2007 greek equities guide -...

Please read important disclosures at the end of the report.

2007 GREEK EQUITIES GUIDE

Investment Strategy ASE Index: 4,699.8 Report Issue Date: 26/01/07

Greek indices 25/01/2007 % daily % m-o-m % Y-t-d Athens General 4,699.75 0.03 7.67 6.96 FTSE ASE 20 2,567.33 0.05 8.47 8.00 FTSE ASE 40 5,530.53 0.13 7.55 5.44 FTSE ASE 80 911.67 -0.06 5.11 3.53 Statistics 25/01/2007 % daily % m-o-m % Y-t-d Market Cap. 163.47 -0.01% 7.21% 6.38% Market Cap. / GDP 78.1 *Note: Eurostat, amounts in EUR bn unless otherwise stated Valuation Ratios Mcap (€ bn) P/E 07e P/E 08f PEG 07e ASE Composite 136.60 15.7 x 13.3 x 0.98 FTSE 20 (GR) 120.27 15.5 x 13.1 x 0.83 Dow Jones 30(US) 3,217.45 14.7 x 13.3 x 1.51 NASDAQ (US) 2,864.16 23.4 x 19.2 x 0.96 S&P 500 (US) 10,158.08 15.3 x 13.7 x 1.49 DAX Price (DE) 842.09 13.2 x 11.9 x 1.21 CAC 40 (FR) 1,354.68 13.1 x 12.0 x 1.54 FTSE 100 (GB) 2,369.22 12.4 x 11.7 x 1.45 DJ Stoxx 600 9,007.50 13.6 x 12.5 x 1.33 Nikkei 225 (JP) 2,300.80 18.2 x 16.6 x 1.59 Hang Seng (HK) 996.86 15.6 x 13.6 x 1.89 Source: JCF Quant Universe Ratios 2004 2005 2006e 2007f P/E (x) 28.4 23.0 18.1 15.6 P/BV (x) 3.3 3.3 3.2 2.9 EV/EBITDA (x) 10.5 10.9 9.1 8.0 EV/Sales (x) 1.9 1.7 1.5 1.4 Dividend yield (%) 2.3 2.2 2.9 3.4 Macro indicators 2004 2005e 2006f 2007f Real GDP Growth 4.70% 3.70% 4.00% 3.90% Inflation (CPI) 3.03% 3.50% 3.30% 3.30% Source : Updated GSP 2006-2009

a picturesque sunset from Myconos island (Cyclades)

…Rolling high on M&A speculation

The Greek economy is set to continue growing vigorously in 2007 assuming that the overall picture of the external environment will not alter significantly and remain favorable.

The Greek Government’s targets as depicted in the revised Growth and Stability program for 2006-2009 have been upwards revised but remain focused on the rationalization of public spending, the increase of State revenues, and the reduction of debt, deficit and unemployment.

The corporate tax reform brings the nominal tax rate to 25% as of Jan 1, 2007 from 35% in 2004.

Privatizations should continue in ’07, with the State intending to sell a further stake in Hellenic Telecoms (OTE), Postal Savings Bank, Hellenic Casino of Parnitha, and possibly Public Gas Corporation (DEPA). Additionally, significant activity is expected to arise from the newly established regulatory framework on the State’s partnerships with investors (PPPs and PFIs).

Note, however, that 2007 is a pre-elections period – the deadline is set for March ’08 but Parliamentary elections may take place sooner depending on political conditions and events.

At the same time, regulatory amendments in the Hellenic Capital Market with the introduction of Exchange Traded Funds (ETF's) and a new small caps market could attract more investors.

Key areas of interest during 2007: Banks (M&A speculation and activity), Energy/Electricity (tender for IPPs, expansion of renewable energy sources), Construction (large backlog, possibly M&A activity), Real Estate (high yields remain for commercial real estate property), Medical sector (restructuring in the sector, possibly M&A activity), Passenger shipping (M&A activity, restructuring), Specialty Chemicals (robust growth, expansion into the Balkans).

We see good growth potential in National Bank of Greece (NBGr.AT), Alpha Bank (ACBr.AT), GEK (HRMr.AT), Motor Oil (MORr.AT), Titan (TTNr.AT), Metka (MTKr.AT), Jumbo (BABr.AT), Blue Star (STRr.AT), Lamda Detergent (BLLr.AT), AudioVisual (ADVr.AT), Autohellas (AUTr.AT), Neochimiki (NCHr.AT) and Fourlis (FRLr.AT).

In our calculations the General Index is trading fairly at 4,700 points. For the first time after a long period of time, the ratio of earnings/bond yields stands below its historic mean – evident of equities’ soaring gains and elevated prices. The market now trades much higher than its 5-year average P/E multiple. Still we believe that the market should incorporate an M&A premium of 5%-10% that may bring the Athens General Index in the region of 4,935-5,170 points.

Piraeus Securities 2007 GREEK EQUITIES UPDATE


CONTENTS

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INVESTMENT PREVIEW: GREECE MACRO THEME The Greek economy is set to continue growing vigorously in 2007 assuming that the overall picture of

the external environment does not alter significantly and remains favorable – the Government’s base-case scenario in the National Strategic Plan 2007-2013 targets GDP growth in the region of 4.0% all the way to ’09 while private consumption is expected to be among the main contributors along with supportive exports and gross fixed capital formation (favorable credit terms, higher disposable income and expansion to new markets). The Greek economy has responded to the reforms introduced in 2004 and 2005, the supportive fiscal policies and the accommodative monetary policy in the Eurozone while it has achieved the highest rates in the European zone despite soaring oil prices and a slump of construction activity post the Olympic games in 2004. The Greek Government’s targets as depicted in the revised Growth and Stability program 2006-2009 have been upwards revised but remain focused on the rationalization of public spending, the increase of State revenues, and the reduction of debt, deficit and unemployment.

GREECE: KEY THEMES FOR 2007

• Tax reforms continue this year with the introduction of personal tax rate cuts and the narrowing to the nominal corporate tax rate to 25% from 35% three years ago.

• A further privatization program has been prioritized by the Greek Government involving an additional stake sale in Hellenic Telecoms (OTE) while there are certain other planned steps referring to the development of assets of the Ministry of Tourism Development, the listing of the Athens International Airport (facing some problems recently) and possibly later on the listing of the Public Gas Corporation (DEPA). According to mounting press reports, the Greek State will also narrow further its stake in Postal Savings Bank and ATEBank. Additionally, significant activity is expected to arise from the newly established regulatory framework for partnerships with investors (PPPs and PFIs), which could result in the optimum use of real estate property of various State-owned entities (Olympic properties, Port Authorities etc.).

• The Government has announced a backlog of EUR18bn public projects in the country during the period 2007-2013: EUR13.7bn for infrastructure (7 concession projects of c. EUR8bn) and another EUR4.3bn for environmental projects – construction of concession projects is expected to start in the 2H ’07 with respective effect on profits of engaged construction groups.

• Key areas of interest during 2007: Banks (M&A speculation and activity), Energy/Electricity (tender for IPPs, expansion of renewable energy sources), Construction (large backlog, possibly M&A activity), Real Estate (high yields remain for commercial real estate property), Medical sector (restructuring in the sector, possibly M&A activity), Passenger shipping (M&A activity, restructuring), and Specialty Chemicals (expansion into the Balkans, operating momentum).

• Regulatory amendments in the Hellenic Capital Market with the introduction of Exchange Traded Funds (ETF's) and a new small caps market.

• Pre elections period – deadline is March ’08 but Parliamentary elections may take place sooner depending on political conditions and events.

INVESTMENT PICKS We cover stocks of ~EUR125bn total market cap or 76.5% of the market’s capitalisation as of January 25, 2007. Greek equities have been of extreme favour to investors compared with bonds since Oct ’01. It is true that after a long time earnings/bond yields ratio is lying below mean – evident of equities’ soaring gains and appreciated prices (the market is trading much higher than the 5-year average PER). With regard to PER the market is trading for the first time after 30/09/2004 with a PEG of ~1.0x after a significant appreciation of stock prices and a decelerating eps growth in ’07. Still our universe is trading on 15.6x net earnings ’07, with an eps growth of 16% and dividend yield ’07 of 3.4%. We see good growth potential in National Bank of Greece (NBGr.AT), Alpha Bank (ACBr.AT), GEK (HRMr.AT), Motor Oil (MORr.AT), Titan (TTNr.AT), Metka (MTKr.AT), Jumbo (BABr.AT), Blue Star (STRr.AT), Lamda Detergent (BLLr.AT), AudioVisual (ADVr.AT), Autohellas (AUTr.AT), Neochimiki (NCHr.AT) and Fourlis (FRLr.AT). Our new target price for the General Index stands at 4,700 points. Still we believe that the market should incorporate an M&A premium of 5%-10% that may bring the Athens General Index in the region of 4,935-5,170 points.



MACRO

A small glance at the past During 2000-2005, Greek GDP grew by a 7.8% CAGR to EUR228.16bn (at current prices). Gross value added (output of goods & services minus intermediate consumption) increased by an 8.1% CAGR to EUR207.75bn. From an expenditure approach, final consumption grew by a 7.0% CAGR to EUR189.28bn to account for 83.0% of 2005 GDP, with household spending at 79.6% of total consumption and 66.0% of GDP. Gross capital formation (investments) was also buoyant, up by a 7.1% CAGR to EUR55.22bn or 24.2% of GDP. Finally, exports grew by a 4.4% CAGR at a still low EUR42.02bn or 18.4% of GDP, with imports posting a more moderate rise of 2.6% per annum but still accounting for a 26% cut in gross domestic product.

Greece - Gross Domestic Product at Market Prices (Historic figures) EUR bn 2000 2001 2002 2003 2004 2005 Production approach Output of goods & services (at basic prices) 239.59 253.42 272.96 295.22 322.10 342.48 -Intermediate consumption (at purchasers' prices) 98.98 102.94 110.29 117.27 128.82 134.72 =Gross value added (at basic prices) 140.62 150.48 162.67 177.95 193.29 207.75 +Taxes on products 18.52 19.53 20.26 20.78 21.60 22.54 -Subsidies on products 2.62 2.01 1.93 2.13 2.15 2.13 Expenditure approach +Final consumption expenditure 134.74 144.52 155.34 165.31 177.50 189.28 Households 106.32 114.51 121.90 130.61 140.03 150.58 PNPISH 3.79 4.20 4.58 5.16 5.77 6.21 General Government 24.62 25.81 28.87 29.53 31.70 32.49 +Gross capital formation 39.18 40.99 44.02 50.27 53.99 55.22 Gross fixed capital formation 36.27 38.33 41.30 47.87 51.94 53.40 Changes in inventories 2.91 2.66 2.73 2.40 2.05 1.83 +Exports of goods & services 33.85 34.93 33.06 35.19 38.98 42.02 -Imports of goods & services 51.26 52.44 51.42 54.16 57.73 58.37 Income approach +Compensation of employees 49.09 53.68 59.84 64.87 71.80 76.18 +Gross operating surplus /mixed income 91.13 96.47 102.56 112.89 121.25 131.33 +Taxes on production & imports 19.29 20.22 20.79 21.34 22.15 23.16 -Subsidies 3.00 2.37 2.28 2.49 2.46 2.52 GDP at market prices 156.51 167.99 181.00 196.60 212.74 228.16 y-o-y 7.3% 7.7% 8.6% 8.2% 7.2% Source: National Statistics Service Note: The figures have been derived following a restatement of the base year in accordance with regulation 2223/96 (ESA95)



Greece - Main Macro Figures at Market Prices (Historic figures) EUR bn 2000 2001 2002 2003 2004 2005 GDP at market prices 156.51 167.99 181.00 196.60 212.74 228.16 +Primary income receivable from the rest of the world 6.95 6.14 5.22 5.04 5.20 6.44 -Primary income payable to the rest of the world 6.58 5.93 5.70 6.73 7.34 9.27 Gross national income at market prices 156.88 168.21 180.53 194.92 210.60 225.33 -Consumption of fixed capital 16.84 17.87 18.92 20.07 21.36 22.78 Net national income at market prices 140.04 150.34 161.61 174.84 189.24 202.55 +Current transfers receivable from the rest of the world 3.10 3.06 2.47 2.70 2.63 2.53 -Current transfers payable to the rest of the world 1.50 1.50 1.66 1.83 2.24 2.82 Net national disposable income 141.64 151.90 162.42 175.71 189.63 202.26 -Final consumption expenditure 134.74 144.52 155.34 165.31 177.50 189.28 % of disposable income 95% 95% 96% 94% 94% 94% Net savings 6.90 7.38 7.08 10.40 12.14 12.98 +Capital transfers receivable from the rest of the world 3.42 2.03 1.73 2.43 3.19 2.87 -Capital transfers payable to the rest of the world 0.09 0.15 0.16 0.14 0.16 0.25 -Gross capital formation 39.18 40.99 44.02 50.27 53.99 55.22 +Consumption of fixed capital 16.84 17.87 18.92 20.07 21.36 22.78 Net lending (+) /Net borrowing (-) -12.11 -13.87 -16.46 -17.51 -17.47 -16.85 Source: National Statistics Service Note: The figures have been derived following a restatement of the base year in accordance with regulation 2223/96 (ESA95)

Further progress achieved in 2006…

Greece over-delivered in 2006 as the country managed to:

a) halve budget deficit to 2.6% of GDP from 5.2% in 2005 – in line with the pledge it had made to its European counterparts, and at the same time,

b) accelerate GDP growth to 4.0% from 3.7% in 2005 and 3.8% projected for 2006 in the previous Growth & Stability Pact submitted to the European Commission (EC)

c) the Greek government also managed to curtail public debt to 104.1% of GDP from 107.5% in 2005 and a previously set target of 104.8%.

The country’s GDP growth favorably compares with that of developed economies (3.1%), the Euro-zone (2.6%), the US (3.4%) and Japan (2.7%). Additionally, the narrowing of the deficit below the 3.0% (of GDP) cap set by the European Commission paves the way for the lift of the country’s surveillance status. To round up the story of 2006:

a) inflation eased further to 3.3% from 3.5% a year ago (still remaining above the Euro-zone average of 2.2%), and

b) unemployment narrowed down to 9.2% of the country’s workforce from 10.4% in 2005.

Actual vs. targeted performance (%) 2005e 2006e GDP growth rate projected in 2005 G&SP 3.6 3.8 GDP growth rate projected in 2006 G&SP 3.7 4.0 General government deficit (% of GDP) projected in 2005 G&SP -4.3 -2.6 General government deficit (% of GDP) projected in 2006 G&SP -5.2 -2.6 Public debt (% of GDP) projected in 2005 G&SP 107.9 104.8 Public debt (% of GDP) projected in 2006 G&SP 107.5 104.1 Source: Updated Growth & Stability Pact for 2006-2009



Greek GDP - Quarterly

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Evolution of Greek GDP and National Income (EUR bn)

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…while more is targeted for 2007-2009

For 2007, Greece seeks to narrow the deficit further to 2.4% of GDP, and prove real GDP growth rates sustainable at ~4.0%. The primary pillars of Greek GDP growth will once again be a) private consumption (expected to grow 3.7% after rising by 3.8% in 2006) and b) strong investments (expected to rise by 7.7% after increasing by 9.1% in 2006). In terms of public debt, Greece targets to lower debt levels below 100% of GDP by 2008 which calls for a debt/GDP ratio of 100.1% in 2007. Inflation is expected flat at 3.3%, with unemployment continuing its downfall to 8.2% of GDP in 2007.

Macro Outlook for the Greek economy (Base Case Scenario) 2005a 2005a 2006e 2007f 2008f 2009f EUR bn --------------------------- % change --------------------------- Real GDP 117.4 3.7 4.0 3.9 4.0 4.1 Private Consumption 80.9 3.7 3.8 3.7 3.7 3.7 Public Consumption 16.9 3.1 2.1 1.1 0.7 0.7 Gross fixed capital investments 30.5 -1.4 9.1 7.7 7.7 7.8 Change in inventories (% of GDP) 0.4 0.3 0.0 0.0 0.0 0.0 Exports of goods & services 26.2 3.0 5.1 6.5 7.3 7.6 Imports of goods & services -37.5 -1.2 6.5 7.0 7.3 7.4 Nominal GDP 181.1 7.5 7.8 7.2 7.1 7.0 ------ Contribution in GDP growth rate (in ppts) ------ Domestic final demand 2.62 5.23 4.81 4.78 4.86 Change in inventories -0.03 -0.30 -0.07 -0.01 -0.01 External balance of goods & services 1.07 -0.94 -0.83 -0.77 -0.76 --------------------------- % change --------------------------- Harmonized Index of Consumer Prices 3.5 3.3 3.3 2.8 2.6 GDP deflator 3.7 3.7 3.2 3.0 2.8 Unemployment rate (% of taskforce) 10.4 9.2 8.2 7.4 6.5 Productivity, Employed human capital 2.3 2.2 2.1 2.2 2.3 --------------------------- % of GDP --------------------------- General government deficit -5.2 -2.6 -2.4 -1.8 -1.2 Public debt 107.5 104.1 100.1 95.9 91.3 Source: Updated Growth & Stability Pact for 2006-2009



Public Investments (including those co-funded with the European Commission) EUR bn 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 National funds 1.15 1.60 1.50 1.86 2.11 2.59 3.13 3.97 4.64 2.57 2.60 2.40 Co-funded 2.07 3.17 4.01 4.74 5.31 5.25 3.88 4.46 4.88 4.96 5.50 6.35 Total 3.21 4.77 5.51 6.60 7.42 7.84 7.01 8.44 9.52 7.52 8.10 8.75 y-o-y 48% 16% 20% 12% 6% -11% 20% 13% -21% 8% 8% % of GDP 3.7% 4.9% 5.2% 5.9% 6.1% 6.0% 5.0% 5.5% 5.7% 4.2% 4.2% 4.2% Source: Greek 2007 Budget

Key positive catalysts

The tax rate cuts - already announced - for personal incomes (effective as of 2007) are expected to support private consumption, while proceeds from privatizations (expected in the region of EUR1.5-2.0bn – in line with those achieved in 2005-2006) will aid public revenues. Finally, 2007 marks the final stage of the corporate tax rate cuts with the nominal rate coming down to 25% from 35% 3 years ago.

Key risks Besides effective execution at the internal front (especially in light of the forthcoming elections that would be normally expected to take place in 2008) and geopolitical risks evolving around terrorism and pandemics anywhere in the world, the major risks surrounding the 2007 budget relate to interest rate levels, FX rates, global economic growth, and oil prices.

Basic Assumptions behind the Updated Growth & Stability Pact of Greece for 2006-2009 (%) 2005 2006e 2007f 2008f 2009f Short term rate (annual average) 2.2 3.1 3.7 3.6 3.6 Long term rate (annual average) 3.4 3.8 4.1 4.2 4.2 EUR/USD (annual average) 1.24 1.25 1.27 1.27 1.27 Global GDP growth ex-EU (25 members) 5.6 5.7 5.2 5.2 5.2 EU (25 members) GDP growth rate 1.7 2.8 2.4 2.4 2.4 Global imports volume growth ex-EU 7.3 9.6 8.1 7.5 7.5 Oil price (USD/bbl) 54.1 65.6 66.3 68.0 68.0 Source: Updated Growth & Stability Pact for 2006-2009

Restatement of Greek Macro Figures Note that following a procedure that started back in 2000, Greece submitted to EUROSTAT all necessary data so that the latter revises upwards its historic figures for Greek GDP by approximately 25% in order to fully account for various sectors of the economy (wholesale and retail sales, transportations, hotels, constructions, renting, non-profit organizations, illegal activities). Concerning illegal activities, their percentage contribution in the revision is estimated at a low 0.7 ppts. In a nutshell, if the restatement is approved, it will drive 2005 nominal GDP to EUR228.16bn and 2006 GDP to an estimated EUR237.28bn – it will also automatically deflate all other figures (debt & deficit for example) in respect to GDP.

Important notes a) The restatement will not solve Greece’s fiscal problems: the inflated GDP and the lower debt/GDP

and deficit/GDP ratios will not be accompanied by higher tax proceeds to assist the payment of increasing interest charges. Nor will these translate into higher investments and/or higher public spending.

b) The forecasts included in the Greek Updated Growth & Stability Pact for 2006-2009 have not been based on the revised figures.



Basic Assumptions behind the Greek government's 2007 Budget (%) 2005 2006e 2007f GDP growth rate Developed economies 2.6 3.1 2.7 Eurozone 1.4 2.6 2.1 USA 3.2 3.4 2.9 Japan 2.6 2.7 2.1 Inflation rate Developed economies 2.3 2.6 2.3 Eurozone 2.2 2.2 2.1 USA 3.4 3.6 2.9 Japan -0.6 0.3 0.7 Unemployment rate Developed economies 6.0 5.6 5.5 Eurozone 8.6 8.0 7.7 USA 5.1 4.8 4.9 Japan 4.4 4.1 4.0 Current account deficit (% of GDP) Developed economies -1.4 -1.6 -1.7 Eurozone 0.0 -0.1 0.1 USA -6.4 -6.6 -6.9 Japan 3.6 3.7 3.5 General government deficit (% of GDP) Developed economies -3.6 -3.2 -3.2 Eurozone -2.4 -2.0 -1.5 USA -3.7 -3.1 -3.2 Japan -5.6 -5.2 -4.9 Source: Greek government budget for 2007 (IMF, European Commission)

Greece: What's the Bear-Case Scenario --------Base Case-------- --------Bear Case-------- (%) 2007f 2008f 2009f 2007f 2008f 2009f Real GDP growth rate 3.9 4.0 4.1 3.5 3.5 3.5 GDP deflator 3.2 3.0 2.8 3.1 2.9 2.6 Unemployment rate 8.2 7.4 6.5 8.4 7.8 7.3 General government deficit (% of GDP) 2.4 1.8 1.2 2.4 1.9 1.4 Public debt (% of GDP) 100.1 95.9 91.3 100.6 97.0 93.3 Source: Updated Growth & Stability Pact for 2006-2009



FACT SHEET ON THE GREEK ECONOMY / MARKET

As already presented previously a strong recovery in investment, a material growth in Greek exports and a significant reduction of the fiscal deficit below the threshold of 3% of Greece’s GDP were evident in 2006 while almost all respective macro-indicators of domestic demand improved followed by a deceleration in core inflation and unemployment rate. Growth is set to continue…

The Greek economy is set to continue growing vigorously in 2007 assuming that the overall picture of the external environment will not alter and remain favorable – the Government’s base-case scenario (National Strategic Plan 2007-2013) targets GDP growth in the region of 4% all the way to ’09 while private consumption is expected to be among the main contributors along with supportive exports and gross fixed capital formation (favorable credit terms, higher disposable income and gateway to new markets). The Greek economy has responded to the reforms introduced in 2004 and 2005, the supportive fiscal policies and the accommodative monetary policy in the Eurozone while it has achieved the highest rates in the European zone despite soaring oil prices and despite a slump of construction activity post-Olympic games in 2004. The Greek Government’s efforts as depicted by the revised Growth and Stability program 2006-2009 have not changed as they remain focused on the rationalization of public spending and increased State revenues along with the decline of unemployment. Tax reforms and Investment incentives

New tax reforms (reduced corporate tax rates to 25% as of Jan 1, 2007 from 35% in ’04) along with a new Investment Incentives Law for the period 2007-2013 are also to spur activity and foreign investment in Greece during the coming years. In the 9m 06 period Foreign Direct Investment (FDI) in Greece increased by c.1000% at EUR3.7bn – as an example we mention a EUR2.1bn direct investment by Credit Agricole after the acquisition of a 70% stake in Emporiki Bank, a EUR1.2bn direct investment in Crete island by Minoan Group to develop an integrated resort and other. Privatisation program

The Greek Government prioritized a significant privatization program through ’04 -’06 and deregulation of certain markets – the national budget for ’05 was surpassed with recorded revenues from privatizations of EUR2.1bn while the respective figure in ’06 amounted to EUR1.74bn against a budget of EUR1.65bn. For the current year the Greek Government is planning to place part of its residual stake in Hellenic Telecoms (please refer to privatization themes overleaf) while there are certain other planned steps referring to the development of assets of the Tourism Development, the listing of the Athens International Airport (facing some problems recently) and possibly later on the listing of the Public Gas Corporation (DEPA). In addition significant activity is expected to arise from the newly established regulatory framework for partnerships with investors (PPPs and PFIs), which could result in the optimum use of real estate property of various state-owned entities (Olympic properties, Port Authorities etc.). The Special Secretariat for PPPs is currently evaluating PPP projects that account for EUR1.4bn and pertain to sport facilities, health, education, tourism and justice. As an example we refer to some projects of EUR800mn already approved by the Inter-Ministerial PPP Committee: a) construction of 27 school buildings in Attica region, b) Police building complexes, c) the construction and maintenance of fire stations, d) the construction and maintenance of justice courts in Patra and Heraklion and other.



Expansion to the Balkans

Thanks to its geographical position, Greece remains an important gateway to SE Europe and Middle East – Greece has been one of the most serious investors in the Balkans contributing to the development and stability of the region. Recall that Greek investments in SE Europe have exceeded Eur12bn in the last decade while Greek investments ranked first in Albania and Fyrom and third in Bulgaria, Romania and Serbia. The EU entry of Bulgaria and Romania as of January 2007 has triggered a great deal of investments in the respective countries while Greek enterprises invested EUR300mn in the 1st H 06 compared to a respective amount for the whole ’05. Particularly in Romania, total foreign investments during the period Jan-Aug ’06 increased 25% y-o-y and amounted to USD956mn with main focus on Telecoms, services, general trade and wood. Based on ’05 figures (Vima newspaper 30/10/06) Greece holds the 9th position among the largest foreign investors in Romania while accounting for indirect investments through offshore companies, Greece ranks high among the three largest foreign investors (estimated invested capital of Eur3bn) in the country. With respect to Bulgaria, Greek enterprises invested EUR140mn in the 1st H 06 compared to EUR180mn in total during ’05. Greece has been the second largest foreign investor in Bulgaria in the last decade with total investments of EUR1.4bn. Among large groups with presence in Romania are the listed telecom retail chain Germanos, the super market chain Marinopoulos, Intralot, Delta Dairy, Chipita, Alumil, Viochalco, construction groups (Athena, Aktor, Themeliodomi, Aegek) and the Greek Banks (Alpha Bank, Bank of Piraeus, Emporiki Bank and Marfin Popular Bank). Among large groups with presence in Bulgaria are the Greek Banks (National Bank, Alpha Bank, EFG Eurobank, Piraeus Bank and Emporiki Bank), Hellenic Telecoms, Hellenic Bottling, Titan and other. The Greek Banking hub across the five Balkan countries (i.e. Albania, Bulgaria, FYROM, Romania, Serbia and Montenegro) is also developing with a network of over 1,000 branches and 16,000 employees. In other terms, total banking assets in the respective countries as at end ’05 amounted to EUR66bn or 53% of the countries’ GDP (compared to bank assets in Greece accounting for 156% of GDP). Services - the highest contributor to GDP The Greek Agricultural sector accounts for 7% of the country’s GDP, high enough compared to other European countries while manufacturing in Greece covers 22%, at the low-end compared to European peers – services in Greece account for 71% of total GDP at the high end of European averages. Greece’s competitive edge

Greece is struggling to become competitive in certain sectors where serious delays and impediments relating to the market’s competitiveness and entrepreneurship (like the degree of regulation) exist. Based on Product Market Regulation Indicator, Greece ranks high among countries with the most de-motivating for investments regulatory framework worldwide (at the same level with Poland, Turkey, Mexico, Hungary, Italy, the Czech Republic and France) while the indicator has improved lately but still remains higher than the European average. Apart from the uninspiring regulation the Greek market’s weak competitive position also stems from the introvert character of Greek enterprises and the lack of investments by small and fragmented sectors. On the other hand the Telecoms / Banking / and Postal markets have become deregulated and largely competitive in line with developed countries. Tourism and merchant shipping constitutes the Greek economy’s cornerstones with significant weight in the world’s trade activity as recorded by the World Trade Organization, which ranks Greece in the 9th position in terms of tourism and in the 15th position in transportation. Tourism accounts for 17% of Greece’s GDP with 800,000 employees and around 13mn arrivals per annum. Greek merchant shipping is also starring in the context of European and international merchant shipping community while the Greek fleet ranks 4th in the world covering 14.1% of total tonnage and 16.5% of total transportation.



