Millennium investment banking
5 March 2010
ALL SECTORS
Spotting turning points
Fears of Greece’s meltdown have dissipated as news of additional deficit cuts (freeze on pensions, cuts in civil servants payments sharp and increase in value-added tax) hit the headlines. The yield on Greek 10-year bonds fell to below 6% for the first time in three weeks.
Although some disappointing data came through this month, like US new home sales having hit a record low, we welcomed the small upward revision to the US Q4 GDP growth and the fact that ISM services expanded at quickest pace in two years to 53.0 (new orders hit the best reading since August 2007).
Cement sales in Portugal continued to fall 5.5% YoY in January, down to the lowest January consumption level in at least 15 years. In Spain, cement consumption fell 16% YoY in January and came 65% lower than the record 2007 level. According to last available data in Brazil, cement consumption came 6.4% higher YoY in November and 1% lower in the 11M09, coming closer to our zero YoY growth estimated for 2009.
SIC / Impresa kept 2nd place in TV audience shares for the second consecutive month, benefiting from football’s return (Carlsberg League Cup semifinals, UEFA Europe League), positive numbers from Interactive talent show “Idol” and encouraging audiences from new youth soap “Lua Vermelha”.
CDSs
500 bp 400 bp 300 bp
3,00%
200 bp
2,00%
43 35
Greece
Germany
Spain
Greece
PMI Services Eurozone PMI Services Spain
Source: Bloomberg and Millennium investment banking All prices are those of the end of the trading session unless otherwise indicated. For important Disclosure and Disclaimer go to the second last page.
ISM Services USA
Fev-10
Set-09
Abr-09
Nov-08
Jun-08
Jan-08
Ago-07
Fev-10
Fev-10
Fev-10
Jan-10
Ireland
Fev-10
Jan-10
Jan-10
Jan-10
Jan-10
Dez-09
Dez-09
Dez-09
Dez-09
Portugal
Mar-07
27
0,00% Nov-09
Telephone +351 21 721 8000 Facsimile +351 21 721 8000
ISM Services and PMI Services
59
1,00%
0 bp
Set-08 Out-08 Nov-08 Dez-08 Jan-09 Fev-09 Mar-09 Abr-09 Mai-09 Jun-09 Jul-09 Ago-09 Set-09 Out-09 Nov-09 Dez-09 Jan-10 Fev-10
1099-010 Lisboa
67
51
100 bp
Av. José Malhoa, 27 – 5º
Sovereign yield spreads over German Bunds
4,00%
Nov-09
Equity Research + 351 21 0037820
Nov-09
SECTOR OVERVIEW
Location is important, but it’s what you do with it that matters
Millennium investment banking
Sector Overview
5 March 2010
Index Comments
3
Global
4
Banking Sector - Portugal
16
Banking Sector - Spain
18
ECB Banking Survey
22
Construction, Cement
23
Telecoms
26
Utilities
29
Media
31
Motorways
32
Port of Lisbon
32
Disclosures
33
2
Millennium investment banking
Sector Overview
5 March 2010
Comments The Portuguese Pay TV market reached 2,528k subscribers in the end of 4Q09, with 85k net adds in the quarter. By the end of the quarter, more than 45% of households (5.6 mn) had Pay TV service. The market continues to keep an interesting vitality, with 4Q09 subscribers growing 10.6% vs. 4Q08. The pace of growth has stabilized around this figure in the last 3 quarters. The Portuguese Fixed Broadband market reached 1,865k subscribers in the end of 4Q09, with 59k net adds in the quarter. By the end of the quarter there were 17.6 broadband subscribers per 100 inhabitants. The market growth has accelerated since the end of 2008: in 2009 the number of subscribers grew by 14.1%. The Portuguese Mobile market reached 15,929k subscribers in the end of 4Q09, a 6.8% growth vs. 4Q08. This YoY growth rate is similar to the one observed in 3Q09. Mobile penetration rate reached 149.9%. In the same quarter there were 2,170 active mobile Internet users, 20.4% of the population. Regarding wireless datacards, last available figure is of 2Q09 and shows that there were 1,148 wireless datacards in Portugal, 10.8% of the population, the third highest penetration rate among UE countries. The Brazilian mobile market has reached 175.6 million clients and a penetration of 91.3% in January, according to data disclosed by Anatel. Net additions in January 2010 were 1,640k, which compares to 1,308k net adds in January 2009 (+ 25.4%). The market is showing a healthy growth, with the number of mobile subscribers in Brazil growing by 15.6% in the last 12 months. Fears of Greece’s meltdown have dissipated as news of additional deficit cuts (freeze on pensions, cuts in civil servants payments sharp and increase in value-added tax) hit the headlines. The yield on Greek 10-year bonds fell to below 6% for the first time in three weeks. Although some disappointing data came through this month, like US new home sales having hit a record low, we welcomed the small upward revision to the US Q4 GDP growth and the fact that ISM services expanded at quickest pace in two years to 53.0 (new orders hit the best reading since August 2007). Cement sales in Portugal continued to fall 5.5% YoY in January, down to the lowest January consumption level in at least 15 years. January sales recovered almost 15% from December’s, explainable by seasonality. Domestic sales in Portugal had plummeted more than 15% in 2009 YoY. Still in Portugal in January, the construction confidence remained by last month’s level, price and activity expectations came both 12% under December’s. The order book expectations increased 5% MoM. In Spain, cement consumption fell 16% YoY in January. This cement consumption plunge in Spain seems to be slowing down since the 3Q09. January consumption came 65% lower than the record 2007 level. We estimate a further reduction in consumption level for 2010 probably not stronger than 10%, to a historically low level around 550kg per capita. In 2009, the YoY plunge had come close to our estimated 30% estimated fall. In South Africa, last available data shows a 15% YoY fall in October 2009 and we maintain our estimate of a 10% YoY decrease in the FY09 for this country. According to last available data in Brazil, cement consumption came 6.4% higher YoY in November and 1% lower in the 11M09. We keep our estimate of a close to zero YoY growth in 2009, implying another YoY recovery in December. SIC / Impresa kept 2nd place in TV audience shares for the second consecutive month, benefiting from football’s return (Carlsberg League Cup semi-finals, UEFA Europe League), positive numbers from Interactive talent show “Idol” and encouraging audiences from new youth soap “Lua Vermelha”. 3
Millennium investment banking
Sector Overview
5 March 2010
Global 60
59
52
51
PMI Services Eurozone PMI Services Spain
ISM Services USA
Jun-09
Jan-09
Nov-09
PMI Manufg Eurozone PMI Manufg Spain
Ago-08
Mar-08
Out-07
Mai-07
Fev-10
Set-09
Abr-09
Nov-08
Jun-08
28 Jan-08
27 Ago-07
36
Mar-07
35
Dez-06
44
43
Jul-06
PMI & ISM
67
PMI Manufg USA PMI Manuf Poland
Source: Bloomberg and Millennium investment banking
ISM Services Employment
ISM Services New Orders
Mar-05 Jul-05 Nov-05 Mar-06 Jul-06 Nov-06 Mar-07 Jul-07 Nov-07 Mar-08 Jul-08 Nov-08 Mar-09 Jul-09 Nov-09
70 65 60 55 50 45 40 35 30 25 20
70 65 60 55 50 45 40 35 30
Mar-05 Jul-05 Nov-05 Mar-06 Jul-06 Nov-06 Mar-07 Jul-07 Nov-07 Mar-08 Jul-08 Nov-08 Mar-09 Jul-09 Nov-09
PMI Components
ISM Manufacturing Employment ISM Manufacturing New Orders ISM Manufacturing Inventories
4
Millennium investment banking
Sector Overview
5 March 2010
Source: Bloomberg and Millennium investment banking
Dez-09
Set-09
Jun-09
Mar-09
Dez-08
Set-08
Jun-08
Mar-08
Dez-07
PMI Manufacturin g Chin a
Set-07
150 145 140 135 130 125 120 115 110 105 100 Jun-07
Dez-09
Jun-09
Jun-08
Dez-08
PMI Imports China PMI New Orders China
Dez-07
Jun-07
Dez-06
Jun-06
70 65 60 55 50 45 40 35 30 Dez-05
PMI China and business climate In China
Business Climate China
Source: Bloomberg and Millennium investment banking
15
%
10 5 0 -5
GDP China YoY
Jan-10
Out-09
Jul-09
Abr-09
Jan-09
Out-08
Jul-08
Abr-08
Jan-08
Out-07
Jul-07
-10 Abr-07
China GDP, prices and PMI Manufacturing Brazil
PPI China YoY
Source: Bloomberg and Millennium investment banking
5
Millennium investment banking
110
5 March 2010
130
120 100 80 60 40 20 0
100 100
90 80
Euro Zone OECD Leading Indicators
Mar-08
Mar-06
Mar-04
Mar-02
Mar-00
Mar-98
Mar-96
70
Nov-06 Jan-07 Mar-07 Mai-07 Jul-07 Set-07 Nov-07 Jan-08 Mar-08 Mai-08 Jul-08 Set-08 Nov-08 Jan-09 Mar-09 Mai-09 Jul-09 Set-09 Nov-09 Jan-10
