CEE Equity Monthly

www.erstegroup.
com
CEE Equity Monthly

December 2009
That's it for 2009
Sentiment fades a bit but remains at

reasonable levels
Markets strong enough to somehow digest

Middle East disturbance
Expectations of positive performance remain

This research report was prepared by Erste Group Bank AG (”Erste Group”) or its affiliate named herein. 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
modest through year-end
opinions, forecasts and estimates herein reflect our judgement 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.
Valuations at fair levels overall, or just below
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 transaction 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
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Please refer to www.erstegroup.com for the current list of specific disclosures and the breakdown of Erste Group’s investment recommendations.
Table of Contents
Summary
Summary 2
Top picks 4
Changes in Ratings and Target Prices 5
One Month Performance 6
Top 20 Dividend Yield 6
Top 20 P/E 6
Top 20 by Turnover 7
Stock Market Performances 8
Sector Performance 9
3Q Reporting Summary 12
Macroeconomy 14
Real Economy 14
Interest Rates and Currencies 15
Special Events 16
Sector Insight 17
Banks 17
Basic Resources 29
Chemicals 35
Construction 42
Food & Beverages 49
Healthcare 56
Industrial Goods & Services 65
Insurance 74
Media 77
Oil & Gas 85
Personal & Household Goods 95
Real Estate 99
Retail & Distribution 109
Technology 115
Telecom 122
Travel & Tourism 128
Utilities 132
Looking Ahead 137

Contacts 140
Disclosures 141
Share prices are as of December 3, 2009.

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. Negative valuation multiples have been excluded from
aggregate measures.
Erste Group Research - CEE Equity Monthly, December 2009 Page 1

Summary
While confessions in Dubai have triggered some rather unexpected corrections, this contributed to the market
movement that we described in our latest quarterly strategy report. Overall, we continue to expect some rather
uninspiring sideways movement for the rest of the year. Nevertheless, the news from Dubai did prove two things.
First of all, the crisis is not over yet and further surprises might be waiting for us down the road. Growth should be
looked at carefully, and sustainability remains the challenge. This might be also the guidance for some Asian
markets, which have delivered quite some impetus to overall emerging market developments. Secondly – this is
the positive news – markets still “want” to remain positive, and sentiment has been strong enough to help equity
markets digest the disturbance from the Middle East rather quickly – so far. However, in case of further positive
news flow such as recent US employment data, we might even have a chance for a moderate year-end rally.
GDP data released for the third quarter indeed confirmed our categorization of CEE countries into two groups.
Czech Republic and Slovakia did suffer from the sudden decrease in exports and bottomed out earlier this year, in
contrast to Romania, Hungary, Croatia and Serbia, where adjustment of external imbalances hindered this early
bottoming out. Consequently, this situation will also influence expected growth in 2010. The first group should
have recovered early enough to see y/y growth in 1Q 2010 and reasonable FY growth. Poland remains in a class
of its own, totally avoiding recession.
The ZEW/Erste sentiment indicator has basically been showing ever-improving economic expectations since its
low in Oct/Nov last year. In the latest issue, the outlook for the next six months remains clearly positive, but
nevertheless the balance has lost about 20 points for CEE. Given the earlier strong base effect fading out now, we
do not see this as too alarming, but rather as a reasonable judgment. At the same time, the current situation has
started to improve, while in total still remaining on a negative balance. We would see this as further proof of the
base effect argument for long-term expectations. In particular, the current situation in Poland is seen as improving
nicely, while unsurprisingly, Hungary is still at the bottom of the list. Expectations on inflation have continued to
rise as well, this time with the Czech Republic and Austria taking the lead. Summing up, sentiment remains
positive overall, but expectations on stock market performance have again became more sober.
For fund flows, the positive picture for emerging markets continues, with October again bringing nice inflows for
global emerging markets as well as for regionally dedicated markets including CEE. Hence, the total inflows for all
dedicated emerging market equity funds have reached a total of USD 66bn, more than compensating for the
outflows seen in 2008. Both developed markets as well as emerging markets enjoyed net buying in October, while
emerging markets outperformed developed markets by far, based on this measure. In terms of
allocations/weightings, Turkey and Russia lost some stature, mostly to the benefit of Poland, while other markets
in our region gained very moderately or remained flat.
Valuation-wise, markets have calmed down a bit in recent days. The consensus forward P/E is back to its long-
term average for the region. While already exceeding implied fair valuations based on risk premiums, recent
corrections have brought CEE markets back to what may actually be a slight undervaluation, with the exception of
Poland. Overall, implied P/E based on spreads between earnings yields and risk free rates indicate a slight
undervaluation of about 6% for the region. Here, the Austrian and Czech markets offer the highest implied
undervaluation of 7% and 14%, respectively.
Among our top picks, we see some interesting possibilities in the media sector (as already published in our recent
CEE media sector report). We would argue that expectations for ad market declines and reductions in advertising
spending have actually exceeded the levels suggested by the GDP decline. Our favorites are Agora and TVN,
while our previous darling, CME, was downgraded from Buy to Reduce, with its recent rally exceeding its short-
term potential. We also remain positive on the technology sector, as indicated in our latest CEE Equity strategy for
4Q 2009. Consequently, we remain buyers of Kapsch TrafficCom and have upgraded S&T and Asseco Poland to
Buy.
While we mentioned earlier that the air is getting thinner for basic resources and chemicals, we remain positive on
Semperit, voestalpine and RHI, which should all still have some more headroom in terms of their respective target
prices. Voestalpine posted fine quarterly numbers, and its steel division is already back to 100% capacity
utilization, while its specialized steel division is expected to follow with some delay. Semperit not only presented
sound quarterly figures, but the outlook for its Sempermed division remains appealing, with further capacities
planned. With losses on revaluations potentially coming to an end, we also still see some possibilities in the real
estate sector, namely ECO Business-Immo and S-Immo.

Summary
0
100
200
300
400
500
600
5.0
7.0
9.0
11.0
13.0
15.0
17.0
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
31/10/1998 06/01/2008
28/02/2002 30/01/2008
30/04/1999
30/06/2002 25/02/2008
31/10/2002 31/10/1999 20/03/2008
28/02/2003 30/04/2000 15/04/2008
09/05/2008
Implied valuation
30/06/2003 31/10/2000
04/06/2008
31/10/2003 30/04/2001 30/06/2008
Regional forward P/E

29/02/2004 24/07/2008
31/10/2001
30/06/2004 19/08/2008
30/04/2002
31/10/2004 12/09/2008
Regional index versus CDS
31/10/2002 08/10/2008
Erste Group Research - CEE Equity Monthly, December 2009

28/02/2005
30/06/2005 30/04/2003 03/11/2008
27/11/2008
31/10/2005 31/10/2003
23/12/2008
28/02/2006 30/04/2004 20/01/2009
30/06/2006 13/02/2009
31/10/2004
Median CDS ex UA (lhs)
Average 11.8
31/10/2006 11/03/2009
Over/undervaluation (lhs)
30/04/2005
28/02/2007 06/04/2009
31/10/2005 30/04/2009
30/06/2007
31/10/2007 30/04/2006 26/05/2009
19/06/2009
29/02/2008 31/10/2006
15/07/2009
NTX (rhs)
30/06/2008 30/04/2007 10/08/2009
NTX (rhs)
31/10/2008 03/09/2009
31/10/2007
28/02/2009 29/09/2009
30/04/2008
30/06/2009 23/10/2009
31/10/2008 18/11/2009
30/10/2009
30/04/2009
0
31/10/2009
500
0.0
11.9
1000
1500
2000
2500
500.0
1000.0
1500.0
2000.0
2500.0
Regional numbers based on A, CZ, HU, PL, RO (HR for CDS spreads); Source: Bloomberg, Factset, own calculations
Page 3
Summary
Top Picks
Current price (LC) Target price (LC) Recom mendation Upside
A-Tec 9.7 16.0 Buy 64.6%
Krka 68.8 103.0 Buy 49.7%
Sojaprotein AD 1,057.0 1,569.0 Buy 48.4%
CEZ 855.0 1,230.0 Buy 43.9%
ECO Business-Immo 4.5 6.4 Buy 41.0%
Kapsch TrafficCom 25.6 36.0 Buy 40.8%
OMV 28.9 39.0 Buy 35.1%
Vienna Insurance Group 36.1 48.0 Buy 33.1%
Torfarm 71.4 95.0 Buy 33.1%
S&T 15.4 20.2 Buy 31.0%
Trakcja Polska 3.9 5.1 Buy 29.4%
BWT 20.0 25.5 Buy 27.2%
RHI 16.7 21.0 Buy 25.6%
Sparkassen Immobilien 5.1 6.3 Buy 24.8%
TVN 12.9 16.0 Buy 24.0%
Intercell 26.0 31.7 Buy 22.0%
Cersanit 15.3 18.5 Buy 21.0%
Asseco Poland 61.0 73.8 Buy 20.9%
Semperit 28.3 33.4 Buy 18.0%
voestalpine 24.8 29.0 Buy 17.1%
Agora 22.2 24.0 Buy 8.0%
Changes in estimates
Changes in Previous Current
forecasts EPS (local currency) EPS (local currency)
2009e 2010e 2011e 2009e 2010e 2011e
A-Tec 1.94 0.84 1.33 2.26 0.89 1.33
Agora 0.88 1.10 1.38 0.70 1.38 1.88
Andritz 1.77 2.08 2.58 1.78 2.29 2.70
Asseco Poland 5.26 5.35 5.58 5.45 5.51 5.60
BWT 1.08 1.05 1.45 1.36 1.26 1.62
CA IMMO International -2.20 0.11 0.24 -2.73 0.14 0.26
CAToil 0.08 0.37 0.29 0.27 0.41 0.37
Cersanit 0.16 0.59 1.11 -0.27 0.66 1.27
CME 1.27 1.73 2.05 -1.01 -0.21 0.19
CNG 0.24 0.22 0.29 0.21 0.25 0.39
Cyfrowy Polsat 1.00 1.18 1.78 0.79 1.06 1.29
Danubius Hotels -176.91 -43.15 44.80 11.50 6.48 79.77
ECO Business-Immo -0.50 0.62 0.76 -0.06 0.72 0.72
Emperia H olding 4.13 4.24 4.52 4.67 5.04 5.40
Eurocash 0.8 0.8 0.9 0.7 0.9 1.0
Farmacol 3.38 4.29 4.53 3.12 3.72 3.97
Intercell 0.13 0.48 0.97 -0.26 0.11 0.56
Jutrzenka 0.19 0.25 0.33 0.25 0.26 0.33
Magyar Telekom 78.36 70.18 68.85 75.52 72.14 76.34
Mayr-Melnhof 4.48 4.85 5.32 4.64 4.85 5.16
Palfinger -0.57 0.48 1.29 -0.31 0.49 1.31
PGF 3.17 3.59 3.88 4.12 3.43 3.64
S&T -0.07 0.81 1.97 0.06 1.40 1.78
SBO 0.99 1.21 2.03 0.91 1.18 1.98
Semperit 1.58 1.76 2.00 1.88 2.11 2.28
Sparkassen Immobilien 0.03 0.56 0.88 -0.96 0.43 0.87
STRABAG 1.46 1.16 1.23 1.52 1.41 1.17
Sygnity -6.74 0.14 0.48 -6.81 0.10 0.44
T-Hrvatski Telekom 24.89 21.33 23.69 25.05 21.40 23.42
Telekom Austria 0.81 0.89 0.96 0.11 0.71 0.75
Telekom Slovenije 8.17 8.60 9.12 6.23 4.97 6.18
Torfarm 5.33 8.65 8.99 9.23 8.48 9.53
TVN 0.97 1.02 1.21 0.85 0.91 0.82
Vienna Insurance Group 3.03 3.60 4.43 2.70 3.60 4.43
Vienna Int. Airport 3.28 3.40 2.96 3.31 3.30 3.23
Wienerberger -2.55 0.17 0.94 -3.12 0.08 0.81

Summary
Changes in Ratings and Target Prices

Changes in Previous C urrent Date of
recommendation change
Agora Hold Buy 20-N ov-09
Antibiotice not rated R educe 06-N ov-09
Asseco Poland Accumulate Buy 17-N ov-09
Biofarm not rated H old 06-N ov-09
CAToil Hold Accumulate 02-Dec-09
Cersanit Hold Buy 23-N ov-09
CME Buy R educe 19-N ov-09
CNG Buy Accumulate 23-N ov-09
Eurocash Hold Accumulate 03-Dec-09
Farmacol Accumulate Sell 23-N ov-09
Immoeast Buy Accumulate 26-N ov-09
Jutrzenka Accumulate H old 30-N ov-09
S&T Hold Buy 03-N ov-09
TVN Under review Buy 20-N ov-09
Changes in Ratings and Target Prices

target price change
11-Nov-09
A-Tec
A-Tec 15.0
15.0 16.0
16.0 11-Nov-09
Agora 15.5 24.0 20-Nov-09
Andritz 38.5 45.0 10-Nov-09
Antibiotice not rated 0.6 06-Nov-09
Asseco Poland 72.1 73.8 17-Nov-09
Biofarm not rated 0.2 06-Nov-09
BWT 21.0 25.5 16-Nov-09
CA IMMO International 6.9 6.3 27-Nov-09
CAToil 7.6 8.0 02-Dec-09
Cersanit 11.5 18.5 23-Nov-09
CME 35.3 27.0 19-Nov-09
CNG 3.7 3.9 23-Nov-09
Cyfrowy Polsat 16.6 16.0 20-Nov-09
Danubius Hotels 3,750.0 3,650.0 18-Nov-09
Emperia Holding 47.5 56.0 19-Nov-09
Eurocash 13.5 16.5 03-Dec-09
Farmacol 45.0 35.0 23-Nov-09
Intercell 33.5 31.7 17-Nov-09
Jutrzenka 4.2 4.5 30-Nov-09
Magyar Telekom 700.0 800.0 12-Nov-09
Mayr-Melnhof 70.0 71.0 16-Nov-09
Palfinger 17.0 17.3 06-Nov-09
PGF 23.5 26.0 25-Nov-09
S&T 12.9 20.2 03-Nov-09
Sanochemia 1.8 0.0 11-Nov-09
SBO 27.2 32.0 25-Nov-09
Semperit 29.0 33.4 25-Nov-09
Sparkassen Immobilien 7.1 6.3 30-Nov-09
STRABAG 26.0 25.0 01-Dec-09
Sygnity 16.2 13.2 16-Nov-09
T-Hrvatski Telekom 260.0 300.0 05-Nov-09
Telekom Austria 13.2 12.0 13-Nov-09
Telekom Slovenije 140.0 125.0 26-Nov-09
TVN under review 16.0 20-Nov-09
Vienna Insurance Group 44.0 48.0 11-Nov-09
Vienna Int. Airport 33.0 38.0 20-Nov-09
Wienerberger 15.7 14.0 12-Nov-09

Summary
One Month Performance (in EUR terms)

Outperformer 1M YTD Underperformer 1M YTD
Sanochemia 58.4% 74.9% Austrian Airlines -25.4% -56.0%
Graal 45.0% 64.3% CA IMMO -15.6% 88.8%
Ambra 37.1% 333.1% ZCh Police S.A. -14.6% 6.4%
ComArch 36.2% 54.1% Telekom Slovenije -8.2% 15.4%
Emperia H olding 29.7% 62.3% RHI -7.6% 48.6%
Banca Transilvania 27.3% -14.9% Austrian Post -7.6% -24.1%
Lotos Group 27.1% 172.0% CNG -7.5% 21.1%
Cinema City 26.1% 54.5% PGF -7.2% 46.4%
Agora 23.8% 37.2% Komercijalna Banka -6.9% 20.5%
BZ WBK 20.7% 57.5% Aik Banka AD Nis -5.1% 6.0%
Top 20 Dividend Yield

2008 2009e 2010e
Atlantska plovidba 10.5% 11.7% 7.9%
Magyar Telekom 14.6% 9.8% 10.2%
Telefónica O2 CR 12.7% 9.6% 9.9%
T-Hrvatski Telekom 15.4% 9.2% 7.9%
TPSA 9.2% 8.6% 9.1%
Austrian Post 10.4% 8.5% 8.7%
KGHM 48.7% 8.2% 7.4%
Philip Morris CR 10.0% 8.0% 9.7%
Transgaz 9.4% 7.7% 7.5%
CEZ 6.9% 6.8% 5.8%
Telekom Austria 7.3% 6.4% 6.4%
Vienna Int. Airport 8.2% 5.8% 5.8%
Ciech S.A. 21.4% 5.6% 3.5%
Pegas Nonwovens 9.8% 5.4% 5.4%
Cyfrowy Polsat 1.5% 5.2% 4.4%
CNG 0.0% 4.9% 5.9%
Uniqa 2.2% 4.7% 2.9%
Lotos Group 14.7% 4.4% 4.6%
TVN 4.3% 4.2% 2.6%
Top 20 P/E
2008 2009e 2010e
Atlantska plovidba 2.4 2.1 3.2
ECM nm 3.1 1.1
A-Tec nm 4.3 11.0
ZA Pulawy S.A. 7.6 6.1 10.1
Sojaprotein AD 10.0 7.4 6.0
Pegas Nonwovens 5.4 7.7 8.6
Torfarm 9.3 8.2 8.4
CWT nm 8.3 32.0
CEZ 8.4 8.7 9.7
KGHM 1.6 9.1 10.2
BRD - Group SG 3.3 9.2 8.9
Magyar Telekom 5.7 10.0 10.0
Mostostal Warszawa 10.7 10.0 10.7
Ericsson Nikola Tesla 7.6 10.1 9.6
Transgaz 5.4 10.2 10.4
PGF 5.7 10.3 11.7
Vienna Int. Airport 7.3 10.5 10.5
OTP 3.0 10.7 9.0

Summary
Top 20 by Turnover
Average turnover (EUR)* Average volume (pieces)
OTP 56,379,900 2,830,088
CEZ 31,953,668 920,026
Telefónica O2 CR 26,576,523 1,584,867
PKO BP 26,143,907 3,176,189
KGHM 23,259,243 995,677
Bank Pekao 22,221,254 561,152
Raiffeisen International 16,490,258 393,971
OMV 16,344,197 572,530
CEDC 16,313,182 764,390
TPSA 15,378,720 3,783,344
voestalpine 14,369,448 593,453
Wienerberger 12,893,490 958,981
Aik Banka AD Nis 12,529,230 413,141
Immoeast 11,528,358 2,749,552
Telekom Austria 10,189,470 849,565
PKN Orlen 10,023,606 1,362,357
MOL 9,051,687 156,405
Komercni banka 8,608,221 61,969
CME 8,408,072 423,231
Richter Gedeon 7,728,967 52,786
* Average turnover is based on 3M daily average volume multipled with 3M average share price
in EUR
Source: Factset, Erste Group Research

Summary
Stock market Performances – CEE in Comparison

(EUR terms) 1M 3M 6M 12M YTD
New Europe Blue C hip Index 7.7% 8.9% 26.9% 38.6% 38.1%
ATX (Austria) 3.7% 5.1% 19.3% 49.3% 45.8%
BELEX 15 (Serbia) -7.8% 0.2% 13.1% 25.8% 17.4%
BET (Romania) 13.5% 19.9% 39.9% 51.1% 60.9%
BUX (Hungary) 9.4% 13.4% 46.7% 61.4% 68.8%
CROBEX (Croatia) -0.1% 4.0% 0.8% 36.2% 23.0%
PX (Czech Republic) 3.0% -1.3% 27.1% 37.1% 36.7%
SBI (Slovenia) -2.2% 2.2% -0.5% 3.9% 14.1%
PFTS (Ukraine) 4.5% 37.5% 20.6% 67.0% 79.9%
WIG (Poland) 12.3% 12.7% 43.1% 41.4% 48.4%
WIG 20 (Poland) 13.7% 13.7% 36.1% 31.7% 34.1%
IRTS (Russia) 5.1% 24.0% 17.5% 96.5% 105.5%
ISE National 100 (Turkey) 5.8% 3.5% 38.6% 83.7% 77.0%
SOFIX (Bulgaria) 2.9% 1.3% 19.6% 26.3% 26.5%
MSCI Emerging Asia 5.6% 7.3% 14.1% 62.2% 55.3%
MSCI Emerging Europe 4.7% 14.6% 20.5% 58.6% 65.8%
MSCI Emerging Far East 1.6% -4.2% 1.0% 5.5% 4.2%
MSCI Emerging Latin America 7.6% 22.3% 30.5% 86.0% 86.3%
MSCI Emerging World 6.2% 10.8% 18.2% 64.8% 60.2%
MSCI W orld Index 2.9% 4.2% 10.4% 14.8% 17.5%
DJ EURO STOXX 50 6.0% 6.6% 15.8% 21.4% 17.3%
DJ EURO STOXX Banks 4.9% 2.7% 26.1% 50.3% 51.2%
DJ EURO STOXX Basic Resources 12.3% 11.3% 12.9% 37.7% 38.0%
DJ EURO STOXX Chemicals 13.3% 21.8% 27.0% 52.0% 38.1%
DJ EURO STOXX Construction & Material 6.5% 7.0% 16.4% 32.8% 27.0%
DJ EURO STOXX Food & Beverage 4.9% 14.0% 28.3% 36.9% 33.2%
DJ EURO STOXX Health Care 6.4% 11.5% 14.9% 16.0% 13.3%
DJ EURO STOXX Industrial Goods & Services 6.4% 9.5% 22.2% 37.7% 29.9%
DJ EURO STOXX Insurance 2.7% 2.6% 14.3% 15.8% 5.9%
DJ EURO STOXX Media 4.9% 5.3% 9.8% 1.2% 0.7%
DJ EURO STOXX Oil & Gas 3.2% 6.6% 4.2% 13.3% 12.6%
DJ EURO STOXX Personal & Household Goods 8.5% 16.4% 28.7% 36.6% 33.1%
DJ EURO STOXX Retail 9.2% 10.5% 13.7% 26.4% 25.2%
DJ EURO STOXX Technology 1.2% -4.5% -1.1% 10.0% 8.1%
DJ EURO STOXX Telecommunications 4.8% 9.2% 22.2% 5.5% 7.2%
DJ EURO STOXX Travel & Leisure 3.9% 2.3% -1.6% 2.7% -3.5%
DJ EURO STOXX Utilities 4.4% 0.2% 6.7% 2.0% -5.3%
S&P 500 2.4% 3.6% 11.0% 6.3% 12.2%
DAX 7.8% 8.8% 14.2% 26.3% 20.0%
1M 3M 6M 12M YTD
Currencies
RSD -1.8% -2.9% -2.0% -14.0% -
RON 2.1% 1.0% 0.3% -8.7% -
HUF 2.5% 1.1% 6.2% -2.4% -
HRK -0.8% 0.3% 0.4% -1.6% -
CZK 1.5% -1.3% 4.3% -0.2% -
UAH 0.4% 4.7% -12.9% -23.2% -
PLN 4.2% 0.1% 9.8% -4.8% -
TRY -1.4% -4.8% -4.0% -10.2% -
Indices in local currency
BELEX 15 (Serbia) -6.1% 3.0% 15.1% 31.6% 25.6%
BET (Romania) 11.1% 19.0% 39.9% 65.6% 67.9%
BUX (Hungary) 6.6% 11.5% 38.1% 67.3% 71.4%
CROBEX (Croatia) 0.7% 3.6% 0.4% 38.5% 22.1%
PX (Czech Republic) 1.4% -0.5% 22.1% 37.8% 31.4%
SBI (Slovenia) -2.2% 2.2% -0.5% 3.9% 14.1%
PFTS (Ukraine) 4.1% 32.1% 34.5% 116.5% 103.3%
WIG (Poland) 7.5% 11.6% 29.6% 50.9% 47.6%
WIG 20 (Poland) 8.9% 12.6% 23.3% 40.5% 33.5%
ISE National 100 (Turkey) 7.2% 7.7% 42.2% 107.5% 84.9%
Source: Factset

Summary
Sector Performance (EUR terms)

Sector* 1M 3M 6M 12M
Real Estate 8.9% 10.2% 66.9% 215.9%
Basic Resources 11.6% 15.2% 38.3% 111.0%
Industrial Goods & Services 6.0% 16.7% 31.3% 90.8%
Chemicals 5.7% 2.8% 19.3% 51.0%
Oil & Gas 9.2% 11.0% 11.7% 48.3%
Banks 15.5% 22.0% 62.8% 39.6%
Food & Beverages -4.3% -5.2% 5.5% 36.8%
Healthcare 2.6% 4.6% 17.5% 33.8%
Retail & Distribution 13.2% 3.0% 56.2% 32.6%
Erste Universe 7.0% 5.7% 23.2% 31.7%
Insurance -3.5% 1.9% 13.1% 29.0%
Construction & Materials 4.5% -7.6% 25.1% 26.0%
Technology 12.0% 7.6% 20.5% 23.9%
Personal & Household Goods 1.0% 4.0% 33.4% 17.5%
Travel & Tourism 3.0% -3.6% 5.5% 13.2%
Telecom 1.9% -3.2% 9.6% 3.2%
Utilities 0.4% -10.9% -5.5% 3.1%
Media 0.6% -7.2% 8.8% -1.6%
*based on Erste Group Research Coverage
Erste Coverage Universe Sector Banks
2,200
3,500
2,000
3,000
1,800
2,500
1,600
2,000
1,400
1,200 1,500
1,000 1,000
Jan-09
Nov-09
Feb-09
Apr-09
May-09
Jun-09
Jul-09
Aug-09
Sep-09
Dec-08
Mar-09
Oct-09
Dec-09
09
09
9
9
09
09
M 9
9
9
08
09
l-0
-0
0
-0
r-0
-0
-0
g-
n-
p-
n-
b-
c-
c-
ov
ct
ar
ay
Ju
Ap
De
Au
Se
De
Ja
Fe
Ju
N
M
Sector Basic Resources Sector Chemicals
2,000 800
1,800
700
1,600
600
1,400
500
1,200
1,000 400
800 300
09
09
09
09
9
9
9
8
09
9
9
09
09
9
9
09
9
9
09
09
8
-0
-0
r-0
-0
l-0
-0
-0
-0
r- 0
l-0
-0
-0
-0
-0
-0
-0
p-
b-
g-
n-
n-
g-
n-
p-
n-
b-
ov
ar
ct
ec
ay
ec
Ju
ar
ov
ct
ay
ec
ec
Ap
Ju
Au
Se
Ja
Fe
Ju
Ap
Au
Se
O
Ja
Fe
Ju
N
O
M
D
D
M
N
M
D

De D D D
c- ec ec ec
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
700
800
900
1,000
1,100
1,200
-0
200
300
400
500
600
700
08 -0 8
-0
1,400
1,600
1,800
2,000
2,200
2,400
2,600
2,800
3,000
3,200
3,400
8 8
Ja Ja Ja
n- Ja n- n-
09 n- 09 09
09
Fe Fe Fe
b- Fe b-
0 b- 09 b-
0
M 9 09 M
ar M ar M 9
-0 -0 ar
9 ar
9 -0
Sector Oil & Gas

-0 9
Sector Insurance
Ap 9 Ap
Sector Health Care

r-0 Ap Ap
Summary
r-0
9 9 r-0
M r-0
M 9
ay 9 M
-0 M ay ay
9 ay -0
9 -0
Ju -0 9
n- 9 Ju
Ju
09 Ju n-
n- 09 n-
Ju 09 09
l-0 Ju
9 Ju l -0 Ju
9
Sector Construction & Materials
Au l-0
g-
l-0
9 Au 9
09 Au g- Au
Se 09 g-
g- 09
p- 09 Se
09 p- Se
Se 09
O p-
p-
ct
-0 09 O 09
9 ct
-0 O
N O 9 ct
ov ct
N -0
-0 -0
9
9
Erste Group Research - CEE Equity Monthly, December 2009

9 ov No
N -0
De ov 9 v-
c- -0 De 09
09 9 c- De
D 09 c-
ec 09
-0
9
D D D
D ec ec ec
-0
500
700
900
1,100
1,300
1,500
1,700
1,900
2,100
600
700
800
900
1,000
1,100
1,200
ec -0
800
1,000
1,200
1,400
1,600
1,800
8 -0
8 8
600
700
800
900
1,000
1,100
1,200
-0
8 Ja Ja Ja
Ja n- n- n-
n- 09 09 09
09 Fe
Fe Fe
Fe b- b- b-
b- 09 09
Sector Media
09
09 M M M
M ar ar ar
-0
ar -0 -0 9
-0 9 9
9 Ap Ap Ap
Ap r-0 r-0 r-0
r-0 9 9 9
9 M M M
M ay ay ay
ay -0 -0 -0
-0 9 9 9
Sector Food & Beverages
9 Ju Ju Ju
Ju n- n- n-
n- 09 09 09
09
Ju Ju Ju
Ju l -0 l-0 l -0
l -0
9 9 9
9 Au Au Au
Au g-
Sector Industrial Goods & Services
g- g- g- 09
09 09 09
Se
Sector Personal & Household Goods

Se Se Se
p- p- p-
p- 09 09 09
09
O O O O
ct ct ct
ct -0 -0 -0
-0
9 9 9 9
N N N N
ov ov ov ov
-0 -0 -0
-0
9 9 9 9
D D D D
ec ec ec ec
-0 -0 -0 -0
9
Page 10
9 9 9
Summary
Sector Real Estate Sector Retail & Distribution
1,200 5,800
1,000 5,300
4,800
800
4,300
600
3,800
400
3,300
200 2,800
0 2,300
09
09
09
9
09
9
9
09
09
8
9
9
09
09
9
9
09
09
9
09
9
8
r-0
l-0
0
-0
-0
-0
-0
l-0
-0
-0
r-0
-0
-0
-0
-0
g-
n-
p-
-
b-
n-
ov
ar
ct
g-
ec
ay
ec
n-
p-
n-
b-
Ju
Ap
ar
ov
ct
ec
ay
ec
Au
Se
Ja
Fe
Ju
Ju
Ap
O
M
Au
Se
Fe
Ja
Ju
N
M
D
D
O
M
N
M
D
D
Sector Technology Sector Telecom
1,600 1,800
1,500 1,750
1,400 1,700
1,650
1,300
1,600
1,200
1,550
1,100
1,500
1,000 1,450
900 1,400
800 1,350
700 1,300
9
9
09
09
9
09
09
09
9
08
09
9
09
09
9
9
09
9
9
09
M 9
8
09
l-0
-0
-0
r-0
-0
-0
l-0
r-0
-0
0
-0
-0
-0
-0
g-
n-
p-
n-
b-
c-
c-
g-
n-
p-
n-
b-
ar
ov
ct
c-
ay
Ju
ar
ov
ct
Ap
ec
ay
Ju
De
Au
Se
De
Ja
Fe
Ju
Ap
O
Au
Se
Ja
Fe
Ju
De
N
O
M
N
M
D
Sector Travel & Tourism Sector Utilities

650 15,000
600 14,000
550 13,000
500 12,000
450 11,000
10,000
400
9,000
350
8,000
300 7,000
250 6,000
200 5,000
Dec-08
Nov-09
Dec-09
Jan-09
Feb-09
Mar-09
Apr-09
May-09
Jun-09
Jul-09
Aug-09
Sep-09
Oct-09
09
09
09
9
09
9
09
8
9
-0
-0
l-0
-0
-0
r -0
-0
-0
p-
b-
g-
n-
n-
ar
ov
ct
ec
ay
ec
Ju
Ap
Au
Se
Ja
Fe
Ju
O
M
N
M
D
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.

Summary
3Q Reporting Summary
Country Company Sector 3Q 2009* Outlook
Austria A-Tec INDUSTRIAL GOODS & SERVICES + improved
Andritz INDUSTRIAL GOODS & SERVICES = confirmed
AT&S TECHNOLOGY + n.a.
Austrian Post MEDIA - confirmed
BW T PERSONAL & HOUSEHOLD GOODS + improved
CA IMMO FINANCIAL SERVICES - n.a.
CA IMMO International FINANCIAL SERVICES - n.a.
CAToil OIL & GAS + improved
conwert FINANCIAL SERVICES = improved
CWT INDUSTRIAL GOODS & SERVICES - weaker
ECO Business-Immo FINANCIAL SERVICES + improved
Immoeast FINANCIAL SERVICES
Intercell HEALTH CARE - weaker
Kapsch TrafficCom TECHNOLOGY = confirmed
OMV OIL & GAS + confirmed
Palfinger INDUSTRIAL GOODS & SERVICES + n.a.
Pankl R acing INDUSTRIAL GOODS & SERVICES - n.a.
Raiffeisen International BANKS + n.a.
RHI BASIC R ESOURCES = confirmed
S&T TECHNOLOGY = improved
Sanochemia HEALTH CARE n.a. n.a.
SBO OIL & GAS - n.a.
Semperit CHEMIC ALS + n.a.
Sparkassen Immobilien FINANCIAL SERVICES - n.a.
STRABAG CONSTRUCTION & MATERIAL + confirmed
Telekom Austria TELECOMMUNICATIONS - weaker
Uniqa INSURANCE - n.a.
Verbund UTILITIES = weaker
Vienna Insurance Group INSURANCE = confirmed
Vienna Int. Airport TRAVEL & LEISURE = confirmed
voestalpine BASIC R ESOURCES + confirmed
Wienerberger CONSTRUCTION & MATERIAL - n.a.
Croatia Atlantska plovidba INDUSTRIAL GOODS & SERVICES - improved

Ericsson Nikola Tesla TECHNOLOGY = confirmed
INA OIL & GAS - n.a.
Institut IGH CONSTRUCTION & MATERIAL - confirmed
Podravka FOOD & BEVERAGE = n.a.
T-H rvatski Telekom TELECOMMUNICATIONS = confirmed
Czech Republic CEZ UTILITIES - confirmed
CME MEDIA - confirmed
ECM FINANCIAL SERVICES - confirmed
Komercni banka BANKS = n.a.
New World Resources BASIC R ESOURCES - improved
Orco FINANCIAL SERVICES = confirmed
Pegas Nonwovens CHEMIC ALS + improved
Telefónica O2 C R TELECOMMUNICATIONS + confirmed
Unipetrol OIL & GAS - confirmed
Hungary Danubius Hotels TRAVEL & LEISURE + improved
Egis HEALTH CARE - confirmed
FHB BANKS - confirmed
Magyar Telekom TELECOMMUNICATIONS = confirmed
MOL OIL & GAS = confirmed
OTP BANKS + confirmed
PannErgy CHEMIC ALS + confirmed
RFV INDUSTRIAL GOODS & SERVICES + confirmed
Richter Gedeon HEALTH CARE = confirmed

Summary
3Q Reporting Summary
Poland Agora MEDIA + improved
Ambra FOOD & BEVERAGE + improved
AmRest TRAVEL & LEISURE - confirmed
Apator UTILITIES = confirmed
Asseco Poland TECHNOLOGY + improved
Bank Pekao BANKS + n.a.
Bioton HEALTH CARE = n.a.
BRE Bank BANKS - n.a.
BZ WBK BANKS + n.a.
CEDC FOOD & BEVERAGE = confirmed
Cersanit CONSTRUCTION & MATER IAL - improved
Ciech S.A. CHEMICALS - confirmed
Cinema City MEDIA = confirmed
CNG CONSTRUCTION & MATER IAL = improved
ComArch TECHNOLOGY + improved
Cyfrowy Polsat MEDIA = confirmed
Duda FOOD & BEVERAGE - weaker
Emperia Holding RETAIL + improved
Empik RETAIL - weaker
Eurocash RETAIL = confirmed
Farmacol HEALTH CARE - weaker
Graal FOOD & BEVERAGE + confirmed
GTC FINANCIAL SERVICES - weaker
Inter Cars AUTOMOBILES & PARTS - confirmed
Jutrzenka FOOD & BEVERAGE + confirmed
KGHM BASIC RESOURCES - confirmed
Koelner CONSTRUCTION & MATER IAL = confirmed
Lotos Group OIL & GAS + confirmed
LPP RETAIL + improved
Mostostal Warszawa CONSTRUCTION & MATER IAL = confirmed
NG2 RETAIL + confirmed
PBG S.A. CONSTRUCTION & MATER IAL - weaker
PGF HEALTH CARE - confirmed
PKN Orlen OIL & GAS = confirmed
PKO BP BANKS + n.a.
Polimex CONSTRUCTION & MATER IAL = confirmed
Rafako INDUSTRIAL GOODS & SERVICES + confirmed
Sygnity TECHNOLOGY - confirmed
Synthos CHEMICALS = improved
Torfarm HEALTH CARE = confirmed
TPSA TELECOMMUNICATIONS - confirmed
Trakcja Polska CONSTRUCTION & MATER IAL + improved
TVN MEDIA - improved
Vistula Group RETAIL - weaker
ZA Pulawy S.A. CHEMICALS = weaker
ZCh Police S.A. CHEMICALS - weaker
Romania A&D Pharma HEALTH CARE n.a. confirmed
Antibiotice HEALTH CARE + confirmed
Banca Transilvania BANKS + n.a.
Biofarm HEALTH CARE = confirmed
BRD - Group SG BANKS + confirmed
Petrom OIL & GAS + confirmed
Transelectrica UTILITIES = confirmed
Transgaz UTILITIES = confirmed
Turbomecanica INDUSTRIAL GOODS & SERVICES - weaker
Serbia Aik Banka AD Nis BANKS + n.a.
Komercijalna Banka BANKS - n.a.
Sojaprotein AD FOOD & BEVERAGE - confirmed
Slovenia Gorenje PERSONAL & HOUSEHOLD GOODS + improved
Krka HEALTH CARE - weaker
Telekom Slovenije TELECOMMUNICATIONS - weaker
Switzerland Winterthur INDUSTRIAL GOODS & SERVICES n.a. n.a.
*signs indicate below/in-line/above expectations
Source: Company data, Erste Group Research

Macroeconomy
Real Economy
GDP growth (%) 2008 2009 2010f 2011f Ind. production growth (%) 2008 2009 2010f 2011f
Austria 2.0 -3.4 1.0 1.5 Austria 3.9 -9.5 1.5 1.9
Croatia 2.4 -5.5 0.0 2.1 Croatia 1.6 -9.0 2.0 5.0
Czech Republic 2.6 -4.9 1.4 2.4 Czech Republic -0.5 -10.1 7.9 7.4
Hungary 0.6 -6.2 0.3 2.6 Hungary -1.1 -14.5 4.5 6.5
Poland 4.8 1.2 2.6 3.4 Poland 5.2 -6.2 2.3 4.9
Romania 7.1 -7.2 0.6 1.8 Romania 0.9 -7.0 1.5 1.9
Serbia 5.4 -4.2 0.0 1.8 Serbia 1.1 -16.0 1.0 0.0
Ukraine 2.1 -13.1 2.0 5.0 Ukraine -3.1 -21.7 5.0 11.0
C/A (% of GDP) 2008 2009 2010f 2011f CPI (%) 2008 2009 2010f 2011f
Austria 3.5 1.9 1.9 1.9 Austria 3.2 0.5 1.3 1.6
Croatia -9.4 -4.8 -4.4 -5.0 Croatia 6.1 2.9 3.9 4.0
Czech Republic -3.1 -1.4 -1.6 -1.7 Czech Republic 6.4 1.1 1.7 1.7
Hungary -7.2 -1.6 -2.0 -2.3 Hungary 6.1 4.2 4.1 2.9
Poland -5.0 -2.0 -3.1 -4.8 Poland 4.2 3.4 2.2 3.5
Romania -12.3 -4.6 -4.8 -5.0 Romania 7.9 5.6 4.4 3.9
Serbia -17.4 -7.0 -6.0 -7.8 Serbia 11.7 8.3 6.4 6.5
Ukraine -6.7 0.0 0.0 2.0 Ukraine 25.2 16.2 12.0 11.0
The recently released 3Q09 GDP data supported our categorization of CEE countries into two
groups - economies which, after a sudden collapse of exports, bottomed out quickly (Czech
Republic and Slovakia), and economies which have lagged in recovery (Romania, Hungary,
Croatia, Serbia). The Polish economy was the outlier in the region, avoiding recession entirely
and growing 1.7% y/y (0.5% q/q) in 3Q 2009. The Czech Republic and Slovakia both showed
renewed growth in 3Q in seasonally adjusted q/q terms even at an accelerating pace (0.8% q/q
and 1.6% q/q, respectively). No doubt, external demand was supported by incentive programs in
Western European countries, particularly the German scrap premium, which ended in
September. At the same time, the most recent monthly data illustrates some resilience of the
economies to fading stimulus programs, showing that the upswing has some strength of its own.
The y/y GDP growth will almost certainly switch to black figures in both countries in 1Q10 due to
the base effect.
The second group is comprised of countries which had to remove their external imbalances in
order to stabilize their currencies and still feel the pain of collapsing domestic demand. The
Hungarian economy contracted further, albeit at a slightly slower pace -1.8% q/q than in 2Q. The
Romanian economy shrank too, but only 0.6% q/q, while Ukraine and Croatia remained stuck in
3Q09 at -15.9% y/y and -5.8% y/y respectively. These countries likely reached the bottom in 3Q
(or 4Q at the latest), and a sharp reversal of y/y growth dynamics is expected in next two
quarters due to the base effect and diminishing depletion of inventories.
Despite the fact that external imbalances have been substantially reduced since the beginning
of year, CEE currencies remain volatile and vulnerable to sudden changes in global sentiment.
In the first half of November the Polish Zloty, Czech koruna and Hungarian forint gained 5-7%,
but in the second half they lost 3-4%. Sensitivity to EUR/USD developments and global risk
aversion is extremely strong in Hungary and Poland. Any widening of emerging market spreads
or fall in stock prices triggers a reaction in CEE currencies. The Romanian leu and Croatian
kuna are partially decoupled from the regional developments for a couple of months as their
central banks have been active and influenced the currency development.

Macroeconomy
Real GDP growth (y/y) CPI (y/y)
12 10
10
8 8
6
4 6
2
0 4
-2
2
-4
-6
Czech Republic Hungary 0
-8 Poland Romania Czech Republic Hungary
-10 Poland Romania
-2
Q1 2007
Q2 2007
Q3 2007
Q4 2007
Q1 2008
Q3 2008
Q4 2008
Q1 2009
Q2 2009
Q2 2008
Jan-09
Jun-08
Aug-08
Oct-08
Nov-08
Feb-09
Mar-09
Apr-09
May-09
Jun-09
Jul-09
Oct-09
Jul-08
Sep-08
Dec-08
Aug-09
Sep-09
Sources: Central statistical offices. Ifo’s business sentiment index (right scale).
Retail sales (y/y) Industrial production (y/y)

25
Poland (nominal) Czech Republic 10
20 Hungary Romania
5
15
0
10
-5
5
-10
0
-15
-5
-10 -20
-15 -25 Czech Republic Hungary

Poland (nominal) Romania
-20 -30
Nov-08
Dec-08
Jul-09
Nov-08
Dec-08
Apr-09
Jul-09
Jun-08
Jul-08
Aug-08
Sep-08
Oct-08
Jan-09
Feb-09
Mar-09
May-09
Jun-09
Aug-09
Sep-09
Oct-09
Jun-08
Jul-08
Aug-08
Sep-08
Oct-08
Feb-09
Apr-09
May-09
Oct-09
Jan-09
Mar-09
Jun-09
Aug-09
Sep-09
Interest Rates & Currencies
Currency/EUR (avg.) 2008 2009 2010f 2011f Currency/USD (avg.) 2008 2009 2010f 2011f
Croatia 7.22 7.40 7.42 7.44 Austria 1.46 1.41 1.52 1.42
Czech Republic 25.0 26.3 24.5 22.9 Croatia 4.94 5.21 5.19 5.95
Hungary 251 280 270 265 Czech Republic 16.8 19.2 17.4 18.4
Poland 3.50 4.30 3.84 3.60 Hungary 172 199 179 187
Romania 3.68 4.20 4.18 4.00 Poland 2.40 3.11 2.77 2.57
Serbia 81.4 94.0 95.0 92.0 Romania 2.52 3.00 2.72 2.82
Ukraine 7.67 11.35 12.7 11.9 Serbia 58.1 66.2 64.8 0.0
Ukraine 5.25 8.05 8.40 8.40
3M interest rate (%) 2008 2009 2010f 2011f 10Y interest rate (%) 2008 2009 2010f 2011f
Austria 4.6 1.2 1.3 2.1 Austria 4.50 4.00 4.05 4.48
Croatia 7.0 9.1 7.5 6.8 Croatia 6.17 7.90 7.25 7.00
Czech Republic 4.0 2.2 1.9 2.7 Czech Republic 4.64 4.75 4.80 5.00
Hungary 8.9 8.7 5.5 5.3 Hungary 8.23 9.10 6.70 5.90
Poland 6.3 4.3 4.3 5.3 Poland 6.10 5.52 5.26 5.35
Romania 13.0 11.1 9.2 7.9
Serbia 15.6 14.5 9.5 10.0
Ukraine 14.8 18.0 11.0 7.0

Macroeconomy
Rumor has it that the Romanian central bank has been intervening frequently on the FX market
in order to keep the EUR/RON below 4.30. The Romanian authorities still have to adopt a fiscal
consolidation plan before they get another tranche from the IMF. The recent decision to cut
minimum reserve requirements on FX liabilities to 25% from 30% was aimed at supporting the
local currency and adding extra liquidity (about EUR 1.2bn) for financing the mounting fiscal
deficit. After the presidential elections are over (Dec. 6), we expect a more constructive
discussion on the budget in parliament and a restarting of talks with the IMF.
Inflation has been on a downward trend in the whole region in recent months. Inflation
temporarily slipped into negative territory in the Czech Republic and Slovakia, but a hike of
indirect taxes in the Czech Republic and a change in the base of fuel prices from a year ago
should move consumer prices away from deflationary threats in coming months. Inflation also
collapsed in Romania and Hungary, opening the door to further monetary easing. The
Hungarian central bank cut rates by another 50bps to 6.50% in November, and we expect the
central bank to continue to reduce the key rate to 5.50% by March 2010. On the other hand, the
Romanian central bank had to postpone a rate reduction until the pressure on currency eases
and bold steps are taken in the fiscal area. The current government (with its restricted powers)
was able to present a budget for next year, but the chances of an austerity budget being passed
by parliament will increase significantly after the presidential elections. The Polish central bank
currently has neutral bias, while the Czech National Bank has been flirting with idea of another
cut in order to stop currency appreciation.
Exchange Rates & Interest Rates

350 Hungary 12.0 5.5 Poland 7.0
11.0
5.0 6.0
10.0
300
9.0 4.5
5.0
8.0
4.0
250 7.0 4.0
6.0 3.5
5.0 3.0
200 3.0
4.0
2.0
3.0 2.5
150 HUF/EUR PLN/EUR
2.0 PLN/USD 1.0
HUF/USD 2.0
3m interbank rate, r.s. 1.0 3m interbank rate, r.s.
100 0.0 1.5 0.0
Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
35 Czech Republic 4.50 8.0 Croatia

4.00 7.5
30 3.50
7.0
3.00
25 6.5
2.50
6.0
2.00
20
5.5
1.50
CZK/EUR 1.00 5.0

15
CZK/USD HRK/EUR
0.50 4.5
3m interbank rate, r.s. HRK/USD
10 0.00 4.0
Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: Bloomberg

Sector Insight Banks
- CEE banks 3Q09 earnings season: 8 above, 3 below, 1 in line with estimates
- CEE banking sector more or less fairly priced at about 1.7x BV10e and 15.2x EPS10e,
taking the remaining insecurities into account
- Neutral stance on the sector with 6 banks at Hold, 2 at Reduce and 2 at Accumulate
- Top picks: BRD GSG and OTP, both with an Accumulate recommendation
Positive Looking at the 3Q09 earnings season of the CEE banking sector, the positive surprises clearly
surprises overweight the negative ones. Out of 12 covered banks, 8 surprised on the positive side,
outweigh whereas 3 came in below expectation and 1 was more or less in line with our estimates. The
quarterly development of the main income sources was mixed as the development in net
provisioning, whereas the trend to lower operating expenses was prolonged in 3Q09. CEE
banks have picked up considerably from there lows in March this year and are currently at about
1.7x BV10e and 15.2x EPS10e more or less fairly priced in our opinion, taking the remaining
insecurities into account. We therefore take a neutral stance on the sector, with 6 banks at Hold,
2 at Accumulate and 2 at Reduce. Our current top picks are BRD GSG and OTP, both with an
Accumulate recommendation.
Rebound from After a relatively weak 2Q09 with a quarterly drop in pre-tax profit by 66%, AIK Banka managed
low level, a rebound in 3Q09 and improved its pre-tax profit by 46% q/q to RSD 814.1mn. Despite the
based on lower improvement q/q, the bottom line in the third quarter is still 56% below 3Q08 figures. The
provisioning quarterly improvement in pre-tax profit was mainly driven by lower net provisions, which dropped
around 56% q/q. Despite net interest income weakened by 17% q/q, risk / earnings ratio
declined considerably to 31.9% vs. 60.0% in 2Q09. Risk costs dropped 2.97% vs. >60% we saw
in the first two quarters. As the company does not publish NPLs and NPL coverage on a
quarterly basis it is hard to asses the quality of the loan book of the bank and the cautiousness
of its provisioning. On the income side the picture was mixed. While net interest income declined
(-9% y/y, -17% q/q) on a lower NIM (5.87% vs. 7.28% in 2Q09) and net trading result diminished
further by 43% q/q, net fee & commission income jumped back to RSD 155.2mn after the slump
in 2Q09. Based on an overall drop in total income (-14% q/q) and increase in total expenses
(+6% q/q) CIR further rose to 26.1%, but remained overall still on a low level compared to its
peers. ROE improved to 8.9% vs. 6.2% in 2Q09.
Positive Banca Transilvania came in with a 3Q09 net profit of RON 37.2mn, which is above our and
surprise based consensus estimates. 3Q08 figures include a net gain from the disposal of a 25% stake in
on strong NII insurer Asiban of around RON 225mn. Main deviations to our estimates came from a better than
and net F&C expected net interest income and net fee & commission income, whereas net provisions and net
trading result surprised on the negative side. The surprisingly strong performance in net interest
income (+39.1% y/y, +33.9% q/q) was mainly driven by improving margins (4.54% vs. 3.28% in
2Q09), supported by a moderate loan growth (+2.5% q/q). Net fee & commission income also
developed positively rising by 4.1% q/q to RON 90.5mn, whereas net trading result dropped
10.9% q/q to RON 52.0mn.
Still high Driven by further deterioration in loan book quality, net provisioning remained on a high level of
provisioning RON -136.9mn (risk costs of 4.97%, risk / earnings ratio of 64.2%). Based on the strong
development on the income side (+15.8% q/q) and an only moderate growth in operating
expenses (+2.3% q/q) CIR improved to 48.4% (vs. 54.8% in 2Q09). Loan / deposit ratio also
improved further (78.5% vs. 81.2% in 2Q09) on successful deposit campaigns (+6.0% q/q) and
moderate loan book growth (+2.5% q/q).
3Q09 bottom Bank Pekao for 3Q09 reported a net profit of PLN 620.5mn (-26% y/y, -19% y/y on adjusted
line above basis, but +1.2% q/q), which is 15% above our estimates and 16% better than consensus
expectations expectations. The main divergence to our forecasts came from net provisions (23% lower than
on low anticipated), which were flat compared to 2Q09 despite a further rising NPL ratio of 7.0% (6.7%
provisioning in 2Q09), however, at a diminishing NPL growth rate of only 1% q/q vs. 8% q/q in the previous
quarter. On the other hand, the NPL coverage ratio in 3Q09 further decreased to 76.4%, from
78% in 2Q09. As a result, the risk/earnings ratio still stands at moderate levels of 15.6% (vs.
16.2% in 2Q09) which is also the case for cost of risk amounting to 78bp vs. 76bp in 2Q09. In

the CC the management pointed out that it expects net provisions to consolidate on current
levels but not to decrease further mainly due to the deteriorating consumer loan book.
Reduce In our view, Pekao in 3Q09 reported good numbers with net profit 15% above expectations
recommendation mainly due to provisions on low levels (again low risk/earnings ratio of 15.6% vs. 16% in 2Q09)
and PLN 157 despite a rising NPL ratio and decreasing NPL coverage ratio. But this time the quality of the
target price results is better than in 2Q09 since it was not driven by the trading result. Good news again
maintained came from net interest income which was 6% above expectations due to slightly improving
margins to 3.08%. Moreover, F&C income came back to growth path driven by financial markets
and banking fees. The remaining questions for the next quarters for us comprise whether the
low provisioning levels may remain and whether sustainable income sources can keep or extend
sequential growth despite the decreasing volumes. With 1-3Q09 contributing 82% to our FY09
estimates we feel quite comfortable at the moment, even if NPLs and provisions further
increase. With the Pekao share currently trading at 2.6x BV10e vs. the peers’ 1.8x (55%
premium) we see Pekao’s better risk profile compared to most peers as more than adequately
priced in. However, in a recovery scenario Pekao’s more conservative profile may also limit its
potential to grow and improve profitability. We maintain our Reduce recommendation and PLN
157 target price.
Good With 3Q09 net profit of RON 235mn (-21.5% y/y, +9.2% q/q), BRD GSG came in above our
development in estimates (+11.0%). 3Q08 figures include a net gain from the disposal of a 25% stake in insurer
all income Asiban of around RON 225mn The positive surprise vs. our estimates came from net interest
sources, above income and net trading income whereas net fee & commission income was lower than expected
expectations and net provisions overstated our expectations. The good performance in net interest income
which advanced to RON 428.2mn (+10.6% y/y, +11.6% q/q) was based on a further uptick in
NIM compared to 2Q09 (3.52%, vs. 3.02%), despite a decline in the loan book of around 1.5%
q/q. Net fee & commission income improved further to RON 259.6mn (+ 3.9% y/y, +2.6% q/q)
and net trading income rose by 5.8% q/q to RON 198.9mn. Negative surprise came from net
provisions, which rose further to RON -299.3mn (+245% y/y, 65.4% q/q) on diminishing loan
book quality. Risk costs jumped to 3.86% (vs. 2.51% in 2Q) and risk /earnings ratio rose to
69.9% (vs. 52.8% in 2Q). Based on lower operating costs (-16.1% q/q) and a good performance
on the income side (+8.1% q/q) CIR improved to 37.6% (vs. 46.0% in 2Q). Based an increase in
customer deposits (+3.6% q/q) and a slightly lower customer loan basis (-1.5% q/q), the loan to
deposit ratio prolonged its downward trend started in 1Q09 and declined by -5.3%p to 102.6%.
On track to BRD GSG again managed to beat our estimates by 11.0% in 3Q09. The main reason for this
reach our FY09 was the better than expected development in net interest income and net fee & commission
estimates income, whereas net provisions surprised on the negative side increasing by 65.4% q/q. Net
trading income was below expectations, but rose 5.8% q/q. Overall, the net profit decline of
18.9% y/y in 1-3Q09 perfectly fits with our full-year bottom line estimate of RON 1,070mn (-
20.2% y/y, based on 2008 net profit adjusted for the gain on the disposal of a 25% stake in
insurer Asiban). We therefore remain positive on the stock of BRD GSG.
Back in black After a one-off driven loss in the second quarter, mainly due to option provisions for corporate
but below clients holding large exposures under derivative instruments, BRE Bank returned with a net
estimates profit of PLN 72.5mn (-64.2% y/y) to profitability in 3Q09, but missed our and consensus
estimates by 7.6% and 4.6%, respectively. The main divergence to our estimates came from
lower than expected net interest income (-2.4%), net fee & commission income (-3.7%) and net
trading result (-17.7%), a higher than expected effective tax rate, partly compensated by positive
surprise from operating expenses (-7.6%). The quarterly performance of income sources was
mixed with declines in net interest income (+13% y/y, -4.5% q/q) and in net trading result (-40%
y/y, -1.4% q/q), but an improving net F&C income (+10,6% y/y, +2.9% q/q). Provisioning
returned to normality, but was at 60% risk / earnings and 1.85% risk costs above 1Q09 level.
The higher net provisions compared to 1Q09 is a combined effect of a further increasing in
NPLs to 5.9% (vs. 4.8% in 2Q09) and an increase in NPL coverage ratio to 56% (vs. 53% in
2Q09).

Negative In 3Q09, BRE Bank returned to profitability, but came in below our and consensus expectations.
surprise from Negative surprises came from net interest income, net F&C income and net trading result,
main income whereas total expenses dropped more than estimated. Net provisions were more or less in line
sources with estimates. Compared with 2Q09, the development on the income side was mixed, with a
decline in net interest income and net trading result, but a further improving net F&C income.
Besides lower provisioning the improvement in bottom line was also supported by lower total
expenses. Based on the results, we currently stick to our Hold recommendation and our target
price of PLN 290.
3Q09 results BZ WBK reported a 3Q09 net profit of PLN 264mn (+6.7% y/y, +2.2% q/q), which is 8% above
better than our forecasts and 39% more than the consensus had expected. The main divergence to our
expected on forecasts came from net interest income (-3.9% y/y, +16% q/q) which is 24% above our
low forecasts mainly due to a better net interest margin of 2.93% (vs. 2.44% in 2Q09) as well as
provisioning 30% lower than expected provisioning (-21% q/q) despite further rising NPL ratio of 5.4% (vs.
4.5% in 2Q09). Net fee & commission income was in line with expectations (flat y/y and +3%
q/q) mainly due to 17.7% q/q higher investment banking fees and the trading result came down
26% q/q which was slightly worse than expected.
In the analyst meeting the BZ WBK management basically elaborated on NPLs/risk costs,
operating costs, margins and F&C income. The ongoing strong 130bp increase of the NPL ratio
in the property loan book to 6.9% (vs. 5.6% in 2Q09) was mainly due to land acquisition
exposure (25.7% NPL ratio) and residential development (14.5% NPL ratio). The decrease in
the NPLs coverage ratio to 39.9% (vs. 40.6% in 2Q09) reflects the well secured increase of
property cases and low LTVs. The management sticks to the guidance for cost of risk of about
150bp for FY09e (1-3Q09: 144bp). The excellent performance of operating costs (-3.8% q/q, of
which personnel +2.4% q/q) is seen as a result of the staff restructuring program effective as of
May (only 100 layoffs, 100 FTE natural fluctuation) and lower bonus accruals. Concerning
margins BZ WBK still sees only small improvements in the next few quarters on the asset side
(competition on lending might rise) but stabilization of deposit prices on high levels.
In our view, the results are a positive surprise due to 49bp higher margins of 2.93% and volume-
driven top line and lower provisioning despite further rising NPL ratio of 5.4% (vs. 4.5% in
2Q09). However, we have also seen further decreasing NPL coverage ratio of 39.9% (vs. 40.6%
in 2Q09) which might be justified by the quality of the property portfolio. A risk/earnings ratio of
only 24% vs. 35% in 2Q09 is rather low as well as an NPL coverage ratio below 40%, which
might not be sustainable with consumer loan quality deteriorating in the next few quarters. With
1-3Q09 contributing 96% to our FY09 estimates, we have to slightly adapt our forecasts. We
maintain our Hold recommendation and PLN 171 target price.
Quarterly drop After a strong second quarter, FHB came in with 3Q09 net profit of HUF 1,443mn (-9.9% y/y, -
based on 44.6% q/q), below our estimate (-21.6%). A negative surprise came from net provisions and net
provisions and profit from financial transactions, whereas net interest income and net F&C income were better
trading result, than expected. The good performance in net interest income (+6.8% y/y, 4.7% q/q) was based
below on a further increase in NIM (3.32%, vs. 3.25% in 2Q09) and a stable development in the loan
expectations book (+0.6% q/q). The downward trend in net F&C income slowed considerably and stood
almost at the level seen in 2Q. After strong performance in the last couple of quarters, net profit
from financial transactions turned negative and came in at HUF -144mn in 3Q09. Net
provisioning increased further to HUF -2,316mn (risk/earnings ratio of 34.8%, risk cost of
2.81%), due to a further deterioration in the loan book quality (NPL ratio of 3.55%, vs. 2.80% in
2Q09) and an increase in NPL coverage ratio to 50.6% vs. 44.2% in 2Q09. Nevertheless,
momentum in NPLs slowed considerably to 27% q/q from 54% q/q in 2Q09. Based on a slightly
weaker total income and stable total expenses, CIR rose slightly to 45.1% vs. 42.2% in 2Q09.
ROE dropped back to 12.7% and capital adequacy stood at 10.3%.
Hold After the 2Q, FHB’s 3Q09 net profit dropped back to the 1Q09 level and came in below our
maintained, estimate. The main reasons for the underperformance were higher than expected net provisions
target price: and weaker net profit from financial transactions, whereas sustainable income sources (net
HUF 1,440

interest income and net F&C income) were better than expected. With a net profit contribution in
1-3Q09 of around 80% to our FY estimates, FHB is (despite the weaker 3Q09) on the way to
reaching our forecasts. We therefore stick to Hold and our target price of HUF 1,440.
Further decline Komercijalna Banka came in with a mixed 3Q09 result. While net interest income improved
in pre-tax profit further to RSD 1,766.6mn (+15.3% y/y, +10.9% q/q), net fee & commission income dropped to
RSD 743.3mn (+1.1% y/y, -31.2% q/q) and net provisioning more than doubled compared with
2Q09 to RSD -358,5mn. Reaching RSD 322.6mn, pre-tax profit declined by 16.3% q/q, the fifth
quarterly decline in a row, but at a diminishing pace. The strong performance in net interest
income was mainly driven by a further increasing NIM (+0.27%p q/q), despite a more or less flat
development in customer loan (+0.3% q/q). Net fee & commission income returned to a more
sustainable level, after the jump in the second quarter, and came in more or less on 3Q08 level.
Net trading result took also a rollercoaster ride. After a strong trading income in 4Q08 and 1Q09,
it turned negative in 2Q09 and came in at the base line this quarter. Net provisions more than
doubled compared with 2Q09, but remained below the levels we saw in 4Q08 and 1Q09. Also in
comparison with its CEE peers, risk / earnings ratio of 20.3% or risk costs of 1.27% do not look
not dramatic. As the company does not publish NPLs on a quarterly basis it is however hard to
asses the quality of the loan book of the bank and the cautiousness of its provisioning. Thanks
to an increase in total income (+2.1% q/q) and a decline in total expenses (-5.3% q/q), CIR
diminished to 73.8% from 79.6% in 2Q09, but is still on a high level. ROE stood at 4.9% vs.
5.9% in 2Q09.
Recapitaliz A contract on a EUR 120mn recapitalization of Komercijalna Banka could be signed on

ation under December 17, according to Deputy Prime Minister Mladjan Dinkic. At yesterday's session, the
way government adopted a draft of the contract, which will be signed with the EBRD, IFC,
SwedFund, and German development bank KfW's subsidiary DEG. According to earlier
announcements, the recapitalization will be done through preferred convertible shares. The
government, which owns 42.6% of Komercijalna, but controls a majority stake through state
owned firms, will have three years to pay its own share of Komercijalna recapitalization in order
to keep its stake unchanged. However, the sum Serbia must pay will grow over time given that
the contract will set interest on delays. After that, the EBRD will increase its current 25% holding
in Komercijalna to 34.6% diluting the small shareholders.
Quarterly Komercni banka reported a 3Q09 net profit of CZK 2,676mn (-22.7% y/y, -8.3% q/q), which is
decline in net in line with our and consensus estimates. The biggest divergence came from net trading result
profit in line which dropped 21% q/q, all other P&L items performed more or less as expected. Net interest
with estimates income (+3.9% y/y, -1.5% q/q) and net F&C income (-3.9% y/y, -0.4% q/q) also showed a
moderate decline compared to 2Q09, due to a decline in the asset base by -2.6% q/q, despite a
relatively stable development in NIM (3.29% in 3Q09 vs.3.27% in 2Q09). Loan book volume and
deposit base remained relatively stable q/q and loan to deposit ratio stood almost unchanged at
70%.
Deterioration in loan book quality moderated considerably and NPL ratio reached 6.9% in 3Q09
vs. 6.4% in 2Q09. Despite a further slight reduction in NPL coverage ratio (54.0% in 3Q09 vs.
55.3% in 2Q09), net provisioning increased further by 6% q/q to around CZK 1,327mn.
Nevertheless, with risk costs of around 1.44% and a risk / earnings ratio 24.2% KB still ranks on
the lower end of CEE peers. After the increase in the second quarter, operating costs dropped
-3.1% q/q (-1.3% y/y), resulting in combination with the slight decline in top line in a more or less
stable CIR of around 41.9% (vs. 41.7% in 2Q09).
In our view, the 3Q09 figures came in more or less in line with our and consensus estimates.
The lower bottom line performance compared with 2Q09 was driven by slight erosion in net
interest income and net F&C income, a drop in net trading result and a further increase in net
provisioning, only partly compensated by lower operating expenses. Despite a further increase
in NPLs the momentum decreased considerably, which is a positive sign in our opinion.

