked by destocking and it will likely take until 1Q12 until lower production can completely restore market balance.

Eurofer revises outlook, but predicts no double-dip recession. In its latest steel market outlook, EUROFER, the European steel industry body, has been forced to alter its economic growth forecasts for this year and next because of the increased risk and uncertainty related to the Eurozone sovereign debt crisis. The EU and other advanced economies have been affected by poor growth and falling macroeconomic indicators, causing the recovery to lose steam and economic confidence to wane. While industrial momentum has not yet ground to a halt, said Eurofer, there is evidence that output in the EU will slow down or could even turn temporarily negative in the months ahead. The outlook for 2012 is currently clouded by more uncertainties than some months ago but the region will avoid a double-dip recession. Despite a loss of momentum, manufacturing looks set to remain a relatively bright spot on the overall darkened EU economic landscape for the remainder of this year and next, said Eurofer. Real steel consumption is now expected to rise by 6.1% in 2011 against 4.8% last year. The association believes that the prospects for 2012 have remained mildly positive despite high levels of uncertainty surrounding the outlook for steel-using industries in the EU. Construction and manufacturing activity will continue to grow next year, although in the case of the latter at a significantly slower pace than in 2010 and 2011. Eurofer expects real steel consumption to grow only modestly in the first half of next year but improving end-user fundamentals should then result in a modest acceleration in consumption growth, leading to an overall 2% rise for 2012.

AMAG still reports good order book after better than expected 3Q11 results. Once more AMAG reported very solid results, above our expectation (3Q EBIT 15% higher than expected). Apart from weaker seasonality demand held up well. 3Q sales were down 8% q/q (up 3% y/y) due to scheduled maintenance in Ranshofen in August and lower average aluminium prices. 3Q11 EBIT was down 11% q/q but up 30% y/y and net income down 2% q/q and up 30% y/y. The Rolling and Casting divisions still profited from solid demand from the automotive, aircraft and engineering sectors. The Metal Division surprised on the upside (EUR 26mn EBITDA vs. our expectation of EUR 19mn) helped by positive valuation effects of hedging instruments (EUR 8mn during the quarter) and high shipments. The Rolling Division slightly missed our expectation, which can be more than explained by 3-4kt lost production from unscheduled repair on the craneways and stormy weather in August as well as precautionary provisioning (EUR 2mn) and fx-losses. Net financial debt declined further to just EUR 23.8mn. Based on good order visibility the company expects the positive business development to continue in 4Q11. Further maintenance however is scheduled for December in Ranshofen and if aluminium prices remain stable, the positive effects of the valuation of hedges will be lower. Although demand from the construction industry remains weak and distributers



are destocking, AMAG still reports full order books based on strong orders by its main customers in the automotive, aircraft and engineering industries. The gearing is already down to a minimal 4.5%. German car production still held up well, declining 2% y/y in October. A look back shows that during the downturn 2009 volumes and operating earnings remained comparably resilient based on the Metal division’s competitive cost structure in primary aluminium production, a high share of speciality products in Ranshofen (recycling and processing activities) and market share gains. We will raise our 2011 estimates in our next research but lower our estimate for 2012 based on the weak general economic outlook. Nevertheless, we see AMAG as a top pick among cyclical stocks.

RHI remains cautiously optimistic on 4Q11 despite strong signs for a marked slowdown in its customer industries. RHI’s 3Q11 sales and EBIT were a touch above expectations and net attributable income more than 50% better helped by EUR 10.7mn tax earnings in 3Q. 3Q11 sales and margins came in slightly higher yoy in all divisions driven by successful price increases and as production rates in RHI’s main customer industries still remained at a good level. 3Q revenues were 1.7% lower q/q due to seasonality but up 12.7% y/y. Despite lower revenues, the EBIT-margin stayed almost unchanged compared to 2Q11 at 9.1% - in line with guidance. Surprisingly the company also booked tax revenues in 3Q this year (EUR 10.7mn vs. EUR 18mn last year from the activation of tax-loss carry forwards). Net debt in the last three months rose from EUR 346.9mn to EUR 356.9mn, due to the purchase consideration payments in Norway and Ireland (EUR 33mn) and investments in Brazil, China and Turkey (EUR 17mn) during the quarter. Due to capacity reductions in the steel industry as well as the conservative investment and ordering behavior of customers in the industrials segment 4Q11 EBIT is guided to stay at the level of 3Q11 (normally the fourth quarter is seasonally stronger than Q3). Despite strong signs for a marked slowdown of steel production in 4Q11 and strong declines in metals prices, the updated 4Q11 outlook is only a touch lower (EUR 147.6mn vs. 149mn previously) and above our estimate (EUR 140.1mn) and consensus (EUR 145mn). As RHI’s steel business usually lags developments in its customer industries we expect 1Q12 to be clearly more affected by the numerous production shutdowns announced for 4Q11 in the steel industry. Furthermore, the company reports first delays of projects in the Industrials business. We will slightly raise our 2011e EBIT estimate and more significantly this year’s net income estimate (on better taxes) but lower our estimates for the following years. Nevertheless, we see value in the share.

In our latest research on voestalpine, we cut our target price from EUR 41 to EUR 35, but confirm our Buy recommendation. We made no big changes to our FY11/12e estimates, but lower our FY12/13e EPS estimate by 18.5%, due to the deteriorating outlook for the broader economy. Up to now, voestalpine’s most important customer industries (except construction) have faced a very positive order situation. In particular, the most important customers, German premium car producers, reported strong production and sales in July and August 2011. We expect EBIT to decline to 27% q/q in 2Q11/12, due to capacity expansion in the Steel division, seasonality and destocking among customers, resulting from the uncertain outlook (inventories, however, are not as excessive as they were in 2008). As the order situation did not deteriorate dramatically, and with new steel capacities available, 3Q11/12 EBIT should see a material rebound. CEO Eder recently stated that he sees no need to cut production in 2011, but that the company will decide in November whether a 10% reduction is necessary at the start of 2012.




AMAG EUR 567 14.9% 17.7% 15.3% 14.9% 18.9% 16.8% 17.3% 16.9% 11.6% -6.4% -12.1% -10.1%KGHM PLN 7,202 36.5% 55.4% 17.0% 13.1% 39.2% 63.6% 37.0% 31.1% 27.5% -18.8% -27.8% 10.6%Mayr-Melnhof EUR 1,368 11.4% 11.9% 11.1% 10.7% 13.7% 13.2% 13.2% 13.2% 6.1% -6.8% -14.9% -12.6%New World Resources EUR 1,545 34% 46.1% 29.3% 29.9% 39.4% 34.0% 14.4% -33.7% -50.4% -50.4%Park Elektrik TRY 238 12.2% 21% 15.7% 14.8% 54.0% 57.6% 57.2% 55.9% 39.1% 2.8% -16.8% 13.9%RHI EUR 621 40.0% 28% 25.7% 23.2% 11.3% 11.7% 12.8% 13.0% 4.5% -3.4% -34.9% -35.9%voestalpine EUR 4,231 3.4% 15% 16.5% 14.2% 11.7% 14.7% 14.3% 13.8% 20.3% -20.0% -25.9% -14.0%Median - - 15% 21% 17% 14% 19% 17% 17% 15% - - - -Median Steel - 33,489 6.9% 7.7% 7.4% 11.2% 8.4% 8.3% 9.6% 12.0% - - - -Median Metals & Mining - 387,751 12.6% 13.0% 11.9% 12.2% 22.8% 19.8% 19.9% 20.5% - - - -Median Pulp & Paper - 11,088 7.0% 7.2% 6.2% 7.4% 13.5% 13.4% 13.1% 14.1% - - - -Median Total - 432,328 9.8% 9.1% 10.0% 10.9% 14.9% 14.2% 14.9% 15.4% - - - -EuroStoxx Basic Resources 64,051 7.3% 7.7% 7.2% 9.4% 11% 11% 12% 12% 14.6% -7.4% -18.7% -4.8%CEE to Peer, Prem/Disc - 51% 132% 65% 33% 27% 18% 16% -1% - - - -


2010 2011e 2012e 2013e 2010 2011e 2012e 2013e 2010 2011e 2012e 2013eAMAG 7.4 6.8 6.3 4.5 4.3 4.1 1.1 1.0 0.9KGHM 7.8 3.1 9.1 12.4 6.8 2.9 7.4 9.4 2.5 1.5 1.6 1.6Mayr-Melnhof 16.2 11.6 11.5 11.0 9.5 6.6 6.8 6.5 1.8 1.3 1.2 1.1New World Resources 3.7 5.1 2.7 3.3 1.6 1.4Park Elektrik 15.2 6.6 7.9 7.3 9.9 5.4 6.4 6.1 1.7 1.4 1.2 1.0RHI 11.1 6.2 5.4 4.9 8.3 4.0 3.6 3.3 3.7 1.6 1.3 1.0voestalpine 46.3 10.9 6.6 6.9 7.3 4.8 3.4 3.6 1.6 1.5 1.0 0.9Median CEE 15.2 6.6 6.8 7.1 8.3 4.5 4.3 5.1 1.8 1.5 1.2 1.0Median Steel n.a. 12.4 11.9 8.0 6.8 6.1 5.0 4.3 1.0 0.9 0.9 0.8Median Metals & Mining 13.0 9.5 9.5 8.3 7.1 6.4 5.6 5.6 1.3 1.2 1.1 1.0Median Pulp & Paper 8.1 10.6 9.9 7.8 4.1 5.1 3.8 3.6 0.6 0.6 0.6 0.6Median Total 13.0 11.1 9.8 8.1 6.8 6.3 5.1 4.7 1.2 1.0 0.9 0.8EuroStoxx Basic Resources 18.8 10.3 10.8 8.3 9.3 5.7 4.6 3.8 1.3 0.8 0.8 0.8CEE to Peer, Prem/Disc 17% -40% -30% -13% 22% -28% -16% 8% 58% 44% 33% 22%

2010 2011e 2012e 2013e 2010 2011e 2012e 2013eAMAG 0.8 0.7 0.6 4.6 3.9 3.5KGHM 2.1 1.2 2.0 2.1 5.3 1.8 5.4 6.6Mayr-Melnhof 0.9 0.6 0.6 0.6 6.7 4.9 4.6 4.3New World Resources 1.0 0.9 2.4 2.8Park Elektrik 6.5 2.6 1.0 0.5 12.0 4.6 1.7 1.0RHI 1.2 0.7 0.7 0.6 10.4 6.3 5.3 4.7voestalpine 1.2 0.9 0.7 0.7 10.0 6.4 5.1 5.0Median CEE 1.2 0.9 0.7 0.6 10.0 4.6 4.6 4.5Median Steel 1.3 0.7 0.6 0.6 11.5 7.3 6.3 4.7Median Metals & Mining 1.7 1.1 1.2 1.1 8.5 6.4 5.7 5.1Median Pulp & Paper 1.0 0.7 0.7 0.6 6.8 6.3 5.3 4.7Median Total 1.3 0.8 0.8 0.7 8.5 6.4 5.7 5.0EuroStoxx Basic Resources 1.0 0.6 0.6 0.6 6.9 5.5 5.4 4.7CEE to Peer, Prem/Disc -11% 17% -5% -16% 18% -28% -19% -10%

P/CE P/BV

EV/Sales EV/EBITDA

P/E




AMAG Buy Target price EUR 24.0Price (EUR) 16.1 ROCE 2010 13.1% 10 11e 12e 13e

ROE 2010 14.9% Sales (EUR mn) 728.0 828.8 871.8 924.3Mcap (EUR mn) 567 Net debt (EURmn, 10) 39.5 EBITDA margin 18.87% 16.85% 17.31% 16.87%Free float (%) 37.9% Gearing (2010) 8% EBIT margin 12.74% 11.22% 11.86% 11.67%Free float (EUR mn) 215 Sales CAGR 10-13e 15.6% Net profit margin 10.27% 8.81% 9.49% 9.74%Shares outst. (mn) 35.3 EPS CAGR 10-13e 25.2% EPS (EUR) 1.57 2.16 2.36 2.56

Dividend/share (EUR) 5.67 0.60 0.65 0.70EV/sales 0.77 0.68 0.59EV/EBITDA 4.57 3.94 3.50P/E 7.43 6.83 6.29P/CE 4.48 4.29 4.06P/BV 1.11 0.99 0.89Dividend yield 3.70% 4.03% 4.37%EV/EBITDA rel. - - 0.9 0.8P/E rel. - - 1.0 0.9

Performance 1M 3M 6M 12MAbsolute (EUR terms) 11.6% -6.4% -12.1% -10.1%Rel. to sector (EUR, ppt) -8.6 9.4 13.6 -2.1Rel. to universe (EUR, ppt) 8.7 3.1 7.4 4.5

KGHM Hold Target price PLN 145.0Price (PLN) 156.8 ROCE 2010 36.5% 10 11e 12e 13eMcap (PLN mn) 31,360 ROE 2010 36.5% Sales (PLN mn) 15,945.0 19,391.8 12,548.6 12,494.6Mcap (EUR mn) 7,202 Net debt (EURmn, 10) -637.7 EBITDA margin 39.16% 63.62% 36.95% 31.12%Free float (%) 68.2% Gearing (2010) -18% EBIT margin 35.36% 60.31% 31.46% 25.31%Free float (EUR mn) 4,912 Sales CAGR 10-13e 3.1% Net profit margin 28.65% 49.39% 27.53% 20.29%Shares outst. (mn) 200.0 EPS CAGR 10-13e 0.0% EPS (PLN) 22.84 47.89 17.27 12.68


Performance 1M 3M 6M 12MAbsolute (PLN terms) 26.5% -12.4% -20.2% 22.5%Rel. to sector (EUR, ppt) 7.4 -3.1 -2.1 18.6Rel. to universe (EUR, ppt) 24.6 -9.3 -8.4 25.1

Mayr-Melnhof Accumulate Target price EUR 82.0Price (EUR) 68.4 ROCE 2010 13.4% 10 11e 12e 13e

ROE 2010 11.4% Sales (EUR mn) 1,778.9 1,930.4 1,935.8 1,990.9Mcap (EUR mn) 1,368 Net debt (EURmn, 10) -130.6 EBITDA margin 13.72% 13.16% 13.18% 13.19%Free float (%) 41.0% Gearing (2010) -13% EBIT margin 9.12% 8.89% 8.91% 8.96%Free float (EUR mn) 561 Sales CAGR 10-13e 5.6% Net profit margin 6.21% 6.18% 6.21% 6.28%Shares outst. (mn) 20.0 EPS CAGR 10-13e 8.7% EPS (EUR) 5.39 5.92 5.96 6.20


Performance 1M 3M 6M 12MAbsolute (EUR terms) 6.1% -6.8% -14.9% -12.6%Rel. to sector (EUR, ppt) -14.1 8.9 10.7 -4.6Rel. to universe (EUR, ppt) 3.2 2.7 4.5 1.9

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New World Resources Accumulate Target price CZK Price (CZK) 146.0 ROCE 2010 18.3% 10 11e 12e 13eMcap (CZK mn) 1,545 ROE 2010 34.1% Sales (EUR mn) 1,590.0 1,886.0 1,807.9Mcap (EUR mn) 1,545 Net debt (EURmn, 10) 329.9 EBITDA margin 29.9% 39.4% 34.0% Free float (%) 36.4% Gearing (2010) 41% EBIT margin 18.94% 30.54% 24.20% Free float (EUR mn) 562 Sales CAGR 10-13e #WERT! Net profit margin 14.23% 21.88% 17.14%Shares outst. (mn) 264.4 EPS CAGR 10-13e #WERT! EPS (EUR) 0.88 1.57 1.16

Dividend/share (EUR) 0.45 0.78 0.69EV/sales 0.96 0.94 EV/EBITDA 2.43 2.76 P/E 3.73 5.05P/CE 2.73 3.29P/BV 1.56 1.41Dividend yield 13.41% 11.88% EV/EBITDA rel. #WERT! 0.5 0.6 #WERT!P/E rel. - 0.6 0.7 #WERT!

Performance 1M 3M 6M 12MAbsolute (CZK terms) 15.0% -31.8% -48.6% -48.6%Rel. to sector (EUR, ppt) -5.8 -17.9 -24.8 -42.4Rel. to universe (EUR, ppt) 11.5 -24.1 -31.0 -35.9

Park Elektrik Buy Target price TRY 5.2Price (TRY) 3.9 ROCE 2010 12.4% 10 11e 12e 13eMcap (TRY mn) 578 ROE 2010 12.2% Sales (TRY mn) 83.8 181.3 194.9 209.5Mcap (EUR mn) 238 Net debt (EURmn, 10) -11 EBITDA margin 54.00% 57.60% 57.23% 55.90%Free float (%) 32.0% Gearing (2010) -6% EBIT margin 30.46% 47.60% 48.23% 48.90%Free float (EUR mn) 76 Sales CAGR 10-13e 27.7% Net profit margin 44.36% 45.85% 37.33% 37.89%Shares outst. (mn) 148.9 EPS CAGR 10-13e 42.2% EPS (TRY) 0.25 0.56 0.49 0.53

Dividend/share (TRY) 0.00 0.00 0.00 0.00EV/sales 6.50 2.65 0.97 0.53EV/EBITDA 12.04 4.60 1.70 0.95P/E 15.23 6.63 7.94 7.28P/CE 9.95 5.44 6.40 6.14P/BV 1.71 1.36 1.16 1.00Dividend yield 0.00% 0.00% 0.00% 0.00%EV/EBITDA rel. 1.2 1.0 0.4 0.2P/E rel. - 1.0 1.2 1.0

Performance 1M 3M 6M 12MAbsolute (TRY terms) 35.2% 2.4% -11.4% 39.6%Rel. to sector (EUR, ppt) 18.9 18.6 8.9 21.9Rel. to universe (EUR, ppt) 36.2 12.3 2.7 28.4

RHI Buy Target price EUR 27.5Price (EUR) 15.6 ROCE 2010 14.2% 10 11e 12e 13e

ROE 2010 40.0% Sales (EUR mn) 1,522.9 1,664.4 1,698.1 1,764.0Mcap (EUR mn) 621 Net debt (EURmn, 10) 610 EBITDA margin 11.27% 11.67% 12.81% 13.04%Free float (%) 53.0% Gearing (2010) 190% EBIT margin 8.26% 8.40% 9.30% 9.59%Free float (EUR mn) 329 Sales CAGR 10-13e 9.3% Net profit margin 6.86% 5.97% 6.75% 7.20%Shares outst. (mn) 39.8 EPS CAGR 10-13e 55.2% EPS (EUR) 2.66 2.50 2.88 3.19


Performance 1M 3M 6M 12MAbsolute (EUR terms) 4.5% -3.4% -34.9% -35.9%Rel. to sector (EUR, ppt) -15.7 12.4 -9.3 -27.9Rel. to universe (EUR, ppt) 1.5 6.1 -15.5 -21.4

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voestalpine Buy Target price EUR 35.0Price (EUR) 25.1 ROCE 2010 4.3% 10 11e 12e 13e

ROE 2010 3.4% Sales (EUR mn) 8,550.0 10,953.7 11,958.9 11,904.1Mcap (EUR mn) 4,231 Net debt (EURmn, 10) 3,923 EBITDA margin 11.75% 14.66% 14.30% 13.76%Free f loat (%) 66.0% Gearing (2010) 92% EBIT margin 4.12% 8.99% 9.33% 8.94%Free f loat (EUR mn) 2,793 Sales CAGR 10-13e 0.4% Net profit margin 2.18% 5.43% 6.05% 5.86%Shares outst. (mn) 168.6 EPS CAGR 10-13e 2.9% EPS (EUR) 0.65 3.04 3.80 3.65


Performance 1M 3M 6M 12MAbsolute (EUR terms) 20.3% -20.0% -25.9% -14.0%Rel. to sector (EUR, ppt) 0.1 -4.2 -0.3 -6.1Rel. to universe (EUR, ppt) 17.3 -10.5 -6.5 0.5

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Sector Insight Chemicals

– Semperit’s mix of cyclical/non-cyclical business yields buy rating despite weaker environment – Ege Gubre: Better operational performance, improved margins in 3Q – Bagfas 3Q11 earnings review: FX gain boosted bottom line, but revenue growth is limited

Pegas will release its 3Q11 results on November 25 at 8:00am CET, followed by a conference call at 17:00 CET (16:00 GMT). PP/PE indices were basically flat y/y in 3Q11 and down some 11% q/q. This should lead to a nice 15% y/y improvement in EBITDA to EUR 10.5mn, thanks to the pass-through mechanism (delayed fast increase in prices from the previous quarter). We should also see gradually growing production (we expect +3.4%y/y to 18kt), as the no. 9 line with 20kt/year capacity was launched during 3Q11. Pegas prolonged the lifetime of some of the older lines in the first quarter, which leads to almost 50% lower depreciation. Pegas should book a loss on the FX translation of EUR-denominated debt in subsidiaries, due to the 1.7% weakening of the CZK vs. the EUR during the quarter. We thus expect net income to go down in a y/y comparison to EUR 5.0mn, purely due to the EUR -7.1mn EBT impact from FX translation.

In our latest Semperit report, we included the overall weakening economic scenario in our model, which has a negative impact for the years 2012e and 2013e. In the short term, the planned maintenance-related standstill at the Wimpassing plant, which is scheduled to last 3-4 weeks in 2H11, prompted us to reduce our estimates for the current fiscal year. We derive new EPS estimates of EUR 2.43 for 2011e (instead of EUR 2.59) and EUR 2.67 and EUR 2.83 for 2012e and 2013e, respectively (instead of EUR 2.94 and EUR 3.19).

We also cut our target price to EUR 37 (from EUR 45), but nonetheless upgrade our recommendation to Buy (from Accumulate). Our target price still includes a liquidity discount of 10%. Despite our reduced estimates, Semperit shares offer attractive multiples, including EV/EBITDA of around 4x and a dividend yield in the range of 4.4% to 5.1% for the coming years.

Semperit offers an interesting mix of the non-cyclical business of the Sempermed division and the cyclical business of the industrial divisions of Semperflex, Semperform and Sempertrans. Even in a deteriorating economic environment, we do not expect Semperit to suffer from significantly declining results. The company has an outstanding track record in reacting to a changing business environment, as seen in 2008/09.

For the first time, Semperit gave investors a clear overview of the strategic plans of the company. In the medical field, Semperit aims to gain market share until 2015. The production of examination gloves should almost double to 23bn pieces, lifting global market share to 12%. In the area of surgical gloves, Sempermed targets increasing production from 130mn to 160mn, which should raise its global market share to 8%. Together with the investment pipeline in the industrial area, Semperit wants to spend EUR 45mn on expanding capacities in the next two years.

PannErgy - Improving cash position helps to accelerate geothermal developments. The company received approval this month from the competition offices regarding the sale of its plastics arm to the US-based private equity firm Sun Capital Partners. PannErgy still expects some HUF 637mn additional income on the deal next January. As a consequence of this, the company received HUF 5.03bn in cash in exchange for its stake in PannUnion, which will help the company to accelerate its geothermal business and hopefully launch its sizeable geothermal services next autumn in Miskolc. Although the plastics arm has been sold, it was still consolidated in 3Q. On one hand, we expect a good operating performance from the plastics arm, as it consists mainly of the food packaging business. It is estimated to have produced EBITDA of some HUF 500mn in 3Q. On the other hand, the significant EUR-based FX loan of EUR 19.5mn caused significant losses of some HUF 500mn, due to the huge depreciation of the Hungarian currency against major currencies. The geothermal business is still tiny, as it produces EBITDA of some HUF 20mn per quarter. The 3Q result is therefore expected to be deeply in red territory. We expect red quarters ahead until the launch of the Miskolc heating plant, as income and operating results will fall back significantly after the deconsolidation of the plastics arm from the beginning of 4Q.

Ege Gubre’s sales fell 14% to TRY 50.5mn in 3Q11, from TRY 58.6mn in 3Q10. Despite the decrease, the sales figure beat both the market consensus (TRY 47.4mn) and our expectation (TRY 41.8mn). The main reason behind this better figure is the improvement in the fertilizer segment, which showed better performance than we estimated,



following bad results in 1Q11 and 2Q11. We still think that the fertilizer segment is weak for Ege Gubre and that the company will lose market share (according to 9M11 figures). On the other hand, port services posted a TRY 2.8mn net profit in 3Q11, in line with our expectation.

Meanwhile, on the bottom line, Ege Gubre’s short FX position (due to its USD-denominated debt) resulted in a TRY 7.6mn loss in 3Q11. This is also better than our loss estimate of TRY 8.9mn and the consensus of TRY 9.0mn. The USD/TRY depreciated by 14.6% in 3Q and this depreciation affected Ege Gubre negatively. Although we observed better operational performance, we expect the financials to have a neutral effect on the share price, due to its heavy short FX position. We maintain our Hold recommendation for Ege Gubre.

Quarterly snapshot

Consolidated, IFRS(TRY, mn) 3Q 11 3Q 10 y/y Erste Group Consensus vs. Erste Group vs. Consensus

Sales 50.5 58.6 -13.8% 41.8 47.4 20.8% 6.5%

Gross profit 11.0 10.8 1.6% 6.4 n.a. 72.1% n.a.EBIT 8.0 5.8 36.6% 2.7 n.a. n.m. n.a.

EBITDA 9.1 7.1 26.6% 3.9 5.2 135.2% 74.1%

Net Income -7.6 3.5 -316.4% -8.9 -9.0 -14.8% -15.8%

Gross margin 21.7% 18.4% 3.3 pp 15.3% n.a. 6.5 pp n.a.EBITDA margin 17.9% 12.2% 5.7 pp 9.2% 11.0% 8.7 pp 7 pp

Net profit margin -15.0% 6.0% -21 pp -21.3% -19.0% 6.3 pp 4 pp

Source: Company Data, Bloomberg Consensus, Erste Group Research

Reported Expected Reported

Bagfas posted TRY 22.6mn net profit in 3Q11, which exceeds our estimate of TRY 19.6mn and the consensus estimate of TRY 19.4mn. The deviation between our estimate and the actual figure mainly came from a TRY16.4mn net FX gain due to the company’s long USD position. In that sense, Bagfas was one of the main beneficiaries of TRY depreciation in 3Q, and indeed, currency levels will remain important in protecting net income in 4Q.

Despite brilliant bottom line figures, sales decreased 3.2% to TRY 63.8mn in 3Q11, from TRY 65.8mn in 3Q10, which is below our estimate of TRY 79.5mn and the consensus estimate of TRY 70.6mn. Bagfas is the only fertilizer company to have a semi-integrated structure and that is capable of producing both sulfuric and phosphoric acids, the raw materials used in the production of compound fertilizers. Accordingly, the company is predominantly focused on more profitable acid sales, which have improved margins while limiting revenue growth. Focusing on acid sales will result in a 1.5% share loss in the solid fertilizer market, by our estimate. Despite significant increases in fertilizer prices, decreasing market shares and limited revenue growth may pose a problem in the coming quarters. We maintain our Accumulate recommendation for Bagfas, with a target price of TRY 178.50.




Bagfas TRY 198.6 32% 26.8% 27.2% 27.6% 22.5% 22.6% 21.6% 18.9% -2.3% 6.7% -18.9% -1.9%Ciech S.A. PLN 166.2 3% -2.7% 8.4% 7.2% 9.7% 7.6% 10.4% 4.3% 5.3% -27.3% -53.7% -31.4%Ege Gubre TRY 71.5 19% 7.9% 18.5% 22.1% 16.2% 8.3% 14.6% 16.4% -1.1% -8.3% -33.0% -17.7%Gubre Fabrikalari TRY 415.0 33% 22.3% 23.0% 21.6% 29.0% 22.0% 21.1% 16.6% 2.5% -9.7% -32.0% -32.0%Lenzing EUR 1,934.4 26% 29.1% 19.7% 21.3% 18.6% 21.9% 20.4% 17.3% 0.5% -13.2% -15.0% 43.7%PannErgy HUF 36.7 0% 4.1% 4.0% 4.6% 12.5% 13.7% 14.0% 6.2% -8.6% -24.7% -37.3% -43.7%Pegas NW EUR 159.4 17% 19.1% 17.5% 15.1% 23.8% 20.7% 20.2% 12.9% -0.9% -9.0% -7.2% 0.7%Petkim TRY 890.9 9% 12.1% 10.8% 10.7% 6.4% 7.7% 7.3% 5.4% -6.6% -10.7% -24.8% -27.8%Semperit EUR 663.3 14% 13.8% 14.2% 13.9% 16.0% 14.4% 15.0% 10.5% 5.9% 2.3% -17.5% 1.5%Synthos PLN 1,276.3 26% 39.2% 34.0% 24.1% 18.2% 25.5% 26.3% 20.9% 13.5% -29.8% -17.1% 47.0%ZA Pulawy S.A. PLN 412.6 2% 16.9% 9.6% 9.3% 4.0% 14.9% 10.9% 7.8% 16.0% -8.3% -30.5% 15.2%ZCh Police S.A. PLN 191.4 13% 24.1% 8.9% 9.0% 8.3% 9.8% 5.7% 3.5% 7.7% -8.9% -34.3% 67.2%Median CEE - - 17% 14% 18% 15% 16% 14% 15% 13% - - - -EuroStoxx Chemicals - 179,780 16% 18% 15% 16% 17% 16% 16% 16% 12.2% -4.2% -25.0% -10.4%CEE to Peer, Prem/Disc - 6% -22% 15% -3% -7% -10% -4% -21% - - - -


2010 2011e 2012e 2013e 2010 2011e 2012e 2013e 2010 2011e 2012e 2013eBagfas 10.2 9.1 9.0 8.5 7.0 7.7 7.7 7.1 2.9 2.5 2.4 2.3Ciech S.A. 29.1 nm 6.4 7.0 2.5 3.5 2.1 2.1 0.7 0.6 0.5 0.5Ege Gubre 14.3 19.4 8.2 5.7 11.5 12.8 6.7 4.9 2.4 1.7 1.4 1.2Gubre Fabrikalari 11.6 9.0 8.8 8.7 5.5 5.2 5.3 5.3 3.2 2.1 2.0 1.8Lenzing 13.5 7.7 9.3 7.3 7.6 5.3 5.6 4.6 3.2 1.9 1.7 1.4PannErgy nm 26.6 24.1 20.4 15.8 7.3 7.6 7.1 1.7 0.9 0.9 0.8Pegas NW 8.2 6.2 6.2 6.6 4.7 4.4 4.2 4.2 1.3 1.1 1.0 1.0Petkim 17.7 9.6 10.9 10.7 11.3 6.8 8.0 7.8 1.5 1.2 1.2 1.1Semperit 17.9 13.3 12.1 11.4 10.9 8.0 7.4 6.9 2.3 1.8 1.7 1.5Synthos 8.6 5.3 4.7 5.3 6.7 4.6 4.2 4.6 1.9 1.9 1.4 1.2ZA Pulawy S.A. 33.5 7.6 9.0 9.1 11.6 5.9 5.9 5.9 0.7 1.2 0.9 0.8ZCh Police S.A. 7.8 5.2 12.6 11.4 3.9 3.5 5.9 5.5 1.0 1.2 1.1 1.0Median CEE 13.5 9.1 8.9 7.9 7.3 6.0 6.2 5.1 2.1 1.4 1.3 1.1EuroStoxx Chemicals 12.8 11.8 10.5 9.9 7.0 7.4 6.7 6.2 2.0 1.7 1.6 1.5CEE to Peer, Prem/Disc 6% -23% -15% -20% 5% -19% -8% -17% 1% -15% -19% -22%

2010 2011e 2012e 2013e 2010 2011e 2012e 2013eBagfas 1.4 1.2 1.1 1.1 6.4 5.4 5.3 4.8Ciech S.A. 0.5 0.3 0.4 0.3 5.4 4.6 3.5 3.4Ege Gubre 1.7 1.1 0.9 0.8 10.6 13.1 6.4 4.2Gubre Fabrikalari 1.5 0.8 0.8 0.7 5.2 3.8 3.8 3.7Lenzing 1.5 1.0 1.1 1.0 7.9 4.8 5.3 4.4PannErgy 1.4 1.0 1.0 1.0 11.3 7.4 7.5 6.9Pegas NW 1.8 1.5 1.3 1.2 7.5 7.2 6.4 6.5Petkim 0.8 0.5 0.5 0.5 12.2 6.8 7.2 6.9Semperit 1.0 0.7 0.7 0.6 6.3 4.8 4.5 4.1Synthos 1.1 0.9 0.7 0.6 5.9 3.6 2.7 2.5ZA Pulawy S.A. 0.5 0.8 0.6 0.6 13.4 5.1 5.5 5.6ZCh Police S.A. 0.4 0.4 0.3 0.3 4.8 3.8 6.1 5.0Median CEE 1.5 1.0 1.0 0.9 7.7 6.1 5.9 4.6EuroStoxx Chemicals 1.1 0.8 0.8 0.7 6.4 5.6 5.5 4.9CEE to Peer, Prem/Disc 36% 33% 28% 19% 20% 9% 6% -6%

P/E P/CE P/BV

EV/Sales EV/EBITDA

*PannErgy is in transition, turning itself into an alternative energy/utility company. For the time being its plastic business is still dominant, while energy activities are in progress. Valuation based on the utility aspect might distort the comparison to other chemical sector peers; Source: JCF Quant, Erste Group Research



Bagfas Accumulate Target price TRY 178.5Price (TRY) 160.5 ROCE 2010 43.4% 10f 11e 12e 13eMcap (TRY mn) 482 ROE 2010 31.6% Sales (TRY mn) 279.8 304.3 335.0 352.1Mcap (EUR mn) 199 Net debt (EURmn, 10) -39.0 EBITDA margin 22.54% 22.58% 21.57% 18.91%Free f loat (%) 59.6% Gearing (2010) -46% EBIT margin 18.82% 19.68% 18.85% 18.91%Free f loat (EUR mn) 118 Sales CAGR 10-13e 7.1% Net profit margin 16.79% 16.67% 15.96% 16.08%Shares outst. (mn) 3.0 EPS CAGR 10-13e #ZAHL! EPS (TRY) 15.66 16.91 17.82 18.87


Performance 1M 3M 6M 12MAbsolute (TRY terms) -5.0% 6.3% -13.7% -13.7%Rel. to sector (EUR, ppt) -4.7 19.2 -0.8 -21.1Rel. to universe (EUR, ppt) -5.2 16.3 0.5 12.6

Ciech S.A. Hold Target price PLN 25.1Price (PLN) 13.7 ROCE 2010 1.9% 10 11e 12e 13eMcap (PLN mn) 724 ROE 2010 2.5% Sales (PLN mn) 3,960.3 4,160.4 4,254.1 4,481.3Mcap (EUR mn) 166 Net debt (EURmn, 10) 362.5 EBITDA margin 9.71% 7.64% 10.37% 4.30%Free f loat (%) 79.9% Gearing (2010) 168% EBIT margin 3.71% 2.37% 4.89% 4.30%Free f loat (EUR mn) 133 Sales CAGR 10-13e 5.0% Net profit margin 0.52% -0.67% 2.64% 2.31%Shares outst. (mn) 52.7 EPS CAGR 10-13e #ZAHL! EPS (PLN) 0.74 -0.53 2.13 1.97

Dividend/share (PLN) 0.00 0.00 0.00 0.00EV/sales 0.53 0.35 0.36 0.32EV/EBITDA 5.40 4.56 3.51 3.37P/E 29.07 nm 6.45 6.98P/CE 2.48 3.50 2.10 2.14P/BV 0.72 0.57 0.52 0.48Dividend yield 0.00% 0.00% 0.00% 0.00%EV/EBITDA rel. 0.7 0.7 0.6 0.7P/E rel. 2.2 - 0.7 0.9


Ege Gubre Accumulate Target price TRY 107Price (TRY) 86.3 ROCE 2010 14.1% 10 11e 12e 13eMcap (TRY mn) 4,331 ROE 2010 18.8% Sales (TRY mn) 174.1 196.7 221.0 241.4Mcap (EUR mn) 72 Net debt (EURmn, 10) 29.0 EBITDA margin 16.20% 8.30% 14.64% 16.42%Free f loat (%) 19.2% Gearing (2010) 59% EBIT margin 13.74% 6.14% 12.67% 16.42%Free f loat (EUR mn) 832 Sales CAGR 10-13e 7.3% Net profit margin 9.61% 4.32% 9.56% 12.57%Shares outst. (mn) 2.0 EPS CAGR 10-13e #ZAHL! EPS (TRY) 8.36 4.25 10.56 15.17


Performance 1M 3M 6M 12MAbsolute (TRY terms) -3.9% -8.7% -28.7% -28.7%Rel. to sector (EUR, ppt) -3.6 4.1 -14.9 -36.9Rel. to universe (EUR, ppt) -4.0 1.2 -13.6 -3.2

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Gubre Fabrikalari Buy Target price TRY 16.30Price (TRY) 12.05 ROCE 2010 23.3% 10f 11e 12e 13eMcap (TRY mn) 1,006 ROE 2010 33.5% Sales (TRY mn) 1,385.5 1,866.1 1,999.9 2,128.7Mcap (EUR mn) 415 Net debt (EURmn, 10) 180.9 EBITDA margin 29.02% 21.96% 21.12% 16.56%Free float (%) 34.1% Gearing (2010) 46% EBIT margin 23.75% 18.13% 17.63% 16.56%Free float (EUR mn) 142 Sales CAGR 10-13e 19.5% Net profit margin 17.68% 11.70% 11.62% 11.04%Shares outst. (mn) 83.5 EPS CAGR 10-13e EPS (TRY) 1.44 1.28 1.36 1.38


Performance 1M 3M 6M 12MAbsolute (TRY terms) 15.0% -31.8% -48.6% -48.6%Rel. to sector (EUR, ppt) 0.0 2.7 -13.9 -51.2Rel. to universe (EUR, ppt) -0.4 -0.2 -12.5 -17.4

Lenzing Buy Target price EUR 104.9Price (EUR) 72.9 ROCE 2010 16.7% 10 11e 12e 13eMcap (EUR mn) 1,934 ROE 2010 25.9% Sales (EUR mn) 1,766.3 2,162.6 2,209.9 2,330.3Mcap (EUR mn) 1,934 Net debt (EURmn, 10) 368 EBITDA margin 18.62% 21.95% 20.43% 17.29%Free float (%) 32.4% Gearing (2010) 50% EBIT margin 12.91% 16.92% 14.57% 17.29%Free float (EUR mn) 627 Sales CAGR 10-13e 16.7% Net profit margin 9.83% 11.98% 9.96% 11.95%Shares outst. (mn) 26.6 EPS CAGR 10-13e -13% EPS (EUR) 6.45 9.43 7.85 9.93


Performance 1M 3M 6M 12MAbsolute (EUR terms) 0.5% -13.2% -15.0% -15.0%Rel. to sector (EUR, ppt) -2.0 -0.8 3.0 24.5Rel. to universe (EUR, ppt) -2.4 -3.7 4.4 58.2

PannErgy Buy Target price HUF 1228.0Price (HUF) 630.0 ROCE 2010 3.5% 10 11e 12e 13eMcap (HUF mn) 11,170 ROE 2010 0.2% Sales (HUF mn) 15,193.7 13,482.3 14,070.7 14,690.6Mcap (EUR mn) 37 Net debt (EURmn, 10) 15 EBITDA margin 12.48% 13.68% 14.00% 6.17%Free float (%) 66.2% Gearing (2010) 41% EBIT margin 4.97% 5.19% 5.72% 6.17%Free float (EUR mn) 24 Sales CAGR 10-13e 3.8% Net profit margin 0.40% 3.37% 3.94% 4.45%Shares outst. (mn) 17.7 EPS CAGR 10-13e 154% EPS (HUF) 0.89 21.31 26.13 30.90

Dividend/share (HUF) 0.00 0.00 0.00 0.00EV/sales 1.41 1.01 1.05 0.98EV/EBITDA 11.29 7.36 7.49 6.90P/E nm 26.61 24.11 20.39P/CE 15.76 7.33 7.58 7.10P/BV 1.71 0.89 0.86 0.82Dividend yield 0.00% 0.00% 0.00% 0.00%EV/EBITDA rel. 1.5 1.2 1.3 1.5P/E rel. - 2.9 2.7 2.6


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Pegas NW Accumulate Target price CZK 500.0Price (CZK) 431.5 ROCE 2010 9.3% 10 11e 12e 13eMcap (CZK mn) 159 ROE 2010 17.4% Sales (EUR mn) 148.2 177.3 208.7 239.5Mcap (EUR mn) 159 Net debt (EURmn, 10) 92 EBITDA margin 23.77% 20.71% 20.19% 12.93%Free f loat (%) 74.6% Gearing (2010) 71% EBIT margin 12.73% 14.98% 14.20% 12.93%Free f loat (EUR mn) 119 Sales CAGR 10-13e 18.0% Net profit margin 14.20% 14.50% 12.33% 10.02%Shares outst. (mn) 9.2 EPS CAGR 10-13e 4% EPS (EUR) 2.28 2.78 2.79 2.60


Performance 1M 3M 6M 12MAbsolute (CZK terms) -0.5% -6.4% -4.1% -4.1%Rel. to sector (EUR, ppt) -3.4 3.4 10.9 -18.5Rel. to universe (EUR, ppt) -3.9 0.5 12.3 15.3

Petkim Hold Target price TRY 2.4Price (TRY) 2.2 ROCE 2010 8.2% 10 11e 12e 13eMcap (TRY mn) 2,160 ROE 2010 8.9% Sales (TRY mn) 2,909.4 3,644.9 3,778.1 4,006.5Mcap (EUR mn) 891 Net debt (EURmn, 10) -12 EBITDA margin 6.41% 7.68% 7.27% 5.37%Free f loat (%) 38.7% Gearing (2010) -2% EBIT margin 4.37% 5.79% 5.41% 5.37%Free f loat (EUR mn) 345 Sales CAGR 10-13e 18.1% Net profit margin 4.47% 5.86% 5.22% 5.02%Shares outst. (mn) 1,000.0 EPS CAGR 10-13e 15% EPS (TRY) 0.13 0.21 0.20 0.20


Performance 1M 3M 6M 12MAbsolute (TRY terms) -9.2% -11.1% -20.0% -20.0%Rel. to sector (EUR, ppt) -9.1 1.7 -6.7 -47.0Rel. to universe (EUR, ppt) -9.5 -1.2 -5.4 -13.3

Semperit Buy Target price EUR 37.0Price (EUR) 32.2 ROCE 2010 14.6% 10p 11e 12e 13e

ROE 2010 13.7% Sales (EUR mn) 689.4 809.1 830.0 898.4Mcap (EUR mn) 663 Net debt (EURmn, 10) -105 EBITDA margin 15.95% 14.36% 15.05% 10.50%Free f loat (%) 45.8% Gearing (2010) -30% EBIT margin 11.70% 10.50% 11.00% 10.50%Free f loat (EUR mn) 304 Sales CAGR 10-13e 11.2% Net profit margin 6.45% 6.11% 6.64% 6.43%Shares outst. (mn) 20.6 EPS CAGR 10-13e 11% EPS (EUR) 2.21 2.43 2.67 2.83


Performance 1M 3M 6M 12MAbsolute (EUR terms) 5.9% 2.3% -17.5% -17.5%Rel. to sector (EUR, ppt) 3.5 14.8 0.6 -17.7Rel. to universe (EUR, ppt) 3.0 11.8 2.0 16.1

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Synthos Accumulate Target price PLN 5.9Price (PLN) 4.2 ROCE 2010 21.4% 10 11e 12e 13eMcap (PLN mn) 5,558 ROE 2010 25.6% Sales (PLN mn) 3,860.7 5,182.0 5,988.5 5,913.0Mcap (EUR mn) 1,276 Net debt (EURmn, 10) 16 EBITDA margin 18.20% 25.47% 26.30% 20.85%Free float (%) 37.5% Gearing (2010) 3% EBIT margin 14.65% 22.64% 23.63% 20.85%Free float (EUR mn) 479 Sales CAGR 10-13e 22.8% Net profit margin 12.35% 18.73% 19.66% 17.79%Shares outst. (mn) 1,323.3 EPS CAGR 10-13e 59% EPS (PLN) 0.36 0.73 0.89 0.79


Performance 1M 3M 6M 12MAbsolute (PLN terms) 12.6% -24.2% -8.3% -8.3%Rel. to sector (EUR, ppt) 11.1 -17.3 1.0 27.8Rel. to universe (EUR, ppt) 10.6 -20.2 2.4 61.5

ZA Pulawy S.A. Hold Target price PLN 92.5Price (PLN) 94.0 ROCE 2010 0.8% 10 11e 12e 13eMcap (PLN mn) 1,797 ROE 2010 2.2% Sales (PLN mn) 2,055.9 2,882.3 3,178.6 3,439.0Mcap (EUR mn) 413 Net debt (EURmn, 10) -23 EBITDA margin 4.00% 14.95% 10.91% 7.79%Free float (%) 34.2% Gearing (2010) -6% EBIT margin 0.74% 11.96% 7.70% 7.79%Free float (EUR mn) 141 Sales CAGR 10-13e 11.4% Net profit margin 1.75% 10.65% 6.09% 5.76%Shares outst. (mn) 19.1 EPS CAGR 10-13e 1% EPS (PLN) 1.86 15.51 10.12 10.35


Performance 1M 3M 6M 12MAbsolute (PLN terms) 15.0% -1.1% -23.2% -23.2%Rel. to sector (EUR, ppt) 13.5 4.1 -12.5 -4.0Rel. to universe (EUR, ppt) 13.0 1.2 -11.1 29.8

ZCh Police S.A. Sell Target price PLN 10.3Price (PLN) 11.1 ROCE 2010 9.4% 10 11e 12e 13eMcap (PLN mn) 833 ROE 2010 13.4% Sales (PLN mn) 2,022.6 2,428.9 2,654.2 2,748.3Mcap (EUR mn) 191 Net debt (EURmn, 10) 59 EBITDA margin 8.28% 9.79% 5.70% 3.47%Free float (%) 31.8% Gearing (2010) 42% EBIT margin 4.60% 6.82% 2.84% 3.47%Free float (EUR mn) 61 Sales CAGR 10-13e 16.6% Net profit margin 3.54% 6.09% 2.46% 2.64%Shares outst. (mn) 75.0 EPS CAGR 10-13e #ZAHL! EPS (PLN) 0.97 1.98 0.88 0.97


Performance 1M 3M 6M 12MAbsolute (PLN terms) 6.8% -1.7% -27.4% -27.4%Rel. to sector (EUR, ppt) 5.3 3.5 -16.3 48.0Rel. to universe (EUR, ppt) 4.8 0.6 -14.9 81.7

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Sector Insight Construction & Materials

– Construction business expectations continued to slide in October – STRABAG downgraded from Buy to Hold, with unchanged target price of EUR 24 – Weaker economy, declining confidence should not have had material impact on Wienerberger’s 3Q yet

While construction activity held up in August, expectations continue to decline sharply. Business expectations by the German construction industry collected by the IFO institute dropped from 4.5 in June 2011, to -10.6 in September and -15.3 in October 2011. Supported by milder temperatures in January/February – particularly in Germany – seasonally-adjusted production in the EU27 rose 0.6% y/y in 1Q11, but turned lower again, by 2.7% y/y, in 2Q11. In August 2011, output rose by 2.5% in the Euro Area and 0.6% in the EU27. Among the member states for which data is available for August 2011, construction output rose in six and fell in eight. The highest increases were registered in Poland (+10.6%), Romania (+6.3%) and Germany (+5.2%) and the largest decreases were in Slovenia (-32.8%), Hungary (-12.3%) and Portugal (-10.0%). Euroconstruct expects that the construction low has been passed, but growth will be hampered by the international debt crisis. Pressure on governments to cut expenditure threatens to delay public investment in the civil engineering sub-sector. In the most severely hit residential construction sector, the volume of new housing construction is forecast to grow slightly under 5% in 2011. Non-residential construction lags behind economic trends and is not expected to grow until 2012. A weak set of macroeconomic data from Europe, North America, Japan and China, as well as a heightened focus on public debt, poses serious threats to construction recovery, in our view, particularly for non-residential construction and civil engineering.

We have only fine-tuned our estimates for STRABAG and leave our 12-month target price unchanged at EUR 24.0. Given the strong outperformance of the share since the start of the buyback program and the limited upside to our target price, we downgrade our recommendation from Buy to Hold. While construction output and earnings developed nicely in 1H11 and a further positive development for the remainder of the year should be guaranteed by the existing order backlog, leading indicators suggest a weaker operating environment for 2012/13. Public debt problems in a number of European countries should continue to affect public sector transport infrastructure investments. We believe that the share buyback program will continue to support the share price over the coming months, particularly on the downside. However, so far, buybacks were reduced or stopped once the share came close to EUR 23. Furthermore, we see a risk that the share price will decline, as soon as the share loses support from buyback activities.

Wienerberger will release 3Q11 results on November 9. For 3Q11, we expect the trends from 1H11 to have continued to a large extent. Weak general economic data, debt problems, and declining confidence should not have had a material impact on third quarter results yet. We expect revenue growth comparable to 2Q11, of 8% resulting from price increases during 1H11, with higher volumes mainly in the important markets of Germany, Poland, France and Belgium, as well as from the consolidation of Steinzeug (about EUR 80mn revenues p.a.). The share swap of an additional 25% of Tondach Gleinstätten for 50% of Bramac already resulted in a EUR 33.2mn non-recurring gain in 2Q11, but the positive recurring effect on the P&L (EUR 40mn higher revenues and EUR 10mn higher EBITDA p.a.) will start in 3Q11. We expect the adjusted EBIT margin in 3Q11 to be slightly up on last year, at 7.9%, but down on the 10.7% margin in 2Q11, mainly due to seasonality and helped by price increases.

The Croatian press revealed details this month on the concession contract for Zagreb airport, which leans in favor of engineering company Institut IGH for the required reconstruction of the airport. IGH and its architects will most likely be engaged by a new concessionaire (not yet decided) for a design solution in both phases of reconstruction, which secures some HRK 90-130mn for the company. Separately, Institut IGH has increased the capital by HRK 46.2mn in its daughter company IGH Turizam, which needs restructuring and is a continuing issue for IGH. On the project side, IGH Lux Energija, a 30% owned associate company, is kicking off with a 500 MW combined cycle power plant construction (EUR 500mn estimated value). The project is still in the phase of environmental study preparation and preliminary design creation, while financing options are still being considered. IGH’s 3Q11 financial result was strong on the top line, with 14% y/y growth, a 22% outperformance of our estimate. This can be ascribed to daughter companies working on the Ban and Bundek projects (Geotehnika) and (most likely) better figures from tourism company DIG. The EBITDA and EBIT of IGH outperformed our quarterly estimates by 21% and 135%, respectively. Unfortunately, the financial result was much weaker y/y



(mainly due to FX losses); therefore, no improvement was seen on the bottom line in the quarter (still an HRK 2mn net loss vs. an HRK 2.6mn gain estimate). The cumulative profitability forecasts still lag behind our estimates. However, with a somewhat better financial result in 4Q11 and a lack of one-off cost items, we think our FY11 bottom line figure should be reached.