Mainland Transportation: The Greek road map has gone through significant changes in the last years while among the country’s key priorities is the connection with Trans-European Road Network mainly through Egnatia and PATHE freeways. In parallel there is a plan for complementary / upgrading of transportation infrastructure between Greece’s big cities, tourist destinations, ports etc. In this context 5 concessions of Eur6bn total budget that should have a completion period of 4-5 years (2007-2013) have been recently awarded to domestic and foreign construction consortia (Ionian Free Way, Korinthos-Tripoli, Maliakos, Tripoli-Kalamata, Central Greece Free Way and Thessalonica Sub-merged tunnel). Sea Transportation: Given the country’s morphology and dispersion of islands there is a strong demand for port infrastructure and logistic centers to facilitate trade and passenger shipping. The Greek Government has also made steps and discussions on concession contracts for container terminals for the two main ports of the country. Energy: Greek energy strategy constitutes the cornerstone of the country’s strategic plan on competitiveness and economic development in the context of the European region. The amended regulatory framework on energy moved towards the electricity and gas markets’ full deregulation with the award of new licenses on energy production, the adoption of new directives on renewables (RES), co-generation and bio-fuels – still the country lags significantly behind in terms of capacity installation relating to RES and adoption of energy saving measures while Independent Power Producers (IPPs) are not present ahead of electricity market’s full liberalization as of July 2007 (non-eligible customers are to select their own electricity suppliers). Greece is among the largest lignite producers in Europe (after Germany) while lignite plants account for 60% of electricity production. This has significant effect on Co2 emission and the country’s target to meet Kyoto protocol benchmarks (RES to cover 20% of total electricity production by 2010). Real estate: Despite the downward trend in yields for the past ten years, Athens (the capital city) remains highly attractive compared to the major European office markets with only the regional markets of the SEE region offering higher yields. On the development front, construction activity is increasing in the emerging submarkets of Athens West, along the Athens-Thessalonica highway (E75) and Attica Ring Road. We expect that focus on these more accessible regions will reduce demand and raise vacancy rates around the CBD area (Central Business District) in the following years. Furthermore, rationalization of the publicly owned real estate assets (their value exceeds EUR7bn) should provide a boost to investment activity. The Greek Capital Market has performed strongly in the last few years with material increase in trading volumes and market capitalization as a percent of GDP (in line with European benchmarks) – foreign institutional investors have increased their participation while the cost of transactions has declined. The constituent companies’ profitability has respectively improved with significant effect on the dividend returns as compared with bond yields. Still the market’s liquidity has room for improvement while the concentration of trading volumes remains a thorn for the market’s efficiency. The Greek market’s regulatory framework has been recently and efficiently updated while the capital market’s surveillance has improved with strict control and amendments. All the above have resulted in a more integrated capital market which still remains focused on further expansion through the introduction of new financial products (i.e. ETFs), the establishment of a regulatory framework for Hedge Funds, the update of corporate Governance and extension of working hours in conjunction with foreign markets. Cohesion Policy 2007 – 2013 / GREECE

The renewed cohesion policy has given priority to less developed Member States and regions with main focus on three objectives: convergence, competitiveness and cooperation.

Convergence Regional

Competitiveness

EUR mn Cohesion

Fund Converge -

nce

Statistical phasing-

out Phasing

in Competitiv

eness

European territorial

cooperation Total Overall financial allocation EU 27 69,578 199,322 19,355 11,409 43,556 8,723 351,943 Indicative financial allocation for Greece 3697 9420 6458 635 210 20,420 European Union factsheet



2007: CALENDAR (sources: Kathimerini newspaper as of 31/12/06, Piraeus Sec.)

January • Reduction in PLC tax rate to 25% • New legislation for insurance funds portfolio’s • The National Strategic Growth plan is approved • Memorandum for the new 3rd EU structural fund framework is approved • NBG's public offer for the remaining 46% stake in Finansbank is completed (January 29) • Legislation for new small caps market • Legislation for Exchange Traded Funds (ETF's) • Piraeus Bank presents its 07-09 business plan and FY’06 results (January 31) February • New real estate objective values • Deal between Athens and Bulgaria exchanges is expected • Eurobank releases FY’06 results (February 8) • Bank of Cyprus presents its 07-09 business plan and FY’06 results (February 7) • Coca Cola HBC releases FY’06 results (February 14) • Hellenic Exchanges releases FY’06 results (February 15) • Blue Star and Attica Group release FY’06 results (February 21 and 22) • National Bank presents its 07-09 business plan (February 22) • Alpha Bank and Fourlis release FY’06 results (February 28) March • New labour legislation • EFG Eurobank, presents its 07-09 business plan (March 23) • Piraeus Bank and ATEbank present their business plans (press) April • The bid for the Tae Kwon Do Olympic property is completed May • EU procedures to lift the surveillance status of Greece’s economy commence • Athens Exchange moves to its new location June • Postal Savings Bank new placement • Sale of 15% stake (state-owned) in Hellenic Telecoms July • Approval of Greece’s GDP restatement (up 25%) by the EU September • Prime Minister’s speech in the Thessalonica International Fair October • Draft 2008 budget is filed December • Bid for the first electricity production plant is completed



2006 ROUND UP

Greek stocks ended with gains for the fourth consecutive year

Following a rally in the first four months of 2006 that sent the General index up by 17.8% to 4,317 points in May, Greek stocks corrected steeply thereafter down by 21.7% to a temporary low of 3,362 points. May’s correction was triggered by a) interest rate jitters and fears over a possible slowdown in the world economic growth that led investors globally to reduce exposure in equities, especially in emerging markets b) the domestic banking sector, as ECB’s interest rate hikes combined with competitive pricing policies by banks which led investors to focus on margin pressures, despite buoyant lending growth rates. Appetite for equities returned in the course of the year and the market staged a rebound from mid-June to close the year with gains of 19.9% at 4.394,13 points as of December 29. Large caps (FTSE/ASE 20) closely tracked the market throughout the year (17.7% y-o-y) while mid (FTSE/ASE 40) and small caps (FTSE/ASE 80) outperformed both the market and large caps for the second consecutive year (after a weak 02-04 period) posting annual gains of 54.4% and 40.5% respectively. Following a 5-year rally, banks remained in focus throughout the year, slightly outperforming the market on the back of strong fundamentals and positive outlook for the coming period. Healthcare was the top-performing sector of 2006 (figure 1), on the back of strong growth prospects and M&A activity (Marfin acquisition of a stake in Hygeia), followed by chemicals and financials. The telecom sector, although not in the top list, was a strong performer driven by M&A activity (Cosmote’s acquisition of Germanos) and improving profitability. Refineries on the other hand significantly underperformed the market due to concerns over the sustainability of refinery margins. The main catalysts that led to a positive market performance overall during the previous year were the strong corporate results and M&A activity (NBG-Finansbank deal, Emporiki-Credit Agricole). Furthermore, investors spread their focus also to smaller capitalizations, in search for new investment opportunities leading to exceptional performance in a selected number of mid and small caps. The significant average daily volume increase of 63% y-o-y (figure 3) can be attributed mainly to the increased interest by foreign investors (figure 6) and to a lesser extent to domestic institutional and private investors. The continuing fall in active accounts (figure 4) is a result of the reduced participation of private investors - it is still evident that the retail segment has not recovered from the ‘99 crash. All in all domestic retail and institutional investors were net sellers for another year while foreign institutional investors increased their participation. According to the Central Depository Data for December, foreign investors were net buyers last year participating with 46.64% in total capitalization from 40.32% in December 2005, 52.31% in FTSE/ASE 20 from 44.51%, 39.80% in FTSE/ASE 40 from 31.07% and 15.63% in FTSE/ASE 80 from 15.35%.



Figure 1: ATHEX best/worst performing sectors in ‘06 Figure 2: ATHEX indices annual performance in ‘06 Healthcare 150.43%Chemicals 98.21%Financials 74.71%Raw materials 56.58%Construction 32.43%Industrials 31.27%

Insurance 12.45%Travel & Leisure 11.64%Media 3.92%Services 3%Technology -3.31%Petroleum -6.81%Source: Piraeus Securities

Best performing sectors in '06

Worst performing sectors in '06

80%

90%

100%

110%

120%

130%

140%

150%

160%

2/1/2006 2/3/2006 2/5/2006 2/7/2006 2/9/2006 2/11/2006

GI FTSE 20 FTSE 40 FTSE 80

Figure 3: Average daily volume (EUR mn) Figure 4: Active accounts (ths)

0

50

100

150

200

250

300

350

400

FY 02 FY 03 FY 04 FY 05 FY 06

1,000

1,050

1,100

1,150

1,200

1,250

1,300

1,350

1,400

FY 03 FY 04 FY 05 FY 06

Figure 5: Capitalization (EUR mn) Figure 6: Foreign investor participation (%)

0

2040

60

80100

120

140160

180

FY 02 FY 03 FY 04 FY 05 FY 06

0%5%

10%15%20%25%30%35%40%45%50%

FY 02 FY 03 FY 04 FY 05 FY 06

z

IPOs

Only two companies were floated on the Athens Exchange the previous year with total proceeds of EUR0.67bn: a) the Postal Savings Bank was floated in June with the sale of a 34.8% stake previously owned by the state and total proceeds of EUR550mn b) Eurobank Properties was the second Real Estate Investment Trust (REIT) in the domestic market was floated in April with total proceeds of EUR114mn Share capital increases (cash)

Domestic companies raised a total of EUR3.307bn in ’06 through 9 share capital increases with 91% of the raised funds arising from National Bank. The EUR3bn raised by the bank in June aimed to finance the acquisition of 46% stake in the Turkish Finansbank. Forthnet raised a total of EUR120mn in May to utilize its 2006-2009 business plan (development of fiber-optics network, ULL).



SHARE CAPITAL INCREASES IN 2006 Company Funds raised (Eur mn) Athina ATE 14.07 Forthnet 119.90 Dias 31.14 National Bank 3,000.50 Viosol 9.14 Plias 20.45 Aspis Bank 52.74 Hygeia 59.92 Source: Athens Exchange

State owned shares

Three important transactions altered the state’s share portfolio in 2006 a) the placement to institutional investors of a 7.18% stake in ATEbank in May against EUR328mn, b) the floating of 34.84% of Postal Savings Bank in May with 621mn proceeds and c) the sale of 11.01% in Emporiki Bank to Credit Agricole against EUR364mn.

Source: Athens Exchange

Placements

A number of placements took place during 2006 with the most significant being that of Alpha Bank in December with the placement of treasury stock accounting for 5.2% of shares outstanding for a total consideration of EUR483mn - Agricultural Bank in May also placed treasury stock accounting for 7.2% stake for a total consideration of EUR329mn and Piraeus Bank in November with the placement of treasury stock accounting for 3.7% of shares outstanding against EUR224mn.

STATE OWNED SHARE PORTFOLIO (includes shares held by DEKA) Company Total number of shares State owned shares % of total ATEbank 905,444,444 700,016,294 77.31% PPC 232,000,000 118,605,101 51.12% Hellenic Petroleum 305,513,425 108,430,304 35.49% Thessalonica Water 18,150,000 13,434,000 74.02% Athens Water 106,500,000 65,319,740 61.33% Thessalonica Port Authority 10,080,000 7,486,194 74.27% Piraeus Port Authority 25,000,000 18,534,440 74.14% OPAP 319,000,000 108,460,369 34.00% OTE 490,150,389 189,848,051 38.73% Postal Savings Bank 140,866,770 77,700,100 55.16% Piraeus Bank 268,588,043 6,675,120 2.49% Bank of Greece 15,891,909 1,047,368 6.59% Alpha Bank 407,685,052 3,306,202 0.81% HDFS 52,675,000 1,480,262 2.81% Petzetakis 22,559,780 128,857 0.57% Kerameia Allatini 17,585,374 317,887 1.81%

STATE OWNED SHARE PORTFOLIO (includes shares held by DEKA) ctd Company Total number of shares State owned shares % of total Kekrops 3,300,689 3,777 0.11% Titan 76,761,164 30,464 0.04% Alatini 14,298,696 91,024 0.64% Phoenix 43,089,939 13,746 0.03% National Insurance 86,071,200 42,547 0.05% Aspis Pronia 41,937,950 6,250 0.01% Source: State budget



PLACEMENTS IN 2006

Company Date Shares

(mn) Share price

Transaction value (EUR

mn) %

stake Share price

Dec 30 (EUR) Agricultural Bank February 7.02 5.00 35.09 0.8% 3.80 Piraeus Bank March 8.36 24.20 202.26 3.9% 23.00 Motor Oil March 6.50 22.44 145.86 5.9% 20.08 Terna (by Gek) March 1.70 11.40 19.38 3.7% 11.02 Lamda Detergent March 16.98 4.04 68.54 47.5% 5.60 Babis Vovos March 5.43 18.42 100.02 16.0% 24.98 Hellenic Technodomiki April 2.00 8.40 16.80 1.3% 8.16 Agricultural Bank May 65.20 5.05 329.26 7.2% 3.80 Neochimiki June 5.80 12.52 72.57 16.1% 13.62 Sidenor November 19.00 6.50 123.50 19.9% 8.14 Piraeus Bank November 10.00 22.40 224.00 3.7% 23.00 Alpha December 21.25 22.75 483.44 5.2% 22.92 Egnatia (by Marfin) December 13.13 8.56 112.39 14.1% 8.74 Eurobank December 2.00 26.90 53.79 0.5% 26.6 Source: Athens Exchange

M&A activity

A considerable number of transactions, some of them market moving (especially in the banking sector), took place in ‘06. Among the most important were: National Bank acquired a 46% stake in ordinary shares and 100% stake in its founder’s shares in Finansbank from FIBA holdings in August for a total consideration of USD2.77bn. On December, NBG filed a mandatory public offer for the minorities in Finans Leasing and Finans Investment Trust. The public offer for the remaining 44% stake in Finansbank commenced on January 8 this year with deadline on January 29. Emporiki: Credit Agricole filed conditional public offer for 100% of Emporiki in June at EUR23.50/share implying a total value of Emporiki at EUR3.1bn. The offer was then raised to EUR25/share on July 27 implying a total value of EUR3.3bn. At the offers closure on August 7, 53% of shareholders had accepted and Credit Agricole held 72%. Vivartia: The merger through absorption of Chipita (CHIr.AT), General Frozen Foods (STAr.AT) and Goody’s (GUDr.AT) by Delta Holdings was completed in August 06. The combined company is the leader in the Greek food sector and a strong international player. Cosmote/Germanos: On May 9, Cosmote bought 8% stake in Germanos. By October 2 it had raised its stake to 61%. It then filed a mandatory public offer for the remaining shares between November 23 and December 20. Cosmote will utilize Germanos’ extensive network to distribute its products and services. Marfin/Egnatia/Cyprus Popular Bank: Dubai Financial Group acquired a 32% stake in Marfin in March against EUR25/share. M&A speculation grew strongly after that and Marfin merged with Egnatia Bank and Popular Bank. Folli Follie / Hellenic Duty Free Shops: Folli Follie acquired a 24.7% stake in Hellenic Duty Free Shops in May raising its stake to 49.4%. Regency Entertainment: Mr. Laskaridis sold 52% stake to BC Partners against EUR478mn (EUR11/share) in January. The merger through absorption by Dionysos Leisure was approved by Greek authorities and is expected to be completed in Q1’07 (delisting will then take place).



Delta Ice Cream: Nestle bought a 96.5% stake from Vivartia on December 2005 and submitted a mandatory public offer for the remaining shares of Delta Ice Cream in June. By the end of the acceptance period in August Nestle held over 90% and subsequently exercised its right for a squeeze-out. The share was then delisted on December 12. Hygeia: Marfin acquired a 49% stake in the company at EUR54mn. Alpha Insurance: Alpha Bank sold the company to the French insurance group AXA against EUR255mn.



MUTUAL FUNDS – PARTICIPATION OF PRIVATE INVESTORS

Mutual funds – outflows persisted

Net outflows from mutual funds persisted during ’06 due to the wariness of domestic retail investors towards equity investment option. The numbers are discouraging, especially for equity funds, if we take into account the price appreciation during the year. Outflows were most significant mainly in domestic money market funds where assets fell by 48% y-o-y explained by the negative real returns. Foreign money market funds on the other hand recorded an impressive rise in assets since they offered more attractive returns. Furthermore, low yields induced a sell-off in both domestic and foreign bond funds last year. The appealing returns of domestic stocks for another year, did not manage to attract investors to domestic equity funds. As a result, a large proportion of domestic liquidity remains underutilized in bank deposits, repos and money market funds that offered negative real returns if we account for domestic inflation rate, which is above the Eurozone average. This persistence in defensive solutions even when market conditions dictate a shift towards equities can be largely attributed to private investors’ lack of investment sophistication. Given Bank of Greece’s latest data (October 2006), domestic equity mutual fund assets represent c.3% of total deposits of domestic households and enterprises (EUR165bn). A fall in investor risk aversion would cause the transfer of funds from deposits to mutual funds and therefore to significant inflows. For example, in case of a 1% increase in domestic equity fund proportion as a percentage of deposits, mutual fund gross inflows would amount to EUR1.6bn without accounting for any price appreciation.

DOMESTIC MUTUAL FUND MARKET Change in assets (EUR mn) 2004 2005 2006 Foreign money market 362.16 2,270.09 4,486.02 % y-o-y change n/a 526.82% 97.61% Domestic money market 15,145.75 2,664.32 1,398.95 % y-o-y change -3.13% -82.41% -47.49% Foreign equity 802.44 1,015.04 1,197.22 % y-o-y change 29.10% 26.49% 17.95% Domestic equity 4,323.05 4,968.17 5,153.79 % y-o-y change 3.31% 14.92% 3.74% Foreign balanced 92.49 1,334.68 1,033.67 % y-o-y change 757.21% 1343.05% -22.55% Domestic balanced 2,858.83 1,279.06 1,454.37 % y-o-y change -6.41% -55.26% 13.71% Foreign bond 1,059.43 8,579.86 3,838.70 % y-o-y change 41.52% 709.86% -55.26% Domestic bond 5,358.42 5,000.47 2,392.24 % y-o-y change 4.86% -6.68% -52.16% Total 30,002.57 27,111.69 20,954.98 % y-o-y change 0.93% -9.64% -22.71% Source: Association of Institutional Investors



Private investors – risk aversion remains high

Domestic retail, institutional and non-financial investors were net sellers both in December ’05 and ’06. It is worth noting that total trading turnover (buy & sell) of private investors [(1)+(2)] fell 1.7% y-o-y to EUR2.95bn, which accounts for 22.2% of total turnover from 31.2% in December ’05 (corresponding to a EUR51.2mn Dec-o-Dec fall). The findings suggest that the private investors’ sentiment remains fragile from 99 crash and shows no signs of improvement despite equities’ strong performance recorded during the last 3 years.

Transactions breakdown (EUR mn) Buys Sells Net December 2005 2006 2005 2006 2005 2006 Domestic retail 1,441.63 1,395.85 (1) 1,563.74 1,558.32 (2) -122.11 -162.47 % of total 29.93% 20.94% 32.46% 23.38% Domestic institutional 898.82 925.77 1,032.60 1,631.04 -133.78 -705.27 % of total 18.66% 13.89% 21.43% 24.47% Non-financial companies 31.05 69.04(1) 90.45 135.98 (2) -59.40 -66.94 % of total 0.64% 1.04% 1.88% 2.04% Domestic total 2,380.81 2,476.19 2,742.38 3,425.99 -361.57 -949.80 % of total 49.42% 37.15% 56.93% 51.39% Transaction total 4,817.44 6,666.15 4,817.44 6,666.15 Source: Central Securities Depository



PENSION FUNDS

Since equity portfolios of pension funds remain overweight in banks, telecoms and energy stocks (figure 4) their performance broadly tracks that of the Athens General Index. Furthermore, the lack of active portfolio management and lack of legislation leaves insurance funds’ capital inert to market condition changes. In addition investment decisions are largely influenced by the state and political objectives.

The proportion of securities held by pension funds varies, with some funds holding only a small fraction of treasury bills and others holding above 50% despite a 23% limit in security investments. All in all, the average proportion reached 54.4% in 2005 corresponding to EUR15.7bn out of EUR28.9bn total asset value (figures 1, 2). Given the latest available data (2005), the security portfolio of insurance funds (figure 3) consists mainly of bonds (58.22%) and equities (31.68%). Some funds hold a large proportion of equities in their portfolios, for example TSAY with 31.64% (EUR364.5mn) and TAP-OTE with 23.69% (EUR161.7mn).

The low utilization of insurance funds’ real estate assets is reflected in the relatively stable real estate portfolio value for the last 12 years (figure 1), which reached 2.42% of total portfolio asset value or EUR699.9mn in 2005 (figure 2). The largest proportion of real estate assets is held by IKA (33.59%) followed by TAP-OTE with 8.33%.

In order to free up underutilized capital and maximize value the government plans the following amendments in the legislation framework by February 07: a) a 5% rise in the proportion of funds that can be invested, without prior permission from the Ministry of Employment, from 23% today to 28% b) ability to invest in European stocks as well as mutual funds c) the creation of an investment committee that will set a common investment framework d) ability to hire investment advisors.

Figure 1: Portfolio breakdown evolution Figure 2: Portfolio breakdown (2005)

0

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1993

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2004

2005

Real estate Deposits Securities

Real estate;

2.42%

Deposits43.14%

Securities54.43%

Source: Ministry of Employment

Figure 3: Security portfolio breakdown (2005) Figure 4: Equity portfolio breakdown (2005)

58.22%

Treasury bills1.49%

Mutual funds8.58%

Equities31.68%

Other bonds0.01%

Non-listed shares0.01%


Banks; 82.71%

Refineries1.89% Other

1.80%

Gambling2.30%

Energy4.39%

Telecoms6.91%




VALUATION

We compare 10-year Greek bond yields to Greek equity yields through a period of 5 years (2001-2006) and provide a range for the fraction (of 2 std deviations >< mean) where 95.4% of the data lies (assuming a Normal distribution).

The Greek market has been moving above mean (1.78) for a long period of time and especially post June ’04 and consistently above 1.0 during the whole respective period (earnings / bond yield ratio < 1 = bonds become appealing – earnings / bond yield ratio > 1 = equities become more rewarding). This implies that Greek equities have been of extreme favour of investors compared to bonds since Oct ’01. The truth is that for the first time after a long period of time the ratio (earnings/bond yields) is standing below mean – evident of equities’ soaring gains and appreciated prices (the market is trading much higher than the 5-year average PER).

With regard to the market’s PER we can see in the diagram below that the market is trading for the first time after 30/09/2004 with a PEG of c.1x after a significant appreciation of stock prices and a decelerating eps growth in ’07.

23/01/2007

JCF Quant as of 23/01/07

Earnings Yield / Bond Yield

0.0

0.5

1.0

1.5

2.0

2.5

3.0

10/3

1/01

1/31

/02

4/30

/02

7/31

/02

10/3

1/02

1/31

/03

4/30

/03

7/31

/03

10/3

1/03

1/31

/04

4/30

/04

7/31

/04

10/3

1/04

1/31

/05

4/30

/05

7/31

/05

10/3

1/05

1/31

/06

4/30

/06

7/31

/06

10/3

1/06

mean2std > mean

2std < mean

Earnings yield / bond yield

0.0%

2.0%

4.0%

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12.0%

10/3

1/01

2/28

/02

6/30

/02

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1/02

2/28

/03

6/30

/03

10/3

1/03

2/29

/04

6/30

/04

10/3

1/04

2/28

/05

6/30

/05

10/3

1/05

2/28

/06

6/30

/06

10/3

1/06

Earnings Yield Bond Yield

General Index: P/E - EPS growth

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

10/3

1/01

3/31

/02

8/31

/02

1/31

/03

6/30

/03

11/3

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/04

9/30

/04

2/28

/05

7/31

/05

12/3

1/05

5/31

/06

10/3

1/06

Deviation from mean

-0.80

-0.60

-0.40

-0.20

0.00

0.20

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0.80

31/0

1/20

02

30/1

1/20

02

30/0

9/20

03

31/0

7/20

04

31/0

5/20

05

31/0

3/20

06

23/0

1/20

07



NEW TP FOR THE

GENERAL INDEX In our 2-stage Dividend Discount Model for the General Index we assume a) 3.4% dividend yield for ’07 for the market and 8% growth for DPS 08, b) a risk free rate of 4% (Rf for the 10-year bond), c) a risk premium of 4.5% and d) a terminal dividend growth rate of 5% (considering the average between OECD‘s GDP growth for the period ’05-’10 and Greece’s GDP growth based on GSP for the period ’06-’09 + inflation rate). Our new target price for the General Index stands at 4,700 points. Still we believe that the market should incorporate an M&A premium of 5-10% that may bring the General Index in the region of 4,935-5,170 points.

EUROPEAN LARGE CAP INDICES PER EPS Growth PEG '07 Index 07 08 07 08 Bel 20 Bench (BE) 13.5 x 12.6 x 5.0% 7.1% 1.9 x SMI Bench (CH) 15.5 x 14.0 x 9.9% 10.9% 1.4 x DAX Price Bench (DE) 13.0 x 11.7 x 11.6% 10.6% 1.2 x ISEQ Overall Bench (EI) 14.2 x 12.5 x 14.7% 14.0% 1.0 x Ibex 35 Bench (ES) 14.2 x 12.6 x 12.7% 13.2% 1.1 x CAC 40 Bench (FR) 12.8 x 11.8 x 9.0% 8.7% 1.5 x FTSE 100 Bench (GB) 12.4 x 11.7 x 8.7% 5.8% 2.2 x AEX Bench (NL) 12.0 x 11.4 x 4.3% 5.8% 2.1 x OBX Bench (NO) 12.7 x 11.7 x 11.1% 8.5% 1.5 x PSI 20 Bench (PT) 16.0 x 14.6 x 7.7% 10.1% 1.6 x FTSE ASE 20 15.5 x 13.1 x 18.7% 17.8% 0.9 x JCF Quant (as of 25/01/07)

SECTORAL DJ INDICES Weighted Per Weighted EPS Change Net PEG '07 Sectoral Valuations 07 08 07 08 Yield 07 DJ Stoxx 600 Bench 13.4 x 12.3 x 8.5% 10.7% 3.16% 1.2 x DJ Stoxx /2/ Banks Bench 11.8 x 10.6 x 11.3% 8.9% 3.89% 1.3 x DJ Stoxx /2/ Construction & Material Bench 15.2 x 13.8 x 10.6% 12.1% 2.39% 1.3 x DJ Stoxx /2/ Financial Service Bench 19.8 x 17.7 x 11.7% 8.8% 2.32% 2.2 x DJ Stoxx /2/ Food & Beverage Bench 16.9 x 15.3 x 10.8% 10.3% 2.60% 1.6 x DJ Stoxx /2/ Health Care Bench 16.7 x 14.9 x 12.0% 11.3% 2.31% 1.5 x DJ Stoxx /2/ Industrial Goods & Services Bench 15.6 x 13.9 x 12.1% 19.0% 2.41% 0.8 x DJ Stoxx /2/ Insurance Bench 10.5 x 10.3 x 1.9% 7.8% 3.36% 1.3 x DJ Stoxx /2/ Media Bench 15.9 x 13.9 x 14.3% 11.1% 3.13% 1.4 x DJ Stoxx /2/ Oil & Gas Bench 10.1 x 10.0 x 0.8% 1.1% 3.61% 8.9 x DJ Stoxx /2/ Personal & Household Goods Bench 16.4 x 14.6 x 12.0% 12.5% 2.45% 1.3 x DJ Stoxx /2/ Retail Bench 17.1 x 15.1 x 12.8% 14.6% 2.66% 1.2 x DJ Stoxx /2/ Technology Bench 17.1 x 15.1 x 13.4% 56.0% 1.82% 0.3 x DJ Stoxx /2/ Telecommunications Bench 14.2 x 12.9 x 9.8% 7.0% 4.68% 2.0 x DJ Stoxx /2/ Travel & Leisure Bench 17.8 x 15.6 x 14.6% 18.3% 2.40% 1.0 x DJ Stoxx /2/ Utilities Bench 15.3 x 14.1 x 8.5% 12.6% 4.04% 1.2 x

JCF Quant (as of 25/01/07)



PIRAEUS SECURITIES UNIVERSE (as of 25/01/07)

0.0X 10.0X 20.0X 30.0X 40.0X 50.0X 60.0X 70.0X

MARKET

Banks

Telecommunications

Utilities

Construction

Cyclical Goods & Services

Industrial Goods & Services

Energy

Food & Beverage

Basic Resources

Stock Exchanges

Media

Retail

Technology

P/E'07

0.0X 1.0X 2.0X 3.0X 4.0X 5.0X 6.0X 7.0X 8.0X

MARKET

Banks

Telecommunications

Utilities

Construction



Energy

Food & Beverage

Basic Resources

Stock Exchanges

Media

Retail

Technology

P/BV'07

Piraeus Securities Universe

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0%

MARKET

Banks

Telecommunications

Utilities

Construction



Energy

Food & Beverage

Basic Resources

Stock Exchanges

Media

Retail

Technology

DY'07

-40.0%-30.0%-20.0%-10.0%0.0% 10.0%20.0%30.0%40.0%50.0%60.0%

MARKET

Banks

Telecommunications

Utilities

Construction



Energy

Food & Beverage

Basic Resources

Stock Exchanges

Media

Retail

Technology

EPS growth '06-'07




OTE - VRS costs

Aluminium of Greece

0.0X 1.0X 2.0X 3.0X 4.0X 5.0X 6.0X 7.0X 8.0X

MARKET

Banks

Telecommunications

Utilities

Construction



Energy

Food & Beverage

Basic Resources

Stock Exchanges

Media

Retail

Technology

P/BV'07

0.0X 10.0X 20.0X 30.0X 40.0X 50.0X 60.0X 70.0X

MARKET

Banks

Telecommunications

Utilities

Construction



Energy

Food & Beverage

Basic Resources

Stock Exchanges

Media

Retail

Technology

P/E'07



INVESTMENT PICKS PIRAEUS

SECURITIES UNIVERSE: (76.7% of total mcap) ’06 RECOMMENDED LIST

We cover stocks of c. Eur125bn total mcap or 76.7% of the market’s capitalisation as of January 25, 2007. During ’06 we deleted Chipita after the company’s merger with Delta Holdings and creation of Vivartia (VIVr.AT), Hyatt (HYAr.AT), Germanos (GERr.AT) and Intracom of c.Eur3.2bn mcap and initiated coverage on 7 stocks (Lamda Detergent LMDr.AT, Neochimiki NEOr.AT, Autohellas AUTr.AT, Blue Star STR.AT, Frigoglass FRIr.AT, Piraeus Real Estate REIT PREr.AT and Audio Visual ADVr.AT) with a market capitalisation in the region of c. Eur2.3bn.