70
Mar-94
OECD Leading Indicator And Confidence Indicators
Sector Overview
IFO Expectations (lhs) IFO Current Assessment (lhs) Consumer Confidence USA (rhs)
Source: Bloomberg and Millennium investment banking
6
Millennium investment banking
NAHB – US Housing Index, US Home Prices
Sector Overview
45%
5 March 2010
210
100
190 180 170 160 150 140 130 120 110 100 90
80
0%
150
60 40
Jul-09
Nov-08
Mar-08
Jul-07
Nov-06
Mar-06
Jul-05
Nov-04
Mar-04
Jul-03
Nov-02
Mar-02
S&P/CS Composite-20 City Home Price Index YoY S&P/CS Composite-20 City Home Price Index (rhs)
20 0 Mar-95 Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10
90
-45%
NAHB
Houmebuyer Affordability Index (RHS)
Source: Bloomberg and Millennium investment banking
10%
5%
0% Set-00 Mai-01 Jan-02 Set-02 Mai-03 Jan-04 Set-04 Mai-05 Jan-06 Set-06 Mai-07 Jan-08 Set-08 Mai-09
US Delinquencies and foreclosures
US Delinquencies as % of Total Loans US Foreclosures as % of total loans
Source: Bloomberg and Millennium investment banking
7
30% 15%
Real Consumption Expenditures (rhs)
Out-09
Mai-09
Dez-08
Jul-08
0%
Fev-08
Consumer Expectations (lhs)
45%
Set-07
Jun-09
Jun-08
Jun-07
Jun-06
Jun-05
Jun-04
Jun-03
Jun-02
Jun-01
0
60%
Abr-07
40
75%
Nov-06
80
90%
Jun-06
5 4 3 2 1 0 -1 -2 -3
Jan-06
120
5 March 2010
Ago-05
US Consumer expectations VIX
Sector Overview
Mar-05
Millennium investment banking
VIX
Source: Bloomberg and Millennium investment banking
$ 420
500 450 400 350 300 250 200 150
$ 1400 $ 1200 $ 1000 $ 800 $ 600 $ 400 $ 200 $0
$ 270 $ 120
RJ/CRB Commodity Price
Mar-05 Ago-05 Jan-06 Jun-06 Nov-06 Abr-07 Set-07 Fev-08 Jul-08 Dez-08 Mai-09 Out-09
-$ 30 Mar-05 Jul-05 Nov-05 Mar-06 Jul-06 Nov-06 Mar-07 Jul-07 Nov-07 Mar-08 Jul-08 Nov-08 Mar-09 Jul-09 Nov-09
Commodities
Oil
Copper
Gold (rhs)
Wheat
Source: Bloomberg, Millennium investment banking
8
Millennium investment banking
Baltic Dry Index
Sector Overview
5 March 2010
12000 9000 6000 3000
Out-09
Mai-09
Dez-08
Jul-08
Fev-08
Set-07
Abr-07
Nov-06
Jun-06
Jan-06
Ago-05
Mar-05
0
Baltic Dry Index
Source: Bloomberg, Millennium investment banking
1,3 1,2 1,1 1 0,9 0,8 0,7 0,6
S&P 500 Value/S&P 500 Growth
Mar-09
Dez-09
Jun-08
Set-07
Dez-06
Jun-05
Mar-06
Set-04
Mar-03
Dez-03
Jun-02
Set-01
Dez-00
Mar-00
Mar-09
Jun-08
Set-07
Dez-06
Mar-06
Jun-05
Set-04
Dez-03
Mar-03
Jun-02
Set-01
Dez-00
0,6 0,55 0,5 0,45 0,4 0,35 0,3 0,25 Mar-00
Value vs. Growth Small Caps vs. Big Caps
Russell 2000 vs S&P500
Source: Bloomberg, Millennium investment banking
9
Millennium investment banking
Fed Fund rates, Libor, BCE rate, Euribor
Sector Overview
5 March 2010
6%
5%
5%
4% 3%
3%
2% 1%
2%
Libor 6M
Euribor 3M
Fed Fund Rates
Euribor 6M
Out-09
Mai-09
Dez-08
Jul-08
Fev-08
Set-07
Abr-07
Jun-06
Out-09
Mai-09
Dez-08
Jul-08
Fev-08
Set-07
Abr-07
Nov-06
Jun-06
Libor 3M
Nov-06
0%
0%
BCE Rate
Source: Bloomberg, Millennium investment banking
Portugal Germany
Out-09
Spain Greece (rhs)
Mai-09
France UK
0 bp
Dez-08
Set-08 Out-08 Nov-08 Dez-08 Jan-09 Fev-09 Mar-09 Abr-09 Mai-09 Jun-09 Jul-09 Ago-09 Set-09 Out-09 Nov-09 Dez-09 Jan-10 Fev-10
0 bp
70 bp
Jul-08
40 bp
Fev-08
80 bp
140 bp
Set-07
120 bp
Abr-07
160 bp
210 bp
Nov-06
200 bp
Jun-06
500 450 400 350 300 250 200 150 100 50 0
240 bp
Sovereign CDSs & Europe 5y Index
CDS - Europe
Source: Blooomberg, Millennium investment banking
10
Millennium investment banking
5000 bp 95
3800 bp
90
2600 bp
85
1400 bp
80
200 bp
75
Brazil
Argentina (rhs)
70
Dez-09
Set-09
Jun-09
Mar-09
Dez-08
Set-08
Jun-08
Mar-08
Dez-07
-1000 bp Set-07
0 bp
Venezuela (rhs)
$/Kwanza
Fev-10
200 bp
Nov-09
400 bp
Ago-09
600 bp
Jun-09
800 bp
5 March 2010
Mar-09
Sovereign CDSs Latin America, $/Kwanza
Sector Overview
Source: Blooomberg, Millennium investment banking
Currencies
2
30
2
50
Dolar/Zloty
Fev-10
Nov-09
Ago-09
Mai-09
Fev-09
Nov-08
Ago-08
Jun-08
Mar-08
Dolar/Real
Dolar/Rupia (rhs)
Eur/Real
Eur/Zloty
Fev-10
58
Nov-09
3
Ago-09
37
Mai-09
3
Fev-09
66
Nov-08
4
Ago-08
44
4
Jun-08
74
51
Mar-08
5
5
Eur/Rupia (rhs)
Source: Blooomberg, Millennium investment banking
11
Millennium investment banking
Sector Overview
5 March 2010
Spreads Between Bund and Other Government Yields
Source: Blooomberg, Millennium investment banking
Swap Rates (changes)
Source: Blooomberg, Millennium investment banking
Euribor (changes)
Source: Blooomberg, Millennium investment banking
12
Millennium investment banking
5 March 2010
11% 10% 9% 8% 7% 6% 5% 4% 3%
600
33%
550
22%
500
11%
450
0%
Jobless Claims (lhs)
Jan-10
Fev-09
Abr-07
Mar-08
Mai-06
Jun-05
Jul-04
Ago-03
Set-02
-22% Out-01
300 Nov-00
-11%
Jan-99
350 Dez-99
Dez-09
Mar-09
Set-07
Unemployment rate - Portugal
Jun-08
Dez-06
Mar-06
Jun-05
Set-04
Mar-03
Dez-03
Jun-02
Set-01
Dez-00
400
Mar-00
Unemployment - Portugal
Sector Overview
YoY (rhs)
Source: Bloomberg and Millennium investment banking
Unemployment - Spain
13
Millennium investment banking
Unemployment – Other Countries
Sector Overview
5 March 2010
0,12 0,11 0,1 0,09 0,08 0,07 0,06 0,05 0,04
22%
11%
18% 14%
9%
10% 6%
Poland
Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09
Fev-08
Fev-07
Fev-06
Fev-05
Fev-04
Fev-03
7%
Germany
Brazil
Euro Zone
US (rhs)
Source: Bloomberg and Millennium investment banking
750
250 150
Jobless Claims 4W MA
Ago-09
350
Jun-09
450
Abr-09
550
Fev-09
900 800 700 600 500 400 300 200 100 0
650
Fev-70 Jan-73 Nov-75 Out-78 Set-81 Ago-84 Jul-87 Jun-90 Mai-93 Abr-96 Mar-99 Fev-02 Jan-05 Nov-07
US Jobless Claims (4 week MA)
Persons claiming extended unemployment insurance benefits (thousand)
Source: Bloomberg and Millennium investment banking
14
Millennium investment banking
Retail Sales (YoY)
Sector Overview
5 March 2010
32%
10%
25% 3%
18% 11%
-4%
4%
Poland Food
Portugal Non Food
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
Jan-04
Jan-03
Jan-02
Jan-00
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
Jan-04
Jan-03
Jan-02
Jan-01
Portugal Food
Jan-01
-3%
-11%
Poland Retail
Source: Bloomberg and Millennium investment banking
Set-09
Mar-09
Set-08
Mar-08
Set-07
Mar-07
Set-06
Mar-06
Set-05
85 84 83 82 81 80 79 78 77 76 75 Mar-05
Industrial Production Year Brazil YoY GDP Quarter Brazil YoY
Out-09
Abr-09
Out-08
Abr-08
Out-07
Abr-07
Out-06
Abr-06
Out-05
Abr-05
Capacity, Production and GDP In Brazil
25 20 15 10 5 0 -5 -10 -15 -20
Capacity Utilization Brazil
Source: Bloomberg and Millennium investment banking
15
Millennium investment banking
Sector Overview
5 March 2010
Credit Spreads 420 bp
500 bp
750 bp
400 bp
600 bp
300 bp
450 bp
140 bp
200 bp
300 bp
70 bp
100 bp
150 bp
0 bp
0 bp
280 bp
Markit iTraxx Financial Senior 5y CDS Index Markit iTraxx Financial Sub 5y CDS Index Source: Bloomberg, Millennium investment baking
Nov-09
Ago-09
Mai-09
Jan-09
Out-08
Jun-08
Mar-08
Nov-07
Ago-07
Abr-07
Jan-07
Set-06
210 bp
0 bp Jan-07 Abr-07 Jul-07 Out-07 Jan-08 Abr-08 Jul-08 Out-08 Jan-09 Abr-09 Jul-09 Out-09 Jan-10
350 bp
Jun-06
5 Year CDS - Europe
Industrial TMT
Consumer Non-Financial
Energy Auto (rhs)
16
Millennium investment banking
Sector Overview
5 March 2010
Banking Sector - Portugal 18% 12% 6% 0%
40%
250%
30%
200%
20%
150%
10%
100%
0%
50%
Loan to non-fin corporations Total
Loan to private individuals
Deposits
Loans
Dec-09
Dec-07
Dec-05
Dec-03
Dec-01
Dec-99
Dec-97
Dec-95
0% Dec-93
Dec-09
Dec-08
Dec-07
Dec-06
Dec-05
Dec-04
Dec-03
-10% Dec-91
Portugal’s Aggregate Credit & Deposits
Loan/Deposits (rhs)
Source: Banco de Portugal and Millennium investment banking
35%
8% 6%
25%
5%
15%
3%
5%
Dec-09
Dec-08
Dec-07
Dec-06
Dec-05
Dec-04
Dec-03
Dec-02
Dec-09
Dec-08
Dec-07
Dec-06
Corporate NPL Ratio Total NPL Ratio
-5% Dec-01
Mortgage NPL Ratio Consumer NPL Ratio
Dec-05
Dec-04
Dec-03
Dec-02
Dec-01
0%
Dec-00
2% Dec-00
Portugal’s Aggregate Loans & NPL growth
Total NPL growth
Source: Banco de Portugal and Millennium investment banking
17
Millennium investment banking
Portugal’s NPLgrowth yoy% US Delinquencies and foreclosures
Sector Overview
5 March 2010
110% 75% 40% 5%
Mortgage NLP Growth Consumer NPL Growth
Dec-09
Dec-08
Dec-07
Dec-06
Dec-05
Dec-04
Dec-03
Dec-02
Dec-01
Dec-00
-30%
Corporate NPL Growth
Source: Banco de Portugal and Millennium investment banking 6% 4% 2%
Sectorial NPL (corporate level) September Sectorial NPL (corporate level) December
Other
Education, ...
