Beruflich Dokumente
Kultur Dokumente
Bernardo Teixeira
bernardo.teixeira@btgpactual.com
+55 11 3383-3315
LEGAL DISCLAIMERS & DISCLOSURES:
www.btgpactual.com/research/Disclaimers/Overview.aspx
We are bullish Brazilian equities
3
The new administration
✓ As the new president’s economic policies are implemented, investors should feel more comfortable to invest in the
country
− Increased investors’ confidence in the government´s ability to deal with its fiscal problems should drive long-term real interest rates down,
making stocks more attractive.
✓ Initial signs are encouraging; main question mark is on PSL’s support in congress
– Bolsonaro’s PSL will have the second largest base in the lower house, with 52 congressmen (vs. 8 before). Maybe more importantly, we
estimate Bolsonaro’s support base to reach some 168 congressmen, or close to 52% of the house — to reach constitutional quorum (308
votes) he would need the support of “independent” parties PSDB and MDB.
– On the other hand, Bolsonaro should expect a fierce opposition from the PT party, which elected the largest base in the lower house and
the most number of state governors.
4
Valuations are relatively attractive
✓ The Ibovespa is now trading at 11.7x 12-month forward P/E, below its historical average.
− Trading below average (11.7x 12-month forward P/E), there is clear upside potential for the Ibovespa. We would expect it to quickly move
back to its historical trading average, implying an Ibovespa close to 97,000 points and an upside of close to 10%.
− The beginning of the new government and concrete moves towards privatization and the approval of a pension reform could cause the
Ibovespa to trade at one-standard deviation above average, implying an Ibovespa trading close to 112,000 points and an upside close to
27%.
6% 5.5%
15x
4%
13x 2% 1.9%
11.7
0%
11x
-2%
9x
-4%
7x -6%
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
Sep-12
Sep-14
Sep-16
Sep-18
Sep-13
Sep-15
Sep-17
May-07
May-09
May-11
May-12
May-13
May-14
May-15
May-16
May-18
May-08
May-10
May-17
-8%
Jan-07
Jan-09
Jan-11
Jan-12
Jan-13
Jan-14
Jan-16
Jan-18
Jan-08
Jan-10
Jan-15
Jan-17
May-07
Sep-07
May-08
May-09
Sep-09
May-11
May-13
May-10
Sep-10
May-12
Sep-12
May-14
Sep-14
May-15
May-17
May-18
May-16
Sep-16
Sep-18
Sep-06
Sep-08
Sep-11
Sep-13
Sep-15
Sep-17
Average +1 Std Dev -1 Std Dev P/E 12MF (ex-Petro & Vale)
Real Earnings Yield (Ex-Petro & Vale) AVERAGE +1 Std Dev -1 Std Dev
✓ We are modeling for 2018 & 2019 domestic earnings to growth of 23% y/y and 17% y/y, respectively.
Domestic earnings and revenue growth
2014 2015 2016 2017 2018E 2019E
Net revenues 595,933 674,071 698,859 713,524 795,552 873,411
Growth 13.1% 3.7% 2.1% 11.5% 9.8%
Net income 111,532 114,921 106,548 114,921 141,529 164,885
Growth 3.0% -7.3% 7.9% 23.2% 16.5%
Source: BTG Pactual estimates
6
Brazilian equities are under-owned
✓ In September, Global and GEM funds were close to historical lows. Exposure levels rose slightly in October, but
allocations are still way off levels seen in the recent past.
✓ Local investors’ equities allocations aren’t expiring either.
AuM (R$bn)
Dec-13 11.0% 1.07% 14.8% 2,362
2500 2,246
Dec-14 9.1% 1.07% 15%
15.5% 14.9%
Dec-15 6.0% 0.52% 2000 1,950
14.3% 14.0% 13%
Dec-16 8.6% 0.93% 1,651 1,858 2,104
11.3% 11.6%11.4% 1,420 1,500
1500 10.6%
Dec-17 7.2% 0.60% 11%
9.9% 9.8%
Jan-18 7.6% 0.69% 1,167 8.7%
1000 717 981
Mar-18 7.5% 0.62%
854 893 11.1% 940 11.9% 9%
9.1%
500 8.5%
Jun-18 6.0% 0.42% 7%
362
Sep-18 6.4% 0.37% 97 88 80 99 113 133 221 224 334 356 311 321 331 303 255 278 330 405
0 5%
Oct-18 8.0% 0.51% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Oct-18
Fixed Income AuM (R$bn) Equity AuM (R$bn) Equity Share End of Period Selic Rate
7
Economic recovery to accelerate in 2019
✓ All conditions are in place for the economy to accelerate in 2019
− A combination of significant idle capacity in industries, abundant human resources and improving business and consumer confidence can
drive the economic recovery.
− Privatizations, concessions and a more pro-business stance by the new government should help fuel Brazil’s economic growth
Unemployment rate Capacity Utilization in Industry (%)
14
13
12.1
12
11.7
11
10
6
Feb-13
Feb-15
Feb-16
Feb-17
Feb-18
Feb-14
Oct-13
Oct-14
Oct-16
Oct-17
Oct-12
Oct-15
Oct-18
Jun-12
Jun-13
Jun-15
Jun-16
Jun-18
Jun-14
Jun-17
s.a. n.s.a.
202
2.20
R$ thousands
197
R$ billions
2.15
192
2.10
187
182 2.05
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Jul-18
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Mar-18
Nov-12
Nov-13
Nov-14
Nov-15
Nov-16
Nov-17
Source: IBGE and BTG Pactual estimates Source: Central Bank of Brazil and BTG Pactual
Households deleveraging process continues
✓ Leverage has fallen over the past years
9
Bolsonaro’s election boosted confidence levels
✓ Both consumer and business confidence levels moved up after Bolsonaro’s election
− Consumer confidence grew 7.3 points m/m in November (after +4.1 points m/m in October), standing at its highest level since the start of its recovery at
the beginning of 2016. The increase was mostly driven by the expectations component of the index, which grew 10.5 points, while the component that
measures the current perception grew 2.6 points.
− Business confidence didn’t grow as much as the consumer confidence index, but it was the first month since the truck drivers’ strike that it moved up. The
improvement was driven by the current situation component of the index (+1.3 points m/m).
90
80
80 70
70 60
Nov-07
Nov-08
Nov-09
Nov-10
Nov-11
Nov-12
Nov-13
Nov-14
Nov-15
Nov-16
Nov-17
Nov-18
May-07
May-08
May-09
May-12
May-13
May-14
May-15
May-18
May-10
May-11
May-16
May-17
Nov-07
Nov-08
Nov-09
Nov-10
Nov-11
Nov-12
Nov-13
Nov-14
Nov-15
Nov-16
Nov-17
Nov-18
May-07
May-08
May-09
May-10
May-11
May-12
May-13
May-14
May-15
May-16
May-17
May-18
Business confidence Current Situation Expectation Consumer confidence Current Situation Expectation
10
A confidence boost improves the outlook for GDP growth
✓ More confidence, improved growth prospects
Business confidence trajectories GDP growth (y/y) vs. business confidence scenarios
120 10
8
110
6
4 3.2% in 2019
100
2.8% in 2019
2
90
0
80 -2
-4
70
-6
60 -8
May-16
Dec-09
Feb-08
Oct-11
Sep-12
Feb-19
Mar-07
Mar-18
Jun-15
Nov-10
Jan-09
Jul-14
Aug-13
Apr-17
Nov-07
Nov-12
Nov-17
Sep-08
Sep-13
Sep-18
May-10
May-15
Jul-09
Jul-14
Jul-19
Mar-11
Mar-16
Jan-07
Jan-12
Jan-17
11
Top Picks, by sector
12
BTG Pactual’s December 10SIM
Company Ticker Weight (%) ADTV (R$m) Mkt Cap (R$m) Upside (%) PE 2019E
Petrobras PETR4 15% 2,230.6 348,276 - -
Banco do Brasil BBAS3 10% 615.1 126,017 15% 6.6x
B3 B3SA3 10% 293.9 58,560 12% 17.2x
BR Distribuidora BRDT3 10% 126.6 28,496 -6% 18.6x
Lojas Renner LREN3 10% 150.9 28,234 -11% 24.1x
Rumo RAIL3 10% 139.5 27,439 19% 36.1x
Gerdau GGBR4 10% 248.7 24,009 52% 7.5x
Localiza RENT3 10% 141.8 18,414 8% 19.9x
Embraer EMBR3 10% 68.2 15,972 15% 12.8x
Oi OIBR3 5% 29.8 3,658 - na.
13
BTG Pactual’s December Small Caps portfolio
Company Ticker Weight (%) ADTV (R$m) Mkt Cap (R$m) Upside (%) PE 2019E
CVC CVCB3 20% 64.9 8,784 -1% 23.0x
Marfrig MRFG3 20% 23.0 3,848 37% 8.6x
Santos Brasil STBP3 20% 5.3 2,584 18% 29.4x
Tegma TGMA3 20% 8.6 1,627 18% 12.0x
Even EVEN3 20% 6.7 1,128 35% 17.6x
14
Why we selected these stocks
✓ B3
ᅳ With lower disbursements and banks more restrictive in corporate lending, we expect capital markets to continue to gain relevance going
forward, and B3 is one of the most interesting stories to play in this environment. With a presence on all fronts – from cash equities trading
to fixed income custody – the company is perfectly positioned to benefit from additional volumes in many different ways. October may be an
“appetizer” of how high volumes could reach in a bull market – ADTV for cash equities was of R$17bn. Valuation is not demanding at this
point, with the stock trading at ~18x P/E19.
✓ BR Distribuidora
ᅳ We believe the combination of (i) improving macro outlook and sentiment, with obvious and direct impacts to the fuel market in the form of
stronger volumes growth, and (ii) growing odds that BRDT could become part of a broader privatization program could easily tackle
corporate governance concerns as well as lead the way for investors to be on improvements in SG&A front, which is by far the main reason
BRDT margins are historically far lower than its peers.
✓ Gerdau
ᅳ We believe Gerdau is set to continue focusing on higher return assets, deleveraging and simplification of the business. Improving prospects
for margin recovery in its US division, stronger pricing power and demand recovery in Brazil should drive the company’s EBITDA and
profitability sustainably higher. We expect very strong results in the 3Q18, with the company delivering around R$2bn in EBITDA. We see
leverage moving down below 1.5x by 2018YE and the stock trading at near 5.5x for 2018. However, we see fast multiple compression
ahead, with numbers trending below ~5.0x EBITDA 2019. Overall, we see a very compelling case for the next 2-3 years. Reiterate our long-
held Buy rating. Gerdau is our Top pick in the sector.
✓ Oi
ᅳ With the restructuring moving ahead as planned, Oi’s restructured debt will collapse, leaving hefty upside for equity holders. Even under our
more conservative estimates for the NPV of its restructured net debt, we still see a huge upside for the stock. Our target price is based on a
fair EV/EBITDA multiple of 5.5x (LatAm sector average).
✓ Embraer
ᅳ Following Bolsonaro’s election, we expect the Embraer-Boeing deal to be approved. We don’t believe Embraer shares are pricing-in upside
from the deal. In our calculations, monetization of the Commercial Aviation stake + Embraer’s put option on the remaining 20% of
Commercial Aviation would alone be worth, net of taxes, ~US$4bn, or US$22/ADR. There is also significant value from synergies.
15
Why we selected these stocks
✓ Petrobras
ᅳ We are adding Petrobras to the portfolio on the back of what we see as a strong top down call. In many ways, PBR risk is perceived as a
Brazil sovereign risk, and we see the post-election macro environment, with an improving sentiment, as driving a Brazil de-risking as well as
a PBR de-risking.
✓ Rumo
ᅳ Remains our Top Pick in Transportation. We see RAIL3 trading at 8x EV/EBITDA 2019, with strong earnings momentum (Q3 should be a
positive catalyst), balance sheet derisking and the potential to become a strong FCF generator. The outlook remains bright, and we believe
the company is well positioned to renegotiate long term contracts with clients and have its Malha Paulista concession renewed. We also
believe there are relevant upside risks such as (1) the Sorriso project; (2) a strategic investment at Malha Sul and related Araucaria project;
(3) improvements at Brado.
✓ Banco do Brasil
ᅳ Although we’ve been consistently (and positively) surprised by CEO Paulo Caffarelli's administration, which has accomplished a lot more
than we initially expected, we were still cautious on BB’s ability to grow/recover ROE at a fast pace. At the end of the day, BB was de-
leveraging. But after Q2, with much better earnings power, we became more constructive on BB’s ability, on a fundamental basis, to keep
improving profitability.
✓ Localiza
ᅳ The growth rates in car rental industry have been nothing short of stellar (especially Localiza, whose rent-a-car volumes grew at a 32%
CAGR since 2015, accelerating year after year since then) despite a sluggish GDP scenario.
ᅳ With the corporate demand recovery, still low rental penetration in Brazil and potential for further market share gains, we expect strong
growth rates to persist for longer. Also, given its capital intensiveness and strong growth, Localiza is one of the stocks we cover with the
longest cash flow duration, which means it should outperform in a declining cost of capital scenario.
✓ Renner
ᅳ LREN consistent track record over a long period shows management’s execution discipline, leaving us more comfortable with the
challenges ahead (push-and-pull for core and fashion items + e-commerce’s greater share of sales).
16
Why we selected these stocks
✓ CVC
ᅳ CVC combines a hybrid business model (franchise, own stores, independent agencies, student travel and online) with flawless execution,
as well as diligent acquisitions, delivering solid numbers in recent quarters. Meanwhile, the company’s brand equity, coupled with the
synergies from recent acquired assets (Trend and Visual), and a more positive economic outlook should enable CVC to cement its
leadership in the coming years, while keeping ROIC at ~30%, well above the retail sector’s average. CVC currently trades at 21x PE 2018
(and 17x P/E 2019), being the cheapest premium retailer among our coverage universe.
✓ Tegma
ᅳ The company is highly exposed to the recovery trend of light vehicles sales in Brazil (which is still sub-normal levels). We view Tegma’s
valuation as especially attractive, at only 12x P/E 2019 and a dividend yield above 5%, with improving earnings momentum: following cost-
saving initiatives and revenue growth, we expect profitability to reach historical highs in the near term.
✓ Santos Brasil
ᅳ Supply-demand has been consistently improving at the so-called Santos Cluster, with volumes improving and no (major) container capacity
expansion at Port of Santos (Brazil´s #1 port). Our bullishness on this thesis is enhanced by (i) better growth prospects thanks to stronger
economic activity; (ii) a better profitability outlook due to BRL appreciation (likely attracting more long-haul imported volumes, which are
more valuable for terminals); (iii) stronger (longer-term) container flows on the back of potential new trade agreements and a more open
economy; and (iv) more potential (international) interest in the company’s divestment process, plus better earnings momentum following the
strong EBITDA recovery expected for Q3.
✓ Even
ᅳ In a scenario of lower long-term interest rates and rising consumer confidence, mid/high-income homebuilder Even benefits from stronger
housing demand – selling its finished units in inventory faster and accelerating the pace of project launches. Even’s earnings outlook is
admittedly weak, as the top line is shrinking (on less construction works) and margins are under pressure (cancellations remain high),
leading us to forecast a loss in 2018. But as Even trades at a big discount to peers at 0.6x P/TBV, has comfortable leverage (39%
ND/equity) and generates cash (22% FCF yield ‘19E), we see room for a re-rating, which is why the stock is joining our Small Caps 10SIM.
✓ Marfrig
ᅳ While we acknowledge Marfrig is far from an obvious macro call at a time investors are more likely to focus on domestic, discretionary
consumer names, we believe there’s a strong argument here for investors looking for solid bottom-up names. Marfrig comes from a decade-
long period of poor results, with high leverage pretty much consuming all of its cash flows, leaving little to equity holders. We believe the
company could e entering a new phase, underscored by the recently announced sale of Keystone, and the focus on the beef segment. The 17
result is that Marfrig should now be the least leverage company in the sector, with pro-forma leverage ratio approaching a comfortable 2x.
BTG Pactual’s 10SIM Historical Performance
300 281.8
10SIM portfolio
250 Ibovespa
IBX-50
200
172.3
150
145.5
100
50
0
Sep-09
Sep-10
Sep-11
Sep-12
Sep-13
Sep-14
Sep-15
Sep-16
Sep-17
Sep-18
Mar-18
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Dec-09
Dec-10
Dec-11
Jun-12
Dec-12
Jun-13
Dec-13
Jun-14
Jun-15
Jun-16
Jun-17
Jun-18
Dec-14
Dec-15
Dec-16
Dec-17
Jun-10
Jun-11
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year Ibov. Accum. Ibov Accum.
18
How high can the Ibovespa go?
Just how high can the Ibovespa go?
– We ran a few simulations (more details on the coming slides). In a scenario assuming key constitutional reforms are passed and the
economy starts growing again, the upside could be big. Discussing real interest rates of ~3% may be a bit premature, but if the pension
reform passes, the debate on how low real rates can go will take center stage.
𝑷 𝑹𝑶𝑬𝒍𝒕 −𝒈𝒍𝒕
=
𝑬 𝑹𝑶𝑬𝒍𝒕 𝑲𝒆,𝒍𝒕 −𝒈𝒍𝒕
20
One-stage model…
✓ Scenario 1 – current situation
– For this scenario we are assuming a ROE of 13%, growth rate in nominal BRL of 6.5% and a Ke of 12.0%.
– Under this scenario we would arrive at a target Ibov. of 66,836 points (22% of downside).
✓ BTG Pactual´s equity research team is modeling for 2019 domestic earnings growth of 16.5% y/y, while revenues are
forecasted to climb 9.8% in the same period
24
Domestic-related companies’ earnings set to grow 16.5% in 2019
Sales growth Net margin 2014 2015 2016 2017 2018E 2019E
25
Reduced Selic rates have a big impact on earnings
26
Earnings/GDP growth multiplier consistently above average
2.8x
2.0x
2.4x
-0.7x
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: Company reports and BTG Pactual estimates. 2015/2016 numbers adjusted for gains/losses with derivatives
booked by JBS.
27
Double-digit growth expected for several sectors in 2019
28
Downwards earnings revisions stopped in August
Real GDP growth estimate (Focus survey) Revisions to 2018E and 2019E earnings (domestic companies)
178,024 177,316
2.2% 174,000 172,204
155,780 154,633
1.6% 1.5%
1.4% 147,737 147,938
1.4% 1.4% 1.3%
2018 Domestic Earnings (R$ mn) 2019 Domestic Earnings (R$ mn)
29
Brazilian equities look under-owned
Global and GEM investors have reduced their exposure to Brazil in 2018
✓ In September, Global and GEM funds were close to historical lows. Exposure levels rose slightly in October, but
allocation is still way off levels seen in the recent past.
✓ At the end of October, Global funds had 0.5% of their money parked in Brazil (26% lower than January allocation).
Source: EPFR
31
Huge potential inflows from foreigners
✓ Potential inflows into Brazilian equities is huge
− Although low allocation levels reveal Foreign Investors’ continued (extreme) cautiousness when it comes to investing in Brazil, we see huge
potential inflows into Brazilian equities.