Our Universe (Sectors & No of constituents) mcap (Eurbn) (%) of Universe

Banks (7) 57.4 45.8%

Telecoms (2) 19.1 15.2%

Utilities (2) 5.8 4.6%

Construction (5) 7.7 6.1%

Cyclical Goods & Services (10) 15.1 12.1%

Industrial Goods & Services (3) 2.6 2.1%

Energy (2) 5.7 4.5%

Food & Beverage (1) 7.1 5.6%

Basic Resources (1) 0.8 0.6%

Stock Exchanges (1) 1.2 0.9%

Real Estate (1) 0.1 0.1%

Media (2) 0.1 0.1%

Retail (3) 2.6 2.1% Total Mcap of Piraeus Securities universe as of 25/01/07 125.3 (%) of the Athens Exchange 76.65% Total Market Cap of the Athens Exchange as of 25/01/07 163.5 Piraeus Securities Our recommended picks in ’06 were the following: Alpha Bank (ACBr.AT), NBG (NBGr.AT), EFG Eurobank (EFGr.AT), Cosmote (COSr.AT), Hellenic Telecoms (OTEr.AT), Folli Follie (FOLr.AT), Jumbo (BABr.AT), Blue Star Ferries (STRr.AT), and Titan Cement (TTNr.AT) As shown in the table overleaf, among our top picks Jumbo was the best performer of our picks for ‘06 with absolute gains of 98% and relative gains of 69% while NBG was the worst performer in ’06 with absolute gains of 2% and relative losses of 13%. Blue Star was the second strong performer in ’06 largely due to buoyant traffic volumes and fundamentals while overall Banks and Telcos fared in line with Greece’s General Index. Our faith in Folli Follie proved right as the stock outperformed the Athens Composite during ’06 followed by Minoan Lines where speculation on future moves is intensive but fundamentals remained stretched after a rather difficult year in terms of fuel costs. All in all we scored well in 4 outperform picks that achieved relative performance above 10% (including dividend yields) while in the remaining outperform picks we proved wrong as they underperformed the General Index but still their performance was strongly positive in absolute terms (except that of Sarantis and NBG).



06 ABSOLUTE & RELATIVE PERFORMANCE OF RECOMMENDED PICKS

Free Float Q1'06 Q2'06 1st H '06 Q3 '06 Q4 '06 06

Relative perf % ytd '07*

Alpha Bank 100% -13% 12% -3% -7% 9% 22% 4% 9.3%

EFG Eurobank Ergasias SA 75% -13% 22% 6% -10% 14% 19% 2% 10.1%

National Bank of Greece SA 100% -5% 17% 11% -9% 3% 2% -13% 13.1%

Ote (Hellenic Telecom) (GR Listing) 75% 0% 7% 7% -11% 18% 24% 6% 1.5% Cosmote Mobile Telecommunications SA (GR Listing) 40% 0% 9% 9% -7% 19% 17% 0% 3.6%

Titan Cement 75% -14% 7% -7% -2% 10% 21% 4% 4.4%

Folli Follie SA 50% -5% 29% 22% -20% 31% 34% 14% 4.0%

Sarantis 75% -13% 3% -10% 12% 7% 7% -9% 0.7%

Minoan Lines Sa 75% -4% 2% -2% -14% -4% 24% 6% 15.8%

Coca Cola Hellenic Bottling (GR Listing) 40% -3% 10% 7% -14% -8% 19% 2% -0.7%

Fourlis Bros 75% 14% -1% 13% -20% -13% 28% 9% -3.9%

Jumbo SA 50% -27% 17% -14% -18% 39% 98% 69% 1.3%

Blue Star 50% -27% 14% -17% -10% 34% 80% 54% 9.0% Athex Composite Bench (GR) -9% 11% 2% -6% 12% 17% 7.0%

Notes: highest performance in blue, lowest performance in red – * closing prices as of Jan 25, 2007

We see good growth potential for ’07 in National Bank of Greece (NBGr.AT), Alpha Bank (ACBr.AT), GEK (HRMr.AT), Titan (TTNr.AT), Motor Oil (MORr.AT), Metka (MTKr.AT), Jumbo (BABr.AT), Blue Star (STRr.AT), Lamda Detergent (BLLr.AT), AudioVisual (ADVr.AT), Autohellas (AUTr.AT), Neochimiki (NCHr.AT) and Fourlis (FRLr.AT).

OUTPERFORM LIST --- P/E --- --- EPS GROWTH -- --- P/BV --- --- EV/EBITDA --- --- DIV. YIELD --- 2005A 2006F 2007F 2005A 2006F 2007F 2005A 2006F 2007F 2005A 2006F 2007F 2005A 2006F 2007FAlpha Bank 20.3x 15.7x 13.3x 19% 29% 18% 3.3x 4.3x 3.7x n.m n.m n.m 2.4% 3.2% 4.0%EFG Eurobank 22.1x 17.7x 14.6x 46% 25% 21% 3.7x 4.1x 3.6x n.m n.m n.m 3.1% 3.3% 4.0%National Bank * 17.2x 19.9x 13.8x 161% -13% 44% 4.1x 3.8x 4.0x n.m n.m n.m 2.5% 3.3% 3.9%Gek Group 29.5x 34.5x 23.1x -13% -14% 49% 2.1x 2.1x 1.9x 12.0x 11.0x 9.1x 1.8% 2.0% 2.2%Titan 17.4x 14.0x 12.5x 19% 24% 12% 4.2x 3.6x 2.9x 10.5x 8.5x 7.4x 1.4% 1.7% 2.4%Intralot 28.7x 18.2x 13.2x 18% 58% 37% 13.0x 9.0x 6.2x 12.2x 7.7x 5.5x 2.1% 2.3% 2.6%Lamda Detergent 30.5x 19.1x 13.4x 117% 60% 42% 1.3x 5.0x 3.9x 17.4x 12.6x 9.1x 0.0% 1.4% 2.0%Neochimiki 47.8x 27.9x 15.6x 72% 71% 79% 9.6x 3.7x 3.1x 26.4x 15.3x 8.8x 0.2% 0.3% 1.0%Autohellas 11.5x 9.5x 9.9x -53% 21% -4% 1.7x 1.5x 1.4x 4.7x 4.4x 4.2x 4.2% 5.3% 5.1%Metka 15.8x 12.8x 11.8x 70% 24% 8% 6.1x 4.7x 3.8x 9.4x 7.5x 6.9x 3.0% 3.2% 3.5%Motor Oil 16.4x 12.4x 11.9x 12% 33% 4% 6.5x 5.6x 5.3x 12.3x 8.7x 8.8x 5.6% 7.5% 7.8%Blue Star 20.5x 18.6x 13.2x 65% 10% 41% 1.8x 1.7x 1.5x 15.9x 15.9x 12.0x 2.1% 2.7% 4.5%Audiovisual 13.0x 11.2x 8.2x 3% 16% 36% 1.9x 1.3x 1.2x 8.5x 6.0x 5.1x 2.0% 1.4% 1.4%Source: Piraeus Securities estimates (as of 25/01/07) valuations based on outstanding number of shares

* NBGs valuations have not been adjusted for excess capital



‘Outperform’ on Banks

Recommendation. We believe that Greek banks will continue attracting investors’ interest thanks to the sector’s good growth outlook and strong underlying profitability. M&A activity and planned privatisations may add some further momentum. We have an Outperform rating on NBG as it combines good fundamentals (superior growth outlook largely stemming from the international business, strong liquidity, under-leveraged balance sheet, under-utilized customer base and cross-selling opportunities as well as further restructuring potential) combined with attractive valuations. We are also positive on Alpha as its business model, though not as aggressive as the competition’s, can deliver sustainable profitability at quite attractive valuations. We have placed Eurobank Under Review (from Outperform) awaiting for some feedback on the earnings outlook of the bank’s quite large foreign business. We are Restricted on Piraeus (Piraeus Securities is a subsidiary of Piraeus Bank). We are Neutral on Agricultural and Emporiki due to low earnings visibility combined with relatively stretched valuations. Finally, we are Neutral on Postal Savings Bank (PSB) due to unattractive valuations, though we see some upside risk to our recommendation if other Greek banks are willing to pay a premium for PSB’s large and under-utilized deposit base if the gov’t announces a tender (not so likely to happen in 2007, in our view). Earnings Outlook. We expect banks to continue delivering superior earnings growth in 2007 supported by favourable market dynamics, ongoing restructuring initiatives and a growing international presence with focus on the greater SE European region. We forecast EPS CAGR (’06-’08) of 23% with a risk to our forecasts being on the upside considering the sector’s dynamic expansion in the region. New business plans to be announced within the first four months of the year are expected to focus on regional expansion and could trigger earnings revisions. Piraeus Bank is the first to announce its business plan, a quite ambitious one according to the management, on January 31. PE multiples are fully justified by the superior EPS growth while the quite high PBV figures reflect the sector’s strong profitability as reflected in the ROE ratios and the excess capital.

Valuation Matrix

Market price

EPS growth 07/06 adj

EPS CAGR (06-08)

P/E 06

P/E 07

P/E 08

P/B 06

P/B 07

P/B 08

ROE 06

ROE 07

ROE 08

Div Yield

06

Div Yield

07

Div Yield

08

PEG 2006

NBG 37.8 23.8% 16.0% 14.7 13.1 10.7 3.7 4.0 3.3 22.9% 28.9% 33.1% 3.3% 3.9% 4.4% 0.9Alpha 25.0 18.1% 22.2% 15.7 13.3 11.1 3.6 3.2 2.8 26.0% 25.9% 27.3% 3.1% 3.8% 4.5% 0.7EFG 29.5 20.9% 24.3% 17.6 14.6 11.8 3.8 3.5 3.1 24.1% 26.2% 28.7% 3.3% 4.0% 5.0% 0.7Piraeus 26.2 31.8% 30.9% 16.1 14.5 11.8 4.2 3.7 3.1 28.7% 27.2% 28.5% 2.5% 3.1% 3.7% 0.5Avg (4 banks) 23.7% 23.4% 16.0 13.9 11.4 3.9 3.6 3.1 25.4% 27.0% 29.4% 3.0% 3.7% 4.4% 0.7

CBG 22.9 30.0% 35.4% 25.9 16.5 12.8 2.7 2.4 2.2 10.6% 15.5% 18.1% 1.7% 2.7% 3.5% 0.7AGB 4.2 36.1% 21.6% 24.3 17.9 15.2 2.9 2.7 2.5 12.7% 15.7% 16.9% 1.8% 2.5% 3.0% 1.1

PSB 18.8 18.5% 12.3% 20.9 17.6 15.3 3.4 3.3 3.1 19.7% 21.7% 23.1% 3.1% 3.7% 4.3% 1.7Avg (7 banks) 25.6% 23.2% 19.3 15.3 12.7 3.5 3.3 2.9 20.7% 23.0% 25.1% 2.7% 3.4% 4.0% 0.9Notes: EPS growth adjusted calculates the underlying growth excluding one-offs.NBG: EPS growth assumes 80% of Finansbank in '06-'08.NBG: valuation multiples have been adjusted for excess capital.Piraeus: EPS growth excludes one-off gains from the sale of ING stake. Further, potential sale of the BoC stake is not included.Emporiki (CBG): EPS growth excludes extra loan provisions in '06.Agricultural Bank (AGB).Postal Savings Bank (PSB).

Source: Piraeus Securities estimates



‘Outperform’ on

Banks (ctd)

Favorable market dynamics. The Greek economy is the fastest growing economy in Eurozone partly supported by EU structural inflows. According to the updated Stability & Growth program, GDP growth is forecasted at 4.0% in 2006, at 3.9% in 2007, at 4.0% in 2008 and at 4.1% in 2009. The budget deficit is expected at 2.6% in 2006 (from 5.2% in 2005) further falling to 1.2% by 2009. Credit penetration remains below EU average as statistics show below. The Greek market could grow by 15% p.a. over the period 2006-2009 for total credit penetration to exceed 100%, still below a growing EMU average. Besides the household lending, we believe that there are growth prospects in corporate lending driven by EU funds and structural reforms (i.e. privatizations, legislation on private-public partnerships). Credit penetration levels are quite low in countries such as Romania, Bulgaria and Serbia where Greek banks are expanding quite aggressive through a combination of acquisitions and organic growth. Lending growth. For the four largest banks, we forecast loan growth of 24.7% in 2006 and 21% in 2007. Greek operations should continue delivering quite strong volumes underpinned by a healthy macro environment and still relatively low credit penetration rates. Eurobank and Piraeus are expected to post the highest loan growth rates (for Piraeus Bank, the loan growth reflects productivity gains at new immature branches). Postal Savings’ high volume growth is from a low loan base. Foreign operations should post growth rates of 48.6% and 42% in ’06 and ’07 respectively due to improving market fundamentals and the expansion of the Greek banks’ network in the region. Loan growth

Total loan growth (06/05)

Loan growth - Greece (06/05)

Loan growth - intl (06/05)

Total loan growth (07/06)

Loan growth - Greece (07/06)

Loan growth intl (07/06)

NBG 20.3% 18.0% 31.4% 20.5% 15.5% 32.8%Alpha 19.7% 17.8% 35.9% 17.9% 15.7% 35.2%EFG 28.6% 24.8% 84.9% 23.2% 19.6% 60.4%Piraeus 30.1% 27.1% 42.0% 22.9% 20.4% 40.2%Avg (4 banks) 24.7% 21.9% 48.6% 21.1% 17.8% 42.1%CBG 15.4% 15.4% 15.3% 15.3%AGB 13.6% 13.6% 10.7% 10.7%PSB 64.4% 64.4% 47.9% 47.9%Avg (7 banks) 27.4% 25.9% 22.6% 20.7%Notes: Emporiki (CBG), Agricultural (AGB) and Postal Savings (PSB) have a small intl presence.NBG's '06/'05 loan growth does not incorporate Finansbank.Source: Piraeus Securities estimates

Credit penetration Greece EMU Romania Bulgaria Serbia CyprusTotal credit / GDP (%) 70 122 25 45 28 122 Business loans / GDP (%) 37 63 15 29 19 76 Household loans / GDP (%) 33 59 10 16 9 46 Mortgage credit / GDP (%) 22 43 n/a n/a n/a n/aConsumer credit / GDP (%) 11 16 n/a n/a n/a n/aSource: Alpha Bank (EBRD, Central Banks - as of Jun. 2006)



‘Outperform’ on Banks (ctd)

Profitability. The sector’s profitability should be driven by margin improvement and efficiency gains. Although spreads should continue declining due to the maturing of the Greek market and improved pricing allowed by the introduction of better risk management practises, margins should expand due to changes in asset mix and loan book composition. Cost ratios should also improve as a result of higher income generation in conjunction with better cost management. The reduction in the non-interest income in ’07 from ‘06 is due to lower trading income. This is particularly evident in Piraeus Bank as 2006 non-interest income incorporates the ING gains while 2007 respective income does not incorporate the gains from a possible sale of the BoC stake. Among the banks in our universe, NBG, Alpha, Piraeus and EFG seem to have the highest ROAs. NBG’s profitability is driven by a combination of expanding NIM due changes in asset mix, increasing non-interest income generation and declining cost ratios, partly helped by the consolidation of Finansbank. Alpha’s profitability is due to expanding margins helped by the loan book shift to retail combined with low cost ratios. Piraeus Bank’s ROA is driven by non-interest income (largely fees and income from real estate subsidiaries), low cost of risk and a gradual improvement in cost ratios. EFG’s profitability is the result of quite strong margins and the expected improvement of the cost ratios in line with the conclusion of the integration process at foreign operations.

Profitability drivers

2006 2007 2008 2006 2007 2008 2006 2007 2008 2006 2007 2008 2006 2007 2008

NBG 3.06% 3.57% 3.72% 1.52% 1.77% 1.82% 51.23% 46.91% 43.90% 0.44% 0.54% 0.60% 1.47% 1.81% 1.98%Alpha 3.10% 3.18% 3.29% 1.20% 1.17% 1.14% 44.93% 42.55% 40.69% 0.55% 0.58% 0.61% 1.40% 1.48% 1.58%EFG 3.34% 3.40% 3.37% 1.17% 1.09% 1.04% 46.54% 45.28% 42.37% 0.77% 0.77% 0.78% 1.33% 1.36% 1.42%Piraeus 2.61% 2.66% 2.80% 1.85% 1.40% 1.26% 48.40% 47.49% 44.42% 0.30% 0.31% 0.32% 1.69% 1.52% 1.57%CBG 3.47% 3.42% 3.33% 1.17% 1.11% 1.08% 63.75% 60.45% 57.36% 0.87% 0.73% 0.71% 0.56% 0.77% 0.88%AGB 2.77% 2.83% 2.90% 1.06% 1.07% 1.04% 63.79% 60.96% 58.40% 0.30% 0.30% 0.30% 0.73% 0.93% 1.02%PSB 2.08% 2.00% 2.12% 1.02% 0.91% 0.88% 48.34% 42.04% 39.53% 0.24% 0.23% 0.23% 1.03% 1.11% 1.20%Source: Piraeus Securities estimates

ROANIMNon-interest

income/assets Cost-to-income Provisions/assets

SE European expansion. Expansion in the under - penetrated SE European region adds a new

growth element in the sector. Romania and Bulgaria, which joined EU in 2007, and Serbia have projected GDP growth for ’06-’08 of more than 5% (source: Alpha Bank).

Greek banks regional branch network (2006e)

Romania Bulgaria Serbia Albania FYROM Cyprus Egypt Poland Ukraine Turkey Total Earnings

contribution (9m '06)

NBG 75 134 203 6 49 - - - - 300 767 28.0%Alpha 70 45 100 14 10 28 - - - 30 297 8.0%EFG 210 281 100 - - - - 70 32 30 723 1.2%Piraeus 50 70 25 37 - - 40 - - - 222 13.5%Emporiki 9 13 - 7 - 12 - - - - 41 nilNotes: NBG's earnings contribution has been adjusted to incorporate Finansbank (est).EFG's earnings contribution excludes Poland due to start-up losses.Piraeus' earnings contribution has been calculated excluding the ING gain.



‘Outperform’ on

Banks (ctd) The table above shows the branch network of the Greek banks in the region. Romania, Bulgaria and Serbia are key countries of interest for Greek banks. Turkey and Ukraine are becoming of increasing importance and banks with no presence there are exploiting expansion opportunities primarily through the acquisition of a local bank. The new business plans should put particular emphasis on the regional expansion. We would expect NBG to announce a quite aggressive expansion strategy in Romania through organic growth following the cancellation of the CEC privatization. NBG is also evaluating some acquisition targets in Ukraine. Alpha launched its regional strategy in the beginning of 2006 targeting earnings contribution of 20% by ’08. It recently expanded into Turkey while it is examining a couple of acquisition targets in Ukraine. We would expect an update on the new business plan to be announced in Bucharest in April. EFG is growing mainly through acquisitions, with the exception of Poland where it decided to set up its own network. The main challenge for EFG is to integrate all these acquisitions and start producing profits. In fact, EFG targets earnings contribution of 20% by ’09 from 1.2% today (based on 9m ’06 statements excluding Poland’s losses). EFG is the only Greek bank with a presence in Poland. Finally, Piraeus’ regional network has the highest, after NBG, earnings contribution of 13.5% with a target to reach 20% by ’08. Piraeus is the only Greek bank with a presence in Egypt. M&A developments. It appears that M&A activity will be a key theme for the sector this year.

Consolidation developments began in 2006 with the initiative of Marfin Financial Group’s management to become a consolidator of small banks in Greece. It has initiated procedures for the merger of Marfin Bank, Egnatia Bank and Laiki Greece under the umbrella of Laiki Cyprus renamed to Marfin Popular Bank. The new entity should be the 6th largest bank in terms of assets in Greece and Cyprus together.

Piraeus Bank also seems to become, once again, an active M&A player. Although organic growth remains at the core of Piraeus’ strategy, responding to the general consolidation trend that prevails internationally, in June 2006, it announced that it owns 8.2% of Bank of Cyprus (BoC). Towards the end of 2006, Piraeus management submitted to BoC management a proposal for a strategic co-operation of the two banks through a merger of equals, which however was rejected by BoC, principally on the grounds that organic growth is currently the only strategy for BoC. On January 11, Piraeus Bank launched a voluntary tender offer for up to 100% of Marfin Popular Bank (minimum of 40%) under the swap ratio of 1 Piraeus share for 5.7 shares of Marfin Popular. The rationale of the tender was value creation through geographic and product complementarity and the combination of each bank’s areas of expertise. The combined entity should have over Eur50 bn in assets, 16% market share in loans, 15% market share in deposits, the 2nd highest presence in Cyprus and a quite strong and growing presence in SEE.

Following Piraeus’ offer, Marfin Popular submitted an offer for BoC under the exchange ratio of 1.241 Marfin Popular shares for every BoC share, which was rejected by BoC management. Marfin Popular intended to submit an offer for Piraeus Bank as well under the reported ratio of 2.842 Marfin Popular shares for every Piraeus share. However, the Capital Markets Committee in Cyprus decided that Marfin’s offers for Piraeus and BoC were against the law as a company that has received a takeover bid (Marfin Popular in this case) cannot make a counter bid or a public offer.

Hence, only Piraeus’ offer is valid at this time. The whole process should last for approx. 50 days- i.e. until mid-March.

Possible privatizations this year that could affect the sector’s consolidation process are those of Agricultural Bank (AGB), Postal Savings Bank (PSB) and Bank of Attica. The Greek state has indicated its intention to eventually reduce its stake in AGB (currently at 77.3%) and in PSB (currently at 65.16% including Post Office’s 10% stake) possibly through placements. If the government decided to launch a tender for PSB, such a move would add further momentum to the sector’s consolidation activity. Regarding Bank of Attica, the Greek state currently owns c38% indirectly through Postal Savings Bank and the Loans and Deposits Fund.



‘Neutral’ on Gaming

We remain positive on the Greek gaming market as the average gaming per capita stood at Eur730 (excluding illegal gaming) for 2006 with total turnover from betting and games of chance at Eur8bn or c. 4% of GDP (Ependytis newspaper). As of 11m 06, OPAP is estimated to have achieved a turnover of Eur4.1bn, followed by casinos with a turnover of Eur2.49bn and horse races at Eur300mn – Popular Lottery and National Lottery posted a turnover of Eur337mn during the respective period (Ependytis newspaper). GAMING MARKET IN GREECE Eurmn 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006eOPAP 585 527 549 710 624 1,449 1,799 1,974 2,282 3,177 3,695 4,450% -10% 4% 29% -12% 132% 24% 10% 16% 39% 16% 20%Lottery - ScratchCards (Xisto) 563 525 483 473 465 472 498 505 461 377 415 416 % -7% -8% -2% -2% 1% 5% 1% -9% -18% 10% 0% Horse racecourse 155 167 204 263 330 348 349 336 322 330 324 335 % 8% 22% 29% 26% 5% 0% -4% -4% 3% -2% 3% Casinos (amount of bets) 294 794 1,249 1,126 1,343 1,536 1,664 1,825 2,194 2,413 2,517 2,769% 170% 57% -10% 19% 14% 8% 10% 20% 10% 4% 10%Total 1,597 2,013 2,485 2,572 2,763 3,805 4,311 4,640 5,258 6,297 6,951 7,970% 26% 23% 4% 7% 38% 13% 8% 13% 20% 10% 15%CAGR % 14%Source: Newspapers, Piraeus Securities With regard to OPAP we hold our Neutral recommendation despite this year’s strong eps growth (+17%) as the company will be challenged to prove whether it is capable of operating autonomously the risk management of fixed odds betting. In addition we believe the market has largely incorporated recent developments in the stock price. On the other hand Intralot, which belongs in the Gaming sector of our universe, takes full advantage of its technical expertise and know-how to expand into foreign gaming markets while fundamentals remain and growth potential remains solid unless the legal dispute between Gtech and the Turkish State turns against the Turkish subsidiary (Inteltek – Intralot participates with a 45% stake).

‘Outperform’ on Contractors

The Greek construction industry has gone through a transition phase since ‘00 amidst consolidation moves and increasing competition – operations of leading contractors currently rely on domestic and foreign construction business but also on revenues from concessions, energy, real estate development and other more diversified activities (i.e. waste management). From a total market value of Eur4.3bn pertaining to Greek listed contractors, we cover companies of Eur2.6bn mcap or 60% of total market cap (including GEK, Terna, Hellenic Technodomiki) – we also trace developments on JP Avax with a Non-rating recommendation. The three construction groups (GEK, Hellenic Technodomiki and JP Avax) have obtained significant construction backlog (concessions’ budget exceeds Eur6bn with a completion period of 4-5 years) compared to their market capitalization – we see construction turnover of our universe companies peaking up again in the coming years still on thinner profit margins, stretched working capital cycle and weaker than previously cash flow generation. We value construction business from 9x-13x net earnings 07 depending on the case while with regard to free way concessions (all groups have extensive exposure) the IRR ranges from 7% to a peak of 13% for Attica Ring Road (currently operated by Hellenic Technodomiki and JP Avax). Electricity generation through wind farms or gas plants finds strong application by contractors as it assures a constant stream of revenues, cash flows and high operating margins. In the context of this relatively stable business we value 1MW of installed capacity from wind turbines at Eur1.1mn while the regulatory regime still remains an issue for most operators. Hellenic Technodomiki and Terna operate wind farms with 30MW and 109MW installed capacity respectively. With regard to real estate development both GEK and Hellenic Technodomiki have a large real estate portfolio to develop – the Greek real estate market improves fast on decreasing yields in line with European benchmarks.



We hold our Neutral recommendation on Terna and our Outperform recommendation on GEK – we changed our rating on Hellenic Technodomiki to Under Review following the stock’s recent soaring performance. We hold a Non-rated recommendation on JP Avax at the time.

‘Outperform’ on Building Materials

Titan and Heracles have been the two building materials producers of the Greek market and our universe – We have not changed our positive stance on Titan’s stock in spite of concerns on the US cement market which slowed down in the 3rd Q 06 on a flat EBITDA y-o-y – the slump mainly in Florida’s housing market affected cement demand compared with an overall exceptionally strong basis of comparison in 05 but overall a pipeline of public works should offset the decline of housing – additionally cement prices hold up well around the world (and in the US especially). The rest of Titan’s foreign markets grow up vigorously (mainly the Balkans) while the Greek cement market remains supportive – valuation provide a good upside potential – we reiterate an outperform recommendation. Heracles has been largely focused on the domestic construction and cement market with diversification to the low-margin exports directed mainly to Europe and North Africa. We definitely favor the company’s strong capital structure (among few net cash cement producers in the world), the dividend yield and tested business model but we do not like the limited free-float of the stock, the limited potential for further expansion and the unclear shareholding structure with the National Bank of Greece (willing seller) holding 26%.

‘Neutral’ on Utilities

PPC has been a political story rather than a pure fundamental pick – the company’s performance was seriously hurt during ’06 due to the bunker prices’ steep increase, PPC’s weight on fuel consuming oil and gas fired plants and the Government’s persistence on specific tariff scheme that does not cover costs – in addition PPC’s energy purchases from new coming IPPs (Hellenic Petroleum and HERON) burdened the company’s bottom line – in our view ahead of Parliamentary elections possibly in the end of ’07 or beginning of ’08 investors should not expect material changes in PPC’s electricity tariff scheme or personnel – we reiterate our Neutral recommendation. The Athens Water company remains a state-controlled monopoly with positive FCF generation and a limited leverage but with an unclear tariff scheme and overstaffed position, which is not easy to change in the near future. The company was supposed to present a 5-year business plan in the end of the previous year to announce measures on streamlining of current business and workforce rationalisation along with recent developments and prospects on electricity generation through hydro and bio-gas plants. We still remain concerned on the financial criteria of capex decisions and valuation multiples. We reiterate a Neutral recommendation.

‘Positive’ on Real Estate

Office market – yields remain attractive

Despite the downward trend in yields for the past ten years (figure 1 overleaf), Athens remains highly attractive compared to the major European office markets (figure 2) with only the regional markets of the SEE region offering higher yields. Vacancy rates are dropping with Athens South at 10% in 2005, below 6% in the CBD (Central Business District) and 5% in Athens North. These rates should remain at approximately the same levels going forward, since increased demand will be largely counterbalanced by new developments. Supply of grade A office space remains limited while demand is growing, mainly concentrating on 1,500-3000sqm properties as well as 5,000-15,000sqm (for relocation purposes).

On the development front, construction activity is increasing in the emerging submarkets of Athens West, along the Athens-Thessalonica highway (E75) and Attica Road. We expect that focus on these more accessible regions will reduce demand and raise vacancy rates around the CBD area in the following years. In this context, the relocation of the Athens Stock Exchange in Athinon Avenue (Athens West) in 2-3 years will create demand for office space in the surrounding area. Furthermore, rationalization of the publicly owned real estate assets (their value exceeds EUR7bn) should provide a boost to investment activity.

Retail market – potential for shopping center developments

The recent retail boom, fuelled by the low interest rate environment led to the development of shopping centres and the rise in demand for warehouses by retail chains (yields stand at the top of our sample along with Istanbul (figure 3)). Despite the recent shopping centre developments (The Mall, City Link) density in Athens remains relatively low (c.32.5 sqm per 1000 inhabitants) compared to Western Europe average (c.175sqm per 1000 inhabitants). The question now is how many shopping centers Athens can support. Developers estimate the number at 4-5 large units and now focus on differentiated projects in order to avoid saturation and cannibalisation. In this context, Lamda Development’s International Broadcasting Centre project, which is in a close distance to “Mall Athens”,



will accommodate high-end consumer goods, Haragionis Group’s Sonae project will be theme based and Hellenic Technodomiki’s Yialou project will accommodate hyper stores in big box constructions. Furthermore, a specialized type of shopping centre, namely discount parks, popular in Western Europe, remains an untapped market in Greece. The first such project is planned by Hellenic Technodomiki in cooperation with Mc Arthur Glenn in the Kantza area (East Attica). All in all, planned shopping centre space by 2008 should exceed 190,000sqm. Project’s nearing completion are Delta Falirou project (13,627sqm) by Babis Vovos and Piraeus 180 project (23,000sqm).

