PIAGGIO S.p.A. Politecnico Student Research Global Investment Research Challenge 2011 Automobiles & Parts

Wide brand portfolio Company Overview Mobility Style Young Sport Business Largest European producer of 2w and LCVs by revenues Company Overview Wht invest in Piaggio Financial Analysis Valuation Risk Analysis Data and Charts

Company Overview Internationalization strategy Company Overview Wht invest in Piaggio Financial Analysis Valuation Risk Analysis Data and Charts Premiumisation strategy Production Facilities Distribution Network Joint Venture DesignSafetyPerformanceReliabilityEnvironment Revenues Breakdown

Company Overview Company Overview Wht invest in Piaggio Financial Analysis Valuation Risk Analysis Data and Charts Latest Results Actual Guidelines Revenues €1,485M €1,500M 1 Ebitda Margin 13.3% 13.3% EPS €0.115 €0.118 Slightly below guidelines … … but positive underlying trends. Europe IndiaVietnam 335,000 2Ws 220,000 LCVs 60,000 2Ws -7.5% +11.7%+25% Growth in Emerging Markets stronger than expected Developed Markets at their bottom Unit Sold Vs Management Guidelines:From Revenues to Earnings: Efficiency Improvements Financial Savings Higher Materials Costs One-off Fiscal Items

Company Overview Company Overview Wht invest in Piaggio Financial Analysis Valuation Risk Analysis Data and Charts Our Rating Price (03/31/11): € M Target Price: €2.8 Upside: 16.2% Rating: BUY BUY HOLD Indian sales report 2010 financial results

1. Launch of new products in India 2. Expansion in South-Eastern Asia 3. Consolidation in Europe Why invest in Piaggio Initiation Coverage Why Invest in Piaggio Financial Analysis Valuation Risk Analysis Company Overview - Entry in the 2 wheel market with the launch of Vespa - Expansion of the 4 wheel product line - Expansion of the Hanoi plant (200k vehicles per year) - Entry in other ASEAN countries - Leadership Consolidation - Efficiency Improvements

Why invest in Piaggio: New products in India Trend: shift from 3 wheelers to 4 wheelers Initiation Coverage Why Invest in Piaggio Financial Analysis Valuation Risk Analysis Company Overview Launch of Vespa in India Expected sales: 75,000 units by Wheel Segment 25% 24% 23% 18% 10% LCV Segment

Why invest in Piaggio: Expansion in Asia Vietnam MalaysiaIndonesia Thailand Taiwan Initiation Coverage Why Invest in Piaggio Financial Analysis Valuation Risk Analysis Company Overview Potential market: 3M vehicles per year Potential Market: 11M vehicles per year From Vietnam to new markets

Initiation Coverage Why Invest in Piaggio Financial Analysis Valuation Risk Analysis Why invest in Piaggio: Consolidation in Europe 155bps European EBITDA margin increase by 2013 due to: - Improvement of global sourcing position - Production plants rationalization - Synergies in the distribution network Main trends in the European market: - entering of new low cost competitors, such as Kymco (in the right chart) - the introduction of anti pollution laws (bottom chart). Company Overview

€153M €155M €181M €197M €0.11 €0.14 €0.18 €0.22 €197M €218M €249M €276M €1485M €1615M €1745M €1850M 7.6% Revenue CAGR Income Statement Cash Flow Statement + 160bps EBITDA margin 8.8% OCF CAGR % EBITDA CAGR Lower D&A and Financial Charges CAGR 24.3% EPS CAGR Financial Analysis Higher than Revenue CAGR 2010 E 2011 E 2012 E 2013 E Company Overview Wht invest in Piaggio Financial Analysis Valuation Risk Analysis Data and Charts

~ €65M ~ €140M Financial Analysis 2010 ~ €15M ~ €310M ~€530M Company Overview Wht invest in Piaggio Financial Analysis Valuation Risk Analysis Data and Charts 2013 ∆NWC CapexOCF∆NFP 8.8% OCF CAGR Div. & Buy Back

Balance Sheet Financial Analysis Ability to meet short and long term obligations Deleveraging and improving ROE Company Overview Wht invest in Piaggio Financial Analysis Valuation Risk Analysis Data and Charts E 2012 E 2013 E NFP €350M €342M €318M €288M Debt €528M €500M €470M €440M Cash&other €155M €148M €147M €147M Equity €443M €467M €499M €537M

Sum-of-the-part approach Two-Stage model Three-Stage model Analytical Period + Perpetuity Analytical Period + Convergence Stage + Perpetuity Valuation: Discounted Cash Flow Company Overview Wht invest in Piaggio Financial Analysis Valuation Risk Analysis Data and Charts Source: Politecnico Estimates