Telecoms
Services
Mining
Real estate
Transport
Hotels
Retail trade
Fishing
Construction
Utilities
Manufacturing
0% Agriculture
NPL ratios by sectors; NPL distribution by sector
Education... 4% Telecoms 16% Services 19% Mining 0% Real estate 6% Transport 4%
Manufact 0%
Agriculture 2% Utilities 0% Construction 13% Fishing 3% Retail trade Hotels 19% 14%
Source: Banco de Portugal and Millennium investment banking
18
-5.00% -0.35%
Total loans spanish banking system (YoY%)
35.00% 35%
25.00% 25%
15.00% 15%
5.00% 5%
-5.00% -2.72%
Spanish Banks - Total loan growth YoY% Corporate Loans YoY % Individual Loans YoY %
Sep-09
Jun-07
Mar-05
Dec-02
Sep-00
5.00%
Jun-98
15.00%
Mar-96
25.00%
Dec-93
Sep-63 Sep-65 Sep-67 Sep-69 Sep-71 Sep-73 Sep-75 Sep-77 Sep-79 Sep-81 Sep-83 Sep-85 Sep-87 Sep-89 Sep-91 Sep-93 Sep-95 Sep-97 Sep-99 Sep-01 Sep-03 Sep-05 Sep-07 Sep-09
Loan growth in Spain
Oct-72 Mar-75 Sep-77 Feb-80 Aug-82 Jan-85 Jul-87 Dec-89 Jun-92 Dec-94 May-97 Nov-99 Apr-02 Oct-04 Apr-07 Sep-09
Sep-63 Sep-65 Sep-67 Sep-69 Sep-71 Sep-73 Sep-75 Sep-77 Sep-79 Sep-81 Sep-83 Sep-85 Sep-87 Sep-89 Sep-91 Sep-93 Sep-95 Sep-97 Sep-99 Sep-01 Sep-03 Sep-05 Sep-07 Sep-09
Millennium investment banking Sector Overview 5 March 2010
Banking Sector - Spain 40%
30%
20%
10% 0%
-10%
Mortgages YoY %
Source: Bank of Spain, Millennium investment banking
-5% 0%
Loans by Cajas + Cooperatives
19
Millennium investment banking
500%
300%
5 March 2010
300%
400%
200%
300% 200%
100%
100%
0%
200% 100%
0%
0%
Sep-09
Mar-08
Dec-08
Jun-07
Sep-06
Dec-05
Jun-04
Mar-05
Sep-03
Dec-02
Jun-01
Mar-02
Sep-00
-100% Dec-99
-100%
-100% Dec-99 Sep-00 Jun-01 Mar-02 Dec-02 Sep-03 Jun-04 Mar-05 Dec-05 Sep-06 Jun-07 Mar-08 Dec-08 Sep-09
NPL growth in Spain
Sector Overview
Mortgages NPL YoY% (RHS) Individual NPL YoY% (RHS) Corporate NPL YoY% (LHS)
Total NPL YoY %
Source: Bank of Spain, Millennium investment banking
10%
8.9% 8.00% 6.00%
5.08%
5%
4.00% 2.00%
NPL as % of total loans
Sep-09
Sep-08
Sep-07
Sep-06
Sep-05
Sep-04
Sep-03
Sep-02
Sep-01
Sep-00
0%
Sep-99
0.00%
Dec-63 Dec-65 Dec-67 Dec-69 Dec-71 Dec-73 Dec-75 Dec-77 Dec-79 Dec-81 Dec-83 Dec-85 Dec-87 Dec-89 Dec-91 Dec-93 Dec-95 Dec-97 Dec-99 Dec-01 Dec-03 Dec-05 Dec-07 Dec-09
NPL ratios in Spain
Corporate NPL as % of Loans Mortgages NPL as % of Loans Individual NPL as % of Loans
Source: Bank of Spain, Millennium investment banking 20
Millennium investment banking
2
0
0
-5
-2
-10
-4 Dez-02
House prices -Spain QoQ% (RHS)
5 March 2010
Mar-09
5
Dez-07
4
Set-06
10
Jun-05
6
Mar-04
15
Set-01
8
Jun-00
20
Mar-99
Housing market - Spain
Sector Overview
YoY% (LHS)
Source: Bank of Spain, Millennium investment banking NPL ratios by sectors; NPL distribution by sector 10.00%
4Q08
Other Services 6%
1Q09 7.8%
6.8% 5.00%
3.9%
3.0% 2.7%
Agriculture 2%
3.0%
2.2%
2.0%
Horeca 2%
Other Services
Transport, storage and Financial intermediation Real Estate activities
Horeca
Wholesale and retail
Construction
0.00% Industry
Construction 20% Wholesale and retail 7%
Real Estate activities 51%
0.5% Agriculture
Industry 9%
Financial intermediation (ex credit institutions) 1%
Transport, storage and communicatio n 2%
21
Millennium investment banking
Sep-09
Sep-07
Sep-05
Sep-94 Sep-95 Sep-96 Sep-97 Sep-98 Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09
-20%
Sep-03
0%
Sep-01
20%
18% 17% 16% 15% 14% 13% 12% 11% 10% Sep-99
40%
35% 30% 25% 20% 15% 10% 5% 0% Sep-97
40% 30% 20% 10% 0% -10% -20%
Sep-95
60%
5 March 2010
Sep-93
Real estate and construction In Spain
Sector Overview
Weight of Real Estate loans in Spanish banking system (LHS)
Loans to Real Estate YoY% (LHS) Loans to Construction YoY% (RHS)
Weight of Construction loans in Spanish banking system (RHS)
Source: Bank of Spain, Millennium investment banking
€ 60,000,000
€ 100,000,000 € 80,000,000
€ 40,000,000
€ 60,000,000 € 40,000,000
€ 20,000,000
€ 20,000,000
Total Provisions
Specific Provisions
General Provisions
Specific provisions
Sep-09
Sep-08
Sep-07
Sep-06
Sep-05
Sep-04
Sep-03
Sep-02
Sep-01
Sep-00
€0 Sep-99
Sep-08
Sep-06
Sep-04
Sep-02
Sep-00
€0 Sep-98
NPL’s and specific provisions and Total, specific and general provisions
NPL
Source: Bank of Spain, Millennium investment banking
22
Millennium investment banking
300%
285%
5 March 2010
210%
231%
250% 200%
188% 186%
140%
112%
123% 127% 130%
138%
146%
160%
169%
178% 161%
96%
150% 69%
100%
70%
50%
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
0%
1997
Dec-09
Jun-09
Dec-08
Jun-08
Dec-07
Jun-07
Dec-06
Jun-06
Dec-05
0% Jun-05
Spanish coverage ratio And Loan to Deposit ratio
Sector Overview
Average Loan to Deposit Ratio - Iberia Source: Bank of Spain, Millennium investment banking
23
Millennium investment banking
Sector Overview
5 March 2010
Construction, Cement 800
10%
700
0%
600
YoY (rhs)
400
Cement Sales Cimpor+Secil
2007
2008
2009
Dec
Nov
Oct
Sep
Aug
Jul
300 Jan
1Q 09
1Q 08
1Q 07
1Q 06
1Q 05
1Q 04
1Q 03
1Q 02
1Q 01
1Q 00
-30% 1Q 99
0
500
Jun
-20%
May
-10%
1 000
Apr
2 000
20%
Mar
3 000
Feb
Domestic Cement Sales in Portugal (k tons)
2010
Source:GPEARI
135 125 115 105 95 85 75 65
real Q GDP YoY
Construction index (rhs)
0 -20 -40 -60 -80 Dec-03 Apr-04 Aug-04 Dec-04 Apr-05 Aug-05 Dec-05 Apr-06 Aug-06 Dec-06 Apr-07 Aug-07 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09
4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% Mar-00 Dec-00 Sep-01 Jun-02 Mar-03 Dec-03 Sep-04 Jun-05 Mar-06 Dec-06 Sep-07 Jun-08 Mar-09
GDP & Construction Index & Other Construction Indicators in Portugal
Construction and Public works - Activity Expectations Construction and Public works - Order book Construction and Public works - Price Expectations Construction - Confidence indicator
Sources: INE, BP, GPEARI
24
-40% -50%
YoY (rhs)
1.0 Jan
1Q 02 3Q 02 1Q 03 3Q 03 1Q 04 3Q 04 1Q 05 3Q 05 1Q 06 3Q 06 1Q 07 3Q 07 1Q 08 3Q 08 1Q 09 3Q 09
6
2.0
2007
Domestic Sales
2008
2009
Dec
8
3.0
Nov
-30%
Oct
-20%
Sep
10
4.0
Aug
-10%
Jul
12
5.0
Jun
0%
May
10%
14
6.0
Apr
20%
16
5 March 2010
Mar
Domestic Cement Sales in Spain (mn tons)
Sector Overview
Feb
Millennium investment banking
2010
Source: Oficemen
16
20%
5.5
15% 14
10% 5%
12
4.5
0% -5%
10
3.5
-10%
YoY (rhs)
Domestic Sales
2006
2007
2008
Dec
Nov
Oct
Sep
Aug
Jul
Jun
May
Apr
Mar
2.5 Feb
-15%
Jan
8 1Q 02 3Q 02 1Q 03 3Q 03 1Q 04 3Q 04 1Q 05 3Q 05 1Q 06 3Q 06 1Q 07 3Q 07 1Q 08 3Q 08 1Q 09 3Q 09
Domestic Cement Sales in Brazil (mn tons)
2009
Source:SNIC
25
Millennium investment banking
4.5
5 March 2010
20%
mn ton
10%
3.5
1.50
mn ton
0%
2006
2007
2008
Dec
Nov
Oct
Sep
Aug
Jul
Jun
May
Apr
2Q 08 1Q 09
Domestic Sales
0.50 Mar
YoY (rhs)
4Q 03 3Q 04 2Q 05 1Q 06 4Q 06 3Q 07
-20% 3Q 01 2Q 02 1Q 03
1.5
1.00
Feb
-10%
Jan
2.5
1Q 00 4Q 00
Domestic Cement Sales in South Africa (mn tons)
Sector Overview
2009
Source: Genstats
26
Millennium investment banking
Sector Overview
5 March 2010
Telecoms
Mobile subs growth (lhs)
3,300
-8% 3Q09
-6% 2Q09
3,400 1Q09
-4%
4Q08
3,500
3Q08
-2%
2Q08
3,600
1Q08
1%
4Q07
3,700
3Q07
3%
4Q09
3Q09
2Q09
1Q09
4Q08
3Q08
100% 2Q08
4% 1Q08
120%
4Q07
8%
3Q07
140%
2Q07
12%
3,800
2Q07
160%
1Q07
16%
1Q07
Mobile Penetration and Fixed Voice Subscribers in Portugal
Fixed Telephone subs (th) (lhs) Fixed Telephone subs growth (rhs)
Mobile penetration rate (rhs)
Source: Anacom, Millennium investment banking
24%
20.4% 18.7%
20% 16%
17.6% 17.0%
14.8%
12% 8%
20%
50%
16%
45%
12%
40%
8%
8.3%
4%
35%
4%
Number of Fixed Broadband subs / 100 Inh. Number of Active Mobile BB subs (Datacards and others) / 100 Inh.
4Q09
3Q09
2Q09
1Q09
4Q08
3Q08
2Q08
1Q08
4Q07
3Q07
30% 2Q07
0% 1Q07
4Q09
3Q09
2Q09
1Q09
4Q08
3Q08
2Q08
1Q08
4Q07
3Q07
2Q07
0% 1Q07
Broadband and Pay TV Penetration in Portugal
Pay TV subs YoY growth (lhs) % Pay TV subscribers / Total households (rhs)
Source: Anacom, Millennium investment banking
27
Millennium investment banking
Mobile Penetration and Fixed Voice Subscribers in Spain
Sector Overview
20,500 20,250
5 March 2010
6%
12%
4%
8%
110%
20,000
105%
Mobile subs growth (lhs)
3Q09
2Q09
1Q09
4Q08
Fixed Telephone accesses (th) (lhs) Fixed Telephone accesses growth (rhs)
3Q08
100% 2Q08
0% 1Q08
0%
4Q07
4%
3Q09
2Q09
1Q09
4Q08
3Q08
2Q08
1Q08
4Q07
3Q07
19,500
2%
3Q07
19,750
Mobile penetration rate (rhs)
Source: CMT, Millennium investment banking
Pay TV subs YoY growth (lhs) % Pay TV subscribers / Total households (rhs)
3Q09
3.7% 2Q09
2.3% 1Q09
20.5%
4Q08
19.0%
3Q08
2Q08
20%
1Q08
-8%
4Q07
22%
24% 20% 16% 12% 8% 4% 0% 3Q07
-4% 3Q09
24%
2Q09
0%
1Q09
26%
4Q08
4%
3Q08
28%
2Q08
8%
1Q08
30%
4Q07
12%
3Q07
Broadband and Pay TV Penetration in Spain
Number of Fixed Broadband subs/ 100 Inh. Number of Mobile Broadband subs (Datacards only)/ 100 Inh.
