Bloomberg Ticker: 6C4 BU Equity Index: SOFIX, BG40, BG TR30

Recommendation: BUY

CHIMIMPORT
INDUSTRY: HOLDING COMPANY COUNTRY: BULGARIA
17 June 2010

Current Price: BGN 2.08

Target Price: 4.90

Shares Information Price (BGN) 52 weeks Price Change 52 weeks Price Range Market Cap (BGN) Market Cap (EUR) Shares Outstanding-ordinary Shares Outstanding-preferred Free Float Basic EPS Dilluted EPS P/E (ttm)-basic P/S (ttm) P/BV Net Profit Margin ROA ROE

17 June 2010 2.07 -5.48% 1,85 - 2,97 475,272,000 243,002,715 144,909,000 84,691,000 20.32% 0.79% 0.57% 3.62 0.75 0.47 2.70% 3.66% 15.12%

Chimimport Holding hidden value in the subsidiaries

We initiate coverage of Chimimport (6C4 BU Equity) with a buy recommendation and 12 months price target of BGN 4.90 per share which offers 137% upside potential to the current market price. We have decided to value the business of Chimimport Holding by performing a sum of the parts valuation. Due to the large number of non public companies, part of Chimimport, and hence the lack of reliable financial information, we have modified the approach by summing the value of the four business sectors in which Chimimport operates. The firm is active in the finance, transport, production and real estate sectors; the finance sector accounts for the highest share (76%) of companys total net income. Chimimport is one of the largest public companies listed on the Bulgarian Stock Exchange. The group has majority stakes in big public firms such as Central Cooperative Bank, Oil and Gas Exploration and Production AD, Psrahodstvo Bulgarian Rivershipping Company, Zarneni Hrani, etc. In 2009 Chimimport Holding registered a net income at the amount of BGN 129 mln. which was the same as the result achieved in 2008. Companys debt to equity ratio was 2.45 less than the level of 3.29 in 2008. In 2009 return on assets and return on equity were 3.84% and 15.48% compared to 4.33% and 19.34% back in 2008 increased assets and equity combined with unchanged net income.
Financial Highlights BGN '000 2007 2008 2009 Q1' 09 Q1'10 Total assets 2,746,844 3,193,631 3,549,885 3,395,898 3,784,306 Long term liabilities 1,222,286 1,023,765 923,528 1,048,490 1,032,507 Equity 629,718 700,331 973,413 735,200 1,001,403 Sales 520,028 736,694 640,850 151,064 141,042 Financial income 1,823,462 4,217,138 5,122,638 2,060,076 1,162,422 Net income 119,110 128,624 129,531 33,446 35,196 ROA 5.44% 4.33% 3.84% n.a. n.a. ROE 25.90% 19.34% 15.48% n.a. n.a. Debt to equity 3.08 3.29 2.45 3.36 2.58 Current ratio 2.14 1.09 1.09 1.10 1.25
Source: Company reports; yearly reports audited; quarterly not audited

Source: BSE, company information, SIS calculations

Share price of Chimimport - 1 year

3.5 3 2.5 2 1.5 1 0.5 0
16.06.09 16.07.09 16.08.09 16.09.09 16.10.09 16.11.09 16.12.09 16.01.10 16.02.10 16.03.10 16.04.10 16.05.10 16.06.10

Source: BSE Parvoleta Ivanova Head of Research

+ 359 2 937 98 62

ivanova@sis.bg Martin Georgiev Equity Analyst

+ 359 2 937 98 84

martin.georgiev@sis.bg Elina Shoeva Equity Analyst

+359 2 937 98 74 shoeva@sis.bg

Please see the disclaimer on the last page of this report.

