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Today's Rating & PT ChangesAIB, ALBK.I Alastair Ryan p.3Looking through the complexities12-month rating: Prior: Sell => Neutral, FY09E €(2.98)=>€(3.07), FY10E€(2.06)=>€(0.74), PT Prior: €1.70/US$4.89 => €1.55/US$4.46, MktCap €1.30bn/US$1.89bnBank of Ireland, BKIR.I Alastair Ryan p.4A way back12-month rating: Neutral (Unchanged), FY10E €(2.12)=>€(5.02), FY11E€(1.55)=>€(0.29), PT Prior: €1.50/US$8.63 => €1.60/US$9.21, MktCap €1.47bn/US$2.11bnBurberry, BRBY.L Eva Quiroga p.5After the conference call12-month rating: Neutral (Unchanged), FY10E 31.00p=>32.15p, FY11E36.05p=>36.87p, PT Prior: 620p/US$10.12 => 640p/US$10.45, MktCap £2.60bn/US$4.25bnKomax, KOMN.S Torsten Wyss p.6Trough behind: Upgrade to Neutral12-month rating: Prior: Sell => Neutral, FY09E CHF(4.23)=>CHF(0.79), FY10ECHF1.67=>CHF5.29, PT Prior: CHF52.00/US$50.74 => CHF90.00/US$87.82, MktCap CHF0.28bn/US$0.27bnLand Secs, LAND.L Quentin Freeman p.7Ready and steady12-month rating: Neutral (Unchanged), FYE -, PT Prior:685p/US$11.20 => 700p/US$11.44, Mkt Cap £5.18bn/US$8.47bnLindt & Sprüngli, LISN.S Joern Iffert p.8Cautious view on 201012-month rating: Sell (Unchanged), FY09E CHF1,043.24=>CHF976.96, FY10ECHF1,183.51=>CHF1,123.93, PT Prior:CHF23,500.00/US$22,926.83 => CHF23,000.00/US$22,439.02, MktCap CHF5.59bn/US$5.45bnMunich Re, MUVGn.DE Marc Thiele p.9Change growth profile vs more buy backs12-month rating: Prior: Buy => Neutral, FY09E €11.80, FY10E €11.04, PT Prior:€115.00/US$165.47 => €111.00/US$159.72, Mkt Cap €21.4bn/US$30.8bnODH, ODHN.S Till Leisner p.10More upside than downside12-month rating: Prior: Neutral => Buy, FY09E CHF4.8=>CHF4.4, FY10ECHF5.9=>CHF5.2, PT Prior: CHF95.00/US$92.70 => CHF85.00/US$82.94, MktCap CHF1.70bn/US$1.65bn

20 January 2010http://www.ubs.com/investmentresearch

This package has been prepared by UBS Limited UBS 1ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 19UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may havea conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making theirinvestment decision.

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Pearson, PSON.L Alastair Reid p.11Good prospects12-month rating: Buy (Unchanged), FY09E 60.1p=>63.4p, FY10E 63.1p=>64.9p, PTPrior: 980p/US$16.00 => 1,000p/US$16.33, Mkt Cap £7.29bn/US$11.7bnPSA, PEUP.PA Philippe Houchois p.12So much change and so few expectations12-month rating: Buy (Unchanged), FY09E €(5.81)=>€(5.76), FY10E€(0.31)=>€(0.24), PT Prior: €30.00/US$43.17 => €33.00/US$47.48, MktCap €6.07bn/US$8.61bnRenault, RENA.PA Philippe Houchois p.13More expectations than change12-month rating: Prior: Neutral => Sell, FY09E €(6.92)=>€(5.55) , PT Prior:€37.00/US$53.24 => €36.00/US$51.80, Mkt Cap €10.9bn/US$15.6bnSEB SA, SEBF.PA Julie de Vigneral p.14FY09 sales & conf. call – Buy, PT up to €4812-month rating: Buy (Unchanged), FY09E €2.85=>€2.99, FY10E €3.53=>€3.56, PTPrior: €45.00/US$64.73 => €48.00/US$69.04, Mkt Cap €2.27bn/US$3.26bnUnilever NV, UNc.AS Alan Erskine p.15FY 2009 results preview12-month rating: Neutral (Unchanged), FY09E €1.35=>€1.36, FY10E €1.43=>€1.44,PT Prior: €19.80/US$28.49 => €21.70/US$31.22, Mkt Cap €67.1bn/US$95.1bnUnilever Plc, ULVR.L Alan Erskine p.16FY 2009 results preview12-month rating: Neutral (Unchanged), FY09E 121p=>122p, FY10E 131p=>122p, PTPrior: 1,780p/US$29.06 => 1,900p/US$31.02, Mkt Cap £60.0bn/US$98.7bnWartsila, WRT1V.HE Sven Weier p.17Price target raised to €3712-month rating: Neutral (Unchanged), FY09E €4.05=>€4.12, FY10E €2.02=>€2.71,PT Prior: €28.00/US$40.29 => €37.00/US$53.24, Mkt Cap €3.35bn/US$4.81bnZurich Financial, ZURN.VX Marc Thiele p.18Capital re-deployment challenging12-month rating: Prior: Buy => Neutral, FY09E US$22.72, FY10E US$27.35, PT Prior:CHF250.00/US$24.40 => CHF245.00/US$23.91, Mkt Cap CHF33.2bn/US$32.4bn

UBS Daily Research summary - Europe 20 January 2010

UBS 2

AIB (ALBK.I / AIB.N)

Looking through the complexities. A lot needs to happenAIB needs a lot to happen this year. To become a ‘normal’ company, it needs the Irish mortgagemarket to reprice, the EC or the government to drive domestic consolidation, divest itself of M&Tand BZWBK, the government to convert its subordinated debt to equity, the signs of economicstability to translate into a bottoming of GDP and real estate and – finally – an equity issue.. A broad range of outcomesWe estimate that current shareholders may hold an effective interest in the fully-diluted, post-disposal AIB of around 24%. This figure could vary wildly depending on the government’s atti tude to the banks and to the share price itself, given the amount of equity to be raised. Should arepricing of the mortgage market take hold, we believe the group could be worth up to €7.5billion, with the current market cap around one fifth of this.. Particular funding challengesOnly 18% of wholesale funding was over one year in duration as of 30 September 2009. NAMAand the Irish government ELG scheme ensure AIB’s liquidity will remain robust, but the NIMpressure from terming out the balance sheet is likely to be greater than at AIB’s peers.. Valuation: Upgrading to Neutral

Our valuation is a probability-weighted post-recapitalisation approach. We are reducing ourprice target to €1.55 (from €1.70). Our estimates have been substantially reviewed post NAMAdisclosures. While the possibility of a poor outcome for shareholders remains, the 45% declinein the shares over the last three months leaves the risks more finely balanced and we areraising our rating on the stock to Neutral.

Highlights (€m) 12/07 12/08 12/09E 12/10E 12/11ERevenues 4,868 5,068 4,199 3,564 3,728Pre-tax profits 2,508 1,029 (2,264) (3,800) 457Net income 1,908 715 (2,248) (3,212) 292EPS (UBS, €) 2.06 0.7 (3.07) (0.74) 0.33Net DPS (UBS, €) 0.79 0.31 0 0 0

Source: Company accounts, Thomson Reuters, UBS estimates. (UBS) valuations are stated before goodwill, exceptionals and other special items.Valuations: based on an average share price that year, (E): based on a share price of €1.48 on 18 Jan 2010 21:36 GMT

Profitability & Valuation 5-yr hist. av. 12/08 12/09E 12/10E 12/11EROE % - 7.9 -29.5 -65.5 8.5P/Op x 8.1 3 0.6 0.8 0.8P/BVPS x 2 1 0.2 0.4 0.4PE (UBS) x 10.9 13.5 -0.5 -2 4.5Net dividend yield % 4.1 3.2 0 0 0

Ireland

Banks, Ex-S&L12-month rating Neutral

Prior: Sell12m price target €1.55/US$4.46

Prior: Prior: €1.70/US$4.89

Price €1.48/US$4.32 (ADR)

RIC: ALBK.I / AIB.N BBG: ALBK ID / AIB

US

20 January 2010

Trading data (local/US$)52-wk range €3.37-0.27/US$9.77-0.82Market cap. €1.30bn/US$1.89bnShares o/s 877m (ORD)/439m (ADR)ADR ratio 1 ADR:2 ORDFree float 100%Avg. daily volume ('000) 3,336/472Avg. daily value (m) €5.7/US$2.3