− Assuming allocations return to October 2014 levels, i.e. just before ex-President Rousseff´s reelection, and based on the current AUM
levels of all fund categories, our back-of-the envelope calculation estimates BRL193bn (USD52bn) could flow into Brazilian equities.
4500 25%
4,122
14.8% 2,362
2500 2,246
15.5% 14.9% 15%
2000 1,950
14.3% 14.0% 13%
1,651 1,858 2,104
11.3% 11.6%11.4% 1,420 1,500
1500 10.6% 11%
9.9% 9.8%
1,167 8.7%
1000 717 981
854 893 11.1% 940 11.9% 9%
9.1%
500 8.5%
7%
362 334 356 331 330 405
224 311 321 303 255 278
0 97 88 80 99 113 133 221 5%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Oct-18
Fixed Income AuM (R$bn) Equity AuM (R$bn) Equity Share End of Period Selic Rate
33
Source: EPFR and Anbima
Lower long-term rates to drive locals’ money to equities
✓ As confidence grows, allocations to Brazilian equities should rise
− As the new president’s economic policies become clear, we would expect allocations in Brazilian equities to rise. Increased investors’
confidence in the government´s ability to deal with its fiscal problems should drive long-term real interest rates down, making stocks more
attractive.
− In fact, long-term rates have already come down in recent months, anticipating the new government’s commitment to reducing the fiscal gap.
The long-term 2035 government bond (2035 NTN-B) now pays inflation plus 5.2%, down from inflation plus 5.6% a couple of months ago.
That’s still a juicy return, which should trend down as Brazil´s fiscal accounts improve.
6.0%
11/01/18
03/01/19
03/01/20
07/01/20
11/01/21
03/01/23
07/01/24
11/01/25
03/01/26
03/01/27
07/01/27
07/01/28
11/01/28
11/01/29
07/01/19
11/01/19
11/01/20
03/01/21
07/01/21
03/01/22
07/01/22
11/01/22
07/01/23
11/01/23
03/01/24
11/01/24
03/01/25
07/01/25
07/01/26
11/01/26
11/01/27
03/01/28
03/01/29
07/01/29
34
Source: EPFR and Anbima
Credit Market: Funding costs are plummeting
Brazil’s credit markets are well and truly back on their feet
✓ Average spread (DI+) and tenor of issuances have normalized after tough years
Domestic debentures: average spread (DI+) vs. average tenor of issuances
*issuers/issuances rated AA- or higher )in the Brazilian national scale)
2.50%
2016²
3,3y @ DI+2,3%
2.30%
2.10%
1.90%
1.70%
Avg. Spread (DI+)
2015
3,3y @ DI+1,8%
1.50%
1.30%
2014
4,2y @ DI+1,2%
1.10%
2018
0.90% 4,2y @ DI+1,0%
2017
4,4y @ DI+1,0%
0.70% 2013
5y @ DI+0,9%
0.50%
3.0 3.5 4.0 4.5 5.0 5.5
Avg. Tenor (years)
36
1,863
1,420
1,287 1,297
874 828
670 757
475 515
252 269 312
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Nov-18
Source: Serasa
37
Capital market deals are back
✓ In 2017, international debt markets reopened their doors to Brazilian issuers
– After raising USD30bn in the international bonds market and USD13.8bn in IPOs and Follow-On transactions in 2017, Brazilian companies
have raised USD14.5bn in international bonds and USD7.3bn in IPOs and Follow-Ons so far in 2018.
38
Lower Selic rate: Financing companies is good again
✓ Increasingly high interest for local corporate bonds
– With government bonds yields down, local bond issuances skyrocketed in 2017 and 2018.
The higher NTN-B real interest rates, the lower the appetite for corporate bonds
Local bond market (R$bn)
70.0 8.0%
6.7% 6.7%
95.87 60.0 6.3% 6.1% 6.3% 6.3% 7.0%
Source: ANBIMA, BTG Pactual estimates Source: ANBIMA, BTG Pactual estimates
– While local mutual funds’ asset allocation in fixed-income instruments (ex-government bonds) is still at very low levels, it tends to increase in
the next years.
Local mutual funds’ allocation in fixed income instruments (ex-government bonds)
25.0% 23.2%
19.7%
20.0% 18.7% 18.4%
16.0%
13.9% 13.8%
15.0%
9.4%
10.0%
0.0%
Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Oct-18
39
Total credit Financials Corporates
Claudio Ferraz
claudio.ferraz@btgpactual.com
+55 21 3262-9758
Iana Ferrão
iana.ferrao@btgpactual.com
+55 11 3383-3453
President and Vice-president
41
Main Ministries
42
Main Ministries (II)
44
Heads of key government entities (II)
• Professor at FGV
• Economist at the National Development Bank (BNDES)
• PhD: Economics (University of Chicago) • President of the Brazilian Association Supporting Micro and Small Enterprises
(Sebrae)
Banco do Brasil • Writer of economic books
Rubem Novaes
45
Proposals of the elected President
• Plans to maintain macroeconomic • Plans to gradually change pension • Defends simplifying and unifying • Expand government support,
tripod (fiscal- and inflation-targeting model from distribution to federal taxes and decentralizing and approving solutions to the
regime plus floating exchange rate) capitalization. New participants would 'municipalizing' taxes. problems of caucuses – e.g.
and simplify Brazil's tax system. be able to choose between the two • Opposes taxing large fortunes and backing ‘ruralists’ with land
• Plans to reduce public debt by 20% via systems. Those who opt for inheritances and new taxes on property issues.
privatizations, concessions and sale of capitalization would 'earn' the benefit entrepreneurs. • Reduce the number of ministries.
federal government real estate. of lower labor charges.
• Plans to eliminate primary public • Shortage of resources caused by
deficit in first year of government and transition from one regime to another
convert it into a surplus in second will be remedied by creating a fund to
year. strengthen social security financing and
offset the reduction of social security
contributions in the old system.
• Plans to implement a wide-sweeping • Reduce the primary deficit to zero in • Will preserve inflation-targeting • Defends stronger trade ties with
privatization program. 2019 and turn it into a surplus during regime. China and US and closer ties with
• All resources from privatizations and the second year of government. • Defends autonomy and Chile.
concessions must be used to pay • Promote a Tax Reform to unify taxes independence of Central Bank, with • Reduce importance of Mercosur
public debt. and simplify the national system. 4-year regimes that do not coincide in international trade.
• Reduce the tax burden whilst creating with the 4-year term of Brazil’s • Plans to promote greater
room to rein in expenditures. President. openness of the economy.
• Reduce debt via spending control and • Critical of Petrobras’ daily price
less red tape. adjustment.
• Reduce the size of the State.
46
Proposals of the elected President (II)
• Doesn’t plan to privatize Banco do • Less bureaucracy and privatization of • Create a new federal agricultural • Plans to keep social programs such
Brasil or Caixa Econômica Federal. infrastructure projects, generating structure, with a dedicated as
low regulatory risk for investments. agricultural policy. ‘Bolsa Familia’, ensuring a
• Integrate Northeast region with the • Centralize agribusiness demands at a minimum level of subsistence for
country’s developed regions. single ministry. families.
• Increase port efficiency. • Create specific policies to consolidate • Defends a family planning program
• Promote investments in railways, and open up new external markets. to control birth rates.
waterways and improvements in the
quality of highways.
• Create the National Electronic Record • Defends distance learning, from basic • Reduce minimum criminal age to 16. • Plans to create Economy Ministry,
with the aim of integrating the to higher education. • Ease gun ownership rules. Promises covering functions currently
national health system. • Militarization of education with to restructure the Disarmament performed by the Finance, Planning
• Establish neonatal programs military schools. Initially, create Statute. and Trade Ministries, as well as the
(including dental check-ups) schools in São Paulo – Campo de • Provide legal backing to security Executive Secretariat of the PPI
throughout the country. Marte. officers and to anyone who reacts to (Investment Partnership Program).
• Include physical education • Invest in university research. a crime or property invasion.
professionals in family health • Against quota policy in universities. • End the progression of prison
program. • Defends schools without political sentences and temporary releases.
influence from teachers. • Restructure the human rights policy.
• Reinforce the role of Brazil’s Armed
Forces in combating organized crime.
47
Proposals defended by the Finance Minister
Delinking Give more freedom to the Budget, which today has minimum compulsory
Constitutional amendment High
the budget expenditures (inflation-adjusted) for health and education
Pension reform Proposal provides for capitalization system (individual accounts) for new entrants Constitutional amendment High
Change income tax to 20% (no details on if there will be changes to income tax
20% income tax Ordinary law High
bands and brackets)
Government is talking about privatizing or liquidating companies such as EPL (bullet Control of some state-owned companies, such as EPL,
Privatizations Medium
train) and Valec (railroads) can only be sold if authorized by law
48
Proposals defended by the Finance Minister (II)
Reduction in minimum age for carrying weapons from 25 to 21, and waiving the
Possession and carrying of Must be approved in congress since it requires
requirement to declare the need to own a gun. Carrying a weapon is authorized for Medium
weapons changes in the disarmament statute.
those above the age of 25 who meet the gun possession criteria.
Sell, for example, areas of public banks not directly related to banking, such as Some experts say it needs approval via law, such as
Sale of subsidiaries Medium
insurance and cards the sale of state-owned companies
13th Bolsa Família extra year- During the election campaign, Bolsonaro promised a 13th (extra monthly) salary for
Provisional measure Medium
end allowance the Bolsa Família family allowance program
The new portfolio, which will coexist with the current one, will guarantee only
Green and yellow wallet constitutional rights such as paid vacations, 13th year-end bonus salary and FGTS Provisional measure Medium
(Workers´ Severance Fund)
Lower industry tariffs and Cautious and negotiated trade opening, under a pro-competitive agenda; avoids a
Government decree Low
gradual trade opening reduction in trade tariffs with no counterpart measures
49
Procedural passage of main legislative rules
One of the main obstacles to the approval of the Social Security Reform is that the proposal requires changes in the text of the Constitution. The
criteria for approval of a constitutional amendment are much stricter than for approval of statutory legislation.
Constitutional Amendment (EC) Statutory Law (LO) Supplementary Law (LC) Provisional Measure (MP)
Votes required
for approval
(more than 50% of total votes, excluding (more than 50% of total votes, excluding
(308 federal deputies and 49 senators) abstentions. An absolute majority must be present (257 federal deputies and 41 senators) abstentions. An absolute majority must be
for the bill to be voted) present for the bill to be voted)
Legal Committee in the House of Representatives Thematic committees Thematic committees Joint congressional committee
(CCJC)1 2 2
(may have a conclusive nature ) (may have a conclusive nature )
»
»
Legal Committee in the House of Legal Committee of the House of
Special Committee (CE) 1 round in House of Representatives
Representatives (CCJC)1 Representatives (CCJC)1
»
»
2 rounds in House of Representatives 1 round in House of Representatives 1 round in House of Representatives 1 round in Senate
Processing
»
Thematic committees Thematic committees Signed into law or vetoed by president
CCJ3
2 2
(may have a conclusive nature ) (may have a conclusive nature )
»
»
2 rounds in the Senate CCJ3 CCJ3
»
»
Enactment 1 round in Senate 1 round in Senate
»
»
Signed into law or vetoed by president Signed into law or vetoed by president
1If rejected, one-third of deputies may call a floor vote. 2 This means that the bill would not need to be put to a floor vote. 3 If rejected, one-third of senators may call a floor vote.
CCJC: Commission on Constitution, Justice and Citizenship in the House of Representatives; CE: Special Committee; and CCJ: Commission on Constitution and Justice in the Senate.
Source: Brazilian Constitution, Rules of Order of House of Representatives, Rules of Order of Senate, BTG Pactual
50
Constitutional amendments usually take long to get approved
• The fastest approval of a constitutional amendment occurred in 4 months, while the longest approval is 155 months. The median time is 21 months. The Social
Security reform approved by the Fernando Henrique Cardoso (FHC) administration took 45 months to be approved. The reform approved by the Lula
administration, which was much narrower than that of the FHC government, took 8 months.
• The procedural passage track record of PECs suggests that approval of the Social Security reform in the first half of 2019 would be atypical. Only 8 of the 99
amendments were approved within six months
45
37
21
8
4
Source: House of Representatives, Senate, BTG Pactual
Party 2014 election Currently 2018 election Growth/reduction in number of seats: Growth/reduction in number of seats:
PT 69 61 56
PSL 1 8 52 2018 vs. 2014 election 2018 election vs. current level
PP 38 50 37
MDB 65 51 34
PSL 51 PSL 44
PSD 36 37 34 10 9
PR 34 40 33
DEM 8 PDT 9
PSB 33 26 32 8 8
PRB 20 21 30 Novo 8 PSB 6
PSDB 54 49 29 7 4
DEM 21 43 29 AVANTE 6 PRP 4
PDT 20 19 28 5 3
SD 15 10 13 PATRI 3 PMN 3
1 2
PODE 4 17 11
PRP 1 PHS 2
PSOL 5 6 10 1 2
PTB 25 16 10 REDE 1 PV 1
PC do B 10 10 9 0 1
PSC 13 9 8 PTC 0 PPS 0
PPS 10 8 8 -1 0
PROS 11 11 8 PR -1 PPL 0
Novo 0 0 8 -1 0
PC do B -1 PRTB 0
AVANTE 1 5 7
PHS 5 4 6 -1 -1
PRTB -1 PSC -1
PATRI 2 5 5
-2 -1
PV 8 3 4 SD -2 PSD -3
PRP 3 0 4 -2 -3
PMN 3 0 3 PSDC -2 PT -5
PTC 2 0 2 -3 -6
PPL 0 1 1 PV -4 PTB -6
DC 2 0 1 -5 -7
PT -13 PP -13
REDE 0 2 1
-15 -14
PSDC 2 0 0 PSDB -25 MDB -17
PRTB 1 0 0 -31 -20
Total 513 512 513
Source: Superior Electoral Court, House of Representatives, BTG Pactual
52
MDB lost most Senate seats in the upcoming legislature
Party 2014 election Currently 2018 election Growth/reduction in number of seats: Growth/reduction in number of seats:
MDB 18 18 12 2018 vs. 2014 election 2018 election vs. current level
PSDB 10 12 8
DEM 5 5 7
PT 12 9 6
REDE 5 REDE 4
PP 5 6 6 4 4
PSD 3 5 6 PSD 3 PDT 3
PDT 8 3 6 2 2
PSB 7 3 5 PPS 2 PSB 2
REDE 0 1 5 2 2
PSL 0 0 4 PP 1 PHS 2
PTB 3 2 4
1 1
PSC 1 PPS 1
PR 4 4 2 1 1
PPS 0 1 2 PRP 1 PSC 1
PHS 0 0 2 0 1
PRB 1 2 1 SD 0 PP 0
SD 1 0 1 0 0
PSC 0 0 1 Novo 0 PSOL 0
PODE 0 5 1
0 0
PTC 0 PATRI 0
PROS 1 1 1 0
PRP 0 0 1 -1
PSOL -1 PC do B -1
PSOL 1 0 0
-1 -1
PC do B 1 1 0 PV -1 PTC -1
Novo 0 0 0 -2 -1
PATRI 0 0 0 PDT -2 PR -2
PV 1 1 0 -2 -3
PTC 0 1 0 PR -2 PSDB -4
No party 0 1 0 -6 -4
PT -6 MDB -6
Total 81 81 81
53
Bolsonaro’s possible base of support looks good
Lower House composition after 2018 election
The number of parties will remain at a high level in the next legislature (2019-22)
PT 56
PDT 28 Parties which probably will support
PSB 32 Left parties Bolsonaro’s administration
PSOL 10 148 in 2018 election
PC do B 9
(vs. 157 in 2014)
PROS 8
PV 4
Rede 1
PPL 1
Avante 7 Left parties
PPS 8
PSDB 29
MDB 34
Novo 8
PMN 3
PTC 2
Patriotas 5
PHS 6
DC 1
PRP 4
PSC 8
SD 13
Podemos 11 Parties which will
PTB 10 probably support
PR 33 Bolsonaro’s
PSD 34
administration: 268 in
PP 37
DEM 29 2018 election
PRB 30 (vs. 214 in 2014)
PSL 52
54
Bolsonaro’s possible base of support looks good
✓ Bolsonaro may have more than 50% of the votes in the Lower House.
Lower House
Bolsonaro's support base Opposition Independents
Party # of seats % of total Party # of seats % of total Party # of seats % of total
PSL 52 10.1% PT 56 10.9% MDB 34 6.6%
PP 37 7.2% PDT 28 5.5% PSDB 29 5.7%
PSD 34 6.6% PSB 32 6.2% PPL 1 0.2%
PR 33 6.4% PV 4 0.8% PMN 3 0.6%
DEM 29 5.7% Rede 1 0.2% PTC 2 0.4%
PRB 30 5.8% PROS 8 1.6% Patriotas 5 1.0%
Podemos 11 2.1% PSOL 10 1.9% Avante 7 1.4%
PTB 10 1.9% PcdoB 9 1.8% PPS 8 1.6%
PSC 8 1.6% 148 28.8% Novo 8 1.6%
PHS 6 1.2% 97 18.9%
SD 13 2.5% Total 513
PRP 4 0.8%
DC 1 0.2%
268 52.2%
55
State-owned companies: A long list of assets to sell
A big government
✓ A Finance Ministry report a few weeks ago shows that there were 148 Federal government-owned companies in
Brazil at the end of 2017, 5 less than at the end of 2016
– However, since the end of 2004, i.e. in the past 13 years, 16 new state-owned companies were created.
– The chart below shows the different types of stakes held by the government. It controls some companies directly, some indirectly and is a
minority investor in others.
Types of ownership
Equity Share
Control Minority
Interest Interest
Federal Government Companies
57
47 directly-controlled companies
✓ At the end of 2017, the government controlled 47 companies directly, including high-profile listed companies like
Petrobras, Eletrobras and Banco do Brasil.
Companies directly controlled by the government
Controlling stake - 148 companies
Direct control - 47 Companies
✓ In addition to the 47 directly controlled companies, the government controls 101 companies indirectly.
– Brazil’s new administration has been talking about privatizing a large number of companies but has reiterated that it doesn’t intend to
privatize Petrobras or Banco do Brasil (and maybe not even Eletrobras).
– However, Petrobras, Eletrobras and Banco do Brasil control together 92 subsidiaries. By selling some of these subsidiaries, the government
can slash the number of state-owned companies.
✓ The government also has minority stakes in 58 companies from a range of sectors.
– Of these, 27 have an equity value above R$100mn. The government also has golden shares in three privately-controlled listed companies:
Vale, Embraer and IRB.
59
Broad privatization program could slash debt levels
314
293
281 277
270 270
34
36
37 40
229
32 62 34
20 35 205
15 25
179 18 34
168 27
66 61 61 22
52 66
28 26 63
27 55
13 30 34 33 35 31
13 40
28
25 31 34 29 26 44
36 39
24 23
20
17 18 19
37 33
96 95 98 100 89
73 72 76
46 53
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
60
Profits of state-owned companies have plummeted
✓ The three big listed state-owned companies were trading at or below their book values at the end of 2017.
Price/Book Value: Petrobras, Eletrobras and Caixa
1.03 x 1.03 x
0.92 x
0.83 x 0.82 x 0.84 x
0.79 x
0.72 x
0.58 x
0.52 x 0.50 x
0.41 x 0.39 x
0.22 x
0.15 x
Petrobras BB Eletrobras
✓ The profits generated by government-controlled companies have also plummeted in recent years, as shown in the
table below.