Akcansa posted strong improvement in margins. Akcansa posted a TRY 33.6mn net profit in 3Q11, higher than our estimate of TRY 28.9mn and the consensus estimate of TRY 22.7mn. The company increased its sales by 33% to TRY 270.4mn y/y in 3Q11, which is pretty much in line with our expectation of TRY 264.3mn and higher than the market expectation of TRY 254.3mn. The deviation between our estimate and the actual figure mainly came from the better pricing environment in Turkey. The company increased its domestic sales by 36.7% y/y to TRY 231.2mn, which exceeds our estimate of TRY 217.5mn, and its exports by 11.1% y/y to TRY 44.2mn, which is slightly below our estimate of TRY 46.8mn. The EBITDA margin rose to 23.0%, which is significantly higher than our estimate of 20.3% and consensus estimate of 18.7%. Petcoke prices eased in 3Q, but in our view, the better pricing environment in Turkey and the company’s 100k ton exports to Russia on strong prices and margins are the key factor behind the rise. The share price rose 5% after financials were released, and we view them as positive for the company, and accordingly reiterate our “Buy” recommendation for Akcansa, with a target price of TRY 9.00




Akcansa TRY 557.4 7.6% 10.9% 11.9% 12.5% 16.2% 19.5% 20.3% 20.5% 2.6% 0.7% -15.6% -25.6%Berling PLN 17.0 21.6% 19.0% 18.9% 20.4% 16.4% 17.1% 17.1% 17.1% 20.7% -21.1% -41.3% -43.6%Cersanit PLN 241.0 8.8% 7.1% 9.1% 10.6% 16.6% 17.6% 18.6% 19.5% 9.2% -40.1% -64.2% -62.5%Cimsa TRY 443.5 12.1% 12.6% 13.6% 13.6% 25.6% 25.1% 25.7% 25.5% 9.5% -4.4% -28.4% -39.3%CNG PLN 28.0 2.7% 3.9% 5.0% 6.6% 14.2% 15.3% 15.2% 16.0% -5.8% -13.8% -35.7% -36.4%Institut IGH HRK 19.0 1.0% 2.5% 14.1% 14.8% 13.6% 15.7% 14.9% 12.4% -10.0% -35.7% -48.2% -40.3%Mostostal Warszawa PLN 112.5 12.6% 3.0% 4.6% 9.5% 4.6% 1.8% 2.1% 3.6% 13.3% -19.5% -45.2% -66.2%PBG S.A. PLN 279.0 15.1% 11.4% 7.5% 4.5% 11.7% 9.2% 7.4% 6.4% 45.5% -35.4% -52.6% -64.7%Polimex PLN 183.0 8.2% 8.3% 8.2% 8.2% 7.2% 6.3% 5.8% 6.1% 2.9% -43.5% -59.5% -66.3%STRABAG EUR 2,463.0 5.8% 6.2% 6.0% 5.8% 5.9% 5.2% 5.2% 5.2% 3.2% 18.6% 2.3% 24.4%Teraplast RON 23.3 -3.9% 9.3% 12.1% 21.1% 5.2% 11.6% 12.2% 12.3% -5.0% -27.4% -37.2% -23.8%Trakcja Polska PLN 62.1 8.4% 13.6% 10.9% 9.3% 7.2% 7.0% 19.2% -34.8% -56.7% -68.9%Wienerberger EUR 1,038.2 -3% 2.0% 4.6% 6.8% 12.1% 15.6% 17.1% 18.7% 3.7% -13.7% -40.2% -23.9%Median - - 8% 8% 9% 10% 12% 15% 15% 14% - - - -Median Materials - 50,549 7.1% 7.7% 8.0% 9.1% 15.8% 16.1% 15.9% 12.2% - - - -Median Construction - 53,491 15.8% 14.2% 13.9% 14.2% 8.0% 7.8% 6.8% 7.3% - - - -Median Total - 104,040 14.7% 11.3% 11.8% 12.3% 11.6% 11.7% 11.8% 11.9% - - - -EuroStoxx Construction & Materials

114,183 10.2% 9.7% 9.6% 10.2% 12% 14% 15% 15% 3.8% 1.2% -3.3% 2.1%

CEE to Peer, Prem/Disc - -44% -26% -23% -19% 4% 31% 27% 20% - - - -




2010 2011e 2012e 2013e 2010 2011e 2012e 2013e 2010 2011e 2012e 2013eAkcansa 23.6 12.8 11.6 10.3 11.5 8.2 7.8 7.1 1.7 1.4 1.3 1.2Berling 11.5 6.2 6.3 6.2 10.9 5.8 5.9 5.8 2.0 1.2 1.2 1.3Cersanit 22.5 10.4 7.8 6.2 10.9 4.6 4.1 3.6 1.8 0.7 0.7 0.6Cimsa 12.6 8.8 8.5 8.2 8.7 6.7 6.6 6.3 1.5 1.2 1.1 1.1CNG 34.1 14.6 11.5 8.2 7.6 4.4 4.3 3.7 0.9 0.6 0.6 0.5Institut IGH 35.7 14.0 2.3 1.9 n.m. 1.8 1.3 1.3 0.4 0.3 0.3 0.3Mostostal Warszawa 19.7 30.0 20.3 9.3 17.6 n.m. 6.3 3.4 2.4 0.9 0.9 0.8PBG S.A. 13.7 6.0 8.9 14.0 11.7 8.3 6.3 6.6 1.9 0.7 0.6 0.6Polimex 17.1 6.1 6.1 5.7 9.0 3.9 3.6 3.6 1.4 0.5 0.5 0.5STRABAG 13.4 13.5 12.9 12.9 4.0 4.5 4.0 4.0 0.8 0.8 0.8 0.7Teraplast nm 6.0 3.7 4.1 19.4 3.2 2.4 2.4 0.9 0.5 0.4 nmTrakcja Polska 7.7 4.3 4.2 6.2 2.7 2.8 0.6 0.5 0.4Wienerberger nm 25.6 10.8 7.0 11.7 4.3 3.5 2.9 0.8 0.5 0.5 0.5Median CEE 17.1 10.4 8.5 7.6 10.9 4.4 4.1 3.7 1.4 0.7 0.6 0.6Median Materials 14.0 11.6 9.8 9.5 6.1 6.1 5.9 5.5 1.0 0.9 0.9 0.9Median Construction 10.8 12.5 11.5 10.3 5.5 5.3 6.6 6.0 1.7 1.5 1.4 1.3Median Total 11.6 11.8 10.6 10.3 5.8 5.6 5.9 5.5 1.6 1.5 1.4 1.3EuroStoxx Construction & Materials

11.0 11.8 10.9 10.0 5.5 5.3 5.0 4.5 1.0 1.0 0.9 0.9

CEE to Peer, Prem/Disc 47% -12% -20% -26% 86% -21% -31% -33% -8% -54% -54% -50%

2010 2011e 2012e 2013e 2010 2011e 2012e 2013eAkcansa 2.0 1.5 1.4 1.2 12.1 7.5 6.9 6.1Berling 1.3 0.7 0.7 0.8 8.0 4.0 4.3 4.6Cersanit 2.1 1.0 0.9 0.8 12.5 5.6 5.0 4.1Cimsa 2.0 1.4 1.4 1.4 7.9 5.7 5.6 5.5CNG 1.4 0.8 0.8 0.6 9.9 5.4 5.1 4.0Institut IGH 1.6 1.6 1.5 0.9 11.9 10.1 10.3 7.1Mostostal Warszawa 0.4 0.1 0.1 0.1 7.9 7.3 6.0 3.1PBG S.A. 1.4 0.9 0.8 0.8 12.2 9.9 10.6 12.2Polimex 0.7 0.3 0.3 0.3 9.3 4.5 4.7 4.3STRABAG 0.1 0.2 0.2 0.2 2.5 3.3 3.4 3.4Teraplast 0.7 0.5 0.5 0.4 13.4 4.6 4.1 3.2Trakcja Polska 0.2 0.4 0.3 2.4 5.0 4.0Wienerberger 1.5 1.0 0.9 0.8 12.6 6.4 5.2 4.3Median CEE 1.4 0.8 0.8 0.8 9.9 5.6 5.1 4.3Median Materials 1.2 1.0 1.0 0.9 7.6 6.6 6.3 5.7Median Construction 0.4 0.4 0.4 0.4 7.1 6.1 6.4 5.8Median Total 0.8 0.7 0.7 0.6 7.6 6.2 6.4 5.8EuroStoxx Construction & Materials

1.2 0.9 0.9 0.9 7.9 7.0 5.9 5.4

CEE to Peer, Prem/Disc 72% 19% 16% 27% 31% -9% -21% -26%

P/E P/CE P/BV

EV/Sales EV/EBITDA




Akcansa Buy Target price TRY 9.0Price (TRY) 7.1 ROCE 2010 5.8% 10f 11e 12e 13eMcap (TRY mn) 1,351 ROE 2010 7.6% Sales (TRY mn) 817.4 980.8 1,046.7 1,132.2Mcap (EUR mn) 557 Net debt (EURmn, 10) 100.7 EBITDA margin 16.23% 19.49% 20.30% 20.51%Free float (%) 20.6% Gearing (2010) 25% EBIT margin 9.52% 13.90% 15.02% 15.54%Free float (EUR mn) 115 Sales CAGR 10-13e 12.4% Net profit margin 7.26% 10.27% 11.19% 11.66%Shares outst. (mn) 191.4 EPS CAGR 10-13e 15.1% EPS (TRY) 0.31 0.53 0.61 0.69


Performance 1M 3M 6M 12MAbsolute (TRY terms) -0.3% 0.3% -10.2% -8.8%Rel. to sector (EUR, ppt) -2.5 4.9 10.0 -4.3Rel. to universe (EUR, ppt) -0.3 10.2 3.9 -11.1

Berling Buy Target price PLN 9.0Price (PLN) 4.3 ROCE 2010 24.8% 10 11e 12e 13eMcap (PLN mn) 74 ROE 2010 21.6% Sales (PLN mn) 76.9 84.6 87.1 89.8Mcap (EUR mn) 17 Net debt (EURmn, 10) -3.5 EBITDA margin 16.44% 17.12% 17.11% 17.09%Free float (%) 29.9% Gearing (2010) -25% EBIT margin 15.78% 16.20% 16.20% 16.20%Free float (EUR mn) 5 Sales CAGR 10-13e 8.6% Net profit margin 11.87% 13.04% 13.46% 13.31%Shares outst. (mn) 17.4 EPS CAGR 10-13e 2.5% EPS (PLN) 0.57 0.63 0.67 0.69



Cersanit Hold Target price PLN 9.0Price (PLN) 4.9 ROCE 2010 4.8% 10 11e 12e 13eMcap (PLN mn) 1,049 ROE 2010 8.8% Sales (PLN mn) 1,532.5 1,754.1 1,872.0 1,958.0Mcap (EUR mn) 241 Net debt (EURmn, 10) 213.2 EBITDA margin 16.61% 17.58% 18.64% 19.53%Free float (%) 51.4% Gearing (2010) 64% EBIT margin 9.34% 10.87% 12.04% 13.16%Free float (EUR mn) 124 Sales CAGR 10-13e 8.5% Net profit margin 6.79% 5.38% 7.22% 8.71%Shares outst. (mn) 216.4 EPS CAGR 10-13e 63.0% EPS (PLN) 0.48 0.44 0.62 0.79

Dividend/share (PLN) 0.00 0.00 0.00 0.00EV/sales 2.08 0.98 0.92 0.81EV/EBITDA 12.55 5.60 4.95 4.12P/E 22.52 10.35 7.76 6.15P/CE 10.85 4.61 4.06 3.55P/BV 1.76 0.74 0.68 0.63Dividend yield 0.00% 0.00% 0.00% 0.00%EV/EBITDA rel. 1.3 1.0 1.0 1.0P/E rel. 1.3 1.0 0.9 0.8Performance 1M 3M 6M 12MAbsolute (PLN terms) 8.3% -35.3% -60.4% -58.4%Rel. to sector (EUR, ppt) 4.0 -35.9 -38.6 -41.2Rel. to universe (EUR, ppt) 6.2 -30.6 -44.8 -48.0

52 weeks

456789

1011121314

CersanitWIG (Rebased)DJ EURO STOXX Construction & Material (Rebased)

52 weeks

3,03,54,04,55,05,56,06,57,07,5

Berling WIG (Rebased) DJ EURO STOXX Retail (Rebased)

52 weeks

5,5

6,0

6,5

7,0

7,5

8,0

8,5

9,0

9,5

AkcansaISE 100 (Rebased)DJ EURO STOXX Construc tion & Materia l (Rebased)



Cimsa Buy Target price TRY 10.3Price (TRY) 8.0 ROCE 2010 11.0% 10f 11e 12e 13eMcap (TRY mn) 1,075 ROE 2010 12.1% Sales (TRY mn) 708.5 791.6 826.5 868.3Mcap (EUR mn) 443 Net debt (EURmn, 10) 58.3 EBITDA margin 25.58% 25.10% 25.71% 25.50%Free f loat (%) 32.1% Gearing (2010) 14% EBIT margin 20.60% 20.59% 21.27% 21.14%Free f loat (EUR mn) 142 Sales CAGR 10-13e 9.0% Net prof it margin 14.62% 14.68% 15.22% 15.13%Shares outst. (mn) 135.1 EPS CAGR 10-13e 4.9% EPS (TRY) 0.77 0.86 0.94 0.97


Performance 1M 3M 6M 12MAbsolute (TRY terms) 15.0% -31.8% -48.6% -48.6%Rel. to sector (EUR, ppt) 4.4 -0.2 -2.8 -18.0Rel. to universe (EUR, ppt) 6.6 5.1 -9.0 -24.8

CNG Buy Target price PLN 3.0Price (PLN) 2.1 ROCE 2010 1.9% 10 11e 12e 13eMcap (PLN mn) 122 ROE 2010 2.7% Sales (PLN mn) 177.2 204.6 220.7 236.8Mcap (EUR mn) 28 Net debt (EURmn, 10) 17 EBITDA margin 14.18% 15.29% 15.19% 16.04%Free f loat (%) 81.0% Gearing (2010) 34% EBIT margin 3.81% 6.52% 7.22% 8.61%Free f loat (EUR mn) 23 Sales CAGR 10-13e 9.4% Net prof it margin 3.00% 3.82% 4.82% 6.31%Shares outst. (mn) 57.0 EPS CAGR 10-13e 29.9% EPS (PLN) 0.09 0.14 0.19 0.26

Dividend/share (PLN) 0.00 0.00 0.00 0.00EV/sales 1.41 0.82 0.77 0.65EV/EBITDA 9.95 5.35 5.06 4.04P/E 34.11 14.57 11.48 8.16P/CE 7.56 4.41 4.32 3.75P/BV 0.89 0.59 0.56 0.52Dividend yield 0.00% 0.00% 0.00% 0.00%EV/EBITDA rel. 1.0 1.0 1.0 0.9P/E rel. 2.0 1.4 1.3 1.1Performance 1M 3M 6M 12MAbsolute (PLN terms) -6.6% -7.0% -28.9% -29.6%Rel. to sector (EUR, ppt) -10.9 -9.6 -10.1 -15.2Rel. to universe (EUR, ppt) -8.7 -4.3 -16.3 -21.9

Institut IGH Accumulate Target price HRK 2427.0Price (HRK) 898.0 ROCE 2010 1.5% 10F 11e 12e 13eMcap (HRK mn) 142 ROE 2010 1.0% Sales (HRK mn) 490.2 502.0 553.5 893.3Mcap (EUR mn) 19 Net debt (EURmn, 10) 90 EBITDA margin 13.65% 15.66% 14.90% 12.41%Free f loat (%) 87.0% Gearing (2010) 165% EBIT margin 8.33% 7.28% 7.18% 8.42%Free f loat (EUR mn) 17 Sales CAGR 10-13e 5.9% Net prof it margin 0.85% 2.01% 11.16% 10.37%Shares outst. (mn) 0.2 EPS CAGR 10-13e 62.8% EPS (HRK) 24.48 63.57 391.22 473.07

Dividend/share (HRK) 0.00 0.00 0.00 0.00EV/sales 1.62 1.58 1.53 0.88EV/EBITDA 11.90 10.08 10.25 7.12P/E 35.68 13.99 2.30 1.90P/CE n.m. 1.77 1.32 1.27P/BV 0.35 0.35 0.30 0.26Dividend yield 0.00% 0.00% 0.00% 0.00%EV/EBITDA rel. 1.2 1.8 2.0 1.7P/E rel. 2.1 1.4 0.3 0.3Performance 1M 3M 6M 12MAbsolute (HRK terms) -10.1% -35.4% -47.4% -38.9%Rel. to sector (EUR, ppt) -15.1 -31.6 -22.5 -19.0Rel. to universe (EUR, ppt) -12.9 -26.2 -28.7 -25.8

52 w eeks

1,82 ,02 ,22 ,42 ,62 ,83 ,03 ,23 ,43 ,63 ,8

C NGW IG (Rebas ed)D J E UR O STO XX C ons truction & Ma te ria l (R ebas ed)

52 weeks

7

8

9

10

11

12

13

CimsaISE 100 (Rebased)DJ EURO STOXX Construction & Materia l (Rebased)

52 weeks

800

1.000

1.200

1.4001.600

1.800

2.000

2.200

2.400

Ins titut IG H CROBE X (Rebased)



Mostostal Warszawa Buy Target price PLN 47.0Price (PLN) 24.5 ROCE 2010 19.5% 10 11e 12e 13e

ROE 2010 12.6% Sales (PLN mn) 2,570.4 2,945.7 3,050.5 2,799.1Mcap (EUR mn) 113 Net debt (EURmn, 10) -92 EBITDA margin 4.62% 1.82% 2.06% 3.57%Free float (%) 50% Gearing (2010) -62% EBIT margin 3.28% 0.59% 0.89% 2.30%Free float (EUR mn) 56 Sales CAGR 10-13e 0.8% Net prof it margin 2.56% 0.63% 0.83% 1.98%Shares outst. (mn) 20.0 EPS CAGR 10-13e -18.2% EPS (PLN) 3.12 0.76 1.20 2.63

Dividend/share (PLN) 0.55 0.51 0.58 0.97EV/sales 0.36 0.13 0.12 0.11EV/EBITDA 7.87 7.34 6.03 3.05P/E 19.72 30.00 20.33 9.31P/CE 17.63 n.m. 6.30 3.41P/BV 2.36 0.94 0.91 0.85Dividend yield 0.89% 2.24% 2.38% 3.97%EV/EBITDA rel. 0.8 1.3 1.2 0.7P/E rel. 1.2 2.9 2.4 1.2Performance 1M 3M 6M 12MAbsolute (PLN terms) 12.4% -13.1% -39.4% -62.6%Rel. to sector (EUR, ppt) 8.2 -15.4 -19.5 -44.9Rel. to universe (EUR, ppt) 10.4 -10.0 -25.7 -51.7

PBG S.A. Reduce Target price PLN 60.0Price (PLN) 85.0 ROCE 2010 9.1% 10 11e 12e 13eMcap (PLN mn) 1,215 ROE 2010 15.1% Sales (PLN mn) 2,740.3 3,282.8 4,293.4 4,067.4Mcap (EUR mn) 279 Net debt (EURmn, 10) 149 EBITDA margin 11.66% 9.16% 7.39% 6.41%Free float (%) 76% Gearing (2010) 32% EBIT margin 9.95% 7.60% 5.91% 4.79%Free float (EUR mn) 212 Sales CAGR 10-13e 12.1% Net prof it margin 7.98% 5.50% 3.66% 2.47%Shares outst. (mn) 14.3 EPS CAGR 10-13e -20.6% EPS (PLN) 15.69 13.14 9.57 6.05


Polimex Hold Target price PLN 3.3Price (PLN) 1.5 ROCE 2010 7.3% 10 11e 12e 13eMcap (PLN mn) 797 ROE 2010 8.2% Sales (PLN mn) 4,160.9 4,639.9 4,838.4 4,675.3Mcap (EUR mn) 183 Net debt (EURmn, 10) 172 EBITDA margin 7.22% 6.27% 5.85% 6.10%Free float (%) 100% Gearing (2010) 47% EBIT margin 5.11% 4.31% 3.97% 4.15%Free float (EUR mn) 183 Sales CAGR 10-13e -0.9% Net prof it margin 2.87% 2.63% 2.70% 3.00%Shares outst. (mn) 520.9 EPS CAGR 10-13e -5.4% EPS (PLN) 0.24 0.23 0.25 0.27

Dividend/share (PLN) 0.04 0.06 0.06 0.08EV/sales 0.67 0.28 0.28 0.26EV/EBITDA 9.31 4.54 4.72 4.28P/E 17.06 6.08 6.10 5.69P/CE 8.99 3.86 3.59 3.59P/BV 1.44 0.51 0.48 0.45Dividend yield 0.99% 4.12% 4.10% 5.27%EV/EBITDA rel. 0.9 0.8 0.9 1.0P/E rel. 1.0 0.6 0.7 0.7Performance 1M 3M 6M 12MAbsolute (PLN terms) 2.0% -39.0% -55.3% -62.7%Rel. to sector (EUR, ppt) -2.3 -39.4 -33.9 -45.0Rel. to universe (EUR, ppt) -0.1 -34.0 -40.1 -51.8

52 weeks

10

20

30

40

50

60

70

80

Mostos ta l W arszawaW IG (Rebased)DJ EURO STOXX Cons truc tion & Materia l (Rebased)

5 2 w eeks

50

100

150

200

250

300

P B G S .A.W IG (R ebas e d)D J E UR O S TO X X C ons truc tio n & M a te ria l (R e ba se d)

52 weeks

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

5,0

PolimexW IG 20 (Rebased)DJ EURO STOXX Construction & Materia l (Rebased)



STRABAG Hold Target price EUR 24.0Price (EUR) 22.9 ROCE 2010 5.3% 10 11e 12e 13e

ROE 2010 5.8% Sales (EUR mn) 12,381.5 13,583.6 13,704.5 13,721.0Mcap (EUR mn) 2,463 Net debt (EURmn, 10) -669 EBITDA margin 5.90% 5.21% 5.22% 5.25%Free float (%) 18% Gearing (2010) -21% EBIT margin 2.40% 2.37% 2.32% 2.30%Free float (EUR mn) 451 Sales CAGR 10-13e 2.3% Net prof it margin 1.51% 1.65% 1.55% 1.52%Shares outst. (mn) 107.4 EPS CAGR 10-13e 5.7% EPS (EUR) 1.53 1.69 1.78 1.77

Dividend/share (EUR) 0.55 0.60 0.65 0.65EV/sales 0.15 0.17 0.18 0.18EV/EBITDA 2.46 3.28 3.45 3.44P/E 13.37 13.55 12.88 12.95P/CE 3.99 4.47 4.05 4.01P/BV 0.76 0.79 0.76 0.74Dividend yield 2.68% 2.62% 2.83% 2.83%EV/EBITDA rel. 0.2 0.6 0.7 0.8P/E rel. 0.8 1.3 1.5 1.7Performance 1M 3M 6M 12MAbsolute (EUR terms) 3.2% 18.6% 2.3% 24.4%Rel. to sector (EUR, ppt) -1.9 22.7 27.9 45.7Rel. to universe (EUR, ppt) 0.3 28.1 21.7 38.9

Teraplast Under review Target price RONPrice (RON) 0.3 ROCE 2010 -0.6% 10 11e 12e 13eMcap (RON mn) 101 ROE 2010 -3.9% Sales (RON mn) 278.9 292.7 324.8 371.5Mcap (EUR mn) 23 Net debt (EURmn, 10) 17 EBITDA margin 5.18% 11.63% 12.16% 12.26%Free float (%) 45% Gearing (2010) 53% EBIT margin -0.08% 6.92% 7.53% 7.85%Free float (EUR mn) 10 Sales CAGR 10-13e 10.7% Net prof it margin -1.78% 5.56% 8.24% 6.63%Shares outst. (mn) 297.9 EPS CAGR 10-13e 42.2% EPS (RON) -0.02 0.05 0.09 0.08

Dividend/share (RON) 0.00 0.00 0.00 0.00EV/sales 0.69 0.54 0.49 0.40EV/EBITDA 13.39 4.60 4.06 3.24P/E nm 6.04 3.73 4.09P/CE 19.40 3.18 2.36 2.41P/BV 0.89 0.47 0.43 nmDividend yield 0.00% 0.00% 0.00% 0.00%EV/EBITDA rel. 1.3 0.8 0.8 0.8P/E rel. - 0.6 0.4 0.5Performance 1M 3M 6M 12MAbsolute (RON terms) -4.2% -25.3% -33.5% -22.7%Rel. to sector (EUR, ppt) -10.2 -23.2 -11.6 -2.5Rel. to universe (EUR, ppt) -8.0 -17.8 -17.8 -9.2

Trakcja Polska Under review Target price PLNPrice (PLN) 1.7 ROCE 2010 9.1% 10e 11e 12e 13eMcap (PLN mn) 271 ROE 2010 8.4% Sales (PLN mn) 482.1 2,236.2 2,688.5 Mcap (EUR mn) 62 Net debt (EURmn, 10) -35 EBITDA margin 9.33% 7.15% 6.99% Free float (%) 49% Gearing (2010) -34% EBIT margin 6.97% 5.61% 5.47%Free float (EUR mn) 31 Sales CAGR 10-13e #WERT! Net prof it margin 6.69% 3.53% 3.45%Shares outst. (mn) 160.1 EPS CAGR 10-13e #WERT! EPS (PLN) 0.20 0.37 0.40

Dividend/share (PLN) 0.00 0.00 0.00 EV/sales 0.23 0.36 0.28 EV/EBITDA 2.44 4.98 4.03P/E 7.70 4.27 4.22P/CE 6.16 2.67 2.81P/BV 0.61 0.48 0.43 Dividend yield 0.00% 0.00% 0.00% EV/EBITDA rel. 0.2 0.9 0.8 #WERT!P/E rel. 0.5 0.4 0.5 #WERT!Performance 1M 3M 6M 12MAbsolute (PLN terms) 18.2% -29.6% -52.1% -65.5%Rel. to sector (EUR, ppt) 14.0 -30.6 -31.1 -47.6Rel. to universe (EUR, ppt) 16.3 -25.2 -37.3 -54.3

52 weeks

1,01,52,02,53,03,54,04,55,05,56,0

Trakc ja Po lskaW IG (Rebas ed)DJ EURO STO XX Construction & Ma teria l (Re ba se d)

5 2 w e eks

1 2

1 4

1 6

1 8

2 0

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2 6

S TR AB AGATX (R e ba s ed )D J E URO S TOX X C o ns truc tio n & M a te ria l (R eba se d)

52 weeks

0,30

0,35

0,40

0,45

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0,55

0,60

Tera plas t D J EURO STO XX Chemicals (Re ba se d) BET (Rebas ed)



Wienerberger Accumulate Target price EUR 16.5Price (EUR) 8.8 ROCE 2010 0.1% 10 11e 12e 13eMcap (EUR mn) 1,038 ROE 2010 -3.3% Sales (EUR mn) 1,744.8 1,991.5 2,179.3 2,369.6Mcap (EUR mn) 1,038 Net debt (EURmn, 10) 474 EBITDA margin 12.06% 15.63% 17.06% 18.69%Free f loat (%) 90% Gearing (2010) 19% EBIT margin 0.61% 5.76% 8.04% 10.06%Free f loat (EUR mn) 934 Sales CAGR 10-13e 6.9% Net prof it margin -2.00% 3.70% 5.96% 7.71%Shares outst. (mn) 117.4 EPS CAGR 10-13e #ZAHL! EPS (EUR) -0.57 0.35 0.82 1.26

Dividend/share (EUR) 0.10 0.25 0.50 0.70EV/sales 1.52 1.00 0.89 0.80EV/EBITDA 12.57 6.39 5.23 4.26P/E nm 25.62 10.82 7.01P/CE 11.68 4.33 3.47 2.89P/BV 0.83 0.50 0.49 0.47Dividend yield 0.70% 2.83% 5.65% 7.92%EV/EBITDA rel. 1.3 1.1 1.0 1.0P/E rel. - 2.5 1.3 0.9Performance 1M 3M 6M 12MAbsolute (EUR terms) 3.7% -13.7% -40.2% -23.9%Rel. to sector (EUR, ppt) -1.4 -9.5 -14.6 -2.6Rel. to universe (EUR, ppt) 0.8 -4.1 -20.8 -9.4

52 weeks

789

1011121314151617

W ienerbergerATX (Rebased)DJ EURO STOXX Construction & Material (Rebased)



Sector Insight Food & Beverages

– Anadolu Efes takes over SABMiller's beer operations in Russia and Ukraine – Sojaprotein sales should come in slightly below our expectations – Atlantic Grupa’s 1-3Q11 results broadly matched our estimates – Podravka’s 1-3Q11 top line met expectations, but its net result was well ahead

Anadolu Efes has signed an MoU with SABMiller to cooperate in Turkey, the CIS, Central Asia and Middle Eastern regions. Accordingly, SABMiller is to transfer its beer operations in Russia and Ukraine to Anadolu Efes in return for a 24% stake in Anadolu Efes. The total value of these operations is announced to be USD 1.9bn. Anadolu Efes is to increase its paid-in capital through a rights issue (142.1mn shares) with restricted pre-emptive rights. Thereafter, new shares will be transferred to SABMiller. By our calculations, the shares to be transferred are valued at USD 13.37 per share. Following the transaction, SABMiller will hold a 24% stake in Anadolu Efes, while the free float will decline to 33.2% from 43.7%. SABMiller will be represented on the Anadolu Efes board; however, the management weight of Anadolu Group in Anadolu Efes will not change.

Sojaprotein sales should come in slightly below our expectations, mostly due to weaker demand for soy meal. Consequently, the operating results will be weaker. However, thanks to restructured debt and the favorable movement of the domestic currency vs. the EUR, we expect the bottom line to be better than expected. This supports our positive stance towards the company and we stick to our Buy recommendation (issued on September 29).

Atlantic Grupa presented its 1-3Q11 report last month. Sales jumped 104.8% y/y to HRK 3,450.2mn, EBITDA surged 102.2% y/y to HRK 402.0mn, operating profit increased 53.5% y/y to HRK 248.6mn and net profit after minorities contracted 66.5% y/y to HRK 33.3mn. Excluding the one-offs from the 1-3Q10 figures (namely the boost to profit from the gain on the sale of Neva’s former facility in Tuskanova of HRK 48.6mn, HRK 9.1mn positive forex impact and HRK 21.6mn transaction costs related to the acquisition of Droga Kolinska), as well as from 1-3Q11 (HRK 4.0mn transaction costs related to the Droga Kolinska acquisition and HRK 12.0mn gain from the sale of a 13% stake in RTL Hrvatska), operating profit growth would have reached 91.0% y/y and EBITDA would have climbed 142.0% y/y. As expected, the Droga Kolinska acquisition effect was the most decisive factor behind the stellar top line tempo. The 1-3Q11 report confirmed that the integration of Droga Kolinska remains the key task for Atlantic Grupa’s management. Unfortunately, the high commodity prices and challenging macroeconomic developments keep compromising the results. The company confirmed its 2011 guidance (sales of HRK 4,650mn, EBITDA of HRK 527mn and EBIT of HRK 319mn), with its major parameters still evidencing that 2011 should be viewed as a transitional year, with more synergy effects to gradually kick in and bolster Atlantic Grupa’s results in the coming periods. As the 1-3Q11 results were broadly in line with our forecasts, we do not feel any need to revise them for the time being, while carefully watching the commodity price developments along with the changing macroeconomic picture. We continue to believe that the stock’s currently depressed price levels are inviting, in particular from the long-term perspective, and we stick to our Accumulate call on Atlantic Grupa.

Although Podravka’s domestic sales tempo remained at a subdued 1% y/y (to HRK 1,288.6mn), fueled by exports, Podravka’s total sales advanced a solid 3.7% y/y to HRK 2,690.3mn in 1-3Q11. The company kept its operating costs well under control, with their tempo lagging behind the top line growth. While marketing expenses expanded somewhat faster (to boost sales), the cut in distribution costs (down 4% y/y) more than offset this rise, resulting in a mere 0.5% y/y increase in total selling & distribution costs in 1-3Q11. On top of that, as shown already in the 1H11 results, these efforts were complemented by the favorable impact of non-recurring items (most importantly, the income from insurance recoveries of HRK 23.7mn). Consequently, operating profit jumped 21.5% y/y to HRK 193.5mn in 1-3Q11. Although the financial result deteriorated somewhat and the effective tax rate was higher y/y in 1-3Q11, reflecting the bold move on the operating line, Podravka’s 1-3Q11 net profit surged 22.0% y/y to HRK 100.4mn. Podravka’s sales were fully in line with our target of HRK 2,690.2mn. Thanks to strict cost control, including cost optimization in the distribution area, coupled with better gross margin profitability, the actual EBIT result was 18.7% above our target. The somewhat weaker financial result, along with the slightly higher effective tax rate, sent the positive difference between the reported net profit and our forecast to 14.8%. The reported figures point to the possibility of increasing our estimates, but we will wait until a final solution is found in the OTP case before we touch our forecasts. (As the company announced, it might have to account in the 2011 results for one



more negative item linked to the past affairs: HRK 20mn provisioning in the OTP loan case [already incorporated into our projections], should another solution to this issue not be found in the meantime.) In summary, we stick to our Accumulate recommendation on the stock.




Agrana EUR 1,178.6 8.6% 9.3% 11.7% 9.5% 9.0% 9.5% 10.6% 9.5% 1.2% -3.5% 6.4% 16.9%Albalact RON 29.8 8.0% 11.4% 16.2% 8.7% 9.6% 10.3% 16.1% -11.5% -15.4% -24.8%Astarta Holding NV EUR 358.8 48.9% 27.7% 32.5% 30.7% 45.9% 38.2% 30.9% 29.2% -5.9% -36.0% -26.6% -26.7%Atlantic Grupa HRK 225.1 9.1% 4.6% 6.6% 8.8% 9.6% 11.2% 11.9% 12.6% -4.4% -26.0% -33.1% -40.4%Colian (Jutrzenka) PLN 85.6 6% 4.5% 4.9% 4.9% 9.7% 7.8% 8.7% 8.7% 18.6% -14.6% -34.7% -35.3%Podravka HRK 180.9 5.5% 6.2% 7.2% 8.6% 10.2% 10.5% 11.0% 11.8% 0.2% -21.3% -22.1% -11.8%Sojaprotein AD RSD 80.9 7.2% 11.5% 12.5% 12.9% 12.5% 13.5% 18.1% 17.7% 1.3% -24.1% -19.1% 13.4%Median - - 8% 8% 9% 9% 10% 10% 11% 12% - - - -Remy Cointreau S.A. EUR - 2,978 10.0% 12.5% 13.4% 14.0% 23.3% 23.7% 24.7% 23.5% 15.2% 0.4% 8.7% 17.1%Finsbury Food Group PGBP - 15 7.7% 8.1% 8.3% 0.0% 0.0% 0.0% 0.0% 0.6% 7.1% 0.4% 9.0%Donegal Creameries PLEUR - 33 8.7% 10.8% 10.0% 7.5% 8.7% 0.0% 0.0% 2.5% -13.4% -18.8% -27.8%Nestle S.A. CHF - 138,610 17.5% 16.7% 16.6% 17.3% 15.0% 20.6% 20.7% 20.2% 1.8% -6.0% -1.0% 6.4%Kraft Foods Inc. USD - 45,981 9.7% 10.5% 11.0% 11.4% 17.7% 17.7% 18.3% 19.0% 4.5% 8.5% 14.1% 15.6%Rieber & Son ASA NOK - 389 15.1% 12.3% 18.6% 18.1% 12.0% 14.1% 14.2% 0.0% 0.2% -1.3% -14.4% 11.6%Laurent-Perrier EUR - 416 5.7% 7.3% 8.3% 7.7% 21.5% 22.1% 22.4% 0.0% -2.0% -24.6% -18.5% -22.2%Median Total - 191,682 10.0% 11.4% 12.1% 13.0% 17.7% 20.6% 21.5% 21.9% - - - -EuroStoxx Food & Beverages

230,221 14.3% 13.9% 14.2% 14.5% 17% 16% 16% 15% 3.4% -2.0% -4.6% 6.3%

CEE to Peer, Prem/Disc - -17% -32% -22% -33% -46% -51% -50% -46% - - - -


2010 2011e 2012e 2013e 2010 2011e 2012e 2013e 2010 2011e 2012e 2013eAgrana 14.1 13.3 10.3 11.8 11.8 6.6 7.1 6.0 6.5 1.2 1.2 1.2Albalact 17.7 11.5 7.4 6.9 5.4 4.2 1.4 1.3 1.2Astarta Holding NV 7.2 5.5 3.3 2.4 2.4 8.7 7.4 4.3 3.1 2.8 1.4 0.9Atlantic Grupa 23.5 25.7 17.0 12.1 12.1 9.2 6.2 5.3 4.5 1.9 1.2 1.1Colian (Jutrzenka) 17.8 13.3 12.3 12.2 12.2 9.5 7.4 7.6 7.5 0.9 0.6 0.6Podravka 19.2 13.1 10.6 8.3 8.3 6.8 4.9 4.5 3.9 1.0 0.8 0.7Sojaprotein AD 9.7 5.9 4.7 4.2 4.2 7.5 4.7 3.7 3.4 0.7 0.6 0.5Median CEE 17.8 13.2 10.5 11.8 11.8 7.8 6.6 4.9 4.5 1.3 1.2 1.0Remy Cointreau S.A. 27.5 21.6 18.6 16.7 22.4 20.9 16.4 14.6 2.7 2.7 2.5 2.3Finsbury Food Group PLC 3.5 3.5 3.2 2.6 2.9 0.3 0.3 0.3Donegal Creameries PLC 10.3 5.9 4.6 4.4 12.7 6.1 0.5 0.5 0.4Nestle S.A. 16.3 16.7 15.6 14.4 12.9 13.8 12.7 11.8 2.9 2.8 2.6 2.5Kraft Foods Inc. 17.3 15.7 14.1 12.8 16.0 11.5 10.4 9.5 1.7 1.6 1.6 1.5Rieber & Son ASA 10.9 14.0 11.1 10.5 6.6 7.3 6.7 6.3 1.6 1.7 2.1 1.9Laurent-Perrier 28.3 20.9 17.4 17.4 20.0 17.9 15.9 14.5 1.6 1.5 1.4 1.3Median Total 16.8 16.2 14.8 14.4 16.9 13.2 11.6 12.3 1.7 1.7 1.8 1.9EuroStoxx Food & Beverages 13.4 14.0 12.7 11.3 8.3 9.1 8.6 8.6 2.0 1.9 1.8 1.6

CEE to Peer, Prem/Disc 6% -19% -29% -18% -31% -41% -43% -60% 171% -25% -35% -46%

2010 2011e 2012e 2013e 2010 2011e 2012e 2013eAgrana 1.1 0.8 0.7 0.7 0.6 8.5 7.6 6.3Albalact 0.7 0.6 0.5 7.6 6.0 4.6Astarta Holding NV 0.6 3.1 2.0 1.3 1.0 6.9 5.3 4.3Atlantic Grupa 1.0 2.2 0.9 0.9 0.8 23.4 8.0 7.2Colian (Jutrzenka) 0.6 0.9 0.6 0.6 0.6 9.8 7.4 7.0Podravka 0.7 0.9 0.7 0.7 0.6 8.3 6.8 6.1Sojaprotein AD 0.5 0.8 0.9 0.8 0.8 6.1 6.3 4.6Median CEE 0.7 0.9 0.7 0.7 0.6 8.4 7.1 6.2Remy Cointreau S.A. 3.2 3.0 2.8 2.6 16.2 14.1 12.6 11.1Finsbury Food Group PLC 0.3 0.1 0.1 4.4 0.9 1.1Donegal Creameries PLC 0.4 0.4 0.4 5.8 4.5 4.3Nestle S.A. 1.8 2.2 2.0 1.9 11.2 11.3 10.5 9.8Kraft Foods Inc. 1.7 1.6 1.5 1.5 10.2 10.0 9.0 8.3Rieber & Son ASA 0.9 0.9 0.9 0.9 6.2 7.0 6.6 6.2Laurent-Perrier 3.9 3.3 3.1 3.1 20.1 16.8 14.9 14.1Median Total 1.8 1.9 1.8 1.9 11.2 10.6 9.5 9.0EuroStoxx Food & Beverages 1.4 1.2 1.1 1.0 8.9 7.9 7.1 6.4

CEE to Peer, Prem/Disc -61% -53% -60% -65% -94% -21% -25% -31%

P/E P/CE P/BV

EV/Sales EV/EBITDA




Agrana Hold Target price EUR 88.0Price (EUR) 83.0 ROCE 2010 5.3% 10 11e 12e 13e

ROE 2010 8.6% Sales (EUR mn) 1,989.2 2,165.9 2,448.8 2,500.0Mcap (EUR mn) 1,179 Net debt (EURmn, 10) 420.8 EBITDA margin 9.01% 9.47% 10.56% 9.52%Free float (%) 9.5% Gearing (2010) 47% EBIT margin 4.57% 5.85% 7.27% 6.26%Free float (EUR mn) 112 Sales CAGR 10-13e 5.4% Net prof it margin 3.82% 3.96% 4.74% 4.18%Shares outst. (mn) 14.2 EPS CAGR 10-13e #ZAHL! EPS (EUR) 5.08 5.95 8.07 7.06


Performance 1M 3M 6M 12MAbsolute (EUR terms) 1.2% -3.5% 6.4% 6.4%Rel. to sector (EUR, ppt) 1.4 11.1 15.7 22.0Rel. to universe (EUR, ppt) -1.7 6.0 25.8 31.4

Albalact Buy Target price RON 0.328Price (RON) 0.2 ROCE 2010 6.1% 10e 11e 12e 13eMcap (RON mn) 130 ROE 2010 8.0% Sales (RON mn) 252.0 285.4 350.5Mcap (EUR mn) 30 Net debt (EURmn, 10) 9.8 EBITDA margin 8.68% 9.57% 10.27%Free float (%) 31.8% Gearing (2010) 45% EBIT margin 4.26% 5.33% 6.53%Free float (EUR mn) 9 Sales CAGR 10-13e #WERT! Net prof it margin 2.82% 3.85% 4.99% Shares outst. (mn) 652.7 EPS CAGR 10-13e #WERT! EPS (RON) 0.01 0.02 0.03

Dividend/share (RON) 0.00 0.00 0.01EV/sales 0.66 0.57 0.48EV/EBITDA 7.63 6.00 4.64P/E 17.66 11.45 7.42 P/CE 6.89 5.45 4.24P/BV 1.37 1.25 1.16Dividend yield 0.00% 0.00% 6.74%EV/EBITDA rel. 11.9 0.7 0.7 #WERT!P/E rel. 1.0 0.9 0.7 #WERT!

Performance 1M 3M 6M 12MAbsolute (RON terms) 17.1% -8.9% -10.4% -10.4%Rel. to sector (EUR, ppt) 16.3 3.1 -6.1 -19.7Rel. to universe (EUR, ppt) 13.1 -1.9 4.1 -10.3

Astarta Holding NV Buy Target price EUR 139.2Price (EUR) 62.5 ROCE 2010 33.9% 10 11e 12e 13eMcap (EUR mn) 359 ROE 2010 48.9% Sales (EUR mn) 219.3 251.6 495.2 752.3Mcap (EUR mn) 359 Net debt (EURmn, 10) 110.4 EBITDA margin 45.92% 38.18% 30.92% 29.24%Free float (%) 31.0% Gearing (2010) 53% EBIT margin 39.90% 31.38% 26.00% 25.00%Free float (EUR mn) 111 Sales CAGR 10-13e 55.6% Net prof it margin 36.53% 26.04% 21.73% 19.67%Shares outst. (mn) 25.0 EPS CAGR 10-13e 49.4% EPS (EUR) 3.20 2.62 4.31 5.92



52 weeks

45505560657075808590

AgranaATX (Rebased)DJ EURO STOXX Food & Beverage (Rebased)

52 weeks

1,41,61,82,02,22,42,62,83,03,23,4

Albaraka TurkISE 100 (Rebased)DJ EURO STOXX Banks (Rebased)

52 weeks

60

70

80

90

100

110

120

Astarta Holding NVDJ EURO STOXX Food & Beverage (Rebased)W IG food (Rebased)



Atlantic Grupa Accumulate Target price HRK 720.0Price (HRK) 505.9 ROCE 2010 5.6% 10 11e 12e 13eMcap (HRK mn) 1,687 ROE 2010 9.1% Sales (HRK mn) 2,268.6 4,654.6 4,842.9 5,053.9Mcap (EUR mn) 225 Net debt (EURmn, 10) 333.1 EBITDA margin 9.56% 11.20% 11.86% 12.57%Free f loat (%) 27.0% Gearing (2010) 169.0% EBIT margin 7.17% 6.83% 7.44% 8.11%Free f loat (EUR mn) 61 Sales CAGR 10-13e 23.1% Net prof it margin 4.64% 1.67% 2.32% 3.01%Shares outst. (mn) 3.3 EPS CAGR 10-13e 4.9% EPS (HRK) 33.84 19.52 29.82 41.70

Dividend/share (HRK) 0.00 0.00 8.00 10.00EV/sales 2.23 0.90 0.85 0.80EV/EBITDA 23.36 8.01 7.19 6.37P/E 23.48 25.67 16.97 12.13P/CE 9.20 6.17 5.27 4.54P/BV 1.93 1.15 1.10 1.03Dividend yield 0.00% 0.00% 1.58% 1.98%EV/EBITDA rel. 36.3 1.0 1.0 1.0P/E rel. 1.3 1.9 1.6 1.0

Performance 1M 3M 6M 12MAbsolute (HRK terms) 15.0% -31.8% -48.6% -48.6%Rel. to sector (EUR, ppt) -4.2 -11.4 -23.8 -35.3Rel. to universe (EUR, ppt) -7.3 -16.5 -13.6 -25.9

Colian (Jutrzenka) Buy Target price PLN 2.7Price (PLN) 2.6 ROCE 2010 4.5% 10 11e 12e 13eMcap (PLN mn) 373 ROE 2010 5.5% Sales (PLN mn) 621.6 632.6 630.2 630.2Mcap (EUR mn) 86 Net debt (EURmn, 10) 8 EBITDA margin 9.65% 7.84% 8.68% 8.68%Free f loat (%) 36.7% Gearing (2010) 5% EBIT margin 5.69% 4.72% 5.59% 5.59%Free f loat (EUR mn) 31 Sales CAGR 10-13e 2.1% Net prof it margin 5.03% 4.14% 4.79% 4.84%Shares outst. (mn) 143.4 EPS CAGR 10-13e -2.4% EPS (PLN) 0.22 0.18 0.21 0.21


Performance 1M 3M 6M 12MAbsolute (PLN terms) 17.6% -7.8% -27.8% -27.8%Rel. to sector (EUR, ppt) 18.8 0.0 -25.4 -30.2Rel. to universe (EUR, ppt) 15.7 -5.0 -15.2 -20.8

Podravka Accumulate Target price HRK 312.5Price (HRK) 250.0 ROCE 2010 5.1% 10 11e 12e 13eMcap (HRK mn) 1,355 ROE 2010 5.5% Sales (HRK mn) 3,522.3 3,628.5 3,730.5 3,885.6Mcap (EUR mn) 181 Net debt (EURmn, 10) 184 EBITDA margin 10.22% 10.51% 11.05% 11.78%Free f loat (%) 70.3% Gearing (2010) 83% EBIT margin 5.82% 5.85% 6.35% 7.10%Free f loat (EUR mn) 127 Sales CAGR 10-13e 2.0% Net prof it margin 2.39% 2.83% 3.41% 4.21%Shares outst. (mn) 5.4 EPS CAGR 10-13e #ZAHL! EPS (HRK) 15.54 18.96 23.53 30.19


Performance 1M 3M 6M 12MAbsolute (HRK terms) 0.0% -20.8% -20.9% -20.9%Rel. to sector (EUR, ppt) 0.4 -6.7 -12.8 -6.7Rel. to universe (EUR, ppt) -2.8 -11.7 -2.6 2.7

52 weeks

240250260270280290300310320330340350

PodravkaCROBEX (Rebased)DJ EURO STOXX Food & Beverage (Rebased)

52 weeks

400

500

600

700

800

900

1.000

1.100

Atlantic GrupaCROBEX (Rebased)DJ EURO STOXX Food & Beverage (Rebased)

52 weeks

2,02,22,42,62,83,03,23,43,63,84,0

Colian (Jutrzenka)W IG (Rebased)DJ EURO STOXX Food & Beverage (Rebased)



Sojaprotein AD Buy Target price RSD 723.0Price (RSD) 553.0 ROCE 2010 4.9% 10 11e 12e 13eMcap (RSD mn) 8,237 ROE 2010 7.2% Sales (RSD mn) 16,806.7 16,108.3 17,126.9 17,887.6Mcap (EUR mn) 81 Net debt (EURmn, 10) 48 EBITDA margin 12.51% 13.47% 18.13% 17.68%Free f loat (%) 37.1% Gearing (2010) 43% EBIT margin 11.03% 11.59% 15.59% 15.20%Free f loat (EUR mn) 30 Sales CAGR 10-13e -0.5% Net prof it margin 5.04% 8.95% 10.71% 11.43%Shares outst. (mn) 14.9 EPS CAGR 10-13e 31.7% EPS (RSD) 56.11 94.41 118.88 132.48

Dividend/share (RSD) 0.00 0.00 0.00 42.83EV/sales 0.76 0.85 0.83 0.83EV/EBITDA 6.11 6.34 4.59 4.67P/E 9.73 5.85 4.65 4.17P/CE 7.46 4.74 3.73 3.40P/BV 0.71 0.62 0.55 0.53Dividend yield 0.00% 0.00% 0.00% 7.75%EV/EBITDA rel. 9.5 0.8 0.6 0.8P/E rel. 0.5 0.4 0.4 0.4

Performance 1M 3M 6M 12MAbsolute (RSD terms) 1.5% -24.2% -17.3% -17.3%Rel. to sector (EUR, ppt) 1.5 -9.5 -9.8 18.4Rel. to universe (EUR, ppt) -1.6 -14.6 0.3 27.9

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S ojaprote in ADB ELEX 15 (Rebased)DJ STOXX Food & Bev erage (TR) (Rebased)



Sector Insight Healthcare

– All major companies scheduled to publish their 3Q results in November – Y/y high comparative base envisaged to put brake on both Richter and Egis’ progress in 3Q – Bioton’s 3Q bottom line is expected to remain in the red – Krka tops our recommendation list

The stock prices of major CEE pharmas witnessed a fragile recovery last month, with share price appreciation in most cases limited to single-digit terms. With its share price remaining flat, Poland’s Bioton was among the worst performer. Not only did the Actavis deal see more delays, but the recent purchase of veterinary manufacturer Biolek (with the associated capital increase) raised additional worries among investors, lacking more details about the benefits of the transaction.

Richter: High comparative base speaks against y/y progress in 3Q11. Richter is expected to announce its 3Q11 results in the second week of November 2011 (no precise date is known yet). We forecast 3Q11 net profit of HUF 19,825mn on sales of HUF 71,387mn (consolidated and according to IFRS standards). Reflecting the renewed pricing pressures, we expect Richter’s consolidated domestic sales nearly flat y/y at HUF 8.3bn in 3Q11. Although the situation in the Russian market is stable and the outlook remains positive, with respect to the extremely high comparative base (boosted by pre-shipments associated with changing regulations for product labeling), sales in 3Q11 are envisaged to fall 27.1% y/y to EUR 69.8mn in 3Q11. On the other hand, fueled by the first-time consolidation effect of the Grünenthal oral contraceptives portfolio acquisition, sales in the EU are envisaged to advance a robust 25.7% y/y to EUR 97.3mn in 3Q11. In total, we anticipate that Richter’s consolidated sales will decline 9.0% y/y to HUF 71.4bn in 3Q11. We assume that the y/y shrinking stake of high-margin Russian sales will be only partly counterbalanced by the slowdown in low-margin wholesale activities in Romania (still plagued with receivables collection problems) and project the gross margin to deteriorate to 61.1%. Furthermore, the expansion of sales and marketing activities in Western Europe (including amortization of marketing and patent rights acquired from Grünenthal) continues to lift the relevant costs. All told, despite the assumed bolstering impact from accounting for the Polpharma arbitration case proceedings (USD 40mn plus interest), we anticipate the operating line to head south in 3Q11. We project operating profit sliding 8.5% y/y to HUF 20,955mn. The weakening of the forint vs. the Swiss franc at the end of the period (with a negative reassessment related to the deferred purchase price of PregLem) is envisaged to largely erase the gains from the impact of the weaker forint on the receivables/payables balance. In summary, we project 3Q11 consolidated net profit advancing 2.2% y/y to HUF 19,825mn.

Egis’ 4Q10/11 operating profit to contract, reflecting less favorable sales mix, end of year provisioning. Egis is scheduled to publish its 4Q10/11 report on November 9, 2011, after market close. We expect net profit of HUF 2,827mn on sales of HUF 32,996mn for July-September 2011, the fourth quarter of Egis’ fiscal year 2010/11. Reflecting the renewed pricing pressures towards the end of the period, to be partly offset by the contribution from new introductions, we project Egis’ domestic sales slipping 2.3% y/y to HUF 8.2bn in 4Q10/11. We forecast Egis’ sales to Western markets to advance 15.2% y/y to EUR 14.5mn in 4Q10/11, out of which bulk chemicals are expected to contribute EUR 10.1mn. On the other hand, both the high comparative base effect (helped by pre-shipments) and the ruble weakening are set to dampen the y/y progress in Russia. We estimate Egis’ Russian sales increasing 8.8% y/y to EUR 27.6mn in 4Q10/11. In summary, we envisage Egis’ sales up a mere 1.8% y/y to HUF 32,996mn in 4Q10/11. The renewed home market regulatory burden, along with end of the year provisioning and write-offs, are anticipated to put pressure on the operating line. Reflecting the latest change in accounting for the local corporate tax, we assume that 4Q10/11 EBIT will arrive at HUF 2,796mn, down by 39.1% y/y. (Excluding the accounting change, we forecast 4Q10/11 operating profit contracting 42.3% y/y to HUF 2,386mn.) Although the financial result is foreseen to improve significantly y/y, given the operating profitability heading sharply south, we project for 4Q10/11 only a modest 1.1% y/y rise in Egis’ net profit to HUF 2,827mn.

Despite help from GSK milestone, Bioton’s 3Q11 results to be painted in red again. Bioton is scheduled to announce its 3Q11 results on November 14, 2011. We expect a 3Q11 net loss of PLN 8.4mn on sales of PLN 84.0mn (consolidated and according to IFRS standards). Reflecting the support from the GSK deal related milestone, as well as solid performance in the insulin segment (including first deliveries within the GSK contract to Russia), Bioton’s sales are envisaged to advance a solid 34% y/y to PLN 84.0mn in 3Q11, sending the 1-3Q11 total



sales to PLN 220.2mn, up 17% y/y. As overhead costs remain relatively high and underlying gross profitability low, despite the help from the GSK milestone proceeds (USD 2.5mn), we anticipate the operating line to stay in red territory. We forecast the operating loss narrowing y/y to PLN 7.8mn in 3Q11, translating into an operating loss of PLN 40.7mn in 1-3Q11. The financial result is foreseen to weigh further on the company’s bottom line, sending the net loss to PLN 8.4mn in 3Q11 (and to PLN 42.7mn in 1-3Q11). Finally, we want to emphasize that our forecasts are provisional and subject to fine-tuning, should more information become available ahead of Bioton’s reporting date.