Valuation: Discounted Cash Flow Source: Politecnico Estimates Company Overview Wht invest in Piaggio Financial Analysis Valuation Risk Analysis Data and Charts Sales 2010 Sales CAGR EBITDA margin 2010 Tax Rate FCFF 2010 WACC €389M 12.9% 19.5% 42% €13M 9.31% €963M 2.5% 9.75% 30% €33M 7.63% €133M 13.5% 20.5% 7.5% €10M 10.72%

Valuation: Discounted Cash Flow Source: Politecnico Estimates €2.90 €0.95 €1.30 €0.65 TP DCFEU + USIndiaVietnam Company Overview Wht invest in Piaggio Financial Analysis Valuation Risk Analysis Data and Charts

Piaggio’s Indian and Vietnamese businesses are comparable to its Indian peers Valuation: Multiple Analysis Initiation Coverage Why Invest in Piaggio Financial Analysis Valuation Risk Analysis Company Overview Company Overview Wht invest in Piaggio Financial Analysis Valuation Risk Analysis Data and Charts Using the median EV/EBITDA multiple EV Piaggio Asia € 1,114M DCF EV € 970.5M 13% discount Harmonic Mean HeroMahindraBajajTata 2011 E9.35 x10.60 x8.10 x11.12 x5.46 x

Valuation: Multiple Analysis As regards the whole Piaggio Group (EV/EBITDA multiple): Company Overview Wht invest in Piaggio Financial Analysis Valuation Risk Analysis Data and Charts

Valuation: Multiple Analysis As regards the whole Piaggio Group (EV/EBITDA multiple): EMs multiple - for the Asian Business: DMs multiple - for the non-Asian Business: 9.3 x 4.4 x Multiple Target Price: € 2.62 Company Overview Wht invest in Piaggio Financial Analysis Valuation Risk Analysis Data and Charts DCF Target Price: € % weight 70% weight Year end TP: € 2.80

Probable Possible Istable Vietnam labour market Supply Chain risk Tighter regulations Credit risk Increase in interest rates Unlikely Strikes Intellectual Property Liquidity risk De-premiumisation Rare Machinary failure Vehicles defects MarginalMinorIntermediateMajor Risk analysis: Risk matrix Impact Likelihood Source: Politecnico Estimates Unsuccessful product launches Stronger competition Exchange rate risk Increase in energy, raw materials and components costs GDP growth rates Risk analysis: Risks from Asia Company Overview Wht invest in Piaggio Financial Analysis Valuation Risk Analysis Data and Charts

Unsuccessful product launches Exchange rate risk Stronger competition Unsuccessful product launches Risk analysis: Risk matrix Risk analysis: Risks from Asia Company Overview Wht invest in Piaggio Financial Analysis Valuation Risk Analysis Data and Charts

Increase in energy, raw materials and components costs GDP growth rates Risk analysis: Risk matrix Risk analysis: Global risks Company Overview Wht invest in Piaggio Financial Analysis Valuation Risk Analysis Data and Charts

Price Confidence Interval: (€ 2.70, € 2.90) Risk analysis: Montecarlo Simulation Company Overview Wht invest in Piaggio Financial Analysis Valuation Risk Analysis Data and Charts % of volatility comes from Asia Source: Politecnico Estimates P = 80% Frequency Target Price €2.80€2.82€2.85€2.87€2.90€2.92€2.95€2.97€2.77€2.75€2.72€2.70€2.67€2.65€2.62

Source: Company Data, Politecnico Estimates Data and Charts Balance Sheet E2012 E2013 E FIXED ASSETS 899, , , , , ,412 Intangible assets 648, , , , , ,271 Tangible assets 250, , , , , ,559 Financial assets NET WORKING CAPITAL(3,726)17,212 30,553 52,103 72,844 92,798 Current trade receivables 90, ,164 90, , , ,597 Other current receivables 21,380 24,198 23,300 25,823 27,893 29,622 Other non-current receivables 12,587 12,914 12,655 13,718 14,818 15,737 Inventories 257, , , , , ,182 Trade payables (362,224) (345,987) (352,627) (377,660) (402,699) (425,820) Short term Tax receivables 27,772 23,979 44,200 40,200 39,400 37,000 Long term Tax receivables 8,166 4, ,708 Deferred tax assets 36,227 46,462 46,294 42,994 Short term Tax payables (19,065) (18,952) (19,290) (19,102) Long term Tax payables (166) - (3,361) Other short term payables (70,677) (79,567) (69,503) (75,855) (87,164) (92,569) Other long term payables (5,965) (6,485) (5,961) (6,294) (6,799) (7,220) PROVISIONS (137,531) (133,685) (131,100) (124,680) (123,807) (122,733) NET CAPITAL EMPLOYED 757, , , , , ,808 NET FINANCIAL POSITION 359, , , , , ,535 Short term debt 140, , , , ,000 90,000 Long term debt 264, , , , ,000 Other liquid assets 5,787 4,127 23,051 10,000 5,000 Cash 39, , , , , ,465 TOTAL SHAREHOLDER’S EQUITY 398, , , , , ,273 SOURCES OF FUNDS 757, , , , , ,808