Earnings of companies directly controlled by the government (R$mn)
Company 2012 2013 2014 2015 2016 2017
64
A slow recovery after the worse GDP performance in decades
Deviation from the peak before recession GDP – Median market forecasts (Focus report)
Source: IBGE and Central Bank of Brazil Source: IBGE and Central Bank of Brazil
65
Industrial activity bounced back from the strike
Mar-07
Mar-12
Mar-17
Jul-05
Jul-10
Jul-15
Nov-03
Nov-08
Nov-13
Sep-04
Sep-09
Sep-14
May-06
May-11
May-16
Jan-03
Jan-13
Jan-18
Jan-08
Oct-07
Jul-08
Oct-10
Jul-11
Oct-13
Jul-14
Oct-16
Jul-17
Jan-07
Jan-10
Jan-13
Jan-16
Apr-09
Apr-12
Apr-15
Apr-18
66
Commerce: Retail sales was also impacted by the strike
✓ And recovery has been at a much slower pace…
Retail Sales, index s.a. (2014=100) Chart 1: Retail Sales breakdown, index s.a (3-month moving average)
105
170
100
150
95 130
90 110
85 90
80 70
Oct-10
Oct-13
Oct-16
Jul-14
Jul-17
Jul-11
Jan-10
Jan-13
Jan-16
Apr-12
Apr-15
Apr-18
Jul-12
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Jul-18
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
67
Services: lagging behind in the ongoing economic recovery…
105
100
95
90
85
Dec-14
Oct-13
Jul-15
Feb-16
Sep-16
Jun-18
Jan-12
May-14
Nov-17
Mar-13
Apr-17
Aug-12
68
Consumption and investment show signs of recovery
✓ But remain low by historical standards, and the GDP should end 2018 5% below the 2014 peak
210
190
170
150
130
110
90
70
Mar-96
Mar-01
Mar-06
Mar-11
Mar-16
Nov-97
Nov-02
Nov-07
Nov-12
Nov-17
Jul-99
Jul-04
Jul-09
Jul-14
Consumption Investment GDP
69
Labor market: employment has improved of late…
✓ But driven by low paying, less secure, non-payroll jobs
Millions
Millions
12 12.1% 105
11.7% 92
11 103
10 91
101
9 90
99
8
97 89
7
6 95 88
Oct-12
Dec-13
Jul-14
Feb-15
Sep-15
Jun-17
May-13
Jan-18
Mar-12
Apr-16
Nov-16
Aug-18
Sep-12
Sep-13
Sep-14
Sep-15
Sep-16
Sep-17
Sep-18
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Mar-18
70
Thousands
200
400
600
800
-600
-400
-200
Mar-04
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Actual
Mar-11
Mar-12
Mar-13
Mar-14
Net payroll jobs, s.a.
Mar-15
Forecast
Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
...and the adjustment will take long
10
11
12
13
14
6
7
8
9
Mar-12
Oct-12
May-13
Dec-13
Jul-14
Feb-15
Sep-15
Actual
Apr-16
Nov-16
Jun-17
Jan-18
Forecast
Aug-18
Unemployment rate, s.a. %
Mar-19
Oct-19
11.8
Dec-18
May-20
11.1
Dec-19
Dec-20
71
Credit market has shown some positive signs
✓ With momentum slowly increasing
Dec-12
Jul-10
Jul-15
Oct-11
Jul-13
Oct-18
Sep-09
Sep-14
Feb-14
Sep-14
Jun-16
May-12
Jan-17
Jan-08
May-11
Jan-13
May-16
Jan-18
Nov-15
Nov-08
Nov-13
Mar-11
Mar-18
Mar-07
Mar-12
Mar-17
Apr-15
Aug-17
Total Households Non-financial corporations Households Non-financial corporations (rhs)
72
Leverage has fallen over the past years
✓ Despite worsening slightly at the margin
50
24
45 23
42.1
40 22
35 21
20 20.0
30
19
25 23.7 18
17 17.6
20
16
15
15
Dec-05
Oct-07
Jul-10
Dec-16
Sep-08
Feb-15
Jun-11
Jan-05
Jan-16
May-12
Nov-06
Mar-14
Nov-17
Apr-13
Aug-09
Dec-05
Dec-16
Oct-07
Jul-10
Sep-08
Feb-15
Jun-11
May-12
Jan-05
Jan-16
Nov-06
Nov-17
Mar-14
Apr-13
Aug-09
Total Ex-mortgage Total Ex-mortgage
73
Business and consumer confidence have started to improve
✓ But remain below their historic average (mean=100)
75 70
65 60
Jul-06
Jul-11
Jul-16
Sep-05
Sep-10
Sep-15
May-07
May-12
May-17
Jan-09
Jan-14
Mar-08
Nov-09
Mar-13
Nov-14
Mar-18
Jul-07
Jul-12
Jul-17
Sep-06
Sep-11
Sep-16
May-08
May-13
May-18
Jan-05
Jan-10
Jan-15
Mar-09
Mar-14
Nov-05
Nov-10
Nov-15
Current situation Expectations Confidence index Current situation Expectation Consumer confidence index
74
A confidence boost improves the outlook for GDP growth
May-16
Dec-09
Feb-08
Oct-11
Sep-12
Feb-19
Mar-07
Mar-18
Jun-15
Nov-10
Jan-09
Jul-14
Aug-13
Apr-17
Nov-07
Nov-12
Nov-17
Sep-08
Sep-13
Sep-18
May-10
May-15
Jul-09
Jul-14
Jul-19
Mar-11
Mar-16
Jan-07
Jan-12
Jan-17
Source: IBGE, FGV and BTG Pactual Source: IBGE, FGV and BTG Pactual
75
4
8
6
10
12
14
Sep-92
Jun-94
Mar-96
Dec-97
Sep-99
Jun-01
Mar-03
Dec-04
How much slack?
Sep-06
Jun-08
Mar-10
Dec-11
Unemployment rate, s.a. %
73
75
77
81
85
87
79
83
Jan-05
Oct-05
Jul-06
Apr-07
Jan-08
Oct-08
Jul-09
Apr-10
Jan-11
Avera ge
Oct-11
2007-2017
Jul-12
Apr-13
Jan-14
Avera ge
Oct-14
2012-2017
Jul-15
Apr-16
Jan-17
Capacity Utilization in Industry, %
Oct-17
Jul-18
78.4
80.4
75.3
76
Benign inflation scenario
✓ Benign inflation scenario in the short and medium term.
– In the short term, energy prices (electricity tariffs and fuels) are declining significantly.
– Sizable slack in the economy favors contained inflationary pressures.
– In fact, underlying inflation measures running at a weak pace for this time of year.
– Medium and long-term inflation expectations remain well-anchored, amidst declining inflation targets.
– Central Bank credibility will be critical to maintain inflation expectations anchored should the BRL faces a more volatile environment.
– Our expectation for the IPCA is 3.8% for 2018 (target: 4.5%) and 4.2% for 2019 (target: 4.25%)
IPCA 2018-2020 (12-month accumulated inflation, %)
20
15
10
0
May-17
Dec-16
Oct-17
Sep-15
Feb-16
Sep-20
Jun-14
Jun-19
Nov-14
Nov-19
Mar-18
Jul-16
Jan-14
Jan-19
Aug-18
Apr-15
Apr-20
IPCA Monitored prices Free prices
Source: IBGE and BTG Pactual
77
Benign inflation outlook in the short term
✓ Energy prices and core measures have helped...
Seasonality: Headline
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
-0.2
-0.4
15-Nov
15-Jan
15-Apr
15-Jun
15-Jul
15-Aug
15-Oct
15-Mar
15-May
15-Dec
15-Feb
15-Sep
Median 2017 2018 2019
Source: IBGE and BTG Pactual
Seasonality: Gasoline Seasonality: Electricity
Source: IBGE and BTG Pactual Source: IBGE and BTG Pactual
78
Benign inflation outlook in the short term
✓ Energy prices and core measures have helped...
3.80 1.20
3.60 1.00
3.40 0.80
Jan-18
Jan-18
Jun-18
Jun-18
Oct-17
Oct-18
Oct-18
Aug-18
Aug-18
Nov-17
Nov-17
Nov-18
Dec-17
Sep-17
Sep-17
Feb-18
Sep-18
Dec-18
Mar-18
Mar-18
Jul-18
Apr-18
May-18
79
Benign inflation outlook in the short term
✓ With core measures trending around comfortable levels
Seasonality: core measures (average) Seasonality: core services (as per BCB)
0.8 1.2
0.7 1.0
0.6
0.8
0.5
0.6
0.4
0.4
0.3
0.2
0.2
0.1 0.0
0.0 -0.2
15-Mar
15-Feb
28-Feb
28-Mar
15-May
28-May
15-Sep
28-Sep
15-Feb
28-Feb
15-Mar
28-Mar
15-May
28-May
15-Sep
28-Sep
15-Aug
28-Aug
15-Oct
28-Oct
15-Dec
28-Dec
15-Jan
28-Jan
15-Apr
28-Apr
15-Aug
28-Aug
15-Oct
28-Oct
15-Dec
28-Dec
15-Jan
28-Jan
15-Apr
28-Apr
15-Nov
28-Nov
15-Nov
28-Nov
15-Jun
28-Jun
15-Jul
28-Jul
15-Jun
28-Jun
15-Jul
28-Jul
Median 2017 2018 2019 Median 2017 2018 2019
Source: IBGE and BTG Pactual Source: IBGE and BTG Pactual
80
12-month services inflation at low levels
12
10
2
Jan-02
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Jan-03
81
Benign inflation outlook in the medium term
✓ Inflation expectations remain well anchored
20
IPCA Monitored Free
15
2016 6.3 6.5 5.5
10 2017 2.9 1.3 8.0
5 2018F 3.8 3.0 5.8
0 2019F 4.2 3.8 5.3
May-17
Dec-16
Oct-17
Sep-15
Feb-16
Sep-20
Jun-14
Jun-19
Nov-14
Nov-19
Mar-18
Jan-19
Aug-18
Apr-15
Apr-20
82
2020 2018
2.5
3.5
4.5
5.5
6.5
2.5
3.5
4.5
5.5
6.5
2
3
4
5
6
3
4
5
6
jan-16 jan-16
mar-16 mar-16
Source: BCB
mai-16 mai-16
jul-16 jul-16
set-16 set-16
nov-16 nov-16
jan-17 jan-17
mar-17 mar-17
2018
mai-17 mai-17
2020
jul-17 jul-17
set-17 set-17
nov-17 nov-17
jan-18 jan-18
mar-18 mar-18
mai-18 mai-18
jul-18 jul-18
Midpoint target and target band
✓ Inflation expectations remain well anchored
set-18 set-18
4.00
3.94
2021 2019
2.5
2.5
3.5
3.5
4.5
5.5
6.5
4.5
5.5
6.5
2
3
2
3
4
5
6
4
5
6
jan-17 jan-16
fev-17 mar-16
mar-17
abr-17 mai-16
Benign inflation outlook in the medium term
mai-17 jul-16
jun-17 set-16
jul-17
ago-17 nov-16
set-17 jan-17
out-17 mar-17
2021
2019
nov-17
dez-17 mai-17
jan-18 jul-17
fev-18 set-17
mar-18
abr-18 nov-17
mai-18 jan-18
jun-18
mar-18
jul-18
ago-18 mai-18
set-18 jul-18
Midpoint target and target band
Midpoint target and target band
83
out-18
set-18
nov-18
nov-18
4.12
3.86
External accounts remain at a good shape
✓ The current account deficit will increase in 2018, owing mainly to a decline in the trade balance. We expect an
increase in the current account deficit in 2019, primarily owing to more robust economic growth, which will likely
increase imports and other expenditures such as remittances of profits and dividends
– FDI will remain relatively stable in 2018 in comparison with 2017. However, the composition will change, with a sharp increase in
intercompany loans and a decline in equity capital. The prospects of higher GDP growth in the coming years will contribute to increase the
FDI in 2019. FDI will continue to finance the current account deficit comfortably in 2018 and 2019.
– International reserves remain at a very high level, helping keep Brazil’s external vulnerability at a low level.
– The adverse external scenario for EM economies tends to curb further BRL appreciation in 2018. The dynamic of the exchange rate in 2019
will depend on the capacity of the new administration to implement the structural reform agenda.
101.2
88.5 97.2
86.6 77.8 85.0
74.7 70.7 80.0
69.7
50.7 66.0
54.1 60.9 55.0
31.5
20.1 24.1
12.6 12.4 15.3
5.2
-5.2 -7.0
-9.8 -14.0
-26.3 -23.7 -30.0
-30.6
-59.5
-75.8 -77.0 -74.2 -74.8
-104.2
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018e 2019e
84
Balance of Payments overview
2010 2011 2012 2013 2014 2015 2016 2017 2018e 2019e
Current account -75.8 -77.0 -74.2 -74.8 -104.2 -59.5 -23.7 -9.8 -15.0 -30.0
Trade Balance 18.5 27.6 17.4 0.4 -6.6 17.7 45.0 64.0 54.0 45.0
Exports 201.3 255.5 242.3 241.6 224.1 190.1 184.5 217.2 239.2 275.0
Imports 182.8 227.9 224.9 241.2 230.7 172.4 139.4 153.2 185.2 230.0
Services -30.2 -37.2 -40.2 -46.4 -48.1 -36.9 -30.4 -33.9 -35.0 -40.0
Travel -10.7 -14.7 -15.7 -18.6 -18.7 -11.5 -8.5 -13.2 -13.0 -15.0
Operational leasing -13.7 -16.7 -18.7 -19.1 -22.6 -21.5 -19.5 -16.8 -15.5 -19.0
Other -5.7 -5.8 -5.8 -8.8 -6.8 -3.9 -2.5 -3.8 -6.5 -6.0
Primary income -67.1 -70.5 -54.3 -32.5 -52.2 -42.9 -41.2 -42.6 -36.7 -38.6
Compensation of employees 0.5 0.6 0.5 0.5 0.4 0.3 0.3 0.3 0.3 0.4
Interest -12.0 -14.4 -16.6 -19.3 -21.4 -22.5 -22.1 -21.9 -19.0 -14.4
Profits and dividends -55.6 -56.6 -38.2 -13.7 -31.2 -20.8 -19.4 -21.0 -18.0 -24.0
Secondary income 2.9 3.0 2.8 3.7 2.7 2.8 2.9 2.6 2.7 3.0
Capital and financial account -76.3 -79.5 -74.2 -74.1 -100.9 -55.6 -16.8 -6.6 -9.0 -25.0
Capital account 0.2 0.3 0.2 0.3 0.2 0.5 0.3 0.4 0.4 0.5
Investments - assets 71.8 35.0 36.5 62.2 79.5 53.9 45.4 62.9 50.0 70.0
Direct investment 26.8 16.1 5.2 14.9 26.0 13.5 12.8 6.3 2.0 10.0
Portfolio investments -0.6 -5.2 3.8 3.4 -1.4 -1.1 -1.7 -6.7 0.0 5.0
Other assets 45.7 24.1 27.5 43.9 54.9 41.5 34.3 63.4 48.0 55.0
Investments – liabilities 197.1 172.9 129.3 130.0 192.5 114.1 70.2 74.9 84.0 129.0
Direct investment 88.5 101.2 86.6 69.7 97.2 74.7 77.8 70.7 80.0 85.0
Portfolio investments 55.2 12.4 17.0 42.1 38.6 26.5 -15.6 0.6 -1.0 17.0
Equity and investment fund shares 37.7 7.2 5.6 11.1 11.5 9.8 11.0 5.7 4.0 12.0
Debt securities 17.5 5.3 11.4 31.0 27.1 16.7 -26.7 -5.1 -5.0 5.0
Long-term loans and debt securities issued abroad 30.1 47.7 18.7 2.5 21.6 -3.6 -15.7 -5.7 0.0 7.0
Short-term loans and debt securities issued abroad 27.4 -3.9 -4.1 -0.1 24.9 -6.3 4.4 -5.3 0.0 5.0
Other liabilities -4.1 15.5 11.1 15.9 10.3 22.7 19.4 14.6 5.0 15.0
Financial derivatives – assets and liabilities 0.1 0.0 0.0 -0.1 1.6 3.4 -1.0 0.7 3.0 5.0
Reserve assets 49.1 58.6 18.9 -5.9 10.8 1.6 9.2 5.1 22.4 29.5
Errors and omissions -0.4 -2.5 0.1 0.7 3.4 3.8 6.9 3.3 6.0 5.0
85
Slight increase in the current account deficit in 2018
✓ The current account deficit will increase just slightly in 2018, to 0.8% of GDP from 0.5% of GDP in 2017. The decline
in the trade balance will be the main driver of the reduction in the current account deficit in the year. On the other
hand, net expenditures with income fell in 2018, curbing a higher increase in the current account.
– The increase in the current account deficit in 2019 will be driven mainly by an acceleration in imports, in turn reflecting higher growth in
domestic demand.
Current account balance 12-month accumulated (left axis: US$bn; right axis: % of GDP)
30 2.0
1.7
1.5
1.2
10 1.0
4 11 14 13 0
0.7
-8 -10
-10 0.0 -15 0.0
-25 -24 -26 -24
-30
-0.5
-0.8
-30 -59 -1.0
-31 -1.3
-76 -77 -74 -75
-1.6 -1.6 -1.5
-1.8
-50 -2.0
-104
-3.4 -3.3
-3.8
-90 -4.0
-4.2 -4.2
-110 -5.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018e2019e
86
Higher current account deficit in 2018; Slightly worse trade balance
✓ The reduction in the trade balance in 2018 has been partially offset by the decline in net expenditures with income
(remittances of profits and dividends and interest payments). Net expenditures with services (e.g. travel and
equipment rental) have remained relatively stable in the year.
87
Trade balance remains at a high level in 2018
64
52 54 54
48 54
45
43 45 38 45
38 33
33 29 25
23 22 23 28
24 20 18 24 25
15 16 15
18 17 18 14
13 11
7 7 12
3 2 1
2 0
-2
0 -1 -7
-3
-6
-8 -10
-13
Exports (year-on-year -17
change)
88
Exports overview: countries, products and share
90
16
79 36
16
5
NAFTA European Union
Latin America (ex-Mexico) Middle East
53 Asia (ex-Middle East) Africa
Other Countries
43
38
30 29
26 25 24
Main products – Exports (%)
20 19 1
15 10
13 11
1 9
42
7
15
6 10
89
Significant growth of imports in 2018
✓ Growth in exports in 2018 was explained by an increase in prices and quantum, while growth in the quantum was
the main driver of expansion in imports.