Krka remains our top pick, Richter keeps its appeal. The coming month is poised to see buoyant reports flowing from the CEE pharma sector. As before, we assume that Bioton’s 1-3Q11 report will be sidelined by investors and the share price developments will be dictated by the news flow on the prepared deal with Actavis, as well as the Biolek acquisition’s impact. While the recent weakening of the Hungarian forint vs. the EUR bodes well for Richter and Egis’ results in the coming periods, with sales invoicing in Russia switching to the ruble (and Richter’s deferred purchase price for the Swiss PregLem, adding the HUF/Swiss franc exchange rate into the equation), the impact is not so straightforwardly positive as it used to be. Furthermore, both Richter and Egis’ valuations are also coming under pressure from the shaky macroeconomic picture in their home country and increased risk aversion of investors, mirrored in the upward move of Hungarian government bond yields. Nonetheless, we believe that the home pharma market regulatory pressures are more than adequately priced in and both Richter and Egis offer solid long-term upside potential. With respect to Richter’s well defined and executed strategy, as well as more interesting triggers in the coming months (in particular, news from its R&D cooperation program with Forest Laboratories), we continue to prefer Richter (Buy) over Egis (Accumulate). In our opinion, Krka (Buy) maintains its competitive edge, as demonstrated by its superb profitability parameters achieved in 1H11. This year, Krka’s share price performance has had solid support from the accumulation of treasury shares, part of the company’s preparation for foreign listing, with more details on the issue promised by the company to be delivered in November 2011. With our target price (of EUR 84.5) pointing to extensive room for appreciation, Krka remains our top pick and we continue to believe that its return to its traditional premium over its regional peers is fully warranted.




Antibiotice RON 42.9 5.0% 9.4% 9.7% 9.2% 17.8% 18.4% 18.8% 18.2% 2.9% -19.2% -19.5% -12.2%Biofarm RON 51.6 10% 13.7% 13.0% 13.2% 26.0% 24.8% 27.0% 26.9% 8.7% -0.2% -7.8% 7.0%Bioton PLN 105.5 11.3% -4.6% 0.6% 2.2% 30% -3.8% 14.2% 19.8% 0.8% -32.6% -57.4% -59.9%Egis HUF 454.8 11.9% 9.7% 8.9% 8.6% 20% 19% 17.9% 18.1% 17.3% -13.8% -20.8% -26.9%Farmacol PLN 119.3 10.0% 11.0% 9.8% 9.5% 1.9% 2.3% 2.3% 2.2% 2.9% -22.8% -38.3% -52.1%Intercell EUR 93.4 -105% -42.2% -24.6% -15.2% -712% -87.0% -18.1% -2.0% -1.5% -23.5% -68.7% -88.7%Krka EUR 1,846.1 17.4% 15.8% 15.5% 15.2% 29.0% 30.5% 30.8% 31.2% 2.2% -13.4% -11.5% -16.7%Neuca PLN 69.0 17.3% 18.0% 16.8% 15.4% 1.4% 1.6% 1.7% 1.6% -4.4% -3.7% -23.0% -18.4%PGF PLN 90.9 16.6% 12.0% 9.6% 10.2% 2.4% 1.9% 1.8% 1.9% 10.8% -27.0% -46.7% -40.3%Richter Gedeon HUF 2,159.0 15.9% 11.6% 9.8% 10.6% 30.4% 26.2% 23.8% 24.6% 13.1% -15.0% -17.0% -32.4%Median - - 12% 11% 10% 10% 19% 10% 16% 18% - - - -Teva Pharmaceutical IndusILS - 27,808 18.6% 18.1% 17.8% 16.6% 36.4% 31.5% 31.5% 33.1% 4.9% 0.2% -6.6% -19.9%Mylan Inc. USD 5,862 15.1% 22.6% 22.8% 18.2% 25.7% 27.1% 28.3% 28.6% 12.7% -3.8% -15.8% -4.5%Watson Pharmaceuticals InUSD 6,098 12.9% 15.6% 16.8% 16.6% 23.5% 23.6% 25.1% 28.0% -2.0% 4.0% 13.6% 38.3%Stada Arzneimittel AG EUR 1,060 15.2% 15.6% 15.8% 16.2% 18.4% 19.6% 20.4% 20.7% 16.5% -26.3% -39.8% -18.1%Ranbaxy Laboratories Ltd. INR - 3,205 22.4% 18.0% 13.2% 11.8% 19.0% 15.8% 20.0% 13.5% -3.3% -13.0% 12.5% -21.5%Recordati S.p.A. EUR 1,266 18.8% 18.3% 17.9% 17.1% 25.0% 24.9% 24.3% 24.3% -6.1% -14.8% -15.8% -17.1%Dr. Reddy's Laboratories Lt INR - 4,110 23.9% 23.8% 22.5% 20.5% 20.9% 22.5% 22.4% 21.8% 8.5% -2.4% -4.9% -10.9%Median Total - 49,410 18.6% 18.1% 17.8% 16.6% 23.5% 23.6% 24.3% 24.3% - - - -EuroStoxx Healthcare 151,140 14.2% 14.0% 13.9% 13.9% 23% 22% 23% 23% 11.1% -7.3% -22.3% -12.1%CEE to Peer, Prem/Disc - -38% -38% -45% -41% -20% -56% -34% -25% - - - -


2010 2011e 2012e 2013e 2010 2011e 2012e 2013e 2010 2011e 2012e 2013eAntibiotice 19.7 8.9 7.9 7.6 9.6 7.7 4.9 4.6 0.9 0.8 0.7 0.7Biofarm 16.4 10.7 10.6 9.7 13.3 9.1 8.3 7.6 1.5 1.4 1.3 1.2Bioton 6.9 nm 67.8 17.5 5.2 n.m. 10.4 6.9 0.7 0.4 0.4 0.4Egis 10.3 8.6 9.0 8.8 6.8 5.2 5.5 5.3 1.2 0.8 0.8 0.7Farmacol 13.2 5.8 6.1 5.9 6.5 4.9 5.2 5.0 1.2 0.6 0.6 0.6Intercell nm nm nm nm n.m. n.m. n.m. n.m. 4.7 1.1 1.3 1.4Krka 13.0 10.4 9.5 8.6 8.8 7.0 6.5 5.8 2.1 1.6 1.4 1.2Neuca 9.1 6.4 6.3 6.0 5.7 4.2 4.3 4.2 1.5 1.1 1.0 0.9PGF 9.6 6.7 8.0 6.8 5.7 4.4 5.0 4.5 1.5 0.8 0.7 0.7Richter Gedeon 12.2 12.1 13.9 11.9 9.2 8.1 9.0 8.0 1.8 1.4 1.3 1.2Median CEE 12.2 8.8 9.0 8.6 6.8 6.1 5.5 5.3 1.5 1.0 0.9 0.8Teva Pharmaceutical Industrie 8.7 8.2 7.2 6.6 8.7 7.5 6.5 5.6 1.6 1.5 1.5 1.3Mylan Inc. 11.5 9.4 7.9 7.3 8.7 11.5 7.3 6.4 1.7 2.1 2.1 1.8Watson Pharmaceuticals Inc. 18.8 14.3 11.5 10.3 15.2 12.9 10.2 7.7 2.4 2.2 2.2 1.9Stada Arzneimittel AG 8.1 7.6 6.7 5.8 5.4 7.5 4.5 4.2 1.2 1.2 1.2 1.1Ranbaxy Laboratories Ltd. 15.3 18.5 20.8 20.1 10.4 19.2 11.6 14.7 3.4 3.3 3.3 2.7Recordati S.p .A. 11.6 10.6 10.1 9.1 9.3 8.9 8.3 7.8 2.2 1.9 1.9 1.8Dr. Reddy's Laboratories Ltd. 22.4 20.7 18.0 16.0 19.1 14.6 13.7 12.4 5.4 4.9 4.9 4.0Median Total 11.6 10.6 10.1 9.1 9.3 11.5 8.3 7.7 2.2 2.1 2.1 1.8EuroStoxx Healthcare 14.9 15.1 13.4 12.1 11.1 9.9 9.4 8.5 2.4 2.2 1.9 1.7CEE to Peer, Prem/Disc 4% -17% -11% -6% -27% -47% -34% -31% -33% -54% -58% -56%

P/E P/CE P/BV




2010 2011e 2012e 2013e 2010 2011e 2012e 2013eAntibiotice 1.3 1.1 1.0 0.8 7.1 5.9 5.1 4.6Biofarm 1.9 1.9 1.7 1.5 7.2 7.6 6.3 5.6Bioton 2.7 2.1 2.0 1.7 9.0 -54.8 13.9 8.6Egis 1.3 0.8 0.8 0.7 6.6 4.2 4.4 3.9Farmacol 0.2 0.1 0.1 0.1 11.0 5.0 4.7 4.6Intercell 15.3 2.7 2.1 1.5 -2.1 -3.1 -11.3 -77.1Krka 2.3 1.8 1.7 1.5 8.0 6.0 5.4 4.9Neuca 0.1 0.1 0.1 0.1 9.0 6.6 6.5 6.2PGF 0.2 0.2 0.2 0.1 9.4 7.9 8.7 7.9Richter Gedeon 2.7 1.8 1.8 1.6 8.8 7.0 7.6 6.5Median CEE 1.6 1.4 1.3 1.2 8.4 5.9 5.9 5.3Teva Pharmaceutical Industrie 4.0 3.4 2.7 2.1 12.1 9.4 8.6 6.6Mylan Inc. 2.1 2.6 2.1 1.7 8.6 10.0 7.6 6.0Watson Pharmaceuticals Inc. 2.0 2.1 2.1 1.6 8.5 9.0 8.7 6.6Stada Arzneimittel AG 1.5 1.4 1.3 1.2 8.3 7.9 6.8 5.9Ranbaxy Laboratories Ltd. 3.3 3.1 2.4 2.1 34.0 16.2 15.1 10.4Recordati S.p.A. 1.5 2.0 1.6 1.4 5.6 7.9 6.5 5.8Dr. Reddy's Laboratories Ltd. 2.9 4.0 3.2 2.7 14.6 19.1 14.1 11.9Median Total 2.1 2.6 2.1 1.7 8.6 9.4 8.6 6.6EuroStoxx Healthcare 2.1 2.3 2.2 2.0 8.7 8.0 7.2 6.5CEE to Peer, Prem/Disc -24% -43% -36% -32% -2% -37% -32% -20%

EV/Sales EV/EBITDA



Antibiotice Accumulate Target price RON 0.475Price (RON) 0.410 ROCE 2010 4.4% 10 11e 12e 13eMcap (RON mn) 187 ROE 2010 5.0% Sales (RON mn) 243.6 288.5 310.5 336.9Mcap (EUR mn) 43 Net debt (EURmn, 10) 15.5 EBITDA margin 17.77% 18.43% 18.84% 18.21%Free float (%) 37.0% Gearing (2010) 25% EBIT margin 12.41% 12.51% 13.11% 12.40%Free float (EUR mn) 16 Sales CAGR 10-13e 11.3% Net profit margin 5.09% 8.87% 9.21% 8.87%Shares outst. (mn) 454.9 EPS CAGR 10-13e 19.89% EPS (RON) 0.03 0.04 0.05 0.05

Dividend/share (RON) 0.02 0.02 0.02 0.02EV/sales 1.27 1.08 0.97 0.84EV/EBITDA 7.14 5.86 5.15 4.60P/E 19.71 8.90 7.92 7.58P/CE 9.65 7.69 4.88 4.58P/BV 0.95 0.81 0.73 0.67Dividend yield 3.65% 4.49% 5.05% 5.28%EV/EBITDA rel. 0.8 1.0 0.9 0.9P/E rel. 1.6 1.0 0.9 0.9Performance 1M 3M 6M 12MAbsolute (RON terms) 3.8% -16.8% -14.8% -11.0%Rel. to sector (EUR, ppt) -6.5 -9.5 -4.9 18.2Rel. to universe (EUR, ppt) 0.0 -9.6 -0.1 2.4

Biofarm Accumulate Target price RON 0.219Price (RON) 0.205 ROCE 2010 12.9% 10e 11e 12e 13eMcap (RON mn) 224 ROE 2010 9.7% Sales (RON mn) 82.3 97.1 105.4 114.2Mcap (EUR mn) 52 Net debt (EURmn, 10) -15.8 EBITDA margin 25.98% 24.76% 27.04% 26.95%Free float (%) 57.0% Gearing (2010) -46% EBIT margin 20.34% 19.72% 21.54% 21.21%Free float (EUR mn) 29 Sales CAGR 10-13e 14.2% Net profit margin 16.34% 20.85% 19.81% 19.82%Shares outst. (mn) 1,095 EPS CAGR 10-13e 4.09% EPS (RON) 0.01 0.02 0.02 0.02

Dividend/share (RON) 0.01 0.01 0.01 0.01EV/sales 1.87 1.88 1.70 1.52EV/EBITDA 7.22 7.60 6.30 5.64P/E 16.37 10.70 10.57 9.74P/CE 13.28 9.09 8.27 7.55P/BV 1.54 1.43 1.33 1.24Dividend yield 2.70% 4.21% 4.26% 4.62%EV/EBITDA rel. 0.9 1.3 1.1 1.1P/E rel. 1.3 1.2 1.2 1.1Performance 1M 3M 6M 12MAbsolute (RON terms) 9.6% 2.7% -2.3% 8.5%Rel. to sector (EUR, ppt) -0.7 9.5 6.8 37.4Rel. to universe (EUR, ppt) 5.8 9.4 11.7 21.5

Bioton Hold Target price PLN 0.100Price (PLN) 0.080 ROCE 2010 5.8% 10 11e 12e 13eMcap (PLN mn) 459 ROE 2010 11.3% Sales (PLN mn) 379 306 336 368Mcap (EUR mn) 105 Net debt (EURmn, 10) 36.4 EBITDA margin 30.50% -3.84% 14.22% 19.84%Free float (%) 70.4% Gearing (2010) 12% EBIT margin 20.43% -15.47% 3.04% 8.99%Free float (EUR mn) 74 Sales CAGR 10-13e 6.5% Net profit margin 21.11% -17.26% 1.14% 6.30%Shares outst. (mn) 5,740.8 EPS CAGR 10-13e #ZAHL! EPS (PLN) 0.02 -0.01 0.00 0.00

Dividend/share (PLN) 0.00 0.00 0.00 0.00EV/sales 2.73 2.11 1.98 1.71EV/EBITDA 8.96 nm 13.92 8.60P/E 6.88 nm 67.80 17.50P/CE 5.19 nm 10.35 6.94P/BV 0.74 0.41 0.40 0.39Dividend yield 0.00% 0.00% 0.00% 0.00%EV/EBITDA rel. 1.1 - 2.4 1.6P/E rel. 0.6 -. 7.5 2.0Performance 1M 3M 6M 12MAbsolute (PLN terms) 0.0% -27.3% -52.9% -55.6%Rel. to sector (EUR, ppt) -8.5 -22.9 -42.8 -29.5Rel. to universe (EUR, ppt) -2.1 -23.1 -38.0 -45.4

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Antibiotice BET (Rebased) DJ STOXX Health Care (Rebased)



Egis Accumulate Target price HUF 21,500Price (HUF) 17,800 ROCE 2010 12.3% 10 11e 12e 13eMcap (HUF mn) 138,586 ROE 2010 11.9% Sales (HUF mn) 118,915.0 128,862.0 134,713.1 141,731.8Mcap (EUR mn) 455 Net debt (EURmn, 10) -53.4 EBITDA margin 20.02% 19.12% 17.95% 18.10%Free float (%) 49.1% Gearing (2010) -10% EBIT margin 13.04% 12.03% 10.79% 10.90%Free float (EUR mn) 223 Sales CAGR 10-13e 5.1% Net profit margin 14.11% 11.14% 11.16% 11.16%Shares outst. (mn) 7.8 EPS CAGR 10-13e 3.56% EPS (HUF) 2,155.61 1,843.31 1,931.58 2,031.68

Dividend/share (HUF) 120.00 120.00 120.00 120.00EV/sales 1.32 0.81 0.79 0.70EV/EBITDA 6.61 4.24 4.42 3.89P/E 10.26 8.63 9.02 8.76P/CE 6.83 5.22 5.47 5.30P/BV 1.17 0.82 0.79 0.73Dividend yield 0.54% 0.75% 0.69% 0.67%EV/EBITDA rel. 0.8 0.7 0.8 0.7P/E rel. 0.8 1.0 1.0 1.0Performance 1M 3M 6M 12MAbsolute (HUF terms) 20.7% -3.8% -9.2% -18.3%Rel. to sector (EUR, ppt) 7.9 -4.1 -6.2 3.4Rel. to universe (EUR, ppt) 14.4 -4.3 -1.4 -12.4

Farmacol Hold Target price PLN 34.0Price (PLN) 22.5 ROCE 2010 7.7% 10 11e 12e 13eMcap (PLN mn) 519 ROE 2010 10.0% Sales (PLN mn) 5,101.5 5,048.1 4,906.8 5,054.0Mcap (EUR mn) 119 Net debt (EURmn, 10) 35 EBITDA margin 1.93% 2.30% 2.27% 2.22%Free float (%) 50.0% Gearing (2010) 18% EBIT margin 1.69% 2.01% 1.96% 1.93%Free float (EUR mn) 60 Sales CAGR 10-13e -0.4% Net profit margin 1.40% 1.68% 1.76% 1.76%Shares outst. (mn) 23.1 EPS CAGR 10-13e 3.68% EPS (PLN) 3.05 3.64 3.70 3.81

Dividend/share (PLN) 0.00 0.00 2.97 3.05EV/sales 0.21 0.11 0.11 0.10EV/EBITDA 10.98 4.98 4.71 4.60P/E 13.19 5.76 6.08 5.90P/CE 6.47 4.92 5.23 4.97P/BV 1.24 0.63 0.57 0.56Dividend yield 0.00% 0.00% 13.19% 13.56%EV/EBITDA rel. 1.3 0.8 0.8 0.9P/E rel. 1.1 0.7 0.7 0.7Performance 1M 3M 6M 12MAbsolute (PLN terms) 2.0% -16.6% -31.8% -46.9%Rel. to sector (EUR, ppt) -6.5 -13.1 -23.7 -21.7Rel. to universe (EUR, ppt) 0.0 -13.2 -18.9 -37.6

Intercell Reduce Target price EUR 3.8Price (EUR) 1.9 ROCE 2010 -138.8% 10 11e 12e 13eMcap (EUR mn) 93 ROE 2010 -105.0% Sales (EUR mn) 34.2 40.0 58.5 81.7Mcap (EUR mn) 93 Net debt (EURmn, 10) -41 EBITDA margin -711.80% -87.00% -18.14% -1.95%Free float (%) 82.6% Gearing (2010) -34% EBIT margin -734.19% -105.48% -31.92% -12.85%Free float (EUR mn) 77 Sales CAGR 10-13e 7.3% Net profit margin -745.82% -108.05% -33.59% -14.18%Shares outst. (mn) 48.6 EPS CAGR 10-13e -14.25% EPS (EUR) -5.25 -0.86 -0.37 -0.21

Dividend/share (EUR) 0.00 0.00 0.00 0.00EV/sales 15.27 2.73 2.05 1.50EV/EBITDA nm nm nm nmP/E nm nm nm nmP/CE nm nm nm nmP/BV 4.66 1.15 1.34 1.41Dividend yield 0.00% 0.00% 0.00% 0.00%EV/EBITDA rel. - - - -P/E rel. - -. -. -.Performance 1M 3M 6M 12MAbsolute (EUR terms) -1.5% -23.5% -68.7% -88.7%Rel. to sector (EUR, ppt) -10.9 -13.8 -54.2 -58.3Rel. to universe (EUR, ppt) -4.5 -14.0 -49.3 -74.2

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Intercell ATX (Rebased) DJ EURO STOXX Health Care (Rebased)

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Farmacol WIG (Rebased) DJ EURO STOXX Health Care (Rebased)

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Krka Buy Target price EUR 84.5Price (EUR) 52.1 ROCE 2010 13.8% 10 11e 12e 13eMcap (EUR mn) 1,846 ROE 2010 17.4% Sales (EUR mn) 1,010.0 1,080.0 1,169.4 1,271.7Mcap (EUR mn) 1,846.1 Net debt (EURmn, 10) 127 EBITDA margin 29.03% 30.50% 30.81% 31.24%Free float (%) 70.0% Gearing (2010) 12% EBIT margin 20.94% 22.10% 22.20% 22.41%Free float (EUR mn) 1,291 Sales CAGR 10-13e 7.5% Net profit margin 16.92% 16.38% 16.66% 16.88%Shares outst. (mn) 35.4 EPS CAGR 10-13e 5.4% EPS (EUR) 4.83 5.00 5.50 6.06

Dividend/share (EUR) 1.40 1.45 1.55 1.65EV/sales 2.34 1.82 1.67 1.53EV/EBITDA 8.05 5.97 5.42 4.89P/E 13.04 10.43 9.47 8.59P/CE 8.77 7.04 6.47 5.81P/BV 2.12 1.56 1.39 1.24Dividend yield 2.22% 2.78% 2.97% 3.17%EV/EBITDA rel. 1.0 1.0 0.9 0.9P/E rel. 1.1 1.2 1.0 1.0Performance 1M 3M 6M 12MAbsolute (EUR terms) 2.2% -13.4% -11.5% -16.7%Rel. to sector (EUR, ppt) -7.2 -3.7 3.1 13.7Rel. to universe (EUR, ppt) -0.7 -3.8 7.9 -2.1

Neuca Buy Target price PLN 100.0Price (PLN) 68 ROCE 2010 8.1% 10 11e 12e 13eMcap (PLN mn) 300 ROE 2010 17.3% Sales (PLN mn) 6,132 6,414 6,222 6,409Mcap (EUR mn) 69 Net debt (EURmn, 10) 104 EBITDA margin 1.40% 1.57% 1.66% 1.62%Free float (%) 43.8% Gearing (2010) 169% EBIT margin 1.04% 1.20% 1.30% 1.27%Free float (EUR mn) 30 Sales CAGR 10-13e 3.0% Net profit margin 0.60% 0.69% 0.77% 0.78%Shares outst. (mn) 4.4 EPS CAGR 10-13e 6.7% EPS (PLN) 8.51 9.95 10.84 11.28

Dividend/share (PLN) 2.30 2.48 2.70 2.81EV/sales 0.13 0.10 0.11 0.10EV/EBITDA 8.95 6.59 6.48 6.18P/E 9.12 6.37 6.27 6.03P/CE 5.71 4.21 4.28 4.16P/BV 1.46 1.13 0.99 0.88Dividend yield 2.97% 3.91% 3.97% 4.13%EV/EBITDA rel. 1.1 1.1 1.1 1.2P/E rel. 0.7 0.7 0.7 0.7Performance 1M 3M 6M 12MAbsolute (PLN terms) -5.2% 3.9% -14.9% -9.6%Rel. to sector (EUR, ppt) -13.7 6.0 -8.4 12.0Rel. to universe (EUR, ppt) -7.3 5.8 -3.6 -3.9

PGF Sell Target price PLN 30.0Price (PLN) 32 ROCE 2010 9.4% 10 11e 12e 13eMcap (PLN mn) 396 ROE 2010 16.6% Sales (PLN mn) 5,795.4 6,520.6 6,381.9 6,573.4Mcap (EUR mn) 91 Net debt (EURmn, 10) 158 EBITDA margin 2.42% 1.94% 1.83% 1.88%Free float (%) 60.1% Gearing (2010) 134% EBIT margin 1.90% 1.48% 1.35% 1.42%Free float (EUR mn) 55 Sales CAGR 10-13e 4.9% Net profit margin 1.24% 0.87% 0.79% 0.90%Shares outst. (mn) 12.4 EPS CAGR 10-13e -1.7% EPS (PLN) 5.69 4.45 3.98 4.66


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Richter Gedeon Buy Target price HUF 43,865.0Price (HUF) 35,300 ROCE 2010 17.1% 10 11e 12e 13eMcap (HUF mn) 657,903 ROE 2010 15.9% Sales (HUF mn) 275,312.0 287,200.9 310,976.2 340,431.2Mcap (EUR mn) 2,159 Net debt (EURmn, 10) -195 EBITDA margin 30.43% 26.22% 23.78% 24.59%Free float (%) 74.7% Gearing (2010) -12% EBIT margin 22.76% 17.86% 15.50% 16.52%Free float (EUR mn) 1,613 Sales CAGR 10-13e 6.2% Net profit margin 23.48% 17.14% 15.23% 16.24%Shares outst. (mn) 18.6 EPS CAGR 10-13e 1.9% EPS (HUF) 3,459.64 2,632.16 2,531.49 2,955.20

Dividend/share (HUF) 860.00 700.00 670.00 770.00EV/sales 2.67 1.83 1.82 1.59EV/EBITDA 8.76 6.99 7.65 6.45P/E 12.17 12.07 13.94 11.95P/CE 9.16 8.11 9.02 7.97P/BV 1.83 1.42 1.32 1.22Dividend yield 2.04% 2.20% 1.90% 2.18%EV/EBITDA rel. 1.0 1.2 1.3 1.2P/E rel. 1.0 1.4 1.5 1.4Performance 1M 3M 6M 12MAbsolute (HUF terms) 16.3% -5.1% -4.9% -24.4%Rel. to sector (EUR, ppt) 3.7 -5.3 -2.4 -2.0Rel. to universe (EUR, ppt) 10.1 -5.4 2.4 -17.9

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Richter GedeonBUX (Rebased)DJ EURO STOXX Health Care (Rebased)



Sector Insight Industrial Goods & Services

– PMI showing mixed picture – Eurozone deteriorating further – China improving – News on Romanian venture more interesting for E-Star – Palfinger – upgrade to Accumulate

It will be more difficult for stocks in the Industrial Goods & Services sector to keep the momentum going.After strong 2Q11 figures, we expect a slowdown in dynamics in 3Q11. We consequently expect that business will no longer improve on a sequential basis. Leading indicators such as PMIs display a disparate picture on a global scale. China’s Manufacturing PMI for October rose from 49.9 in September to an indicative level of 51.1 for October, the sharpest rise since April this year. China’s PMI was driven by a pickup in new orders (a good sign) as well as output (not necessarily a leading indicator). The September Manufacturing PMI data from the US delivered an increase to 51.6, from 50.6 in August. However, new orders remained flat and the uptick of the PMI reading was mainly driven by inventory built up at customers (rose from 46.5 to 49.0). It is thus overall not such a good reading. The flash Eurozone manufacturing PMI for October dropped from 48.5 in September to 47.3. The rate of contraction is the fastest since July 2009. This time it is not only the periphery that is contracting. France and Germany are showing signs of decline.

Still no monetary trigger in sight. In our opinion, the markets are being driven by political decision making at the moment. Even though some stocks in our coverage are trading below historical averages (like Palfinger or CAToil), we are not yet overly enthusiastic for our sector. Other stocks like Andritz or SBO are still trading above historic averages – one can thus say they are not even currently cheap. We remain cautious due to (1) debt growth in almost all major currency areas (USD, EUR, China) continues to decelerate – a bearish sign (2) it is not yet been decided whether the EM can steer to a soft-landing after the lending spree of 2009 and 2010. From a valuation perspective, it is obvious that Andritz and SBO would be especially vulnerable to any negative news flow coming out of EM. The announcement or indication of QE3 in the US would be a short-term trigger. The outlook for the Eurozone will quite likely remain uncertain and it will hardly be supportive for equity markets.

Palfinger upgrade to Accumulate; new target price: EUR 17.2: On the basis of lower estimates for 2012 and 2013, as well as lower TV EBIT margin assumptions, we cut our target price from EUR 30.5 to EUR 17.2. Due to steep decline in stock price we raise our recommendation from Hold to Accumulate. Due to better capacity utilization, we expect Palfinger to deliver a top line performance of +19.4% y/y in 3Q11. Thanks an improved capacity utilization, the EBIT margin should rise by more than 200bp y/y. Due to plant holidays, we expect that Palfinger’s 3Q performance will fall behind the figures already posted in 2Q. We nevertheless expect that Palfinger’s performance will pick up again in 4Q. YTD registration of new heavy trucks in the US (+36.2%) and Europe (50.5%) was very strong. In Brazil, another important market for Palfinger, the growth pace for new heavy truck registration slowed down (+10.6% YTD, after 54.4% in 2010). We expect that new registration of heavy trucks in Europe will slow down in the next couple of months. For example, truck manufacturer Scania recently announced that it will lower the production at European sites as of November by 10-15%. Palfinger is determined to enter the Chinese market via a JV quite soon. Based on the company’s very ambitious statements, we estimate that China could contribute some EUR 200mn in additional annual sales by 2015-17. Upon application of a medium EBIT margin level of 7%, we derive a possible EBIT contribution of EUR 14mn. We continue to see Palfinger as an attractive long-term secular growth story with a proven ability to earn an excess return on capital invested. The key question in our view will be how profitable this growth will be. Palfinger is well known for its strong profitability in Europe (14% EBIT margin in 1H11). The AREA unit (rest of the world) so far is still in red figures. It would be a real success if Palfinger manages to boost its EBIT margin in the AREA unit to around 5-7% in the next 2-3 years.

Andritz Hold confirmed; new target price: EUR 70.1. Driven by a slightly increased discount rate to reflect the rising risk aversion we lowered our target equity price to EUR 70.1 (after EUR 72.4). We have confirm our Hold recommendation. Backed by a record order backlog of EUR 7.3bn, we expect Andritz to post double-digit sales and earnings growth in 3Q11. Thanks to an improved price quality we expect the profitability level to rise as well. New orders in 3Q11 (e: EUR 1.2bn) should benefit from the booking of the Belo Monte order (worth EUR 330mn). IR confirmed in a recent call an ongoing sound market environment for Andritz. Due to the comeback of the Pulp & Paper Division, we expect that Hydro’s contribution to group EBITA in 2011 will drop to 42%, after peaking in 2009 with 61%. Overall, the rather stable development of the Hydro business during the financial crisis in 2009 is very



appealing, in light of the currently looming economic slowdown. Thanks to the substantial long-term prospects, it is even more interesting. In 2010/11, Andritz has acquired an additional sales volume of around EUR 400mn. The largest acquisition has been AE&E, adding annual sales volume of around EUR 250-300mn alone. From a strategic perspective, the acquisition of Asselin-Thibeau was very important in terms of strengthening the nonwoven product portfolio. A hard landing in major EMs, especially China, India and Brazil, poses the biggest risk to the investment case of Andritz. The recent weakness in pulp prices is an indicator that market activity here might start to slow down a bit.

SBO Hold confirmed; new target price: EUR 59.3: Due to an extended time-horizon we slightly increased our 12-month target equity price to EUR 59.3 (after EUR 58.1). We confirm our Hold recommendation. Due to a very strong order book already worth EUR 137.1mn as of June 30, 2011, we expect further sound top line growth of 18.7% y/y in 3Q11. Thanks to improved capacity utilization, the EBIT margin should rise 310bp to 21.5%. New orders in 3Q11 should be around EUR 100mn. The global rig count (3,662 as of September 2011) has exceeded the peak level of September 2008 already by 3%. We expect that the global slowdown will have a slight impact on global drilling activity, but not a substantial one. We therefore believe that the global rig count will remain stable over the next couple of months until spring next year. Due to a low gearing ratio of 28.2%, SBO can easily boost future earnings potential M&A-wise. The recent acquisition of DSI has shown that the management team has the skills to make successful M&A deals. Due to the supply and demand metrics of the global oil industry (declining supply side, due to ageing oil fields, meets gradually rising demand side), we consider SBO (supplying high-tech equipment for complex drilling) a very attractive secular growth story. We would therefore consider lower prices as favorable entry points into the stock. SBO furthermore has a very strong track record in delivering value to shareholders, thanks to earning an excess return on the capital invested.

CAToil Accumulate confirmed; new target price: EUR 5.3: On the basis of lower short-term estimates as well as a lowered TV EBIT margin assumption, we drop our target price to EUR 5.3 per share (previously EUR 6.4). We confirm our Accumulate recommendation. CAToil’s 3Q11 top line performance (+10.1% y/y) will be driven by new capacity in sidetrack drilling services. Due to ramp-up costs for conventional drilling services, we expect a slightly weaker EBIT margin development when compared to last year. We decided to lower our FY11 EPS estimates (-9.2%), mainly driven by an ongoing weakening of the ruble exchange rate vs. the euro. With regards to 2012 and 2013, however, we decided to lower EPS estimates by 19.3% and 9.7%, respectively. The main reason for this is the deteriorating global economic outlook. During the last downturn, CAToil displayed a very stable cash flow profile. The main reasons have been (1) shrinking WC requirements; (2) and a rather stable ongoing business development, despite a very weak oil price. This is in our opinion an argument for CAToil in these times of a deteriorating economic outlook. CAToil is the leading service provider for sidetrack drilling as well as hydraulic fracturing services on the Russian oilfield service market. We therefore believe that CAToil remains a very attractive takeover target, albeit certainly not at the current price level.

E-Star is expected to publish its 3Q11 results on November 15, after the market closes. This will be the second quarter that the company had published its figures in euro terms. Net profit is expected to come in at EUR 593tsd (-58% y/y, +361% q/q). Similarly to the previous quarters, sales revenues are expected to be boosted by EETEK, the Polish company acquired at the beginning of the year. At the same time, costs stabilized at a very high level, which put significant pressure on margins. 3Q11 EBITDA may reach EUR 2,686tsd, which means an EBITDA margin of 11.2%, compared to the 3% seen in the previous quarter. The most important one-off could be the sell-off of the non-core businesses of EETEK in September, a transaction valued at EUR 4.5mn. The loan portfolio also increased by EUR 4mn, due to the installation of 8.4 Mwe gas turbines in Mielec. Investors will also very closely monitor every hint regarding the Romanian projects. In spring, management admitted that it took over the district heating system in Targu Mures and Zalau with fewer clients than originally planned and some weeks ago there was speculation that hundreds of insolvent consumers would like to abandon the expensive district heating system in Gheorgheni. All this news negatively affects the P&L of E-Star.

Atlantska plovidba announced slightly weaker than expected 3Q11 results. Sales underperformed our estimate by 10% in the quarter, with a large part of the underperformance stemming from the core shipping business. The tourism business did a good job on both the top and bottom lines. Consolidated EBITDA was in line with our estimate, reaching around HRK 50mn. However, backed by the weaker than expected financial result, the bottom line figure went HRK 7mn into negative territory, compared to our HRK 6mn gain estimate. Our 4Q11 forecasts were rather conservative; therefore, we believe that FY11 sales and net profit forecasts of HRK 560mn and HRK 31mn, respectively, are achievable. Separately, after the assessment of all received offers in the tender,



the company has signed a contract with construction company Tremont on the construction of an approx. 20,000 sqm business and residential building (three underground and five upper floors). According to the company's initial estimates, the overall investment value could be worth roughly EUR 25mn, with completion at the end of 2013. Atlantska will use 2,500 sqm for its own business premises, while the remaining apartments and floors will be sold (the estimated price is slightly above 2,000 EUR/sqm).




Andritz EUR 3,360.6 25.9% 25.0% 21.1% 22.8% 8.8% 8.4% 7.7% 7.9% 9.6% 5.0% -7.9% 18.3%Apator PLN 138.8 27.5% 22.4% 22.6% 16.7% 17.2% 17.9% 5.2% -16.0% -19.9% -13.6%Aselsan TRY 747.1 33.7% 26.4% 25.9% 24.6% 22.8% 22.6% 22.6% 23.6% 7.7% -9.9% -20.1% -27.1%Atlantska plovidba HRK 71.6 2.9% 2.2% 2.9% 1.1% 32.5% 36.9% 38.1% 34.9% -9.9% -37.3% -45.5% -51.7%CAToil EUR 224.3 9.0% 7.1% 9.6% 11.1% 24.7% 23.2% 25.0% 24.9% 17.5% -24.2% -43.5% -26.2%E-Star HUF 48.9 43.9% 36.6% 32.0% 25.2% 26.5% 21.7% 33.2% 30.8% -17.4% -49.8% -58.7% -37.7%Palfinger EUR 551.7 8.0% 13.5% 11.5% 13.0% 8.8% 11.6% 11.4% 12.4% -2.1% -28.0% -43.8% -32.1%Rafako PLN 135.7 11.7% 14.8% 10.2% 9.0% 6.1% 7.1% 5.3% 4.6% -0.4% -32.2% -37.1% -36.1%SBO EUR 963.7 11.0% 18.2% 16.5% 16.4% 27.6% 29.6% 29.3% 29.8% 20.7% -5.8% -11.5% 18.2%Zumtobel EUR 614.7 14.3% 16.2% 18.3% 19.1% 10.4% 10.5% 11.3% 11.7% 12.8% -11.2% -40.8% -2.3%Median - - 13% 17% 17% 16% 20% 19% 20% 24% - - - -EuroStoxx Industrial Goods & Services

287,481 15.4% 15.1% 15.6% 15.8% 13% 13% 14% 15% 12.3% -4.8% -24.7% -15.5%

CEE to Peer, Prem/Disc - -15% 14% 12% 4% 51% 44% 41% 62% - - - -


2010 2011e 2012e 2013e 2010 2011e 2012e 2013e 2010 2011e 2012e 2013eAndritz 19.7 16.7 17.7 14.8 14.9 13.2 13.7 11.9 4.7 3.9 3.6 3.2Apator 10.5 11.5 10.7 8.1 8.6 8.3 2.6 2.6 2.3Aselsan 7.8 6.7 6.1 5.5 6.3 5.2 4.8 4.1 2.3 1.7 1.5 1.3Atlantska plovidba 25.6 17.0 12.8 34.3 4.1 3.1 2.5 2.7 0.7 0.4 0.4 0.4CAToil 19.0 13.7 9.5 7.6 7.2 4.2 3.6 3.3 1.6 0.9 0.9 0.8E-Star 14.1 8.1 6.9 6.6 11.3 6.9 4.9 4.5 5.1 2.6 1.9 1.5Palf inger 42.0 12.2 13.0 10.5 16.1 8.0 8.5 7.4 3.2 1.6 1.4 1.3Rafako 21.5 9.5 13.9 15.3 17.0 7.7 11.2 11.0 2.4 1.4 1.4 1.4SBO 37.6 18.6 18.3 16.4 16.6 11.2 11.2 10.5 3.9 3.2 2.9 2.5Zumtobel 20.5 9.6 7.5 6.4 10.0 5.0 4.4 3.8 2.8 1.5 1.3 1.1Median CEE 20.1 11.9 11.8 10.5 10.6 7.3 6.6 4.5 2.7 1.6 1.5 1.3EuroStoxx Industrial Goods & Services

14.2 12.9 11.6 10.1 8.7 8.2 7.6 6.7 2.1 1.9 1.7 1.5

CEE to Peer, Prem/Disc 42% -8% 2% 5% 22% -11% -12% -32% 28% -16% -16% -15%

2010 2011e 2012e 2013e 2010 2011e 2012e 2013eAndritz 0.8 0.6 0.6 0.5 8.6 6.7 7.5 5.9Apator 1.5 1.3 1.3 8.8 7.6 7.0Aselsan 1.2 1.0 0.7 0.6 5.3 4.3 3.3 2.4Atlantska plovidba 2.3 2.5 2.4 2.1 7.2 6.9 6.2 6.1CAToil 1.5 1.0 0.8 0.7 6.0 4.2 3.2 2.8E-Star 3.3 1.6 1.9 1.7 12.5 7.5 5.6 5.6Palf inger 1.9 0.9 0.9 0.8 21.5 8.0 8.0 6.6Rafako 0.7 0.3 0.4 0.4 10.8 4.9 7.4 7.9SBO 3.5 2.4 2.4 2.2 12.7 8.3 8.1 7.3Zumtobel 1.1 0.6 0.6 0.5 10.2 6.1 5.1 4.4Median CEE 1.5 1.0 0.9 0.7 9.5 6.8 6.6 5.9EuroStoxx Industrial Goods & Services

1.2 0.9 0.8 0.7 9.7 7.4 6.6 5.9

CEE to Peer, Prem/Disc 23% 3% 5% -6% -2% -8% 0% -1%

P/E P/CE P/BV

EV/Sales EV/EBITDA




Andritz Hold Target price EUR 70.1Price (EUR) 65.6 ROCE 2010 123.6% 10 11e 12e 13e

ROE 2010 25.9% Sales (EUR mn) 3,553.8 4,339.6 4,576.8 5,148.1Mcap (EUR mn) 3,360.6 Net debt (EURmn, 10) -935.1 EBITDA margin 8.78% 8.44% 7.68% 7.89%Free f loat (%) 69.0% Gearing (2010) -118% EBIT margin 7.02% 6.88% 6.19% 6.55%Free f loat (EUR mn) 2,319 Sales CAGR 10-13e 12.6% Net profit margin 5.06% 4.87% 4.37% 4.63%Shares outst. (mn) 51.2 EPS CAGR 10-13e 12.6% EPS (EUR) 3.48 3.92 3.71 4.42


Performance 1M 3M 6M 12MAbsolute (EUR terms) 9.6% 5.0% -7.9% 18.3%Rel. to sector (EUR, ppt) 0.5 11.7 12.5 17.3Rel. to universe (EUR, ppt) 6.7 14.5 11.5 32.8

Apator Buy Target price PLN 24.7Price (PLN) 17.2 ROCE 2010 16.6% 10e 11e 12e 13eMcap (PLN mn) 605 ROE 2010 27.5% Sales (PLN mn) 403.3 464.9 505.3Mcap (EUR mn) 139 Net debt (EURmn, 10) 10.1 EBITDA margin 16.72% 17.24% 17.86%Free f loat (%) 73.0% Gearing (2010) 19% EBIT margin 12.97% 13.74% 14.63%Free f loat (EUR mn) 101 Sales CAGR 10-13e #WERT! Net profit margin 13.63% 10.58% 11.15%Shares outst. (mn) 35 EPS CAGR 10-13e #WERT! EPS (PLN) 1.51 1.39 1.60

Dividend/share (PLN) 0.70 0.85 1.00EV/sales 1.48 1.31 1.25EV/EBITDA 8.82 7.57 7.02P/E 10.47 11.53 10.73P/CE 8.14 8.64 8.32P/BV 2.60 2.56 2.31Dividend yield 4.44% 5.29% 5.78%EV/EBITDA rel. 0.9 1.1 1.1 #WERT!P/E rel. 0.5 1.0 0.9 #WERT!

Performance 1M 3M 6M 12MAbsolute (PLN terms) 4.4% -9.3% -11.5% -4.3%Rel. to sector (EUR, ppt) -3.9 -9.3 0.5 -14.6Rel. to universe (EUR, ppt) 2.3 -6.5 -0.5 0.9

Aselsan Buy Target price TRY 11.1Price (TRY) 7.7 ROCE 2010 15.5% 10 11e 12e 13eMcap (TRY mn) 1,811 ROE 2010 33.7% Sales (TRY mn) 1,190 1,467 1,683 1,870Mcap (EUR mn) 747 Net debt (EURmn, 10) -223.1 EBITDA margin 22.84% 22.58% 22.58% 23.58%Free f loat (%) 15.3% Gearing (2010) -55% EBIT margin 18.04% 17.58% 17.58% 17.58%Free f loat (EUR mn) 114 Sales CAGR 10-13e 15.9% Net profit margin 20.25% 17.58% 17.58% 17.58%Shares outst. (mn) 235.2 EPS CAGR 10-13e -3% EPS (TRY) 1.02 1.10 1.26 1.40


Performance 1M 3M 6M 12MAbsolute (TRY terms) 4.6% -10.3% -15.0% -10.7%Rel. to sector (EUR, ppt) -1.4 -3.1 0.3 -28.1Rel. to universe (EUR, ppt) 4.7 -0.3 -0.7 -12.6

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Atlantska plovidba Accumulate Target price HRK 590.0Price (HRK) 384.2 ROCE 2010 4.3% 10 11e 12e 13eMcap (HRK mn) 536 ROE 2010 2.9% Sales (HRK mn) 875.0 560.2 775.9 834.3Mcap (EUR mn) 72 Net debt (EURmn, 10) 137.9 EBITDA margin 32.46% 36.92% 38.15% 34.89%Free f loat (%) 77.9% Gearing (2010) 71% EBIT margin 12.12% 12.47% 15.90% 12.78%Free f loat (EUR mn) 56 Sales CAGR 10-13e 3.9% Net profit margin 4.43% 5.30% 5.56% 1.94%Shares outst. (mn) 1.4 EPS CAGR 10-13e #ZAHL! EPS (HRK) 28.43 22.33 29.95 11.21


Performance 1M 3M 6M 12MAbsolute (HRK terms) 15.0% -31.8% -48.6% -48.6%Rel. to sector (EUR, ppt) -19.0 -30.6 -25.1 -52.7Rel. to universe (EUR, ppt) -12.8 -27.8 -26.1 -37.2

CAToil Accumulate Target price EUR 5.3Price (EUR) 4.6 ROCE 2010 9.8% 10 11e 12e 13e

ROE 2010 9.0% Sales (EUR mn) 228.8 257.3 295.6 325.0Mcap (EUR mn) 224 Net debt (EURmn, 10) -33 EBITDA margin 24.66% 23.21% 25.00% 24.93%Free f loat (%) 30.0% Gearing (2010) -15% EBIT margin 12.04% 8.88% 11.94% 12.99%Free f loat (EUR mn) 67 Sales CAGR 10-13e 9.3% Net profit margin 8.51% 6.38% 8.01% 9.11%Shares outst. (mn) 48.9 EPS CAGR 10-13e 36.9% EPS (EUR) 0.40 0.34 0.48 0.61


Performance 1M 3M 6M 12MAbsolute (EUR terms) 17.5% -24.2% -43.5% -26.2%Rel. to sector (EUR, ppt) 8.4 -17.5 -23.1 -27.1Rel. to universe (EUR, ppt) 14.6 -14.7 -24.1 -11.6

E-Star Under review Target price HUFPrice (HUF) 5,650.0 ROCE 2010 18.5% 10p 11e 12e 13e

ROE 2010 43.9% Sales (HUF mn) 7,895 15,437 16,174 17,473Mcap (EUR mn) 49 Net debt (EURmn, 10) 22 EBITDA margin 26.49% 21.67% 33.23% 30.82%Free f loat (%) 45.4% Gearing (2010) 150% EBIT margin 22.76% 17.97% 27.70% 24.91%Free f loat (EUR mn) 22 Sales CAGR 10-13e 45.4% Net profit margin 18.21% 10.59% 13.19% 12.79%Shares outst. (mn) 2.6 EPS CAGR 10-13e 26.2% EPS (HUF) 599.04 624.78 813.67 852.20

Dividend/share (HUF) 0.00 0.00 0.00 0.00EV/sales 3.31 1.63 1.87 1.74EV/EBITDA 12.51 7.53 5.63 5.65P/E 14.05 8.14 6.94 6.63P/CE 11.33 6.86 4.90 4.54P/BV 5.12 2.64 1.92 1.49Dividend yield 0.00% 0.00% 0.00% 0.00%EV/EBITDA rel. 1.3 1.1 0.9 1.0P/E rel. 0.7 0.7 0.6 0.6


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Atlantska plovidbaCROBEX (Rebased)DJ STOXX Industrial Goods & Services (Rebased)

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CAToilPrime All Share (Rebased)DJ EURO STOXX Industrial Goods & Services (Rebased)

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E-Star DJ EURO STOXX Industrial Goods & Services (Rebased)



Palfinger Accumulate Target price EUR 17.2Price (EUR) 15.6 ROCE 2010 7.1% 10 11e 12e 13e

ROE 2010 8.0% Sales (EUR mn) 651.8 831.2 819.3 871.4Mcap (EUR mn) 552 Net debt (EURmn, 10) 204 EBITDA margin 8.81% 11.65% 11.35% 12.36%Free f loat (%) 35.6% Gearing (2010) 62% EBIT margin 5.32% 8.71% 8.46% 9.68%Free f loat (EUR mn) 196 Sales CAGR 10-13e 14.6% Net profit margin 4.18% 5.97% 5.67% 6.59%Shares outst. (mn) 35.3 EPS CAGR 10-13e #ZAHL! EPS (EUR) 0.68 1.28 1.20 1.48



Rafako Reduce Target price PLN 8.5Price (PLN) 8.5 ROCE 2010 21.7% 10 11e 12e 13eMcap (PLN mn) 590.9 ROE 2010 11.7% Sales (PLN mn) 1,188.1 1,176.0 1,072.1 1,147.7Mcap (EUR mn) 136 Net debt (EURmn, 10) -42 EBITDA margin 6.07% 7.13% 5.33% 4.55%Free f loat (%) 50.0% Gearing (2010) -42% EBIT margin 5.06% 6.11% 4.13% 3.38%Free f loat (EUR mn) 68 Sales CAGR 10-13e 4.5% Net profit margin 3.73% 5.01% 4.04% 3.42%Shares outst. (mn) 69.6 EPS CAGR 10-13e 0.5% EPS (PLN) 0.63 0.83 0.61 0.55


Performance 1M 3M 6M 12MAbsolute (PLN terms) -1.3% -26.8% -30.4% -29.2%Rel. to sector (EUR, ppt) -9.6 -25.5 -16.6 -37.1Rel. to universe (EUR, ppt) -3.4 -22.7 -17.6 -21.5

SBO Hold Target price EUR 59.3Price (EUR) 60.2 ROCE 2010 9.3% 10 11e 12e 13e

ROE 2010 11.0% Sales (EUR mn) 307.7 407.6 403.3 423.5Mcap (EUR mn) 964 Net debt (EURmn, 10) 53 EBITDA margin 27.65% 29.57% 29.30% 29.83%Free f loat (%) 64.0% Gearing (2010) 20% EBIT margin 17.10% 21.20% 21.00% 22.00%Free f loat (EUR mn) 617 Sales CAGR 10-13e 13.9% Net profit margin 8.88% 12.67% 12.98% 13.80%Shares outst. (mn) 16.0 EPS CAGR 10-13e 39.9% EPS (EUR) 1.71 3.24 3.28 3.67


Performance 1M 3M 6M 12MAbsolute (EUR terms) 20.7% -5.8% -11.5% 18.2%Rel. to sector (EUR, ppt) 11.6 0.9 8.9 17.2Rel. to universe (EUR, ppt) 17.8 3.7 7.9 32.7

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PalfingerATX (Rebased)DJ EURO STOXX Industria l Goods & Services (Rebased)

52 weeks

8

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RafakoW IG (Rebased)DJ EURO STOXX Industrial Goods & Services (Rebased)

52 weeks

30354045505560657075

SBOATX (Rebased)DJ EURO STOXX Industrial Goods & Services (Rebased)



Zumtobel Accumulate Target price EUR 20.5Price (EUR) 14.4 ROCE 2010 9.4% 10 11e 12e 13e

ROE 2010 14.3% Sales (EUR mn) 1,228.2 1,327.5 1,447.3 1,573.5Mcap (EUR mn) 614.7 Net debt (EURmn, 10) 247 EBITDA margin 10.36% 10.53% 11.30% 11.73%Free f loat (%) 49.0% Gearing (2010) 65% EBIT margin 6.17% 6.57% 7.39% 7.78%Free f loat (EUR mn) 301 Sales CAGR 10-13e 9.0% Net profit margin 4.29% 4.85% 5.66% 6.15%Shares outst. (mn) 42.8 EPS CAGR 10-13e - EPS (EUR) 1.19 1.50 1.91 2.25


Performance 1M 3M 6M 12MAbsolute (EUR terms) 12.8% -11.2% -40.8% -2.3%Rel. to sector (EUR, ppt) 3.7 -4.4 -20.3 -3.3Rel. to universe (EUR, ppt) 9.9 -1.6 -21.3 12.2

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ZumtobelATX (Rebased)DJ EURO STOXX Industrial Goods & Services (Rebased)



Sector Insight Insurance

– PZU’s 3Q to be weak, but accumulate rating and target price maintained – New target price of EUR 40/Buy maintained for VIG on more conservative assumptions

Since PZU’s 2Q figures were better than we had expected, we raised our EPS estimates for the current fiscal year, as well as for 2012 and 2013. For 2011, we now calculate PLN 34.4 (instead of PLN 31.8). We increase our EPS estimates for 2012e and 2013e to PLN 35.6 and PLN 36.2, respectively (from PLN 34 and PLN 34.7, respectively).

We reiterate our Accumulate recommendation and target price of PLN 400. We therefore currently see an upside potential of some 15%, which is backed by a very attractive dividend yield of more than 7%. PZU will present its 3Q figures on Nov. 8. We think that the decline on the Warsaw Stock Exchange had a negative impact on the company’s investment result and therefore also on PZU’s bottom line. We thus expect 3Q to be the weakest so far this year.

We slightly adjust our 2011 estimates for Vienna Insurance Group as well as for the coming years to reflect the depressed economic outlook. We think that VIG will be able to achieve a reported net result of EUR 428.9mn (instead of EUR 445.3mn). However, this figure does not include the interest on hybrid capital. Since VIG has now started to report additional EPS net of hybrid interest, we have now changed our EPS definition. In the future, EPS will be defined for us as earnings per share net of hybrid interest. In our forecasts, we will also include figures (net result as well as EPS) according to the reporting of VIG. Our new EPS estimates (net of hybrid interest) now amount to EUR 3.12, EUR 3.33 and EUR 3.62 for the years 2011e-13e, respectively.

We derive a new target price of EUR 40, based on rather conservative assumptions. We therefore reiterate our Buy recommendation. VIG is currently traded at single-digit P/Es and below book value. Given the company’s excellent balance sheet and strong track record during the crisis in 2008-09, we are very optimistic that the company will also deliver in the coming years.