Source: CMT, Millennium investment banking
28
Millennium investment banking
5 March 2010
28%
190 170
21%
150
14%
130
7%
110 Jan-10
Nov-09
Set-09
Jul-09
Mai-09
Mar-09
Jan-09
Nov-08
Set-08
Jul-08
Mai-08
0% Mar-08
90 Jan-08
Mobile Subscribers in Brazil
Sector Overview
Number of Mobile subscribers (millions) (lhs) YoY growth (rhs) Source: ANATEL, Millennium investment banking (For further information please refer to Snapshot: Portugal Telecom & Telefónica - Brazilian Mobile Market MoM - Net adds performance remains strong, 22/02/10)
29
Millennium investment banking
Sector Overview
5 March 2010
Utilities 50
10%
40
5%
30
0%
20
-5%
10 Fev-10
Dez-09
Out-09
Ago-09
Jun-09
Abr-09
Fev-09
OMEL DABS Spain
Portugal
OMEL DABS Portugal
Source: Bloomberg, Millennium investment banking
Espanha
Source: Ren (Rede Eléctrica Nacional), Ree (Red Electrica Espana)
01-03-2010
01-01-2010
01-12-2009
01-11-2009
01-10-2009
01-09-2009
01-08-2009
01-07-2009
01-06-2009
01-05-2009
01-04-2009
01-03-2009
01-02-2009
25 23 21 19 17 15 13 11 9 7 5 01-01-2009
CO2 costs
-15%
Jan-08 Fev-08 Mar-08 Abr-08 Mai-08 Jun-08 Jul-08 Ago-08 Set-08 Out-08 Nov-08 Dez-08 Jan-09 Fev-09 Mar-09 Abr-09 May-09 Jun-09 Jul-09 Ago-09 Set-09 Out-09 Nov-09 Dez-09 Jan-09 Fev-09
-10%
0
01-02-2010
Energy Prices OMEL Day Ahead Baseload Spot in Iberia (€/MW) + Electricity Consumption YoY adjusted to temperature and Working days
Source: Bloomberg
30
Millennium investment banking
48%
5 March 2010
3,300 39%
24%
26%
2,700
28% 25% 23%
2,500 2,300
18% 18%
17%
24% 16%
20%
34%
33% 21% 21% 22%
25%
3,100 2,900
28%
34%
26%
30%
29%
35%
39%
40%
45% 40%
3,500
43%
50%
36%
Wind in the Portuguese Energy System
Sector Overview
2,100 1,900
Jan-08 Fev-08 Mar-08 Abr-08 Mai-08 Jun-08 Jul-08 Ago-08 Set-08 Out-08 Nov-08 Dez-08 Jan-09 Fev-09 Mar-09 Abr-09 Mai-09 Jun-09 Jul-09 Ago-09 Set-09 Out-09 Nov-09 Dez-09 Jan-10
15%
Load Factor
Installed capacity (MWs)
Source: Ren (Rede Eléctrica Nacional) , Millennium investment banking 40% 37% 35%
17,500
31%
30% 32% 28% 29%
35%
16,500 16,000 15,500
18% 19% 16% 19%
22%
23%
25% 25% 16%
20%
19% 19% 17% 19% 21%
25% 21%
25%
27%
30%
17,000
15%
15,000 14,500 14,000 13,500 13,000
Jan-08 Fev-08 Mar-08 Abr-08 Mai-08 Jun-08 Jul-08 Ago-08 Set-08 Out-08 Nov-08 Dez-08 Jan-09 Fev-09 Mar-09 Abr-09 Mai-09 Jun-09 Jul-09 Ago-09 Set-09 Out-09 Nov-09 Dez-09
Wind in the Spanish Energy System
Load Factor
Installed capacity (MWs)
Source: Ree (Red Electrica Espana) , Millennium investment banking
31
Millennium investment banking
Sector Overview
5 March 2010
Media Audience Share - all-day (monthly)
34%
Audience Share - prime-time (monthly)
43% 33%
24%
23% 14%
13%
4%
SIC
TVI
RTP1
2:
Others
SIC
TVI
RTP1
Dez-09
Dez-08
Dez-07
Jan-07
Dez-09
Dez-08
Dez-07
3% Jan-07
TV Audience Shares in Portugal
2:
Others
Source: Marktest, Millennium investment banking; numbers are simple averages of monthly data
32
Millennium investment banking
Sector Overview
5 March 2010
Motorways Average Daily Traffic Shadow Tolls (YoY) in Portugal
2010 Jan
2009
Average
5.3%
(1) C. Prata*
Dec
Nov
Oct
Sept
August
2009 July
June
May
April
Mar
Feb
Jan
3.8%
4.1%
2.6%
4.5%
5.1%
6.0%
6.1%
6.1%
4.1%
4.5%
1.7%
1.0%
-1.4%
7.8%
5.0%
6.1%
5.3%
7.4%
6.4%
5.1%
4.3%
5.4%
6.2%
3.9%
7.5%
2.7%
-0.4%
B. Lit. Alta*
5.9%
1.8%
2.8%
2.5%
3.7%
3.4%
5.0%
6.9%
4.2%
1.9%
3.5%
-5.3%
-3.3%
-5.7%
(1) G. Porto*
8.0%
6.7%
6.2%
4.5%
4.5%
8.9%
12.9%
10.6%
7.5%
8.2%
3.9%
9.9%
2.7%
0.9%
(1) N Litoral
1.1%
3.3%
2.5%
0.7%
3.2%
5.3%
7.0%
6.1%
5.4%
2.6%
1.1%
1.7%
2.5%
1.0%
Int. Norte
25%
5.2%
21%
9.0%
6.4%
4.3%
6.7%
9.0%
6.4%
4.4%
10.5%
-6.4%
-3.0%
-8.4%
B. Interior
3.7%
0.4%
-1.0%
-0.2%
5.6%
2.6%
0.7%
4.5%
6.2%
1.6%
10.4% -14.3%
-2.5%
-7.5%
Algarve -5.6% -1.3% -5.0% -6.5% -1.1% -2.2% (1) Potentially converted in real tolls; * Shadow tolls belonging to ME group Source: Estradas de Portugal, Millennium investment banking
0.8%
1.4%
6.9%
-4.0%
-3.1%
-5.3%
8.7%
-11%
Port of Lisbon Y-t-D
2010 Jan
2009
Nr. of Containers
-7.7%
-7.7%
TEU's
-4.2%
Tons
-0.4%
Traffic Containers at Port of Lisbon (YoY)
2009 July June
Dec
Nov
Oct
Sept
Aug
-11.7%
-15%
-20%
-8%
-16%
1%
-24%
-4.2%
-9.9%
-11%
-18%
-7%
-14%
3%
-0.4%
-11.8%
-11%
-15%
-4%
-15%
-3%
2008
May
April
Mar
Feb
Jan
-7%
-11%
-11%
-16%
-5%
-6%
-0.1%
-21%
-4%
-10%
-8%
-14%
-4%
-8%
0.2%
-22%
-7%
-16%
-13%
-14%
-8%
-11%
-0.6%
Source: Lisbon Port Authority, Millennium investment banking
33
Millennium investment banking
Sector Overview
5 March 2010
Disclosures
This report has been prepared on behalf of Millennium investment banking (Mib), a registered trademark of Banco Comercial Português, S.A. (Millennium bcp). Millennium bcp is regulated by Comissão de Mercado de Valores Mobiliários. Recommendations: Buy means more than 10% absolute return; Neutral means between 0% and +10% absolute return; Reduce means between -10% and 0% absolute return; Sell means less than -10% absolute return. Unless otherwise specified, the time frame for price targets included in this report is current year-end or next year-end. Risk is defined by the analyst’s view in a qualitative way. Usually we update our models and price targets in between 6 and 18 months. Millennium bcp prohibits its analysts and members of their households to own any shares of the companies covered by them. BCP group may have business relationships with the companies mentioned in this report. Millennium bcp, expects to receive or intends to seek compensations for investment banking services from the companies mentioned in this report. The views expressed above, accurately reflect personal views of the authors. They have not and will not receive any compensation for providing a specific recommendation or view in this report. There were not any agreements between the companies covered and the analysts regarding the recommendation. Analysts are paid in part based on the profitability of BCP group, which includes investment banking revenues. BCP group has more than 2% of EDP. BCP group has more than 2% of Cimpor. BCP group has more than 2% of Novabase. BCP group has more than 2% of Sonaecom. BCP group has more than 2% of Cofina. A member of the Executive Board of Directors of Millennium bcp is member of the General and Supervisory Board of EDP - Energias de Portugal, SA. Banco Millennium bcp Investimento, S.A. (merged into Millennium bcp) was chosen as a joint global coordinator of the Initial Public Offering of EDP Renováveis. Banco Millennium bcp Investimento, S.A. (merged into Millennium bcp) was part of the consortium, as a Co-Leader, of BES rights issue, done in April 2009.
34
Millennium investment banking
Sector Overview
5 March 2010
Recommendations on Millennium bcp covered companies (%) Recommendation
Feb-10
Jan-10
Buy
81%
78%
Dec-09 Sep-09 Jun-09 Mar-09 Dec-08 Sep-08 Jun-08 Mar-08 Dec-07 Jun-07 Dec-06 Dec-05 Dec-04 63%
41%
59%
56%
54%
62%
71%
63%
41%
19%
37%
30%
Neutral
7%
4%
15%
15%
7%
0%
4%
0%
8%
4%
27%
24%
11%
40%
6%
Reduce
0%
7%
7%
19%
11%
4%
0%
0%
0%
0%
0%
33%
21%
5%
6%
63%
Sell
0%
0%
4%
11%
0%
0%
0%
8%
4%
8%
14%
19%
16%
5%
0%
Unrated/Under Revision
11%
11%
11%
15%
22%
41%
42%
31%
17%
25%
18%
5%
16%
20%
25%
-3%
20%
30%
Performance
-5%
-6%
0%
19%
15%
-3%
-21%
-10%
-15%
-19%
PSI 20
7,559
7,927
8,464
8,475
7,111
6,175
6,341
8,033
8,904
10,496 13,019 13,385 11,198
13%
na
8,619
7,600
DISCLAIMER This information is not an offer to sell or a solicitation to enter into any particular deal or contract. It consists of data compiled by or of opinions or estimates from Banco Comercial Português, S.A. and no representation or warranty is made as to its accuracy or completeness. This information is merely an auxiliary means of analysis to be used by its recipients, who will be solely responsible for its use, including for any losses or damages that may, directly or indirectly, derive from it. Its reproduction is not allowed without permission from the BCP group. The data herein disclosed are merely indicative and reflect the market conditions prevailing on the date they have been collected. Thus, its accuracy and timing must absolutely be confirmed before its usage. Any alteration in the market conditions shall imply the introduction of changes in this report. This information / these opinions may be altered without prior notice and may differ or be contrary to opinions expressed by other business areas of BCP group as a result of using different assumptions and criteria. The analysis contained herein is based on numerous assumptions. Different assumptions could result in materially different results.
35
OFFICE LOCATIONS Millennium investment banking Av. José Malhoa, Lote 27 - 5 1099-010 Lisboa Portugal
Telephone +351 21 003 7811 Fax
+351 21 003 7819 / 39
Equity Team
Luis Feria (Head of Equities) Equity Research +351 21 003 7820
Institutional Equity Sales +351 21 003 7880
António Seladas, CFA (Head)
Kartsen Sommer (Head)
Fundamental Analysis
Pedro Conclaves
Alexandra Delgado (Telecoms) João Flores (Media and Retail)
Equity Trading +351 21 003 7850
João Mateus (Industrials and Utilities)
Paulo Cruz (Head)
Rita Silva (Banks and IT)
Gonçalo Lima
Vanda Mesquita (Utilities and Oil&Gas)
Jorge Caldeira
Market Analysis
Manuel Lança Lopes
Ramiro Loureiro
Paulo Santos
Sónia Martins
Pedro Lalanda
Telma Santos
Nuno Marques
Publishing
Tiago Alves
Sónia Primo Equity Derivatives +351 21 003 7890 Prime Brokerage +351 21 003 7855
Vitor Almeida (Head) Hugo Ferreira Pinto
Jorge Pina (Head) Diogo Justino Inês Conceição Marco Barata Maria Cardoso Baptista
ALL SECTORS
Spotting turning points
Fears of Greece’s meltdown have dissipated as news of additional deficit cuts (freeze on pensions, cuts in civil servants payments sharp and increase in value-added tax) hit the headlines. The yield on Greek 10-year bonds fell to below 6% for the first time in three weeks.