Balance sheet data 12/09ECommon equity €6.51bnP/BVPS x 0.2Tier one capital ratio 8.3%

Forecast returnsForecast price app. +4.7%Forecast dividend yield 0.0%Forecast stock return +4.7%Mkt return assumption 9.0%Forecast excess return -4.3%

EPS (UBS, €)12/09E 12/08

From To Cons. ActualH1 - - - 1.00H2E - - - (0.29)12/09E (2.98) (3.07) (3.56) -12/10E (2.06) (0.74) (2.01) -

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Bank of Ireland (BKIR.I / IRE.N)

A way back. Normality may not be that far awayOut the other side of its current challenges, we see a Bank of Ireland with around €80bn inongoing loans, a 100% loan/deposit ratio and over €1bn in pre-tax profits. With the Irisheconomy showing signs of stabilising and property prices adjusting rapidly, the prohibitivemacro picture could trough this year. In our view, there is a way back to normality for the bank ifindustry structure and capital are addressed.. Mortgage market needs repricingIrish mortgage pricing remains a fundamental problem. Without this book – over half of Bank ofIreland’s domestic loans post National Asset Management Agency (NAMA) participation,progressing towards a 200bp new business spread – group profitability is not likely to reachreasonable levels. There is much to do on industry structure to achieve this pricing: excludingthe big two, we see a €90 billion funding shortfall, pressuring deposit costs. The ongoing statedependence of other banks runs the risk of depressing asset spreads.. Ownership percentages uncertainTo judge what proportion of the ‘other side’ picture current shareholders own requires manyassumptions. We expect the conversion of the government’s €3.5 billion interest into commonequity and estimate that €1 billion or more in new stock is also likely to be necessary. At today’sprice, we estimate 22% of the equity is effectively owned by current holders. Using the last sixmonths’ share prices, this estimate would range between 19% and 38%.. Valuation: Neutral maintained

Our estimates have been substantially reviewed post NAMA disclosures. We value thecompany on a probability-weighted basis, increase our price target slightly from €1.50 to €1.60,and maintain our Neutral rating.

Highlights (€m) 03/08 03/09 03/10E 03/11E 03/12ERevenues 4,120 3,957 3,307 2,855 3,034Pre-tax profits 1,933 (7) (5,011) (324) 609Net income 1,685 69 (4,025) (289) 486EPS (UBS, €) 1.5 0.03 (5.02) (0.29) 0.45Net DPS (UBS, €) 0.64 0 0 0 0


Profitability & Valuation 5-yr hist. av. 03/09 03/10E 03/11E 03/12EROE % - 1 -75.4 -7.9 12.8P/Op x 7.7 2.1 - 1.4 1.2P/BVPS x 2.2 1.1 4.5 38.8 2.8PE (UBS) x 10.1 >100 -0.3 -5.3 3.3Net dividend yield % 4.2 0 0 0 0

Ireland

Banks, Ex-S&L12-month rating Neutral

Unchanged

12m price target €1.60/US$9.21


Price €1.52/US$8.68 (ADR)

RIC: BKIR.I / IRE.N BBG: BKIR ID / IRE

US

20 January 2010

Trading data (local/US$)52-wk range €3.42-0.13/US$19.81-0.72Market cap. €1.47bn/US$2.11bnShares o/s 973m (ORD)/243m (ADR)ADR ratio 1 ADR:4 ORDFree float 100%Avg. daily volume ('000) 4,206/108Avg. daily value (m) €7.4/US$1.1

Balance sheet data 03/10ECommon equity €3.83bnP/BVPS x 4.5Tier one capital ratio 8.3%

Forecast returnsForecast price app. +5.6%Forecast dividend yield 0.0%Forecast stock return +5.6%Mkt return assumption 9.0%Forecast excess return -3.4%

EPS (UBS, €)03/10E 03/09



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Burberry (BRBY.L)

After the conference call. A solid performance in the third quarter…Burberry reported solid sales of £380 million for 3Q10, driven by +12% organic top-line growthand some +4% from currencies. Underlying top-line growth was particularly strong in Retail(+16% with +6% from new space and +10% from same-store sales growth, driven by strong full-price sales of the autumn/ winter collection), followed by Wholesale (+5%, given earlier ship ment of the spring collection) and Licensing (-3%) – a clear improvement over the -6% in 1H10.. …Vindicating Burberry’s long-term strategyWe believe that a number of the elements at play in 3Q10 illustrate that the five strategic pillars(leveraging the franchise, intensifying non-apparel, accelerating retail-led growth, investing inunder-penetrated markets, pursuing operational leverage) are beginning to have a positiveimpact on growth.. FY10 guidance: at the top-end of the rangeWhile visibility on momentum in 4Q10 is limited at this stage (especially given last year’ssubstantial promotional activity in the March quarter), management is guiding for PBT at theupper end of the £175-200 million consensus range, given the strong performance achieved in3Q10. Valuation

We continue to rate Burberry Neutral, albeit with a slightly increased (DCF-based) price target of640p, reflecting the small increase in our forecast for 2010 and the following years, given that (i)the stock is trading in line with the rest of the sector and (ii) we continue to prefer hard luxuryover soft luxury at this point in the cycle.

Highlights (£m) 03/08 03/09 03/10E 03/11E 03/12ERevenues 995.4 1,201.50 1,277.07 1,339.03 1,444.64EBIT (UBS) 206.6 182.5 204.96 227.75 270.08Net Income (UBS) 139.7 132.1 138.68 159.01 190.39EPS (UBS, p) 32.33 30.63 32.15 36.87 44.14Net DPS (UBS, p) 12 12 12 13.76 16.48

Source: Company accounts, Thomson Reuters, UBS estimates. (UBS) valuations are stated before goodwill, exceptionals and other special items.Valuations: based on an average share price that year, (E): based on a share price of 600p on 18 Jan 2010 21:36 GMT

Profitability & Valuation 5-yr hist. av. 03/09 03/10E 03/11E 03/12EEBIT margin % 21.6 15.2 16 17 18.7ROIC (EBIT) % 45.9 32.7 37 40 45.2EV/EBITDA (core) x 10.4 6.9 10.2 9 7.5PE (UBS) x 17.2 11.6 18.6 16.3 13.6Net dividend yield % 1.8 3.4 2 2.3 2.7

United Kingdom

Retailers, Apparel12-month rating Neutral

Unchanged

12m price target 640p/US$10.45

Prior: Prior: 620p/US$10.12

Price 600p/US$9.79

RIC: BRBY.L BBG: BRBY LN

19 January 2010

Trading data (local/US$)52-wk range 611p-206/US$10.10-2.98Market cap. £2.60bn/US$4.25bnShares o/s 434m (ORD)Free float 100%Avg. daily volume ('000) 1,733Avg. daily value (m) 10.0p

Balance sheet data 03/10EShareholders' equity £0.63bnP/BV (UBS) 4.1xNet Cash (debt) £0.07bn

Forecast returnsForecast price app. +6.8%Forecast dividend yield 1.4%Forecast stock return +8.2%Mkt return assumption 5.6%Forecast excess return +2.6%

EPS (UBS, p)03/10E 03/09

From To Cons. ActualH1E - - - 17.35H2E - - - (18.72)03/10E 31.00 32.15 31.38 -03/11E 36.05 36.87 34.91 -


Eva [email protected]+44-20-7568 7519

William HoustonAssociate [email protected]+44-20-7568 8829



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Komax (KOMN.S)

Trough behind: Upgrade to Neutral. Upgrade to NeutralKomax’ 2H order intake and sales surprised positively being c40% above expectations on orderintake and c10% on sales. We now look for a 09 EBIT loss of CHF7m (prev -CHF19m) with anet loss of CHF3m (prev -CHF14m). We increase our 2010 order intake est. by c30% with oursales est. c25% up. As a result we calculate EBIT of CHF22m (prev CHF8m, cons CHF6m) andnet profit of CHF18m (prev CHF6m, cons CHF3m). We derive a new CHF90 PT.. Stabilizing end markets – China gaining importanceKomax stated that major markets appear to be stabilizing with Wire (c50% of sales) and Solar(c20%) having bottomed except for the PV thin film business (c20% of solar) not participatingfrom the recovery yet. Medtech (c30%) has been doing relatively well throughout the crisisanyway, starting off the new year with a high order book. Acc. to mgmt, China has gainedsubstantial weight in 2009. We estimate Komax Wire (Automotive) to generate cCHF20m salesin China in 09.. New product mix: Lower margins – Higher growthMgmt is guiding for a FY09 EBIT loss (cons: -19m, UBS: -7m) with 4Q EBIT being >0m. Komaxexpects top line growth in 2010 “if the recovery continues” (cons: +10%; UBS: +24%). Due to aless favourable product mix (less Wire) and some add. restr. charges for solar, we expect 2010EBIT-margin (8.3%) to be still below the 2005 EBIT margin (9.6%) despite the same salesvolume of cCHF260m.. Valuation: Upgrade to Neutral

We value Komax in line with UBS’ EU small/ mid cap eng. stocks on a midpoint of 2010 PER &EV/EBITDA, we derive a new CHF90 PT. If end markets continue to recover as in 2H, we seefurther upside to our est. On 2010 EV/EBIT(DA), Komax trades at a 20-30% premium vs. peers.Upgrade to Neutral.