A closer look at the financial statements of VIG’s peer group reveals huge differences in the quality of the balance sheets. VIG’s equity ratio (12.7%) and solvency ratio (210-220%) are clearly better than those of its Western European peers and are only beaten by the outstanding balance sheet of PZU. With regard to sovereign debt exposure to PIIGS countries, VIG has only 0.4% of its total financial statements invested in these countries. Compared to its shareholders’ equity, VIG’s PIIGS exposure amounts to 2.3%. Both ratios are (by far) the lowest within its peer group.

VIG is interested in buying Poland’s Warta, which has a market share of 7.7% in the life insurance business and 8.9% in the non-life business (as of 1H11 and according to the Polish Financial Supervision Authority). The acquisition of Warta would lift VIG into the undisputed no. 2 position in the highly attractive Polish market.

We incorporated the new outlook UNIQA provided at the end of September into our model. The company will book some EUR 190mn one-off expenditures in 2011 and therefore only expects to reach ‘flat zero’ on the EBT level. UNIQA does not expect any significant one-offs related to the planned restructuring in the coming years and reiterated its target to improve its pre-tax profit to EUR 550mn by 2015. UNIQA also plans to double its premium income by 2020.

We adjusted our estimates according to the new guidance. However, we do not think UNIQA will be able to reach this ambitious goal without the capital increase planned for 2013. We reduce our top line estimates to reflect the depressed economic outlook. We set our EBT estimate for the current year to almost zero, but increase the estimates for the years 2012e and 2013e. Our EPS estimate for 2011e is now EUR -0.14 (instead of EUR 0.72). For 2012e and 2013e, we calculate EUR 0.85 and EUR 1.07, respectively (instead of EUR 0.79 and EUR 0.93, respectively).



We derive a new target price of EUR 10.5 and reiterate our Reduce recommendation. Our new target price is still above UNIQA’s current book value. UNIQA is one of the rare insurance stocks still traded significantly above its book value. We do not see profitability in the near future that would justify the current P/B multiple of 1.4x.

Our negative view on the stock is bolstered by a look at the company’s balance sheet. UNIQA still has rather weak equity and solvency ratios. The relatively high exposure to sovereign debt in PIIGS countries can be seen as an additional threat.




Aksigorta TRY 181.7 0.1% 2.7% 4.8% 5.9% 0.2% 1.3% 1.9% 2.2% 10.6% -9.0% -31.3% -46.1%Anadolu Hayat TRY 309.3 18.0% 18.4% 19.6% 23.1% 19.9% 21.1% 22.6% 25.3% 3.6% -15.4% -39.2% -46.4%Anadolu Sigorta TRY 173.2 4.8% 3.0% 3.7% 4.3% 2.6% 2.1% 2.2% 2.6% -1.8% -22.6% -41.5% -47.7%PZU PLN 6,801.9 20.5% 21.0% 22.2% 21.0% 20.8% 21.8% 24.6% 24.4% 13.4% -13.2% -17.5% -17.4%Uniqa EUR 1,558.2 3.5% -1.6% 9.3% 10.7% 2.8% 0.0% 3.9% 4.6% -5.8% -19.4% -28.4% -25.4%Vienna Insurance Group EUR 3,801.6 8.5% 9.3% 9.3% 9.4% 5.9% 6.3% 6.5% 6.7% 8.9% -20.1% -26.9% -24.4%Median - - 6.6% 6.2% 9.3% 10.0% 4.4% 4.2% 5.2% 5.7% - - - -Allianz SE EUR 35,778 11.4% 9.5% 11.2% 10.9% 6.7% 6.5% 7.5% 7.9% 14.4% -7.3% -26.0% -12.3%AXA S.A. EUR 25,379 7.9% 9.3% 9.0% 9.2% 4.9% 7.8% 7.2% 7.6% 14.2% -9.1% -28.1% -16.3%Assicurazioni Generali S.p.AEUR 19,819 9.7% 9.4% 11.9% 12.3% 4.3% 3.8% 5.3% 5.8% 7.0% 2.7% -21.1% -18.3%Mapfre S.A. EUR 8,290 14.3% 13.9% 13.8% 13.2% 8.4% 9.4% 9.5% 9.8% 15.4% 18.2% -3.7% 15.1%Sampo Oyj EUR 11,237 12.4% 12.1% 13.5% 13.3% 25.9% 30.9% 35.3% 37.0% 5.7% 1.0% -11.7% 0.4%Median Total - 100,503 11.4% 9.5% 11.9% 12.3% 6.7% 7.8% 7.5% 7.9% - - - -EuroStoxx Insurance 172,590 9.7% 9.3% 10.5% 10.8% 6% 8% 8% 8% 8.0% -1.0% -16.6% -16.5%CEE to Peer, Prem/Disc - -42% -35% -22% -18% -35% -47% -31% -28% - - - -

ROE EBT margin Performance (EUR terms)

2010 2011e 2012e 2013e 2010 2011e 2012e 2013e 2010 2011e 2012e 2013eAksigorta nm 39.7 24.3 19.1 1.9 1.2 1.1 1.1 0.0% 1.6% 2.7% 3.4%Anadolu Hayat 15.2 8.5 7.5 5.4 2.8 1.6 1.4 1.1 4.4% 5.9% 6.0% 6.3%Anadolu Sigorta 17.5 14.9 12.8 10.5 0.8 0.5 0.5 0.4 0.0% 0.0% 0.0% 0.0%PZU 12.7 10.3 9.7 9.5 2.4 2.2 2.1 1.9 7.3% 8.1% 7.6% 7.6%Uniqa 45.3 nm 12.9 10.2 1.6 1.3 1.1 1.0 2.7% 0.0% 3.6% 4.6%Vienna Insurance Group 14.7 9.5 8.9 8.2 1.2 0.9 0.8 0.7 2.6% 3.7% 4.0% 4.4%Median CEE 15.2 10.3 11.2 9.9 1.8 1.2 1.1 1.1 0.0 0.0 0.0 0.0Allianz SE 7.0 8.3 6.5 6.3 0.8 0.8 0.7 0.7 5.7% 5.7% 6.4% 6.6%AXA S.A. 6.4 5.7 5.5 5.1 0.5 0.5 0.5 0.5 6.3% 6.7% 7.5% 8.2%Assicurazioni Generali S.p.A. 11.6 11.8 8.7 8.0 1.1 1.1 1.0 1.0 3.5% 3.5% 4.5% 4.9%Mapfre S.A. 8.7 8.4 7.9 7.5 1.2 1.2 1.1 1.0 5.6% 5.6% 5.9% 6.5%Sampo Oyj 10.2 10.7 8.9 8.4 1.3 1.3 1.2 1.1 5.7% 6.0% 6.4% 7.0%Median Total 10.2 10.7 8.9 8.4 1.3 1.3 1.2 1.1 5.7% 5.7% 6.4% 6.6%EuroStoxx Insurance 7.2 9.0 6.8 6.3 0.7 0.8 0.7 0.7 5.7% 5.7% 6.4% 6.9%CEE to Peer, Prem/Disc 50% -3% 26% 17% 39% -6% -5% -3% -54% -53% -39% -32%

2008 2009 2010 2010* 2008 2009 2010 2010* 2008 2009 2010 2010*AksigortaAnadolu HayatAnadolu SigortaPZUUniqa 0.5 0.4 0.3 0.3 1.0 1.3 0.8 0.7 1.5 1.6 1.3 1.2Vienna Insurance Group 0.4 0.3 0.3 0.4 1.3 0.8 1.0 0.8 1.6 1.3 1.6 1.2Median CEE 0.4 0.4 0.3 0.3 1.1 1.0 0.9 0.7 1.6 1.5 1.4 1.2Allianz SE (Life) 0.4 0.4 0.4 0.4 2.7 1.7 1.5 1.4 3.4 3.2 3.0 2.6AXA SA (Group) 0.4 0.4 0.3 0.3 1.0 1.2 0.8 0.7 1.7 3.2 2.0 1.8Generali (Group) 0.4 0.4 0.3 0.3 1.2 1.1 0.8 0.7 - - - -Mapfre SA (Life) 0.5 0.5 0.4 0.5 3.0 3.9 n.a. 1.0 8.4 12.2 n.a. 1.6Sampo Oyj (Life) 1.6 2.0 2.2 2.2 12.0 8.3 n.a. n.a. 36.4 12.6 n.a. n.a.Median Peer Group 0.4 0.4 0.4 0.4 2.7 1.7 0.8 0.9 5.9 7.7 2.5 1.8EuroStoxx Insurance - - - - - - - - - - - -CEE to Peer, Prem/Disc - - - - - - - - - - - -

PBV Dividend yield

Price/premium Price/Embedded Value Price/NAV

P/E




Aksigorta Hold Target price TRY 1.3Price (TRY) 1.4 Op. profit margin (10) 0.2% 10 11e 12e 13eMcap (TRY mn) 441 ROE (2010) 0.1% GW Premium (TRY mn) 886.0 1,028.0 1,146.6 1,290.0Mcap (EUR mn) 182 Combined ratio (2010) Net earned prem. (TRY mn) 634.8 739.7 836.0 945.0Free float (%) 38.0% EmbV (TRY mn, 2010) EBT. (TRY mn) 1.5 13.0 21.5 27.9Free float (EUR mn) 69 GPW CAGR 10-13e 11.0% Net prof it margin 0.17% 1.03% 1.58% 1.79%Shares outst. (mn) 306.0 EPS CAGR 10-13e -9.9% EPS (TRY) 0.00 0.03 0.06 0.08

Dividend/share (TRY) 0.00 0.02 0.04 0.05Combined ratio Claims rat io Cost ratioP/E nm 39.66 24.26 19.08P/BV 1.88 1.17 1.14 1.11Dividend yield 0.00% 1.64% 2.68% 3.41%P/BV rel. 1.1 1.0 1.0 1.0P/E rel. - 3.8 2.2 1.9

Performance 1M 3M 6M 12MAbsolute (TRY terms) 7.5% -9.4% -26.9% -33.9%Rel. to sector (EUR, ppt) 2.4 3.9 -12.3 -28.5Rel. to universe (EUR, ppt) 7.7 0.5 -11.9 -31.6

Anadolu Hayat Buy Target price TRY 3.9Price (TRY) 3.0 Op. profit margin (10) 28.3% 10 11e 12e 13eMcap (TRY mn) 750 ROE (2010) 18.0% GW Premium (TRY mn) 357.0 512.0 568.3 712.3Mcap (EUR mn) 309 Combined ratio (2010) 2.3 Net earned prem. (TRY mn) 251.0 382.9 423.0 528.4Free float (%) 17.0% EmbV (TRY mn, 2010) EBT. (TRY mn) 71.1 108.1 128.6 180.5Free float (EUR mn) 118 GPW CAGR 10-13e 9.3% Net prof it margin 19.91% 16.46% 17.52% 19.49%Shares outst. (mn) 250.0 EPS CAGR 10-13e 15.0% EPS (TRY) 0.28 0.34 0.40 0.56

Dividend/share (TRY) 0.19 0.17 0.18 0.19Combined ratioClaims rat ioCost ratioP/E 15.20 8.49 7.53 5.40P/BV 2.76 1.55 1.41 1.12Dividend yield 4.40% 5.94% 6.00% 6.33%P/BV rel. 1.6 1.3 1.2 1.0P/E rel. 1.0 0.8 0.7 0.5

Performance 1M 3M 6M 12MAbsolute (TRY terms) 0.7% -15.7% -35.3% -34.3%Rel. to sector (EUR, ppt) -4.6 -2.4 -20.2 -28.8Rel. to universe (EUR, ppt) 0.7 -5.8 -19.7 -31.9

Anadolu Sigorta Buy Target price TRY 1.2Price (TRY) 0.8 Op. profit margin (10) 3.4% 10 11e 12e 13eMcap (TRY mn) 420 ROE (2010) 4.8% GW Premium (TRY mn) 1,420.5 1,642.0 1,892.0 1,921.0Mcap (EUR mn) 173 Combined ratio (2010) 132.4 Net earned prem. (TRY mn) 1,116.1 1,285.0 1,447.0 1,601.0Free float (%) 42.7% EmbV (TRY mn, 2010) EBT. (TRY mn) 37.5 34.0 40.9 50.0Free float (EUR mn) 74 GPW CAGR 10-13e 11.5% Net prof it margin 2.64% 1.64% 1.73% 2.08%Shares outst. (mn) 500.0 EPS CAGR 10-13e -8.4% EPS (TRY) 0.08 0.05 0.07 0.08

Dividend/share (TRY) 0.00 0.00 0.00 0.00Combined ratio Claims rat ioCost ratioP/E 17.54 14.88 12.81 10.53P/BV 0.80 0.48 0.47 0.45Dividend yield 0.00% 0.00% 0.00% 0.00%P/BV rel. 0.5 0.4 0.4 0.4P/E rel. 1.2 1.4 1.1 1.1


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Anadolu HayatISE 100 (Rebased)DJ EURO STOXX Insurance (Rebased)

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AksigortaISE 100 (Rebased)DJ EURO STOXX Insurance (Rebased)

52 weeks

0,8

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1,6

Anadolu S igortaISE 100 (Rebased)DJ EURO STOXX Insurance (Rebased)



PZU Accumulate Target price TRY 400.0Price (TRY) 343.0 Op. profit margin (10) 10 11e 12e 13eMcap (TRY mn) 29,619 ROE (2010) 20.5% GW Premium (PLN mn) 14,544.5 15,221.7 15,541.7 15,956.6Mcap (EUR mn) 6,802 Combined ratio (2010) 21.5 Net earned prem. (PLN mn) 14,213.0 14,874.5 15,290.1 15,678.3Free float (%) 54.8% EmbV (TRY mn, 2010) 6,358.2 EBT. (PLN mn) 3,029.4 3,325.9 3,821.8 3,886.1Free float (EUR mn) 3,727 GPW CAGR 10-13e 2.7% Net prof it margin 16.77% 17.59% 19.67% 19.48%Shares outst. (mn) 86.4 EPS CAGR 10-13e -4.7% EPS (PLN) 28.25 31.00 35.41 36.00

Dividend/share (PLN) 26.00 26.00 26.00 26.00Combined ratio 1.05 Claims rat io 0.74 Cost ratioP/E 12.68 10.31 9.69 9.53P/BV 2.40 2.22 2.08 1.94Dividend yield 7.26% 8.14% 7.58% 7.58%P/BV rel. 1.4 1.8 1.8 1.8P/E rel. 0.8 1.0 0.9 1.0

Performance 1M 3M 6M 11MAbsolute (TRY terms) 12.5% -6.3% -8.8% -6.3%Rel. to sector (EUR, ppt) 5.2 -0.2 1.5 0.2Rel. to universe (EUR, ppt) 10.5 -3.6 1.9 -2.9

Uniqa Reduce Target price PLN 10.5Price (PLN) 11.0 Op. profit margin (10) 3.0% 10 11e 12e 13eMcap (PLN mn) 1,558 ROE (2010) 3.5% GW Premium (EUR mn) 5,379.1 5,460.1 5,552.9 5,716.2Mcap (EUR mn) 1,558 Combined ratio (2010) 831.7 Net earned prem. (EUR mn) 5,140.8 5,177.8 5,266.2 5,421.3Free float (%) 8.0% EmbV (TRY mn, 2010) 2,168.0 EBT. (EUR mn) 152.8 1.2 215.0 263.4Free float (EUR mn) 125 GPW CAGR 10-13e 3.3% Net prof it margin 0.86% -0.38% 2.19% 2.68%Shares outst. (mn) 142.2 EPS CAGR 10-13e 77.7% EPS (EUR) 0.32 -0.14 0.85 1.07

Dividend/share (EUR) 0.40 0.00 0.40 0.50Combined ratio 1.05 1.02 1.01 1.00Claims rat io 0.72 0.68 0.68 0.68Cost ratio P/E 45.27 nm 12.87 10.22P/BV 1.63 1.27 1.14 1.05Dividend yield 2.72% 0.00% 3.65% 4.56%P/BV rel. - 1.0 1.0 1.0P/E rel. - - 1.1 1.0


Vienna Insurance Group Buy Target price EUR 40.0Price (EUR) 29.7 Op. profit margin (10) 6.5% 10 11e 12e 13e

ROE (2010) 8.5% GW Premium (EUR mn) 8,593.0 8,832.5 9,128.8 9,541.6Mcap (EUR mn) 3,802 Combined ratio (2010) -2.0 Net earned prem. (EUR mn) 7,860.4 8,045.3 8,323.6 8,709.7Free float (%) 29.0% EmbV (TRY mn, 2010) 5,062.7 EBT. (EUR mn) 507.8 558.8 595.2 643.4Free float (EUR mn) 1,102 GPW CAGR 10-13e 4.4% Net prof it margin 3.95% 4.52% 4.66% 4.86%Shares outst. (mn) 128.0 EPS CAGR 10-13e 10.9% EPS (EUR) 2.65 3.12 3.33 3.62

Dividend/share (EUR) 1.00 1.10 1.20 1.30Combined ratio 0.98 0.96 0.96 0.96Claims rat io 0.67 0.66 0.66 0.66Cost ratioP/E 14.65 9.52 8.93 8.21P/BV 1.20 0.86 0.80 0.75Dividend yield 2.57% 3.70% 4.04% 4.38%P/BV rel. 0.7 0.7 0.7 0.7P/E rel. 1.0 0.9 0.8 0.8

Performance 1M 3M 6M 11MAbsolute (EUR terms) 8.9% -20.1% -26.9% -20.1%Rel. to sector (EUR, ppt) 0.7 -7.1 -7.9 -6.7Rel. to universe (EUR, ppt) 6.0 -10.6 -7.4 -9.8

52 weeks

9101112131415161718

Uniqa ATX (Rebased) DJ EURO STOXX Insurance (Rebased)

52 weeks

240260280300320340360380400420440

PZU W IG (Rebased) DJ EURO STOXX Insurance (Rebased)

52 weeks

242628303234363840424446

Vienna Insurance GroupATX (Rebased)DJ EURO STOXX Insurance (Rebased)



Sector Insight Media

– CME delivers relatively strong set of 3Q11 figures – Agora: Helios consolidation to offset margin slump– Cyfrowy Polsat: FX losses to put net profit deeply into red territory – TVN: FX loss to dent net profit

3Q is seasonally the weakest quarter of the year for media companies. We expect almost flat development y/y due to the high base from 3Q10 and higher advertiser uncertainty as the current market turmoil casts a shadow over ad budgets, while some advertisers could also start to cut back on their budgets. Agora’s 3Q11 results should show that circulation is still under pressure, as copy sales of flagship daily Gazeta Wyborcza continue to fall, while the recent acquisition of cinema network Helios should almost offset margin deterioration. The results of Cyfrowy Polsat and TVN will be burdened by significant FX losses, as the Polish zloty lost some 10% q/q (EUR-denominated debt revaluation), which will push net levels deeply into the red. CME already presented a relatively strong set of figures, supported by strong local currencies and mild improvements across ad markets in CEE.

CME released its 3Q11 results, which were slightly above the market consensus and our estimates.Revenues were up 23.2% y/y, reaching USD 165.5mn, some 8.6% above our estimate of USD 152.3mn. OIBDA improved by USD 13.4mn y/y, returning to positive territory at USD 8.9mn (above the market consensus of USD 4.8mn). The operating loss narrowed by USD 12.3mn y/y to USD -12.9mn and net profit was negatively influenced by a one-off FX loss (USD -45.9mn), coming in at USD -82mn. The cost side developed almost in line with our estimates (no major surprises), while the higher than expected revenues pushed the operational performance up (most of the costs are fixed). The top line was positively influenced by the strong local currencies against the USD across the region (the CZK added some 11.8%, the EUR 9.4%, while the RON added some 9.3% y/y). The Czech operation, the largest for CME, saw revenues up 17% y/y in USD (excluding the positive FX movement, the Czech operation was up 4.6% y/y). CME delivered quite good results across its markets (only Romania was down in local currency in 3Q11). CME confirmed its FY11 guidance, with revenues at USD 850mn and OIBDA at USD 166mn (in line with the market consensus). CME is bullish regarding ad market performance in 4Q, expecting ad markets to pick up 2% y/y in average in 4Q (note that in 3Q they grew by 0.7% y/y and in 2Q11 were down by an almost 3% y/y). CME is fully on track to deliver positive free cash flow in 2011 (USD -4mn by the end of 3Q11 vs. USD -74mn in 9M10). Despite challenging macroeconomic conditions in 2012, CME expects further growth mainly due to 1) recent restrictions on the broadcasting of commercials on state-owned TV in the Czech Republic, which would enable them to increase market share; 2) monetizing its leadership across the region and further improvements in audience share in Croatia; 3) positive contribution from the New Media division and Media Pro Entertainment. All in all, the summer programming season (3Q) is seasonally the weakest quarter. However, strong local currencies and mild improvements across ad markets in CEE improved the results (hand-in-hand with increasing market share). CME confirmed its FY11 guidance and seems to be relatively bullish towards the near future.

Agora is scheduled to present its 3Q11 results on November 10, before market open. We expect revenues at PLN 269.4mn (up 9.3% y/y), while EBITDA should reach PLN 36.9mn (up 7% y/y). EBIT is expected to be down by 13% y/y at PLN 12.0mn and net profit level at PLN 10.4mn (down 11% y/y). The total ad market in 3Q11 is predicted to be almost flat (high base in 3Q10; higher uncertainty, given the market turmoil, with some advertisers starting to step back with their budgets). The newspaper segment is still suffering due to the circulation decline (down by 8.9% y/y in July-August). Moreover, newsprint costs have already returned to pre-crisis levels, with negative implications for margins in the newspaper segment. Excluding the Helios acquisition, underlying business revenues should decrease by 3.8% y/y in 3Q11 (Helios acquisition to push group revenues up 9.3% y/y). The Internet should post solid y/y dynamics (revenues up by 13%, EBITDA to stay in black territory). Cutting the promotion and marketing budget (-17% y/y to PLN 24.1mn in 3Q11) should slightly improve the results (cost side).

Cyfrowy is scheduled to present its 3Q11 results on November 14, after market close. We expect revenues at PLN 579.2mn (up 58% y/y), while EBITDA should reach PLN 182.6mn (up 76% y/y). EBIT is expected to be up by 69% y/y at PLN 137.8mn, while net profit level should be harmed by FX losses and reach PLN -69.4mn. The total ad market in 3Q11 was almost flat (high base in 3Q10).�Cyfrowy should book a one-off FX loss close to PLN 153mn on EUR 350mn denominated senior debt (PLN/EUR weakened approx. 10% q/q).� The DTH segment is to post a relatively strong set of figures on an almost flat subscriber base (q/q) ahead of the seasonally strong 4Q. The



TV segment was supported by a higher audience share in 3Q11 (up 2.9pp y/y), mainly at the expense of TVP (down 5.2 pp y/y).

TVN is scheduled to present its 3Q11 results on November 10, before market open. We expect revenues at PLN 569.5mn (up 7% y/y), while EBITDA should reach PLN 106.6mn (up 6% y/y). EBIT should reach PLN 41mn (down 6% y/y), while the net profit level should be harmed by FX loss and reach PLN -163.2mn.The total ad market in 3Q11 was almost flat (high base in 3Q10). �TVN should book a one-off FX loss of more than PLN 165mn on EUR-denominated senior debt (PLN/EUR weakened approx. 10% q/q). The DTH segment is expected to stay in black territory, compounding an almost flat subscriber base q/q ahead of the seasonally strong 4Q (in terms of new additions). We expect ‘n’ platform EBITDA to reach PLN 8.2mn (EBITDA margin at 4.5%).� The online segment is expected to post solid y/y dynamics (revenues up 15%, the EBITDA margin is expected to reach 24.4%, despite the seasonally low 3Q).

Austrian Post announced the closing of the acquisition of a 26% stake in the Romanian firm PostMaster s.r.l., including an option to increase this shareholding to 100% over the next two years. PostMaster s.r.l. was founded in 2007 and is headquartered in Bucharest. The company’s core business is delivering direct mail items weighing more than 50gr. PostMaster s.r.l. has a workforce of 100 employees and a delivery staff of 1,500 people. In 2010, the company generated revenues of EUR 6.7mn which are expected to rise to some EUR 10mn in 2011. The two parties agreed not to disclose any details about the purchase price, which we assume to be a EURmn single-digit one.

Allami Nyomda to keep on track for this year’s profit target. Allami Nyomda is to publish its IFRS consolidated 3Q11 report on November 18, after market close. We expect the company to post a HUF 286mn profit, up by 6.5% y/y. YTD profit might thus climb to HUF 737mn, which means that the management’s guidance that it will reach FY profit above HUF 1bn seems reasonable. Total revenues should climb to HUF 4.37bn vs. HUF 4.21bn in 2Q11. However, total sales could drop 6.9% compared to 3Q10, due to the one-off ~HUF 500mn gain from municipal elections in October 2010. We expect EBIT at HUF 328mn, meaning a 7.5% operating margin for the quarter.




Agora PLN 184.6 6.0% 4.7% 5.3% 5.7% 15.0% 14.1% 14.4% 14.2% 22.4% -7.2% -44.0% -49.5%Allami Nyomda HUF 29.9 15.7% 18.9% 17.8% 17.5% 9.1% 12.2% 12.7% 13.1% -13.2% -24.5% -24.8% -21.3%Austrian Post EUR 1,472.3 17.4% 17.7% 18.0% 17.8% 11.1% 12.0% 11.7% 11.4% 2.2% 6.2% -11.2% 2.3%Cinema City EUR 332.1 15% 10.5% 12.4% 13.8% 17.2% 20.7% 22.1% 22.9% 10.1% -17.8% -30.6% -39.7%CME USD 502.3 9% -3.6% 2.8% 3.0% 14.0% 18.8% 21.4% 21.8% 54.1% -36.5% -49.3% -53.7%Cyfrowy Polsat PLN 1,152.7 n.m. 26.4% 22.7% 22.8% 27.2% 27.5% 31.0% 31.2% -1.5% -13.8% -19.5% -4.3%Multimedia Polska PLN 238.7 n.m. 22.3% 19.3% 18.0% 53.5% 52.2% 51.9% 51.4% 0.8% -10.4% -11.5% -14.9%TVN PLN 963.1 n.m. 14.4% 16.0% 20.8% 24.6% 26.1% 27.3% 28.1% -16.1% -28.8% -37.8% -38.0%Median - - 15% 18% 18% 17% 15% 19% 21% 22% - - - -St. Ives PLC GBP 119 11.1% 14.7% 17.4% 0.0% 0.0% 0.0% 0.0% 32.1% 15.8% -5.3% 11.6%Edipresse I CHF - 632 0.0% 0.0% 0.0% 0.0% 2.3% 2.1% 34.9% 169.2%Roularta Media Group N.V. EUR 187 9.7% 8.9% 9.1% 9.6% 10.8% 10.5% 11.2% 11.4% -2.3% -23.4% -42.1% -38.9%Dogan Yayin Holding A.S. TRY - 520 -20% -8.1% 2% 3.9% 8.0% 9.7% 10.9% 11.6% -8.7% -24.7% -62.9% -63.3%Grupo Televisa S.A. de C.VMXN 14,667 17.4% 16.2% 16.8% 16.3% 38.0% 38.6% 38.7% 38.3% 10.6% 3.5% -3.4% -5.8%TV Azteca S.A.B. de C.V. MXN 968 28.6% 22.0% 22.0% 17.8% 40.9% 42.6% 41.9% 41.4% 19.3% -3.9% -0.9% -14.1%ProSiebenSat.1 Media AG EUR 3,648 39.7% 35.1% 34.2% 31.5% 30.2% 31.1% 31.1% 31.5% 29.3% -0.1% -10.9% -18.6%Bloomsbury Publishing PLCGBP 82 5.4% 5.6% 6.3% 6.4% 9.5% 9.7% 10.3% 10.3% -3.8% -10.0% -26.6% -23.7%Median Total - 21,027 9.7% 10.0% 11.9% 12.9% 16.6% 18.2% 18.2% 18.8% - - - -EuroStoxx Media 62,862 12.3% 12.5% 11.9% 12.9% 23% 21% 20% 21% 17.0% 3.1% -13.2% -3.5%CEE to Peer, Prem/Disc - 54% 78% 49% 35% -10% 3% 18% 16% - - - -




2010 2011e 2012e 2013e 2010 2011e 2012e 2013e 2010 2011e 2012e 2013eAgora 18.6 13.2 12.0 11.0 8.7 4.8 4.8 4.6 1.1 0.6 0.6 0.6Allami Nyomda 12.1 7.6 7.9 7.5 7.3 4.3 4.5 4.2 1.8 1.5 1.4 1.3Austrian Post 14.1 11.9 11.5 11.3 9.4 6.7 6.8 6.6 2.4 2.1 2.0 2.0Cinema City 19.1 13.6 10.2 8.3 11.5 6.9 5.6 4.9 2.6 1.4 1.2 1.1CME 12.9 nm 20.8 18.2 12.3 7.3 5.5 5.4 1.1 0.6 0.6 0.5Cyfrowy Polsat 22.4 21.1 14.4 12.5 15.3 14.1 10.6 9.5 13.4 3.5 3.0 2.7Multimedia Polska 12.2 11.3 11.1 9.9 3.9 3.8 3.8 3.5 2.7 2.4 2.0 1.6TVN 125.7 20.9 17.4 11.8 19.2 8.9 8.6 6.9 4.7 2.9 2.6 2.3Median CEE 14.1 12.5 11.5 11.0 9.4 6.7 5.5 4.9 2.4 1.5 1.4 1.3St. Ives PLC 9.4 6.3 6.1 5.5 0.7 0.9 1.0Edipresse IRoularta Media Group N.V. 5.3 5.5 4.9 4.6 3.4 3.8 3.3 3.3 0.5 0.5 0.5 0.4Dogan Yayin Holding A.S. 25.3 11.9 11.6 4.4 3.6 0.9 0.5 0.5 0.5Grupo Televisa S.A. de C.V. 18.7 19.8 17.9 16.1 10.9 13.3 12.3 9.0 3.3 3.2 3.0 2.6TV Azteca S.A.B. de C.V. 10.4 12.1 11.2 11.3 8.0 10.9 10.5 12.0 3.0 2.7 2.5 2.0ProSiebenSat.1 Media AG 9.0 8.8 8.8 8.3 7.3 7.7 3.2 4.4 3.6 3.1 3.0 2.6Bloomsbury Publishing PLC 11.5 10.7 9.2 8.8 7.1 13.9 8.8 10.8 0.6 0.6 0.6 0.6Median Total 9.9 10.7 9.0 8.6 7.3 10.9 4.4 4.4 0.9 0.7 0.8 0.8EuroStoxx Media 8.8 10.0 10.2 9.2 5.6 6.1 5.7 5.3 1.3 1.3 1.3 1.3CEE to Peer, Prem/Disc 42% 16% 27% 29% 30% -39% 27% 11% 168% 105% 74% 63%

2010 2011e 2012e 2013e 2010 2011e 2012e 2013eAgora 1.1 0.5 0.5 0.5 7.6 3.9 3.8 3.6Allami Nyomda 0.7 0.5 0.5 0.5 7.2 3.7 3.9 3.7Austrian Post 0.8 0.7 0.7 0.6 6.9 5.7 5.7 5.7Cinema City 1.8 1.3 1.1 1.0 10.7 6.4 5.0 4.3CME 3.3 2.3 2.1 1.9 nm 12.3 9.7 8.9Cyfrowy Polsat 3.9 3.3 3.0 2.8 14.2 12.0 9.6 8.9Multimedia Polska 2.9 2.5 2.4 2.0 5.4 4.8 4.5 4.0TVN 3.3 2.3 2.2 2.0 13.3 8.7 8.2 7.2Median CEE 1.8 1.3 1.1 1.0 7.4 5.7 5.0 4.3St. Ives PLC 0.3 0.3 0.3 0.3 3.3 2.5 3.1 2.7Edipresse IRoularta Media Group N.V. 0.6 0.4 0.3 0.3 5.8 3.6 3.0 2.8Dogan Yayin Holding A.S. 1.3 0.6 0.5 0.4 16.3 5.7 4.1 3.1Grupo Televisa S.A. de C.V. 3.0 5.0 4.5 4.1 7.9 12.9 11.6 10.8TV Azteca S.A.B. de C.V. 1.9 1.6 1.3 1.1 4.7 3.7 3.2 2.6ProSiebenSat.1 Media AG 2.6 2.0 1.9 1.9 8.8 6.4 6.3 5.9Bloomsbury Publishing PLC 0.6 0.6 0.5 0.4 6.6 5.8 4.7 4.4Median Total 1.6 0.8 0.7 0.6 7.2 5.6 4.4 3.4EuroStoxx Media 1.4 1.2 1.1 1.1 7.9 6.0 5.9 5.6CEE to Peer, Prem/Disc 17% 69% 66% 72% 2% 1% 14% 27%

P/E P/CE P/BV

EV/Sales EV/EBITDA




Agora Buy Target price PLN 20.0Price (PLN) 15.8 ROCE 2010 6.1% 10 11e 12e 13eMcap (PLN mn) 804 ROE 2010 6.0% Sales (PLN mn) 1,116.7 1,214.7 1,279.1 1,351.3Mcap (EUR mn) 185 Net debt (EURmn, 10) -21.4 EBITDA margin 14.98% 14.08% 14.41% 14.23%Free float (%) 60.2% Gearing (2010) -7% EBIT margin 7.60% 5.85% 6.46% 6.63%Free float (EUR mn) 111 Sales CAGR 10-13e 5.0% Net profit margin 6.44% 4.70% 5.24% 5.40%Shares outst. (mn) 50.9 EPS CAGR 10-13e 12.0% EPS (PLN) 1.41 1.12 1.32 1.43

Dividend/share (PLN) 0.50 0.56 0.79 1.00EV/sales 1.14 0.54 0.54 0.51EV/EBITDA 7.59 3.87 3.77 3.62P/E 18.63 13.15 12.00 11.03P/CE 8.68 4.77 4.76 4.58P/BV 1.09 0.65 0.63 0.62Dividend yield 1.90% 3.80% 5.00% 6.35%EV/EBITDA rel. 1.0 0.7 0.8 0.8P/E rel. 1.3 1.1 1.0 1.0Performance 1M 3M 6M 12MAbsolute (PLN terms) 21.4% 0.2% -38.1% -44.0%Rel. to sector (EUR, ppt) 21.3 4.8 -19.8 -28.8Rel. to universe (EUR, ppt) 19.5 2.4 -24.6 -35.0

Allami Nyomda Buy Target price HUF 1010.0Price (HUF) 633.0 ROCE 2010 13.7% 10f 11e 12e 13eMcap (HUF mn) 9,099 ROE 2010 15.7% Sales (HUF mn) 17,129.1 16,765.4 17,342.2 17,944.2Mcap (EUR mn) 30 Net debt (EURmn, 10) 2.3 EBITDA margin 9.14% 12.21% 12.68% 13.14%Free float (%) 29.3% Gearing (2010) 10% EBIT margin 5.17% 7.47% 7.58% 7.75%Free float (EUR mn) 9 Sales CAGR 10-13e 6.4% Net profit margin 5.28% 7.02% 7.22% 7.34%Shares outst. (mn) 14 EPS CAGR 10-13e 3.6% EPS (HUF) 59.91 75.33 80.36 84.66

Dividend/share (HUF) 0.00 47.93 48.96 52.23EV/sales 0.66 0.45 0.50 0.48EV/EBITDA 7.20 3.72 3.91 3.66P/E 12.14 7.56 7.88 7.48P/CE 7.29 4.33 4.45 4.24P/BV 1.80 1.45 1.35 1.27Dividend yield 0.00% 8.41% 7.74% 8.25%EV/EBITDA rel. 1.0 0.7 0.8 0.9P/E rel. 0.9 0.6 0.7 0.7Performance 1M 3M 6M 12MAbsolute (HUF terms) -10.7% -15.7% -13.8% -12.1%Rel. to sector (EUR, ppt) -14.3 -12.5 -0.6 -0.6Rel. to universe (EUR, ppt) -16.1 -14.9 -5.4 -6.8

Austrian Post Buy Target price EUR 26.0Price (EUR) 21.8 ROCE 2010 13.9% 10 11e 12e 13e

ROE 2010 17.4% Sales (EUR mn) 2,351 2,317 2,341 2,366Mcap (EUR mn) 1,472 Net debt (EURmn, 10) 132.4 EBITDA margin 11.11% 11.98% 11.65% 11.35%Free float (%) 47.0% Gearing (2010) 19% EBIT margin 6.63% 7.52% 7.63% 7.47%Free float (EUR mn) 52 Sales CAGR 10-13e 0.1% Net profit margin 5.04% 5.34% 5.49% 5.51%Shares outst. (mn) 67.6 EPS CAGR 10-13e 13.1% EPS (EUR) 1.75 1.83 1.90 1.93

Dividend/share (EUR) 1.60 1.65 1.70 1.75EV/sales 0.77 0.68 0.67 0.64EV/EBITDA 6.90 5.70 5.72 5.67P/E 14.11 11.89 11.46 11.30P/CE 9.44 6.65 6.78 6.64P/BV 2.42 2.08 2.04 1.99Dividend yield 6.47% 7.57% 7.80% 8.03%EV/EBITDA rel. 0.9 1.0 1.2 1.3P/E rel. 1.0 0.9 1.0 1.0Performance 1M 3M 6M 12MAbsolute (EUR terms) 2.2% 6.2% -11.2% 2.3%Rel. to sector (EUR, ppt) 1.1 18.2 13.0 23.0Rel. to universe (EUR, ppt) -0.7 15.7 8.2 16.8

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Cinema City Buy Target price PLN 40.0Price (PLN) 28.4 ROCE 2010 12.2% 10 11e 12e 13eMcap (PLN mn) 1,446 ROE 2010 15.0% Sales (EUR mn) 325.8 268.4 300.8 329.3Mcap (EUR mn) 332 Sales CAGR 10-13e 21.5 EBITDA margin 17.24% 20.70% 22.11% 22.90%Free float (%) 46.1% Gearing (2010) 10% EBIT margin 11.16% 11.60% 13.28% 14.38%Free float (EUR mn) 153 Sales CAGR 10-13e 11.7% Net profit margin 9.22% 9.38% 10.90% 12.19%Shares outst. (mn) 50.9 EPS CAGR 10-13e 12.9% EPS (EUR) 0.60 0.48 0.64 0.78

Dividend/share (EUR) 0.00 0.00 0.32 0.63EV/sales 1.84 1.32 1.10 0.98EV/EBITDA 10.67 6.38 4.96 4.30P/E 19.09 13.60 10.23 8.35P/CE 11.53 6.94 5.57 4.86P/BV 2.63 1.36 1.20 1.10Dividend yield 0.00% 0.00% 4.88% 9.58%EV/EBITDA rel. 1.4 1.1 1.0 1.0P/E rel. 1.4 1.1 0.9 0.8Performance 1M 3M 6M 12MAbsolute (PLN terms) 9.2% -11.3% -23.2% -33.2%Rel. to sector (EUR, ppt) 9.0 -5.8 -6.4 -18.9Rel. to universe (EUR, ppt) 7.2 -8.3 -11.1 -25.1

CME Buy Target price USD 15.0Price (USD) 10.7 ROCE 2010 1% 10 11e 12e 13eMcap (USD mn) 690 ROE 2010 9% Sales (USD mn) 737.1 819.7 892.4 930.5Mcap (EUR mn) 502 Sales CAGR 10-13e 832 EBITDA margin 14.01% 18.80% 21.42% 21.84%Free float (%) 53.1% Gearing (2010) 89% EBIT margin 3.10% 8.61% 11.69% 12.50%Free float (EUR mn) 267 Sales CAGR 10-13e 6.8% Net profit margin -15.86% -5.89% 3.35% 3.72%Shares outst. (mn) 64.4 EPS CAGR 10-13e #ZAHL! EPS (USD) 1.56 -0.70 0.52 0.59

Dividend/share (USD) 0.00 0.00 0.00 0.00EV/sales 3.28 2.31 2.08 1.95EV/EBITDA 23.43 12.30 9.70 8.91P/E 12.93 nm 20.76 18.19P/CE 12.29 7.34 5.51 5.42P/BV 1.07 0.59 0.56 0.53Dividend yield 0.00% 0.00% 0.00% 0.00%EV/EBITDA rel. 3.2 2.2 2.0 2.1P/E rel. 0.9 - 1.8 1.6Performance 1M 3M 6M 12MAbsolute (USD terms) 59.5% -38.9% -53.1% -54.6%Rel. to sector (EUR, ppt) 58.4 -26.9 -28.9 -33.9Rel. to universe (EUR, ppt) 56.6 -29.4 -33.6 -40.1

Cyfrowy Polsat Buy Target price PLN 19.0Price (PLN) 14.4 ROCE 2010 64% 10 11e 12e 13eMcap (PLN mn) 5,019 ROE 2010 69% Sales (PLN mn) 1,496 2,436 2,836 2,941Mcap (EUR mn) 1,153 Sales CAGR 10-13e -2 EBITDA margin 27.19% 27.54% 31.00% 31.16%Free float (%) 51.5% Gearing (2010) -2% EBIT margin 21.77% 22.03% 25.64% 25.85%Free float (EUR mn) 594 Sales CAGR 10-13e 23.1% Net profit margin 17.27% 11.19% 15.14% 16.75%Shares outst. (mn) 348.3 EPS CAGR 10-13e 15.1% EPS (PLN) 0.74 0.64 1.00 1.15

Dividend/share (PLN) 0.57 0.39 0.74 0.85EV/sales 3.86 3.31 2.96 2.79EV/EBITDA 14.21 12.00 9.57 8.94P/E 22.40 21.10 14.38 12.53P/CE 15.28 14.14 10.62 9.51P/BV 13.43 3.54 3.03 2.72Dividend yield 3.43% 2.91% 5.13% 5.89%EV/EBITDA rel. 1.9 2.1 1.9 2.1P/E rel. 1.6 1.7 1.3 1.1Performance 1M 3M 6M 12MAbsolute (PLN terms) -2.4% -7.0% -11.0% 6.0%Rel. to sector (EUR, ppt) 385.3 342.7 320.7 299.3Rel. to universe (EUR, ppt) 383.5 340.2 315.9 293.1

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Cyfrowy PolsatWIG (Rebased)DJ EURO STOXX Media (Rebased)



Multimedia Polska Hold Target price PLN 10.0Price (PLN) 9.1 ROCE 2010 10.6% 10e 11e 12e 13eMcap (PLN mn) 1,039 ROE 2010 16.1% Sales (PLN mn) 563.6 600.6 632.6 661.0Mcap (EUR mn) 239 Sales CAGR 10-13e 173 EBITDA margin 53.49% 52.23% 51.90% 51.37%Free float (%) 18.6% Gearing (2010) 194% EBIT margin 24.05% 24.63% 23.37% 22.72%Free float (EUR mn) 44 Sales CAGR 10-13e 5.9% Net profit margin 13.86% 14.28% 14.81% 15.90%Shares outst. (mn) 114.9 EPS CAGR 10-13e 22.0% EPS (PLN) 0.68 0.75 0.82 0.91


Performance 1M 3M 6M 12MAbsolute (PLN terms) 0.0% -3.3% -2.2% -5.7%Rel. to sector (EUR, ppt) -1.1 8.7 22.1 15.0Rel. to universe (EUR, ppt) -2.9 6.2 17.3 8.8

TVN Accumulate Target price PLN 16.0Price (PLN) 12.3 ROCE 2010 3.9% 10 11e 12e 13eMcap (PLN mn) 4,194 ROE 2010 3.7% Sales (PLN mn) 2,490.6 2,639.4 2,852.1 3,075.8Mcap (EUR mn) 963 Sales CAGR 10-13e 573 EBITDA margin 24.56% 26.14% 27.32% 0.00%Free float (%) 43.6% Gearing (2010) 183% EBIT margin 14.64% 16.69% 18.81% 19.89%Free float (EUR mn) 419 Sales CAGR 10-13e 9.8% Net profit margin 1.88% 7.08% 8.47% 11.57%Shares outst. (mn) 340.9 EPS CAGR 10-13e 0.7% EPS (PLN) 0.14 0.55 0.71 1.04



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Multimedia PolskaWIG (Rebased)DJ EURO STOXX Media (Rebased)



Sector Insight Oil & Gas

– OMV 3Q trading statement: Upstream production ahead of forecast, no special charges, lower exploration expenses – Tupras secures loan for residuum upgrading project (RUP) – KOV suspends operations in Syria – PKN Orlen to invest in shale gas exploration, consider sale of Mazeikiu – PGN: Gazprom unlikely to change gas price formula

In the third quarter, OMV’s upstream production came in ahead of our forecast (of 281,000 boe/d) at 283,000 boe/d. It recovered after having fallen from the 320,000 boe/d recorded in 4Q10 and 304,000 boe/d in 1Q11 to 275,000 boe/d in 2Q11. Nonetheless, the production rate in 3Q11 was still at a depressed level, as the production in Libya remains shut in (about 33,000 boe/d), while the Haban field in Yemen was partially brought back on-stream after the damaged export pipeline was repaired. In addition, base effects contributed to the q/q rise in production, as the rate in 2Q11 was negatively affected by maintenance shutdowns of several producing assets. The Tunisian assets acquired earlier this year added around 4,600 boe/d to OMV’s production rate in 3Q11, while the addition of the Petronas assets in Pakistan added approx. 900 boe/d. Petrom’s production volumes (184,000 boe/d) were slightly lower than in 2Q11 (187,000 boe/d), as new wells could not fully compensate for outages caused by bad weather. Exploration expenses will be lower than in 2Q11. Once again, hedging had a negative impact (EUR -44mn). Substantial unrealized profits will be eliminated in the consolidation line. OMV’s 3Q11 refining margin improved slightly from the previous quarter, rising from USD 1.51/bbl in 2Q11 to USD 1.74/bbl in 3Q11. The margin approached the upper end of our forecasted range. In the Gas & Power segment, gas sales volumes increased to 4.79 bcm from 3.11 bcm a year earlier. The petrochemical performance improved vs. 2Q11 (affected by the maintenance shutdown at Schwechat) and higher volumes.

Overall, the trading statement was definitely positive, as the production rate not only improved, but also beat our forecast. Moreover, the refining margin came in towards the upper end of our expected range. The company did not announce any extraordinary expenses for the quarter and exploration expenses were lower (q/q). All of these factors point to an improvement of the 3Q11 results (compared to 2Q11). Despite the production rate having climbed q/q, it remains at a depressed level and is only anticipated to return to more ‘normal’ levels with the gradual recommencement of oil production in Libya. With the comeback of hydrocarbon production in Yemen, we see a good chance that hydrocarbon production will increase further towards the end of the year. Oil prices have drifted downward in 3Q11 (compared to 2Q11), but remain at a highly elevated level (historically). At the same time, the USD has strengthened and thus the effect of lower oil prices (q/q) on the results should be less pronounced. Additionally, the increase in the production rate, as well as significantly lower exploration expenses (they were extraordinarily high in 2Q11, due to impairments), should lead to a clear advance in the profitability of the E&P segment. In terms of currency movements, the sharp decline of the TRY against the USD and the EUR will affect earnings at Petrol Ofisi negatively, which otherwise should improve compared to the disappointing performance in the first half of 2011.

Tupras announced that a contract for a total of USD 2.1bn in loans was signed. The credit facility consists of three tranches. The portion insured by the Spanish Export Credit Agency (CESCE) amounts to USD 1,111.8mn (grace period of four years and a total tenor of 12 years). The approximate financing cost of this tranche is LIBOR +3.05%. The second tranche amounts to USD 624.3mn and is insured by the Italian Export Credit Agency (SACE) with a total tenor of 12 years (four years grace period) and financing costs of LIBOR +3.10%. A third tranche with a total of USD 359mn in commercial loans will be supplied by a consortium of 10 banks (Banco Bilbao Vizcaya Argentaria, S.A., The Bank Of Tokyo-Mitsubishi Ufj, Ltd., BNP Paribas, Crédit Agricole Corporate And Investment Bank, Deutsche Bank AG-London Branch, HSBC Bank Plc, Banco Santander, S.A., Sumitomo Mitsui Banking Corporation Europe Limited, Societe Generale, WestLB AG-London Branch). Tupras is working on a possible conversion of all or parts of the loans to fixed interest rates. The proceeds of the loans will be paid out to the project manager (Spain’s Tecnicas Reunidas) to cover advance payments and completed work over a period of approximately 3-3.5 years.

The signing of the financing contracts marked an important step for the project. The site preparation for the RUP has already commenced and the negotiations for the financing contracts were causing a delay, but, considering



current market conditions and the size of the loans, a hold-up was to be expected. With the presentation of the 2Q11 results, Tupras stated that the contract with Tecnicas Reunidas was converted to a turnkey contract, with costs amounting to a total of USD 2.38bn. Management expects the project NPV to be USD 1.5bn, while the equity and project IRR were calculated at 29.7% and 17.9%, respectively. The anticipated contribution to EBITDA is USD 50mn. The current schedule sees the upgrading unit coming on-stream in the fourth quarter of 2014. In our model, we expect a significant contribution from 2015. Our CAPEX assumptions for the coming years are still based on the previous cost estimates and thus we will have to increase the expected expenditures (2011-14) in our next update. The vast majority of funds will be spent in 2012 and 2013. Overall, the announcement was positive, as the company has now managed to get past the last major hurdle before the actual construction can begin. We stick to our Hold recommendation.

Kulczyk Oil Ventures (KOV) announced that it has suspended current operations in Syria. The decision to suspend operations results from the company requiring time to consider the implications of drilling results from the Itheria-1 well to date, as well as the increasingly difficult operating environment in Syria. As a result, the drilling of the Itheria-1 well, the first exploration well drilled by KOV and its partners at Syria Block-9, was stopped at a depth of 2,072 meters. The original planned target depth of the Itheria-1 well was 3,256 meters. The well was designed to evaluate multiple zones within a large structure with four-way dip closure defined by 3D seismic in an area approximately 200km east of the city of Latakia. Before taking the decision to suspend current operations, KOV requested an extension of the first exploration period under the Block 9 Production Sharing Contract (PSC), which was refused. The Block 9 PSC remains in effect and discussions with the Syrian government authorities concerning Block 9 are continuing. In the meantime, KOV will continue to monitor operating conditions in Syria to assess when, and if, a recommencement of its Syrian operations is possible.

According to the company, the suspension was caused by an increasingly difficult operating environment in the country. Sanctions against Syria have hindered KOV from sending funds necessary for the exploration activities to its Syrian subsidiary. In addition, workers’ security is an issue. This is very frustrating for the company, as it was forced to stop the Itheria-1 drilling midway without it having produced full results, which are necessary to evaluate the drilling completely. The future of KOV’s activities at Block 9 will depend on the political situation in the country and the outcome of talks with authorities. Overall, KOV’s exploration assets in Syria and Brunei have not yielded the expected results yet. Thus, as the probability of future oil and gas discoveries and production is declining, we will need to lower our valuation for these assets. Since the exploration program in Syria currently cannot be continued and recommencement is at risk, we will have to cut the value attached to the prospective resources at Block 9 considerably. In our last update, we included these Syrian hydrocarbon resources with a value of PLN 0.42 per share.

PKN Orlen revealed that it aims to spend up to PLN 500mn (or PLN1.17/share) on shale gas exploration in Poland over the next two years. The first stage of the investment in shale gas exploration assumes four drilling wells in 2012 and two more in 2013. PKN has eight exploration licenses for shale gas in Poland. According to EIA, the potential resources of shale gas in Poland may amount to 5.3trn cm, of which 1.24trn should be in the Lubelszczyzna region. In addition, a cooperation agreement with Canada’s EnCana concerning shale gas should be approved in November.

The Polish press revealed that PKN is considering a partial sale of the Mazeikiu refinery. The company does not want to sell its entire stake in Mazeikiu, as it hopes that the logistics problems at the Lietuva refinery will be resolved next year, which would be helpful in improving Mazeikiu’s profitability. The potential proceeds could bring in approx. PLN 3-4bn in cash. In our view, the sale of the Mazeikiu refinery would be positive for PKN.

Meanwhile, the company issued its trading statement, according to which operating profit in 3Q11 should amount to approx. PLN 750mn, down y/y. The estimated LIFO effect should increase PKN’s operating profit in 3Q11 by PLN 500mn. The impact of a slightly worse macro environment on the results in 3Q11 (incl. refining margins, petchem margins, BU differential and changes in FX) on a y/y basis should amount to PLN 100mn.

PKN disclosed that oil throughput in 3Q11 amounted to 7418mn tons (+10% q/q, +0% y/y). *Oil throughout in the Plock refinery stood at 3,953mn tons (+14% q/q, +8% y/y). *Oil throughput in Unipetrol stood at 941mn tons (-15% q/q, -20% y/y). *Oil throughput in Orlen Lietuva arrived at 2,435mn tons (+15% q/q, -2% y/y). *Moreover, the company revealed that:



- sales in the refining segment grew to 6,279mn tons (+13% q/q, +3% y/y). - sales in the retail segment stood at 1,987mn tons (+8% q/q, +2% y/y). - sales in the petrochemical segment were 1,360mn tons (+12% q/q, + 12% y/y). Up 12% y/y, sales in the petchem segment are mainly due to the start-up of a new PTA installation.