Chimimport Shareholders and Business Structure

Chimimport is a holding company that operates in four major business sectors transportation, production and commerce, finance and real estate. The company is one of the largest listed public firms on the Bulgarian Stock exchange in terms of market capitalization. Chimimports subscribed equity capital amounts to BGN 150 577 000. In 2009 the company also issued 89 068 877 preferred shares with a guaranteed dividend of 9% on the issue price of BGN 2.22 per share, thus increasing its capital to BGN 239 645 877. As of 31 March 2010 Chimimports shareholders are Chimimport Invest with 72.85% of the shares and other juridical or physical persons accounting for 27.15% of the capital.
Chimimport Shareholders' Structure
Others 27%

Chimimport Invest 73%

Source: Company Q1 2010 report

Chimimport organizational structure

Chimimport Invest

Chimimport Holding Commerce and Production

Finance

Transport Maritime and River transport

Real Estate

Air Transport

Chimimport has 65 subsidies and 7 associate companies with less then 50% ownership. Some of the largest public companies that fall under the Holdings structure are Central Cooperative Bank (4CF BU), Zarneni Hrani (T43 BU), Parahodstvo Bulgarian River Shiping Company (5BR BU), Oil and Gaz exploration (4OI BU). The latter account for a significant share of Chimimports sales. The total market capitalization of Chimimports share in the four public companies is BGN 270 mln. The holding also owns large non public companies such as Armeec (insurance and finance), Bulgaria Air (Transport), Hemus Air (transport). The sector that accounts for the highest stake of the Holdings sales and net incomeis the finance and insurance sector.
Chimimport 2009 BGN'000 Sales Cost of Goods Sold Subscribed premiums Compensations paid Net result Interest income Interest expenses Net interest income Incomes from dealings with securities Operating expenses Incomes from investments in associates Other income net Income before taxes Taxes Net income Minority interest Net intcome Production 259,965 240,926 9,094 (12,420) (3,326) 14,195 (8,604) 22 (1,424) 19,902 (2,366) 17,536 Finance Sector 36,627 278,579 254,395 24,184 196,056 (104,127) 91,929 88,712 (146,219) (560) 30,535 125,208 (8,333) 116,875 Transport 354,566 319,608 4,077 (17,237) (13,160) 8,589 (14,078) 7,015 (1,753) 21,571 (1,650) 19,921 Real Estate & Construction 3,956 3,732 429 (176) 253 (238) 2 241 (26) 215 Intercompany eliminations (40,886) (31,360) (7,875) (2,249) (5,626) (34,413) 34,413 0 (5,410) 11,313 (1,366) (10,615) 60 (10,555) Total 614,228 532,906 270,704 252,146 18,558 175,243 (99,547) 75,696 106,086 (157,826) 6,477 25,994 156,307 (12,315) 143,992 14,461 129,531

Source: Companys 2009 consolidated audited report

2 Please see the disclaimer on the last page of this report.

Sector sales and net income

Real Estate & Construction Transport Finance Sector Production 17,536 259,965 215 3,956 19,921 354,566 116,875 511,262 Net income Sales

Net icome sector distribution

Transport 13% Production 11%

Finance Sector 76%

Source: Company audited report 2009

Sector Overview - Finance

The financial business of Chimimport is organized and structured under the management of CCB Group. Its main purpose is the optimization and management of the assets in the financial field. CCB Group coordinates the activities of its subsidiaries by providing consulting services, ensuring long term financing needs, leading negotiations with foreign investors, etc. The financial business of CCB Group includes banking (Central Cooperative Bank), insurance (Armeec, CCB Life, Health Insurance Company CCB ), management of pension funds (CCB-Sila, Saglasie), asset management services (CCB assets management); the list can be concluded with one special investment purpose vehicle executing factoring services (Capital Management REIT). Central Cooperative Bank and Armeec account for the biggest share of the revenues in the financial business. Central Cooperative Bank was established in the year 1991; it has been public since 1999. CCB subscribed equity capital is BGN 83,15 mln. During the last 4 years CCB grew its asset base with above average growth rates relative to the whole banking system. Central Cooperative Bank finances its loan portfolio mainly with deposits as the loans deposits ratio is 0.75 as of 2009.
Total banking system assets/BGN bln./ 42.19 59.00 69.56 70.90 Growth in assets 28.44% 40.04% 17.72% 1.86% CCB assets /BGN bln./ CCB's assets growth 1.13 1.56 1.66 1.87 39.92% 38.55% 6.13% 12.65%