As the 3Q09 results were more or less in line with our estimates, we see currently no need to
change our estimates. We therefore stick to our Hold recommendation and our target price of
CZK 3,850.
Net profit up OTP reported 3Q09 net profit of HUF 45.9bn (-14.4% y/y, +9.9% q/q), which is clearly above our
10% q/q, above (+21.7%) and consensus estimates (+28.1%). The outperformance was mainly driven by one-off
expectations, items. The one-off gain on the repurchase of upper tier 2 capital of HUF 2.65bn in 3Q09 (vs.
partly due to HUF 5.5bn in 2Q09 and HUF 19.6bn in 1Q09) was more or less expected, but the positive tax
one-off items effect of HUF 11.7bn stemming from legal changes concerning goodwill write-offs caught us by
surprise. Based on this effects income tax turned positive to HUF 5bn. The above mentioned
goodwill amortization will not have further effects on the IFRS tax amount payable. The
performance of main income sources was good and basically in line with our expectations. Net
interest income slightly declined by 2.4% q/q, based on a slightly lower NIM (5.74% vs. 5.76% in
2Q09) and a decreasing customer loan base (-1.8% q/q). Due to an overall lower activity, net
F&C income diminished by around 1% q/q. Other non-interest income surprised on the positive
side (+21% q/q), driven not only by the one-off gains from the repurchase of upper tier 2 capital,
but also due to a good trading result. Main negative surprise came from net provisioning, which
increased to HUF -66.6bn (+20.1% q/q), based on a further increase in NPLs (NPL ratio of 8.9%
vs. 7.4% in 2Q09) and a more or less stable NPL coverage ratio of 68.5% (vs. 71% in 2Q09).
Risk costs rose to 3.84% (vs. 3.02% in 2Q09) and risk/earnings reached 48.4% (vs. 39.3% in
2Q09). Especially the loan book quality in UA (NPL ratio of 19.4% vs. 11.2% in 2Q09) and BG
(NPL ratio of 7.9% vs. 5.7% in 2Q09) diminished further, whereas we recognized a considerable
decline in momentum in HU (NPL ratio of 6.8% vs. 6.2% in 2Q09) and a slight decline in RU
(NPL ratio of 13.8% vs. 13.9% in 2Q09). Total expenses decreased by 5.6% q/q and CIR
reached 42.7% (vs. 45.2% in 2Q09). Reaching around 87% of its full-year net profit guidance of
HUF 150bn in 1-3Q09, the profit target appears attainable, but slight deviations are possible
according to the CFO of OTP, depending on the further development of loan book quality.
Looking at the performance so far, we feel comfortable with our FY09 net profit estimates of
HUF 143bn.
Accumulate OTP came in with mixed 3Q09 results all in all beating our and consensus net profit
maintained, expectations. The outperformance was mainly driven by one-off items (gain from repurchase of
target price: upper tier 2 capital and positive tax effects from goodwill write-off). Net interest income and net
HUF 6,550 F&C income came in as expected, whereas net trading result surprised on the positive side and
net provisions were higher than expected. On segment level, the development in HU, BG and
RU was positive, whereas the subsidiary in UA came in with a loss of HUF 19.2bn, mainly driven
by high net provisions. Reaching around 87% of its full-year net profit guidance of HUF 150bn in
1-3Q09, the profit target appears attainable, but slight deviations are possible according to the
CFO of OTP, depending on the further development of loan book quality. Looking at the
performance so far, we feel comfortable with our FY09 net profit estimates of HUF 143bn. We
therefore remain positive on the stock of OTP and stick to our Accumulate recommendation.
3Q09 net profit PKO BP came in with a 3Q09 net profit of PLN 639mn (-29% y/y, +4.7% q/q), which is 14%
14% above above our and consensus expectations. The main divergence to our estimates came from (1) net
expectations interest income (-16% y/y, +20% q/q), which was 20% better than we had expected mainly due
on better to income from derivative hedging instruments of PLN 174mn, (2) net fee & commission income
income (+16% y/y, +13% q/q) which was 11% above our estimates mainly due to better bank account
related fees and payment card fees, and (3) net provisions (+45% y/y, -6.7% q/q) which came in
9% lower than expected. Operating expenses were in line with expectations, up 3.6% q/q but
1.7% lower than in 3Q08 mainly due to 2% wage increase as of July 2009.
The volume growth dynamics in 3Q09 accelerated vs. 2Q09, namely to 3.7% q/q (vs. 1.3% q/q in
2Q09) for gross customer loans, of which consumer loans showed the highest sequential growth
of 5% (vs. 3.5% q/q in 2Q09), followed by corporate loans (3.9% q/q vs. 1.6% q/q) and mortgage
loans (2.9% q/q vs. 0.2% q/q). Deposit growth in 3Q09 was stable at 3.3% q/q (vs. 3.4% q/q in
2Q09). As a result, the loan/deposit ratio slightly deteriorated to 95% (vs. 94% in 2Q09). The

Ukrainian subsidiary Kredobank in 3Q09 further decreased its net loss to PLN -20.3mn, from
PLN -54mn in 2Q09 and PLN -72mn in 1Q09. In hryvnia terms, Kredobank’s gross loans
increased 1.8% q/q, while term deposits grew by 6.6% q/q.
In our view, the 3Q09 numbers are better than expected, which is mainly due to higher net
interest income (also based on accelerating volume growth), better net fee & commission
income as well as lower provisioning resulting in a 27% risk/earnings ratio vs. 35% seen in 2Q09
(cost of risk decreased to 1.33%, from 1.46% in 2Q09). However, the strong outperformance on
the top line is mainly due to derivative hedging and might not be sustainable. The main question
for the coming quarters is, whether the lower provisioning levels will be sustainable since we
expect NPL growth on the retail side to accelerate in the next few quarters. With 1-3Q09
contributing 85% to our FY09 estimate we feel quite comfortable at the moment, even if
operating costs increase in 4Q09 and provisions go up again. We maintain our Hold
recommendation and PLN 38 target price.
3Q09 results Raiffeisen International reported a 3Q09 net profit of EUR 77.5mn (-74% y/y, +254% q/q),
better than which is better than our EUR 43mn forecast, however, significantly above consensus who had
expected due expected a loss of EUR 7mn. The main divergence to our forecasts came from 18% lower than
to low expected net provisions, which decreased 24% q/q despite further rising NPLs (NPL ratio of
provisioning in 7.9% vs. 6.8% in 2Q09), however, at a diminishing growth rate of 12% q/q vs. 37% q/q in 2Q09.
Russia The most significant decrease of NPL growth was observed in Russia where NPLs grew only
13.5% q/q in 3Q09 (vs. 94% q/q in 2Q09) and CIS Other with 5.9% sequential NPL growth (vs.
33% in 2Q09). But also the CE and SEE regions showed diminishing NPL growth rates of 18%
q/q and 7.6% q/q, respectively. The NPL coverage ratio further decreased to 67% (vs. 69% in
2Q09). As a result, the risk/earnings ratio came down to moderate 54% levels, from 72% in
2Q09.
Another positive surprise was net fee & commission income which was 12% above our forecasts
turning around to positive sequential growth in 3Q09 (+11% q/q, -19% y/y) mainly due to FX and
precious metals business (+12% q/q) and slightly accelerating payment transfer business
(+6.5% q/q) as well as loan administration business (+7.3% q/q). Net interest income was fully in
line with our expectations and flat vs. 2Q09 (-13.7% y/y) due to further decreasing gross
customer loans (-3.1% q/q), flat deposits (+0.8% q/q) but slightly better margins (3.75% vs.
3.70% in 2Q09), mainly driven by CIS other (7.3%, +60bps q/q) and the CE (3.0%, +20bps q/q)
regions. Operating costs (-22% y/y, -6% q/q) came in 6% lower than expected and were due to a
8.3% y/y headcount reduction and the optimization of the branch network.
In our view, the 3Q09 bottom line is better than we had expected but it is EUR 85mn better than
market expectations. The lower provisioning (54% risk / earnings ratio vs. 72% in 2Q09) based
on diminishing NPL growth in all regions and the 6% sequential decrease of operating costs
were the positive surprise as well as the sustainable income sources which were in line (NII) or
better than expected (F&C income). From the regions we have seen positive signs from Russia
with EUR 69mn pre-tax profit due to very low provisioning and from CIS Other (including
Ukraine) which lowered the quarterly pre-tax loss to EUR -27mn, from EUR -49mn in 2Q09
mainly due to 22% q/q lower operating costs. The questions in the conference call will be the
status of loan restructuring in the regions and whether the slowdown of NPL growth is already a
trend. As the 3Q09 result cannot be seen as a benchmark for 4Q09, we stick to our FY09e
forecast of EUR 59mn, indicating a loss in 4Q09. We maintain our Hold recommendation and
EUR 51 target price.

Company Curr. Mcap ROE ROA Performance (EUR terms)

(EURmn) 2008 2009e 2010e 2011e 2008 2009e 2010e 2011e 1M 3M 6M 12M
Aik Banka AD Nis RSD 206 16.7% -2.1% -1.9% 12.0% 6.7% -0.9% -0.8% 5.4% -5.1% 7.7% 8.2% 32.3%
Banca Transilvania RON 561 25.8% 3.1% 7.5% 8.5% 2.4% 0.3% 0.7% 0.9% 27.3% 46.0% 95.6% -22.3%
Bank Pekao PLN 11,210 25.3% 12.6% 13.7% 14.7% 3.0% 1.6% 1.8% 2.0% 20.0% 24.5% 69.5% 49.1%
BRD - Group SG RON 2,317 44.9% 22.6% 20.5% 21.2% 3.6% 2.0% 2.0% 2.3% 15.3% 20.6% 70.8% 58.7%
BRE Bank PLN 1,783 26.1% 4.6% 9.3% 15.7% 1.4% 0.2% 0.5% 0.9% -1.0% 5.7% 66.3% 9.7%
BZ WBK PLN 3,106 20.2% 12.0% 12.2% 17.0% 2.1% 1.2% 1.3% 1.9% 20.7% 35.4% 107.2% 63.6%
FHB HUF 311 19.1% 15.2% 15.0% 14.7% 1.1% 0.9% 0.9% 1.0% 11.9% 25.8% 91.2% 63.5%
Komercijalna Banka RSD 284 12.8% -2.7% -0.6% 6.2% 1.7% -0.4% 0.5% 1.5% -6.9% -9.0% -0.9% 33.1%
Komercni banka CZK 5,655 26.7% 17.6% 17.8% 20.4% 2.1% 1.5% 1.6% 2.0% 13.7% 15.9% 49.6% 36.7%
OTP HUF 5,755 25.7% 12.9% 14.2% 16.4% 2.7% 1.5% 1.7% 2.2% 13.8% 20.3% 68.3% 84.7%
PKO BP PLN 11,616 26.5% 11.6% 12.5% 17.4% 2.8% 1.4% 1.8% 2.6% 18.7% 29.0% 74.0% 24.6%
Raiffeisen International EUR 6,576 17.2% 1.1% 4.8% 11.5% 1.4% 0.1% 0.5% 1.1% 10.0% 25.0% 47.9% 116.4%
Median - - 25.5% 11.8% 12.4% 15.2% 2.3% 1.0% 1.1% 1.9% - - - -
Unicredit SpA EUR - Euro39,235 8.2% 3.2% 4.1% 7.2% - - - - -1.0% -7.7% 18.5% 70.3%
KBC Groupe SA EUR - Euro11,876 -22% -20% 12.5% 13.1% - - - - 9.8% 14.4% 124.3% 29.7%
Svenska Handelsbanken
SEK
AB- Swedish Krona
12,397 15.2% 12.4% 10.6% 11.8% - - - - 11.6% 14.7% 55.7% 50.6%
Erste Group Bank AG EUR - Euro10,733 10.7% 8.8% 7.7% 9.3% - - - - -2.9% -1.2% 49.0% 67.1%
Societe Generale EUR - Euro35,803 6.2% 2.8% 7.9% 11.0% - - - - 6.0% -2.2% 17.6% 57.8%
Median - - 8.2% 3.2% 7.9% 11.0% - - - - - - - -
Euro Stoxx Banks 538,153 6.4% 4.6% 7.4% 9.3% - - - - 12.3% 11.3% 12.9% 37.7%
CEE to Peer, Prem/Disc - 212% 275% 57% 38% - - - - - - - -
P/E Div yield P/BV

2008 2009e 2010e 2011e 2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
Aik Banka AD Nis 3.3 nm nm 4.7 1.8% 0.0% 0.0% 1.3% 0.5 0.6 0.6 0.5
Banca Transilvania 6.5 45.2 17.9 14.6 2.0% 0.0% 0.0% 1.0% 1.7 1.4 1.3 1.2
Bank Pekao 8.0 22.1 19.1 17.1 0.0% 2.3% 3.1% 4.1% 2.1 2.7 2.6 2.5
BRD - Group SG 3.3 9.2 8.9 7.5 9.7% 3.3% 3.4% 5.3% 1.4 2.0 1.7 1.5
BRE Bank 5.8 40.1 18.6 10.0 0.0% 0.0% 0.0% 4.0% 1.5 1.8 1.7 1.5
BZ WBK 8.1 20.2 17.9 12.0 0.0% 0.0% 2.8% 4.2% 1.6 2.3 2.1 2.0
FHB 6.4 12.6 11.0 9.8 0.0% 0.0% 0.0% 2.1% 1.1 1.7 1.5 1.3
Komercijalna Banka 7.2 nm nm 15.0 0.0% 0.0% 0.0% 5.3% 0.9 0.9 1.0 0.9
Komercni banka 8.0 14.5 12.9 10.5 6.5% 3.5% 4.6% 5.7% 2.0 2.4 2.2 2.1
OTP 3.0 10.7 9.0 6.8 0.0% 0.0% 0.0% 3.0% 0.7 1.4 1.2 1.0
PKO BP 9.0 20.3 18.0 11.8 3.6% 1.7% 2.2% 3.4% 2.3 2.3 2.2 2.0
Raiffeisen International 3.0 111.4 24.0 9.6 4.9% 0.6% 2.9% 2.1% 0.5 1.2 1.1 1.0
Median CEE 6.4 20.2 17.9 10.2 0.9% 0.0% 1.1% 3.7% 1.4 1.8 1.6 1.4
Unicredit SpA 8.2 21.3 16.2 9.0 0.0% 1.3% 2.1% 4.6% 0.4 0.7 0.7 0.6
KBC Groupe SA 8.7 7.8 0.0% 0.0% 2.3% 3.1% 0.7 1.2 1.1 1.0
Svenska Handelsbanken AB 11.9 12.8 14.0 11.7 3.2% 3.4% 3.4% 3.4% 1.0 1.6 1.5 1.4
Erste Group Bank AG 10.4 11.4 12.1 8.9 2.3% 1.9% 2.0% 2.5% 0.6 1.0 0.9 0.8
Societe Generale 14.2 34.1 11.7 8.0 2.4% 1.3% 3.1% 4.8% 0.6 0.9 0.9 0.9
Median 11.1 17.0 12.1 8.9 2.3% 1.3% 2.3% 3.4% 0.6 1.0 0.9 0.9
Euro Stoxx Banks 8.4 14.1 12.6 8.9 2.4% 1.9% 3.1% 4.5% 0.7 1.0 0.9 0.9
CEE to Peer, Prem/Disc -42% 19% 48% 15% -61% -100% -52% 8% 125% 77% 68% 62%
Source: JCF Quant, Erste Group Research

Cost/income ratio Net interest margin Loans/deposits ratio

2008 2009e 2010e 2011e 2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
Aik Banka AD Nis -16.0% -19.3% -24.9% -28.4% 8.3% 6.4% 5.5% 5.3% 138% 134% 128% 128%
Banca Transilvania -68.5% -60.0% -65.7% -71.8% 3.9% 3.4% 3.5% 3.5% 96% 97% 97% 97%
Bank Pekao -48.2% -54.0% -50.8% -51.4% 3.9% 2.6% 3.0% 3.1% 95% 100% 96% 99%
BRD - Group SG -44.0% -44.6% -47.3% -47.4% 4.3% 3.9% 3.8% 3.6% 118% 117% 117% 117%
BRE Bank -60.0% -54.1% -53.5% -58.5% 2.2% 1.9% 2.1% 2.1% 140% 140% 136% 144%
BZ WBK -51.6% -53.1% -53.6% -53.5% 3.6% 2.2% 2.4% 2.7% 84% 84% 83% 83%
FHB -55.7% -49.1% -49.4% -52.2% 2.6% 2.7% 2.8% 2.7% - - - -
Komercijalna Banka -63.9% -53.6% -54.5% -57.7% 4.3% 4.0% 4.1% 4.1% 90% 90% 91% 92%
Komercni banka -43.2% -43.6% -41.6% -42.7% 3.3% 3.1% 3.2% 3.3% 68% 68% 68% 71%
OTP -64.6% -49.8% -53.8% -58.9% 5.0% 5.7% 5.5% 5.2% 134% 134% 133% 133%
PKO BP -47.0% -51.3% -48.0% -43.6% 5.5% 3.0% 3.5% 4.1% 101% 103% 104% 105%
Raiffeisen International -57.7% -57.0% -51.4% -63.5% 4.1% 3.7% 3.9% 3.8% 131% 114% 113% 109%
Median CEE -53.7% -52.2% -51.1% -52.8% 4.0% 3.3% 3.5% 3.6% 101% 103% 104% 105%
Unicredit SpA - - - - 1.8% 1.7% 1.8% 1.8% - - - -
KBC Groupe SA - - - - 1.4% 1.6% 1.6% 1.5% - - - -
Svenska Handelsbanken AB - - - - 0.9% 1.1% 1.0% 1.0% - - - -
Erste Group Bank AG - - - - 2.4% 2.5% 2.5% 2.5% - - - -
Societe Generale - - - - 0.8% 0.8% 0.8% 0.8% - - - -
Median - - - - 1.4% 1.6% 1.6% 1.5% - - - -
Euro Stoxx Banks - - - - 1.9% 1.6% 1.6% 1.7% - - - -
CEE to Peer, ppt - - - - 2.57 1.67 1.88 2.00 - - - -

Aik Banka AD Nis Reduce Target price RSD

Price (RSD) 2,704.0 CIR (2008) -16% 08 09e 10e 11e
Mcap (RSD mn) 19,768 ROE (2008) 16.7% Total assets (RSD mn) 83,912 79,717 78,920 82,866
Mcap (EUR mn) 206 L/D ratio (2008) 138% Total income (RSD mn) 10,512.5 9,197.6 8,287.8 8,489.1
Free float (%) 79.7% Equity ratio (2008) 41.2% Net interest income (RSD mn) 6,449.5 5,317.9 4,362.5 4,246.9
Free float (EUR mn) 164 BVPS CAGR 08-11e 5.1% Risk provisions (RSD mn) -2,795.4 -8,165.8 -6,850.9 -1,090.9
Shares outst. (mn) 7.3 EPS CAGR 08-11e -2.4% Tot. equity/Tot. assets 41.19% 42.42% 42.06% 44.85%
52 weeks
EPS (RSD) 700.22 -101.59 -85.50 577.69
BVPS (RSD) 4,727.43 4,625.84 4,540.34 5,083.37
3.500 Net interest margin 8.26% 6.42% 5.50% 5.25%
Cost/income ratio -15.97% -19.29% -24.88% -28.44%
3.000 P/BV 0.54 0.58 0.60 0.53
P/E 3.31 nm nm 4.68
2.500
Dividend yield 1.80% 0.00% 0.00% 1.28%
2.000
P/BV rel. 0.4 0.3 0.4 0.4
P/E rel. 0.5 - - 0.5
1.500
Performance 1M 3M 6M 12M
1.000 Absolute (RSD terms) -3.4% 10.8% 10.1% 38.5%
Aik Banka AD Nis Rel. to sector (EUR, ppt) -20.6 -14.3 -54.7 -7.3
BELEX 15 (Rebased)
DJ EURO STOXX Banks (Rebased) Rel. to universe (EUR, ppt) -12.2 2.0 -15.0 0.6
Banca Transilvania Reduce Target price RON 1.660
Price (RON) 2.230 CIR (2008) -68% 08 09e 10e 11e
Mcap (RON mn) 2,363 ROE (2008) 25.8% Total assets (RON mn) 17,149 17,835 18,191 19,283
Mcap (EUR mn) 561 L/D ratio (2008) 96% Total income (RON mn) 1,088.8 1,304.1 1,250.1 1,243.2
Free float (%) 85.0% Equity ratio (2008) 9.6% Net interest income (RON mn) 582.4 612.2 630.5 655.8
Free float (EUR mn) 477 BVPS CAGR 08-11e 10.9% Risk provisions (RON mn) -157.5 -459.6 -273.0 -158.8
Shares outst. (mn) 1,060 EPS CAGR 08-11e -16.6% Tot. equity/Tot. assets 9.60% 9.52% 10.06% 10.20%
EPS (RON) 0.37 0.05 0.12 0.15
52 weeks
BVPS (RON) 1.55 1.60 1.73 1.86
4,5 Net interest margin 3.87% 3.40% 3.50% 3.50%
4,0 Cost/income ratio -68.50% -59.98% -65.67% -71.83%
3,5 P/BV 1.69 1.39 1.29 1.20
3,0
P/E 6.46 45.23 17.93 14.63
Dividend yield 1.97% 0.00% 0.00% 1.03%
2,5
P/BV rel. 1.2 0.8 0.8 0.8
2,0
P/E rel. 1.0 2.2 1.0 1.4
1,5
1,0 Performance 1M 3M 6M 12M
0,5 Absolute (RON terms) 24.6% 44.8% 95.6% -14.9%
Banca Transilvania
BET (Rebased) Rel. to sector (EUR, ppt) 11.8 23.9 32.8 -62.0
DJ EURO STOXX Banks (Rebased) Rel. to universe (EUR, ppt) 20.2 40.3 72.4 -54.1
Bank Pekao Reduce Target price PLN 157.0

Price (PLN) 175.2 CIR (2008) -48% 08 09e 10e 11e
Mcap (PLN mn) 45,948 ROE (2008) 25.3% Total assets (PLN mn) 131,941 135,239 132,534 143,137
Mcap (EUR mn) 11,210 L/D ratio (2008) 95% Total income (PLN mn) 8,115.8 7,365.8 8,023.7 8,655.7
Free float (%) 40.7% Equity ratio (2008) 12.1% Net interest income (PLN mn) 4,509.6 3,660.6 4,042.1 4,290.7
Free float (EUR mn) 4,566 BVPS CAGR 08-11e 6.2% Risk provisions (PLN mn) -293.7 -682.0 -979.3 -858.2
Shares outst. (mn) 262 EPS CAGR 08-11e -4.4% Tot. equity/Tot. assets 12.09% 12.61% 13.59% 13.15%
52 weeks
EPS (PLN) 13.46 8.39 9.16 10.24
BVPS (PLN) 60.82 64.92 68.43 71.29
200 Net interest margin 3.86% 2.59% 3.02% 3.11%
180
P/BV 2.08 2.70 2.56 2.46
160 P/E 8.00 22.13 19.13 17.12
140 Dividend yield 0.00% 2.26% 3.13% 4.08%
P/BV rel. 1.5 1.5 1.6 1.7
120
P/E rel. 1.2 1.1 1.1 1.7
100
80
Absolute (PLN terms) 14.9% 23.4% 53.5% 59.1%
60 Rel. to sector (EUR, ppt) 4.5 2.5 6.7 9.5
Bank Pekao
WIG 20 (Rebased) Rel. to universe (EUR, ppt) 12.9 18.9 46.3 17.4
DJ EURO STOXX Banks (Rebased)

BRD - Group SG Accumulate Target price RON 14.5

Price (RON) 14.0 CIR (2008) -44% 08 09e 10e 11e
Mcap (RON mn) 9,757 ROE (2008) 44.9% Total assets (RON mn) 50,920 52,956 54,016 57,256
Mcap (EUR mn) 2,317 L/D ratio (2008) 118% Total income (RON mn) 3,249.1 3,312.7 3,234.0 3,503.5
Free float (%) 40.8% Equity ratio (2008) 8.3% Net interest income (RON mn) 1,895.8 2,077.5 2,032.5 2,002.9
Free float (EUR mn) 945 BVPS CAGR 08-11e 20.7% Risk provisions (RON mn) -297.2 -570.0 -401.9 -305.0
Shares outst. (mn) 697 EPS CAGR 08-11e 6.1% Tot. equity/Tot. assets 8.29% 9.38% 10.62% 11.37%
52 weeks
EPS (RON) 2.26 1.53 1.58 1.86
BVPS (RON) 6.06 7.13 8.23 9.34
14 Cost/income ratio -43.99% -44.63% -47.29% -47.42%
P/BV 1.36 1.96 1.70 1.50
12
P/E 3.34 9.22 8.89 7.53
10 Dividend yield 9.66% 3.25% 3.38% 5.31%
8 P/BV rel. 1.0 1.1 1.1 1.1
P/E rel. 0.5 0.5 0.5 0.7
6
4 Performance 1M 3M 6M 12M
2
Absolute (RON terms) 12.9% 19.7% 70.7% 73.9%
BRD - Group SG Rel. to sector (EUR, ppt) -0.1 -1.4 7.9 19.1
BET (Rebased)
DJ EURO STOXX Banks (Rebased) Rel. to universe (EUR, ppt) 8.3 14.9 47.5 27.0
BRE Bank Hold Target price PLN 290.0

Price (PLN) 246.2 CIR (2008) -60% 08 09e 10e 11e
Free float (EUR mn) 538 BVPS CAGR 08-11e 9.9% Risk provisions (PLN mn) -269.1 -1,167.3 -1,002.0 -445.3
52 weeks EPS (PLN) 28.89 6.51 13.24 24.55
BVPS (PLN) 131.17 136.78 149.06 163.79
300
P/BV 1.50 1.80 1.65 1.50
250 P/E 5.80 40.07 18.60 10.03
Dividend yield 0.00% 0.00% 0.00% 3.99%
200 P/BV rel. 1.0 1.0 1.0 1.1
150 P/E rel. 0.9 2.0 1.0 1.0

Absolute (PLN terms) -5.2% 4.8% 50.6% 17.1%
50 Rel. to sector (EUR, ppt) -16.5 -16.3 3.4 -29.9
BRE Bank WIG 20 (Rebased) DJ EURO STOXX Banks (Rebased) Rel. to universe (EUR, ppt) -8.0 0.1 43.1 -22.0
BZ WBK Hold Target price PLN 171.0
Price (PLN) 174.5 CIR (2008) -52% 08 09e 10e 11e
Free float (EUR mn) 916 BVPS CAGR 08-11e 10.6% Risk provisions (PLN mn) -364.6 -578.9 -510.3 -188.7
52 weeks
EPS (PLN) 11.72 9.17 9.73 14.58
BVPS (PLN) 67.88 77.04 81.91 89.20
180
P/BV 1.63 2.26 2.13 1.96
160 P/E 8.06 20.17 17.94 11.97
140 Dividend yield 0.00% 0.00% 2.79% 4.18%
P/BV rel. 1.1 1.3 1.4 1.4
120
P/E rel. 1.3 1.0 1.0 1.2
100
80 Absolute (PLN terms) 15.6% 34.1% 87.6% 74.6%
BZ WBK WIG 20 (Rebased) DJ EURO STOXX Banks (Rebased)
Rel. to universe (EUR, ppt) 13.6 29.7 84.0 31.8

FHB Hold Target price HUF 1,440.0

Price (HUF) 1,271.0 CIR (2008) -56% 08 09e 10e 11e
Mcap (HUF mn) 83,886 ROE (2008) 19.1% Total assets (HUF mn) 689,627 827,553 848,242 890,654
Mcap (EUR mn) 311 L/D ratio (2008) - Total income (HUF mn) 24,465.7 28,953.8 29,388.3 29,772.0
Free float (%) 87.4% Equity ratio (2008) 5.8% Net interest income (HUF mn) 16,681.4 21,240.5 23,461.1 23,475.1
Free float (EUR mn) 272 BVPS CAGR 08-11e 18.3% Risk provisions (HUF mn) -805.1 -4,367.2 -3,470.3 -1,450.0
52 weeks EPS (HUF) 101.45 105.28 115.86 129.83
BVPS (HUF) 623.23 727.35 846.22 953.02
1.300 Cost/income ratio -55.72% -49.10% -49.36% -52.17%
1.200 P/BV 1.10 1.75 1.50 1.33
1.100
P/E 6.41 12.56 10.97 9.79
1.000
Dividend yield 0.00% 0.00% 0.00% 2.09%
900
800
P/BV rel. 0.8 1.0 1.0 0.9
700 P/E rel. 1.0 0.6 0.6 1.0
500 Absolute (HUF terms) 9.1% 23.6% 80.0% 69.5%
400 Rel. to sector (EUR, ppt) -3.6 3.8 28.4 23.9
FHB BUX (Rebased) DJ EURO STOXX Banks (Rebased) Rel. to universe (EUR, ppt) 4.9 20.1 68.0 31.8
Komercijalna Banka Reduce Target price RSD

Price (RSD) 31,340.0 CIR (2008) -64% 08 09e 10e 11e
Mcap (RSD mn) 27,295 ROE (2008) 12.8% Total assets (RSD mn) 183,828 189,193 194,869 204,613
Mcap (EUR mn) 284 L/D ratio (2008) 90% Total income (RSD mn) 12,590.9 14,349.1 14,865.6 15,432.1
Free float (%) 32.4% Equity ratio (2008) 14.3% Net interest income (RSD mn) 7,069.3 7,537.4 7,873.3 8,189.4
Free float (EUR mn) 92 BVPS CAGR 08-11e 10.8% Risk provisions (RSD mn) -1,691.2 -7,502.0 -5,851.6 -3,299.5
Shares outst. (mn) 0.87 EPS CAGR 08-11e -13.5% Tot. equity/Tot. assets 14.28% 15.25% 14.71% 14.72%
52 weeks EPS (RSD) 3,286.03 -858.64 -212.95 2,088.20
BVPS (RSD) 30,134.02 33,126.90 32,913.95 34,584.54
35.000
P/BV 0.86 0.95 0.95 0.91
30.000 P/E 7.18 nm nm 15.01
Dividend yield 0.00% 0.00% 0.00% 5.27%
25.000
P/BV rel. 0.6 0.5 0.6 0.6
20.000 P/E rel. 1.1 - - 1.5
15.000 Performance 1M 3M 6M 12M
Absolute (RSD terms) -5.2% -6.4% 0.9% 39.3%
10.000
Komercijalna Banka Rel. to sector (EUR, ppt) -22.4 -31.1 -63.7 -6.6
BELEX 15 (Rebased)
Rel. to universe (EUR, ppt) -13.9 -14.7 -24.1 1.3
Komercni banka Hold Target price CZK 3,850.0

Price (CZK) 3,840.0 CIR (2008) -43% 08 09e 10e 11e
Mcap (CZK mn) 145,958 ROE (2008) 26.7% Total assets (CZK mn) 699,046 709,532 695,341 737,062
Mcap (EUR mn) 5,655 L/D ratio (2008) 68% Total income (CZK mn) 33,876.0 33,574.1 35,779.1 37,347.2
Free float (%) 30.5% Equity ratio (2008) 8.0% Net interest income (CZK mn) 21,262.0 21,946.0 22,387.9 23,361.0
Free float (EUR mn) 1,722 BVPS CAGR 08-11e 9.5% Risk provisions (CZK mn) -2,970.0 -6,139.5 -6,873.5 -3,883.5
52 weeks EPS (CZK) 346.25 271.96 297.18 367.13
BVPS (CZK) 1,471.02 1,607.00 1,725.87 1,872.72
P/BV 2.02 2.39 2.22 2.05
4.000
P/E 7.97 14.48 12.92 10.46
3.500 Dividend yield 6.52% 3.45% 4.64% 5.74%
3.000 P/BV rel. 1.4 1.3 1.4 1.4
P/E rel. 1.2 0.7 0.7 1.0
2.500
2.000
Absolute (CZK terms) 12.1% 16.9% 43.7% 37.3%
1.500 Rel. to sector (EUR, ppt) -1.7 -6.1 -13.2 -2.9
Komercni banka PX (Rebased) DJ EURO STOXX Banks (Rebased) Rel. to universe (EUR, ppt) 6.7 10.2 26.4 5.0

OTP Accumulate Target price HUF 6,550.0

Price (HUF) 5,550.0 CIR (2008) -65% 08 09e 10e 11e
Mcap (HUF bn) 1,554 ROE (2008) 25.7% Total assets (HUF bn) 9,379.4 9,353.1 9,493.2 9,963.6
Mcap (EUR mn) 5,755 L/D ratio (2008) 134% Total income (HUF bn) 747.3 751.6 721.5 721.6
Free float (%) 82.2% Equity ratio (2008) 11.1% Net interest income (HUF bn) 437.3 557.0 516.4 506.5
Free float (EUR mn) 4,730 BVPS CAGR 08-11e 11.5% Risk provisions (HUF bn) -111.4 -208.2 -140.1 -37.2
52 weeks
EPS (HUF) 915.23 540.88 617.23 820.89
BVPS (HUF) 3,932.78 4,048.88 4,666.11 5,322.82
5.000 P/BV 0.73 1.37 1.19 1.04
4.500 P/E 2.97 10.68 8.99 6.76
4.000 Dividend yield 0.00% 0.00% 0.00% 2.96%
3.500 P/BV rel. 0.5 0.8 0.8 0.7
3.000 P/E rel. 0.5 0.5 0.5 0.7
2.500
1.500 Absolute (HUF terms) 11.0% 18.2% 58.5% 91.4%
1.000 Rel. to sector (EUR, ppt) -1.6 -1.8 5.5 45.1
OTP BUX (Rebased) DJ EURO STOXX Banks (Rebased) Rel. to universe (EUR, ppt) 6.8 14.6 45.1 53.0
PKO BP Hold Target price PLN 38.0

Price (PLN) 38.1 CIR (2008) -47% 08 09e 10e 11e
Free float (EUR mn) 5,664 BVPS CAGR 08-11e 13.1% Risk provisions (PLN mn) -1,130.4 -1,525.6 -1,509.3 -1,014.8
Shares outst. (mn) 1,250 EPS CAGR 08-11e 2.6% Tot. equity/Tot. assets 10.36% 13.86% 14.87% 15.01%
EPS (PLN) 3.12 1.99 2.12 3.22
52 weeks
BVPS (PLN) 13.95 16.27 17.55 19.48
45
P/BV 2.35 2.34 2.17 1.96
40 P/E 8.95 20.31 17.95 11.82
35 Dividend yield 3.58% 1.67% 2.23% 3.38%
P/BV rel. 1.6 1.3 1.4 1.4
30
P/E rel. 1.4 1.0 1.0 1.2
25
20
15 Rel. to sector (EUR, ppt) 3.2 7.0 11.1 -15.1
PKO BP WIG 20 (Rebased) DJ EURO STOXX Banks (Rebased) Rel. to universe (EUR, ppt) 11.7 23.3 50.8 -7.2
Raiffeisen International Hold Target price EUR 51.0

Price (EUR) 42.5 CIR (2008) -58% 08 09e 10e 11e
ROE (2008) 17.2% Total assets (EUR mn) 85,397 75,149 77,404 89,014
Mcap (EUR mn) 6,576 L/D ratio (2008) 131% Total income (EUR mn) 5,206.5 4,644.2 4,728.2 4,849.8
Free float (%) 31.5% Equity ratio (2008) 6.6% Net interest income (EUR mn) 3,232.0 2,936.8 2,992.0 3,157.5
Free float (EUR mn) 2,072 BVPS CAGR 08-11e 1.8% Risk provisions (EUR mn) -780.3 -1,886.0 -1,796.9 -609.3
Shares outst. (mn) 155 EPS CAGR 08-11e -6.6% Tot. equity/Tot. assets 6.55% 7.47% 7.36% 7.01%
EPS (EUR) 6.39 0.38 1.77 4.42
52 weeks
BVPS (EUR) 36.42 36.56 37.12 40.72
45
P/BV 0.53 1.16 1.15 1.04
40
P/E 3.02 111.37 24.03 9.62
35 Dividend yield 4.85% 0.63% 2.94% 2.10%
30 P/BV rel. 0.4 0.7 0.7 0.7
25 P/E rel. 0.5 5.5 1.3 0.9
20
15 Absolute (EUR terms) 10.0% 25.0% 47.9% 116.4%
10 Rel. to sector (EUR, ppt) -5.5 3.0 -14.9 76.8
Raiffeisen International
ATX (Rebased) Rel. to universe (EUR, ppt) 3.0 19.3 24.7 84.7

Sector Insight Basic Resources
- voestalpine ahead of expectations – back to capacity utilization of 100%

- NWR sees sound 4Q 09 – FY 09 net will remain red, though
- Copper above USD/t 7,000, silver around USD/troz 19 create eye-popping conditions for
KGHM – 2009 guidance muted by write downs/hedging - we expect better FY results than
management
Rising steel Weak activity in the steel using industries and sharp destocking in the steel supply chain
production but resulted in steel demand (apparent steel consumption) falling by 45% year-on-year in the first
price recovery half of 2009 and by almost 32% in the 3rd quarter. Real steel consumption declined 28.5% y/y in
halted the first 6 months of 2009. The inventory situation is now better aligned with the current weak
level of steel demand and some customers returned to the market to fill gaps in their stocks; this
led to the downward trend in orders at EU mills bottoming out. However, the moderate rebound
of steel prices on the spot market since summer has come to an end and steel prices have
trended moderately lower. A large share of previously idled steel capacity in Europe has been
brought back into operation. Despite a lot of talk, imports into Europe remained relatively low so
far. An important determinant of steel demand in 2010 should be scrap premiums, which will
come to an end. However, to a good part these incentives were used to clear inventories at car
producers and did not translate fully into higher car production in 2009.
voestalpine voestalpine’s 2Q 09/10 results were above expectations and clearly above the guidance (EBIT
improves break even). 2Q09/10 revenues declined 36% to EUR 2,068mn, EBIT was down 83.5% to EUR
stronger than 70.4mn and net profit after minorities 96.7% lower at EUR 8.4mn. Although weaker y/y in all
expected in divisions, results improved significantly compared to 1Q09/10. The Steel division improved most
2Q09/10 significantly as voestalpine has been gaining significant market share with automotive
customers and is back at 100% capacity utilization since September, which is clearly better than
competition. The upturn in the Special Steel division is usually 2-3 months delayed, but first
improvements from a dismal 1Q09/10 were realized and the production trend during the quarter
points upwards (48.6ttons in Sept vs. 30.4ttons in July). Despite weaker demand/prices for
seamless tubes, the EBIT in the Railway Systems division was stable sequentially. The division
will continue to profit from stable high demand for rails and switches, however price pressure
emerged for rails. The Profilform division also improved in line with our expectations. Financial
result was better than expected based on positive results from marketable securities.
voestalpine’s The result was clearly better than the quarterly guidance. While the full year guidance is
full year unchanged and calls for a “clearly positive EBIT and a positive net result”, the headroom has
guidance definitely increased. Results in the three large divisions were all moderately better than our
remains expectations and the positive earnings trend should continue in the current quarter. voestalpine
unchanged has again impressively demonstrated its outperformance of the peers in the current
environment.
RHI results as RHI’s 3Q09 results were as expected. Third quarter results were clearly lower y/y, but slightly
expected – improved on 2Q09. Revenue decline slowed down to -28.6% (EUR 295.7mn), EBIT was down
strong cash 77% at EUR 11.4mn and net income after minorities turned slightly positive again at EUR
flow 2.2mn. EUR 3.1mn restructuring costs were included in results, which is roughly as expected.
Pricing still remained stable. The company defined its new plant concept, which will include
further reduction in headcount in Europe and USA, transferring production to the growing
markets of Asia. In 3Q09 the company was once again able to deliver a strong cash flow and
reduce net financial debt from EUR 308.4mn to EUR 268.5mn (EUR 106.5mn net debt reduction
1-9M09). Further net debt reduction is expected for 4Q09.
Positive trend Production rates in RHI’s main customer industry steel were trending up during 3Q09 as de-
should stocking slowed down – a trend that is gaining speed in the final quarter of the year with a
continue in the number of previously idled blast furnaces back in operation. Order levels in the Industrials
final quarter division remained stable, but a positive development is expected for the coming months. RHI’s
sales should rise in 4Q09 sequentially and

margins should also be supported by the full positive effects from the cost cutting program and
no further restructuring. Achieved cost savings should also support 2010 results. We see further
upside potential for the share.
Sentiment Czech and Polish (52.4) PMI indicies grew above the 50 points hurdle in November, first time in
improving 15 months. Czech preliminary industrial production was up 4%m/m in October and we expect
another +1 to +2%m/m in November and December based on solid new orders in EMU (+8%q/q
in 3Q).
Coking coal Coking coal prices in the biggest regional market Poland still showed a 7%q/q decrease in 3Q
volumes 09, but coking coal volumes finally increased (by an impressive 64%q/q, but from really
strongly up in depressed 2Q level) and are roughly in line with volumes reported by NWR. While prices
Poland in 3Q reported in Poland are below those achieved by NWR, the company claims that the statistics
09 capture only a small part of the market. The charts below compares NWR coking coal volumes
and prices compared to the development on the Polish market.
Sold coking coal volumes

3.5 2.0
1.8
3.0
1.6
2.5 1.4
Poland Mt
1.2
NWR Mt
2.0
1.0
1.5 0.8
1.0 0.6
0.4
0.5
0.2
0.0 0.0
1Q 08 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09
Sales of coking coal in Poland NWR's coking coal sales

Source: NWR, MG, EGB calculations
Average reported prices of coking coal

200 160
180 140
160
120
140
Poland EUR/Mt
100
NWR EUR/Mt
120
100 80
80 60
60
40
40
20 20
0 0
1Q 08 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09
Coking coal price PL Coking coal price NWR

Source: NWR, MG, EGB calculations
NWR with NWR reported EUR 27.6mn net loss in 3Q 09, slightly below consensus and in line with our
operating estimates. On the operating level, EBITDA fell 78%y/y to EUR 34.5mn, what was in line with
result in line consensus. Revenues were with EUR 291mn (-36%y/y) slightly behind our estimates due mainly
with to weak coke prices. Coal volumes sold grew by 5%y/y and 25%q/q, ahead of our expectation of
consensus, +16%q/q. The company increased its FY 09 coal production target from 10.5mn t to 11mn t,
good outlook what is basically in line with management comments from the 2Q results. Coke production target
for the 4Q was also increased from 710kt to 840kt and the company was cleary positive regarding coke

volumes and prices in 4Q 09. NWR said the company does not expect it would breach its debt
covenants. We calculate, that this statement indirectly translates into at least EUR 160-170mn
EBITDA from continuing operations in FY 09 and EUR 50-60mn in the 4Q 09 alone. We thus
see only moderate downside potential to our EUR 199mn EBITDA estimate. NWR also said it
will stay in red on the net level in FY 09 – this is in line with our expectation of EUR 31mn loss.
Regarding the outlook for 2010, the company said it expects improving economy should put
pressure on prices especially of coking coal and coke. Overall, NWR’s 3Q 09 results did not
bring any major surprises, but confirmed expected nice EBITDA ad cash flow growth in 4Q 09.
As the company also indicated higher prices of coking coal in 2010 (we estimated stability of
prices in our last company report), we have slightly positive impression from the results and we
KGHM will are going to increase our 2010 estimates.
write down
assets by over KGHM’s CEO said the reason for the company’s weak guidance for 4Q09 is the expected write
PLN 200mn in downs of assets. In our view, the most likely asset is the telecom company Dialog, where the
4Q09; will not write down should exceed PLN 200mn. The CEO added that he does not plan to sell the
sell Polkomtel company’s 24.4% stake in the mobile operator Polkomtel even after its debut on the Warsaw
even after IPO Stock Exchange in 2010.
KGHM: trade One of the two biggest trade unions at KGHM – Solidarity, is demanding a wage increase from
unions management. At the beginning of the year the trade unions agreed to freeze salaries in 2009 in
demand wage exchange for a one-time bonus (PLN 5k per employee). However, due to the company’s
increase improving results, the Solidarity trade union has now changed its mind. Talks with management
are scheduled for the beginning of December.
KGHM to pave Treasury wants to change KGHM’s articles of association to allow interim dividends (advance
way for interim payments). The state also wants to retain its controlling position as a shareholder, even when it
dividends goes ahead with the planned sale of a 10% stake in the company. The AGM will be held on
December 9. Treasury commented that “one cannot say that Treasury plans interim dividends.
(…). It is just preparing the charter so that an interim dividend could be paid out at any moment.”

Company Curr. Mcap ROE EBITDA margin Performance (EUR terms)

KGHM PLN 5,285 32.8% 23.1% 20.9% 22.5% 36.1% 35.7% 31.1% 32.8% 19.3% 31.7% 58.8% 279.8%
Mayr-Melnhof EUR 1,497 10.5% 10.7% 10.5% 10.4% 12.7% 14.1% 13.9% 13.8% 3.6% 2.3% 11.4% 41.8%
RHI EUR 626 - 8.0% 24.9% 29.7% 13.5% 8.8% 11.2% 12.6% -7.6% -5.4% 26.3% 30.0%
voestalpine EUR 4,137 17.0% -0.8% 8.5% 13.5% 14.8% 10.2% 12.7% 13.7% 11.6% 13.6% 16.3% 67.7%
New World Resources EUR 1,694 68.7% -5.1% 9.5% 15.1% 33.7% 17.7% 24.0% 24.4% 6.0% 8.1% 80.8% 116.7%
Median - - 25% 8% 10% 15% 15% 14% 14% 14% - - - -
Median Steel - 41,533 19.9% -6.8% 5.9% 10.8% 17.6% 0.7% 11.2% 15.4% - - - -
Median Metals & Mining - 375,977 14.7% 9.1% 11.0% 12.3% 14.3% 14.0% 14.4% 18.0% - - - -
Median Pulp & Paper - 10,913 3.1% 1.4% 3.5% 5.4% 11.3% 11.2% 12.2% 13.3% - - - -
Median Total - 428,423 16.0% 4.7% 8.0% 10.9% 13.2% 10.6% 13.1% 15.9% - - - -
EuroStoxx Basic Resources 91,891 14.9% -1.4% 6.5% 10.3% 13% 3% 12% 15% 13.3% 21.8% 27.0% 52.0%
CEE to Peer, Prem/Disc - 56% 70% 31% 39% 12% 33% 6% -13% - - - -
P/E P/CE P/BV

2008 2009e 2010e 2011e 2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
KGHM 1.6 9.1 10.2 9.0 1.3 7.5 7.9 7.1 0.5 2.2 2.1 1.9
Mayr-Melnhof 11.6 14.7 14.0 13.2 6.4 8.0 8.0 7.4 1.2 1.5 1.4 1.3
RHI 4.3 45.6 12.3 7.8 2.8 10.5 6.4 5.0 2.6 3.5 2.7 2.0
voestalpine 3.0 nm 15.7 9.2 1.4 7.4 4.5 3.9 0.5 1.4 1.3 1.2
New World Resources 2.0 nm 29.5 16.7 1.3 12.6 7.5 6.5 1.1 3.0 2.7 2.4
Median C EE 3.0 14.7 14.0 9.2 1.4 8.0 7.5 6.5 1.1 2.2 2.1 1.9
Median Steel 5.8 n.a. 25.9 11.3 4.4 23.9 9.9 6.7 1.1 1.4 1.3 1.2
Median Metals & Mining 12.4 19.9 16.5 13.7 8.4 11.6 9.0 8.2 1.9 1.7 1.6 1.4
Median Pulp & Paper 20.2 37.2 23.0 15.2 6.6 6.0 5.3 4.8 0.8 0.8 0.8 0.8
Median Total 11.9 20.4 20.3 13.8 7.7 12.0 9.0 7.4 1.5 1.5 1.4 1.3
EuroStoxx Basic Resources 4.5 90.9 17.2 12.6 4.4 9.4 7.2 5.3 0.8 1.0 1.0 0.9
CEE to Peer, Prem/Disc -75% -28% -31% -33% -82% -33% -17% -12% -28% 41% 51% 53%
EV/Sales EV/EBITDA
2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
KGHM 0.3 2.1 2.0 1.9 0.8 6.0 6.5 5.7
Mayr-Melnhof 0.6 0.8 0.7 0.7 4.5 5.7 5.3 4.9
RHI 0.7 1.0 0.9 0.7 5.0 11.3 7.8 5.9
voestalpine 0.6 1.1 1.0 0.9 4.3 10.5 7.6 6.4
New World Resources 0.5 2.0 1.7 1.6 1.6 11.3 7.2 6.5
Median C EE 0.6 1.1 1.0 0.9 4.3 10.5 7.2 5.9
Median Steel 0.6 1.4 1.0 0.9 2.6 45.2 8.8 6.4
Median Metals & Mining 0.7 1.7 1.5 1.3 5.3 10.5 8.5 6.8
Median Pulp & Paper 0.8 1.0 0.9 0.9 7.5 8.9 8.6 7.0
Median Total 0.7 1.3 1.1 1.0 5.5 11.3 8.6 6.8
EuroStoxx Basic Resources 0.6 1.2 1.0 0.9 3.7 10.1 8.1 5.9
CEE to Peer, Prem/Disc -19% -17% -12% -11% -22% -7% -16% -13%

KGHM Hold Target price PLN 80.0

Price (PLN) 108.3 ROCE 2008 34.7% 08 09e 10e 11e
Mcap (PLN mn) 21,660 ROE 2008 32.8% Sales (PLN mn) 11,302.9 10,108.9 10,242.4 10,819.8
Mcap (EUR mn) 5,285 Net debt (EURmn, 08) -423.5 EBITDA margin 36.08% 35.72% 31.12% 32.84%
Free float (%) 58.5% Gearing (2008) -16% EBIT margin 31.82% 30.41% 25.67% 27.48%
Free float (EUR mn) 3,091 Sales CAGR 08-11e -2.9% Net profit margin 25.84% 24.91% 20.76% 22.23%
Shares outst. (mn) 200.0 EPS CAGR 08-11e -10.8% EPS (PLN) 14.60 12.59 10.63 12.02
52 weeks Dividend/share (PLN) 11.68 9.44 7.97 9.02
EV/sales 0.29 2.14 2.01 1.86
120 EV/EBITDA 0.81 5.99 6.46 5.67
110
100
P/E 1.64 9.11 10.19 9.01
90 P/CE 1.35 7.47 7.89 7.10
80 P/BV 0.53 2.15 2.10 1.95
70 Dividend yield 48.69% 8.23% 7.36% 8.33%
60
EV/EBITDA rel. 0.2 0.6 0.9 1.0
50
40 P/E rel. 0.5 0.6 0.7 1.0
30
KGHM
W IG 20 (Rebased) Rel. to sector (EUR, ppt) 7.7 16.5 20.5 168.8
DJ EURO STOXX Basic Resources (Rebased) Rel. to universe (EUR, ppt) 12.3 26.0 35.6 248.0
Mayr-Melnhof Hold Target price EUR 71.0

Price (EUR) 68.1 ROCE 2008 10.7% 08 09e 10e 11e
ROE 2008 10.5% Sales (EUR mn) 1,731.2 1,562.9 1,624.1 1,685.5
Free float (EUR mn) 463 Sales CAGR 08-11e -0.7% Net profit margin 5.60% 6.44% 6.44% 6.61%
Shares outst. (mn) 22.0 EPS CAGR 08-11e -0.3% EPS (EUR) 4.38 4.64 4.85 5.16
52 weeks Dividend/share (EUR) 1.70 1.70 1.70 1.80
EV/sales 0.57 0.81 0.73 0.68
75 EV/EBITDA 4.48 5.71 5.25 4.90
70 P/E 11.59 14.66 14.04 13.18
65 P/CE 6.43 8.03 7.96 7.43
60 P/BV 1.21 1.52 1.42 1.33
55 Dividend yield 3.35% 2.50% 2.50% 2.64%
50 EV/EBITDA rel. 1.0 0.5 0.7 0.8
45 P/E rel. 3.8 1.0 1.0 1.4
40
30
Absolute (EUR terms) 3.6% 2.3% 11.4% 41.8%
Mayr-Melnhof Rel. to sector (EUR, ppt) -8.1 -12.9 -26.9 -69.2
ATX (Rebased)
DJ EURO STOXX Basic Resources (Rebased) Rel. to universe (EUR, ppt) -3.5 -3.3 -11.8 10.1
RHI Buy Target price EUR 21.0

ROE 2008 - Sales (EUR mn) 1,596.7 1,206.8 1,272.1 1,358.9
Mcap (EUR mn) 626 Net debt (EURmn, 08) 641.1 EBITDA margin 13.51% 8.79% 11.17% 12.63%
Free float (%) 54.0% Gearing (2008) 353% EBIT margin 9.28% 4.39% 7.25% 8.99%
Shares outst. (mn) 37.5 EPS CAGR 08-11e -9% EPS (EUR) 2.61 0.37 1.36 2.14
EV/sales 0.68 0.99 0.87 0.75
22 EV/EBITDA 5.03 11.31 7.81 5.93
P/E 4.31 45.61 12.27 7.80
20
P/CE 2.82 10.55 6.41 5.01
18 P/BV 2.62 3.49 2.72 2.02
16 Dividend yield 0.00% 0.00% 0.00% 3.85%
EV/EBITDA rel. 1.2 1.1 1.1 1.0
14
P/E rel. 1.4 3.1 0.9 0.8
12
10 Absolute (EUR terms) -7.6% -5.4% 26.3% 30.0%
8 Rel. to sector (EUR, ppt) -19.3 -20.7 -12.1 -80.9
RHI ATX (Rebased) DJ EURO STOXX Basic Resources (Rebased) Rel. to universe (EUR, ppt) -14.6 -11.1 3.1 -1.7

voestalpine Buy Target price EUR 29.0

ROE 2008 17.0% Sales (EUR mn) 11,625.3 9,173.5 10,024.2 10,880.0
Mcap (EUR mn) 4,137 Net debt (EURmn, 08) 4,667.4 EBITDA margin 14.8% 10.2% 12.7% 13.7%
Free float (EUR mn) 2,730 Sales CAGR 08-11e 0.9% Net profit margin 5.5% 0.5% 3.4% 4.8%
Shares outst. (mn) 167.0 EPS CAGR 08-11e -12% EPS (EUR) 3.26 -0.14 1.58 2.69
Dividend/share (EUR) 1.05 0.50 0.80 1.05
52 weeks
EV/sales 0.63 1.07 0.97 0.88
28 EV/EBITDA 4.28 10.47 7.64 6.40
26 P/E 3.02 nm 15.71 9.20
24 P/CE 1.36 7.38 4.51 3.91
22 P/BV 0.52 1.38 1.30 1.19
20
Dividend yield 10.66% 2.02% 3.23% 4.24%
18
16
EV/EBITDA rel. 1.0 1.0 1.1 1.1
14 P/E rel. 1.0 - 1.1 1.0
12
10
8
voestalpine Rel. to sector (EUR, ppt) -0.1 -1.6 -22.0 -43.3
ATX (Rebased)
DJ EURO STOXX Basic Resources (Rebased) Rel. to universe (EUR, ppt) 4.6 7.9 -6.9 36.0
New World Resources Reduce Target price CZK 134.0

Price (CZK) 165.6 ROCE 2008 30.2% 08 09e 10e 11e
ROE 2008 68.7% Sales (EUR mn) 2,041.1 1,124.3 1,262.3 1,400.6
Mcap (EUR mn) 1,694 Net debt (EURmn, 08) 369 EBITDA margin 33.68% 17.74% 24.04% 24.40%
Free float (EUR mn) 614 Sales CAGR 08-11e 0.6% Net profit margin 16.90% -3.39% 3.92% 6.65%
Shares outst. (mn) 264.1 EPS CAGR 08-11e -16.4% EPS (EUR) 1.36 -0.12 0.22 0.38
EV/sales 0.52 2.01 1.74 1.59
200 EV/EBITDA 1.56 11.32 7.23 6.53
180 P/E 2.01 nm 29.55 16.73
160 P/CE 1.32 12.56 7.47 6.51
140 P/BV 1.11 2.96 2.69 2.37
120 Dividend yield 16.85% 0.00% 1.79% 7.88%
100
EV/EBITDA rel. 0.4 1.1 1.0 1.1
P/E rel. 0.7 - 2.1 1.8
80
40
New World Resources
Rel. to sector (EUR, ppt) -5.6 -7.2 42.5 5.7
PX (Rebased)
DJ EURO STOXX Basic Resources (Rebased) Rel. to universe (EUR, ppt) -1.0 2.4 57.6 85.0

Sector Insight Chemicals
- Pegas pleased with strong numbers, new capacities likely to be added

- Semperit’s excellent results mostly driven by Sempermed
- Negotiations on Ciech’s loan repayments extended, potential gain on insurance stake
- Synthos bought what its major owner sold
- ZCh Police in serious trouble with gas deliveries and how to pay
3Q results Pegas released strong 3Q 2009 results, beating both our own and market estimates with
adversely revenues at EUR 30.1mn, EBIT at EUR 4.3mn and net profit of EUR 6mn. Despite the y/y drop
influenced by in absolute profitability, Pegas attained a better-than-expected operating margin (22% above the
increasing consensus) through production efficiencies (lower outage/maintenance, better product mix, lower
PP/PE prices number of scraps, etc), strong sales (clearing inventories from 2008) and production planning
optimization. Total CAPEX for 2009 should not surpass EUR 1.5mn, which is below our estimate
of EUR 4.5mn (we assumed that Pegas would pay the first installment for a new line in 2009),
while FY EBITDA guidance is revised upwards to fall no less than 5% y/y, compared to the original
plan of a decline of up to -10% y/y. 4Q 2009 sales are likely to be below 3Q 2009 results as
management plans to increase depleted inventories. The decision about new line should be taken
in 1Q 2010. The CEO, Mr. Rezac, seems to be in favor of an additional line with extra capacity of
15kt+ p.a., so we assume that Pegas will go for it (start of production would be 4Q 2012, in line
with our estimates). The CEO still sees some pressure on NW prices, but did not give any
guidance or more details for 2010. However, he stressed that we should not forget about the
exceptional 1Q 2009 sales, which will not be repeated. We therefore assume that he expects the
2010 results to be below 2009 with relatively stable NW prices. There are currently 2 new lines
with 30-40kt to be added in Europe, while 20kt in Germany remains idle and Fiberweb plans some
old line scrapping. So, we assume that the supply/demand situation should remain unchanged
(with supply being 5-10% above demand). The company sees the 2010 dividend policy
unchanged (with the dividend per share to be at least EUR 0.9). Net debt should further decrease
even under the assumption that new line will be ordered (the first installment is lower). Further, the
company wants to concentrate on efficiency (current capacity could be further increased by 1-3%),
R&D development (hopefully we will see new textiles in 2010) and super-light weight materials.
The results for 3Q 2009 were better and the FY 2009 results will also be better than our original
forecast. The outlined future is, however, perfectly in line with our expectations – no easing for
prices, with new capacity to most likely be added, a stronger CZK which will weigh negatively on
other costs, growing POR for dividends and a challenging demand-supply environment. We also
have no doubt about Pegas being able to sell out its capacity, however we expect a gradual
decline in margins, and older lines will also come on stream to be replaced.
Record Semperit presented an outstanding set of figures for 3Q09. As expected, revenues declined to
operating cash EUR 146.8mn, or 11.4% lower compared to the corresponding period of last year. However, due
flow of last to an excellent development of margins, the company was able to increase its EBITDA by
quarter 28.8% to EUR 26.8mn, and its operating profit by 36.9% to EUR 18.9mn. The net result came in
exceeded at EUR 11.1mn, or 38.1% higher than in 3Q of the previous year. The operating cash flow
amounted to EUR 40.4mn, which exceeded the company’s record operating cash flow of the
previous quarter by EUR 2.0mn. The management said that there are increasing signs that the
recession has already bottomed out. The company anticipates “satisfactory results” for the
business year 2009.
Sempermed is The excellent figures were mainly driven by the outstanding performance of the Sempermed
the driving division. To meet the increased demand for examination gloves, the company plans to build four
force additional lines at its existing plant in Thailand. In addition, Sempermed is going to build a state-
of-the-art plant in Surat Thani with a production capacity of 3bn examination gloves. The total
investment volume will amount to EUR 25mn. We fully appreciate the decision to expand in this
business area since it has also proved to be resilient in economic downturns.
In our company report, we derive a new target price of EUR 33.4 (previously EUR 29.0) and
therefore reiterate our clear Buy recommendation. Our new assumptions result in increased
EPS estimates which we raise to EUR 1.88 for 2009 (instead of EUR 1.58), and EUR 2.11 and
EUR 2.28 for 2010 and 2011, respectively (instead of EUR 1.76 and EUR 2.00, respectively).