PKN should post up to PLN 1.1bn in losses from the revaluation of foreign currency debt in 3Q11. The PLN lost 10% vs. the EUR and 17% vs. the USD in the July-September period. The company hopes that a third tranche of fuel reserves will be sold in 4Q11. The sale of around 500k tons of crude oil was supposed to take place in 3Q11.

The Polish press revealed that it is unlikely that Gazprom will agree to change the gas price-setting formula for PGN. Lower gas prices are crucial for PGN, as they would mean annual savings of a few hundred million USD. PGN revealed that, if Gazprom will not agree to lower gas prices, the company will apply for arbitrage in court. The negotiations between PGN and Gazprom concerning gas price reductions started in March. The deputy CEO of Gazprom disclosed in a press interview that the company will not negotiate a gas price reduction with PGN. He added that, according to the Yamal contract, a gas price cut for PGN could only be carried out in the event of drastic changes on gas markets, for example, a significant drop in spot prices, while the current gas prices on spot market oscillate at around USD 420 per 1,000 cm. Due to the growing nine-month crawling average of the crude oil price and the weaker PLN vs. the USD, the cost of imported gas from Russia is higher than the current gas tariffs. This means that 4Q11 results may be disappointing.

The company disclosed that it aims to invest in refinery producing diesel and jet fuel made from gas (GTL - gas to liquids). There were no other details regarding the issue, however, the investment should definitely consume a huge pile of cash. PGN will thus seek a partner to finance the investment. According to PGN, shale gas could be a feedstock for GTL fuels.

The company revealed that there will be a delay in the start of extraction of gas & oil on the Skrav field (Norwegian shelf). The start of extraction is scheduled for 1Q12, while earlier it was 4Q11. PGN has therefore lowered its forecasts concerning gas extraction in Norway to 0.24bn cm (from 0.4bn cm). Oil extraction should reach 250k tons vs. the earlier planned 400k tons. The reasons behind the delay are linked to technical problems and bad weather conditions. Moreover, PGN disclosed that its extractable deposits from the Skrav field were increased to 70.9mn bbl (vs. the earlier 61.4mn bbl). After that, PGN doubled its stake in the Skrav field without giving details concerning the price paid for an additional 15% stake.

Meanwhile, PGN disclosed that it sold around 2.5bn cm of gas in 3Q11 (+4% y/y). PGN extracted 1.1bn cm of gas from its own deposits and has imported a further 2.2bn cm of gas, mainly from Russia.




Aygaz TRY 1,182.9 13.7% 17.0% 10.9% 10.8% 6.9% 8.5% 5.3% 5.4% 4.2% -4.5% -22.2% -1.3%FX Energy USD 238.4 -5% 13.1% 8.7% 7.1% 28.8% 38.3% 44.3% 47.9% 61.5% -27.7% -6.7% 23.9%INA HRK 5,606.0 3.6% 19.9% 23.9% 22.6% 15% 18.4% 21.3% 22.8% 0.2% -0.5% -1.5% 135.5%Kulczyk Oil Ventures USD 101.6 -17.4% -4.6% -3.2% -3.2% -151% -1.7% 13.1% 14.3% 24.6% -37.1% -44.7% -39.8%Lotos Group PLN 854.5 9.6% 11.2% 12.0% 11.5% 6% 6.1% 7.1% 7.6% 20.6% -26.4% -44.9% -15.7%MOL HUF 5,037.0 7.6% 12.9% 14.8% 12.6% 12% 11.8% 12.6% 12.5% 4.1% -26.9% -43.3% -30.3%OMV EUR 8,207.9 10.7% 11.8% 11.5% 11.6% 17% 13.1% 12.8% 12.9% 15.1% -3.2% -18.8% -6.6%Petrom RON 3,882.6 15.9% 18.4% 15.3% 15.7% 31% 32.8% 31.7% 31.0% 6.4% -22.3% -34.3% -13.4%PKN Orlen PLN 4,065.5 12.6% 21.2% 8.8% 8.3% 7% 6.3% 6.0% 6.2% 19.3% -11.5% -31.9% -10.3%Tupras TRY 4,193.5 20.4% 26.0% 24.5% 23.2% 5% 4.6% 4.8% 4.8% 6.3% 5.9% -25.9% -11.7%Turcas Petrol AS TRY 268.2 11.3% 3.9% 8.2% 11.9% 17% 90.7% 121.1% 111.6% 15.7% -10.7% -38.4% -42.7%Unipetrol CZK 1,248.3 2.5% 4.6% 4.6% 3.8% 6% 5.1% 5.9% 5.4% -2.2% -2.8% -14.0% -14.6%Median - - 11% 13% 12% 12% 12% 12% 13% 13% - - - -Repsol YPF S.A. EUR 25,638 8.4% 9.1% 10.3% 11.0% 14.4% 13.7% 14.2% 14.5% 8.8% 2.1% -12.2% 5.7%Royal Dutch Shell PLC (CL GBP 161,299 12.2% 16.0% 15.3% 14.6% 13.0% 13.6% 14.2% 14.0% 10.3% 4.3% -2.2% 6.9%Total S.A. EUR 88,611 17.0% 17.6% 16.3% 15.5% 17.3% 18.3% 20.8% 20.9% 15.4% 3.9% -12.1% -5.1%Cia Espanola De Petroleos EUR 11.1% 9.4% 10.5% 6.2% 6.5% 6.5% 0.0% Hellenic Petroleum S.A. EUR 1,959 7.3% 7.7% 11.0% 12.7% 5.9% 5.1% 5.5% 5.9% 10.5% 4.2% -8.8% 15.5%Tupras Turkiye Petrol RafinTRY - 4,194 19.1% 23.7% 25.1% 22.8% 6.0% 4.2% 4.2% 4.3% 6.3% 5.9% -25.9% -11.7%OMV Petrol Ofisi A.S. TRY - 1,074 4.1% 3.8% 3.7% 3.6% 4.5% -16.4% -38.0% -48.7%Lukoil Holdings USD 35,525 15.2% 16.2% 12.5% 11.4% 14.9% 14.3% 14.1% 14.2% 14.3% -6.4% -7.5% 3.6%Median Total - 381,304 12.8% 15.0% 13.2% 14.0% 13.0% 13.6% 14.1% 14.1% - - - -EuroStoxx Oil & Gas 238,158 11.3% 12.3% 10.4% 14.0% 17% 18% 21% 21% 13.9% -2.0% -7.5% -6.4%CEE to Peer, Prem/Disc - -17% -13% -13% -17% -10% -14% -9% -9% - - - -


2010 2011e 2012e 2013e 2010 2011e 2012e 2013e 2010 2011e 2012e 2013eAygaz 10.1 7.4 11.6 11.3 7.5 6.2 9.2 9.0 1.3 1.3 1.3 1.2FX Energy nm 49.2 43.9 45.2 194.3 27.6 17.8 14.3 11.7 4.2 3.5 3.0INA 71.1 15.1 10.8 9.9 13.4 9.0 7.0 6.7 2.5 2.8 2.4 2.1Kulczyk Oil Ventures nm nm nm nm n.m. n.m. n.m. n.m. 1.4 0.8 0.9 0.9Lotos Group 7.0 3.9 3.5 3.4 4.1 2.2 2.4 2.2 0.6 0.4 0.4 0.4MOL 19.2 7.6 6.4 7.2 4.9 3.0 2.9 3.0 1.4 1.0 0.9 0.9OMV 10.1 6.8 6.4 5.9 3.3 2.5 2.5 2.3 1.0 0.8 0.7 0.7Petrom 6.9 4.6 5.1 4.6 3.2 2.4 2.5 2.3 1.0 0.8 0.7 0.7PKN Orlen 7.8 3.4 8.1 8.5 3.9 2.2 3.8 4.0 0.9 0.7 0.7 0.7Tupras 12.7 8.9 9.4 9.2 9.8 7.1 7.2 6.9 2.5 2.4 2.2 2.0Turcas Petrol AS 14.9 27.5 13.7 8.6 14.5 26.3 13.5 8.5 1.6 1.2 1.1 1.0Unipetrol 38.4 17.2 16.3 19.3 7.9 5.9 5.9 6.4 0.9 0.8 0.7 0.7Median CEE 10.1 7.5 8.7 8.5 6.2 4.6 5.4 5.3 1.4 1.0 0.9 0.9Repsol YPF S.A. 12.7 11.4 9.5 8.4 4.4 4.2 3.6 3.4 1.1 1.0 1.0 0.9Royal Dutch Shell PLC (CL A) 11.5 8.1 7.7 7.4 6.7 5.0 4.8 4.6 1.4 1.3 1.2 1.1Total S.A. 8.2 7.2 7.1 6.8 4.5 4.3 4.1 3.8 1.4 1.3 1.2 1.1Cia Espanola De PetroleosHellenic Petroleum S.A. 11.3 10.2 6.8 5.5 18.3 37.6 4.4 3.7 0.8 0.8 0.7 0.7Tupras Turkiye Petrol Rafineril 11.7 10.3 8.9 9.2 4.4 9.0 7.4 7.0 2.2 2.4 2.2 2.1OMV Petrol Ofisi A.S. 12.2 12.9 12.9Lukoil Holdings 5.1 4.0 4.7 4.7 3.4 3.0 3.0 3.0 0.8 0.6 0.6 0.5Median Total 11.3 9.1 7.4 7.1 4.4 4.3 4.1 3.7 1.1 1.0 1.0 0.9EuroStoxx Oil & Gas 14.8 14.0 9.5 8.4 6.0 5.9 4.4 3.8 1.4 1.3 1.2 1.1CEE to Peer, Prem/Disc -10% -18% 18% 21% 41% 7% 34% 44% 23% -6% -6% -4%

P/E P/CE P/BV



2010 2011e 2012e 2013e 2010 2011e 2012e 2013eAygaz 0.5 0.4 0.4 0.4 6.9 5.1 8.4 8.0FX Energy 11.7 8.1 7.0 6.4 40.5 21.1 15.9 13.3INA 1.6 1.5 1.4 1.3 10.7 8.0 6.4 5.8Kulczyk Oil Ventures 30.9 9.5 9.0 9.2 -20.5 -547.2 69.0 64.6Lotos Group 0.5 0.3 0.3 0.3 9.4 5.3 4.8 4.2MOL 0.8 0.5 0.5 0.5 6.4 4.1 3.9 3.9OMV 0.8 0.5 0.5 0.4 4.5 3.8 3.6 3.3Petrom 1.2 0.8 0.9 0.8 3.8 2.5 2.7 2.5PKN Orlen 0.4 0.3 0.3 0.3 5.5 4.0 4.9 4.6Tupras 0.3 0.3 0.3 0.3 5.2 6.1 6.6 6.4Turcas Petrol AS 15.2 79.4 71.4 63.5 87.5 87.5 59.0 56.9Unipetrol 0.4 0.3 0.3 0.3 6.5 6.0 5.6 6.4Median CEE 0.8 0.5 0.5 0.5 6.4 5.1 6.4 5.8Repsol YPF S.A. 0.6 0.6 0.5 0.5 4.2 4.2 3.7 3.4Royal Dutch Shell PLC (CL A) 0.7 0.5 0.5 0.5 5.0 3.8 3.5 3.6Total S.A. 0.7 0.6 0.6 0.6 3.9 3.3 3.0 3.1Cia Espanola De Petroleos 0.3 4.7Hellenic Petroleum S.A. 0.4 0.4 0.4 0.4 7.1 8.8 7.0 6.0Tupras Turkiye Petrol Rafineril 0.3 0.2 0.3 0.3 4.8 5.8 6.5 6.9OMV Petrol Ofisi A.S.Lukoil Holdings 0.5 0.4 0.4 0.4 3.6 2.9 2.9 2.7Median Total 0.6 0.5 0.5 0.5 4.4 3.8 3.5 3.4EuroStoxx Oil & Gas 1.3 1.2 1.1 1.0 8.0 7.0 7.0 5.6CEE to Peer, Prem/Disc 33% -4% -4% -2% 45% 36% 81% 70%

EV/Sales EV/EBITDA




Aygaz Accumulate Target price TRY 11.4Price (TRY) 9.6 ROCE 2010 13.0% 10 11e 12e 13eMcap (TRY mn) 2,868 ROE 2010 13.7% Sales (TRY mn) 4,657.7 5,131.6 5,313.7 5,410.4Mcap (EUR mn) 1,183 Net debt (EURmn, 10) -113.6 EBITDA margin 6.87% 8.53% 5.31% 5.37%Free float (%) 24.3% Gearing (2010) -12% EBIT margin 4.96% 7.11% 4.13% 5.59%Free float (EUR mn) 287 Sales CAGR 10-13e 9.3% Net profit margin 5.16% 7.23% 4.66% 4.73%Shares outst. (mn) 300.0 EPS CAGR 10-13e -5.2% EPS (TRY) 0.80 1.23 0.82 0.85


Performance 1M 3M 6M 12MAbsolute (TRY terms) 1.3% -4.9% -17.2% 21.0%Rel. to sector (EUR, ppt) -4.2 3.0 0.0 -3.8Rel. to universe (EUR, ppt) 1.3 5.1 -2.8 13.3

FX Energy Accumulate Target price USD 9.6Price (USD) 6.3 ROCE 2010 -2.1% 10 11e 12e 13eMcap (USD mn) 328 ROE 2010 -4.5% Sales (USD mn) 25.0 43.5 54.2 61.6Mcap (EUR mn) 238 Net debt (EURmn, 10) 12.4 EBITDA margin 28.82% 38.33% 44.26% 47.92%Free float (%) 83.8% Gearing (2010) 70% EBIT margin 18.32% 26.34% 23.82% 14.37%Free float (EUR mn) 200 Sales CAGR 10-13e 43.2% Net profit margin -3.03% 15.63% 14.01% 12.21%Shares outst. (mn) 52 EPS CAGR 10-13e #ZAHL! EPS (USD) -0.02 0.13 0.14 0.14

Dividend/share (USD) 0.00 0.00 0.00 0.00EV/sales 11.67 8.10 7.03 6.37EV/EBITDA 40.48 21.14 15.88 13.29P/E nm 49.24 43.95 45.23P/CE 194.34 27.64 17.78 14.33P/BV 11.68 4.23 3.47 2.95Dividend yield 0.00% 0.00% 0.00% 0.00%EV/EBITDA rel. 6.3 4.1 2.5 2.3P/E rel. - 6.6 5.0 5.3

Performance 1M 3M 6M 12MAbsolute (USD terms) 67.2% -30.5% -13.6% 21.5%Rel. to sector (EUR, ppt) 53.1 -20.2 15.5 21.4Rel. to universe (EUR, ppt) 58.6 -18.2 12.7 38.4

INA Hold Target price HRK 4,500.0Price (HRK) 4,200.0 ROCE 2010 4.0% 10 11e 12e 13eMcap (HRK mn) 42,000 ROE 2010 3.6% Sales (HRK mn) 25,863.0 33,861.0 36,976.0 36,909.1Mcap (EUR mn) 5,606 Net debt (EURmn, 10) 1,366.0 EBITDA margin 14.64% 18.45% 21.29% 22.79%Free float (%) 7.7% Gearing (2010) 78.8% EBIT margin 8.03% 12.89% 15.56% 15.30%Free float (EUR mn) 432 Sales CAGR 10-13e 13.4% Net profit margin 3.59% 7.95% 10.48% 11.34%Shares outst. (mn) 10.0 EPS CAGR 10-13e #ZAHL! EPS (HRK) 44.30 275.27 387.26 422.43


Performance 1M 3M 6M 12MAbsolute (HRK terms) 0.0% 0.0% 0.0% 141.0%Rel. to sector (EUR, ppt) -8.3 7.0 20.7 133.0Rel. to universe (EUR, ppt) -2.8 9.0 18.0 150.0

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Aygaz ISE 100 (Rebased) DJ EURO STOXX Oil & Gas (Rebased)



Kulczyk Oil Ventures Buy Target price USD 2.4Price (USD) 1.1 ROCE 2010 -11.3% 10 11e 12e 13eMcap (USD mn) 140 ROE 2010 -17.4% Sales (USD mn) 7.5 17.9 21.5 23.7Mcap (EUR mn) 102 Net debt (EURmn, 10) -1.5 EBITDA margin -150.99% -1.74% 13.05% 14.32%Free float (%) 28.3% Gearing (2010) -1.1% EBIT margin -187.69% -28.34% -7.77% -26.20%Free float (EUR mn) 29 Sales CAGR 10-13e #DIV/0! Net profit margin -248.22% -49.47% -30.88% -27.51%Shares outst. (mn) 402.1 EPS CAGR 10-13e -40.5% EPS (USD) -0.06 -0.02 -0.01 -0.01

Dividend/share (USD) 0.00 0.00 0.00 1.00EV/sales 30.91 9.50 9.01 9.25EV/EBITDA nm nm 69.02 64.57P/E nm nm nm nmP/CE nm nm nm nmP/BV 1.36 0.84 0.86 0.88Dividend yield 0.00% 0.00% 0.00% 288.05%EV/EBITDA rel. - - 10.8 11.1P/E rel. - - - -

Performance 1M 3M 6M 12MAbsolute (USD terms) 15.0% -31.8% -48.6% -48.6%Rel. to sector (EUR, ppt) 16.2 -29.6 -22.5 -42.3Rel. to universe (EUR, ppt) 21.7 -27.6 -25.3 -25.3

Lotos Group Accumulate Target price PLN 55Price (PLN) 28.7 ROCE 2010 6.9% 10 11e 12e 13eMcap (PLN mn) 3,721 ROE 2010 9.6% Sales (PLN mn) 19,681 28,233 27,514 27,779Mcap (EUR mn) 854 Net debt (EURmn, 10) 1,513 EBITDA margin 5.86% 6.11% 7.13% 7.60%Free float (%) 41.8% Gearing (2010) 80% EBIT margin 3.88% 4.10% 5.00% 4.69%Free float (EUR mn) 357 Sales CAGR 10-13e 18.0% Net profit margin 3.45% 3.13% 3.89% 3.97%Shares outst. (mn) 129.9 EPS CAGR 10-13e 2.3% EPS (PLN) 5.24 6.81 8.25 8.51



MOL Accumulate Target price HUF 27,500.0Price (HUF) 15,810.00 ROCE 2010 5.0% 10 11e 12e 13eMcap (HUF mn) 1,534,902 ROE 2010 7.6% Sales (HUF mn) 4,298,709 5,505,097 5,899,795 5,707,525Mcap (EUR mn) 5,037 Net debt (EURmn, 10) 2,858 EBITDA margin 11.79% 11.77% 12.55% 12.46%Free float (%) 26.5% Gearing (2010) 40% EBIT margin 5.44% 6.60% 7.69% 6.19%Free float (EUR mn) 1,335 Sales CAGR 10-13e 15% Net profit margin 2.47% 4.31% 4.96% 4.66%Shares outst. (mn) 97.1 EPS CAGR 10-13e 23.8% EPS (HUF) 1,070.80 1,875.06 2,464.63 2,210.89


Performance 1M 3M 6M 12MAbsolute (HUF terms) 7.1% -18.4% -34.9% -22.1%Rel. to sector (EUR, ppt) -4.3 -19.4 -21.1 -32.9Rel. to universe (EUR, ppt) 1.2 -17.4 -23.8 -15.8

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Kulczyk Oil VenturesW IG (Rebased)DJ EURO STO XX Oil & Gas (Rebased)



OMV Buy Target price EUR 34.000Price (EUR) 25.2 ROCE 2010 7.7% 10 11e 12e 13e

ROE 2010 10.7% Sales (EUR mn) 23,323.4 34,202.1 36,641.1 40,779.9Mcap (EUR mn) 8,208 Net debt (EURmn, 10) 6,263 EBITDA margin 16.77% 13.10% 12.82% 12.88%Free float (%) 48.5% Gearing (2010) 55% EBIT margin 10.01% 7.39% 7.38% 7.44%Free float (EUR mn) 3,981 Sales CAGR 10-13e 22.8% Net profit margin 5.21% 4.63% 4.75% 4.76%Shares outst. (mn) 326.1 EPS CAGR 10-13e 22.4% EPS (EUR) 3.08 3.73 3.93 4.30


Performance 1M 3M 6M 12MAbsolute (EUR terms) 15.1% -3.2% -18.8% -6.6%Rel. to sector (EUR, ppt) 6.7 4.3 3.4 -9.1Rel. to universe (EUR, ppt) 12.2 6.3 0.6 7.9

Petrom Buy Target price RON 0.5Price (RON) 0.3 ROCE 2010 10.1% 10 11e 12e 13eMcap (RON mn) 16,897 ROE 2010 15.9% Sales (RON mn) 18,615.7 24,208.1 24,583.8 27,436.1Mcap (EUR mn) 3,883 Net debt (EURmn, 10) 718 EBITDA margin 31.14% 32.84% 31.68% 0.00%Free float (%) 6.2% Gearing (2010) 16% EBIT margin 16.04% 19.96% 18.12% 16.36%Free float (EUR mn) 241 Sales CAGR 10-13e 14.3% Net profit margin 14.65% 14.89% 13.72% 13.66%Shares outst. (mn) 56,644.1 EPS CAGR 10-13e 44.1% EPS (RON) 0.05 0.06 0.06 0.07

Dividend/share (RON) 0.02 0.03 0.03 0.03EV/sales 1.17 0.82 0.86 0.78EV/EBITDA 3.77 2.51 2.73 2.52P/E 6.88 4.59 5.06 4.55P/CE 3.16 2.39 2.47 2.26P/BV 1.03 0.80 0.75 0.69Dividend yield 5.32% 10.89% 9.88% 10.98%EV/EBITDA rel. 0.6 0.5 0.4 0.4P/E rel. 0.7 0.6 0.6 0.5

Performance 1M 3M 6M 12MAbsolute (RON terms) 7.3% -20.0% -30.4% -12.3%Rel. to sector (EUR, ppt) -2.0 -14.8 -12.1 -16.0Rel. to universe (EUR, ppt) 3.5 -12.7 -14.8 1.1

PKN Orlen Hold Target price PLN 54.0Price (PLN) 41.4 ROCE 2010 8.1% 10 11e 12e 13eMcap (PLN mn) 17,703 ROE 2010 12.6% Sales (PLN mn) 83,547.4 89,803.3 84,999.8 83,094.1Mcap (EUR mn) 4,065 Net debt (EURmn, 10) 2,007 EBITDA margin 6.64% 6.32% 5.99% 0.00%Free float (%) 62.2% Gearing (2010) 33% EBIT margin 3.74% 3.54% 3.11% 2.96%Free float (EUR mn) 2,530 Sales CAGR 10-13e 5.2% Net profit margin 2.94% 5.24% 2.45% 2.39%Shares outst. (mn) 427.7 EPS CAGR 10-13e 12.8% EPS (PLN) 5.94 11.25 5.12 4.89


Performance 1M 3M 6M 12MAbsolute (PLN terms) 18.3% -4.5% -24.7% -0.6%Rel. to sector (EUR, ppt) 10.8 -4.0 -9.7 -12.8Rel. to universe (EUR, ppt) 313.5 248.5 266.1 240.5

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OMV ATX (Rebased) DJ EURO STOXX Oil & Gas (Rebased)

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Petrom BET (Rebased) DJ EURO STOXX Oil & Gas (Rebased)

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Tupras Hold Target price TRY 43.5Price (TRY) 40.600 ROCE 2010 28.8% 10 11e 12e 13eMcap (TRY mn) 10,167.0 ROE 2010 20.4% Sales (TRY mn) 26,218.7 35,254.3 35,276.7 36,704.3Mcap (EUR mn) 4,193.5 Net debt (EURmn, 10) -1,414 EBITDA margin 4.79% 4.58% 4.76% 0.00%Free float (%) 49.0% Gearing (2010) -75% EBIT margin 3.94% 3.84% 3.88% 3.69%Free float (EUR mn) 2,055 Sales CAGR 10-13e 15.8% Net prof it margin 2.83% 3.12% 3.10% 3.05%Shares outst. (mn) 250.4 EPS CAGR 10-13e 8.2% EPS (TRY) 2.94 4.36 4.34 4.43


Performance 1M 3M 6M 12MAbsolute ( terms) 3.3% 5.5% -21.2% 8.3%Rel. to sector (EUR, ppt) -2.1 13.4 -3.7 -14.2Rel. to universe (EUR, ppt) 0.4 15.0 -1.7 22.8

Turcas Petrol AS Buy Target price TRY 3.9Price (TRY) 2.9 ROCE 2010 11.5% 10 11e 12e 13eMcap (TRY mn) 650.3 ROE 2010 11.3% Sales (TRY mn) 52.3 8.3 9.1 10.0Mcap (EUR mn) 268.2 Net debt (EURmn, 10) -22 EBITDA margin 17.40% 90.72% 121.07% 0.00%Free float (%) 28.7% Gearing (2010) -8% EBIT margin 14.53% 77.79% 110.89% 837.46%Free float (EUR mn) 77 Sales CAGR 10-13e -31.3% Net prof it margin 107.73% 272.56% 520.83% 753.72%Shares outst. (mn) 225.0 EPS CAGR 10-13e 29% EPS (TRY) 0.25 0.10 0.21 0.34


Performance 1M 3M 6M 12MAbsolute (TRY terms) 12.5% -11.1% -34.5% -29.7%Rel. to sector (EUR, ppt) 4.0 -3.6 -12.3 -32.3Rel. to universe (EUR, ppt) 9.5 -1.6 -15.0 -15.2

Unipetrol Reduce Target price CZK 170.0Price (CZK) 172.0 ROCE 2010 3.4% 10 11e 12e 13eMcap (CZK mn) 31,189.6 ROE 2010 2.5% Sales (CZK mn) 85,966.5 107,062.9 97,713.4 95,792.8Mcap (EUR mn) 1,248.3 Net debt (EURmn, 10) -99 EBITDA margin 6.02% 5.15% 5.87% 0.00%Free float (%) 37.0% Gearing (2010) -6% EBIT margin 1.95% 2.02% 2.47% 2.08%Free float (EUR mn) 462 Sales CAGR 10-13e 9.2% Net prof it margin 1.09% 1.65% 1.96% 1.68%Shares outst. (mn) 181.3 EPS CAGR 10-13e EPS (CZK) 5.17 9.76 10.58 8.90

Dividend/share (CZK) 0.00 2.93 3.90 5.29EV/sales 0.39 0.31 0.33 0.34EV/EBITDA 6.47 6.02 5.64 6.36P/E 38.43 17.21 16.26 19.33P/CE 7.89 5.86 5.95 6.35P/BV 0.92 0.77 0.74 0.73Dividend yield 0.00% 1.74% 2.27% 3.07%EV/EBITDA rel. 1.0 1.2 0.9 1.1P/E rel. - 2.3 1.9 2.3

Performance 1M 3M 6M 12MAbsolute (CZK terms) -1.7% 0.0% -11.2% -12.9%Rel. to sector (EUR, ppt) -10.2 7.5 11.0 -15.4Rel. to universe (EUR, ppt) -4.6 9.5 8.2 1.6

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Unipetrol PX (Rebased) DJ EURO STOXX Oil & Gas (Rebased)

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Turcas Petrol ASISE 100 (Rebased)DJ EURO STOXX Oil & Gas (Rebased)

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Tupras ISE 100 (Rebased) DJ EURO STOXX Oil & Gas (Rebased)



Sector Insight Personal & Household Goods

– Arcelik 3Q11 result beat our forecast, in line with consensus – Vestel WG: Moderately better 3Q11 top line and margins, but net earnings slightly lower than expected – Wolford downgraded to accumulate on strong performance – still more than 10% upside left

Arcelik reported TRY 151.6mn in net profit for 3Q11 (up 2% y/y, up 11% q/q), exceeding our expectation of TRY 134mn, but in line with the consensus estimate of TRY 147mn. The deviation between our estimate and the announced net profit stemmed from slightly higher than expected revenues, as well as lower than expected tax expenses. Although the EBITDA margin is slightly lower than the market consensus, the announced top line and net profit figures are in line with the market consensus. The company increased its consolidated revenues by 25% y/y and 14% q/q, to TRY 2,315mn (our expectation: TRY 2,201mn, consensus: TRY 2,187mn) in 3Q11. The company benefited from strong growth in the domestic market (21% y/y) and the strong EUR against the TRY in export sales in 3Q11. EBITDA increased 13% y/y and 16% q/q to TRY 258mn (our expectation: TRY 242mn, consensus: TRY 249mn) and the EBITDA margin declined 1.2pp y/y (0.2pp q/q deterioration) to 11.1% in 3Q11 (our expectation: 11.0%, consensus: 11.4%). The company recorded just TRY 5.9mn in FX losses (as we expected), since it does not have any major FX exposure, thanks to hedging instruments. Management revised its FY11 guidance: greater than 15% growth in domestic market unit sales (previously above 10%), 8-10% growth in international unit sales (maintain previous guidance), 15-20% growth in total revenues in TRY terms (previously 13-18%), 11.5% EBITDA margin (previously above 11.5%).

Vestel WG reported TRY 3.9mn net profit in 3Q11 (3Q10: TRY 3.2mn, 2Q11: TRY 9.3mn), above our expectation of TRY 0.3mn and below the consensus estimate of TRY 5.1mn. The deviation between our estimate and the announced net profit mainly stemmed from slightly higher than expected gross profit and lower financial expenses. Although the net profit is somewhat below the market consensus, the announced top line and margins are slightly higher. The company increased revenues by 42% y/y, to TRY 557mn (our expectation: TRY 551mn, consensus: TRY 541mn) in 3Q11, thanks to strong domestic market sales and robust EUR impact on export revenues this quarter. EBITDA rose to TRY 39mn (our expectation and consensus: TRY 37.1mn) from TRY 15.2mn in 3Q10, while the EBITDA margin improved by 3.2pp y/y to 7.0% in 3Q11 (our expectation: 6.7% and consensus: 6.9%), mainly on strong revenues, this despite rising raw material prices. Net debt jumped TRY 56mn to TRY 300mn in 3Q11, the highest figure since 2007; the net debt to EBITDA ratio is 2.7 in 3Q11 compared to 1.2 in 1Q11. The company recorded a TRY 19.7mn FX loss, including the effect of FX forward contracts in 3Q11. As the majority of its transactions are denominated in EUR and USD, the company engages in cross currency forward contracts in order to hedge its foreign currency risk.

Wolford. In our latest report, we maintain our target price of EUR 28, but reduce our recommendation to Accumulate, due to the solid share price performance. At the current share price of close to EUR 25, we see further upside potential of more than 10%. We keep our EPS estimates unchanged. For 2012e, we expect EUR 1.83, which should then increase to EUR 1.95 in 2013e.

Wolford has been a clear outperformer vs. the ATX in 2011. While Austria’s leading index declined by almost a third in the first nine months of the year, Wolford stock actually gained a touch. Wolford stock is still traded at discounts vs. its peer group. The company’s EV/Sales multiples are still well below 1x, while the peer group is traded around 2x. Wolford’s P/Es for 2012e and 2013e currently reveal discounts of 13-17%. Wolford could suffer from a relatively warm September, which might have a slightly negative impact on the company’s 2Q11/12 figures. In addition, a further deteriorating economic environment would certainly also hit Wolford’s P/L. Although we think that this is reflected in our DCF model, investor concerns in this respect might lead to a decline in Wolford’s share price. However, we currently still see investor interest in the stock.




Arcelik TRY 1,861.8 18.0% 12.8% 17.0% 17.1% 10.9% 11.2% 11.4% 11.4% -5.1% -7.6% -24.9% -29.9%BWT EUR 235.5 14.4% 10.4% 10.5% 11.4% 10.2% 9.3% 9.3% 9.7% -5.3% -11.4% -32.1% -28.9%Gorenje EUR 89.1 5.3% 3.6% 4.9% 5.9% 7.9% 6.1% 6.5% 6.7% -1.8% -29.3% -49.0% -57.0%Philip Morris CR CZK 1,276.8 29.9% 30.2% 25.0% 24.9% 33.1% 32.5% 28.9% 29.0% 5.1% 7.6% 21.5% 17.5%Vestel TRY 161.4 4.8% 5.3% 11.2% 11.2% 5.8% 6.8% 7.4% 7.4% 1.9% -21.3% -39.1% -56.9%Wolford EUR 128.9 3.3% 6.2% 10.3% 10.2% 9.0% 10.1% 12.0% 12.3% 10.5% 5.1% -2.6% 17.5%Median - - 10% 8% 11% 11% 10% 10% 10% 11% - - - -EuroStoxx Personal & Household Goods

221,958 14.8% 14.7% 15.1% 15.0% 17.8% 18.7% 19.3% 19.6% 10.2% 2.9% -12.7% -16.2%

CEE to Peer, Prem/Disc - -34% -43% -28% -25% -46% -48% -46% -46% - - - -


2010 2011e 2012e 2013e 2010 2011e 2012e 2013e 2010 2011e 2012e 2013eArcelik 9.9 9.6 7.2 6.3 6.7 6.1 5.4 4.8 1.6 1.3 1.1 1.0BWT 16.6 13.4 12.4 10.6 9.1 6.8 6.2 5.6 2.3 1.4 1.3 1.2Gorenje 10.8 6.2 4.4 3.5 2.2 0.9 1.0 0.9 0.5 0.2 0.2 0.2Philip Morris CR 11.9 10.9 13.0 12.8 10.1 9.4 10.9 10.8 3.4 3.2 3.2 3.2Vestel 24.9 13.3 6.3 5.7 7.7 4.6 3.5 3.3 1.3 0.8 0.7 0.6Wolford 31.7 26.2 14.4 13.5 7.3 9.3 7.5 7.4 1.0 1.6 1.4 1.3Median CEE 14.3 12.1 9.8 8.4 7.5 6.4 5.8 5.2 1.4 1.3 1.2 1.1EuroStoxx Personal & Household Goods

18.7 16.3 14.3 12.6 13.3 12.4 10.8 9.9 2.5 2.3 2.0 1.7

CEE to Peer, Prem/Disc -24% -26% -32% -33% -43% -48% -47% -47% -44% -41% -39% -37%

2010 2011e 2012e 2013e 2010 2011e 2012e 2013eArcelik 0.9 0.8 0.6 0.6 8.0 6.7 5.4 4.9BWT 0.9 0.6 0.6 0.6 8.9 6.8 6.6 5.7Gorenje 0.5 0.3 0.3 0.3 5.7 5.2 4.7 4.3Philip Morris CR 2.4 2.2 2.3 2.2 7.2 6.8 7.9 7.8Vestel 0.5 0.3 0.2 0.2 9.0 4.3 3.3 3.2Wolford 0.8 1.0 0.9 0.9 9.1 10.1 7.8 7.2Median CEE 0.8 0.7 0.6 0.6 8.5 6.8 6.0 5.3EuroStoxx Personal & Household Goods

1.4 1.4 1.3 1.2 9.2 8.4 7.1 6.0

CEE to Peer, Prem/Disc -39% -52% -54% -55% -8% -19% -16% -12%

P/E P/CE P/BV

EV/Sales EV/EBITDA




Arcelik Buy Target price TRY 8.9Price (TRY) 7 ROCE 2010 12.1% 10f 11e 12e 13eMcap (TRY mn) 4,514 ROE 2010 18.0% Sales (TRY mn) 6,936.4 8,029.5 9,245.3 10,018.0Mcap (EUR mn) 1,862 Net debt (EURmn, 10) 469.0 EBITDA margin 10.93% 11.20% 11.40% 11.40%Free f loat (%) 25.0% Gearing (2010) 51% EBIT margin 8.15% 8.63% 9.24% 9.28%Free f loat (EUR mn) 465 Sales CAGR 10-13e 11.0% Net profit margin 7.92% 5.97% 7.24% 7.60%Shares outst. (mn) 675.7 EPS CAGR 10-13e 10.2% EPS (TRY) 0.77 0.67 0.93 1.06


Performance 1M 3M 6M 12MAbsolute (TRY terms) -7.7% -8.0% -20.1% -14.1%Rel. to sector (EUR, ppt) -2.7 -3.9 -13.2 -19.6Rel. to universe (EUR, ppt) -8.0 1.9 -5.5 -15.4

BWT Buy Target price EUR 26.8Price (EUR) 14.0 ROCE 2010 11.2% 10 11e 12e 13e

ROE 2010 14.4% Sales (EUR mn) 460.7 468.8 501.9 539.2Mcap (EUR mn) 236 Net debt (EURmn, 10) 39.3 EBITDA margin 10.17% 9.31% 9.34% 9.68%Free f loat (%) 54.0% Gearing (2010) 28% EBIT margin 6.78% 5.75% 5.68% 6.16%Free f loat (EUR mn) 127.2 Sales CAGR 10-13e 7.7% Net profit margin 4.92% 3.75% 3.77% 4.13%Shares outst. (mn) 17 EPS CAGR 10-13e 0.1% EPS (EUR) 1.32 1.05 1.12 1.32



Gorenje Buy Target price EUR 12.0Price (EUR) 5.6 ROCE 2010 3.9% 10 11e 12e 13e

ROE 2010 5.3% Sales (EUR mn) 1,382 1,548 1,592 1,666Mcap (EUR mn) 89 Gearing (2010) 401 EBITDA margin 7.94% 6.11% 6.47% 6.69%Free f loat (%) 53.4% Gearing (2010) 115% EBIT margin 4.12% 2.77% 3.14% 3.42%Free f loat (EUR mn) 48 Sales CAGR 10-13e 8.9% Net profit margin 1.46% 0.95% 1.28% 1.54%Shares outst. (mn) 15.9 EPS CAGR 10-13e #ZAHL! EPS (EUR) 1.25 0.91 1.27 1.60


Performance 1M 3M 6M 12MAbsolute (EUR terms) -1.8% -29.3% -49.0% -57.0%Rel. to sector (EUR, ppt) 0.6 -25.6 -37.4 -46.6Rel. to universe (EUR, ppt) -4.7 -19.8 -29.6 -42.5

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BW TATX (Rebased)DJ EURO STOXX Personal & Household Goods (Rebased)

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56789

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GorenjeSBI TOP (Rebased)DJ EURO STOXX Personal & Household Goods (Rebased)

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ArcelikISE 100 (Rebased)DJ EURO STOXX Personal & Household Goods (Rebased)



Philip Morris CR Reduce Target price CZK 9600.0Price (CZK) 11,620.0 ROCE 2010 66.7% 10e 11e 12e 13eMcap (CZK mn) 31,901 ROE 2010 29.9% Sales (CZK mn) 11,699.6 12,460.5 12,304.4 12,301.1Mcap (EUR mn) 1,277 Gearing (2010) -172 EBITDA margin 33.09% 32.53% 28.89% 29.00%Free float (%) 22.4% Gearing (2010) -67% EBIT margin 28.98% 28.70% 25.08% 25.30%Free float (EUR mn) 286 Sales CAGR 10-13e 1.3% Net profit margin 23.13% 22.92% 20.03% 20.21%Shares outst. (mn) 2.7 EPS CAGR 10-13e -0.2% EPS (CZK) 985.42 1,039.84 897.19 905.31

Dividend/share (CZK) 890.04 929.96 794.97 808.01EV/sales 2.39 2.20 2.28 2.25EV/EBITDA 7.21 6.77 7.89 7.75P/E 11.93 10.92 12.95 12.84P/CE 10.13 9.35 10.88 10.85P/BV 3.37 3.22 3.25 3.15Dividend yield 7.57% 8.19% 6.84% 6.95%EV/EBITDA rel. 0.9 1.0 1.3 1.5P/E rel. 0.8 0.9 1.3 1.5

Performance 1M 3M 6M 12MAbsolute (CZK terms) 15.0% -31.8% -48.6% -48.6%Rel. to sector (EUR, ppt) 7.5 11.3 33.2 27.8Rel. to universe (EUR, ppt) 2.2 17.1 40.9 32.0

Vestel Accumulate Target price TRY 2.4Price (TRY) 2.1 ROCE 2010 4.6% 10e 11e 12e 13eMcap (TRY mn) 391 ROE 2010 4.8% Sales (TRY mn) 1,424.3 1,658.3 1,778.0 1,857.7Mcap (EUR mn) 161 Gearing (2010) 58 EBITDA margin 5.79% 6.80% 7.40% 7.40%Free float (%) 27.4% Gearing (2010) -2% EBIT margin 2.14% 3.50% 4.63% 4.63%Free float (EUR mn) 44 Sales CAGR 10-13e 9.4% Net profit margin 1.77% 1.69% 3.50% 3.68%Shares outst. (mn) 190.0 EPS CAGR 10-13e -12.7% EPS (TRY) 0.13 0.15 0.33 0.36


Performance 1M 3M 6M 12MAbsolute (TRY terms) -1.0% -21.7% -35.2% -47.2%Rel. to sector (EUR, ppt) 1.4 -18.0 -23.5 -36.8Rel. to universe (EUR, ppt) -3.9 -12.1 -15.8 -32.7

Wolford Accumulate Target price EUR 28.0Price (EUR) 26.3 ROCE 2010 2.4% 10 11e 12e 13e

ROE 2010 3.3% Sales (EUR mn) 144 152 165 167Mcap (EUR mn) 129 Gearing (2010) 32 EBITDA margin 8.98% 10.09% 11.97% 12.28%Free float (%) 52.0% Gearing (2010) 60% EBIT margin 3.24% 4.70% 7.45% 7.79%Free float (EUR mn) 67 Sales CAGR 10-13e 3% Net profit margin 1.84% 3.24% 5.39% 5.64%Shares outst. (mn) 4.9 EPS CAGR 10-13e EPS (EUR) 0.52 1.03 1.83 1.95


Performance 1M 3M 6M 12MAbsolute (EUR terms) 10.5% 5.1% -2.6% 17.5%Rel. to sector (EUR, ppt) 12.9 8.8 9.1 27.8Rel. to universe (EUR, ppt) 7.6 14.6 16.9 32.0

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Philip Morris CRPX (Rebased)DJ EURO STOXX Personal & Household Goods (Rebased)

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WolfordATX (Rebased)DJ EURO STOXX Personal & Household Goods (Rebased)

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Veste l ISE 100 (Rebased)DJ EURO STOXX Personal & Household Goods (Rebased)



Sector Insight Real Estate

– Summary of our sector report: Top picks are Immofinanz and S Immo – 3Q real estate market data points to stable development – Orco reiterated revenue targets, progress in GSG refinancing – GTC sells its crown assets in Warsaw at 6.7% yield

Real estate markets still stable. The 3Q CBRE data shows a stable picture for the European real estate market. At EUR 26.2bn, the transaction volume could be kept at the same level as in 2Q. For the full year, CBRE expects more deals to be closed than in 2010. CEE developed especially strongly. Investment volumes doubled to EUR 8bn in the first nine months. For the first time, UK and US investors were again back on the market looking for opportunistic deals in Poland and the Czech Republic. Prime office rents and yields are little changed compared to 2Q. EU15 prime yields declined by 4bp to 5.41%. Austria, Germany and most Eastern European capital cities remained stable. Only Moscow and interestingly Budapest posted a decline of 25bp. The data matched our expectation of stable development over the summer months. Looking ahead, we anticipate flat prime yields, but pressure on non-prime assets as investors shun assets with low liquidity.

Development of office prime rents and yields in 3Q11 Country City Prime rent Prime yield

EUR per sqm pa q/q y/y from trough q/q y/y from peakAustria Vienna 285 1.1% 5.6% 6.7% 5.25% 0 -15 -50Germany Berlin 264 0.0% 4.8% 10.0% 5.10% 0 -30 -40Germany Düsseldorf 276 0.0% 0.0% 2.2% 5.10% 0 -10 -20Germany Frankfurt 456 0.0% 0.0% 0.0% 5.00% 0 -20 -40Germany Hamburg 276 2.2% 2.2% 2.2% 4.90% 0 -10 -20Germany Munich 360 0.0% 1.7% 1.7% 4.80% 0 -10 -20Germany 326 0.4% 1.7% 3.2% 4.98% 0 -16 -28Czech Republic Prague 252 0.0% 0.0% 0.0% 6.50% 0 -35 -50Hungary Budapest 240 0.0% 0.0% 0.0% 7.25% -25 -50 -75Poland Warsaw 312 0.0% 4.0% 13.0% 6.20% 0 0 -50Slovakia Bratislava 204 0.0% 0.0% 0.0% 7.25% 0 -25 -25CE4 average 252 0.0% 1.0% 3.3% 6.80% -6 -28 -50Bulgaria Sofia 162 -3.6% -5.3% 0.0% 9.35% 0 -65 -65Croatia Zagreb 191 0.0% -2.2% 0.0% 8.30% 0 0 -20Romania Bucharest 234 0.0% 0.0% 0.0% 8.50% 0 -100 -100Serbia Belgrade 176 -0.3% -2.0% 1.4% 9.50% 0 -50 -50SEE average 191 -1.0% -2.4% 0.3% 8.91% 0 -54 -59Russia 1) Moscow 793 9.5% 31.4% 35.3% 8.75% -25 -175 -325Ukraine 1) Kiev 290 0.0% 25.0% 25.0% 13.00% 0 -100 -200CIS average 541 4.8% 28.2% 30.1% 10.88% -13 -138 -263CEE average 328 1.3% 9.0% 11.3% 8.86% -6 -73 -124EU-15 average 0.1% 1.9% 3.9% 5.41% -4 -20 -80

Source: CB Richard EllisComment: 1) Prime rent in USD

Percentage change Basis point change

In our recent sector report, we maintained our positive stance on Immofinanz and S Immo and upgraded GTC to Buy on its historically high discount to book value. We upgraded conwert to Hold due to the fall in share price and continue to stick to Accumulate for CA Immo. Orco remains a restructuring case with a debt equity swap likely coming up. In the current environment and with the current low valuations of a 50% discount to book values, we prefer companies focusing on shareholder-friendly measures such as share buybacks and dividends as opposed to real estate investments.

CA Immo. We cut our target price from EUR 15.0 to EUR 11.0 and confirmed our Accumulate recommendation. Given the high gearing of CA Immo, our slightly reduced EBITDA estimates drove down the DCF value and hence our target price. With our reduced estimates, we arrived at a 2011 ROE of 3%, which is markedly below CA Immo’s full-year ROE target of 5%. However, we have an unchanged dividend assumption of EUR 0.40 in our forecast, in line with the company’s target of paying out around 2% of NAV.



conwert. We upgraded conwert to Accumulate (from Hold) with a reduced target price of EUR 11.0 (previously EUR 12.40). We only moderately reduced our EPS and BVPS estimates. The company’s main advantage compared to the other property companies lies in strategic share transactions: (1) Petrus Advisers is constantly increasing its stake in conwert, which recently amounted to around 22%; (2) conwert itself has a running share buyback program that it uses from time to time. Both certainly support conwert’s share price development when compared to other property stocks.

conwert with new property management contract. conwert announced at the beginning of October that it will take over the management of the German portfolio of the Tower Group A/S as of November 1, 2011. The property company, which is listed on the Danish Stock Exchange, owns a total of 4,600 residential and approx. 300 commercial units, which will in the future be managed by conwert’s subsidiary alt+kelber Immobiliengruppe GmbH. This is in line with our expectations, as we modeled an increase in third-party property management revenues.

GTC trades at a historically high 47% discount to its 1H11 book value. We set our target price at PLN 13.6/share, a 42% discount to the 2013e book value, using a DCF model. We thus upgraded our recommendation from Hold to Buy. We believe that GTC should still be traded at a slight development premium, thanks to its proven development skills and equity-funded landbank, while we do not see a liquidity risk in the next twelve months. We believe that GTC’s exposure to SEE markets (43% of its portfolio) is already priced in. The value of GTC’s real estate assets would have to fall by 21%, with its moderate 2.1x leverage, to send its book value to par with the share price.

GTC has signed a Head of Terms with Allianz to sell the Platinum Business Park in Warsaw, which consists of four completed buildings with a total of approx. 44k sqm, one 11k sqm building under construction and a site with building permit for another building of 13.8k sqm. The final price will reflect an investment yield of 6.7% on net operating income. GTC expects that the sale of Buildings 1-4 will generate free cash of approximately EUR 40mn. The closing of the first transaction is expected to take place in December 2011, the sale of Building No. 5 by the third quarter of 2012, and the sale of Building No. 6 during 2013. It seems that GTC is hoarding cash to be prepared for a possible slowdown of the real estate market. The yield achieved is 5bp lower than in GTC’s books, which is good, but the disposal will further increase the share of SEE markets with a weak outlook for rents in its portfolio. Also, GTC’s interest coverage will go down. We thus see the sale as slightly negative.

GTC 3Q preview (reports on November 10): We expect over a 4% y/y increase in rental income as the sale of Galeria Mokotow (in August, 10% of ERV) will be offset by the first rents from fresh assets (Osijek, Stara Zagora). EBITDA is, at EUR 17.9mn, expected to be almost stable y/y, due to lower gross margin (higher service costs related to vacant space and slightly higher S&G). We expect an almost zero revaluation as GTC did a big clean up in 2Q11, Platinum Park pre-sold at some EUR 1mn gain. EBIT is expected slightly lower y/y on higher rental income and lower revaluation. The net result is forecasted to be close to zero (EUR 0.6mn) due to anticipated tax provisions related to the weak PLN to EUR (appreciation of assets in PLN). GTC’s balance sheet will improve thanks to the proceeds from a sale of GM (EUR 110mn net cash) with LTV likely back below 50%. Some one-off costs related to the recently announced sale of the Platinum Business Park are possible.

Immofinanz. We confirmed our Buy recommendation, but lowered our target price from EUR 4.0 to EUR 3.5.This reflects our lower estimates as well as an allowance for legal risks. After paying out a first dividend of EUR 0.10/share, Immofinanz targets a step up to EUR 0.20 in 2 years, which results in a dividend yield of 9%. With the recent AGM approval of a fresh share buyback, this could be another stock price trigger, but it depends largely on the conversion of the CB 2011 by Oct. 6. With almost full conversion of the CB 2011, pressure on the share price should have eased.

Orco. We assigned a Hold recommendation to Orco, with a EUR 4.3 twelve-month target price on the stock.Our target price is based on a 60% discount to 2013e adjusted NAV, due to the significant refinancing risk Orco faces at present. We believe that the planned conversion of Orco Germany bonds at close to the current share price would allow the refinancing of Orco’s huge amount of short-term loans and above-average future NAV growth, but would also create a share overhang for quite a long time. There are threats that bondholders will not agree on a bond/equity swap and that Orco will not be able to refinance the loans.

Orco’s CEO Ott reiterated the full-year revenue forecast of EUR 340mn to EUR 370mn, including asset sales, rents and development income. Orco expects to sell its Sky Office tower in Düsseldorf with EUR 40-50mn net cash



flow before year-end. Ott also said Orco is at the level of a EUR 225-250mn possible refinancing of its EUR 300mn GSG loan and that some bondholders of EUR 100mn Orco Germany bonds would agree to swap bonds for Orco Group shares. The revenue guidance is above our estimates (EUR 318mn, including the sale of Sky Office). However, we have included EUR 255mn refinancing of the GSG loan and full conversion of bonds in our model. The lower expected level of refinancing thus offsets the possibly higher revenue outlook.

S Immo. We reduced our target price from EUR 6.3 to EUR 5.2, but confirmed our Buy recommendation for S Immo. The cut in the target price reflects our reduced estimates for 2012 and 2013 and expected weaker economic development. With the start of a major buyback program of its outstanding participation certificates and more recently of shares, a shareholder value-driven spirit has entered S Immo and the company is starting to take into account the current market environment in its strategic decisions.

Repurchase of up to 3% of own shares announced at beginning of October. The management board of S Immo resolved at the beginning of October to make use of the authorization to repurchase treasury shares granted by the resolution of the 21st Annual General Meeting on May 21, 2010, and to repurchase up to 3% of the shares issued by the company, i.e. up to 2,043,561 no-par value shares, by way of a share repurchase program. The repurchase is made for any purpose allowed by section 65 para 1 no 8 of the Austrian Stock Corporation Act. The company reserves the right to cancel the acquired treasury shares, to build up an acquisition currency for potential share and real estate acquisitions or resell the shares via the stock exchange. The repurchase program started on October 6, 2011, and is expected to end on May 31, 2012, at the latest.

The repurchase is positive news and adds another share price trigger to the S Immo investment story. So far, the company has bought about 5,000-10,000 shares per day and reached some 0.11% of the total share capital as of October 21, 2011. The additional demand for the share seems to have helped the stock to surpass the EUR 4.0 level, which is fundamentally fully justified. We will include the buyback in our model together with the next company update, which will have a moderately positive effect, all other things being equal.

Sinpas REIT reports 9M11 unit sales figures featuring poor pre-sales performance. Sinpas REIT announced its 9M11 unit sales figures yesterday evening. The company sold 876 residential units and delivered 1,407 units in 9M11. The company sold 108 residential units and delivered 337 units in the third quarter. A total of 767 units were sold, with approximately 1,000 units delivered in 2010 from ongoing projects. The company developed approximately 6.4k residential units and generated TRY 2.4bn in revenues from these units in the past five years.

Emlak Konut REIT purchases land in Istanbul for TRY46mn. Emlak Konut REIT has purchased 13 plots of land in Basaksehir-Istanbul with a total area of 223.25k sqm for TRY 46.25mn+VAT (TRY 245/sqm). Separately, the company is to open the tender for the sale of five undeveloped plots of land (total of 63.5k sqm) in Karsiyaka-Izmir on October 21, with an approximate value of TRY 72.6mn (including VAT) in total (TRY 1,143/sqm). Emlak Konut REIT received a construction permit for 1,509 residential units and five commercial units in a revenue sharing (RSM) project planned to be developed on a 72k sqm parcel of the Tuzla land in Istanbul. Emlak Konut REIT also received a construction permit regarding the change in the Bizim Evler-4 revenue sharing project in Istanbul. 762 residential units and 93 commercial units are planned to be developed in the project.