Exports: price, quantum and value (%, y/y) Imports: price, quantum and value (%, y/y)
Value Value
32 44 42
23 27
18 30 32
16 17 24 24
10 17 20
14 10
2 7
0 -3 -3 -1 -1
-5 -7 -4
-15 -15 -15 -20
-23 -26 -25
26 Price Quantum 37
19 21 23 Price Quantum
16
8
11 10 9 11 129 13 11 10 8 10 18
22 22
7 4 16 18
3 3 5 3 5 3 3 3 3 13 11 14 13
10 7 8 9 9
2 0 3
6 5 4 1 45 6
0
-2 0 -2
-7
-3 -5 -5 -3 -5 -6
-13 -11
-13 -3 -3 -2 -1 -2-3
-5 -4
-22 -11 -12 -9
-15 -12
-17 -15 -12
Source: MDIC, FUNCEX and BTG Pactual Source: MDIC, FUNCEX and BTG Pactual
90
FDI may increase significantly in 2019
✓ FDI will remain relatively stable in 2018 in comparison with 2017. However, the composition will change, with a sharp
increase in intercompany loans and a decline in equity capital.
– The prospects of higher GDP growth in the coming years will contribute to increase the FDI in 2019. FDI will continue to finance the current
account deficit comfortably in 2018 and 2019, we believe.
101
97
88 16 87 85
78 80
13 75
23 70 39 71 18
18 24 24
12
51
45 38
21 85
33 31 75
19 67
3 64
23 58 57 59 56
19 12 54
17 18
4 15
30 10 4 30 31
26
19 17 1 19 15 15 20
9
-1 0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018e2019e
91
Share of Brazil in EM FDI is higher than 15%
✓ Brazil’s Foreign Direct Investment (FDI) has accounted for around 15% of the total FDI received by Emerging
Markets since 2011 (excluding 2014, when this share declined to 10.7%).
– The share of Brazil in world FDI is around 3.5% in 2018, much higher than it was in the previous decade.
22.9
20
16.5
15.6 15.9 15.7
15 15.2
14.5 14.1
13.6
12.3
10.7
10
9.2 9.2
8.2 8.3
7.5
92
Brazil was the sixth highest receptor of world FDI
2006 27
Netherlands (2) 210 China (2) 244 China (2) 242 Netherlands (2) 317
2007 21
United States (3) 142 Netherlands (3) 116 Ireland (3) 235 China (3) 168
2008 14
China (4) 104 Belgium (4) 111 Hong Kong (4) 181 Hong Kong (4) 122 2009 14
France (5) 85 Brazil (5) 88 Netherlands (5) 181 Germany (5) 78 2010 5
2011 5
Austria (6) 81 Germany (6) 86 Switzerland (6) 116 Brazil (6) 71
2012 5
Germany (7) 60 Hong Kong (7) 83 Brazil (7) 75 United Kingdom (7) 65
2013 6
Ireland (8) 47 Arab World (8) 70 Singapore (8) 71 Singapore (8) 64 2014 5
2015 7
Arab World (9) 46 United Kingdom (9) 67 Canada (9) 62 France (9) 47
2016 7
Brazil (21) 15 Singapore (10) 55 Germany (10) 54 Australia (10) 45
2017 6
Country (#), where # is position in the ranking of the highest receptors of FDI.
93
Foreign investments in portfolio will remain low in 2018
✓ Foreign investments in portfolio have remained highly volatile in 2018. These investments will continue to be much
lower in 2018 than what we saw up to 2015.
Foreign investment in portfolio (US$ bn) Foreign investment in portfolio (12-month, US$ bn)
Equity and investmets fund 42.1
Debt securities issued in Brazil 38.6
Portfolio investment
26.5
31.0 27.1
10.1 10.3 17.0
12.4 16.7
6.0 6.2
5.3 11.4
5.4 0.6
11.1 11.5 9.8 11.0
3.1 2.2 7.2 5.6 5.7 0.7
1.4
4.1 4.1 -0.1 1.5
-5.1
0.6
2.8 2.3 -3.1
0.7 0.5 0.6
-0.1 -2.4
-1.9 -2.7 -26.7
-4.1 -4.4 -1.2
-3.0 -3.1 -0.8
-3.5 Equity and investmets fund
-7.7
-5.7 -2.0
-3.7 -6.4 Debt securities issued in Brazil
-15.6
-7.8 -7.8
Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 Oct-18 2011 2012 2013 2014 2015 2016 2017 Oct-18
94
External debt stable in the last four years
✓ Brazil's total external debt remained relatively stable in the past four years at approximately USD540bn.
– The external debt of the public sector has remained relatively stable since 2012.
– The external debt of the private sector increased significantly from 2009 to 2014, but since then has declined gradually.
– External debt of intercompany loans increased significantly from 2005 to 2018 and has accounted for the bulk of external debt since 2016.
487
455
208
416 206 222 228 244
128 174
352
106
278 95
263
235 241
226 228 220 214
65 79 199 207
17 20 199 47 190 195 184
19 188 196 173
19 27 153
85 79 69
102
107 114 103
69 83
125 136 132 128 123 139 128 127 133 127
108 100 96 104 114
89 86 84
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Oct-18
External Debt - Public Sector External Debt - Private Sector Intercompany Loans
95
Short-term external debt account for less than 15% of total
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Jun-18*
96
International Reserves still at a high level
US$ bn
% of GDP
20 20
20
18
15 15
14 15
13 13
13
11 373 365 374 381
352 359 364 356
9 289
7 8 8 239
6 6 194
180
5
86
49 53 54
33 36 38
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Nov-18
97
Brazil’s exports are higher than the net external debt
3.5
400
2.8
350 2.7
300 2.1
250
1.4
200
0.9
150 0.5
100
-0.1 -0.1
50 -0.2 -0.2
-0.3 -0.3 -0.3
-0.4 -0.4 -0.4
0
Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14 Jan-16 Jan-18 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
98
The key challenge: Fiscal reforms
✓ Positive fiscal news in the shorth term but long-term scenario yet to be addressed.
– Public accounts should outperform the 2018 target, with help from all government spheres.
– But primary surpluses are still far away. Unless for significant non-recurring revenues or tax hikes, public accounts should return to positive
territory only in 3-4 years.
– Spending cap ceiling will be respected this year and (with strong efforts) next year. Margin of maneuver require urgent reform on mandatory
expenses
– Golden rule to be met this year and the following. Risks still lie ahead due to pressure to adjust via discretionary spending (investment).
– Fiscal turnaround needed is large (~4% of GDP). Risk of higher tax burden increase if markets impose a frontloaded adjustment.
Italy
France Greece
Portugal
Brazil
% of GDP
Japan
99
Consolidated Public Accounts - Summary
In Nominal Terms (R$ Bn) Monthly YTD Rolling 12-month Rolling 12-month (% of GDP)
Oct-18 Oct-17 ∆ Oct-18 Oct-17 ∆ Oct-18 Oct-17 ∆ Oct-18 Sep-18 Oct-17
Nominal Result (C=A+B) -6.1 -30.5 24 -369 -416 47 -464 -601 137 -6.8 -7.2 -9.2
Central Government -0.2 -24.6 24 -326 -385 58 -401 -554 153 -5.9 -6.3 -8.5
Federal Government -2.0 -29.6 28 -393 -418 25 -478 -584 106 -7.0 -7.4 -9.0
Central Bank 1.8 5.0 -3 67 34 33 78 30 47 1.1 1.2 0.5
Subnational Government -6.2 -4.7 -1 -41 -27 -14 -61 -42 -19 -0.9 -0.9 -0.7
States -5.6 -4.2 -1 -39 -27 -13 -55 -39 -16 -0.8 -0.8 -0.6
Municipalities -0.6 -0.5 0 -2 0 -2 -6 -4 -2 -0.1 -0.1 -0.1
Government Owned Companies 0.4 -1.1 1 -1 -4 3 -2 -5 3 0.0 -0.1 -0.1
Federal 0.6 -0.4 1 1 -1 2 1 -1 2 0.0 0.0 0.0
States -0.3 -0.7 0 -2 -3 1 -3 -4 1 0.0 -0.1 -0.1
Municipal 0.0 0.0 0 0 0 0 0 0 0 0.0 0.0 0.0
Interest Payments (B) -13.9 -35.3 21 -317 -338 21 -380 -414 34 -5.6 -5.9 -6.4
Central Government -10.4 -29.6 19 -260 -289 29 -312 -354 42 -4.6 -4.9 -5.4
Federal Government -12.6 -34.5 22 -327 -323 -4 -391 -385 -6 -5.7 -6.1 -5.9
Central Bank 2.1 4.9 -3 67 34 33 79 31 47 1.1 1.2 0.5
Subnational Government -3.1 -5.1 2 -52 -45 -7 -62 -55 -7 -0.9 -0.9 -0.8
States -2.8 -4.7 2 -48 -41 -7 -57 -50 -7 -0.8 -0.9 -0.8
Municipalities -0.3 -0.4 0 -4 -4 0 -5 -5 0 -0.1 -0.1 -0.1
Government Owned Companies -0.3 -0.6 0 -5 -5 0 -6 -6 0 -0.1 -0.1 -0.1
Federal 0.1 0.0 0 0 0 0 0 0 0 0.0 0.0 0.0
States -0.4 -0.5 0 -5 -4 0 -6 -5 0 -0.1 -0.1 -0.1
Municipal 0.0 0.0 0 0 0 0 0 0 0 0.0 0.0 0.0
Primary Result (A) 7.8 4.8 3 -52 -77 26 -85 -187 102 -1.2 -1.3 -2.9
Central Government 10.2 5.0 5 -66 -96 30 -89 -200 111 -1.3 -1.4 -3.1
Federal Government 23.8 18.7 5 103 60 43 107 -18 126 1.6 1.5 -0.3
Central Bank -0.4 0.0 0 -1 -1 0 -1 -1 0 0.0 0.0 0.0
Social Security -13.2 -13.8 1 -168 -155 -13 -195 -181 -14 -2.9 -2.9 -2.8
Subnational Government -3.1 0.4 -3 11 18 -7 0 12 -12 0.0 0.1 0.2
States -2.8 0.5 -3 9 14 -5 1 11 -10 0.0 0.1 0.2
Municipalities -0.3 -0.1 0 2 4 -2 -1 1 -2 0.0 0.0 0.0
Government Owned Companies 0.7 -0.6 1 4 1 3 4 0 3 0.1 0.0 0.0
Federal 0.5 -0.4 1 1 -1 2 1 -1 2 0.0 0.0 0.0
States 0.1 -0.2 0 2 1 1 2 1 1 0.0 0.0 0.0
Municipal 0.0 0.0 0 0 0 0 0 0 0 0.0 0.0 0.0
Source: Central Bank of Brazil and BTG Pactual
100
The key challenge. Fiscal accounts in red ink
-1.9% -2.2%
65.0
-1.7%
-2.0%
% of GDP
-1.0% 55.0
0.0%
45.0
Central Government
1.0% 0.6%
Subnational Government 1.2%
35.0
2.0% Government Owned Companies 1.7%
Primary - Total 1.9% 2.5%
3.0% 25.0
Mar-12
Feb-08
Sep-08
Feb-15
Sep-15
Jul-07
Oct-12
Jul-14
Nov-09
Nov-16
Jun-10
Jun-17
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
May-13
Aug-11
Aug-18
2018.10.
Apr-09
Apr-16
Jan-11
Jan-18
Dec-06
Dec-13
Source: Central Bank of Brazil and BTG Pactual
101
Positive short term fiscal performance
✓ Strong revenue growth and contained expenditures; the recurring primary deficit measure still points to a bigger
deficit
15.0 5.0%
Federal Government 4.0%
10.3 3.0%
12-month accumulated - Real terms
10.0
2.0%
1.0%
% of GDP
5.0
0.0%
-1.0%
0.0 0.0 -2.0%
-3.0%
-5.0
Net revenues -4.0%
-5.0%
Total expenditures
-10.0
Sep-11
Sep-12
Sep-13
Sep-14
Sep-15
Sep-16
Sep-17
Sep-18
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
May-11
May-12
May-13
May-14
May-15
May-16
May-17
May-18
102
Backloaded slow fiscal adjustment
✓ But big imbalance persists; compliance with the spending cap rule is a growing challenge
22%
% of GDP
17% 20%
16% 18%
15% 16%
14% 14%
13% 12%
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2018*
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
103
Long term challenges – secular growth in expenditures
Primary Expenditures, % of GDP Primary Expenditures, % of GDP (Breakdown) Primary Expenditures, % of Budget (Breakdown)
20.0 12.0 Other -
Income Transfer Legislative, 0.1% Judiciary, 0.7%
Personnel Executive, 4%
Fed Discretionary, Soc Ministries (ex-FP) Education, 3%
19.0 Extended Subsidies
~6% pa in real terms 10.0
Other Current Expenditures Soc Development,
~0.3% of GDP pa PAC (ex-Housing Program) 3%
18.0
8.0 Health, 8%
17.0
% of GDP
6.0
PAC, 2%
16.0
4.0
15.0
Other
2.0 mandatory
14.0 expenditures,
14%
0.0
Social security
13.0 benefits, 43%
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Payroll, 22%
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
104
Long term challenges - High debt and high tax burden
Gross debt (% of GDP) – IMF Fiscal Monitor Tax Burden (% of GDP) – IMF 2015
0 20 40 60 80 100 120 40
35
1
30
25
2
20
3 15
10
4 5
0
5 Developed Brazil Emerging Low income
economies economies countries
Source: Treasury, fiscal monitor (IMF) and BTG Pactual
105
Long term challenges – Tax breaks
106
Long Term challenges – Generous Pension system
Italy
France Greece
Portugal
Brazil
% of GDP
Japan
107
Long Term challenges – Generous Pension system
✓ Deficits everywhere…
108
Long Term challenges – Generous Pension system
✓ Deficits everywhere - breakdown
RGPS (% of GDP)
1.0%
0.5%
0.0%
-0.5%
% of GDP
-1.0%
-1.5%
Social security deficit*- (% of GDP) - Breakdown 2017 -2.0%
# of benefits Revenues Expenditures Total Revenues Expenditures Total -2.5%
Private System - Total 30.7 411.9 680.7 -268.8 6.3% 10.4% -4.1% -3.0%
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
RGPS - Total 29.8 374.8 557.2 -182.4 5.7% 8.5% -2.8%
Urban 20.3 365.5 437.2 -71.7 5.6% 6.7% -1.1% Urban Rural RGPS
RPPS Total** 0.9 37.1 123.5 -86.3 0.6% 1.9% -1.3% RPPS (% of GDP)
0.0%
Civil servants 0.6 33.8 82.4 -48.7 0.5% 1.3% -0.7%
-0.2%
Army 0.3 3.3 41.0 -37.7 0.1% 0.6% -0.6%
-0.4%
*Except regional government spheres (deficit of ~1%) **number of benefits as of dec/2016 -0.6%
% of GDP
-0.8%
-1.0%
-1.2%
-1.4%
-1.6%
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Civil servants Army RPPS
109
Gross Debt: Scenarios
GDP Growth
2.0% -1.6 0.0 1.6 3.2 4.8
GDP Growth
2.0% -0.5 0.8 2.0 3.3 4.5
Source: Treasury and BTG Pactual 4.0% 1.5 2.8 4.0 5.3 6.5
110
Exchange rate of BRL3.90/USD YE 2018 and 2019
4.50
adverse scenario
4.00
3.90
3.90
3.50
3.40
3.00
2.50
2.00
1.50
111
External factors curbs further BRL appreciation
475
425
400
375
325
275
225 225
175
150
125
75
112
External factors curbs further BRL appreciation
10-year US Treasury rate forecast (%, p.a.) 2-year US Treasury rate forecast (%, p.a.)
5.25 6.00
benign scenario
1.75 1.00
1.25
0.00
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Dec-19
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Dec-19
Source: Central Bank of Brazil and BTG Pactual
113
Macro Scenario
Inflation
IPCA 6.5 5.8 5.9 6.4 10.7 6.3 2.95 3.8 4.2
IGPM 5.1 7.8 5.5 3.7 10.5 7.2 -0.52 8.6 3.3
FX Rate
R$/US$ (end of period) 1.9 2.0 2.3 2.7 3.9 3.3 3.31 3.80 3.90
R$/US$ (average) 1.7 2.0 2.2 2.4 3.3 3.5 3.19 3.55 3.85
Interest Rates
End of period 11.00 7.25 10.00 11.75 14.25 13.75 7.00 6.50 7.50
Average 11.71 8.46 8.44 11.02 13.58 14.15 9.83 6.6 6.7
Real / Average (IPCA) 4.89 2.47 2.39 4.33 2.63 7.39 6.69 2.7 2.4
Public Accounts
Primary Surplus - % GDP 3.1 2.2 1.7 -0.6 -1.9 -2.5 -1.7 -1.8 -1.2
Net Public Debt - % GDP 36.5 32.2 30.5 32.6 35.6 46.2 51.6 51.8 55.5
Gross Debt - % GDP 51.3 53.7 51.5 56.3 65.5 70.0 74.0 76.1 78.8
As of Dec-18
Source: Central Bank of Brazil and BTG Pactual
114
Investment Themes, by sector
Basic Materials
VALE | Risk/return profile looking attractive
Simplified risk/return analysis for Vale – stock currently pricing in < US$60/t
IO price 40 45 50 55 60 65 70 75 80
Implied EBITDA/t 11 16 21 26 31 36 41 46 51
Volumes – Mt 390 390 390 390 390 390 390 390 390
IO EBITDA - US$mn 4,290 6,240 8,190 10,140 12,090 14,040 15,990 17,940 19,890
Bmetals/others EBITDA - US$mn 3,200 3,200 3,200 3,200 3,200 3,200 3,200 3,200 3,200
TOTAL EBITDA 7,490 9,440 11,390 13,340 15,290 17,240 19,190 21,140 23,090
EV/EBITDA target 6.0x 6.0x 6.0x 6.0x 6.0x 6.0x 6.0x 6.0x 6.0x
Implied EV 44,940 56,640 68,340 80,040 91,740 103,440 115,140 126,840 138,540
Net Debt 17,838 16,570 15,303 14,035 12,768 11,500 10,233 8,965 7,698
Adjustments 0 0 0 0 0 0 0 0 0
Asset sales 0 0 0 0 0 0 0 0 0
Implied Equity value 27,103 40,070 53,038 66,005 78,973 91,940 104,908 117,875 130,843
Equity value/shr 5.2 7.7 10.2 12.7 15.2 17.7 20.2 22.7 25.2
Upside/downside -59% -40% -21% -1% 18% 38% 57% 76% 96%
EV/EBITDA 11.8x 9.2x 7.5x 6.4x 5.5x 4.8x 4.2x 3.8x 3.4x
117
Source: BTG Pactual.
VALE | A 10% dividend yield at US$60/t IO…
✓ All these, dividend payments respect a leverage ceiling of 1.5x (max). Conservative BS.
✓ M&A unlikely.
50 55 60 65
118
Source: Vale, Bloomberg, BTG Pactual.
Brazilian steels
30%
20%
10%
0%
-10%
-20%
-30%
-40%
119
Source: IABr, BTG Pactual.
What’s priced in? A contraction from current levels
GGBR USIM CSN TX
120
Note: Priced as of 10/12/2018
Pulp S&D Outlook
121
Source: RISI, BTG Pactual
P&P | FCF Profile
20%
18%
17%
15%
13%
12% 12%
11% 11%
10% 10% 10%
9% 10%
9% 9%
Klabin Suzano
122
Note: Priced as of 10/12/2018.