Negotiations Ciech’s major creditors agreed to prolong negotiations regarding the repayment of PLN 1.6bn in
on PLN 1.6bn loans until 15 December 2009 (the earlier deadline was 30 October). Until that time, banks are
loan repayment obliged not to notice any loans and have agreed to finance Ciech’s current activity.
extended
Meanwhile, the daily Parkiet disclosed that Generali (insurance group) has offered PLN 100mn
for a 100% stake in PTU (the tenth player on the Polish insurance market with 2% market share;
Ciech subsidiaries hold an approx. 45.4% stake). This would mean that Ciech might receive
Generali PLN 45.4mn for its PTU stake. The proposal might not be satisfactory for Ciech, as another
offered PLN shareholder - PTR (an insurance group holding a 22.71% stake) - offered Ciech PLN 65mn at
100mn for the end of September for the 45.4% stake. In addition, Generali stipulated that the transaction
100% stake in will take place only if: (1) All shareholders of PTU answer the bid; (2) FSO (Polish car producer)
PTU (Ciech relinquishes its claim regarding a majority stake in PTU (FSO’s stake has dropped from 87.4%
would receive to 2.5% due to a capital increase in 2003; in May 2009 the court canceled the AGM resolution
PLN 45.4mn) concerning the capital increase).
Treasury Treasury said it would sell a 25% stake in the chemical company ZCh Alwernia (operating in the
prepares to fertilizer business), with a tender scheduled for December 17 (offers should be placed by
sell 25% stake December 14). Ciech holds a 73.75% stake in ZCh Alwernia and should have exclusive interest
in ZCh in the transaction. However, asked whether it will bid for the remaining 25% stake in ZCh
Alwernia Alwernia, Ciech would not comment.
Synthos went Synthos announced that has purchased shares in the tile and ceramics maker Cersanit and the
shopping real estate company Echo Investment for a total of PLN 260mn. Synthos purchased a 7.8%
stake (11.25mn shares) of Cersanit for a total of PLN 181.4mn (PLN 16.12 per share) and a
4.26% stake (17.88mn shares) in Echo Investment for a total of 78.5mn (PLN 4.39 per share).
All the stakes of Cersanit and Echo were sold by Synthos’ owner Mr. Solowow. The deal was
not well received by the market. The management of Synthos disclosed that it is not planning
any further purchases on the WSE.
SB approved The Supervisory Board of ZA Pulawy has approved a proposal by management to pay a
management’s dividend amounting to PLN 2.55 per share (or PLN 48.7mn) from the 2008/09 net profit (payout
dividend ratio of 25%; yield 3.5%). However, the final decision on the dividend will be made at the next
proposal AGM. In our view, it is possible that Treasury (which holds a 50.7% stake) might ask for higher
dividend.
PGNiG PGNiG (the main natural gas supplier to ZCh Police) has called ZCh Police to repay
announced outstanding gas liabilities amounting to PLN 126mn. At the same time, PGNiG has terminated
termination of the contract with ZCh Police to supply natural gas with a 30 day notice period. However, the
gas supply announcement did not mention that PGNiG is considering legal action to resolve the problem. It
contract with is obvious that, currently without funds from PKO BP (PLN 190mn), ZCh Police does not have
ZCh Police the money to repay the debt in such a short term. The funds from the bank will not be available
before mid-December, when the shareholder meeting of the Agency of Industrial Development
will approve the promised loan guarantees. Meanwhile, another obstacle has appeared, as the
promised guarantees might be considered a public subsidy. If that is the case, then the EU will
have to decide about the matter, which will postpone the availability of funds for ZCh Police. In
that case, the biggest question is whether PGNiG is willing to wait for outstanding gas
receivables.
In response to ZCh Police’s problems with gas liabilities, Treasury called a meeting with PGNiG
and ZCh Police (as well as other chemical companies). At the meeting all sides discussed the
problem of overdue gas liabilities. Moreover, they discussed the problem of expensive gas for
Polish chemical companies. No crucial decision were taken at the meeting, though Treasury
agreed to give a helping hand if ZCh Police problems are very serious. However, no details
were given. ZCh Police’s problem with gas liabilities are serious; in the event that gas supplies
are cut off, the company will be forced to halt production, which would mean bankruptcy.
However, such scenario is less likely in our view. ZCh Police is the biggest multi-component

fertilizer producer in Poland and third biggest domestic natural gas consumer (around 2-3% of
total domestic gas usage). Therefore, in the event of a permanent gas cutoff to the company,
PGNiG would lose a key corporate client, which would affect their gas volume. Moreover, both
companies are state owned, which suggests that solutions might be found at the political level.
New investor, Following the successful drilling result in the town of Szentlorinc by PannErgy’s geothermic arm
new impetus Polifin, and after PannErgy’s decision to change its plan to carry out the next drilling at Miskolc,
which has a higher potential for success and greater cost, it located a private investor to
increase Polifin’s capital. According to the agreement with ONP Holdings, owned by Mr.
Albrecht, who holds a majority stake in Cashline, one of the biggest Hungarian brokerage firms,
the parties agreed that ONP and PannErgy would increase Polifin’s capital in several steps. The
initial step, to be taken on 31 Dec., 2009, will see a capital increase for Polifin of HUF 1.08bn in
exchange for a 7.43% stake in the company. In the second step, by next April, PannErgy will
increase the capital of Polifin by the same amount (HUF 1.08bn). After that, depending on the
drilling results (likely at Miskolc) ONP will increase Polifin’s capital by HUF 1.485bn in several
steps, and via these steps, its stake will not reach more than a 15% share in the company. After
these steps it will be a purely financial investor, with several additional rights: (i) one seat on the
BoD of Polifin; (ii) parties having call and put options for the partner’s stake with a defined
exercise price changing in every year according to the definition. The deal mentioned above
values the Polifin stake of PannErgy (92.57%) at some HUF 730 per PannErgy share. Adding
the plastics arm’s value of PannErgy puts the value at some HUF 1,000-1,100 per PannErgy
share (HUF 730+ HUF 340 = HUF1,070), which was not priced in. In the meantime, the
company announced its 3Q results at the beginning of November, which did not bring any major
surprises. This year, the plastics arm (Pannunion) will probably post a better result than
expected, though sales were down somewhat due to the decrease in raw materials prices in 3Q
and are expected to show a decline for the full year. This improvement is due to the improved
margins in the plastic packaging business. On the other hand, this development has no real
impact on PannErgy’s share price, as almost all of the investors are interested in geothermal
developments.


Ciech S.A. PLN 255.8 5% 5.4% 11.8% 13.2% 12.2% 12.4% 14.0% 14.2% 0.3% 5.0% 25.4% 42.1%
PannErgy* HUF 61.1 -24.8% 1.2% 1.5% 2.2% 12.4% 11.3% 11.3% 11.0% 8.8% 12.2% -4.4% 1.7%
Pegas Nonwovens EUR 153.4 15.4% 19.5% 16.4% 13.3% 27.7% 30.7% 27.3% 25.1% 4.7% -1.7% 20.2% 78.7%
Semperit EUR 582.2 13.2% 12.9% 13.6% 13.8% 13.3% 16.9% 16.0% 15.2% 23.2% 19.6% 44.2% 73.1%
Synthos PLN 371.3 7.2% 6.1% 6% 8.0% 9.3% 11.4% 11.3% 11.7% -1.6% 3.6% 36.5% 82.6%
ZA Pulawy S.A. PLN 335.8 23.1% 13.2% 8% 8.9% 17.3% 19.4% 9.1% 10.2% 0.0% -9.7% -6.5% 27.3%
ZCh Police S.A. PLN 94.2 3.3% -14.5% 3% 6.9% 9.5% -2.1% 5.2% 6.4% -14.6% -14.6% -18.6% -19.0%
Median CEE - - 7% 6% 8% 9% 12% 12% 11% 12% - - - -
EuroStoxx Chemicals - 162,404 17% 7% 10% 11% 15% 14% 16% 16% 21.8% 27.0% 52.0% 0.4%
CEE to Peer, Prem/Disc - -58% -17% -19% -22% -20% -9% -27% -28% - - - -
P/E P/CE P/BV

2008 2009e 2010e 2011e 2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
Ciech S.A. 12.6 23.0 10.1 8.0 3.1 4.2 3.1 2.8 0.8 1.3 1.1 1.0
PannErgy* nm 148.3 115.1 75.3 -9.4 15.4 15.0 14.2 1.4 1.5 1.5 1.5
Pegas Nonwovens 5.4 7.7 8.6 10.2 2.6 4.2 4.5 4.7 0.8 1.4 1.4 1.3
Semperit 6.5 15.1 13.4 12.4 3.5 8.3 7.8 7.4 0.8 1.9 1.8 1.7
Synthos 5.5 16.2 15.0 10.8 2.4 6.2 6.7 5.6 0.4 1.0 0.9 0.8
ZA Pulawy S.A. 7.6 6.1 10.1 8.5 5.8 4.6 6.3 5.5 1.5 0.9 0.8 0.7
ZCh Police S.A. 10.8 nm 14.0 6.4 3.5 -5.7 4.1 3.0 0.4 0.5 0.5 0.4
Median C EE 7.0 15.7 13.4 10.2 3.1 4.6 6.3 5.5 0.8 1.3 1.1 1.0
EuroStoxx Chemicals 12.4 20.0 16.3 13.0 7.1 9.6 7.5 7.4 2.1 2.1 2.0 1.8
CEE to Peer, Prem/Disc -44% -22% -18% -21% -57% -52% -15% -25% -62% -39% -43% -46%
EV/Sales EV/EBITDA
2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
Ciech S.A. 0.5 0.9 0.8 0.7 4.3 6.9 5.7 5.2
PannErgy* 1.4 1.5 1.4 1.4 11.4 13.6 12.6 12.4
Pegas Nonwovens 1.4 2.1 1.9 1.7 5.1 7.0 7.1 6.7
Semperit 0.4 0.9 0.8 0.7 2.7 5.4 5.0 4.7
Synthos 0.3 0.8 0.7 0.5 2.7 6.7 5.8 4.6
ZA Pulawy S.A. 0.8 0.3 0.4 0.4 4.5 1.8 4.5 3.6
ZCh Police S.A. 0.1 0.3 0.3 0.2 1.4 -15.8 5.5 3.8
Median C EE 0.5 0.9 0.8 0.7 4.3 6.7 5.7 4.7
EuroStoxx Chemicals 0.6 1.0 0.9 0.9 4.3 8.4 6.4 5.7
CEE to Peer, Prem/Disc -19% -15% -15% -18% 0% -20% -11% -16%
*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;

Ciech S.A. Accumulate Target price PLN 45.0

Free float (EUR mn) 98 Sales CAGR 08-11e - Net profit margin 1.45% 1.38% 2.75% 3.29%
Shares outst. (mn) 28.0 EPS CAGR 08-11e - EPS (PLN) 1.59 1.72 3.70 4.70
Dividend/share (PLN) 4.30 2.22 1.32 1.43
52 weeks EV/sales 0.52 0.85 0.80 0.74
EV/EBITDA 4.30 6.87 5.70 5.22
45
P/E 12.63 23.01 10.12 7.96
40 P/CE 3.05 4.16 3.07 2.83
P/BV 0.76 1.27 1.13 0.99
35
Dividend yield 1.34% 21.43% 5.60% 3.52%
30 EV/EBITDA rel. 1.0 1.0 1.0 1.1
P/E rel. 1.8 1.5 0.8 0.8
25
15 Rel. to sector (EUR, ppt) -5.4 2.2 6.1 -9.0
Ciech S.A. W IG (Rebased) DJ STOXX Chemicals (Rebased) Rel. to universe (EUR, ppt) -6.7 -0.7 2.2 10.3
PannErgy Under review Target price HUF

Price (HUF) 783.0 ROCE 2008 3.2% 08 09e 10e 11e
Mcap (HUF mn) 16,486 ROE 2008 -24.8% Sales (HUF mn) 13,063.3 12,699.4 12,744.1 13,094.1
Free float (EUR mn) 35 Sales CAGR 08-11e -0.7% Net profit margin -20.74% 1.13% 1.68% 2.16%
Shares outst. (mn) 21.1 EPS CAGR 08-11e -7.3% EPS (HUF) -124.27 5.49 6.80 10.40
52 weeks Dividend/share (HUF) 1.00 1.00 1.00 1.00
EV/sales 1.41 1.54 1.42 1.36
1.400 EV/EBITDA 11.44 13.57 12.57 12.35
1.300 P/E nm 148.33 115.15 75.27
1.200 P/CE n.m. 15.37 15.03 14.18
1.100 P/BV 1.43 1.55 1.53 1.49
1.000 Dividend yield 0.06% 0.15% 0.12% 0.13%
900 EV/EBITDA rel. 2.7 2.0 2.2 2.6
800 P/E rel. - 9.5 8.6 7.4
700
600 Absolute (HUF terms) 6.1% 10.3% -10.0% -10.0%
500 Rel. to sector (EUR, ppt) 3.1 9.4 -23.7 -49.3
PannErgy BUX (Rebased) DJ STOXX Chemicals (Rebased) Rel. to universe (EUR, ppt) 1.8 6.5 -27.6 -30.0
Pegas Nonwovens Hold Target price CZK 350

Mcap (CZK mn) 3,959 ROE 2008 15.4% Sales (EUR mn) 142.8 116.5 125.8 143.1
Net debt (EURmn, 08) 120.5 EBITDA margin 27.66% 30.66% 27.32% 25.11%
Shares outst. (mn) 9.2 EPS CAGR 08-11e -9% EPS (EUR) 1.61 2.17 1.93 1.63
52 weeks
EV/sales 1.41 2.14 1.94 1.69
500 EV/EBITDA 5.08 6.98 7.09 6.74
P/E 5.38 7.68 8.62 10.20
450
P/CE 2.59 4.18 4.47 4.73
400 P/BV 0.81 1.45 1.38 1.33
350 Dividend yield 2.69% 9.80% 5.42% 5.42%
EV/EBITDA rel. 1.2 1.0 1.2 1.4
300
P/E rel. 0.8 0.5 0.6 1.0
250
200 Absolute (CZK terms) 3.1% -0.9% 15.5% 15.5%
150 Rel. to sector (EUR, ppt) -1.0 -4.5 0.9 27.6
Pegas Nonwovens PX (Rebased) DJ STOXX Chemicals (Rebased) Rel. to universe (EUR, ppt) -2.3 -7.4 -3.0 46.9

Semperit Buy Target price EUR 33.4

Mcap (EUR mn) 582 ROE 2008 13.2% Sales (EUR mn) 655.3 595.6 652.7 715.1
Mcap (EUR mn) 582 Net debt (EURmn, 08) -60.6 EBITDA margin 13.28% 16.95% 15.99% 15.25%
Free float (EUR mn) 285 Sales CAGR 08-11e 4.1% Net profit margin 6.78% 9.66% 9.33% 8.94%
Shares outst. (mn) 20.6 EPS CAGR 08-11e 1% EPS (EUR) 1.83 1.88 2.11 2.28
52 w eeks
EV/sales 0.36 0.92 0.80 0.72
28 EV/EBITDA 2.74 5.43 5.03 4.74
26 P/E 6.46 15.07 13.42 12.41
24 P/CE 3.54 8.27 7.82 7.37
22 P/BV 0.83 1.89 1.77 1.67
20 Dividend yield 3.80% 9.24% 3.98% 4.47%
18 EV/EBITDA rel. 0.6 0.8 0.9 1.0
16 P/E rel. 0.9 1.0 1.0 1.2
14
S e mpe rit ATX (Re ba se d) DJ STOX X C hemica ls (Re ba se d) Rel. to sector (EUR, ppt) 17.5 16.8 25.0 22.1
Synthos Accumulate Target price PLN 1.1

Mcap (EUR mn) 371 Net debt (EURmn, 08) 60 EBITDA margin 9.31% 11.41% 11.32% 11.67%
Shares outst. (mn) 1,323.3 EPS CAGR 08-11e -27% EPS (PLN) 0.07 0.07 0.08 0.11
EV/sales 0.25 0.77 0.66 0.54
1,4 EV/EBITDA 2.73 6.71 5.79 4.60
1,2 P/E 5.46 16.24 14.96 10.79
P/CE 2.36 6.15 6.70 5.58
1,0 P/BV 0.39 0.96 0.90 0.83
0,8
Dividend yield 0.00% 0.00% 0.00% 0.00%
EV/EBITDA rel. 0.6 1.0 1.0 1.0
0,6 P/E rel. 0.8 1.0 1.1 1.1
0,2
Rel. to sector (EUR, ppt) -7.3 0.8 17.3 31.6
Synthos WIG (Rebased) DJ STOXX Chemicals (Rebased)
Rel. to universe (EUR, ppt) -8.6 -2.0 13.3 50.9
ZA Pulawy S.A. Hold Target price PLN 77.3

Mcap (EUR mn) 336 Net debt (EURmn, 08) -155 EBITDA margin 17.29% 19.44% 9.08% 10.24%
Shares outst. (mn) 19.1 EPS CAGR 08-11e 6% EPS (PLN) 17.31 11.49 7.31 8.50
EV/sales 0.78 0.35 0.41 0.36
100 EV/EBITDA 4.50 1.80 4.55 3.55
P/E 7.59 6.11 10.08 8.47
90
P/CE 5.82 4.64 6.33 5.54
80 P/BV 1.51 0.89 0.78 0.73
70 Dividend yield 1.23% 3.28% 3.16% 1.79%
EV/EBITDA rel. 1.0 0.3 0.8 0.7
60
P/E rel. 1.1 0.4 0.8 0.8
50
40
Absolute (PLN terms) -4.3% -10.6% -15.3% -15.3%
ZA Pulawy S.A. DJ EURO STOXX Chemicals (Rebased) Rel. to universe (EUR, ppt) -7.0 -15.4 -29.7 -4.4

ZCh Police S.A. Reduce Target price PLN 4.5

Mcap (PLN mn) 386 ROE 2008 3.3% Sales (PLN mn) 2,403.7 1,819.2 1,953.7 2,237.9
Mcap (EUR mn) 94 Net debt (EURmn, 08) 2 EBITDA margin 9.54% -2.11% 5.17% 6.42%
Free float (%) 21.0% Gearing (2008) 1% EBIT margin 6.79% -5.66% 1.75% 3.35%
Shares outst. (mn) 75.0 EPS CAGR 08-11e -26% EPS (PLN) 0.38 -1.82 0.37 0.81
52 weeks
EV/sales 0.13 0.33 0.28 0.24
9,5 EV/EBITDA 1.38 n.m. 5.47 3.79
9,0 P/E 10.76 nm 14.03 6.37
8,5
8,0
P/CE 3.46 n.m. 4.09 2.99
7,5 P/BV 0.38 0.47 0.46 0.43
7,0 Dividend yield 0.00% 0.00% 0.00% 0.00%
6,5 EV/EBITDA rel. 0.3 n.m. 1.0 0.8
6,0
5,5
P/E rel. 1.5 - 1.0 0.6
5,0
4,5
4,0 Absolute (PLN terms) -18.3% -15.4% -26.3% -26.3%
ZCh Police S.A.
DJ EURO STOXX Chemicals (Rebased)
Rel. to sector (EUR, ppt) -20.3 -17.4 -37.9 -70.1
W IG (Rebased) Rel. to universe (EUR, ppt) -21.7 -20.3 -41.9 -50.8

Sector Insight Construction
- Wienerberger keeps pessimistic outlook – remains a long-term value play

- STRABAG remains Accumulate on slightly lower target price
- Cersanit passed through its cyclical trough, slight recovery is underway / new
capacities will be opened in 1H2010
- 8% stake in Cersanit sold by major shareholder to Synthos / capital increase likely
- Koelner hopes for rebound in demand next year; 2009 figures better be forgotten
Broad based Our expectation that we will see the first positive effects of public infrastructure spending this
recovery of autumn seems to hold – there is anecdotal evidence that Western European construction
residential companies have received the first orders in the third quarter, with more to come in 2010. In
markets may Eastern Europe large infrastructure projects generally continue to be supported by EU-funds.
take until 2011 Activity is particularly strong in Poland, but price pressure has increased over the last months.
New order intake in the non-residential construction sector also seems to recover from very low
levels. However, due to the long-term nature of non-residential construction (average
construction time is roughly around 18 months) we expect a lag-effect for construction activity.
There are big differences regarding the state of European housing markets. However, apart
from some brighter spots like the UK, a broad based recovery of European housing markets will
likely have to wait until 2011.
3Q09 results Wienerberger’s 3Q09 results were somewhat lower than expected. In the third quarter
somewhat revenues still declined -21.8% to EUR 518.6mn (we expected EUR 514.7mn) and operating
lower than profit was 85.5% lower at EUR 7.5mn. Adjusted for restructuring costs EBIT declined 76.4% to
expected EUR 28.9mn (we expected EUR 32.5mn). Net result after minorities stayed in red with EUR -
2.3mn. There were no meaningful signs of recovery in 3Q results yet. Compared to last year
sales still declined in all major regions. While lower capacity utilization and standstill costs
burdened results, earnings were helped by EUR 135mn positive effects of earlier cost savings
initiatives. Free cash flow in 3Q09 was EUR 146.1mn mainly from EUR 110mn lower working
capital. In the first nine months operating cash flow declined 21% to EUR 139mn.
Pessimistic Wienerberger’s management stated that September was again weaker than they expected
outlook especially in the US and in CEE and they see no signs that the downturn will soon bottom out.
Operating EBITDA in the H209 is therefore guided at the level of the first six months (EUR
100.6mn). Wienerberger stepped up the number of plants it intends to close from 26 to 31 plants
this year (associated restructuring costs rise from EUR 100mn to EUR 120mn, of which 70
writedowns). Targeted cost savings should increase from EUR 150mn to EUR 155mn in 2009
and further EUR 35mn in 2010.
Target price In our view, Wienerberger is a long-term value play. The y/y rates of decline in residential
lowered to construction overall should continue getting smaller, stabilizing at a depressed level, but we do
EUR 14; not expect a recovery of revenues near term. With a P/BV multiple of 0.7, Wienerberger is the
Accumulate only company in the peer group trading below book value. Wienerberger looks expensive on
confirmed 2009/10e multiples, but trades in line on 2011e. The company has a strong earnings uplift
potential as soon as markets improve, based on current capacity utilization of <60% (on
average). Third quarter results and the guidance for 2009 were both somewhat below our
expectations, partly caused by inventory reduction efforts. Due to our lower estimates, as well as
further restructuring costs, we have cut our 12-month target price from EUR 15.7 (dilution-
adjusted) to EUR 14.0. We see no near-term share price trigger, but due to the long-term
potential we confirmed our Accumulate recommendation.
Roughly stable STRABAG’s output volume in the third quarter (-7.1%, EUR 3,795.4mn) was somewhat lower,
results in 3Q09 but revenues (+5.9%, EUR 3,744.2mn) and EBIT (+5.0%, EUR 185.7mn) were slightly higher
than expected. The top-line was still helped mainly by the first-time consolidation of the facility
services activities (some EUR 250mn). Lower expenses for raw materials and sub-contractors
contributed to slightly higher operating margins. In the first nine months financing costs, tax rate
and minorities were all up y/y, which led to 10.6% lower net income after minorities of EUR

102.7mn. As expected output volume in the Building Construction & Civil Engineering segment
was significantly lower y/y (-27% in 3Q 09), while the Transportation Infrastructures segment (+-
2% y/y) was stable and Special Divisions & Consolidations (+69% y/y) posted increases from
consolidation.
STRABAG Instead of expecting stable output volume and EBIT the company’s guidance for 2009 was
management changed to slightly lower output volume and stable result (meaning net income after minorities).
fears tough For 2010 the company expects relatively stable business, but a first deterioration of market
years after conditions in 2011, followed by several difficult years starting in 2012. With about EUR 300mn
2010 net debt, STRABAG remains financially sound. Cash flow 1-9M09 was also slightly positive due
to lower receivables.
Accumulate We confirmed our Accumulate recommendation and slightly lowered our target price from EUR
confirmed, 26 to EUR 25 due to the weak mid-term outlook. STRABAG’s 3Q09 results were better than
target price expected, despite an impairment charge of about EUR 20mn included. Results were supported
EUR 25 by variable cost declines. Should there be no material one-off effects from
restructuring/impairments, then the guidance on stable bottom line for 2009 is clearly too
conservative in our view. Group order backlog in 3Q09 increased further, mainly from large road
construction contracts in Poland and first orders from stimulus programs. Also the weak Building
Construction segment showed sequential improvements in net new order intake. We made only
moderate changes to our EPS estimates: 2009 and 2010 are higher and 2011 slightly lower to
account for increasing price pressure.
Press Mr. Solowow sold this stake in Cersanit to Synthos, a chemical company in which he also holds
speculates that a 58% share. In off-session transactions, 11.25mn shares at PLN 16.12 per share (valued at
Mr. Solowow PLN 181mn) changed hands. This is 7.8% of all shares in the company. There is speculation in
sold shares to the press about Mr. M. Solowow’s motives for selling the almost 8% stake in Cersanit to his
secure money other company, Synthos (chemical). Among other things, press reports suggest that he wanted
for capital to secure cash to participate in Cersanit’s capital increase. Earlier, Cersanit shareholders
increase agreed on a 20% capital increase (about PLN 450mn) to reduce debt and potentially provide
capacity for acquisitions. Besides, Treasury on Thursday sold its entire stake in sanitary
ceramics producer Cersanit. It sold 2.8mn shares (1.95% stake) for PLN 15.6 each, taking in
almost PLN 44mn.
Koelner Koelner’s CEO said that a recovery in demand for construction materials in 2010 should boost
expects figures, and added that the restructuring of Srubex will be finalized. Currently, only the Polish
recovery in market is showing some signs of revival; other regional markets are stagnant.
2010


Cersanit PLN 538.1 0.9% -3.6% 8.8% 15.1% 22.4% 20.3% 21.7% 24.3% 11.7% -1.1% 31.0% 5.3%
CNG PLN 43.1 11.8% 5.3% 6.3% 9.6% 24.5% 20.5% 22.4% 24.5% -7.5% 1.6% 29.2% 8.8%
Institut IGH HRK 69.4 16.1% 5.1% 9.4% 14.4% 17.8% 17.1% 16.9% 17.1% -10.8% -15.5% -19.9% -0.4%
Koelner PLN 109.6 -3.6% 2.4% 4.0% 6.4% 5.5% 5.4% 5.6% 6.6% 19.9% 7.6% 25.0% 76.9%
Mostostal Warszawa PLN 323.5 27.8% 31.8% 22.0% 15.9% 6.4% 8.7% 6.1% 5.2% 4.9% -8.7% 23.9% 26.3%
PBG S.A. PLN 711.0 19.7% 17.0% 16.6% 14.7% 12.9% 13.7% 13.8% 13.5% 3.6% 2.8% 7.9% 3.2%
Polimex PLN 427.1 13.1% 11.6% 8.5% 9.9% 6.8% 6.7% 6.2% 6.4% 7.6% -7.4% 10.7% 12.5%
STRABAG EUR 2,378.0 5.5% 6.0% 5.4% 4.3% 5.3% 5.4% 4.9% 4.4% 8.7% -6.8% 32.4% 74.4%
Trakcja Polska PLN 153.9 26.8% 17.3% 12.8% 15.9% 7.7% 10.9% 8.9% 9.4% 9.7% 1.7% 13.6% -13.3%
Wienerberger EUR 1,381.8 3.3% -14% 0.5% 4.6% 16.7% 8.6% 14.0% 17.1% -5.0% -15.3% 31.5% 19.4%
Median - - 12% 6% 9% 12% 10% 10% 11% 11% - - - -
Median Materials - 65,340 13.3% 6.3% 7.5% 9.5% 13.7% 12.3% 14.6% 15.1% - - - -
Median Construction - 54,029 19.1% 15.6% 13.7% 14.4% 4.9% 5.8% 5.4% 5.1% - - - -
Median Total - 119,369 16.4% 11.6% 12.8% 12.9% 11.7% 10.6% 11.2% 12.1% - - - -
EuroStoxx 130,954 14.0% 8.5% 10.2% 11.1% 14% 12% 13% 14% 4.9% 14.0% 28.3% 36.9%
Construction &
Materials
CEE to Peer, Prem/Disc - -24% -51% -32% -6% -12% -8% 2% -6% - - - -
P/E P/CE P/BV

2008 2009e 2010e 2011e 2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
Cersanit nm nm 23.1 12.0 17.2 17.1 10.2 7.2 1.9 2.1 2.0 1.7
CNG 5.9 15.9 12.5 8.0 2.7 5.8 5.2 4.2 0.7 0.8 0.8 0.7
Institut IGH 9.7 24.6 12.4 7.2 5.4 4.2 5.2 4.4 1.5 1.2 1.1 1.0
Koelner nm 60.3 34.9 20.8 n.m. 60.3 34.9 20.8 0.9 1.4 1.4 1.3
Mostostal Warszawa 10.7 10.0 10.7 12.2 8.9 11.4 11.4 10.1 2.9 2.7 2.1 1.8
PBG S.A. 14.2 14.9 12.3 11.8 14.6 15.5 10.8 9.3 2.6 2.2 1.9 1.6
Polimex 9.9 13.2 16.0 12.8 5.0 7.5 8.5 7.1 1.3 1.4 1.3 1.2
STRABAG 11.8 13.7 14.8 17.9 2.4 4.3 4.9 5.4 0.7 0.8 0.8 0.8
Trakcja Polska 8.7 11.0 13.2 9.6 6.8 9.1 9.9 7.4 2.1 1.8 1.6 1.4
Wienerberger 13.2 nm 146.1 14.6 2.8 10.8 7.6 4.7 0.4 0.7 0.7 0.7
Median C EE 10.3 14.3 14.0 12.1 5.4 10.0 9.2 7.2 1.4 1.4 1.4 1.3
Median Materials 8.3 19.1 14.9 12.0 4.6 7.7 6.8 5.8 1.1 1.2 1.2 1.1
Median Construction 13.9 14.2 13.9 12.7 5.4 6.8 6.2 5.9 2.3 2.1 2.0 1.8
Median Total 11.8 15.8 14.0 12.1 5.0 7.4 6.3 5.9 1.7 1.5 1.5 1.3
EuroStoxx Construction & 9.8 14.6 13.6 12.1 4.6 6.2 6.2 5.7 1.4 1.3 1.3 1.2
Materials
CEE to Peer, Prem/Disc -13% -9% 0% 0% 8% 34% 45% 21% -17% -2% -7% -7%
EV/Sales EV/EBITDA
2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
Cersanit 1.8 2.5 2.1 1.7 7.9 12.3 9.7 7.0
CNG 1.0 1.5 1.3 1.1 4.1 7.2 5.7 4.5
Institut IGH 2.1 2.1 1.7 1.4 11.5 12.3 9.9 8.3
Koelner 0.7 1.2 1.1 1.0 13.1 23.0 19.9 15.3
Mostostal Warszawa 0.3 0.4 0.3 0.3 4.8 4.7 5.2 5.4
PBG S.A. 1.4 1.4 1.2 1.0 10.9 10.5 8.5 7.7
Polimex 0.4 0.5 0.5 0.5 5.8 8.1 8.3 7.1
STRABAG 0.2 0.2 0.2 0.2 3.3 3.7 3.8 4.2
Trakcja Polska 0.5 0.8 0.7 0.5 6.9 7.5 7.6 5.5
Wienerberger 1.0 1.4 1.2 1.1 5.9 15.7 8.9 6.3
Median C EE 0.9 1.3 1.1 1.0 6.4 9.3 8.4 6.7
Median Materials 0.8 0.9 0.9 0.8 4.8 8.3 7.2 6.0
Median Construction 0.3 0.5 0.4 0.4 5.5 9.2 8.3 7.5
Median Total 0.6 0.8 0.8 0.7 5.4 8.6 7.3 6.3
EuroStoxx Construction & 0.9 1.1 1.1 1.0 5.7 8.6 7.4 6.7
Materials
CEE to Peer, Prem/Disc 45% 59% 50% 51% 18% 8% 15% 6%

Cersanit Buy Target price PLN 18.5

Shares outst. (mn) 144.3 EPS CAGR 08-11e 8.8% EPS (PLN) 0.05 -0.27 0.66 1.27
EV/sales 1.76 2.50 2.11 1.71
22 EV/EBITDA 7.87 12.33 9.75 7.01
20 P/E nm nm 23.14 11.99
18
P/CE 17.22 17.09 10.17 7.18
P/BV 1.92 2.13 1.95 1.68
16
Dividend yield 0.00% 0.00% 0.00% 0.00%
14 EV/EBITDA rel. 1.2 1.3 1.2 1.1
12 P/E rel. nm nm 1.7 1.0
8 Absolute (PLN terms) 6.9% -2.0% 18.6% 12.4%
Cersanit
W IG (Rebased)
Rel. to sector (EUR, ppt) 7.2 6.6 5.9 -20.7
DJ EURO STOXX Construction & Material (Rebased) Rel. to universe (EUR, ppt) 4.6 -6.7 7.8 -26.4
CNG Accumulate Target price PLN 3.9
Mcap (PLN mn) 177 ROE 2008 11.8% Sales (PLN mn) 192.0 170.5 177.4 195.4
Shares outst. (mn) 57.0 EPS CAGR 08-11e 5.4% EPS (PLN) 0.37 0.21 0.25 0.39
EV/sales 1.00 1.48 1.28 1.11
22 EV/EBITDA 4.09 7.24 5.70 4.51
20 P/E 5.92 15.85 12.46 7.97
P/CE 2.73 5.76 5.18 4.18
18
P/BV 0.73 0.80 0.78 0.75
16 Dividend yield 0.00% 4.86% 5.94% 11.62%
14 EV/EBITDA rel. 0.6 0.8 0.7 0.7
12 P/E rel. - 1.1 0.9 0.7
8
Cersanit Rel. to sector (EUR, ppt) -12.0 9.2 4.0 -17.2
W IG (Rebased)
DJ EURO STOXX Construc tion & Material (Rebased) Rel. to universe (EUR, ppt) -14.5 -4.1 6.0 -22.9
Institut IGH Hold Target price HRK 4029.0
Price (HRK) 3,200.0 ROCE 2008 6.5% 08 09e 10e 11e
Mcap (HRK mn) 507 ROE 2008 16.1% Sales (HRK mn) 842.8 901.9 1,079.5 1,192.1
Shares outst. (mn) 0.2 EPS CAGR 08-11e 5.7% EPS (HRK) 367.58 130.82 257.08 446.46
Dividend/share (HRK) 75.00 0.00 0.00 0.00
52 weeks
EV/sales 2.05 2.10 1.67 1.42
5.500 EV/EBITDA 11.54 12.32 9.88 8.29
5.000 P/E 9.73 24.56 12.45 7.17
4.500 P/CE 5.41 4.25 5.24 4.43
4.000 P/BV 1.46 1.22 1.11 0.96
3.500 Dividend yield 2.10% 0.00% 0.00% 0.00%
3.000 EV/EBITDA rel. 1.8 1.3 1.2 1.2
2.500 P/E rel. 0.9 1.7 0.9 0.6
1.500 Absolute (HRK terms) -10.1% -15.8% -20.2% 1.3%
1.000 Rel. to sector (EUR, ppt) -15.2 -7.9 -45.0 -26.4
Institut IGH CROBEX (Rebased) Rel. to universe (EUR, ppt) -17.8 -21.2 -43.1 -32.1

Koelner Under review Target price PLN

Price (PLN) 13.8 ROCE 2008 -1.2% 08 09e 10e 11e
Mcap (PLN mn) 449 ROE 2008 -3.6% Sales (PLN mn) 630.7 562.0 561.4 613.5
Free float (EUR mn) 44 Sales CAGR 08-11e - Net profit margin -1.02% 1.41% 2.29% 3.51%
Shares outst. (mn) 32.6 EPS CAGR 08-11e - EPS (PLN) -0.31 0.24 0.40 0.66
52 weeks
EV/sales 0.73 1.25 1.12 1.01
17 EV/EBITDA 13.13 22.97 19.94 15.33
16 P/E nm 60.26 34.91 20.84
15
14 P/CE n.m. 60.26 34.91 20.84
13 P/BV 0.87 1.44 1.38 1.29
12 Dividend yield 0.00% 0.00% 0.00% 0.00%
11
10
EV/EBITDA rel. 2.1 2.5 2.4 2.3
9 P/E rel. - 4.2 2.5 1.7
8
Koelner
W IG (Rebased) Rel. to sector (EUR, ppt) 15.4 15.3 -0.1 50.9
DJ EURO STOXX Construction & Material (Rebased) Rel. to universe (EUR, ppt) 12.9 2.0 1.8 45.1
Mostostal Warszawa Hold Target price PLN 82.0
52 weeks
EV/sales 0.31 0.41 0.32 0.28
80 EV/EBITDA 4.81 4.73 5.18 5.37
75 P/E 10.69 10.03 10.74 12.22
70 P/CE 8.90 11.43 11.44 10.14
65 P/BV 2.94 2.67 2.12 1.80
60
Dividend yield 0.00% 0.00% 0.00% 0.00%
55
EV/EBITDA rel. 0.8 0.5 0.6 0.8
50
P/E rel. 1.0 0.7 0.8 1.0
45
40
Mostos tal W ars zawa
W IG (Rebased) Rel. to sector (EUR, ppt) 0.4 -1.1 -1.3 0.3
DJ EURO STOXX Cons truc tion & Material (Rebased) Rel. to universe (EUR, ppt) -2.1 -14.4 0.7 -5.4
PBG S.A. Hold Target price PLN 230.0
52 weeks
EV/sales 1.40 1.44 1.17 1.05
320 EV/EBITDA 10.86 10.54 8.47 7.72
300 P/E 14.21 14.88 12.31 11.82
280 P/CE 14.64 15.55 10.80 9.29
260 P/BV 2.60 2.25 1.87 1.61
240 Dividend yield 0.00% 0.00% 0.00% 0.00%
220
EV/EBITDA rel. 1.7 1.1 1.0 1.2
P/E rel. 1.4 1.0 0.9 1.0
200
160 Absolute (PLN terms) -0.8% 1.9% -2.3% 10.2%
PB G S .A.
W IG (Rebased)
Rel. to sector (EUR, ppt) -0.9 10.5 -17.2 -22.8
DJ EURO STO XX Construc tion & Material (Rebased) Rel. to universe (EUR, ppt) -3.5 -2.8 -15.3 -28.5

Polimex Sell Target price PLN 3.3

Free float (%) 100% Gearing (2008) 40% EBIT margin 5.13% 4.77% 4.05% 4.37%
52 weeks
EV/sales 0.40 0.54 0.51 0.46
5,0 EV/EBITDA 5.83 8.07 8.26 7.15
4,5
P/E 9.91 13.22 16.03 12.78
P/CE 4.97 7.51 8.51 7.14
4,0 P/BV 1.34 1.42 1.32 1.22
3,5 Dividend yield 0.38% 1.25% 1.33% 1.06%
EV/EBITDA rel. 0.9 0.9 1.0 1.1
3,0
P/E rel. 1.0 0.9 1.1 1.1
2,0 Absolute (PLN terms) 3.0% -8.3% 0.3% 20.1%
Polimex
W IG 20 (Rebas ed)
Rel. to sector (EUR, ppt) 3.1 0.2 -14.4 -13.5
DJ EURO STO XX Construction & Material (Rebas ed) Rel. to universe (EUR, ppt) 0.5 -13.1 -12.5 -19.2
STRABAG Accumulate Target price EUR 25.0
ROE 2008 5.5% Sales (EUR mn) 12,227.8 12,928.9 12,822.8 12,687.0
52 we eks
EV/sales 0.17 0.20 0.18 0.18
26 EV/EBITDA 3.26 3.68 3.78 4.16
24 P/E 11.76 13.70 14.78 17.89
22 P/CE 2.42 4.30 4.94 5.44
20 P/BV 0.65 0.81 0.78 0.76
18 Dividend yield 3.40% 2.63% 2.64% 2.40%
16 EV/EBITDA rel. 0.5 0.4 0.5 0.6
14
P/E rel. 1.1 1.0 1.1 1.5
12
8 Absolute (EUR terms) 8.7% -6.8% 32.4% 74.4%
S TR ABAG
ATX (R ebas ed) Rel. to sector (EUR, ppt) 4.2 0.9 7.2 48.4
D J E UR O S TOX X C ons truc tio n & M a te ria l (Reba se d) Rel. to universe (EUR, ppt) 1.7 -12.5 9.2 42.7
Trakcja Polska Buy Target price PLN 5.1
Mcap (PLN mn) 631 ROE 2008 26.8% Sales (PLN mn) 794.7 777.5 859.2 1,052.9
Free float (%) 49% Gearing (2008) -51% EBIT margin 6.66% 9.19% 7.03% 7.88%
52 weeks
EV/sales 0.53 0.82 0.67 0.51
7,0 EV/EBITDA 6.90 7.55 7.59 5.48
6,5 P/E 8.67 10.96 13.24 9.62
P/CE 6.84 9.10 9.86 7.43
6,0
P/BV 2.08 1.77 1.63 1.44
5,5
Dividend yield 2.90% 2.74% 2.27% 3.12%
5,0
EV/EBITDA rel. 1.1 0.8 0.9 0.8
4,5
P/E rel. 0.8 0.8 0.9 0.8
4,0
3,5
Absolute (PLN terms) 5.1% 0.8% 2.9% -7.5%
3,0
Trakc ja Polska Rel. to sector (EUR, ppt) 5.2 9.4 -11.5 -39.3
W IG (Rebased) Rel. to universe (EUR, ppt) 2.7 -4.0 -9.6 -45.1
DJ EURO STOXX Construction & Material (Rebased)

Wienerberger Accumulate Target price EUR 14.0

ROE 2008 3.3% Sales (EUR mn) 2,431.4 1,845.7 1,854.5 2,050.7
Free float (%) 100% Gearing (2008) 39% EBIT margin 6.49% -13.60% 4.08% 8.23%
Free float (EUR mn) 1,382 Sales CAGR 08-11e -4.6% Net profit margin 4.24% -13.69% 2.29% 6.27%
52 weeks
EV/sales 0.98 1.35 1.25 1.08
16 EV/EBITDA 5.87 15.74 8.89 6.31
P/E 13.21 nm 146.11 14.57
14
P/CE 2.77 10.83 7.58 4.74
12 P/BV 0.45 0.69 0.68 0.66
Dividend yield 0.00% 0.00% 1.68% 3.37%
10
EV/EBITDA rel. 0.9 1.7 1.1 0.9
8 P/E rel. 1.3 - 10.4 1.2
Absolute (EUR terms) -5.0% -15.3% 31.5% 19.4%
4
W iene rbe rger Rel. to sector (EUR, ppt) -9.5 -7.6 6.4 -6.6
ATX (Reba sed)
DJ E URO S TOX X Cons truc tion & M ate ria l (Rebase d)
Rel. to universe (EUR, ppt) -12.1 -20.9 8.3 -12.3

Sector Insight Food & Beverages
- CEDC in the middle of its huge debt and equity offering
- Jutrzenka eyes acquisitions after excellent 2009; strong outlook for 2010
- Graal boasts about its outlook, but we see management as overly optimistic
- Sojaprotein’s new FY guidance is slightly below our estimates
CEDC issue CEDC set an issue price of USD 31 per share. The final number of shares has been set at
price set at 10.25mn and the overallotment option at 1.025mn. Hence, the company will take in about USD
USD 31 320-350mn. Earlier, the maximum number of new shares was 10.45, so the final amount is
almost 8% higher. The proceeds (together with the pending USD 870mn bond issue) will be
used to buy Russian Alcohol minorities and repay some debt facilities (mainly EUR-
denominated bonds and a USD-denominated loan in Russia).
CEDC bond The company has announced a USD 380mn bond issue with a coupon of 9.125% priced at
issues: USD 99.366% and a EUR 380mn bond issue (USD 566mn) with a coupon of 8.875% priced at
380mn with 99.361%. Both will mature in 2016. The total proceeds will amount to USD 946mn, which is
9.125% coupon much higher than the earlier announced USD 870mn. The money will be used to repay 8%
and EUR EUR-denominated bonds due in 2011, a loan facility in Russia and to finance (together with the
380mn with ongoing equity issue) the acquisition of 42% of Russian Alcohol Group. The coupon (and yield)
8.875% coupon are quite high and point to the risk premium which the market demands from the company. We
maintain our view that the whole transaction (equity + debt) is slightly negative for CEDC.
Though the recent drop by shares from over USD 34 to below our target of USD 30 brings
CEDC much closer to being an attractive investment.
Jutrzenka Jutrzenka’s CEO said that he expects strong 4Q09 (the seasonal harvest period) and sees the
plans robust environment extending into 2010. Jutrzenka also plans to develop and centralize its
acquisitions, capacities in its production plant in Bydgoszcz (up by 30%). This will be financed with cash
mulls capital flows. Capex is about PLN 60mn. Additionally, the company intends to go on a spending spree.
increase It is targeting beverage and spice companies in Poland (with revenues of over PLN 100mn) or
confectionary producers in the region. However, larger acquisitions will mean a capital increase.
Jutrzenka is considering issuing up to 10% of new shares (proceeds of about PLN 60-70mn) to
finance acquisitions. The strategy (capacity growth, acquisitions) is in line with our expectations
and company’s mid-term goal to exceed PLN 1bn in revenue (from 630mn in 2010). The news is
positive, but on the other hand, the stock price is very high. We think that for now Jutrzenka’s
share rally will run out of steam. Wrap up: currently very strong fundamentals and compelling
strategy, but very expensive stock.
Jutrzenka The CEO added that he expects net profit for 2009 to top PLN 30mn (we expect PLN 35mn) and
expects strong sales of around PLN 600mn (we foresee PLN 590mn). These are bullish numbers, but the
2009 profits, strong recent quarters show that company has the potential for a strong 4Q09. For 2010, the
mulls dividend CEO expects sales approaching PLN 700mn (which we do not expect purely on organic
grounds) and gross profitability of 8% which will imply a robust profit of PLN 35-40mn.
Graal expects The CFO said that in the long run Graal will show sales of PLN 1bn and a 6% net margin. This
1bn revenue statement assumes major acquisitions. Given the massive debt and current figures (PLN 450mn
and a 6% net sales and zero net profit) we see these targets as overly ambitious.
margin in the
long run Soybean processing company Sojaprotein reported in mid-November the unconsolidated
results for the period 1-3Q09. Net sales of RSD 12.2bn are 7% lower compared to the same
period in 2008. The transfer of crop financing activities from Sojaprotein to Victoria Logistics, a
1-3Q09 soy newly established company within the majority owner Victoria Group, started at the end of 2008
product sales and it will be completed by the end of 2009. This development resulted in 27% lower expenses
increase 26% related to this activity and also affected sales figure. On the other hand, purchase of additional
raw materials increased by 44% due to higher average prices for soybeans. Consequently,
EBITDA of RSD 1.3bn was 31% lower compared to the previous year. Negative FX effects and
higher interest expenses slashed EBT and net profit by almost 70%.

Sojaprotein has also provided full year guidance for 2009 in an additional report on 1H09
realization and plans for 2H09. Projected sales of RSD 15.8bn are slightly below our estimates,
as well as EBITDA and EBT. Estimated net profit of RSD 925mn is 7% lower to our estimate.
We expect additional changes in crop financing expenses by the end of the year since the
transfer of related revenues and expenses is still in progress. Very good news is 26% increase
in 1-3Q09 sales of core soy products, from RSD 5.7bn to RSD 7.2bn (EUR 76.6mn), offsetting
the decreased revenues related to crop financing. No new details have been provided on
realization of Soy Protein Isolates facility, whose completion and effects within next 12 to 18
months is incorporated in our model. Nevertheless, we feel comfortable with our estimates for
consolidated results in 2009 and stick to our Buy recommendation.

Agrana EUR 921.0 -1.4% 8.0% 7.3% 7.7% 6.0% 8.4% 8.9% 9.2% 2.1% -8.0% 17.1% 63.8%
Ambra PLN 41.8 -5.0% 2.9% 6.5% 6.8% 4.5% 6.2% 7.7% 7.7% 37.1% 44.2% 166.3% 281.5%
CEDC USD 1,088.0 -2.0% 11.5% 12.0% 12.5% 13.0% 15.6% 17.0% 17.6% -12.0% -7.1% -6.8% 24.7%
Duda PLN 31.8 7.5% 6.3% 6.4% 6.7% 6.8% 6.4% -9.1% 2.5% 73.3% 2.0%
Graal PLN 25.5 1.7% 0.9% 3.1% 3.5% 5.4% 5.7% 5.9% 5.8% 45.0% 44.0% 101.9% 43.3%
Jutrzenka PLN 155.3 -10% 6.2% 6.6% 7.9% -0.9% 13.9% 13.4% 13.2% -2.6% 14.6% 80.9% 98.1%
Podravka HRK 209.0 2.4% 2.5% 3.8% 5.0% 8.7% 9.2% 9.8% 10.2% -0.1% 6.8% 1.1% 4.7%
Sojaprotein AD RSD 83.9 5.2% 10.6% 11.5% 19.0% 10.3% 12.2% 13.5% 19.1% 2.6% -7.2% 23.3% 14.8%
Median - - 0% 6% 7% 8% 6% 9% 9% 10% - - - -
Remy Cointreau EUR - Euro 1,687 7.8% 8.1% 9.0% 9.7% 22.0% 23.3% 24.6% 23.7% 2.7% 26.4% 25.1% 20.2%
Finsbury Food Group Plc
GBP - UK Pound12 Sterling
14.3% 9.3% 8.3% 8.5% 6.5% 6.0% 0.0% 0.0% -20.6% -18.0% -7.1% 33.4%
Donegal Creameries EUR - Euro 22 -0.2% 4.8% 5.0% 5.0% 5.7% 7.2% 0.0% 0.0% -4.3% -2.2% -4.3% -33.1%
Nestle CHF - Swiss Franc 20.5%
120,131 20.7% 21.1% 18.9% 16.9% 18.1% 18.5% 19.9% 4.9% 15.2% 25.0% 18.9%
Kraft Foods USD - US Dollar
25,844 12.7% 12.1% 12.8% 12.6% 13.9% 17.0% 17.5% 17.4% -2.6% -11.3% -8.1% -14.6%
Rieber & Son NOK - Norwegian
358 Krone
9.6% 10.7% 13.2% 13.3% 13.4% 12.6% 13.6% 0.0% -8.5% -0.6% -7.5% 19.7%
Laurent Perrier SA EUR - Euro 306 8.4% 5.4% 5.6% 7.5% 18.2% 21.9% 26.2% 25.5% -4.4% 3.3% 12.5% -2.3%
Median Total - 150,518 11.1% 10.0% 10.9% 11.2% 15.4% 17.5% 21.6% 23.7% - - - -
EuroStoxx Food & 202,549 15.0% 14.4% 15.0% 14.9% 16% 16% 16% 16% 6.4% 11.5% 14.9% 16.0%
Beverages
P/E P/CE P/BV
2008 2009e 2010e 2011e 2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
Agrana nm 13.9 14.6 13.4 16.1 6.2 6.5 6.2 0.8 1.1 1.0 1.0
Ambra nm 12.7 15.1 13.0 n.m. 3.2 7.4 6.8 0.6 0.4 0.9 0.9
CEDC nm 11.4 10.2 8.6 n.m. 10.1 9.1 7.9 1.0 1.3 1.2 1.0
Duda 3.5 4.3 3.9 1.7 2.0 2.0 0.3 0.3 0.2
Graal 19.1 63.8 17.5 15.2 4.0 9.0 6.3 5.9 0.3 0.6 0.5 0.5
Jutrzenka nm 18.9 16.9 13.6 40.6 9.4 7.8 7.5 0.5 1.1 1.1 1.1
Podravka 31.0 31.6 20.2 14.9 6.8 7.1 6.1 5.3 0.7 0.8 0.8 0.7
Sojaprotein AD 10.0 7.4 6.0 3.4 6.5 6.0 5.0 2.8 0.5 0.7 0.7 0.6
Median C EE 14.5 13.3 14.8 13.4 6.6 6.6 6.4 6.2 0.6 0.7 0.8 0.9
Remy Cointreau 21.7 20.1 17.5 15.6 16.9 16.6 15.7 13.4 1.7 1.6 1.6 1.5
Finsbury Food Group Plc 2.1 3.1 3.1 2.8 6.8 4.4 9.2 5.1 0.3 0.3 0.3 0.2
Donegal Creameries 7.5 7.0 6.8 5.7 4.8 4.4 0.4 0.4 0.4 0.3
Nestle 17.4 17.1 16.0 14.7 14.2 12.7 11.8 10.8 3.6 3.5 3.4 2.8
Kraft Foods 12.9 13.3 12.3 11.3 11.1 10.0 9.2 8.5 1.6 1.6 1.6 1.4
Rieber & Son 18.3 14.0 10.6 9.5 8.6 6.7 6.4 5.7 1.7 1.5 1.4 1.3
Laurent Perrier SA 16.0 24.0 22.2 16.3 13.6 21.0 16.1 13.3 1.4 1.3 1.3 1.2
Median Total 16.6 14.3 13.0 11.8 13.6 11.1 10.4 9.5 1.7 1.5 1.5 1.3
EuroStoxx Food & Beverages 15.5 15.0 13.9 13.1 9.7 9.8 9.9 9.1 2.3 2.2 2.0 1.8
CEE to Peer, Prem/Disc -13% -7% 14% 13% -51% -40% -39% -35% -64% -52% -44% -37%

EV/Sales EV/EBITDA
2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
Agrana 0.6 0.7 0.6 0.6 10.4 8.2 6.9 6.4
Ambra 0.6 0.4 0.6 0.6 13.0 6.3 7.9 7.2
CEDC 1.2 1.5 1.4 1.3 9.0 9.7 8.4 7.6
Duda 0.3 0.4 0.3 4.5 5.2 4.7
Graal 0.5 0.6 0.5 0.5 9.2 11.0 9.3 8.9
Jutrzenka 0.6 1.3 1.0 1.0 -64.1 9.1 7.8 7.3
Podravka 0.8 0.8 0.8 0.7 9.1 8.8 7.9 7.1
Sojaprotein AD 0.7 0.8 0.9 0.8 6.3 6.5 6.9 4.3
Median C EE 0.6 0.7 0.7 0.7 9.0 8.5 7.8 7.2
Remy Cointreau 2.7 3.1 2.9 2.7 12.7 14.2 13.0 11.5
Finsbury Food Group Plc 0.3 0.3 0.3 0.3 3.8 5.0 5.0 4.5
Donegal Creameries 0.4 0.4 0.4 0.3 13.0 6.0 5.3 4.7
Nestle 1.6 1.8 1.8 1.7 9.2 10.5 10.2 9.2
Kraft Foods 1.4 1.4 1.3 1.3 9.4 8.9 8.3 7.7
Rieber & Son 0.8 0.8 0.8 0.7 7.0 7.0 6.1 5.4
Laurent Perrier SA 3.6 3.8 3.6 3.3 13.9 18.5 16.9 13.6
Median Total 1.5 1.6 1.6 1.5 9.3 9.7 9.0 8.1
EuroStoxx Food & Beverages 1.0 1.2 1.1 1.1 7.1 8.9 8.1 7.1

Agrana Hold Target price EUR 67.0
ROE 2008 -1.4% Sales (EUR mn) 2,026.3 2,026.0 2,061.0 2,093.1
Free float (EUR mn) 113 Sales CAGR 08-11e 2.6% Net profit margin -0.81% 3.32% 3.06% 3.30%
Shares outst. (mn) 14.2 EPS CAGR 08-11e 1.7% EPS (EUR) -0.82 4.67 4.45 4.85
EV/sales 0.62 0.69 0.62 0.59
75 EV/EBITDA 10.39 8.17 6.93 6.38
70 P/E nm 13.90 14.58 13.37
65 P/CE 16.09 6.23 6.46 6.22
60 P/BV 0.84 1.09 1.05 1.00
55 Dividend yield 4.11% 3.01% 3.01% 3.08%
50 EV/EBITDA rel. 1.2 1.0 0.9 0.9
45 P/E rel. - 1.0 1.0 1.0
40
35
Absolute (EUR terms) 2.1% -8.0% 17.1% 17.1%
30
Agrana Rel. to sector (EUR, ppt) 6.4 -2.8 11.6 27.0
ATX (Rebased)
DJ EURO STOXX Food & Beverage (Rebased) Rel. to universe (EUR, ppt) -4.9 -13.7 -6.1 32.1
Ambra Hold Target price PLN 5.0

Shares outst. (mn) 25.2 EPS CAGR 08-11e -8.3% EPS (PLN) -0.35 0.20 0.46 0.52
EV/sales 0.59 0.39 0.60 0.55
7 EV/EBITDA 13.05 6.29 7.88 7.24
6 P/E nm 12.70 15.05 13.05
P/CE n.m. 3.19 7.40 6.81
5 P/BV 0.65 0.41 0.91 0.85
4
Dividend yield 4.34% 0.00% 0.00% 0.00%
EV/EBITDA rel. 1.4 0.7 1.0 1.0
3 P/E rel. - 1.0 1.0 1.0
2
Ambra
W IG (Rebased) Rel. to sector (EUR, ppt) 41.4 49.4 160.7 244.7
DJ EURO STOXX Food & Beverage (Rebased) Rel. to universe (EUR, ppt) 30.1 38.5 143.1 249.8
CEDC Hold Target price USD 30.0

Price (USD) 28.7 ROCE 2008 -1.2% 08 09e 10e 11e
Mcap (USD mn) 1,642 ROE 2008 -2.0% Sales (USD mn) 1,647.0 1,604.2 1,819.2 1,936.2
Mcap (EUR mn) 1,088 Net debt (EURmn, 08) 595.1 EBITDA margin 12.96% 15.58% 17.00% 17.63%
Shares outst. (mn) 57.2 EPS CAGR 08-11e 14% EPS (USD) -0.42 2.32 2.83 3.32
52 weeks Dividend/share (USD) 0.00 0.00 0.00 0.00
EV/sales 1.16 1.52 1.43 1.34
40 EV/EBITDA 8.96 9.74 8.41 7.61
35 P/E nm 11.39 10.16 8.65
P/CE n.m. 10.10 9.09 7.87
30
P/BV 0.99 1.30 1.15 1.02
25 Dividend yield 0.00% 0.00% 0.00% 0.00%
20 EV/EBITDA rel. 1.0 1.1 1.1 1.1
15 P/E rel. - 0.9 0.7 0.6
5 Absolute (USD terms) -9.5% -1.7% -0.9% -0.9%
CEDC
W IG (R ebased) Rel. to sector (EUR, ppt) -7.7 -1.9 -12.3 -12.1
DJ EURO STOXX Food & Beverage (Rebased) Rel. to universe (EUR, ppt) -19.0 -12.8 -30.0 -7.0

Duda Under review Target price PLN
Mcap (PLN mn) 130 ROE 2008 7.5% Sales (PLN mn) 1,438.4 1,501.5 1,581.6
Mcap (EUR mn) 32 Net debt (EURmn, 08) 91.9 EBITDA margin 6.72% 6.80% 6.44%
Free float (%) 82.0% Gearing (2008) 81% EBIT margin 4.34% 4.44% 4.39%
Free float (EUR mn) 26 Sales CAGR 08-11e - Net profit margin 2.19% 2.16% 2.10%
Shares outst. (mn) 96.6 EPS CAGR 08-11e - EPS (PLN) 0.33 0.33 0.34
52 weeks Dividend/share (PLN) 0.00 0.00 0.00
EV/sales 0.30 0.35 0.30
2,0 EV/EBITDA 4.51 5.19 4.67
1,8 P/E 3.55 4.27 3.94
1,6 P/CE 1.73 2.04 1.99
1,4 P/BV 0.28 0.26 0.25
1,2 Dividend yield 0.00% 0.00% 0.00%
EV/EBITDA rel. 0.5 0.6 0.6
1,0
P/E rel. 0.2 0.3 0.3
0,8
0,4 Absolute (PLN terms) 11.6% 13.6% 16.3% 67.7%
Duda
W IG (Rebased) Rel. to sector (EUR, ppt) -4.7 7.7 67.8 -34.8
DJ EURO STOXX Food & Beverage (Rebased) Rel. to universe (EUR, ppt) -16.1 -3.2 50.1 -29.7
Graal Sell Target price PLN