Source: Company data, Politecnico Estimates E2012 E2013 E Net Sales 1,570,0601,486,882 1,485,304 1,613,932 1,743,286 1,851,390 Reported Growth -7.2%-5.3%-0.1%8.7%8.0%6.2% Business Units Two Wheeler Vehicles 1,180,666 1,065, ,015 1,063,383 1,154,554 1,224,789 Reported Growth -8.8%-9.8%-7.3%7.6%8.6%6.1% Commercial Vehicles 389, , , , , ,600 Reported Growth 2.4%8.2%18.0%10.7%6.9%6.4% Geographical Area Europe and America 1,280,9321,116,191963,2531,008,1871,038,3621,060,882 Reported Growth -8.6%-12.9%-13.7%4.7%3.0%2.2% India 243,972286,753388,890448,934527,477590,348 Reported Growth 2.5%17.5%35.6%15.4%17.5%11.9% ASEAN 45,15683,938133,161156,810177,447188,000 Reported Growth -13.2%85.9%58.6%17.8%13.2%5.9% Other operating income 133, ,938121,128130,728134,233140,706 Cost for materials (936,603) (871,653)(881,075)(963,517)(1,040,742)(1,107,131) Cost for services (292,920) (272,065)(258,358)(279,210)(294,615)(307,331) Employee costs (250,967) (242,916)(240,115)(251,773)(256,263)(262,897) Other operating costs (33,993) (35,387)(29,821)(32,279)(36,609)(38,879) EBITDA 189, , , , , ,857 EBITDA margin 12.04%13.50%13.27%13.50%14.30%14.90% D&A94,54096,37886,00694,560101,459103,261 % Capex 91.85%102.76%89.50%93.00%97.00% EBIT 94, , , , , ,596 EBIT margin 6.02%7.02%7.48%7.64%8.48%9.32% Financial charges (41,288) (33,275) (33,905) (32,725) (32,548) (31,570) % Tot Financial Liabilities 10.18%5.98%6.42%6.55%6.93%7.18% Other Financials 6,410 2,947 6,625 3,000 Earnings before tax 59,633 74,093 83,777 93, , ,026 Taxation for the period 16,302 26,674 40,983 41,182 50,862 61,931 Actual tax rate (%) 27.34%36.00%48.92%44.00%43.00% Consolidated net income 43,331 47,419 42,794 52,413 67,421 82,095 Profit margin 2.76%3.19%2.88%3.25%3.87%4.43% Minority Shareholders 330 1, Earnings per share (€) Avg. number of Ordinary Shares 396, ,793 Dividend per share (€) Earnings paid as dividends 22,120 25,795 26,000 28,303 35,733 43,510 Payout Ratio 51%56%61%54%53% Income Statement Data and Charts

Source: Politecnico Estimates Data and Charts Cash Flow Statement India INDIA2011 E2012 E2013 E2014 E2015 E LCV volumes (units) 243,756258,381271,817285,408299,393 LCV ARPU (€) 1,8421,9101,9772,0362,097 2w volumes (units) 50,00075,00095,000110,000 2w ARPU (€) Sales from India 448,934527,477590,348650,970712,000 % tot sales 27.82%30.26%31.89%33.38%34.71% % growth 15.44%17.50%11.92%10.27%9.38% EBITDA from India 87,542102,331114,528124,986134,568 EBITDA margin India 19.50%19.40% 19.20%18.90% D&A India 22,87724,58025,01725,20625,309 % Capex India 90.00%94.00% EBIT from India 64,66577,75089,51199,780109,259 EBIT margin India 14.40%14.74%15.16%15.33%15.35% Tax Rate India 42.00% Op. Tax India 27,15932,65537,59441,90845,889 Adj. Op. Tax India 34,71340,72547,06952,58257,556 Adj. Tax Rate India 53.68%52.38%52.58%52.70%52.68% D&A India 22,87724,58025,01725,20625,309 Change in NWC India (4,363)(2,262)(2,265)(1,005)(84) Cash Flow From Indian Operations 48,46659,34365,19471,39976,928 Capex India 25,41926,14926,61426,81526,924 % Capex 25.00% FCFF India 23,04633,19438,58044,58550,004 % growth 44.03%16.23%15.56%12.15%