Food and Beverage
Our main Food & Beverage calls
In a low beta sector, we favor stocks that benefit from undemanding valuations and positive cyclical effects
✓ Proteins: time to change your diet! Lower growth, deleverage and positive cycle to drive stronger performance:
− JBS: Our top pick on a combination of improving corporate governance, management professionalization, strong momentum across
most relevant segments and undemanding valuation;
− Marfrig: Some exposure to stronger US and Brazil beef outlook, but weaker track record of execution and lack of clarity on further
deleveraging after buying assets in Argentina make it no longer our preferred vehicle to surf the sector’s new diet.
− BRF: also a beneficiary of improving poultry cycle in Brazil, but we believe poor visibility on structural margins following indirect costs
inflation and lost of pricing power in both Brazil and internationally leave us Neutral.
✓ Ambev (Neutral) seems unattractive on a combination of rich valuations and continued miss to consensus earnings
expectations on deteriorating revenue mix and earnings quality, all of which justifies a de-rating, in our view.
✓ M.Dias Branco: our Neutral remains in place at least until we have greater visibility of when margins will rebound.
MDB shares remains a “mean reversion” story, which we believe shall start to happen only later in 2019, when
margins normalize, following the full implementation of 2018’s price increases and the impact of the recent drop in
wheat prices on costs. That said, we admittedly like the stock more today, and believe the differentiated pricing
approach in 2018 could be a strong testament that MDB’s improving commercial platform could be bearing fruits.
This could mean stronger LT margins, in our view.
124
2019: Beef - positive cattle cycle is up and running
Positive cattle cycle in Brazil is intensifying, which should translate into higher margins for players
Dec-09
Jul-10
Nov-12
Jun-13
Jan-14
Dec-16
Jul-17
Aug-07
Sep-11
Aug-14
Sep-18
Feb-11
Feb-18
May-09
Apr-12
May-16
Mar-08
Oct-08
Mar-15
Oct-15
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Cow slaughtering (% of total slaughter) 12M moving average
Brazil US Australia
Spreads are 11% above historical average Brazil – Total Beef production to grow (‘000 tons)
2.200
10,150
2.00 9,951
1.800 9,675 9,723
9,550
1.600 9,425
9,307 9,284
1.400 9,024 8,935 9,115 9,030
1.200
1.00
Sep-10
Sep-14
Sep-16
Sep-18
Sep-12
May-11
May-13
May-15
May-17
Jan-10
Jan-12
Jan-14
Jan-16
Jan-18
Beef exports spread (LHS) Average 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018E 2019E
Source:
Bloomberg / BTG Pactual / Cepea / IBGE / Secex / USDA / MAPA 125
JBS: Our Top Food Pick
Strong momentum and attractive valuation, well positioned to benefit from positive commodity cycles
43% of JBS’ EBITDA comes from its US beef business, … which should translate into higher spreads, which
with growing cattle supplies… already are 16% above historical average
50 15%
24%
22% 30 10%
20% 5%
10
18% 0%
16% -10 -5%
14%
-30 -10%
12%
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jul-04
Jul-07
Jul-10
Jul-13
Jul-16
Jul-01
Jan-06
Jan-09
Jan-12
Jan-15
Jan-18
Jan-00
Jan-03
Apr-08
Oct-00
Apr-02
Oct-03
Apr-05
Oct-06
Oct-09
Apr-11
Oct-12
Apr-14
Oct-15
Apr-17
Oct-18
US beef spread Historical avg. JBS USA
Cow slaughter (% of total slaughter) 12-month moving avg National Beef Tyson Beef
Jul-11
Jul-16
Nov-09
Nov-14
Dec-11
Dec-16
Sep-10
Aug-13
Sep-15
Aug-18
May-12
May-17
Jan-09
Jun-09
Jan-14
Jun-14
Feb-16
Feb-11
Mar-13
Mar-18
Oct-12
Oct-17
Apr-10
Apr-15
Jul-12
Jul-17
Nov-10
Dec-12
Nov-15
Sep-16
Dec-17
Sep-11
Aug-14
May-13
May-18
Jan-10
Jun-10
Mar-14
Jan-15
Jun-15
Feb-17
Feb-12
Apr-11
Oct-13
Apr-16
Brazil's poultry production volumes y/y Poultry production margin (R$/Kg) EV/EBITDA 12M Fwd Average Avg + Std. Dev. Avg - Std. Dev.
Source:
Companies data / Bloomberg / BTG Pactual / Secex / APINCO / IBGE 126
BRF – The gross margin and asset turnover dilemma
Asset turnover and operating margin seem to have suffered a downshift in recent years
BRF is struggling to show improvements on both fronts Indirect costs are now at higher levels
2.2 25% BRF - COGS (R$mn) 2010 2011 2012 2013 2014 2015 2016 2017 2018E
2.0 ? 20% COGS (16,796) (19,047) (22,064) (22,953) (20,497) (22,108) (26,206) (26,796) (28,592)
Soybean + corn (from 20-F) 22.7% 23.0% 25.0% 24.6% 27.2% 27.4% 32.5% 28.5% 30.5%
1.8 15%
COGS from soybean + corn (3,813) (4,381) (5,516) (5,646) (5,575) (6,058) (8,517) (7,637) (8,720)
1.6 10% Depreciation + Amortization (633) (800) (856) (1,016) (1,022) (1,085) (1,296) (1,378) (1,470)
1.4 5% Total Volumes (k tons) 6,064 6,202 6,337 5,863 4,722 4,726 4,688 4,919 4,932
COGS / kg (R$) (2.77) (3.07) (3.48) (3.91) (4.34) (4.68) (5.59) (5.45) (5.80)
1.2 0% Soybean + corn / kg (R$) (0.63) (0.71) (0.87) (0.96) (1.18) (1.28) (1.82) (1.55) (1.77)
1.0 -5% Depreciation + Amortization / kg (R$) (0.10) (0.13) (0.14) (0.17) (0.22) (0.23) (0.28) (0.28) (0.30)
2019E
2018E
2007
2008
2009
2010
2012
2013
2014
2015
2016
2017
2006
2011
COGS / Kg (ex-grains) (R$) (2.14) (2.36) (2.61) (2.95) (3.16) (3.40) (3.77) (3.89) (4.03)
Cash COGS / Kg (ex-grains) (R$) (2.04) (2.24) (2.48) (2.78) (2.94) (3.17) (3.50) (3.61) (3.73)
BRF's ROIC (pre-tax) % Invested Capital turnover (x) EBIT Margin % Y/Y 9.8% 10.8% 12.2% 5.9% 7.6% 10.4% 3.4% 3.2%
Pricing has lagged below inflation for quite some time now International margins have decoupled from spreads
4% More promotional prices 14% 5.0 1,600
take effect and affect 1,400
2% margins 12% 4.5 1,200
1,000
0% 10% 4.0
800
600
-2% 8% 3.5
400
-4% 6% 3.0
200
-
-6% 4% 2.5 (200)
(400)
-8% 2% 2.0 (600)
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
1Q18
2Q18
3Q18
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
1Q18
2Q18
3Q18
FPP Price vs. inflation LTM EBIT mg in Brazil LTM BRF Int'l EBIT/ton (R$) Secex (gross profit per ton)
Source:
Company data / Bloomberg / BTG Pactual / Secex 127
Ambev: Good, but not necessarily great; a de-rating call
Economic environment is improving but Ambev is failing to capture it; pricing power is down
Beer consumption shows strong correlation with GDP Ambev’s apparently losing share based on IBGE’s data
10.00% 70%
8.00% 68%
6.00%
66%
64%
4.00%
62%
2.00%
60%
.00%
58%
-2.00%
56%
-4.00% 54%
-6.00% 52%
2019 E
2018E
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
50%
1Q2010
1Q2014
3Q2014
1Q2015
3Q2015
1Q2016
3Q2016
1Q2017
3Q2017
1Q2018
3Q2018
3Q2010
1Q2011
3Q2011
1Q2012
3Q2012
1Q2013
3Q2013
GDP Growth Beer consumption growth
Margin resilience based on pricing power is under threat Consensus continues to revise earnings down
60% 6% 30,000 CONSENSUS EBITDA REVIEW
56%
52% 53% 52% 54%
50% 51% 48% 49% 50%
55%
4% 2007 2008 2009 2010
50% 46% 45% 45% 46% 24,000 2011 2012 2013 2014
42% 4% 3%
2% 2015 2016 2017 2018
45%
3% 3% 3% 2%
1% 1% 3% 2% 2019
40% 0% 0% 0% 0%
-1% 18,000
35%
-2%
30% 34% 33% 33%
33%
30% 30% 30% 28% 31% 30% 30% 30% -4%
25% 28% 29% 29% 12,000
-6%
20% -6%
2018E
2005
2006
2008
2009
2011
2012
2015
2016
2004
2007
2010
2013
2014
2017
6,000
ABV's Brazil Beer Price VS. Inflation ABV's Brazil Beer EBITDA margin
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-13
Jan-14
Jan-15
Jan-16
Jan-18
Jan-06
Jan-12
Jan-17
ABV's Brazil Beer SG&A as % of Revenues
Source:
Company data / SICOBE / BTG Pactual / IBGE 128
Agribusiness
Agribusiness: Sugar world production could be at a turning point
Sugar prices still under pressure, but we and the market are consistently revising surplus estimates down
Attribute Country 2006/2007 2007/2008 2008/2009 2009/2010 2010/2011 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018E 2018/2019E
Brazil 31,450 31,600 31,850 36,400 38,350 36,150 38,600 37,800 35,950 34,650 39,333 29,200 28,000
China 12,855 15,898 13,317 11,429 11,199 12,341 14,001 14,263 11,000 9,050 9,300 10,250 10,800
India 30,780 28,630 15,950 20,637 26,574 28,620 27,337 26,605 30,460 27,385 22,200 34,000 31,000
Sugar Production (1000 MT) Thailand 6,720 7,820 7,200 6,930 9,663 10,235 10,024 11,333 10,793 9,743 10,033 13,730 14,100
European Union 17,987 15,834 14,290 16,897 15,939 18,320 16,655 16,020 18,449 14,283 16,500 21,150 19,900
Others 64,486 63,475 61,226 60,891 60,496 66,683 71,341 70,080 70,810 69,592 74,106 75,000 75,750
World 164,278 163,257 143,833 153,184 162,221 172,349 177,958 176,101 177,462 164,703 171,472 183,330 179,550
World 151,399 151,247 154,448 154,926 155,938 160,219 166,816 168,172 171,241 172,488 173,573 175,309 177,062
Total Use (1000 MT)
% y/y -0.1% 2.1% 0.3% 0.7% 2.7% 4.1% 0.8% 1.8% 0.7% 0.6% 1.0% 1.0%
Surplus / (deficit) World 12,879 12,010 -10,615 -1,742 6,283 12,130 11,142 7,929 6,221 -7,785 -2,101 8,021 2,488
Ending Stocks (1000 MT) World 36,736 43,080 29,836 28,028 29,491 35,190 42,521 43,928 45,762 37,763 32,828 40,849 43,337
Stock-to-Use (% ) World 24.3% 28.5% 19.3% 18.1% 18.9% 22.0% 25.5% 26.1% 26.7% 21.9% 18.9% 23.3% 24.5%
Avg Sugar Price (USDc/lbs) World 10.4 12.1 20.8 23.8 25.4 20.1 17.4 15.8 13.2 17.1 20.0 14.0 12.5
Average BRL/USD Avg. Oct - Sep 2.04 1.71 2.13 1.77 1.65 1.89 2.11 2.29 3.01 3.62 3.20 3.52 3.86
Avg Sugar Price (BRLc/lbs) World 21.1 20.8 44.4 42.1 41.8 38.0 36.6 36.0 39.7 61.9 64.1 49.3 48.3
2018/2019E
2017/2018E
2018/2019E
2017/2018E
2007/2008
2008/2009
2011/2012
2015/2016
2007/2008
2008/2009
2012/2013
2013/2014
2006/2007
2009/2010
2010/2011
2012/2013
2013/2014
2014/2015
2016/2017
2006/2007
2009/2010
2010/2011
2011/2012
2014/2015
2015/2016
2016/2017
Stock-to-Use (%) Avg Sugar Price (USDc/lbs) Surplus / (deficit) Sugar Production (1000 MT) Total Use (1000 MT)
Source: 130
BTG Pactual / USDA / Datagro
Agribusiness: Ethanol market still supportive despite oil price slump
Despite high ethanol inventories, our S-D model still points to a tight market by crop-end, driven by strong consumption
Ethanol (m ³) Inventory (BoP) Production Net im port Available Consum ption Inventory (EoP)
January-18 7,252,445 323,938 41,264 7,384,588 2,292,575 5,092,013
February-18 5,092,013 259,883 99,855 5,396,550 2,088,632 3,307,918
March-18 3,307,918 563,255 255,803 4,354,791 2,351,787 2,003,004
Cro p B o P April-18 2,003,004 2,658,072 313,295 4,362,633 2,198,022 2,164,611
May-18 2,164,611 3,774,927 11,394 6,105,132 2,143,978 3,961,154
June-18 3,961,154 4,491,870 (63,814) 8,175,531 2,345,116 5,830,415
July-18 5,830,415 5,002,034 (37,248) 10,583,342 2,418,293 8,165,049
August-18 8,165,049 4,380,728 (178,514) 12,314,644 2,685,826 9,628,818
September-18 9,628,818 4,235,914 (170,724) 13,536,968 2,581,980 10,954,988
October-18 10,954,988 3,219,020 (213,012) 13,851,802 2,858,114 10,993,688
Cro p Eo P November-18 10,993,688 167,969 (85,145) 11,076,512 2,459,331 8,617,181
December-18 8,617,181 67,187 18,396 8,702,764 2,745,026 5,957,738
January-19 5,957,738 50,391 123,791 6,131,919 2,398,188 3,733,731
February-19 3,733,731 33,594 299,565 4,066,890 2,204,531 1,862,359
March-19 1,862,359 16,797 511,606 2,390,762 2,485,341 (94,579)
TOTAL 29,245,578 36,256,741 (94,579)
Drop in gasoline prices is a risk, but ethanol remains well below pump parity, offering upside
80%
72% 70%
63%
64%
56%
48%
40%
Jul-17
Jul-18
Nov-17
Dec-17
Nov-18
Aug-17
Sep-17
Sep-18
Aug-18
May-17
May-18
Jun-17
Jan-18
Jun-18
Mar-18
Feb-18
Oct-17
Oct-18
Apr-18
Source: 131
BTG Pactual / ANP / MAPA
São Martinho: our Top Agri Pick – When asset quality pays off
Strong FCF, even during sugar price lows. Unique ethanol storage capacity should enable better pricing
SMTO is one of the most efficient S&E producers Low leverage ratio may trigger stronger dividends
3,000 2.50x
1.89 2.14
2,500 2.00x
0.88 2,000
1.50x
1,500
14.6 14.6 1.00x
13.9 1,000
10.6 0.50x
500
0 0.00x
São Martinho Adecoagro Cosan Avg. Brazil 2010A 2011A 2012A 2013A 2014A 2015A 2016A 2017A 2018A 2019E
Cash Production Costs (c/lb) Cogeneration Net Debt (R$mn) Net Debt/EBITDA
15% 12.000
10.000
10%
8.000
5%
6.000
0%
4.000
-5% 2.000
-10% -
Feb-11
Feb-12
Feb-13
Feb-14
Feb-15
Feb-16
Feb-17
Feb-18
Aug-12
Aug-13
Aug-14
Aug-15
Aug-16
Aug-10
Aug-11
Aug-17
Aug-18
Brazil land prices - real y/y appreciation Brazil average land prices (R$/ha)
✓ SLC Agrícola and BrasilAgro have for some years now sold land more often than buying it. We believe this approach may
soon have to change, as we believe land market could be on the verge of a recovery. Brazil’s soybean and cotton yields
have improved over 20% in the past two years, which combined with low real rates all suggest land prices may soon show
real term appreciation.
Source:
FNP/ IBGE / BTG Pactual 133
Fuel Distribution
Fuel Distribution Industry – A very tough macroeconomic backdrop
After 11 years of sales growth, fuel volumes stagnated in the last 3-4 years. Volumes in 2019 should recover, but on a
very weak comparison basis.
60,000
2%
40,000 0%
-2%
20,000
-4%
0 -6%
10M18
2000
2001
2002
2003
2004
2006
2007
2009
2010
2011
2012
2013
2014
2016
2017
2005
2008
2015 135
Source: ANP / BTG Pactual
Fuel Distribution Industry – Fiercer competition
Bad macro + premium to international parity = imports. Recent scenario has favored smaller distributors
Diesel imports reached record level in 2017…
(since beginning of subsidy, it has fallen sharply)… … helping smaller players to gain share and….
2,000 90% Plural Others/White Flags
'000 m3
80%
73%
1,600
70%
1,200
50%
800
30%
400 20%
27%
0 10%
3,000
2,500
2,000
1,500
1,000
500
0
2010 2011 2012 2013 2014 2015 2016 2017 9M18 136
Source: Companies data / ANP / BTG Pactual
Cosan: our Top Fuel Distribution Pick
Competition should hinder high returns from the past. CSAN’s better positioned in a scenario of increased competition
Pre-tax ROIC has trended higher for private Co’s… … driven mainly by higher EBIT margin
Ipiranga Raizen Combustíveis BR Distribuidora BR Distribuidora Ipiranga Raizen Combustíveis
40% 4.0%
34% 3.6%
28% 3.2%
22% 2.8%
16% 2.4%
10% 2.0%
2011 2012 2013 2014 2015 2016 2017 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Asset turnover has failed to impress, with Cosan’s Out of top 3 players, only Raízen has grown share in
Raízen being the only exception last 7 years (Otto cyle + diesel)
Ipiranga Raizen Combustíveis BR Distribuidora Ipiranga BR Raízen
35%
12.00
31%
10.80
27%
9.60
23%
8.40
19%
7.20
15%
6.00
Jul-13
Jul-14
Jul-15
Jul-17
Jul-18
Jul-12
Jul-16
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Oct-12
Oct-14
Oct-15
Oct-16
Oct-18
Oct-13
Oct-17
Apr-12
Apr-13
Apr-14
Apr-15
Apr-16
Apr-17
Apr-18
2011 2012 2013 2014 2015 2016 2017
137
Source: Companies data / BTG Pactual
BR Distribuidora: a binary story!