2006 2007 2008 2009

Source: BNB and CCB data

Central Cooperative Bank is currently the 12th largest bank in Bulgaria in terms of assets. The bank has more than 50 branches and 200 offices around the country; CCB is well positioned in the agrarian sector and is the leading bank servicing the agrarian niche within the country. CCB also develops the retail banking services and is aggressively penetrating the credit and debit card market. Central Cooperative Bank executes brokerage and investment services and is a primary dealer of Bulgarian Treasury notes. In 2008 the bank acquired a small bank in Macedonia as CCB aims to broaden its cross border operations and presence. Net interest income of the bank grew with a CAGR of 23.26% over the last three years and is BGN 70 mln in 2009. Historically the bank has reported low level of non performing loans; as at the end of 2009 CCB has 4.28% bad loans compared to 6.4% for the banking system as a whole. Nevertheless CCB has 4.15% of total credits categorized as under monitoring; the highest risk for the bank would be to classify those as non performing loans in subsequent periods. Recognized provisions in the end of 2009 are at the amount of BGN 22.07 mln.; the coverage ratio of provisions to stated NPLs is 44%. Interest income of the bank for 2009 is BGN139 mln accounting for 27% of the revenues in the Holdings exposure to the finance sector; thus Central Cooperative bank represents one of the most important entities in Chimimport Holding and is a major revenue generating unit.

3 Please see the disclaimer on the last page of this report.

Armeec is a leading insurance company in Bulgaria with a 10.2% market share in the general insurances market. The firm ranks fourth in terms of market share after Bulstrad, DZI and Lev Ins. Armeec is not active in the life insurance business. The company was established in 1996 with main shareholders being the Ministry of Defense and several partner firms within the Ministry of Defense system. The capital of the company is BGN15.02 mln. In 2002 Chimimport acquired 92% of Armeec and since then the company has been included within the Holdings structure. Armeec is present in more than 80 towns through 56 agencies and 45 representation units. The distribution network is organized through 4000 agents and 220 insurance brokers within the whole country. The distribution network includes products and projects designed in collaboration with Central Cooperative Bank, Bulgaria Air and the pension business of the Holding, thus creating synergies across Chimimports structure and possibilities for expanding market share. Armeec offers all classes of general insurance services including: home and auto insurances, technical insurances, agriculture related insurances and others; the company is very active in the air and maritime transport insurance services. In 2008 Armeec recorded an outstanding growth in subscribed premiums as they increased from BGN 90 mln in 2007 to BGN146 mln in 2008; the growth of 60% outpaced the average growth of the insurance business of 20% during that year; In 2009 Armeec registered a slight increase in subscribed premiums by 0.68%. As of the end of 2009 subscribed premiums are at the amount of BGN 148 mln; thus revenues of Armeec represent 29% of Chimimports total financial revenues. CCB Life is part of Chimimport Holding that engages in the life insurance business. The company is licensed by the Financial Supervision Commission in Bulgaria in 2007. The company has a minor market share of 0.73% in 2009; nevertheless CCB Life operates in a very competitive environment and tries to capture a business niche that is relatively underdeveloped and new in Bulgaria. CCB Life can benefit in the long term through the collaboration and expertise of the other businesses in Chimimport, in particular Armeec, and thus will try to increase its market share and presence in the life insurance segment. Health Insurance Company CCB is licensed by the Financial Supervision Commission and provides voluntarily health insurance services to individuals. The company offers coverage of prophylactic medical examinations to its clients, hospital medical costs coverage and others; Health Insurance Company CCB has a market share of 0.8% and will try to capitalize on the expertise of the other subsidiaries in the Holding and expand its market presence. CCB Sila was set up in 1994 and is one of the first to offer auxiliary pension insurance services in the country. The company manages three pension funds. CCB Sila enjoys a market share of 5.08% in terms of number of insured people in the managed funds. The company ranks sixth among total of ten companies operating in the pension insurance business. Lukoil Garant is another company that operates in the pension insurance business. It manages three funds and has 4.48% market share in this segment. Chimimport also has a significant ownership (49%) in Saglasie AD which is another company present in the pension insurance business. Saglasie has a market share of 12.08% in terms of number of people insured. Companys total assets as at the end of 2009 amount at BGN 359 mln. marking an increase by 41% from 2008 level. Thus Chimimport through its subsidiaries and associated companies has a total of 21.64% market share in the pension insurance segment making it one of the biggest players after Doverie AD and Allianz Bulgaria AD. CCB assets management is a managing company that specializes in the management of collective investment schemes and the management of discretionary client portfolios. The company administers three mutual funds each one with different investment profile and characteristics. CCB assets management manages nearly BGN 30 mln. assets as of December 2009. Chimimport owns 23.08% of Capital Management REIT, a special investment purpose vehicle that specializes in factoring services and securitization of receivables. The firm has a registered capital of BGN 830 153. Capital Management REIT has assets at the amount of BGN 61 mln. and net income amounting to BGN 3,1 mln in 2009.