Listed real estate companies – growing investor interest

Listed real estate companies have outperformed the GI on an annual basis (figure 4) reflecting the relatively high yields, the strong growth potential arising from domestic projects as well as CEE expansion and the limited competition (strong entry barriers). Both Lamda Development (Non rated) and Babis Vovos (Non rated) are market leaders in the field of property investment and development with Lamda concentrating mainly on the retail segment while Vovos has a more diversified portfolio.

Lamda Development’s (Non rated) primary focus is on retail space developments in Greece offering exposure in the growing shopping mall segment of the market after successfully completing “Mall Athens” and “Mediterranean Kosmos” projects. Excluding Mall Athens, 60% of Lamda Development's investment portfolio is retail space, 20% office space and 5% residential. The sale of 50% of Mall Athens to HSBC (completed in November) reflects international investor belief in the domestic real estate market’s potential and provides Lamda with necessary funds to implement its EUR400mn 2006-2008 business plan, which targets c.EUR250mn invested in Greece and c.EUR150mn in CEE. In this context, it was recently awarded a 4-year concession contract for the International Broadcasting Center in Athens. The EUR60mn project includes the development of a 40,000sqm premium shopping center, 4,500sqm office space and 1,400 parking slots and is expected to be complete by mid-2008. Given January 15 close of EUR12.44 the company currently trades at 51.7% premium to H1’06 NAV.

Babis Vovos (Non rated) focuses on retail and tourist developments and plans to expand into property fund management. Property portfolio value stood at EUR1.1bn in H1’06 with the majority (85%) consisting of class A office properties in Athens (100% occupancy – 6.5% average yield). Major NAV growth drivers for 2006-2008 are a) Office: 108 Athens Ave project – 23,000sqm, estimated completion in Q3 2007 (6,700sqm for the new Hellenic Exchanges building). The company already sold 5,000sqm and 112 parking slots to Allianz group against EUR17.5mn b) Retail: Delta Falirou – Complex II 13,400sqm leased to Village Roadshow, Media Markt and Giannelos (completion in q4 2006), 340 Syngrou Ave, 14,000sqm estimated completion in Q4 2007 c) Tourist development: Poros, 23,000sqm with estimated completion in q4 2007, Sounio-13,000sqm with estimated completion in late 2007-early 2008. To aid its developments plans the company proceeded in a private placement of 5.8mn shares (16% stake) in May with a transaction value of EUR100.02mn (EUR18.4/share – last close EUR27.90). Following the transaction, free float factor is high at c.65% with the largest stake held by foreign institutional investors (c.59%). Real Estate Investment Trusts (REITs), which have performed in line (Piraeus REIT; Restricted) or underperformed (Eurobank Properties; Non rated)) relative to the GI, are nevertheless gaining popularity since they offer indirect exposure in the domestic real estate investment market. Their major advantages are a) low risk: REITs business model is straightforward offering a predictable income stream. REIT framework does not permit property development and limits bank lending (cannot exceed 25% of property portfolio value). Low gearing on the other hand, limits return on equity b) attractive dividend yield c) REITs are exempt from transfer tax and all related expenses upon acquisition of property, however the sale of properties is taxed as Greek legislation entails (annual taxation amounts to 0.3% of portfolio value).

Eurobank Properties is the larger of the two REITs listed in the Greek market with a EUR326.3mn investment portfolio value, which comprises of 34 assets, all located in Greece (mainly Athens and other major cities). The company has already invested around half of the net IPO funds (EUR78.9mn) with a high average rental yield of 7.9% (considering office yields in Greece currently stand at c.7%, retail yields at c.6.3% and logistics yields at c.8.4%). For the remaining of the raised funds, Eurobank Properties seeks to acquire properties with attractive annual yields, quality tenants and substantial value appreciation potential in Greece as well as CE Europe (in line with EFG Eurobank’s expansionary plans in the region). The company is currently in negotiations for the acquisition of 10 properties in Greece (mostly office and retail) with a total market value of EUR173mn.



The company follows a high dividend policy aiming to distribute c.85-90% of net profits. 2005 dividend yield on last close of EUR16.12 stood at 2.23% although we expect Eurobank Properties’ dividend yield to increase significantly with the investment of the remaining IPO proceeds.

Figure 1: Athens prime office yields evolution Figure 2: CBD prime office space yields Q2’06

5%

6%

7%

8%

9%

10%

11%

12%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Syngrou Ave Kifissias CBD

Source: Savills

3.8%4.3%4.3%4.3%

4.5%4.8%4.8%4.8%

5.0%5.0%

5.3%5.4%5.4%5.5%

5.8%6.3%

6.5%7.0%

7.5%

0% 1% 2% 3% 4% 5% 6% 7% 8%

LondonParis

DublinMadrid

ManchesterBarcelona

StockholmMunich

BerlinFrankf urt

RomeVienna

AmsterdamWarsaw

MilanAthensLisbon

BudapestIstanbul

Figure 3: Prime warehouse yields Q2’06 Figure 4: Real estate companies’ annual performance vs. GI

5.5%5.8%

6.0%6.0%

6.3%6.3%

6.8%7.0%7.0%7.2%7.3%7.4%7.4%7.5%

8.0%9.0%9.0%

0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%

LondonManches

ParisBarcelon

MadridAmsterd

MunichFrankf urtBudapest

MilanLisbonRome

ViennaWarsaw

BerlinAthens

Istanbul

Source: Savills 80%

90%

100%

110%

120%

130%

140%

150%

160%

170%

180%

190%

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30/12/2005 28/2/2006 30/4/2006 30/6/2006 30/8/2006 30/10/2006

GI Piraeus REITLamda Development Babis VovosEurobank Properties



‘Positive’ on

Medical Sector The healthcare sector is among the hottest in the Greek market due to

• a significant turnaround in profitability achieved in the past couple of years with significant top line growth and margin expansion due to cost containment and rationalization of operations and procurement.

• an increased M&A activity and M&A speculation by almost all listed companies. Hygeia in particular has been very active in this field acquiring minority stakes in two maternity clinics in Athens, while it is rumored that is eyeing a 450-bed hospital owned by the Greek Red cross. Athens Medical and Euromedica have reportedly shown interest for the same facility as well as for a cardiosurgical centre in Athens. Athens Medical also sold an 8.3% stake to a German hospital operator Asklepios. Iaso on the other hand, the biggest maternity hospital in Greece is also a potential target for Euromedica. All in all, it seems that further consolidation is imminent.

• Favorable demographics: The ageing Greek population is favoring a further pick up in healthcare spending.

• The inability of the public hospitals to provide adequate service. We are positive on the sector, we believe there is potential for improved performance by most companies; however we feel that the market has already discounted lots of developments in the prices.

PIRAEUS SECURITIES & INVESTMENT SERVICES S.A. RESEARCH DEPARTMENT, 10 STADIOU ST., 105 64 ATHENS, GREECE, TEL. +30210-3354100, +30210-3311456, FAX +30210-3354072 WEB PAGE: www.piraeus-sec.gr, E-MAIL: [email protected]

Please read important disclosures at the end of the report

NATIONAL BANK (NBGr.AT) Rating: OUTPERFORM (Unchanged) New Target Price: EUR42.4 Total Expected Return Targeted (yield incl.): 15.5% From: 40.5 (as at 01/12/06) Sector: BANKS

Share price: EUR37.80 General Index: 4,634 Date: 23/01/07

Market Cap. (EUR bn) 17.717 52-week High-Low 41.57-25.88

Shares Outstanding (mn) 474.98 Avg. Daily Volume 1,271,955

Free Float (%) 100% BRIEF COMPANY OVERVIEW

NBG is the largest bank in Greece (loan and deposit market share of 19.5% and 30.3%, respectively) with a growing regional presence. It has leading positions in asset gathering (25.7%) and insurance. It has a total network of 1,443 branches (568 in Greece, 575 abroad mainly in SEE and 300 in Turkey through Finansbank). Retail lending accounts for c59% of the loan book – mortgages stand at 36% of total loans. It has ample liquidity with more than Eur25.0 bn of savings accounts.

SHARE PRICE PERFORMANCE

The share gained 4% in 2006, largely underperforming the G.I. on initial concerns about the potential dilutive effect of the Finansbank acquisition, which was financed through a EUR3.0bn rights issue in July. The share has gained 8.31% ytd.

DEVELOPMENTS FOR ‘07

NBG has launched a mandatory public offer for the acquisition of up to 44.3% of Finansbank shares it does not own – on August 18, NBG acquired an initial 46% stake of Finansbank from FIBA Holdings. The public offer’s acceptance period is Jan 8 to Jan 29. As of Jan 24, NBG owned c86% of Finansbank. Assuming 100% acceptance, NBG should own 90.3% of Finansbank for a total cost of cUSD5.5 bn, of which a stake of up to 5% will be sold to IFC. NBG’s capital reserves will be largely utilized in the public offer, organic growth and possibly some small acquisitions in the region. Any remaining excess capital could be returned to shareholders with some cushion reserved for Basle II capital adjustments.

VALUATION

We value NBG share at EUR42.4 through the Gordon’s growth model under the following assumptions: ROE sustainable of 26.0%, g of 5%, COE of 9.5% and BVPS ’07 of EUR9.20. NBG should deliver EPS CAGR (’06-’08) of 16.0%. Valuation upgrade mainly reflects a higher stake of Finansbank of 85% vs 80% previously. Finansbank should account for c22% of group net profit. Further earnings upgrades could be triggered by stronger revenues in Greek and better outlook for the international assets, mainly Finansbank.

CATALYSTS AHEAD

Domestically, investors’ interest will be in loan growth figures, spread evolution, and possibly the introduction of a new VRS. Internationally, investors will closely monitor the macroeconomic data in Turkey and the operating performance of Finansbank. NBG plans to release its new business plan on February 22.

Valuation ratios 2005A 2006E 2007F 2008F P/E 17.23 14.7 13.3 10.7 P/BVPS 4.02 3.72 4.05 3.34 Dividend Yield 2.49% 3.30% 3.91% 4.37%

Valuations have been adjusted for excess capital. Fundamentals 2005A 2006E 2007F 2008F Net Loans 29,528 40,365 48,629 58,136 Deposits 42,729 52,796 57,851 63,519 Equity 3,124 4,762 4,497 5,411 Assets 57,694 73,575 81,529 90,562 NII 1,596 2,008 2,772 3,205 Total Income 2,492 2,960 4,098 4,723 Total costs (1,351) (1,516) (1,922) (2,073) Net Profit 727 901 1,321 1,601 NIM 2.91% 3.06% 3.57% 3.72% Cost-to-Income 54.21% 51.23% 46.91% 43.90% ROAavg 1.37% 1.47% 1.81% 1.98% ROEavg 26.55% 22.86% 28.92% 33.13% CAR 15.19% 17.12% 13.02% 12.86% NPLs/Loans 4.7% 4.1% 4.0% 3.7%

Amounts in EUR mn

Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI 2.7% 2.5% -8.9% 2.7% Abs. perf. 9.0% 32.2% 6.7% 8.3%

Natasha Roumantzi +30 210 3354354 – Head of Equity Research [email protected]



ALPHA BANK (ACBr.AT) Rating: OUTPERFORM (Unchanged) Target Price: EUR29.00 Total Expected Return Targeted (yield incl.): 19.1% Unchanged (last report out on Nov 11, 2006) Sector: BANKS



Shares Outstanding (mn) 407.68 Avg. Daily Volume 979,455

Free Float (%) 100%

BRIEF COMPANY OVERVIEW

Alpha is the 2nd-3rd largest bank in Greece (loan and deposit market share of 18.9% and 15.1%, respectively). It started as a wholesale bank, hence its leading position in business lending (16.4% market share). Over the last few years it shifted focus on retail lending which now accounts for 49% of the total loan book. In the beginning of 2006, it announced an aggressive regional expansion strategy. It has a total network of c660 branches: 393 in Greece and 267 in SEE and Cyprus. It also has a leading position in asset gathering (20.8% market share in equity MFs). The Costopoulos family is the largest shareholder with a 9% stake.


The share gained 29.9% in 2006, outperforming the G.I. principally on valuation grounds. Price performance was also helped by the adoption of a more aggressive international expansion strategy. The share has gained 9.17% ytd.


Alpha’s international expansion strategy should be the main theme this year. In terms of organic expansion, Alpha plans to grow its network in SEE to 433 units by ‘08 and 720 units by 2010 from 267 at end-‘06. It also targets a market share in SEE lending of 8% by ’08 from 5.7% today and earnings contribution of 20% from 8% today. As regards M&A activity, the acquisition of 47% of Turkish Abank should be concluded within Q1 ’07 for USD246 mn – Abank has a network of 30 units with a target of 100 branches in the medium term. Alpha also examines expansion opportunities in Ukraine through the acquisition of a mid-sized bank (100-150 branches) at a cost of cEUR40mn. In Q1 ‘07, Alpha should also finalize the sale of its insurance arm to AXA and book a gain of cEUR150mn. Alpha will also start a long-term exclusive co-operation with AXA for the distribution of AXA products, which should benefit fee income.

VALUATION

We value Alpha share at EUR29.00 through the Gordon’s growth model under the following assumptions: ROE sustainable of 21.7%, g of 5%, COE of 9.5% and BVPS ’07 of EUR7.72. We forecast EPS CAGR (’06-’08) of 22%. Our net profit figure for 2007 does not incorporate the one-off gain from the sale of Alpha Insurance to AXA. Earnings upgrades could be triggered by foreign operations.

CATALYSTS AHEAD

Investors will be interested in loan volumes and spread evolution. Progress of Alpha’s international strategy will be also monitored. Alpha will host a Capital Markets Day on April 20 in Bucharest (the location of the event may signal Alpha’s international orientation) to present the new business plan. A key catalyst for the sector should be the outcome of the Piraeus/Marfin deal and potential Postal Savings Bank privatization.


Fundamentals 2005A 2006E 2007F 2008F Net Loans 27,357 32,737 38,613 45,036 Deposits 21,645 24,220 27,126 30,389 Equity 2,225 2,788 3,142 3,571 Assets 44,007 49,288 55,202 61,275 NII 1,225 1,445 1,662 1,915 Total Income 1,724 2,004 2,271 2,581 Total costs (823) (900) (966) (1,030) Net Profit 502 650 768 917 NIM 3.17% 3.10% 3.18% 3.29% Cost-to-Income 47.77% 44.93% 42.55% 39.90% ROAavg 1.31% 1.40% 1.48% 1.58% ROEavg 23.86% 25.99% 25.89% 27.31% CAR 13.50% 13.49% 12.51% 11.66%

Amounts in EUR mn

Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI 2.7% 1.3% 5.3% 3.5% Abs. perf. 9.1% 30.6% 23.3% 9.2%




EUROBANK (EFGr.AT) Rating: Under Review (from Outperform) Target Price: EUR30.70 Total Expected Return Targeted (yield incl.): 7.5% Unchanged (last report out on Oct 31, 2006) Sector: BANKS




Free Float (%) 60.87%


Eurobank is the 2nd-3rd largest bank in Greece (loan and deposit market share of 19.3% and 14.8%, respectively). It grew through acquisitions, the largest of which was that of Ergobank in 1999. It has a strong presence in retail lending which accounts for c63% of the loan book and in asset gathering (36.7% market share in equity MFs). It has the 2nd largest presence in SEE (after NBG) with over 700 branches by end-’06. EFG Consolidated Holdings (the Latsis group) is the main shareholder with a 39.13% stake.


The share gained 23.5% in 2006, managing to outperform the G.I. despite the derating that took place after the release of Q1 ’06 results which showed a relatively large spread compression. Eurobank’s financial performance in the remaining quarters showed quite strong underlying profitability alleviating market concerns. The share has gained 7.36% ytd.


The performance of the international assets should be in focus this year. Eurobank expects to have invested a total of EUR1.0bn in SE and Central Europe (New Europe) in 2006. Recent acquisitions are those of Tefkenbank in Turkey (30 branches, EUR140mn investment), Universal Bank in Ukraine (32 branches, EUR45mn) and DZI in Bulgaria (174 units, EUR158mn investment). Eurobank also expands organically in Poland (70 branches). The region’s loan book currently accounts for c10% of the total. However, the earnings contribution is quite small (1.2% excluding Poland as of end-Sept ’06 or losses of EUR1.6 mn including Poland). The big challenge for Eurobank is to integrate the various acquisitions and bring productivity levels closer to its standards. EFG targets earnings contribution of 20% by ’09.

VALUATION

We value Eurobank share at EUR30.70 through the Gordon’s growth model under the following assumptions: ROE sustainable of 21.6%, g of 5%, COE of 9.5% and BVPS ’07 of Eur8.24. Valuation upgrades could be triggered by a better outlook of the foreign operations. We forecast EPS CAGR (’06-’08) of 24%.

CATALYSTS AHEAD

Loan volumes and spread evolution should be closely monitored throughout the quarters. Investors will be also interested in the performance of the international operations. Eurobank will host a Capital Markets Day on March 23 in London to present the new business plan with particular focus on New Europe. A key catalyst for the sector should be the outcome of the Piraeus/Marfin deal and potential Postal Savings Bank privatization.

Valuation ratios 2005A 2006E 2007F 2008F P/E 22.42 17.64 14.59 11.84 P/BVPS 4.45 3.84 3.46 3.08 Dividend Yield 3.05% 3.33% 4.03% 4.96% Fundamentals 2005A 2006E 2007F 2008F Net Loans 27,357 32,737 38,613 45,036 Deposits 21,645 24,220 27,126 30,389 Equity 2,225 2,788 3,142 3,571 Assets 44,007 49,288 55,202 61,275 NII 1,225 1,445 1,662 1,915 Total Income 1,724 2,004 2,271 2,581 Total costs (823) (900) (966) (1,030) Net Profit 502 650 768 917 NIM 3.17% 3.10% 3.18% 3.29% Cost-to-Income 47.77% 44.93% 42.55% 39.90% ROAavg 1.31% 1.40% 1.48% 1.58% ROEavg 23.86% 25.99% 25.89% 27.31% CAR 13.50% 13.49% 12.51% 11.66% NPLs/Loans 3.02% 3.05% 3.05% 3.05%

Amounts in EUR mn Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI 2.4% 8.0% -1.5% 1.8% Abs. perf. 8.7% 39.2% 15.4% 7.4%




EMPORIKI BANK (CBGr.AT) Rating: NEUTRAL (Unchanged) New Target Price: EUR24.40 Total Expected Return Targeted (yield incl.): 8.29% From: 24.30 (as at 01/02/06) Sector: BANKS




Free Float (%) 28%


Emporiki Bank is the 4rd - 5rd largest bank in Greece (loan and deposit market share of 11.5% and 11.7%, respectively). It has a network of 374 branches in Greece and a small intl presence with 44 branches in SEE and Cyprus. It has a well-diversified loan book: 43.5% household, 28% SMEs and 28% large corporates. It owns Phoenix, one of the largest Greek insurance companies. Credit Agricole (CA) is the largest shareholder with a 72% stake largely acquired through a tender offer at Eur25.0 in August ’06.


The share lost 18.8% in 2006, which reflects price rationalization ahead of CA’s tender offer in July-August supported by weak financial performance. The share has lost 1.72% ytd.


The new management (Chairman is Jean Frederic de Leusse who was Head of International Development of CA and CEO is Anthoni Crontiras) should present the business plan in Q1 ’07. A project called ‘Joining Forces’ is underway which intends to transform Emporiki into a model Greek bank with a customer-centric approach. CA has also announced that it intends to align Emporiki’s risk management practices to its own policies, which may require extra P&L provisions.

VALUATION

We value Emporiki share at EUR24.40 through the Gordon’s growth model under the following assumptions: ROE sustainable of 16.7%, g of 5%, COE of 9.5% and BVPS ’07 of EUR9.35. We forecast EPS CAGR (’06-’08) of 37%, though from a low base. Emporiki’s profitability is below its peers due to the large cost base, low branch productivity and high provisions. Earnings upgrades are subject to the new management’s strategic initiatives. Funding cost is a key competitive advantage given that Emporiki, being part of the CA group, enjoys the highest credit rating among peers. Valuation is particularly sensitive to costs.

CATALYSTS AHEAD

The announcement of the new business plan might put Emporiki back into analysts and investors’ focus list.


Fundamentals 2005A 2006E 2007F 2008F Net Loans 15,633 18,045 20,814 24,038 Deposits 14,245 15,810 17,612 19,619 Equity 1,072 1,137 1,238 1,368 Assets 20,018 22,420 25,334 28,628 NII 610 736 816 899 Total Income 846 983 1,082 1,189 Total costs (587) (627) (654) (682) Provisions (118) (185) (175) (191) Net Profit 95 117 184 236 Net Profit (old) 95 176 211 246 NIM 3.15% 3.47% 3.42% 3.33% Cost-to-Income 69.43% 63.75% 60.45% 57.36% Provisions/Loans 0.81% 1.10% 0.90% 0.85% ROAavg 0.48% 0.56% 0.77% 0.88% ROEavg 12.74% 10.60% 15.47% 18.12% CAR 8.85% 8.23% 7.64% 7.28% NPLs/Loans 5.7% 5.4% 5.1% 5.0%

Amounts in EUR mn

Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI -9.2% -28.7% -34.1% -6.8% Abs. perf. -3.6% -8.1% -22.8% -1.7%




PIRAEUS BANK (BOPr.AT) Rating: RESTRICTED Sector: BANKS




Free Float (%) 100%


Piraeus is the 4th - 5th largest bank in Greece (loan and deposit market share of 12.2% and 11.0%, respectively). It has grown through acquisitions and organically. It has a network of 301 branches in Greece (39% of which are new immature branches) and a growing international presence with 219 branches, largely located in SEE region. Its loan book is largely geared towards household and SME lending accounting for 37% and 41% of the loan book, respectively.


The share gained 68.6% in 2006, largely outperforming the G.I. The share’s performance was the result of consecutive earnings surprises in interim results and M&A speculation largely related to the Bank of Cyprus. The share has gained 7.29% ytd.


Strong organic growth both domestically and overseas should continue being the bank’s focus area. Management has indicated that the new business plan to be released on Jan 31 will incorporate some quite ambitious growth and profitability targets. At the same time, responding to the general consolidation trend that prevails internationally, on January 11, Piraeus Bank submitted a voluntary tender offer for the acquisition of up to 100% of Marfin Popular Bank (minimum of 40%) under the swap ratio of 1 Piraeus for 5.7 shares of Marfin Popular. The rationale of the acquisition was value creation through geographic and product complementarity and the combination of each bank’s areas of expertise. Since July ’06, Piraeus Bank is also the larger single shareholder of BoC with an 8.14% stake (45 mn shares) at an avg price of around EUR7.16 per share. Following the rejection by the Bank of Cyprus BoD of Piraeus’ proposal regarding a strategic co-operation between the two banks, Piraeus considers selling the stake. Although, a potential merger between the two banks would have been value enhancing, in our view, the acquisition of the BoC stake proved to be a good investment move. Piraeus may book approx. EUR180 mn of trading gains (based on current prices).

VALUATION

We forecast EPS CAGR (’06-’08) of 27% due to the balance sheet expansion driven by lending, productivity gains at new immature Piraeus branches and good cost management. Earnings upgrades could be triggered by higher lending volumes, hence stronger income generation. Our net profit forecast for 2007 does not incorporate the potential sale of the Bank of Cyprus stake.

CATALYSTS AHEAD

The new business plan may trigger earnings upgrades. A key catalyst for the sector should be the outcome of the Piraeus/Marfin deal and potential Postal Savings Bank privatization. Developments around the existing shareholding relationship with BoC will be closely monitored.

Valuation ratios 2005A 2006E 2007F 2008F P/E 16.08 14.46 11.84 10.04 P/BVPS 4.25 3.66 3.12 2.71 Dividend Yield 2.46% 3.06% 3.73% 4.48% Fundamentals 2005A 2006E 2007F 2008F Net Loans 15,451 20,102 24,701 30,294 Deposits 13,051 15,436 18,461 21,230 Equity 1,378 1,638 1,902 2,225 Assets 23,545 29,903 35,883 41,266 NII 559 699 875 1,080 Total Income 901 1,190 1,329 1,560 Total costs (521) (576) (631) (694) Net Profit 264 432 481 587 NIM 2.77% 2.61% 2.66% 2.80% Cost-to-Income 57.89% 48.40% 47.49% 44.42% ROAavg 1.40% 1.69% 1.52% 1.57% ROEavg 23.13% 28.68% 27.16% 28.46% CAR 11.56% 10.31% 9.34% 9.11% NPLs/Loans 3.4% 2.5% 2.5% 2.5%

Amounts in EUR mn Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI 2.6% 5.8% 46.1% 2.0% Abs. perf. 8.9% 36.5% 71.1% 7.6%




ATEbank (AGBr.AT) Rating: NEUTRAL (Unchanged) Target Price: EUR4.50 Total Expected Return Targeted (yield incl.): 9.0% Unchanged (last report out on Jan 1, 2006) Sector: BANKS






AGB is the 3rd largest bank in Greece by deposits (c12% share) and the 6th largest by loans (c9% share). It has the 2nd largest branch network in Greece with 458 units, 75% of which are located in rural areas. Loan book composition is: 33% retail, 40% corporate and 27% public sector. It has an NPLs ratio of c14% (end – Sept ’06) largely due to legacy loans to the agricultural sector. Following a EUR1.2bn capital increase in June ’06, AGB embarked on a restructuring exercise comprised of loan book improvement through a combination of loan write-offs, loan restructurings and introduction of stricter credit approval policies; business diversification shifting focus to household lending; and cost containment. It owns 49% of First Business Bank (13 branches). It has also an 82% stake in listed Hellenic Sugar, fully consolidated. AGB is also building a small presence in the region through acquisitions, namely in Romania and Serbia. The Greek state owns 77.3% of AGB.


The share lost 22% in 2006 on weak operating performance triggering earnings downgrades. The share has gained 7.69% ytd.


The progress of AGB’s restructuring and its impact on financial performance and loan quality should be key factors to be monitored throughout the quarters. As of January 1, 2007 AGB’s main pension fund will be absorbed by the National Social Security Fund (IKA) and the auxiliary fund by the banks-specific fund (ETAT). Due to lower employer contributions, AGB calculates cost savings of at least 5% in 2007 over the 2006 personnel costs gradually increasing in the following years. AGB expects loan restructurings of up to EUR300 mn (c20% of total NPLs). AGB has an equities portfolio with a market value of EUR700 mn. At end-2006, it sold part of its Piraeus Bank stake. We would expect further liquidations in 2007 to release capital. AGB has currently cEUR600 mn of excess capital, on our calculations, to be used for business expansion, higher provisions for loan write-offs and Basle II adjustments. The Greek State plans to reduce its stake in 2007 (note that the latest placement was in May 2006 for a 7.18% stake at EUR5.05/share).

VALUATION

We value AGB share at EUR4.50/share through the Gordon’s growth model under the following assumptions: ROE sustainable of 18%, g of 5%, COE of 9.5% and BVPS of Eur1.61. We forecast EPS CAGR (’06-’08) of 21.6%. We expect retail lending penetration to be driven by AGB’s large network and low cost of funding of 1.3% as a result of the large deposit base. Valuation is particularly sensitive to costs and the cost of risk.

CATALYSTS AHEAD

Loan volumes, cost growth and loan quality issues will be closely monitored. A placement of AGB shares is subject to the share price.

Valuation ratios 2005A 2006E 2007F 2008F P/E 27.32 24.34 17.88 15.21 P/BVPS 3.23 2.67 2.70 2.46 Dividend Yield 1.67% 1.85% 2.52% 2.96% Fundamentals 2005A 2006E 2007F 2008F Net Loans 12,557 14,263 15,788 17,724 Deposits 17,596 18,611 19,914 21,308 Equity 1,172 1,293 1,410 1,547 Assets 20,826 22,284 23,844 25,513 NII 603 597 653 717 Total Income 820 823 898 972 Total costs (507) (525) (547) (567) Net Profit 139 156 213 250 NIM 3.06% 2.77% 2.83% 2.90% Cost-to-Income 61.84% 63.79% 60.96% 58.40% ROAavg 0.74% 0.73% 0.93% 1.02% ROEavg 11.88% 12.68% 15.74% 16.91% CAR 13.53% 13.02% 12.39% 11.58% NPLs/Loans 15.52% 13.52% 12.18% 10.81%

Amounts in EUR mn Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI 2.5% -11.5% -31.2% 2.1% Abs. perf. 8.8% 14.1% -19.4% 7.7%




Postal Savings Bank (GPSr.AT) Rating: NEUTRAL (Unchanged) New Target Price: EUR20.20 Total Expected Return Targeted (yield incl.): 10.56% From: 18.90 (last report out on Sep 18 ‘06) Sector: BANKS






The transformation of Postal Savings Bank (PSB) from a deposit gatherer into a commercial bank began in 2004 under a new management team and the support of upgraded technical infrastructure. It received a banking license in 2006. PSB offers only household products (mortgages and pre-approved consumer loans) accounting for 95% of the loan book (the rest are public sector loans). It has an exclusive co-operation agreement (incl a 10% cross shareholding) with the Post Office for the distribution of retail products through post offices. It has the largest distribution network comprised of 136 PSB branches and 820 post office units. It has a large deposit base (cEur7.6 bn in savings). It is highly liquid with a loan to deposit ratio of 33%. It is overcapitalized with a CAR of 13%, virtually all core Tier I. The Greek state owns 55% of PSB and the Post Office owns 10%.


Since its IPO in June ’06 at EUR12.50, the share gained 43% in 2006, outperforming the G.I. The share’s performance reflects price rationalization post - IPO and some M&A speculation if the govt decided to sell the bank. The share has gained 5.5% ytd.


We should expect the first positive results of PSB’s retail strategy on the bank’s financial performance, principally affecting net interest income and fees. We should expect the bank to report growth rates in mortgages and consumer lending above the market. We should also see some cost rationalization in the absence of one-off expenses of cEUR33.0 mn that burdened 2006 numbers and a provisioning rationalization.