Although some disappointing data came through this month, like US new home sales having hit a record low, we welcomed the small upward revision to the US Q4 GDP growth and the fact that ISM services expanded at quickest pace in two years to 53.0 (new orders hit the best reading since August 2007).
Cement sales in Portugal continued to fall 5.5% YoY in January, down to the lowest January consumption level in at least 15 years. In Spain, cement consumption fell 16% YoY in January and came 65% lower than the record 2007 level. According to last available data in Brazil, cement consumption came 6.4% higher YoY in November and 1% lower in the 11M09, coming closer to our zero YoY growth estimated for 2009.
SIC / Impresa kept 2nd place in TV audience shares for the second consecutive month, benefiting from football’s return (Carlsberg League Cup semifinals, UEFA Europe League), positive numbers from Interactive talent show “Idol” and encouraging audiences from new youth soap “Lua Vermelha”.
CDSs
500 bp 400 bp 300 bp
3,00%
200 bp
2,00%
43 35
Greece
Germany
Spain
Greece
PMI Services Eurozone PMI Services Spain
Source: Bloomberg and Millennium investment banking All prices are those of the end of the trading session unless otherwise indicated. For important Disclosure and Disclaimer go to the second last page.
ISM Services USA
Fev-10
Set-09
Abr-09
Nov-08
Jun-08
Jan-08
Ago-07
Fev-10
Fev-10
Fev-10
Jan-10
Ireland
Fev-10
Jan-10
Jan-10
Jan-10
Jan-10
Dez-09
Dez-09
Dez-09
Dez-09
Portugal
Mar-07
27
0,00% Nov-09
Telephone +351 21 721 8000 Facsimile +351 21 721 8000
ISM Services and PMI Services
59
1,00%
0 bp
Set-08 Out-08 Nov-08 Dez-08 Jan-09 Fev-09 Mar-09 Abr-09 Mai-09 Jun-09 Jul-09 Ago-09 Set-09 Out-09 Nov-09 Dez-09 Jan-10 Fev-10
1099-010 Lisboa
67
51
100 bp
Av. José Malhoa, 27 – 5º
Sovereign yield spreads over German Bunds
4,00%
Nov-09
Equity Research + 351 21 0037820
Nov-09
SECTOR OVERVIEW
Location is important, but it’s what you do with it that matters
Millennium investment banking
Sector Overview
5 March 2010
Index Comments
3
Global
4
Banking Sector - Portugal
16
Banking Sector - Spain
18
ECB Banking Survey
22
Construction, Cement
23
Telecoms
26
Utilities
29
Media
31
Motorways
32
Port of Lisbon
32
Disclosures
33
2
Millennium investment banking
Sector Overview
5 March 2010
Comments The Portuguese Pay TV market reached 2,528k subscribers in the end of 4Q09, with 85k net adds in the quarter. By the end of the quarter, more than 45% of households (5.6 mn) had Pay TV service. The market continues to keep an interesting vitality, with 4Q09 subscribers growing 10.6% vs. 4Q08. The pace of growth has stabilized around this figure in the last 3 quarters. The Portuguese Fixed Broadband market reached 1,865k subscribers in the end of 4Q09, with 59k net adds in the quarter. By the end of the quarter there were 17.6 broadband subscribers per 100 inhabitants. The market growth has accelerated since the end of 2008: in 2009 the number of subscribers grew by 14.1%. The Portuguese Mobile market reached 15,929k subscribers in the end of 4Q09, a 6.8% growth vs. 4Q08. This YoY growth rate is similar to the one observed in 3Q09. Mobile penetration rate reached 149.9%. In the same quarter there were 2,170 active mobile Internet users, 20.4% of the population. Regarding wireless datacards, last available figure is of 2Q09 and shows that there were 1,148 wireless datacards in Portugal, 10.8% of the population, the third highest penetration rate among UE countries. The Brazilian mobile market has reached 175.6 million clients and a penetration of 91.3% in January, according to data disclosed by Anatel. Net additions in January 2010 were 1,640k, which compares to 1,308k net adds in January 2009 (+ 25.4%). The market is showing a healthy growth, with the number of mobile subscribers in Brazil growing by 15.6% in the last 12 months. Fears of Greece’s meltdown have dissipated as news of additional deficit cuts (freeze on pensions, cuts in civil servants payments sharp and increase in value-added tax) hit the headlines. The yield on Greek 10-year bonds fell to below 6% for the first time in three weeks. Although some disappointing data came through this month, like US new home sales having hit a record low, we welcomed the small upward revision to the US Q4 GDP growth and the fact that ISM services expanded at quickest pace in two years to 53.0 (new orders hit the best reading since August 2007). Cement sales in Portugal continued to fall 5.5% YoY in January, down to the lowest January consumption level in at least 15 years. January sales recovered almost 15% from December’s, explainable by seasonality. Domestic sales in Portugal had plummeted more than 15% in 2009 YoY. Still in Portugal in January, the construction confidence remained by last month’s level, price and activity expectations came both 12% under December’s. The order book expectations increased 5% MoM. In Spain, cement consumption fell 16% YoY in January. This cement consumption plunge in Spain seems to be slowing down since the 3Q09. January consumption came 65% lower than the record 2007 level. We estimate a further reduction in consumption level for 2010 probably not stronger than 10%, to a historically low level around 550kg per capita. In 2009, the YoY plunge had come close to our estimated 30% estimated fall. In South Africa, last available data shows a 15% YoY fall in October 2009 and we maintain our estimate of a 10% YoY decrease in the FY09 for this country. According to last available data in Brazil, cement consumption came 6.4% higher YoY in November and 1% lower in the 11M09. We keep our estimate of a close to zero YoY growth in 2009, implying another YoY recovery in December. SIC / Impresa kept 2nd place in TV audience shares for the second consecutive month, benefiting from football’s return (Carlsberg League Cup semi-finals, UEFA Europe League), positive numbers from Interactive talent show “Idol” and encouraging audiences from new youth soap “Lua Vermelha”. 3
Millennium investment banking
Sector Overview
5 March 2010
Global 60
59
52
51
PMI Services Eurozone PMI Services Spain
ISM Services USA
Jun-09
Jan-09
Nov-09
PMI Manufg Eurozone PMI Manufg Spain
Ago-08
Mar-08
Out-07
Mai-07
Fev-10
Set-09
Abr-09
Nov-08
Jun-08
28 Jan-08
27 Ago-07
36
Mar-07
35
Dez-06
44
43
Jul-06
PMI & ISM
67
PMI Manufg USA PMI Manuf Poland
Source: Bloomberg and Millennium investment banking
ISM Services Employment
ISM Services New Orders
Mar-05 Jul-05 Nov-05 Mar-06 Jul-06 Nov-06 Mar-07 Jul-07 Nov-07 Mar-08 Jul-08 Nov-08 Mar-09 Jul-09 Nov-09
70 65 60 55 50 45 40 35 30 25 20
70 65 60 55 50 45 40 35 30
Mar-05 Jul-05 Nov-05 Mar-06 Jul-06 Nov-06 Mar-07 Jul-07 Nov-07 Mar-08 Jul-08 Nov-08 Mar-09 Jul-09 Nov-09
PMI Components
ISM Manufacturing Employment ISM Manufacturing New Orders ISM Manufacturing Inventories
4
Millennium investment banking
Sector Overview
5 March 2010
Source: Bloomberg and Millennium investment banking
Dez-09
Set-09
Jun-09
Mar-09
Dez-08
Set-08
Jun-08
Mar-08
Dez-07
PMI Manufacturin g Chin a
Set-07
150 145 140 135 130 125 120 115 110 105 100 Jun-07
Dez-09
Jun-09
Jun-08
Dez-08
PMI Imports China PMI New Orders China
Dez-07
Jun-07
Dez-06
Jun-06
70 65 60 55 50 45 40 35 30 Dez-05
PMI China and business climate In China
Business Climate China
Source: Bloomberg and Millennium investment banking
15
%
10 5 0 -5
GDP China YoY
Jan-10
Out-09
Jul-09
Abr-09
Jan-09
Out-08
Jul-08
Abr-08
Jan-08
Out-07
Jul-07
-10 Abr-07
China GDP, prices and PMI Manufacturing Brazil
PPI China YoY
Source: Bloomberg and Millennium investment banking
5
Millennium investment banking
110
5 March 2010
130
120 100 80 60 40 20 0
100 100
90 80
Euro Zone OECD Leading Indicators
Mar-08
Mar-06
Mar-04
Mar-02
Mar-00
Mar-98
Mar-96
70
Nov-06 Jan-07 Mar-07 Mai-07 Jul-07 Set-07 Nov-07 Jan-08 Mar-08 Mai-08 Jul-08 Set-08 Nov-08 Jan-09 Mar-09 Mai-09 Jul-09 Set-09 Nov-09 Jan-10
70
Mar-94
OECD Leading Indicator And Confidence Indicators
Sector Overview
IFO Expectations (lhs) IFO Current Assessment (lhs) Consumer Confidence USA (rhs)