Mcap (PLN mn) 105 ROE 2008 1.7% Sales (PLN mn) 390.5 450.4 493.5 526.0
EV/sales 0.50 0.63 0.55 0.52
13 EV/EBITDA 9.20 10.97 9.27 8.92
12 P/E 19.06 63.76 17.51 15.24
11 P/CE 3.99 9.01 6.31 5.94
10 P/BV 0.34 0.55 0.54 0.52
9 Dividend yield 0.00% 0.00% 0.00% 0.00%
8 EV/EBITDA rel. 1.0 1.3 1.2 1.2
7 P/E rel. 1.3 4.8 1.2 1.1
6
5
4
Graal Rel. to sector (EUR, ppt) 49.3 49.2 96.3 6.5
W IG (Rebased)
DJ EURO STOXX Food & Beverage (Rebased) Rel. to universe (EUR, ppt) 37.9 38.3 78.7 11.5
Jutrzenka Hold Target price PLN 4.5

Mcap (EUR mn) 155 Net debt (EURmn, 08) 30 EBITDA margin -0.94% 13.90% 13.42% 13.15%
Free float (%) 17.6% Gearing (2008) 23% EBIT margin -5.03% 9.26% 9.06% 9.02%
Shares outst. (mn) 143.4 EPS CAGR 08-11e 13.1% EPS (PLN) -0.35 0.25 0.26 0.33
EV/sales 0.60 1.26 1.04 0.96
5,0 EV/EBITDA n.m. 9.05 7.79 7.30
4,5 P/E nm 18.87 16.90 13.61
4,0 P/CE 40.65 9.36 7.80 7.46
3,5 P/BV 0.49 1.14 1.08 1.06
3,0 Dividend yield 1.96% 1.31% 5.93% 7.35%
EV/EBITDA rel. n.m. 1.1 1.0 1.0
2,5
P/E rel. - 1.4 1.1 1.0
2,0
1,0 Absolute (PLN terms) -6.7% 13.6% 63.8% 63.8%
Jutrzenka Rel. to sector (EUR, ppt) 1.7 19.8 75.4 61.3
W IG (Rebased)
DJ EURO STOXX Food & Beverage (Rebased) Rel. to universe (EUR, ppt) -9.6 8.9 57.7 66.4

Podravka Accumulate Target price HRK 260.0
Price (HRK) 282.0 ROCE 2008 4.0% 08 09e 10e 11e
Mcap (HRK mn) 1,528 ROE 2008 2.4% Sales (HRK mn) 3,660.0 3,787.9 3,941.5 4,144.3
52 weeks
EV/sales 0.79 0.81 0.77 0.73
380 EV/EBITDA 9.09 8.79 7.89 7.13
360 P/E 30.99 31.59 20.19 14.88
340 P/CE 6.77 7.05 6.07 5.35
320 P/BV 0.73 0.78 0.76 0.74
300
Dividend yield 1.95% 1.77% 2.13% 2.84%
280
EV/EBITDA rel. 1.0 1.0 1.0 1.0
260
P/E rel. 2.1 2.4 1.4 1.1
240
200 Absolute (HRK terms) 0.7% 6.4% 0.7% 0.7%
180
Podravka Rel. to sector (EUR, ppt) 4.2 12.0 -4.4 -32.1
CROBEX (Rebased) Rel. to universe (EUR, ppt) -7.1 1.1 -22.1 -27.0
DJ EURO STOXX Food & Beverage (Rebased)
Sojaprotein AD Buy Target price RSD 1569.0

Price (RSD) 1,057.0 ROCE 2008 13.3% 08 09e 10e 11e
Mcap (RSD mn) 8,056 ROE 2008 5.2% Sales (RSD mn) 20,997.3 17,933.4 16,980.7 19,447.4
Shares outst. (mn) 7.6 EPS CAGR 08-11e 6.2% EPS (RSD) 77.32 139.21 175.94 314.73
Dividend/share (RSD) 0.00 0.00 48.00 89.00
52 weeks
EV/sales 0.65 0.80 0.93 0.82
1.500 EV/EBITDA 6.30 6.53 6.92 4.30
1.400 P/E 9.98 7.42 6.01 3.36
1.300 P/CE 6.47 5.98 5.03 2.83
1.200
P/BV 0.54 0.71 0.68 0.61
1.100
1.000 Dividend yield 0.00% 0.00% 4.54% 8.42%
900 EV/EBITDA rel. 0.7 0.8 0.9 0.6
800 P/E rel. 0.7 0.6 0.4 0.3
700
500 Absolute (RSD terms) 4.4% -4.6% 25.5% 25.5%
400
Sojaprotein AD Rel. to sector (EUR, ppt) 6.9 -2.0 17.8 -22.0
BELEX 15 (Rebased)
DJ STOXX Food & Beverages (Rebased)
Rel. to universe (EUR, ppt) -4.5 -12.9 0.1 -17.0

Sector Insight Healthcare
- Forint appreciation at end of period put a lid on y/y progress in both Richter and Egis’
bottom lines; Egis’s net profit also hampered by losses at foreign subsidiaries
- While Krka’s margins remained superior, plagued by currencies depreciation and delays
in Western markets launches, 1-3Q09 performance lagged behind expectations
- Bioton’s 3Q bottom line did not get out of red, reflecting restructuring burden
- Biofarm matched expectations – Antibiotice's profitability progress in 3Q09 delivered

positive surprise
The CEE pharmas’ stock performance was rather mixed last month. The weaker-than-
anticipated 3Q09 results, and most importantly the subdued full year outlook, depressed the
share price of Slovene Krka. Poland’s Bioton continued to be driven by restructuring news, with
a deal signed on the potential cooperation/merger with Polpharma, providing an antidote to the
share price after another set of red figures.
Krka’s 1-3Q As per recent tradition, Krka kicked off the reporting season in the CEE pharma universe. Unlike
tempo in the past, its results failed to beat or meet market expectations. In summary: Hampered by the
decelerated, negative impact from regional currency depreciation vs. the euro along with postponements in
guidance was Western markets launches, sales advanced by a mere 0.3% y/y to EUR 689.9mn in 1-3Q09. At
cut the same time, Krka’s operating profit rose by just 0.2% y/y to EUR 154.9mn and net profit after
minorities slid 2.2% y/y to EUR 108.4mn (all figures consolidated and according to IFRS
standards). In addition, the company significantly cut its sales target for 2009: instead of the
earlier projected sales growth of 12% to EUR 1,062mn, it said that it anticipates sales to be flat
y/y at EUR 950mn in 2009. While the company is sticking to its original net profit guidance of
EUR 161mn, it seems to be a bit bullish, in view of the published 1-3Q results. Nevertheless,
one has to bear in mind that the company’s final 2009 numbers might look much rosier, should
the release of provisions related to the atorvastatin case (adding up to EUR 69.3mn on the net
level) become a reality. According to the newly revealed guidance for 2010, the company is
aiming for sales growth of 6% y/y to EUR 1,008mn, while the planned net profit for 2010 is at
EUR 159mn.
Richter’s 3Q09 Helped by the forint’s y/y weakening, Richter’s 3Q09 results showed a bit more optimistic
top line growth picture than that one provided by Krka. Richter’s consolidated sales advanced by 10.6% y/y to
solid, HUF 62,535mn, while operating profit rose by 8.8% y/y to HUF 9,262mn. Net profit after
benefiting from minorities dropped 31.7% y/y to HUF 9,756mn. This translated into 1-3Q09 consolidated results
the y/y weaker as follows: sales grew by 15.0% y/y to HUF 197,074mn, while operating profit surged 31.7% y/y
forint, to HUF 36,589mn and net profit after minorities jumped 37.0% y/y to HUF 37,561mn. Richter’s
drospirenone sales performance at home in 3Q09 was relatively solid. Despite the pricing pressures and the
boost to US relatively high comparative base from the same period a year earlier, the y/y decrease was only
sales minor, at 0.2% y/y in 3Q09. The export results were mixed this time. While the US performance
remained excellent (sales up by 26% y/y in EUR terms), in other export markets, namely in the
EU and Russia/CIS, sales retreated y/y in 3Q. The most decisive factor for the bottom line
outcome was once again the financial result. While the revaluation losses linked to the changing
forex situation (namely, the reassessment of currency related trade receivables and payables)
were rather minimal in 3Q09 and the financial result remained in black territory at a profit of HUF
689mn, given the high comparative base (with the financial result reaching HUF 5.7bn, boosted
by forex gains), the y/y drop in the bottom line was unavoidable in 3Q09. Importantly, the
traditionally cautious CEO turned more optimistic, leading investors to anticipate a higher tempo
in the crucial US and Russian markets, as well as indicating that the y/y improvement in
profitability parameters (EBIT margin up from 16.2% to 18.6%) delivered by 1-3Q09 can be
sustained for the full year.

Egis’ 2008/09 As Egis published a profit warning, revealing the sales, EBIT and net profit figures ahead of its
net profit full 2008/09 report, the announced results did not surprise market participants. 4Q08/09 results
slipped by in brief: sales retreated by 1.0% y/y to HUF 24,043mn, while operating profit fell by 36.3% y/y to
5.9% y/y, HUF 997mn and net profit plummeted 93.1% y/y to HUF 406mn. This translated into fiscal year
reflecting 2008/09 results as follows: sales advanced by a solid 10.7% y/y to HUF 106,302mn, operating
absence of profit jumped 54.3% y/y to HUF 13,072mn and net profit slipped 5.9% y/y to HUF 13,130mn (all
previous year’s figures unconsolidated and according to IFRS). Benefits from new product launches helped to
boost from offset, at least partially, the continuing (albeit easing) pricing pressures; domestic sales rose by
Anpharm 1.4% y/y to HUF 29,769mn in 2008/09. Reflecting the depressed Russia/CIS sales coupled with
transaction the negative impact from the Polish zloty depreciation and contracting bulk chemicals sales,
2008/09 exports fell by 7.7% y/y to USD 371.3mn. Although the positive currency effect
gradually diminished in the course of the year, the y/y currency situation was far more favorable
and, combined with the improving sales mix (namely the shrinking proportion of low-margin bulk
sales), lifted the company’s gross margin from 56.8% in 2007/08 to 60.4% in 2008/09. The
operating profit rose by an impressive 54.3% y/y in 2008/09 and the operating margin for the full
year reached 12.3% (well above the year-earlier figure of 8.8%). The 4Q08/09 financial result
was hampered by the revaluation of investments at loss-making foreign subsidiaries totaling
HUF 1,646mn and net profit amounted to just HUF 406mn in 4Q08/09. Thus, despite a tax
allowance (reducing the effective tax rate to 3.8%), net profit slid 5.9% y/y in 2008/09.
Nonetheless, stripping out the impact of the one-off Anpharm transaction-related boost from the
comparative base, 2008/09 pre-tax profit would notch a 31% y/y increase (vs. the reported 5.8%
y/y drop).
Restructuring As expected, both operating and bottom line remained in the red territory in the first nine months
took a heavy of 2009 for Bioton, the Polish insulin manufacturer. The company’s consolidated sales retreated
toll on Bioton’s by 6.1% y/y to PLN 218.8mn in 1-3Q09. (However, it is worth mentioning that excluding one-off
3Q09 results elements from the comparative base the 1-3Q09 top line growth notched 8.1% y/y.) The still
meager gross profitability combined with significantly high restructuring costs both at the parent
company and at SciGen (amounting to PLN 15.5mn) and write-offs of assets and the creation of
provisions (totaling PLN 21.7m) as well as costs associated with implementation of the new
strategy (PLN 5.1mn) did bite into the company’s operating and net results. On the operating
line, the company recorded a loss of PLN 55.2mn (vs. an operating profit of PLN 19.3mn in the
same period a year earlier) and the net loss after minorities widened to PLN 50.1mn (vs. a net
loss of PLN 37.2mn in the same period a year earlier). Apart from rather disappointing business
results, Bioton still delivered a positive piece of news to investors last month. Namely, the
company announced that it had signed a letter of an intent which could result in the merger of
Bioton with pharmaceuticals producer Polpharma and the disposal of antibiotics units and Italian
subsidiaries, all of which represents a very bold move in the company’s restructuring. Should the
plans materialize, they will substantially change the shape of the company and promise to shore
up its ailing profitability. According to Bioton’s CEO Slawomir Ziegert, the company should
obtain some PLN 90-110mn from the sale of its antibiotics segment, with the proceeds to be
used for developing high-margin biotech products as well as its core business i.e. insulin sales.
Biofarm's 3Q09 Biofarm announced that its 3Q09 sales rose by 4.7% y/y to RON 16.4mn, while EBIT
report decreased by 3% y/y to RON 3.6mn. For the 1-3Q09 period, sales amounted to RON 50.6mn
confirmed (up by 7.7% y/y) and EBIT went down by 3.1% y/y to RON 13.1mn. According to the company,
stable the sales volume slipped by 6.4% y/y in 1-3Q09, a significantly better performance than the 15%
operating decline recorded by the entire Romanian market (according to CEGEDIM data). All told, we stick
performance, to our forecasts and expect the company's sales to advance by 5% y/y to RON 68.4mn in 2009.
clawback At the same time, the operating profit is envisaged to fall by 11% y/y to RON 12.9mn as the
system to hit implementation of the clawback system (tax on sales), starting from October 1, 2009, is set to
4Q09 results depress Biofarm's profitability in 4Q09.

Antibiotice's Antibiotice reported 3Q09 sales worth RON 49.7mn (up by 3.5% y/y) and EBIT of RON 2.7mn
profitability (3.8 times higher than in 3Q08), which was a positive surprise to us, as we expected the
progress in company's operating profit to slide into the red territory. In 1-3Q09, sales amounted to RON
3Q09 157.8mn (up by 1.5% y/y) while EBIT advanced by 11% y/y to RON 25.5mn. Nonetheless, as
surpassed with Biofarm, the company faces difficult times ahead, due to the introduction of the clawback
expectations, system from October this year. Consequently, we leave our conservative forecast unchanged
but the and for FY09, and estimate the company's sales at RON 225.4mn (+4.5%y/y), with EBIT of RON
company faces 25.7mn (+1.5%y/y). Furthermore, we stick to our pessimistic stance regarding the company's
difficult times operating performance in 2010, with the company's margins remaining under pressure due to
ahead the tax on sales and ambitious marketing campaigns as well as the difficulties with working
capital financing, caused by the very long period (280-290 days) for collecting receivables.
Richter’s rich The coming month should be calm, giving investors more time to digest the heavy report flow
news flow to from the CEE pharma sector from November. The situation around the possible
propel share cooperation/merger with Polpharma should continue to attract attention to the Polish Bioton. As
price in the the company announced, a study of the merger with Polpharma will be prepared by December
near term; 15, 2009; by February 28, 2010 both sides are expected to decide on the merger possibility and
Krka remains its basic parameters, and by August 30, 2010 a merger plan could be signed. The contract
our long-term regarding the sale of the antibiotics segment and the Italian units should be inked by end-
fundmental February 2010. While the reversing currency fortunes dampened the 3Q financial results of
pick Richter and Egis, and the upcoming quarters should see a diminishing currency cushion, the
underlying business remains strong and, helped by cost containment measures, the profitability
margins should be compromised to only a minimal extent. In addition, we believe that Richter
should benefit from the upcoming news flow related to its R&D cooperation with Forest
Laboratories (RGH-188 anticipated to move to phase III clinical trials in 1H2010), which should
provide a desirable trigger for its stock price. While Egis lacks such an element of positive
surprise in its news pipeline, the stock’s valuation gap is supportive for share price appreciation.
Last but not least, we continue to think that Krka’s share price has dived to very attractive levels
that fail to adequately reflect the company’s clear regional competitive edge (namely its superior
pace of innovation, strong regional footing and excellent profitability margins). With that in mind,
Krka retains its position as our long-term, fundamental-based pick in the regional pharma sector.


A&D Pharma EUR 131.7 -1.0% 4.9% 5.5% 6.4% 4.4% 7.5% 7.6% 7.8% 1.3% 43.6% 61.2% 36.2%
Antibiotice RON 70.2 4% 6.2% 6.4% 9.0% 17.2% 16.9% 16.1% 19.3% 5.4% -7.1% 23.8% 48.3%
Biofarm RON 55.4 -15.6% 7.9% 9.0% 10.2% 28.1% 24.8% 24.8% 27.8% 13.9% 0.3% 24.6% 149.2%
Bioton PLN 300.8 -24.4% -4.0% 6.7% 3.7% -16.3% -9.4% 34.2% 24.3% 4.4% -14.0% 1.6% -6.3%
Egis HUF 553.6 12.7% 9.9% 10.4% 11.1% 16.7% 19.1% 20.8% 22.2% 3.1% 1.4% 34.6% 71.6%
Farmacol PLN 226.6 13.7% 10.9% 12.2% 11.7% 2.2% 1.9% 2.0% 1.9% -3.4% 11.3% 40.3% 48.5%
Intercell EUR 1,234.2 5.7% -3.6% 1.5% 7.8% -19.4% -21.4% 8.1% 24.5% -2.5% 4.2% 15.5% 20.3%
Krka EUR 2,437.0 21.5% 19.3% 19.1% 18.6% 32.5% 31.6% 31.8% 31.9% -2.4% -3.2% -4.6% 30.6%
PGF PLN 124.5 18.2% 13.5% 10.5% 10.1% 2.2% 2.2% 2.0% 2.0% -7.2% -3.2% 33.8% 32.0%
Richter Gedeon HUF 2,947.2 13.3% 12.3% 12.2% 12.8% 23.1% 25.3% 26.0% 26.9% 9.6% 16.8% 47.4% 47.2%
Sanochemia EUR 37.5 -6.2% -5.7% 0.6% 2.1% 11.7% 4.3% 15.1% 18.2% 58.4% 44.1% 96.3% 1.7%
Torfarm PLN 76.9 10.0% 18.5% 15.5% 15.4% 1.2% 1.5% 1.3% 1.3% 6.7% -0.2% 64.6% 69.4%
Median - - 8% 9% 10% 10% 8% 6% 16% 21% - - - -
Teva Pharmaceutical ILS - Israeli Shekel 14.7%
33,081 16.2% 18.2% 16.9% 28.6% 30.9% 36.0% 35.4% 5.5% -0.7% 8.9% 7.2%
Mylan Inc. USD - US Dollar
3,686 10.0% 13.5% 19.8% 14.0% 20.1% 25.6% 25.6% 25.8% 6.1% 18.2% 26.0% 63.5%
Watson Pharmaceuticals USD - US Dollar
2,623 11.3% 12.1% 10.7% 10.7% 21.5% 25.0% 23.3% 22.5% 4.7% 1.1% 14.5% 37.3%
Stada Arzmeimittel AG EUR - Euro1,397 11.1% 10.8% 11.2% 11.1% 15.6% 16.7% 17.0% 17.4% 24.1% 49.9% 32.1% 26.5%
Ranbaxy Laboratories INR - Indian3,092
Rupee -5.2% 4.2% 11.3% 16.7% 8.5% 7.0% 13.3% 16.1% 29.0% 59.0% 74.3% 121.8%
Recordati EUR - Euro1,142 22.4% 22.2% 17.3% 16.6% 25.2% 25.7% 23.3% 22.5% 4.1% 18.1% 17.2% 35.2%
Dr Reddy Laboratories INR - Indian2,706
Rupee-10.9% 17.3% 17.9% 17.2% 18.7% 19.0% 19.7% 20.8% 5.1% 44.4% 66.8% 112.7%
Median Total - 47,726 11.1% 13.5% 17.3% 16.6% 20.1% 25.0% 23.3% 22.5% - - - -
EuroStoxx Healthcare 130,960 13.4% 10.8% 11.9% 12.7% 20% 22% 23% 23% 6.4% 9.5% 22.2% 37.7%
P/E P/CE P/BV

2008 2009e 2010e 2011e 2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
A&D Pharma nm 11.9 10.0 8.1 12.0 7.0 6.0 5.0 0.3 0.6 0.5 0.5
Antibiotice 14.1 18.5 16.8 10.7 6.6 10.1 9.0 6.8 0.7 1.1 1.0 0.9
Biofarm nm 21.3 17.6 14.1 n.m. 15.5 13.2 10.9 0.7 1.7 1.5 1.4
Bioton nm nm 12.4 22.5 n.m. n.m. 9.5 14.2 0.6 0.8 0.8 0.8
Egis 6.5 12.0 10.7 9.1 4.2 7.5 6.8 5.8 0.8 1.2 1.1 1.0
Farmacol 8.0 13.5 10.7 10.0 12.1 13.4 9.9 9.0 1.1 1.4 1.2 1.1
Intercell 57.9 nm nm 46.8 49.3 n.m. 112.0 37.5 3.0 3.6 3.7 3.6
Krka 11.0 14.9 12.9 11.4 7.3 10.1 9.0 8.0 2.2 2.7 2.3 2.0
PGF 5.7 10.3 11.7 11.0 5.9 6.5 6.9 6.6 1.0 1.3 1.2 1.1
Richter Gedeon 12.1 18.2 16.8 14.6 8.1 12.4 11.3 10.0 1.6 2.1 2.0 1.8
Sanochemia nm nm 121.3 35.0 64.4 20.5 6.8 5.6 0.9 0.7 0.7 0.7
Torfarm 9.3 8.2 8.4 7.5 5.2 7.5 5.5 4.9 1.0 1.4 1.2 1.1
Median C EE 10.2 13.5 12.4 11.2 7.7 10.1 9.0 7.4 1.0 1.3 1.2 1.1
Teva Pharmaceutical 17.4 16.1 12.0 11.1 14.4 15.3 11.5 9.5 2.6 2.6 2.2 1.9
Mylan Inc. 21.0 14.4 12.0 10.2 14.4 13.2 8.5 5.4 2.1 1.9 2.4 1.4
Watson Pharmaceuticals 16.9 14.6 13.9 12.1 10.3 10.2 8.8 7.7 1.9 1.8 1.5 1.3
Stada Arzmeimittel AG 15.2 14.5 12.9 12.0 9.4 8.0 7.3 6.9 1.7 1.6 1.4 1.3
Ranbaxy Laboratories 117.8 37.9 22.0 51.9 24.2 20.5 4.1 4.9 4.3 3.7
Recordati 11.4 10.1 11.9 11.2 8.5 7.9 9.4 9.1 2.6 2.2 2.1 1.9
Dr Reddy Laboratories 22.6 18.5 16.4 24.6 16.0 15.1 12.7 4.4 3.9 3.3 2.8
Median Total 16.9 14.6 12.9 12.0 12.3 13.2 9.4 9.1 2.6 2.2 2.2 1.9
EuroStoxx Healthcare 19.1 15.9 16.4 15.0 12.5 12.3 11.4 10.5 2.3 2.3 2.2 2.0

EV/Sales EV/EBITDA
2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
A&D Pharma 0.2 0.4 0.3 0.3 4.7 5.0 4.6 4.1
Antibiotice 0.8 1.5 1.4 1.2 4.5 9.0 8.5 6.1
Biofarm 0.6 2.7 2.3 1.9 2.1 10.8 9.2 6.8
Bioton 3.4 4.7 2.7 2.7 -21.0 -49.6 8.0 11.2
Egis 0.8 1.3 1.1 0.9 n.m. 6.6 5.1 4.1
Farmacol 0.1 0.2 0.2 0.2 6.6 11.4 9.0 8.2
Intercell 15.7 15.2 10.1 7.0 -81.1 -71.2 124.6 28.4
Krka 2.0 2.6 2.4 2.1 6.2 8.2 7.4 6.6
PGF 0.2 0.2 0.2 0.2 8.1 9.8 10.0 9.3
Richter Gedeon 1.8 2.8 2.5 2.1 8.0 11.1 9.4 7.9
Sanochemia 1.6 1.2 1.1 1.0 13.4 28.6 7.6 5.7
Torfarm 0.1 0.1 0.1 0.1 6.4 7.8 6.8 6.2
Median C EE 0.8 1.4 1.3 1.1 6.2 8.6 8.2 6.7
Teva Pharmaceutical 3.8 3.9 3.2 2.9 13.2 12.6 9.0 8.1
Mylan Inc. 1.6 2.1 1.9 1.6 7.8 8.2 7.5 6.2
Watson Pharmaceuticals 1.2 1.9 1.4 1.2 5.8 7.8 6.2 5.2
Stada Arzmeimittel AG 1.3 1.5 1.4 1.4 8.7 9.2 8.4 7.8
Ranbaxy Laboratories 1.8 3.3 2.8 2.5 20.5 47.7 21.3 15.7
Recordati 1.3 1.6 1.6 1.4 5.1 6.2 6.9 6.2
Dr Reddy Laboratories 1.3 2.8 2.4 2.1 7.1 14.6 12.3 10.0
Median Total 1.3 2.1 1.9 1.6 7.8 9.2 8.4 7.8
EuroStoxx Healthcare 2.2 2.4 2.3 2.2 9.2 10.2 9.1 8.2

A&D Pharma Accumulate Target price EUR 3.7

Mcap (EUR mn) 132 ROE 2008 -1.0% Sales (EUR mn) 501.5 467.5 500.3 540.6
Shares outst. (mn) 33.3 EPS CAGR 08-11e - EPS (EUR) -0.07 0.33 0.39 0.49
EV/sales 0.21 0.38 0.35 0.32
5,0 EV/EBITDA 4.68 5.04 4.61 4.10
4,5 P/E nm 11.89 10.02 8.09
4,0 P/CE 12.02 7.00 5.96 5.02
3,5 P/BV 0.33 0.56 0.53 0.50
3,0 Dividend yield 0.00% 0.00% 0.00% 0.00%
2,5 EV/EBITDA rel. 0.8 0.6 0.6 0.6
2,0
P/E rel. - 0.9 0.8 0.7
1,5
1,0
0,5
A&D Pharma Rel. to sector (EUR, ppt) -1.3 39.0 43.7 2.4
BET (Rebased)
DJ EURO STOXX Health Care (Rebased) Rel. to universe (EUR, ppt) -5.7 38.0 38.0 4.5
Antibiotice Reduce Target price RON 0.615
Price (RON) 0.65 ROCE 2008 5.0% 08 09e 10e 11e
Mcap (RON mn) 296 ROE 2008 4.4% Sales (RON mn) 215.8 225.4 245.1 265.2
Shares outst. (mn) 455 EPS CAGR 08-11e -3.9% EPS (RON) 0.02 0.04 0.04 0.06
Dividend/share (RON) 0.02 0.02 0.02 0.02
52 weeks
EV/sales 0.78 1.52 1.36 1.18
0,8 EV/EBITDA 4.54 8.98 8.49 6.09
P/E 14.15 18.45 16.75 10.70
0,7
P/CE 6.61 10.08 9.03 6.82
0,6 P/BV 0.66 1.12 1.03 0.91
0,5
Dividend yield 5.08% 2.71% 2.39% 3.74%
EV/EBITDA rel. 0.7 1.0 1.0 0.9
0,4 P/E rel. - - 1.3 1.0
Absolute (RON terms) 3.2% -7.8% 23.8% 62.5%
0,2
Rel. to sector (EUR, ppt) 2.8 -11.7 6.3 14.5
Antibiotice BET (Rebased) DJ STOXX Health Care (Rebased)
Biofarm Hold Target price RON 0.21
Price (RON) 0.2 ROCE 2008 -27.3% 08 09e 10e 11e
Mcap (RON mn) 233 ROE 2008 -15.6% Sales (RON mn) 65 68 75 83
Shares outst. (mn) 1,094.9 EPS CAGR 08-11e 2.32% EPS (RON) -0.02 0.01 0.01 0.02
52 weeks
EV/sales 0.60 2.69 2.27 1.90
0,26 EV/EBITDA 2.12 10.85 9.18 6.85
0,24 P/E nm 21.31 17.65 14.05
0,22 P/CE n.m. 15.48 13.20 10.85
0,20
0,18 P/BV 0.66 1.66 1.51 1.37
0,16 Dividend yield 0.00% 0.00% 0.00% 0.00%
0,14 EV/EBITDA rel. 2.0 0.8 0.7 0.7
0,12 P/E rel. nm 1.6 1.4 1.3
0,10
0,06 Absolute (RON terms) 11.5% -0.5% 24.6% 173.1%
0,04 Rel. to sector (EUR, ppt) 11.3 -4.3 7.1 115.4
Biofarm BET (Rebased) DJ EURO STOXX Health Care (Rebased) Rel. to universe (EUR, ppt) 6.9 -5.4 1.4 117.5

Bioton Hold Target price PLN 0.26

Mcap (PLN mn) 1,233 ROE 2008 -24.4% Sales (PLN mn) 293.5 309.7 471.1 451.6
Mcap (EUR mn) 301 Net debt (EURmn, 08) 104.6 EBITDA margin -16.27% -9.41% 34.22% 24.31%
Free float (%) 58.9% Gearing (2008) 35% EBIT margin -24.36% -18.69% 27.84% 17.29%
Free float (EUR mn) 177 Sales CAGR 08-11e 13.6% Net profit margin -75.99% -18.34% 20.66% 12.57%
Shares outst. (mn) 5,360.4 EPS CAGR 08-11e -0.35% EPS (PLN) -0.07 -0.01 0.02 0.01
EV/sales 3.41 4.67 2.72 2.73
0,34
EV/EBITDA n.m. n.m. 7.95 11.24
0,32
P/E nm nm 12.41 22.45
0,30
P/CE n.m. n.m. 9.53 14.24
0,28
P/BV 0.55 0.84 0.83 0.82
0,26
Dividend yield 0.00% 0.00% 0.00% 0.00%
0,24
EV/EBITDA rel. n.m. n.m. 1.0 1.7
0,22
0,20
P/E rel. nm nm 1.0 2.0
0,16 Absolute (PLN terms) 0.0% -14.8% -8.0% 0.0%
Bioton
WIG 20 (Rebased) Rel. to sector (EUR, ppt) 1.8 -18.7 -15.9 -40.1
DJ EURO STOXX Health Care (Rebased) Rel. to universe (EUR, ppt) -2.6 -19.7 -21.6 -38.0
Egis Accumulate Target price HUF 22,700.0
Price (HUF) 19,200.0 ROCE 2008 13.2% 08 09p 10e 11e
Mcap (HUF mn) 149,486 ROE 2008 12.7% Sales (HUF mn) 96,008.0 106,302.0 107,915.4 115,842.8
Shares outst. (mn) 7.8 EPS CAGR 08-11e 21.12% EPS (HUF) 1,792.90 1,686.42 1,791.54 2,118.45
EV/sales 0.79 1.26 1.06 0.92
22.000
EV/EBITDA 4.71 6.57 5.13 4.13
20.000 P/E 6.47 11.98 10.71 9.06
18.000 P/CE 4.23 7.52 6.82 5.84
P/BV 0.76 1.20 1.06 0.95
16.000
Dividend yield 1.03% 0.59% 0.63% 0.63%
14.000 EV/EBITDA rel. 0.8 0.8 0.6 0.6
12.000 P/E rel. 0.6 0.9 0.9 0.8
Absolute (HUF terms) 0.5% -0.3% 26.7% 77.8%
8.000
Egis BUX (Rebased) DJ EURO STOXX Health Care (Rebased) Rel. to universe (EUR, ppt) -3.9 -4.3 11.4 39.8
Farmacol Sell Target price PLN 35.0
Price (PLN) 39.7 ROCE 2008 12.5% 08 09p 10e 11e
52 weeks
EV/sales 0.14 0.21 0.18 0.16
45 EV/EBITDA 6.59 11.38 9.01 8.23
P/E 8.00 13.48 10.67 10.00
40
P/CE 12.15 13.45 9.90 9.04
35 P/BV 1.11 1.41 1.23 1.13
Dividend yield 0.00% 0.00% 0.00% 2.80%
30
EV/EBITDA rel. 1.1 1.3 1.1 1.2
25 P/E rel. 0.8 1.0 0.9 0.9
20
Farmacol WIG (Rebased) DJ EURO STOXX Health Care (Rebased) Rel. to universe (EUR, ppt) -10.4 5.6 17.1 16.8

Intercell Buy Target price EUR 31.7

Price (EUR) 26.0 ROCE 2008 34.6% 08 09p 10e 11e
Mcap (EUR mn) 1,234 ROE 2008 5.7% Sales (EUR mn) 55.8 70.2 105.0 152.0
Mcap (EUR mn) 1,234.2 Net debt (EURmn, 08) -160 EBITDA margin -19.41% -21.39% 8.12% 24.52%
Free float (%) 82.5% Gearing (2008) -46% EBIT margin -24.78% -29.15% 2.50% 20.21%
Free float (EUR mn) 1,018 Sales CAGR 08-11e 29.9% Net profit margin 30.80% -17.56% 4.87% 17.35%
Shares outst. (mn) 47.5 EPS CAGR 08-11e 46.3% EPS (EUR) 0.38 -0.26 0.11 0.56
EV/sales 15.73 15.24 10.12 6.95
32 EV/EBITDA nm nm 124.61 28.35
30 P/E 57.90 nm nm 46.78
28 P/CE 49.30 n.m. 112.00 37.46
26 P/BV 2.97 3.61 3.66 3.65
24 Dividend yield 0.00% 0.00% 0.00% 0.00%
22 EV/EBITDA rel. n.m. n.m. 15.2 4.2
20 P/E rel. 5.7 nm nm 4.2
16 Absolute (EUR terms) -2.5% 4.2% 15.5% 20.3%
Intercell ATX (Rebased) DJ EURO STOXX Health Care (Rebased) Rel. to universe (EUR, ppt) -9.5 -1.5 -7.7 -11.5
Krka Buy Target price EUR 103.0
Price (EUR) 69 ROCE 2008 15.3% 08 09p 10e 11e
Mcap (EUR mn) 2,437 ROE 2008 21.5% Sales (EUR mn) 950 1,006 1,107 1,225
Shares outst. (mn) 35.4 EPS CAGR 08-11e 12.7% EPS (EUR) 4.40 4.62 5.34 6.04
EV/sales 2.00 2.60 2.36 2.12
80 EV/EBITDA 6.16 8.24 7.42 6.65
75 P/E 10.96 14.89 12.89 11.38
70 P/CE 7.32 10.11 9.03 8.01
65 P/BV 2.19 2.67 2.29 1.97
Dividend yield 2.18% 1.60% 1.74% 2.04%
60
EV/EBITDA rel. 1.0 1.0 0.9 1.0
55
P/E rel. 1.1 1.1 1.0 1.0
50
45 Absolute (EUR terms) -2.4% -3.2% -4.6% 30.6%
Krka SBI (Rebased) DJ EURO STOXX Health Care (Rebased) Rel. to universe (EUR, ppt) -9.4 -8.9 -27.8 -1.2
PGF Sell Target price PLN 26.0
Price (PLN) 40 ROCE 2008 7.1% 08 09p 10e 11e
Shares outst. (mn) 12.8 EPS CAGR 08-11e - EPS (PLN) 4.08 4.12 3.43 3.64
52 weeks
EV/sales 0.17 0.22 0.20 0.19
55 EV/EBITDA 8.13 9.80 9.96 9.31
50 P/E 5.71 10.28 11.66 10.97
45 P/CE 5.87 6.49 6.89 6.65
P/BV 1.02 1.29 1.17 1.05
40
Dividend yield 0.00% 0.00% 0.00% 0.00%
35
EV/EBITDA rel. 1.3 1.1 1.2 1.4
30
P/E rel. 0.6 0.8 0.9 1.0
25
20
Absolute (PLN terms) -11.1% -4.1% 21.2% 40.8%
PGF WIG (Rebased) DJ STOXX Health Care (Rebased) Rel. to universe (EUR, ppt) -14.2 -8.9 10.6 0.2

Richter Gedeon Accumulate Target price HUF 45,900.0

Price (HUF) 42,700 ROCE 2008 15.0% 08 09p 10e 11e
Mcap (EUR mn) 2,947 Net debt (EURmn, 08) -268 EBITDA margin 23.14% 25.31% 26.02% 26.90%
Shares outst. (mn) 18.6 EPS CAGR 08-11e 13.1% EPS (HUF) 2,221.87 2,437.82 2,540.32 2,923.49
EV/sales 1.84 2.81 2.45 2.12
50.000
EV/EBITDA 7.97 11.09 9.43 7.89
45.000 P/E 12.09 18.23 16.81 14.61
P/CE 8.08 12.44 11.29 9.95
40.000
P/BV 1.57 2.15 1.96 1.78
35.000 Dividend yield 2.20% 1.35% 1.52% 1.64%
EV/EBITDA rel. 1.3 1.3 1.1 1.2
30.000
P/E rel. 1.2 1.4 1.4 1.3
Richter Gedeon
BUX (R ebased)
Rel. to sector (EUR, ppt) 7.0 12.2 29.9 13.4
DJ EURO STOXX Health Care (Rebased) Rel. to universe (EUR, ppt) 2.5 11.1 24.2 15.5
Sanochemia Reduce Target price EUR
Price (EUR) 3.69 ROCE 2008 -2.4% 08 09p 10e 11e
Mcap (EUR mn) 37 ROE 2008 -6.2% Sales (EUR mn) 29.5 29.3 31.9 34.8
Free float (%) 30.0% Gearing (2008) -7% EBIT margin -4.05% -11.29% 0.17% 3.33%
Shares outst. (mn) 10.2 EPS CAGR 08-11e - EPS (EUR) -0.34 -0.29 0.03 0.11
EV/sales 1.57 1.24 1.15 1.04
6,0 EV/EBITDA 13.39 28.62 7.62 5.72
5,5 P/E nm nm 121.34 34.99
5,0 P/CE 64.36 20.45 6.79 5.55
4,5 P/BV 0.94 0.74 0.73 0.72
4,0 Dividend yield 0.00% 0.00% 0.00% 0.00%
3,5 EV/EBITDA rel. 2.2 3.3 0.9 0.8
3,0 P/E rel. nm nm 9.8 3.1
2,0 Absolute (EUR terms) 58.4% 44.1% 96.3% 1.7%
1,5 Rel. to sector (EUR, ppt) 55.8 39.5 78.8 -32.2
Sanochemia
ATX (Rebased) Rel. to universe (EUR, ppt) 51.3 38.5 73.1 -30.1
DJ EURO STOXX Health Care (Rebased)
Torfarm Buy Target price HUF 95.0
Price (HUF) 71 ROCE 2008 8.2% 08 09p 10e 11e
Mcap (HUF mn) 315 ROE 2008 10.0% Sales (PLN mn) 3,969.6 5,644.1 6,490.0 6,814.5
52 weeks EV/sales 0.08 0.11 0.09 0.08
EV/EBITDA 6.42 7.78 6.80 6.20
80
75 P/E 9.35 8.20 8.42 7.49
70 P/CE 5.16 7.48 5.45 4.93
65 P/BV 0.98 1.39 1.23 1.08
60 Dividend yield 4.16% 2.45% 2.45% 2.38%
55
50 EV/EBITDA rel. 1.0 0.9 0.8 0.9
45 P/E rel. 0.9 0.6 0.7 0.7
35 Absolute (HUF terms) 2.1% -1.1% 49.1% 80.8%
30
25
Torfarm W IG (Rebased) DJ EURO STOXX Health Care (Rebased)

Sector Insight Industrial Goods & Services
- 3Q09 confirms that the worst is behind industrials – however no uptrend in sight yet
- China the last man standing – but for how long?
- A-TEC top pick on grounds of clear undervaluation
- CWT – GLV’s takeover bid successful
- RFV reported spectacular 3Q, thanks to new contracts
New orders With the 3Q09 reporting season behind us, it seems to be confirmed that with regards to new
bottoming out order development things have stabilized in all industries. However, we still do not see a clear
uptrend yet. As the only truly global player in our coverage, Andritz, has been able to capitalize
on the ongoing growth dynamics of the Chinese and South-American markets. Other players
with a regional focus on Europe and North America, like Palfinger, SBO or A-TEC, reported an
ongoing sluggish market environment. A-TEC, though, has benefited from the meteoric rise of
copper prices (+ 132% ytd) which boosted its operating results. This regionally dispersed pattern
comes as no big surprise given the fact that China is the only global economy where total loan
growth is brisk (+32.1% y/y in September 2009), whereas in the euro area and the U.S., loan
growth is sluggish, as only public sector debt is growing substantially.
Chinese Thus the big question going into 2010 is whether China’s monetary expansion can continue at
miracle to end such a breakneck pace. We have our doubts. China’s ability to amass FX reserves, which in
in 2010? turn is heavily reliant on developments in China’s trade balance, is key to the continuation of its
monetary expansion path without doing harm to the exchange rate of the Yuan. However, as the
stabilizing effect from the gigantic U.S. stimulus program fades in 2010, it will be increasingly
difficult for China to generate the exports much needed in order to keep its balance of trade in
surplus. Y-t-d China’s trade surplus with the U.S. already declined 38% to USD 165bn, despite
massive governmental support from the U.S. If China’s trade surplus continues to dwindle, we
believe that global commodity prices will come under severe pressure because China will lack
the means to sustain its demand for oil, ore and copper. As soon as the likelihood of this
scenario increases, we believe that nearly all industrial goods stocks in our universe face the
risk of significant downwards dips. As an example, Andritz has so far has a major beneficiary of
China’s monetary expansion, and A-TEC has benefited from the significant increase in copper
prices, which can also be attributed to China’s loose monetary policy.
Buy confirmed Our DCF model and peer group comparison show significant upside potential of 50% or more.
– new target We thus confirm our Buy recommendation for A-TEC and raise our target price to EUR 16.0
price: EUR 16.0 (previously EUR 15.0). The 3Q09 results were significantly above expectations. A-TEC
delivered free cash-flow of EUR 19.4mn y-t-d. Net debt was roughly unchanged at EUR 414mn,
bringing the gearing to 116%. Management confirmed its guidance, with EUR 3bn in sales and
an expected EBIT margin of 3.5%. We deem this too conservative and believe that an EBIT
margin of 4.0-4.2% is what investors can expect, as long as A-TEC does not take further
restructuring measures. New orders for capital goods continue their slight upward trend. We
thus expect further improved order intake development for A-TEC’s machinery and plant
construction divisions in the quarters ahead. Copper prices remain stable at around USD
6,500/t. The price would have to decline below USD 5,500/t to harm A-TEC’s FY09 operating
results. We doubt that this will happen.
Accumulate Due to a slight increase in Andritz’s EPS estimates for 2010 and 2011, we raise our target price
confirmed – to EUR 45 (from EUR 38.5). We confirm our Accumulate recommendation. Andritz’s operating
new target performance in 3Q09 was solid. The EBITA margin reached a strong level of 6% and order
price: EUR 45.0 intake (total EUR 842mn) was more balanced, with pulp & paper and metals picking up
sequentially in 3Q09. Andritz’s net debt (the company has a net cash position) rose
substantially, from EUR -291.9mn after 1H09 to EUR -447.5mn (adjusted for personnel
provisions of EUR 212mn). However, CEO Leitner considers this exceptionally high and expects
this level to come down somewhat. The guidance for FY09 was confirmed, with sales declining
15% and net income below the 2008 level. CEO Leitner said that the signs of stabilization visible
since the end of 2Q09 are continuing. However, further economic developments remain
uncertain. Andritz does not expect a substantial change in project activity for the next few
quarters here. Overall, we consider Andritz an excellent long-term investment idea. Andritz has

an excellent track record of delivering strong capital gains accompanied by substantial dividend
payouts. However, in the short term, we see only limited upside potential for the stock, unless
the entire market moves higher.
Hold confirmed Based on a lower discount rate and an increased TV-EBIT margin assumption, we are raising
– new target our 12-month target-equity price for SBO to EUR 32.0. We confirm our Hold recommendation.
price: EUR 32.0 Driven by lower capacity utilization and a weakening USD, SBO’s 3Q09 results dropped quite
significantly. Sales were down 46.6% y/y and EBIT declined 85.2% y/y. Being late in the cycle,
SBO’s operating performance continued to deteriorate sequentially as well. Sales declined 11%
q/q and EBIT dropped by 42% q/q. At EUR 37.5mn, SBO’s 3Q09 order intake stabilized
compared to 2Q09 at EUR 37mn. Management indicated that inquiries started to pick up in
3Q09. Net debt dropped to EUR 69.9mn thanks to a sound cash-flow development. There is
clear evidence from the industry that demand for oilfield equipment bottomed out in 2Q09. The
global rig count has continued to rise on a monthly comparison since May 2009. We also believe
that vigorous Chinese loan growth (+32.1% y/y in September 2009) will remain supportive for oil
prices as well as all other types of commodities. We believe that SBO is a perfect bet on the
rising complexity of the global oilfield service industry. However, we are currently not sure
whether the upswing will be visible in 2010. Furthermore, we deem the current market
expectations based on the current valuation level as fair.
Hold confirmed Palfinger’s 3Q09 results came in well above expectations. Supported by cost saving measures,
– new target Palfinger managed to nearly reach break-even on the EBIT level, despite the seasonally weak
price: EUR 17.3 sales pattern. Due to declining sales and tight WC management, operating cash flow was up by
around 5% y/y to EUR 33.6mn. Driven by the strong operating cash flow, net debt declined
further from EUR 198mn as of June 30, 2009, to EUR 189mn. We expect that, in 4Q09,
Palfinger will already deliver a slightly positive EBIT of around EUR 2-3mn. With regard to 2010,
management expects earnings and revenues to pick up, in line with our expectations. Due to
slightly increased earnings expectations, we raise our target price to EUR 17.3 (previously EUR
17.0). At the current share price level, we stick to our Hold recommendation. With regard to
cranes, Palfinger reported that the weak demand continued throughout 3Q09, although signs
that this market was bottoming out started to emerge in March 2009. CEO Ortner reported in the
CC that recently market inquiries picked up quite significantly. Re-stocking should start within
the next couple of quarters and will give Palfinger’s results a one-time boost.
Takeover bid On November 17, Management of GLV announced, that 80.5% of the voting shares of CWT
successful were tendered by CWT shareholders into the voluntary takeover bid thereby exceeding the
minimum acceptance threshold of 75% of the voting shares required pursuant to the offer.
GLV’s purchase of the shares tendered as of November 17 represents a cash consideration of
CND 85mn. CWT shareholders who have not yet tendered their shares have another three
months to do so for a cash consideration of EUR 3.35 per CWT share, pursuant to the same
terms as set forth in the Offer. GLV aims to acquire 100% of CWT’s shares at a price of EUR
3.35 per CWT share. The acceptance of the offer by 80.5% of CWT shareholders is a reflection
of the difficult situation of CWT. The alternative would have been a significant capital increase
accompanied by a short term share price drop. Given the success of the first offer, GLV has not
raised its offer price, we thus recommend the remaining shareholders to accept the offer during
the next three months. Given the rather low free float the remaining shares of CWT will gradually
loose the markets interest.
Spectacular As expected, the investments related to the new contracts in Romania (Gheorgheni) and Fejer
3Q, thanks to County (Hungary) boosted RFV’s 3Q09 results. The company achieved a net profit of HUF
new contracts 341mn (+864.9% y/y) on sales of HUF 1,068mn (+116.0% y/y) in 3Q09. The quarterly figures
correspond broadly to those in RFV’s profit guidance from September. From July to September,
there were two one-off items on the cost side: (i) costs related to the capital increase in July
amounted to HUF 20mn; (ii) import hedging transactions related to investments reached HUF
21mn. Management plans further portfolio cleaning in 4Q09: the sale of stakes in RFV Galga
Power System and RFV Panelrekonstrukcios Kft. The latter means that RFV has given up its
plans to participate in the oil from plastic waste project. RFV wanted to start the "heating oil-

from-plastic waste" project in March 2009, but due to discussions with Hungarian Customs
Authorities (VPOP) it was delayed. RFV was awaiting the authority’s decision on whether or not
this kind of heating oil is subject to excise tax. (The production cost of one liter of heating oil is
HUF 30-40, while the excise tax could reach HUF 140.) Alluding to the opinion of the
Environment Ministry, RFV thought that this kind of oil was not subject to excise tax.
Shareholders’ equity at RFV Galga Power System is HUF 75.1mn, while at RFV
Panelrekonstrukcios Kft. it stands at HUF -1.1mn; registered capital amounts to HUF 79mn and
HUF 25mn, respectively. RFV has a 50% stake in RFV Galga Power System, while in
Panelrekonstrukcios Kft. it holds a 100% stake. RFV is also preparing numerous new contracts
in Hungary and Romania and hopes to start operations in other European countries (Bulgaria
and Serbia) as well.


A-Tec EUR 243.3 -9.7% 17.8% 6.2% 8.7% 2.4% 5.7% 5.2% 5.5% -2.3% -10.2% 2.9% 22.9%
Andritz EUR 2,131.8 27.7% 16.3% 19.1% 19.9% 7.6% 6.7% 7.6% 8.0% 12.7% 32.1% 39.4% 135.1%
Apator PLN 143.4 14.8% 17.4% 20.0% 21.0% 19.8% 18.3% 17.7% 17.9% 17.9% 5.0% 9.1% 46.5%
Atlantska plovidba HRK 185.7 54.8% 43.8% 23.7% 1.4% 52.3% 54.6% 43.2% 25.1% 6.6% -3.7% -5.8% 126.5%
CAToil EUR 328.6 1.2% 6.2% 8.6% 10.4% 17.1% 21.5% 21.8% 22.3% -12.7% 70.1% 35.2% 248.2%
CWT EUR 65.7 -56% 19.8% 4.6% 6.5% -2.4% 3.6% 4.0% 4.6% 1.2% 28.8% 35.1% 93.6%
Palfinger EUR 572.3 14.8% -3.8% 6.0% 14.7% 12.4% 4.1% 9.2% 13.8% 1.3% -0.3% 39.7% 41.5%
Pankl Racing EUR 32.2 10.0% 0.9% 1.8% 4.9% 16.1% 14.6% 14.6% 15.5% -8.3% -8.9% -2.4% -48.8%
Rafako PLN 166.2 -3.7% 8.8% 10.2% 11.2% 6.6% 6.0% 5.6% 5.9% 4.6% 3.5% 36.0% 182.2%
RFV HUF 38.6 62.7% 49.3% 35.0% 31.6% 21.4% 33.6% 34.9% 33.6% 10.4% 43.9% 71.3% 69.3%
SBO EUR 495.5 28% 6.3% 8.0% 12.5% 29.4% 23.3% 23.8% 26.2% -3.4% 5.0% 8.7% 21.0%
Turbomecanica RON 8.4 -33% 2.8% 5.1% 6.9% -18.0% 14.1% 15.4% 19.0% -1.7% 7.9% 29.9% -1.6%
Winterthur EUR 151.9 12.4% 0.0% 5.4% 8.4% 18.3% 9.5% 14.5% 17.0% -1.2% 3.2% 15.5% 27.5%
Zumtobel EUR 562.1 2.8% 2.9% 6.6% 11.3% 9.3% 7.7% 9.7% 11.8% 14.9% 27.9% 49.4% 97.0%
Median - - 11% 8% 7% 11% 14% 12% 15% 16% - - - -
EuroStoxx Industrial 276,617 19.9% 12.8% 12.8% 13.3% 13% 13% 12% 13% 2.7% 2.6% 14.3% 15.8%
Goods & Services
CEE to Peer, Prem/Disc - -44% -41% -43% -19% 7% -8% 21% 26% - - - -
P/E P/CE P/BV
2008 2009e 2010e 2011e 2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
A-Tec nm 4.3 11.0 7.3 9.9 2.2 3.5 3.0 0.5 0.7 0.7 0.6
Andritz 6.7 23.4 18.2 15.4 4.6 12.2 11.8 10.5 1.7 3.7 3.3 2.9
Apator 13.4 19.9 15.7 13.7 6.5 13.2 11.1 10.0 2.1 3.3 3.0 2.8
Atlantska plovidba 2.4 2.1 3.2 49.7 2.1 1.8 2.3 5.2 1.1 0.8 0.7 0.7
CAToil 38.7 24.6 16.5 12.4 3.6 8.9 7.8 6.9 0.5 1.5 1.4 1.2
CWT nm 8.3 32.0 21.3 n.m. 5.1 18.1 13.3 0.8 1.5 1.4 1.3
Palfinger 9.1 nm 33.4 12.4 5.2 48.7 14.5 8.5 1.3 2.1 1.9 1.7
Pankl Racing 15.4 59.4 28.9 9.9 6.6 3.4 3.4 2.9 1.5 0.5 0.5 0.5
Rafako nm 22.4 18.3 16.0 n.m. 14.8 11.8 10.9 0.6 1.9 1.8 1.8
RFV 12.7 13.8 10.5 9.8 8.8 9.9 7.1 6.7 6.2 4.3 3.2 3.0
SBO 6.0 34.1 26.3 15.6 4.0 11.9 10.9 8.7 1.5 2.2 2.1 1.9
Turbomecanica nm 14.5 7.3 5.1 n.m. 9.9 4.1 3.1 0.3 0.4 0.4 0.3
Winterthur 8.3 nm 20.2 12.2 5.5 13.8 8.6 6.6 1.0 1.1 1.1 1.0
Zumtobel 22.1 41.7 17.6 9.5 4.2 12.0 7.6 5.4 0.6 1.2 1.1 1.0
Median CEE 10.9 21.1 17.9 12.4 5.2 10.9 8.2 6.8 1.1 1.5 1.4 1.3
EuroStoxx Industrial Goods 11.1 15.5 13.9 12.4 7.2 8.7 8.6 7.6 2.1 1.9 1.8 1.7
& Services
CEE to Peer, Prem/Disc -2% 36% 29% 0% -28% 25% -5% -10% -50% -24% -24% -24%
EV/Sales EV/EBITDA
2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
A-Tec 0.2 0.2 0.2 0.2 7.0 3.8 4.2 3.7
Andritz 0.2 0.6 0.6 0.5 2.8 9.2 8.1 6.7
Apator 1.0 1.9 1.7 1.6 4.9 10.3 9.3 8.7
Atlantska plovidba 1.5 1.2 1.2 1.8 2.8 2.3 2.7 7.0
CAToil 0.4 1.4 1.1 0.9 2.6 6.6 5.3 4.1
CWT 0.3 0.4 0.5 0.4 -11.9 10.8 11.4 8.6
Palfinger 0.8 1.5 1.3 1.1 6.1 36.3 13.8 7.6
Pankl Racing 1.3 0.8 0.7 0.6 7.9 5.3 4.9 3.9
Rafako 0.0 0.5 0.5 0.4 0.1 8.8 8.7 7.5
RFV 1.9 3.9 2.8 2.6 8.8 11.5 8.1 7.9
SBO 1.1 2.3 2.2 1.8 3.8 10.0 9.2 7.0
Turbomecanica 1.1 1.1 1.1 1.1 -6.0 8.0 6.9 5.5
Winterthur 1.0 1.6 1.3 1.1 5.3 16.7 9.1 6.8
Zumtobel 0.5 0.8 0.7 0.7 4.9 9.9 7.5 5.6
Median CEE 0.9 1.2 1.1 1.0 4.3 9.6 8.1 6.9
EuroStoxx Industrial Goods 0.6 0.8 0.9 0.8 5.3 8.6 8.2 6.6
& Services
CEE to Peer, Prem/Disc 42% 40% 29% 26% -18% 11% -1% 5%

A-Tec Buy Target price EUR 16.0

ROE 2008 -9.7% Sales (EUR mn) 3,256.9 2,932.1 2,611.7 2,836.2
Mcap (EUR mn) 243.3 Net debt (EURmn, 08) 375.0 EBITDA margin 2.40% 5.70% 5.22% 5.46%
Shares outst. (mn) 25.0 EPS CAGR 08-11e -3.4% EPS (EUR) -1.31 2.26 0.89 1.33
EV/sales 0.17 0.22 0.22 0.20
14 EV/EBITDA 7.04 3.84 4.24 3.65
13 P/E nm 4.30 10.96 7.29
12 P/CE 9.92 2.21 3.46 2.97
11 P/BV 0.54 0.70 0.66 0.61
10 Dividend yield 0.00% 0.00% 0.00% 0.00%
9 EV/EBITDA rel. 1.6 0.4 0.5 0.5
8 P/E rel. - 0.2 0.6 0.6
7
6
Absolute (EUR terms) -2.3% -10.2% 2.9% 22.9%
5
A-Tec Rel. to sector (EUR, ppt) -8.3 -27.0 -28.5 -67.9
ATX (Rebased)
DJ EURO STOXX Industrial Goods & Services (Rebased) Rel. to universe (EUR, ppt) -9.3 -15.9 -20.3 -8.9
Andritz Accumulate Target price EUR 45.0

ROE 2008 27.7% Sales (EUR mn) 3,609.8 3,106.6 3,021.1 3,281.8
Shares outst. (mn) 51 EPS CAGR 08-11e 1.2% EPS (EUR) 2.73 1.78 2.29 2.70
52 w eeks Dividend/share (EUR) 1.10 0.80 1.15 1.35
EV/sales 0.22 0.62 0.62 0.53
45 EV/EBITDA 2.85 9.25 8.09 6.66
40 P/E 6.66 23.41 18.15 15.42
P/CE 4.57 12.24 11.80 10.49
35
P/BV 1.71 3.69 3.26 2.91
30 Dividend yield 6.06% 1.92% 2.75% 3.24%
25 EV/EBITDA rel. 0.7 1.0 1.0 1.0
20
P/E rel. 0.6 1.1 1.0 1.2
10
Andritz Rel. to sector (EUR, ppt) 6.7 15.4 8.1 44.3
ATX (R ebased)
D J E URO STO XX Indus trial Go o ds & S e rvice s (Re ba s ed) Rel. to universe (EUR, ppt) 5.7 26.5 16.2 103.4
Apator Accumulate Target price PLN 16.0

Mcap (PLN mn) 588 ROE 2008 14.8% Sales (PLN mn) 356 356 376 401
Shares outst. (mn) 35.3 EPS CAGR 08-11e 5% EPS (PLN) 0.60 0.89 1.06 1.21
EV/sales 0.98 1.89 1.65 1.56
20 EV/EBITDA 4.94 10.32 9.34 8.71
18 P/E 13.41 19.87 15.71 13.71
P/CE 6.51 13.23 11.07 10.02
16 P/BV 2.08 3.30 2.99 2.78
14 Dividend yield 4.32% 3.07% 4.78% 6.56%
EV/EBITDA rel. 1.1 1.1 1.2 1.3
12
P/E rel. 1.2 0.9 0.9 1.1
10
8 Absolute (PLN terms) 12.9% 4.1% -1.2% 56.3%
Apator
W IG (Rebased) Rel. to sector (EUR, ppt) 11.9 -11.7 -22.2 -44.3
D J EURO STOXX Industrial Goods & Services (Rebased) Rel. to universe (EUR, ppt) 10.8 -0.6 -14.1 14.7

Atlantska plovidba Under review Target price HRK

Shares outst. (mn) 1.3 EPS CAGR 08-11e -42% EPS (HRK) 443.01 499.93 336.88 21.45
52 weeks Dividend/share (HRK) 110.75 124.98 84.22 5.36
EV/sales 1.47 1.25 1.16 1.76
1.300 EV/EBITDA 2.82 2.29 2.69 7.01
1.200 P/E 2.38 2.14 3.16 49.66
1.100 P/CE 2.09 1.79 2.30 5.24
1.000 P/BV 1.12 0.80 0.70 0.74
900 Dividend yield 10.53% 11.69% 7.91% 0.50%
800 EV/EBITDA rel. 0.6 0.2 0.3 1.0
700 P/E rel. 0.2 0.1 0.2 4.0
600
Atlantska plovidba
CROBEX (Rebased)
Rel. to sector (EUR, ppt) 0.6 -20.4 -37.1 35.7
DJ STOXX Industrial Goods & Services (Rebased) Rel. to universe (EUR, ppt) -0.4 -9.4 -29.0 94.8
CAToil Accumulate Target price EUR 8.0

ROE 2008 1.2% Sales (EUR mn) 276.2 222.6 253.6 288.8
EV/sales 0.44 1.43 1.14 0.92
9 EV/EBITDA 2.56 6.64 5.26 4.13
8 P/E 38.66 24.61 16.48 12.38
7 P/CE 3.56 8.89 7.84 6.94
6 P/BV 0.48 1.48 1.36 1.22
5 Dividend yield 0.00% 0.00% 0.00% 0.00%
EV/EBITDA rel. 0.6 0.7 0.6 0.6
4
P/E rel. 3.6 1.2 0.9 1.0
3
CAToil
Prime All Share (Rebased) Rel. to sector (EUR, ppt) -18.7 53.4 3.9 157.4
DJ EURO STOXX Industrial Goods & Services (Rebased) Rel. to universe (EUR, ppt) -19.8 64.4 12.0 216.5
CWT Hold Target price EUR u.r.