Highlights (CHFm) 12/07 12/08 12/09E 12/10E 12/11ERevenues 349 343 210 261 299EBIT (UBS) 43 31 (7) 22 31Net Income (UBS) 32 23 (3) 18 24EPS (UBS, CHF) 9.86 6.99 (0.79) 5.29 7.12Net DPS (UBS, CHF) 6.5 2 0 0.3 0.7

Source: Company accounts, Thomson Reuters, UBS estimates. (UBS) valuations are stated before goodwill, exceptionals and other special items.Valuations: based on an average share price that year, (E): based on a share price of CHF82.00 on 19 Jan 2010 17:04 GMT

Profitability & Valuation 5-yr hist. av. 12/08 12/09E 12/10E 12/11EEBIT margin % 12 9.1 -3.5 8.3 10.4ROIC (EBIT) % 20.3 15.9 (3.7) 10.9 15.3EV/EBITDA (core) x 8.7 10 >100 8.1 5.9PE (UBS) x 15.2 18.1 <-100 15.5 11.5Net dividend yield % 2.5 1.6 0 0.4 0.9

Switzerland

Industrial, Diversified12-month rating Neutral

Prior: Sell12m price target CHF90.00/US$87.82

Prior: Prior: CHF52.00/US$50.74

Price CHF82.00/US$80.02

RIC: KOMN.S BBG: KOMN SW

20 January 2010

Trading data (local/US$)52-wk rangeCHF82.00-36.05/US$79.31-30.78Market cap. CHF0.28bn/US$0.27bnShares o/s 3.39m (REG )Free float 89%Avg. daily volume ('000) 7Avg. daily value (m) CHF0.5

Balance sheet data 12/09EShareholders' equity CHF0.22bnP/BV (UBS) 1.3xNet Cash (debt) CHF0.02bn


EPS (UBS, CHF)12/09E 12/08

From To Cons. ActualH1E (3.31) (3.31) - 4.48H2E (0.92) 2.52 - 2.5612/09E (4.23) (0.79) (4.68) -12/10E 1.67 5.29 1.06 -


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Land Secs (LAND.L)

Ready and steady. West End development to start in 2010, but patient on acquisitionsGroup aims to commit to c£345m capex to deliver 625,000 sq ft of mixed use space in Mayfairand Victoria 2012-13. We estimate the cash yield on the commercial space at c7% before rentalinflation. It is looking at asset management income opportunities but expects to see a widerrange of these during 2010. In Q3 it acquired one Glasgow site for £10 m and sales totalled£249m (7.7% yield).. Income maintained and debt extendedOperationally combined voids and tenants in administration were static at 7.1% in Q3. Furtherprogress was made on lettings at Dashwood House, EC2. The Group has extended its averagedebt maturity out to twelve years. Undrawn facilities total £2.3 billion (£1.6 billion availableimmediately). UBS estimates current gearing at c81% of March 2010E NAV (103% inSeptember 2009).. March 2010 NAV raised 7% to 679pAs expected there was no revaluation with Q3 IMS and commentary on current values sparse.We have raised our H2 asset growth estimates from 6% to 10% with a strong H2 performancefrom retail warehouses and offices. However we have lowered the following year’s growth from5% to 3% reflecting our view that growth is likely to slow as 2010 progresses.. Raising our PT 2% to 700p

We raise our price target to 700p reflecting the further improved short term outlook for values.Our PT represents our September 2010 NAV estimate, a 2011E (March) dividend yield of 4.0%and earnings yield of 4.6%.

Highlights (£m) 03/08 03/09 03/10E 03/11E 03/12ENet rental income 556.5 575.8 502.25 478.48 497.61EBITDA 621.6 481.8 413.15 387.82 404.97EPS (UBS adj, p) 73.8 62.55 32.42 30.27 32.19fd NAV/share (UBS, p) 1,762.58 590.15 678.78 722.46 766.3DPS (UBS, p) 57.67 56.5 28 28 28.84

Source: Company accounts, Thomson Reuters, UBS estimates. (UBS) valuations are stated before goodwill, exceptionals and other special items.Valuations: based on an average share price that year, (E): based on a share price of 686p on 19 Jan 2010 19:33 EST

Profitability & Valuation 5-yr hist. av. 03/09 03/10E 03/11E 03/12EDPS yield (UBS) % 3.4 5.8 4.1 4.1 4.2Prem/disc to NAV % -19.1 66.4 1.1 -5 -10.5CEPS yield (UBS) % 5.1 2.3 4.5 4.1 4.5EV/EBITDA x 18.9 20.2 21.2 22.2 21.7PE (UBS) x 22.5 15.7 21.2 22.7 21.3

United Kingdom

Real Estate12-month rating Neutral

Unchanged

12m price target 700p/US$11.44


Price 686p/US$11.21

RIC: LAND.L BBG: LAND LN

20 January 2010

Trading data (local/US$)52-wk range 727p-341/US$12.22-4.72Market cap. £5.18bn/US$8.47bnShares o/s 755m (ORD)Free float 95%Avg. daily volume ('000) 3,427Avg. daily value (m) 23.1p

Balance sheet data 03/10EShareholders' equity £5.55bnPrem (discount) to NAV/Share +1.1%Net Cash (debt) (£3.30bn)


EPS (UBS adj, p)03/10E 03/09

From To Cons. ActualH1 16.89 16.89 - 25.66H2E 15.52 15.52 - 27.4403/10E 32.42 32.42 33.30 -03/11E 30.27 30.27 33.89 -


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Lindt & Sprüngli (LISN.S)

Cautious view on 2010. Company has not confirmed FY 10 guidance in FY 09 trading statmentFor FY 09 the company has reported sales growth of -1.9% (+2.3% LFL) to CHF2.52bn, broadlyin with expectations. For H1 10, it expects a continued tough market environment (mutedconsumer sentiment, high cocoa prices), but is looking for a recovery from H2. Lindt has notconfirmed its FY 10 guidance of 2-5% LFL sales growth (UBSe 4.7%) with cCHF360m EBIT(UBSe CHF345m, consensus CHF350m).. Full negative impact of high cocoa prices in 2010 as company uses FIFO(1) We believe Lindt spent cCHF20m of additional marketing/promotion expenditure in 2009 toincrease brand recognition and stimulate demand in a market environment of trading-down.Continued high marketing expenditure remains a key concern for Lindt’s earnings generation.(2) Cocoa prices (35-40% of Lindt’s COGS) are as high as £2.3k/t, hurting the gross margin. Wesee limited downside risk to cocoa bean prices (thin CHF12bn annual trading volume makes thecommodity vulnerable to speculation) and we see little scope for more supply.. Industry consolidation could result in additional pricing pressureCompanies which are directly affected by industry consolidation could benefit from cost effi ciency and pricing advantages. This could result in additional pricing pressure for ‘stand-alone’companies such as Lindt, and reduce its negotiating power with trade partners in terms of pricehikes due to peaking cocoa prices.. Valuation: DCF (VCAM ) based PT of CHF23,000 (previously CHF23,500)

We have cut our 2009-11E EPS by 3.5-6% (risk of high cocoa prices, additional marketingexpenditure). Consequently, we lower our PT to CHF23,000. The stock trades on 12.4x 2010EEV/EBITDA and 23x PE, a premium to the European food sector of 35% and 60%, respectively.We maintain our Sell rating.