Source: Bloomberg and Millennium investment banking
6
Millennium investment banking
NAHB – US Housing Index, US Home Prices
Sector Overview
45%
5 March 2010
210
100
190 180 170 160 150 140 130 120 110 100 90
80
0%
150
60 40
Jul-09
Nov-08
Mar-08
Jul-07
Nov-06
Mar-06
Jul-05
Nov-04
Mar-04
Jul-03
Nov-02
Mar-02
S&P/CS Composite-20 City Home Price Index YoY S&P/CS Composite-20 City Home Price Index (rhs)
20 0 Mar-95 Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10
90
-45%
NAHB
Houmebuyer Affordability Index (RHS)
Source: Bloomberg and Millennium investment banking
10%
5%
0% Set-00 Mai-01 Jan-02 Set-02 Mai-03 Jan-04 Set-04 Mai-05 Jan-06 Set-06 Mai-07 Jan-08 Set-08 Mai-09
US Delinquencies and foreclosures
US Delinquencies as % of Total Loans US Foreclosures as % of total loans
Source: Bloomberg and Millennium investment banking
7
30% 15%
Real Consumption Expenditures (rhs)
Out-09
Mai-09
Dez-08
Jul-08
0%
Fev-08
Consumer Expectations (lhs)
45%
Set-07
Jun-09
Jun-08
Jun-07
Jun-06
Jun-05
Jun-04
Jun-03
Jun-02
Jun-01
0
60%
Abr-07
40
75%
Nov-06
80
90%
Jun-06
5 4 3 2 1 0 -1 -2 -3
Jan-06
120
5 March 2010
Ago-05
US Consumer expectations VIX
Sector Overview
Mar-05
Millennium investment banking
VIX
Source: Bloomberg and Millennium investment banking
$ 420
500 450 400 350 300 250 200 150
$ 1400 $ 1200 $ 1000 $ 800 $ 600 $ 400 $ 200 $0
$ 270 $ 120
RJ/CRB Commodity Price
Mar-05 Ago-05 Jan-06 Jun-06 Nov-06 Abr-07 Set-07 Fev-08 Jul-08 Dez-08 Mai-09 Out-09
-$ 30 Mar-05 Jul-05 Nov-05 Mar-06 Jul-06 Nov-06 Mar-07 Jul-07 Nov-07 Mar-08 Jul-08 Nov-08 Mar-09 Jul-09 Nov-09
Commodities
Oil
Copper
Gold (rhs)
Wheat
Source: Bloomberg, Millennium investment banking
8
Millennium investment banking
Baltic Dry Index
Sector Overview
5 March 2010
12000 9000 6000 3000
Out-09
Mai-09
Dez-08
Jul-08
Fev-08
Set-07
Abr-07
Nov-06
Jun-06
Jan-06
Ago-05
Mar-05
0
Baltic Dry Index
Source: Bloomberg, Millennium investment banking
1,3 1,2 1,1 1 0,9 0,8 0,7 0,6
S&P 500 Value/S&P 500 Growth
Mar-09
Dez-09
Jun-08
Set-07
Dez-06
Jun-05
Mar-06
Set-04
Mar-03
Dez-03
Jun-02
Set-01
Dez-00
Mar-00
Mar-09
Jun-08
Set-07
Dez-06
Mar-06
Jun-05
Set-04
Dez-03
Mar-03
Jun-02
Set-01
Dez-00
0,6 0,55 0,5 0,45 0,4 0,35 0,3 0,25 Mar-00
Value vs. Growth Small Caps vs. Big Caps
Russell 2000 vs S&P500
Source: Bloomberg, Millennium investment banking
9
Millennium investment banking
Fed Fund rates, Libor, BCE rate, Euribor
Sector Overview
5 March 2010
6%
5%
5%
4% 3%
3%
2% 1%
2%
Libor 6M
Euribor 3M
Fed Fund Rates
Euribor 6M
Out-09
Mai-09
Dez-08
Jul-08
Fev-08
Set-07
Abr-07
Jun-06
Out-09
Mai-09
Dez-08
Jul-08
Fev-08
Set-07
Abr-07
Nov-06
Jun-06
Libor 3M
Nov-06
0%
0%
BCE Rate
Source: Bloomberg, Millennium investment banking
Portugal Germany
Out-09
Spain Greece (rhs)
Mai-09
France UK
0 bp
Dez-08
Set-08 Out-08 Nov-08 Dez-08 Jan-09 Fev-09 Mar-09 Abr-09 Mai-09 Jun-09 Jul-09 Ago-09 Set-09 Out-09 Nov-09 Dez-09 Jan-10 Fev-10
0 bp
70 bp
Jul-08
40 bp
Fev-08
80 bp
140 bp
Set-07
120 bp
Abr-07
160 bp
210 bp
Nov-06
200 bp
Jun-06
500 450 400 350 300 250 200 150 100 50 0
240 bp
Sovereign CDSs & Europe 5y Index
CDS - Europe
Source: Blooomberg, Millennium investment banking
10
Millennium investment banking
5000 bp 95
3800 bp
90
2600 bp
85
1400 bp
80
200 bp
75
Brazil
Argentina (rhs)
70
Dez-09
Set-09
Jun-09
Mar-09
Dez-08
Set-08
Jun-08
Mar-08
Dez-07
-1000 bp Set-07
0 bp
Venezuela (rhs)
$/Kwanza
Fev-10
200 bp
Nov-09
400 bp
Ago-09
600 bp
Jun-09
800 bp
5 March 2010
Mar-09
Sovereign CDSs Latin America, $/Kwanza
Sector Overview
Source: Blooomberg, Millennium investment banking
Currencies
2
30
2
50
Dolar/Zloty
Fev-10
Nov-09
Ago-09
Mai-09
Fev-09
Nov-08
Ago-08
Jun-08
Mar-08
Dolar/Real
Dolar/Rupia (rhs)
Eur/Real
Eur/Zloty
Fev-10
58
Nov-09
3
Ago-09
37
Mai-09
3
Fev-09
66
Nov-08
4
Ago-08
44
4
Jun-08
74
51
Mar-08
5
5
Eur/Rupia (rhs)
Source: Blooomberg, Millennium investment banking
11
Millennium investment banking
Sector Overview
5 March 2010
Spreads Between Bund and Other Government Yields
Source: Blooomberg, Millennium investment banking
Swap Rates (changes)
Source: Blooomberg, Millennium investment banking
Euribor (changes)
Source: Blooomberg, Millennium investment banking
12
Millennium investment banking
5 March 2010
11% 10% 9% 8% 7% 6% 5% 4% 3%
600
33%
550
22%
500
11%
450
0%
Jobless Claims (lhs)
Jan-10
Fev-09
Abr-07
Mar-08
Mai-06
Jun-05
Jul-04
Ago-03
Set-02
-22% Out-01
300 Nov-00
-11%
Jan-99
350 Dez-99
Dez-09
Mar-09
Set-07
Unemployment rate - Portugal
Jun-08
Dez-06
Mar-06
Jun-05
Set-04
Mar-03
Dez-03
Jun-02
Set-01
Dez-00
400
Mar-00
Unemployment - Portugal
Sector Overview
YoY (rhs)
Source: Bloomberg and Millennium investment banking
Unemployment - Spain
13
Millennium investment banking
Unemployment – Other Countries
Sector Overview
5 March 2010
0,12 0,11 0,1 0,09 0,08 0,07 0,06 0,05 0,04
22%
11%
18% 14%
9%
10% 6%
Poland
Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09
Fev-08
Fev-07
Fev-06
Fev-05
Fev-04
Fev-03
7%
Germany
Brazil
Euro Zone
US (rhs)
Source: Bloomberg and Millennium investment banking
750
250 150
Jobless Claims 4W MA
Ago-09
350
Jun-09
450
Abr-09
550
Fev-09
900 800 700 600 500 400 300 200 100 0
650
Fev-70 Jan-73 Nov-75 Out-78 Set-81 Ago-84 Jul-87 Jun-90 Mai-93 Abr-96 Mar-99 Fev-02 Jan-05 Nov-07
US Jobless Claims (4 week MA)
Persons claiming extended unemployment insurance benefits (thousand)
Source: Bloomberg and Millennium investment banking
14
Millennium investment banking
Retail Sales (YoY)
Sector Overview
5 March 2010
32%
10%
25% 3%
18% 11%
-4%
4%
Poland Food
Portugal Non Food
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
Jan-04
Jan-03
Jan-02
Jan-00
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
Jan-04
Jan-03
Jan-02
Jan-01
Portugal Food
Jan-01
-3%
-11%
Poland Retail
Source: Bloomberg and Millennium investment banking
Set-09
Mar-09
Set-08
Mar-08
Set-07
Mar-07
Set-06
Mar-06
Set-05
85 84 83 82 81 80 79 78 77 76 75 Mar-05
Industrial Production Year Brazil YoY GDP Quarter Brazil YoY
Out-09
Abr-09
Out-08
Abr-08
Out-07
Abr-07
Out-06
Abr-06
Out-05
Abr-05
Capacity, Production and GDP In Brazil
25 20 15 10 5 0 -5 -10 -15 -20
Capacity Utilization Brazil
Source: Bloomberg and Millennium investment banking
15
Millennium investment banking
Sector Overview
5 March 2010
Credit Spreads 420 bp
500 bp
750 bp
400 bp
600 bp
300 bp
450 bp
140 bp
200 bp
300 bp
70 bp
100 bp
150 bp
0 bp
0 bp
280 bp
Markit iTraxx Financial Senior 5y CDS Index Markit iTraxx Financial Sub 5y CDS Index Source: Bloomberg, Millennium investment baking
Nov-09
Ago-09
Mai-09
Jan-09
Out-08
Jun-08
Mar-08
Nov-07
Ago-07
Abr-07
Jan-07
Set-06
210 bp
0 bp Jan-07 Abr-07 Jul-07 Out-07 Jan-08 Abr-08 Jul-08 Out-08 Jan-09 Abr-09 Jul-09 Out-09 Jan-10
350 bp
Jun-06
5 Year CDS - Europe
Industrial TMT
Consumer Non-Financial
Energy Auto (rhs)
16
Millennium investment banking
Sector Overview
5 March 2010
Banking Sector - Portugal 18% 12% 6% 0%
40%
250%
30%
200%
20%
150%
10%
100%
0%
50%
Loan to non-fin corporations Total
Loan to private individuals
Deposits
Loans
Dec-09
Dec-07
Dec-05
Dec-03
Dec-01
Dec-99
Dec-97
Dec-95
0% Dec-93
Dec-09
Dec-08
Dec-07
Dec-06
Dec-05
Dec-04
Dec-03
-10% Dec-91
Portugal’s Aggregate Credit & Deposits
Loan/Deposits (rhs)
Source: Banco de Portugal and Millennium investment banking
35%
8% 6%
25%
5%
15%
3%
5%
Dec-09
Dec-08
Dec-07
Dec-06
Dec-05
Dec-04
Dec-03
Dec-02
Dec-09
Dec-08
Dec-07
Dec-06
Corporate NPL Ratio Total NPL Ratio
-5% Dec-01
Mortgage NPL Ratio Consumer NPL Ratio
Dec-05
Dec-04
Dec-03
Dec-02
Dec-01
0%
Dec-00
2% Dec-00
Portugal’s Aggregate Loans & NPL growth
Total NPL growth
Source: Banco de Portugal and Millennium investment banking
17
Millennium investment banking
Portugal’s NPLgrowth yoy% US Delinquencies and foreclosures
Sector Overview
5 March 2010
110% 75% 40% 5%
Mortgage NLP Growth Consumer NPL Growth
Dec-09
Dec-08
Dec-07
Dec-06
Dec-05
Dec-04
Dec-03
Dec-02
Dec-01
Dec-00
-30%
Corporate NPL Growth
Source: Banco de Portugal and Millennium investment banking 6% 4% 2%
Sectorial NPL (corporate level) September Sectorial NPL (corporate level) December
Other
Education, ...