Source: Politecnico Estimates Data and Charts Cash Flow Statement Europe and US EUROPE and US2011 E2012 E2013 E2014 E2015 E 2W volumes (units) 352,275362,843370,100373,801377,539 2W ARPU (€) 2,5732,5992,6252,6512,678 LCV volumes (units) 13,16512,56011,98211,43110,905 LCV ARPU (€) 7,7187,5847,4527,3237,195 Sales from Europe and US 1,008,1871,038,3621,060,8821,074,8221,089,504 % tot sales 62.47%59.56%57.30%55.11%53.11% % growth 4.66%2.99%2.17%1.31%1.37% EBITDA from Europe and US 98,802110,066119,880121,455123,114 EBITDA margin Europe and US 9.80%10.60%11.30% D&A Europe and US 61,00763,38664,51264,99965,264 % Capex Europe and US %101.00% EBIT from Europe and US 37,79646,68055,36856,45657,850 EBIT margin Europe and US 3.75%4.50%5.22%5.25%5.31% Tax Rate Europe and US 30.00% Op. Tax Europe and US 11,33914,00416,61016,93717,355 Adj. Op. Tax Europe and US 15,75418,84922,47122,97623,532 Adj. Tax Rate Europe and US 41.68%40.38%40.58%40.70%40.68% D&A Europe and US 61,00763,38664,51264,99965,264 Change in NWC Europe and US (3,265)(869)(811)(231)(20) Cash Flow From EU Operations 79,78390,34896,59798,24899,562 Capex Europe 61,00762,75863,87364,35664,618 % Capex 60.00% FCFF Europe 18,77727,59032,72533,89234,943 % growth 17.54%12.71%5.53%1.42%

Source: Politecnico Estimates Data and Charts Cash Flow Statement ASEAN ASEAN2011 E2012 E2013 E2014 E2015 E 2W volumes (units) 76,16093,677112,412132,646153,870 2W ARPU (€) 2,0591,8941,7811,6921,624 Sales from ASEAN 156,810177,447200,160224,379249,869 % tot sales 9.72%10.18%10.81%11.51%12.18% % growth 17.76%13.16%12.80%12.10%11.36% EBITDA from ASEAN 31,67635,66740,23244,65149,224 EBITDA margin ASEAN 20.20%20.10% 19.90%19.70% D&A ASEAN 11,89613,33614,37114,48014,539 % Capex ASEAN 78.00%85.00%90.00% EBIT from ASEAN 19,77922,33125,86130,17134,685 EBIT margin ASEAN 12.61%12.58%12.92%13.45%13.88% Tax Rate ASEAN 7.50% Op. Tax ASEAN 1,4831,6751,9402,2632,601 Adj. Op. Tax ASEAN 3,7943,9934,6775,4906,305 Adj. Tax Rate ASEAN 19.18%17.88%18.08%18.20%18.18% D&A ASEAN 11,89613,33614,37114,48014,539 Change in NWC ASEAN (1,211)(504)(675)(335)(29) Cash Flow From ASEAN Operations 26,67131,17034,88038,82642,890 Capex ASEAN 15,25215,69015,96816,08916,155 % Capex 15.00% FCFF ASEAN 11,41915,48018,91222,73726,735 % growth 35.56%22.17%20.22%17.59%

Data and Charts Source: Company data, Politecnico Estimates Ratios Key Financial Ratios E2012E2013E E2012E2013E Profitability ratios EBITDA margin 13.50%13.27%13.50%14.30%14.90% ROI 6.67%7.18%7.85%9.19%10.49% EBIT margin 7.02%7.48%7.64%8.48%9.32% ROA 3.03%2.77%3.34%4.19%4.99% EBT margin 4.98%5.64%5.80%6.79%7.78% ROE 11.19%9.66%11.22%13.52%15.28% Cost structureDu Pont Analysis Labor Cost / Sales 16.34%16.17%15.60%14.70%14.20% Profit Margin 3.19%2.88%3.25%3.87%4.43% Materials Cost / Sales 58.62%59.32%59.70% 59.80% Asset Turnover 0.95x0.96x1.03x1.08x1.13x Services Cost / Sales 18.30%17.39%17.30%16.90%16.60% Total Assets/Equity 3.69x3.49x3.36x3.22x3.06x Gearing ratios Debt ratios Net Debt to Equity 0.83x0.79x0.73x0.64x0.54x Interest coverage ratio 3.44x4.07x4.15x5.00x6.04x Total Debt to Equity 1.31x1.19x1.07x0.94x0.82x Net Debt / EBITDA 0.57x0.56x0.64x0.78x0.96x Liquidity ratiosCash flow ratios Current ratio 1.05x0.93x0.94x0.99x1.02x OCF / Sales 10.93%10.28%9.60%10.37%10.62% Solvency ratio 0.26x0.24x0.29x0.36x0.42x OCF / Earnings 3.43x 3.57x 2.96x 2.68x 2.40x Market Ratios Capex EPS €0.116€0.115€0.141€0.181€0.221 Capex / Sales 6.31%6.30%6.00%5.85%5.75% DPS €0.07 €0.08€0.10€0.12 D&A / Capex 6.48%5.79%5.86%5.82%5.58%