VALUATION

We value PSB share at EUR20.20 through the Gordon’s growth model under the following assumptions: ROE sustainable of 20%, g of 5%, COE of 9.5% and BVPS of EUR5.64. Valuation upgrade reflects the roll out of valuation to 2007. We forecast EPS CAGR (’06-’08) of 13%. The below sector earnings growth reflects PSB’s relatively conservative business strategy. PSB’s key attractions are its large and underutilized deposit base in conjunction with a large branch network. Earnings upgrades could be triggered by higher volumes leading to higher income generation.

CATALYSTS AHEAD

A placement of PSB shares by the Greek state is part of the 2007 privatization agenda. In addition, retail lending volumes and cost evolution (compared to an inflated ’06) will be closely monitored. We would expect a generous dividend given the bank’s ample capital.

Valuation ratios 2005A 2006E 2007F 2008F P/E 21.66 20.86 17.60 15.29 P/BVPS 3.07 3.35 3.34 3.10 Dividend Yield 0.42% 3.12% 3.69% 4.25% Fundamentals 2005A 2006E 2007F 2008F Net Loans 3,010 4,949 7,318 9,528 Deposits 9,021 10,374 11,204 12,100 Equity 624 668 721 782 Assets 11,565 13,068 14,098 14,794 NII 242 256 272 306 Total Income 296 382 395 433 Total costs (127) (185) (166) (171) Net Profit 123 127 151 174 Net Profit (old) 123 140 151 175 NIM 2.16% 2.08% 2.00% 2.12% Cost-to-Income 43.02% 48.34% 42.04% 39.53% ROAavg 1.09% 1.03% 1.11% 1.20% ROEavg 12.06% 15.36% 19.02% 21.05% CAR 13.09% 11.96% 11.50% 10.75% NPLs/Loans 0.22% 0.96% 1.12% 1.20%

Amounts in EUR mn Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI -0.5% -7.1% 28.7% 0.0% Abs. perf. 5.6% 19.8% 50.7% 5.5%




OTE (OTEr.AT) Rating: NEUTRAL (from Outperform) Target Price: EUR24.00 Total Expected Return Targeted (yield incl.): 5.26% Unchanged (last report out on Nov 29, 2006) Sector: TELECOMS






OTE is Greece’s incumbent telecoms operator offering fixed-line, internet and high-speed communications as well as mobile services through its 67% subsidiary Cosmote. It is market leader in fixed-line with c6.0 mn lines and 73% market share. It has 500,000 ADSL subscribers, a share of c68% in a market with a penetration rate of only 4.6% (vs c14% the EU average). In 2006, CEO Mr. Vourloumis completed a VRS for 5,500 people at a cost of cEur900 mn and introduced private sector labor regulation. Based on 9m ’06 figures, the fixed-line division posted an EBITDA margin of 30% from 25% one year ago, expected to stabilize at around 34%-35% by 2008. OTE has a quite strong regional presence both in fixed-line (Romania and Serbia) and in mobile (Albania, FYROM, Bulgaria and Romania). The Greek state owns 38.7% of OTE.


The share gained 26.4% in 2006, outperforming the G.I. The share’s performance reflects the progress of OTE’s restructuring programme and partly discounts a favorable outcome of the planned privatization. The share has lost 2.11% ytd.


We expect intensifying competition in the domestic fixed-line due to the evolution of the unbundling model and, possibly, the creation through M&As of stronger competitors. On the other hand, we expect broadband penetration to continue growing rapidly reaching 8% in 2007 and approaching 13%-14% in 2009. OTE should have more than 700,000 subscribers by end-2007. ADSL and other new business revenues should partly offset the decline in traditional voice revenues. Cost cutting should continue (a new VRS might be in the cards). The re-organization of OTE’s real estate may also produce cost savings and incremental cash flows. The competitive environment in Romania should remain quite tough due to mobile and cable competition affecting Romtelecom’s top line and putting some pressure on margins. Revenue decline should be reversed after the completion of the Next-Generation-Network by 2008.

VALUATION

We value OTE through a DCF-based sum of the parts methodology, which gives a TP of EUR24.00. Upgrades could be triggered by Cosmote.

CATALYSTS AHEAD

Investors’ interest will be in ADSL subscribers and cost growth at the fixed-line. The group should end 2007 relatively underleveraged, on our estimates, which may trigger speculation for a special cash distribution (on top of the regular dividend). The govt has initiated procedures for the sale of a stake to a strategic investor.

Valuation ratios 2005A 2006E 2007F 2008F P/E n/a 14.65 19.66 16.39 EV/EBITDA 13.79 7.64 6.71 6.12 FCFE Yield 4.2% -7.1% 6.5% 9.0% Dividend Yield 0.00% 1.99% 2.08% 2.35% Fundamentals 2005A 2006E 2007F 2008F Assets 11,050 11,312 11,736 12,172 Net Debt 1,928 2,819 2,397 1,697 Equity 3,312 3,862 4,205 4,632 Revenues 5,475 5,718 6,307 6,593 EBITDA 1,132 2,156 2,394 2,510 EBITDA margin 20.7% 37.7% 38.0% 38.1% Net Profit (217) 777 579 695 WC (319) (172) (124) (65) CAPEX (680) (1,001) (979) (831) FCF (157) (812) 738 1,030 DPS (EUR) - 0.46 0.48 0.55 Net debt/EBITDA 1.70 1.31 1.00 0.68 ROE -6.3% 21.7% 14.4% 23.6%

Amounts in EUR mn Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI -4.1% 4.2% 6.3% -3.2% Abs. perf. 1.8% 34.3% 24.5% 2.1%




COSMOTE (COSr.AT) Rating: NEUTRAL (from Outperform) Target Price: EUR24.10 Total Expected Return Targeted (yield incl.): 6.99% Unchanged (last report out on Nov 9, 2006) Sector: TELECOMS






Cosmote is Greece’s number one mobile operator with 5.0 mn customers and a c37% share. It has operations in Albania (82.45% of AMC), in Bulgaria (Globul), in FYROM (Cosmofon) and in Romania (70% of Cosmote Romania). Cosmote Group has currently 10 mn subscribers in five countries targeting 15 million in 2009, with a substantial part of this growth coming from Romania. In May 2006, it acquired Germanos, the largest telecom retailer in Greece for a net cost of cEUR1.2bn financed through debt. The rationale of the acquisition was to consolidate Cosmote’s leading position in Greece and strengthen its commercial policy in Greece and abroad. OTE owns 67% of Cosmote.


The share gained 19.5% in 2006, in line with the market. The market initially saw the acquisition of Germanos with skepticism considering it quite expensive. Initial concerns were erased by the strong performance of the Greek operations in Q3 (the first quarter after the acquisition) and the release of new guidance including Germanos. The share has gained 4.46% ytd.


The performance of Cosmote Romania should be the main focus in 2007. Cosmote Romania has already 1.0 million subscribers, mostly pre-paid. It has expanded its network to 95% population and has consolidated a strong nationwide retail distribution network of almost 600 stores. Cosmote Romania should start targeting the post-paid market segment, which should improve ARPU. We expect Romania to turn EBITDA positive in 2008 and cash flow positive in 2009.

VALUATION

We value Cosmote through a DCF-based sum of the parts methodology, which gives a TP of EUR24.10. Upgrades could be triggered by Cosmote Romania. The latter is currently valued at EUR507mn (EUR355mn for Cosmote’s stake) accounting for just 3.5% of Cosmote’s EV.

CATALYSTS AHEAD

Investors’ interest will be in subscriber additions and ARPU progression in Romania. Developments around the planned sale of OTE to strategic investors should also affect Cosmote.

Valuation ratios 2005A 2006E 2007F 2008F P/E 22.97 21.30 18.00 14.84 EV/EBITDA 11.67 11.47 9.49 8.26 FCFE Yield -1.41% -13.03% 4.26% 6.75% Div Yield (%) 3.51% 4.00% 4.85% 5.42% Fundamentals 2005A 2006E 2007F 2008F Assets 2,549 4,323 4,663 4,962 Net Debt 995 2,230 2,145 1,917 Equity 652 801 988 1,214 Revenues 1,798 2,355 3,030 3,361 EBITDA 755 875 1,048 1,177 EBITDA margin 42.0% 37.2% 34.6% 35.0% Net Profit 340 367 434 526 CAPEX (263) (523) (472) (354) FCF (110) (1,017) 332 527 DPS (EUR) 0.65 0.74 0.90 1.01 Net debt/EBITDA 1.32 2.55 2.05 1.63 ROE 41.9% 50.5% 48.5% 47.8%

Amounts in EUR mn Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI -3.5% 2.6% 3.7% -0.9% Abs. perf. 2.5% 32.4% 21.5% 4.5%




Coca Cola HBC (HLB.AT) Rating: NEUTRAL (from Outperform) Target Price: EUR30.00 Total Expected Return Targeted (yield incl.): 1.6% Unchanged (last report out on Oct 30, 2006) Sector: Food & Beverage

Share price: EUR 29.84 General Index: 4,634 Date: 23/01/07





CCHBC is one of the main anchor bottlers of the Coke system. It is currently operating in 28 countries, having three distinct markets: established, developing and emerging. Its product portfolio comprises of CSD’s and non-CSD’s like water and juices. Approximately one third of its revenues come from non-CSD’s, where the main growth opportunities for the group lie, in our view.


The share gained 19% the last six months, ending the year very close to our target price of EUR30.00. CCHBC moved in tandem with the broader market index, while it outperformed slightly the FTSE/ASE 20 blue chip index. The current year started in a good tone for the share, which hit a record high of EUR31.28 on January 8 to ease off the following days, as investors turned to defensive stocks like CCHBC, discounting at the same time reduced cost pressures from falling commodity prices.


CCHBC is targeting more acquisitions in the non-CSD segment in order to reinforce its brand portfolio. Further commodity pressures are expected, especially in sugar due to the entrance of Bulgaria and Romania in the EU. The focus of the management, apart from further acquisitions is on cost containment and full exploitation of the strong distribution capabilities of the group.

VALUATION

Our DCF-derived target price points to a fair value of EUR30.00, offering ALMOST no upside on the current market price. We believe though that there is upside potential on our EPS estimates given that commodity costs have been hit so far this year, further margin expansion in developing markets and a possible turnaround in established markets. However, at this stage, CCHBC is fairly priced and we thus downgrade our recommendation to Neutral from the previous outperform.

CATALYSTS AHEAD

New acquisitions and/or a possible expansion in other countries may trigger further price appreciation. On the other hand, and in case of no expansionary moves, a capital return may materialize during 2007.

Valuation ratios 2005A 2006E 2007F 2008F P/E 23.4 21.1 17.4 15.7 P/CFPS 11.3 10.4 9.0 8.2 P/BVPS 3.0 2.8 2.4 2.2 EV/Sales 1.9 1.6 1.4 1.3 EV/EBITDA 11.0 9.9 8.8 7.9 Dividend Yield 1.0% 1.1% 1.1% 1.3% Fundamentals 2005A 2006E 2007F 2008F Turnover 4,780 5,577 6,169 6,647 EBITDA (underlying) 817 903 975 1,067 EBIT (underlying) 481 558 591 652 Net profit 308 342 413 459 ROE 16.86% 16.61% 16.80% 16.27% ROIC 9.42% 9.55% 10.45% 11.09%

Amounts in EUR mn

Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI -5.4% -8.2% 2.7% -4.4% Abs. perf. -0.3% 17.9% 20.3% 0.8%

George J. Doukas +30 210 3354093 – Equity Analyst [email protected]



Hellenic Exchanges (EXCr.AT) Rating: NEUTRAL (Unchanged) Target Price: EUR14.60 Total Expected Return Targeted (yield incl.): -6.2% Unchanged (last report out on Nov 11, 2006) Sector: Other Financials






Hellenic Exchanges (HelEX) is operating the Athens spot and derivative markets, including their clearing functions.


The shares gained c.66% YoY, outperforming the local market. The significant improvement of the company’s profitability and the increased trading volumes in the ATHEX helped the stock post a significant jump in its price during the year. The strong performance continues in ‘07, where the shares have significantly outperformed the market boosted by the increased trading volumes.


The new rules on short selling are expected to help trading turnover in the ATHEX. The decisions were taken at the end of ‘06 but their application started from the beginning of ‘07. Other initiatives, like the ETF’s and the change of the maturity of futures are also expected to increase interest on the Athens stock market. We would also like to see the effect of the new fee structure, initiated in December 2006. Trading so far in 07 has been robust, in excess of EUR400mn per day, a good sign for the rest of the year; short selling however has not been so strong, at least not as much as the market was expecting

VALUATION

Our DCF-derived target price points to a fair value of EUR14.60, offering no upside on the current market price. Note however that our target price is based on average trading volumes of EUR367mn/day, which so far this year has been surpassed; average trading volumes currently stand well above EUR400mn on a daily basis. Current market price implies average daily trading volume of c. EUR490mn on our numbers, well above our current estimates. We feel that it would be very optimistic to see volumes remaining at these levels for the rest of the year. Recall that volumes for ‘06 stood at c. EUR342mn.

CATALYSTS AHEAD

A possible acquisition of the Bulgarian stock exchange could bring in the forefront the vision of the management to apply the model with Cyprus to other regional stock exchanges and transform HelEx to a regional player. Furthermore, we wouldn’t rule out a capital return in 07, which could be in the range of EUR 0.30- EUR0.40.

Valuation ratios 2005A 2006E 2007F 2008F P/E 41.67 20.96 19.01 17.74 P/E (x) adj. for cash 37.66 18.94 17.18 16.03 P/BVPS 5.37 7.98 6.96 6.12 EV/Sales 12.88 9.16 9.21 8.57 EV/EBITDA 22.87 13.25 12.87 11.74 Dividend Yield 1.55% 3.10% 3.42% 3.66% Fundamentals 2005A 2006E 2007F 2008F Turnover 74 114 111 117 EBITDA 42 79 79 85 EBIT 39 77 77 83 Net profit 27 54 60 64 ROE 10.14% 31.34% 39.03% 36.63% ROIC 47.54% 97.37% 89.39% 97.91%

Amounts in EUR mn





TITAN (TTNr.AT) Rating: OUTPERFORM (from Outperform) Target Price: EUR 48.0 Total Expected Return Targeted (yield incl.): 13% From: 48.0 (as at 01/11/06)

Sector: BUILDING MATERIALS

Price (EUR): 43.5 General Index: 4,634 Date: 23/01/07

Market Cap. (Eurmn) 3,640 52-week High-Low 44.2-32.8

Shares Outstanding (mn) 84.485 (incl. 7.56mn preferred) Avg. Daily Volume 52-weeks (shares) 110,769

Free Float (%) 50%

BRIEF COMPANY REVIEW

Titan is the only domestic cement producer remaining under Greek management. The company is active in both domestic and export markets in the broader field of building materials owning over 40 subsidiaries which in turn are involved in ready-mix concrete (RMC) production and trading, aggregates, quarrying, transportation, and other services. It has 15.8mn tons cement capacity (13.9mn effective) – 38% in Greece, 21% in the US (to increase to 23%), 20% in Balkans and 21% in Egypt. As a result of significant exposure to aggregates in the US and high cement prices, the US operations account for more than 50% of group’s sales (from 39% in ’03) while EBITDA contribution from the US ranks first at 41% (expected to grow to 46% in ’08). Greece is expected to slow and remain in the region of 33% and 35% with regard to sales and EBITDA contribution respectively. DEVELOPMENTS FOR ‘07

US: The slump in the US housing is expected to have a negative effect with a time lag (with the gradual decline of projects in the pipeline) while cement prices are seen remaining resilient – public works are to offset at a certain degree the slump in housing. Greece continued its strong performance in ’06 pursuant to VAT amendments with regard to the domestic housing market in the end of 05 and also as a result of mortgages growth subject to low-interest rates. We see an easing growth in ’07 on slightly improved cement prices (in line with inflation) – possibly not material changes in sales mix (exports-domestic sales). Balkans: As expected Bulgaria posted strong growth during 06 period ahead of EU accession in the beginning of 07 and increased public infrastructure – Serbia incurred higher fuel prices but prices held up well. Overall SE Europe performed satisfactory while operating margins improved but not significantly due to inflated cost of sales. Increased capacity in Bulgaria (0.45mn tons) - to be completed in the beginning of 07 - should give an extra boost in the country’s cement sales. Egypt had a very good ’06 with operating margins reaching impressive new highs – unfortunately the price ceiling by local authorities are to hold back momentum – still at current price levels returns to the shareholders are more than satisfactory. VALUATION

The company’s stock is trading fairly compared with other peers in terms of PER and EV/EBITDA for ’07 while running a DCF model provides a higher price than current levels on positive FCF generation and without including acquisitive capex in the years to come. The group is currently under-leveraged while the management has been in search for new growth exits (i.e. a new USD200mn plant in Albania). We have a TP of Eur48.0 and an Outperform recommendation.

Valuation ratios 2005A 2006F 2007F 2008F P/E 17.42 14.08 12.55 11.75 P/CFPS 12.84 10.65 9.60 8.98 P/BVPS 3.82 3.28 2.62 2.29 EV/Sales 2.78 2.29 2.03 1.83 EV/EBITDA 9.57 7.74 6.75 6.07 Dividend Yield (%) 1.4% 1.7% 2.4% 3.4% EV/ton ($) 370.33 342.71 322.64 262.36 Fundamentals 2005A 2006F 2007F 2008F Turnover (€ mn) 1,341.7 1,585.8 1,710.0 1,798.2 EBITDA (€ mn) 389.2 468.5 513.0 540.6 EBIT (€ mn) 317.2 389.1 427.5 448.5 Net profit (€ mn) 210.1 260.5 292.8 312.9 ROE 27.6% 27.6% 25.5% 22.9% ROIC 18.3% 20.6% 22.0% 22.7%

Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI -1.1% -6.5% 8.8% 0.1% Abs. perf. 6.7% 22.8% 27.5% 2.9%

George J. Minardos +30 210 3354083 - Analyst [email protected]



HERACLES (HERr.AT) Rating: Underperform (from Neutral) Target Price: EUR 15.5 Total Expected Return Targeted (yield incl.): -4.5% From: 14.5 (as at 13/09/06)

Sector: BUILDING MATERIALS

Price (EUR): 17.2

General Index: 4,634 Date: 23/01/07


Shares Outstanding (mn) 71.082 Avg. Daily Volume 52-weeks (shares) 63,028

Free Float (%) 21%


Heracles is the leading cement producer in Greece with market share exceeding 50% and a respectively strong brand name. With three plants in operation total capacity of 9.1mn tons, Heracles constitutes a significant cement exporter to the US, UK, Africa, Spain and Italy (65% domestic sales – 35% exports). Lafarge holds 53% in Heracles’ share capital while the National Bank of Greece remains a shareholder with a stake of c. 26%. DEVELOPMENTS FOR ‘07 Domestic cement volume posted strong growth in ’06 due to a buoyant housing activity (spurred by VAT amendments on housing during the end of 05) while export cement prices picked up as evidenced also from other peers. Domestic prices grew in line with inflation rates while top line increase outpaced any increase in the cost of sales. The company concluded with the sale of non-core subsidiaries and the streamline of its business – RMC and quarrying assets turned profitable. We expect no material changes in the business during the current year – the domestic market should post a slowing growth while domestic and export prices are not seen altering significantly. There are also no developments as to what the National Bank of Greece intends to do with its stake in Heracles (26%). VALUATION

Heracles remains among the least leveraged cement producers with an estimated net cash of Eur130mn in the end of 06 – this points to an over-capitalized group with ROE below industry’s average. In terms of valuations the group is trading fairly with larger and more diversified groups which in our view is not fair. FCF generation and increasing dividend yield should be evident in the near future unless the management decides on a generous capital return. We downgrade our recommendation to Underperform on rich valuation multiples but not supportive growth profile and in the absence of positive catalysts ahead.

Valuation ratios 2005A 2006F 2007F 2008F P/E 10.67 16.40 13.27 13.47 P/CFPS 7.56 9.96 8.58 8.53 P/BVPS 1.65 1.55 1.49 1.44 EV/Sales 1.84 1.58 1.45 1.34 EV/EBITDA 8.15 6.42 6.08 5.81 EV/ton ($) 159.43 155.53 147.46 141.37 Dividend Yield (%) 5.5% 4.1% 5.3% 5.5%

Fundamentals 2005A 2006F 2007F 2008F Turnover (€ mn) 609.1 691.4 713.8 739.9 EBITDA (€ mn) 137.5 170.1 170.3 171.1 EBIT (€ mn) 90.3 121.9 120.0 118.7 Net profit (€ mn) 114.6 74.6 92.1 90.8 ROE 16.4% 9.5% 11.4% 10.9% ROIC 17.6% 10.8% 13.7% 13.8%

Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI 1.3% -5.4% 31.8% 0.4% Abs. perf. 7.4% 22.9% 54.4% 3.6%




PPC (DEHr.AT) Rating: NEUTRAL (from Neutral) Target Price: 19.6 Total Expected Return Targeted (yield incl.): -4.0% From: 19.6 (as at 22/11/06)

Sector: ELECTRICITY



Shares Outstanding (mn) 232 Avg. Daily Volume 52-weeks (shares) 469,768

Free Float (%) 49%

BRIEF COMPANY REVIEW Public Power Corporation is the dominant electricity company in Greece. The company produces c. 52.6 TWh per annum and serves more than 7.1m customers in Greece. PPC implements an ambitious plan to improve efficiency of operations in order to maintain its leading position, following the market’s full liberalization as of July 2007. Public Power Corporation produces electricity through a combination of lignite-fired plants – 62-63% of total, thermal ones (oil and gas) – 30% and hydro plants 8%. COMPETITION: Hellenic Petroleum’s gas-fired plant in the Northern Greece is the first IPP (Independent Power Producer) that launched operations in Greece’s electricity system – HERON gas plant (GEK/Terna own 100%) of 150MW is also a spare capacity plant that assures for the system’s balance during peak hours. DEVELOPMENTS FOR ‘07 With the gradual increase of IPPs and new comers (mostly RES) in the system, PPC will incur higher energy purchases in ’07 while on the other hand the good news is that bunker prices have declined significantly compared to ’06 and Mr P. Athanassopoulos, ex- Head of Toyota Europe and "Businessman of the year" for several years has been appointed the position of CEO and Chairman of BoD in PPC - Mr Athanassopoulos is considered to be among the most prestigious managers in Europe. Keys issues for the management to deal with: Personnel expenses remain high in spite of natural attrition and measures on tighter collective agreements, unclear tariff strategy especially now that Greece enters into a pre-elective period, control of operating costs pertaining to consumables, maintenance etc. and implementation of best practices as per Hercules business plan 06-10.

VALUATION We value PPC using a DCF model assuming in line with inflation tariff increases and electricity demand growth of 2.5% - the stock is trading high in terms of PER ’07 and EV/EBITDA ’07. Still there is a significant opportunity for a stock rebound given the fuel price depreciation (c. -20% during Jan 07). A 10% decrease in fuel costs provides a TP of Eur24.0. We reiterate a Neutral recommendation.

Valuation ratios 2005A 2006F 2007F 2008F P/E 35.5 60.2 37.1 22.6 P/BV 0.9 0.9 0.9 0.9 P/CF 5.8 5.2 4.9 4.3 EV/EBITDA 9.5 10.4 9.0 7.6 EV/EBIT 25.1 36.0 26.7 19.6 (EV/IC)/(ROIC/WACC) 2.96 2.60 1.75 1.30 Dividend Yield (%) 2.4% 1.2% 2.0% 3.3%

Fundamentals 2005A 2006F 2007F 2008F Turnover (€ m) 4,291 4,703 5,083 5,392 EBITDA (€ m) 907 823 941 1,091 EBIT (€ m) 343 237 317 424 Net profit (€ m) 136 80 130 213 ROE 2.88% 1.54% 2.48% 3.94% ROA 1.14% 0.62% 0.99% 1.59%

Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI 0.9% -10.5% -8.0% 2.6% Abs. perf. 6.3% 16.5% 7.8% 2.4%




OPAP (OPAr.AT) Rating: Neutral (from Neutral) Target Price: 30.4 Total Expected Return Targeted (yield incl.): 5% From: 29.4 (as at 01/12/06)

Sector: GAMING




Free Float (%) 60.6

BRIEF COMPANY REVIEW OPAP is a state-controlled company engaged in the organization, management and operation of games of chance. In 99 the company was restructured and transformed into a Societe Anonyme. Currently it operates under the Statute of Greek Corporations. Its agreement with Intralot on Stihima’s (fixed odds betting) risk management has been recently renewed for another 6 months – According to the management after the termination of agreement OPAP is to run the risk management of the game in-house – if operated well (with a controllable payout) the benefit will be material for OPAP. DEVELOPMENTS FOR ‘07 We entered into a period with significant fluctuation in payout ratios and profits for OPAP – this increases OPAP’s risk profile. During ’07 we expect the full effect from the introduction of Greek football matches in Stihima’s slip and the larger betting volume to be combined with in-house risk management of Stihima for 6 months. We also expect the conclusion of the tender for new terminals by the end of the 1st H ’07 while the management has indicated for expansion to new markets and games.

VALUATION OPAP’s stock is trading attractively compared to other gaming peers – we use a DCF method to value the stock assuming EBITDA margin in the region of 18.5% into perpetuity and a decreasing top line pace post 2012. We believe that OPAP constitutes a good risk/reward investment pick at current levels with the risk on the upside – first indicative signs of successful in-house risk management of Stihima should provide positive momentum to the stock. We remain Neutral.

Valuation ratios 2005A 2006F 2007F 2008F P/E 20.88 19.90 17.10 14.97 P/E (excl. XO) 20.88 19.90 17.10 14.97 P/CFPS 19.95 19.05 16.35 14.27 P/BVPS 52.20 47.81 38.76 32.26 EV/Sales 2.48 2.06 2.00 1.92 EV/EBITDA 13.01 13.33 12.04 10.45 EV/EBIT 13.42 13.76 12.45 10.85 Dividend Yield (%) 4.7% 5.0% 5.8% 6.6% FCF yield 4.5% 5.4% 6.1% 6.2%

Fundamentals 2005A 2006F 2007F 2008F Turnover (€ m) 3,695.2 4,450.0 4,594.9 4,746.1 EBITDA (€ m) 704.0 688.5 761.5 873.1 EBIT (€ m) 682.6 667.0 736.1 841.5 Net profit (€ m) 458.3 481.0 559.7 639.2 ROE 253.8% 250.8% 250.4% 235.2%

Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI -2.6% -12.5% -17.3% -2.8% Abs. perf. 2.2% 11.9% -3.2% 1.7%




INTRALOT (INLr.AT) Rating: Under Review (from Outperform) Target Price: Under Review Total Expected Return Targeted (yield incl.): (n.a) From: 28.2 (as at 03/01/07)

Sector: GAMING




Free Float (%) 55.7

BRIEF COMPANY REVIEW Intralot specializes in the development of integrated gaming systems rendering technical know-how and high quality services to domestic and foreign Lottery Organizations. Additionally, it operates as a risk manager to domestic and foreign football betting games. Intralot has presence in the Balkans (Bulgaria, Romania and Fyrom), Eastern Europe (Poland), Moldova, Turkey, Latin America (Chile, Peru, Colombia and recently Argentina), South Africa, Malta, Italy, Australia and Malaysia. The largest contribution comes from Greece (the contract with OPAP has been renewed for 6 months of ’07), Turkey, Bulgaria while Italy is to contribute significantly in ’07 and more in ’08. Intralot has a good track record in gaining new contracts in foreign markets based on its technical expertise and competitive advantage on sports betting games (gained through the risk management operation of the Greek Stihima). DEVELOPMENTS FOR ‘07 It is important to see how much Italy will contribute to the group during ’07 while new contract agreements in Latin America (Argentina), possibly in the US (Illinois, Indiana, Texas and other), Spain and elsewhere are seen increasing expectations for higher than estimated profits. In other news Intralot recently announced with respect to the lawsuit filed by Gtech against the Turkish Public Tender Authority and the General Directorate of Youth and Sports in Turkey which had petitioned for annulment of the fixed odd betting tender awarded to Intralot’s subsidiary Inteltek that according to information a chamber of the Turkish Administrative Court of Appeals granted on the one hand a stay of execution of the decision of the court of first instance and on the other suspended the administrative transactions that relate to the tender process. This is an interim decision and the final decision of the chamber of the Court of Appeals is expected to be rendered within the next months and in any case the parties have the right to appeal.

VALUATION Our combined valuation assumed renewal for most of current and new contracts and therefore sustainability of margins post the expiration of the important Turkish fixed odds betting game in 2011. Turkish operations account for 26% and 23% of group EBT for ’06 and ’07 so any issue arising on the Turkish contract has material effect on the company’s valuation. The company’s risk profile has significantly increased from the legal issue in Turkey. Until we conclude with a more solid view we turn our recommendation to Under Review from Outperform previously.

Valuation ratios 2005A 2006F 2007F 2008F P/E 28.75 18.18 13.43 15.63 P/CFPS 22.91 15.53 11.54 12.89 P/BVPS 13.01 9.04 6.32 5.15 EV/Sales 3.67 2.43 1.50 1.25 EV/EBITDA 12.00 7.56 5.50 5.24 Dividend Yield (%) 2.1% 2.3% 2.5% 2.8%

Fundamentals 2005A 2006F 2007F 2008F Turnover (€ m) 523.0 772.4 1,187.7 1,283.5 EBITDA (€ m) 160.0 248.1 323.5 307.2 EBIT (€ m) 142.2 229.2 298.7 279.5 Net profit (€ m) 69.9 110.6 151.7 130.3 ROE 51.9% 58.7% 55.7% 36.3% ROCE high net cash high net cash high net cash high net cash

Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI -1.5% 5.2% 28.8% -6.8% Abs. perf. 6.3% 37.5% 50.9% -3.5%




GEK (HRMr.AT) Rating: Outperform (from Outperform) Target Price: EUR 10.4 Total Expected Return Targeted (yield incl.): 25% From: 10.4 (as at 20/12/06)

Sector: CONSTRUCTION

Current Price (EUR): 8.48 General Index: 4,634 Date: 23/01/07

Market Cap. (Eurmn) 555 52-week High-Low 8.7-4.8


Free Float (%) 58.1

BRIEF COMPANY REVIEW GEK fully consolidates Terna (54.223% stake) – apart from construction business and wind energy, GEK consolidates the real estate operations of the group while GEK also participates with a 33% stake in Hellenic Autopistas consortium (with Cintra and ACS) which was recently awarded the concession projects of Ionian and E-65 free way.