Highlights (CHFm) 12/07 12/08 12/09E 12/10E 12/11ERevenues 2,605.60 2,574.90 2,520.00 2,633.38 2,788.32EBIT (UBS) 350.8 361.2 300.86 345.38 393.15Net Income (UBS) 250.5 261.5 220.72 250.67 285.54EPS (UBS, CHF) 1,123.18 1,157.45 976.96 1,123.93 1,280.28Net DPS (UBS, CHF) 330 360 300 360 420

Source: Company accounts, Thomson Reuters, UBS estimates. (UBS) valuations are stated before goodwill, exceptionals and other special items.Valuations: based on an average share price that year, (E): based on a share price of CHF26,225.00 on 19 Jan 2010 17:34 EST

Profitability & Valuation 5-yr hist. av. 12/08 12/09E 12/10E 12/11EEBIT margin % 11.7 14 11.9 13.1 14.1ROIC (EBIT) % 25.1 24.6 19.8 22.3 24.8EV/EBITDA (core) x 13.9 15 14.4 12.5 11.2PE (UBS) x 24.7 27.3 26.8 23.3 20.5Net dividend yield % 1.2 1.1 1.1 1.4 1.6

Switzerland

Food Products12-month rating Sell

Unchanged

12m price target

CHF23,000.00/US$22,439.02

Prior: Prior: CHF23,500.00/US$22,926.83

Price CHF26,225.00/US$25,585.37

RIC: LISN.S BBG: LISN SW

20 January 2010

Trading data (local/US$)52-wk rangeCHF29,835.00-18,090.00/US$29,104.40-15723.60Market cap. CHF5.59bn/US$5.45bnShares o/s 0.14m (REG )Free float 77%Avg. daily volume ('000) 0Avg. daily value (m) CHF5.1

Balance sheet data 12/09EShareholders' equity CHF1.59bnP/BV (UBS) 3.7xNet Cash (debt) CHF0.11bn

Forecast returnsForecast price app. -12.3%Forecast dividend yield 1.4%Forecast stock return -10.9%Mkt return assumption 5.6%Forecast excess return -16.5%

EPS (UBS, CHF)12/09E 12/08

From To Cons. ActualH1 84.30 84.30 - 101.68H2E 958.92 892.66 -1,069.8312/09E 1,043.24 976.96 933.35 -12/10E 1,183.511,123.931,111.00 -


Joern [email protected]+41-44-23 91639



UBS 8

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Munich Re (MUVGn.DE)

Change growth profile vs more buy backs. Little upside leftWe are downgrading Munich Re to Neutral from Buy. We are reducing the price target to €111from €115 as we are replacing our risk allowance for investments (was €2 per share) with a 5%discount for potential M&A risks. The shares look optically cheap below adjNAV but the <10%ROE does not justify a premium, in our view.. M&A or accelerate share buy backsWe anticipate sequential earnings pressure in Q409 vs Q309 with lower investment income andweather related claims normalising. This trend is likely persisting in 2010E and we identifiedMunich Re as one of the insurers to look at M&A options to re-deploy capital, in particular inprimary insurance. For more detail see Q-Series – European Insurers: Which insurers could beinvolved in M&A? also published today. Alternatively, Munich Re could accelerate share buybacks (€1bn by 28 April under way).. Renewal update on 2 Feb together with prelim FY09 resultsWe look for a 2-3% decline in P&C rates at 1 Jan renewals for Munich Re with some natCATpressure offset by proportional business and areas impacted by winter storm Klaus. This is farless than some of the 5-15% headline drop mentioned by brokers for US natCAT but the US isonly one third of the global natCAT book of which only 50% is renewed on 1 Jan.. Valuation: €111 price target based on our risk-adjusted SOTP

Munich Re trades on 0.9x 10E adjNAV compared with 1x sector average.

Highlights (€m) 12/07 12/08 12/09E 12/10E 12/11EPre-ex PBT 4,726 3,262 3,641 3,333 3,598Net Income (UBS) 3,855 1,503 2,303 2,153 2,344Pre-ex EPS (UBS, €) 17.91 7.67 11.8 11.04 12.02Reported EPS (€) 17.91 7.67 11.8 11.04 12.02Adj NAV/share (UBS, €) 133.88 105.57 118.9 121.46 128.41

Source: Company accounts, Thomson Reuters, UBS estimates.Valuations: based on an average share price that year, (E): based on a share price of €109.65 on 19 Jan 2010 15:04 GMT

Profitability & Valuation 5-yr hist. av. 12/08 12/09E 12/10E 12/11EAdjusted ROE % 13.7 12.2 11 9.3 9.9ROE % 9.5 6.5 10.4 9.2 9.7Pre-ex PE (UBS) x -1.2 14.7 9.3 9.9 9.1PE x - 14.7 9.3 9.9 9.1P/Adj Nav x 1 1.1 0.9 0.9 0.9

Germany

Insurance, Property & Casualty12-month rating Neutral

Prior: Buy12m price target €111.00/US$159.72

Prior: Prior: €115.00/US$165.47

Price €109.65/US$157.78

RIC: MUVGn.DE BBG: MUV2 GR

20 January 2010

Trading data (local/US$)52-wk range€114.20-81.03/US$171.27-102.17Market cap. €21.4bn/US$30.8bnShares o/s 195m (REG )Free float 100%Avg. daily volume ('000) 1,068Avg. daily value (m) €114.5

Balance sheet data 12/09EShareholders' equity €23.3bnFinancial debt €4.84bnTotal invested assets €178bn


EPS (UBS, €)12/09E 12/08

From To Cons. ActualQ1 - 2.13 2.12 -Q2 - 3.62 3.54 -Q3 - 3.30 3.30 -Q4E - 2.75 2.96 -12/09E - 11.80 12.33 -12/10E - 11.04 13.21 -


Marc [email protected]+44 20 7567 5837

European [email protected] 5359



UBS 9

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ODH (ODHN.S)

More upside than downside. Upgrade to Buy, new CHF85 price targetOrascom shares fell >15% since Dubai’s announcement to push out the repayment of $3.5bndebt. We however think that Orascom’s recent refinancing (CHF160m) and low UAE exposure(5% of sales) show that recent share price corrections could be overdone. In the mid-termOrascom could benefit from up-ticking tourism & real estate markets, which leads us to upgradethe stock to Buy with a new CHF85 PT.. Morocco project delayed – cutting EPSMainly due to the expected delay of Orascom’s Morocco project (c20% of old 2010E real estatepre-sales) we reduce our 2009-11E EPS by 7-11% and cut our PT from CHF95 to CHF85. ButOrascom’s business model seems intact and project wins (e.g., UK, Montenegro) should bodewell for future revenue generation. Our estimates are 10% below 2010 targets and 1-3% belowconsensus for 2009/11E.. A couple of potential upsidesRecent industry data indicate gradual improvements in demand for hotels and tourism in Egypt.Orascom’s sales are >80% related to this region, so we see the prospective recovery in hoteland real estate revenues to result in an 2009-11E EPS CAGR of more than 20%. Further wethink that first sales in Orascom’s Andermatt project (expected H1 2010) could act as a positiveshare price trigger.. Valuation: 0.7x PEG-ratio not unattractive

Our CHF85 price target is DCF-based (10% WACC, 7% growth, 29% EBIT-margin). Our pricetarget does not include any land bank upside. The stock trades at 2010/11E PE of 14x and 11x.Next catalyst: FY09 results which are due 31 March 2010.

Highlights (CHFm) 12/07 12/08 12/09E 12/10E 12/11ERevenues 407 568 613 666 798EBIT (UBS) 122 139 169 192 231Net Income (UBS) 83 96 103 121 151EPS (UBS, CHF) 3.9 4.3 4.4 5.2 6.5Net DPS (UBS, CHF) 0 0 0 0 0

Source: Company accounts, Thomson Reuters, UBS estimates. (UBS) valuations are stated before goodwill, exceptionals and other special items.Valuations: based on an average share price that year, (E): based on a share price of CHF73.30 on 19 Jan 2010 16:32 GMT

Profitability & Valuation 5-yr hist. av. 12/08 12/09E 12/10E 12/11EEBIT margin % - 24.4 27.6 28.9 28.9ROIC (EBIT) % - 14.9 14.2 13.4 13.8EV/EBITDA (core) x - 13.8 10.4 9.8 8.5PE (UBS) x - 20.3 16.5 14 11.2Net dividend yield % - 0 0 0 0

Switzerland

Real Estate12-month rating Buy

Prior: Neutral12m price target CHF85.00/US$82.94


Price CHF73.00/US$71.23

RIC: ODHN.S BBG: ODHN SW

20 January 2010

Trading data (local/US$)52-wk rangeCHF96.25-25.00/US$94.09-21.11Market cap. CHF1.70bn/US$1.65bnShares o/s 23.2m (ORD)Free float 41%Avg. daily volume ('000) 18Avg. daily value (m) CHF1.5

Balance sheet data 12/09EShareholders' equity CHF0.90bnP/BV (UBS) 1.9xNet Cash (debt) (CHF0.30bn)