A ‘what if’ analysis to BRDT’s investment case
We run a DCF-based valuation for BRDT shares, using a real WACC of 8.2% and real perpetuity of 2.5%
DCF, BRL mn 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E
EBIT (ex-PF) 2,754 3,226 3,436 3,659 3,897 4,149 4,418 4,705 5,009 5,333
(-) Tax (936) (1,097) (1,168) (1,244) (1,325) (1,411) (1,502) (1,600) (1,703) (1,813)
NOPLAT 1,818 2,129 2,268 2,415 2,572 2,739 2,916 3,105 3,306 3,520
(+) Depreciation 457 490 521 554 589 627 667 709 754 802
(-) NWC (609) (505) (482) (513) (545) (580) (616) (656) (697) (741)
(-) Capex (682) (330) (330) (380) (380) (380) (380) (380) (380) (380)
Cash Flow 984 1,784 1,977 2,077 2,236 2,406 2,586 2,778 2,983 3,200
Cash flow (real) 984 1,716 1,832 1,855 1,925 1,996 2,069 2,142 2,216 2,292
DCF 984 1,586 1,565 1,465 1,406 1,348 1,291 1,235 1,182 1,130
BRDT could capture up to R$49/m3 in a bull case We estimate an significant gain of R$12/share to our
scenario if fully closes its gaps to peers current TP if all upsides materialize
140 40
125 35
120 9 35
4
17 30
100
8
25
80 32
R$ / m3
R$
20
60
15
40 23
67 10
20 5
0 0
2017 Norm. Co's Gross Profit SG&A Inflation 2020 Norm. Co's PT w/o gap Gross Profit SG&A PT with gap
Adj. EBITDA Adj. EBITDA improvements improvements
138
Source: Company data / BTG Pactual
Ultrapar – High multiples don’t bode well with lower growth
Focus in WK management and increase POS productivity is the right path in the long term, but it comes at a cost
EV/EBITDA 12M Forward P/E 12M Forward
48.0x
18.0x
39.0x
15.0x
12.0x 30.0x
10.1x 9.9x 22.6x
22.2x
9.0x 21.0x
6.0x 12.0x
3.0x
3.0x
2009
2010
2012
2013
2015
2016
2018
2011
2014
2017
2010
2011
2012
2013
2014
2017
2018
2009
2015
2016
EV/EBITDA 12M Fwd Average Avg + Std. Dev. Avg - Std. Dev. P/E 12M Forward Average Avg + Std. Dev. Avg - Std. Dev.
Company recently released its ‘19 guidance to even lower figures. Gas station conversion should slow down
2,500
2,000
1,500
R$ mn
1,000
500
0
2013 2014 2015 2016 2017 2018E 19 UGP
Guidance
✓ Bradesco
– After several bad years in Brazil’s economy and the acquisition of HSBC, Bradesco’s ROE (and investor’s preference) lost ground versus
peers Itau and Santander. But with the help of insurance (stronger healthcare and financial results at the group due to stable/higher Selic),
HSBC´s full incorporation (as of Jan/19 they will be able to adjust fees of former HSBC clients), and a stronger economy (which helps
Bradesco more than peers in SMEs, countryside/north & northeast clients; and should drive another nominal decline in provisions), we
expect the group´s earnings to outpace peers in the coming years, paving the way for a bigger re-rating on a relative basis.
✓ B3
– As we’ve been banging on the drum for a while, B3 is one of the most interesting stories to play as capital markets gain more relevance.
With the overhang of elections now behind us, market sentiment is set to improve and B3 should benefit from additional volumes in many
different ways - from cash equities trading to fixed income custody. Even though there are some risks – change in regulation for auto liens
and loans and an expected new competitor in registration – the upside from higher activity in a favorable market seems much larger than
such threats. If volumes remain at these levels, there is a very relevant upside risk to our (and consensus) earnings estimates.
141
B3: Capital markets to continue gaining importance in 2019
✓ While demand for capital has been increasing
Domestic pension funds allocation in equities has a lot
Capital markets more active, particularly in fixed income of room to increase…
Capital raising activity (R$bn) AuM - Pension Funds (R$bn)
200 190 188 80% 71% 72% 74% 74%
176 173
156148 70% 61% 62% 64%
144 135 60%
150 139 134 60%
111 115 50%
102
100 88 40%
71 30% 29% 29%
30% 25%
19% 18% 18% 17%
50 40 44 20% 11% 11% 11%
24 9% 10% 9% 9% 9%
19 14 15 18 11 10%
7
0 0%
2011 2012 2013 2014 2015 2016 2017 3Q18 2011 2012 2013 2014 2015 2016 2017 5M18
BNDES Capital Markets - Fixed Income Capital Markets - Equities Fixed Income Equities Others
…mutual funds as well With lower interest rates, more individual investors have
been buying more sophisticated products
AuM - mutual funds (R$bn)
Number of individual investors by asset class ('000)
100% 88% 91% 91% 91% 90%
85% 86% 86% 1,600 1,466
80% 1,400
1,200 1,043
60% 1,000
766
800 583 587 589 620 619
40% 510 564 557 564
500 505 438
600 482 484 438 413 341 399
20% 15% 14% 14% 12% 400 185 237
204
9% 9% 9% 10% 125
88 144
96 163
119
200 1562
0% 0
2011 2012 2013 2014 2015 2016 2017 5M18 2011 2012 2013 2014 2015 2016 2017 3Q18
142
Fixed Income Equities REITs Tesouro Direto Equities Hedge Funds
Scenario remains positive for banks
✓ A better Brazil + HSBC full benefits + insurance improvement = BBDC’s earnings outgrow vs peers!
– ROE of credit business should match CoE in the medium-to-long run. But the credit ROE destroyed value in the past few years and just
very recently got above the CoE. If, on average, ROE = CoE in credit, we need to see a value generation in the next 12-18 months to
compensate for the previous years destruction.
– Loan growth + favorable mix (SME recovery and double digit growth in individuals) + healthy NPLs should lead to ROE expansion in 2019!
– In such scenario, Bradesco is our TOP PICK among the banks.
ROE – CoE of the system continues While NPLs should fall for Bradesco
expanding Overall, loans should accelerate in 2019 and BB
18.0 15.0% 13.7% 7.0% 6.4%
10.6%12.0% 10.1%
16.0 10.1% 10.1% 10.0%10.4% 6.0%
8.9% 8.4% 5.3%
14.0 10.0% 7.3% 4.9% 5.0% 4.9%
7.1% 5.0%
12.0 4.2% 4.4% 4.2%
3.9% 4.0%
10.0 5.0% 4.0% 3.7% 3.7% 3.7%
1.3% 3.2% 3.0%
8.0 0.4% 2.9%
3.0%
6.0 0.0%
4.0 2.0%
2.0 -5.0% -3.2% 1.0%
- -5.6%
-10.0% 0.0%
Jun-11
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Jun-17
Jun-18
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Itau Bradesco Banco do Brasil Santander Brasil Itau Bradesco Banco do Brasil Santander Brasil
Adjusted ROE for the system SELIC
143
Retail
Dynamic periodic table 2018 – our main calls
145
Brazilian e-commerce – secular growth ahead
200
179
CAGR17/21E = 16.5%
159
142
127
112
96
82
69
59
2016A 2017A 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E
146
Brazilian e-commerce – market breakdown
✓ MercadoLibre as the LatAm winner with its Alibaba/Taobao-esque platform, and B2W and Magazine Luiza as the
winners with an Alibaba/Tmall-esque platform
Taobao-like platform
C2C
and smaller players
B2C Tmall-like platform
35% 65%
of the market of the market
147
Source: e-Bit and BTG Pactual
Brazilian e-commerce – only a few potential winners
R$200bn 13%
68%
10%
26%
2%
2017
2017
70%
MELI's Share (Taobao-like market) Others
139,979
R$69bn MELI B2W MGLU VVAR Others
15%
10%
44,992 13%
65%
59,991
30% 28%
24,226 35%
85%
2017 2025
40%
Taobao-like market Tmall-like market
8%
2025 2025
MELI B2W MGLU VVAR Others MELI's Share (Taobao-like market) Others
148
Source: BTG Pactual
LatAm Transportation & Capital Goods
Transportation and Capital Goods Best Ideas
150
Rumo – Still Top Pick
✓ 2018 to remain strong: market share gains, new projects
✓ Positive FCFE for the first time in several years
✓ Double digit normalized FCF yield
✓ We believe the likelihood of Malha Paulista’s renewal has not changed and is still high; we also believe investors
over-quantify its value
✓ Sorriso Project is material upside risk
R$mn Comment
EBITDA 4,500 Assuming mid-point of 2020 guidance
Capex, pre expansion (1,200) Maintenance; in line w/ depreciation. 2020 last expansion year
Net financial expenses, cash (500) Avg. R$5bn adjusted net debt
Taxes (420) Tax rate @ 20% , Malha Norte benefit + accumulated losses
Working capital change (50) Assumes WK @ 5% of revenues
FCFE 2,330
Market cap 25,334
FCFE yield (early 2020s) 9.2%
P/CF 10.9x
✓ Since the strategic partnership with Boeing was officially announced, ERJ shares underperformed as the deal came
at a lower value than investors were expecting.
– But we see good upside from current levels, and believe investors are not pricing in a deal happening.
– Embraer’s value is now below the monetization value announced for Embraer’s Commercial Aviation alone (cash portion net of taxes + put
option), which we believe is unfair – we continue to expect a deal to ultimately happen, which should be highly accretive to ERJ.
– ERJ has recently announced the golden share request notification.
Jul-15
Dec-15
Nov-18
May-16
Aug-17
Jan-18
Jun-18
Feb-15
Mar-17
Oct-16
favorite pick)
Launches / sales of residential units in the city of São Paulo MCMV budget remains solid for the next four years
50,000
FGTS' budget
40,000
11 9 9 9 9
UNITS
30,000 10 9
8 8
7
20,000 5
5 51 53 53 53 53
43 48 46
10,000 35 40
26 32
- 2011
2012
2013
2014
2015
2016
2017
2010
2018E
2019E
2020E
2021E
2005
2006
2007
2008
2009
2011
2013
2014
2015
2016
2017
2010
2012
9M18
154
Housing: we prefer low-income (very attractive valuation)
ROEs will lackluster in the mid/high-end segment; strong growth for low-income homebuilders
✓ Valuations of mid/high-income homebuilders are already Aggregate launches and sales – mid/high-end segment
pricing-in a nice recovery of ROEs, but we think they
24.0
may take much longer to materialize than market is
20.0
expecting. Therefore, we prefer (i) the brokerage firm
Lopes; and (ii) the discounted homebuilder Even. 16.0
12.0
Brazilian Housing – Valuation multiples Aggregate launches and sales – low-income segment
155
Malls: all set for a strong year; Offices: we would still avoid
Malls should see nice SSS and SSR growth; Rents to keep falling in the office segment
✓ We expect nice Same-Store-Sales for malls: (i) retail Office vacancy in São Paulo and Rio markets
sales improving and (ii) easy comps. This combined with 35%
a higher IGP (LTM is 8%), we also expect companies to 30%
post nice Same-Store-Rent growth. 25%
20%
✓ In office spaces, we expect vacancy to remain high, 15%
while rents should keep falling (in nominal terms), mostly 10%
in the Rio de Janeiro market. 5%
2010
2011
2012
2013
2014
2015
2016
2017
2018E
the leveraged companies, with some potential upside
SP RJ
coming from a reduction of long-term real rates.
Same-Store-Sales (SSS) growth of listed shopping malls Same-Store-Rents (SSR) growth of listed shopping malls
20% 20%
15% 15%
10%
10%
5%
5%
0%
-5% 0%
-10% -5%
1Q10
3Q10
1Q11
3Q11
1Q12
3Q12
1Q13
3Q13
1Q14
3Q14
1Q15
3Q15
1Q16
3Q16
1Q17
3Q17
1Q18
3Q18
1Q10
3Q10
1Q11
3Q11
1Q12
3Q12
1Q13
3Q13
1Q14
3Q14
1Q15
3Q15
1Q16
3Q16
1Q17
3Q17
1Q18
3Q18
Aliansce BR Malls Iguatemi Multiplan Aliansce BR Malls Iguatemi Multiplan
156
Properties: solid outlook for malls, with a potential re-rating
Retail sales recovering + low interest rates = Buy shopping malls
Brazilian Properties – Implied IRR vs. long-term interest rates
✓ We expect a solid 2019 for shopping malls: (i) retail sales
recovering, top line growth (higher sales and some 10%
IGTA3
PARAUCO
BRPR3
SCAR3
BRML3
MULT3
ALSC3
✓ For the office companies, we still expect vacancy to remain
high (Rio’s market is ~40% vacant and SP’s is ~20%),
Brazilian Properties – Valuation multiples
while rents should remain under pressure for a while and
allowances very high. Last Target Upside Implied P / FFO
Company Rating Price Price 12m IRR 2018E 2019E
BR Malls Buy 13.10 15.00 15% 7.7%
✓ In terms of valuation, we see malls trading at attractive Multiplan Buy 23.29 26.00 12% 6.8%
19.6x
19.3x
16.2x
18.7x
valuations (nice premium to long-term real interest rates). Iguatemi Buy 39.15 45.00 15% 8.1% 18.7x 16.8x
Multiplan is our favorite pick, on AAA portfolio of shopping Aliansce Buy 18.16 22.00 21% 9.2% 18.7x 14.2x
malls and attractive valuation.
157
Our calls in summary
Housing and Properties preferred picks
What to own?
• Homebuilders focused in the low-income segment (strong top line growth + high FCF yields +
attractive valuation)
• Shopping malls, focused on the more AAA portfolios (faster recovery beta) and at attractive
valuation
What to avoid?
• Commercial properties with high exposure to the office sector (supply glut, high vacancies and
declining rents)
• High-end homebuilders that would remain destroying equity value for a while and too much
geared (i.e. the “turnaround” stories)
158
Healthcare and Education
Education – K12 and DL in the spotlight
K12 on the rise: A year for Kroton to deliver synergies and for Arco to take a toll on market leaders
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Distance Learning: growing uncertainty about price pressure after the capacity expansion
The higher flexibility in the regulatory framework for DL was the main catalyst for the
17.6% CAGR
recent market growth acceleration. KROT is market leader, but ESTC is closing the 1.6
gap. 1.4
1.3
1.2
In 2018 companies were in growth mode not only in the number of learning centers, 0.9
1.0
but expanding its portfolio of courses. We believe that competition will deteriorate 0.7
0.8
down the road and margins will likely come down. But Estácio still has ample room to
grow in the segment, helping the consolidated profitability of the company.
160
Estácio: Our Top Pick in Education
Faculty Cost: Efficiencies clearly being captured
If the onsite business is proving to be a big growth challenge (ESTC has been
206
suffering with double digit intake drops recently), DL is doing better than expected.
170 171
The company continues to fine tune its products and increase the offer of courses. 154 146
128 133
117
ESTC is doubling the efforts in the sector, reaching 506 active LCs by 3Q18, 81% up
79
y/y. To keep growing, the company wants to have 85 courses available in the DL 59 61
business, 38 more than in 2Q18.
1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18
DL Students - 000s
161
Healthcare – Vertical players still outperforming
Vertical players will keep consolidating the market
The vertical players will keep on leveraging on inefficient providers and operators to
increase their footprint.
*2017 Data, except Vitallis, São Francisco and Plena = 2016 Data (last available)
Smaller players tend to have less control over its costs, so we expect consolidation
moves to keep gaining traction in the years to come.
# of acquisitions
162
Hapvida: Our Top Pick in Healthcare
Growing organically, but the market expects M&A moves from 1H19 on
Lower price caps for Individual health plans -> ST negative, but LT positive for HAPV
ANS is working on the new methodology for the calculation of max price hikes for 2017
Individual health plans, and we believe it will come down, closer to the 7-8% range.
While ST negative for all the operators, it’ll certainly accelerate consolidation moves. VDA 17.4% Adjusted CPI 2.9%
Good for those better prepared to capture that, like Hapvida.
Age Adjustment 1.8%
Adj VDA 15.3% IVDA Weight 80%
IPCA* Weight 20%
FGE 3.7%
IVDA 11.6% Readjustment 9.8%
163
Telecom and Technology
Sector consolidation I: Oi is a unique strategic asset
✓ Once Oi’s debt restructuring is concluded, it would be natural to expect M&A talks to resurface.
- The company will be a full corporation with 71% of its capital in the hands of former bondholders and distressed debt investors.
- We believe these investors may favor a sale to a strategic player, assuming a reasonable offer is made.
165
Sector consolidation II: Nextel has valuable spectrum & clients
✓ Nextel is the other attractive asset which is up for sale
- Nextel Brazil is an interesting target for any of the big three mobile operators in Brazil: TIM, Vivo and Claro. With the new spectrum cap
regulation having been recently approved by Anatel, we believe the company should be sold in the near future.
- Nextel Brazil is the 5th largest wireless carrier in Brazil, with 3.1mn subscribers and 1.3% overall market share. Its subscriber base mostly
comprises postpaid users (96% of its customers, or 3mn subscribers) with an ARPU of R$56 in 2Q18 (vs. R$28 for Vivo, R$22 for TIM
and R$17 for Claro). Its share of the postpaid market is 3%. TIM has 20%, Vivo 41% and Claro 23%.
✓ The company’s spectrum portfolio has a lot of value for all telco’s (especially TIM)
- The company’s spectrum portfolio includes 20Mhz of national spectrum in the 1.9/2.1GHz frequency band, 30MHz in the 1.8GHz
frequency band in SP & another 20MHz in the 1.8GHz frequency band in RJ, ES, MG and the North & Northeast regions.
- Nextel’s 1.8MHz frequency (formerly used for 2G services) has a lot of value for companies looking to increase their 4G/LTE coverage (all
other telcos are refarming their 1.8GHz frequency for 4G use) and its 1.9/2.1GHz frequency can be used for 3G services.
166
Sector consolidation II: Nextel has valuable spectrum & clients
✓ Spectrum alone is likely worth at least R$2.7bn
- In December 2010, Nextel paid R$1.2bn for 20Mhz national spectrum in the 1.9/2.1Ghz frequency band, and then forked out an
additional R$200mn for 20Mhz spectrum in the 1.8Ghz band in part of the Southeast, North and Northeast regions.
- At the end of 2015, it paid another R$455mn for 30Mhz spectrum in the 1.8Ghz band in São Paulo, for a total investment of R$1.9bn in
3G and 4G spectrum in a five-year window.
- If we adjust these payments by past inflation, this spectrum is worth at least R$2.7bn.
✓ Clientbase is also valuable for current players
- Nextel Brasil has 3.1mn 3G/4G subscribers, 96% of them postpaid. Its client base generated R$2.6bn in sales in 2017 and R$1.15bn in
1H18 (R$2.3bn annualized). Full-year 2017 EBITDA was -R$74mn, improving to +R$2mn in 1H18.
- The incremental margin of Nextel’s clients when plugged into the operations of existing telecom providers should be very high. These
companies probably won’t have to make any important adjustments to their structures to absorb Nextel’s 3mn clients (Vivo has 75mn
clients, Claro 59mn, TIM 56mn). The commercial structure, networks, support overhead, systems are all in place and operating.
- The incremental margin of Nextel’s clients when plugged into the operations of existing telecom providers should be very high. These
companies probably won’t have to make any important adjustments to their structures to absorb Nextel’s 3mn clients (Vivo has 75mn
clients, Claro 59mn, TIM 56mn). The commercial structure, networks, support overhead, systems are all in place and operating.
✓ Nextel Brazil seems more attractive for TIM
- TIM has less spectrum than its competitors and a weaker position in postpaid. Claro could also be a strong bidder. At a June event in New
York, senior management openly expressed their interest in the asset. Claro´s share in the postpaid segment is a relatively small at 23%.
- Vivo, on the other hand, may face some regulatory/anti-trust constraints as its share of Brazil´s postpaid market is a sizable 41% and it is
particularly strong in São Paulo, home to most of Nextel Brasil’s 3mn clients
167
Regulatory environment: Important pipeline, but uncertain timeline
✓ After being approved in the Lower House and by the Senate's thematic commission, the Telecom Bill (PL#79), that changes fixed-
line concessions to authorizations, got bogged down in the Senate in a dispute involving Senate leaders, opposition parties and
the Supreme Court.