Worse than expected 3Q11 results. Emlak Konut REIT reported a TRY 10mn net loss in 3Q11 (3Q10: TRY 2.5mn net loss, 2Q11: TRY 29.3mn net profit), thus short of our TRY 19.2mn net profit expectation and the consensus estimate of a TRY 19.4mn net profit. The deviation between our estimate and the announced net profit mainly stemmed from lower than expected revenues and higher than expected financial expenses. We maintain our target price of TRY 2.9 and Buy recommendation. 3Q is traditionally the weakest period for the real estate sector. The company sold a total of 2k units in 3Q11, below the 2.3k units sold in 2Q11 and the 4.2k units sold in 1Q11. Revenues fell 43% y/y to TRY 67mn (our expectation: TRY 90mn, consensus: TRY 85mn) in 3Q11, due to a lack of land sales this quarter. Emlak Konut REIT generated TRY 67mn in revenue (3Q10: TRY 46mn) from the delivery of residential and commercial units in 3Q11. The gross margin remained low at 13% (3Q10: 37%, 2Q11: 17.5%), given the delivery of units of lower-margin projects. The company recorded negative EBITDA of TRY 2mn for this quarter (our expectation: TRY 22mn, consensus: TRY 14mn).




CA IMMO EUR 773.2 3% 3.0% 3.1% 3.8% 70.7% 65.1% 67.3% 62.0% -1.6% -18.9% -33.9% -17.4%conwert EUR 814.6 2% 2.3% 3.4% 3.8% 83.3% 51.9% 52.6% 52.3% 10.8% -2.7% -15.4% -4.5%Emlak Konut REIT TRY 2,443.8 17% 6.5% 12.0% 21.8% 43.6% 32.7% 38.9% 37.3% 1.6% -2.1% -23.7% 0.7%GTC EUR 569.3 4% -1.5% 3.0% 14.1% 40.2% 44.1% 49.2% 52.0% 0.5% -25.7% -51.8% -55.5%Immofinanz EUR 2,277.1 2% 6.3% 4.4% 5.5% 54.9% 49.2% 50.4% 56.2% 15.4% -4.6% -25.2% -14.2%Orco EUR 67.2 130% -1.6% 0.8% 9.6% 11.2% 12.6% 19.9% 19.4% -2.7% -47.7% -55.8% -46.8%S Immo EUR 289.5 0% 3.7% 4.0% 5.0% 40.8% 46.7% 45.7% 47.7% 9.0% 2.4% -17.8% -24.2%Sinpas REIT TRY 299.4 7% 18.4% 19.3% 11.9% 15.8% 26.5% 23.8% 29.6% -14.1% -24.1% -38.3% -43.0%Median - - 4% 3% 3% 8% 49% 47% 50% 52% - - - -Atrium European Real EstaEUR 1,361.0 4.7% 4.2% 4.0% 4.2% 95.9% 0% 0% 0% 2.0% -15.1% -20.1% -19.6%Warimpex Finanz- und BeteEUR 66.4 -8% 0.0% 0.0% 0.0% 0.0% 6.5% -38.2% -52.7% -45.6%XXI Century Investments P GBP 27.9 0.0% 0.0% 0.0% 12.7% -26.3% -27.5% -79.1%Echo Investment S.A. PLN - 342.4 7.8% 11.6% 8.7% 7.3% - 0.0% 0.0% - 0.3% -17.8% -37.5% -37.0%Median Peers - 5% 4.2% 4.2% 4.8% 68.0% 50.3% 0.0% 0.0% - - - -CEE to Peer, Prem/Disc - -31% -38% -24% 58% -28% -7% - - - - - -


2010 2011e 2012e 2013e 2010 2011e 2012e 2013e 2010 2011e 2012e 2013eCA IMMO 22.9 15.4 15.9 13.1 99.1 16.7 15.8 15.6 0.64 0.45 0.45 0.46conwert 37.3 28.1 18.5 16.0 -99.7 21.4 16.9 15.1 0.69 0.63 0.62 0.61Emlak Konut REIT 10.2 22.9 12.7 6.1 9.9 21.0 12.7 6.1 1.37 1.61 1.46 1.22GTC 32.3 nm 19.0 3.7 -390.6 29.1 41.0 -41.7 1.34 0.57 0.56 0.48Immofinanz 18.7 10.1 10.1 8.2 3.9 11.5 10.5 8.5 0.70 0.59 0.46 0.44Orco 0.4 nm 36.2 3.4 0.5 -1.5 -2.2 -6.6 0.34 0.20 0.33 0.32S Immo 195.2 15.6 14.1 10.7 20.2 12.8 9.9 8.1 0.75 0.57 0.55 0.53Sinpas REIT 16.5 3.6 3.2 4.7 15.5 3.5 3.1 4.5 1.11 0.67 0.58 0.54Median CEE 20.8 19.2 17.2 7.2 2.2 18.9 14.2 7.3 0.70 0.58 0.51 0.47Atrium European Real Estate L 13.4 14.2 14.6 13.0 14.1 14.6 11.5 11.3 0.62 0.60 0.58 0.55Warimpex Finanz- und Beteilig 20.2 7.5 2.6 0.74XXI Century Investments PublEcho Investment S.A. 9.2 6.1 7.4 8.1 11.5 0.72 0.71 0.65 0.59Median Peers 9.2 13.5 9.1 9.3 - 13.3 11.4 10.3 0.67 0.60 0.58 0.55CEE to Peer, Prem/Disc 126% 42% 88% -23% - 42% 25% -29% 4% -3% -13% -13%

2010 2011e 2012e 2013e 2010 2011e 2012e 2013e 2010 2011e 2012e 2013eCA IMMO 0.63 0.45 0.44 0.46 20.3 18.2 15.9 16.4 0.0% 4.5% 4.5% 4.5%conwert 0.75 0.68 0.67 0.66 16.1 20.8 19.1 18.5 2.8% 3.0% 3.2% 3.4%Emlak Konut REIT 7.5 23.3 10.6 5.5 0.0% 3.1% 1.7% 3.1%GTC 1.13 0.53 0.51 0.44 37.5 25.6 20.9 18.9 0.0% 0.0% 0.0% 0.0%Immofinanz 0.64 0.56 0.44 0.43 21.0 21.0 17.9 14.7 0.0% 3.1% 6.2% 8.2%Orco 0.26 0.15 0.26 0.25 35.9 25.3 28.3 14.2 0.0% 0.0% 0.0% 0.0%S Immo 0.69 0.52 0.50 0.47 26.2 18.1 18.2 16.7 0.0% 2.4% 2.6% 2.8%Sinpas REIT 17.9 4.0 2.9 0.9 0.0% 4.3% 7.9% 9.4%Median CEE 0.64 0.53 0.44 0.44 20.7 22.2 18.5 15.5 0.0 0.0 0.0 0.0Atrium European Real Estate L - - - - 13.0 15.8 13.4 12.0 3.3% 3.8% 4.4% 4.9%Warimpex Finanz- und Beteilig - - - - 24.0 0.0%XXI Century Investments Publ - - - -Echo Investment S.A. - - - - 21.6 8.7 7.2 11.6 0.0% 0.0% 0.0% 0.0%Median Peers - - - - 20.9 15.8 13.4 12.0 1.6% 3.8% 4.4% 4.9%CEE to Peer, Prem/Disc - - - - -1% 40% 38% 30% - - - -

P/CE P/BV

P/NAV EV/EBITDA Dividend yield

P/E




CA IMMO Accumulate Target price EUR 11.0Price (EUR) 8.80 ROE 2010 2.8% 10 11e 12e 13e

Net debt (EURmn, 10) 1,770.5 Tot. revenues (EUR mn) 197.3 322.7 334.9 348.9Mcap (EUR mn) 773.2 Gearing (2010) 106.7% NOI yield 5.1% 6.1% 5.3% 5.5%Free f loat (%) 82.8% Loan/value (2010) 48.7% EBIT margin 92.9% 74.7% 73.0% 66.5%Free f loat (EUR mn) 640.0 Reven. CAGR 10-13e 13.4% Net margin 22.2% 17.9% 17.9% 21.6%Shares outst. (mn) 87.9 NAV CAGR 10-13e 1.1% EPS (EUR) 0.52 0.57 0.55 0.67

Dividend/share (EUR) 0.00 0.40 0.40 0.40NAV/share (EUR) 18.95 19.62 19.94 19.33EV/EBITDA 20.28 18.16 15.87 16.37P/E 22.90 15.45 15.94 13.11P/CE 99.12 16.72 15.76 15.56P/BV 0.64 0.45 0.45 0.46Dividend yield 0.00% 4.50% 4.54% 4.53%P/BV rel. 0.9 0.8 0.9 1.0P/E rel. 1.1 0.8 0.9 1.8


conwert Accumulate Target price EUR 11.0Price (EUR) 9.96 ROE 2010 1.8% 10 11e 12e 13e

Net debt (EURmn, 10) 2,049.7 Tot. revenues (EUR mn) 222.1 242.0 240.0 238.6Mcap (EUR mn) 814.6 Gearing (2010) 154.1% NOI yield 4.8% 4.9% 5.4% 5.7%Free f loat (%) 73.8% Loan/value (2010) 63.3% EBIT margin 46.5% 53.9% 54.9% 54.9%Free f loat (EUR mn) 601.2 Reven. CAGR 10-13e 4.7% Net margin 11.6% 13.3% 18.9% 21.5%Shares outst. (mn) 81.8 NAV CAGR 10-13e 2.6% EPS (EUR) 0.29 0.35 0.54 0.62

Dividend/share (EUR) 0.30 0.30 0.32 0.34NAV/share (EUR) 14.30 14.59 14.85 15.17EV/EBITDA 16.09 20.77 19.05 18.55P/E 37.28 28.10 18.48 16.03P/CE -99.69 21.42 16.87 15.12P/BV 0.69 0.63 0.62 0.61Dividend yield 2.79% 3.01% 3.21% 3.41%P/BV rel. 1.0 1.1 1.2 1.3P/E rel. 1.8 1.5 1.1 2.2

Performance 1M 3M 6M 12MAbsolute (EUR terms) 10.8% -2.7% -15.4% -4.5%Rel. to sector (EUR, ppt) 6.6 5.4 10.8 6.8Rel. to universe (EUR, ppt) 7.9 6.8 4.0 10.0

Emlak Konut REIT Buy Target price TRY 2.9Price (TRY) 2.37 ROE 2010 17.2% 10f 11e 12e 13eMcap (TRY mn) 5,925 Net debt (EURmn, 10) 40.4 Tot. revenues (TRY mn) 1,497.9 803.6 1,263.0 2,582.9Mcap (EUR mn) 2,443.8 Gearing (2010) 2.3% NOI yield Free f loat (%) 25.0% Loan/value (2010) EBIT margin 43.6% 32.6% 38.9% 37.3%Free f loat (EUR mn) 611.0 Reven. CAGR 10-13e 31.5% Net margin 31.3% 30.7% 36.8% 37.5%Shares outst. (mn) 2,500.0 NAV CAGR 10-13e #WERT! EPS (TRY) 0.19 0.10 0.19 0.39

Dividend/share (TRY) 0.00 0.07 0.04 0.07NAV/share (TRY) EV/EBITDA 7.46 23.30 10.62 5.52P/E 10.21 22.90 12.74 6.11P/CE 9.86 21.02 12.73 6.11P/BV 1.37 1.61 1.46 1.22Dividend yield 0.00% 3.10% 1.67% 3.14%P/BV rel. 2.0 2.8 2.9 2.6P/E rel. 0.5 1.2 0.7 0.9

Performance 1M 3M 6M 12MAbsolute (TRY terms) -1.3% -2.5% -18.8% 24.7%Rel. to sector (EUR, ppt) -2.5 6.1 2.5 12.0Rel. to universe (EUR, ppt) -1.3 7.5 -4.3 15.3

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GTC Buy Target price PLN 13.60Price (PLN) 11.30 ROE 2010 4.3% 10 11e 12e 13e

Net debt (EURmn, 10) 1,148.4 Tot. revenues (EUR mn) 169.0 151.8 173.6 194.4Mcap (EUR mn) 569.3 Gearing (2010) 109.1% NOI yield 4.7% 4.6% 5.4% 5.6%Free float (%) 57.9% Loan/value (2010) 51.5% EBIT margin 65.4% 20.9% 57.8% 138.0%Free float (EUR mn) 329.6 Reven. CAGR 10-13e 5.6% Net margin 16.9% -16.7% 19.1% 87.9%Shares outst. (mn) 219.4 NAV CAGR 10-13e 3.2% EPS (EUR) 0.19 -0.07 0.14 0.71

Dividend/share (EUR) 0.00 0.00 0.00 0.00NAV/share (EUR) 5.46 4.92 5.07 5.91EV/EBITDA 37.49 25.62 20.87 18.87P/E 32.34 nm 19.01 3.68P/CE -390.56 29.06 40.99 -41.69P/BV 1.34 0.57 0.56 0.48Dividend yield 0.00% 0.00% 0.00% 0.00%P/BV rel. 1.9 1.0 1.1 1.0P/E rel. 1.6 - 1.1 0.5


Immofinanz Buy Target price EUR 3.5Price (EUR) 2.42 ROE 2010 2% 10f 11e 12e 13e

Net debt (EURmn, 10) 4,886.2 Tot. revenues (EUR mn) 719.2 763.4 785.4 861.0Mcap (EUR mn) 2,277.1 Gearing (2010) 100% NOI yield 5.1% 4.9% 4.9% 5.6%Free float (%) 82.2% Loan/value (2010) 52.9% EBIT margin 25.2% 55.6% 52.1% 58.1%Free float (EUR mn) 1,871.8 Reven. CAGR 10-13e 4.0% Net margin 27.2% 41.1% 29.3% 35.0%Shares outst. (mn) 941.0 NAV CAGR 10-13e 1.9% EPS (EUR) 0.17 0.32 0.24 0.29


Performance 1M 3M 6M 12MAbsolute (EUR terms) 15.4% -4.6% -25.2% -14.2%Rel. to sector (EUR, ppt) 11.3 3.5 1.0 -2.8Rel. to universe (EUR, ppt) 12.5 4.9 -5.8 0.4

Orco Hold Target price EUR 4.3Price (EUR) 3.96 ROE 2010 130% 10 11e 12e 13e

Net debt (EURmn, 10) 1,106.4 Tot. revenues (EUR mn) 314.7 318.1 170.0 339.8Mcap (EUR mn) 67.2 Gearing (2010) 311% NOI yield 5.2% 5.2% 5.8% 8.4%Free float (%) 98.0% Loan/value (2010) 70.3% EBIT margin 16.2% 23.1% 50.0% 39.9%Free float (EUR mn) 65.9 Reven. CAGR 10-13e 7.8% Net margin 70.8% -2.3% 1.9% 14.8%Shares outst. (mn) 17.0 NAV CAGR 10-13e 18.6% EPS (EUR) 17.77 -0.33 0.11 1.17

Dividend/share (EUR) 0.00 0.00 0.00 0.00NAV/share (EUR) 28.60 26.51 15.29 16.13EV/EBITDA 35.87 25.27 28.29 14.24P/E 0.41 nm 36.16 3.38P/CE 0.45 -1.46 -2.22 -6.57P/BV 0.34 0.20 0.33 0.32Dividend yield 0.00% 0.00% 0.00% 0.00%P/BV rel. 0.5 0.3 0.7 0.7P/E rel. 0.0 - 2.1 0.5


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OrcoPX (Rebased)DJ EURO STOXX Financial Services (Rebased)



S Immo Buy Target price EUR 5.2Price (EUR) 4.25 ROE 2010 0.4% 10 11e 12e 13eMcap (EUR mn) 290 Net debt (EURmn, 10) 1,220.1 Tot. revenues (EUR mn) 174.9 204.1 198.0 196.0Mcap (EUR mn) 289.5 Gearing (2010) 158.3% NOI yield 4.8% 5.3% 5.5% 5.8%Free float (%) 81.0% Loan/value (2010) 65.3% EBIT margin 34.6% 46.9% 43.8% 46.1%Free float (EUR mn) 234.5 Reven. CAGR 10-13e 6.3% Net margin 1.2% 10.4% 11.1% 14.5%Shares outst. (mn) 68.1 NAV CAGR 10-13e 5.1% EPS (EUR) 0.03 0.27 0.30 0.40


Performance 1M 3M 6M 12MAbsolute (EUR terms) 9.0% 2.4% -17.8% -24.2%Rel. to sector (EUR, ppt) 4.9 10.6 8.4 -12.9Rel. to universe (EUR, ppt) 6.1 12.0 1.6 -9.7

Sinpas REIT Buy Target price TRY 2.0Price (TRY) 1.21 ROE 2010 7.1% 10f 11e 12e 13eMcap (TRY mn) 726 Net debt (EURmn, 10) -3.9 Tot. revenues (TRY mn) 353.3 697.3 953.2 542.1Mcap (EUR mn) 299.4 Gearing (2010) -0.9% NOI yieldFree float (%) 36.9% Loan/value (2010) EBIT margin 14.6% 25.8% 23.1% 28.1%Free float (EUR mn) 110.5 Reven. CAGR 10-13e 33.4% Net margin 17.3% 27.5% 23.8% 28.5%Shares outst. (mn) 600.0 NAV CAGR 10-13e #WERT! EPS (TRY) 0.10 0.32 0.38 0.26

Dividend/share (TRY) 0.00 0.05 0.10 0.11NAV/share (TRY)EV/EBITDA 17.90 3.95 2.88 0.88P/E 16.49 3.61 3.20 4.71P/CE 15.46 3.51 3.11 4.48P/BV 1.11 0.67 0.58 0.54Dividend yield 0.00% 4.33% 7.93% 9.38%P/BV rel. 1.6 1.2 1.1 1.1P/E rel. 0.8 0.2 0.2 0.7


52 weeks

3,03,5

4,04,55,0

5,56,06,5

7,0

S ImmoATX (Rebased)DJ EURO STOXX Financial Services (Rebased)

52 weeks

1,11,21,31,41,51,61,71,81,92,02,1

Sinpas REITISE 100 (Rebased)DJ EURO STOXX Financial Serv ices (Rebased)



Sector Insight Retail & Distribution

– BIM: No surprise in 3Q11 results, no change in price target or rating – Good October sales numbers for LPP and NG2

BIM reported a TRY 78mn net profit for 3Q11 (up 25% q/q, up 22% y/y), perfectly in line with our expectation of TRY 79mn and slightly higher than the consensus estimate of TRY 74mn. The company increased its revenues by 26% y/y to TRY 2,160mn in 3Q11, in line with our expectation of TRY 2,087mn and the consensus estimate of TRY 2,089mn. Revenue growth came from L-F-L growth (both increases in basket size and traffic) and newly opened stores (12% increases in the number of stores over the past year). Revenues increased by 12% q/q thanks to the positive impact of Ramadan and school openings in 3Q. As of September 2011, BIM’s total store number had reached 3,227 in Turkey, following the net opening of 38 new stores in 3Q11. The company opened 7 new stores in 3Q11 and reached a store number of 64 in Morocco, which has a negligible impact on consolidated figures (accounts for less than 1% of total revenues).

As a result of pricing pressure in the competitive domestic market environment, gross margin declined by 0.9pp y/y to 15.9% in 3Q11 (up 0.1pp q/q). Meanwhile, the OPEX (excluding depreciation) to revenues ratio declined to 10.8% (down 0.4pp q/q, down 0.6pp y/y), mainly due to the efficiency increase as a result of high sales volume. EBITDA rose by 23% y/y and 17% q/q to TRY 110mn (our expectation: TRY 111mn, consensus: TRY 105mn), while the EBITDA margin improved by 0.5pp q/q (contracted by 0.4% y/y) to 5.1% in 3Q11, thus in line with expectations.

Overall, we are not changing our estimates for FY11 and accordingly maintain our target price of TRY 51.6 and ‘Reduce’ recommendation for the stock. BIM shares have unperformed the ISE-100 index by 2% yesterday but outperformed the index by 6% over the past month.

LPP, NG2: good October for retail companies. According to the sales reports published by companies, October was a good month for retail companies. LPP recorded a strong 23% growth of sales y/y, what implies a LTL growth of around 15%. The gross margin was also at the very good level of 65%. NG2 reported growth of sales of over 11%, what implies LTL growth of around 5%. This is the first month with positive LTL dynamics after a period of negative LTL dynamics. Valuations in the retail segment look attractive especially in case of NG2.




Action SA PLN 66.3 14.5% 17.4% 15.6% 15.0% 2.2% 2.5% 2.5% 2.5% 11.8% -13.7% -20.5% -13.6%BIM TRY 3,396.7 58.2% 50.7% 50.9% 49.2% 5.4% 5.2% 5.2% 5.2% 4.8% -4.4% -2.4% -11.1%Emperia Holding PLN 387.0 11.5% 11.1% 11.5% 11.3% 3.4% 3.3% 3.4% 3.3% 15.9% 1.4% -8.6% 1.7%Empik PLN 236.7 11.5% 12.5% 6.2% 6.2% 16.6% -28.9% -50.8% -54.9%Eurocash PLN 810.3 31.5% 28.3% 27.0% 26.4% 3.0% 2.6% 2.7% 2.8% 9.4% -12.5% -29.0% -12.8%Jeronimo Martins SGPS EUR 8,042.3 34.6% 36.9% 33.6% 31.9% 7.1% 7.2% 7.2% 7.2% 13.4% -2.5% 12.0% 16.4%LPP PLN 877.7 19.7% 27.3% 26.6% 28.4% 14.7% 16.3% 15.2% 14.8% 11.2% -6.0% -9.2% 0.9%NG2 PLN 399.5 31.1% 28.3% 27.7% 29.1% 14.7% 16.8% 17.3% 17.7% 8.0% -16.0% -30.6% -36.0%Vistula Group PLN 23.7 0.6% 3.5% 4.6% 5.9% 11.1% 12.6% 12.6% 12.9% 29.3% -31.9% -56.5% -63.4%Median - - 20% 27% 27% 27% 6% 6% 6% 6% - - - -Next PLC GBP 5,467 168.7% 142.3% 124.3% 109.2% 20.1% 21.0% 21.2% 21.2% 7.1% 17.1% 28.4% 26.8%Hugo Boss AG EUR 4,437 55.1% 57.3% 53.6% 48.9% 19.4% 22.5% 23.2% 23.8% 10.2% -7.8% -2.3% 36.7%Benetton Group S.p.A. EUR 754 7.2% 5.1% 5.3% 5.8% 14.6% 12.4% 13.1% 13.8% -5.4% -10.2% -24.5% -25.2%EDOB Abwicklungs AG EUR 3 0.0% 0.0% 0.0% -25.1% 72.8% -1.4% -69.0%Ted Baker PLC GBP 359 22.8% 22.7% 21.2% 20.7% 16.4% 16.1% 16.6% 17.5% 5.9% 0.2% 4.1% 22.8%Baltika A.S. EUR 17 -51.3% - - - 0.0% - - - 1.1% -23.9% -54.9% -60.4%Damartex S.A. EUR 151 9.6% 12.2% 10.5% 10.7% 5.6% 0.0% 0.0% 0.0% -0.2% -8.3% -9.8% -2.6%French Connection Group PGBP 85 10.4% 11.3% 12.8% 3.4% 5.4% 5.2% 5.5% -5.1% 24.9% -24.8% 48.4%Industria de Diseno Textil SEUR 40,099 27.1% 26.5% 26.0% 26.4% 23.7% 23.1% 23.6% 23.6% 2.4% 7.0% 6.8% 10.0%Gerry Weber International AEUR 1,042 27.8% 21.3% 22.6% 25.5% 15.3% 16.1% 16.9% 17.2% 4.4% 6.5% 3.1% 29.6%Silvano Fashion Group A.S EUR 128 29.0% 56.3% 28.9% 24.7% 0.0% 0.0% 0.0% 0.0% 17.8% 3.0% 5% 12.0%H&M Hennes & Mauritz AB SEK - 38,737 42.3% 36.0% 39.0% 40.0% 25.6% 22.1% 23.3% 23.4% 5.0% 6.6% -4.8% -6.4%Median Total - 92,009 27.1% 22.0% 21.9% 22.7% 16.0% 16.1% 16.9% 17.5% - - - -EuroStoxx Retail 112,496 13.0% 10.5% 11.4% 12.1% 7% 7% 7% 7% 15.8% 7.5% -14.2% -3.5%CEE to Peer, Prem/Disc - -28% 24% 23% 20% -61% -61% -63% -65% - - - -


2010 2011e 2012e 2013e 2010 2011e 2012e 2013e 2010 2011e 2012e 2013eAction SA 11.0 7.9 8.1 7.7 7.1 5.9 6.1 5.8 1.5 1.3 1.2 1.1BIM 31.4 27.2 24.1 20.9 24.5 21.3 18.6 15.8 15.9 13.6 11.3 9.5Emperia Holding 16.8 15.9 15.1 14.3 9.7 9.0 9.1 8.6 1.8 1.8 1.7 1.6Empik 13.3 11.3 6.0 5.4 1.4 1.4Eurocash 27.6 23.7 21.8 19.0 19.4 17.7 14.9 13.4 7.8 6.4 5.4 4.7Jeronimo Martins SGPS 25.5 21.1 17.6 15.4 15.0 13.3 11.8 10.6 8.5 6.6 5.4 4.5LPP 27.6 17.1 16.9 14.7 16.5 11.4 11.3 10.1 5.1 4.7 4.3 4.0NG2 22.3 12.9 11.9 10.5 18.6 10.7 10.0 8.9 6.2 3.5 3.1 3.0Vistula Group 137.3 9.9 7.6 5.6 26.2 3.6 3.5 3.6 0.8 0.4 0.3 0.3Median CEE 25.5 15.9 16.0 14.5 16.5 10.7 10.6 9.5 5.1 3.5 3.7 3.5Next PLC 12.6 11.4 10.4 9.5 11.4 9.1 8.3 7.3 21.2 16.3 12.9 10.3Hugo Boss AG 24.2 17.1 14.9 13.2 17.3 13.3 11.5 10.5 13.4 9.8 8.0 6.5Benetton Group S.p.A. 7.0 9.7 9.1 8.1 3.7 4.0 3.8 3.6 0.5 0.5 0.5 0.5EDOB Abwicklungs AGTed Baker PLC 17.9 16.5 14.7 13.0 4.1 3.8 3.1 2.7Balt ika A.S. 47.5 1.2 1.4 1.7 1.6Damartex S.A. 11.7 7.9 8.4 7.6 4.0 9.8 3.8 3.1 1.1 1.0 0.9 0.8French Connection Group PLC 10.3 9.8 9.0 8.0 1.0 1.0 1.0Industria de Diseno Textil S.A. 23.1 20.8 18.6 16.3 16.6 15.2 13.7 12.1 6.3 5.5 4.8 4.3Gerry Weber International AG 17.9 16.0 13.9 12.4 14.6 13.1 11.9 10.7 5.0 3.4 3.1 3.2Silvano Fashion Group A.S. 10.5 3.6 5.9 6.0 7.7 4.1 5.3 5.1 3.0 2.0 1.7 1.5H&M Hennes & Mauritz AB 18.7 21.9 18.7 16.5 16.0 18.3 15.8 14.2 7.9 7.9 7.3 6.6Median Total 12.8 15.9 13.2 12.0 11.4 9.8 8.3 7.3 4.1 2.7 2.4 2.1EuroStoxx Retail 13.3 13.5 11.6 10.1 6.1 6.2 5.4 4.9 1.4 1.4 1.3 1.2CEE to Peer, Prem/Disc 99% 0% 21% 21% 44% 9% 29% 30% 27% 31% 55% 63%

P/E P/CE P/BV




2010 2011e 2012e 2013e 2010 2011e 2012e 2013eAction SA 0.2 0.1 0.1 0.1 7.8 5.8 5.7 5.3BIM 1.1 1.0 0.8 0.7 21.0 18.3 15.9 13.3Emperia Holding 0.3 0.3 0.3 0.3 8.9 8.2 8.1 7.6Empik 0.4 0.3 6.2 5.4Eurocash 0.5 0.3 0.3 0.3 16.0 12.9 12.0 10.6Jeronimo Martins SGPS 0.9 0.8 0.7 0.6 12.5 11.3 9.8 8.6LPP 2.0 1.5 1.5 1.3 13.7 9.5 9.7 8.7NG2 2.6 1.5 1.4 1.3 17.8 8.8 8.1 7.3Vistula Group 1.3 0.8 0.7 0.7 11.8 6.2 5.9 5.3Median CEE 0.9 0.8 0.7 0.6 12.5 8.8 8.9 8.1Next PLC 1.2 1.5 1.5 1.4 6.0 7.3 6.9 6.6Hugo Boss AG 2.3 2.3 2.1 1.9 11.8 10.2 8.9 7.9Benetton Group S.p.A. 0.7 0.6 0.6 0.6 4.6 4.9 4.6 4.2EDOB Abwicklungs AGTed Baker PLC 1.4 1.4 1.3 1.2 8.3 8.9 8.0 6.9Balt ika A.S.Damartex S.A. 0.3 0.2 0.2 0.2 5.3 4.4 4.0 3.0French Connection Group PLC 0.2 0.2 0.1 0.1 6.5 3.2 2.8 2.5Industria de Diseno Textil S.A. 2.5 2.6 2.3 2.0 10.6 11.2 9.6 8.3Gerry Weber International AG 1.4 1.4 1.2 1.1 8.8 8.7 7.3 6.3Silvano Fashion Group A.S. 0.9 0.8 0.6 0.5 4.5 2.3 2.2 1.9H&M Hennes & Mauritz AB 3.2 3.0 2.7 2.4 12.5 13.4 11.4 10.2Median Total 1.2 1.4 1.2 1.1 6.5 7.3 6.9 6.3EuroStoxx Retail 0.4 0.4 0.3 0.3 6.6 5.7 5.4 4.9CEE to Peer, Prem/Disc -27% -44% -41% -41% 92% 20% 29% 28%

EV/Sales EV/EBITDA




Action SA Buy Target price PLN 24.0Price (PLN) 18 ROCE 2010 11.7% 10 11e 12e 13eMcap (PLN mn) 289 ROE 2010 14.5% Sales (PLN mn) 2,105.9 2,298.1 2,367.0 2,438.0Mcap (EUR mn) 66 Net debt (EURmn, 10) 18.5 EBITDA margin 2.19% 2.50% 2.48% 2.47%Free f loat (%) 52.0% Gearing (2010) 39% EBIT margin 1.64% 2.01% 2.00% 2.00%Free f loat (EUR mn) 34 Sales CAGR 10-13e -5.7% Net profit margin 1.22% 1.49% 1.51% 1.55%Shares outst. (mn) 16.4 EPS CAGR 10-13e 12.8% EPS (PLN) 1.60 2.08 2.18 2.30


Performance 1M 3M 6M 12MAbsolute (PLN terms) 10.8% -6.9% -12.0% -4.3%Rel. to sector (EUR, ppt) 1.9 -10.3 -23.5 -21.9Rel. to universe (EUR, ppt) 8.8 -4.2 -1.0 0.9

BIM Reduce Target price TRY 51.6Price (TRY) 54.3 ROCE 2010 90.7% 10f 11e 12e 13eMcap (TRY mn) 8,235 ROE 2010 58.2% Sales (TRY mn) 6,574.0 7,995.2 9,604.0 11,349.2Mcap (EUR mn) 3,397 Net debt (EURmn, 10) -116.4 EBITDA margin 5.42% 5.21% 5.20% 5.20%Free f loat (%) 65.3% Gearing (2010) -48% EBIT margin 4.43% 4.28% 4.22% 4.13%Free f loat (EUR mn) 2,219 Sales CAGR 10-13e 20.8% Net profit margin 3.74% 3.62% 3.55% 3.47%Shares outst. (mn) 152 EPS CAGR 10-13e 16.6% EPS (TRY) 1.62 1.90 2.25 2.60


Performance 1M 3M 6M 12MAbsolute (TRY terms) 1.9% -4.8% 3.8% 8.9%Rel. to sector (EUR, ppt) -5.0 -1.0 -5.4 -19.3Rel. to universe (EUR, ppt) 1.9 5.1 17.0 3.4

Emperia Holding Hold Target price PLN 100.0Price (PLN) 111.5 ROCE 2010 9.5% 10 11e 12e 13eMcap (PLN mn) 1,685 ROE 2010 11.5% Sales (PLN mn) 5,917 6,329 6,644 6,972Mcap (EUR mn) 387 Net debt (EURmn, 10) 49 EBITDA margin 3.44% 3.33% 3.35% 3.33%Free f loat (%) 70.0% Gearing (2010) 22% EBIT margin 2.28% 2.17% 2.26% 2.23%Free f loat (EUR mn) 271 Sales CAGR 10-13e 6.0% Net profit margin 1.61% 1.56% 1.68% 1.69%Shares outst. (mn) 15.1 EPS CAGR 10-13e 14.1% EPS (PLN) 6.32 6.52 7.37 7.79


Performance 1M 3M 6M 12MAbsolute (PLN terms) 14.9% 9.4% 1.1% 12.6%Rel. to sector (EUR, ppt) 6.1 4.8 -11.6 -6.5Rel. to universe (EUR, ppt) 13.0 10.9 10.9 16.2

52 weeks

707580859095

100105110115

Emperia Holding W IG (Rebased)

DJ EURO STOXX Retail (Rebased)

52 weeks

13141516171819202122

Action SA WIG (Rebased) DJ EURO STOXX Retail (Rebased)

52 weeks

35

40

45

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60

BIM ISE 100 (Rebased) DJ EURO STOXX Retail (Rebased)



Empik Under review Target price PLN Price (PLN) 10.0 ROCE 2010 8.5% 10e 11e 12e 13eMcap (PLN mn) 1,031 ROE 2010 11.5% Sales (PLN mn) 3,099.3 3,476.2Mcap (EUR mn) 237 Net debt (EURmn, 10) 54 EBITDA margin 6.16% 6.24% Free float (%) 37.0% Gearing (2010) 32% EBIT margin 3.35% 3.56% Free float (EUR mn) 88 Sales CAGR 10-13e #WERT! Net profit margin 2.27% 2.52%Shares outst. (mn) 103.2 EPS CAGR 10-13e #WERT! EPS (PLN) 0.69 0.82

Dividend/share (PLN) 0.00 0.00EV/sales 0.38 0.34 EV/EBITDA 6.19 5.44 P/E 13.34 11.35P/CE 6.01 5.44P/BV 1.44 1.40Dividend yield 0.00% 0.00% EV/EBITDA rel. 0.5 0.6 #WERT!P/E rel. 0.5 0.7 #WERT!


Eurocash Accumulate Target price PLN 26.0Price (PLN) 25.9 ROCE 2010 31.5% 10 11e 12e 13eMcap (PLN mn) 3,528 ROE 2010 31.5% Sales (PLN mn) 7,791.8 9,977.5 10,699.5 11,430.0Mcap (EUR mn) 810 Net debt (EURmn, 10) 31 EBITDA margin 2.96% 2.63% 2.74% 2.81%Free float (%) 48.5% Gearing (2010) 27% EBIT margin 2.19% 1.91% 2.04% 2.11%Free float (EUR mn) 393 Sales CAGR 10-13e 14.3% Net profit margin 1.65% 1.40% 1.54% 1.65%Shares outst. (mn) 136.3 EPS CAGR 10-13e 15.2% EPS (PLN) 0.95 1.02 1.19 1.36


Performance 1M 3M 6M 12MAbsolute (PLN terms) 8.5% -5.5% -21.5% -3.4%Rel. to sector (EUR, ppt) -0.4 -9.0 -32.0 -21.0Rel. to universe (EUR, ppt) 6.5 -3.0 -9.5 1.7

Jeronimo Martins SGPS Buy Target price EUR 16.0Price (EUR) 12.8 ROCE 2010 20.1% 10 11e 12e 13eMcap (EUR mn) 8,042 ROE 2010 34.6% Sales (EUR mn) 9,099 10,475 11,688 12,919Mcap (EUR mn) 8,042 Net debt (EURmn, 10) 574 EBITDA margin 7.06% 7.17% 7.17% 7.17%Free float (%) 31.2% Gearing (2010) 51% EBIT margin 4.97% 5.15% 5.23% 5.30%Free float (EUR mn) 2,509 Sales CAGR 10-13e 14% Net profit margin 3.29% 3.81% 4.09% 4.24%Shares outst. (mn) 629.3 EPS CAGR 10-13e 27.2% EPS (EUR) 0.45 0.61 0.73 0.83

Dividend/share (EUR) 0.21 0.00 0.30 0.36EV/sales 0.88 0.81 0.71 0.61EV/EBITDA 12.51 11.33 9.83 8.56P/E 25.53 21.05 17.58 15.35P/CE 15.01 13.28 11.85 10.57P/BV 8.49 6.55 5.38 4.50Dividend yield 1.84% 0.00% 2.35% 2.82%EV/EBITDA rel. 1.0 1.3 1.1 1.1P/E rel. 1.0 1.3 1.1 1.1Performance 1M 3M 6M 12MAbsolute (EUR terms) 13.4% -2.5% 12.0% 16.4%Rel. to sector (EUR, ppt) 3.5 0.9 8.9 8.2Rel. to universe (EUR, ppt) 10.5 7.0 31.4 31.0

52 weeks

6

8

10

12

14

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22

Empik WIG (Rebased) DJ EURO STOXX Retail (Rebased)

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18202224262830323436

Eurocash WIG (Rebased) DJ EURO STOXX Retail (Rebased)

52 weeks

8

9

10

11

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15

Jeronimo Martins SGPS W IG (Rebased)

DJ EURO STOXX Retail (Rebased)



LPP Hold Target price PLN 2100.0Price (PLN) 2,150.0 ROCE 2010 16.5% 10 11e 12e 13eMcap (PLN mn) 3,822 ROE 2010 19.7% Sales (PLN mn) 1,997.2 2,363.4 2,644.4 3,028.7Mcap (EUR mn) 878 Net debt (EURmn, 10) 51 EBITDA margin 14.74% 16.26% 15.20% 14.79%Free float (%) 49.3% Gearing (2010) 27% EBIT margin 10.01% 11.92% 11.04% 11.03%Free float (EUR mn) 433 Sales CAGR 10-13e 10.9% Net profit margin 6.93% 8.68% 8.42% 8.47%Shares outst. (mn) 1.8 EPS CAGR 10-13e 25.1% EPS (PLN) 79.11 117.20 127.25 146.50


Performance 1M 3M 6M 12MAbsolute (PLN terms) 10.3% 1.4% 0.4% 11.7%Rel. to sector (EUR, ppt) 1.3 -2.6 -12.2 -7.3Rel. to universe (EUR, ppt) 8.3 3.5 10.3 15.4

NG2 Buy Target price PLN 56.0Price (PLN) 45.3 ROCE 2010 27.9% 10 11e 12e 13eMcap (PLN mn) 1,740 ROE 2010 31.1% Sales (PLN mn) 1,028.6 1,124.5 1,228.0 1,339.0Mcap (EUR mn) 399 Net debt (EURmn, 10) 17 EBITDA margin 14.71% 16.82% 17.34% 17.72%Free float (%) 52.2% Gearing (2010) 16% EBIT margin 12.55% 14.52% 15.06% 15.52%Free float (EUR mn) 208 Sales CAGR 10-13e 9.8% Net profit margin 11.46% 11.18% 11.87% 12.39%Shares outst. (mn) 38.4 EPS CAGR 10-13e 18.7% EPS (PLN) 3.07 3.28 3.80 4.32


Performance 1M 3M 6M 12MAbsolute (PLN terms) 7.1% -9.3% -23.2% -29.1%Rel. to sector (EUR, ppt) -1.9 -12.5 -33.6 -44.2Rel. to universe (EUR, ppt) 5.1 -6.5 -11.1 -21.5

Vistula Group Buy Target price PLN 2.0Price (PLN) 1.0 ROCE 2010 4.4% 10 11e 12e 13eMcap (PLN mn) 103 ROE 2010 0.6% Sales (PLN mn) 353.9 384.8 428.1 469.8Mcap (EUR mn) 24 Net debt (EURmn, 10) 56 EBITDA margin 11.08% 12.64% 12.62% 12.90%Free float (%) 80.0% Gearing (2010) 74% EBIT margin 6.57% 8.62% 8.72% 9.27%Free float (EUR mn) 19 Sales CAGR 10-13e 3.6% Net profit margin 0.47% 2.72% 3.45% 4.24%Shares outst. (mn) 103.3 EPS CAGR 10-13e 2.2% EPS (PLN) 0.02 0.09 0.13 0.18



52 weeks

1.4001.5001.6001.7001.8001.9002.0002.1002.2002.3002.400

LPP W IG (Rebased) DJ EURO STOXX Retail (Rebased)

52 weeks

35

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70

NG2 WIG (Rebased) DJ EURO STOXX Reta il (Rebased)

52 weeks

0,60,81,01,21,41,61,82,02,22,42,62,8

Vistula Group W IG (Rebased) DJ EURO STOXX Retail (Rebased)



Sector Insight Romanian Funds & Other Holdings

– Templeton position to be supported after shareholder meeting scheduled for Nov. 23 – 2011 dividends of over 7% expected for Romanian funds – Secondary listing of FP on Warsaw Stock Exchange delayed– SIFs and FP continue to be traded at discounts close to 60% of their NAVs

In September, the NAV of all six closed-end funds decreased between 2% and 5% compared to the month before, as a direct effect of the financial market turbulence, which sent stocks to new lows. Since the beginning of the year, the NAV per share has adjusted by over 10% in the case of SIF3 Transilvania and SIF4 Muntenia, while Fondul Proprietatea’s (FP) NAV is 4.65% lower YTD.

The main event of the recent period was the agreement between four SIFs (SIF2 Moldova did not join the initial agreement) and Erste Group Bank AG regarding the exit of the financial investment companies from BCR. Each SIF is to receive about EUR 29mn in cash and a 1% stake in Erste for their 6% stakes in the largest Romanian bank. With the exception of SIF3 Transilvania, which, according to the letter of intent sent to its shareholders, will most likely convert all its shares into Erste shares by the end of the year, the other SIFs will carry out the equity swap gradually, with the closing of the deal in 2012 or 2013. SIF4 Muntenia was the first financial investment company to already sign the final agreement with Erste Group. According to a press release sent to the Bucharest Stock Exchange (BSE), SIF4 Muntenia will receive EUR 16mn in cash and 2.5mn Erste shares (0.67% stake) in 2011, while the rest will be received at the closing of the deal next year.

Franklin Templeton announced that the buyback program was completed. Shares representing about 2% of the share capital were purchased with the cash available for this program, namely RON 120mn. The shares acquired will be canceled if shareholders agree with the proposal of the fund manager.

FP will organize a GSM on November 23 to update the constitutive act, removing voting restrictions on shareholders owning more than 1% of FP shares (in force as long as the government stake was at least 33%). Franklin Templeton proposed a few other important topics for the shareholder meeting: (1) Changing the management contract to support the power of the fund manager to be able to decide without GSM approval on selling stakes representing 20% of FP assets. (2) The quarterly payment of a fee of 0.479% of the fund’s market capitalization on average, considering the last 90 trading sessions (compared to an annual payment, as will be the case for FY11). (3) Net profit of RON 442mn for FY12, according to the budget proposal (this is below the profit expected this year). Support for the position of the fund manager after the government exits from FP is positive news for the corporate profile of the fund.

The fund manager also announced that the secondary listing of FP on the Warsaw Stock Exchange (WSE) will be delayed (the initial plan was for the listing to take place in 1Q12), due to the feedback from the Romanian National Securities Commission (CNVM), which identified a few more obstacles than Franklin Templeton had envisaged.

Ex-owners’ heirs received about 30% of FP shares this year. Most likely, by the end of 2011, the MoF will not be a shareholder in FP anymore. Foreign institutional investors have a 37% stake, while domestic institutional investors have accumulated a 10.5% stake. The government canceled its plan to create two national integrated power companies via combining profitable hydro and nuclear units with old and inefficient thermo units. As an alternative, the MoEc and Franklin Templeton have agreed to create a thermo power complex, Oltenia, which will include the three lignite-fired power producers CE Turceni, CE Rovinari and CE Craiova, in which Fondul Proprietatea is a minority shareholder. The new power complex should be listed on the Bucharest Stock Exchange (BSE) within two years after creation.

Koc Holding to form consortium for privatization of motorways and bridges in Turkey. Koc Holding has signed an MoU with Malaysia-based UEM Group Berhad and Gözde Giri�im Sermayesi (a Turkish private equity firm) to establish a bidding consortium for the privatization of motorways and bridges in Turkey. The decision of the



consortium regarding making a bid for the tender will be taken following an investigation. The Privatization Administration (PA) announced the tender for privatization of motorways and bridges on August 25. The privatization will be made through the method of 'transfer of operation rights' for a period of 25 years as a single package. The package contains eight different motorways throughout the country and two bridges in Istanbul. According to reports in the media, more than USD 7bn in revenue is expected from the tender and the PA generated TRY 1.5mn in toll revenue from motorways and bridges in the past three years.



Romanian SIFs03/11/2011 Rep. Mcap Recommendation

Curr. Current NAV*Company (EURmn) 1M 3M 6M 12MFondul Proprietatea RON 1,393.0 0.440 0.720 Accumulate 2.1% -12.0% - -SIF 1 Banat Crisana RON 94.5 0.750 1.930 Not rated -3.3% -22.7% -40.8% -32.5%SIF 2 Moldova RON 96.4 0.808 1.831 Not rated 4.3% -31.5% -42.0% -33.2%SIF 3 Transilvania RON 114.2 0.455 1.129 Not rated 8.2% -5.6% -20.7% -20.2%SIF 4 Muntenia RON 92.4 0.498 1.337 Not rated 0.0% -22.1% -41.4% -25.6%SIF 5 Oltenia RON 120.0 0.900 2.055 Not rated 1.5% -31.3% -40.4% -36.2%

Price Performance (EUR terms)

(LC)

2008 2009 2010 Last rep. 2008 2009 2010 Last rep. 2008 2009 2010 Last rep.Fondul Proprietatea - - 5.328,17 14,616.2 - - 1.112 1.090 - - -0.59 -0.58SIF 1 Banat Crisana 1,011.3 1,541.5 1,361.5 1,289.1 1.843 2.809 2.481 2.349 -0.70 -0.60 -0.71 -0.69SIF 2 Moldova 957.9 1,177.5 1,141.2 1,081.5 1.845 2.268 2.199 2.084 -0.71 -0.50 -0.67 -0.65SIF 3 Transilvania 1,335.1 1,627.8 1,506.5 1,343.4 1.222 1.490 1.379 1.230 -0.78 -0.54 -0.69 -0.66SIF 4 Muntenia 1,389.2 1,477.7 1,417.8 1,267.3 1.721 1.831 1.757 1.570 -0.64 -0.61 -0.72 -0.69SIF 5 Oltenia 1,128.3 1,643.4 1,557.4 1,520.4 1.945 2.833 2.684 2.621 -0.70 -0.55 -0.69 -0.68Median SIF - - - - - - - - -0.70 -0.55 -0.69 -0.68

2007 2008 2009 2010 2007 2008 2009 2010 2007 2008 2009 2010SIF 1 Banat Crisana 35.5% -73.7% 222.8% -46.1% -0.6% 28.3% 13.6% -42.6% 47.7% -22.3% 17.5% -43.8%SIF 2 Moldova 16.4% -7.9% 89.0% 7.6% 10.2% 27.9% 55.6% -70.4% 35.6% 43.2% 3.6% -4.1%SIF 3 Transilvania 41.4% -31.1% -19.3% -0.2% 14.9% 15.8% 75.0% -59.3% 107.0% -14.0% 31.6% -42.6%SIF 4 Muntenia -22.7% 89.3% -89.0% 487.2% 7.8% 16.5% 72.9% -71.4% 20.4% 3.4% -8.5% -11.4%SIF 5 Oltenia 48.0% -78.5% 443.5% -36.4% 11.6% 75.4% 5.3% -53.9% 34.9% -17.7% 114% -56.8%Median SIF 35.5% -31.1% 89.0% -0.2% 10.2% 27.9% 55.6% -59.3% 35.6% -14.0% 17.5% -42.6%

2007 2008 2009 2010 2007 2008 2009 2010 2007 2008 2009 2010SIF 1 Banat Crisana 6.9% 6.3% 8.8% 4.3% 29.0% 21.7% 24.6% 12.1% 0.8% 1.2% 0.9% 1.2%SIF 2 Moldova 4.2% 6.9% 9.3% 8.4% 18.8% 25.8% 24.6% 20.4% 1.0% 1.4% 1.4% 1.9%SIF 3 Transilvania 5.1% 4.6% 8.4% 4.3% 19.4% 15.5% 20.0% 9.8% 1.0% 1.2% 1.3% 1.7%SIF 4 Muntenia 5.0% 5.0% 5.7% 5.0% 5.4% 5.5% 6.3% 5.5% 1.4% 1.3% 1.7% 1.6%SIF 5 Oltenia 4.5% 4.5% 13.5% 5.1% 19.3% 16.8% 33.9% 12.4% 0.8% 1.1% 1.0% 1.4%Median SIF 5.0% 5.0% 8.8% 5.0% 19.3% 16.8% 24.6% 12.1% 1.0% 1.2% 1.3% 1.6%

Net profit / NAV ROE Expense ratio

NAV/share (RON)** Discount/NAV**

Revenues from disposal of assets Revenues from dividends Net profitGrowth Growth Growth

NAV (RONmn)**

Source: Company data, Erste Group Research

* adjusted NAV per share: fair NAV based on sum-of-the-parts, with discount applied (46%)

** NAV as reported, calculated by official methodology



Sector Insight Technology

– AT&S – 2Q11/12 marking strong rebound q/q – austriamicrosystems – TAOS acquisition added to 2Q11 – ERNT – 3Q11 with negative surprise on one-off – Polish ITs: unspectacular 3Q11 results ahead

AT&S posted strong 2Q11 results on mobile devices demand. Overall, business has strongly rebounded after the sluggish 1Q12. Throughout the quarter, business development has gradually been improving. Revenues were driven by the rebounding mobile devices segment (new product launches) and an ongoing upward trend of the automotive segment. The industrial/medical segment has posted weaker development for the second quarter in a row. Capacity utilization has been on a high level. Profitability surged through 1) economies of scale 2) generally higher demand for complex PCBs form the automotive segment. Still, one must bear in mind that the ramp up costs for the last two production lines in Shanghai have burdened profitability with a few EURmn. The quarterly result was positively influenced by favorable FX development.

Investments in the new plant in Chongqing are on track. First, AT&S will build the new plant (EUR 25mn), and in a further step it will decide, depending on the business environment, when the new production lines (machinery) will be bought and set up (EUR 175mn). Based on the posted result and ongoing strong demand, AT&S has confirmed its guidance in terms of sales (EUR 530-550mn) and profitability (EBIT margin >9%).

After receiving some positive comments from the quarterly reporting season so far and based on the outlook on the Christmas quarter, we expect AT&S to post a strong 3Q12. With the new capacities in place, the company should even manage to post one of the strongest (if not the strongest) quarterly results ever. We have seen some stockpiling of inventories ahead of the Christmas season and how demand will develop will depend on consumer behavior in the AT&S March quarter. For the time being, we will continue to watch the market carefully in order to incorporate changes to our model once we get a feeling for demand development after Christmas.

austriamicrosystems - TAOS consolidation boosts 3Q11: The first-time consolidation of TAOS adds nicely to the top line, based on strong dynamics. ams is experiencing robust demand along all major segments and its revenues beat market estimates. The order backlog increased sequentially to EUR 89.1mn at a B2B ratio of 1.09, which remained stable q/q. The purchase price allocation of about EUR 2mn (TAOS acquisition) and some EUR 1.5-2mn (our estimate) on ramp-up costs related to a global smart phone launch at TAOS burdened gross profitability in 3Q11. Excluding both effects, the result would have met our expectations and would have beaten market estimates. A USD loan revaluation related to the TAOS acquisition burdened the bottom line in 3Q11. Based on the posted result and the favorable demand situation (even if hinting at a cautious order trend), ams expects revenues of EUR 270-275mn (up from EUR >260mn) in 2011. For 2012, ams has announced that it expects to grow at double-digit pace on the top and bottom lines. Due to the FY consolidation of TAOS, this growth target is reachable, even anticipating an economic slowdown going forward.

Despite revising our estimates downwards, we anticipate a strong upside. We have increased our top line estimate in 2011 and incorporated the PPA (EUR 8mn p.a.), but reduced our growth assumptions going forward. Even limiting growth in 2012 to the FY consolidation effect from TAOS and applying some conservative assumptions in the TV, ams remains strongly undervalued. Our new target price is CHF 51.7, which is slightly down from CHF 56.8 previously. ams provides an attractive risk/reward profile, especially in the current environment.

Ericsson Nikola Tesla – 3Q11 below expectations, negative one-off. Revenues fell short of expectations, although still slightly up y/y. While demand from Croatia and CIS are declining y/y, this development is compensated for by an increase of revenues from other SEE countries and the internal business with the Ericsson mother company. The�order backlog decreased further in 3Q11 (-24% y/y), given a decrease in demand combined with price pressure on products and services. The quarterly gross margin decreased further sequentially to 3.8%, after 17.2% (1Q11) and 8.4% (2Q11) and 16.9% in 3Q10. Apart from the already mentioned price pressure faced by ERNT, investment into export markets (SEE region) in order to secure new business as well as a weaker sales mix are the main drivers behind this development. ERNT has written-off HRK 23.7mn related to a tax asset (withholding tax) that ERNT will not be able to use due to other tax reliefs (mainly due to R&D investments serving



as a tax shield). ERNT generated a free cash flow of about HRK 10mn for the period and holds a net cash position of above HRK 500mn.