EPS (UBS, CHF)12/09E 12/08

From To Cons. ActualQ1 1.1 1.1 0.9 0.6Q2 1.0 1.0 1.9 1.1Q3 1.4 1.4 1.1 1.2Q4E 1.4 1.4 1.4 1.412/09E 4.8 4.4 4.4 -12/10E 5.9 5.2 5.3 -


Till [email protected]+41-44-239 1369

Kim Wright, [email protected]+44 20 756 71706



UBS 10

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Pearson (PSON.L / PSO.N)

Good prospects. Robust FY IMSPearson yesterday released an upbeat FY IMS, raising FY09 EPS guidance again. Mgmt nowexpect headline EPS growth of 10%, from a base of 57.7p in FY08 this implies FY09 EPS of63.5p, c5% ahead of the previous consensus. By division, we believe almost all areas of thebusiness performed better than expected - with robust growth continuing in US College, easingdeclines in FT advertising and ongoing stabilisation of the US Schools market.. Forecasts upgraded 3-5%We upgrade our FY09E EPS by 5% to 63.4p, driven by these underlying trends and a tax rate atthe lower end of previous guidance. Going forward, forecasts are upgraded only c3% given therecent £/$ move back to 1.64 from 1.60 earlier in Jan.. Next leg of the storyThe negative reaction yesterday reflects high expectations going into results & after 2 years ofconsistently beating expectations, it may become harder to surprise the market, despite furtherupside risk to forecasts. We believe, however, that portfolio change (with a potential sale of IDCto fund expansion in Intl Education) and focus on LT growth prospects can help drive furthershare price upside.. Buy, 1000p DCF/SOTP-based PT

Despite a strong re-rating over 2009, the stock is trading on only c13.5x 2010E earnings postupgrades at the current price, well below its historic average still - which we believe to be toocheap given its positioning as one of the best long-term growth stories in the sector. Our DCF/SOTP-based PT nudges up to 1000p, from 980p.

Highlights (£m) 12/07 12/08 12/09E 12/10E 12/11ERevenues 4,329.0 4,811.0 5,560.3 5,503.1 5,705.5EBIT (UBS) 634 762 840.3 852.5 893.5Net Income (UBS) 372 460 505.4 517.4 548.5EPS (UBS, p) 46.7 57.7 63.4 64.9 68.8Net DPS (UBS, p) 31.6 33.8 35.5 37.3 39.1

Source: Company accounts, Thomson Reuters, UBS estimates. (UBS) valuations are stated before goodwill, exceptionals and other special items.Valuations: based on an average share price that year, (E): based on a share price of 909p on 18 Jan 2010 21:36 GMT

Profitability & Valuation 5-yr hist. av. 12/08 12/09E 12/10E 12/11EEBIT margin % 12.8 15.8 15.1 15.5 15.7ROIC (EBIT) % 10.8 13.5 12.8 12.5 12.7EV/EBITDA (core) x 11.3 8.6 9.7 9.4 8.8PE (UBS) x 18.1 11.2 14.3 14 13.2Net dividend yield % 4.1 5.3 3.9 4.1 4.3

United Kingdom

Publishing12-month rating Buy

Unchanged

12m price target 1,000p/US$16.33


Price 909p/US$14.61 (ADR)

RIC: PSON.L / PSO.N BBG: PSON LN /

PSO US

20 January 2010

Trading data (local/US$)52-wk range 909p-578/US$14.62-8.56Market cap. £7.29bn/US$11.7bnShares o/s 802m (ORD)/802m (ADR)ADR ratio 1 ADR:1 ORDFree float 95%Avg. daily volume ('000) 2,670/33Avg. daily value (m) 22.7p/US$0.5

Balance sheet data 12/09EShareholders' equity £5.29bnP/BV (UBS) 1.4xNet Cash (debt) (£1.17bn)


EPS (UBS, p)12/09E 12/08

From To Cons. ActualH1E 30.1 31.7 - 28.8H2E 30.1 31.7 - 28.812/09E 60.1 63.4 60.6 -12/10E 63.1 64.9 61.7 -


Alastair [email protected]+44-20-7568 8011

Simon [email protected]+44-20 7568 8114

Polo [email protected]+44 20 7568 1286



UBS 11

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PSA (PEUP.PA / PEUGY.PK)

So much change and so few expectations. Most under-rated equity story in European AutosThere has been more change at PSA in the past 6 months than in the previous 10 years, in ourview. Controlling shareholders have (1) adopted an open stance on industry consolidation, (2)made clear choices to retain ownership of the captive finco, (3) and instead have given Faureciathe means to grow, with positive implications for PSA’s balance sheet and equity value and (4)hired a CEO with a strategic mandate and global credentials.. Valuation lags cash flow and balance sheet improvementsFrom most at risk of external recapitalisation a year ago, PSA now appears most likely amongleveraged peers to restore a cash/debt neutral balance sheet by 2010. Our expectations oforganic de-leveraging have come through and we further reduce our YE 2009 net debt estimateby €0.8bn to €2.1bn, or some €3 per share.. Low probability of a cash deal on Mitsubishi Motors (MMC)While we appreciate the importance of MMC’s assets to PSA (SUV platform, Russia and EVs)and their potential high replacement costs, we remain confident that a straight cash deal isunlikely as it would reverse progress on balance sheet flexibility and prevent PSA from pursuingmore meaningful scale/transformational consolidation (Fiat Auto-PSA remains our keyEuropean consolidation call).. Retain Key Call Buy – TP raised to €33 (from €30)

Our 12-month price target is based on our scenario analysis, applying trough sector EV/EBITDAmultiples. Our raised TP reflects revised debt assumptions. PSA trades on EV/sales of 0.16xand 2.5x EBITDA (all 2010 estimates, with EV including share of JV debt).

Highlights (€m) 12/07 12/08 12/09E 12/10E 12/11ERevenues 58,676 54,356 49,707 50,737 54,510EBIT (UBS) 1,120 (367) (1,449) 386 1,560Net Income (UBS) 847 (616) (1,442) (59) 823EPS (UBS, €) 3.69 (2.71) (5.76) (0.24) 3.28Net DPS (UBS, €) 1.5 0 0 0.8 1


Profitability & Valuation 5-yr hist. av. 12/08 12/09E 12/10E 12/11EEBIT margin % 3.6 -0.7 -2.9 0.8 2.9ROIC (EBIT) % 24.7 (3.5) (14.8) 4.8 19EV/EBITDA (core) x 2.4 5 21.5 2.5 1.6PE (UBS) x 9.2 - - - 7.9Net dividend yield % 2.9 0 0 3.1 3.9

France

Automobile Manufacturers12-month rating Buy

Unchanged



Price €25.93/US$36.80 (ADR)

RIC: PEUP.PA / PEUGY.PK BBG: UG

FP / PEUGY US

20 January 2010

Trading data (local/US$)52-wk range€26.71-11.77/US$38.60-15.45Market cap. €6.07bn/US$8.61bnShares o/s 234m (ORD)/234m (ADR)ADR ratio 1 ADR:1 ORDFree float 67%Avg. daily volume ('000) 2,023/2Avg. daily value (m) €48.7/US$0.1

Balance sheet data 12/09EShareholders' equity €5.93bnP/BV (UBS) 1.0xNet Cash (debt) (€2.12bn)


EPS (UBS, €)12/09E 12/08



Philippe [email protected]+44-20-7568 3474

David [email protected]+44-20 7567 5815

Stephan [email protected]+44-207-568 1171



UBS 12

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Renault (RENA.PA / RNSDY.PK)

More expectations than change. Downgrade to Sell on 2010 FCF reversal and excess leverageWe downgrade Renault to Sell. The shares have tracked the recovery of Volvo and Nissan butalso benefited from improved YE net debt expectations as recovering production helps earningsand deferred supplier payments. We have slightly reduced EBIT loss estimates and reduced YE09E net debt by €900m to €6.9bn (in line with consensus) but cash improvements could reversein 2010.. Core can’t deleverage and selling Volvo may be insufficientLooking back on 10+ years of history, Renault has been unable to generate sufficient cashlargely due to poor revenue growth. We do not expect this trend to change as ageing productsand low impact of new models will likely compound weak market conditions. We estimate thatselling Volvo for €2.4bn (assuming a 15-20% discount) would result in net debt of €4.5bn, abovemanagement’s current targets. Investment in electric cars should maintain high spending.. Nissan – dividend valuationWith Nissan likely to resume some form of dividend, we switch back to a DDM valuation ofRenault’s stake in Nissan as the stake is core. This yields a per share value of €30 vs €38market value.. Valuation – downgrade to sell, PT: €36 (prev: €37)

We value Nissan using DDM and apply a 20% discount to the market value of Volvo assuming ashare placement. Renault currently trades on a 2011E EV/Sales of 11% and an EV/EBITDA of2.0x.