GEK is set to move in line with Terna in terms of bottom line growth during ’07 with the exception of a minor contribution from real estate, which cannot be estimated at the moment. GEK is also set to take the full benefit from a potential renewal of the agreement between HERON (gas fired plant) and the Hellenic Transmission System Operator (HTSO) with regard to the provision of spare capacity to the grid. Recall that the Greek electricity system needs spare capacity to operate during peak hours and to balance without causing interruptions and blackouts.

VALUATION We value GEK with a SOTP method and we believe that there is more to be discounted in the stock price mostly in relation to the new concession projects. The stock is trading on demanding PER multiples and fair on EV/EBIT terms. We assign an Outperform recommendation.

Valuation ratios 2005A 2006F 2007F 2008F P/E 29.58 34.32 20.77 14.85 P/CFPS 16.52 16.74 11.69 9.17 P/BVPS 2.09 2.19 2.17 2.13 EV/Sales 2.31 2.26 1.54 1.26 EV/EBITDA 12.02 11.25 8.44 6.77 EV/EBIT 16.74 15.78 11.25 8.60 Dividend Yield (%) 1.8% 2.0% 2.4% 2.6%

Fundamentals 2005A 2006F 2007F 2008F Turnover (eurmn) 274.2 294.2 454.5 584.2 EBITDA (eurmn) 52.6 59.1 83.0 108.7 EBIT (eurmn) 37.8 42.1 62.3 85.5 Net profit (eurmn) 18.8 16.2 26.7 37.4 ROE 7.4% 6.2% 10.5% 14.5% ROCE 7.1% 9.0% 13.1% 16.0%

Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI 1.1% 3.5% 8.4% -3.4% Abs. perf. 7.3% 32.9% 26.9% 5.0%




TERNA (TERr.AT) Rating: NEUTRAL (from Neutral) Target Price: EUR 12.8 Total Expected Return Targeted (yield incl.): 1.3% From: 12.8 (as at 20/12/06)





Free Float (%) 40.62


Terna constitutes the construction arm of GEK with a strong market share among the 5 largest in Greece. It generates electricity through 65MW-installed capacity generated by wind parks with plans for additional 105MW by June ’07. The group’s current order book exceeds Eur1.5bn. DEVELOPMENTS FOR ‘07

Terna is to act as a subcontractor of Hellenic Autopistas consortium (GEK participates with a 33.3% stake along with Cintra and ACS) which was recently awarded the concession of Ionian free way (the completion period is 6 years while the construction budget stands at Eur1.4bn) and E-65 free way concession project (construction budget stands at Eur1.5bn and the completion period is 6 years) – we expect construction business from concessions to begin in the 2nd H ’07 while the regulatory framework for renewable energy resources should speed up the roll out plan of current wind licenses portfolio. At the same time commercial building in Greece is seen remaining vivid while expansion into Balkans (Romania) and Middle East is expected to grow rapidly.

VALUATION At current price we believe the stock has incorporated a great deal of good prospects including the roll out plan of wind parks and certification of a large number of projects – in terms of relative valuations the stock trades on rich PER and EV/EBIT multiples while we value 8x times ’07 net construction earnings which is not excessive.



Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI -1.2% -2.1% 15.6% -4.3% Abs. perf. 5.0% 25.9% 35.4% 0.9%




HELLENIC TECHNODOMIKI (HELr.AT) Rating: UNDER REVIEW (from Outperform)

Target Price: Under review Total Expected Return Targeted (yield incl.): (n.a) From: 9.1 (as at 14/12/06)





Free Float (%) 69.7


Hellenic Technodomiki is a holding group with exposure to construction business through Aktor (holding the 7th class certificate), 5 concessions (Attica Ring Road, Rio-Antirio Bridge, Maliakos-Kleidi, Korinthos-Tripoli, Thessalonica submerged tunnel), renewable energy resources through the operation of biogas plants (30MW by the end of 06) and wind farms (140MW to be in operation by the end of ’08). Hellenic Technodomiki is also engaged with real estate development (owns a real estate property of Eur110mn) and waste management with the deployment of Herhof technology. HT has also a 14.7% stake in Mont Parnes casino (49% subsidiary of Hyatt-HT joint venture with 70-30 stakes), a 30% stake in the company that operates Kassandra gold mine (northern Greece) while the company recently sold its 39.17% stake in Attica Telecoms at a price of Eur40mn. DEVELOPMENTS FOR ‘07

Hellenic Technodomiki has a backlog in excess of Eur3bn - c. 60% of which comes from Greece and the rest from foreign markets (Oman, Kuwait, Romania and Dubai) where margins are lower than domestic ones. Hellenic Technodomiki is seen proceeding fast with the financing of Blue City (1st phase) project of USD1.866bn total budget and the contracting company, Aeco Development LLC (JV between Hellenic Technodomiki and ENKA) received an advanced payment of USD130.6mn to start operations – construction operations are not seen beginning before ’08. On the other hand we see some more intensive construction activity by concessions in the 2nd H ’07. The same goes with the roll out plan of wind parks, which is expected to speed up after the release of the regulatory framework on Renewable Energy Sources (RES). Finally there is another concession (Korinthos-Patra) pending to be tendered for ’07 and there is strong likelihood that Hellenic Technodomiki will be awarded the project with a budgeted cost of c. Eur2bn. The group should further enhance its backlog with new projects abroad and more specifically in Russia (pending agreement to construct Spartak’s stadium at a cost of Eur100mn) and in Romania with projects of c. Eur160mn.

VALUATION We value Hellenic Technodomiki using a SOTP valuation – Attica ring road concession project along with Rio Antirio Bridge currently account for 20% of our valuation while we value construction business 13x ’07 net earnings (given the all time high backlog of the group). The stock is trading on rich PER and EV/EBIT ’07 multiples - Given the share’s strong outperformance in the beginning of ’07 we assign an Under Review recommendation (from Outperform previously) awaiting for the company’s ’07 guidance.







JP AVAX (AVAr.AT) Rating: Non rated Target Price: - Total Expected Return Targeted (yield incl.): (n.a) From: -





Free Float (%) 52.3


JP Avax constitutes the 2nd largest construction and concession group in Greece with an active presence in Europe, Africa and the Persian Gulf. JP Group is the sole strategic investor with a 48% stake. Its backlog should soon stand in the region of Eur1.5bn (more than 2x its mcap). JP Avax participates in the Attica Ring Road concession with a 30.8% stake and in GEFYRA (Rio-Antirio bridge) with an 11.2%. DEVELOPMENTS FOR ‘07 The company’s operating margins have always been lower than the rest of peers but overall in line with European standards. Backlog intake performance was strong in ’06 and this may be depicted in the company’s profitability in ’07 - the group is seeking to diversify its construction exposure through concessions in view of diminishing construction margins and increased competition worldwide. The group recently secured its participation in Maliakos-Kleidi BOT project with a stake of 16.25% while it participates with an 18% stake in the tender for Korinthos-Patra concession with a budgeted cost of Eur2bn. The company recently guided for group sales of Eur353mn in ’06, EBITDA of Eur42mn and net profits of Eur21mn – for ’07 the management expects group sales in the region of Eur550mn, EBITDA of Eur56mn and net earnings of 30mn.

VALUATION With the new management guidance the stock is trading attractively in terms of PER ’07 but close to fair in terms of EV/EBIT ’07 as a result of weak operating margin and leverage. We currently do not rate the stock.







MINOAN LINES (MILr.AT) Rating: Under Review (from Outperform) Target Price: Under Review Total Expected Return Targeted (yield incl.): (n.a.) From: 3.94 (as at 05/04/06)

Sector: SHIPPING




Free Float (%) 81.66

BRIEF COMPANY REVIEW Minoan Lines is a passenger shipping company that operates 4 vessels in the Adriatic Sea (calling Ancona and Venice) and 2 vessels on the Heraclion – Athens sea route. The company has a 33% stake in Hellenic Sea Ways (equity consolidation), a domestic non-listed passenger-shipping operator with the largest fleet in Greece (catamaran and conventional vessels). In our calculations 70% of group sales comes from Adriatic and 30% from domestic routes while in terms of EBITDA the ratio is 56% for Adriatic and 44% for domestic routes. DEVELOPMENTS FOR ‘07 After a difficult ’06 in terms of fuel costs but a good year in terms of traffic volumes (mostly in the domestic routes), Minoan Lines is set to post a relatively flat profitability in ’07 in the absence of any gains from the sale of vessels as happened in ’06 with the sale of Ariadni (capital gain of Eur11.3mn). We assume lower bunker costs (around 10% for the year) and higher utilization rates as a result of one less vessel on Patra-Venice route. Attica Holdings has recently increased its stake in Minoan Lines (13% officially) while press reports speculate on consolidation moves in the sector. We stick to our view that the capacity in the Adriatic Sea is excessive given the low returns of all active players as compared with the WACC. Domestic routes remain profitable especially after the liberalization of economy class tickets – operating margins of domestic sea routes and high utilization rates offset foreign routes’ weak returns. Hellenic Sea Ways posted an excellent performance in ’06 and conditions seem to be pretty favorable for ‘07 as well.

VALUATION In terms of valuation multiples the stock trades high compared with other peers while the growth potential of the current structure is not material. We set the stock Under Review (from Outperform previously) remaining alert for future developments.

Valuation ratios 2005A 2006F 2007F 2008F P/E 19.3 17.6 17.1 14.9 P/BV 1.4 1.3 1.2 1.2 P/CF 10.2 9.7 10.1 9.4 EV/EBITDA 14.5 12.2 12.6 11.8 EV/EBIT 23.0 18.6 19.1 17.7 (EV/IC)/(ROIC/WACC) 1.5 1.2 1.3 1.2 Dividend Yield (%) 0.0% 2.0% 2.1% 2.4% Free cash flow yield (%) 19.2% 37.3% 5.9% 10.2%

Fundamentals 2005A 2006F 2007F 2008F Turnover (€ mn) 204.8 205.7 190.8 193.7 EBITDA (€ mn) 56.3 56.6 53.8 55.3 EBIT (€ mn) 35.5 37.1 35.5 36.8 Net profit (€ mn) 17.6 19.4 20.0 22.9 ROIC 5.58% 7.22% 6.66% 7.09% eps (Eur) 0.25 0.27 0.28 0.32





ATTICA HOLDINGS (EPAr.AT) Rating: Neutral/Trading Buy (unchanged) Target Price: 4.90 Total Expected Return Targeted (yield incl.): 17% From: 4.6 (as at 18/09/06)

Sector: SHIPPING




Free Float (%) 57

BRIEF COMPANY REVIEW Attica Group is a holding company that operates car-passenger ferries in the Adriatic Sea – in ’06 it sold the vessels and terminated both routes of Baltic (Germany-Finland) and North Sea (Scotland – Belgium) – Attica Group also holds a 48.8% stake in Blue Star which operates in the Greek Islands (Cyclades, Dodecanese), in the Adriatic Sea with one vessel (calling Bari) and from Feb ’07 in the North Sea. DEVELOPMENTS FOR ‘07 Attica Group reportedly appears to be the Greek sector’s consolidator based on its presence in the Adriatic Sea (where Minoan Lines and Anek also operate) and strong cash balance. Its SuperFast vessels calling Patra- Ancona provide insufficient returns to cover the cost of capital as a result of fierce price competition and declining market shares in ’05 and ’06. High bunker prices in ’06 further deteriorated the company’s performance in Greece-Italy routes. We stick to our view that the subsidiary company is the steam of the group.

VALUATION We value the group using a net asset valuation assuming liquidation of the Adriatic fleet. Under this rationale and taking into consideration our recent target price upgrade in Blue Star we value the group at Eur4.9 – investors should not be willing to see another year of weak returns in the Adriatic Sea for their invested capital. We hold our Neutral/Trading Buy recommendation.

Valuation ratios 2005A 2006F 2007F 2008F P/E 15.9 20.1 12.8 15.2 P/E adj. 16.9 209.8 21.3 15.2 P/BV 1.1 1.3 1.2 1.2 P/CF 5.9 7.0 5.9 6.2 EV/EBITDA 11.5 11.0 7.9 6.5 EV/EBIT 18.4 20.5 11.9 9.1 (EV/IC)/(ROIC/WACC) 1.2 1.6 1.0 0.8 Dividend Yield (%) 1.9% 1.9% 2.7% 2.3%

Fundamentals 2005A 2006F 2007F 2008F Turnover (€ mn) 385.1 321.5 298.5 312.0 EBITDA (€ mn) 99.1 69.8 79.7 88.5 EBIT (€ mn) 61.7 37.5 52.7 62.9 Net profit (€ mn) 28.1 22.2 34.9 29.4 ROIC 5.77% 4.97% 8.22% 10.10%





BLUE STAR (STRr.AT) Rating: Outperform (Outperform) Target Price: 4.00 Total Expected Return Targeted (yield incl.): 21.5% From: 4.00 (as at 8/01/07)

Sector: SHIPPING




Free Float (%) 51.2

BRIEF COMPANY REVIEW Blue Star Ferries is a passenger-shipping operator serving the Greek Islands (Cyclades, Dodecanese), Greece-Italy routes and North Sea. Attica Holdings owns a 48.8% stake. The company posted strong results in the domestic routes during ’06 while its foreign routes (Italy-Bari) were weak in terms of profitability as a result of high fuel costs and price war. DEVELOPMENTS FOR ‘07 As of Feb ’07 Blue Star has arranged to deploy Blue Star I (previously calling Patra-Bari route) in the Scotland-Belgium route (North Sea) – this should improve profitability compared to the previous year. Domestic routes should account for 75% of the company’s sales with the rest coming from foreign routes. In terms of EBITDA domestic routes should add 75% of total, Adriatic sea routes should contribute 5% and North Sea 20% of total. With the advantage of lower fuel costs (20% down as of today compared with the average bunker price during ’06), full contribution by Diagoras in Dodecanese islands and the profitable operation of North Sea route by Blue Star I we expect strong profitability to be preserved.

VALUATION We value the company using a combination of relative multiples, DCF and NAV – in terms of relative valuations the stocks trades attractively against peers while using a DCF we are provided with a strong upside given the company’s FCF generation. Blue Star offers a good risk/return play with eps growth momentum, strong capital structure, good positioning and new fleet. We reiterate our Outperform recommendation.

Valuation ratios 2005A 2006F 2007F 2008F P/E 20.5 18.6 13.2 10.6 P/BV 1.8 1.7 1.5 1.4 P/CF 11.7 11.3 8.9 7.7 EV/EBITDA 13.1 12.5 9.4 7.9 EV/EBIT 19.4 18.4 12.9 10.4 (EV/IC)/(ROIC/WACC) 1.6 1.6 1.2 1.0 Dividend Yield (%) 2.0% 2.7% 4.5% 5.7%

Fundamentals 2005A 2006F 2007F 2008F Turnover (€ m) 133.4 141.9 159.8 168.3 EBITDA (€ m) 37.6 38.9 47.9 53.7 EBIT (€ m) 25.3 26.3 34.9 40.7 Net profit (€ m) 17.5 19.3 27.2 33.9 ROIC 7.6% 7.8% 10.6% 12.7%





FOLLI FOLLIE (FOLr.AT) Rating: Neutral (Unchanged) Target Price: EUR28.50 Total Expected Return Targeted (yield incl.): -6.9% Unchanged (last report out on Dec 13, 2006) Sector: LUXURY RETAIL


Market Cap. (EUR mn) 1,020.04 52-week High-Low 31.96-16.62




Folli Follie (FF) designs, produces and sells branded gold and silver jewellery, watches, and other accessories. The company has a unique selling proposition of “affordable luxury” for young, working, independent women and has also launched new collection of watches for men. Having established its presence in Greece, Folli Follie has been aggressively expanding in Europe and Asia, currently operating a global network of 329 points-of-sale in 23 countries. During 2006, FF raised its stake in HDFS to 52.3% after buying a 24.7% stake from Germanos and fully consolidated for a 7-month period. During the same year, HDFS fully acquired Links-of-London, a British luxury brand with small earnings but high expansion potential.

KEY STRENGTHS

Its unique positioning as an ‘affordable luxury brand’ and its geographic reach across 2 key continents (Europe & Asia) constitute FF’s major strengths. On top, the stock attractively trades at steep discounts relative to the local market and international luxury peers. The aforementioned discounts have narrowed after FF share price jumped by 83% from last June’s low of EUR17.00.

KEY RISKS

Apart from sector-wide risks like a likely global economic slowdown, geopolitical tensions (terrorism acts) and/or epidemic outbreaks, FF’s investment case could also lose its shine in the case of slowing growth rates at key geographical segments (ie Japan & China), worsening working capital requirements, excessive CAPEX to penetrate new markets and/or revive the brand at existing markets, strengthening of the EURO vis-a-vis the USD and the JPY, delays in new store rollouts and finally execution risks surrounding the recent investments in HDFS and Links-of-London (wholly owned by HDFS).

VALUATION - RATING

FF is cheap in relative terms (international luxury brands trade 19.2x ’07 EPS) but at par with its historical 1 year forward P/E multiple (11.4x) following a surge in the share price during the last 7 months. We now believe it is time for a breather and thus stick to our Neutral rating. Our Sum-of-the-Parts derived fair value for the group stands at EUR28.50/share.

UPSIDE RISK

Higher like-for-like growth rates, new initiatives by management to bolster growth (at a reasonable cost) and stronger cash flow generation than the one witnessed during the first 3 quarters of 2006 could attach upside risk on our estimates, rating and valuation.

Valuation ratios 2005A 2006E 2007F 2008F P/E 18.4x 15.8x 13.4x 11.6x P/CFPS 17.4x 14.0x 11.5x 10.0x P/BVPS 6.5x 5.3x 4.4x 3.7x EV/Sales 5.0x 2.7x 2.1x 1.8x EV/EBITDA 16.5x 10.6x 8.3x 7.1x EV/EBIT 17.3x 11.3x 8.9x 7.7x Dividend yield 0.8% 1.2% 1.2% 1.4%

Fundamentals 2005A 2006E 2007F 2008F Turnover 222.80 488.51 638.22 712.02 EBITDA 67.56 126.58 161.27 183.83 EBT 70.05 110.13 133.14 154.71 Net profit 55.43 64.64 76.21 88.04 EPS (EUR) 1.68 1.96 2.31 2.67 DPS (EUR) 0.26 0.37 0.38 0.43

Amounts in EUR mn

Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI -2.5% 34.4% 4.5% -1.8% Abs. perf. 3.5% 73.3% 22.4% 3.5%

Ioannis Arapoglou +30 210 3354367 – Equity Research Analyst [email protected]



Hellenic Duty Free Shops (HDFr.AT) Rating: Neutral (Unchanged) Target Price: EUR14.00 Total Expected Return Targeted (yield incl.): -5.8% Unchanged (last report out on Dec 05, 2006) Sector: SPECIAL RETAIL


Market Cap. (EUR mn) 829.10 52-week High-Low 17.00-11.30




HDFS commenced operations in 1979 and holds the exclusive right to operate duty free stores in Greece up until January 2048. The company also performs duty paid sales in border stations, airports, and seaports, currently operating a widespread network of 85 stores in 41 points-of-sale.

KEY STRENGTHS

Its sole concession to exclusively operate duty free stores in Greece for the next 4 decades is undoubtedly HDFS’ major strength, while the transfer of management control from the State to private hands forms an additional advantage, in our view. On top, HDFS’ business is highly cash flow generative, which in turn allows for hefty dividend distributions. Finally, the acquisition of the British brand, Links of London, during 2006 arms the company with a growth element that should be seen in the context of aggressive expansion in Asian markets (where major shareholder Folli Follie has a strong foothold).

KEY RISKS

HDFS’ line of business heavily relies on global economic conditions – to the extent that these affect passenger traffic and consumption patterns. Geopolitical tensions (terrorism acts) and/or epidemic outbreaks could also heavily weigh on group results. The diversification into luxury retail widens business risks to include those of a brand retailer (higher advertising expenses for example). Finally, the recently announced strategy of aggressive acquisitions embodies execution and investment risks. The entrance of Bulgaria and Romania into the European Union as of January 1, 2007 may put some additional pressure on the group’s margins (fewer duty free sales).

NEXT POTENTIAL CATALYST

The new management team has communicated plans for expansion into the tourism sector in the form of financing and/or coordinating flights from China to Athens as a means of taking advantage of the influx of high-spenders. No official announcements as of now.

VALUATION - RATING

We believe HDFS will have a good year with group EPS rising by 18% to EUR0.95. The full consolidation of Links-of-London for a 12-month period (compared to only 5 months in 2006) and the easier comparator in respect to duty-free fuel sales (seized sales as of April 2006) will bolster group performance. At the same time, however, we believe valuation is fair at 16.6x 2007 EPS and after HDFS has risen by 32.3% in the last 6 months. We therefore re-iterate a Neutral rating on the stock.

Valuation ratios 2005A 2006E 2007F 2008F P/E (x) 21.89 19.57 16.62 13.94 P/CFPS (x) 19.85 17.03 14.61 12.39 P/BVPS (x) 6.82 6.89 6.56 5.92 EV/Sales (x) 2.92 2.80 2.36 2.09 EV/EBITDA (x) 13.15 12.64 11.34 9.59 RoE (%) 30.4% 35.2% 39.5% 42.5% Dividend Yield 5.1% 5.2% 5.2% 5.5%

Fundamentals 2005A 2006E 2007F 2008F Turnover 261.45 297.82 356.22 401.39 EBITDA 58.04 65.83 74.27 87.53 EBT 56.41 60.34 66.50 79.32 Net profit 37.87 42.36 49.88 59.49 EPS adj. (EUR) 0.72 0.80 0.95 1.13 DPS (EUR) 0.80 0.82 0.83 0.86

Amounts in EUR mn

Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI -5.4% 2.6% -18.6% -5.5% Abs. perf. 0.4% 32.3% -4.6% -0.4%




JUMBO (BABr.AT) Rating: OUTPERFORM (Unchanged) Target Price: EUR18.00 Total Expected Return Targeted (yield incl.): 9.8% Unchanged (last report out on Nov 24, 2006) Sector: TOYS RETAIL






Established in 1986, Jumbo is active in the retail and wholesale trade of toys, baby products and school supplies. The group controls a leading market share of 32% in Greece and Cyprus, where it operates 38 and 3 stores respectively.

1H06/07 GROUP SALES UP BY A FORECAST-BEATING 22%

Following a strong performance in 1Q06/07 (fiscal year ends in June) when sales grew 28.5% y-o-y and net profits were up by a striking 53.3% to EUR10.70mn, Jumbo guided for an 18.5% rise in 2Q06/07 group revenues that translate to sales growth of 22% in the first 6 months of the year. This rate is particularly strong taking into account that a) Jumbo increased its effective selling capacity by only 2.67% y-o-y, b) strikes at Greece’s major ports caused anomalies during the crucial Christmas period, and c) full year guidance called for a 10% rise in group sales. Given that 1H performance traditionally accounts for 60% of full year numbers, we believe management will revise upwards its end-year targets. We expect Jumbo’s sales to grow 15.9% y-o-y to EUR325.97mn and group net profit 18.2% to EUR58.43mn.

MEDIUM TERM PROSPECTS

Jumbo had guided for 5 new hyperstores (~10,000sqm each) in Athens in the next 3 years and the first Jumbo store in Bulgaria as of late 2007. In its recent trading statement, the company said that it will close down a total of 3 old Athenian stores this year (compared to 1 we projected) and establish 2 out of the 5 hyperstores in the last quarter of this fiscal year (compared to only 1 we expected). Additionally, Jumbo plans to penetrate the Romanian market, where we expect the first store in 2 years time. In this context, Jumbo seeks to materially increase its effective selling space and also enter virgin territories in order to gain first mover advantages. In the local market, the company has managed to diversify its sales mix to account for less toys (the respective market seems to have reached a climax) and more of baby products, stationary and seasonal goods (still growing double-digit). Over the next 2 years, we expect Jumbo to post an 18% CAGR in revenues and EPS respectively, with risk on our estimates remaining on the upside.

VALUATION - RATING

Jumbo performed really well during the previous year with its share gaining 116.7% and strongly outperforming the local market. For 2007, we believe Jumbo will continue to outperform the market and other retailers. On our projected EPS growth for 2007/2008 (+21.5%), the stock trades on a PEG of 0.81x - at a steep discount relative to Greek and international peers. We consider the stock a genuine growth story and a very successful business model, backed by superior logistics infrastructure and a very efficient management team. We stick to our Outperform rating.

Valuation ratios 2004/2005 2005/2006 2006/2007e 2007/2008f P/E (x) 27.07 20.13 17.51 14.41 P/CFPS (x) 24.56 17.67 15.05 12.46 P/BVPS (x) 8.90 6.08 4.92 3.99 EV/Sales (x) 4.80 3.89 3.39 2.81 EV/EBITDA (x) 17.12 13.20 12.02 10.06 RoE (%) 29.7% 29.4% 28.1% 27.7% Dividend Yield 1.3% 1.4% 1.8% 2.2%

Fundamentals 2004/2005 2005/2006 2006/2007e 2007/2008f Turnover 229.07 281.31 325.97 392.84 EBITDA 64.25 82.84 91.90 109.56 EBT 50.97 69.49 76.57 93.04 Net profit 34.13 49.44 58.43 70.99 EPS (EUR) 0.62 0.84 0.96 1.17 DPS (EUR) 0.22 0.23 0.31 0.37

Amounts in EUR mn

Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI -3.6% 34.1% 68.1% -3.5% Abs. perf. 2.3% 73.0% 97.0% 1.8%




FOURLIS (FRLr.AT) Rating: OUTPERFORM (Unchanged) Target Price: EUR17.00 Total Expected Return Targeted (yield incl.): 7.8% Unchanged (last report out on Nov 22, 2006) Sector: HOLDING (furniture)






Fourlis is a holding group consisting of 3 main divisions: Home Furnishing through the IKEA brand, Athletics retail through the Intersport brand, and Wholesale of electric/electronic goods, representing General Electric, Samsung, and other international brands in Greece. The group sold in Sept 2004 a 21.5% stake of the leading electronics retailer Kotsovolos to Dixons, retaining an additional 20.0% stake with the option to sell it during 2006-2008. Fourlis operates 2 IKEA stores in Athens and Thessaloniki and has announced plans for two more by mid-2007. Our set of estimates involves a total of 10 IKEA stores by end 2010 (3 in Athens, 1 in Thessaloniki, 2 in Greek provinces, 1 in Cyprus, and 3 in Bulgaria).

KEY STRENGTHS

Fourlis is the only listed IKEA globally and portrays a superior growth outlook – we project a 2005-2008 underlying EPS CAGR of 41.3% and free cash flow generation of ~EUR100mn per annum following the end of its aggressive expansion. The group managed to divest from the risky and low-return retail activity of electric and electronic devices (Kotsovolos) and concentrated on its ‘golden’ IKEA franchise. Note that Fourlis still holds a 20% stake in Kotsovolos with the put option to sell it for at least EUR33mn and book capital gains of EUR24mn over 2006-2008. On top, the group seeks to sell a real estate worth EUR29mn and use the proceeds to finance IKEA stores rollouts. Additionally, Fourlis successfully expands the Intersport brand in Greece and the Balkans. Return on Equity is expected at 27% in 2006 from 19.3% a year ago.

KEY RISKS

Besides industry/sector specific risks, financial, economic, political, management and execution risks, we highlight the following key factors with a significant weight on the group’s performance & valuation: a) the potential loss of the IKEA franchise (quite remote at the moment, especially after the shareholding agreement in the IKEA franchise in Bulgaria), b) the extension/renewal of the franchise under worse terms (regarding procurement of merchandise and royalties on sales), and c) delays in the rollout of new IKEA stores.

VALUATION - RATING

Despite the small implied potential and demanding valuation at 24.0x 2007e EPS, we believe Fourlis will continue to outperform the market on the back of a) its growing IKEA franchise, and b) the promising performance of Intersport. Moreover, we project underlying EPS growth of 42% in 2006, 32% in 2007e and 51% in 2008f that we consider supportive for further share price appreciation. We therefore stick to our Outperform rating: more-than-expected IKEA store rollouts or faster launches could widen the upside potential for Fourlis’ shares, in our view.