4 Please see the disclaimer on the last page of this report.

Selected data BGN '000 Subscribed premiums Interest income Incomes from dealings with securities Operating expenses Incomes from investments in associates Net income
Source: Chimimport audited 2009 report

Financial sector - 2009 278,579 196,056 88,712 (146,219) (560) 116,875

Sector Overview - Real Estate

Chimimport Holding has business operations in the real estate and construction sector. Nevertheless the latter represent just a small share of the companys total sales. The main participant in the real estate sector is CCB Real Estate REIT which is owned by Armeec (23.08%), CCB Group (44.66%) and Technoimportexport AD (23.08%). The company was incorporated in 2005 with a registered capital of BGN 650 000. In 2009 CCB Real Estate REIT successfully increased its capital to BGN 1 077 193. Between 2004 and 2008 the booming property market in Bulgaria was among the key drivers of the Bulgarian GDP growth, which averaged 6% in that period. Market conditions were suitable for the real estate companies which realized hefty profits. With the start of the credit crisis the Bulgarian real estate market was among the most seriously affected sectors of the economy. CCB Real Estate currently has industrial logistics plots around the country, investment plot areas and office plots in major Bulgarian cities. The financial result of the company for 2009 is negative (BGN 36 thousand) compared to a profit of BGN 1.4 mln in 2008. CCB Real Estate has assets at the amount of BGN 26.8 mln. in the end of 2009.
Selected data (BGN '000) Sales Interest income Operating expenses Net income
Source: Chimimport audited 2009 report

Real estate and Construction - 2009 3,956 429 (238) 215

Sector Overview -Transport

Chimimports transport business is divided into air transport and marine and river transport. The main assets in the air transport segment are the airline companies Bulgaria Air and Hemus Air, the plane service company Lufthansa Technik and Fraport Twin Star Airport Management the concessioner of Varna and Burgas airports. In the marine and river transport segment Chimimport has majority stakes in the public company Parahodstvo Bulgarian River Shipping Company, Korabno Mashinostroene, Lesport and port Balchik and non-controlling stakes in Koraboremonten Zavod Odesos. Bulgaria Air was acquired by Chimimport in the beginning of 2007 and currently the Ministry of Transport holds 1 golden share. Bulgaria Air performs regular international flights to more than 30 destinations in Europe, Middle East and North Africa and internal flights to Varna and Burgas; the company offers charter flights and plane leasing. Bulgaria Air is a member of IATA and BSP. Companys share in the Bulgarian market is 30.8%. In 2009 income from airplane flights amounts at BGN 226.01 mln. Investments are directed for modernization of the plane fleet and implementing the most up to date technologies for efficient management of the sales operations. Airbus A320, Airbus A 319 and Boeing 737 are the newest bought planes. Hemus Air is being integrated into Bulgaria Air and currently offers plane rental services, cargo transportation and repair works.