The posted set of results illustrates the difficult business environment ERNT is currently exposed to. Local telecom operators are not expected to invest big money in network expansion in the coming quarters. They are freed from the telecom tax that will be abolished from 2012 on but will face tougher price pressure on roaming due to Croatia’s EU accession in mid 2013, as well as fairly lower lease prices for the LTE network usage of other operators compared to those that T-HT, especially, wants to charge. While the domestic and CIS market show sluggish development, ERNT is looking for business opportunities in the public and health care sectors. Still, for the time being, we see a lack of a trigger for the share price.

Polish ITs about to publish unspectacular 3Q11 results. Taking a glance at the upcoming results presentation of Asseco Poland, Sygnity and ComArch, we do not see major potential for surprise. While it should report stable business development, including compensating one-offs, Sygnity is expected to post a result at around break-even. ComArch is anticipated to show rebounding business after an utterly disappointing 1H11, with a net loss of PLN 20mn, which will be needed in order to finish FY11 in the black.




Asseco Poland PLN 829.3 9.9% 9.5% 8.6% 8.3% 21.8% 21.8% 21.8% 21.8% 20.2% -2.4% -16.0% -16.3%AT&S EUR 214.2 -16.2% 16.1% 14.9% 14.4% 9.2% 19.7% 20.3% 20.8% 1.6% -17.4% -36.7% -29.8%austriamicrosystems EUR 413.3 12.7% 13.0% 12.0% 11.0% 23.9% 25.6% 24.5% 21.8% 7.7% -18.1% -15.1% 10.2%ComArch PLN 92.5 8.9% 9.6% 9.3% 9.2% 9.7% 9.9% 10.0% 10.1% 0.0% -26.8% -51.9% -42.8%Ericsson Nikola Tesla HRK 179.6 11.8% 12.8% 13.1% 12.5% 12.9% 13.2% 13.3% 12.9% 0.0% -21.9% -38.5% -21.5%Kapsch TrafficCom EUR 688.9 22.0% 13.0% 24.1% 19.5% 14.5% 15.8% 18.9% 23.5% 9.5% -0.6% -21.5% 20.4%Sygnity PLN 51.9 0.4% 1.8% 5.1% 6.0% 4.4% 4.5% 4.6% 4.6% 22.5% -4.4% -20.7% 12.7%Median - - 10% 13% 12% 11% 13% 16% 19% 21% - - - -TecDAX Technology - 21,847 9.7% 8.4% 8.2% 10.0% 13.4% 15.9% 14.0% 14.3% - - - -EuroStoxx Technology 129,007 19.2% 18.4% 15.5% 15.3% 16.8% 15.3% 15.3% 16.8% 5.3% -3.7% -17.3% -21.1%

Total Peer Group 150,854 14.5% 13.4% 11.9% 12.6% 15.1% 15.6% 14.7% 15.6%CEE to Peer, Prem/Disc - -32% -5% 1% -13% -15% 1% 29% 34% - - - -


2010 2011e 2012e 2013e 2010 2011e 2012e 2013e 2010 2011e 2012e 2013eAsseco Poland 8.3 8.3 9.1 8.8 6.5 6.5 7.1 7.0 0.8 0.8 0.8 0.7AT&S nm 10.5 5.9 5.5 7.8 4.4 2.4 2.1 0.9 1.6 0.8 0.7austriamicrosystems 15.8 11.2 10.2 10.2 7.7 3.7 5.8 6.4 1.9 1.3 1.2 1.1ComArch 7.5 6.6 6.5 6.0 4.6 4.3 4.4 4.5 0.6 0.6 0.6 0.5Ericsson Nikola Tesla 9.0 8.2 7.6 7.6 6.5 6.4 6.3 6.3 1.1 1.0 1.0 0.9Kapsch TrafficCom 23.7 29.3 12.8 12.4 19.2 12.5 23.4 8.6 4.7 3.7 2.6 2.3Sygnity 172.7 40.3 14.4 11.7 6.3 6.4 5.3 5.7 0.7 0.8 0.7 0.7Median CEE 12.4 10.5 9.1 8.8 6.5 6.4 5.8 6.3 0.9 1.0 0.8 0.7TecDAX Technology 14.2 13.6 13.1 10.4 8.4 8.9 7.7 6.0 1.4 1.3 1.2 1.2EuroStoxx Technology 13.0 11.6 13.6 11.4 8.7 8.0 7.6 7.4 2.8 2.4 2.2 2.0Total Peer Group 13.6 12.6 13.3 10.9 8.6 8.4 7.6 6.7 2.1 1.8 1.7 1.6CEE to Peer, Prem/Disc -9% -17% -32% -19% -24% -24% -24% -5% -56% -44% -51% -53%

2010 2011e 2012e 2013e 2010 2011e 2012e 2013eAsseco Poland 1.1 0.9 0.9 0.8 4.8 4.3 4.2 3.7AT&S 0.9 1.2 0.9 0.9 10.3 6.0 4.3 4.4austriamicrosystems 1.8 1.7 1.3 1.2 7.6 6.5 5.3 5.3ComArch 0.3 0.2 0.2 0.1 3.0 2.4 1.8 1.0Ericsson Nikola Tesla 0.5 0.5 0.4 0.4 4.1 3.7 3.3 3.1Kapsch TrafficCom 3.4 1.8 1.1 1.3 23.3 11.6 6.0 5.6Sygnity 0.3 0.3 0.3 0.2 7.4 6.7 5.9 4.9Median CEE 0.9 0.9 0.9 0.8 7.4 6.0 4.3 4.4TecDAX Technology 1.1 0.9 0.8 0.6 8.3 7.4 5.5 4.9EuroStoxx Technology 1.2 1.1 1.0 1.0 7.6 6.3 6.7 6.1Total Peer Group 1.1 1.0 0.9 0.8 7.9 6.9 6.1 5.5CEE to Peer, Prem/Disc -15% -2% -5% 3% -6% -13% -29% -20%

P/E P/CE P/BV

EV/Sales EV/EBITDA




Asseco Poland Buy Target price PLN 72.8Price (PLN) 49 ROCE 2010 10.7% 10e 11e 12e 13eMcap (PLN mn) 3,611 ROE 2010 9.9% Sales (PLN mn) 3,224.6 3,339.3 3,407.0 3,476.1Mcap (EUR mn) 829 Net debt (EURmn, 10) -97.5 EBITDA margin 21.80% 21.80% 21.80% 21.80%Free f loat (%) 55.0% Gearing (2010) -8% EBIT margin 18.53% 18.69% 18.80% 18.90%Free f loat (EUR mn) 456 Sales CAGR 10-13e 3.3% Net profit margin 14.89% 14.81% 14.44% 14.55%Shares outst. (mn) 73.1 EPS CAGR 10-13e 0.9% EPS (PLN) 5.43 5.53 5.45 5.58


Performance 1M 3M 6M 12MAbsolute (PLN terms) 19.2% 5.3% -7.1% -7.3%Rel. to sector (EUR, ppt) 9.7 2.3 5.4 -11.0Rel. to universe (EUR, ppt) 17.2 7.1 3.4 -1.8

AT&S Buy Target price EUR 19.0Price (EUR) 9.2 ROCE 2010 -5.9% 10 11e 12e 13e

ROE 2010 -16.2% Sales (EUR mn) 372.2 487.9 545.0 593.2Mcap (EUR mn) 214 Net debt (EURmn, 10) 159.3 EBITDA margin 9.23% 19.66% 20.32% 20.82%Free f loat (%) 50.9% Gearing (2010) 76% EBIT margin -6.87% 9.54% 9.80% 10.10%Free f loat (EUR mn) 109 Sales CAGR 10-13e 7.2% Net profit margin -10.11% 7.18% 6.63% 6.64%Shares outst. (mn) 23 EPS CAGR 10-13e - EPS (EUR) -1.60 1.51 1.55 1.68

Dividend/share (EUR) 0.10 0.35 0.40 0.44EV/sales 0.95 1.18 0.88 0.91EV/EBITDA 10.26 6.00 4.35 4.36P/E nm 10.50 5.92 5.46P/CE 7.85 4.39 2.42 2.06P/BV 0.92 1.61 0.83 0.75Dividend yield 1.21% 2.21% 4.36% 4.80%EV/EBITDA rel. 1.4 1.0 1.0 1.0P/E rel. - 1.0 0.7 0.6

Performance 1M 3M 6M 12MAbsolute (EUR terms) 1.6% -17.4% -36.7% -29.8%Rel. to sector (EUR, ppt) -8.9 -12.7 -15.3 -24.5Rel. to universe (EUR, ppt) -1.4 -7.9 -17.2 -15.3

austriamicrosystems Buy Target price EUR 51.7Price (EUR) 39 ROCE 2010 11.6% 10 11e 12e 13e

ROE 2010 12.7% Sales (EUR mn) 209 270 315 323Mcap (EUR mn) 413 Net debt (EURmn, 10) 16 EBITDA margin 23.86% 25.60% 24.51% 21.82%Free f loat (%) 76.1% Gearing (2010) 8% EBIT margin 12.93% 15.17% 14.64% 13.81%Free f loat (EUR mn) 314 Sales CAGR 10-13e 23.8% Net profit margin 11.03% 12.28% 12.89% 12.58%Shares outst. (mn) 12.9 EPS CAGR 10-13e EPS (EUR) 2.27 2.88 3.15 3.15


Performance 1M 3M 6M 12MAbsolute (EUR terms) 7.6% -9.2% -19.3% -2.5%Rel. to sector (EUR, ppt) -2.8 -13.4 6.3 15.5Rel. to universe (EUR, ppt) 4.8 -8.6 4.4 24.7

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ComArch Hold Target price PLN 100.2Price (PLN) 50.0 ROCE 2010 9.5% 10e 11e 12e 13eMcap (PLN mn) 403 ROE 2010 8.9% Sales (PLN mn) 846.2 905.9 931.8 958.4Mcap (EUR mn) 92 Net debt (EURmn, 10) -35 EBITDA margin 9.66% 9.88% 10.03% 10.08%Free float (%) 23.4% Gearing (2010) -23% EBIT margin 6.26% 6.67% 6.94% 7.11%Free float (EUR mn) 22 Sales CAGR 10-13e 7.1% Net profit margin 5.80% 6.21% 6.58% 6.89%Shares outst. (mn) 8.1 EPS CAGR 10-13e 19.5% EPS (PLN) 6.15 7.05 7.68 8.28


Performance 1M 3M 6M 12MAbsolute (PLN terms) 15.0% -31.8% -48.6% -48.6%Rel. to sector (EUR, ppt) -10.4 -22.1 -30.5 -37.6Rel. to universe (EUR, ppt) -2.9 -17.2 -32.4 -28.3

Ericsson Nikola Tesla Hold Target price HRK 1549.9Price (HRK) 1,020.0 ROCE 2010 18.0% 10e 11e 12e 13eMcap (HRK mn) 1,346 ROE 2010 11.8% Sales (HRK mn) 1,438.1 1,480.2 1,515.2 1,525.3Mcap (EUR mn) 180 Net debt (EURmn, 10) -72 EBITDA margin 12.88% 13.17% 13.30% 12.91%Free float (%) 42.2% Gearing (2010) -43% EBIT margin 9.06% 10.19% 10.82% 10.61%Free float (EUR mn) 76 Sales CAGR 10-13e 2.2% Net profit margin 9.94% 10.88% 11.49% 11.45%Shares outst. (mn) 1.3 EPS CAGR 10-13e 8.2% EPS (HRK) 109.99 123.94 134.00 134.39


Performance 1M 3M 6M 12MAbsolute (HRK terms) -0.2% -21.5% -37.6% -19.7%Rel. to sector (EUR, ppt) -10.5 -17.3 -17.2 -16.2Rel. to universe (EUR, ppt) -3.0 -12.4 -19.1 -7.0

Kapsch TrafficCom Buy Target price EUR 78.0Price (EUR) 53.0 ROCE 2010 25.1% 10 11e 12e 13eMcap (EUR mn) 689 ROE 2010 22.0% Sales (EUR mn) 216 389 569 436Mcap (EUR mn) 689 Net debt (EURmn, 10) -21 EBITDA margin 14.48% 15.78% 18.85% 23.50%Free float (%) 30.7% Gearing (2010) -12% EBIT margin 11.10% 12.34% 15.93% 19.79%Free float (EUR mn) 212 Sales CAGR 10-13e 21% Net profit margin 16.51% 7.18% 10.92% 14.61%Shares outst. (mn) 13.0 EPS CAGR 10-13e 41.6% EPS (EUR) 2.64 1.81 4.15 4.27


Performance 1M 3M 6M 12MAbsolute (EUR terms) 9.5% -0.6% -21.5% 20.4%Rel. to sector (EUR, ppt) -1.0 4.1 -0.1 25.7Rel. to universe (EUR, ppt) 6.6 8.9 -2.0 34.9

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Sygnity Hold Target price PLN u.r.Price (PLN) 19.0 ROCE 2010 1.3% 10e 11e 12e 13eMcap (PLN mn) 226 ROE 2010 0.4% Sales (PLN mn) 702 732 753 774Mcap (EUR mn) 52 Net debt (EURmn, 10) 5 EBITDA margin 4.42% 4.47% 4.64% 4.60%Free f loat (%) 56.6% Gearing (2010) 7% EBIT margin 0.70% 1.11% 2.55% 3.03%Free f loat (EUR mn) 29 Sales CAGR 10-13e 8% Net profit margin 0.17% 0.73% 2.12% 2.55%Shares outst. (mn) 11.9 EPS CAGR 10-13e #ZAHL! EPS (PLN) 0.10 0.44 1.32 1.63


Performance 1M 3M 6M 12MAbsolute (PLN terms) 21.5% 3.2% -12.3% 24.8%Rel. to sector (EUR, ppt) 12.1 0.3 0.7 17.9Rel. to universe (EUR, ppt) 19.6 5.2 -1.3 27.2

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Sector Insight Telecom

– Telekom Austria: Tough macro environment and competition to reduce 3Q11 earnings – T-Hrvatski Telekom: 3Q11 profit beat estimates, due to one-offs – Turk Telekom: Strong 3Q11 revenue to EBIT, but profit hit by FX losses – Turkcell: We expect seasonally strong revenues, but overshadowed by FX losses – TPSA: Strong set of 3Q11 results, thanks to OPEX savings – Telefónica CR: Weak revenues anticipated, but strong OPEX savings in 3Q11 – Magyar Telekom: Weak consumer spending, competition and crisis tax to burden 3Q11 earnings

Telekom Austria will release its 3Q11 figures on November 14, 2011, at 7:00 CET. We expect to see an acceleration of the rate of revenue and comparable EBITDA decline in 3Q11 compared to the previous quarters. The competitive environment in Austria remained challenging, marked by aggressive tariffs from Orange and cheap handsets from Hutchison 3G. The mobile termination rate in Austria was reduced by 33.2% y/y to 2.01 eurocents as of July 1, 2011. The roaming tariff was reduced as of July 1, 2011, from 39 eurocents to 35 eurocents for making calls and from 15 eurocents to 11 eurocents for receiving calls. As a result, we expect Austrian revenues to decline by 5% y/y. We estimate comparable EBITDA of EUR 244.9mn; excluding EUR 8mn of restructuring costs.

The macroeconomic situation in Bulgaria remained weak in 3Q11. In addition, the billing problems seen in 1H11 should continue into 3Q, leading to higher bad debt provisions and lower usage for impacted customers. We therefore expect Bulgarian revenues to decline by 5.7% y/y. The EBITDA margin in Bulgaria should nevertheless remain strong, thanks to cost efficiency.

The Croatian operation should also be negatively affected by the weak macroeconomic environment, with a high employment rate of 16.7% in August 2011. Furthermore, the mobile termination rate was reduced from 56 lipas to 39.6 lipas as of January 2011. On the positive side, mobile taxes (6% of voice and data revenues) will be abolished as of 2012. We expect Croatian revenues to decline by 9% y/y.

The Belarusian operation remained negatively affected by the ruble devaluation. The ruble exchange rate in 2Q11 was 7,000/EUR. The rate was rather stable in July and August 2011, but plunged to 10,000-11,000/EUR in September 2011. The 2011 guidance was based on an exchange rate of 8,700/EUR. We therefore expect revenues to decline by 39%, mainly due to the FX effect.

Underlying OPEX should decline by 3.9% y/y, which was not sufficient to compensate for lower revenues. We therefore expect comparable EBITDA to fall by 9.6% y/y. Financial results should remain similar to the amounts in the past two quarters. We assume a 22% effective tax rate. As a result, we expect net income to drop by 21.2% y/y. We do not include any Velcom (Belarus) goodwill impairment in the 3Q11 forecast. The goodwill stood at EUR 265.131mn at the end of 2010.

Overall, T-Hrvatski Telekom’s 3Q11 results were helped by one-off items, which were HRK 73mn of positive revenue impact from the shorter useful life of fixed line customers and a one-time improvement in receivables collection. Excluding the one-offs, revenues would have declined by 6.1% y/y to HRK 2,137mn (accelerated vs. previous quarters) and the net profit would not beat our and consensus estimates. We saw OPEX savings in the employee, maintenance and marketing areas, but material costs were pushed up by smartphone and tablets promotions – which should continue in 4Q. Furthermore, the regulatory pressure looks intensifying: 1) Wholesale bitstream access is priced at retail minus 60% (very tough); 2) T-HT is declared as an operator with significant market power in retail broadband access. This means THT should oblige with retail price control and regulation of promotional offers.

Competition in the broadband and TV market should intensify, following the acquisition of B.net by VIPnet.On the positive side, the 6% mobile tax will be abolished as of 2012. We estimate the impact on revenues at around HRK 150mn. Thanks to this and further OPEX savings, we are still comfortable with our Hold recommendation.



Turk Telekom’s 3Q11 results were in line with our and slightly above consensus estimates, from revenues until EBIT. Larger than expected FX losses, at TRY 404mn, led to a 43.7% y/y decline net income, worse than our and consensus estimates. The large FX losses were driven by TTKOM’s USD/EUR-denominated debts. The revenue guidance for 2011 was confirmed at ‘+9-10% y/y’. TTKOM upgraded its 2011 revenue outlook on September 8, 2011, from ‘more than 5-7% y/y’. The revenue target is slightly higher than our current estimate of +8.3% y/y. The EBITDA margin guidance is confirmed at 40-45%, while the CAPEX target of TRY 2.2bn is also confirmed.

Revenues rose by 13.3% y/y or by 10.3% organically. Mobile revenues were surprisingly strong, growing at 20.5% y/y. Fixed line revenues grew by 11% y/y, or by 7.2% y/y organically. Revenues from ADSL rose by 19.2% y/y to TRY 728mn, benefiting from the low broadband penetration and price increase. Domestic PSTN declined by 5.2% y/y to TRY 1.02bn, due to 4.4% lower number of fixed line access, to 15.5mn. Avea, the smallest mobile operator in Turkey, reported 10.6% y/y ARPU growth to TRY 21.3, which is better than expected. The number of mobile subscribers at 12.5mn (+9.6% y/y) is in-line with our expectations.

Marketing expenses rose by 30% y/y, as a direct result of strong competition in the mobile segment for voice and data services. The direct cost of revenues rose by 7.4% y/y, mainly driven by EUR/USD-denominated expenses such as handsets, networks, IT equipments and international traffics. Therefore, EBITDA rose only 3.4% y/y to TRY 1.3bn, giving an EBITDA margin of 42.4% (in line with FY11 guidance: 40-45%). Fixed line EBITDA came in at 51%, slightly lower than our expectation of 52% but looked strong nevertheless. The mobile EBITDA margin was 14%, a touch lower than our estimate of 14.5%.

Overall, the underlying operating performance was strong in 3Q11, with strong mobile revenue growth. We may need to reduce our EPS and dividend estimates for 2011 because of FX losses. Furthermore, the falling TRY means that net debt translated into TRY would increase, which should lead to a lower target price for TTKOM. We still recommend TTKOM shares, but its upside potential would not be as high as before.

We estimate Turkcell’s revenue growth to come in at 6.3% y/y, driven largely by Turkcell Turkey (+5.6% y/y).Turkcell Turkey should contribute around 88% of the Group revenues. We forecast 34.5mn subscribers for Turkcell Turkey, with 68.1% prepaid subscribers. The number of postpaid subscriber should rise by 11% to 11mn. Meanwhile, blended ARPU should rise by 4% y/y to TRY 21.2, thanks to higher usage of data and value added services. Overall, the subscriber net adds, rising postpaid users and data usage were the revenue growth drivers in the 3Q11.

As the Ukrainian currency UAH fell by 12.8% against the TRY, we expect revenues for Euroasia to decline by 3% y/y to TRY 123mn. Revenues from BeST, the smallest mobile operator in Belarus, should decline by 24% sequentially, as the BYR/USD fell from 4,960 in 2Q11 to 7,630 in 3Q11.

EBITDA should decline by 1.1% y/y to TRY 853.7mn, driven by higher selling and marketing expenses, as well as the payment of a TRY 40.1mn ICTA fine refund related to ‘GSM maximum tariff schedule’. Competition in Turkey remained intensive, with price pressure on both voice and data services. We estimate Turkcell Turkey to deliver a 36% EBITDA margin and to contribute 92% of the Group EBITDA in 3Q11. The aforementioned negative FX development in Ukraine and Belarus should put pressure on the EBITDA of Euroasia and BeST.

As the TRY depreciated by 13.6% against the USD and 6.1% against the EUR sequentially in 3Q11, we expect FX losses of TRY 150mn. As of 30 June, 2011, Turkcell had USD 1.755bn debt and USD 1.233bn cash, as well as EUR 30.3mn debt and EUR 8.7mn cash (source: note 20, IFRS report). Largely due to these FX losses, we estimate net income to fall by 19.2% y/y to TRY 450.7mn.

TPSA’s revenues in 3Q11 were in-line with our and consensus estimates. EBITDA was very strong, with OPEX declined by 3.8% y/y - much better than expected. Cost savings were especially seen in commercial expenses, other external purchases (overhead costs) and other expenses. Considering the depreciation of PLN vs. EUR by 10% sequentially, commercial expenses could even decline sequentially. A significant decline in other OPEX could be attributed to unexplained non-recurring items. TPSA booked much lower taxes than expected, due to PLN 108mn new technology tax relief related to 2006-10 (unexpected). Overall, the strong OPEX savings and one-off items on other OPEX and taxes led to a net income of PLN 376mn. Excluding the unexpected tax relief, the net income in 3Q11 would amount to PLN 268mn. This would still be considerably above our and consensus estimates.



The guidance for 2011 was confirmed. 9M11 revenues declined by 4.2% y/y, which was in-line with the lower end of guidance of -2 to -4.5% y/y. TPSA expects net FCF in 4Q to reach PLN 900mn. This should be achieved through lower CAPEX y/y and a reduction in working capital. 4Q is seasonally the most competitive, with many marketing and commercial activities. Therefore, TPSA expects to increase its commercial activities in 4Q11.

Overall, TPSA was able to successfully control and reduce its OPEX. There is even further room for higher efficiency. Unfortunately, the DPTG issue is a significant risk and we would rather wait until the Commercial Court decision in Vienna by Nov. 8, 2011, before reconsidering our current negative rating.

Telefónica CR will release its 3Q11 results on November 10, 2011, at 16:00 CET. Domestic operations should perform poorly, while the Slovakian operation should continue its strong growth. We estimate domestic fixed line revenues to decline by 6.4% y/y, driven mainly by falling traditional fixed voice (-7.5% y/y) and access revenues (-16.5% y/y). Fixed broadband remained competitive, with UPC offering cheap broadband internet to its existing TV customers. Therefore, we expect internet/broadband revenues to grow only slightly, by 2.5% y/y. Domestic mobile faced pressure from the weak corporate and SME segment, as well as a 35% y/y mobile termination rate reduction. In addition, mobile tariffs were falling under competitive pressure. We expect relatively flat domestic mobile subscribers, at 4.88mn in 3Q11e. Meanwhile, we expect blended ARPU to decline by 10.2% y/y to CZK 425/month. In Slovakia, we assume a 35% y/y revenue growth, driven by a 34.4% y/y higher number of mobile subscribers to 1.05mn.

OPEX should decline by 4.2% y/y, driven by a 10.3% y/y lower labor costs after last year’s redundancy measures. This year, the company expects to reduce its labor costs by at least 7-8% y/y. Supplies costs should decline by 5.7% y/y, due to lower interconnection costs (lower MTR) and fewer number of ICT projects. Taxes should decline considerably, by 19.9% y/y, resulting from the positive tax impact of bad debt provisions booked in 1Q11. Brand fees should rise by 41.5% y/y, as the mother company asked for a higher rate. Reported OIBDA is expected to decline by 45.8% y/y or by 6.9% y/y, excluding the CZK 4.3bn asset impairment reversal done in 3Q10. Guided OIBDA before brand fees is expected to drop by 5.3% y/y, driven mainly by weak revenues. We estimate improvements in net financial results, due to higher cash position y/y. As a result, we expect net profit of 3Q11 to drop by 63.9% y/y, or by 16.9% y/y, excluding the asset impairment reversal.

We view the FY11 OIBDA guidance of -1% to -5% y/y as unrealistic. The company said that OIBDA will be back-end loaded.

Magyar Telekom will release its 3Q11 results on November 10, 2011, at 0:00 CET. We expect revenues falling by 2.7% y/y, largely driven by fixed line revenues. Traditional fixed voice revenues should decline by 13.1% y/y, while internet revenues should fall by 2% y/y. Mobile revenues should decline slightly. The effect of customer migration to lower-priced packages and the impact of the double mobile termination rate reduction in January and December 2010 could be partially compensated for by higher equipment (especially smart phone) sales. IT services should recover slightly in 3Q11, as the corporate segment again started to spend on projects. IT revenues from governmental projects remained weak, as hardly any new public sector projects were coming in. Overall, the results reflect the weak household, corporate and public sector spending in Hungary.

Reported EBITDA should decline by 15% y/y, and underlying EBITDA by 6.4% y/y. The adjustments for underlying EBITDA can be seen in the previous table. Excluding severance costs, we expect employee expenses to increase by 1.5% y/y, mainly due to a 4% average salary increase in Hungary as of 1 July 2011. Equipment costs should increase by 6.7% y/y due to smart phone subsidies. Payments to other network operators should decline by 3.9% y/y, mainly due to the lower mobile termination rate in Hungary. Overall, we expect the underlying OPEX to remain flat y/y.

Financial results should remain flat sequentially (on a comparable basis, excluding the HUF 1.1bn financial expense related to the SEC agreement in 2Q11). We apply a 22% effective tax rate. As a result, we expect net income of HUF 17.1bn (-30.3% y/y).

Update on the crisis tax: MTel and the new government budget plan for 2012 do not include the crisis tax from 2013 onwards. We had expected half of the crisis tax from 2013 onwards to perpetuity. We will therefore revise our earnings estimates for 2013 onwards in our next report.




Magyar Telekom HUF 1,771.9 12.0% 5.8% 9.2% 11.0% 34.9% 34.0% 34.7% 36.6% 2.1% -13.2% -18.5% -22.2%T-Hrvatski Telekom HRK 2,656.0 15.9% 16.3% 15.7% 15.6% 43.7% 44.1% 43.2% 41.9% -1.1% -4.3% -6.5% -11.6%Telefónica CR CZK 4,911.6 17.0% 11.4% 11.8% 12.9% 49.2% 40.9% 41.2% 41.2% -2.8% -14.7% -11.2% -8.1%Telekom Austria EUR 3,645.4 12.7% 1.4% 26.9% 38.2% 32.3% 27.8% 32.5% 32.6% 6.7% 1.6% -21.0% -26.2%Telekom Slovenije EUR 399.2 -22.7% 4.6% 5.2% 5.6% 4.3% 32.2% 33.0% 33.6% 0.7% -17.0% -17.9% -37.7%TPSA PLN 5,347.7 0.7% 11.6% 7.0% 8.2% 30.0% 40.9% 35.7% 35.4% 1.6% -4.1% -10.3% -13.5%Turk Telekomunikasyon ASTRY 10,798.2 44.5% 39.0% 52.3% 50.5% 44.5% 43.7% 44.1% 43.6% -3.8% 2.1% -13.0% -8.4%Turkcell Iletisim Hizmetleri ATRY 8,511.5 20.3% 11.3% 18.3% 18.3% 32.5% 31.1% 33.4% 33.5% 11.7% 13.5% -2.3% -26.4%Median - - 12% 9% 11% 12% 34% 37% 35% 36% - - - -Rostelecom USD 3,154 14.2% 15.3% 15.3% 15.6% 37.9% 37.9% 37.8% 39.0% 2.5% -25.6% -13.4% 24.1%TeliaSonera AB SEK - 21,275 16.8% 15.0% 15.7% 15.4% 35.3% 35.3% 35.7% 35.7% -1.5% -1.5% -10.2% -18.3%Telenor ASA NOK 20,711 12.0% 13.3% 14.8% 16.9% 30.2% 31.2% 32.3% 33.7% 13.8% 10.3% 12.5% 8.5%Koninklijke KPN N.V. EUR 14,172 51.6% 58.4% 55.6% 56.3% 40.9% 39.7% 39.4% 39.4% -1.6% -3.9% -10.9% -20.3%Portugal Telecom SGPS S/ EUR 4,634 8.8% - - - 38.8% 35.8% 34.9% 34.9% -2.3% -11.7% -33.1% -41.8%Swisscom AG CHF - 14,979 29.0% - - - 38.3% 39.7% 39.5% 39.4% -4.9% -15.3% -7.0% -3.5%Median Total - 79,396 15.9% 15.0% 15.3% 15.6% 38.3% 36.9% 37.8% 37.5% - - - -EuroStoxx Telecommunications

196,143 20.7% 21.6% 23.9% 23.1% 35% 33% 34% 34% 7.3% -6.8% -18.3% -20.2%

CEE to Peer, Prem/Disc - -23% -43% -31% -23% -12% 2% -7% -4% - - - -


2010 2011e 2012e 2013e 2010 2011e 2012e 2013e 2010 2011e 2012e 2013eMagyar Telekom 8.3 17.4 12.2 10.6 3.2 3.2 4.1 3.7 1.0 1.1 1.1 1.2T-Hrvatski Telekom 12.8 11.0 11.6 11.7 7.5 6.3 6.6 6.7 2.1 1.8 1.8 1.8Telefónica CR 10.1 15.3 15.7 15.0 5.0 6.2 6.4 6.3 1.7 1.8 1.9 2.0Telekom Austria 23.8 nm 17.9 14.7 3.4 2.9 3.4 3.3 3.2 4.4 5.3 6.0Telekom Slovenije nm 10.7 9.3 8.3 n.m. 1.7 1.7 1.7 0.7 0.5 0.5 0.5TPSA nm 13.2 24.6 23.1 4.5 3.7 5.0 5.0 1.5 1.6 1.8 2.0Turk Telekomunikasyon AS 9.0 10.8 9.0 8.4 5.5 6.3 5.8 5.5 3.7 5.1 4.4 4.1Turkcell Iletisim Hizmetleri AS 12.7 17.5 11.4 10.5 7.5 8.0 6.8 6.5 2.4 2.2 2.0 1.9Median CEE 11.4 13.2 13.9 13.2 4.5 3.5 4.6 4.3 1.6 1.7 1.8 1.9Rostelecom 13.6 12.0 10.6 9.3 5.3 5.0 4.5 4.2 1.9 1.8 1.6 1.5TeliaSonera AB 9.4 10.4 9.4 9.0 7.1 6.6 6.2 6.1 1.6 1.6 1.5 1.4Telenor ASA 15.6 13.3 11.3 9.3 6.6 6.3 5.8 5.3 1.9 1.8 1.7 1.6Koninklijke KPN N.V. 8.3 7.8 7.7 7.4 3.9 3.6 3.5 3.5 4.3 4.6 4.3 4.1Portugal Telecom SGPS S/A 12.6 9.6 9.3 8.6 4.4 2.6 2.7 2.7 1.1 1.2 1.3 1.2Swisscom AG 10.3 9.5 9.5 9.3 5.0 4.7 4.7 4.7 3.0 2.6 2.3 2.2Median Total 10.3 10.4 9.5 9.3 5.3 5.0 4.7 4.7 1.9 1.8 1.6 1.6EuroStoxx Telecommunications

9.0 9.4 9.3 8.7 3.9 2.9 3.1 3.2 2.3 2.3 2.3 2.3

CEE to Peer, Prem/Disc 11% 27% 46% 42% -15% -31% -3% -7% -15% -3% 12% 21%

2010 2011e 2012e 2013e 2010 2011e 2012e 2013eMagyar Telekom 1.5 1.4 1.6 1.7 4.2 4.1 4.7 4.5T-Hrvatski Telekom 2.4 2.0 2.1 2.0 5.5 4.6 4.8 4.9Telefónica CR 2.2 2.2 2.3 2.3 4.5 5.5 5.6 5.5Telekom Austria 1.7 1.6 1.6 1.6 5.3 5.6 4.8 4.8Telekom Slovenije 1.3 1.1 0.9 0.8 30.6 3.3 2.9 2.5TPSA 1.7 1.6 1.8 1.7 5.6 4.0 5.0 4.9Turk Telekomunikasyon AS 2.4 2.6 2.5 2.4 5.4 5.9 5.8 5.5Turkcell Iletisim Hizmetleri AS 2.3 2.1 2.0 1.9 7.0 6.6 6.1 5.8Median CEE 1.7 1.6 1.7 1.7 5.4 4.3 4.8 4.8Rostelecom 0.9 0.9 0.8 0.7 2.4 2.3 2.1 1.7TeliaSonera AB 2.7 2.4 2.3 2.3 7.6 6.9 6.5 6.3Telenor ASA 1.8 1.8 1.7 1.6 6.1 5.9 5.4 4.8Koninklijke KPN N.V. 2.2 2.0 2.0 2.0 5.3 5.0 5.0 5.0Portugal Telecom SGPS S/A 2.5 1.8 1.6 1.6 6.5 5.0 4.6 4.5Swisscom AG 2.5 2.3 2.3 2.2 6.6 5.8 5.8 5.7Median Total 2.2 1.9 1.8 1.8 6.1 5.0 5.0 4.8EuroStoxx Telecommunications

1.8 1.6 1.6 1.6 5.1 5.0 4.9 5.0

CEE to Peer, Prem/Disc -21% -16% -8% -3% -11% -13% -4% 0%

P/E P/CE P/BV

EV/Sales EV/EBITDA




Magyar Telekom Hold Target price HUF 550.0Price (HUF) 519 ROCE 2010 11.0% 10 11e 12e 13eMcap (HUF mn) 539,927 ROE 2010 12.0% Sales (HUF mn) 609,579.0 582,954.1 567,718.2 562,563.4Mcap (EUR mn) 1,772 Net debt (EURmn, 10) 1,084.0 EBITDA margin 34.94% 34.01% 34.74% 36.62%Free f loat (%) 40.7% Gearing (2010) 51% EBIT margin 18.39% 17.02% 17.42% 19.34%Free f loat (EUR mn) 720 Sales CAGR 10-13e -3.3% Net profit margin 12.69% 6.74% 9.89% 11.22%Shares outst. (mn) 1,040.3 EPS CAGR 10-13e -9.9% EPS (HUF) 61.76 26.86 42.71 49.06


Performance 1M 3M 6M 12MAbsolute (HUF terms) 5.1% -3.2% -6.5% -13.1%Rel. to sector (EUR, ppt) 1.8 -14.5 -12.6 -16.3Rel. to universe (EUR, ppt) -0.8 -3.7 1.0 -7.7

T-Hrvatski Telekom Hold Target price HRK 265.0Price (HRK) 243.0 ROCE 2010 23.0% 10 11e 12e 13eMcap (HRK mn) 19,899 ROE 2010 15.9% Sales (HRK mn) 8,374.6 7,949.3 7,728.6 7,734.8Mcap (EUR mn) 2,656 Net debt (EURmn, 10) -460.3 EBITDA margin 43.73% 44.11% 43.16% 41.93%Free f loat (%) 38.5% Gearing (2010) -31% EBIT margin 26.83% 27.39% 26.48% 25.48%Free f loat (EUR mn) 1,023 Sales CAGR 10-13e -2.4% Net profit margin 21.74% 22.52% 22.26% 22.01%Shares outst. (mn) 82 EPS CAGR 10-13e -4.4% EPS (HRK) 22.24 21.86 21.01 20.79


Performance 1M 3M 6M 12MAbsolute (HRK terms) -1.2% -3.8% -5.1% -9.5%Rel. to sector (EUR, ppt) -1.4 -5.6 -0.6 -5.6Rel. to universe (EUR, ppt) -4.0 5.2 13.0 3.0

Telefónica CR Hold Target price CZK 410Price (CZK) 381 ROCE 2010 16.4% 10 11e 12e 13eMcap (CZK mn) 122,716 ROE 2010 17.0% Sales (CZK mn) 55,655 52,462 51,483 51,757Mcap (EUR mn) 4,912 Net debt (EURmn, 10) -68.7 EBITDA margin 49.20% 40.94% 41.16% 41.16%Free f loat (%) 30.6% Gearing (2010) -2.4% EBIT margin 27.89% 18.77% 18.99% 19.51%Free f loat (EUR mn) 1,503 Sales CAGR 10-13e -3.6% Net profit margin 22.07% 14.94% 15.23% 15.77%Shares outst. (mn) 322.1 EPS CAGR 10-13e -8.5% EPS (CZK) 38.13 24.33 24.34 25.34


Performance 1M 3M 6M 12MAbsolute (CZK terms) -2.3% -12.2% -8.2% -6.3%Rel. to sector (EUR, ppt) -3.1 -15.9 -5.3 -2.2Rel. to universe (EUR, ppt) -5.7 -5.1 8.3 6.4

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T-Hrvatski TelekomCROBEX (Rebased)DJ EURO STOXX Telecommunications (Rebased)

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Telefónica CRPX (Rebased)DJ EURO STOXX Telecommunications (Rebased)



Telekom Austria Sell Target price EUR 5.5Price (EUR) 8.2 ROCE 2010 5.4% 10 11e 12e 13e

ROE 2010 12.7% Sales (EUR mn) 4,650.8 4,467.4 4,418.0 4,424.0Mcap (EUR mn) 3,645 Net debt (EURmn, 10) 3,377 EBITDA margin 32.33% 27.85% 32.53% 32.58%Free float (%) 72.6% Gearing (2010) 229% EBIT margin 9.42% 5.01% 10.54% 11.70%Free float (EUR mn) 2,648 Sales CAGR 10-13e -2.0% Net profit margin 4.20% 0.37% 4.62% 5.60%Shares outst. (mn) 442.6 EPS CAGR 10-13e - EPS (EUR) 0.44 0.04 0.46 0.56

Dividend/share (EUR) 0.75 0.76 0.76 0.76EV/sales 1.73 1.56 1.57 1.56EV/EBITDA 5.35 5.62 4.82 4.78P/E 23.83 nm 17.87 14.71P/CE 3.44 2.90 3.40 3.27P/BV 3.16 4.42 5.26 6.03Dividend yield 7.13% 9.23% 9.23% 9.23%EV/EBITDA rel. 1.0 1.3 1.0 1.0P/E rel. 2.1 - 1.3 1.1

Performance 1M 3M 6M 12MAbsolute (EUR terms) 15.0% -31.8% -48.6% -48.6%Rel. to sector (EUR, ppt) 6.4 0.3 -15.2 -20.3Rel. to universe (EUR, ppt) 3.8 11.1 -1.6 -11.7

Telekom Slovenije Accumulate Target price EUR 80.0Price (EUR) 61.4 ROCE 2010 -12.2% 10 11e 12e 13e

ROE 2010 -22.7% Sales (EUR mn) 839.3 810.9 789.8 776.7Mcap (EUR mn) 399 Net debt (EURmn, 10) 541 EBITDA margin 4.29% 32.19% 33.05% 33.59%Free float (%) 35.4% Gearing (2010) 67% EBIT margin -21.26% 7.99% 8.97% 9.87%Free float (EUR mn) 141 Sales CAGR 10-13e -2.2% Net profit margin -25.06% 4.60% 5.44% 6.22%Shares outst. (mn) 6.5 EPS CAGR 10-13e 18.4% EPS (EUR) -32.33 5.74 6.61 7.42

Dividend/share (EUR) 3.40 3.40 3.40 3.40EV/sales 1.31 1.05 0.95 0.83EV/EBITDA 30.59 3.27 2.87 2.47P/E nm 10.71 9.30 8.27P/CE nm 1.74 1.72 1.72P/BV 0.69 0.49 0.47 0.46Dividend yield 3.95% 5.54% 5.54% 5.54%EV/EBITDA rel. 5.7 0.8 0.6 0.5P/E rel. - 0.8 0.7 0.6Performance 1M 3M 6M 12MAbsolute (EUR terms) 0.7% -17.0% -17.9% -37.7%Rel. to sector (EUR, ppt) 0.3 -18.2 -12.1 -31.8Rel. to universe (EUR, ppt) -2.2 -7.5 1.5 -23.2

TPSA Reduce Target price PLN 16.0Price (PLN) 17.4 ROCE 2010 0.9% 10 11e 12e 13eMcap (PLN mn) 23,286 ROE 2010 0.7% Sales (PLN mn) 15,715 15,018 14,762 14,622Mcap (EUR mn) 5,348 Net debt (EURmn, 10) 1,149 EBITDA margin 29.98% 40.92% 35.65% 35.35%Free float (%) 50.2% Gearing (2010) 31% EBIT margin 5.78% 15.57% 11.04% 11.51%Free float (EUR mn) 2,685 Sales CAGR 10-13e -3% Net profit margin 0.69% 10.94% 6.31% 6.66%Shares outst. (mn) 1,336.0 EPS CAGR 10-13e -5.8% EPS (PLN) 0.08 1.23 0.71 0.76

Dividend/share (PLN) 1.50 1.50 1.50 1.50EV/sales 1.69 1.62 1.78 1.74EV/EBITDA 5.65 3.95 4.98 4.93P/E nm 13.21 24.57 23.08P/CE 4.50 3.69 5.04 5.04P/BV 1.49 1.63 1.81 1.96Dividend yield 9.11% 9.24% 8.61% 8.61%EV/EBITDA rel. 1.0 0.9 1.0 1.0P/E rel. - 1.0 1.8 1.7

Performance 1M 3M 6M 12MAbsolute (PLN terms) 0.8% 3.5% -0.9% -4.2%Rel. to sector (EUR, ppt) 1.3 -5.3 -4.5 -7.6Rel. to universe (EUR, ppt) -1.3 5.4 9.1 1.0

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TPSAWIG 20 (Rebased)DJ EURO STOXX Telecommunications (Rebased)



Turk Telekomunikasyon ASBuy Target price TRY 10.0Price (TRY) 7.5 ROCE 2010 23.9% 10 11e 12e 13eMcap (TRY mn) 26,180 ROE 2010 44.5% Sales (TRY mn) 10,852.5 11,758.4 12,294.4 12,774.2Mcap (EUR mn) 10,798 Net debt (EURmn, 10) 2,032 EBITDA margin 44.55% 43.73% 44.06% 43.64%Free float (%) 12.5% Gearing (2010) 68% EBIT margin 30.51% 30.18% 31.19% 31.31%Free float (EUR mn) 1,350 Sales CAGR 10-13e 4.9% Net profit margin 21.46% 18.29% 22.55% 23.51%Shares outst. (mn) 3,500.0 EPS CAGR 10-13e 14.3% EPS (TRY) 0.70 0.66 0.83 0.89


Performance 1M 3M 6M 12MAbsolute (TRY terms) -6.5% 1.6% -7.4% 12.3%Rel. to sector (EUR, ppt) -4.1 0.8 -7.2 -2.4Rel. to universe (EUR, ppt) -6.7 11.6 6.4 6.2

Turkcell Iletisim Hizmetleri Hold Target price TRY 8.3Price (TRY) 9.4 ROCE 2010 21.5% 10 11e 12e 13eMcap (TRY mn) 20,636 ROE 2010 20.3% Sales (TRY mn) 9,003.6 9,036.6 9,306.2 9,649.5Mcap (EUR mn) 8,512 Net debt (EURmn, 10) -1,003 EBITDA margin 32.50% 31.08% 33.36% 0.00%Free float (%) 33.5% Gearing (2010) -22% EBIT margin 19.36% 16.65% 20.60% 21.10%Free float (EUR mn) 2,850 Sales CAGR 10-13e 1.9% Net profit margin 18.96% 11.76% 18.92% 19.77%Shares outst. (mn) 2,200.0 EPS CAGR 10-13e 3.4% EPS (TRY) 0.81 0.51 0.83 0.89


Performance 1M 3M 6M 12MAbsolute (TRY terms) 8.6% 13.0% 4.0% -9.8%Rel. to sector (EUR, ppt) 8.2 11.8 9.8 -3.9Rel. to universe (EUR, ppt) 5.6 22.5 23.4 4.7

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4 ,55 ,05 ,56 ,06 ,57 ,07 ,58 ,08 ,59 ,09 ,5

Turk Telekomunikas yon ASIS E 100 (Rebased)DJ EURO STO XX Te lecommunica tions (R ebased)

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Turkcell Iletisim Hizmetleri ASISE 100 (Rebased)DJ EURO STOXX Telecommunications (Rebased)



Sector Insight Travel & Tourism

– Danubius: HUF depreciation weighs on seasonally strong quarter’s result

Danubius Hotels is to publish its IFRS consolidated 3Q11 report on November 15 after market close. We expect the company to post an HUF 1,002mn pre-tax profit, down 68.4%, due to unrealized losses on FX loans offsetting the forecasted slight increase on the revenue side. Total sales might climb by only 3% y/y, to HUF 14.7bn, as the weaker forint helps mainly euro-denominated room revenues, offsetting the drop in rates. Capacity increases in the Hungarian hotel industry are still causing a problem as oversupply further decreases room rates. This process has also been exacerbated by the newly-appeared coupon-based discounts. We expect operating profit to decline by 1.9% y/y to HUF 2.63bn as operating expenses might climb faster than revenues. Danubius had to increase wages to compensate those who suffered from personal income tax changes in 2011. Higher food and fuel prices might also raise the expense side. All in all, we expect a weak result from Danubius, in spite of it being peak season in the hotel industry.




AmRest PLN 291.0 7.4% 7.9% 10.7% 13.5% 8.7% 9.6% 10.9% 11.8% 0.8% -15.8% -26.6% -20.2%Danubius Hotels HUF 75.3 -2% -0.1% 0.9% 1.8% 11.3% 11.7% 12.9% 13.2% -11.9% -25.8% -34.3% -29.5%DO & CO EUR 281.6 14.8% 12.8% 13.0% 10.6% 10.8% 10.6% 10.7% 10.3% 11.1% -5.7% -10.2% 32.7%Fortuna Entertainment EUR 199.8 42.5% 30.8% 33.0% 35.3% 30.9% 22.0% 19.6% 21.2% 0.3% -16.6% -17.7% -7.7%Turkish Airlines TRY 1,247.3 7.2% 13.3% 20.5% 22.1% 11.7% 11.1% 13.1% 12.8% -5.4% -17.6% -37.0% -58.3%Vienna Int. Airport EUR 664.7 9.4% 9.8% 5.8% 5.2% 31.5% 32.9% 30.0% 31.4% 1.2% -4.8% -24.8% -30.4%Median - - 8% 11% 12% 12% 12% 11% 13% 13% - - - -EuroStoxx Travel & Tourism

27,376 12.3% 7.7% 7.9% 11.3% 12.5% 12.0% 11.9% 11.7% 1.6% -7.7% -25.5% -22.1%

CEE to Peer, Prem/Disc - -32% 48% 51% 7% -8% -5% 9% 11% - - - -


2010 2011e 2012e 2013e 2010 2011e 2012e 2013e 2010 2011e 2012e 2013eAmRest 25.8 20.5 14.4 10.1 7 .3 6.3 5.1 4 .1 1.6 1.6 1.5 1.3Danubius Hotels nm nm 53.2 25.4 10.5 4.3 4.6 4 .1 0.7 0.5 0.5 0.4DO & CO 19 16 14 16 8.8 6.7 7.0 8 .0 2.3 1.9 1.7 1.6Fortuna Entertainment 11 13 13 11 9.6 11.6 11.1 9 .5 4.1 4.5 4.1 3.7Turkish Airlines 11 6 4 4 3.8 3.1 2.4 2 .2 0.7 0.8 0.8 0.8Vienna Int. Airport 14 8 13 15 6.8 4.4 4.7 4 .1 1.3 0.8 0.8 0.7Median CEE 14.2 13.4 13.7 12.7 8 .0 5.3 4.9 4 .1 1.5 1.2 1.1 1.0EuroStoxx Travel & Tourism

13.1 12.9 15.8 11.7 5.8 5.6 5.5 4.8 1.6 1.5 1.4 1.3

CEE to Peer, Prem/Disc 9% 4% -13% 9% 39% -4% -10% -14% -10% -16% -17% -19%

2010 2011e 2012e 2013e 2010 2011e 2012e 2013eAmRest 0.7 0.7 0.6 0.5 7 .6 6.8 5.5 4 .2Danubius Hotels 1.4 0.9 0.9 0.9 12.2 7.9 7.3 6 .5DO & CO 0.5 0.4 0.3 0.3 4 .5 3.6 3.0 2 .9Fortuna Entertainment 2.7 2.2 1.9 1.7 8 .6 10.0 9.6 7 .9Turkish Airlines 0.6 0.6 0.6 0.6 5 .1 5.7 5.0 4 .7Vienna Int. Airport 3.5 2.8 2.8 2.7 11.0 8.6 9.5 8 .5Median CEE 1.0 0.8 0.8 0.7 8 .1 7.4 6.4 5 .6EuroStoxx Travel & Tourism

0.6 0.5 0.4 0.4 7.0 5.4 4.9 3.8

CEE to Peer, Prem/Disc 63% 72% 81% 91% 15% 37% 31% 48%

P/E P/CE P/BV

EV/Sales EV/EBITDA




AmRest Sell Target price PLN 74.0Price (PLN) 67.0 ROCE 2010 6.9% 10 11e 12e 13eMcap (PLN mn) 1,267 ROE 2010 7.4% Sales (PLN mn) 2,029.4 2,379.0 2,780.8 3,110.7Mcap (EUR mn) 291 Net debt (EURmn, 10) 44.6 EBITDA margin 8.73% 9.59% 10.94% 11.84%Free float (%) 68.2% Gearing (2010) 24% EBIT margin 3.69% 4.18% 5.18% 5.98%Free float (EUR mn) 198 Sales CAGR 10-13e 11.7% Net profit margin 2.05% 2.42% 3.16% 4.04%Shares outst. (mn) 18.9 EPS CAGR 10-13e 25.3% EPS (PLN) 2.38 3.04 4.65 6.65


Performance 1M 3M 6M 12MAbsolute (PLN terms) 0.0% -9.2% -18.8% -11.6%Rel. to sector (EUR, ppt) 3.6 -3.2 -0.1 14.8Rel. to universe (EUR, ppt) -2.1 -6.3 -7.1 -5.7

Danubius Hotels Hold Target price HUF 4040.0Price (HUF) 2,900.0 ROCE 2010 -0.2% 10 11e 12e 13eMcap (HUF mn) 22,942 ROE 2010 -1.7% Sales (HUF mn) 42,920.0 44,422.5 47,386.2 49,842.6Mcap (EUR mn) 75 Net debt (EURmn, 10) 77.4 EBITDA margin 11.30% 11.69% 12.89% 13.20%Free float (%) 17.6% Gearing (2010) 41% EBIT margin 0.83% 1.15% 3.17% 3.97%Free float (EUR mn) 13 Sales CAGR 10-13e 3.5% Net profit margin -2.06% -0.13% 0.91% 1.81%Shares outst. (mn) 7.9 EPS CAGR 10-13e #ZAHL! EPS (HUF) -111.62 -7.43 54.51 114.01

Dividend/share (HUF) 0.00 0.00 0.00 0.00EV/sales 1.38 0.93 0.94 0.86EV/EBITDA 12.17 7.94 7.31 6.53P/E nm nm 53.20 25.44P/CE 10.49 4.34 4.61 4.15P/BV 0.70 0.45 0.45 0.44Dividend yield 0.00% 0.00% 0.00% 0.00%EV/EBITDA rel. 1.5 1.1 1.1 1.2P/E rel. - - 3.9 2.0

Performance 1M 3M 6M 12MAbsolute (HUF terms) -9.4% -17.1% -24.7% -21.2%Rel. to sector (EUR, ppt) -9.1 -13.1 -7.9 5.5Rel. to universe (EUR, ppt) -14.8 -16.2 -14.9 -15.0

DO & CO Buy Target price EUR 40.0Price (EUR) 28.9 ROCE 2010 29.4% 10 11e 12e 13e

ROE 2010 14.8% Sales (EUR mn) 426 486 550 540Mcap (EUR mn) 282 Net debt (EURmn, 10) -109 EBITDA margin 10.76% 10.55% 10.70% 10.33%Free float (%) 47.0% Gearing (2010) -72% EBIT margin 6.65% 6.42% 6.62% 5.92%Free float (EUR mn) 132 Sales CAGR 10-13e 11.2% Net profit margin 5.26% 5.26% 5.41% 4.88%Shares outst. (mn) 9.7 EPS CAGR 10-13e 10.6% EPS (EUR) 1.58 1.81 2.04 1.85


Performance 1M 3M 6M 12MAbsolute (EUR terms) 11.1% -5.7% -10.2% 32.7%Rel. to sector (EUR, ppt) 13.9 7.0 16.2 67.7Rel. to universe (EUR, ppt) 8.1 3.8 9.2 47.2

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Fortuna Entertainment Accumulate Target price EUR 120.0Price (EUR) 96.0 ROCE 2010 32.7% 10 11e 12e 13eMcap (EUR mn) 200 ROE 2010 42.5% Sales (EUR mn) 384 456 543 602Mcap (EUR mn) 200 Net debt (EURmn, 10) 1 EBITDA margin 30.89% 21.98% 19.58% 21.17%Free float (%) 32.7% Gearing (2010) 1% EBIT margin 27.65% 19.41% 17.20% 18.82%Free float (EUR mn) 65 Sales CAGR 10-13e 15.5% Net profit margin 21.40% 15.92% 14.29% 15.58%Shares outst. (mn) 52.0 EPS CAGR 10-13e 2.0% EPS (EUR) 0.39 0.29 0.30 0.35

Dividend/share (EUR) 0.30 0.20 0.21 0.25EV/sales 2.65 2.21 1.87 1.67EV/EBITDA 8.59 10.03 9.56 7.91P/E 10.61 13.42 12.89 10.90P/CE 9.55 11.55 11.06 9.48P/BV 4.13 4.47 4.06 3.65Dividend yield 7.26% 5.22% 5.43% 6.42%EV/EBITDA rel. - 1.4 1.5 1.4P/E rel. - 1.0 0.9 0.9

Performance 1M 3M 6M 12MAbsolute (EUR terms) 0.8% -14.2% -15.0% -5.9%Rel. to sector (EUR, ppt) 3.1 -3.9 8.8 27.3Rel. to universe (EUR, ppt) -2.6 -7.0 1.8 6.8

Turkish Airlines Accumulate Target price TRY 4.75Price (TRY) 2.5 ROCE 2010 3.7% 10 11e 12e 13eMcap (TRY mn) 3,024 ROE 2010 7.2% Sales (TRY mn) 8,167 10,425 11,970 12,764Mcap (EUR mn) 1,247 Net debt (EURmn, 10) 1,204 EBITDA margin 11.71% 11.09% 13.08% 12.82%Free float (%) 50.9% Gearing (2010) 71% EBIT margin 6.49% 6.87% 8.72% 8.46%Free float (EUR mn) 635 Sales CAGR 10-13e 16.1% Net profit margin 2.89% 4.65% 6.20% 6.51%Shares outst. (mn) 1,200.0 EPS CAGR 10-13e 10.4% EPS (TRY) 0.20 0.40 0.62 0.69



Vienna Int. Airport Reduce Target price EUR 32.0Price (EUR) 31.7 ROCE 2010 5.1% 10 11e 12e 13eMcap (EUR mn) 665 ROE 2010 9.4% Sales (EUR mn) 534 573 600 632Mcap (EUR mn) 665 Net debt (EURmn, 10) 771 EBITDA margin 31.50% 32.93% 29.95% 31.38%Free float (%) 50.0% Gearing (2010) 94% EBIT margin 19.17% 21.48% 14.95% 13.18%Free float (EUR mn) 332 Sales CAGR 10-13e 6% Net profit margin 14.18% 14.45% 8.33% 7.22%Shares outst. (mn) 21.0 EPS CAGR 10-13e -11.2% EPS (EUR) 3.61 3.95 2.38 2.17


Performance 1M 3M 6M 12MAbsolute (EUR terms) 1.2% -4.8% -24.8% -30.4%Rel. to sector (EUR, ppt) 4.0 7.9 1.6 4.6Rel. to universe (EUR, ppt) -1.7 4.8 -5.4 -15.9

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Vienna Int. AirportATX (Rebased)DJ EURO STOXX Travel & Leisure (Rebased)

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Fortuna EntertainmentPX (Rebased)DJ EURO STOXX Travel & Leisure (Rebased)



Sector Insight Utilities

– CEZ expanding into renewables mostly in Romania and Poland – 3Q rather seen as rather weak – Verbund’s surprise one-off gains helped to compensate impairment losses

One-year forward power prices on the EEX extended their decline from September and gave up some 2% in October due to decreasing hard coal (-7%) and CO2 (-8%) prices. On a positive note, model clean-dark spreads went up from EUR 4.2 to EUR 5.4 (including O&M costs) on CAL 2012. Spreads between EEX and Czech prices have slightly decreased, from EUR 2.3/MWh to EUR 1.8/MWh on CAL 2012. Polish prices are steady in the local currency, with the 2012 contract trading at around PLN 202/MWh. This means, however, that Polish prices are at a 16% discount to prices in Germany due to the weak PLN. We expect pressure on the price of energy coal imported from Russia (denominated in USD) and consequently on electricity prices in Poland in the medium term.