Valuation ratios 2005A 2006E 2007F 2008F P/E adj. (x) 44.74 31.57 24.00 15.87 P/CE (x) 32.23 21.83 19.60 11.03 P/BV (x) 8.62 7.12 6.08 4.60 EV/Sales (x) 2.27 2.00 1.61 1.30 EV/EBITDA (x) 21.56 18.44 15.26 10.84 RoE (%) 19.3% 26.9% 25.3% 36.5% Dividend yield 0.9% 1.3% 1.8% 2.7%

Fundamentals 2005A 2006E 2007F 2008F Turnover 407.52 464.09 585.91 732.88 EBITDAadjusted 42.83 50.22 61.79 87.81 Net profit 18.11 30.66 33.76 64.36 EPS (EUR) 0.36 0.60 0.66 1.26 EPSadjusted (EUR) 0.36 0.50 0.66 1.00 DPS (EUR) 0.15 0.21 0.28 0.42

Amounts in EUR mn

Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI 1.9% 10.3% 29.3% -6.1% Abs. perf. 8.2% 42.2% 51.4% -1.0%




SARANTIS (SRSr.AT) Rating: NEUTRAL (from Outperform) Target Price: EUR9.10 Total Expected Return Targeted (yield incl.): 9.2% Unchanged (last report out on Nov 11, 2006) Sector: COSMETICS





BRIEF COMPANY OVERVIEW Sarantis produces and distributes cosmetics, household goods, healthcare products and car accessories in Greece, Poland, Romania, Bulgaria, the Czech Republic, Serbia and FYROM. Sarantis expanded to Turkey and Ukraine in 2005 and launched operations in Russia and Hungary during 2006. The company’s know how, access to extensive distribution networks in Greece & abroad and the lucrative distribution agreements with global cosmetics leaders (owns a 49% stake in a respective joint venture with Estee Lauder) arm the group with significant competitive advantages. KEY STRENGTHS Sarantis is a leading player in the production and distribution of successful household products and cosmetics in Greece and CEE markets. Its foothold in 11 growing economies and access to extensive distribution networks make it an appealing investment case: besides the highly cash-generative agreements with world leading brands, Sarantis is now focusing on extending the contribution of its mass market household and cosmetics products (core) that boast materially higher operating margins. We expect new markets to be Sarantis’ launch pad for growth in 2007. KEY RISKS The saturation of the Greek market and the group’s high leverage (significantly above peers) pose as major risks for Sarantis, along with execution risks surrounding its global aspirations. The sudden resignation of the group’s CEO this week also raises some concerns. VALUATION - RATING On our estimates, Sarantis trades 13.4x 2007 EPS versus a weighted peer group average 2007 P/E of 18.6x. On top, 2007 reported and adjusted EPS should rise by 12.9% and 29.3% y-o-y respectively versus 6.9% for its international peers (based on JCF). At the same time however the upside potential implied by our Sum-of-the-Parts valuation model is limited to a high single-digit percentage and therefore calls for a Neutral rating. Key catalysts ahead would involve the announcement of new acquisitions and/or new exporting destinations.

Valuation ratios 2005A 2006E 2007F 2008F P/E adj. (x) 16.69 17.35 13.42 11.88 P/CE (x) 14.07 12.96 11.48 10.16 P/BV (x) 5.30 5.07 4.76 4.38 EV/Sales (x) 1.90 1.74 1.60 1.46 EV/EBITDA (x) 12.50 12.22 10.19 9.15 RoE (%) 31.7% 33.6% 35.7% 37.3% Dividend Yield 1.5% 1.7% 1.9% 2.2%


Amounts in EUR mn

Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI -2.1% -18.0% -3.7% -0.2% Abs. perf. 3.9% 5.8% 12.8% 5.2%




MOTOR OIL (MORr.AT) Rating: OUTPERFORM (Unchanged) Target Price: EUR23.20 Total Expected Return Targeted (yield incl.): 26.2% Unchanged (last report on Nov 14, 2006) Sector: OIL REFINING






Motor Oil Hellas (MOH) is a Greek independent oil refiner with interests in trading and marketing. The company is the second largest refinery in the Greek duopoly and owns the most sophisticated refineries in Europe (Nelson Complexity Index: 11.95), with capacity of 7.1mn MT. The company is active in the domestic market (47% of revenues), shipping and aviation (13%), and exports (40%). Additionally, it operates 570 retail stations in Greece through its wholly owned subsidiary Avin Oil (marketing).

KEY STRENGTHS

MOH takes advantage of premium prices domestically (that in part compensate it for the mandatory reserves it keeps) and yields superior margins on the back of a) 100% use of lower-cost sour crudes and b) a premium product mix involving 75% white products. In November 2005, MOH put on stream a EUR350mn hydrocracker, raising gas oil output by 700,000MT/annum and thereby enhancing its gross margin by an estimated US$1.7/bbl. MOH currently earns ~US$9.5/bbl, which reflects a 15% premium to the average of its complex Med peers. Following the end of the high CAPEX era, MOH is poised to generate strong free cash flows (FCFE yield at 8.6% in 2007e) and distribute hefty dividends (2006e DY at 7.3%).

KEY RISKS

As in the case of other refiners, MOH’s performance is sensitive to refining margins (pressures could be evident in the case of lower-than-expected demand for refined products), as well as safety and environmental parameters/regulation changes (MOH heavily invests in promoting safety and environmental standards). Additionally, MOH is affected by a weakening US$ vis-a-vis the EUR (earnings/bbl are in US$) and significantly higher crude prices that would imply higher WC needs. A final risk relates to its extreme dependency on a single asset, the refinery at Agii Theodoroi.

VALUATION - RATING

We have rolled over our valuation to end 2007 and have slightly trimmed our margin assumptions to account for a soft 4Q06 and y-t-d performance. Our Target Price remains unchanged at EUR23.20/share that now points to an expected return of 26.2% (including dividend yield). We therefore stick to our Outperform rating. We need to stress 3 key points:

Our forecasts and valuation exclude a number of projects that are still in the front engineering process: new topping unit, expansion of the lubricants production capacity, entrance in the electricity production field through a minority stake.

There is a lot of speculation over the likely entrance of a strategic investor in MOH. Such rumors have intensified following the exit of Aramco and are fuelled by the limited free float.

Share price performance is often linked to the operating momentum: In the case of MOH, a rebound in margins could act as an important catalyst for the stock. Our underlying view is that despite any soft patches, margins will continue to head north due to constraints in the supply of white products (no significant capacity additions should be expected before 2009-2010).

Valuation ratios 2005A 2006E 2007F 2008F P/E (x) 16.44 12.38 11.88 11.73 P/CE (x) 13.74 9.69 9.44 9.40 P/BV (x) 6.45 5.57 5.30 5.10 EV/Sales (x) 0.88 0.69 0.68 0.70 EV/EBITDA (x) 12.30 8.68 8.85 8.63 RoE (%) 39.2% 45.0% 44.6% 43.5% Dividend Yield 5.6% 7.5% 7.8% 7.9%

Fundamentals 2005A 2006E 2007F 2008F Turnover 3,237.38 4,108.08 4,142.61 3,951.67 EBITDA 230.31 328.02 318.61 319.57 EBT 191.36 254.25 243.91 247.11 Net profit 131.64 174.87 182.25 184.59 EPS (EUR) 1.19 1.58 1.65 1.67 DPS (EUR) 1.10 1.46 1.52 1.54

Amounts in EUR mn

Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI -7.2% -26.4% -26.8% -2.4% Abs. perf. -2.2% -5.1% -14.3% -0.3%




METKA (MTKr.AT) Rating: OUTPERFORM (Unchanged) New Target Price: EUR11.30 Total Expected Return Targeted (yield incl.): 15.5% From: EUR10.60 (last report on Nov 28 ‘06) Sector: CONSTRUCTIONS






Metka, 53.55% owned by Mytilineos Holdings, is the leading electromechanical and metallic construction company in Greece. It is listed in the Athens Stock Exchange since 1973 and it is involved in the manufacturing of heavy/compound steel constructions and integrated electromechanical equipment/machinery, as well as in large-scale electromechanical, industrial, energy and defense projects, including complete assembly, development and commissioning.

KEY STRENGTHS

Metka, PPC’s traditional key subcontractor, recently formed a strategic commercial alliance with Alstom. The 2 groups plan to make joint bids for all construction tenders relating to new power units in Greece (3 to be tendered from the Greek State/900 MW, 4 to be replaced by PPC/1,200 MW, plus any units to be established by Mytilineos). Additionally, they will bid together for projects in the Balkans with Metka probably acting as an EPC contractor and Alstom providing the necessary technology/equipment. On top, Metka will start manufacturing parts of Alstom’s equipment as a means of utilizing spare capacity and addressing the scarcity in supply/production in the wake of escalating demand from across the globe. Expertise in thermoelectric power plants and industrial projects, good track record, sophisticated facilities & human capital round up Metka’s advantages.

KEY RISKS

Delays in tenders or failure to gain new contracts constitute the major investment risks for Metka. In our view, a) the cooperation with Alstom (no shareholding agreement at the moment), b) the stellar prospects of the Greek energy sector, and c) the potential arising from projects abroad place risk on our estimates on the upside.

VALUATION – RATING

Metka poses as a unique investment proposition: the company is active in a highly promising sector - ahead of the Greek energy market liberalization - and is also trading at attractive multiples (on 11.7x 2008f EPS the share looks cheap in both DCF and relative terms as European peers trade on average 17.2x EPS). A positive net cash balance of EUR0.41/share, a hefty dividend yield and the upside risk stemming from a) major shareholder’s ambitious energy plans and b) ample potential in developing countries further support an Outperform rating. Note that Metka announced this week a new EUR110mn project in Pakistan for a 220MW electricity plant that should be completed by end 2008. We roll over our valuation to end 2007 and raise our DCF-derived Target Price to EUR11.30. New projects that are not included in our assumptions could trigger earnings upgrades (our model includes projections for 1 thermoelectric plant on behalf of Mytilineos assuming 1 IPP license and the replacement of 2-out-of-4 of PPC’s units).

Valuation ratios 2005A 2006E 2007F 2008F P/E (adj.) 15.8x 12.8x 11.8x 11.7x P/E on TP 17.8x 14.4x 13.3x 13.2x P/BVPS 6.1x 4.7x 3.8x 3.2x EV/Sales 2.2x 1.6x 1.5x 1.4x EV/EBITDA 9.4x 7.5x 6.9x 6.4x Earnings yield 6.3% 7.8% 8.4% 8.5% Dividend yield 3.0% 3.2% 3.5% 3.5%


Amounts in EUR mn

Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI -1.9% 23.4% -15.5% -6.5% Abs. perf. 4.1% 59.2% -1.0% -1.4%




NEOCHIMIKI (NCHr.AT) Rating: OUTPERFORM (Unchanged) Target Price: EUR18.00 Total Expected Return Targeted (yield incl.): 7.9% Unchanged (last report out on Dec 21, 2006) Sector: CHEMICALS






Neochimiki was established in 1974 as a chemicals trading company. Since then, the group expanded to the production of detergents on behalf of key players such as Henkel, Unilever and Sara Lee and private labels like Carrefour, DIA, Makro and AB Vassilopoulos. Neochimiki continues the distribution activity (54% of group sales /33% of gross profit) for customers like Shell, BP, BASF and recently Lukoil to a network comprising ~2,500 points-of-sale. The company has established subsidiaries in Romania, Bulgaria, Poland, Serbia, Ukraine, Cyprus and Germany.

KEY STRENGTHS

The group boasts a successful business model that has resulted in sales rising to an estimated EUR300mn in 2006 from EUR12.08mn in 2000 and underlying EPS to EUR0.60 from EUR0.07 during the same period. a) Strong relations with multinational players, b) long lasting commercial contracts, c) low market shares in existing markets, d) accelerating trends in favor of outsourcing, and e) growth opportunities in the neighboring Balkan countries form the basis of our investment proposition. The challenge for the group’s management team is to ‘duplicate’ the successful Greek business model abroad.

KEY RISKS

Any disturbance in the relations with key clients, the loss of existing contracts, and/or less favorable terms in renewed contracts could weigh on group performance. There is also investment and execution risk surrounding the company’s expansion into CEE markets – the risk is capped, however, from the fact that the company targets the same (multinational) clients it works with in Greece. Finally, investors should bear in mind the group’s over-reliance on its major shareholder, Chairman, and CEO, L. Lavrentiadis.

VALUATION - RATING

Neochimiki’s share has rallied by >100% since our initiation report on February 24, 2006, strongly outperforming the Athens General Index. Despite the small upside potential implied by our Target Price, we believe the share will continue to outperform the market on the back of its stellar growth outlook (we expect Neochimiki to post a 79.1% surge in underlying EPS in 2007 on sales growth of 66.3%) and undemanding valuation (2008f P/E at 12.3x compared to 14.9x for the European specialty chemicals sector). Given track record and growth opportunities available (ie privatizations of base oil producers in Serbia), we believe risk on our estimates is skewed on the upside with earnings upgrades remaining into the picture for 2007. Important note: a total of EUR79.90mn capital gains booked in 2006 will undermine reported EPS growth during 2007.

Valuation ratios 2005A 2006E 2007F 2008F P/E adj. (x) 47.75 27.90 15.58 12.28 P/E on TP (x) 51.36 30.01 16.76 13.21 P/BV (x) 9.56 3.71 3.08 2.56 EV/Sales (x) 5.10 2.61 1.56 1.17 EV/EBITDA (x) 26.40 15.29 8.76 6.72 RoE (%) 20.0% 13.3% 19.8% 20.8% Dividend Yield 0.2% 0.3% 1.0% 1.5% Fundamentals 2005A 2006E 2007F 2008F Turnover 142.50 299.67 498.26 637.99 EBITDA 27.53 51.20 88.68 111.45 Net profit 12.62 101.50 38.68 49.07 Clean Net profit 12.62 21.60 38.68 49.07 Clean EPS (EUR) 0.35 0.60 1.07 1.36 DPS (EUR) 0.03 0.06 0.16 0.25

Amounts in EUR mn





LAMDA DETERGENT (BLLr.AT) Rating: OUTPERFORM (Unchanged) New Target Price: EUR7.40 Total Expected Return Targeted (yield incl.): 22.4% From: EUR7.00 (last report out on Nov 3, ‘06) Sector: CHEMICALS






Lamda Detergent (LD) produces detergents on behalf of multinationals and private labels in Greece and is active in the production and distribution of raw materials for detergents. The company was established following the merger of Ballis Chemicals and Lamda Detergent, the production arm of Neochimiki. LD owns 3 plants in Greece (2) and Bulgaria (1) with total production capacity of 210,000 tons p.a. of liquid detergents, 150,000 tons p.a. of powder detergents and 25,000 tons p.a. of raw materials for detergents. LD recently announced the acquisition of a fourth production plant engaged in the manufacturing of cosmetics (higher-margin activity). Major shareholder Neochimiki holds a 34.03% stake in LD.

KEY STRENGTHS

The group is the dominant producer of a) detergents for private labels and b) raw materials for detergents, while it monopolizes the Greek market of detergents production on behalf of multinationals. A combination of leading but still low market shares (a lot of business is conducted directly by multinationals), spare capacity, favorable trends championing outsourcing, high entry barriers in terms of CAPEX and time-consuming audits, contractual agreements with key global players (Henkel, Unilever) and conformance to demanding quality standards pave the way for sustainable growth. The Balkan arena is the group’s next strategic target.

KEY RISKS

As in the case of Neochimiki, any disturbance in LD’s relations with its multinational clients, the loss of existing contracts, and/or less favorable terms as contracts get renewed could affect group performace. There is also investment and execution risk embedded in the LD’s expansionary plans – the risk is limited, in our view, from the fact that LD aims at sealing contracts with the same multinational clients it works with in Greece. Finally, rising competition abroad and/or slower-than-expected transformation of the Balkan economies could prevent the group from achieving our medium-term estimates. Over-reliance on CEO, L. Lavrentiadis, remains a potential risk.

VALUATION - RATING

We rollover our valuation horizon to end 2007 and raise our Target Price to EUR7.40 per share. The total expected return targeted stands at 22.4% and justifies an Outperform rating on the stock. For 2007, we expect LD group to deliver a 42.1% rise in EPS on the back of a) a 35.7% increase in revenues and b) improving margins. The latter are attributed to savings from the announced merger with Lamda Cosmetics, as well as to the lucrative margins of the cosmetics business. In all, we consider risk on our estimates lying on the upside. On a comparative basis, the share looks very attractive at 10.3x 2008f EPS versus 14.9x for the European specialty chemicals sector.

Valuation ratios 2005A 2006E 2007F 2008F P/E (x) 30.57 19.08 13.43 10.33 P/CE (x) 18.55 12.38 9.04 7.03 P/BV (x) 6.16 4.99 3.93 3.08 EV/Sales (x) 2.92 2.23 1.69 1.30 EV/EBITDA (x) 17.44 12.58 9.06 7.05 RoE (%) 20.14% 26.15% 29.26% 29.83% Dividend Yield 0.0% 1.4% 2.0% 2.7%

Fundamentals 2005A 2006E 2007F 2008F Turnover 94.99 134.85 182.99 234.68 EBITDA 15.90 23.89 34.09 43.33 EBT 8.51 14.36 20.82 27.69 Clean net profit 7.82 12.53 17.80 23.16 Clean EPS 0.20 0.32 0.46 0.59 DPS 0.00 0.09 0.13 0.16

Amounts in EUR mn

Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI -2.6% -4.7% 39.7% -3.9% Abs. perf. 3.4% 22.9% 63.6% 1.3%




Autohellas Hertz (AUTr.AT) Rating: OUTPERFORM (Unchanged) Target Price: EUR 5.70 Total Expected Return Targeted (yield incl.): 18.4% Unchanged (last report out on Dec 1, 2006) Sector: CG& Services






Autohellas holds the national Hertz franchisee license, which expires in 2023. The main activities of the company are rent-a-car, as well as car and equipment leasing.


The stock gained 21.1 YoY, most of which was realized in the second half of the year in a typical fashion for Autohellas, as the third quarter is by far its strongest quarter and it is the time when investors typically look at the stock. However, the stock underperformed the FTSE/ASE 40 index. So far this year the stock is literally flat.


The management has guided for a significant increase of the leasing fleet in order to gain market share from competition. Furthermore, we would expect to see more contribution from its operations abroad, namely Cyprus and Bulgaria. Note that apart from these two countries, Autohellas is starting a Hertz leasing business in Romania in early 2007 (in parallel to the country’s EU entrance), which is expected to start having a meaningful effect in the medium term.

VALUATION

We have adjusted our bottom line estimates for 06, in order to incorporate the EUR 3.7mn capital gains from the sale of a 12.5% stake in Multifin. Net income now stands at EUR 19.4mn or EPS of 0.53. DPS 07 now is expected at EUR 0.27 offering a hefty dividend yield of 5.3%. We have a target price of EUR 5.70 on Autohellas.

CATALYSTS AHEAD

No major catalysts are lying ahead for the company in terms of operations. Expansion in near countries has already been made (Cyprus, Bulgaria, Romania) and now the company is focusing on how it is going to make these investments bear fruits. Further expansion into other countries is not expected in the short term. The only significant catalyst would be the disposal of the stake in Aegean Airlines in the forthcoming listing of the latter in the Athens Stock Exchange. Autohellas holds a 9.2% stake in Aegean at a BV of EUR10.2mn, a discount in our view to the real value of the airliner.

Valuation ratios 2005A 2006E 2007F 2008F P/E 11.44 9.40 9.69 9.02 P/CFPS 3.3 3.1 2.8 2.6 P/BVPS 1.67 1.56 1.44 1.34 EV/Sales 2.31 2.30 2.21 2.16 EV/EBITDA 4.06 3.88 3.73 3.63 Dividend Yield 4.15% 5.34% 5.19% 5.68% Fundamentals 2005A 2006E 2007F 2008F Turnover 108 116 125 132 EBITDA 61 67 73 78 EBIT 21 24 26 27 Net profit 16 19 19 20 ROE 15.2% 17.0% 15.2% 15.2% ROIC 7.6% 8.0% 7.9% 7.7%

Amounts in EUR mn

Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI -2.9% 1.7% 3.9% -5.9% Abs. perf. 2.4% 30.6% 21.7% -0.8%




Piraeus REIT (PREr.AT) Rating: RESTRICTED (Unchanged) Target Price: - Total Expected Return Targeted (yield incl.): - From: - Sector: REAL ESTATE




Free Float (%) 25%


Piraeus Real Estate Investment Trust (REIT) is a special purpose company established in order to invest and manage income-generating commercial real estate. Investment in the company offers indirect exposure to the Greek real estate market. SHARE PRICE PERFORMANCE

During 2006, the stock gained 3.9% in absolute terms, underperforming the Athens benchmark General Index by 11.3%. Since the beginning of the year the stock has shed 3.6% in absolute terms despite the positive momentum in the local market. DEVELOPMENTS FOR ‘07

The company has now completed its investment program following the acquisition of the remaining retail properties in the Kosmopolis Center in Komotini in June. Following the latest acquisition, its investment portfolio stood at EUR91mn (53,135 sqm of building space) with 59% in office and 17% in retail properties. The company seeks to diversify its portfolio geographically in accordance with domestic real estate market trends. For this purpose there is possibility for a share capital increase in order to finance further expansion. VALUATION

The company trades on a forecasted P/BV of 1.3x for 2007 compared to a peer group weighted average of 1.3x. The stock offers the opportunity to invest in a listed REIT that operates in a real estate market with strong growth prospects. Although valuation looks demanding, the stock’s dividend yield (estimated at 5.5% in 2007 compared to 4.1% for its peers) offers a cushion to investors. CATALYSTS AHEAD

Expansion in the Balkan region could offer higher yields. In this context, the company could follow its major shareholder’s (Piraeus Bank) expansionary strategy in the region. Debt-financed developments could trigger a higher valuation.

Valuation ratios 2005A 2006E 2007F 2008F P/E 14.06 19.53 19.77 19.27 P/FFO 25.74 21.98 22.86 22.20 P/BVPS 1.33 1.33 1.34 1.35 P/NAV 1.32 1.33 1.33 1.34 EV/EBITDA 12.68 16.71 17.23 17.14 Dividend Yield 5.4% 5.3% 5.5% 5.6%

Fundamentals 2005A 2006E 2007F 2008F Turnover 10.51 9.25 9.24 9.50 EBITDA 9.98 8.06 7.91 8.05 EBIT 9.97 8.06 7.91 8.05 Net profit 9.17 7.45 7.36 7.55 ROE 8.4% 6.8% 6.8% 7.0% ROIC 10.6% 7.9% 7.7% 7.7% EPS (EUR) 0.19 0.14 0.13 0.14 DPS (EUR) 0.14 0.14 0.14 0.15

Amounts in EUR mn

Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI -8.6% -12.2% -11.3% -8.6% Abs. perf. -2.9% 12.8% 3.9% -3.6%

Pantelis Voutirakis +30 210 3354049 - Analyst [email protected]



AUDIOVISUAL (ADVr.AT) Rating: OUTPERFORM (Unchanged) Target Price: EUR6.50 Total Expected Return Targeted (yield incl.): 30.6% Unchanged (last report out on Dec 5 ’06) Sector: ENTERTAINMENT






Audiovisual is a leader in the domestic entertainment sector. The company distributes films from major Hollywood and independent studios such as Buena Vista, Warner and Village Roadshow in DVD. Additionally, its subsidiary Ster operates a multiplex cinema network in Greece. SHARE PRICE PERFORMANCE

The stock gained 40.4% in 2006, outperforming the Athens General Index by a hefty 20%. Since the beginning of 2007, it shed 2.7% in absolute terms despite the positive domestic market conditions (-4.8% relative to the General Index). DEVELOPMENTS FOR ‘07

The merger with Prooptiki was initially expected to be completed by August 2006 but instead was delayed until November 30. Expected synergies from the merger, namely a) film sales from the combined AV-Prooptiki backlog to TV stations (high margin revenue) b) DVD rental and sell-through turnover (bargaining power from the distribution of a single monthly package to video clubs), c) increased bargaining power against film studios (helps achieve new deals), were therefore absent in 9m ’06 results and only a small contribution is expected in full year numbers. We expect to see the full merger effect as of the current year. VALUATION

On December 5, we raised our Target Price to EUR6.50/share from EUR6.10 previously, implicitly valuing the stock at 10.7x 2007f EPS. Audiovisual currently trades 8.2x 2007f EPS on an EV/EBITDA of 5.1x - at a deep discount to the local market and our universe list. Despite its small size and limited coverage, we include Audiovisual in our Top Picks for the year on valuation grounds. CATALYSTS AHEAD

Following the merger, AV-Prooptiki combined bargaining power can assist the company in gaining new studio contracts. Furthermore, the Balkan markets become accessible through Prooptiki Romania, Prooptiki Bulgaria and Prooptiki Entertainment (Belgrade).

Valuation ratios 2005A 2006E 2007F 2008F P/E 13.57 11.21 8.23 6.91 P/CFPS -2.61 -30.75 -28.13 7.39 P/BVPS 2.07 1.43 1.27 1.13 EV/Sales 2.01 1.49 1.31 1.18 EV/EBITDA 8.52 5.96 5.08 4.44 Dividend Yield 2.3% 2.5% 2.6% 3.8% Fundamentals 2005A 2006E 2007F 2008F Turnover 73.33 104.97 122.38 129.21 EBITDA 17.31 26.17 31.63 34.44 EBIT 12.84 18.70 21.05 23.13 Net profit 4.84 6.61 9.00 10.72 ROE 12.6% 11.9% 14.4% 15.3% ROIC 7.6% 9.1% 10.2% 11.2% EPS 0.37 0.63 0.61 0.72 DPS 0.11 0.13 0.13 0.19

Amounts in EUR mn

Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI -12.8% 0.4% 19.9% -4.8% Abs. perf. -7.4% 28.9% 40.4% -2.7%




FRIGOGLASS (FRIr.AT) Rating: NEUTRAL (Unchanged) Target Price: EUR17.90 Total Expected Return Targeted (yield incl.): -0.2% Unchanged (last report out on Nov 16 ‘06) Sector: INDUSTRIAL EQUIPMENT






Frigoglass is a professional cooler manufacturer specializing in ICMs (Ice Cold Merchandisers) with a broad geographical presence and long term synchronization with the Coca Cola system. By following an impulse creation approach, the company starts from base cooler models in order to design and manufacture custom solutions to suit individual customer needs. Its global presence and large production scale results in economies of scale and strong bargaining power.


The stock outperformed both the General Index and FTSE/ASE 40 during 2006. All in all, it gained 92% y-o-y in absolute terms and outperformed the Athens General Index and FTSE/ASE Mid Cap 40 by 64% and 35% respectively.


China presents strong growth opportunities for Frigoglass. Construction of the first ICM plant in the region began in September ’06 and it should be operational by November 2007, prior to the 2008 Beijing Olympic Games. The company plans to initially penetrate the Chinese market through the Coca Cola system as well as brewers. Other carbonated drinks, water, fresh juices and tea (currently the fastest growing beverage segment in China) will follow.

VALUATION

In October we upgraded our Target Price to EUR17.90 from EUR17.20 to account for the effect of expanding into China. In November we downgraded our commendation to Neutral from Outperform due to the small implied upside. In our view, the stock now incorporates the growth potential of the ICM division in European markets, the expansion in China, and the ongoing restructuring of the Nigerian division. Upside risk could emerge from new innovations and/or more aggressive cost cutting initiatives.

CATALYSTS AHEAD

It is already known that US expansion is in the management’s agenda and involves the acquisition of a local player in the cooler market (mainly supermarket food coolers). A possible announcement over such a move in 2007 would boost the stock’s performance to reflect the strong growth potential in the local beer, soft drinks, juice and bottled water markets.

Valuation ratios 2005A 2006E 2007F 2008F P/E 28.82 18.40 17.23 16.00 P/CFPS 32.90 38.95 47.99 20.22 P/BVPS 5.96 4.86 4.06 3.45 EV/Sales 2.50 1.91 1.76 1.57 EV/EBITDA 12.91 9.61 8.92 8.14 Dividend Yield 1.1% 1.6% 1.7% 1.9%

Fundamentals 2005A 2006E 2007F 2008F Turnover 306.83 398.23 430.24 469.07 EBITDA 59.51 79.01 84.94 90.42 EBIT 41.22 62.46 65.73 69.81 Net profit 24.29 38.04 40.63 43.75 ROE 26.4% 23.5% 21.5% 20.5% ROIC 12.4% 16.6% 15.8% 16.2% EPS (EUR) 0.61 0.95 1.02 1.09 DPS (EUR) 0.20 0.29 0.30 0.33

Amounts in EUR mn

Share price data 1m 6m 12m Since 31/12/06 Rel. perf. vs GI -0.2% 15.7% 64.2% 0.9% Abs. perf. 5.9% 48.6% 92.3% 3.1%


ASE FTSE140 FTSE20 FTSE40 FTSE80 Traded shares (,000s) 44,749Market capitalization (€ bn) Daily 0.03% 0.05% 0.05% 0.13% -0.06% Traded value (,000s €) 466,990

174.71 YTD 6.96% 7.54% 8.00% 5.44% 3.53%

January 26, 2007Closing

price (€)Daily

changeYTD (abs.) YTD (rel.)

MTD (abs.)

WTD (abs.)