Price (EUR) 3.4 ROCE 2008 -22.0% 08 09e 10e 11e
ROE 2008 -55.7% Sales (EUR mn) 307 222 162 178
Shares outst. (mn) 19.6 EPS CAGR 08-11e 7.5% EPS (EUR) -1.40 0.40 0.10 0.16
EV/sales 0.28 0.39 0.46 0.40
3,5 EV/EBITDA n.m. 10.82 11.39 8.62
3,0 P/E nm 8.29 32.01 21.33
P/CE n.m. 5.09 18.11 13.31
2,5 P/BV 0.82 1.49 1.43 1.34
2,0 Dividend yield 0.00% 0.00% 0.00% 0.00%
EV/EBITDA rel. n.m. 1.1 1.4 1.3
1,5 P/E rel. - 0.4 1.8 1.7
CW T Rel. to sector (EUR, ppt) -4.8 12.1 3.7 2.8
ATX (Rebased)
DJ EURO STOXX Industrial Goods & Services (Rebased) Rel. to universe (EUR, ppt) -5.8 23.2 11.9 61.9

Palfinger Hold Target price EUR 17.3

ROE 2008 14.8% Sales (EUR mn) 794.8 518.5 582.7 668.2
Free float (EUR mn) 204 Sales CAGR 08-11e -1.0% Net profit margin 6.13% -1.96% 3.11% 7.33%
EV/sales 0.76 1.48 1.26 1.05
20 EV/EBITDA 6.08 36.30 13.78 7.64
18 P/E 9.06 nm 33.36 12.37
16
P/CE 5.20 48.73 14.53 8.49
P/BV 1.31 2.06 1.94 1.71
14
Dividend yield 3.47% 0.00% 1.23% 2.42%
12 EV/EBITDA rel. 1.4 3.8 1.7 1.1
10 P/E rel. 0.8 - 1.9 1.0
Palfinger
ATX (R eba sed)
Rel. to sector (EUR, ppt) -4.7 -17.0 8.3 -49.3
D J EURO STOXX Indus tria l Goods & Service s (Re ba sed) Rel. to universe (EUR, ppt) -5.8 -6.0 16.4 9.7
Pankl Racing Reduce Target price EUR 8.0

ROE 2008 10.0% Sales (EUR mn) 105.9 88.5 85.5 92.7
EV/sales 1.26 0.78 0.72 0.60
26 EV/EBITDA 7.86 5.32 4.92 3.89
24 P/E 15.35 59.36 28.86 9.92
22
P/CE 6.57 3.35 3.42 2.90
20
P/BV 1.52 0.51 0.50 0.48
18
16 Dividend yield 1.98% 0.00% 0.00% 3.02%
14 EV/EBITDA rel. 1.8 0.6 0.6 0.6
12 P/E rel. 1.4 2.8 1.6 0.8
10
8
6 Absolute (EUR terms) -8.3% -8.9% -2.4% -48.8%
Pankl Racing
ATX (Rebased)
Rafako Hold Target price PLN 8.1

Mcap (PLN mn) 681 ROE 2008 -3.7% Sales (PLN mn) 1,125.7 1,070.0 1,214.0 1,308.7
Shares outst. (mn) 69.6 EPS CAGR 08-11e 36.7% EPS (PLN) -0.17 0.46 0.54 0.61
EV/sales 0.01 0.53 0.48 0.44
11 EV/EBITDA 0.09 8.80 8.65 7.52
10 P/E nm 22.40 18.28 15.99
9 P/CE n.m. 14.80 11.78 10.88
8 P/BV 0.60 1.91 1.83 1.75
7 Dividend yield 6.06% 3.13% 3.83% 6.26%
6 EV/EBITDA rel. 0.0 0.9 1.1 1.1
5 P/E rel. - 1.1 1.0 1.3
4
3
2
Rafako Rel. to sector (EUR, ppt) -1.4 -13.2 4.6 91.4
W IG (Rebas ed)
DJ EURO STOXX Industrial Goods & Services (Rebas ed) Rel. to universe (EUR, ppt) -2.4 -2.2 12.8 150.5

RFV Buy Target price HUF 4,200.0

Price (HUF) 4,340.0 ROCE 2008 16.3% 08 09e 10e 11e
Mcap (HUF mn) 10,416.0 ROE 2008 62.7% Sales (HUF mn) 3,221.0 4,598.2 5,977.7 6,293.7
Mcap (EUR mn) 38.6 Net debt (EURmn, 08) 9 EBITDA margin 21.43% 33.65% 34.94% 33.56%
Shares outst. (mn) 2.4 EPS CAGR 08-11e 32.8% EPS (HUF) 149.43 327.23 411.86 443.40
Dividend/share (HUF) 0.00 0.00 0.00 266.04
52 weeks
EV/sales 1.88 3.88 2.84 2.64
4.500 EV/EBITDA 8.76 11.54 8.12 7.87
P/E 12.66 13.80 10.54 9.79
4.000
P/CE 8.83 9.89 7.05 6.70
3.500 P/BV 6.21 4.33 3.21 2.97
3.000 Dividend yield 0.00% 0.00% 0.00% 6.13%
2.500 EV/EBITDA rel. 2.0 1.2 1.0 1.1
P/E rel. 1.2 0.7 0.6 0.8
2.000
1.500
Absolute (HUF terms) 7.7% 41.4% 61.3% 75.4%
1.000
Rel. to sector (EUR, ppt) 4.5 27.2 40.0 -21.5
RFV DJ EURO STOXX Indus trial Goods & Servic es (Rebas ed) Rel. to universe (EUR, ppt) 3.4 38.2 48.1 37.6
SBO Hold Target price EUR 32.0

Mcap (EUR mn) 495.5 ROE 2008 28.0% Sales (EUR mn) 388.7 234.5 241.7 279.3
Free float (EUR mn) 317 Sales CAGR 08-11e - Net profit margin 15.13% 6.16% 7.75% 11.27%
Shares outst. (mn) 16.0 EPS CAGR 08-11e - EPS (EUR) 3.676 0.908 1.178 1.979
52 weeks
EV/sales 1.10 2.34 2.19 1.84
45
EV/EBITDA 3.75 10.03 9.22 7.04
P/E 5.96 34.10 26.30 15.65
40 P/CE 4.04 11.85 10.86 8.66
35 P/BV 1.55 2.15 2.06 1.87
Dividend yield 3.42% 1.61% 1.61% 1.61%
30 EV/EBITDA rel. 0.9 1.0 1.1 1.0
25 P/E rel. 0.5 1.6 1.5 1.3
15
Absolute (EUR terms) -3.4% 5.0% 8.7% 21.0%
SBO Rel. to sector (EUR, ppt) -9.4 -11.7 -22.7 -69.8
ATX (Rebased)
DJ EURO STOXX Industrial Goods & Services (Rebas ed) Rel. to universe (EUR, ppt) -10.5 -0.7 -14.5 -10.8
Turbomecanica Reduce Target price RON 0.0760

Price (RON) 0.0960 ROCE 2008 -17.7% 08 09e 10e 11e
Mcap (RON mn) 35.5 Net debt (EURmn, 08) -32.6% Sales (RON mn) 63.0 77.9 77.2 77.2
Mcap (EUR mn) 8.4 Net debt (EURmn, 08) 14 EBITDA margin -18.00% 14.08% 15.42% 19.00%
Shares outst. (mn) 369.4 EPS CAGR 08-11e -3% EPS (RON) -0.0783 0.0067 0.0132 0.0190
52 weeks Dividend/share (RON) 0.0000 0.0000 0.0000 0.0000
EV/sales 1.08 1.13 1.07 1.05
0,16 EV/EBITDA n.m. 8.02 6.94 5.55
0,14 P/E nm 14.50 7.28 5.06
P/CE n.m. 9.86 4.09 3.06
0,12
P/BV 0.35 0.38 0.36 0.34
0,10 Dividend yield 0.00% 0.00% 0.00% 0.00%
0,08 EV/EBITDA rel. n.m. 0.8 0.9 0.8
0,06 P/E rel. - 0.7 0.4 0.4

Absolute (RON terms) -3.8% 7.0% 29.9% 7.9%
0,02
Turbomecanica Rel. to sector (EUR, ppt) -7.7 -8.8 -1.4 -92.4
BET (Rebased)
DJ EURO STOXX Industrial Goods & Services (Rebased) Rel. to universe (EUR, ppt) -8.8 2.2 6.7 -33.3

Winterthur Hold Target price EUR 40.2

Net debt (EURmn, 08) 12.4% Sales (EUR mn) 219.2 141.8 160.3 173.0
EV/sales 0.98 1.59 1.33 1.15
45 EV/EBITDA 5.34 16.74 9.13 6.75
P/E 8.28 nm 20.24 12.20
40
P/CE 5.45 13.76 8.60 6.61
35 P/BV 0.98 1.12 1.06 0.99
30 Dividend yield 0.86% 0.00% 0.74% 1.64%
EV/EBITDA rel. 1.2 1.8 1.1 1.0
25 P/E rel. 0.8 - 1.1 1.0
W interthur
SMI (Rebased)
Zumtobel Accumulate Target price EUR 13.5

Net debt (EURmn, 08) 2.8% Sales (EUR mn) 1,174.0 1,036.5 1,033.8 1,109.2
EV/sales 0.46 0.76 0.73 0.66
14 EV/EBITDA 4.94 9.88 7.51 5.55
13 P/E 22.09 41.75 17.64 9.50
12 P/CE 4.17 11.97 7.59 5.35
11 P/BV 0.64 1.20 1.13 1.03
10 Dividend yield 0.00% 0.00% 2.28% 3.80%
9 EV/EBITDA rel. 1.1 1.0 0.9 0.8
8 P/E rel. 2.0 - - 0.8
7
Zumtobel Rel. to sector (EUR, ppt) 8.9 11.2 18.0 6.2
ATX (Rebased)
DJ EURO STOXX Industrial Goods & Services (Rebased) Rel. to universe (EUR, ppt) 7.9 22.2 26.2 65.3

Sector Insight Insurance
- VIG records 5% growth in life insurance, supported by first-time consolidation

of s Versicherung
- UNIQA reports weak numbers
Depreciation of Vienna Insurance Group recorded premiums written of EUR 6.11bn in the first three quarters
CEE of the year, which corresponds to a growth rate of 1.5% compared to last year. Net earned
currencies hit premiums increased by 4.0% to EUR 5.37bn. However, on the basis of local currencies, these
property and growth rates amounted to 6.6% and 9.2%, respectively. The depreciation of CEE currencies
casualty mainly hit the property and casualty business, which decreased by 1.1% in euro terms, but
business showed an increase of 10.5% based on local currencies. Life insurance recorded a rise of 5.0%,
due mainly to the first-time consolidation of s Versicherung, while health insurance registered
growth of 2.2%.
Pre-tax VIG’s pre-tax profit suffered from high storm damages in June/July, amounting to EUR 130mn,
suffered from and thus decreased by 16.3% to EUR 340.5mn. The net result dropped 12.6% to EUR 263.1mn.
storm VIG hence failed to reach last year’s figures, which were supported by the disposals of BA-CA
damages Versicherung and Unita.
Despite the challenging business environment (with increasing unemployment), we remain

optimistic for 2010. Based on a ‘normalized’ business environment, a reduced cost base and
average losses due to natural catastrophes, we think that VIG will be able to significantly
increase its profitability.
Target price In our company update, we reduced our EPS estimate for 2009 to EUR 2.70 (from EUR 3.03),
raised to EUR but keep our estimates for 2010 (EUR 3.60) and 2011 (EUR 4.43). We increase our target price
48 to EUR 48: Due to the significantly reduced cost of equity (reflecting the decreased risk-free
rates throughout the region), we derive a higher equity value per share, to which we add the
proceeds of last year’s capital increase. We consequently increase our target price to EUR 48
(from EUR 44).
Weak economy UNIQA reported disappointing 1-3Q 09 figures. Gross written premiums (including savings
and currencies portion of unit- and index-linked insurance products) declined by 3.8% to EUR 4,233mn, due
cast a spell on mainly to the difficult economic conditions and to the negative impact of CEE currencies’
9M results development. Recurring premiums rose by 2.0%, however, single premiums were reduces by
30.6%. CEE premium income declined by 9.9%, adjusted by currency effects, growth in CEE
was 5.0%. Segment wise, property and casualty business was up 2.4%, health business was up
3.3%, but life insurance dropped by 12.7%.
Combined ratio EBT declined from EUR 104mn in 1-3Q 09 to EUR 42mn, the net result fell from EUR 91mn to
increased EUR 21mn. The net impact of the storm events in the third quarter amounted to EUR 45mn.
significantly Thus the combined ratio significantly increased from 96.5% to 102.7%. While life insurance and
health insurance segment turned positive in the third quarter, p&c business was massively
burdened by the storm events and therefore showed huge losses.
No outlook The company refused to give any outlook for the year 2009 (albeit only five weeks remaining in
given this year). The company is currently involved in a capital increase transaction of 8.6% by issuing
11.3mn new shares. Existing shareholders are entitled to purchase shares in the ratio 11:1; the
maximum share price was fixed at EUR 18.0.
Stock does not The now presented 1-3Q results were massively burdened by the storm events of the third
appear to be quarter and therefore much weaker than expected. Our estimates are currently under review.
cheap For the time being, we reiterate our neutral stance on the share. From the fundamental point of
view, UNIQA's share is not cheap at the moment. We can not comment any rumours concerning
a possible delisting of the share.

Company Curr. Mcap ROE EBT margin Performance (EUR terms)

Uniqa EUR 1,528.4 4.1% 9.9% 11.2% 11.5% 1.8% 3.9% 4.8% 5.1% -4.0% -6.5% -12.4% -24.9%
Vienna Insurance Group EUR 4,617.0 13.7% 9.2% 11.4% 12.9% 6.8% 5.7% 6.7% 7.6% -3.3% 5.5% 22.3% 70.9%
Median - - 8.9% 9.5% 11.3% 12.2% 4.3% 4.8% 5.7% 6.4% - - - -
Allianz SE EUR - Euro38,010 11.8% 11.3% 11.7% 12.0% 6.0% 6.5% 7.0% 7.3% 5.5% 8.8% 19.1% 25.1%
AXA SA EUR - Euro37,003 8.4% 7.8% 10.0% 10.7% 3.3% 5.7% 6.9% 7.0% 0.0% 8.7% 16.5% 12.9%
Assicurazioni Generali SpAEUR - Euro25,957 7.6% 9.9% 13.9% 14.0% 2.2% 3.6% 5.3% 5.8% 2.4% 5.2% 12.2% 3.4%
Mapfre SA EUR - Euro8,594 18.5% 16.4% 14.3% 14.1% 9.7% 9.2% 9.1% 10.5% -0.3% 3.0% 19.3% 27.1%
Sampo Oyj EUR - Euro9,105 14.4% 8.2% 10.4% 10.7% 20.0% 19.6% 19.5% 22.4% 0.2% 0.9% 19.9% 18.7%
Median Total - 118,669 11.8% 9.9% 11.7% 12.0% 6.0% 6.5% 7.0% 7.3% - - - -
EuroStoxx Insurance 205,311 7.5% 9.1% 10.0% 10.7% 3% 6% 7% 7% 4.9% 5.3% 9.8% 1.2%
CEE to Peer, Prem/Disc - -24% -4% -4% 2% -28% -27% -19% -13% - - - -
P/E PBV Dividend yield
2008 2009e 2010e 2011e 2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
Uniqa 40.9 12.6 10.1 8.8 1.9 1.2 1.1 1.0 2.2% 4.7% 2.9% 3.3%
Vienna Insurance Group 7.1 13.3 10.0 8.1 0.9 1.2 1.1 1.0 8.3% 3.6% 4.2% 5.0%
Median CEE 24.0 13.0 10.0 8.5 1.4 1.2 1.1 1.0 5.3% 4.2% 3.5% 4.1%
Allianz SE 9.5 8.5 7.7 7.1 1.1 1.0 0.9 0.8 4.2% 4.5% 5.1% 5.7%
AXA SA 11.0 10.8 7.9 7.0 0.9 0.8 0.8 0.8 2.4% 2.9% 4.4% 5.7%
Assicurazioni Generali SpA 28.8 18.0 12.0 10.7 2.2 1.8 1.7 1.5 3.4% 2.5% 3.4% 3.9%
Mapfre SA 8.9 8.9 9.4 9.1 1.6 1.5 1.3 1.3 5.1% 5.1% 5.4% 5.7%
Sampo Oyj 13.6 14.2 10.8 9.9 2.0 1.2 1.1 1.1 4.9% 5.5% 6.2% 6.2%
Median Total 13.6 14.2 10.8 9.9 2.0 1.2 1.1 1.1 4.2% 4.5% 5.1% 5.7%
EuroStoxx Insurance 12.3 10.4 9.4 7.5 1.1 0.9 0.9 0.9 4.9% 3.7% 4.3% 5.4%
CEE to Peer, Prem/Disc 76% -9% -7% -14% -31% 1% -3% -8% 26% -8% -30% -27%
Price/premium Price/Embedded Value Price/NAV
2006 2007 2008 2008* 2006 2007 2008 2008* 2006 2007 2008 2008*
Uniqa 0.6 0.5 0.4 0.3 1.4 1.0 1.3 0.8 2.0 1.5 1.6 1.1
Vienna Insurance Group 0.9 0.8 0.4 0.6 1.3 1.3 0.7 1.1 2.0 2.0 1.1 1.7
Median CEE 0.8 0.7 0.4 0.4 1.3 1.1 1.0 1.0 2.0 1.8 1.4 1.4
Allianz SE (Life) 0.7 0.7 0.4 0.4 3.4 3.0 2.7 3.0 7.5 7.1 3.4 3.8
AXA SA (Group) 0.9 0.7 0.4 0.4 1.8 1.7 1.0 1.2 4.8 4.8 1.7 2.0
Generali (Group) 0.7 0.7 0.4 0.4 1.6 1.6 1.2 1.2 - - - -
Mapfre SA (Life) 0.5 0.6 0.5 0.6 2.6 3.5 3.0 3.9 7.8 11.1 8.4 10.9
Sampo Oyj (Life) 2.4 2.2 1.6 2.0 8.1 8.1 12.0 14.7 11.9 12.5 36.4 44.6
Median Peer Group 0.7 0.7 0.4 0.4 2.6 3.0 2.7 3.0 7.6 9.1 5.9 7.4
EuroStoxx Insurance - - - - - - - - - - - -
CEE to Peer, Prem/Disc - - - - - - - - - - - -
*based on 2007 reported numbers and current price


Uniqa Hold Target price EUR 14.0

Price (EUR) 12.8 Op. profit margin (08) 1.9% 08 09e 10e 11e
ROE (2008) 4.1% GW Premium (EUR mn) 5,002.4 5,258.0 5,472.0 5,742.7
Mcap (EUR mn) 1,528 Combined ratio (2008) 1.0 Net earned prem. (EUR mn) 4,730.4 4,992.2 5,194.0 5,449.4
Free float (%) 13.0% EmbV (EUR mn, 2008) 1,857.0 EBT. (EUR mn) 90.2 203.3 260.9 295.5
Free float (EUR mn) 199 GPW CAGR 08-11e 6.1% Net profit margin 1.07% 2.51% 3.03% 3.31%
52 weeks
Combined ratio 0.97 0.97 0.97 0.96
28 Claims ratio 0.64 0.64 0.64 0.64
26 Cost ratio
24 P/E 40.95 12.65 10.08 8.79
22 P/BV 1.87 1.19 1.08 0.95
20 Dividend yield 2.21% 4.74% 2.93% 3.30%
18 P/BV rel. 1.4 1.0 1.0 1.0
16
P/E rel. 1.7 1.0 1.0 1.0
Uniqa ATX (Rebased) DJ EURO STOXX Insurance (Rebased) Rel. to universe (EUR, ppt) -11.0 -12.1 -35.6 -56.7
Vienna Insurance Group Buy Target price EUR 48.0

Price (EUR) 36.1 Op. profit margin (08) 7.8% 08 09e 10e 11e
ROE (2008) 13.7% GW Premium (EUR mn) 7,898.9 8,030.8 8,979.1 9,682.0
Mcap (EUR mn) 4,617 Combined ratio (2008) 274.2 Net earned prem. (EUR mn) 6,961.6 7,178.7 8,115.5 8,848.6
Free float (%) 29.0% EmbV (EUR mn, 2008) 4,162.4 EBT. (EUR mn) 540.8 455.5 600.6 738.2
Free float (EUR mn) 1,339 GPW CAGR 08-11e 8.8% Net profit margin 5.17% 4.31% 5.14% 5.86%
Combined ratio 0.96 0.96 0.95 0.94
45 Claims ratio 0.64 0.66 0.65 0.64
40 Cost ratio
35
P/E 7.08 13.34 10.01 8.14
P/BV 0.85 1.18 1.10 1.01
30
Dividend yield 8.29% 3.60% 4.16% 4.99%
25 P/BV rel. 0.6 1.0 1.0 1.0
20 P/E rel. 0.3 1.0 1.0 1.0
Vienna Insurance Group
ATX (Rebased)
Rel. to sector (EUR, ppt) 0.2 3.7 9.1 42.0
DJ EURO STOXX Insurance (Rebased) Rel. to universe (EUR, ppt) -10.3 -0.1 -0.9 39.2

Sector Insight Media
- 3Q reporting indicates advertising spending to have bottomed out

- Agora ready to benefit from any recovery with high operating leverage and significant
cost cutting
- Positive long-term view on CME remains intact, short-term cut to Reduce
- TVN raised to Buy, N platform remains a bit of a burden
- Coverage on Multimedia Polska initiated with an Accumulate rating
Advertising The 3Q 2009 reporting season has finally brought, hopefully, the bottoming of advertising
spending spending decline in the CEE region. Especially figures in Poland were mixed, but somewhat
should slowly encouraging, with TV, dailies and total ad spending declining less y/y than in 2Q 2009 (total ad
stabilize in spending down 15% y/y), see below. CME has already released its 3Q figures at the end of
CEE October, while quite surprisingly S&P´s downgraded its local and foreign currency rating to B-.
Agora surprised on the positive side, beating our and market consensus on favorable cost
development (staff, marketing costs). Cyfrowy showed good dynamics on the top line, whereas
profitability was down by more than 20% y/y on negative FX and operating costs development.
New services will be added in 1H 2010, which could bolster ARPU. The like-for-like sales of TVN
were down by “only” 5.2% y/y in the 3Q on strong results from thematic channels. However
costs were sticky (amplified by loss making N consolidation), which resulted in small operating
loss. It will see a double-digit decline in revenues, but still remains in the black.
Ad spending dynamics in Poland

10%
5%
5%
1%
0%
TV Internet Radio Outdoor Dailies Magazines Total ad
-5% market
-10%
-10%
-15% -13%
-15%
-16%
-17%
-20% -18% -18%
-20% -20%
-21%
-25% -23%
-30%
-31%
-35%
2Q 09 3Q 09
Source: Agora
Declines in Finally we would like to draw attention to our new media sector report, which we issued on
advertising November 23 and also our initial coverage of Multimedia Polska. The media sector is pro-
spending were cyclical, and recent macroeconomic stabilization should help propel a mild recovery in 2010
higher than advertising budgets, with a full recovery to come in 2011. Advertising spending plummeted in
correlation to 2009, with declines ranging between 15-30%, which is far above what the GDP correlation
GDP would suggests. We therefore believe that advertisers have over-done the cuts and should begin
have returning next year. Poland remained the only CEE country with a positive GDP figure in 2009,
suggested while ad declines could reach -15%. We are therefore bullish about the country prospects (many
infrastructure projects and the EURO 2012 soccer championships), and expect local media
companies to benefit. We rate Agora as Buy, Cyfrowy Polsat as Accumulate and TVN as
Buy. Agora should mainly benefit from operating leverage and cost efficiency even with a mild
revenue recovery in 2010 (we expect +5.6%), which should fall through to bottom line. CME’s LT
prospects remain intact and we like them, however we think that the recent share price rally
does not justify its ST fundamentals and we rate it a Reduce. Cyfrowy manages to hold well
with ARPU as it will offer new services (VoD, HD, triple play), but subscribers base growth is

constraint. At the same time costs remain high on increased competition. We cut slightly our
12M target price, but thanks to share price correction we keep Accumulate recommendation.
TVN has increased substantially its leverage and paid expensive price for N pay TV operator. At
the same time its share price corrected recently and has one of the best exposition to the Polish
media market, we therefore upgrade it to Buy.
Agora newly Agora decided to concentrate on its efficiency program with results already visible in 9M 2009
with Buy on and more to come in 2010. The operating leverage of Agora, cost savings and anticipated 5.6%
healthy cost y/y growth in revenues in 2010 should be positively reflected on the bottom line. Despite its
cutting and exposure to the least attractive media segment (newspapers), we believe that all segments will
operating benefit in ad spending recovery. Moreover the company has one of the best balance sheets
leverage; 3Q among Polish media companies with scope for M&A activity. We therefore decided to raise our
2009 results 12M target price from PLN 15.5 to PLN 24.0, while upgrading Agora from Hold to Buy. Cost
above cutting, cost cutting and again cost cutting is the way for Agora to post relatively solid figures
expectations (revenues declined by 13.3% in 3Q y/y, while operating costs were down by 12.5% y/y in 3Q).
Biggest savings arose from staff costs (-16.6% y/y) and marketing and promotion costs (-29.2%
y/y), while staff headcount reduction will be fully visible in 2010. Ad market decrease was
smaller q/q in 3Q (dailies were down 21% vs. -31% in 2Q), TV, radio and magazines also
improved q/q, only outdoor and Internet still worsened q/q. Copy sales of Agora were still
declining, while copy sales revenues were up 4.5% y/y on higher cover price. Agora manages to
keep weekly readership at strong 4.2mn, partly thanks to synergies with the Internet version of
Gazeta. Metro continues to deliver strong readership and was no. 3 in Poland in 3Q. Agora
increased ad market share in outdoor segment on investments in new boards (AMS holds 26%
of the market). Management is still rather cautious about ad market prospects for 4Q, due to
weak consumer spending recovery. Recruitments are still down and do not improve, which is,
according to Agora, good indicator for economic activity and what can be expected from ad
market! We believe that ad market recovery will occur in 2010, even though it can be very mild
(we expect 2010 revenues to be up 5.6% y/y). However, Agora is ready for a top line recovery
with lean operating costs and headcount.
We cut CME CME has rebounded massively since our last report with a Buy recommendation and 12M target
from Buy to price of USD 35.3/share. There has been a lot going on since our last report, as CME
Reduce on underwrote fresh capital, re-financed its 2012 maturing notes, cut a deal with Mr. Kolomoiski to
dilution and secure financing for Ukraine operations, experienced the biggest drop in ad spending revenues
mild ad in its history and bought the MediaPro content division for ca. USD 95mn. The dilution of shares
spending was massive reaching 45% of original shares outstanding (19mn of new shares) for a price
recovery below current valuation. At the time the transaction was important for securing liquidity and
strong partner – Time Warner. However, when markets recover, the dilution has negative impact
on minority shareholders. Further, we had to significantly cut our short-medium term outlook on
much deeper 2009 ad decline and slower recovery in 2010. While we have not changed our
view on the LT prospects of CME much, the dilution and slower ad recovery in 2010 has made
us cut our 12M target price from USD 35.3 to USD 27.0 based on DCF, resulting in a
downgrade in our recommendation from Buy to Reduce. Peers comparison ratios of CME also
support our current slightly negative view on the stock. We want to see CME delivering
“promised” improving numbers in 1H 2010, before reconsidering the outlook again.
Cyfrowy Cyfrowy is weathering the downturn in media extremely well. Revenues have surpassed our
delivers strong estimates as ARPU holds its ground. On the other hand, costs do not seem to be coming down
top line, costs on FX, and the need to invest in marketing remains. There is still room for the pay TV market to
remain an grow in Poland, while sensible M&A activity by the company could give it a future revenue and
issue, but profit boost. However, we have cut our profit forecasts for the next couple of years on higher
more services costs, reducing our 12M target price from PLN 16.6 to PLN 16, based on our DCF model.
should boost Thanks to the recent share price correction, we maintain an Accumulate recommendation.
ARPU Cyfrowy released 3Q 2009 results in line with our and market estimates, with revenues up 11%
y/y and operating profit down 30% y/y. Despite the negative cost development, we can say that
the plans of Cyfrowy are quite interesting and we expect positive impact on Cyfrowy´s financials
in years to come. Cyfrowy will extend its HD offer with new programs at minimized costs. The

slight decrease in ARPU in 3Q was caused by early promotions, while Cyfrowy plans to launch
VoD services at minimum CAPEX (PLN 2.8mn) as of 4Q 09/1Q 10, while subscribers tend to
upgrade their packages, which should lead to higher ARPU in 2H 2010. Cyfrowy also decided to
buy 45% stake in mPunkt distribution network with more than 200 point of sales across Poland
for PLN 24.6mn with an option for 45% remaining stake. MPunkt had revenues of PLN 571mn
and net of PLN 2mn in 2008. The price seems fair at 2008 P/E of 27 and 2009e P/E of 18.
Cyfrowy will launch triple play offer as of 2Q 2010, which is good move to attract additional
subscribers. We are in the middle of the strongest season of the year (4Q) and Cyfrowy seems
to be well prepared. It will now better compete with N as it will offer HD and VoD services. Even
should subscribers stagnate, ARPU should grow (compare Cyfrowy´s PLN 35 vs. N platform
ARPU of PLN 57). We like the story, stability of financials and strong balance sheet and expect
moderate growth in medium term!
TVN with Buy TVN’s share price has underperformed its regional peers like CME or CTC since the rally started
on share price in March 2009. At the same time, it has not actually dropped that much overall. TVN is an FTA
correction; N leader on the Polish market, and we are bullish about the Polish economy and hence also the
platform Polish advertising market. We are fond of TVN’s core operations (broadcasting), but do not like
CAPEX and the recent N platform acquisition from TVN’s majority shareholder ITI (negative for FCF). We
results cap believe FTA can offset the negative N contribution as ad spending has a solid outlook. Based on
stronger our DCF model, we have raised our 12M target price from PLN 14.5 to PLN 16.0 and also our
upside recommendation from Accumulate to Buy on recent share price correction. TVN released its 3Q
potential 2009 results with revenues at PLN 428mn, up 21% y/y, EBITDA down 48.4% y/y at PLN
48.9mn, operating loss of PLN -3.7mn vs. a gain of PLN 74.1mn and net profit of PLN 58.2mn
vs. PLN 5mn year ago. It should be well noted that TVN already released its top line figure
earlier. The like-for-like revenues were down by 5.2% y/y due to the more than 12% decline in
overall TV ad spending, partly offset by higher market share of TVN (up 0.5 pp) and good
revenues out of thematic channels. N platform contributed by PLN 102mn to the top line, while
negatively weighted on operating results. Polish ad market declined by 14% y/y (stabilizing after
2Q), while TVN sees early signs of small recovery in ad spending in 4Q. Audience shares in
3Q/4Q were well above competitors, while thematic channels continue to gain audience share
(6.2% in 3Q up 0.2pp y/y), this should fuel TVN´s good 4Q revenues. CAPEX plan is maintained
at PLN 323mn for 2009 with PLN 200mn flowing to N. TVN further believes that it will increase
ARPU to PLN 62.9 and number of subscribers to arrive at 766tsd. Net debt currently stands at
PLN 2bn or 3.1 times projected FY EBITDA. Comments about ad spending recovery in 4Q were
very encouraging. The results of TVN were distorted by N consolidation with PLN 102mn adding
to top line, while more than PLN 160mn to TVN´s operating costs. CAPEX for N is also an issue
as TVN is financing the purchasing of HD set-top boxes. At the same time N surprised on the
positive side with the number of subscribers added and should easily surpass its FY target of
766tsd. ARPU at PLN 63 is unattainable in our view within 4Q 2009. The key concern for TVN is
how fast can it turn N into black on operating levels and for how much of additional CAPEX.
Should the additions continue in the similar speed like in 2009, we believe that by the end of
2010 N could break-even on EBITDA level.
Multimedia We initiate our coverage of Multimedia Polska with an Accumulate recommendation and a
Polska initiated target price of PLN 8.3. We appreciate the company’s leading position on the market, its focus
with on innovation, its competitive advantages (such as having the most extensive backbone among
Accumulate all cable operators in Poland) and the possibility of consolidation on very fragmented market.
There are over 600 cable TV operators in Poland. Only the biggest players have enough cash
and infrastructure to be up to date with innovation. Smaller companies will eventually have to
give up. This should lead to a consolidation process and a strengthening of the position of the
biggest players in the market, such as Multimedia. Potential M&A activities would create an
additional upside to our forecasts. Multimedia frequently launches new services, which increase
average revenue per unit (ARPU) and thus create additional value for shareholders. Recently,
the company’s offering was enriched with mobile broadband. Currently, the management is
considering becoming an MVNO (mobile virtual network operator), which would expand the offer
from triple play into to quadruple play (TV, Internet, fixed-line telephony, mobile telephony).
Multimedia is clearly not an aggressive stock. It operates in a very stable market and generates

hefty cash flows. However, we see a potential growth trigger in value-creative acquisitions. If
not, the stock would evolve into a dividend story with solid payments to shareholders in a 2-3
year time horizon.
The CEO
expects The CEO of Multimedia stated in the press interview that he expected around PLN 300mn
around PLN EBITDA in 2010 (up from over PLN 260mn, that should be recorded this year). This guidance is
300mn EBITDA even slightly above our forecasts and confirms our positive view on the company. In our
in 2010 yesterday’s report we assumed EBITDA at PLN 264mn in FY09 and PLN 291.6mn in FY10.
9M09 way Austrian Post presented 1-3Q09 figures coming in significantly below those of the
below last corresponding period of last year. Revenues dropped by 3.4% or EUR 61.4mn to EUR
year’s figures 1,723.2mn. The company is still facing the negative impact of the economic crisis which
accelerates the substitution of letters by electronic media and leads to declining volumes in the
infomail business. The Parcel & Logistics division is suffering from recession-related price
pressure as a result from the current excess of capacities. Therefore, the Mail and the Parcel &
Logistics segments therefore recorded revenue declines of -4.5% and -2.4%, respectively (to
EUR 1,018.7mn and EUR 561.5mn, respectively).
Some cost cutting supported EBIT

EBITDA decreased by 9.7% to EUR 168.9mn, while the operating result dropped by 9.0% to
EUR 93.7mn. The heavy impact on the top line was partly absorbed by declining staff costs (-
3.2%, whereas a 3.7% salary increase and a EUR 30.6mn provision for the employee social
plan were compensated by the reduction of work force and the reduction of provisions for under-
utilization in the amount of EUR 26.6mn) and cutting other operating expenses (-5.1%). The
profit for the period fell by 23.0% to EUR 67.4mn, additionally burdened by a weaker financial
result due to lower interest rates and a positive one-off effect in the previous year.
Free cash flow The operating cash flow dropped from EUR 161.7mn in 1-3Q08 to EUR 128.4mn. The free cash
still needs to flow amounted to EUR 73.4mn after three quarters (instead of EUR 94.0mn in 1-3Q08) and the
strengthen in management is very confident to reach at least the EUR 100mn, which are needed to keep
order to keep Austrian Post’s attractive dividend policy. The balance sheet remains in a good shape with EUR
dividend policy 278mn in financial assets, securities and cash/cash equivalents.
attractive
Cost measures Austrian Post’s management said that it expects the decline in the economic performance of
main tool to Austrian Post’s core markets to continue, burdening the company’s letter mail and parcel
support business. There is no short-term improvement expected. Therefore, the company’s top priorities
outlook are achieving operational savings and implementing cost reduction measures. In addition,
capital expenditure will be cut to EUR 80mn in 2009. The group EBIT for the FY is expected to
come in 10-15% below that of the previous year and should already include possible goodwill
write-downs. This guidance is in line with our expectations of an EBIT decline of 12%. The
company underlined its commitment to an attractive dividend policy.
Although Austrian Post’s Q3 net result came in slightly below our expectations, we keep our
EPS estimates for the time being (due to the outlook which is in line with our estimates). We
stick to our Hold recommendation and our target price of EUR 20.5. We still see only a very
limited upside potential for Austrian Post. We are waiting for further details on the company’s
efforts to reduce its work force by shifting civil servants to the Austrian police or other public
institutions, which could be a small trigger for Austrian Post share. However, the main focus lies
on the company’s top line development in an improving business environment, which we expect
to come in 2010.


Agora PLN 276.3 2.1% 2.9% 5.9% 7.7% 9.9% 11.4% 14.1% 15.4% 23.8% 2.5% 54.6% 30.6%
Austrian Post EUR 1,281.0 14.7% 15.9% 16.3% 16.6% 13.1% 11.1% 11.2% 11.4% -7.6% 0.5% -10.5% -22.1%
Cinema City EUR 295.1 11.2% 12.6% 8.1% 9.3% 21.7% 21.4% 18.9% 19.0% 26.1% 7.9% 31.3% 42.9%
CME USD 1,087.1 -21% -5.9% -1.0% 0.9% -4.0% -1.1% 17.8% 23.0% 0.5% -8.7% 23.4% 67.2%
Cyfrowy Polsat PLN 883.8 173% 65.2% 69.6% 60.2% 30.7% 22.2% 24.3% 28.8% 0.3% -13.3% 1.3% -9.6%
Multimedia Polska PLN 294.4 n.m. 9.3% 12.1% 13.3% 49.5% 50.4% 51.0% 50.9% 18.6% -8.9% 25.1% 11.1%
TVN PLN 1,071.2 n.m. 17.9% 21.6% 18.1% 37.5% 29.8% 27.8% 30.8% -2.9% -2.8% 17.7% -4.8%
Median - - 11% 13% 12% 13% 22% 21% 19% 23% - - - -
St Ives Group GBP - UK Pound
67 Sterling
13.3% 3.4% 3.8% 4.2% 13.3% 0.0% 0.0% 0.0% -16.2% -10.7% -8.1% -23.7%
Edipresse SA CHF - Swiss 194
Franc10.0% -3.7% 23.8% 22.3% 13.4% -11.7% -3.3% 0.0% -3.7% 16.9% 20.3% 0.0%
Roularta EUR - Euro 185 4.9% 2.7% 4.8% 6.2% 8.3% 6.1% 8.3% 8.6% 3.0% 6.3% 4.6% 65.3%
Dogan Yayin Holding TRY - New Turkish Lira
411 -25% -12.1% -4% 2.4% 6.0% 5.1% 8.1% 10.0% -13.3% -31.0% 7.8% 70.6%
Grupo Televisa SA MXN - Mexican
6,739Peso
20.9% 16.7% 18.2% 17.5% 38.3% 39.3% 38.5% 40.6% 3.3% 16.4% 16.0% 19.4%
TV Azteca MXN - Mexican
754Peso
27.7% 19.1% 22.8% 21.1% 39.7% 40.0% 40.4% 40.8% 2.8% 23.4% 27.6% 6.4%
ProSiebenSat.1 Media AG EUR - Euro1,781 30.0% 30.3% 26.9% 23.6% 20.3% 22.2% 23.0% 24.4% 9.1% 20.1% 111.3% 515.7%
Bloomsbury Publishing GBP - UK Pound
101 Sterling
6.9% 4.5% 4.7% 5.0% 9.3% 8.8% 9.3% 9.6% -5.1% -7.3% -2.6% -21.6%
Median Total - 10,682 10.0% 3.4% 5.3% 6.4% 13.4% 13.8% 15.6% 22.2% - - - -
EuroStoxx Media 74,995 14.5% 12.7% 14.2% 14.9% 27% 23% 24% 26% 3.2% 6.6% 4.2% 13.3%
CEE to Peer, Prem/Disc - 12% 268% 130% 106% 62% 55% 21% 4% - - - -
P/E P/CE P/BV

2008 2009e 2010e 2011e 2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
Agora 30.4 33.4 16.1 11.8 6.7 10.3 7.4 6.3 0.7 1.0 0.9 0.9
Austrian Post 14.1 10.9 11.0 10.7 7.1 5.9 5.6 5.5 2.2 1.8 1.8 1.8
Cinema City 10.8 13.7 19.2 15.4 5.4 7.8 9.0 7.6 1.2 1.6 1.5 1.4
CME nm nm nm 137.7 n.m. 51.7 179.6 17.9 0.9 1.4 1.3 1.3
Cyfrowy Polsat 11.5 18.0 12.7 10.4 10.2 15.2 10.7 9.0 12.3 11.2 7.4 5.5
Multimedia Polska 18.2 22.1 15.0 12.4 4.7 5.9 4.8 4.3 1.9 2.0 1.7 1.6
TVN 11.0 16.1 14.2 15.7 9.1 10.0 8.8 9.5 2.9 3.2 3.0 2.7
Median C EE 12.8 17.1 14.6 12.4 6.9 10.0 8.8 7.6 1.9 1.8 1.7 1.6
St Ives Group 3.0 11.7 10.3 9.1 2.2 2.6 4.5 3.0 0.4 0.4 0.4 0.4
Edipresse SA 9.1 3.2 2.7 3.4 5.7 12.8 0.9 1.0 0.8 0.6
Roularta 11.5 25.7 13.2 10.0 3.9 6.8 4.7 4.3 0.6 0.7 0.6 0.6
Dogan Yayin Holding 32.9 2.8 1.2 1.1 1.2 0.6 0.8 0.8 0.8
Grupo Televisa SA 17.1 19.9 17.0 16.2 8.0 19.7 17.5 8.5 3.6 3.3 3.1 2.8
TV Azteca 14.8 17.3 14.2 13.0 18.4 12.8 13.5 10.0 4.1 3.3 3.2 2.7
ProSiebenSat.1 Media AG 13.6 10.9 9.5 8.5 1.3 7.3 6.9 6.6 4.1 3.3 2.6 2.0
Bloomsbury Publishing 12.4 17.6 16.8 15.3 7.4 0.9 0.8 0.8 0.8
Median Total 12.4 17.6 13.7 13.0 3.4 6.3 6.9 6.6 0.9 1.0 0.8 0.8
EuroStoxx Media 12.6 13.1 13.1 11.8 7.6 8.1 8.1 7.6 2.3 2.1 1.9 1.8
CEE to Peer, Prem/Disc 3% -3% 7% -5% 102% 61% 27% 15% 105% 87% 101% 101%
EV/Sales EV/EBITDA
2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
Agora 0.5 1.0 0.9 0.8 4.8 8.9 6.1 5.1
Austrian Post 0.8 0.7 0.6 0.6 5.9 5.9 5.8 5.5
Cinema City 1.5 1.8 1.7 1.4 6.8 8.3 8.8 7.6
CME 2.0 3.3 2.9 2.5 -49.7 -300.2 16.2 11.0
Cyfrowy Polsat 2.6 2.8 2.0 1.9 8.5 12.8 8.3 6.5
Multimedia Polska 2.5 3.0 2.4 2.2 5.0 6.0 4.7 4.2
TVN 2.7 3.1 3.1 2.7 7.2 10.4 11.0 8.8
Median C EE 2.0 2.8 2.0 1.9 5.9 8.3 8.3 6.5
St Ives Group 0.3 0.2 0.2 0.2 2.0 2.6 2.6 2.5
Edipresse SA 0.6 2.5 1.9 1.1 4.2 23.2
Roularta 0.4 0.4 0.4 0.4 4.7 7.0 5.1 4.5
Dogan Yayin Holding 0.6 0.9 0.7 0.6 10.6 17.6 9.2 6.3
Grupo Televisa SA 1.9 2.5 2.2 2.1 5.0 6.4 5.8 5.3
TV Azteca 1.8 2.0 1.8 1.7 4.6 4.9 4.4 4.1
ProSiebenSat.1 Media AG 1.3 1.9 1.8 1.6 6.3 8.5 7.8 6.7
Bloomsbury Publishing 0.7 0.7 0.6 0.5 7.0 8.0 6.9 5.4
Median Total 0.7 1.7 1.5 1.1 4.7 7.5 6.3 5.4
EuroStoxx Media 1.5 1.7 1.6 1.5 6.8 8.4 8.0 7.3

Agora Buy Target price PLN 24.0

EV/sales 0.48 1.01 0.86 0.80
26 EV/EBITDA 4.82 8.88 6.09 5.15
24 P/E 30.36 33.44 16.05 11.81
22 P/CE 6.69 10.25 7.41 6.28
20
P/BV 0.71 0.96 0.93 0.88
Dividend yield 3.62% 0.00% 2.25% 3.39%
18
EV/EBITDA rel. 0.8 1.1 0.7 0.8
16 P/E rel. 2.4 2.0 1.1 1.0
14
Agora W IG 20 (Rebased) DJ EURO STOXX Media (Rebased) Rel. to universe (EUR, ppt) 16.8 -3.1 31.4 -1.1
Austrian Post Hold Target price EUR 20.5
ROE 2008 14.7% Sales (EUR mn) 2,441.4 2,360.7 2,343.4 2,330.7
Shares outst. (mn) 70 EPS CAGR 08-11e -0.6% EPS (EUR) 1.71 1.68 1.66 1.71
EV/sales 0.78 0.66 0.65 0.63
36 EV/EBITDA 5.94 5.92 5.77 5.54
34 P/E 14.09 10.91 11.02 10.71
32
P/CE 7.06 5.95 5.58 5.50
30
P/BV 2.20 1.80 1.78 1.76
28
26
Dividend yield 10.37% 8.47% 8.74% 9.02%
24 EV/EBITDA rel. 1.0 0.7 0.7 0.9
22 P/E rel. 1.1 0.6 0.8 0.9
18 Absolute (EUR terms) -7.6% 0.5% -10.5% -22.1%
16 Rel. to sector (EUR, ppt) -8.2 7.8 -19.3 -20.5
Austrian Post ATX (Rebased) DJ EURO STOXX Media (Rebased) Rel. to universe (EUR, ppt) -14.6 -5.1 -33.7 -53.9
Cinema City Reduce Target price PLN 20.5
ROE 2008 11.2% Sales (EUR mn) 189 204 212 241
52 weeks
EV/sales 1.47 1.78 1.67 1.44
26
EV/EBITDA 6.78 8.29 8.84 7.59
P/E 10.77 13.71 19.17 15.39
24
P/CE 5.38 7.77 9.02 7.61
22 P/BV 1.19 1.63 1.50 1.37
20 Dividend yield 0.00% 0.00% 0.00% 0.00%
EV/EBITDA rel. 1.1 1.0 1.1 1.2
18
P/E rel. 0.8 0.8 1.3 1.2
16
Cinema City WIG (Rebased) DJ EURO STOXX Media (Rebased)

CME Reduce Target price USD 27.0

Price (USD) 26.7 ROCE 2008 -8.7% 08 09e 10e 11e
Mcap (USD mn) 1,640 ROE 2008 -20.7% Sales (USD mn) 1,019.9 714.9 818.4 932.8
Mcap (EUR mn) 1,087 Sales CAGR 08-11e 714.0 EBITDA margin -4.00% -1.10% 17.76% 22.98%
Free float (EUR mn) 577 Sales CAGR 08-11e 2.7% Net profit margin -24.85% -9.41% -2.21% 0.73%
Shares outst. (mn) 61.3 EPS CAGR 08-11e -44.8% EPS (USD) -6.04 -1.01 -0.21 0.19
52 weeks Dividend/share (USD) 0.00 0.00 0.00 0.00
EV/sales 1.99 3.30 2.88 2.53
40 EV/EBITDA n.m. n.m. 16.25 10.99
35 P/E nm nm nm 137.68
30 P/CE n.m. 51.68 179.59 17.89
P/BV 0.92 1.35 1.32 1.29
25
Dividend yield 0.00% 0.00% 0.00% 0.00%
20
EV/EBITDA rel. n.m. n.m. 2.0 1.7
15 P/E rel. nm nm nm 11.1
5 Absolute (USD terms) 3.3% -3.4% 31.2% 98.8%
0 Rel. to sector (EUR, ppt) -0.1 -1.4 14.6 68.9
CME PX (Rebased) DJ EURO STOXX Media (Rebased) Rel. to universe (EUR, ppt) -6.5 -14.3 0.2 35.5
Cyfrowy Polsat Accumulate Target price PLN 16.0
Price (PLN) 13.5 ROCE 2008 196% 08 09e 10e 11e
Mcap (PLN mn) 3,622 ROE 2008 173% Sales (PLN mn) 1,133.6 1,337.9 1,728.2 1,783.1
Mcap (EUR mn) 884 Sales CAGR 08-11e -33 EBITDA margin 30.71% 22.16% 24.31% 28.85%
EV/sales 2.63 2.84 2.01 1.86
21
EV/EBITDA 8.55 12.81 8.26 6.46
20
19 P/E 11.51 18.01 12.73 10.43
18 P/CE 10.18 15.16 10.71 8.96
17 P/BV 12.35 11.15 7.35 5.48
16
15
Dividend yield 1.48% 5.24% 4.41% 5.11%
14 EV/EBITDA rel. 1.4 1.5 1.0 1.0
13 P/E rel. 0.9 1.1 0.9 0.8
12
10 Absolute (PLN terms) -3.9% -14.1% -8.2% -3.6%
Cyfrowy Polsat
W IG (Rebased) Rel. to sector (EUR, ppt) -4.5 -6.9 -17.1 -1.9
DJ EURO STOXX Media (Rebased) Rel. to universe (EUR, ppt) -10.9 -19.8 -31.4 -35.3
Multimedia Polska Accumulate Target price PLN 8.3
Price (PLN) 7.9 ROCE 2008 8% 08 09e 10e 11e
Mcap (PLN mn) 1,207 ROE 2008 9% Sales (PLN mn) 475 525 572 623
Mcap (EUR mn) 294 Sales CAGR 08-11e 72 EBITDA margin 49.46% 50.36% 50.95% 50.87%
52 weeks
EV/sales 2.46 3.00 2.41 2.16
10,0
EV/EBITDA 4.97 5.96 4.73 4.25
9,5 P/E 18.20 22.11 14.99 12.38
9,0 P/CE 4.72 5.86 4.81 4.30
8,5 P/BV 1.87 1.96 1.69 1.60
8,0 Dividend yield 0.00% 0.00% 4.73% 8.07%
7,5 EV/EBITDA rel. 0.8 0.7 0.6 0.7
7,0
P/E rel. 1.4 1.3 1.0 1.0
6,5
5,5 Absolute (PLN terms) 13.6% -9.8% 13.3% 18.6%
5,0 Rel. to sector (EUR, ppt) 245.3 307.6 232.4 217.7
Multimedia Polska
WIG (Rebased) Rel. to universe (EUR, ppt) 238.9 294.7 218.0 184.3
DJ EURO STOXX Media (Rebased)

TVN Buy Target price EUR 16.0

Mcap (EUR mn) 4,391 ROE 2007 26.0% Sales (PLN mn) 1,897.3 2,066.7 2,292.3 2,552.9
52 weeks
EV/sales 2.71 3.12 3.06 2.70
18 EV/EBITDA 7.23 10.44 11.02 8.77
17 P/E 11.03 16.14 14.17 15.67
16 P/CE 9.07 10.05 8.80 9.46
15 P/BV 2.86 3.15 2.97 2.71
14 Dividend yield 4.27% 4.17% 2.63% 2.82%
13 EV/EBITDA rel. 2.1 1.3 0.9 0.8
12 P/E rel. 0.9 0.9 1.0 1.3
11
8 Rel. to sector (EUR, ppt) -7.6 3.5 -2.2 3.3
TVN WIG 20 (Rebased) DJ EURO STOXX Media (Rebased) Rel. to universe (EUR, ppt) -14.0 -9.4 -16.6 -30.1

Sector Insight Oil & Gas
- Crack margins remained almost flat, but Ural/Brent differential is widening

- OMV and Petrom with strong Q3 figures, OMV ends Petrol Ofisi talks
- MOL releases mixed 3Q 2009 results, INA´s results below expectations, both with
strong upstream
Oil price torn The price of oil (Brent) stabilized in the range 75 - 80 USD/bbl. There are two main drivers of oil
between price development: short-term balance of supply and demand, which tends to push prices down
current supply (illustrated by the still high level of stock, low refinery utilization) and the expected rebound of
and demand global growth, which should support growth in demand for oil, especially in developing countries
and expected like China. There are two main risks linked to these factors. The first is the sub-par growth of the
rebound of world economy and the subsequent weaker-than-expected demand for oil. Oil may, in such a
global growth situation, temporarily fall back towards 40 USD/bbl. The second is increasing investment flows
into commodities motivated by the long-term outlook for rising demand and exhaustion of
sources. We may see a repeat of sharp growth in price witnessed in the first half of 2008. The
price of oil should grow steadily next year in the absence of such extreme events. We expect
only a moderate recovery accompanied by increased demand for oil in developing countries and
steady demand in OECD countries. OPEC has ample reserves, and non-OPEC production is
also growing steadily. Moreover, the high level of stocks should act as a curb for too-rapid
growth of oil prices.
Development of oil prices in last 2 years
140
130
120
110
100
90
80
70
60
50
40
30
20
Nov-07
Jan-08
Mar-08
May-08
Jun-08
Jul-08
Nov-08
Jan-09
Mar-09
May-09
Jun-09
Jul-09
Sep-07
Dec-07
Feb-08
Aug-08
Sep-08
Dec-08
Feb-09
Aug-09
Sep-09
Oct-07
Apr-08
Oct-08
Apr-09
Oct-09
Ural USD/bbl Ural EUR/bbl Brent USD/bbl
Source: Reuters
Crack margins Crack margins remained almost flat during last month, when the average Ural crack margin
flat – stood at 1.42 USD/bbl, leading to another slight decrease compared to the 3Q09 level, with an
Ural/Brent average of 1.59 USD/bbl (-10%). The average Ural crack margin in the same period last year
differential stood at 4.12 USD/bbl, or 66% above the current level. The Brent crack margin also remained
widens almost flat, with the average margin based on Reuters’ calculation reaching 2.91 USD/bbl during
last month (down 67% y/y). On the other hand, a slight positive sign for CEE refineries (which
process Ural oil) is the widening Ural-Brent differential, with the U-B differential more than
doubling compared to 3Q09. It currently stands at 0.86 USD/bbl (in y/y comparison, still 50%
down).

Development of crack margins in last 2 years
16,00
14,00
12,00
10,00
8,00
USD/bbl
6,00
4,00
2,00
0,00
-2,00
Nov-07
Nov-08
Nov-09
Jan-08
Jun-08
Jul-08
Jan-09
Jun-09
Jul-09
Dec-07
Feb-08
Mar-08
Apr-08
May-08
Aug-08
Sep-08
Oct-08
Dec-08
Feb-09
Mar-09
Apr-09
May-09
Aug-09
Sep-09
Oct-09
Ural Crack Margin Brent Crack Margin
Source: Reuters
Mild winter The diesel margin rebounded from the bottom seen in 2Q09, and the worst is probably already
slows recovery over, but the speed of recovery is slightly slower than what we had originally expected. The
of middle average diesel margin for last month was 6.89 USD/bbl (up 8% compared to 3Q09), mainly
distillate crack thanks to improvements in the freight market. On the other hand, the limiting factor for a swifter
spread rebound of the middle distillates crack spread (heating oil, diesel) is the above-average
temperatures in the northern hemisphere during the start of winter heating season and also
higher reserves of heating oil (in y/y comparison). Diesel margins are still way below last year’s
levels (19.28 USD/bbl, 64% difference). The gasoline margin has decreased in the last couple of
months and is developing perfectly in line with our estimates. The average gasoline margin
stood at 5.43USD/bbl last month and is down 26% compared to 3Q09, mainly due to the end of
the summer driving season.
Development of margins in last 2 years
35
30
25
20
USD/bbl
15
10
0
Dec-07
Jan-08
Feb-08
Mar-08
May-08
Jun-08
Jul-08
Oct-08
Nov-08
Dec-08
Jan-09
Feb-09
Mar-09
May-09
Jun-09
Jul-09
Oct-09
Nov-09
Sep-08
Sep-09
Apr-08
Aug-08
Apr-09
Aug-09
-5
-10
Diesel Margins Gasoline margins

Source: Reuters
To sum up, crack margins stayed almost flat in November. The Ural crack margin, which is more
important for oil & gas companies in the CEE region than the Brent crack margin, should be
further supported by a rebound in the Brent-Ural differential. A mild recovery in diesel margins
(middle distillates) is visible, mainly due to the improved situation in the freight market and the
upcoming heating season, but above-average temperatures and higher reserves of heating oil
could limit the upside potential.

MOL releases MOL released its 3Q 2009 results, with operating profit beating our and market expectations on
mixed 3Q 2009 positive INA contribution, while it lagged the market consensus on the net level with HUF
results with 12.9bn, which was behind both the market’s and our expectations, on high taxes from options
strong revaluations. Income tax for 3M reached HUF 87bn, out of which HUF 30bn was non-cash. The
performance source of the increase in tax is the revaluation of MOL treasury shares options, which increased
upstream with MOL’s share price increase. It should be noted that MOL enjoyed tax benefits last year,
which are reversed this year. For 2010 we can expect Hungarian combined tax of around 27%,
while Slovakia and Russia could see some tax benefits on past losses and any further
revaluation of profits/losses out of treasury share options. Operating profit was fuelled by INA
contribution, which added almost 30% of MOL EBITDA in 3Q09 (HUF 22.5bn), as INA benefited
from a strong upstream result. MOL also benefited from inventory revaluation gains, though it
has not yet come any closer to striking a deal with the Croatian government regarding INA´s
loss making gas distribution division. However, it believes that a preliminary agreement will be
reached, but has not given any specific time frame. Should it not agree with the government, it
has an option to move out of INA (selling 47% stake to 3rd party).
MOL The outlook for 2010, given by the management, sees the price of Brent oil at USD 70 (slightly
Management below our outlook), a stronger diesel crack spread, a lower gasoline crack spread and improved
sees Brent oil Petchem margin (EUR 402/t vs. EUR 315 during 9M09). Further, the company should focus on
prices around optimized CAPEX (to reach HUF 357bn in 2010) with a majority of cash flowing to E&P
USD 70 in 2010 development, completion of R&M upgrades in Croatia (refinery modernization) and an
(below our expansion of existing Slovak plants in cooperation with CEZ (G&P). It should also be noted that
estimate) no agreement has yet been made between MOL and Kurdistan for oil and gas exports. Given
MOL´s exposure to the two major local field developments, it cannot count on local demand.
MOL is rather optimistic about the agreement, as all parties would benefit. MOL plans to sell the
production to Turkey and/or Europe. The company is on track for securing stable upstream
production levels within its core markets and potential upsides from new field exploration in
Syria and Iraq. Refining margins are likely to weigh negatively on results in 2010, but as MOL
has high exposure to diesel margins, any macroeconomic recovery should help boost diesel
margins. 3Q 2009 has not brought any major news, and the outlook of the company for 2010 is
pretty much in line with our valuation. There could be some negative reaction to the Croatian
agreement and questions regarding Kurdistan, but in the medium term we believe that MOL will
strike the deals.
INA´s results INA’s 3Q 09 adjusted results came in below our expectations (consensus was again not
below available). Despite the quarterly improvement in the external environment in general (the
expectations, increase in the average crude oil price should more than counterbalance the still low refining
but with strong margins), total adjusted EBIT from continuing operations was HRK 128mn, compared to our
upstream forecast of HRK 515mn and 2Q09 operating profit of HRK 478mn. The main reasons for such a
weak “clean” operating profit were the worse-than-expected performances by the upstream and
refining segments. Moreover, the company posted several one-off items, which worsened 3Q09
operating numbers by an additional HRK 844mn, to HRK -716mn. The loss from discontinued
operations (gas segment business, which should be divested) amounted to HRK 224mn,
basically in line with last quarter’s figure of HRK 215mn. In the E&P business, oil prices were
almost unchanged q/q in 3Q09, as Brent crude oil traded slightly under 66 USD/bbl at the end of
3Q09. However, the average price of Brent oil in 3Q09 was 68.32 USD/bbl (up 15% q/q, but still
down 43% in y/y terms). On the other hand, the strengthening HRK vs. USD (on q/q basis)
caused a decrease in sales and EBIT in HRK terms. Also, the production levels were somewhat
lower (average daily hydrocarbon production decreased by 5.5% q/q) and INA showed an
operating profit of HRK 482mn in 3Q09. One-off item included HRK 675mn in expenses for
impairment and a field abandonment provision in 3Q 2009. Refining EBIT loss in 3Q09 again
widened to HRK -256mn on a y/y basis (compared to HRK -43mn), which cannot, however, be
explained by the similar margin environment. The average Ural crack margin for 3Q09 was 1.59
USD/bbl (up 18% from the level seen in 2Q09). We should mention, however, that the margins
increased from very low levels and were still down 76% down in the Ural expression (in 3Q08 it
was 6.7 USD/bbl). The average Brent margin in 3Q09, based on Reuters’ calculation, was 3.28
USD/bbl (+4.8% q/q and -68% y/y). Therefore, INA’s refining margin was effectively much worse

than we expected, INA also posted a quite low inventory revaluation profit of HRK 33mn. Retail
was slightly better than our forecast (HRK 74mn vs. HRK 36mn). The adjusted results were
worse than expected, mainly because of weaker- than-expected upstream and refining
segments. We therefore expect a slightly negative reaction to these figures. However, the
outlook remains rather mixed, as we expect further improvements in the upstream segment (due
to increasing crude oil prices), while the downstream figures will be negatively influenced by the
very low refining margins.
Lotos Lotos posted a 3Q09 operating profit PLN 185mn, in line with our expectation of PLN 182mn,
surprised but well above the market consensus of PLN 76mn. The result was boosted by a PLN 86mn
positively in revaluation of oil inventory, which supported the downstream performance, despite very low
3Q on refining margins (2.87 USD/bbl – a decrease of 69% y/y and 23.5% q/q) and the very low
revaluation Brent/Ural spread (0.32 USD/bbl – a decrease of 82% y/y and 52% q/q). The financial net
gains, but amounted to positive PLN 515mn – this is mostly due to the revaluation of FX loans (PLN
weak refining 434mn) other FX differences and hedging. This led to the net result beating the market
margin outlook consensus by 44%. Despite the good overall figures, the clean operating performance remains
weighs quite weak. Looking at a breakdown by segment, the downstream segment in particular came in
negatively on well ahead of market expectations due to FX fluctuations, a revaluation gain of PLN 86mn and a
anticipated strong driving season fuelled by retail segment performance (PLN 17mn compared to PLN 7mn
future in 3Q 08). However, this effect will be diminished in the winter months and 4Q. At the same
performance time, it should be noted that the clean operating performance remains close to breakeven, and
we do not expect any significant changes in this clean performance – we expect only a slight
increase in refining margins and widening of the B-U differential. On the other hand, the
upstream segment recorded EBIT of PLN 4mn, well below our expectation of PLN 38mn, mainly
because of a 47% y/y fall in sales volumes. In 3Q 2009, Lotos reported a profit of PLN 514.3mn
on financing activities. Note that the USD/PLN exchange rate moved in the range of 2.80–3.19,
with a closing value of 2.89 at the end of third quarter (down by 9.0% from 2Q 2009). We expect
the outlook for the refining margin environment to continue to be sluggish and without one-off
revaluation items; the results could be poor in upcoming quarters.
Unipetrol 3Q Unipetrol reported its 3Q09 results with revenues at CZK 18.7bn, below the market estimate of
results below CZK 19.1bn, and with EBIT at CZK 5mn compared to market expectations of CZK 49mn. The
estimates, net loss of CZK -36mn was also slightly below the consensus of CZK -29mn. Operating profit
despite already was negatively influenced by the very weak performance of both the petchem and refining
low segments, despite the slight improvement in petrochemical margins. After the 1H09 operating
expectations loss of more than CZK 0.5bn and the addition of further weak 3Q09 figures, we think the current
full-year Bloomberg consensus looks unachievable. Unlike its Polish mother company PKN
Orlen, Unipetrol posted a loss from financials in 3Q09.
In the refining segment, Unipetrol's model refining margin remained relatively stable on a q/q
basis (USD/bbl 1.31 in 3Q09 and USD/bbl 1.28 in 2Q09), but still well below last year’s level of
6.23). As for sales volumes, 3Q09 recorded q/q increases (more a seasonal effect because of
the driving season) by 31%. Overall, the refining operating loss stood at CZK 465m in 3Q09,
compared to a gain of CZK 54mn in 3Q08, which was also somewhat worse than we expected
(CZK -380mn) due to lower inventory revaluation effect. The outlook continues to remain
sluggish; crack margins in the last two months increased only moderately from the levels seen in
2Q09. As for the retail segment, we could see a 41% y/y increase, mainly because of higher unit
margins and quite strong demand, putting the retail segment performance at CZK 241mn. The
situation in the petrochemical business improved somewhat in 3Q09, as Unipetrol margins
increased q/q by roughly 20% to 584 EUR/t., but still remain weak compared to the long-term
average of 750 EUR/t. Sales volumes stagnated in total (Unipetrol's volumes increased by 2%
q/q). The outlook remains sluggish, as the slight improvement in both the refining and petchem
segments will likely be offset by the decrease in profitability of retail due to the end of the driving
season (seasonal effect). All in all, we remain quite negative on the company.

