1

Romanian Capital Market in 1H 2008

Banca Comerciala RomanaBCR Equity Research

June 30, 2008

2

Indices performance (January 1 – June 30, 2008)

-33.8%

-13.6%

-22.3%

-26.1%

-18.3%

-31.5%

-12.6%

-20.4%

-23.8%

0.6%

BET (Romania)

NTX (CEE Region)

BUX (Hungary)

WIG (Poland)

PX (Czech Republic)

CROBEX (Croatia)

RTS (Russia)

ATX (Austria)

DAX (Germany)

DJ Euro Stoxx 50 (Europe)

3

Regional Valuation Comparison (P/E June 30, 2008)

After downward trend in 2008, the Romanian market became valuated at levels

comparables with Poland and Czech Republic markets with a P/E 2008 of 10.9

Source: JCF consensus data

»

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

CZ HR HU PL RO SLO AT CEE TR RU JP USA DE

2006 2007 2008e 2009e 2010e

4

Key items about Equity Market

BSE capitalization highly concentrated;

Low level of free float capitalization;

High interest for major IPOs;

In 2009 the BSE is able to become

the most demanding CEE

markets, if the Romanian

authorities proceed with the

listing of Property Fund and few

utilities companies, such as:

Nuclearelectrica, Hidroelectrica,

Romgaz, Aeroportul Henri Coanda

BSE’s 2010 targets:

Market Capitalization: EUR 100bn Average Daily Turnover: EUR 100mn

BCR’s 2010 forecasts:

Market Capitalization: EUR 70bn Average Daily Turnover: EUR 45mn

»

»

»

»

Market Capitalization and Turnover

(BSE and Rasdaq market)

1.32.5

4.4 4.9

10.9

17.6

24.523.0

31.6

2.9

12.3

21.8

11.2

1.0 1.0 1.4 1.6

9.9

0

5

10

15

20

25

30

35

2000 2001 2002 2003 2004 2005 2006 2007 YTD

MkCap (EUR bn) Daily average turnover (EUR mn)

5

Market Returns

96.48%24.85%32.6%22.1%2007

-8.0%-41.2%-30.4%-33.8%6M 2008

33.9%32.4%28.5%22.2%2006

-1.14%175.2%38.2%50.9%2005

39.0%115.7%103.5%101.0%2004

21.7%33.2%26.0%30.9%2003

RASDAQ-CBET-FIBET-CBETYear/

Index

Return indices (RON)

22.6%30.2%19.8%2007

-42.3%-31.7%-35.0%6M 2008

41.6%37.4%30.7%2006

191.1%46.2%59.6%2005

127.0%114.1%111.5%2004

13.2%7.1%11.2%2003

BET-FIBET-CBETYear/

Index

Return indices (EUR)

6

Indices' evolution on a fixed base (June 30, 07)

-50%

-30%

-10%

10%

Jun-07 Aug-07 Oct-07 Dec-07 Feb-08 Apr-08 Jun-08

-50%

-30%

-10%

10%

B ET B ET -C B ET -F I

Jun-07 Aug-07 Oct-07 Dec-07 Feb-08 Apr-08 Jun-08

7

Volatility

Rolling Annualized Standard Deviation of BET

Daily Returns (January 1, 2006 – June 30, 2008)

0%

10%

20%

30%

40%

Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08

8

BSE Characteristics

Many important companies from

sectors such as utilities, agriculture,

telecoms are missing from the market;

BSE structure is different as compared

with GDP structure

The floating of utilities companies

(Nuclearelectrica, Hidroelectrica,

Romgaz), as well as of Property Fund,

would bring a very different structure

of BSE starting 2009; this will continue

to be different compared to GDP

structure

»

»

MARKET CAPITALIZATION

(BSE Regulated market, without Rasdaq)

Sector Classification; June 30, 2008

GDP STRUCTURE IN 2007 (%, current prices)

Services,

49.6%

Net taxes on

product,

11.1%

Agriculture,

6.6%

Industry,

23.5%

Construction

s, 9.1%

Utilities, 6.2%

Pharmaceutical

s, 1.7%

Banks, 26.6%

SIFs, 9.4%Others, 13.8%

Oil&gas and

related

services,

42.2%

9

BSE Characteristics

BSE capitalization is highly concentrated; Petrom and BRD-GSG have weights of 31%

and 16%, respectively in the total market capitalization (including BSE Rasdaq market

and excluding Erste Bank);

The five SIFs have a weight of 7.5% in total BSE and Rasdaq market capitalization

(excluding Erste Bank), but a weight of 35.5% in total turnover in 1H 2008 (including BSE

Rasdaq market);

The most visible 17 companies of BSE represented 68% of total capitalization (without

Erste Bank) and 69% of the 2008 total liquidity; But their free float capitalization

represents 21.8% of these companies capitalization (June 30, 2008);

»

»

»

10

MARKET CAPITALIZATION and TURNOVER for TARGETED RESEARCH UNIVERSE

CompanyBVB

TickerSector

Free

float

2008

Turnover

(EUR mn)