5 Please see the disclaimer on the last page of this report.

Air Ban is the other Chimimports company operating in the air transport segment. It is licensed to perform surveillance from air, passengers and cargo transport, flights for emergency medical assistance, sightseeing from air. Air Ban operates four helicopters that can perform flights over land and water areas and can ground in small urban areas. Lufthansa Technik Sofia is a joint venture between Chimimports Bulgarian Aviation Group and Lufthansa Technik AG engaged in repairing and servicing planes not only those of Bulgaria Air and Hemus Air but also offering its services to clients from Europe, Middle East and North Africa. The company has competitive advantage in terms of price-quality. Chimimports share in the joint venture is 20%. Fraport Twin Star Airport Management is the airport operator of the civil airports in Varna and Burgas (the biggest towns at the Black Sea coast). The company has concession contracts for both the airports for 35 years and services more than 100 Bulgarian and foreign airline companies executing charter and regular flights from Varna and Burgas airports. In the year 2009 Fraport has serviced more than 2.925 mln passengers and 28.33 thousand flights in the two airports. Sales in 2009 amount to BGN 69.26 mln and net income realized is BGN 14.90 mln; Burgas airport accounts for BGN 12.23 mln of the net result for last year. Companys equity is BGN 52.34 mln and long term liabilities as at the end of 2009 are BGN 20.12 mln. Investments in Fraport Twin Star Airport Management are directed toward increasing the capacity to service passengers (by 40%), modernization and improving the safety measures. Currently new terminal buildings and passenger terminals for the two airports that are expected to cost more than EUR 110mln are being projected. Fraports sales in 2008 amount to EUR 40.65 mln and net income is EUR 8.3 mln. Chimimport holds 40% of Fraport Twin star Airport Management. Chimimport has majority stake (82.89%) in the public company Parahodstvo Bulgarian Rivershipping Company - the leader in river shipping in Bulgaria. Companys shares are publicly traded from the beginning of 2004. In 2006 Chimimport won a tender organized by the Privatization Agency and bought the states share in Parahodstvo Bulgarian Rivershipping Company 70%. The company offers transportation of bulk, general, liquid and oversized cargoes, Ro-Ro transportation Ruse-Reni-Ruse and Passau-Vidin-Passau, regular container lines and ferryboat shipments, forwarding services in river, sea, road and combined transport, chartering of river and sea vessels and agency services. Chimimport has engaged to invest in Parahodstvo Bulgarian Rivershipping Company EUR 25 mln in 20072011 at present EUR 15 mln have already been invested; the main purpose of the investment program is to renovate the ship fleet and build a logistic centre of more than 25,000 m2 and storage base. In 2009 companys sales amount to BGN 59.73 mln 5% up y-o-y and net income is BGN 4.24 mln. Assets are BGN 88.96 mln and total liabilities BGN 20.42 mln as at year end 2009. Mayak KM is a subsidiary of Parahodstvo Bulgarian Rivershipping Company, producing deck taps, hydraulic systems for operating marine ships and floating vessels. Among the major clients of the company is Rolls Royce. Chimimport controls 51% of VTC a company offering tugboat services at ports, agency and chartering services. The market share of VTC is 45% of the tugboat services market. The main assets of the company are three tugboats; money invested till now amount to USD 3.3 mln. Ship Machine Building is indirectly owned by Chimimport the company produces ship equipment: ramps, deck mechanisms, ship doors and stairs; does ship building and ship repair works. Among Ship Machine Buildings clients are Parahodstvo Bulgarian Rivershipping Company, Bulyard Korabostroitelna Industria, Odesos. The company is a supplier to world leaders in ship building as MacGregor, TTS Ships Equipment, Volharding Shipyards Newbuilding BV and others. Chimimport holds 30% stake in the public company Ship repair plant Odesos. The company does ship repair works and is engaged in engineering activities. Odesos repairs all kind of passenger, freight and tanker ships. 95% of Odesos sales come from clients from Western Europe Nederland, Germany, Sweden,