Extraordinary Unipetrol called an EGM for December 10. The agenda mainly concerns administrative issues,
dividend in like changes in articles of association or the election of an Audit Committee. There is nothing on
Unipetrol the agenda concerning profit distribution (dividend), and we do not think that Unipetrol will pay
unlikely, given out anything this time. As we wrote in our latest CEE oil and gas sector report, we found that
the EGM Chemopetrol paid a dividend to Unipetrol RPY (its mother company) of some CZK 3.75bn at the
agenda end of last year. Adding CZK 100mn from Ceska rafinerska and retained earnings of some CZK
0.45bn, we arrived at some CZK 4.3bn which can be paid as dividends (roughly CZK 24/share).
In theory, somebody could try to put the dividend payment on the agenda, but that is pure
speculations.
PKN benefited PKN reported 3Q09 results basically in line with our and market expectations; only net profit
from level was well above the consensus, due to the higher financial result. However, operating profit
revaluation was at PLN 423mn, slightly below the consensus of PLN 436mn. The PLN 89mn y/y drop in
profits in 3Q; EBIT in 3Q09 mainly resulted from (1) a drop in operating profit at Orlen Lietuva of PLN 83mn
clean y/y due to the unfavorable macro situation and by 18% decline in volume sold; (2) A PLN 80mn
operating y/y decline in Unipetrol´s EBIT due to losses in the petrochemical segment. The PLN 79mn y/y
results still increase in the retail segment profitability is the only good news for PKN at the operating level.
depressed The bottom line of PLN 931mn (+20% y/y) was boosted by FX gains amounting to PLN 762mn,
of which PLN 376mn came from FX loan revaluation, a significantly larger effect than was
expected (NI consensus stood at PLN 778mn).
Petchem see The significant deterioration of the macroeconomic situation reflected in the refining margins and
moderate the Ural/Brent differential (expressed in foreign currencies) together with deprecation of the
improvement, Polish zloty against the USD and EUR led to a decline in refining EBIT by PLN -485mn y/y. At
but weak the same time, the effect of rising crude oil prices re-valued inventories, boosting operating profit
refining by PLN 588mn on a y/y basis. The clean level results improvement (measured by the refining
margins to margins) is still not visible. The petchem segment reported a operating profit of PLN 65mn,
weigh on slightly ahead of our expectation of PLN 60mn. After three consecutive quarters of losses, PKN
future results showed its performance is improving, driven by monomer margins. As expected, the retail
segment confirmed a good “summer” performance supported by the driving season, and the
EBIT of PLN 363mn is above our estimation of PLN 320mn. However, retail EBIT is expected to
decrease in 4Q09. Importantly, margins in the refining segment remain very weak and a
significant improvement is not expected. The petrochemical result is improving (mainly driven by
the monomer segment, where PKN is stronger than e.g. Unipetrol), but this should only offset
the expected seasonal drop in profitability of the retail segment. As a result, we still remain
rather “neutral” on PKN. We therefore expect PKN´s performance in upcoming quarters to
remain weak.
Strong Q3 In its release of Q3 financial results, OMV presented strong figures exceeding both our and the
results, market forecast. CCS clean EBIT was reported at EUR 514mn (-49% y/y). The plunge
beating compared to last year is clearly related to much lower crude oil prices (the average Brent price
forecasts in 3Q08 was 115.09 USD/bbl vs. 68.08 USD/bbl in 3Q09) and a slim refining margin (1.30
USD/bbl in 3Q09 vs. 6.24 USD/bbl a year earlier). However, as oil prices recovered in the
course of 2009, so did OMV’s clean CCS EBIT line, rising sharply q/q (it was EUR 151mn in
2Q09). Reported EBIT amounted to EUR 553mn (-23% y/y), which includes inventory
revaluations gains (EUR 53mn) and net special charges of EUR 15mn. Revenues came in at
EUR 4,719mn (-31% y/y), while clean CCS net profit after minorities was reported at EUR
259mn.
Lower oil price The Exploration and Production (E&P) segment posted the expected drop in profitability, as
hurts E&P y/y, clean CCS EBIT came in at EUR 502mn, 31% below last year’s figure. The drop in crude oil
R&M suffers prices was the decisive factor in the decline in profitability compared to last year (see above).
from However, looking at the q/q development, EBIT was strongly boosted by the fact that hedging
depressed losses in 2Q09 turned into hedging gains of EUR 88mn in 3Q09. This, together with higher
margins crude oil prices, lifted clean CCS EBIT by 81% q/q. In the Refining and Marketing (R&M)
segment, clean CCS EBIT arrived at EUR -14mn, well below the figure in 3Q08 (EUR 207mn).
The figure plunged compared to the same period last year, as the refining margin dropped

sharply (see above). Inventory revaluations gains (EUR 53mn) lifted the reported EBIT figure to
EUR 36mn. In the gas segment, clean CCS EBIT reached EUR 46mn, down 23% y/y.The net
financial result of EUR -20mn was significantly below 3Q08 (EUR 52mn). This was mainly due to
higher net interest expenses and a lower contribution from associated companies. Within the
latter income from Borealis dropped by 71% y/y while Petrol Ofisi’s contribution was down 39%
y/y. OMV’s net debt increased from EUR 2,717mn the end of 2Q09 to EUR 3,152nm a quarter
later, raising net gearing to 31% from 28% in 2Q09.
Acquisitions: The company later announced that it dropped its plan to take full control of the Turkish oil
plan for Petrol retailer Petrol Ofisi. Negotiations with the Turkish Dogan Holding regarding a potential
Ofisi dropped, acquisition of its share in Petrol Ofisi were terminated after a USD 3.3bn tax fine imposed on
upstream Petrol Ofisi in October made matters more complex. Both companies now agreed to continue
assets more their stable partnership in Petrol Ofisi. Separately, speaking at a media conference in London,
likely CEO Ruttensdorfer did reiterate the exploration target of 350kbpd by the end of 2010, while
admitting that the goal is unlikely to be reached. The aim for existing production sites will be to
redevelop fields to stabilize the output at the current level, overcoming the natural decline. Thus,
to achieve growth, new sources will have to be acquired. Furthermore, management stressed
that it will allocate more capital towards upstream at the detriment of the downstream
investments. We expect to see acquisitions of upstream assets in the near future. We were
encouraged by the results presented and the termination of negotiations added positive news to
the picture, as we now assume that the rumoured capital increase is off the table. In our view,
the trend of higher oil prices is likely to continue (compared to the beginning of 2009), thus we
feel comfortable in continuing to recommend investors to buy OMV.
Clearly ahead With its 3Q09 results, Petrom was able to exceed our expectation and the market consensus by
of expectations a significant margin, reporting EBIT of RON 705mn (+9.6% y/y). The main reasons for that were
in Q3, the 18% increase in realized crude oil price and higher production supporting upstream figures,
Accumulate while positive inventory revaluation gain aided the refining segment. Petrom posted positive
confirmed hedging and FX results, resulting in a net profit of RON 615mn (-1.8% y/y). On y/y basis, the
results were negatively influenced by the significantly lower crude oil price (the average Ural
price in 3Q08 was 113.6 USD/bbl vs. 67.9 USD/bbl in 3Q09). Compared to the previous quarter,
profitability in the upstream segment clearly improved as the oil price recovered considerably
from the lows seen earlier in 2009. Refining margins have remained at a very low level (average
Ural crack margin for 3Q09 was only 1.65 USD/bbl down from 6.59 USD/bbl in 3Q08). The
financial result decreased in 3Q09 to RON 36mn from RON 139mn in 3Q08, mainly a result of
foreign exchange losses and the impairment of financial assets. This was partially compensated
by the realization of oil price hedging (gain of RON 126mn). As Petrom has strong upstream
exposure, results should further improve in the coming quarters. Thus, we remain relatively
positive on the company and stick to our Accumulate recommendation.


INA HRK 2,298.8 2.8% 5.8% 10.8% 12.4% 9.7% 14.0% 16.0% 16.7% 1.7% 16.3% 15.5% 53.1%
Lotos Group PLN 901.6 -9% 4.0% 6.0% 6.7% 1.1% 7.8% 7.8% 7.7% 27.1% 35.7% 71.6% 157.0%
MOL HUF 6,539.3 15.1% 8.8% 16.9% 17.3% 10.0% 10.9% 12.8% 13.4% 11.6% 14.6% 33.1% 51.7%
OMV EUR 8,620.8 17.7% 12.0% 15.9% 15.6% 14.3% 15.0% 15.8% 16.0% 7.7% 5.6% 3.2% 61.1%
PKN Orlen PLN 3,287.1 -3.6% 4.2% 6.5% 8.3% 4.1% 6.0% 6.3% 6.4% 13.1% 14.6% 10.1% 10.5%
Petrom RON 3,551.8 7.9% 7.2% 9.7% 11.6% 14.7% 18.0% 23.4% 24.3% 7.9% 7.7% 1.2% 33.8%
Unipetrol CZK 974.7 0.2% -0.1% 2.6% 3.6% 4.6% 5.9% 7.3% 7.7% 4.6% 5.1% 24.5% 24.0%
Median - - 3% 6% 10% 12% 10% 11% 13% 13% - - - -
Repsol EUR - Euro22,818 13.8% 7.2% 9.9% 11.2% 14.1% 14.0% 14.6% 14.5% 2.5% 10.9% 15.6% 24.9%
Royal Dutch Shell Group PlcGBP - UK123,745
Pound Sterling
22.3% 9.4% 13.2% 15.2% 13.7% 12.2% 13.5% 15.1% 0.3% 4.1% 4.7% 5.2%
Total SA EUR - Euro99,490 28.4% 15.4% 17.9% 18.9% 20.7% 18.8% 21.2% 20.2% 1.8% 5.4% 2.9% 8.3%
Espanola Petroleos (cepsa EUR - Euro 6,114 9.7% 5.2% 8.1% 9.7% 5.4% 6.6% 8.0% 7.6% -4.2% -21.1% -25.1% -66.5%
Hellenic Petroleum Sa EUR - Euro 2,494 9.4% 8.6% 7.6% 9.2% 5.1% 6.7% 6.0% 6.3% 2.0% 11.3% 7.8% 52.8%
Tupras TRY - New Turkish Lira
3,212 14.6% 20.2% 24.1% 25.6% 4.2% 5.4% 4.6% 4.9% 6.1% 17.7% 42.3% 85.1%
Petrol Ofisi New TRY - New Turkish
1,417 Lira
3.8% 8.6% 8.0% 7.7% 5.5% 5.2% 4.5% 4.6% -7.2% -25.6% 14.0% 96.0%
Lukoil Holding USD - US 32,416
Dollar 18.3% 12.8% 12.7% 13.3% 15.5% 17.3% 18.1% 18.2% -0.1% 14.2% 2.6% 64.6%
Median Total - 359,276 14.6% 9.4% 12.7% 13.3% 13.7% 12.2% 13.5% 14.5% - - - -
EuroStoxx Oil & Gas 240,691 18.6% 11.4% 13.3% 13.4% 14% 15% 16% 17% 8.5% 16.4% 28.7% 36.6%
P/E P/CE P/BV

2008 2009e 2010e 2011e 2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
INA 32.0 23.6 11.6 9.0 7.9 5.8 4.5 4.0 1.0 1.3 1.2 1.0
Lotos Group nm 16.9 11.0 9.8 n.m. 8.8 4.0 3.8 0.3 0.7 0.7 0.7
MOL 5.8 14.0 6.8 6.0 3.1 5.7 3.6 3.3 0.8 1.2 1.1 1.0
OMV 4.1 9.6 7.1 6.9 2.3 3.0 5.4 3.1 0.8 1.2 1.1 1.0
PKN Orlen nm 16.3 10.2 7.8 4.5 5.2 3.5 3.2 0.6 0.7 0.7 0.6
Petrom 9.2 14.4 10.3 8.2 3.1 n.m. 7.8 5.4 0.8 1.0 1.0 0.9
Unipetrol nm nm 24.5 17.6 7.6 5.1 5.1 5.0 0.7 0.6 0.6 0.6
Median C EE 7.5 15.3 10.3 8.2 3.8 5.4 4.5 3.8 0.8 1.0 1.0 0.9
Repsol 8.2 15.4 10.7 8.9 3.6 4.6 3.9 3.5 1.1 1.1 1.1 1.0
Royal Dutch Shell Group Plc 6.1 14.5 9.9 8.0 4.2 7.4 5.3 4.6 1.4 1.4 1.3 1.2
Total SA 6.8 12.0 9.5 8.3 5.4 6.4 5.4 4.9 1.9 1.9 1.7 1.6
Espanola Petroleos (cepsa 11.5 21.2 13.1 11.0 6.7 6.7 6.6 7.2 1.1 1.1 1.1 1.1
Hellenic Petroleum Sa 11.4 11.8 13.0 10.2 8.2 7.6 8.0 1.1 1.0 1.0 0.9
Tupras 13.4 9.8 8.8 8.1 5.8 7.4 6.8 8.0 2.0 2.0 2.1 2.1
Petrol Ofisi New 27.9 12.0 12.1 12.2 49.1 5.1 6.5 8.7 1.1 1.0 1.0 0.9
Lukoil Holding 4.9 6.8 6.0 5.1 3.1 5.9 3.9 3.7 0.9 0.9 0.8 0.7
Median Total 8.2 12.0 9.9 8.3 4.8 6.4 5.4 4.9 1.1 1.1 1.1 1.1
EuroStoxx Oil & Gas 10.2 13.2 13.5 11.3 5.8 6.4 5.7 5.3 1.9 1.8 1.7 1.6
CEE to Peer, Prem/Disc -9% 28% 4% -1% -20% -15% -15% -23% -34% -8% -8% -14%
EV/Sales EV/EBITDA
2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
INA 0.6 0.9 0.8 0.8 6.6 6.5 5.2 4.6
Lotos Group 0.3 0.8 0.6 0.5 24.2 9.9 7.8 6.8
MOL 0.4 0.8 0.6 0.6 4.2 7.4 4.7 4.4
OMV 0.4 0.8 0.8 0.7 2.6 5.1 4.9 4.6
PKN Orlen 0.3 0.4 0.3 0.3 6.9 6.3 5.3 5.1
Petrom 0.6 1.2 1.1 1.0 4.1 6.8 4.6 4.0
Unipetrol 0.3 0.4 0.3 0.3 6.4 6.3 4.5 4.1
Median C EE 0.4 0.8 0.6 0.6 6.4 6.5 4.9 4.6
Repsol 0.4 0.8 0.7 0.6 3.0 5.6 4.7 4.3
Royal Dutch Shell Group Plc 0.4 0.7 0.6 0.6 2.7 6.1 4.7 4.0
Total SA 0.6 1.0 0.9 0.7 3.1 5.4 4.3 3.7
Espanola Petroleos (cepsa 0.8 0.5 0.5 0.4 14.3 7.0 5.7 5.2
Hellenic Petroleum Sa 0.2 0.6 0.6 0.5 4.5 8.6 9.3 8.3
Tupras 0.1 0.4 0.3 0.3 3.1 6.9 6.8 5.9
Petrol Ofisi New 0.1 0.2 0.2 0.2 0.9 3.5 4.6 4.1
Lukoil Holding 0.3 0.7 0.6 0.5 2.1 4.3 3.5 3.0
Median Total 0.4 0.7 0.6 0.5 3.0 5.6 4.7 4.1
EuroStoxx Oil & Gas 0.7 1.2 1.0 0.9 3.9 6.4 6.7 5.8
CEE to Peer, Prem/Disc 3% 4% -5% 7% 112% 16% 5% 11%

INA Accumulate Target price HRK 1,888.0

Price (HRK) 1,681 ROCE 2008 1.8% 08 09e 10e 11e
EV/sales 0.64 0.91 0.83 0.77
1.900 EV/EBITDA 6.62 6.52 5.19 4.63
1.800 P/E 32.02 23.65 11.59 8.97
1.700 P/CE 7.94 5.79 4.54 4.01
1.600 P/BV 0.96 1.32 1.18 1.05
1.500 Dividend yield 1.33% 0.00% 0.89% 0.89%
1.400
EV/EBITDA rel. 1.0 1.0 1.1 1.0
1.300
P/E rel. 4.3 1.5 1.1 1.1
1.200
1.000 Absolute (HRK terms) 2.5% 15.9% 15.0% 55.6%
INA CROBEX (Rebased) DJ EURO STOXX Oil & Gas (Rebased) Rel. to universe (EUR, ppt) -5.3 10.7 -7.7 21.4
Lotos Group Sell Target price PLN 21.0

Mcap (PLN mn) 3,695 ROE 2008 -9.3% Sales (PLN mn) 16,294.7 12,239.7 15,022.2 16,717.4
Shares outst. (mn) 114 EPS CAGR 08-11e -17.4% EPS (PLN) -4.19 2.04 2.94 3.33
EV/sales 0.26 0.77 0.61 0.52
35 EV/EBITDA 24.21 9.89 7.81 6.76
30 P/E nm 16.90 11.04 9.77
P/CE n.m. 8.75 3.99 3.80
25 P/BV 0.25 0.67 0.65 0.65
20 Dividend yield 14.71% 4.36% 4.62% 7.69%
EV/EBITDA rel. 3.8 1.5 1.6 1.5
15 P/E rel. - 1.1 1.1 1.2
5
Lotos Group Rel. to sector (EUR, ppt) 17.9 24.6 59.9 108.6
WIG 20 (Rebased)
DJ EURO STOXX Oil & Gas (Rebased) Rel. to universe (EUR, ppt) 20.1 30.0 48.4 125.2
MOL Accumulate Target price HUF 18,200

Price (HUF) 16,100 ROCE 2008 8.5% 08 09e 10e 11e
Mcap (HUF mn) 1,765,766 ROE 2008 15.1% Sales (HUF mn) 3,535,084 3,090,963 3,831,462 3,940,391
Mcap (EUR mn) 6,539 Net debt (EURmn, 08) 2,218 EBITDA margin 10.05% 10.87% 12.81% 13.44%
Shares outst. (mn) 109.7 EPS CAGR 08-11e -2.8% EPS (HUF) 1,608.18 1,195.50 2,357.84 2,666.95
EV/sales 0.42 0.81 0.60 0.59
18.000 EV/EBITDA 4.20 7.44 4.65 4.38
17.000 P/E 5.81 14.01 6.83 6.04
16.000 P/CE 3.09 5.66 3.57 3.32
15.000
P/BV 0.76 1.22 1.09 1.00
14.000
13.000 Dividend yield 1.93% 2.39% 2.48% 2.48%
12.000 EV/EBITDA rel. 0.7 1.1 0.9 1.0
11.000 P/E rel. 0.8 0.9 0.7 0.7
10.000
7.000 Rel. to sector (EUR, ppt) 2.4 3.5 21.3 3.4
MOL BUX (Rebased) DJ EURO STOXX Oil & Gas (Rebased) Rel. to universe (EUR, ppt) 4.5 8.9 9.8 20.0

OMV Buy Target price EUR 39.0

ROE 2008 17.7% Sales (EUR mn) 25,542.6 17,672.0 20,313.7 21,917.0
EV/sales 0.37 0.77 0.78 0.74
32 EV/EBITDA 2.62 5.15 4.93 4.60
30 P/E 4.06 9.64 7.09 6.86
28 P/CE 2.31 2.99 5.36 3.09
26 P/BV 0.75 1.16 1.09 1.04
24 Dividend yield 5.33% 2.08% 2.83% 3.66%
22 EV/EBITDA rel. 0.4 0.8 1.0 1.0
20 P/E rel. 0.5 0.6 0.7 0.8
14 Rel. to sector (EUR, ppt) -1.5 -5.4 -8.6 12.8
OMV ATX (Rebased) DJ EURO STOXX Oil & Gas (Rebased) Rel. to universe (EUR, ppt) 0.7 0.0 -20.0 29.4
PKN Orlen Hold Target price PLN 30.0

Mcap (PLN mn) 13,473 ROE 2008 -3.6% Sales (PLN mn) 79,535.0 67,267.0 72,575.4 76,839.9
Free float (EUR mn) 2,382 Sales CAGR 08-11e 4.8% Net profit margin -0.79% 1.47% 2.00% 2.42%
EV/sales 0.28 0.38 0.33 0.32
38 EV/EBITDA 6.95 6.27 5.31 5.10
36
P/E nm 16.28 10.19 7.82
34
P/CE 4.55 5.20 3.53 3.18
32
30
P/BV 0.56 0.67 0.66 0.64
28 Dividend yield 0.00% 3.00% 6.35% 9.52%
26 EV/EBITDA rel. 1.1 1.0 1.1 1.1
24 P/E rel. - 1.1 1.0 1.0
22
20
18 Absolute (PLN terms) 8.3% 13.5% -0.3% 18.0%
PKN Orlen Rel. to sector (EUR, ppt) 3.9 3.5 -1.7 -37.8
WIG 20 (Rebased)
DJ EURO STOXX Oil & Gas (Rebased) Rel. to universe (EUR, ppt) 6.0 8.9 -13.1 -21.2
Petrom Accumulate Target price RON 0.31

Mcap (RON mn) 14,954 ROE 2008 7.9% Sales (RON mn) 17,400 13,426 14,898 16,671
Free float (EUR mn) 221 Sales CAGR 08-11e 7% Net profit margin 5.88% 7.79% 9.76% 10.98%
Shares outst. (mn) 56,644.1 EPS CAGR 08-11e 0.7% EPS (RON) 0.02 0.02 0.03 0.03
52 weeks
EV/sales 0.60 1.23 1.07 0.97
0,32
EV/EBITDA 4.09 6.84 4.57 4.00
0,30 P/E 9.16 14.39 10.29 8.17
0,28 P/CE 3.06 n.m. 7.80 5.36
0,26 P/BV 0.76 1.02 0.97 0.92
0,24
Dividend yield 0.00% 0.00% 0.00% 0.00%
0,22
0,20 EV/EBITDA rel. 0.6 1.0 0.9 0.9
0,18 P/E rel. 1.2 0.9 1.0 1.0
0,16
0,12 Absolute (RON terms) 5.6% 6.9% 1.1% 46.7%
0,10 Rel. to sector (EUR, ppt) -1.3 -3.3 -10.6 -14.5
Petrom BET (Rebased) DJ EURO STOXX Oil & Gas (Rebased) Rel. to universe (EUR, ppt) 0.9 2.1 -22.0 2.1

Unipetrol Reduce Target price CZK 140.0

Mcap (CZK mn) 25,158 ROE 2008 0.2% Sales (CZK mn) 98,144.0 76,173.4 81,589.7 82,930.6
Free float (EUR mn) 361 Sales CAGR 08-11e -1.7% Net profit margin 0.07% -0.03% 1.28% 1.76%
Shares outst. (mn) 181.3 EPS CAGR 08-11e 3.6% EPS (CZK) 0.36 -0.11 5.66 7.89
52 weeks Dividend/share (CZK) 0.00 0.00 0.00 0.00
EV/sales 0.29 0.37 0.33 0.31
160 EV/EBITDA 6.36 6.30 4.52 4.08
150 P/E nm nm 24.53 17.58
140 P/CE 7.56 5.11 5.12 4.98
P/BV 0.70 0.65 0.64 0.62
130
Dividend yield 0.00% 0.00% 0.00% 0.00%
120 EV/EBITDA rel. 1.0 1.0 0.9 0.9
110 P/E rel. - - 2.4 2.2
100
90
Unipetrol PX (Rebased) DJ EURO STOXX Oil & Gas (Rebased) Rel. to universe (EUR, ppt) -2.4 -0.6 1.3 -7.7

Sector Insight Personal & Household Goods
- BWT a clearly undervalued water play

- Concerns on taxes triggered share price drop for PM CR
- Gorenje should have the worst behind it
Strong Q309 BWT’s 3Q09 operating performance was outstanding. Sales rose 1.1% y/y, fuelled by a strong
performance performance in the point-of-use segment (+43% y/y). BWT’s 1-3Q09 operating cash flow was a
jackpot, rising 65% to EUR 29mn. Thus, as of September 30, 2009, BWT’s net debt dropped to
an historic low of EUR 27.4mn, bringing the gearing down to just 17.8%. Management targets
EUR 390mn in sales, as well as slightly higher net profitability for 2009 compared to 2008, given
the fact that pre-tax profit for 2009 benefits from a one-off gain of EUR 4.5mn.
Buy confirmed Given the fact that BWT is a 100% water pure play with substantial growth potential in the point-
– new target of-use segment (19% sales growth 1-3Q09 y/y), accompanied by a very strong cash flow
price: EUR 25.5 pattern, we deem this stock clearly undervalued. As a reflection of the strong cash flow
generation and rather low valuation levels, management plans another share buyback program.
BWT’s management is authorized to buy back up to 7.8% of shares outstanding until May 2010.
Based on our higher forecasts, we raise our target equity price to EUR 25.5 (after 21.0). On the
peer group level, we observe discounts of 8-31% in terms of EV/EBITDA and EV/EBIT. We thus
confirm our Buy recommendation.
Price We lacked any major news on PM CR in November, though the share price fell abruptly by more
correction on than 10%. The only explanation that we can see involves concerns about 2010 market
doubtful discrepancies connected to VAT and excise tax hikes at the beginning of 2010. The percentage
outlook in 2010 increase in retail price should be around 5%+, which is not negligible. We therefore expect a
substitution effect and drop in sales in 2010 to negatively influence net results and dividends. It
is hard to judge the short term trajectory of the share price, especially given the solid outlook for
the April CZK 700+ gross dividends, but we expect the price to remain volatile.
Gorenje 3Q09 Gorenje published its unaudited 1-3Q2009 report last month. In summary: in 3Q09 sales
results indicate retreated by 20.1% y/y to EUR 297.9mn, the operating profit fell by 14.2% y/y to EUR 8.1mn and
that worst is net profit after minorities decreased by 58% y/y to EUR 3.0mn. This translated into 1-3Q09
over; full-year results as follows: sales dropped by 12.7% y/y to EUR 865.8mn, the operating profit slumped by
outlook better 98% y/y to EUR 0.6mn and the net loss after minorities amounted to EUR 14.1mn (all figures
than originally consolidated and according to IFRS standards). The 3Q09 improvements were remarkable in
anticipated the company’s traditional markets of Eastern and Southeastern Europe, especially in Ukraine
and Russia. Importantly, the third quarter confirmed the positive turnaround that started in 2Q,
with improving alignment of operating costs to declining sales volumes. Gorenje’s operating line
switched back to the black territory, with EBIT reaching EUR 8.1mn in 3Q09, translating into
operating profit of EUR 0.6mn in 1-3Q09. Witnessing the negative impact of the forex result
along with receivable value adjustments, the financial result deteriorated y/y. All told, while the
company posted net profit after minorities of EUR 3.0mn in 3Q09, the 1-3Q09 bottom line stayed
in the red territory, with net loss after minorities of EUR 14.1mn. The first nine months of 2009
confirmed that the company is coping well with challenging market conditions this year. Although
the slump in demand for household appliances wiped out the benefits from the first-time
consolidation effect of ATAG on the company’s top line, costs cutting measures are bringing the
desired results. As before, the scope of progress will also depend on a gradual white goods
market recovery, which is coming somewhat sooner than originally envisaged. We continue to
believe that Gorenje retains its attractiveness from a long-term perspective and stick to our
Accumulate recommendation on the stock.


BWT EUR 350.0 15.4% 16.3% 13.6% 15.7% 9.8% 9.8% 10.4% 11.4% 17.8% 7.2% 30.1% 46.7%
Gorenje EUR 189.5 2.5% -4.7% 1.8% 4.6% 7.0% 5.7% 7.2% 7.9% 5.0% 29.5% 22.3% 3.0%
Philip Morris CR CZK 870.3 21.8% 23.8% 28.2% 25.7% 27.4% 26.0% 30.7% 31.2% -5.1% -0.4% 37.4% 15.1%
Wolford EUR 57.6 -1.5% -1.0% 1.8% 4.7% 6.5% 6.8% 8.3% 9.7% -1.2% 5.9% 17.0% -9.1%
Median - - 9% 8% 8% 10% 8% 8% 9% 11% - - - -
EuroStoxx Personal & 169,085 16.7% 12.8% 13.0% 13.8% 19.5% 17.6% 19.2% 19.3% 9.2% 10.5% 13.7% 26.4%
Household Goods
P/E P/CE P/BV
2008 2009e 2010e 2011e 2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
BWT 9.5 14.7 15.8 12.4 6.4 10.0 10.1 8.5 1.4 2.3 2.1 1.8
Gorenje 16.6 nm 28.0 10.9 2.1 4.4 2.6 2.5 0.4 0.5 0.5 0.5
Philip Morris CR 9.1 11.8 9.2 9.7 7.3 9.8 7.9 8.3 2.1 2.7 2.5 2.5
Wolford nm nm 41.4 15.4 11.1 8.3 6.5 5.0 0.5 0.8 0.7 0.7
Median CEE 9.5 13.2 21.9 11.7 6.9 9.1 7.2 6.7 1.0 1.5 1.4 1.3
EuroStoxx Personal & 17.0 22.1 17.7 14.0 12.7 15.0 11.6 10.3 2.7 2.5 2.3 2.0
Household Goods
CEE to Peer, Prem/Disc -44% -40% 24% -17% -46% -39% -38% -35% -63% -39% -39% -37%
EV/Sales EV/EBITDA
2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
BWT 0.6 1.1 0.9 0.8 6.1 10.8 9.1 7.3
Gorenje 0.5 0.6 0.6 0.5 6.6 10.3 7.8 6.8
Philip Morris CR 1.4 1.9 1.7 1.8 5.2 7.2 5.7 5.8
Wolford 0.6 0.7 0.7 0.6 9.1 10.8 8.3 6.5
Median CEE 0.6 0.9 0.8 0.7 6.4 10.6 8.1 6.6
EuroStoxx Personal & 1.3 1.5 1.3 1.2 8.7 10.6 8.6 7.4
Household Goods

BWT Buy Target price EUR 25.5

Price (EUR) 20 ROCE 2008 12.3% 08 09e 10e 11e
ROE 2008 15.4% Sales (EUR mn) 410.2 390.8 431.0 465.4
EV/sales 0.60 1.06 0.95 0.83
22 EV/EBITDA 6.10 10.81 9.09 7.29
20 P/E 9.51 14.70 15.85 12.38
18
P/CE 6.38 10.03 10.07 8.47
P/BV 1.42 2.26 2.07 1.84
16
Dividend yield 3.45% 2.23% 2.07% 2.65%
14 EV/EBITDA rel. 1.0 1.0 1.1 1.1
12 P/E rel. 1.0 1.1 0.7 1.1
BW T
ATX (Rebased)
Rel. to sector (EUR, ppt) 16.8 3.2 -3.2 29.2
DJ EURO STOXX Personal & Hous ehold Goods (Rebased) Rel. to universe (EUR, ppt) 10.8 1.5 6.9 15.0
Gorenje Accumulate Target price EUR 13.5

ROE 2008 2.5% Sales (EUR mn) 1,330.8 1,139.9 1,207.9 1,290.9
Shares outst. (mn) 14 EPS CAGR 08-11e -9.2% EPS (EUR) 0.63 -1.24 0.48 1.24
EV/sales 0.47 0.59 0.56 0.53
20 EV/EBITDA 6.64 10.34 7.83 6.78
18 P/E 16.62 nm 27.99 10.93
P/CE 2.12 4.37 2.56 2.50
16
P/BV 0.39 0.52 0.51 0.49
14 Dividend yield 0.00% 0.00% 1.24% 3.09%
12 EV/EBITDA rel. 1.0 1.0 1.0 1.0
10 P/E rel. 1.7 - 1.3 0.9
Gorenje Rel. to sector (EUR, ppt) 4.0 25.5 -11.1 -14.5
SBI (Rebased)
DJ EURO STOXX Personal & Household Goods (Rebased) Rel. to universe (EUR, ppt) -2.1 23.9 -0.9 -28.8
Philip Morris CR Accumulate Target price CZK 7,150

Price (CZK) 8,183 ROCE 2008 19.6% 08 09e 10e 11e
Mcap (CZK mn) 22,465 ROE 2008 21.8% Sales (CZK mn) 9,902 11,062 11,272 10,556
Shares outst. (mn) 2.7 EPS CAGR 08-11e 4.3% EPS (CZK) 616.31 711.59 892.42 847.86
52 weeks Dividend/share (CZK) 559.76 668.37 792.54 772.14
EV/sales 1.42 1.88 1.74 1.82
10.000 EV/EBITDA 5.18 7.21 5.66 5.84
9.500 P/E 9.09 11.79 9.17 9.65
9.000 P/CE 7.32 9.85 7.94 8.31
8.500 P/BV 2.08 2.68 2.50 2.46
8.000
Dividend yield 9.99% 7.97% 9.69% 9.44%
7.500
EV/EBITDA rel. 0.8 0.7 0.7 0.9
7.000
6.500
P/E rel. 1.0 0.9 0.4 0.8
5.500 Absolute (CZK terms) -6.5% 0.4% 32.0% 15.7%
5.000
Philip Morris CR Rel. to sector (EUR, ppt) -6.1 -4.4 4.0 -2.4
PX (Rebased) Rel. to universe (EUR, ppt) -12.1 -6.1 14.2 -16.6
DJ EURO STOXX Personal & Household Goods (Rebased)

Wolford Hold Target price EUR 12.0

ROE 2008 -1.5% Sales (EUR mn) 147.3 139.4 146.4 153.7
Free float (EUR mn) 28 Sales CAGR 08-11e -0.6% Net profit margin -0.81% -0.56% 0.94% 2.40%
Shares outst. (mn) 4.9 EPS CAGR 08-11e -15.1% EPS (EUR) -0.24 -0.16 0.28 0.76
EV/sales 0.59 0.74 0.68 0.63
18 EV/EBITDA 9.10 10.84 8.30 6.52
17
P/E nm nm 41.38 15.45
16
15 P/CE 11.05 8.34 6.50 5.02
14 P/BV 0.53 0.76 0.74 0.71
13 Dividend yield 0.00% 0.00% 0.85% 1.70%
12
EV/EBITDA rel. 1.4 1.0 1.0 1.0
11
10 P/E rel. - - 1.9 1.3
9
8
W olford
ATX (Rebased)
Rel. to sector (EUR, ppt) -2.2 1.9 -16.3 -26.6
DJ EURO STOXX Personal & Household Goods (Rebased) Rel. to universe (EUR, ppt) -8.2 0.2 -6.2 -40.8

Sector Insight Real Estate
- Rebound in European investment volume, CEE lagging behind

- Quarterly results of CEE developers showed further (probably final) losses on property
revaluation, but also restart of projects in both residential and commercial development
- European capital value decline on yield shifts seems to be ending
- Rents across Europe are still declining, but pace is slowing
- CEE rents still facing significant declines
- Sparkassen Immo’s sale of Gemini offices in Prague confirmed growing investor
appetite for properties in core CE markets and growing availability of financing (the deal
is worth EUR 110mn)
- Our top picks: S Immo and ECO
Investment The upturn on the European commercial real estate markets strengthened further in 3Q09,
volume buoyed by improved market sentiment. After a 12% q/q increase in 2Q 09, 3Q investment
rebounded in volume increased by 34% to EUR 17.3bn. The UK and Germany registered the strongest
3Q09 increases of more than 50% compared to 2Q09, although it came from completely different
investor groups. While the recovery in the UK was driven by foreign investors, the German
market is almost entirely domestic at the moment. According to CBRE, for the first time in a
year, 2 transactions in excess of EUR 1bn closed in the UK and Spain.
CEE Investment volumes in CEE showed the strongest turnaround q/q. With EUR 550mn, the
investment investment volume in 3Q09 almost reached the whole 1H09 figure of EUR 567mn. A rapid
volume lagging increase was recorded in Moscow, while several pending transactions were closed in core CE
behind markets. As we expected, GOEFs with volume of EUR 200mn focused on Poland and the
Czech Republic. Thus, there is a possibility investment volumes will increase further in 2H09,
but at higher yield levels.
First yield Overall, EMEA office yields fell further, decreasing marginally by 9bps compared to 2Q09 after
decrease in UK easing slightly q/q (-2bp) in 2Q09 for the first time since 2007. However, regional trends are
and Paris markedly different. The q/q decrease in yields remains restricted to the UK and Paris only.
Germany and most CEE markets showed a stabilization of yields, and only Bratislava moved out
by 25 bps. In a y/y comparison, the overall EMEA increase in yields was still a strong 53bps.
Moscow, Sofia Looking at the relative valuation of CEE properties compared to Western markets, local rental
and Bucharest yields are sufficiently (but not ‘excessively’) above those in WE. When compared to local risk-
with highest free yields, the CEE real estate markets are slightly less attractive than those in WE. Exceptions
spreads are the higher-risk markets of Moscow, Sofia and Bucharest, where the spread is higher. The
relative stability of the German and Austrian office market is reflected in the lower spread
differential. Still, the EU-27 average prime yield of around 6.29% looks like an attractive return
when compared to the 10-year government bond yields of around 3.5% and investment grade-
rated corporate bond yields of around 4.5%.
Capital value Yield shifts were the prime reason so far for the capital value declines seen since mid-2007, due
decline on to the re-pricing of risk. Falls in capital values seem to have come to a halt, at least in some
yield shifts Western European markets, in line with the halt of yield expansion. However, rents are still on a
seems to be downward trend and hence could level out some of the benefit from stabilizing yields on capital
ending values.
Rents still Overall, EMEA prime rents still show a downward trend q/q at -1.3% following -2.9% in 2Q09.
declining, but Regional differences also become apparent here. In Germany, rents were either stable or
pace slowing declining slightly, such as in Vienna. Rents in London, Ireland and Spain are still falling at 1.2%
down to 11% q/q.
CEE rents still Core CEE markets continued to see rent declines, which basically started in 1Q09. The most
facing stable markets were Hungary, Slovakia, Romania and Serbia (flat). Prague, Warsaw and Sofia
significant posted q/q rent declines of around 4-6%. Only Moscow and Kiev remain under heavier pressure.
declines However, the rental decline rates in 3Q have slowed compared to 2Q09.

Moving on in In a y/y comparison, most European cities moved by one or two quadrants in the rent cycle. But
the rent cycle a look at the quarterly development alone, shows that other cities are following the leaders
London, Moscow and Kiev, which have registered the strongest rental declines of between 35%
to 65% from peak values. Most markets on the 3Q 09 office property clock now figure at around
3 o’ clock which indicates the highest rental falls in their cycle. But the first cities have already
entered the stabilization phase, with limited further rental decreases expected.
Top picks S Both of our top picks - S Immo and ECO - have very attractive discounts to P/BV. ECO is still the
Immo and ECO cheapest among the Austrian real estate stocks in our coverage universe. While S Immo trades
above the median in 2009, it shows strong discounts in 2011, after finalization of its
development projects. These development projects also provide for attractive growth in earnings
and cash flows in later years. Due to free cash flows from asset sales not used for deleveraging,
ECO offers the upside of paying a dividend or conducting a share buyback program, which
should benefit current investors.
CEE office market

Country City Prime rent Percentage change Prime yield Basis point change
EUR per sqm pa q/q y/y from peak q/q y/y from peak
Austria Vienna 267.0 -1.1% -5.3% -5.3% 5.70% -5 85 95
Germany Berlin 240.0 0.0% -11.1% -11.1% 5.50% 0 25 60
Germany Düsseldorf 270.0 -2.2% -2.2% -2.2% 5.30% 0 5 30
Germany Frankfurt 456.0 0.0% -2.6% -2.6% 5.40% 0 10 40
Germany Hamburg 282.0 -2.1% -2.1% -2.1% 5.10% 0 10 20
Germany Munich 372.0 0.0% -1.6% -1.6% 5.00% 0 20 20
Germany 324.0 -0.9% -3.9% -3.9% 5.26% 0 14 34
Czech Republic Prague 252.0 -4.6% -8.7% -8.7% 7.00% 0 100 182
Hungary Budapest 240.0 0.0% -11.1% -11.1% 8.00% 0 175 225
Poland Warsaw 276.0 -4.2% -34.3% -34.3% 6.75% 0 100 135
Slovakia Bratislava 204.0 0.0% -5.6% -5.6% 7.50% 25 125 190
CE4 average 243.0 -2.2% -14.9% -14.9% 7.31% 6 125 183
Bulgaria Sofia 192.0 -5.9% -11.1% -12.3% 10.0% 0 100 300
Croatia Zagreb 202.0 -1.2% -2.9% -4.0% 8.5% 0 150 180
Romania Bucharest 240.0 0.0% -9.1% -9.1% 9.5% 0 125 325
Serbia Belgrade 192.0 0.0% -11.1% -23.8% 10.0% 0 100 100
SEE average 206.5 -1.8% -8.6% -12.3% 9.50% 0 119 226
Russia Moscow 615.0 -10.0% -47.1% -47.1% 12.0% 0 350 450
Ukraine Kiev 230.0 -6.7% -67.1% -67.1% 15.0% 0 600 650
CIS average 422.5 -8.3% -57.1% -57.1% 13.50% 0 475 550
CEE average 290.7 -4.1% -26.8% -28.1% 10.10% 2 240 320
EU-15 average -1.3% -10.0% -9 53
Source: CBRE
3Q09 results ECO Business-Immo recently presented 1-3Q09 results that were significantly better than
much better expected by us. The revaluation result was EUR -18.55mn in 1-3Q and EUR +6.76mn in 3Q
than expected, alone, so way above our estimate of EUR -6.5mn in 3Q. The company actually successfully
turned around the revaluation result, the last quarter with revaluation gains before this one was
1Q08. ). BVPS (NAV) reached EUR 10.37 compared to our estimate of EUR 10.20 (and
compared to EUR 10.27 in June 2009), so nearly 2% higher than estimated. Net debt was
reduced by 34% to EUR 466.3mn in the first 9 months of this year. The company stated that it
plans to sell further properties in 4Q09. No new development projects are planned, just
redevelopments. The company also stated that the EBIT should be further increased in 4Q, also
due to the turnaround in property valuations.
EUR 6.4 target Based on revised estimates we have confirmed our Buy rating and our EUR 6.4 target price,
price and Buy which is based on a 65/35 weighting of DCF and expected NAV. We increased our EPS
rating estimates for 2009 from EUR -0.50 to EUR -0.06 and for 2010 from EUR 0.62 to EUR 0.72. For
confirmed 2011, we lowered our estimate to EUR 0.72 (from EUR 0.76). All changes mainly result from the
revaluation result. A comparison with the other Austrian listed real estate stocks clearly shows
the attractiveness of ECO. We see clear discounts based on nearly all relevant multiples. ECO’s
24.9% shareholder conwert is still investigating strategic options for ECO Business-Immo. A full
property sell-off has become less likely, a strategic partnering more likely.
3Q09 results Sparkassen Immo reported unexpectedly bad 1-3Q09 results mid-October. The net result from
affected by property revaluation was EUR -96.475mn, which was unexpected for us, as we were looking for
property write- the new portfolio revaluation only as of Dec. 31, 2009. Sparkassen Immo mentioned the yield
downs shifts and problems with the office part of the Bulgarian Serdika development project as main
reasons for the write-downs. The NAV per share reached EUR 7.6 and obviously also fell short
of our expectation of EUR 8.9 per share. There was no concrete outlook given. The company
just mentioned the expected significant increases in rental income plus the doubling of the cash
flow following the completion of the development projects.
Buy rating Following these disappointing 3Q09 results, we reduced our target price to EUR 6.3 (after EUR
confirmed, 7.1), but confirmed our Buy recommendation. The target price is still based on a 70/30 weighting
target price of our DCF result and the expected NAV per share as of Dec. 31, 2009. Given the expected
lowered to FFO per share of EUR 0.45 and EUR 0.57 for 2010/2011, we see an attractive P/CE valuation
EUR 6.3 for these two years. We also expect the company to start paying out dividends for the fiscal year
2010. In a peer group comparison, Sparkassen Immo looks rather expensive based on 2009
multiples, but the picture improves substantially based on 2011 estimates. Main risks are the
actual results from the property appraisals as of Dec. 31, 2009 in the near term and the actual
occupancy of the two major developments in Bucharest and Sofia upon finalization in the mid- to
long-term.
Downgrade Based on unchanged estimates and valuation parameters, we left our 12-month target price
from Buy to unchanged at EUR 5.2. Relative to the current price of EUR 4.5 for Immoeast shares, our DCF
Accumulate valuation indicates an upside potential of 15%. We therefore downgrade the stock to
Accumulate from Buy. 0.71x BV09e Immoeast is currently traded at a premium compared to its
closest peers. Based on EV/EBITDA, it is perfectly in line and even looks cheap taking the
finalization of development projects and some disposals of non-core assets in 2009 and 2010
into account. A capital increase and a merger of Immofinanz and Immoeast are the next planned
steps in the restructuring process. A merger should be carried out as quickly as possible in the
first half of 2010. Only afterward will a decision concerning capital measures of Immofinanz be
made. We regard the decision of the management to delay the capital increase as clearly
favorable to Immofinanz shareholders, as the dilutive effect of a possible capital increase will be
shared with Immoeast minority shareholders.
After twelve months of negotiations, Immofinanz and Immoeast reached an agreement with a
consortium of banks on the restructuring of a EUR 415mn syndicated loan. The restructuring of
the loan has several positive effects on Immoeast; in particular, the elimination of (or
substantially higher limits for) financial covenants and default criteria, the extensive cancellation
of the repayment obligation due to sales, and a considerably improved documentation which is
adapted to the real estate business. In return, a voluntary repayment in the amount of EUR
100mn and EUR 75mn will take place in the current and next business year. The loan, which is
in the sphere of Immoeast, shall be secured through a guarantee from Immofinnaz and partly
through properties in the CEE region.
Revaluation CA Immo reported a 3Q09 net loss of EUR -22mn, which is almost twice as high as expected.
and one-offs Besides the higher-than-expected negative revaluation adjustments (+13.3%), the divergence
spoiled results from our estimates mainly came from a negative one-off effect of EUR 22mn stemming from the
more than reclassification of interest rate swaps into P&L and was only slightly counterbalanced by a
expected better-than-expected operating result (+6.4%). The reclassification of the changes in the fair
value of these swaps into P&L was necessary due to the repayment of the underlying loans.
Besides that, the main driver behind the net loss was again a negative revaluation result of EUR
-21.5mn, almost entirely stemming from CAI’s CEE subsidiary CA Immo Int., whereas there
have been positive revaluations in the German development portfolio and income-producing
properties with singed purchase contracts. As expected, rental income declined by 1.5% q/q to
EUR 44.2mn, due to recent property disposals in Austria and Germany. Based on a lower rental
income, but mainly due to a weaker result from sale of properties of EUR 2.1mn (partly due to
previous revaluation, after a very strong result of EUR 8.7mn in 2Q09), EBITDA slipped 14.8%
q/q to EUR 36.5mn. Operating cash flow, on the other hand, jumped by 20.3% q/q to EUR
34.7mn. The divergence between EBITDA and operating cash flow can be largely explained by
the revaluation of properties scheduled for disposal. EPS dropped to EUR -0.25 and BVPS
declined further to EUR 17.97 vs. EUR 18.21 in 2Q09. With a net loss of EUR -78.3mn in 1-
3Q09, we still feel comfortable with our FY09 estimate of EUR -107.3mn.
Despite a challenging market environment, CAI managed property disposals amounting to over
EUR 360mn (the deals are either finalized or agreed on a binding basis) in 1-3Q09 and have
therefore already exceeded its FY09 property sales target of EUR 300mn. Of that, around EUR
230mn was already reflected in the accounts to September 2009, while an additional EUR
130mn have been signed, but closing is expected in 4Q or later. Gains from disposal of
properties reached EUR 16.4mn in the first three quarters. Early in 4Q09, CAI was proactively
improving its maturity structure and its liquidity position via a EUR 150mn corporate bond issue,
the issuance of convertible bonds amounting to EUR 135mn and disposal of treasury stocks
with a total value of EUR 14.3mn. Taking all measures together, the pro-forma cash situation
improved to EUR 487mn vs. EUR 274mn at end of 3Q09, including debt repayments of EUR
85mn. According to the management, the proceeds will be used for opportunities arriving on the
market, development projects, and also selective purchase of CAII shares. For two new
projects, construction start is scheduled for 2010.
CA Immo Based on lowered forecasts and slightly changed valuation parameters, we reduced our target
International price to EUR 6.3 (EUR 6.9). At 0.57x P/BV09e and 20.7x EV/EBITDA09e, CA Immo Int. is
traded in line with its closest peers. Main upside triggers are, in our opinion, besides an overall
low valuation of the real estate sector, expected improvements in operating results, based on
contributions from finalized developments, disposals of properties and cost-cutting measures.
CAII came in with a net loss of EUR -26mn, which was 13% higher than expected. Besides the
still relatively high (but diminishing) negative revaluations, the operating result also contributed
to the deviation from our estimates, but was flat compared with 3Q08. Strong operating cash
flow: Rental income and net operating income rose slightly due to the finalization of Sava City
and Capital Square in 2Q. Operating cash flow remained strong (+7.9% y/y, -2% q/q), despite
lacking a contribution from the sales of properties. As the net loss in 1-3Q09 already exceeded
our previous FY09 estimate of EUR -95.4mn, we have revised our FY09 forecast downward to
EUR -118.6mn (+24.2%) and also adjusted our mid-term estimates somewhat. The main
deviation from our previous FY09 forecast is due to the higher negative revaluation result.
Recent market data indicate a stabilization of yields, but the rental market is still under pressure.
We have therefore lowered our rental income estimate for 2010, but expect EBITDA to rise on
the finalization of development projects and cost cutting. The net result for FY10 is expected to
return to positive territory on a balanced revaluation result.
3Q09 results Overall, conwert’s presented 3Q09 results were perfectly in line with our estimates. 3Q rental
fully in line income reached EUR 39.29mn compared to our estimate of EUR 39.31mn. Property sales
with estimates amounted to EUR 138.3mn, whereby the net gain amounted to EUR 6.85mn. The revaluation
result was EUR +3.3mn in 3Q, so slightly ahead of our estimate of EUR 2.0mn. BVPS reached
EUR 15.57 compared to EUR 15.56 as of June 30, 2009 and EUR 16.89 at the same time last
year. The company stated that it expects an ongoing positive market environment in Q4,
property sales in total should exceed EUR 300mn. conwert also confirmed that it expects a
dividend payment for the current fiscal year 2009 based on these satisfactory results. Sales and
EBITDA should exceed the previous year’s level.
EUR 10.7 With the exception of the amount of potential acquisitions (EUR 400mn - which are somewhat
target price higher than included in our projections), the figures were quite in line with our estimates. We will
still realistic just have to fine-tune EPS estimates overall. So our 12-months target price of EUR 10.70 still
looks realistic to us and we do not plan any major changes of this. The stock looks quite
attractive to us overall at current price levels.
GTC with GTC reported a 3Q 09 net loss of EUR 32.9mn, which was far below consensus (EUR -1.2mn)
unexpected and our estimate. Revenues with EUR 33.4mn (-6.6%y/y) arrived below our estimates due to
loss on naturally volatile residential housing sales. The company significantly cut operating expenses (-
property 31%y/y) so its EBITDA actually increased by 28%y/y to EUR 14.0mn. Main reason for the low
valuation, net result was EUR 43.9mn revaluation loss caused by „softening rental rates“ on completed
starts two assets and by still growing yields (by 20bp to 30bp outside Poland). The company applied rents
retail projects for office valuations some 10% to 20% below actual level. However, its like-for-like rents on
completed portfolio were stable to growing and recent extensions of leases were signed at
higher rents. The company itself does not expect rents would decrease to the extent applied in
valuation (total rents will grow thanks to recent completion of several assets). Second important
news is that the company started two retail projects in Bulgaria and Croatia with estimated costs
at EUR 150mn. It is clear that we will have to lower our FY09 net estimate from EUR 33mn net
profit to below zero and to partly lower also estimates for 2010. But GTC’s long term story
seems untouched and news about new projects (and low financing costs) is encouraging. We
see the 3Q revaluation as conservative and are convinced GTC will not show further revaluation
losses on completed assets. Vacancy levels in the Polish market should decrease next year
(development pipelines were cut significantly below take-up). We thus expect stabilisation of
rents relatively soon.
Orco in a slight Orco reported 3Q net loss of EUR 1.1mn, basically in line with our estimates and ahead of
loss in 3Q 09, consensus thanks to somewhat lower operating costs and better margins in residential
progress in development (the company does not revalue its properties in 1Q and 3Q). Looking at revenues,
development residential housing fell 76%y/y to EUR 16.3mn, but the number of future purchase contracts has
projects stabilized q/q. With –7%y/y, rental income was slightly better than we expected, while the
hospitality business was still very weak (-27%y/y). The financial result showed stable interest
costs q/q. Orco announced completion of its biggest development project Sky Office in
Düsseldorf and three smaller projects in Germany and Budapest (over 60k sqm total). Initial
occupancy on recently finalized projects is 71% according to our calculation. The company
announced the launch of two smaller residential projects in Prague and said it has several
projects, which it can start immediately after the market picks up. Orco said its base case in the
restructuring of bonds is to reach prolongation of maturities under the term-out procedure in the
court protection regime and a swap of warrants to equity (see below). Orco was cleary positive
regarding the expected result of the term-out procedure: The company said the repayment
schedule should call for almost zero bond repayments in first two years, 30% repayments in first
five years and 70% repayments in five to ten years. Also news about the restart of three
residential projects and timely finalization of several development projects is encouraging. Still,
Orco’s future depends on actual result of the term-out procedure. Also, the option given to
CoIonial to increase Orco’s capital by EUR 80mn at EUR 7.0 per share expired on November
30. We are thus slightly optimistic regarding Orco’s survival, but do not see its shares as a
bargain taking the high risks surrounding its restructuring into account.
Orco proposes Orco called general meetings of bondholders of EUR 50.3mn 2010 and EUR 175mn 2014
changes in OBSAR bonds and general meetings of warrant holders of 2.9mn 2014 warrants (strike EUR
bonds and 11.2, excercise ratio 1.6) and 21k 2012 warrants (strike EUR 68.61, excercise ratio 1.03). The
warrants GMs will be held on December 16 and will vote on several adjustments to the bonds and
warrants conditions. While the proposed changes look complicated, the main targets are (I) to
lower strike on 2012 warrants from EUR 68 to EUR 7/share (i.e. same as is the strike on 2014
warrants: 11.2/1.6 = 7) and (II) to temporarily increase number of shares to be possibly issued
through warrants excercise from 4.6mn to 25.2mn (until February 15, 2010). The total strike
price thus increases from EUR 32.2mn to EUR 176mn, what can be offset against the
redemption of 2010 and 2014 bonds (EUR 225mn principal). What we read from the proposal is
that Orco lowers strike on 2012 warrants to EUR 7/share to convince the warrant holders to
exercise the warrants. The company also temporarily increases number of shares to be possibly
issued at EUR 7/share from 4.6mn to 25.1mn to match bonds principal with warrants strike price
(i.e. to allow almost full bond/equity swap at EUR 7). If exercised, the warrants would bring EUR
176mn in combination of bonds swap and cash only slightly below current share price. Such
amount would be enough to ensure healthy development of Orco in the mid term. However,
bondholders (most of them are also warrant holders) rejected the bond/equity swap earlier. We
thus have to wait for the actual result of the EGM – an approval of the proposed changes would
be an indication that bondholders/warrant holders are willing to improve Orco’s balance sheet at
EUR 7/share. We see the proposal neutral for the time being.
ECM results ECM reported 3Q 09 net loss of EUR 9.4mn (derived from 9M numbers), 28% below our
below estimates and below market consensus due to higher interest costs and higher loss on FX
expectations translation. Net rental income nicely increased by 21%y/y to EUR 4.6mn and surpassed our
due to high estimates, mainly thanks to higher service income. As operating costs arrived 13% below our
interest costs estimate, ECM's operating profit finished at EUR 2.4mn, above our EUR 0.0mn. ECM moved
closer to debt covenants (64% financial debt/assets vs. 65% covenant) and reported a decrease
in BVPS to EUR 7.5 due to the net loss. The company said it is in advanced negotiations to sell
several finished assets, what will help it to keep the covenants. We have mixed feeling from the
results due to high interest costs and very tight balance sheet. However, ECM said it saw a pick
up in investor interest in its core market in Prague and we understand that it should be able to
sell the assets at or above their book value. We are thus neutral on the stock at 1.7 P/BV and
0.8 P/NAV.