Telecoms
Services
Mining
Real estate
Transport
Hotels
Retail trade
Fishing
Construction
Utilities
Manufacturing
0% Agriculture
NPL ratios by sectors; NPL distribution by sector
Education... 4% Telecoms 16% Services 19% Mining 0% Real estate 6% Transport 4%
Manufact 0%
Agriculture 2% Utilities 0% Construction 13% Fishing 3% Retail trade Hotels 19% 14%
Source: Banco de Portugal and Millennium investment banking
18
-5.00% -0.35%
Total loans spanish banking system (YoY%)
35.00% 35%
25.00% 25%
15.00% 15%
5.00% 5%
-5.00% -2.72%
Spanish Banks - Total loan growth YoY% Corporate Loans YoY % Individual Loans YoY %
Sep-09
Jun-07
Mar-05
Dec-02
Sep-00
5.00%
Jun-98
15.00%
Mar-96
25.00%
Dec-93
Sep-63 Sep-65 Sep-67 Sep-69 Sep-71 Sep-73 Sep-75 Sep-77 Sep-79 Sep-81 Sep-83 Sep-85 Sep-87 Sep-89 Sep-91 Sep-93 Sep-95 Sep-97 Sep-99 Sep-01 Sep-03 Sep-05 Sep-07 Sep-09
Loan growth in Spain
Oct-72 Mar-75 Sep-77 Feb-80 Aug-82 Jan-85 Jul-87 Dec-89 Jun-92 Dec-94 May-97 Nov-99 Apr-02 Oct-04 Apr-07 Sep-09
Sep-63 Sep-65 Sep-67 Sep-69 Sep-71 Sep-73 Sep-75 Sep-77 Sep-79 Sep-81 Sep-83 Sep-85 Sep-87 Sep-89 Sep-91 Sep-93 Sep-95 Sep-97 Sep-99 Sep-01 Sep-03 Sep-05 Sep-07 Sep-09
Millennium investment banking Sector Overview 5 March 2010
Banking Sector - Spain 40%
30%
20%
10% 0%
-10%
Mortgages YoY %
Source: Bank of Spain, Millennium investment banking
-5% 0%
Loans by Cajas + Cooperatives
19
Millennium investment banking
500%
300%
5 March 2010
300%
400%
200%
300% 200%
100%
100%
0%
200% 100%
0%
0%
Sep-09
Mar-08
Dec-08
Jun-07
Sep-06
Dec-05
Jun-04
Mar-05
Sep-03
Dec-02
Jun-01
Mar-02
Sep-00
-100% Dec-99
-100%
-100% Dec-99 Sep-00 Jun-01 Mar-02 Dec-02 Sep-03 Jun-04 Mar-05 Dec-05 Sep-06 Jun-07 Mar-08 Dec-08 Sep-09
NPL growth in Spain
Sector Overview
Mortgages NPL YoY% (RHS) Individual NPL YoY% (RHS) Corporate NPL YoY% (LHS)
Total NPL YoY %
Source: Bank of Spain, Millennium investment banking
10%
8.9% 8.00% 6.00%
5.08%
5%
4.00% 2.00%
NPL as % of total loans
Sep-09
Sep-08
Sep-07
Sep-06
Sep-05
Sep-04
Sep-03
Sep-02
Sep-01
Sep-00
0%
Sep-99
0.00%
Dec-63 Dec-65 Dec-67 Dec-69 Dec-71 Dec-73 Dec-75 Dec-77 Dec-79 Dec-81 Dec-83 Dec-85 Dec-87 Dec-89 Dec-91 Dec-93 Dec-95 Dec-97 Dec-99 Dec-01 Dec-03 Dec-05 Dec-07 Dec-09
NPL ratios in Spain
Corporate NPL as % of Loans Mortgages NPL as % of Loans Individual NPL as % of Loans
Source: Bank of Spain, Millennium investment banking 20
Millennium investment banking
2
0
0
-5
-2
-10
-4 Dez-02
House prices -Spain QoQ% (RHS)
5 March 2010
Mar-09
5
Dez-07
4
Set-06
10
Jun-05
6
Mar-04
15
Set-01
8
Jun-00
20
Mar-99
Housing market - Spain
Sector Overview
YoY% (LHS)
Source: Bank of Spain, Millennium investment banking NPL ratios by sectors; NPL distribution by sector 10.00%
4Q08
Other Services 6%
1Q09 7.8%
6.8% 5.00%
3.9%
3.0% 2.7%
Agriculture 2%
3.0%
2.2%
2.0%
Horeca 2%
Other Services
Transport, storage and Financial intermediation Real Estate activities
Horeca
Wholesale and retail
Construction
0.00% Industry
Construction 20% Wholesale and retail 7%
Real Estate activities 51%
0.5% Agriculture
Industry 9%
Financial intermediation (ex credit institutions) 1%
Transport, storage and communicatio n 2%
21
Millennium investment banking
Sep-09
Sep-07
Sep-05
Sep-94 Sep-95 Sep-96 Sep-97 Sep-98 Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09
-20%
Sep-03
0%
Sep-01
20%
18% 17% 16% 15% 14% 13% 12% 11% 10% Sep-99
40%
35% 30% 25% 20% 15% 10% 5% 0% Sep-97
40% 30% 20% 10% 0% -10% -20%
Sep-95
60%
5 March 2010
Sep-93
Real estate and construction In Spain
Sector Overview
Weight of Real Estate loans in Spanish banking system (LHS)
Loans to Real Estate YoY% (LHS) Loans to Construction YoY% (RHS)
Weight of Construction loans in Spanish banking system (RHS)
Source: Bank of Spain, Millennium investment banking
€ 60,000,000
€ 100,000,000 € 80,000,000
€ 40,000,000
€ 60,000,000 € 40,000,000
€ 20,000,000
€ 20,000,000
Total Provisions
Specific Provisions
General Provisions
Specific provisions
Sep-09
Sep-08
Sep-07
Sep-06
Sep-05
Sep-04
Sep-03
Sep-02
Sep-01
Sep-00
€0 Sep-99
Sep-08
Sep-06
Sep-04
Sep-02
Sep-00
€0 Sep-98
NPL’s and specific provisions and Total, specific and general provisions
NPL
Source: Bank of Spain, Millennium investment banking
22
Millennium investment banking
300%
285%
5 March 2010
210%
231%
250% 200%
188% 186%
140%
112%
123% 127% 130%
138%
146%
160%
169%
178% 161%
96%
150% 69%
100%
70%
50%
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
0%
1997
Dec-09
Jun-09
Dec-08
Jun-08
Dec-07
Jun-07
Dec-06
Jun-06
Dec-05
0% Jun-05
Spanish coverage ratio And Loan to Deposit ratio
Sector Overview
Average Loan to Deposit Ratio - Iberia Source: Bank of Spain, Millennium investment banking
23
Millennium investment banking
Sector Overview
5 March 2010
Construction, Cement 800
10%
700
0%
600
YoY (rhs)
400
Cement Sales Cimpor+Secil
2007
2008
2009
Dec
Nov
Oct
Sep
Aug
Jul
300 Jan
1Q 09
1Q 08
1Q 07
1Q 06
1Q 05
1Q 04
1Q 03
1Q 02
1Q 01
1Q 00
-30% 1Q 99
0
500
Jun
-20%
May
-10%
1 000
Apr
2 000
20%
Mar
3 000
Feb
Domestic Cement Sales in Portugal (k tons)
2010
Source:GPEARI
135 125 115 105 95 85 75 65
real Q GDP YoY
Construction index (rhs)
0 -20 -40 -60 -80 Dec-03 Apr-04 Aug-04 Dec-04 Apr-05 Aug-05 Dec-05 Apr-06 Aug-06 Dec-06 Apr-07 Aug-07 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09
4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% Mar-00 Dec-00 Sep-01 Jun-02 Mar-03 Dec-03 Sep-04 Jun-05 Mar-06 Dec-06 Sep-07 Jun-08 Mar-09
GDP & Construction Index & Other Construction Indicators in Portugal
Construction and Public works - Activity Expectations Construction and Public works - Order book Construction and Public works - Price Expectations Construction - Confidence indicator
Sources: INE, BP, GPEARI
24
-40% -50%
YoY (rhs)
1.0 Jan
1Q 02 3Q 02 1Q 03 3Q 03 1Q 04 3Q 04 1Q 05 3Q 05 1Q 06 3Q 06 1Q 07 3Q 07 1Q 08 3Q 08 1Q 09 3Q 09
6
2.0
2007
Domestic Sales
2008
2009
Dec
8
3.0
Nov
-30%
Oct
-20%
Sep
10
4.0
Aug
-10%
Jul
12
5.0
Jun
0%
May
10%
14
6.0
Apr
20%
16
5 March 2010
Mar
Domestic Cement Sales in Spain (mn tons)
Sector Overview
Feb
Millennium investment banking
2010
Source: Oficemen
16
20%
5.5
15% 14
10% 5%
12
4.5
0% -5%
10
3.5
-10%
YoY (rhs)
Domestic Sales
2006
2007
2008
Dec
Nov
Oct
Sep
Aug
Jul
Jun
May
Apr
Mar
2.5 Feb
-15%
Jan
8 1Q 02 3Q 02 1Q 03 3Q 03 1Q 04 3Q 04 1Q 05 3Q 05 1Q 06 3Q 06 1Q 07 3Q 07 1Q 08 3Q 08 1Q 09 3Q 09
Domestic Cement Sales in Brazil (mn tons)
2009
Source:SNIC
25
Millennium investment banking
4.5
5 March 2010
20%
mn ton
10%
3.5
1.50
mn ton
0%
2006
2007
2008
Dec
Nov
Oct
Sep
Aug
Jul
Jun
May
Apr
2Q 08 1Q 09
Domestic Sales
0.50 Mar
YoY (rhs)
4Q 03 3Q 04 2Q 05 1Q 06 4Q 06 3Q 07
-20% 3Q 01 2Q 02 1Q 03
1.5
1.00
Feb
-10%
Jan
2.5
1Q 00 4Q 00
Domestic Cement Sales in South Africa (mn tons)
Sector Overview
2009
Source: Genstats
26
Millennium investment banking
Sector Overview
5 March 2010
Telecoms
Mobile subs growth (lhs)
3,300
-8% 3Q09
-6% 2Q09
3,400 1Q09
-4%
4Q08
3,500
3Q08
-2%
2Q08
3,600
1Q08
1%
4Q07
3,700
3Q07
3%
4Q09
3Q09
2Q09
1Q09
4Q08
3Q08
100% 2Q08
4% 1Q08
120%
4Q07
8%
3Q07
140%
2Q07
12%
3,800
2Q07
160%
1Q07
16%
1Q07
Mobile Penetration and Fixed Voice Subscribers in Portugal
Fixed Telephone subs (th) (lhs) Fixed Telephone subs growth (rhs)
Mobile penetration rate (rhs)
Source: Anacom, Millennium investment banking
24%
20.4% 18.7%
20% 16%
17.6% 17.0%
14.8%
12% 8%
20%
50%
16%
45%
12%
40%
8%
8.3%
4%
35%
4%
Number of Fixed Broadband subs / 100 Inh. Number of Active Mobile BB subs (Datacards and others) / 100 Inh.
4Q09
3Q09
2Q09
1Q09
4Q08
3Q08
2Q08
1Q08
4Q07
3Q07
30% 2Q07
0% 1Q07
4Q09
3Q09
2Q09
1Q09
4Q08
3Q08
2Q08
1Q08
4Q07
3Q07
2Q07
0% 1Q07
Broadband and Pay TV Penetration in Portugal
Pay TV subs YoY growth (lhs) % Pay TV subscribers / Total households (rhs)
Source: Anacom, Millennium investment banking
27
Millennium investment banking
Mobile Penetration and Fixed Voice Subscribers in Spain
Sector Overview
20,500 20,250
5 March 2010
6%
12%
4%
8%
110%
20,000
105%
Mobile subs growth (lhs)
3Q09
2Q09
1Q09
4Q08
Fixed Telephone accesses (th) (lhs) Fixed Telephone accesses growth (rhs)
3Q08
100% 2Q08
0% 1Q08
0%
4Q07
4%
3Q09
2Q09
1Q09
4Q08
3Q08
2Q08
1Q08
4Q07
3Q07
19,500
2%
3Q07
19,750
Mobile penetration rate (rhs)
Source: CMT, Millennium investment banking
Pay TV subs YoY growth (lhs) % Pay TV subscribers / Total households (rhs)
3Q09
3.7% 2Q09
2.3% 1Q09
20.5%
4Q08
19.0%
3Q08
2Q08
20%
1Q08
-8%
4Q07
22%
24% 20% 16% 12% 8% 4% 0% 3Q07
-4% 3Q09
24%
2Q09
0%
1Q09
26%
4Q08
4%
3Q08
28%
2Q08
8%
1Q08
30%
4Q07
12%
3Q07
Broadband and Pay TV Penetration in Spain
Number of Fixed Broadband subs/ 100 Inh. Number of Mobile Broadband subs (Datacards only)/ 100 Inh.