6 Please see the disclaimer on the last page of this report.

Greece and also USA, Thailand, Ukraine and other. Odesos accounts for about 40% of the ship repair market in the region of Varna. The major investment in Odesos valued at USD 25 mln is the floating dock it has carrying capacity of 20,000 tones and is among the largest facilities in the Black Sea region vessels with 60,000 tones dead weight, 220 meters length and 32.5 meters width can be repaired on the dock. In the year 2009 Odesos sales nearly halved to BGN 29.25 mln compared to BGN 57.44 mln a year ago and net income amounted to BGN 2.95 mln compared BGN 12.04 mln in 2008. The companys total assets are BGN 76.67 mln as at the end of 2009; total liabilities amount to BGN 13.63 mln and Debt to Assets is 0.18. Chimimport owns 99% of Port Lesport, Varna. From 2006 the company has a 30 year concession contract to operate the port Lesport which is of national importance and is accessible all year. Port Lesport offers the full range of port services. Investments in Port Lesport will be directed to enlarge the port and build two terminals and storage facilities. Port Balchik is 100% owned by Chimimport and has a concession contract to operate the port terminal in Balchik. Investments will be directed to put the port into compliance with the highest European quality standards. The port takes advantage from its proximity to the grain production region of Dobrudja.
Selected data (BGN '000) Total sales Result from non financial operations Interest expenses Administrative expenses Result from investments in associated companies Net income-transpost business
Source: Chimimport audited 2009 report Sector Overview Sector Overview

Transport sector - 2009 354,566 34,958 (17,237) (14,078) 7,015 19,921

- Production and Commerce

Chimimport Group actively supports and coordinates the activities of several public and non public companies from the Production sector. Chimimport provides financial support to the companies, and consultations regarding their technological development, construction and implementation of new production facilities in the operating process; Chimimport also explores new markets and facilitates the connection with foreign counterparts and trading partners. Oil and Gas Exploration and Production AD is the only Bulgarian company performing the full range of activities related to exploration, development and exploitation of oil and gas and the conversion of the raw materials into finished products. The equity capital of Oil and Gas Exploration and Production AD amounts to BGN 12.23 million. In September 2002 the company became public and its shares were admitted to trading on the floor of Bulgarian Stock Exchange. Chimimport owns directly and through related parties 53.66% of the capital. In 2004 Oil and Gas Exploration and Production AD created three new companies, in which it was the sole shareholder: Geophysical Research Ltd., Bulgarian Drilling Company Ltd. and Bulgarian Petroleum Refinery Ltd. In 2008 was signed the contract for the merger of the Bulgarian Drilling Company Ltd., Geophysical Research Ltd. and PDNG OIL PLC in Oil and Gas Exploration and Production AD. Oil and Gas Exploration and Production AD owns 12 concession contracts for crude oil and / or natural gas in the following fields: Tyulenovo, Dolni Dubnik, Dolni Lukovit, Dolni Lukovit - West, Staroseltsi, Gorni Dubnik, Bardarski Geran, Selanovtsi, Bulgarevo, Marinov Geran, Bhutan South and Durankulak. For 2009 the company reported net income of BGN 6.3 million, which marked a decrease by 13.5%, compared to 2008 7.3 million. Sales also shrunk to BGN 27.3 million, compared to 2008 BGN 47.6 million. In 2008 operating expenses amounted to BGN 40.8 million, in 2009 they fell to BGN 24.2 million. Oil and Gas Exploration and Production AD maintains and develops good business relations with leading companies and suppliers in the oil industry from the EU, U.S., Russia, and Ukraine.