Highlights (€m) 12/07 12/08 12/09E 12/10E 12/11ERevenues 40,682 37,791 35,243 32,658 34,660EBIT (UBS) 1,238 (117) (937) 114 971Net Income (UBS) 2,176 303 (1,426) 166 1,125EPS (UBS, €) 8.29 1.18 (5.55) 0.65 4.38Net DPS (UBS, €) 3.8 0 0 0 0

Source: Company accounts, Thomson Reuters, UBS estimates. (UBS) valuations are stated before goodwill, exceptionals and other special items.Valuations: based on an average share price that year, (E): based on a share price of €38.40 on 19 Jan 2010 19:08 EST

Profitability & Valuation 5-yr hist. av. 12/08 12/09E 12/10E 12/11EEBIT margin % 3.3 -0.3 -2.7 0.3 2.8ROIC (EBIT) % 18.5 (1.2) (9.0) 1.2 10EV/EBITDA (core) x 1.3 11.5 4.2 2 1.2PE (UBS) x 7.6 45.3 - 59.4 8.8Net dividend yield % 3.4 0 0 0 0

France

Automobile Manufacturers12-month rating Sell

Prior: Neutral12m price target €36.00/US$51.80


Price €38.40/US$54.89 (ADR)

RIC: RENA.PA / RNSDY.PK BBG: RNO

FP / RNSDY US

20 January 2010

Trading data (local/US$)52-wk range€39.70-10.57/US$57.39-13.28Market cap. €10.9bn/US$15.6bnShares o/s 285m (ORD)/285m (ADR)ADR ratio 1 ADR:1 ORDFree float 67%Avg. daily volume ('000) 2,492Avg. daily value (m) €85.3



EPS (UBS, €)12/09E 12/08

From To Cons. ActualH1 0.00 0.00 - 4.68H2E (6.92) (6.92) - (3.53)12/09E (6.92) (5.55) (10.56) -12/10E 0.65 0.65 0.51 -


Philippe [email protected]+44-20-7568 3474

David [email protected]+44-20 7567 5815

Stephan [email protected]+44-207-568 1171



UBS 13

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SEB SA (SEBF.PA)

FY09 sales & conf. call – Buy, PT up to €48. Q409 sales up 6.1% LFL, FY09 Op. Margin above, better cash generationFY09 sales of €3,177 m down -1.6% y/y and +0.1% LFL (UBSe: -3.1% LFL) were 1.5% aboveUBSe and 1.1% above consensus (Forex c-1.7% FY09). During the conference call, themanagement indicated that the operating margin should be above €340m (ie before c€40-50mone offs and profit sharing). Finally, SEB SA benefited from the strong December products sellin, leading to a huge destocking and is now guiding on c€250-300m Net debt year end (€504mH109).. Volume uptick seems durable (China strength), no selling prices decreaseThe uptick on Q409 was strong as sales were up 6.1% LFL o/w c2% volume (UBSe), and c4%price/mix (stable vs. Q309 excluding some temporary promotions). China in particular was up“high double digit” confirming the Q3 rebound. In terms of outlook, SEB SA understands thatrestocking from distributors was cautious and should be durable. Also the group did not changeits pricing policy (while competition remained tough).. Upside risk to our forecasts thanks to potential M&AThe weaker USD will remain favourable to H1 2010 operating margin (UBSe FY10E: 1.45); rawmaterials are partially hedged (excl Supor) and outsourcers haven’t for now (Q409) asked forselling prices increases. In the view of the c25% FY09E gearing (c62% FY08) we thus think thatSEB will focus on acquisitions. We see at least c€150m fire power that could lead to c3%accretive impact. Valuation: We upgrade our PT to €48 from €45: DCF + recovery multiple

Our updated €48PT leads to 13.5x 2010E PE and 10.7x 2010E EV/EBIT. Higher PT due to DCF(7.6% WACC down from 8% prior with lower risk free rate), higher EBIT (up c5%), and lower netdebt year end ‘09.

Highlights (€m) 12/07 12/08 12/09E 12/10E 12/11ERevenues 2,869.60 3,230.20 3,177.00 3,247.39 3,412.65EBIT (UBS) 237.4 279.7 268.76 317.54 323.57Net Income (UBS) 142.8 154.9 151.83 178.24 185.29EPS (UBS, €) 2.81 3.06 2.99 3.56 3.7Net DPS (UBS, €) 0.93 0.89 0.7 0.82 0.85

Source: Company accounts, Thomson Reuters, UBS estimates. (UBS) valuations are stated before goodwill, exceptionals and other special items.Valuations: based on an average share price that year, (E): based on a share price of €44.50 on 19 Jan 2010 20:07 EST

Profitability & Valuation 5-yr hist. av. 12/08 12/09E 12/10E 12/11EEBIT margin % 7.6 8.7 8.5 9.8 9.5ROIC (EBIT) % 15.4 16.9 16.3 22.2 18.7EV/EBITDA (core) x 7.4 7.9 9 7.5 7.5PE (UBS) x 13.5 11.2 14.9 12.5 12Net dividend yield % 3.7 2.6 1.6 1.8 1.9

France

Furnishings & Appliances12-month rating Buy

Unchanged



Price €44.50/US$64.00

RIC: SEBF.PA BBG: SK FP

19 January 2010

Trading data (local/US$)52-wk range€44.50-17.63/US$63.58-22.41Market cap. €2.27bn/US$3.26bnShares o/s 50.9m (ORD)Free float 49%Avg. daily volume ('000) 57Avg. daily value (m) €2.3



EPS (UBS, €)12/09E 12/08

From To Cons. ActualH1E 0.54 0.54 - 1.04H2E 2.31 2.45 - 2.0112/09E 2.85 2.99 2.91 -12/10E 3.53 3.56 3.40 -


Julie de [email protected]+33-1 48 88 33 60



UBS 14

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Unilever NV (UNc.AS / UN.N)

FY 2009 results preview. Q4 & FY09 results to be announced Thursday February 4thWe anticipate FY sales of €40.0bn (-1%) – representing org growth of 3.3% [consensus 3.4%],of which 1.5% is price [consensus 1.6%]. This implies Q4 org growth of 0.9% (-2.5% price). We,and consensus, expect FY adj margins to have risen by 20bps to 14.8% (implying a 100bpsincrease in Q4 to 13%). Assuming a 26% tax charge, and excluding pension financing, thisresults in adjusted EPS of €1.36. We anticipate a Q4 dividend of €0.205 and YE net debt of€7.36bn.. We suspect a margin ‘beat’ is factored into the valuationIn our view these results will be an important test of how CEO Polman manages expectations,particularly as we expect him to give a relatively cautious outlook for 2010 (with negative pricingexpected in H1 and lapping an increasingly demanding volume comparative). He has consist ently indicated ‘flattish’ margins in FY09, but it is feasible, with an input cost tailwind in Q4, thatUnilever could deliver better than that and, in our view, the current valuation anticipates an earn ings upgrade.. The Unilever ‘transformation’ will take longer than 12 months, in our view50% of sales coming from emerging markets and positive news-flow momentum (volume pick-up, 290bps of Q3 gross margin expansion and new CFO) have fuelled a significant multipleexpansion and left the valuation looking full to us. We don’t dispute there is a transformationtaking place at Unilever, but believe the market has got ahead of itself in terms of where we arein the process.. Valuation Our price target is increased by c10% to €21.7

Our price target is based on an unchanged forward EV/Ebitda multiple of 10x.