Source: CMT, Millennium investment banking
28
Millennium investment banking
5 March 2010
28%
190 170
21%
150
14%
130
7%
110 Jan-10
Nov-09
Set-09
Jul-09
Mai-09
Mar-09
Jan-09
Nov-08
Set-08
Jul-08
Mai-08
0% Mar-08
90 Jan-08
Mobile Subscribers in Brazil
Sector Overview
Number of Mobile subscribers (millions) (lhs) YoY growth (rhs) Source: ANATEL, Millennium investment banking (For further information please refer to Snapshot: Portugal Telecom & Telefónica - Brazilian Mobile Market MoM - Net adds performance remains strong, 22/02/10)
29
Millennium investment banking
Sector Overview
5 March 2010
Utilities 50
10%
40
5%
30
0%
20
-5%
10 Fev-10
Dez-09
Out-09
Ago-09
Jun-09
Abr-09
Fev-09
OMEL DABS Spain
Portugal
OMEL DABS Portugal
Source: Bloomberg, Millennium investment banking
Espanha
Source: Ren (Rede Eléctrica Nacional), Ree (Red Electrica Espana)
01-03-2010
01-01-2010
01-12-2009
01-11-2009
01-10-2009
01-09-2009
01-08-2009
01-07-2009
01-06-2009
01-05-2009
01-04-2009
01-03-2009
01-02-2009
25 23 21 19 17 15 13 11 9 7 5 01-01-2009
CO2 costs
-15%
Jan-08 Fev-08 Mar-08 Abr-08 Mai-08 Jun-08 Jul-08 Ago-08 Set-08 Out-08 Nov-08 Dez-08 Jan-09 Fev-09 Mar-09 Abr-09 May-09 Jun-09 Jul-09 Ago-09 Set-09 Out-09 Nov-09 Dez-09 Jan-09 Fev-09
-10%
0
01-02-2010
Energy Prices OMEL Day Ahead Baseload Spot in Iberia (€/MW) + Electricity Consumption YoY adjusted to temperature and Working days
Source: Bloomberg
30
Millennium investment banking
48%
5 March 2010
3,300 39%
24%
26%
2,700
28% 25% 23%
2,500 2,300
18% 18%
17%
24% 16%
20%
34%
33% 21% 21% 22%
25%
3,100 2,900
28%
34%
26%
30%
29%
35%
39%
40%
45% 40%
3,500
43%
50%
36%
Wind in the Portuguese Energy System
Sector Overview
2,100 1,900
Jan-08 Fev-08 Mar-08 Abr-08 Mai-08 Jun-08 Jul-08 Ago-08 Set-08 Out-08 Nov-08 Dez-08 Jan-09 Fev-09 Mar-09 Abr-09 Mai-09 Jun-09 Jul-09 Ago-09 Set-09 Out-09 Nov-09 Dez-09 Jan-10
15%
Load Factor
Installed capacity (MWs)
Source: Ren (Rede Eléctrica Nacional) , Millennium investment banking 40% 37% 35%
17,500
31%
30% 32% 28% 29%
35%
16,500 16,000 15,500
18% 19% 16% 19%
22%
23%
25% 25% 16%
20%
19% 19% 17% 19% 21%
25% 21%
25%
27%
30%
17,000
15%
15,000 14,500 14,000 13,500 13,000
Jan-08 Fev-08 Mar-08 Abr-08 Mai-08 Jun-08 Jul-08 Ago-08 Set-08 Out-08 Nov-08 Dez-08 Jan-09 Fev-09 Mar-09 Abr-09 Mai-09 Jun-09 Jul-09 Ago-09 Set-09 Out-09 Nov-09 Dez-09
Wind in the Spanish Energy System
Load Factor
Installed capacity (MWs)
Source: Ree (Red Electrica Espana) , Millennium investment banking
31
Millennium investment banking
Sector Overview
5 March 2010
Media Audience Share - all-day (monthly)
34%
Audience Share - prime-time (monthly)
43% 33%
24%
23% 14%
13%
4%
SIC
TVI
RTP1
2:
Others
SIC
TVI
RTP1
Dez-09
Dez-08
Dez-07
Jan-07
Dez-09
Dez-08
Dez-07
3% Jan-07
TV Audience Shares in Portugal
2:
Others
Source: Marktest, Millennium investment banking; numbers are simple averages of monthly data
32
Millennium investment banking
Sector Overview
5 March 2010
Motorways Average Daily Traffic Shadow Tolls (YoY) in Portugal
2010 Jan
2009
Average
5.3%
(1) C. Prata*
Dec
Nov
Oct
Sept
August
2009 July
June
May
April
Mar
Feb
Jan
3.8%
4.1%
2.6%
4.5%
5.1%
6.0%
6.1%
6.1%
4.1%
4.5%
1.7%
1.0%
-1.4%
7.8%
5.0%
6.1%
5.3%
7.4%
6.4%
5.1%
4.3%
5.4%
6.2%
3.9%
7.5%
2.7%
-0.4%
B. Lit. Alta*
5.9%
1.8%
2.8%
2.5%
3.7%
3.4%
5.0%
6.9%
4.2%
1.9%
3.5%
-5.3%
-3.3%
-5.7%
(1) G. Porto*
8.0%
6.7%
6.2%
4.5%
4.5%
8.9%
12.9%
10.6%
7.5%
8.2%
3.9%
9.9%
2.7%
0.9%
(1) N Litoral
1.1%
3.3%
2.5%
0.7%
3.2%
5.3%
7.0%
6.1%
5.4%
2.6%
1.1%
1.7%
2.5%
1.0%
Int. Norte
25%
5.2%
21%
9.0%
6.4%
4.3%
6.7%
9.0%
6.4%
4.4%
10.5%
-6.4%
-3.0%
-8.4%
B. Interior
3.7%
0.4%
-1.0%
-0.2%
5.6%
2.6%
0.7%
4.5%
6.2%
1.6%
10.4% -14.3%
-2.5%
-7.5%
Algarve -5.6% -1.3% -5.0% -6.5% -1.1% -2.2% (1) Potentially converted in real tolls; * Shadow tolls belonging to ME group Source: Estradas de Portugal, Millennium investment banking
0.8%
1.4%
6.9%
-4.0%
-3.1%
-5.3%
8.7%
-11%
Port of Lisbon Y-t-D
2010 Jan
2009
Nr. of Containers
-7.7%
-7.7%
TEU's
-4.2%
Tons
-0.4%
Traffic Containers at Port of Lisbon (YoY)
2009 July June
Dec
Nov
Oct
Sept
Aug
-11.7%
-15%
-20%
-8%
-16%
1%
-24%
-4.2%
-9.9%
-11%
-18%
-7%
-14%
3%
-0.4%
-11.8%
-11%
-15%
-4%
-15%
-3%
2008
May
April
Mar
Feb
Jan
-7%
-11%
-11%
-16%
-5%
-6%
-0.1%
-21%
-4%
-10%
-8%
-14%
-4%
-8%
0.2%
-22%
-7%
-16%
-13%
-14%
-8%
-11%
-0.6%
Source: Lisbon Port Authority, Millennium investment banking
33
Millennium investment banking
Sector Overview
5 March 2010
Disclosures
This report has been prepared on behalf of Millennium investment banking (Mib), a registered trademark of Banco Comercial Português, S.A. (Millennium bcp). Millennium bcp is regulated by Comissão de Mercado de Valores Mobiliários. Recommendations: Buy means more than 10% absolute return; Neutral means between 0% and +10% absolute return; Reduce means between -10% and 0% absolute return; Sell means less than -10% absolute return. Unless otherwise specified, the time frame for price targets included in this report is current year-end or next year-end. Risk is defined by the analyst’s view in a qualitative way. Usually we update our models and price targets in between 6 and 18 months. Millennium bcp prohibits its analysts and members of their households to own any shares of the companies covered by them. BCP group may have business relationships with the companies mentioned in this report. Millennium bcp, expects to receive or intends to seek compensations for investment banking services from the companies mentioned in this report. The views expressed above, accurately reflect personal views of the authors. They have not and will not receive any compensation for providing a specific recommendation or view in this report. There were not any agreements between the companies covered and the analysts regarding the recommendation. Analysts are paid in part based on the profitability of BCP group, which includes investment banking revenues. BCP group has more than 2% of EDP. BCP group has more than 2% of Cimpor. BCP group has more than 2% of Novabase. BCP group has more than 2% of Sonaecom. BCP group has more than 2% of Cofina. A member of the Executive Board of Directors of Millennium bcp is member of the General and Supervisory Board of EDP - Energias de Portugal, SA. Banco Millennium bcp Investimento, S.A. (merged into Millennium bcp) was chosen as a joint global coordinator of the Initial Public Offering of EDP Renováveis. Banco Millennium bcp Investimento, S.A. (merged into Millennium bcp) was part of the consortium, as a Co-Leader, of BES rights issue, done in April 2009.
34
Millennium investment banking
Sector Overview
5 March 2010
Recommendations on Millennium bcp covered companies (%) Recommendation
Feb-10
Jan-10
Buy
81%
78%
Dec-09 Sep-09 Jun-09 Mar-09 Dec-08 Sep-08 Jun-08 Mar-08 Dec-07 Jun-07 Dec-06 Dec-05 Dec-04 63%
41%
59%
56%
54%
62%
71%
63%
41%
19%
37%
30%
Neutral
7%
4%
15%
15%
7%
0%
4%
0%
8%
4%
27%
24%
11%
40%
6%
Reduce
0%
7%
7%
19%
11%
4%
0%
0%
0%
0%
0%
33%
21%
5%
6%
63%
Sell
0%
0%
4%
11%
0%
0%
0%
8%
4%
8%
14%
19%
16%
5%
0%
Unrated/Under Revision
11%
11%
11%
15%
22%
41%
42%
31%
17%
25%
18%
5%
16%
20%
25%
-3%
20%
30%
Performance
-5%
-6%
0%
19%
15%
-3%
-21%
-10%
-15%
-19%
PSI 20
7,559
7,927
8,464
8,475
7,111
6,175
6,341
8,033
8,904
10,496 13,019 13,385 11,198
13%
na
8,619
7,600
DISCLAIMER This information is not an offer to sell or a solicitation to enter into any particular deal or contract. It consists of data compiled by or of opinions or estimates from Banco Comercial Português, S.A. and no representation or warranty is made as to its accuracy or completeness. This information is merely an auxiliary means of analysis to be used by its recipients, who will be solely responsible for its use, including for any losses or damages that may, directly or indirectly, derive from it. Its reproduction is not allowed without permission from the BCP group. The data herein disclosed are merely indicative and reflect the market conditions prevailing on the date they have been collected. Thus, its accuracy and timing must absolutely be confirmed before its usage. Any alteration in the market conditions shall imply the introduction of changes in this report. This information / these opinions may be altered without prior notice and may differ or be contrary to opinions expressed by other business areas of BCP group as a result of using different assumptions and criteria. The analysis contained herein is based on numerous assumptions. Different assumptions could result in materially different results.
35
OFFICE LOCATIONS Millennium investment banking Av. José Malhoa, Lote 27 - 5 1099-010 Lisboa Portugal
Telephone +351 21 003 7811 Fax
+351 21 003 7819 / 39
Equity Team
Luis Feria (Head of Equities) Equity Research +351 21 003 7820
Institutional Equity Sales +351 21 003 7880
António Seladas, CFA (Head)
Kartsen Sommer (Head)
Fundamental Analysis
Pedro Conclaves
Alexandra Delgado (Telecoms) João Flores (Media and Retail)
Equity Trading +351 21 003 7850
João Mateus (Industrials and Utilities)
Paulo Cruz (Head)
Rita Silva (Banks and IT)
Gonçalo Lima
Vanda Mesquita (Utilities and Oil&Gas)
Jorge Caldeira
Market Analysis
Manuel Lança Lopes
Ramiro Loureiro
Paulo Santos
Sónia Martins
Pedro Lalanda
Telma Santos
Nuno Marques
Publishing
Tiago Alves
Sónia Primo Equity Derivatives +351 21 003 7890 Prime Brokerage +351 21 003 7855
Vitor Almeida (Head) Hugo Ferreira Pinto
Jorge Pina (Head) Diogo Justino Inês Conceição Marco Barata Maria Cardoso Baptista