CA IMMO EUR 692.0 -13% -6.8% 0.5% 1.6% 65.4% 68.5% 60.8% 63.3% -15.6% -5.6% 32.4% 127.2%
CA IMMO International EUR 227.3 -16% -25.2% 1.5% 2.6% 62% 49.4% 52.0% 55% 3.4% 4.0% 36.9% 137.7%
conwert EUR 682.8 -2.3% 2.2% 2.9% 5.9% 50% 54.8% 51.5% 52% 5.8% -3.7% 39.4% 110.0%
ECM EUR 52.9 -92% 19.8% 30.4% -60.3% 36.3% 145.2% 3.0% -12.7% -0.9% 10.3%
ECO Business-Immo EUR 154.8 -9.0% -0.5% 6.6% 6.2% 56.5% 52.2% 55.7% 52.5% 9.1% 10.5% 46.0% 254.7%
GTC EUR 1,311.3 16.1% 3.0% 6.5% 21.3% 42.5% 29.3% 35.6% 29.9% 4.4% -1.1% 21.8% 53.0%
Immoeast EUR 3,618.8 -35% 1% 4.6% 5.9% 40.1% 57.0% 56.4% 59.6% 19.6% 30.3% 143.8% 1176.5%
Orco EUR 78.5 -75% -73.5% 13.2% 25.8% 6.2% 2.3% 10.7% 19.9% 5.7% -15.3% 7.9% 5.8%
Sparkassen Immobilien EUR 344.0 1.0% -12.1% 5.7% 10.6% 52.3% 54.3% 58.7% 58.3% 0.2% 7.9% 20.8% 111.3%
Median - - -13% -1% 6% 6% 50% 52% 56% 54% - - - -
CA Immobilien Anlagen AGEUR - Euro694.6 -13% -7.1% 0.7% 1.0% 172.7% 69.3% 62.1% 63.6% -12.1% -8.1% 36.1% 131.4%
Immofinanz AG EUR - Euro 1,239.3 7.7% 10.5% 40.7% 0% 0% 0% 7.6% 21.6% 81.2% 592.3%
Atrium European Real Estate
EUR
Ltd.- Euro
1,158.7 -38% -22.4% 2.3% 5.6% 0.0% 0.0% 54.4% 63.1% 15.9% 18.6% 70.6% 82.1%
Warimpex Finanz und Beteiligungs
EUR - EuroAG 93.5 -14% -66.4% -6.5% 11.2% 31% 13.7% 25.0% 29.8% 3.1% -19.5% 14.0% 98.3%
XXI Century Investments Public
GBPLtd - UK Pound Sterling - 0.0% 0.0% -
Echo Investment SA PLN - Polish448.8
Zloty 5.7% 5.9% 6.8% 6.8% - 59.7% 68.5% 69.9% 4.4% -6.0% 61.3% 74.4%
Median Peers - -13% -7.1% 2.3% 6.2% 40.7% 59.7% 58.2% 63.4% - - - -
CEE to Peer, Prem/Disc - -1% -93% 145% -3% 23% -13% -4% -15% - - - -
P/E P/CE P/BV

2008 2009e 2010e 2011e 2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
CA IMMO nm nm 89.1 27.0 20.4 23.7 165.5 32.6 0.2 0.4 0.4 0.4
CA IMMO International nm nm 37.1 20.4 7.5 25.4 52.8 31.6 0.2 0.6 0.5 0.5
conwert nm 25.0 18.1 8.8 12.9 20.1 20.1 17.6 0.2 0.5 0.5 0.5
ECM nm 3.1 1.1 -0.7 239.3 1.8 0.9 0.8 0.5
ECO Business-Immo nm nm 6.3 6.3 9.4 -13.2 10.4 11.5 0.1 0.4 0.4 0.4
GTC 4.9 39.5 17.2 4.6 -12.9 83.9 118.2 -27.6 0.7 1.2 1.1 0.9
Immoeast nm 71.2 14.1 10.5 23.9 23.0 14.1 12.0 0.3 0.7 0.6 0.6
Orco nm nm 5.7 2.4 -0.4 -1.4 -5.7 -2.4 0.2 0.8 0.7 0.5
Sparkassen Immobilien 23.2 nm 11.7 5.8 3.9 20.9 11.1 8.8 0.2 0.7 0.6 0.6
Median C EE 14.0 32.2 14.1 7.5 7.5 23.0 14.1 11.7 0.2 0.7 0.5 0.5
CA Immobilien Anlagen AG 66.3 46.1 6.0 23.8 49.8 43.8 0.4 0.5 0.4 0.4
Immofinanz AG 4.1 8.3 5.7 0.6 0.6
Atrium European Real Estate Ltd. 37.5 15.0 26.8 16.5 13.4 0.5 0.8 0.9 0.8
Warimpex Finanz und Beteiligungs AG 16.9 6.2 3.6 0.6 1.0 1.1 1.9
XXI Century Investments Public Ltd
Echo Investment SA 19.6 18.3 14.6 13.7 1.1 1.1 1.0 0.9
Median Peers 11.9 13.3 26.0 15.9 6.0 25.3 16.5 13.4 0.5 0.8 0.9 0.9
CEE to Peer, Prem/Disc 18% 143% -46% -53% 24% -9% -14% -13% -57% -21% -38% -39%
P/NAV EV/EBITDA Dividend yield
2008 2009e 2010e 2011e 2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
CA IMMO 0.2 0.4 0.4 0.4 15.9 17.3 21.8 19.0 0.0% 0.0% 0.0% 4.5%
CA IMMO International 0.2 0.5 0.5 0.5 9.9 20.4 21.1 17.9 0.0% 0.0% 0.0% 3.7%
conwert 0.2 0.6 0.6 0.5 18.7 18.3 18.6 17.7 0.0% 3.6% 3.6% 4.8%
ECM 0.5 0.5 0.4 -18.5 41.2 8.2 0.0% 0.0% 0.0%
ECO Business-Immo 0.1 0.4 0.4 0.4 17.7 19.0 17.3 18.4 0.0% 0.0% 3.3% 4.4%
GTC 0.9 0.8 0.7 33.5 43.4 30.3 23.7 0.0% 0.0% 0.0% 0.0%
Immoeast 0.2 0.6 0.6 0.6 29.6 19.6 18.0 15.6 0.0% - - -
Orco 0.2 0.7 0.5 0.4 89.4 249.4 24.5 31.0 0.0% 0.0% 0.0% 0.0%
Sparkassen Immobilien 0.2 0.7 0.6 0.6 21.6 24.3 19.1 16.5 0.0% 0.0% 2.0% 4.0%
Median C EE 0.2 0.6 0.5 0.5 18.7 20.4 19.1 18.2 0.0 0.0 0.0 0.0
CA Immobilien Anlagen AG - - - - 15.6 16.6 19.1 17.0 0.0% 0.0% 0.0% 0.0%
Immofinanz AG - - - - 77.8% 65.9%
Atrium European Real Estate Ltd. - - - - 0.0% 5.2% 1.2% 1.2%
Warimpex Finanz und Beteiligungs AG - - - - 13.9 42.0 18.4 12.5 0.0% 0.0% 3.2% 0.0%
XXI Century Investments Public Ltd - - - -
Echo Investment SA - - - - 3.5 13.5 13.3 14.4 0.0% 0.0% 0.0% 0.0%
Median Peers - - - - 13.9 16.6 18.4 14.4 0.0% 0.0% 1.2% 0.0%
CEE to Peer, Prem/Disc - - - - 35% 23% 4% 26% - - - -
CA IMMO Hold Target price EUR 10.2

Price (EUR) 7.93 ROE 2008 -13.4% 08 09e 10e 11e
Net debt (EURmn, 08) 1,602.3 Tot. revenues (EUR mn) 210.5 207.6 187.8 207.9
Mcap (EUR mn) 692.0 Gearing (2008) 86.4% NOI yield 5.6% 5.9% 5.3% 5.5%
Free float (%) 90.0% Loan/value (2008) 42.0% EBIT margin -72.5% 3.3% 64.0% 69.0%
Free float (EUR mn) 622.8 Reven. CAGR 08-11e 9.5% Net margin -140.1% -66.7% 5.2% 15.6%
Shares outst. (mn) 87.3 NAV CAGR 08-11e -4.1% EPS (EUR) -2.73 -1.25 0.09 0.29
NAV/share (EUR) 20.50 18.81 18.77 19.01
16 EV/EBITDA 15.93 17.28 21.85 19.03
14 P/E nm nm 89.12 26.99
12
P/CE 20.37 23.73 165.46 32.62
P/BV 0.22 0.45 0.45 0.44
10
Dividend yield 0.00% 0.00% 0.00% 4.52%
8 P/BV rel. 1.0 0.7 0.8 0.8
6 P/E rel. - - 6.3 3.6
CA IMMO
Immobilien ATX (Rebased) Rel. to sector (EUR, ppt) -24.5 -15.8 -34.5 -88.7
DJ STOXX Financial Services (Rebased) Rel. to universe (EUR, ppt) -22.7 -11.3 9.2 95.5
CA IMMO International Accumulate Target price EUR 6.3

Price (EUR) 5.23 ROE 2008 -16.4% 08 09e 10e 11e
Mcap (EUR mn) 227.3 Net debt (EURmn, 08) 168.4 Tot. revenues (EUR mn) 52.0 53.0 61.9 71.8
Free float (%) 38.0% Loan/value (2008) 21.1% EBIT margin -119.3% -224.4% 54.5% 56.4%
NAV/share (EUR) 13.28 9.94 10.05 10.27
8
EV/EBITDA 9.92 20.43 21.07 17.94
7 P/E nm nm 37.10 20.44
6 P/CE 7.45 25.36 52.80 31.61
P/BV 0.23 0.55 0.54 0.53
5
Dividend yield 0.00% 0.00% 0.00% 3.72%
4 P/BV rel. 1.0 0.8 1.0 1.0
3 P/E rel. - - 2.6 2.7
CA IMMO International
Immobilien ATX (Rebased) Rel. to sector (EUR, ppt) -5.5 -6.2 -30.0 -78.2
conwert Accumulate Target price EUR 10.7

Price (EUR) 8.42 ROE 2008 -2.3% 08 09e 10e 11e
Free float (%) 80.0% Loan/value (2008) 57.9% EBIT margin 37.2% 49.4% 51.9% 76.9%
Free float (EUR mn) 546.2 Reven. CAGR 08-11e 17.6% Net margin -16.0% 13.5% 18.1% 36.9%
Shares outst. (mn) 81.1 NAV CAGR 08-11e 0.6% EPS (EUR) -0.37 0.34 0.46 0.96
NAV/share (EUR) 14.12 14.33 14.52 15.43
16 EV/EBITDA 18.66 18.32 18.60 17.71
14 P/E nm 24.95 18.13 8.76
P/CE 12.92 20.13 20.07 17.55
12
P/BV 0.21 0.54 0.53 0.51
10 Dividend yield 0.00% 3.56% 3.56% 4.75%
8 P/BV rel. 0.9 0.8 1.0 0.9
6
P/E rel. - 0.8 1.3 1.2
Absolute (EUR terms) 5.8% -3.7% 39.4% 110.0%
2
conwert Rel. to sector (EUR, ppt) -3.1 -13.9 -27.5 -105.9
Immobilien ATX (Rebased)
ECM Under review Target price EUR

Price (EUR) 321.40 ROE 2008 -92.2% 08 09e 10e 11e
Mcap (EUR mn) 52.9 Net debt (EURmn, 08) 346.4 Tot. revenues (EUR mn) 38.8 48.4 57.3
Mcap (EUR mn) 52.9 Gearing (2008) 363.3% NOI yield 2.8% 4.4% 4.8%
Free float (%) 15.9% Loan/value (2008) 59.8% EBIT margin -191.5% 104.4% 192.4%
Free float (EUR mn) 8.4 Reven. CAGR 08-11e - Net margin -237.6% 57.6% 130.2%
Shares outst. (mn) 4.3 NAV CAGR 08-11e - EPS (EUR) -23.36 4.06 10.87
52 weeks Dividend/share (EUR) 0.00 0.00 0.00
NAV/share (EUR) 20.38 24.45 35.32
450 EV/EBITDA -18.54 41.21 8.23
P/E nm 3.07 1.15
400
P/CE -0.74 239.30 1.76
350 P/BV 0.89 0.83 0.48
Dividend yield 0.00% 0.00% 0.00%
300
P/BV rel. 3.9 1.3 0.9
250 P/E rel. - 0.1 0.1

Absolute (EUR terms) 1.5% -11.9% -4.8% 10.8%
ECM PX (Rebased) DJ STOXX Financial Services (Rebased) Rel. to universe (EUR, ppt) -4.0 -18.3 -24.1 -21.4
ECO Business-Immo Buy Target price EUR 6.4

Price (EUR) 4.54 ROE 2008 -9.0% 08 09e 10e 11e
Net debt (EURmn, 08) 694.0 Tot. revenues (EUR mn) 74.8 60.6 57.4 56.9
NAV/share (EUR) 10.72 10.45 11.30 12.03
5,5 EV/EBITDA 17.69 19.04 17.34 18.36
5,0
P/E nm nm 6.31 6.30
4,5
4,0
P/CE 9.36 -13.23 10.36 11.48
3,5 P/BV 0.13 0.43 0.40 0.38
3,0 Dividend yield 0.00% 0.00% 3.30% 4.41%
2,5 P/BV rel. 0.5 0.6 0.7 0.7
2,0 P/E rel. - - 0.4 0.8
1,5
1,0
ECO Business-Immo
Rel. to sector (EUR, ppt) 0.3 0.3 -20.9 38.8
DJ STOXX Financial Services (Rebased) Rel. to universe (EUR, ppt) 2.1 4.8 22.8 223.0
GTC Accumulate Target price PLN 26.7

Price (PLN) 24.50 ROE 2008 16.1% 08 09e 10e 11e
Mcap (EUR mn) 1,311.3 Gearing (2008) 66.3% NOI yield 4.7% 4.7% 5.1% 5.8%
Free float (%) 41.6% Loan/value (2008) 40.9% EBIT margin 247.8% 38.3% 62.9% 115.9%
Free float (EUR mn) 545.6 Reven. CAGR 08-11e 51.7% Net margin 165.1% 18.6% 34.9% 79.9%
Shares outst. (mn) 219.4 NAV CAGR 08-11e - EPS (EUR) 0.75 0.15 0.35 1.31
52 weeks
s Dividend/share (EUR) 0.00 0.00 0.00 0.00
NAV/share (EUR) 6.93 7.04 8.63
28 EV/EBITDA 33.50 43.38 30.32 23.72
26 P/E 4.89 39.53 17.17 4.55
24 P/CE -12.86 83.94 118.25 -27.59
22 P/BV 0.74 1.16 1.09 0.88
20 Dividend yield 0.00% 0.00% 0.00% 0.00%
18 P/BV rel. 3.2 1.7 2.0 1.6
16 P/E rel. 0.3 1.2 1.2 0.6
GTC W IG 20 (Rebased) DJ STOXX Financial Services (Rebased) Rel. to universe (EUR, ppt) -2.6 -6.8 -1.4 21.3
Immoeast Accumulate Target price EUR 5.2

Price (EUR) 4.34 ROE 2008 -35.4% 08 09e 10e 11e
Mcap (EUR mn) 3,618.8 Gearing (2008) 63.0% NOI yield 4.6% 5.8% 6.0% 6.0%
Free float (EUR mn) 1,641.8 Reven. CAGR 08-11e 23.7% Net margin -582.9% 8.2% 38.5% 50.1%
Shares outst. (mn) 833.8 NAV CAGR 08-11e -6.4% EPS (EUR) -2.85 0.06 0.31 0.41
NAV/share (EUR) 7.09 7.06 7.40 7.87
5,0 EV/EBITDA 29.60 19.57 18.00 15.58
4,5
P/E nm 71.25 14.06 10.49
4,0
P/CE 23.93 23.02 14.11 11.96
3,5
3,0 P/BV 0.27 0.67 0.64 0.60
2,5 Dividend yield 0.00% - - -
2,0 P/BV rel. 1.1 1.0 1.2 1.1
1,5 P/E rel. - 2.2 1.0 1.4
1,0
0,5
0,0
Immoeast Rel. to sector (EUR, ppt) 10.7 20.1 76.9 960.6
DJ STOXX Financial Services (Rebased) Rel. to universe (EUR, ppt) 12.5 24.7 120.6 1144.7
Orco Reduce Target price EUR 7.2

Price (EUR) 7.26 ROE 2008 -74.9% 08 09e 10e 11e
Free float (%) 82.8% Loan/value (2008) 68.0% EBIT margin -129.0% -78.3% 20.7% 71.3%
Free float (EUR mn) 65.0 Reven. CAGR 08-11e -3.3% Net margin -154.7% -89.5% 6.8% 34.9%
NAV/share (EUR) 42.64 11.09 13.32 17.09
12 EV/EBITDA 89.37 249.44 24.48 31.04
11 P/E nm nm 5.72 2.40
10 P/CE -0.41 -1.41 -5.7 -2.44
9 P/BV 0.23 0.81 0.71 0.55
8
Dividend yield 0.00% 0.00% 0.00% 0.00%
7
P/BV rel. 1.0 1.2 1.3 1.0
6
P/E rel. nm nm 0.4 0.3
5
Orco PX (Rebased) DJ STOXX Financial Services (Rebased) Rel. to universe (EUR, ppt) -1.3 -21.0 -15.3 -25.9
Sparkassen Immobilien Buy Target price EUR 6.3

Price (EUR) 5.05 ROE 2008 1.0% 08 09e 10e 11e
Free float (%) 81.0% Loan/value (2008) 50.4% EBIT margin 21.0% -32.8% 61.9% 79.5%
Free float (EUR mn) 278.6 Reven. CAGR 08-11e 15.0% Net margin 5.1% -53.5% 20.5% 35.7%
Shares outst. (mn) 68.1 NAV CAGR 08-11e - EPS (EUR) 0.09 -0.96 0.43 0.87
NAV/share (EUR) 8.89 7.66 8.19 9.12
11 EV/EBITDA 21.64 24.26 19.05 16.48
10 P/E 23.20 nm 11.68 5.83
9
P/CE 3.94 20.89 11.10 8.81
8
P/BV 0.23 0.69 0.65 0.59
7
6 Dividend yield 0.00% 0.00% 1.98% 3.96%
5 P/BV rel. 1.0 1.0 1.2 1.1
4 P/E rel. 1.7 nm 0.8 0.8
3
2
1
Sparkassen Immobilien Rel. to sector (EUR, ppt) -8.7 -2.3 -46.1 -104.6
DJ STOXX Financial Serv ices (Rebased) Rel. to universe (EUR, ppt) -6.8 2.2 -2.4 79.6
Sector Insight Retail & Distribution
- Weak numbers posted by LPP confirm that Polish retail is still under pressure
- NG2 expects sound 4Q and received approval for capital increase if needed
Upgrade to In our recent company report on Eurocash the stronger-than-forecast operating cash flow
Accumulate on expectations for the coming years prompted us to raise our 12M target price from PLN 13.5 to
higher target PLN 16.5 and upgrade our recommendation from Hold into Accumulate. We assume Eurocash
price will spend PLN 70mn on Batna (P/E at 11.5 for 2010), a chain of three cash & carry warehouses
located in Warsaw in 4Q09. For 2010 we expect Batna to raise Eurocash Group’s operating
profit by PLN 7.5mn. We increased the operating cash flows forecasts for 2010 to PLN 202mn
which, followed by PLN 68mn CAPEX, lead to PLN 200mn net cash at the end of 2010
(compared to PLN 100mn at the end of 2009).
Sales still LPP delivered disappointing sales data for November. Revenues arrived at a mere PLN 135mn
under pressure (down by as much as 18% y/y). Having in mind the fast pace of new openings, we estimate like-
to-like growth to be deeply in red at around -40%! At the same time the company informed that
thanks to stronger PLN and discounts negotiated with Chinese producers, it recorded very high
gross margin on sales at approx. 64%. It is much above 48% reported in 1-3Q 2009. November
sales data are very weak and prove that retail in Poland is still under pressure. During the last
year, LPP has been operating in a very hard environment, i.e. low demand for clothing, weak
gross margin on sales, high rental payments, etc. As soon as the market improves, we should
see a significant jump in the company’s figures (especially when taking into account remarkable
effects of cost cutting). We maintain our target of PLN 1,600.
Very strong 4Q At November’s conference, NG2’s management announced that it expects very strong figures
figures for 4Q. In October alone, the company’s bottom line was supposed to exceed PLN 40mn
expected (compared to PLN 46mn net profit generated in 1- 3Q09). November should contribute another
PLN 10mn to the bottom line, whereas December will probably break even. This implies overall
4Q09 net profit of around PLN 50-55mn and the FY09 bottom line at PLN 96-101mn (in line with
our estimate and the market consensus).
10% capital The company’s shareholders have recently approved the issue of 3.84mn new shares (a 10%
increase capital increase) during the next three years. The shares will be offered to institutional investors
approved in one or several tranches, without subscription rights. The offer price is to be higher than PLN
45. The CFO claims that the share issue should not take place in the near future, as the
company can still acquire financing from banks. The EGM approval just gives a green light for a
capital increase, if such a need occurs.
Fortis Bank As expected, Vistula Group issued 8.247mn new shares. The offer price equaled PLN 4.85.
acquired 8mn The issue was acquired by Fortis Bank, which currently holds 7.4% stake in Vistula. Proceeds
shares issue from the issue (PLN 40mn) will be used to partially repay credit in Fortis Bank. The sissue and
by Vistula – as its conditions are in line with earlier announcements of the company. Recently, Fortis Bank
expected agreed to roll over PLN 250mn Vistula’s credit till 2018. At the same time, the bank obliged to
acquire the company’s shares for PLN 40mn. The share issue has been already included in our
valuation.
Record top line Inter Cars revealed that dominant unit revenues in October amounted to PLN 181mn, or 23.3%
in October y/y growth. The reported monthly revenues are impressive; however October in general was
very good for companies operating in automotive sector (spare parts distributors, tier makers
etc.).

Emperia Holding PLN 307.9 9.1% 8.6% 9.0% 8.9% 2.8% 3.2% 3.1% 3.1% 29.7% 16.6% 63.2% 49.0%
Empik PLN 390.1 28.7% 14.8% 11.4% 12.2% 6.4% 5.1% 6.2% 6.2% 7.9% 8.9% 80.2% 39.6%
Eurocash PLN 491.7 33.4% 28.4% 29.3% 27.6% 2.6% 2.7% 2.8% 2.9% 9.6% 12.4% 61.9% 40.7%
Inter Cars PLN 253.3 10.2% 14.2% 11.7% 10.9% 5.9% 8.4% 6.8% 7.1% 10.2% 3.7% 64.1% 163.0%
LPP PLN 644.4 38.1% 17.3% 20.4% 23.0% 17.3% 12.7% 14.1% 14.9% 11.5% -2.0% 58.7% 30.8%
NG2 PLN 440.3 47.0% 28.5% 30.7% 31.0% 19.0% 15.6% 16.4% 17.2% 19.3% 8.1% 37.2% 8.7%
Vistula Group PLN 61.0 -61.3% 3.8% 3.4% 5.0% -21.7% 12.0% 11.6% 12.2% -2.1% -15.0% 46.4% -17.7%
Median - - 29% 15% 12% 12% 6% 8% 7% 7% - - - -
Next GBP - UK Pound
4,438 Sterling
192.9% 88.2% 58.6% 44.0% 18.2% 18.8% 19.0% 19.1% 5.4% 18.7% 28.3% 84.6%
Hugo Boss AG EUR - Euro1,481 56.2% 47.6% 52.0% 50.0% 14.9% 14.3% 16.3% 17.0% 6.3% 2.6% 28.0% 110.7%
Benetton EUR - Euro1,096 11.4% 7.7% 7.9% 8.3% 16.6% 15.0% 15.4% 16.1% -11.1% -7.7% -11.0% 10.5%
Escada AG EUR - Euro 30 -68.2% -32.3% -72.5% 1.4% 3.4% 2.1% 61.7% 12.8% -66.2% -76.9%
Ted Baker GBP - UK Pound
220 Sterling
22.4% 19.1% 19.1% 18.8% 16.3% 15.8% 16.7% 17.1% 11.8% 15.0% 27.0% 54.0%
Baltika EUR - Euro 13 - - - 0.0% - - - 5.9% -4.0% 20.0% -12.2%
Damartex SA EUR - Euro 115 10.7% 5.3% 6.4% 8.5% 7.0% 0.0% 3.9% 0.0% 3.8% -2.0% 24.2% 26.7%
French Connection GBP - UK Pound34 Sterling
-6.5% -10.9% -9.3% -5.4% -0.4% -2.7% -1.0% 0.2% -15.3% -44.5% -47.5% -12.7%
Inditex EUR - Euro26,417 26.6% 23.2% 22.9% 23.7% 21.0% 20.3% 20.2% 20.9% 2.6% 16.0% 32.3% 57.3%
Gerry Weber international AG
EUR - Euro 467 21.8% 22.0% 20.6% 19.6% 13.0% 13.7% 13.8% 14.5% -1.7% 8.5% 19.2% 23.3%
Silvano Fashion Group AS EUR - Euro 32 -4.0% 9.8% 12.5% 0.0% 0.0% 0.0% 0.0% 23.1% 14.3% 100.0% 90.5%
Hennes & Mauritz AB SEK - Swedish Krona
32,355 41.4% 39.4% 39.9% 41.8% 25.2% 23.4% 24.7% 25.2% -2.4% 3.0% 17.1% 37.2%
Median Total - 67,903 22.4% 18.4% 18.0% 18.8% 16.3% 15.4% 16.3% 17.1% - - - -
EuroStoxx Retail 107,929 13.7% 12.2% 13.1% 13.8% 7% 7% 7% 7% 1.2% -4.5% -1.1% 10.0%
CEE to Peer, Prem/Disc - 28% -19% -35% -35% -64% -45% -58% -59% - - - -
P/E P/CE P/BV

2008 2009e 2010e 2011e 2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
Emperia Holding 11.2 18.9 16.6 15.5 5.7 10.2 8.7 8.3 1.0 1.5 1.4 1.3
Empik 7.3 20.0 22.6 18.9 4.5 10.7 10.2 9.1 2.0 2.7 2.4 2.2
Eurocash 14.1 21.8 17.1 15.4 7.7 13.7 11.5 10.7 4.6 5.6 4.6 4.0
Inter Cars 11.6 16.4 17.6 16.9 5.7 11.1 11.1 10.6 0.9 2.2 1.9 1.7
LPP 10.0 24.5 17.1 12.2 6.9 13.1 9.8 7.8 3.5 3.9 3.2 2.5
NG2 11.6 19.5 14.8 12.0 10.4 16.2 12.6 10.2 4.7 5.1 4.1 3.4
Vistula Group nm 23.7 24.5 16.0 n.m. n.m. 64.7 10.4 0.9 0.9 0.8 0.8
Median CEE 11.4 20.0 17.1 15.5 6.3 12.1 11.1 10.2 2.0 2.7 2.4 2.2
Next 14.0 11.8 11.3 10.5 10.6 9.2 8.5 8.0 26.9 10.4 6.6 4.6
Hugo Boss AG 14.3 16.7 13.5 11.4 9.3 9.5 8.4 7.3 8.1 8.0 7.0 5.7
Benetton 7.0 10.0 9.4 8.6 4.3 4.8 4.7 4.4 0.8 0.8 0.7 0.7
Escada AG 0.9 0.2 0.4 0.7
Ted Baker 15.7 15.3 13.9 12.7 13.9 11.3 10.7 3.5 2.9 2.7 2.4
Baltika
Damartex SA 6.8 16.8 13.3 9.4 3.5 3.3 10.8 6.3 0.7 0.9 0.9 0.8
French Connection 0.3 0.4 0.4 0.5
Inditex 21.0 21.5 19.3 16.4 14.4 14.2 12.5 10.9 5.6 5.0 4.4 3.9
Gerry Weber international AG 11.8 10.5 9.8 9.2 9.7 7.3 6.6 6.1 2.6 2.3 2.0 1.8
Silvano Fashion Group AS 7.3 5.0 0.8 0.7 0.6
Hennes & Mauritz AB 23.3 21.4 18.9 16.2 20.3 18.2 15.7 13.7 9.6 8.4 7.5 6.8
Median Total 14.0 15.5 13.4 11.0 9.5 9.5 8.9 8.0 2.8 2.5 2.3 2.3
EuroStoxx Retail 13.5 15.3 13.5 11.5 7.0 7.5 6.9 6.5 1.8 1.7 1.5 1.4
CEE to Peer, Prem/Disc -19% 29% 28% 41% -34% 27% 24% 28% -28% 8% 8% -5%
EV/Sales EV/EBITDA
2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
Emperia Holding 0.2 0.3 0.3 0.2 6.0 9.2 8.4 7.9
Empik 0.5 0.7 0.6 0.5 8.2 13.8 9.6 8.5
Eurocash 0.2 0.3 0.3 0.2 6.8 11.3 8.8 7.8
Inter Cars 0.4 0.8 0.7 0.7 7.3 9.9 11.0 10.0
LPP 1.3 1.6 1.2 1.0 7.4 12.7 8.7 6.8
NG2 1.7 2.2 1.7 1.5 8.7 14.1 10.7 8.7
Vistula Group 0.9 1.3 1.2 1.1 -4.3 10.7 10.2 8.9
Median CEE 0.5 0.8 0.7 0.7 7.3 11.3 9.6 8.5
Next 0.8 1.3 1.2 1.1 4.6 7.1 6.5 6.0
Hugo Boss AG 1.0 1.3 1.3 1.2 6.9 9.4 7.9 7.2
Benetton 0.8 0.9 0.8 0.8 5.1 5.7 5.4 5.0
Escada AG 0.4 0.4 0.4 31.3 10.5 18.1
Ted Baker 0.9 1.2 1.1 1.0 5.4 7.5 6.6 5.8
Baltika
Damartex SA 0.1 0.2 0.2 0.2 2.1 5.9 5.5 4.2
French Connection 0.0 0.0 0.0 0.0 17.0
Inditex 1.8 2.2 1.9 1.7 8.4 11.0 9.6 8.0
Gerry Weber international AG 0.9 0.8 0.8 0.7 7.0 6.0 5.6 4.9
Silvano Fashion Group AS
Hennes & Mauritz AB 2.6 3.1 2.8 2.4 10.3 13.1 11.3 9.7
Median Total 0.9 1.2 1.1 1.1 6.1 7.3 6.6 5.9
EuroStoxx Retail 0.4 0.4 0.4 0.3 5.3 7.3 6.7 6.0
CEE to Peer, Prem/Disc -40% -29% -32% -33% 20% 54% 45% 43%
Emperia Holding Sell Target price PLN 56.0

Price (PLN) 84 ROCE 2008 8.2% 08 09e 10e 11e
EV/sales 0.17 0.30 0.26 0.24
85 EV/EBITDA 5.97 9.22 8.39 7.87
80 P/E 11.16 18.94 16.55 15.45
75 P/CE 5.69 10.17 8.72 8.29
70 P/BV 1.04 1.55 1.43 1.33
65 Dividend yield 2.01% 0.67% 0.84% 0.91%
60 EV/EBITDA rel. 0.8 0.8 0.9 0.9
55 P/E rel. 1.0 0.9 1.0 1.0
50
Emperia Holding W IG (Rebased) Rel. to sector (EUR, ppt) 16.5 13.6 7.0 16.4
DJ EURO STO XX Retail (Rebas ed) Rel. to universe (EUR, ppt) 22.7 10.9 40.0 17.3
Empik Sell Target price PLN 9.7

Shares outst. (mn) 103 EPS CAGR 08-11e -0.1% EPS (PLN) 1.15 0.82 0.69 0.82
EV/sales 0.53 0.70 0.59 0.53
16 EV/EBITDA 8.24 13.75 9.65 8.50
P/E 7.27 19.97 22.57 18.90
14
P/CE 4.53 10.73 10.18 9.07
12 P/BV 2.03 2.73 2.45 2.17
Dividend yield 0.00% 0.00% 0.00% 0.00%
10 EV/EBITDA rel. 1.1 1.2 1.0 1.0
8 P/E rel. 0.6 1.0 1.3 1.2
Empik W IG (Rebased) DJ EURO STOXX Retail (Rebased) Rel. to universe (EUR, ppt) 0.9 3.3 56.9 7.9
Eurocash Accumulate Target price PLN 16.5

Mcap (PLN mn) 2,016 ROE 2008 33.4% Sales (PLN mn) 6,130 6,674 7,390 7,851
EV/sales 0.18 0.31 0.25 0.23
16 EV/EBITDA 6.81 11.27 8.84 7.79
15 P/E 14.05 21.83 17.11 15.41
14 P/CE 7.73 13.67 11.48 10.70
13 P/BV 4.63 5.59 4.56 4.00
12 Dividend yield 3.52% 1.88% 2.33% 3.73%
11 EV/EBITDA rel. 0.9 1.0 0.9 0.9
10 P/E rel. 1.2 1.1 1.0 1.0
Eurocash W IG (Rebased) DJ EURO STOXX Retail (Rebased) Rel. to universe (EUR, ppt) 2.6 6.7 38.7 9.0
Inter Cars Sell Target price PLN 44.7

EV/sales 0.43 0.83 0.75 0.71
90 EV/EBITDA 7.32 9.92 10.99 10.03
80 P/E 11.62 16.45 17.63 16.89
70 P/CE 5.69 11.07 11.11 10.55
P/BV 0.89 2.19 1.94 1.74
60
Dividend yield 0.00% 0.00% 0.00% 0.00%
50
EV/EBITDA rel. 1.0 0.9 1.1 1.2
40 P/E rel. 1.0 0.8 1.0 1.1
30
Inter Cars W IG 20 (Rebased) DJ EURO STOXX Retail (Rebased) Rel. to universe (EUR, ppt) 3.1 -2.0 40.9 131.3
LPP Hold Target price PLN 1600.0

Price (PLN) 1,509.0 ROCE 2008 25.2% 08 09e 10e 11e
EV/sales 1.29 1.60 1.23 1.02
1.700 EV/EBITDA 7.45 12.65 8.74 6.82
1.600 P/E 10.02 24.51 17.14 12.22
1.500 P/CE 6.89 13.08 9.80 7.83
1.400 P/BV 3.52 3.89 3.17 2.52
1.300 Dividend yield 0.00% 0.00% 0.00% 5.81%
1.200 EV/EBITDA rel. 1.0 1.1 0.9 0.8
1.100 P/E rel. 0.9 1.2 1.0 0.8
1.000
LPP W IG (Rebased) DJ EURO STOXX Retail (Rebased) Rel. to universe (EUR, ppt) 4.5 -7.6 35.5 -0.9
NG2 Reduce Target price PLN 42.5
Mcap (PLN mn) 1,805 ROE 2008 47.0% Sales (PLN mn) 769 938 1,123 1,300
Free float (EUR mn) 186 Sales CAGR 08-11e 24% Net profit margin 13.46% 10.43% 10.83% 11.54%
52 weeks EV/sales 1.66 2.20 1.74 1.50
65
EV/EBITDA 8.73 14.05 10.65 8.71
P/E 11.55 19.53 14.84 12.03
60
P/CE 10.37 16.24 12.57 10.23
55
P/BV 4.75 5.09 4.12 3.40
50 Dividend yield 3.21% 2.01% 3.19% 4.26%
45 EV/EBITDA rel. 1.2 1.2 1.1 1.0
40 P/E rel. 1.0 1.0 0.9 0.8
25 Rel. to sector (EUR, ppt) 6.1 5.1 -19.0 -23.9
NG2 W IG (Rebased) DJ EURO STOXX Retail (Rebased) Rel. to universe (EUR, ppt) 12.2 2.4 14.0 -23.0
Vistula Group Sell Target price PLN 1.6

52 weeks
EV/sales 0.94 1.27 1.19 1.09
4,0 EV/EBITDA n.m. 10.65 10.22 8.90
P/E nm 23.71 24.47 16.02
3,5
P/CE n.m. n.m. 64.66 10.37
3,0 P/BV 0.92 0.85 0.82 0.78
2,5 Dividend yield 0.00% 0.00% 0.00% 0.00%
2,0 EV/EBITDA rel. n.m. 0.9 1.1 1.0
P/E rel. - 1.2 1.4 1.0
1,5
1,0
Absolute (PLN terms) -6.3% -15.8% 32.5% -12.2%
0,5 Rel. to sector (EUR, ppt) -15.3 -18.0 -9.9 -50.3
Vistula Group W IG (Rebased) DJ EURO STOXX Retail (Rebased) Rel. to universe (EUR, ppt) -9.2 -20.7 23.1 -49.4
Sector Insight Technology
- ComArch with strong comeback in 3Q09

- S&T and Asseco Poland raised to Buy after figures
- Sygnity with profit warning again
- AT&S - Sell confirmed as threats remain
Strong ComArch showed a strong comeback with its 3Q09 results based on increased demand for
comeback in software and services. SoftM’s contribution to the bottom line was also positive (not so the
3Q09 stand-alone result) for the first time this year. The CEO mentioned in an interview ahead of
today’s results presentation that ComArch expects a strong 4Q09 result, similar to those seen in
2008. The company’s backlog is strong and the net contribution of SoftM should be positive for
2H09 on the net level.
Further news from the presentation:
• The backlog for 2010e is now at PLN 215mn (+17.1% y/y) – consisting of 90% software &
services
• FY09 EBIT of at least PLN 14mn (our estimate: PLN 1mn).
• ComArch will invest about PLN 24mn in another office building in Cracow, to be finished in
April 2011
• For 2010, ComArch expects better results y/y
• SoftM’s contribution to 1H10 is expected to be lower than in 2H09 (cyclical nature of
business)
• In 2011, ComArch might acquire a company in France which operates in the same segment
as SoftM. Consequently, this set of figures together with its guidance for FY09 will prompt us
to increase our estimates.
Lifting target Asseco Poland’s strong results prompted us to increase our estimates. We set the new target
price to PLN price at PLN 73.8 (after PLN 72.1) and the recommendation from Accumulate to Buy. One could
73.8 after 3Q09 almost get used to the fact that Asseco keeps beating market estimates, as they’ve done again
results in 3Q09. A dividend payout ratio of 30-40% for 2009 was already announced, translating into
DPS of between PLN 1.32 and 1.75 per share (assuming net profit at around PLN 300mn). We
have assumed a payout ratio of 35% in our model (DPS: PLN 1.54 / share). 3.1mn new shares
to be issued in March 2010 would add about PLN 180mn cash at current share price levels. The
proceeds will be used for acquisitions. Asseco shares have already offered sound discounts all
over the place ahead of our estimate revisions. Now, the peer group offers discounts of between
16-25%. Our new EPS 2009e-2011e: PLN 5.45 (PLN 5.26), PLN 5.51 (PLN 5.35) and PLN 5.60
(PLN 5.58), respectively.
S&T: raised to Based on the company’s FY09 guidance (revenues: EUR 415-425mn; EBIT: EUR 4mn) and the
Buy on FY09 positive effect of the already achieved cost savings on the 2010 results, we have increased our
guidance target price to EUR 20.2 (from EUR 12.9) and lifted our recommendation to Buy (Hold). We
have included a liquidity discount of 15% to reflect the low trading volume of the stock. Together
with its 3Q09 results, which indicated the first signs of improvement, we have adjusted our
estimates for 2009 and beyond by lowering our top line estimates, as well as the cost base,
given the company’s cost savings/restructuring efforts. Extrapolating these savings to 2010e,
S&T’s EBIT margin should improve to 2.7%, from 1.0% for 2009e. For 2011e and beyond, we
expect a gradual improvement of the EBIT margin, following an ongoing shift of the sales mix
towards services. The potential upside in the short/mid term could arise from the release of
Windows 7, as many companies have skipped to upgrade their IT to the predecessor Windows
Vista. Our new EPS estimates for 2009-2011e are EUR 0.06 (previously EUR -0.07), EUR 1.40
(EUR 0.81) and EUR 1.78 (EUR 1.97), respectively.
Target price We have adjusted our figures slightly to mirror Sygnity’s 3Q09 performance together with the
down to PLN profit warning for FY09. The published set of 3Q09 figures showed a decline of revenues even
13.2 after profit q/q. Although the gross margin improved y/y, EBIT was still negative despite the book gain of
warning the KPG sale and the reversal of provisions. All in all, except for the top line, 3Q09 was in line
with market expectations. Furthermore, instead of targeting an EBIT of PLN 20mn in 2H09, the
company now expects only PLN 10mn due to the delay of orders. The top line for FY09 should
also be about PLN 640 instead of the previous guidance of PLN 700mn. As our estimates have
already incorporated Sygnity missing it’s previous FY09 guidance, our adjustments in the model
were minor. We remain cautious regarding a sustainably improved profitability – even for 4Q09,
our EBIT estimate remains well below the guidance of the company. Our new EPS for 2009-
2011e are: PLN -6.81 (PLN 6.74), PLN 0.1 (PLN 0.14) and PLN 0.44 (0.48), respectively.
Guidance for In its Capital Market’s Day, AT&S’ management guided revenues of EUR 360mn for the full
FY09/10: EUR year 2009/10, along with a positive result on the EBIT line (excluding non-recurring items).
360mn in CAPEX should amount to EUR 25mn in FY09/10. Expenditures in the following year will depend
revenues, EBIT on the state of the global economy and the PCB market. Sluggish demand would prompt AT&S
positive to focus on its FCF, limiting investments to EUR 25mn. A strong recovery, on the other hand,
could drive CAPEX as high as EUR 80mn, shifting the company’s focus to growth. The latter of
the two scenarios described above could be funded by the cash flow, alternative financing and
additional equity. Alternative financing sources comprise of partnerships in technology projects
and factoring. To increase its equity and raise cash, AT&S could sell its treasury shares (10% of
total shares) on the market. A capital increase is also a possibility, but regarded as a measure of
last resort.
Largest In the mobile devices segment, has reshuffled its customer base. While it still supplies 8 of the
customer is 10 largest producers of mobile devices, it is no longer selling its products to the manufacturer
lost and which was AT&S’ largest client as recently as last year. This is due to that customer’s focus on
replaced lower end products, while AT&S is aiming at the higher end. The loss in sales was fully
compensated by increased revenues from two other customers. Some of the world’s largest
semiconductor companies have shown interest in new packaging solutions via embedding
technologies which are currently being developed. This may expand AT&S’ core business from
the production of PCBs to component assembly.
Sentiment at a The changes in the customer base were a bit of a surprise. Had the company not been able to
high, threats replace their largest customer by two others recently, this obviously would have been a massive
remain, Sell blow to AT&S. This development reveals the vulnerability of AT&S’ business model and the
confirmed dependence on a handful of customers. Nonetheless, we believe that the company has worked
its way out from the trough seen in 1Q09/10. However, we are at the peak of sales seasonality
and the positive sentiment is bound to diminish soon. The sale of treasury shares seems to be a
reasonable possibility to reduce gearing and is backed by the owners, but this may put pressure
on the stock going forward. Furthermore, with the restructuring steps taken to reduce capacity, a
very weak dollar and significant growth in the near future being far from sure thing, sales will be
under pressure. Additionally, a currency revaluation of the Chinese RNB is a threat. Thus, we
stick target price (EUR 5.2) which still warrants a Sell recommendation at the current share price
level. We are comfortable with our full year estimate, which is marginally below the company’s
guidance.
ENT’s top line Ericsson Nikola Tesla announced its 3Q09 result, with sales of HRK 392mn, +22% q/q. This
continues to was mainly due to the revival of the regional market, which had largely underperformed in 1H09.
head south y/y; However, the top line is still down 23.5% y/y, in line with the drop seen in 1H09. This overall
financial result drop was caused mainly by the CIS market, which failed to reach last year's sales. Book orders
boosted amounted to HRK 1.07bn, a 27% drop compared to the HRK 1.47bn seen last year. This
bottom line suggests that selling activities in the last quarter should be increased, in order to keep the top
line drop at the current level. ENT was able to cut material costs by some 28% y/y, due to its
somewhat stronger reliance on service related sales. SG&A were also curtailed by almost 30%,
which brought savings of some HRK 10mn. The cost reduction would have been even higher if
the company did not run investments in the enterprise segment.
However, the fixed component of personnel costs did not change much y/y, in the end lowering
total cost savings to 19%. Consequently, quarterly margins saw a downward trend, with EBITDA
moving from 12.4% to 10.8% and EBIT dropping from 8.9% to 6.7%. On the bottom line, the
company surprised with a net profit of HRK 44.8mn, which outpaced last year's figure of HRK
32.5mn. This 38% growth was due primarily to the positive financial result, which was backed by
forex gains of HRK 3mn compared to a loss of HRK 21.5mn in 3Q08. Tax savings of HRK
8.7mn due to R&D expenses as well as the release of provisioning for outstanding receivables
at around HRK 8.1mn also contributed to the bottom line surprise. Operative cash flow has
gradually improved throughout the year, reaching HRK 121mn in 3Q09, double the figure seen
in 3Q08. However, the company highlighted that it has around HRK 460mn in outstanding
receivables. Even though collection risk has increased and there are indications of impaired
receivables, the company did not impair any amount and did not book provisioning in the P&L,
which could arise in the following quarters. The balance sheet remains strong and indebtedness
was kept at a negligible level, with the debt to equity ratio at 0.32. We find this result in line with
our expectations. The top line somewhat underperformed, while net profit came as a surprise.
As bottom line improvement was backed by forex movements and tax savings, it does not affect
our view on the weaker FY performance.
2Q09/10 KTC’s revenues were slightly above expectations, both in the RSP as well as in the SEC
somewhat segment. The main reasons were the higher-than-expected contribution from the extension of
above the CZ ETC system to trucks >3.5t (RSP), revenues related to the highway extension in Austria
estimates - and higher number of OBUs sold (both SEC). Even if the result was far better q/q (negative
Buy confirmed EBIT and net profit), it still falls short y/y as last year’s result was influenced by high margin
project revenues from the Czech Republic (satellite interface & telematic solution in CZ). The
same arguments apply for analyzing the posted EBIT, on top of the fact that KTC’s EBIT is
burdened by investments, especially in the US market, which are at cost (about EUR 10mn p.a.
or EUR 2.5mn p.q.).
The results fit well with our FY09/10 view, which will be supported by a strong 2H following
already contracted revenues from the CZ (telematic system & remaining part of the satellite
interface), RSA (ETC system implementation), AUS (ETC system implementation) and ongoing
revenues from OBU sales. Consequently, we are confident that KTC will reach our estimates.
We therefore confirm our Buy recommendation and our target price of EUR 36.

Asseco Poland PLN 1,015.8 13.4% 9.9% 9.8% 9.3% 21.2% 22.3% 21.8% 21.8% 14.8% 2.6% 15.1% 19.6%
AT&S EUR 142.1 -2.2% -21.4% 2.0% 5.4% 11.6% 5.7% 14.7% 15.7% 13.0% 40.2% 50.2% 96.8%
ComArch PLN 182.6 56.6% 1.6% 6.8% 7.5% 9.4% 5.9% 8.8% 9.3% 36.2% 35.9% 57.3% 66.2%
Ericsson Nikola Tesla HRK 244.6 16.8% 14.7% 14.0% 15.1% 13.1% 12.4% 12.9% 12.9% 0.6% -4.2% -4.0% 25.6%
Kapsch TrafficCom EUR 312.0 10.4% 15.5% 19.6% 18.3% 17.1% 17.4% 17.4% 22.8% 2.5% 15.6% 35.3% 74.1%
S&T EUR 54.7 -0.4% 0.4% 10.1% 11.5% 3.2% 2.4% 4.3% 4.6% 6.9% 32.7% 56.1% 20.3%
Sygnity PLN 37.7 -0.5% -23.2% 0.4% 1.8% 5.9% -10.1% 4.4% 4.5% 15.0% -12.4% -25.4% -50.3%
Median - - 10% 2% 10% 9% 12% 6% 13% 13% - - - -
TecDAX Technology - 27,008 11.3% 7.2% 9.4% 10.5% 14.4% 12.8% 13.6% 14.5% - - - -
EuroStoxx Technology 117,013 17.6% 15.9% 19.4% 20.5% 13.7% 10.1% 15.4% 16.2% 4.8% 9.2% 22.2% 5.5%
Total Peer Group 144,021 14.4% 11.5% 14.4% 15.5% 14.0% 11.4% 14.5% 15.3%
P/E P/CE P/BV

2008 2009e 2010e 2011e 2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
Asseco Poland 7.4 11.9 11.1 10.9 4.5 9.1 8.7 8.6 1.0 1.1 1.0 1.0
AT&S nm nm 35.3 12.7 1.2 n.m. 3.2 2.8 0.3 0.7 0.7 0.7
ComArch 2.1 93.3 21.2 17.9 1.9 15.4 11.0 10.1 1.0 1.5 1.4 1.3
Ericsson Nikola Tesla 7.6 10.1 9.6 8.1 5.6 7.5 7.4 6.4 1.4 1.4 1.3 1.2
Kapsch TrafficCom 13.2 14.6 10.2 9.4 10.0 17.0 8.4 7.2 1.4 2.1 1.8 1.6
S&T nm nm 11.0 8.7 4.5 10.0 4.7 4.1 0.7 1.2 1.1 0.9
Sygnity nm nm 128.8 29.6 5.5 n.m. 4.7 4.7 0.8 0.5 0.5 0.5
Median C EE 7.5 13.2 11.1 10.9 4.5 10.0 7.4 6.4 1.0 1.2 1.1 1.0
TecDAX Technology 16.1 23.2 18.5 15.0 11.7 16.9 13.3 10.1 2.1 2.0 2.0 1.7
EuroStoxx Technology 15.4 13.6 14.8 12.1 9.9 11.1 9.2 8.1 3.3 3.0 2.7 2.5
Total Peer Group 15.8 18.4 16.6 13.6 10.8 14.0 11.2 9.1 2.7 2.5 2.4 2.1
EV/Sales EV/EBITDA
2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
Asseco Poland 1.2 1.7 1.4 1.2 5.8 7.5 6.3 5.7
AT&S 0.6 0.9 0.8 0.8 4.8 16.2 5.7 4.8
ComArch 0.5 0.9 0.8 0.7 5.6 15.9 9.1 7.8
Ericsson Nikola Tesla 0.7 0.8 0.8 0.7 5.4 6.7 5.9 5.2
Kapsch TrafficCom 0.9 1.4 0.9 1.0 5.5 8.2 5.0 4.5
S&T 0.2 0.3 0.2 0.2 5.6 11.0 5.7 4.9
Sygnity 0.3 0.2 0.3 0.2 4.7 -2.2 5.7 5.0
Median C EE 0.6 0.9 0.8 0.7 5.5 8.2 5.7 5.0
TecDAX Technology 0.8 1.6 1.4 1.1 6.0 11.4 8.9 7.6
EuroStoxx Technology 1.0 1.0 0.9 0.8 6.3 8.0 6.5 5.6
Total Peer Group 0.9 1.3 1.1 1.0 6.1 9.7 7.7 6.6
Asseco Poland Buy Target price PLN 73.8

EV/sales 1.24 1.67 1.37 1.24
70 EV/EBITDA 5.82 7.49 6.29 5.68
65 P/E 7.45 11.86 11.08 10.89
60
P/CE 4.46 9.08 8.66 8.57
P/BV 0.95 1.12 1.05 0.98
55
Dividend yield 2.55% 2.39% 2.45% 2.53%
50 EV/EBITDA rel. 1.1 0.9 1.1 1.1
45 P/E rel. 1.0 0.9 1.0 1.0
Ass eco Poland
W IG 20 (Rebas ed)
Rel. to sector (EUR, ppt) 2.8 -5.0 -5.3 -4.3
DJ EURO STOXX Tec hnology (Rebas ed) Rel. to universe (EUR, ppt) 7.7 -3.1 -8.1 -12.2
AT&S Sell Target price EUR 5.2

ROE 2008 -2.2% Sales (EUR mn) 449.9 355.4 373.2 391.8
Shares outst. (mn) 23 EPS CAGR 08-11e -28.3% EPS (EUR) -0.23 -2.07 0.17 0.48
EV/sales 0.56 0.93 0.84 0.76
7,0 EV/EBITDA 4.83 16.23 5.70 4.83
6,5 P/E nm nm 35.30 12.68
6,0 P/CE 1.21 n.m. 3.17 2.77
5,5 P/BV 0.27 0.72 0.70 0.68
5,0 Dividend yield 6.10% 0.00% 3.11% 3.61%
4,5 EV/EBITDA rel. 0.9 2.0 1.0 1.0
4,0 P/E rel. - - 3.2 1.2
3,5
3,0
2,5
AT&S Rel. to sector (EUR, ppt) 1.0 32.7 29.8 72.9
ATX Prime (Rebased)
DJ EURO STOXX Technology (Rebased) Rel. to universe (EUR, ppt) 5.9 34.6 27.0 65.0
ComArch Hold Target price PLN 69.9

Mcap (PLN mn) 748 ROE 2008 56.6% Sales (PLN mn) 701 750 782 804
52 weeks
EV/sales 0.52 0.94 0.80 0.72
100 EV/EBITDA 5.56 15.91 9.08 7.76
P/E 2.08 93.27 21.18 17.86
90
P/CE 1.88 15.43 10.97 10.07
80 P/BV 0.98 1.48 1.39 1.29
70 Dividend yield 0.00% 0.00% 0.00% 0.00%
EV/EBITDA rel. 1.0 1.9 1.6 1.5
60
P/E rel. 0.3 7.0 1.9 1.6
50
40
ComArch W IG (Rebased) DJ EURO STOXX Technology (Rebased) Rel. to universe (EUR, ppt) 29.2 30.3 34.1 34.4
Ericsson Nikola Tesla under review Target price HRK

EV/sales 0.71 0.83 0.75 0.67
1.600 EV/EBITDA 5.41 6.72 5.86 5.16
1.500 P/E 7.58 10.10 9.64 8.06
1.400 P/CE 5.58 7.51 7.38 6.40
1.300 P/BV 1.35 1.43 1.28 1.16
1.200 Dividend yield 5.95% 2.35% 6.61% 7.91%
1.100 EV/EBITDA rel. 1.0 0.8 1.0 1.0
1.000 P/E rel. 1.0 0.8 0.9 0.7
900
Ericsson Nikola Tesla
Rel. to sector (EUR, ppt) -11.4 -11.8 -24.5 1.7
CROBEX (Rebased)
DJ EURO STOXX Technology (Rebased) Rel. to universe (EUR, ppt) -6.4 -9.9 -27.2 -6.2
Kapsch TrafficCom Buy Target price EUR 36.0

ROE 2008 10.4% Sales (EUR mn) 200.3 212.5 298.7 243.9
EV/sales 0.95 1.44 0.87 1.03
28 EV/EBITDA 5.54 8.25 5.00 4.53
26 P/E 13.25 14.64 10.15 9.43
24 P/CE 10.04 17.02 8.42 7.18
22 P/BV 1.39 2.15 1.85 1.63
20 Dividend yield 3.38% 2.25% 3.25% 3.50%
18 EV/EBITDA rel. 1.0 1.0 0.9 0.9
16 P/E rel. 1.8 1.1 0.9 0.9
14
12
10
Kapsch TrafficCom Rel. to sector (EUR, ppt) -9.5 8.1 14.8 50.2
ATX (Rebased)
DJ EURO STOXX Technology (Rebased) Rel. to universe (EUR, ppt) -4.5 10.0 12.1 42.3
S&T Buy Target price EUR 20.2

ROE 2008 -0.4% Sales (EUR mn) 513 421 422 430
Free float (EUR mn) 19 Sales CAGR 08-11e -5% Net profit margin -0.06% 0.05% 1.19% 1.48%
Shares outst. (mn) 3.6 EPS CAGR 08-11e - EPS (EUR) -0.05 0.06 1.40 1.78
52 weeks EV/sales 0.18 0.26 0.25 0.23
EV/EBITDA 5.63 10.96 5.74 4.94
18
P/E nm nm 10.98 8.65
16 P/CE 4.48 9.96 4.72 4.15
P/BV 0.67 1.17 1.06 0.94
14
Dividend yield 0.00% 0.00% 0.00% 0.00%
12 EV/EBITDA rel. 1.0 1.3 1.0 1.0
P/E rel. - - 1.0 0.8
10
6 Rel. to sector (EUR, ppt) -5.1 25.1 35.6 -3.5
Rel. to universe (EUR, ppt) -0.1 27.0 32.9 -11.4
S&T ATX (Rebased) DJ EURO STOXX Technology (Rebased)
Sygnity Hold Target price PLN 13.2

ROE 2008 -0.5% Sales (PLN mn) 995.7 648.3 701.6 731.8
Mcap (EUR mn) 38 Net debt (EURmn, 08) 4 EBITDA margin 5.87% -10.11% 4.42% 4.47%
Shares outst. (mn) 11.9 EPS CAGR 08-11e - EPS (PLN) -0.13 -6.81 0.10 0.44
52 weeks EV/sales 0.28 0.23 0.25 0.22
EV/EBITDA 4.73 n.m. 5.72 5.03
40
P/E nm nm 128.76 29.58
35 P/CE 5.55 n.m. 4.70 4.69
P/BV 0.81 0.53 0.53 0.52
30 Dividend yield 0.00% 0.00% 0.00% 0.00%
25 EV/EBITDA rel. 0.9 n.m. 1.0 1.0
P/E rel. - - 11.6 2.7
20
15 Absolute (PLN terms) 10.1% -13.2% -32.4% -47.0%
10
Rel. to sector (EUR, ppt) 3.0 -20.0 -45.8 -74.2
Rel. to universe (EUR, ppt) 7.9 -18.1 -48.6 -82.1
Sygnity WIG (Rebased) DJ EURO STOXX Technology (Rebased)
Sector Insight Telecom
- Downgrade TP SA from Accumulate to Reduce due to bleak outlook

- Macro stabilisation to support T-HT share price
- Good cost control at Magyar Telekom
- Telekom Austria posts net loss due to large impairments in SEE
- Profit warning at Telekom Slovenije
- Results of Telefónica O2 CR better than expected
Short-term We downgrade TP SA from Accumulate to Reduce and lower our target price from PLN 17.7 to
outlook PLN 15.5. We lower our EPS estimates by 6% for 2009e and 19% for 2010e, following the weak
unimpressive 3Q09 results and the likely impact of implementing the recent MOU with UKE. The short-term
outlook is weak, with further revenue erosion expected. There should be further cost savings but
they will not be sufficient to compensate for lower revenues and the additional costs from
implementing the agreement with UKE. We only expect a more positive outlook from 2012
onwards.
Negative The agreement with UKE has averted the functional separation threat. However, we expect a
effects from negative impact on earnings, especially for 2010e and 2011e, due to the additional PLN 3bn in
MOU with UKE investments and PLN 200mn in expenses to fulfil the agreement, as well as the expected
intensifying fixed and broadband competition. Indeed, the earnings impact would be even worse
if TPSA has to implement functional separation.
DPTG The Arbitration Tribunal's decision on the DPTG claim is still unknown (due before year’s end).
dispute’s This is the next major share price trigger for TPSA. We continue to include PLN 2bn, or PLN
outcome due 1.7/share, for the potential claim in our DCF valuation, as in our previous report. We think the
anytime current share price does not include the potential DPTG award. We also think that it is more
likely than before, that TP will end up paying an award to DPTG, and that only the amount is
completely unknown.
Positive macro We confirm our Accumulate recommendation on T-Hrvatski Telekom, while raising our target
factors price from HRK 260 to HRK 300. We expect T-HT's share price to continue to be heavily driven
alongside by the macroeconomic improvements in Croatia. The government bond yield has declined
strong significantly in the past few months, which leads us to reduce our risk-free rate assumption and
fundamentals consequently arrive at a higher target price. In addition, we think that the company's
fundamentals remain relatively strong compared to other CEE incumbents, despite the
recession and the introduction of new mobile taxes.
Results The 3Q09 results were a touch below our estimates, excluding the one-off. Mobile revenues
slightly below were weaker than expected, due to the sluggish usage. On the other side, broadband revenue
estimates growth was higher than expected. The EBITDA and net profit margins remained high at 47.3%
and 28.3%, respectively.
Good OPEX We reiterate our Hold recommendation on Magyar Telekom, while increasing our target price
control leads from HUF 700 to HUF 800. The higher target price can be explained by the lower risk-free rate
to higher target (from 8.5% to 7.56%) and our higher estimates from 2010 onwards. The peer group valuation
price shows that Magyar Telekom stock remains attractive. Therefore, we remain comfortable with our
Hold recommendation, despite the YTD share price rally.
2009 outlook Magyar Telekom confirmed its 2009 outlook of a revenue decline of around 2% and an
confirmed underlying EBITDA decline of up to 5%. Our new estimates show a 3% revenue decline and a
3.1% underlying EBITDA decline. The company lowered its underlying operating expenses by
6.8% y/y in 3Q09 alone, or by 3.4% y/y in 9M09. We therefore factor in a bigger share of
operating cost reductions in our forecast and upgrade the EPS estimate for 2010e by 3% and for
2011e by 11%. We lower our 2009 EPS estimate by 4%, mainly due to one-off deferred tax
liability recognition and higher results from minorities (Macedonia).
2010 remains We expect the 2010 outlook to remain subdued, with declining revenues and profitability.
subdued Consumer spending power should remain weak, while the unemployment rate should remain
high in 2010e. Both are key macroeconomic factors directly affecting Magyar Telekom’s
revenues. Nevertheless, we expect a stable dividend of HUF 74 in the medium term, supported
by strong cash flow generation.
Unexpected We have reduced our target price for Telekom Austria from EUR 13.2 to EUR 12.0, while
impairment maintaining our Hold recommendation. The lower target price is mainly driven by our new, lower
leads to net estimates. We have reduced our EPS estimates for 2009e and 2010e by 86% and 20%,
loss in 3Q09 respectively, as we expect the mobile business to suffer from macroeconomic, regulatory and
competitive pressures. Furthermore, we include the EUR 352mn impairment charges booked in
3Q09.
Telekom Austria unexpectedly posted an operating loss of EUR 126.4mn and a net loss of EUR
136.3mn, due to impairment changes for the goodwill from the acquisition of Velcom in Belarus
(EUR 290mn) and for the mobile license in Serbia (EUR 62mn). Excluding this impairment, the
3Q09 results would be slightly below our estimates.
Lower 2009 The company lowered its 2009 outlook and was cautious about the market environment in 2010,
outlook which prompted us to lower our mobile revenue expectations for both years. Risk factors include
devaluation of the Bulgarian lev, which is not included in our current forecast. The share
buyback plan for 2010 remains unchanged, though the amount might be less than previously
expected (EUR 140mn).
Aggressive As Christmas is around the corner, we are seeing really aggressive offers from telecom
Xmas offers providers in Austria. Monthly fees have been slashed by up to 50% and that is valid during the
whole contract period, not just for some months. Most offers are available only until the end of
the year and the customer has to keep the contract for at least 24 months in general. We are
seeing seriously low prices, led by Bob for mobile voice, Orange for mobile Internet and
Telekom Austria for quadruple play.
Customer as The Christmas promotion confirms that the competition level in Austria remains extremely high,
clear winner with prices continuing to drop. The winner is clearly the customer, as prices have never been so
low. For Telekom Austria, we forecast 4% lower revenues for mobilkom and 8.4% lower
revenues for fixed net in 2009e. EBITDA for mobilkom is estimated at -6.4% y/y and for fixed net
at -5.9% y/y (excluding the restructuring charges in 4Q08) in 2009e. We do not expect
competition to soften in the medium term (three years) and we therefore estimate declining
revenues and EBITDA for both operations in the medium term. The domestic operations
contribute around 60-70% to Telekom Austria’s revenues and EBITDA.
From bad to We confirm our Reduce recommendation on Telekom Slovenije and lower our target price from
worse EUR 140 to EUR 125. The company’s 3Q09 results were much weaker than expected and the
company issued a profit warning, expecting 2009 earnings to fall by 50-55%. We therefore lower
our EPS 2009 estimate by 24%. Due to the continuing weak domestic business, we lower our
EPS estimates for 2010 and 2011 by 42% and 32%, respectively.
Low ROCE Despite heavy investments to secure future growth, the company’s return on capital employed of
around 3% looked abysmal and lies significantly below WACC of around 6-7%. The
CAPEX/sales ratio has been above 20% since 2005, reaching its peak in 2009e at around 55%.
The peer group comparison shows that Telekom Slovenije shares remain expensive compared
to its CEE peers, while the FCF and dividend yield are among the lowest.
Downgraded In mid-November Moody’s downgraded the long-term issuer rating of Telekom Slovenije to Baa1
by Moody’s from A3. The outlook on the rating is negative. The downgrade was due to the deterioration of
the group’s operating performance as a result of its transition to a convergence strategy, as well
as enhanced competitive, regulatory and macro-economic pressures, which are affecting growth
prospects and could result in profitability deterioration beyond previous expectations. The
downgrade also reflects Moody's concerns that this deterioration will delay the group's prospects
for reverting to a meaningful positive free cash flow position in 2009, following a substantial
capital expenditure program in 2007 and 2008. We think this is negative for Telekom Slovenije,
especially as the company is preparing to issue corporate bonds for the first time in early 2010
for refinancing purposes.
Stronger-than- Thanks to lower-than-expected OPEX and depreciation charges, Telefónica O2 CR’s net profit
expected 3Q09 was clearly above our (+15%) and consensus (+20%) estimates. As expected, revenues fell by
results around 10% y/y (or by 5.3% y/y excluding the CZK 960mn universal service revenues booked in
3Q08). The strong growth in the Slovakian mobile business could not compensate for the
revenue decline in the domestic fixed and mobile units. The company could reduce its operating
expenses by 14% y/y in 3Q09, especially interconnection, cost of goods sold, marketing and IT
expenses. As a result, OIBDA declined at a lower rate than the revenue decline and the OIBDA
margin rose from 43% last year to 45.2%. Depreciation charges fell unexpectedly by 10.6% y/y,
mainly due to timing issues. As a result, EBIT fell by only 2.6% y/y and came in clearly above
our estimates. Net profit declined slightly, by 0.9% y/y, compared to our forecast of -14% y/y and
consensus of -17% y/y.
Confirm 2009 The company confirmed its OIBDA and cash flow guidance for 2009, while the revenue
OIBDA and guidance remains unconfirmed. In the 9M09, business revenues fell by 6.7% y/y, which is in any
cash flow case clearly weaker than the original revenue guidance of -3% to 0%. The management
target believes that the 2009 guidance can be achieved through a reduction of operating and capital
expenditures.