Highlights (€m) 12/07 12/08 12/09E 12/10E 12/11ERevenues 40,187 40,523 40,000 42,100 43,997EBIT (UBS) 5,814 5,898 5,900 6,300 6,655Net Income (UBS) 4,217 4,009 3,947 4,213 4,486EPS (UBS, €) 1.42 1.38 1.36 1.44 1.53Net DPS (UBS, €) 0.75 0.77 0.78 0.82 0.87


Profitability & Valuation 5-yr hist. av. 12/08 12/09E 12/10E 12/11EEBIT margin % 14.9 14.6 14.8 15 15.1ROIC (EBIT) % 26.2 32.1 35.4 40 43.8EV/EBITDA (core) x 10.3 10.5 11.7 10.9 10.2PE (UBS) x 12.8 14.4 16.5 15.6 14.7Net dividend yield % 4.9 3.9 3.5 3.6 3.9

Netherlands

Food Products12-month rating Neutral

Unchanged



Price €22.49/US$32.14 (ADR)

RIC: UNc.AS / UN.N BBG: UNA NA / UN

US

20 January 2010

Trading data (local/US$)52-wk range€22.92-13.59/US$32.24-17.04Market cap. €67.1bn/US$95.1bnShares o/s 1,716m (ORD)/1,716m (ADR)ADR ratio 1 ADR:1 ORDFree float 100%Avg. daily volume ('000) 5,594/1,354Avg. daily value (m) €119.6/US$41.3


Forecast returnsForecast price app. -3.5%Forecast dividend yield 3.5%Forecast stock return 0.0%Mkt return assumption 5.4%Forecast excess return -5.4%

EPS (UBS, €)12/09E 12/08

From To Cons. ActualQ1E 0.29 0.29 - 0.34Q2E 0.36 0.28 - 0.40Q3E 0.40 0.42 - 0.40Q4E 0.30 0.38 - 0.2512/09E 1.35 1.36 - -12/10E 1.43 1.44 - -


Alan [email protected]+44 20 7568 4395

Eva [email protected]+44-20-7568 7519



UBS 15

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Unilever Plc (ULVR.L / UL.N)

FY 2009 results preview. Q4 & FY09 results to be announced Thursday February 4thWe anticipate FY sales of £35.7bn (+11%) – representing org growth of 3.3% [consensus 3.4%],of which 1.5% is price [consensus 1.6%]. This implies Q4 org growth of 0.9% (-2.5% price). We,and consensus, expect FY adj margins to have risen by 20bps to 14.8% (implying a 100bpsincrease in Q4 to 13%). Assuming a 26% tax charge, and excluding pension financing, thisresults in adjusted EPS of £1.22. We anticipate a Q4 dividend of 18p and YE net debt of €6.6bn.. We suspect a margin ‘beat’ is factored into the valuationIn our view, these results will be an important test of how CEO Polman manages expectations,particularly as we expect him to give a relatively cautious outlook for 2010 (with negative pricingexpected in H1 and lapping an increasingly demanding volume comparative). He has consist ently indicated ‘flattish’ margins in FY09, but it is feasible, with an input cost tailwind in Q4, thatUnilever could deliver better than that and, in our view, the current valuation anticipates an earn ings upgrade.. The Unilever ‘transformation’ will take longer than 12 months, in our view50% of sales coming from emerging markets and positive news-flow momentum (volume pick-up, 290bps of Q3 gross margin expansion and new CFO) have fuelled a significant multipleexpansion and left the valuation looking full to us. We don’t dispute there is a transformationtaking place at Unilever, but believe the market has got ahead of itself in terms of where we arein the process. .. Valuation Price target increased by c7% to 1,900p

Our price target is based on an unchanged forward EV/Ebitda multiple of 10x

Highlights (£m) 12/07 12/08 12/09E 12/10E 12/11ERevenues 27,715 32,223 35,714 36,609 38,259EBIT (UBS) 4,010 4,690 5,268 5,478 5,787Net Income (UBS) 2,908 3,188 3,524 3,663 3,901EPS (UBS, p) 98 110 122 122 130Net DPS (UBS, p) 51 61 70 73 76

Source: Company accounts, Thomson Reuters, UBS estimates. (UBS) valuations are stated before goodwill, exceptionals and other special items.Valuations: based on an average share price that year, (E): based on a share price of 1,972p on 19 Jan 2010 17:34 GMT

Profitability & Valuation 5-yr hist. av. 12/08 12/09E 12/10E 12/11EEBIT margin % 14.9 14.6 14.8 15 15.1ROIC (EBIT) % 29.8 32.1 38.3 39.8 43.3EV/EBITDA (core) x - 10.5 11.7 11.2 10.5PE (UBS) x 14.4 14.2 16.2 16.1 15.1Net dividend yield % 3.7 3.9 3.5 3.7 3.8

United Kingdom

Food Products12-month rating Neutral

Unchanged

12m price target 1,900p/US$31.02

Prior: Prior: 1,780p/US$29.06

Price 1,972p/US$32.36 (ADR)

RIC: ULVR.L / UL.N BBG: ULVR LN / UL

UN

20 January 2010

Trading data (local/US$)52-wk range2,015p-1,230/US$32.89-17.04Market cap. £60.0bn/US$98.7bnShares o/s 1,299m (ORD)/1,299m (ADR)ADR ratio 1 ADR:1 ORDFree float 100%Avg. daily volume ('000) 2,662/1,823Avg. daily value (m) 49.6p/US$57.5

Balance sheet data 12/09EShareholders' equity £7.29bnP/BV (UBS) 8.1xNet Cash (debt) (£6.57bn)


EPS (UBS, p)12/09E 12/08

From To Cons. ActualQ1E 2 2 24 2Q2E 2 2 29 2Q3E 2 2 33 2Q4E 111 111 28 10212/09E 121 122 114 -12/10E 131 122 127 -


Alan [email protected]+44 20 7568 4395



UBS 16

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Wartsila (WRT1V.HE)

Price target raised to €37. Earnings pre-announcement and 2010 guidance surprise positivelyWärtsilä has pre-announced 2009 sales +14% vs UBSe +14% (cons +14%) and stated thatadjusted EBIT margin improved vs the previous guidance of flat margins (UBSe -10bp, consflat). It guides for 2010 sales to decrease by 10-20% (UBSe now -16% vs -23% before, cons -17%) and an EBIT margin of 9-10% (UBSe now at 9.5% vs 8.0% before, cons 8.7%). Finally, itannounced to cut 8% of global staff to prepare for the engine-related sales decline.. We raise our EPS forecasts by 2-35%Wärtsilä’s more optimistic 2010 sales guidance is not surprising because the exact timingimpact of the 2009 backlog decrease on 2010 was tough to predict. However, the margin resili ence is impressive and combined with the cost savings of €80-90m should also hold true for2011. Our new 2010 forecasts are at the midpoint of the new guidance. Overall, we have raisedour 2009-2013 EPS estimates by 2-35%.. Order momentum key to continue a further re-rating of the sharesYesterday’s share price reaction was impressive. We believe further upside will now depend onorder momentum in the engine business and the sales momentum in service. We expect littlesequential change on these issues in the Q4 report due 28 January. However, we expectservice sales to start improving in the coming months, marine orders to rebound from a low leveland power orders to come back in H2.. Valuation

Our valuation is based on midcycle sales of €4,431m and a midcycle margin of 9.5%. Ourprevious valuation was based on the midpoint of peer group 2011E EV/EBIT (9.0x) and PEmultiples (14.0x) but we no longer think that a discount to the midcycle value is justified.

Highlights (€m) 12/07 12/08 12/09E 12/10E 12/11ERevenues 3,763 4,612 5,270 4,431 4,127EBIT (UBS) 372 525 614 422 383Net Income (UBS) 257 380 406 267 240EPS (UBS, €) 2.68 3.86 4.12 2.71 2.44Net DPS (UBS, €) 4.25 1.5 1 0.5 0.5


Profitability & Valuation 5-yr hist. av. 12/08 12/09E 12/10E 12/11EEBIT margin % 6.7 11.4 11.6 9.5 9.3ROIC (EBIT) % 17.5 38.3 34.4 21.3 20EV/EBITDA (core) x 6.3 5.5 5.2 7 7PE (UBS) x 6.9 9.3 8.2 12.5 13.9Net dividend yield % 8.9 4.2 2.9 1.5 1.5

Finland

Industrial, Diversified12-month rating Neutral

Unchanged



Price €33.94/US$48.84

RIC: WRT1V.HE BBG: WRT1V FH

20 January 2010

Trading data (local/US$)52-wk range€33.94-15.89/US$48.48-21.02Market cap. €3.35bn/US$4.81bnShares o/s 98.6m (ORD)Free float 100%Avg. daily volume ('000) 476Avg. daily value (m) €13.0



EPS (UBS, €)12/09E 12/08

From To Cons. ActualQ1 0.88 0.88 0.89 0.49Q2 1.04 1.04 1.01 0.96Q3 0.86 0.86 0.87 0.97Q4E 1.24 1.30 1.23 1.4612/09E 4.05 4.12 4.05 -12/10E 2.02 2.71 2.30 -


Sven [email protected]+49-69-1369 8278

Sebastian [email protected]+49 69 1369 8243



UBS 17

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Zurich Financial (ZURN.VX / ZFSVY.PK)