✓ Recently, in a surprising turn of events, the bill was approved in the Senate’s Cience & Technology commission.
✓ At this point, the only thing that is needed for the Bill to be sanctioned is the approval of the Senate’s plenary (by simple majority).
✓ While this looks like a simple task, for unknown reasons, the Senate’s President, Eunício de Oliveira hasn’t been putting it up for
voting in plenary.
✓ In our base case scenario: the bill will most probably only be voted next year, once the new government takes office and a new
President is elected for the Senate. Having said this, there is still a 2-week window before Congress enters its end of year recess
where we could see positive surprises
Telefonica estimated savings if concession rules change Oi estimated savings if concession rules change
In BRL mn In BRL mn
1) End of concession fees (1% of concession revenues) 85 1) End of concession fees (1% of concession revenues) 151
2) Savings with public phones 100 2) Savings with public phones 300
3) Savings from less harsh requirements 150 3) Savings from less harsh requirements 300
4) Rental gains from real estate assets under concession 4) Rental gains from real estate assets under concession
Estimated market value of real estate assets 7.294 Estimated market value of real estate assets 18.235
% of the value of the assets effectively rented 70% % of the value of the assets effectively rented 50%
Value of assets rented 5.106 Value of assets rented 9.118
rental fee per year 6% rental fee per year 6%
rental gains 306 rental gains 547
6) Total estimated gains from change in regulation 641 6) Total estimated gains from change in regulation 1.298
Contribution to EBITDA margin (based on 2015 net revenues) +1,5% Contribution to EBITDA margin (based on 2015 net revenues) +4,8%
Contribution to overall EBITDA (based on 2015 EBITDA) +5,0% Contribution to overall EBITDA (based on 2015 EBITDA) +18,5%
Contribution to overall OpFCF (2015 EBITDA - Capex) +14,6%
Source: BTG Pactual estimates Source: BTG Pactual estimates
168
Linx is our top pick
✓ Omni-platform is a reality; This is where the next leap will come from
ᅳ Linx has been investing heavily in its Omni platform since its IPO in 2013. A platform designed to help retailers improve their
customers' shopping experience with seamless integration between physical stores, virtual sales channels, retailers’ headquarters
and tax authorities.
ᅳ And it seems that the company is finally in a position to start selling these solutions to the market in a competitive way. The 2 most
important solutions OMS & E-commerce (website & marketplace integration) are already attracting relevant retailers.
ᅳ Linx has already been hired to deploy its OMS or E-commerce solutions for the following big retailers: Centauro, Hering, Drogarias
São Paulo, Restoque, Boticário, Ri-Happy.
ᅳ Given the complexity of the solutions, we could be talking about relevant contracts for Linx. At this point, contribution to topline is still
small (the solutions are still being deployed), but we believe they can grow to become relevant revenue generators for the company in
the future.
✓ Payments: taking advantage of unique position as Brazil’s leading software management company for retailers
ᅳ Being the largest technology player when it comes to management software for Retail in Brazil, Linx processes a relatively large
amount of payments transactions for retailers using the company’s POS solutions.
ᅳ The company is looking for alternatives to monetize the payments transactions processed within its client base. This is the goal of the
partnership with REDE.
ᅳ Linx basically helps REDE convert a retailer that uses some other acquirer into becoming a REDE client and receives a % of the
MDR charged by REDE from this client.
ᅳ The second strategy, which is more incipient, and similar to what we have been seeing in more developed countries, Linx and REDE
are developing a model so that they can access micro retailers and micro service providers and offer an integrated solution that
combines acquiring and technology for business management (POS + simplified ERP).
ᅳ Last but not least, there seems to be an incipient discussion inside the company on the possibility of becoming a sub-acquirer.
169
The reasons why we like Linx…
✓ There’s still room to grow on the Traditional Business (POS/ERP + Cross-selling initiatives):
ᅳ Even though Brazil’s macroeconomic scenario has been extremely challenging for some time (with retailers closing stores, no new
clients being added, etc), the company has grown organically some 9/10% per year (down from mid-teens some years ago).
ᅳ As economic activity picks up, store openings should accelerate and new clients should be added. In addition, one specific cross-
selling initiative (electronic invoicing – NFC-e) should prove a strong tailwind for the business in the coming years.
ᅳ Until the end of 2019, all retailers will be required to have electronic invoicing (this is a regulatory obligation). Linx sells the solution for
R$50 per store and its clients own 120,000 stores. Since only ~30,000 stores already have NFC-e, we would expect some R$50mn
of incremental revenues (some 8% of revenues) in the next years. Margins of the solution are very high (probably close to 100%),
which makes it even more relevant in terms of incremental EBITDA generation.
ᅳ We expect organic revenue growth to accelerate in the coming years as the traditional businesses improve.
✓ M&A’s: there’s room for more!
ᅳ Since its follow-on in October 2016, the company acquired 7 companies, deploying R$320mn in this transactions - the average
multiple paid on average was 3.4x EV/Sales. In addition to addition to growing the company, these acquisitions brought in new
technology to Linx, reinforcing their portfolio of solutions.
ᅳ Linx is still sitting on a net cash position of R$217mn, which it could deploy in more acquisitions, generating more value through
M&A’s for shareholders
170
Utilities
Highlights for 2019
✓ After relevant M&A deals during 2018 (Eletropaulo, Cesp, Eletrobras’ discos) and general elections, we expect
advances on the regulatory agenda in 2019 with a new structure for the sector coming sooner than expected.
172
IRR & Utilities ERP
16% 8.0%
14% 7.0%
12% 6.0%
10% 5.0%
8% 4.0%
6% 3.0%
4% 2.0%
2% 1.0%
0% 0.0%
Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Apr-17 Oct-17 Apr-18 Oct-18 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Apr-17 Oct-17 Apr-18 Oct-18
Average IRR Median IRR 10y Real Rates Utility ERP Top 5 IRR - Bottom 5 IRR
173
100%
100%
20%
70%
20%
70%
10%
30%
40%
50%
60%
80%
90%
10%
30%
40%
50%
60%
80%
90%
0%
0%
Jan-00 Jan-00
Jul-00 Jul-00
Jan-01 Jan-01
Jul-01 Jul-01
Jan-02 Jan-02
Jul-02 Jul-02
Jan-03 Jan-03
Jul-03 Jul-03
Jan-04 Jan-04
Jul-04 Jul-04
Jan-05 Jan-05
Jul-05 Jul-05
Jan-06 Jan-06
Jul-06 Jul-06
Jan-07 Jan-07
Jul-07 Jul-07
Jan-08 Jan-08
Jul-08 Jul-08
Jan-09 Jan-09
Jul-09 Jul-09
Jan-10 Jan-10
Jul-10 Jul-10
Jan-11 Jan-11
Jul-11 Jul-11
Northeast
Southeast
Jan-12 Jan-12
Jul-12 Jul-12
Jan-13 Jan-13
Jul-13 Jul-13
Jan-14 Jan-14
Jul-14 Jul-14
Jan-15 Jan-15
Reservoir Levels – Historical
Jul-15 Jul-15
Jan-16 Jan-16
Jul-16 Jul-16
Jan-17 Jan-17
Jul-17 Jul-17
Jan-18 Jan-18
Jul-18 Jul-18
Jan-19 Jan-19
100%
100%
20%
70%
20%
70%
10%
30%
40%
50%
60%
80%
90%
10%
30%
40%
50%
60%
80%
90%
0%
0%
Jan-00 Jan-00
Jul-00 Jul-00
Jan-01 Jan-01
Jul-01 Jul-01
Jan-02 Jan-02
Jul-02 Jul-02
Jan-03 Jan-03
Jul-03 Jul-03
Jan-04 Jan-04
Jul-04 Jul-04
Jan-05 Jan-05
Jul-05 Jul-05
Jan-06 Jan-06
Jul-06 Jul-06
Jan-07 Jan-07
Jul-07 Jul-07
Jan-08 Jan-08
Jul-08 Jul-08
Jan-09 Jan-09
Jul-09 Jul-09
North
South
Jan-10 Jan-10
Jul-10 Jul-10
Jan-11 Jan-11
Jul-11 Jul-11
Jan-12 Jan-12
✓ After five years of intense draught the reservoirs seems to be recovering their seasonal regularity.
Jul-12 Jul-12
Jan-13 Jan-13
Jul-13 Jul-13
Jan-14 Jan-14
Jul-14 Jul-14
Jan-15 Jan-15
Jul-15 Jul-15
Jan-16 Jan-16
Jul-16 Jul-16
Jan-17 Jan-17
Jul-17 Jul-17
174
Jan-18 Jan-18
Jul-18 Jul-18
Jan-19 Jan-19
Reservoir Levels 2019
According to the most recent forecast made by CCEE (Energy Trading Chamber), we can expect a strong recovery in the
Northeast region reservoirs, allowing not only the Southeast region to regain storable energy, but also the whole system to
improve the metabolism of reservoirs depletion during the dry months.
Jul-19
Aug-19
Jul-19
Aug-19
Mar-19
Mar-19
Mar-19
Sep-19
Sep-19
Sep-19
Jan-19
Jan-19
Jan-19
Jun-19
Oct-19
Jun-19
Oct-19
Jun-19
Oct-19
May-19
May-19
May-19
Dec-18
Dec-19
Dec-18
Dec-19
Dec-18
Dec-19
Feb-19
Feb-19
Feb-19
Apr-19
Apr-19
Apr-19
Nov-19
Nov-19
Nov-19
Jul-19
Aug-19
Mar-19
Sep-19
Jan-19
Jun-19
Oct-19
May-19
Dec-18
Dec-19
Feb-19
Apr-19
Nov-19
175
Top Picks: Equatorial
✓ Incorporating Cepisa
– After incorporating Cepisa in our model, we’ve updated our TP to R$79/share for YE19.
– We incorporate its extraordinary tariff review in 2019 and assume EQTL will be able to implement its full turnaround.
✓ Valuation
– We see EQTL trading at 2.2x EV/RAB, but we still see it as one of the best carry names in the sector
176
Top Picks: Cemig
✓ Political upside
– We believe Cemig still has significant upside considering the current political scenario
– While a privatization may still be a long shot, the nomination of a pro-market CEO could be the next trigger for Cemig.
– Tackling costs and implementing its full divestment plan could are the next milestones.
177
Top Picks: Light
✓ Crucial timing
– We acknowledge that we’d rather see the deal coming back sooner than later, as Light’s deteriorating Operations could lead to potential
value destruction.
✓ Valuation
– Assuming the same deal structure with GP, if Light is valued at 1.3x EV/RAB, post the R$2bn capital increase, it could be worth
~R$26/share.
178
Brazil Follow the Money: Allocations are low
180
AuM and
AuM and Allocations
Allocations - GEM Weighted
Weighted Funds
Funds
800.000
800.000 18%
18%
700.000
700.000 16%
16%
14%
Equity AuM (USD mn)
600.000
600.000 14%
12%
12%
500.000
500.000
10%
10%
400.000
400.000
8%8%
300.000
300.000 6%6%
200.000
200.000 4%4%
100.000
100.000 2%2%
00 0%0%
13-Dec-11
6-Dec-11 13-Dec-12
6-Dec-12 13-Dec-13
6-Dec-13 13-Dec-14
6-Dec-14 13-Dec-15
6-Dec-15 13-Dec-16
6-Dec-16 13-Dec-17
6-Dec-17 13-Dec-18
6-Dec-18
AuM
AuM Allocation
Allocation in
in Brazil
Brazil
AuM and
AuM and Allocations
Allocations - Global Weighted
Weighted Funds
Funds
4.000.000
4.000.000 1,6%
1,6%
3.500.000
3.500.000 1,4%
1,4%
3.000.000
3.000.000 1,2%
1,2%
2.500.000
2.500.000 1,0%
1,0%
2.000.000
2.000.000 0,8%
0,8%
1.500.000
1.500.000 0,6%
0,6%
1.000.000
1.000.000 0,4%
0,4%
500.000
500.000 0,2%
0,2%
00 0,0%
0,0%
13-Aug-15 13-Jan-16 13-Jun-16
6-Aug-15 6-Dec-15 6-Apr-16 6-Aug-16 13-Nov-16
6-Dec-16 13-Apr-17
6-Apr-17 13-Sep-17
6-Aug-17 13-Feb-18
6-Dec-17 6-Apr-1813-Jul-18
6-Aug-18 13-Dec-18
6-Dec-18
AuM Allocation in Brazil
AuM Allocation in Brazil
Evolution of allocations among continents (Global funds ex-USA)
Global Latin America Emerging Asia Developed Asia Emerging Europe Developed Europe Middle East Africa North America
Dez-09 4.6% 8.5% 22.8% 1.4% 55.8% 0.6% 0.8% 3.1%
Dez-10 3.8% 9.1% 23.6% 0.8% 55.1% 0.5% 0.8% 4.4%
Dez-11 3.7% 8.3% 23.1% 0.9% 55.6% 0.9% 0.9% 3.7%
Dez-12 3.1% 8.0% 22.8% 1.0% 55.4% 1.1% 0.7% 4.6%
Dez-13 2.4% 7.0% 23.6% 1.2% 57.1% 1.1% 0.6% 4.7%
Dez-14 1.9% 7.6% 23.4% 0.7% 57.5% 1.0% 0.6% 5.5%
Dez-15 1.4% 7.7% 25.1% 0.5% 56.3% 1.4% 0.5% 5.3%
Nov-16 2.8% 9.7% 25.7% 0.9% 50.9% 1.3% 0.6% 6.3%
Jan-17 2.7% 9.2% 25.6% 1.1% 52.5% 1.1% 0.5% 5.7%
May-17 2.6% 9.3% 24.4% 1.0% 53.9% 1.1% 0.5% 4.6%
Oct-17 2.1% 8.1% 26.2% 0.9% 54.3% 0.9% 0.4% 4.5%
Dec-17 2.1% 8.4% 26.3% 0.9% 54.1% 0.9% 0.4% 4.6%
May-18 1.6% 8.0% 26.8% 0.7% 53.9% 0.8% 0.5% 4.9%
Oct-18 1.4% 7.3% 26.7% 0.7% 54.6% 0.7% 0.4% 5.2%
30.000
30.000 65%
65%
Brazil (%)
(%)
(USD mn)
mn)
25.000
25.000
in Brazil
60%
60%
AuM (USD
20.000
20.000
Allocation in
55%
55%
Equity AuM
Allocation
15.000
15.000
50%
50%
Equity
10.000
10.000
5.000
5.000 45%
45%
00 40%
40%
13-Dec-11
6-Dec-11 13-Dec-12
6-Dec-12 13-Dec-13
6-Dec-13 13-Dec-14
6-Dec-14 13-Dec-15
6-Dec-15 13-Dec-16
6-Dec-16 13-Dec-17
6-Dec-17 13-Dec-18
6-Dec-18
30%
20.000
25%
15.000 20%
15%
10.000
10%
5.000
5%
0 0%
6-Dec-12
13-Dec-12 6-Dec-13
13-Dec-13 6-Dec-14
13-Dec-14 6-Dec-15
13-Dec-15 6-Dec-16
13-Dec-16 6-Dec-17
13-Dec-17 6-Dec-18
13-Dec-18
Equity Evolution in the Brazilian Mutual Fund Industry vs. Domestic Interest Rates
4500 25%
4,122
14.8% 2,362
2500 2,246
15.5% 14.9% 15%
2000 1,950
14.3% 14.0% 13%
1,651 1,858 2,104
11.3% 11.6%11.4% 1,420 1,500
1500 10.6% 11%
9.9% 9.8%
1,167 8.7%
1000 717 981
854 893 11.1% 940 11.9% 9%
9.1%
500 8.5%
7%
362 334 356 321 331 330 405
224 311
255 278 303
0 97 88 80 99 113 133 221 5%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Oct-18
Fixed Income AuM (R$bn) Equity AuM (R$bn) Equity Share End of Period Selic Rate
184
185
Ibovespa ADTV
✓ So far in December, daily Bovespa volumes averaged R$15.8bn, 63% above December 2017.
18.0
18,0
16.0
16,0
14.0
14,0
12.0
12,0
10.0
10,0
8.0
8,0
6.0
6,0
4.0
4,0
2.0
2,0
0.0
0,0
Jul-11
Aug-11 Mar-12
Apr-12 Nov-12
Dec-12 Jul-13
Aug-13 Mar-14
Apr-14 Nov-14
Dec-14 Jul-15
Aug-15 Mar-16
Apr-16 Nov-16
Dec-16 Jul-17
Aug-17 Mar-18
Apr-18 Nov-18
Dec-18
Source: Bovespa,
Bloomberg, BTG Pactual
185
Ibovespa: Looks attractive, and under-owned
Ibovespa trading below its historical average
✓ The Ibovespa is now trading at 11.7x 12-month forward P/E, below its historical average.
19x
Brazil’s 12-month forward P/E
17x
15x
13x
11.7
11x
9x
7x
Jan-08
Jan-10
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-07
Jan-09
Jan-11
Jan-18
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
Sep-12
Sep-14
Sep-16
Sep-18
Sep-13
Sep-15
Sep-17
May-07
May-09
May-11
May-12
May-13
May-14
May-15
May-16
May-18
May-08
May-10
May-17
Average +1 Std Dev -1 Std Dev P/E 12MF (ex-Petro & Vale)
✓ The premium to hold equities stands at 5.5%, above its historical average, with real interest rates hovering around
3%.
8%
6% 5.5%
4%
2% 1.9%
0%
-2%
-4%
-6%
-8%
Jan-07
Jan-09
Jan-11
Jan-12
Jan-13
Jan-14
Jan-16
Jan-18
Jan-08
Jan-10
Jan-15
Jan-17
May-07
May-08
May-09
May-11
May-13
May-15
May-17
May-18
Sep-07
Sep-09
May-10
Sep-10
May-12
Sep-12
May-14
Sep-14
May-16
Sep-16
Sep-18
Sep-06
Sep-08
Sep-11
Sep-13
Sep-15
Sep-17
Real Earnings Yield (Ex-Petro & Vale) AVERAGE +1 Std Dev -1 Std Dev
✓ In spite of last two years rally, in USD terms the Ibovespa is trading at quite depressed levels.
8000 0.00
17,000 3
IBOV Index (USD) IBOV Index (BRL) USD/BRL IBOV Index (USD) USD/BRL
189
Long positive cycles can yield outstanding performances
✓ We looked at an Ibovespa series (in USD) dating back to the 1980s (chart 1 below) and identified lengthy rallies,
usually triggered by key political events that drove the Ibovespa to post outstanding performances.