Magyar Telekom HUF 2,793.2 18.2% 14.1% 14.6% 15.9% 39.9% 39.5% 39.8% 40.6% -1.5% -4.1% 29.4% 21.9%
T-Hrvatski Telekom HRK 3,050.9 18.8% 16.7% 14.7% 16.2% 45.0% 42.9% 40.6% 42.2% 0.1% 20.2% 25.4% 40.3%
Telefónica O2 CR CZK 5,315.6 15.5% 14.9% 15.1% 16.2% 43.8% 45.1% 43.8% 43.6% 2.2% -14.3% 6.6% 1.7%
Telekom Austria EUR 5,405.0 -2.1% 2.5% 17.4% 19.5% 25.1% 36.7% 37.0% 37.1% 3.8% -2.5% 9.4% 11.9%
Telekom Slovenije EUR 889.8 8.1% 3.8% 3.0% 3.7% 37.1% 33.3% 32.3% 33.0% -8.2% -12.7% -23.3% -7.9%
TPSA PLN 5,381.5 13.7% 7.6% 6.8% 6.9% 42.1% 38.3% 37.4% 37.7% 4.5% 1.6% 5.3% -16.4%
Median - - 15% 11% 15% 16% 41% 39% 39% 39% - - - -
Rostelecom USD - US Dollar
3,006 19.0% 5.0% 5.5% 5.9% 21.4% 17.1% 17.5% 15.3% 8.6% 4.2% -12.0% -18.4%
Teliasonera Ab SEK - Swedish Krona14.8%
22,424 13.6% 13.4% 13.2% 31.8% 32.5% 33.1% 33.5% 10.4% 13.7% 42.1% 47.7%
Telenor ASA NOK - Norwegian
15,642 Krone
16.4% 13.3% 11.2% 11.8% 30.2% 31.4% 28.1% 28.9% 6.7% 38.9% 59.4% 114.2%
KPN Koninklijke EUR - Euro20,285 35.6% 45.4% 58.9% 71.9% 35.1% 38.2% 39.5% 39.2% -0.7% 14.0% 32.2% 10.5%
Portugal Telecom EUR - Euro7,610 255.9% - - - 36.3% 35.6% 35.3% 35.5% 7.9% 17.9% 33.8% 41.4%
Swisscom AG CHF - Swiss Franc 32.6%
13,763 - - - 39.3% 39.6% 39.2% 38.9% 8.8% 9.6% 27.5% 16.2%
Median Total - 83,162 19.0% 16.6% 16.5% 15.3% 35.1% 35.6% 35.3% 35.5% - - - -
EuroStoxx 254,775 35.6% 34.3% 32.8% 32.4% 35% 36% 36% 36% 3.9% 2.3% -1.6% 2.7%
Telecommunications
CEE to Peer, Prem/Disc - -24% -35% -11% 5% 17% 9% 9% 10% - - - -
P/E P/CE P/BV

2008 2009e 2010e 2011e 2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
Magyar Telekom 5.7 10.0 10.0 9.5 2.7 4.4 4.3 4.2 1.0 1.4 1.5 1.5
T-Hrvatski Telekom 6.9 10.9 12.7 11.6 4.3 6.5 7.1 6.8 1.3 1.9 1.9 1.9
Telefónica O2 CR 10.9 12.4 12.6 12.1 5.7 6.0 6.0 6.0 1.7 1.9 1.9 2.0
Telekom Austria nm 103.1 16.4 15.6 2.8 3.7 3.8 3.7 2.2 2.9 3.2 3.5
Telekom Slovenije 9.0 22.0 27.6 22.2 2.9 3.6 3.8 3.6 0.7 0.8 0.8 0.8
TPSA 10.2 17.2 20.1 21.0 3.3 4.2 4.2 4.2 1.5 1.3 1.4 1.5
Median C EE 9.0 14.8 14.6 13.9 3.1 4.3 4.2 4.2 1.4 1.6 1.7 1.7
Rostelecom 10.2 36.5 32.1 28.5 10.2 18.0 19.9 12.8 1.9 1.8 1.8 1.7
Teliasonera Ab 12.7 12.0 11.5 10.9 9.1 8.3 7.9 7.8 1.9 1.6 1.5 1.4
Telenor ASA 11.5 11.3 12.3 10.6 6.0 4.9 5.8 5.4 1.9 1.5 1.4 1.3
KPN Koninklijke 15.8 13.3 11.3 10.5 5.5 5.3 4.8 4.5 5.6 6.1 6.7 7.5
Portugal Telecom 12.3 13.8 12.1 11.5 4.2 4.1 3.9 4.0 31.6 15.7 14.6 12.0
Swisscom AG 11.6 10.6 10.7 10.6 5.1 5.3 5.3 5.3 3.8 3.3 3.0 2.7
Median Total 11.6 12.0 11.5 10.6 5.8 5.3 5.5 5.3 1.9 1.8 1.8 1.7
EuroStoxx 10.9 11.6 11.4 10.5 4.2 4.1 3.9 4.0 3.6 3.4 3.1 2.6
Telecommunications
CEE to Peer, Prem/Disc -22% 23% 27% 31% -46% -19% -23% -22% -28% -10% -3% 1%
EV/Sales EV/EBITDA
2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
Magyar Telekom 1.3 1.8 1.8 1.8 3.2 4.5 4.5 4.5
T-Hrvatski Telekom 1.2 2.1 2.3 2.2 2.8 4.9 5.6 5.2
Telefónica O2 CR 1.9 2.3 2.3 2.3 4.4 5.1 5.3 5.2
Telekom Austria 1.7 1.9 1.9 2.0 6.9 5.1 5.3 5.3
Telekom Slovenije 1.4 1.9 1.9 1.8 3.8 5.8 5.8 5.4
TPSA 1.5 1.7 1.6 1.6 3.6 4.4 4.4 4.4
Median C EE 1.4 1.9 1.9 1.9 3.7 5.0 5.3 5.2
Rostelecom 2.3 1.8 1.6 1.6 10.7 10.6 9.4 10.3
Teliasonera Ab 2.2 2.6 2.5 2.4 6.9 7.9 7.6 7.2
Telenor ASA 1.3 1.7 1.6 1.5 4.2 5.4 5.8 5.3
KPN Koninklijke 2.0 2.3 2.3 2.2 5.7 6.0 5.8 5.7
Portugal Telecom 1.6 1.9 1.8 1.7 4.5 5.4 5.0 4.8
Swisscom AG 2.3 2.5 2.4 2.4 5.9 6.3 6.2 6.1
Median Total 2.0 1.9 1.8 1.7 5.7 6.0 5.8 5.7
EuroStoxx 1.8 1.9 1.8 1.7 5.2 5.4 5.0 4.8
Telecommunications
CEE to Peer, Prem/Disc -27% 0% 8% 12% -35% -17% -10% -9%
Magyar Telekom Hold Target price HUF 800.0

Price (HUF) 725 ROCE 2008 15.0% 08 09e 10e 11e
Mcap (EUR mn) 2,793 Net debt (EURmn, 08) 1,028.8 EBITDA margin 39.87% 39.50% 39.79% 40.55%
Shares outst. (mn) 1,040.3 EPS CAGR 08-11e 7.2% EPS (HUF) 89.40 75.52 72.14 76.34
EV/sales 1.26 1.80 1.81 1.84
1.100 EV/EBITDA 3.16 4.55 4.55 4.54
1.000 P/E 5.68 9.99 10.05 9.50
900 P/CE 2.73 4.37 4.32 4.19
P/BV 1.04 1.44 1.49 1.53
800
Dividend yield 14.56% 9.81% 10.21% 10.21%
700 EV/EBITDA rel. 0.9 0.9 0.9 0.9
600 P/E rel. 0.6 0.7 0.7 0.7
400 Absolute (HUF terms) -4.0% -5.7% 21.8% 26.3%
Magyar Telekom
BUX (Rebased) Rel. to sector (EUR, ppt) -3.4 -0.9 19.8 18.7
DJ EURO STOXX Telecommunications (Rebased) Rel. to universe (EUR, ppt) -8.5 -9.8 6.2 -9.8
T-Hrvatski Telekom Accumulate Target price HRK 300.0

Price (HRK) 272.5 ROCE 2008 29.0% 08 09e 10e 11e
Shares outst. (mn) 82weeks
52 EPS CAGR 08-11e -6.1% EPS (HRK) 28.21 25.05 21.40 23.42
280 EV/sales 1.24 2.10 2.26 2.19
260 EV/EBITDA 2.75 4.90 5.56 5.19
P/E 6.92 10.92 12.73 11.63
240
P/CE 4.33 6.46 7.10 6.79
220 P/BV 1.31 1.85 1.89 1.87
200 Dividend yield 15.36% 9.16% 7.86% 8.59%
EV/EBITDA rel. 0.8 1.0 1.1 1.0
180 P/E rel. 0.8 0.7 0.9 0.8
160
T-Hrvatski Telekom
CROBEX (Rebased) Rel. to sector (EUR, ppt) -1.8 23.4 15.8 37.2
DJ EURO STOXX Telecommunications (Rebased) Rel. to universe (EUR, ppt) -7.0 14.5 2.2 8.6
Telefónica O2 CR Accumulate Target price CZK 500

Price (CZK) 426 ROCE 2008 14.9% 08 09e 10e 11e
Mcap (CZK mn) 137,210 ROE 2008 15.5% Sales (CZK mn) 64,655 60,230 58,801 58,870
Free float (%) 30.6% Gearing (2008) -4.8% EBIT margin 23.79% 24.51% 23.46% 23.98%
Shares outst. (mn) 322.1 EPS CAGR 08-11e 2.2% EPS (CZK) 36.10 35.24 33.91 35.16
Dividend/share (CZK) 50.00 42.00 42.00 42.00
52 weeks
EV/sales 1.91 2.30 2.30 2.29
600 EV/EBITDA 4.36 5.10 5.25 5.24
P/E 10.92 12.39 12.56 12.11
550
P/CE 5.68 5.98 6.02 5.99
500 P/BV 1.75 1.87 1.94 2.00
Dividend yield 12.68% 9.62% 9.86% 9.86%
450
EV/EBITDA rel. 1.2 1.0 1.0 1.0
400 P/E rel. 1.2 0.8 0.9 0.9
Absolute (CZK terms) 0.7% -13.6% 2.4% 2.2%
300
Telefónica O2 CR Rel. to sector (EUR, ppt) 0.3 -11.1 -3.0 -1.5
PX (Rebased)
D J EURO STOXX Telecommunications (Rebas ed) Rel. to universe (EUR, ppt) -4.8 -20.0 -16.6 -30.0
Telekom Austria Hold Target price EUR 12.0

ROE 2008 -2.1% Sales (EUR mn) 5,170.3 4,828.8 4,616.9 4,554.4
Free float (EUR mn) 3,926 Sales CAGR 08-11e -1.9% Net profit margin -0.94% 1.04% 6.76% 7.02%
Shares outst. (mn) 460.0 EPS CAGR 08-11e -8.8% EPS (EUR) -0.11 0.11 0.71 0.75
EV/sales 1.72 1.88 1.94 1.95
17 EV/EBITDA 6.85 5.13 5.26 5.27
16 P/E nm 103.14 16.43 15.61
15 P/CE 2.81 3.69 3.76 3.67
14 P/BV 2.20 2.88 3.15 3.47
13 Dividend yield 7.28% 6.38% 6.38% 6.38%
12 EV/EBITDA rel. 1.9 1.0 1.0 1.0
11 P/E rel. - 7.0 1.1 1.1
10
8
Telekom Austria Rel. to sector (EUR, ppt) 1.9 0.7 -0.2 8.7
ATX (Rebased)
DJ EURO STOXX Telecommunications (Rebased) Rel. to universe (EUR, ppt) -3.2 -8.2 -13.8 -19.8
Telekom Slovenije Reduce Target price EUR 125.0

ROE 2008 8.1% Sales (EUR mn) 842.4 842.4 843.9 854.9
EV/sales 1.40 1.95 1.89 1.79
180 EV/EBITDA 3.78 5.84 5.84 5.42
170 P/E 8.99 21.99 27.56 22.16
160 P/CE 2.88 3.60 3.77 3.63
P/BV 0.72 0.83 0.82 0.80
150
Dividend yield 5.06% 1.82% 1.45% 1.80%
140 EV/EBITDA rel. 1.0 1.2 1.1 1.0
130 P/E rel. 1.0 1.5 1.9 1.6
Telekom Slovenije
SBI (Rebased)
TPSA Reduce Target price PLN 15.5

Mcap (PLN mn) 22,057 ROE 2008 13.7% Sales (PLN mn) 18,165 16,620 16,081 15,805
Free float (EUR mn) 2,479 Sales CAGR 08-11e -4% Net profit margin 12.06% 8.15% 6.83% 6.64%
Shares outst. (mn) 1,336.0 EPS CAGR 08-11e
52 weeks -16.8% EPS (PLN) 1.61 1.01 0.82 0.79
28 EV/sales 1.49 1.70 1.63 1.65
26
EV/EBITDA 3.55 4.45 4.36 4.37
P/E 10.19 17.24 20.07 21.02
24 P/CE 3.31 4.19 4.18 4.18
22 P/BV 1.49 1.33 1.41 1.50
Dividend yield 9.16% 8.58% 9.09% 9.09%
20
EV/EBITDA rel. 1.0 0.9 0.8 0.8
18 P/E rel. 1.1 1.2 1.4 1.5
14 Absolute (PLN terms) 0.1% 0.7% -4.6% -10.8%
TPSA
WIG 20 (Rebased)
Rel. to sector (EUR, ppt) 2.6 4.8 -4.3 -19.5
Sector Insight Travel & Tourism
- Danubius delivered respectable results within the currently weak environment
Danubius 3Q Danubius Hotels published its 3Q09 IFRS report. Profit rose by 78% (y/y) to HUF 2.45bn, vs.
profit up 78% our estimate of HUF 2.18bn. This was a result of a 10% hike in the operating result and an FX
y/y, slightly gain of HUF 451mn. Revenues dropped by 5.1% y/y to HUF 13.18bn. Room revenues grew by
above our 2.5%, due to the 14.8% higher EUR/HUF average in 3Q09 than in the same period of 2008,
estimate offsetting the decreasing occupancy ratio (56.7% in Hungary in 3Q09, vs. 65.7% in 2008). Room
revenues were also helped by the 2%pp VAT cut (from 20% to 18%) in accommodation prices.
Sales in the Food & Beverage and SPA segments declined by more than 11%, as a result of the
decreasing corporate spending on business & conference trips and due to the 5%pp VAT hike in
July 2009. An 8% cost cut since last year more than offset the weak revenue side; thus,
operating profit grew by 10% y/y to HUF 2.42bn, totally in line with our expectations.
The result is good, considering the weakening demand in the segment and taking a look at
Danubius’ history. It is also positive that the bottom line was supported by operating profit, rather
than the FX gain/loss. Despite the good result, only a minimal positive share price effect were
expected as the market is focusing on the main shareholder, Sir Bernard Schreier. As he has
not continued his accumulation of the stock recently, investors are getting tired of holding onto
their positions. It is hard to find new investors interested in the story of Danubius’ delisting, due
to the too many uncertainties. All in all we maintain our Hold recommendation.

AmRest PLN 263.4 8.3% 12.3% 15.6% 17.0% 10.7% 8.6% 9.5% 9.9% 12.6% 2.5% 47.4% 39.8%
Austrian Airlines EUR 149.8 -13% -2.6% 1.1% 0.5% 8.0% 10.8% 12.0% 11.3% -25.4% -60.6% -57.1% -52.4%
Danubius Hotels HUF 103.4 -0.7% 0.2% 0.1% 1.2% 13.9% 14.9% 15.3% 15.6% 5.7% -0.5% 1.2% -29.1%
Vienna Int. Airport EUR 726.6 12.1% 8.9% 8.6% 8.2% 36.8% 33.6% 34.3% 34.5% 2.6% 19.3% 15.6% 11.6%
Median - - 4% 5% 5% 5% 12% 13% 14% 13% - - - -
EuroStoxx Travel & 37,131 8.9% 8.3% 8.3% 9.5% 11.3% 10.6% 11.5% 13.0% 4.4% 0.2% 6.7% 2.0%
Tourism
CEE to Peer, Prem/Disc - -58% -46% -42% -50% 9% 21% 19% 4% - - - -
P/E P/CE P/BV
2008 2009e 2010e 2011e 2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
AmRest 24.1 23.2 15.8 12.3 6.1 8.1 6.3 5.6 1.9 2.7 2.3 1.9
Austrian Airlines nm nm 37.1 80.4 1.6 2.0 1.7 1.8 0.4 0.4 0.4 0.4
Danubius Hotels nm nm nm 44 8.0 6.2 5.9 5.2 0.7 0.6 0.6 0.5
Vienna Int. Airport 7.3 10.5 10.5 10.7 4.1 5.5 5.2 5.0 0.9 0.9 0.9 0.9
Median CEE 15.7 16.8 15.8 28.3 5.1 5.9 5.6 5.1 0.8 0.7 0.7 0.7
EuroStoxx Travel & 14.4 15.1 15.2 12.9 7.0 8.0 7.5 6.9 1.6 1.6 1.5 1.3
Tourism
CEE to Peer, Prem/Disc 9% 11% 4% 119% -27% -27% -26% -26% -50% -53% -51% -46%
EV/Sales EV/EBITDA
2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
AmRest 0.7 0.7 0.6 0.6 6.2 8.8 6.6 5.6
Austrian Airlines 0.4 0.4 0.4 0.3 5.5 3.8 3.2 2.9
Danubius Hotels 1.3 1.4 1.3 1.2 9.6 9.2 8.2 7.4
Vienna Int. Airport 2.3 2.8 3.3 3.4 6.3 8.3 9.5 9.7
Median CEE 1.0 1.1 0.9 0.9 6.2 8.5 7.4 6.5
EuroStoxx Travel & 0.8 0.7 0.7 0.7 6.0 7.1 6.0 5.6
Tourism
AmRest Hold Target price PLN 73.6

EV/sales 0.66 0.75 0.63 0.56
90 EV/EBITDA 6.15 8.76 6.65 5.64
80 P/E 24.07 23.16 15.82 12.29
P/CE 6.13 8.12 6.30 5.62
70 P/BV 1.92 2.67 2.29 1.93
60 Dividend yield 0.00% 0.00% 0.00% 0.00%
EV/EBITDA rel. 1.0 1.0 0.9 0.9
50 P/E rel. 1.5 1.4 1.0 0.4
40
AmRest
W IG (Rebased) Rel. to sector (EUR, ppt) 9.5 6.1 41.9 26.6
DJ EURO STOXX Travel & Leis ure (Rebased) Rel. to universe (EUR, ppt) 5.5 -3.2 24.2 8.1
Austrian Airlines Sell Target price EUR

ROE 2008 -13.1% Sales (EUR mn) 2,460.0 2,417.3 2,470.7 2,568.5
Shares outst. (mn) 85 EPS CAGR 08-11e -17.7% EPS (EUR) -1.00 -0.12 0.05 0.02
EV/sales 0.44 0.41 0.38 0.33
5,0 EV/EBITDA 5.49 3.80 3.19 2.88
4,5 P/E nm nm 37.12 80.41
P/CE 1.62 2.02 1.70 1.76
4,0 P/BV 0.40 0.41 0.40 0.40
3,5 Dividend yield 0.00% 0.00% 0.00% 0.00%
EV/EBITDA rel. 0.9 0.4 0.4 0.4
3,0 P/E rel. - - 2.3 2.8
2,0 Absolute (EUR terms) -25.4% -60.6% -57.1% -52.4%
Aus trian Airlines
ATX (R ebased) Rel. to sector (EUR, ppt) -28.4 -57.0 -62.6 -65.6
DJ EURO STOXX Travel & Leisure (Rebased) Rel. to universe (EUR, ppt) -32.4 -66.3 -80.3 -84.2
Danubius Hotels Hold Target price HUF 3,650

Price (HUF) 3,530 ROCE 2008 4.3% 08 09e 10e 11e
Mcap (HUF mn) 27,926 ROE 2008 -0.7% Sales (HUF mn) 43,004 40,784 41,518 43,682
Free float (EUR mn) 20 Sales CAGR 08-11e - Net profit margin -0.64% 0.38% 0.29% 1.60%
Shares outst. (mn) 7.9 EPS CAGR 08-11e - EPS (HUF) -44.50 11.50 6.48 79.77
EV/sales 1.35 1.37 1.26 1.16
8.500
EV/EBITDA 9.65 9.18 8.19 7.42
8.000
7.500 P/E nm nm nm 44.25
7.000 P/CE 7.98 6.21 5.90 5.22
6.500 P/BV 0.69 0.56 0.55 0.55
6.000 Dividend yield 0.00% 0.00% 0.00% 0.00%
5.500
5.000
EV/EBITDA rel. 1.6 1.1 1.1 1.1
4.500 P/E rel. - - - 1.6
4.000
3.500
3.000 Absolute (HUF terms) 3.1% -2.2% -4.7% -26.5%
Danubius Hotels
BUX (Rebased) Rel. to sector (EUR, ppt) 2.7 3.1 -4.3 -42.3
DJ EURO STOXX Travel & Leisure (Rebased) Rel. to universe (EUR, ppt) -1.3 -6.2 -22.0 -60.8
Vienna Int. Airport Hold Target price EUR 38.0

ROE 2008 12.1% Sales (EUR mn) 548.1 500.9 507.8 528.8
EV/sales 2.31 2.79 3.25 3.36
50 EV/EBITDA 6.26 8.32 9.46 9.73
45 P/E 7.31 10.45 10.47 10.71
40
P/CE 4.08 5.50 5.23 5.00
P/BV 0.86 0.92 0.89 0.86
35
Dividend yield 8.19% 5.77% 5.77% 5.79%
30 EV/EBITDA rel. 1.0 1.0 1.3 1.5
25 P/E rel. 0.5 0.6 0.7 0.4
Vienna Int. Airport
ATX (Rebased)
Rel. to sector (EUR, ppt) -0.4 22.9 10.1 -1.6
DJ EURO STOXX Travel & Leisure (Rebased) Rel. to universe (EUR, ppt) -4.4 13.6 -7.6 -20.1
Sector Insight Utilities
- CEZ confirmed FY 09 targets despite weaker 3Q results – potentially interested in ENEA

privatization
- Transelectrica: Weak operational performance confirmed by 3Q09 results
- Transgaz: 3Q09 results much better than company’s expectations
In November, electricity prices were again very weak. Electricity futures prices for baseload
declined by some 4% to EUR 46.3 per MWh, while prices for peakload dropped by 6% to EUR
63.5 reflecting rather low prices for coal and CO2 allowances.
Verbund, a fan Verbund’s said once again that making investments in the CEE/SEE energy sector is very risky,
of Turkish referring to opaque tenders, high capital costs, political instability and bureaucracy. Turkey,
investments however, is providing a contrast in transparency, broadcasting the final phases of tenders on
television. Verbund is currently building a hydro plant at Ashta on Albania’s Drin River with an
installed capacity of 50 MW which will start operations in late 2010 or early 2011.
CEZ’s 3Q CEZ reported 3Q results below our expectations and the market consensus on net income (CZK
results slightly 12.08bn, -1.8%y/y) and the operating level (EBIT CZK 13.6bn, -11.8%y/y), while revenues (CZK
worse, but 43bn, +3.8%y/y) were more or less in line with estimates. OPEX grew 15%q/q: While higher
outlook COGS are explained by optimisation of use of coal fired power plants (higher purchases of
confirmed electricity), also maintenance, personnel and other costs increased due to first time
consolidation of wind park projects in Romania (no revenues yet) and of a distribution grid in
Albania. However, the company confirmed its FY 09 EBITDA target at CZK 90.3bn and net
income target at CZK 50.2bn. CEZ also said its net income guidance does not include the
impact of recent acquisitions of minority stakes in MIBRAG (GE) and Akenerji (TR) – almost
CZK 0.5bn in 3Q09. We thus believe the company will reach or even surpass its conservative
FY 09 net income target. CEZ finalized hedging of some 98% of its 2010 production and 40% of
2011 production. Prices are hedged at around EUR 56/MW for 2010, hedged prices for 2011 are
close to 2009 levels at present. CEZ's prices for 2010 are EUR 2-3/MW lower than reported in
2Q and should be 5% to 10% below 2009 average (depending on FX rates and achieved
premiums from peakload sales). The drop in prices should be counterbalanced by growing
volumes (+3.4% targeted), improving production in NPP's and by higher revenues from
distribution (RAB and WACC is increasing in the Czech Republic, should be also the case in
SEE).
EU officials EU officials raided the offices of CEZ, its subsidiary Severoceske doly (brown cola mining) and
raided the EPH energy holding (owned by CEZ’s JV partner J&T and Czech financial group PPF),
offices of CEZ searching for evidence that CEZ may have unlawfully excluded competitors and raised
wholesale electricity prices. EC is probing whether CEZ created obstacles to competitors’ plans
to build power stations, was involved in restricting the trade of brown coal, or could have
influenced wholesale prices on the Czech electricity market and whether it created cartel on the
Czech energy market. Complaints from Czech Coal, J&T’s unsuccessful competitor in a tender
for assets of International Power in the Czech Republic is reportedly behind the probe (CEZ will
acquire part of the assets later on). We do not expect EC to find a manipulation of wholesale
prices – wholesale prices in the Czech Republic are predominantly driven by prices on the EEX
power exchange in Germany. We also think that the sale of IP assets was driven only by the
price offered. CEZ consumes almost 60% and produces some 48% of brown coal in the Czech
Republic, CEZ thus for sure has an influence on local brown coal prices – but this is nothing
new. Overall, we can imagine, that CEZ would have to give up some of its planned acquisitions
e.g. in the heat production segment. This, however, should not have significant impact on its
financials. An order from EC to pay higher prices for purchased brown coal (mainly from Czech
Coal) would be negative though.
CEZ acquired CEZ signed an agreement for acquiring a 15% stake in heat utility Dalkia CR at a price of CZK
heat utility 3.6bn (2008 sales CZK 10.8bn and net income CZK 2.16bn) and an 85% stake in Dalkia’s
Dalkia Usti nad heating plant in Usti nad Labem for CZK 5.35bn, as a mix of a variable and a fixed sum. Part of
Labem, 15% of the agreement is also an option for the remaining 15% stake in Dalkia Usti nad Labem and
Dalkia CR
Dalkia as well can obtain the 85% share back on certain conditions. Dalkia CR is active in
generation of heat (3,850MWt, 262k customers) and generation of electricity (550MWe). Dalkia
Usti nad Labem operates a heat capacity of 470 MW (30k customers), its electric capacity is 158
MW. CEZ paid 2.2 P/S and 11x earnings for the 15% stake in Dalkia CR, which seems
reasonable given that it means only a slight premium compared to median of European electric
utilities (with high share of generation, i.e. more volatile than Dalkia). We would expect similarly
reasonable ratios for Dalkia Usti nad Labem as Dalkia needs cash to finance other deals.
Poland to Polish Treasury Ministry said that, CEZ and RWE could be interested in acquiring a majority
restart stake in Enea SA. Poland plans to restart the sale of its third-largest power supplier in
privatization of December 2009. The ministry also plans to float 15% of ENEA; the new owner thus would
ENEA acquire a stake of some 51%. CEZ said it did not decide on the participation in the tender yet.
Enea owns 2,880MW coal fired PP and a distribution grid with 2.3mn end customers in the
north-western part of Poland. The Company plans to increase capacity of PP Kozience by
1,000MW by 2014 and by 720MW by 2023. Market values the company at PLN 8.01bn (18.3
PLN/share). At the end of 3Q09 the firm had PLN 2.4bn net cash. Taking the current market
price and deduction for the distribution grid, the price for PP Kozienice appears to be favorable
below EUR 0.3mn/MW (well below CEZ’s recent asset purchases in the region). Also, the
distribution segment is interesting in Poland at present. We thus would see the acquisition of
ENEA at current market price (some CZK 25bn for 51%) as positive.
A major Transelectrica announced net profit of RON 2.5mn for 3Q, while EBIT reached RON 3.8mn,
increase of the down some 86.8% y/y. The 1-3Q09 net result was RON 11.5mn, substantially below the bottom
transmission line seen in past years. The results are under Romanian Accounting Standards (RAS) and do
tariff for 2010 not include the unrealized losses as a result of the revaluation into RON of FX debt positions at
remains the the exchange rates from the end of September 2009. The 3Q figures confirm that the company
major bet is not able to avoid a poor operational performance, due to the contraction of electricity
consumption, estimated to be down by 10% for 2009. This dynamic is in contradiction with the
level of 1.55%, considered for the decrease of electricity transported in 2009 when the budget
and transmission tariffs were set. The operating results are not at all a surprise and are in line
with the weak figures reported starting with the 1Q09 results under RAS, followed by
substantially adjusted figures for 2Q09 and 1H09 figures under IFRS, with a loss of RON 44mn
(the latter included unrealized losses as a result of balance sheet positions in FX as of the end of
the reporting period, which is not the case for quarterly results reported under RAS). We believe
that a very weak FY09 is definitely priced in and that Transelectrica’s share price will be driven
up to the end of December by the market sentiment toward the Romanian equity market.
3Q09 EBIT well Transgaz reported for 3Q09 sales worth RON 219mn, some 5% lower y/y, which is
above budget actually not a surprise considering that for two months of the quarter (July and August) the
company has charged the same tariffs like the year before, whereas the gas consumption
decreased with approximately 14%. The company was, however, helped by higher
revenues from the international transit business line, due to the depreciation of the local
currency against the EUR and USD. EBIT decreased 45% y/y in 3Q09 alone, to RON
21mn. The figure is, however, significantly above the guidance (some RON 3.3mn) from
the recently adjusted budget for 2009. We expect a reasonable good performance in
4Q09 and 1H10 on the back of a recovery in internal gas consumption, while on the
transit business line contracts are stable, based on capacity reservation but not on the
transited gas volume.

CEZ CZK 17,656.1 28.9% 22.5% 15.9% 48.0% 46.8% 44.7% -1.0% -7.8% 0.0% 12.8%
Transelectrica RON 221.1 2.7% 0.8% 10.4% 9.9% 15.3% 13.9% 17.2% 15.0% 9.9% -3.0% 0.8% -5.8%
Transgaz RON 454.1 9.5% 6.5% 6.1% 6.8% 32.8% 33.2% 30.2% 30.4% 14.4% 9.1% -0.3% 14.0%
Verbund EUR 9,338.5 26.0% 21.5% 16.3% 19.6% 35.3% 36.4% 37.3% 37.4% 2.3% -13.7% -18.6% -9.5%
Median - - 18% 14% 13% 10% 34% 35% 34% 30% - - - -
ENEL SPA EUR - Euro3 8,225 24.5% 15.0% 13.1% 12.8% 23.4% 25.2% 24.5% 25.0% -0.9% 0.3% 13.0% 5.8%
RWE AG EUR - Euro3 5,432 29.0% 26.9% 26.2% 23.9% 17.5% 17.9% 18.0% 18.3% 6.9% 1.3% 7.6% 2.6%
Fortum Corporation EUR - Euro1 5,378 18.0% 15.7% 13.4% 13.2% 44.0% 43.1% 41.2% 40.3% 6.9% -3.4% 0.6% 25.0%
Electricite de France EUR - Euro7 2,158 18.7% 15.2% 16.4% 16.5% 22.2% 25.1% 25.7% 26.2% 3.5% 7.6% 10.9% -3.8%
Median Total - 216,300 18.7% 15.2% 13.9% 13.2% 22.2% 25.1% 24.5% 25.0% - - - -
EuroStoxx Utilities 434,803 15.2% 13.7% 13.4% 13.1% 24% 28% 26% 27% 0.0% 0.0% 0.0% 0.0%
CEE to Peer, Prem/Disc - -5% -8% -5% -25% 54% 39% 38% 21% - - - -
P/E P/CE P/BV

2008 2009e 2010e 2011e 2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
CEZ 8.4 8.7 9.7 6.0 11.2 6.2 2.4 1.5 1.6
Transelectrica 14.6 62.1 4.5 4.4 2.6 3.6 2.0 2.0 0.4 0.5 0.5 0.4
Transgaz 5.4 10.2 10.4 9.3 3.2 4.6 4.3 4.3 0.5 0.6 0.6 0.6
Verbund 14.6 14.3 17.4 13.2 10.8 11.0 12.4 9.9 3.5 2.9 2.7 2.5
Median CEE 11.5 12.3 10.1 9.3 4.6 7.8 5.3 4.3 1.5 1.1 1.1 0.6
ENEL SPA 5.8 8.5 9.2 8.9 2.8 3.9 3.8 3.6 1.4 1.3 1.2 1.1
RWE AG 10.1 9.9 8.9 8.8 4.9 5.1 4.9 4.7 2.9 2.7 2.3 2.1
Fortum Corporation 10.7 11.7 13.2 12.9 7.7 8.3 9.1 9.2 1.9 1.8 1.8 1.7
Electricite de France 16.7 18.9 16.3 14.9 9.4 6.1 5.5 5.3 3.1 2.9 2.7 2.5
Median Total 10.1 9.9 9.3 9.2 7.0 5.8 5.5 5.3 1.9 1.8 1.8 1.7
EuroStoxx Utilities 13.1 13.1 12.5 11.5 6.9 6.0 5.7 5.3 1.5 1.6 1.5 1.5
CEE to Peer, Prem/Disc 13% 23% 8% 0% -34% 36% -4% -18% -24% -41% -38% -63%
EV/Sales EV/EBITDA
2008 2009e 2010e 2011e 2008 2009e 2010e 2011e
CEZ 2.2 2.6 2.7 4.6 5.5 6.0
Transelectrica 0.5 0.7 0.7 0.7 3.6 4.8 4.1 4.8
Transgaz 1.1 1.4 1.1 1.0 3.3 4.1 3.7 3.2
Verbund 3.4 4.0 4.7 4.1 9.5 11.1 12.7 10.9
Median CEE 1.6 2.0 1.9 1.0 4.1 5.1 5.0 4.8
ENEL SPA 1.3 1.5 1.4 1.3 5.5 5.8 5.5 5.3
RWE AG 0.8 0.9 0.9 0.9 4.7 5.3 4.9 5.0
Fortum Corporation 3.5 3.9 4.0 3.8 7.9 9.0 9.7 9.5
Electricite de France 1.6 1.7 1.6 1.6 7.0 6.7 6.4 6.0
Median Total 1.3 1.5 1.4 1.3 6.5 6.2 6.1 6.0
EuroStoxx Utilities 1.8 1.9 1.8 1.8 7.8 8.0 7.7 7.3
CEE to Peer, Prem/Disc 27% 33% 40% -27% -37% -17% -17% -21%
CEZ Buy Target price CZK 1,230.0

Price (CZK) 855 ROCE 2008 22.4% 08 09e 10e 11e
Mcap (CZK mn) 455,749 ROE 2008 28.9% Sales (CZK mn) 181,638 204,158 198,788
Mcap (EUR mn) 17,656 Net debt (EURmn, 08) -65.4 EBITDA margin 48.01% 46.83% 44.72%
Free float (%) 27.0% Gearing (2008) -1% EBIT margin 35.88% 35.19% 31.55%
Free float (EUR mn) 4,767 Sales CAGR 08-11e - Net profit margin 26.07% 26.72% 24.03%
Shares outst. (mn) 533.0 EPS CAGR 08-11e - EPS (CZK) 87.00 100.54 87.96
52 weeks Dividend/share (CZK) 50.00 59.64 49.95
EV/sales 2.19 2.56 2.69
1.100 EV/EBITDA 4.57 5.47 6.01
P/E 8.39 8.72 9.72
1.000
P/CE 6.00 11.20 6.24
900 P/BV 2.41 1.53 1.55
Dividend yield 6.85% 6.80% 5.84%
800 EV/EBITDA rel. 1.1 1.1 1.2
700 P/E rel. 0.7 0.7 1.0

Absolute (CZK terms) -2.5% -7.1% -3.9% 13.3%
CEZ PX (Rebased) DJ EURO STOXX Utilities (Rebased) Rel. to universe (EUR, ppt) -8.1 -13.5 -23.2 -18.9
Transelectrica Accumulate Target price RON 14.4

ROE 2008 2.7% Sales (RON mn) 2,988.1 2,972.3 3,149.1 3,300.0
Shares outst. (mn) 73 EPS CAGR 08-11e 35.1% EPS (RON) 0.69 0.21 2.83 2.86
52 weeks Dividend/share (RON) 0.30 0.08 1.13 1.14
EV/sales 0.54 0.67 0.70 0.72
22 EV/EBITDA 3.55 4.82 4.05 4.79
20 P/E 14.62 62.09 4.49 4.44
18 P/CE 2.55 3.58 2.01 1.98
P/BV 0.42 0.48 0.45 0.43
16
Dividend yield 2.99% 0.64% 8.90% 9.00%
14 EV/EBITDA rel. 0.9 0.9 0.8 1.0
12 P/E rel. 1.3 5.1 0.4 0.5
10
8
Absolute (RON terms) 7.6% -3.8% 0.8% 3.3%
6 Rel. to sector (EUR, ppt) 9.6 7.8 6.3 -8.9
Transelectrica BET (Rebased) DJ EURO STOXX Utilities (Rebased) Rel. to universe (EUR, ppt) 2.9 -8.7 -22.4 -37.5
Transgaz Accumulate Target price RON 198.0

Mcap (RON mn) 1,912 ROE 2008 9.5% Sales (RON mn) 1,117 1,321 1,477 1,522
Shares outst. (mn) 11.8 EPS CAGR 08-11e 3.0% EPS (RON) 20.61 16.04 15.58 17.55
52 weeks
EV/sales 1.07 1.35 1.12 0.97
220 EV/EBITDA 3.26 4.08 3.70 3.19
P/E 5.41 10.19 10.43 9.25
200 P/CE 3.15 4.64 4.35 4.31
180 P/BV 0.53 0.65 0.63 0.62
160 Dividend yield 9.40% 7.75% 7.49% 7.95%
EV/EBITDA rel. 0.8 0.8 0.7 0.7
140
P/E rel. 0.5 0.8 1.0 1.0
120
100 Absolute (RON terms) 12.0% 8.2% -0.3% 24.9%
Transgaz BET (Rebased) DJ EURO STOXX Utilities (Rebased)
Rel. to universe (EUR, ppt) 7.4 3.4 -23.5 -17.7
Verbund Hold Target price EUR 36.0

Mcap (EUR mn) 9,338 ROE 2008 26.0% Sales (EUR mn) 3,744.7 3,330.7 2,965.7 3,501.8
52 weeks
EV/sales 3.35 4.04 4.73 4.10
55 EV/EBITDA 9.50 11.11 12.69 10.95
P/E 14.61 14.31 17.39 13.22
50
P/CE 10.81 11.02 12.37 9.92
45 P/BV 3.50 2.92 2.74 2.46
40 Dividend yield 3.22% 3.47% 3.47% 3.47%
EV/EBITDA rel. 2.3 2.2 2.5 2.3
35 P/E rel. 1.3 1.2 1.7 1.4
30
20 Rel. to sector (EUR, ppt) 1.9 -2.8 -13.1 -12.6
Verbund ATX (Rebased) DJ EURO STOXX Utilities (Rebased) Rel. to universe (EUR, ppt) -4.8 -19.3 -41.8 -41.2
Lookoing ahead
Date Company/country Release/event
09 Dec Zumtobel / Austria 2Q 2009/10 results
KGHM / Poland EGM
14 Dec Pankl Racing / Austria FY 2008/09 results
15 Dec Action / Poland 1Q 2009/2010
16 Dec ZA Pulawy / Poland AGM
17 Dec Gorenje / Slovenia 2010 business plan
Lotos / Poland EGM
18 Dec Wolford / Austria 2Q 2009/10 results
21 Dec Action / Poland EGM
Graal / Poland EGM
AT&S 3Q 2009/10 results
22 Dec Immoeast / Austria 2Q 2009/10 results
27 Dec Ambra / Poland ex-dividend day (DPS PLN 0.1)
29 Dec OMV Trading Statement Q4
14 Jan Agrana / Austria 3Q 2009/10 results
21 Jan Krka /Slovenia unconsolidated preliminary 2009 results
AT&S 3Q 2009/10 results
25 Jan UNIQA / Austria Calendar week 4: FY 2009 preliminary results
Palfinger Prelim. 2009 results
SBO Prelim. 2009 results
28 Jan TPSA / Poland 4Q 2009 results
29 Jan OMV Trading Statement Q4
04 Feb Philip Morris CR / Czech Republic FY 2009 results
TPSA / Poland FY 2009 results
09 Feb BRE Bank / Poland prelim. FY09 results
10 Feb S&T / Austria prelim. FY09 results
12 Feb ECM / Czech Republic FY 2009 results
13 Feb Pegas NW / Czech Republic FY 2009 results
14 Feb Orco / Czech Republic FY 2009 results
15 Feb VIG / Czech Republic FY 2009 results
27 Feb Komercni Banka / Czech Republic FY 2009 results
28 Feb NWR / Czech Republic FY 2009 results
01 Mar CETV / Czech Republic FY 2009 results
02 Mar Unipetrol / Czech Republic FY 2009 results
03 Mar Telefonica O2 CR / Czech Republic FY 2009 results
Lookoing ahead
Published by Erste Group Bank AG, Neutorgasse 17, 1010 Vienna, Austria.
Phone +43 (0)5 0100 - ext.
Erste Group Homepage: www.erstegroup.com On Bloomberg please type: ERBK <GO>.
This research report was prepared by Erste Group Bank AG (”Erste Group”) or its affiliate named herein. 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 judgement 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
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Please refer to www.erstegroup.com for the current list of specific disclosures and the breakdown of Erste Group’s investment recommendations.
Lookoing ahead
Erste Group´s CEE Universe
Mcap. Free float Mcap. Free float
(EURmn) (EUR mn) (EURmn) (EUR mn)
Poland PKO BP 11,616 5,664 Austria Verbund 9,338 2,241
Bank Pekao 11,210 4,566 OMV 8,621 4,388
TPSA 5,381 2,479 Raiffeisen International 6,576 2,072
KGHM 5,285 3,091 Telekom Austria 5,405 3,926
PKN Orlen 3,287 2,382 Vienna Insurance Group 4,617 1,339
BZ WBK 3,106 916 voestalpine 4,137 2,730
BRE Bank 1,783 538 Immoeast 3,619 1,642
GTC 1,311 546 STRABAG 2,378 545
CEDC 1,088 979 Andritz 2,132 1,471
TVN 1,071 414 Uniqa 1,528 199
Asseco Poland 1,016 559 Mayr-Melnhof 1,497 463
Lotos Group 902 371 Wienerberger 1,382 1,382
Cyfrowy Polsat 884 246 Austrian Post 1,281 628
PBG S.A. 711 498 Intercell 1,234 1,018
LPP 644 313 Agrana 921 113
Cersanit 538 277 Vienna Int. Airport 727 363
Eurocash 492 232 CA IMMO 692 623
NG2 440 186 conwert 683 546
Polimex 427 427 RHI 626 338
Empik 390 144 Semperit 582 285
Synthos 371 160 Palfinger 572 204
ZA Pulawy S.A. 336 98 Zumtobel 562 354
Mostostal Warszawa 324 161 SBO 496 317
Emperia Holding 308 216 BWT 350 173
Bioton 301 177 Sparkassen Immobilien 344 279
Multimedia Polska 294 129 CAToil 329 99
Agora 276 132 Kapsch TrafficCom 312 95
AmRest 263 238 A-Tec 243 64
Ciech S.A. 256 98 CA IMMO International 227 86
Inter Cars 253 133 ECO Business-Immo 155 116
Farmacol 227 113 Austrian Airlines 150 71
ComArch 183 41 AT&S 142 72
Rafako 166 83 CWT 66 46
Jutrzenka 155 27 Wolford 58 28
Trakcja Polska 154 76 S&T 55 19
Apator 143 117 Sanochemia 37 11
PGF 125 75 Pankl Racing 32 7
Koelner 110 44 Hungary MOL 6,539 2,073
ZCh Police S.A. 94 20 OTP 5,755 4,730
Torfarm 77 34 Richter Gedeon 2,947 2,198
Vistula Group 61 49 Magyar Telekom 2,793 1,135
CNG 43 35 Egis 554 272
Ambra 42 16 FHB 311 272
Sygnity 38 18 Danubius Hotels 103 20
Duda 32 26 PannErgy 61 35
Graal 26 15 RFV 39 4
Croatia T-H rvatski Telekom 3,051 1,172 Czech Republic CEZ 17,656 4,767
INA 2,299 184 Komercni banka 5,655 1,722
Ericsson Nikola Tesla 245 101 Telefónica O2 CR 5,316 1,627
Podravka 209 125 New World Resources 1,694 614
Atlantska plovidba 186 151 CME 1,087 577
Institut IGH 69 60 Unipetrol 975 361
Romania Petrom 3,552 221 Philip Morris CR 870 195
BRD - Group SG 2,317 945 Pegas Nonwovens 153 151
Banca Transilvania 561 477 Orco 79 65
Transgaz 454 52 ECM 53 8
Transelectrica 221 28 Serbia Komercijalna Banka 284 92
A&D Pharma 132 46 Aik Banka AD N is 206 164
Antibiotice 70 26 Sojaprotein AD 84 31
Biofarm 55 32 Slovenia Krka 2,437 1,711
Turbomecanica 8 4 Telekom Slovenije 890 226
Switzerland Winterthur 152 128 Gorenje 190 127
Total universe 171,002 77,671
Lookoing ahead
Contacts
Group Research Group Institutional & Retail Sales
Head of Group Research
Friedrich Mostböck, CEFA +43 (0)5 0100 - 11902 Institutional Equity Sales Vienna
CEE Equity Research Head: Brigitte Zeitlberger-Schmid +43 (0)5 0100 - 83123
Co-Head: Günther Artner, CFA +43 (0)5 0100 - 11523 Cash Equity Sales
Co-Head: Henning Eßkuchen +43 (0)5 0100 - 19634 Hind Al Jassani +43 (0)5 0100 - 83111
Günter Hohberger (Banks) +43 (0)5 0100 - 17354 Werner Fuerst +43 (0)5 0100 - 83121
Franz Hörl, CFA (Steel, Construction) +43 (0)5 0100 - 18506 Josef Kerekes +43 (0)5 0100 - 83125
Gernot Jany, CFA (Banks, Real Estate) +43 (0)5 0100 - 11903 Cormac Lyden +43 (0)5 0100 - 83127
Daniel Lion, CIIA (IT) +43 (0)5 0100 - 17420 Neil Owen +43 (0)5 0100 - 83114
Christoph Schultes, CIIA (Ins., Util.) +43 (0)5 0100 - 16314 Stefan Raidl +43 (0)5 0100 - 83113
Thomas Unger +43 (0)5 0100 - 17344 Simone Rentschler +43 (0)5 0100 - 83124
Vera Sutedja, CFA (Telecom) +43 (0)5 0100 - 11905 Derivative Sales
Vladimira Urbankova, MBA (Pharma) +43 (0)5 0100 - 17343 Christian Luig +43 (0)5 0100 - 83181
Gerald Walek, CFA (Machinery) +43 (0)5 0100 - 16360 Manuel Kessler +43 (0)5 0100 - 83182
International Equities Sabine Kircher +43 (0)5 0100 - 83161
Hans Engel (Market strategist) +43 (0)5 0100 - 19835 Christian Klikovich +43 (0)5 0100 - 83162
Stephan Lingnau (Europe) +43 (0)5 0100 - 16574 Armin Pfingstl +43 (0)5 0100 - 83171
Ronald Stöferle (Asia) +43 (0)5 0100 - 11723 Roman Rafeiner +43 (0)5 0100 - 83172
Macro/Fixed Income Research Institutional Equity Sales London
Head: Gudrun Egger, CEFA (Euroland) +43 (0)5 0100 - 11909 Head: Michal Rizek +44 20 7623 - 4154
Alihan Karadagoglu (Corporates) +43 (0)5 0100 - 19633 Dieter Benesch +44 20 7623 - 4154
Rainer Singer (US) +43 (0)5 0100 - 11185 Tatyana Dachyshyn +44 20 7623 - 4154
Elena Statelov, CIIA (Corporates) +43 (0)5 0100 - 19641 Declan Wooloughan +44 20 7623 - 4154
Mildred Hager (SW, Japan) +43 (0)5 0100 - 17331 Institutional Equity Sales Croatia
Macro/Fixed Income Research CEE Zeljka Kajkut (Equity) +38 562 37 28 11
Co-Head CEE: Juraj Kotian (Macro/FI) +43 (0)5 0100 - 17357 Damir Eror (Equity) +38 562 37 28 13
Co-Head CEE: Rainer Singer (Macro/FI) +43 (0)5 0100 - 11185 Institutional Sales Czech Republic
Editor Research CEE Michal Brezna (Equity) +420 224 995-523
Brett Aarons +420 233 005 904 Ondrej Cech (Fixed income) +420 224 995-577
Research Croatia/Serbia Michal Rizek +420 224 995-53
Head: Mladen Dodig +381 11 22 00 866 Jiri Smehlik (Equity) +420 224 995-510
Damir Cukman (Equity) +385 62 37 2812 Pavel Zdichynec (Fixed income) +420 224 995-590
Alen Kovac (Fixed income) +385 62 37 1383 Institutional Sales Hungary
Iva Cerovsky (Fixed income) +385 62 37 1716 Gregor Glatzer (Equity) +361 235-5144
Davor Spoljar (Equity) +385 62 37 2825 Krisztián Kandik (Equity) +361 235-5140
Research Czech Republic Istvan Kovacs (Fixed income) +361 235-5846
Head: David Navratil (Fixed income) +420 224 995 439 Institutional Equity Sales Poland
Petr Bartek (Equity) +420 224 995 227 Head: Andrzej Tabor +4822 330 62 03
Vaclav Kminek (Media) +420 224 995 289 Pawel Czuprynski (Equity) +4822 330 62 12
Jana Krajcova (Fixed income) +420 224 995 232 Lukasz Mitan (Equity) +4822 330 62 13
Radim Kramule (Oil&Gas) +420 224 995 213 Jacek Krysinski (Equity) +4822 330 62 18
Martin Lobotka (Fixed income) +420 224 995 192 Institutional Equity Sales Slovakia
Lubos Mokras (Fixed income) +420 224 995 456 Head: Dusan Svitek +48 62 56 20
Research Hungary Rado Stopiak (Derivatives) +48 62 56 01
Head: József Miró (Equity) +361 235-5131 Andrea Slesarova (Client sales) +48 62 56 27
Bernadett Papp (Equity) +361 235-5135 Saving Banks & Sales Retail
Gergely Gabler (Equity) +361 253-5133 Head: Thomas Schaufler +43 (0)5 0100 - 84225
Orsolya Nyeste (Fixed income) +361 373-2830 Equity Retail Sales
Research Poland Head: Kurt Gerhold +43 (0)5 0100 - 84232
Head: Artur Iwanski (Equity) +48 22 330 6253 Fixed Income & Certificate Sales
Magda Zabieglik (Equity) +48 22 330 6250 Head: Thomas Schaufler +43 (0)5 0100 - 84225
Tomasz Kasowicz (Equity) +48 22 330 6251 Treasury Domestic Sales
Piotr Lopaciuk (Equity) +48 22 330 6252 Head: Markus Kaller +43 (0)5 0100 - 84239
Marek Czachor (Equity) +48 22 330 6254 Corporate Desk
Wiktor Tymochowicz (Equity) +48 22 330 6253 Head: Leopold Sokolicek +43 (0)5 0100 - 84601
Research Romania Alexandra Blach +43 (0)5 0100 - 84141
Head: Lucian Claudiu Anghel +40 21 312 6773 Markus Pistracher +43 (0)5 0100 - 84100
Mihai Caruntu (Equity) +40 21 311 27 54 Roman Friesacher +43 (0)5 0100 – 84143
Dumitru Dulgheru (Fixed income) +40 21 312 6773 1028 Helmut Kirchner +43 (0)5 0100 – 84144
Cristian Mladin (Fixed income) +40 21312 6773 1028 Christian Skopek +43 (0)5 0100 - 84146
Loredana Oancea (Equity) +40 21311 2754 Fixed Income Institutional Desk
Eugen Sinca (Fixed income) +40 21312 6773 1028 Head: Thomas Almen +43 (0)5 0100 - 84323
Raluca Ungureanu (Equity) +40 21311 2754 Martina Fux +43 (0)5 0100 - 84113
Research Slovakia Fixed Income International & High End Sales Vienna
Head: Juraj Barta (Fixed income) +421 2 4862 4166 Jaromir Malak/ Zach Carvell +43 (0)5 100 - 84254
Michal Musak (Fixed income) +421 2 4862 4512 U. Inhofner/ P. Zagan/ C. Mitu +43 (0)5 100 - 84254
Maria Valachyova (Fixed income) +421 2 4862 4185 Fixed Income International Sales London
Research Ukraine Paul Osment/ Simone Pilz +44 20 7623 4159
Head: Victor Stefanyshyn (Fixed Income) +38 044 593 - 1784
Svitlana Bazilevich (Equity) +38 044 593 - 9286
Maryan Zablotskyy (Fixed income) +38 044 593 – 9188
Lookoing ahead
Disclosures
Important 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 price target 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.
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% .
(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 has managed or co-managed a public offering for the covered company.
(4) Erste Group and/or its affiliates has an agreement with the covered company relating to the provision of investment banking services or
has received a 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.
Lookoing ahead
Company Disclosure Comment Company Disclosure Comment
A&D Pharma -- -- Magyar Telekom -- --
Agora -- -- Mayr-Melnhof 2 --
Ambra -- -- MOL -- --
Amrest -- -- Monnari -- --
Andritz 2 -- NG2 -- --
Apator 4 -- OMV 2 --
Artman -- -- Orco 2 --
Asseco Poland -- -- OTP -- --
AT&S -- -- Palfinger -- --
A-TEC 2 -- Pamapol -- --
Austrian Airlines 2 -- Pankl Racing Systems -- --
Austrian Post 2 -- PannErgy -- --
Bioton -- -- PBG -- --
Boehler Uddeholm -- -- Pegas Nonwowens 2 --
BRE -- -- Pekao -- --
BWT 2 -- Philip Morris CR 2 --
BZ WBK -- -- phion 2,3 --
CA Immo Int. -- -- PKN Orlen -- --
C.A.T.oil -- -- PKO BP -- --
CEDC -- -- Pliva -- --
Ceramika Nowa Gala -- -- Polimex -- --
Cersanit -- -- Podravka -- --
CWT -- -- Praterm -- --
CEZ 2,4 -- Prokom -- --
CME 2 -- Rafako -- --
ComArch -- -- Raiffeisen International 2 --
Sygnity -- -- RHI 2 --
Danubius -- -- Richter Gedeon -- --
Duda -- -- Sanochemia -- --
Synthos -- -- SBO 2 --
ECM 2 -- S&T 2 --
ECO Business Immo -- -- sIMMO 1,2,4 --
Egis -- -- SNP Petrom -- --
Empik -- -- Sygnity -- --
Ericsson Nikola Tesla -- -- Teak Holz Int. 2 --
EuroCash -- -- Telefonica O2 CR 2,4 --
EVN 2 -- Telekom Austria 2 --
FHB -- -- Telekom Slovenije -- --
Flughafen W ien 2 -- T-Hrvatski Telekom 3 --
Gorenje -- -- TPSA -- --
Graal 3 -- Turbomecanica -- --
GTC -- -- TVN -- --
Immoeast 2 -- Unipetrol 2,4 --
INA -- -- UNIQA 2 --
Inter Cars -- -- Verbund 2 --
Intercell 2 -- Vistula&Wolczanka -- --
Jutrzenka 4 -- voestalpine 2,3,4 --
Kapsch TrafficCom 2,3 -- Wienerberger 2 --
KGHM -- -- Winterthur Technologie -- --
Koelner -- -- W. Kruk 4 --
Krka -- -- Wolford -- --
Komercijalna Banka -- -- Vienna Insurance Group 2,3 --
Komercni Banka 2 -- Zentiva 2,4 --
LPP -- -- Zumtobel 2 --
Lotos Group -- --

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That's it for 2009

Sentiment fades a bit but remains at

Markets strong enough to somehow digest

Expectations of positive performance remain

Looking Ahead 137

Share prices are as of December 3, 2009.

Erste Group Research - CEE Equity Monthly, December 2009 Page 1

Erste Group Research - CEE Equity Monthly, December 2009 Page 2

Regional forward P/E

Erste Group Research - CEE Equity Monthly, December 2009

30/06/2008 30/04/2007 10/08/2009

Erste Group Research - CEE Equity Monthly, December 2009 Page 4

Changes in Ratings and Target Prices

Changes in Ratings and Target Prices

Erste Group Research - CEE Equity Monthly, December 2009 Page 5

One Month Performance (in EUR terms)

Top 20 Dividend Yield

Erste Group Research - CEE Equity Monthly, December 2009 Page 6

Erste Group Research - CEE Equity Monthly, December 2009 Page 7

Stock market Performances – CEE in Comparison

Erste Group Research - CEE Equity Monthly, December 2009 Page 8

Sector Performance (EUR terms)

Erste Coverage Universe Sector Banks

Sector Basic Resources Sector Chemicals

Erste Group Research - CEE Equity Monthly, December 2009 Page 9

Sector Oil & Gas

Sector Health Care

Erste Group Research - CEE Equity Monthly, December 2009

Sector Personal & Household Goods

Sector Travel & Tourism Sector Utilities

Source: Factset, Erste Group Research

Erste Group Research - CEE Equity Monthly, December 2009 Page 11

Croatia Atlantska plovidba INDUSTRIAL GOODS & SERVICES - improved

Erste Group Research - CEE Equity Monthly, December 2009 Page 12

Erste Group Research - CEE Equity Monthly, December 2009 Page 13

Erste Group Research - CEE Equity Monthly, December 2009 Page 14

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

-15 -25 Czech Republic Hungary

Erste Group Research - CEE Equity Monthly, December 2009 Page 15

Exchange Rates & Interest Rates

35 Czech Republic 4.50 8.0 Croatia

CZK/EUR 1.00 5.0

Erste Group Research - CEE Equity Monthly, December 2009 Page 16

Erste Group Research - CEE Equity Monthly, December 2009 Page 17

Erste Group Research - CEE Equity Monthly, December 2009 Page 18

Erste Group Research - CEE Equity Monthly, December 2009 Page 19

Recapitaliz A contract on a EUR 120mn recapitalization of Komercijalna Banka could be signed on

Erste Group Research - CEE Equity Monthly, December 2009 Page 20

Erste Group Research - CEE Equity Monthly, December 2009 Page 21

Erste Group Research - CEE Equity Monthly, December 2009 Page 22

Company Curr. Mcap ROE ROA Performance (EUR terms)

P/E Div yield P/BV

Erste Group Research - CEE Equity Monthly, December 2009 Page 23

Cost/income ratio Net interest margin Loans/deposits ratio

Erste Group Research - CEE Equity Monthly, December 2009 Page 24

Aik Banka AD Nis Reduce Target price RSD

Bank Pekao Reduce Target price PLN 157.0

Erste Group Research - CEE Equity Monthly, December 2009 Page 25

BRD - Group SG Accumulate Target price RON 14.5

BRE Bank Hold Target price PLN 290.0

100 Performance 1M 3M 6M 12M