7 Please see the disclaimer on the last page of this report.

Zarneni Hrani Bulgaria is one of the leaders on the Bulgarian market in trading, storing and marketing of grain and oilseeds; including the production and sale of vegetable oils, bottled oil, production and marketing of biodiesel. The capital of Zarneni Hrani Bulgaria is BGN 170.79 million. Zarneni Hrani Bulgaria was created in November 26, 2007 through the merger of the following 8 companies: Slunchevi Luchi Bulgaria AD, Sofia (former public company), Zarneni Hrani Trade AD, Beck International PLC, Zaeneni Hrani- Valchi Dol AD, Zarneni Hrani Balchik, Zora AD, Prima agrohim Ltd. and Chimimport agrochemicals. As a result of the merger, all assets and liabilities of the merging companies were combined into the newly established company Zarneni Hrani Bulgaria. The company has a Biodiesel plant in Provadia which is of crucial importance for its profitability. Company's business strategy is to focus on extending the geographical scope of activities and enter into neighboring countries. In 2008 ZHBG managed to increase sales to BGN 177.09 mln. but couldnt sustain the results achieved in the previous year and profit dropped to BGN 7.09 mln. Operating expenses in 2008 increased to BGN 175.38 mln. Total debt in that year decreased to BGN 140.20 mln, compared to 2007 when it was BGN 152.86 mln. In 2009 sales increased by 6.00% to BGN 187.69 mln; operating expenses increased at a smaller pace - by 4.4% y-o-y, to BGN 183.14 mln. In 2009 net profit slightly increased by 4.4% to reach BGN 8.2 mln compared to BGN 7.9 mln in 2008. Another big public company part of Chimimport Group is Asenova Krepost AD. The company has more than 40 years experience in the production of flexible polymer packages for the agriculture and construction industry. It also has more than 20 years tradition in the production of woven bags and flexible containers of polymeric materials. Asenova Krepost operates on a number of foreign markets in collaboration with companies from Russia, France, Norway, England, and Greece. Chimimport Invest, the majority owner of Chimimport Holding, acquired 50.6% of the capital of Asenova Krepost, after a tender offer in the summer of 2009.
Selected data (BGN '000) Sales Operating expenses Interest income Incomes from investments in associates Incomes from dealings with securities Net income
Source: Chimimport audited 2009 report

Production and commerce sector - 2009 259,965 (8,604) 9,094 22 14,195 17,536

8 Please see the disclaimer on the last page of this report.

Valuation model
In order to perform fair valuation of Chimimports business we have chosen to apply a sum of the parts appraisal model. However the approach that we chose differs slightly from the conventional application. Difficulties stem from the fact that Chimimport Holding consists of more than 60 subsidies and associated firms most of which are not publicly traded; therefore the valuation of such firms becomes an almost impossible process due to the lack of available financial information for all the companies in the structure and the numerous assumptions that have to be undertaken. That is why we chose to perform the appraisal based on sector data. Chimimport has four distinct businesses as already mentioned and the Group provides reliable information regarding the performance of all of them; we consider that the methodology is appropriate as the sector data captures the financial results of all the companies, part of the holding. We apply a relative valuation model in order to value the main business sectors in which Chimimport operates; we use the price to sales multiple because it is the least exposed to change ratio and is more stable than net income. Our comparable data is from the relevant sectors in Eastern and Central Europe (source Bloomberg). The value that we obtain by applying the method assumes that Chimimport owns 100% of all of its subsidiaries; nevertheless this is not the case and that is why we make an appropriate adjustment by subtracting a minority interest share from Chimimports value. We find the minority share by applying the average share of minority profits over the last three years to total company value. Finally we add the associated companies value to derive the total fair value of Chimimport Holding. The following table shows the values of associated companies we have used for Capital management REIT and Odesos we have used company market values, for Fraport Twin Star Airport Management we have used relative valuation model applying price to sales multiple and for POK Saglasie we have used the investment value for the company taken from Chimimports balance sheet.
Associated companies Capital management REIT* Odesos* Fraport Twin Star Airport Management POK Saglasie Total associates value - BGN Chimimport's share Company value BGN 23.08% 40,111,500 30.00% 55,144,348 40.00% 56,100,600 49.28% Chimimport's share in company's value BGN 9,257,734 16,543,304 22,440,240 17,317,000 65,558,279