Capital re-deployment challenging. Little upside leftWe are downgrading ZFS to Neutral from Buy. As of Friday 15 Jan closing the shares offered11% upside to our fair value. We are reducing the price target to CHF245 from CHF250 as weare replacing our risk allowance for investments (was CHF7.6 per share) with a 5% discount forpotential M&A risks.. M&A is a capital re-deployment optionWe identified ZFS as one of the insurers to look at M&A options to re-deploy capital. For moredetail see also Q-Series – European Insurers: Which insurers could be involved in M&A? alsopublished today. The 139% economic solvency in Q309 suggests the company has $5.5bnexcess capital vs the top end of its 110-120% target corridor. This number is before dividendsbut we expect ZFS will be able to pay the dividend from Q409E and Q110E net profit. We do notthink that ZFS will spend the surplus via acquisitions as mgt wants to keep significant buffercapital.. General insurance pricing outlook key, lagging life growthWe are forecasting flat yoy operating general insurance earnings for 2010E as price increasesshould offset claims inflation. However, slow GDP growth could hold back demand and thesolvency recovery across the sector increased supply. Life net inflows of $3bn in 9M09 offercatch-up potential with Allianz, AXA and Generali although the ZFS franchise is not as broad-based and more selective. ZFS could face ROE headwind depending on top line growth/pricing.. Valuation: CHF245 price target based on our risk-adjusted SOTP

ZFS trades on 1.2x 10E adjNAV vs 1x for the sector but has 2ppt higher adjROE.

Highlights (US$m) 12/07 12/08 12/09E 12/10E 12/11EPre-ex PBT 7,795 3,829 4,146 5,473 6,165Net Income (UBS) 5,625 3,037 3,175 3,935 4,434Pre-ex EPS (UBS, CHF) 46.06 23.22 22.72 27.35 30.85Reported EPS (CHF) 46.75 23.35 22.72 27.35 30.85Adj NAV/share (UBS,CHF)

225.62 137.97 184.25 194.65 213.2

Source: Company accounts, Thomson Reuters, UBS estimates.Valuations: based on an average share price that year, (E): based on a share price of CHF232.50 on 19 Jan 2010 14:33 GMT

Profitability & Valuation 5-yr hist. av. 12/08 12/09E 12/10E 12/11EAdjusted ROE % 15.1 11.8 14.9 15.8 16.4ROE % 15.7 12.1 12.6 13.1 13.7Pre-ex PE (UBS) x 8.1 12.1 10.2 8.5 7.5PE x 7.9 12 10.2 8.5 7.5P/Adj Nav x 1.3 2 1.3 1.2 1.1

Switzerland

Insurance, Full-Line12-month rating Neutral

Prior: Buy12m price target CHF245.00/US$23.91


Price CHF232.50/US$22.70 (ADR)

RIC: ZURN.VX / ZFSVY.PK BBG: ZURN

VX / ZFSVY US

20 January 2010

Trading data (local/US$)52-wk rangeCHF260.00-127.80/US$25.30-10.75Market cap. CHF33.2bn/US$32.4bnShares o/s 143m (REG )/1,427m (ADR)ADR ratio 10 ADR:1 REGFree float 100%Avg. daily volume ('000) 791/179Avg. daily value (m) CHF182.0/US$4.0

Balance sheet data 12/09EShareholders' equity US$29.0bnFinancial debt US$8.46bnTotal invested assets US$282bn


EPS (UBS, CHF)12/09E 12/08

From To Cons. ActualQ1 - 2.56 3.04 11.08Q2 - 6.42 6.91 9.72Q3 - 6.54 6.63 1.20Q4E - 7.25 7.25 1.3412/09E - 22.72 24.98 -12/10E - 27.35 29.62 -


Marc [email protected]+44 20 7567 5837

European [email protected] 5359



UBS 18

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UBS Investment Research: Global Equity Rating Allocations

UBS 12-Month Rating Rating Category Coverage[1] IB Services[2]Buy Buy 48% 40%Neutral Hold/Neutral 40% 35%Sell Sell 13% 26%

UBS Short-Term Rating Rating Category Coverage[3] IB Services[4]Buy Buy less than 1% 17%Sell Sell less than 1% 67%

1:Percentage of companies under coverage globally within the 12-month rating category.2:Percentage of companies within the 12-month rating category for which investment banking (IB) services were provided within the past 12 months.3:Percentage of companies under coverage globally within the Short-Term rating category.4:Percentage of companies within the Short-Term rating category for which investment banking (IB) services were provided within the past 12months.Source: UBS. Rating allocations are as of 31 December 2009.UBS Investment Research: Global Equity Rating Definitions

UBS 12-Month Rating DefinitionBuy FSR is > 6% above the MRA.Neutral FSR is between -6% and 6% of the MRA.Sell FSR is > 6% below the MRA.

UBS Short-Term Rating Definition

BuyBuy: Stock price expected to rise within three months fromthe time the rating was assigned because of a specificcatalyst or event.

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Forecast Stock Return (FSR) is defined as expected percentage price appreciation plus gross dividend yield over the next 12 months.Market Return Assumption (MRA) is defined as the one-year local market interest rate plus 5% (a proxy for, and not a forecast of, theequity risk premium).Under Review (UR) Stocks may be flagged as UR by the analyst, indicating that the stock's price target and/or rating are subject topossible change in the near term, usually in response to an event that may affect the investment case or valuation.Short-Term Ratings reflect the expected near-term (up to three months) performance of the stock and do not reflect any change in thefundamental view or investment case.Equity Price Targets have an investment horizon of 12 months.

EXCEPTIONS AND SPECIAL CASES

UK and European Investment Fund ratings and definitions are: Buy: Positive on factors such as structure, management, performance


UBS 19

record, discount; Neutral: Neutral on factors such as structure, management, performance record, discount; Sell: Negative on factors suchas structure, management, performance record, discount.Core Banding Exceptions (CBE): Exceptions to the standard +/-6% bands may be granted by the Investment Review Committee (IRC).Factors considered by the IRC include the stock's volatility and the credit spread of the respective company's debt. As a result, stocksdeemed to be very high or low risk may be subject to higher or lower bands as they relate to the rating. When such exceptions apply, theywill be identified in the Company Disclosures table in the relevant research piece.

Company DisclosuresCompany Name Reuters 12-mo rating Short-term

ratingPrice Price date

Allied Irish Bank2,4,5,16 ALBK.I Sell N/A €1.48 18 Jan 2010Bank of Ireland2,4,14,16 BKIR.I Neutral N/A €1.52 18 Jan 2010Burberry BRBY.L Neutral N/A 600p 18 Jan 2010Fiat SpA2,4,5,6,15,16,18a,22 FIA.MI Neutral N/A €10.66 18 Jan 2010Komax4,5 KOMN.S Sell (UR) N/A CHF82.00 19 Jan 2010Land Securities2,4,14 LAND.L Neutral N/A 693p 18 Jan 2010Lindt & Sprüngli4,5 LISN.S Sell N/A CHF26,000.00 18 Jan 2010Munich Re4,5,15,16 MUVGn.DE Buy N/A €108.40 18 Jan 2010Orascom Development HoldingAG4,5

ODHN.S Neutral N/A CHF76.40 18 Jan 2010

Pearson4,6,16 PSON.L Buy N/A 909p 18 Jan 2010Peugeot SA16 PEUP.PA Buy N/A €25.96 18 Jan 2010Renault SA5 RENA.PA Neutral N/A €39.28 18 Jan 2010SEB SEBF.PA Buy N/A €43.30 18 Jan 2010Unilever NV2,4,5,6,12,15,16,18b UNc.AS Suspended N/A €22.49 18 Jan 2010Unilever Plc2,4,5,12,14,16 ULVR.L Neutral N/A 1,939p 18 Jan 2010Wartsila3 WRT1V.HE Neutral N/A €30.00 18 Jan 2010Zurich Financial Services4,5,15,16 ZURN.VX Buy N/A CHF234.90 18 Jan 2010

Source: UBS. All prices as of local market close.Ratings in this table are the most current published ratings prior to this report. They may be more recent than the stockpricing date

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Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect to eachsecurity or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about


UBS 20

those securities or issuers; and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specificrecommendations or views expressed by that research analyst in the research report.

For a complete set of disclosure statements associated with the companies discussed in this report, including information on valuation and risk,please contact UBS Securities LLC, 1285 Avenue of Americas, New York, NY 10019, USA, Attention: Publishing Administration.

Additional Prices: Danone, €42.96 (18 Jan 2010); Nestlé, CHF49.46 (18 Jan 2010); Source: UBS. All prices as of local market close.


UBS 21

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Global Disclaimer

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