52-wk L (€)

52-wk H (€)

Market Cap. (€ m)

Free float(*)

Shares outst. (m)

Shares traded (,000s)

Value traded (,000s €)

% of total Rating TP (€) (3)

Piraeus Sec. UNIVERSE 0.5% 6.8% -0.7% 7.9% 1.4% 125,327 70% 6,317 15,460 354,353

Banks 1.7% 10.1% 2.4% 11.3% 2.5% 57,381 87% 2,715 7,496 208,399 59% OutperformAlpha Bank ACBr.AT 25.02 0.0% 9.3% 1.6% 8.3% -1.1% 17.50 25.86 10,209 100% 408 721 18,288 5% Outperform 29.00Agricultural Bank AGBr.AT 4.20 -3.2% 7.7% 0.1% 8.8% -4.1% 3.38 6.32 3,803 20% 905 1,176 4,996 1% Neutral 4.50Emporiki Bank CBGr.AT 23.06 0.7% -1.0% -8.0% 0.6% -0.5% 21.60 31.80 3,053 75% 132 68 1,577 0% Neutral 24.40EFG Eurobank EFGr.AT 30.20 -0.2% 10.1% 2.3% 13.2% 0.0% 20.40 30.56 11,572 75% 383 1,009 30,527 9% Under Review 30.70Greek Postal Savings Bank GPSr.AT 19.34 -1.3% 8.3% 0.7% 9.9% 0.8% 13.10 19.72 2,724 75% 141 283 5,478 2% Neutral 20.20National Bank of Greece NBGr.AT 39.48 5.8% 13.1% 5.2% 13.8% 7.3% 25.88 41.59 18,752 100% 475 2,700 106,487 30% Outperform 42.40Piraeus Bank BOPr.AT 26.90 1.0% 10.2% 2.4% 12.2% 5.4% 14.35 26.90 7,268 100% 270 1,539 41,046 12% Restricted Restricted

Telecommunications -2.8% 2.3% -4.8% -1.2% -2.5% 19,064 61% 824 1,092 25,495 7% OutperformOTE OTEr.AT 23.10 -2.4% 1.5% -5.6% -2.6% -4.4% 15.40 24.52 11,322 75% 490 881 20,551 6% Neutral 24.00Cosmote COSr.AT 23.20 -3.3% 3.6% -3.7% 0.9% 0.4% 16.58 24.46 7,742 40% 334 211 4,944 1% Neutral 24.10

Utilities 3.2% 11.3% 3.5% 12.1% 4.3% 5,812 47% 339 946 16,630 5% NeutralPublic Power Corporation DEHr.AT 21.62 3.1% 12.6% 4.7% 13.2% 4.5% 17.20 22.02 5,016 50% 232 672 14,563 4% Neutral 19.60Athens Water (EYDAP) EYDr.AT 7.48 3.3% 3.6% -3.7% 5.4% 2.7% 5.62 8.74 797 30% 107 275 2,067 1% Neutral 6.44

Construction 1.5% 8.7% 1.1% 11.1% 3.4% 7,671 65% 426 866 12,242 3% OutperformHellenic Technodomiki HELr.AT 10.10 1.2% 19.4% 11.0% 21.7% 1.0% 5.48 10.58 1,604 75% 159 340 3,446 1% Under Review Under ReviewTerna TERr.AT 13.00 -0.3% 1.6% -5.6% 4.8% 2.2% 7.40 13.74 598 40% 46 282 3,699 1% Neutral 12.80Gek Group HRMr.AT 8.60 -0.9% 3.4% -3.9% 8.9% 1.7% 4.82 8.82 563 75% 65 140 1,210 0% Outperform 10.40Titan TTNr.AT 43.10 1.2% 4.4% -3.0% 6.2% 1.5% 32.40 46.48 3,641 75% 84 80 3,451 1% Outperform 48.00Heracles HERr.AT 17.80 -1.1% 9.6% 1.9% 11.5% 7.5% 10.00 19.36 1,265 30% 71 25 437 0% Underperform 15.50

Cyclical Goods & Services -2.3% 2.8% -4.4% 8.5% 0.3% 15,128 69% 860 1,367 27,133 8% OutperformOpap OPAr.AT 30.00 -0.6% 2.5% -4.7% 7.9% 1.4% 24.08 33.70 9,570 75% 319 215 6,466 2% Neutral 30.40Intralot INLr.AT 25.96 -10.5% -2.0% -8.9% 7.3% -5.9% 14.78 29.32 2,045 75% 79 310 8,169 2% Under Review Under ReviewLamda Detergent BLLr.AT 6.22 -4.0% 3.0% -4.2% 4.0% 2.6% 3.55 14.04 243 175% 39 109 674 0% Outperform 7.40Folli Follie (6) FOLr.AT 31.10 -0.1% 4.0% -3.3% 3.9% -0.6% 16.62 31.96 1,025 50% 33 171 5,359 2% Neutral 28.50Sarantis (2) SRSr.AT 8.10 -6.5% 0.7% -6.3% 0.2% -2.6% 7.10 9.46 309 75% 38 137 1,119 0% Neutral 9.10Neochimiki (5) NCHr.AT 16.80 -0.8% 6.5% -1.0% 23.0% 8.4% 5.58 17.10 605 -- 36 281 4,707 1% Outperform 18.00Autohellas AUTr.AT 5.06 0.0% -0.4% -7.4% 2.0% 0.4% 3.16 5.26 183 -- 36 18 93 0% Outperform 5.70Attica Enterprises EPA.AT 4.32 0.5% 8.0% 0.4% 13.1% -0.5% 3.06 4.46 450 75% 104 32 139 0%Neutral / Trading Bu 4.90Blue Star STR.AT 3.38 -3.4% 9.0% 1.4% 15.0% -0.6% 1.78 3.58 355 -- 105 34 116 0% Outperform 4.00Minoan Lines MILr.AT 4.84 -2.4% 15.8% 7.7% 19.8% 2.5% 3.12 5.06 343 75% 71 61 292 0% Under Review Under Review

Industrial Goods & Services 2.0% 9.2% 1.6% 14.5% 0.9% 2,637 61% 132 720 14,231 4% n.aFrigoglass FRIr.AT 17.70 -1.7% 5.9% -1.6% 8.7% -2.9% 8.54 18.48 708 50% 40 27 471 0% Neutral 17.90Mytilineos MYTr.AT 33.88 3.9% 12.9% 5.0% 20.3% 4.8% 14.18 33.94 1,373 75% 41 268 9,138 3% Under Review Under ReviewMetka MTKr.AT 10.70 2.3% 4.9% -2.5% 8.7% -3.3% 5.78 11.64 556 40% 52 425 4,622 1% Outperform 11.30

Energy 6.4% -1.1% 5.0% 5.0% 5,693 32% 416 2,019 33,932 10% NeutralHellenic Petroleum HEPr.AT 11.32 3.7% 8.4% 0.8% 7.6% 4.2% 9.00 13.30 3,460 40% 306 811 9,211 3% Under Review Under ReviewMotor Oil MORr.AT 20.16 0.9% 3.3% -4.0% 1.3% 6.1% 17.54 26.00 2,233 20% 111 1,208 24,721 7% Outperform 23.20

Food & Beverage 0.3% -0.7% -7.6% 1.0% -2.0% 7,076 40% 241 124 3,636 1% OutperformCoca Cola Hellenic Bottling HLB.AT 29.40 0.3% -0.7% -7.6% 1.0% -2.0% 21.70 31.64 7,076 40% 241 124 3,636 1% Neutral 30.00

Basic Resources 0.3% -2.8% -9.6% -3.3% -2.0% 761 40% 43 76 1,349 0% Under ReviewAluminium of Greece ALGr.AT 17.64 0.3% -2.8% -9.6% -3.3% -2.0% 13.38 40.00 761 40% 43 76 1,349 0% Under Review Under Review

Stock Exchanges 3.9% 21.5% 13.0% 18.5% 9.9% 1,190 100% 70 359 6,089 2% Under ReviewHellenic Exchanges Holding EXCr.AT 16.94 3.9% 21.5% 13.0% 18.5% 9.9% 8.13 16.72 1,190 100% 70 359 6,089 2% Neutral 15.00

Real Estate 0.0% -1.8% -8.7% -3.6% -0.4% 148 -- 55 75 203 0%Piraeus REIT PREr.AT 2.70 0.0% -1.8% -8.7% -3.6% -0.4% 2.22 3.22 148 -- 55 75 203 0% Restricted Restricted

Media 1.3% -4.2% -10.9% -9.4% -0.3% 116 20% 31 14 66 0% OutperformAttica Publications ATPr.AT 2.44 6.1% -7.9% -14.4% -13.2% 2.5% 2.27 4.36 37 20% 15 1 3 0% Under Review Under ReviewAudiovisual ADVr.AT 4.98 -0.8% -2.4% -9.2% -7.4% -1.6% 2.68 5.98 79 20% 16 13 63 0% Outperform 6.50

Retail -0.4% -0.3% -7.3% 6.6% 1.2% 2,647 51% 164 306 4,947 1% OutperformHellenic Duty Free Shops HDFr.AT 15.98 -2.7% 1.1% -5.9% 6.1% 0.1% 11.30 17.00 842 30% 53 17 276 0% Neutral 14.00Fourlis (4) FRLr.AT 15.44 -2.9% -3.9% -10.6% 5.8% -0.9% 8.90 16.24 787 75% 51 135 2,096 1% Outperform 17.00Jumbo (1) BABr.AT 16.80 3.6% 1.3% -5.8% 7.6% 3.7% 7.58 17.00 1,018 50% 61 153 2,576 1% Outperform 18.00

(*): Free float factors are those used by the FTSE indices methodology

PIRAEUS SECURITIES Universe is approximately accounting for 75% of the total market capitalization

PRICE DATA DAILY VOLUME DATA FUNDAMENTAL VIEW

This document has been issued by Piraeus Securities & Investment Services S.A. (“Piraeus Securities”), a member of the Athens Exchange. ¥ Piraeus Securities have based this document on information obtained from sources theybelieve to be reliable, but they have not independently verified all the information presented in this document. Accordingly, no representation or warranty, express or otherwise implied, is made as to the fairness, accuracy, completeness,or correctness of the information and opinions contained in this document, or otherwise arising in connection therewith. Expressions of opinion herein are those of the Research Department only and are subject to change without notice.

This document does not constitute or form part of any offer for sale or subscription, or solicitation to buy or subscribe to any securities, nor shall it or any part of it form the basis of, in part or in whole, any contract or commitmentwhatsoever. This document was produced by the Research Department of Piraeus Securities and is for distribution only to persons of the kind described in Article II (3) of the financial Services Act 1986 (Investment Advertisements)(Exemptions) Order 1996. It is being supplied to you solely for your information, and may not be reproduced, redistributed or passed on to any other person, or published, in whole or in part, for any purpose. ¥ Additional note to ourU.S. readers: This document may be distributed in the United States solely to “major US institutional investors” as defined in Rule 15a-6 under the US Securities Exchange Act of 1934. Each person that receives a copy, by acceptancethereof, represents and agrees that he/she will not distribute or otherwise make available this document to any other person. The distribution of this document in other jurisdictions may be restricted by law, and persons who comeinto possession of this document should inform themselves about and observe any such restrictions.

Market capitalization (€ bn)174.71

January 26, 2007

Piraeus Sec. UNIVERSE

BanksAlpha BankAgricultural BankEmporiki Bank EFG EurobankGreek Postal Savings BankNational Bank of Greece Piraeus Bank

TelecommunicationsOTE Cosmote

UtilitiesPublic Power CorporationAthens Water (EYDAP)

ConstructionHellenic TechnodomikiTernaGek GroupTitanHeracles

Cyclical Goods & ServicesOpapIntralotLamda DetergentFolli Follie (6)

Sarantis (2)

Neochimiki (5)

AutohellasAttica EnterprisesBlue StarMinoan Lines

Industrial Goods & ServicesFrigoglassMytilineosMetka

EnergyHellenic PetroleumMotor Oil

Food & Beverage Coca Cola Hellenic Bottling

Basic ResourcesAluminium of Greece

Stock ExchangesHellenic Exchanges Holding

Real EstatePiraeus REIT

MediaAttica PublicationsAudiovisual

RetailHellenic Duty Free ShopsFourlis (4)

Jumbo (1)

PIRAEUS SECURITIES Universe is approximately accounting for 75% of the total market capitalization

2005A 2006E 2007F 2005A 2006E 2007F 2005A 2006E 2007F 2005A 2006E 2007F 2005A 2006E 2007F 2005A 2006E 2007F 2005A 2006E 2007F 2005A 2006E 2007F 2005A 2006E 2007F

23.0x 18.1x 15.6x 0.84 1.08 1.24 23.3% 27.4% 15.8% 3.3x 3.2x 2.9x 13.9x 12.0x 10.7x 0.42 0.56 0.66 2.2% 2.9% 3.4% 10.9x 9.1x 8.0x 15.8% 19.0% 20.1%

21.4x 19.4x 15.0x 1.43 1.55 2.01 114.2% 8.0% 29.8% 3.8x 3.8x 3.7x 17.6x 16.7x 13.3x 0.41 0.61 0.75 1.9% 2.9% 3.5% n.m. n.m. n.m. 22.0% 22.3% 25.5%20.3x 15.7x 13.3x 1.23 1.59 1.88 19.2% 29.5% 18.2% 3.3x 4.3x 3.7x 18.1x 14.3x 12.2x 0.60 0.80 0.99 2.4% 3.2% 4.0% n.m. n.m. n.m. 23.8% 28.2% 30.0%19.5x 24.4x 17.9x 0.22 0.17 0.23 R+ -20.0% 35.9% 3.2x 2.9x 2.7x 15.8x 20.0x 15.3x 0.07 0.08 0.11 1.7% 1.9% 2.5% n.m. n.m. n.m. 23.3% 12.7% 15.7%32.1x 26.1x 16.6x 0.72 0.88 1.39 R+ 23.2% n/a 2.8x 2.7x 2.5x 23.5x 19.6x 13.6x 0.00 0.40 0.62 0.0% 1.7% 2.7% n.m. n.m. n.m. 11.9% 10.6% 15.5%22.7x 18.1x 15.0x 1.33 1.67 2.02 46.1% 25.2% 21.1% 3.8x 4.2x 3.7x 19.0x 15.6x 13.1x 0.90 0.97 1.18 3.0% 3.2% 3.9% n.m. n.m. n.m. 21.7% 24.0% 26.2%22.1x 21.5x 18.2x 0.87 0.90 1.06 -1.0% 3.3% 18.1% 3.1x 3.4x 3.4x 21.1x 20.3x 17.2x 0.08 0.59 0.70 0.4% 3.1% 3.6% n.m. n.m. n.m. 12.1% 15.3% 18.9%18.0x 20.8x 14.2x 2.19 1.90 2.78 160.6% -13.4% 46.5% 4.3x 3.9x 4.3x 15.5x 18.4x 13.0x 0.93 1.23 1.46 2.4% 3.1% 3.7% n.m. n.m. n.m. 26.5% 22.9% 28.9%25.7x 16.7x 15.9x 1.05 1.61 1.69 103.3% 53.9% 5.1% 4.2x 3.6x 3.1x 21.8x 14.8x 13.8x 0.50 0.64 0.76 1.9% 2.4% 2.8% n.m. n.m. n.m. 23.2% 28.6% 25.8%

22.7x 17.2x 18.8x 0.15 1.39 1.23 -71.6% 807.3% -11.3% 3.4x 5.7x 4.8x 13.0x 7.4x 7.7x 0.26 0.57 0.65 1.1% 2.5% 2.8% 11.7x 8.5x 7.2x 3.0% 26.5% 20.6%<0 14.6x 19.6x -0.44 1.58 1.18 R- R+ -25.4% 3.4x 2.9x 2.7x 12.7x 5.9x 6.6x 0.00 0.46 0.48 0.0% 2.0% 2.1% 11.7x 6.6x 5.7x <0 21.7% 14.4%

22.7x 21.0x 17.8x 1.02 1.10 1.30 9.6% 7.8% 18.4% 11.8x 9.6x 7.8x 13.6x 11.5x 10.2x 0.65 0.74 0.90 2.8% 3.2% 3.9% 11.6x 11.4x 9.4x 41.9% 50.5% 48.5%

37.4x 57.5x 36.1x 0.53 0.34 0.53 -52.3% -36.1% 57.2% 1.0x 1.0x 1.0x 7.7x 8.0x 7.0x 0.36 0.21 0.33 2.1% 1.2% 1.9% 10.2x 10.8x 9.4x 2.8% 1.9% 2.8%37.0x 62.7x 38.6x 0.58 0.34 0.56 -53.7% -41.0% 62.5% 1.0x 1.0x 0.9x 7.2x 7.5x 6.7x 0.50 0.26 0.42 2.3% 1.2% 1.9% 9.7x 10.6x 9.2x 2.9% 1.5% 2.5%39.8x 24.9x 21.0x 0.19 0.30 0.36 8.1% 60.0% 18.8% 1.1x 1.0x 1.0x 15.3x 12.4x 11.2x 0.07 0.10 0.12 0.9% 1.4% 1.6% 13.2x 11.8x 10.7x 2.3% 4.2% 4.8%

19.5x 19.4x 15.7x 1.70 1.79 2.05 29.2% 5.0% 14.7% 3.2x 2.8x 2.4x 10.3x 11.1x 9.7x 0.45 0.47 0.58 2.5% 2.6% 3.2% 10.7x 9.8x 8.4x 18.1% 15.4% 16.4%21.3x 23.0x 19.8x 0.47 0.44 0.51 20.2% -7.6% 16.1% 2.3x 2.2x 2.1x 16.0x 17.3x 14.9x 0.16 0.18 0.21 1.6% 1.8% 2.1% 12.3x 12.9x 11.2x 10.1% 9.8% 10.7%43.0x 34.0x 21.6x 0.30 0.38 0.60 -59.4% 26.6% 56.8% 3.7x 3.6x 3.3x 22.8x 18.3x 13.0x 0.22 0.24 0.27 1.7% 1.9% 2.0% 16.5x 15.3x 11.4x 8.7% 10.8% 16.0%29.9x 35.0x 23.4x 0.29 0.25 0.37 -13.4% -14.4% 49.4% 2.1x 2.1x 2.0x 16.7x 17.0x 12.6x 0.15 0.17 0.19 1.8% 2.0% 2.2% 12.2x 11.1x 9.2x 7.4% 6.0% 8.6%17.2x 13.9x 12.4x 2.50 3.10 3.49 18.8% 24.0% 12.3% 4.2x 3.6x 2.9x 12.8x 10.6x 9.6x 0.60 0.74 1.04 1.4% 1.7% 2.4% 10.4x 8.4x 7.3x 27.6% 27.6% 25.5%8.0x 17.0x 13.7x 2.23 1.05 1.30 144.5% -53.0% 23.6% 1.6x 1.6x 1.5x 6.1x 10.3x 8.9x 0.95 0.71 0.92 5.3% 4.0% 5.1% 6.4x 6.7x 6.3x 22.2% 9.4% 11.4%

22.6x 19.5x 15.8x 1.20 1.34 1.62 -4.9% 12.0% 21.0% 4.6x 5.6x 4.2x 17.3x 15.6x 12.9x 0.64 0.68 0.79 3.7% 3.8% 4.5% 13.7x 12.3x 10.5x 46.8% 45.9% 49.1%20.8x 19.9x 17.1x 1.44 1.51 1.75 -9.1% 4.7% 16.4% >20 >20 38.8x 19.9x 19.1x 16.4x 1.42 1.49 1.74 4.7% 5.0% 5.8% 13.0x 13.3x 12.0x 254.4% 250.8% 250.4%28.9x 18.2x 13.3x 0.90 1.42 1.95 18.2% 58.2% 37.1% 13.1x 9.1x 6.3x 23.0x 15.6x 11.4x 0.55 0.60 0.66 2.1% 2.3% 2.6% 12.2x 7.7x 5.5x 53.5% 58.7% 55.7%31.0x 19.4x 13.6x 0.20 0.32 0.46 116.9% 60.2% 42.0% 1.3x 5.1x 4.0x 18.8x 12.6x 9.2x 0.00 0.09 0.13 0.0% 1.4% 2.0% 17.7x 12.7x 9.2x 23.2% 28.9% 32.7%18.5x 15.9x 13.4x 1.68 1.96 2.31 5.6% 16.6% 17.9% 6.6x 5.3x 4.5x 17.5x 14.1x 11.6x 0.26 0.37 0.38 0.8% 1.2% 1.2% 16.5x 10.6x 8.3x 44.8% 37.2% 36.2%16.0x 16.6x 12.8x 0.51 0.49 0.63 13.6% -3.8% 29.8% 5.1x 4.9x 4.6x 13.5x 14.0x 11.0x 0.13 0.14 0.16 1.6% 1.8% 2.0% 12.1x 11.8x 9.8x 40.4% 30.0% 36.9%48.0x 28.0x 15.6x 0.35 0.60 1.07 72.0% 71.3% 79.1% 9.6x 3.7x 3.1x 30.9x 18.4x 10.7x 0.03 0.06 0.16 0.2% 0.3% 1.0% 26.5x 15.3x 8.8x 21.5% 19.2% 21.6%11.5x 9.5x 9.9x 0.44 0.53 0.51 -53.1% 21.0% -4.1% 1.7x 1.5x 1.4x 3.3x 2.9x 2.8x 0.21 0.27 0.26 4.2% 5.3% 5.1% 4.7x 4.4x 4.3x 15.1% 16.8% 14.9%16.0x 20.3x 12.9x 0.27 0.21 0.34 -21.1% -21.0% 57.2% 1.2x 1.3x 1.2x 6.9x 8.3x 7.3x 0.08 0.08 0.12 1.8% 1.8% 2.7% 11.5x 11.1x 7.9x 7.4% 6.1% 9.9%20.3x 18.4x 13.0x 0.17 0.18 0.26 65.1% 10.3% 40.9% 1.8x 1.7x 1.5x 11.9x 11.2x 8.9x 0.07 0.09 0.16 2.1% 2.7% 4.6% 15.7x 15.8x 11.9x 9.0% 9.3% 12.1%19.3x 17.9x 16.9x 0.25 0.27 0.29 122.5% 7.9% 5.7% 1.4x 1.3x 1.3x 8.9x 8.9x 8.9x 0.00 0.10 0.10 0.0% 2.0% 2.1% 14.6x 12.3x 12.6x 7.1% 7.4% 7.5%

14.8x 14.0x 15.2x 3.02 1.91 1.62 762.4% -36.7% -15.2% 6.7x 5.0x 4.1x 8.6x 11.4x 11.9x 0.30 0.47 0.41 1.5% 2.4% 2.1% 10.3x 8.2x 7.3x 66.8% 42.2% 30.1%29.1x 18.6x 17.4x 0.61 0.95 1.02 68.4% 56.6% 6.8% 6.0x 4.9x 4.1x 16.6x 13.0x 11.8x 0.20 0.29 0.30 1.1% 1.6% 1.7% 13.0x 9.7x 9.0x 22.9% 29.1% 25.7%6.5x 11.8x 15.1x 5.23 2.86 2.25 1458.8% -45.3% -21.6% 7.1x 5.1x 4.2x 6.0x 10.4x 12.3x 0.40 0.84 0.60 1.2% 2.5% 1.8% 9.1x 7.4x 6.4x 112.2% 49.9% 30.4%

16.9x 13.6x 12.6x 0.63 0.79 0.85 70.0% 24.0% 7.9% 6.5x 5.0x 4.0x 14.8x 12.1x 11.3x 0.30 0.33 0.35 2.8% 3.0% 3.3% 10.0x 8.0x 7.4x 30.4% 41.4% 35.2%

16.9x 14.8x 14.6x 0.87 1.05 1.07 30.3% 19.5% 2.5% 3.7x 3.3x 3.2x 11.3x 10.2x 10.1x 0.48 0.60 0.62 3.5% 4.4% 4.5% 10.3x 9.1x 9.2x 15.3% 16.6% 16.3%16.8x 16.1x 16.1x 0.67 0.70 0.70 60.2% 4.3% 0.1% 1.8x 1.7x 1.7x 10.0x 10.3x 10.3x 0.26 0.29 0.29 2.3% 2.6% 2.6% 8.7x 9.3x 9.3x 10.9% 10.8% 10.5%17.0x 12.8x 12.3x 1.19 1.58 1.65 12.0% 32.8% 4.2% 6.7x 5.7x 5.5x 14.2x 10.0x 9.7x 1.10 1.46 1.52 5.5% 7.3% 7.5% 12.6x 8.9x 9.1x 41.6% 48.3% 45.7%

22.0x 18.7x 16.9x 1.34 1.58 1.74 26.4% 17.6% 10.2% 3.0x 2.7x 2.4x 10.6x 9.3x 8.4x 0.32 0.35 0.36 1.1% 1.2% 1.2% 10.8x 9.6x 8.7x 14.5% 15.1% 14.9%22.0x 18.7x 16.9x 1.34 1.58 1.74 26.4% 17.6% 10.2% 3.0x 2.7x 2.4x 11.0x 9.7x 8.8x 0.31 0.34 0.35 1.1% 1.1% 1.2% 10.8x 9.6x 8.7x 14.7% 15.1% 14.9%


44.4x 22.1x 19.4x 0.38 0.77 0.87 -19.3% 101.0% 13.9% 6.0x 8.5x 7.3x 40.1x 21.2x 18.7x 0.25 0.50 0.57 1.5% 2.9% 3.3% 24.3x 13.9x 12.8x 10.1% 31.6% 40.5%44.4x 22.1x 19.4x 0.38 0.77 0.87 -19.3% 101.0% 13.9% 6.0x 8.5x 7.3x 40.1x 21.2x 18.7x 0.25 0.50 0.57 1.5% 2.9% 3.3% 24.3x 13.9x 12.8x 10.1% 31.6% 40.5%

14.3x 19.9x 20.1x 0.19 0.14 0.13 19.6% -28.1% -1.2% 1.2x 1.4x 1.4x 14.3x 19.9x 20.1x 0.14 0.14 0.14 5.3% 5.2% 5.4% 12.9x 17.0x 17.6x 9.6% 6.8% 6.8%14.3x 19.9x 20.1x 0.19 0.14 0.13 19.6% -28.1% -1.2% 1.2x 1.4x 1.4x 14.3x 19.9x 20.1x 0.14 0.14 0.14 5.3% 5.2% 5.4% 12.9x 17.0x 17.6x 9.6% 6.8% 6.8%


13.0x 11.2x 8.2x 0.38 0.45 0.61 3.5% 16.2% 36.4% 1.9x 1.3x 1.2x 6.8x 5.2x 3.8x 0.10 0.07 0.07 2.0% 1.5% 1.5% 8.5x 5.9x 5.1x 15.1% 14.1% 15.3%

30.7x 23.4x 19.0x 0.56 0.72 0.87 20.6% 27.4% 20.8% 7.5x 6.6x 5.8x 13.1x 10.6x 9.5x 0.53 0.59 0.64 3.3% 3.6% 4.0% 17.1x 14.5x 12.7x 27.2% 31.3% 31.0%22.8x 19.9x 16.9x 0.70 0.80 0.95 -11.9% 14.6% 17.7% 6.9x 7.0x 6.7x 20.2x 17.3x 14.8x 0.80 0.82 0.83 5.0% 5.1% 5.2% 13.4x 12.8x 11.5x 29.9% 35.0% 40.4%43.4x 30.7x 23.3x 0.36 0.50 0.66 153.9% 41.7% 31.6% 8.4x 6.9x 5.9x 31.3x 24.5x 19.0x 0.15 0.21 0.28 1.0% 1.4% 1.8% 21.0x 18.0x 14.9x 22.1% 24.7% 27.3%27.4x 20.6x 17.4x 0.61 0.82 0.96 36.3% 33.1% 18.2% 7.4x 6.1x 4.9x 22.5x 17.6x 15.0x 0.22 0.23 0.31 1.3% 1.4% 1.8% 17.0x 13.1x 12.0x 33.6% 34.9% 31.1%

Cash Earnings = EAT + Depreciation. EPS based on adjusted # of shares. (3) Target Prices are as of end - 2007(*): Free float factors are those used by the FTSE indices methodolog (4) EPS adj. Excludes one-off items.

(1) Valuation Ratios have been adjusted for the convertible bond - FISCAL Year ends June 30th (5) 2006 earnings estimates and ratios exclude a EUR49mn capital gain from the sale of a 43.44%(2) a. EBITDA is adjusted to include income from affiliated companies stake in Lamda Detergent. b. Net profit is adjusted to exclude one-off items, EPS are calculated on adjusted number of share (6) Forecasts are based on the full consolidation of HDFS as of May 2006

c. Shareholders funds and total equity have been hit by the revaluation of stakes in MULr.AT and HDFr.AT (distorting RoE).

EPS (€)P/E DIV. YLD.DPS (€)P/CEEPS GROWTH P/BV EV/EBITDA RoE

PIRAEUS SECURITIES & INVESTMENT SERVICES S.A. RESEARCH DEPARTMENT, 10 STADIOU ST., 105 64 ATHENS, GREECE, TEL. +30210-3354100, FAX +30210-3354072 WEB PAGE: www.piraeus-sec.gr, E-MAIL: [email protected]

IMPORTANT DISCLOSURES

Piraeus Securities Research Stock Ratings

Coverage Universe Rating Definitions

Investment Banking Activities within 12-month period

Outperform : 31.1%

Total return (*) expected to be greater than 10% compared to the market’s return (**) over a 12-month period

-

Neutral: 44.6%

Total return (*) expected to be between -10%/+10% compared to the market’s return (**) over a 12-month period

-

Underperform: 1.0%

Totan return (*) expected to be below -10% compared to the market’s return (**)over a 12-month period

-

Restricted: 5.9%

In certain circumstances that Piraeus Securities S.A. policy or applicable law / regulations preclude certain types of communication and investment recommendations

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Under Review: 17.4% Rating/TP may be subject to future revision -

(*) Total return = Price appreciation + Dividend (**) Market return = Risk free rate + 5% (an approximation of equity risk premium)

Investment ratings are determined by the ranges described above at the time of initiation of coverage, a change in rating, or a change in target price. At other times, the expected total returns may fall outside of these ranges because of price movement and/or volatility. Such interim deviations from specified ranges will be permitted but will become subject to review by Research Management.

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Piraeus Securities seeks to update covered companies on a quarterly basis or else on any material upcoming events.

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PIRAEUS SECURITIES & INVESTMENT SERVICES S.A. RESEARCH DEPARTMENT, 10 STADIOU ST., 105 64 ATHENS, GREECE, TEL.: +30210 3354100, FAX: +30210 3354072 WEBPAGE: www.piraeus-sec.gr, E-MAIL: [email protected]

RESEARCH [email protected] +30 210 3354035

Natasha Roumantzi

George Minardos

Ioannis Arapoglou

Pantelis Voutirakis

George Doukas

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[email protected]

[email protected]

[email protected]

[email protected]

+30 210 3354354

+30 210 3354083

+30 210 3354367

+30 210 3354049

+30 210 3354093

SALES/ TRADING

George Linatsas

Thanos Adamantopoulos

Kostis Nikolaidis

Constantinos Koufopoulos

Maria Mitsouli

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