Source: Company information; SIS calculations

* - public companies, valued by market capitalization

The next table presents the cumulative valuation of Chimimport. Our valuation model shows the fair value per share is BGN 4.9 which offers a 139% upside potential to the current market price.
Sector sales BGN '000 Production Financial Sector Transport Real Estate & Construction Total sector value BGN 000 Minority interest adjustment BGN 000 Adjusted sector value BGN 000 Associated companies value BGN 000 Total Chimimport value BGN '000 259,965 511,262 354,566 3,956 Sector value BGN '000 150,780 705,542 336,838 2,176 1,195,335 (126,705.5) 1,068,629 65,558 1,134,188

Price multiple 0.58 1.38 0.95 0.55

Source: company data, SIS calculations

9 Please see the disclaimer on the last page of this report.

Disclaimers and Required Disclosures

The research and the recommendations in this report have been prepared and reviewed by: Parvoleta Ivanova Head of Research ivanova@sis.bg Martin Georgiev Equity Analyst martin.georgiev@sis.bg Elina Shoeva Equity Analyst shoeva@sis.bg

The individuals responsible for the preparation of this report certify that they have not received nor will receive compensation in exchange for expressing specific views or recommendations in this report. Sofia International Securities AD and the individuals responsible for this report accept no liability whatsoever for any losses arising from the use of information or opinions expressed in this report. Sofia International Securities AD is a member of Bulgarian Stock Exchange (BSE) and the Central Depository of Bulgaria. The company provides brokerage, investment banking, equity research, portfolio management and other services. Sofia International Securities AD is regulated by the Financial Supervision Commission of Bulgaria. Sofia International Securities is not registered as a broker or dealer with the Securities and Exchange Commission or NASD in the United States of America and the information may be distributed in the US only to individuals who by acceptance hereof confirm that they represent major institutional investors as defined in Regulation 15a-16 of the Securities Exchange Act of 1934. Any opinions expressed in this report are subject to change without notice and Sofia International Securities is not under any obligation to update or keep current the information contained herein. Any opinions expressed in this report are only correct as of the stated date of their issue. This report has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. The report is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any Source: Company information; SIS calculations securities or related financial instruments. The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. The report is based on information obtained from sources believed to be reliable but is not guaranteed as being accurate, nor is it a complete statement or summary of the securities, markets or developments referred to in the report. The report should not be regarded by recipients as a substitute for the exercise of their own judgment. Between June 21st 2009 and June 21st 2010 research analysts at Sofia International Securities have issued the following recommendations: Recommendation Number of Recommendations Strong Buy/Buy 8 Hold/Neutral 1 Sell/Avoid/Reduce/Strong Sell 0 These opinions were only correct as of the stated date of their issue and may have not been updated recently. Sofia International Securities owns shares of companies subject of this report. The individuals who are responsible for the preparation of this report do not own shares of the company that is subject of the report. Sofia International Securities is not a market maker in the securities that are subject of this report. Sofia International Securities do not provide any corporate finance or other services to the company that is subject of this report. However, Sofia International Securities may seek to provide such services in the future. Past performance is not necessarily indicative of future results. Foreign currency rates of exchange may adversely affect the value, price or income of any security or related instrument mentioned in this report. Sofia International Securities accepts no liability whatsoever for any loss or damage of any kind arising out of the use of all or any part of this report. Additional information will be made available upon request. For more detailed information about the company, please contact our research department. 2009-2010. All rights reserved. No part of this report may be reproduced or distributed in any manner without the written permission of Sofia International Securities. Sofia International Securities 1766 Sofia 258 Okolovrasten pat Str. Tel.: + 359 2 988 63 40 Fax: + 359 2 937 98 77

10 Please see the disclaimer on the last page of this report.