Power prices on EEX and PXE

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CAL 12 (EEX) First month CAL 12 (PXE)Source: Bloomberg

CEZ’s new CEO Benes came up with a new expansion strategy in renewables. He said the company targets to increase renewable capacity abroad, from the current 350 MW to up to 3 GW by 2016 (i.e. before construction starts on the NPP Temelin extension). The company mainly plans to invest in big wind parks in Poland and Romania and hydro sources in Romania. Renewables abroad should serve as a source of financing for the NPP Temelin extension (2-3 GW). The CEO confirmed the October deadline for the approval of technical documentation for NPP Temelin and 2013 as the date for choosing the winner of the tender. Renewables in both Poland and Romania are currently quite profitable (ROIC around 14%). However, we doubt that CEZ will be able to reach such capacity due to the high investment needed (some EUR 4bn), the low number of suitable big projects and legal obstacles. We believe some 1.0 GW additional renewable capacity is realistic. If CEZ really pushed the plan through in full, we would see it as negative, due to both the high CAPEX and high regulatory risks (possible cut in subsidies due to fiscal consolidation in both Poland and Romania).

CEZ will report its 3Q11 results on November 9 at 8:00 am CET/7:00 GMT, followed by a conference call at 16:30 CET. We expect similarly weak EBITDA (CZK 18.1bn, -9.4% y/y) as in 2Q11, driven mainly by some 7.5% lower hedged wholesale prices amplified by lower electricity production (we expect -4.1% y/y in 3Q) due to longer outages at nuclear plants (we expect NPP production at -9% y/y). The net result will be further depressed (we expect CZK 7.3bn, or -36% y/y) by the new 32% gift tax on CO2 credits (we expect -6% impact on EBT) and by the negative revaluation of options on MOL shares (MOL share price fell by some 36% in CZK in 3Q11). Most of the negative factors (such as lower prices, lower NPP production in 3Q and CO2 tax) should be included in CEZ’s FY11 EBITDA and net profit guidance, at CZK 84.8bn (-5% y/y) and CZK 40.6bn (-13% y/y). However, somewhat



lower spot prices in 3Q11 (influencing the dispatch of marginal plants) and negative revaluation of MOL options pose some threat for CEZ’s targets and our estimates.

Verbund delivered an astonishing set of figures. The company’s operating result increased by 35.5% to EUR 847.6mn, but this was supported by the positive impact of a reversal of an impairment test amounting to EUR 312.6mn. Verbund decided to test the Danube power plant Freudenau as well as the run-of-river power plant chains Mittlere Salzach and Obere Drau, which were impaired (by a total amount of EUR 480.9mn) in the course of the deregulation of the European electricity industry in 1998. Verbund believes that a change in the market environment after Fukushima and the German nuclear phase-out would justify such a reversal of impairments.

The positive effect of this measure is that Verbund is able to compensate for huge losses of the at-equity consolidated companies and the impairment of its new CCGT plant in Mellach and is thus able to stick to its bottom line guidance of EUR 380mn for the FY. However, Verbund ‘confirmed’ in the conference call that the reversal of impairment losses has no bearing on the negative one-offs of the current year.

On the operating level, Verbund had to realize an impairment loss of EUR -110.3mn on its CCGT in Mellach, which is around 20% of the CAPEX amount. Mellach is planned to start operations at the beginning of next year. In Turkey, FX losses extended to EUR -54mn (after EUR -36mn in 1H11). For 4Q, Verbund expects another loss of EUR 24mn stemming from the devaluation of the Turkish lira. In France, changes in the valuation of gas contracts led to a loss of EUR 75mn. However, Verbund has now completely written off its book value in France and therefore does not expect any losses from its Poweo business. Verbund’s joint venture in Italy, Sorgenia, also posted a loss of EUR 8mn. The impairment of its Albanian project Ashta had an additionally negative impact of EUR -35mn. Due to the deconsolidation of Ashta, these losses were no longer booked under other operating expenses and therefore ‘supported’ the operational result of Verbund.

Without considering Verbund’s one-off effects from the reversal of impairment losses, the company’s operating result would have increased by 3.1% to EUR 645.3mn. The net result declined 6.2% to EUR 313.3mn, despite all efforts to increase the operating result. The losses of at-equity consolidated companies amounted to EUR -153.9mn in 1-3Q11, which is far higher than the guidance given at the analyst day in London just seven weeks ago (EUR -10mn). The other financial result included exchange losses from the YEN bond in the amount of EUR 6mn and valuation losses on the put/call option on Poweo Production of EUR 29mn.

Verbund’s cash flow from the result declined by 3.2% to EUR 556.1mn. The gearing ratio improved to 81.4%, from 103.4% in 1H11. The company sticks to its guidance to pay out 45-50% of the group’s results. We stick to our neutral stance on the stock and keep our estimates unchanged. At the moment, we do not see the Verbund stock as very attractive. Investors should consider switching into more interesting stocks as long as Verbund’s share price stays above EUR 20.




Akenerji Elektrik TRY 420.1 -3.8% 5.5% 6.6% 7.4% 6.5% 20.4% 21.7% 21.0% -4.5% -20.9% -33.9% -41.7%Aksa Enerji Uretim AS TRY 805.1 9.9% 14.5% 14.6% 15.4% 20.9% 21.7% 22.0% 22.7% 17.9% -4.7% -36.5% -47.2%CEZ CZK 16,494.7 22.8% 18.4% 17.7% 16.7% 44.8% 40.7% 41.7% 39.2% 9.0% -11.7% -20.2% -2.7%PGE PLN 8,587.9 8.9% 13.6% 10.1% 8.9% 33.3% 32.9% 27.5% 24.3% 3.4% -18.5% -24.4% -17.0%Tauron Polska Energia PLN 2,173.3 6.5% 7.8% 6.8% 4.6% 17.7% 13.3% 12.6% 10.7% 5.1% -21.1% -21.7% -25.6%Transelectrica RON 298.1 0.4% 6.4% 6.8% 6.8% 13.8% 21.0% 21.2% 22.1% 3.2% -12.7% -18.5% -2.4%Transgaz RON 577.6 15.3% 14.6% 11.9% 12.8% 43.9% 41.8% 34.0% 34.0% 10.5% -1.5% -18.9% -20.2%Verbund EUR 7,179.9 11.2% 9.1% 11.9% 12.6% 32.0% 30.3% 30.5% 30.5% -1.2% -24.0% -31.4% -26.6%Zorlu Enerji TRY 201.0 -37% -42% 51.7% 48.6% 11.9% 26.1% 35.8% 36.6% 0.0% -17.3% -40.0% -51.2%Median - - 9% 14% 12% 12% 27% 27% 25% 23% - - - -Enel S.p.A. EUR 31,765 11.8% 11.0% 10.9% 10.7% 23.8% 23.6% 23.6% 23.2% 2.4% -11.9% -29.7% -17.1%RWE AG EUR 17,117 25.7% 14.4% 14.2% 11.1% 20.2% 15.5% 16.3% 14.8% 12.6% -11.2% -30.3% -40.0%Fortum Oyj EUR 15,769 16.4% 14.7% 15.0% 14.5% 36.1% 40.2% 39.6% 39.2% -0.6% -0.7% -24.4% -12.2%Electricite de France S.A. EUR 40,231 12.6% 10.0% 11.3% 11.4% 25.5% 23.0% 24.1% 24.5% 0.6% -12.9% -24.1% -32.2%Median Total - 139,739 12.6% 11.0% 11.3% 11.1% 23.8% 23.0% 23.6% 23.2% - - - -EuroStoxx Utilities 302,531 11.7% 10.0% 11.1% 10.9% 26% 24% 25% 25% 0.0% 0.0% 0.0% 0.0%CEE to Peer, Prem/Disc - -26% 28% 9% 9% 14% 18% 5% 1% - - - -


2010 2011e 2012e 2013e 2010 2011e 2012e 2013e 2010 2011e 2012e 2013eAkenerji Elektrik nm 21.8 18.5 15.3 778.3 12.7 11.6 9.9 1.8 1.3 1.2 1.1Aksa Enerji Uretim AS 46.4 14.0 12.9 10.6 21.3 7.6 6.7 5.9 3.5 2.0 1.8 1.5CEZ 8.9 9.8 9.5 9.4 5.7 6.0 5.8 5.4 1.9 1.7 1.6 1.5PGE 13.6 6.7 8.8 9.6 7.3 4.7 5.1 5.1 1.2 0.9 0.9 0.8Tauron Polska Energia 13.5 7.7 8.7 12.4 4.5 3.4 3.6 3.8 0.8 0.6 0.6 0.6Transelectrica 147.3 8.5 8.0 8.0 5.1 2.7 2.6 2.4 0.6 0.5 0.5 0.5Transgaz 8.7 6.7 8.4 7.5 6.4 4.7 5.5 5.1 1.3 1.0 1.0 0.9Verbund 21.8 19.0 13.7 12.0 14.9 10.8 8.9 8.2 2.4 1.7 1.6 1.5Zorlu Enerji nm nm 7.0 4.5 38.5 17.3 2.8 2.3 5.0 4.9 2.9 1.8Median CEE 13.6 11.9 11.2 10.1 14.3 6.8 6.2 5.7 1.8 1.5 1.4 1.3Enel S.p.A. 7.2 7.3 7.1 6.9 2.8 2.9 2.8 2.9 0.8 0.8 0.8 0.7RWE AG 4.4 7.0 7.0 8.3 2.3 3.0 2.9 2.9 1.1 1.0 1.0 0.9Fortum Oyj 11.7 11.8 10.9 10.7 10.9 7.1 7.7 7.4 1.9 1.7 1.6 1.5Electricite de France S.A. 10.2 12.2 10.4 9.7 3.6 3.8 3.5 3.5 1.3 1.2 1.2 1.1Median Total 7.2 11.8 10.2 9.5 3.1 3.8 3.5 3.5 1.1 1.0 1.0 0.9EuroStoxx Utilities 10.2 11.8 10.1 9.2 4.2 4.1 4.1 3.9 1.1 1.0 1.0 0.9CEE to Peer, Prem/Disc 90% 1% 9% 6% 357% 79% 78% 64% 63% 49% 42% 41%

2010 2011e 2012e 2013e 2010 2011e 2012e 2013eAkenerji Elektrik 5.1 3.2 3.8 3.8 77.7 15.5 17.3 18.1Aksa Enerji Uretim AS 4.4 1.8 1.6 1.4 21.0 8.3 7.3 6.3CEZ 2.9 2.7 2.7 2.4 6.4 6.7 6.5 6.2PGE 2.2 1.2 1.2 1.1 6.6 3.5 4.4 4.7Tauron Polska Energia 0.8 0.4 0.4 0.5 4.4 3.1 3.4 4.4Transelectrica 0.9 0.9 0.9 0.9 6.4 4.1 4.3 4.1Transgaz 2.4 1.7 1.7 1.6 5.5 4.1 5.1 4.6Verbund 4.3 3.5 3.0 3.0 13.6 11.5 9.7 9.7Zorlu Enerji 4.8 4.1 1.9 1.6 40.4 15.6 5.3 4.3Median CEE 3.6 2.3 2.2 1.9 13.8 7.5 6.9 6.3Enel S.p.A. 1.1 1.0 1.0 1.0 4.6 4.4 4.2 4.1RWE AG 0.8 0.6 0.6 0.5 4.0 3.8 3.5 3.5Fortum Oyj 4.3 3.5 3.4 3.2 11.8 8.7 8.7 8.2Electricite de France S.A. 1.4 1.1 1.1 1.1 5.5 4.9 4.6 4.6Median Total 1.1 1.0 1.0 1.0 5.0 4.9 4.6 4.6EuroStoxx Utilities 1.6 1.5 1.4 1.3 7.0 6.7 6.1 5.6CEE to Peer, Prem/Disc 232% 120% 115% 102% 176% 54% 49% 37%

P/E P/CE P/BV

EV/Sales EV/EBITDA




Akenerji Elektrik Accumulate Target price TRY 3.6Price (TRY) 3 ROCE 2010 -1.8% 10 11e 12e 13eMcap (TRY mn) 1,018 ROE 2010 -3.8% Sales (TRY mn) 428 529 546 611Mcap (EUR mn) 420 Net debt (EURmn, 10) 429.1 EBITDA margin 6.52% 20.41% 21.70% 21.00%Free float (%) 25.3% Gearing (2010) 116% EBIT margin -0.03% 14.41% 15.70% 15.00%Free float (EUR mn) 106 Sales CAGR 10-13e 7.5% Net prof it margin -5.99% 8.43% 10.06% 10.90%Shares outst. (mn) 375.8 EPS CAGR 10-13e 41.6% EPS (TRY) -0.07 0.12 0.15 0.18

Dividend/share (TRY) 0.00 0.00 0.00 0.00EV/sales 5.07 3.16 3.75 3.80EV/EBITDA 77.71 15.49 17.29 18.09P/E nm 21.79 18.53 15.30P/CE 778.28 12.73 11.61 9.87P/BV 1.77 1.26 1.18 1.09Dividend yield 0.00% 0.00% 0.00% 0.00%EV/EBITDA rel. 5.6 2.1 2.5 2.9P/E rel. - 1.8 1.7 1.5


Aksa Enerji Uretim AS Buy Target price TRY 3.8Price (TRY) 3.4 ROCE 2010 3.5% 10 11e 12e 13eMcap (TRY mn) 1,952 ROE 2010 9.9% Sales (TRY mn) 911.3 1,597.3 1,763.9 1,806.0Mcap (EUR mn) 805 Net debt (EURmn, 10) 579.9 EBITDA margin 20.86% 21.73% 22.03% 22.69%Free float (%) 5.5% Gearing (2010) 145% EBIT margin 12.99% 14.73% 14.03% 14.69%Free float (EUR mn) 44 Sales CAGR 10-13e 19.8% Net prof it margin 6.62% 8.32% 8.57% 10.20%Shares outst. (mn) 578 EPS CAGR 10-13e 22.0% EPS (TRY) 0.11 0.23 0.26 0.32


Performance 1M 3M 6M 12MAbsolute (TRY terms) 14.6% -5.1% -32.4% -35.2%Rel. to sector (EUR, ppt) 12.8 8.8 -15.7 -35.6Rel. to universe (EUR, ppt) 15.0 4.9 -17.0 -32.7

CEZ Accumulate Target price CZK 902.0Price (CZK) 771.9 ROCE 2010 11.9% 10 11e 12e 13eMcap (CZK mn) 412,121 ROE 2010 22.8% Sales (CZK mn) 198,848 208,583 216,412 234,752Mcap (EUR mn) 16,495 Net debt (EURmn, 10) 5,671 EBITDA margin 44.80% 40.72% 41.75% 39.20%Free float (%) 30.1% Gearing (2010) 63% EBIT margin 32.72% 28.48% 29.27% 25.77%Free float (EUR mn) 4,965 Sales CAGR 10-13e 4.6% Net prof it margin 23.72% 19.63% 20.03% 18.74%Shares outst. (mn) 533.9 EPS CAGR 10-13e 2.4% EPS (CZK) 88.48 76.81 81.32 82.54


Performance 1M 3M 6M 12MAbsolute (CZK terms) 9.6% -9.2% -17.5% -0.8%Rel. to sector (EUR, ppt) 3.9 1.8 0.6 8.9Rel. to universe (EUR, ppt) 6.1 -2.2 -0.7 11.8

52 weeks

500550600650700750800850900950

1.000

CEZ PX (Rebased) DJ EURO STOXX Utilities (Rebased)

52 weeks

2,42,62,83,03,23,43,63,84,04,2

Akenerji E lektrikISE 100 (Rebased)DJ EURO STOXX Utilities (Rebased)

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PGE Accumulate Target price PLN 26.8Price (PLN) 20.0 ROCE 2010 8.6% 10 11e 12e 13eMcap (PLN mn) 37,396 ROE 2010 8.9% Sales (PLN mn) 20,476.5 27,668.0 29,253.6 32,394.7Mcap (EUR mn) 8,588 Net debt (EURmn, 10) 237 EBITDA margin 33.35% 32.88% 27.48% 24.26%Free float (%) 30.7% Gearing (2010) 2% EBIT margin 20.44% 23.18% 17.88% 15.00%Free float (EUR mn) 2,636 Sales CAGR 10-13e 10.6% Net prof it margin 17.60% 19.09% 14.71% 12.16%Shares outst. (mn) 1,869.8 EPS CAGR 10-13e -1.94% EPS (PLN) 1.71 2.78 2.27 2.08


Performance 1M 3M 6M 12MAbsolute (PLN terms) 15.0% -31.8% -48.6% -48.6%Rel. to sector (EUR, ppt) -1.7 -5.1 -3.6 -5.4Rel. to universe (EUR, ppt) 0.5 -9.0 -4.9 -2.5

Tauron Polska Energia Sell Target price PLN 5.8Price (PLN) 5.4 ROCE 2010 6.0% 10 11e 12e 13eMcap (PLN mn) 9,464 ROE 2010 6.5% Sales (PLN mn) 15,428.9 21,386.9 22,548.1 24,613.2Mcap (EUR mn) 2,173 Net debt (EURmn, 10) -2 EBITDA margin 17.66% 13.26% 12.60% 10.66%Free float (%) 59.9% Gearing (2010) 0% EBIT margin 9.07% 7.04% 6.41% 4.51%Free float (EUR mn) 1,302 Sales CAGR 10-13e 15.9% Net prof it margin 6.43% 5.52% 4.95% 3.18%Shares outst. (mn) 1,752.5 EPS CAGR 10-13e 68.92% EPS (PLN) 0.49 0.65 0.62 0.43


Performance 1M 3M 6M 12MAbsolute (PLN terms) 35.2% 2.4% -11.4% 39.6%Rel. to sector (EUR, ppt) 0.0 -7.6 -1.0 -13.9Rel. to universe (EUR, ppt) 2.2 -11.6 -2.3 -11.0

Transelectrica Accumulate Target price RON 19.5Price (RON) 17.7 ROCE 2010 0.6% 10 11e 12e 13eMcap (RON mn) 1,297 ROE 2010 0.4% Sales (RON mn) 2,546 2,494 2,633 2,776Mcap (EUR mn) 298 Net debt (EURmn, 10) 202 EBITDA margin 13.77% 21.04% 21.24% 22.12%Free float (%) 12.8% Gearing (2010) 36% EBIT margin 3.13% 8.47% 8.19% 8.24%Free float (EUR mn) 38 Sales CAGR 10-13e 3% Net prof it margin 0.38% 5.97% 6.14% 5.87%Shares outst. (mn) 73.3 EPS CAGR 10-13e 127.0% EPS (RON) 0.13 2.03 2.21 2.22


Performance 1M 3M 6M 12MAbsolute (RON terms) 4.1% -10.2% -13.7% -1.1%Rel. to sector (EUR, ppt) -1.0 3.3 7.1 10.5Rel. to universe (EUR, ppt) 1.2 -0.6 5.8 13.4

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Tauron Polska Energia W IG 20 (Rebased)DJ EURO STOXX Utilities (Rebased)

52 weeks

10

12

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14

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PGE W IG 20 (Rebased) DJ EURO STOXX Utilities (Rebased)



Transgaz Accumulate Target price RON 235.0Price (RON) 213.5 ROCE 2010 12.8% 10 11e 12e 13eMcap (RON mn) 2,514 ROE 2010 15.3% Sales (RON mn) 1,313 1,381 1,477 1,600Mcap (EUR mn) 578 Net debt (EURmn, 10) -19 EBITDA margin 43.93% 41.85% 34.05% 33.96%Free f loat (%) 11.5% Gearing (2010) -3% EBIT margin 33.67% 31.24% 23.70% 24.31%Free f loat (EUR mn) 66 Sales CAGR 10-13e 8% Net prof it margin 28.56% 26.41% 20.31% 20.84%Shares outst. (mn) 11.8 EPS CAGR 10-13e 2.8% EPS (RON) 31.97 31.05 25.50 28.34


Performance 1M 3M 6M 12MAbsolute (RON terms) 11.5% 1.3% -14.1% -19.1%Rel. to sector (EUR, ppt) 6.4 14.8 6.6 -7.5Rel. to universe (EUR, ppt) 8.6 10.9 5.3 -4.6

Verbund Hold Target price EUR 22.4Price (EUR) 20.8 ROCE 2010 7.5% 10 11e 12e 13eMcap (EUR mn) 7,180 ROE 2010 11.2% Sales (EUR mn) 3,308 3,464 4,026 3,995Mcap (EUR mn) 7,180 Net debt (EURmn, 10) 4,387 EBITDA margin 32.02% 30.33% 30.53% 30.53%Free f loat (%) 15.6% Gearing (2010) 100% EBIT margin 25.05% 22.52% 23.91% 23.92%Free f loat (EUR mn) 1,120 Sales CAGR 10-13e 3% Net prof it margin 14.64% 12.93% 15.41% 17.49%Shares outst. (mn) 345.9 EPS CAGR 10-13e -4.7% EPS (EUR) 1.28 1.09 1.52 1.73



Zorlu Enerji Accumulate Target price TRY 2.0Price (TRY) 1.7 ROCE 2010 -3.5% 10 11e 12e 13eMcap (TRY mn) 487 ROE 2010 -36.6% Sales (TRY mn) 434 466 895 901Mcap (EUR mn) 201 Net debt (EURmn, 10) 661 EBITDA margin 11.87% 26.07% 35.78% 36.58%Free f loat (%) 32.0% Gearing (2010) 869% EBIT margin -8.06% 8.02% 24.33% 25.08%Free f loat (EUR mn) 64 Sales CAGR 10-13e 17% Net prof it margin -17.43% -12.29% 7.78% 12.07%Shares outst. (mn) 281.7 EPS CAGR 10-13e 2.7% EPS (TRY) -0.24 -0.20 0.25 0.39

Dividend/share (TRY) 0.00 0.00 0.00 0.00EV/sales 4.79 4.08 1.90 1.57EV/EBITDA 40.39 15.64 5.32 4.28P/E nm nm 7.00 4.48P/CE 38.45 17.33 2.83 2.30P/BV 5.00 4.88 2.88 1.75Dividend yield 0.00% 0.00% 0.00% 0.00%EV/EBITDA rel. 2.9 2.1 0.8 0.7P/E rel. - - 0.6 0.4


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52 weeks

160

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Zorlu EnerjiISE 100 (Rebased)DJ EURO STOXX Utilit ies (Rebased)



Looking AheadDate Company/country Release/event Comment07 Nov Action/ Poland 3Q 2011 results

Richter / Hungary 3Q 2011 results reporting between 7-11.Nov 08 Nov Intercell / Austria 3Q 2011 results

Komercni banka / Czech Republic 3Q 2011 resultsPZU / Poland 3Q 2011 resultsE-Star / Hungary EGM

09 Nov Sygnity / Poland 3Q 2011/12 results - after sessionKIT digital / Czech Republic 3Q 2011 resultsEgis / Hungary 4Q 2010/2011 resultsOMV / Austria 3Q 2011 resultsPetrom / Romania 3Q 2011 resultsCEZ / Czech Rep. 3Q 2011 resultsWienerberger / Austria 3Q 2011 resultsKGHM/ Poland 3Q 2011 resultsEurocash / Poland 3Q 2011 resultsColian / Poland 3Q 2011 resultsNeuca / Poland 3Q 2011 resultsTauron / Poland 3Q 2011 results

10 Nov Vienna Airport / Austria Traffic figuresTelefónica CR / Czech Republic 3Q 2011 resultsMagyar Telekom / Hungary 3Q 2011 resultsAsseco Poland / Poland 3Q 2011 results - after sessionKulczyk Oil Ventures / Poland 3Q 2011 resultsTVN / Poland 3Q 2011 resultsTrakcja / Poland 3Q 2011 resultsPolimex / Poland 3Q 2011 resultsNG2 / Poland 3Q 2011 resultsGTC / Poland 3Q 2011 resultsTranselectrica / Romania 3Q 2011 resultsTeraplast / Romania 3Q 2011 results

11 Nov SIF5 Oltenia / Romania 3Q 2011 resultsGorenje / Slovenia 3Q 2011 results

14 Nov ComArch / Poland 3Q 2011 results - after sessionTelekom Austria 3Q 2011 resultsBank Pekao / Poland 3Q 2011 resultsBioton / Poland 3Q 2011 resultsSIF2 Moldova / Romania 3Q 2011 resultsBiofarm / Romania 3Q 2011 resultsPekao / Poland 3Q 2011 resultsAB / Poland 3Q 2011 resultsPulawy / Poland 3Q 2011 resultsACE / Poland 3Q 2011 resultsCiech / Poland 3Q 2011 resultsBerling / Poland 3Q 2011 resultsPGF / Poland 3Q 2011 resultsAmrest/ Poland 3Q 2011 resultsEmperia / Poland 3Q 2011 resultsFarmacol / Poland 3Q 2011 resultsMostostal Warszawa / Poland 3Q 2011 resultsPBG / Poland 3Q 2011 resultsRafako / Poland 3Q 2011 resultsSynthos / Poland 3Q 2011 resultsVistula / Poland 3Q 2011 resultsPGE / Poland 3Q 2011 results



Looking AheadDate Company/country Release/event Comment15 Nov VIG / Austria, Czech Republic 3Q 2011 results

MMK / Austria 3Q 2011 resultsMOL / Hungary 3Q 2011 resultsDanubius / Hungary 3Q 2011 resultsFondul Proprietatea / Romania 3Q 2011 resultsSIF4 Muntenia / Romania 3Q 2011 resultsAntibiotice / Romania 3Q 2011 resultsPolice / Poland 3Q 2011 resultsApator / Poland 3Q 2011 resultsIntercars / Poland 3Q 2011 results

16 Nov Semperit / Austria 3Q 2011 resultsNWR / Czech Rep. 3Q 2011 resultsAAA Auto/ Czech Rep. 3Q 2011 results

17 Nov Austrian Post / Austria 3Q 2011 resultsvoestalpine / Austria 2Q 2011/12 resultsFHB / Hungary 3Q 2011 resultsKrka / Slovenia 1-3Q 2011 results

18 Nov OTP / Hungary 3Q 2011 resultsAllami Nyomda / Hungary 3Q 2011 resultsCinema City / Poland 3Q 2011 results

23 Nov conwert / Austria 3Q 2011 resultKapsch TrafficCom / Austria 2Q 2011/12 resultsCA Immo / Austria 3Q 2011 results

24 Nov Raiffeisen Bank Intl. / Austria 3Q 2011 resultsVienna Airport / Austria 3Q 2011 resultS Immo / Austria 3Q 2011 resultUNIQA / Austria 3Q 2011 resultTelekom Slovenije / Slovenia 3Q 2011 resultPegas NW / Czech Rep. 3Q 2011 resultOrco / Czech Rep. 3Q 2011 result

30 Nov STRABAG / Austria 3Q 2011 resultE-Star / Hungary 3Q 2011 results

06 Dec Zumtobel / Austria 1Q 2011/12 results13 Dec Vienna Airport / Austria Traffic figures14 Dec bene / Austria 3Q 2011/12 results15 Dec EVN / Austria FY 2010/1116 Dec Wolford / Austria 2Q 2011/12 results



Erste Group´s CEE Universe Mcap.

(EURmn)Free float (EUR mn)

Mcap. (EURmn)

Free float (EUR mn)

Mcap. (EURmn)

Free float (EUR mn)

PL PKO BP 10,328 5,036 A OMV 8,208 3,981 HU MOL 5,037 1,335Bank Pekao 9,217 3,757 Verbund 7,180 1,120 OTP 2,986 2,437PGE 8,588 2,636 voestalpine 4,231 2,793 Richter Gedeon 2,159 1,613KGHM 7,202 4,912 Raiffeisen Bank Internationa 3,806 818 Magyar Telekom 1,772 720PZU 6,802 3,727 Vienna Insurance Group 3,802 1,102 Egis 455 223TPSA 5,348 2,685 Telekom Austria 3,645 2,648 FHB 105 40PKN Orlen 4,065 2,530 Andritz 3,361 2,319 Danubius Hotels 75 13BZ WBK 3,820 1,127 STRABAG 2,463 451 E-Star 49 22BRE Bank 2,619 789 Immofinanz 2,277 1,872 PannErgy 37 24Tauron Polska Energia 2,173 1,302 Lenzing 1,934 627 Allami Nyomda 30 9Synthos 1,276 479 Uniqa 1,558 125 HR INA 5,606 432Cyfrowy Polsat 1,153 594 Austrian Post 1,472 692 T-Hrvatski Telekom 2,656 1,023TVN 963 419 Mayr-Melnhof 1,368 561 Atlantic Grupa 225 61LPP 878 433 Agrana 1,179 112 Podravka 181 127Lotos Group 854 357 Wienerberger 1,038 934 Ericsson Nikola Tesla 180 76Asseco Poland 829 456 SBO 964 617 Atlantska plovidba 72 56Eurocash 810 393 conwert 815 601 Institut IGH 19 17GTC 569 330 CA IMMO 773 640 TR Garanti Bank 11,122 5,409ZA Pulawy S.A. 413 141 Kapsch TrafficCom 689 212 Akbank 10,955 1,128NG2 399 208 Vienna Int. Airport 665 332 Turk Telekomunikasyon 10,798 1,350Emperia Holding 387 271 Semperit 663 304 Turkcell Iletisim Hizmetle 8,512 2,850AmRest 291 198 RHI 621 329 Isbank 7,796 2,370PBG S.A. 279 212 Zumtobel 615 301 Yapi Kredi Bank 5,989 1,090Inter Cars 272 153 AMAG 567 215 Halkbank 5,878 1,469Cersanit 241 124 Palfinger 552 196 Tupras 4,193 2,055Multimedia Polska 239 44 austriamicrosystems 413 314 BIM 3,397 2,219Empik 237 88 S Immo 290 234 Vakifbank 3,217 810ZCh Police S.A. 191 61 DO & CO 282 132 Emlak Konut REIT 2,444 611Agora 185 111 BWT 236 127 Ford Otosan 1,882 337Polimex 183 183 CAToil 224 67 Arcelik 1,862 465Ciech S.A. 166 133 AT&S 214 109 Tofas 1,411 343Apator 139 101 Polytec 148 85 Turkish Airlines 1,247 635Rafako 136 68 Wolford 129 67 Aygaz 1,183 287Farmacol 119 60 Intercell 93 77 Petkim 891 345Mostostal Warszawa 113 56 RS Komercijalna Banka 258 83 Aksa Enerji Uretim AS 805 44Bioton 105 74 Aik Banka AD 170 134 Aselsan 747 114Kulczyk Oil Ventures 102 29 Sojaprotein AD 81 30 Bank Asya 705 359ComArch 92 22 CZ CEZ 16,495 4,965 Akcansa 557 115PGF 91 55 Komercni banka 5,264 2,087 Turkiye Sinai Kalkinma B 492 204Colian (Jutrzenka) 86 31 Telefónica CR 4,912 1,503 Cimsa 443 142Neuca 69 30 New World Resources 1,545 562 Albaraka Turk 420 93Action SA 66 34 Philip Morris CR 1,277 286 Akenerji Elektrik 420 106Trakcja Polska 62 31 Unipetrol 1,248 462 Gubre Fabrikalari 415 142Sygnity 52 29 CME 502 267 Anadolu Hayat 309 53ACE 29 26 Fortuna Entertainment 200 65 Sinpas REIT 299 111CNG 28 23 Pegas NW 159 119 Turcas Petrol AS 268 77Vistula Group 24 19 Orco 67 66 Park Elektrik 238 76Berling 17 5 RO Petrom 3,883 241 Sekerbank 204 65

SLO Krka 1,846 1,291 BRD-Group SG 1,745 709 Zorlu Enerji 201 64Telekom Slovenije 399 141 Transgaz 578 66 Bagfas 199 118Gorenje 89 48 Banca Transilvania 333 284 Aksigorta 182 69

PT Jeronimo Martins SGPS 8,042 2,509 Transelectrica 298 38 Anadolu Sigorta 173 74USA FX Energy 238 200 Biofarm 52 29 Vestel 161 44NL Cinema City 332 153 Antibiotice 43 16 Ege Gubre 72 14UA Astarta Holding NV 359 111 Albalact 30 9

Teraplast 23 10



Notes



Disclosures

General disclosures: All recommendations given by Erste Group Research are independent and based on the latest company, industry and general information publicly available. The best possible care and integrity is used to avoid errors and/or misstatements. No influence on the rating and/or target price is being exerted by either the covered company or other internal Erste Group departments. Each research piece is reviewed by a senior research executive, the rating is agreed upon with an internal rating committee of senior research executives. Erste Group Compliance Rules state that no analyst is allowed to hold a direct ownership position in securities issued by the covered company or derivatives thereof. Analysts are not allowed to involve themselves in any paid activities with the covered companies except as disclosed otherwise. The analyst's compensation is primarily based not on investment banking fees received, but rather on performance and quality of research produced.

Description of specific disclosures:(1) Erste Group and/or its affiliates hold(s) an investment in any class of common equity of the covered company of more than 5% (for Croatian companies 1%). (2) Erste Group and/or its affiliates act(s) as market maker or liquidity provider for securities issued by the covered company. (3) Within the past year, Erste Group and/or its affiliates have managed or co-managed a public offering for the covered company. (4) Erste Group and/or its affiliates have an agreement with the covered company relating to the provision of investment banking services or have received compensation during the past 12 months. (5) Erste Group and/or its affiliate(s) have other significant financial interests in relation to the covered company.

Erste Group rating definitions

Buy Accumulate Hold Reduce Sell

> +20% to target price +10% < target price < +20% 0% < target price < +10% -10% < target price < 0% < -10% to target price

Our target prices are established by determining the fair value of stocks, taking into account additional fundamental factors and news of relevance for the stock price (such as M&A activities, major forthcoming share deals, positive/negative share/sector sentiment, news) and refer to 12 months from now. All recommendations are to be understood relative to our current fundamental valuation of the stock. The recommendation does not indicate any relative performance of the stock vs. a regional or sector benchmark.



Company Spec. Disclosures*

Company Spec. Disclosures*

Company Disclosures

A &D Ph arma Komercni bank a 2 , A B SA 2, KrkaA CE Kulcz yk Oil Ventures 3 , A ctio n S A Lenzing 4 , A gora Lotos Grou pA grana LPPA ik Banka A D Magyar TelekomA kbank Mayr-Melnhof 2 , A kener ji Ele ktrik Uretim A S Mennica P olskaA ksigorta MOLA lba lact Mostostal W arsza waA lba raka Turk Multimedia PolskaA llami Nyom da Neu caA mb ra New W orld Resou rce s 2 , A mRest NG2A nadolu Hayat OMV 2 , 3, A nadolu Sigorta Orco 2 , 4, A ndritz OTPA ntibiotice 2, Palf ing erA pator Pankl Rac ingA rce lik PannErgyA sse co Poland PBG S.A.A T&S Pegas NW 2 , A -Te c PetkimA tlantic Grupa 2, Petrom 4 , A tlantska plov id ba PGEaustr iamicrosystems PGFA ustrian Airlines 2, Philip Morris CR 2 , A ustrian Post 2, PKN O rlenB anca Transilvania PKO BPB ank Asya PodravkaB ank Pekao Polime xB erli ng 3, ProspectiuniB IM PZUB iofarm RafakoB ioton Rai ffeisen Bank Internati onal 2 , B RD-Group SG RFVB RE Ba nk RHI 2 , 4, B WT 2, Richter GedeonB Z W BK S Immo 1 , 2, 4, 5, CA IMMO S&T 2 , CA IMMO Internationa l Sanoch emiaCAToil SBO 2 , CEDC SekerbankCersanit SemperitCEZ 2, 3, 4, SIF 1 Banat Cr isana 5 , Ciec h S .A. SIF 2 Moldova 5 , Cine ma City SIF 3 Tran silva nia 5 , CME 2, 3, 4, SIF 4 Mun tenia 5 , CNG SIF 5 Oltenia 5 , ComArch Sinpas RE ITconwert Sojapro te in ADCW T STRAB AG 2 , 3, 4, Cyfrowy Pol sat Sygni tyDanubius Hote ls Syntho sDO & CO 3, T-Hrvatski Tele komDuda Telefónica O2 CR 2 , E CO Business-Immo Telek om Aus tria 2 , 3, E gis Telek om Slovenij eE mp eria Holding Tera pla stE mp ik TofasE nergoprojekt TPSAE ricsson Nikola Tesla Trakcja Pols kaE urocash Tran se lectricaFarmaco l Tran sg azFerrovial SA TuprasFHB Turb omecanicaFondul Proprie tatea 2, Turcas Petrol ASFord Otos an Turk Ekono mi Ba nkFortuna Entertainmen t 2, 3, 5, Turk Te lekomunik asyon ASFX Ener gy Turkcell Iletisim Hizm etleri ASG aranti Ban k Turkiye Sinai Kalkinma Ban kasiG orenje TVNG raal Uni petr ol 2 , G TC Uni qa 2 , G unes Sigorta VakifbankHalk bank Verbund 2 , 4, Immoeas t 2, Vestel Immofinanz Vienna Insuran ce Group 2 , 3, 4, Impa ct Vienna Int. Air port 2 , INA Vistula Gro upInstitut IGH voestalpine 2 , 4, Inter Ca rs Wiener berger 2 , Inter cell 2, 4, WinterthurIs REIT WolfordIsbank Yapi Kredi BankJutrzenka Yapi Kredi SigortaK apsch TrafficCom 2, 4, ZA Pulawy S.A.K GHM ZCh Po lice S.A.K oc Hol ding Zor lu E nerj i E lektrik Uretimi ASK oel ner Zumtob el 2 , K omercija lna Bank a



ContactsGroup Research Group Institutional & Retail Sales Head of Group Research Institutional Equity Sales Vienna Friedrich Mostböck, CEFA +43 (0)5 0100 - 11902 Head: Brigitte Zeitlberger-Schmid +43 (0)5 0100 - 83123 Macro/Fixed Income Research Cash Equity Sales Head: Gudrun Egger, CEFA (Euroland) +43 (0)5 0100 - 11909 Dieter Benesch +43 (0)5 0100 – 83131 Adrian Beck (AT, SW)) +43 (0)5 0100 – 11957 Hind Al Jassani +43 (0)5 0100 - 83111 Mildred Hager (US, JP, Euroland) +43 (0)5 0100 - 17331 Werner Fuerst +43 (0)5 0100 - 83121 Alihan Karadagoglu (Corporates) +43 (0)5 0100 - 19633 Josef Kerekes +43 (0)5 0100 - 83125 Peter Kaufmann (Corporates) +43 (0)5 0100 - 11183 Cormac Lyden +43 (0)5 0100 - 83127 Carmen Riefler-Kowarsch (Covered Bonds) +43 (0)5 0100 - 19632 Stefan Raidl +43 (0)5 0100 - 83113 Elena Statelov, CIIA (Corporates) +43 (0)5 0100 - 19641 Simone Rentschler +43 (0)5 0100 - 83124 Macro/Fixed Income Research CEE Derivative Sales Co-Head CEE: Juraj Kotian (Macro/FI) +43 (0)5 0100 - 17357 Christian Luig +43 (0)5 0100 - 83181 Birgit Niessner (CEE) +43 (0)5 0100 - 18781 Manuel Kessler +43 (0)5 0100 - 83182 CEE Equity Research Sabine Kircher +43 (0)5 0100 - 83161 Co-Head: Günther Artner, CFA +43 (0)5 0100 - 11523 Christian Klikovich +43 (0)5 0100 - 83162 Co-Head: Henning Eßkuchen +43 (0)5 0100 - 19634 Armin Pfingstl +43 (0)5 0100 - 83171 Günter Hohberger (Banks) +43 (0)5 0100 - 17354 Roman Rafeiner +43 (0)5 0100 - 83172 Franz Hörl, CFA (Steel, Construction) +43 (0)5 0100 - 18506 Institutional Equity Sales LondonDaniel Lion, CIIA (IT) +43 (0)5 0100 - 17420 Head: Michal Rizek +44 20 7623 - 4154 Christoph Schultes, CIIA (Insurance, Utility) +43 (0)5 0100 - 16314 Jiri Feres +44 20 7623 - 4154 Thomas Unger, CFA (Oil&Gas) +43 (0)5 0100 - 17344 Tatyana Dachyshyn +44 20 7623 - 4154 Vera Sutedja, CFA (Telecom) +43 (0)5 0100 - 11905 Declan Wooloughan +44 20 7623 - 4154 Vladimira Urbankova, MBA (Pharma) +43 (0)5 0100 - 17343 Institutional Equity Sales Croatia Martina Valenta, MBA (Real Estate) +43 (0)5 0100 - 11913 Damir Eror (Equity) +38 562 37 28 13 Gerald Walek, CFA (Machinery) +43 (0)5 0100 - 16360 Zeljka Kajkut (Equity) +38 562 37 28 11 International Equities Institutional Sales Czech Republic Hans Engel (Market strategist) +43 (0)5 0100 - 19835 Head: Michal Rizek +420 224 995-53 Stephan Lingnau (Europe) +43 (0)5 0100 - 16574 Ondrej Cech (Fixed income) +420 224 995-577 Ronald Stöferle (Asia) +43 (0)5 0100 - 11723 Radim Kramule +420 224 995-53 Editor Research CEE Jiri Smehlik (Equity) +420 224 995-510 Brett Aarons +420 233 005 904 Pavel Zdichynec (Fixed income) +420 224 995-590 Research Croatia/Serbia Institutional Sales Hungary Head: Mladen Dodig (Equity) +381 11 22 09 178 Gregor Glatzer (Equity) +361 235-5144 Head: Alen Kovac (Fixed income) +385 62 37 1383 Attila Preisz (Equity) +361 235-5162 Anto Augustinovic (Equity) +385 62 37 2833 Norbert Siklosi (Fixed income) +361 235-5842 Anela Tomic (Fixed income) +385 62 37 2295 Institutional Equity Sales PolandDavor Spoljar; CFA (Equity) +385 62 37 2825 Head: Andrzej Tabor +4822 330 62 03Research Czech Republic Pawel Czuprynski (Equity) +4822 330 62 12 Head: David Navratil (Fixed income) +420 224 995 439 Lukasz Mitan (Equity) +4822 330 62 13 Petr Bittner (Fixed income) +420 224 995 172 Jacek Krysinski (Equity) +4822 330 62 18 Head: Petr Bartek (Equity) +420 224 995 227 Institutional Equity Sales TurkeyVaclav Kminek (Media) +420 224 995 289 Simin Öz Gerards (Head) +9 0212 371 2525Jana Krajcova (Fixed income) +420 224 995 232 Mine Yoruk +9 0212 371 2526 Martin Krajhanzl (Equity) +420 224 995 434 Institutional Equity Sales SlovakiaMartin Lobotka (Fixed income) +420 224 995 192 Head: Dusan Svitek +48 62 56 20Lubos Mokras (Fixed income) +420 224 995 456 Andrea Slesarova (Client sales) +48 62 56 27 Research Hungary Saving Banks & Sales Retail Head: József Miró (Equity) +361 235-5131 Head: Thomas Schaufler +43 (0)5 0100 - 84225 Bernadett Papp (Equity) +361 235-5135 Equity Retail Sales Gergely Gabler (Equity) +361 253-5133 Head: Kurt Gerhold +43 (0)5 0100 - 84232 Zoltan Arokszallasi (Fixed income) +361 373-2830 Fixed Income & Certificate SalesResearch Poland Head: Uwe Kolar +43 (0)5 0100 - 83214 Head: Piotr Lopaciuk (Equity) +48 22 330 6252 Treasury Domestic SalesMagda Zabieglik (Equity) +48 22 330 6250 Head: Markus Kaller +43 (0)5 0100 - 84239 Tomasz Kasowicz (Equity) +48 22 330 6251 Corporate Sales ATMarek Czachor (Equity) +48 22 330 6254 Mag. Martina Kranzl +43 (0)5 0100 – 84147 Research Romania Karin Rattay +43 (0)5 0100 - 84112 Head: Lucian Claudiu Anghel +40 21 312 6773 Mag. Markus Pistracher +43 (0)5 0100 - 84152Head Equity: Mihai Caruntu (Equity) +40 21 311 27 54 Günther Gneiss +43 (0)5 0100 - 84145 Dorina Cobiscan (Fixed Income) +40 21 312 6773 1028 Jürgen Flassak, MA +43 (0)5 0100 - 84141 Dumitru Dulgheru (Fixed income) +40 21 312 6773 1028 Antonius Burger-Scheidlin, MBA +43 (0)5 0100 - 84624 Eugen Sinca (Fixed income) +40 21 312 6773 1028 Fixed Income Institutional DeskRaluca Ungureanu (Equity) +40 21 311 2754 Head G7: Thomas Almen +43 (0)5 0100 - 84323 Research Slovakia Head Germany: Ingo Lusch +43 (0)5 0100 - 84111 Head: Juraj Barta, CFA (Fixed income) +421 2 4862 4166 Fixed Income International & High End Sales Vienna Michal Musak (Fixed income) +421 2 4862 4512 Jaromir Malak/ Zach Carvell +43 (0)5 100 - 84254 Maria Valachyova (Fixed income) +421 2 4862 4185 U. Inhofner/ P. Zagan/ C. Mitu +43 (0)5 100 - 84254Research Ukraine Fixed Income International Sales LondonHead: Maryan Zablotskyy (Fixed income) +38 044 593 - 9188 Antony Brown +44 20 7623 4159 Ivan Ulitko (Equity) +38 044 593 – 0003 Igor Zholonkivskyi (Equity) +38 044 593 - 1784 Research Turkey Head: Erkin Sahinoz (Fixed Income) +90 212 371 2540Sevda Sarp (Equity) +90 212 371 2537 Evrim Dairecioglu (Equity) +90 212 371 2535 Ozlem Derici (Fixed Income) +90 212 371 2536 Mehmet Emin Zumrut (Equity) +90 212 371 2539



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This research report was prepared by Erste Group Bank AG (”Erste Group”) or its affiliate named herein. The individual(s) involved in the preparation of the report were at the relevant time employed in Erste Group or any of its affiliates. The report was prepared for Erste Group clients. The information herein has been obtained from, and any opinions herein are based upon, sources believed reliable, but we do not represent that it is accurate or complete and it should not be relied upon as such. All opinions, forecasts and estimates herein reflect our judgment on the date of this report and are subject to change without notice. The report is not intended to be an offer, or the solicitation of any offer, to buy or sell the securities referred to herein. From time to time, Erste Group or its affiliates or the principals or employees of Erste Group or its affiliates may have a position in the securities referred to herein or hold options, warrants or rights with respect thereto or other securities of such issuers and may make a market or otherwise act as principal in transactions in any of these securities. Erste Group or its affiliates or the principals or employees of Erste Group or its affiliates may from time to time provide investment banking or consulting services to or serve as a director of a company being reported on herein. Further information on the securities referred to herein may be obtained from Erste Group upon request. Past performance is not necessarily indicative for future results and transactions in securities, options or futures can be considered risky. Not all transactions are suitable for every investor. Investors should consult their advisor, to make sure that the planned investment fits into their needs and preferences and that the involved risks are fully understood. This document may not be reproduced, distributed or published without the prior consent of Erste Group. Erste Group Bank AG confirms that it has approved any investment advertisements contained in this material. Erste Group Bank AG is regulated by the Financial Market Authority (FMA) Otto-Wagner-Platz 5,1090 Vienna, and for the conduct of investment business in the UK by the Financial Services Authority (FSA) and for the conduct of investment activities in Croatia by the Croatian Financial Services Supervisory Agency (CFSSA).

Notice to Turkish Investors: As required by the Capital Markets Board of Turkey, investment information, comments and recommendations stated here, are not within the scope of investment advisory activity. Investment advisory service is provided in accordance with a contract of engagement on investment advisory concluded between brokerage houses, portfolio management companies, non-deposit banks and clients. Comments and recommendations stated here rely on the individual opinions of the ones providing these comments and recommendations. These opinions may not fit to your financial status, risk and return preferences. For this reason, to make an investment decision by relying solely to this information stated here may not bring about outcomes that fit your expectations.

Please refer to www.erstegroup.com for the current list of specific disclosures and the breakdown of Erste Group’s investment recommendations.

Documents

CEE Equity Monthly - A Data Proreports.aiidatapro.com/...11-07_CEE_Equity_Monthly.pdf · Albalact 0.2 0.3 Buy 64.8% ... Erste Group Research – CEE Equity Monthly Page 5 Changes