2008

Avg daily

turnover

(EUR mn)

MkCap

June 30, 08

(EUR mn)

Free Float

MkCap

(EUR mn)

SIF Banat Crisana SIF1 Investment Companies 75.4% 75.20 0.62 297.94 224.64

SIF Moldova SIF2 Investment Companies 89.6% 127.24 1.04 271.82 243.55

SIF Transilvania SIF3 Investment Companies 84.1% 55.47 0.45 416.20 350.02

SIF Muntenia SIF4 Investment Companies 54.6% 94.26 0.77 323.04 176.38

SIF Oltenia SIF5 Investment Companies 81.2% 144.98 1.19 424.69 344.85

BRD-GSG BRD Banks 11.3% 113.90 0.93 3,687.51 417.02

Banca Transilvania TLV Banks 70.6% 119.55 0.99 1,098.19 774.84

Petrom SNP Oil & Gas 6.2% 71.15 0.58 7,190.19 446.80

Rompetrol Rafinare RRC Oil & Gas 26.7% 25.53 0.21 306.58 81.98

Antibiotice ATB Pharmaceuticals 36.9% 11.64 0.09 173.35 63.95

Biofarm BIO Pharmaceuticals 49.5% 17.49 0.15 74.24 36.74

Transelectrica TEL Utilities 12.8% 29.15 0.24 476.29 60.92

Transgaz TGN Utilities 10.0% 33.34 0.31 668.18 66.82

Flamingo International FLA IT&C and electronics retailer 32.7% 8.98 0.07 45.49 14.88

Impact Developer & ContractorIMP Real estate developer 52.3% 18.26 0.15 129.40 67.67

Turbomecanica TBM Engineering 50.5% 5.04 0.04 36.97 18.66

Albalact Alba Iulia ALBZ F&B - milk producer 36.4% 14.46 0.13 59.05 21.52

965.66 7.96 15,679.14 3,411.23

1,400.20 11.20 22,978.37 n/a

69.0% 71.1% 68.2% n/a

Source: BCR Research

Total Targeted Research Universe

Total BSE and BSE-Rasdaq market

Weight Targeted Research Universe

11

IPOs Market

Positive market sentiment

regarding major IPOs in

spite of the negative market

context;

The successful IPOs launched in 2006 and 2007 prove that an issuer can easily raise

over EUR 50mn on the BSE;

»

»

TelecomRomtelecom

Airport Operator Aeroportul Henri Coanda

Romanian Air Transporter Tarom

UtilityRomgaz

UtilityNuclearelectrica

UtilityHidroelectrica

Closed End FundProperty Fund

SectorCompany

Potential IPOs to launched starting 2009

The most important offer

should be initiated by

Ministry of Economy and

Finance for at least 10%

holding in Property Fund

(Fondul Proprietatea);

»

12

IPOs (2004 – 1H 2008)

oversubscribed 3.6%83.313.407.04.08 – 17.04.08Teraplast Bistrita

Fully subscribed 15.93.229.02.08 – 13.03.08Contor Grup

subscribed 42% (EUR 5.8mn)46.113.419.02.08 – 10.03.08STK Emergent

oversubscribed by 28 times643.464.326.11.07 – 07.12.07Transgaz Medias

*) Total number of shares after IPO

oversubscribed by 1.4 times9.12.504.12.07 – 17.01.08Casa de Bucovina

oversubscribed by 16.5 times41.98.408.12.06 - 18.12.06Alumil Rom Industry

oversubscribed by 6.5 times345.134.514.06.06 - 28.06.06Transelectrica

oversubscribed by 3.7 times 55.412.415.06.05 - 22.06.05Flamingo

oversubscribed by 1.3 times19.54.817.03.05 - 14.04.05Vrancart Adjud

oversubscribed by 3 times9.12.225.10.04 - 19.11.04SSIF Broker

IPO results

MkCap

IPO price

(EUR mn)*

IPO's

value

(EUR mn)IPO PeriodCompany

13

Stock price performance after IPOs

15.5%14.6%50%67%54%

Transgaz

Medias

---8%-9%-1%

Teraplast

Bistrita

60%71%68%80%96%

Alumil Rom

Industry

276%92%73%63%36%Transelectrica

8%18%7%4%5%Flamingo

-20%-21%-12%1%10%

Vrancart

Adjud

80%63%205%166%159%SSIF Broker

6 months 3 months 1 month7 session1st sessionCompany

14

Fondul Proprietatea (Property Fund)

» The selection of an asset management company after an international auction;

» Investment vehicle in energy sector, with the most important stakes - between 10% and

30% in utilities;

The delineation of its investment policy as NON-UCITS by CNVM;

The valuation of fund's assets and the increase of share capital;

»

»

The floating of Fund after an SPO will substantially increase the free float market

capitalization of the BSE

»

Three major conditions for floating:

Other key aspects:

The main listed companies from Property Fund portfolio worth over EUR 1.7bn;»

15

Property Fund portfolio

The unlisted companies

Company Sector Weight

International Henri Coanda Airport Airport operator 20.00%

Romgaz Natural gas producer 14.99%

Hidroelectrica Hydro-power producer 19.94%

Nuclearelectrica Nuclear power producer 9.49%

CE Craiova Thermo power plant 25.54%

CE Rovinari Thermo power plant 23.73%

CE Turceni Thermo power plant 24.93%

Posta Romana Postal services 25.00%

Companies involved in gas and electricity distribution with stakes between 12% and 30%

The main listed companies

Company Ticker

MkCap

(EUR mn)

30.06.08

Weigh of

Property Fund

Value of Property

Fund's stake

(EUR mn)

Petrom Bucuresti SNP 7,190.19 20.11% 1,445.95

Alro Slatina ALR 1,115.43 9.93% 110.73

Transgaz Medias TGN 668.18 14.99% 100.14

Transelectrica Bucuresti TEL 476.29 13.50% 64.30

Oil Terminal Constanta OIL 95.81 10% 9.58

Total 1,730.70

16

SWOT (Strengths/Opportunities)

» Positive market sentiment for public offering on the BSE launched by major state-

owned companies;

» Successful IPOs launched by Transelectrica and Transgaz encourage Romanian

authorities to float other utilities companies (Nuclearelectrica, Hidroelectrica,

Romgaz) in order to finance their huge CAPEX plan;

Increasing number of small and medium sized companies that have expressed their

interest in becoming public;

»

The floating of Property Fund will have a huge impact on the investability of

Romanian capital market which has a free float capitalization less than EUR 7bn;

»

Pillar II pension funds will strength the Romanian institutional investors segment,

encouraging IPOs launched by private companies starting 2009. The compulsory

pension fund became operational in May this year, having 4.1mn adherents who

contribute with 2% of their gross wage

»

The listing of Erste Bank opens the way for attracting new companies which are

already listed on other markets (AD Pharma);

»

17

SWOT (Strengths/Opportunities)

» Property Fund could become, starting 2009, the major institutional investor on the

Romanian capital market after National Securities Commission will approve the

fund’s investment policy, with its NAV a few times greater than the NAV of all

pension funds in the coming 5-7 years;

The improvement of eligible candidates for MidCaps and SmallCaps segments of

the market as a result of significant increase in the visibility of a few dozen

companies listed on the Rasdaq in the last 1-2 years;

» More and more listed companies have decided to finance through capital market via

preemption rights exercised during share capital increases; this pattern of funding

was very successfully, an amount of over EUR 250mn being raised in 2007;

»

The corporate growth potential of main Romanian companies is at least

comparable with CEE peers within EU convergence scenario in a stable

macroeconomic environment

»

18

SWOT (Weaknesses/Threats)

» Low depth of the market even related to the current listed companies (free float

capitalization less than 30% of the total market capitalization);

» Sectors like telecom, agriculture are not well represented on the market;

Romanian institutional investors have a weak presence on the share demand of

BSE and this situation will be substantially improved starting 2009 when Property

Fund should be fully operational as well as the assets of pillar II pension funds

and mutual funds will have critical size; a significant influence on the transactions

from the BSE is not possible earlier than 2010 when pensions NAVs will reach EUR

1.5bn; it is also the current case of the mutual funds with a industry’s NAV of only

EUR 247mn at the end of May 2008;

»

» Retail segment is represented by at most 50,000 individuals, the BSE’s target of

300,000 individuals in 2010 being optimistic;

Significant risks related to investments in new discovered companies from Rasdaq

consisting in the lack of information due to reduced transparency standards

»

19

BSE Equity Annual Turnover (2008-2010)

44.926.416.321.812.3Average daily liquidity

70%62%-26%79%-The increase of BSE turnover

(inclusively Rasdaq market) (%)

11,123.06,550.44,039.05,440.13,042.8The BSE and Rasdaq turnover (1)+(2)

7,425.85,712.23,808.15,440.13,042.8The annual BSE turnover without the

influence of favorable events (2)

30%50%-30%--The increase of BSE liquidity without

taking into account favorable events

(%)

3,697.2838.2230.9--The increase of annual BSE turnover

due to favorable events (1)

2010e2009e2008e20072006EUR mn

20

Favorable events:

»

» The increasing of Petrom free-float by 8pps (starting 2010);

»

The increase of Transelectrica’s free float by 2.7pps (starting March 2008);

The floating of Transgaz (starting January 2008);

The floating of Property Fund (starting 4Q 2009); daily average turnover of EUR

8mn in 2010;

»

New companies listed after IPOs in 2009, the major candidates being

Nuclearelectrica, Hidroelectrica, Romgaz and Romtelecon; daily average

turnover of EUR 4mn in 2010 generated by new issuers (excepting Property

Fund);

»

The floating of Erste Bank (starting February 2008);

»