+19x
10,000
+30x
Impeachment
of President
Dilma
+16x Election of
President Lula +
1,000 Letter to
Brazilians
Impeachment of
President Collor
End of Dictatorship+
Plano Cruzado
100
01/01/1980
01/01/1983
01/01/1986
01/01/1988
01/01/1989
01/01/1991
01/01/1994
01/01/1996
01/01/1997
01/01/1999
01/01/2002
01/01/2004
01/01/2005
01/01/2007
01/01/2010
01/01/2012
01/01/2013
01/01/2015
01/01/2018
01/01/1981
01/01/1982
01/01/1984
01/01/1985
01/01/1987
01/01/1990
01/01/1992
01/01/1993
01/01/1995
01/01/1998
01/01/2000
01/01/2001
01/01/2003
01/01/2006
01/01/2008
01/01/2009
01/01/2011
01/01/2014
01/01/2016
01/01/2017
Source: BTG Pactual and Bloomberg 190
Ibovespa recent performance
In 2018, IBOV performed better than other LatAm indexes
Ibovespa performance 2018 Stock market performance YTD (in US$)
29,000
Dow Jones -2.4%
27,000
S&P 500 -2.5%
25,000
IBOV -2.7%
23,000 Colombia IGBC -6.0%
21,000 Peru SPBLPGPT -7.5%
19,000 Chile IPSA -16.6%
17,000
MEXBOL -18.3%
Argentina MERVAL -49.5%
-50.0
-40.0
-30.0
-20.0
-10.0
10.0
40.0
20.0
30.0
50.0
Pulp, Paper & Wood
40.4
Banks
39.1
Car Rental & Logistics
37.8
Mining
30.8
Financials ex-Banks
24.4
Utilities
23.1
IBOV
15.0
Ibrx-50
14.5
Performance by sector YTD in 2018
Steel
9.8
Retail
4.9
YTD (%)
Capital Goods
4.3
Infrastructure
-1.7
Real Estate
-11.8
Healthcare
-30.0
Education
-39.8
193
Brazilian stocks performances YTD in 2018
Name Ticker YTD Performance (%) Name Ticker YTD Performance (%) Name Ticker YTD Performance (%) Name Ticker YTD Performance (%)
Irbbrasil Re IRBR3 134.5 Cvc Brasil CVCB3 28.2 Bk Brasil BKBR3 4.9 Cosan CSAN3 -17.2
Magaz Luiza MGLU3 109.4 Bradesco BBDC4 28 Embraer EMBR3 4.6 Helbor HBOR3 -18.9
Eletropaulo ELPL3 104.3 Localiza RENT3 27.7 Aliansce ALSC3 4.2 CCR SA CCRO3 -20.2
Suzano Papel SUZB3 102 Tupy TUPY3 27.2 Energias BR ENBR3 4 Estacio Part ESTC3 -20.6
Cemig CMIG4 97.7 Gerdau Met GOAU4 27 Marcopolo POMO4 4 Marfrig MRFG3 -20.6
SLC Agricola SLCE3 82.9 Gerdau GGBR4 26.9 Iochp-Maxion MYPK3 4 Imc S/A MEAL3 -20.7
B2W Digital BTOW3 81.2 Rumo S.A. RAIL3 26.4 BR Malls Par BRML3 3.9 Gafisa GFSA3 -20.8
Locamerica LCAM3 79.1 Taesa TAEE11 24.6 Alupar ALUP11 3.2 Ambev S/A ABEV3 -22.4
Banrisul BRSR6 66 Santos Brp STBP3 24.6 Multiplan MULT3 2.4 Multiplus MPLU3 -23.7
Cesp CESP6 59.4 B3 B3SA3 24.4 Iguatemi IGTA3 2.3 Lojas Marisa AMAR3 -25.1
Sul America SULA11 58.9 JBS JBSS3 23 Valid VLID3 0.4 JSL JSLG3 -25.6
Petrobras PETR3 58.1 Tran Paulist TRPL4 21.5 Sao Martinho SMTO3 -0.1 Vulcabras VULC3 -27.4
Celesc CLSC4 57.7 Cyrela Realt CYRE3 19.7 Arezzo Co ARZZ3 -1 Biosev BSEV3 -27.9
Porto Seguro PSSA3 57.6 Qgep Part QGEP3 18.6 Klabin S/A KLBN4 -2.6 BR Brokers BBRK3 -29.3
Fibria FIBR3 50.9 Braskem BRKM5 18.4 Sanepar SAPR4 -3.6 Rossi Resid RSID3 -29.5
Gol GOLL4 50.7 Lojas Americ LAME4 17.6 Weg WEGE3 -5 Fleury FLRY3 -30
Direcional DIRR3 49.4 Eztec EZTC3 17 Light S/A LIGT3 -5.2 RaiaDrogasil RADL3 -30.8
Somos Educa SEDU3 47.6 Ibovespa IBOV 15 Klabin S/A KLBN11 -5.2 Sao Carlos SCAR3 -30.9
Linx LINX3 47.1 Ibrx 50 IBXL 14.5 Omega Ger OMGE3 -5.5 Ultrapar UGPA3 -32.6
Petrobras PETR4 46.3 Eneva ENEV3 13.7 Totvs TOTS3 -5.6 Tecnisa TCSA3 -33.5
Brasil BBAS3 44.5 Lojas Renner LREN3 13 Tim Part S/A TIMP3 -6.2 Technos TECN3 -35.2
Santander BR SANB11 43.6 Movida MOVI3 11.6 Sabesp SBSP3 -6.4 Wiz S.A WIZS3 -36.3
Petrobras BR BRDT3 42.6 Equatorial EQTL3 11.4 Hypera HYPE3 -8.3 BRF SA BRFS3 -38
CPFL Energia CPFE3 41.6 Cia Hering HGTX3 9.8 Mills MILS3 -9.2 Smiles SMLS3 -39.6
Tegma TGMA3 37.8 Usiminas USIM3 9.8 Le Lis Blanc LLIS3 -10.6 Anima ANIM3 -39.8
Copasa CSMG3 36.1 Sid Nacional CSNA3 8.2 Lopes Brasil LPSB3 -11.8 Oi OIBR4 -46.3
Copel CPLE6 35.7 BBSeguridade BBSE3 7.3 Alliar AALR3 -12.2 Kroton KROT3 -46.3
ItauUnibanco ITUB4 34.5 Usiminas USIM5 6.5 AES Tiete E TIET11 -12.7 Ser Educa SEER3 -47.3
Natura NATU3 34.4 P.Acucar-Cbd PCAR4 6.4 Odontoprev ODPV3 -13.7 Oi OIBR3 -51.3
Engie Brasil EGIE3 33.1 Telef Brasil VIVT4 6.3 MRV MRVE3 -16.4 Minerva BEEF3 -51.7
Brasilagro AGRO3 30.9 Even EVEN3 5.9 Ecorodovias ECOR3 -16.5 Qualicorp QUAL3 -53.4
Vale VALE3 30.8 Wilson Sons WSON33 5.8 BR Propert BRPR3 -16.7 Cielo CIEL3 -57.9
Duratex DTEX3 29.9 Abc Brasil ABCB4 5.2 M.Diasbranco MDIA3 -16.9 Biotoscana GBIO33 -59.6
Randon Part RAPT4 29.6 CPFL Renovav CPRE3 4.9 Cosan CSAN3 -17.2
20.0
40.0
80.0
140.0
100.0
120.0
160.0
180.0
Car Rental & Logistics
165.7
Airlines & Mileage
114.7
Education
79.5
Healthcare
69.0
Mining
63.7
Capital Goods 61.0
Retail
51.3
Performance by sector in 2017
Infrastructure
41.2
Real Estate
37.2
Banks
32.1
2017 (%)
IBOV
26.9
Ibrx-50
26.8
Steel
21.1
Financials ex-Banks
14.2
Agribusiness
8.3 11.6
Utilities
0.4
Name Ticker 2017 Performance (%) Name Ticker 2017 Performance (%) Name Ticker 2017 Performance (%) Name Ticker 2017 Performance (%)
Magaz Luiza MGLU3 511 Even EVEN3 55.1 Embraer EMBR3 27.3 Engie Brasil EGIE3 9.6
Locamerica LCAM3 230.8 Hypermarcas HYPE3 54.8 Ibovespa IBOV 26.9 Petrobras PETR4 8.3
Gol GOLL4 216 Oi OIBR4 54.2 Ibrx 50 IBXL 26.8 Tran Paulist TRPL4 8.2
Rossi Resid RSID3 166.3 Fibria FIBR3 53.7 Totvs TOTS3 25.8 BBSeguridade BBSE3 6.9
Tegma TGMA3 165.7 RaiaDrogasil RADL3 51.3 Linx LINX3 25 Energias BR ENBR3 5.4
Arezzo Co ARZZ3 129.8 Banrisul BRSR6 51.1 Copasa CSMG3 25 Mills MILS3 5.4
Usiminas USIM5 122 Iguatemi IGTA3 50.7 Wilson Sons WSON33 24.9 Cielo CIEL3 4.9
Estacio Part ESTC3 111.3 Terra Santa TESA3 48.9 Aliansce ALSC3 24.8 CCR SA CCRO3 4.8
Rumo S.A. RAIL3 109.8 Le Lis Blanc LLIS3 46.9 Direcional DIRR3 23.9 Sao Martinho SMTO3 0.6
Randon Part RAPT4 109.6 Marcopolo POMO4 46.3 Sabesp SBSP3 23.8 Cesp CESP6 0.5
Cvc Brasil CVCB3 107 Natura NATU3 45.2 BR Malls Par BRML3 23.1 Lojas Americ LAME4 0.4
Qgep Part QGEP3 106.8 P.Acucar-Cbd PCAR4 44.8 Multiplan MULT3 22.1 Unicasa UCAS3 0
Localiza RENT3 106.1 MRV MRVE3 43.7 Equatorial EQTL3 21.9 Petrobras PETR3 -0.2
B2W Digital BTOW3 105.8 Lopes Brasil LPSB3 43.3 Lojas Marisa AMAR3 21.6 Technos TECN3 -1.4
SLC Agricola SLCE3 102.7 Kroton KROT3 41.8 Sul America SULA11 21.4 Copel CPLE6 -2.3
Iochp-Maxion MYPK3 101.7 BR Propert BRPR3 41.7 Gerdau Met GOAU4 21.1 AES Tiete E TIET11 -3.3
PDG Realt PDGR3 90.8 Porto Seguro PSSA3 41.3 Telef Brasil VIVT4 17.5 Light S/A LIGT3 -3.9
Cia Hering HGTX3 81.6 Santos Brp STBP3 41.2 Brasil BBAS3 16.8 Tecnisa TCSA3 -4
Imc S/A MEAL3 80.1 B3 BVMF3 41 Eneva ENEV3 16.8 Cemig CMIG4 -5.6
Sao Carlos SCAR3 75.1 Oi OIBR3 38 Sanepar SAPR4 15.6 JSL JSLG3 -8.1
Ser Educa SEER3 71 M.Diasbranco MDIA3 37.5 Brasilagro AGRO3 15.4 Profarma PFRM3 -9.1
Lojas Renner LREN3 70.8 Duratex DTEX3 36.8 Gerdau GGBR4 15.2 Wiz S.A WIZS3 -9.6
Celesc CLSC4 70.5 Abc Brasil ABCB4 34.7 Klabin S/A KLBN4 14.4 Minerva BEEF3 -9.9
Tim Part S/A TIMP3 69.5 Bradesco BBDC4 33.5 Santander BR SANB11 14.3 JBS JBSS3 -13.7
Qualicorp QUAL3 69.3 Ambev S/A ABEV3 33.4 CPFL Renovav CPRE3 14.2 Valid VLID3 -15.6
Fleury FLRY3 69 Helbor HBOR3 32.7 Multiplus MPLU3 13.4 CPFL Energia CPFE3 -22.6
Eztec EZTC3 64.4 Odontoprev ODPV3 31.5 Ultrapar UGPA3 12.4 Sid Nacional CSNA3 -22.8
Vale VALE3 63.7 Usiminas USIM3 31.1 Positivo Tec POSI3 12.3 BRF SA BRFS3 -24.1
Tupy TUPY3 63.4 Gafisa GFSA3 30.7 Cosan CSAN3 11.6 OGX Petroleo OGXP3 -28.4
Weg WEGE3 58.5 ItauUnibanco ITUB4 30.6 Taesa TAEE11 11.5 BR Brokers BBRK3 -32.9
Dasa DASA3 56.1 Cyrela Realt CYRE3 29.6 Alupar ALUP11 10.8 BR Insurance BRIN3 -39.3
Ecorodovias ECOR3 55.5 Braskem BRKM5 28.7 Marfrig MRFG3 10.7 Biosev BSEV3 -39.4
Company
Company
Company Ticker
Ticker Ticker
Rating
Rating ShareShare
Rating ShareShareShare
TargetTarget Upside
ShareUpsideMkt Cap
Target
Mkt CapADTV Upside
ADTV Performance
MktPerformance
Capin USD inADTV
USD EV/EBITDAEV/EBITDA
EV/EBITDA P/E P/E P/E Div. Yield Div. Yield Div.P/BV
Yield P/BV Net Debt (USDP/BV
bn)
Net Debt (USD
Net bn)
Debt/EBITDA
Net Debt/EBITDA
Net Debt/EBITDA
Origin
Currency
Currency PricePrice
Currency Price (USD bn)
(USD bn)
(USD mn)
(USD mn)1day 1day
(USD
1month
bn)1month(USD
YTD mn)
YTD2018E 2018E
2018E
2019E 2019E
2019E
2018E 2018E
2019E
2018E 2019E
2018E2019E2018E
2019E 2018E
2018E
2019E 2019E
2019E
2018E 2018E
2019E
2018E 2019E
2018E2019E2018E
2019E 2018E
2019E2018E 2019E
2019E
Oil
Oil
YPF
YPF YPFYPFUSUS YPF
NeutUS
Neutral
ral USDUSD
Neutral 14,3614,36 USD18,5 18,5 14,36
29% 29% 5,6 18,55,6 14,46 14,46
29% 0% 0% 5,6
-7% -7% -36%14,46-36%3,4x 3,4x
3,4x3,7x 3,7x
3,7x
21,0x 21,0x
n.a.
21,0x n.a.
0,8% n.a. 0,8%
0,8% 0,8%0,8%
0,7x 0,8x
0,8%
0,7x 7,90,8x0,7x 8,17,9 0,8x 2,0x8,1 2,0x
2,2x2,0x Argent
2,2x
2,2x
ina
Ecopetrol
Ecopetrol
Ecopetrol ECECUSUS ECSelUSlSell USDUSDSell 18,6918,69 USD14,5 14,5 18,69
-22% -22% 38,4 14,5
38,4 30,85 30,85
-22%-2% -2%38,4
-8% -8% 34%30,8534%4,4x 4,4x
4,4x4,8x 4,8x
4,8x
9,1x 9,1x
10,0x9,1x 10,0x
3,3% 10,0x 3,3%
7,6% 3,3%7,6%
2,0x 1,9x
7,6%
2,0x 9,81,9x2,0x 9,09,8 1,9x 0,9x9,0 0,9x
0,9x0,9x Col0,9x
ombi
0,9xa
Canacol
CanacolEnergy
Energy
Energy CNECNECNCN CNEBuyCN
Buy CADCAD
Buy 4,16 4,16 CAD5,5 5,5 32%
4,16 32% 0,5 5,50,5 0,86 0,86
32% 0% 0% 0,5
5% 5% -13%0,86 -13%5,8x 5,8x
5,8x3,9x 3,9x
3,9x
13,2x 13,2x
6,5x
13,2x 6,5x
0,0% 6,5x 0,0%
0,0% 0,0%0,0%
1,9x 1,5x
0,0%
1,9x 0,31,5x1,9x 0,30,3 1,5x 2,0x0,3 2,0x
1,3x2,0x Col1,3x
ombi
1,3xa
Median
Median
Median -0,3% -0,3%-7,5% -7,5%-12,6% -12,6%4,4x 4,4x
4,4x3,9x 3,9x
3,9x
13,2x 13,2x
8,3x
13,2x 8,3x 8,3x 1,9x 1,5x
1,9x 1,5x1,9x 1,5x 2,0x 2,0x
1,3x2,0x 1,3x
1,3x
Chemicals
Chemicals
Chemicals
Ultrapar
Ultrapar UGPA3
UGPA3 UGPA3
SellSell BRLBRLSell 49,3049,30 BRL44,0 44,0 49,30
-11% -11% 7,1 44,07,1 30,37 30,37
-11%-2% -2% 7,1
16% 16% -43%30,37-43%12,2x 12,2x
12,2x9,9x 9,9x
9,9x
28,4x 28,4x
22,6x
28,4x 22,6x
1,1% 22,6x 1,1%
2,2% 1,1%2,2%
2,8x 2,6x
2,2%
2,8x 2,32,6x2,8x 2,42,3 2,6x 3,0x2,4 3,0x
2,5x3,0x Brazi
2,5x
2,5xl
Alpek
Alpek ALPEKA
ALPEKAMMMMALPEKA
BuyBuy
MM MXNMXN
Buy 23,9923,99MXN37,0 37,0 23,99
54% 54% 2,5 37,02,5 3,38 3,38
54% 1% 1% 2,5
-10% -10% 1%3,38 1% 5,6x 5,6x
5,6x6,0x 6,0x
6,0x
8,1x 8,1x
10,8x8,1x 10,8x
1,0% 10,8x 1,0%
3,0% 1,0%3,0%
1,6x 1,5x
3,0%
1,6x 1,51,5x1,6x 1,21,5 1,5x 2,0x1,2 2,0x
1,8x2,0x Mexi
1,8x
1,8x
co
MEXICHEM
MEXICHEM
MEXICHEM MEXCHEM*
MEXCHEM*MMMEXCHEM*
MM BuyBuyMM MXNMXN
Buy 51,5851,58MXN75,7 75,7 51,58
47% 47% 5,3 75,75,3 11,11 11,11
47% 1% 1% 5,3
0% 0% 3%11,11 3% 6,8x 6,8x
6,8x6,3x 6,3x
6,3x
21,8x 21,8x
13,0x
21,8x 13,0x
3,9% 13,0x 3,9%
7,9% 3,9%7,9%
2,0x 2,0x
7,9%
2,0x 2,52,0x2,0x 2,32,5 2,0x 1,9x2,3 1,9x
1,7x1,9x Mexi
1,7x
1,7x
co
Median
Median
Median -0,8% -0,8%2,7% 2,7%-20,9% -20,9%8,9x 8,9x
8,9x7,9x 7,9x
7,9x
18,3x 18,3x
16,7x
18,3x 16,7x 16,7x 2,2x 2,1x
2,2x 2,1x2,2x 2,1x 2,5x 2,5x
2,2x2,5x 2,2x
2,2x
Agribusiness
Agribusiness
Agribusiness
SLC
SLCAgrícola
Agrícola
Agrícola SLCE3
SLCE3 SLCE3
NeutNeutral
ral BRLBRL
Neutral 46,4646,46 BRL52,0 52,0 46,46
12% 12% 1,1 52,01,1 9,95 9,95
12% -5% -5% 1,1
-15% -15%56%9,95 56%9,2x 9,2x
9,2x7,2x 7,2x
7,2x
11,5x 11,5x
11,1x
11,5x 11,1x
4,6% 11,1x 4,6%
5,4% 4,6%5,4%
1,7x 1,6x
5,4%
1,7x 0,21,6x1,7x 0,20,2 1,6x 1,2x0,2 1,2x
1,0x1,2x Brazi
1,0x
1,0xl
São
SãoMartinho
Martinho
Martinho SMTO3
SMTO3 SMTO3
BuyBuy BRLBRLBuy 18,8018,80 BRL27,0 27,0 18,80
44% 44% 1,7 27,01,7 4,22 4,22
44% -1% -1% 1,7
-4% -4% -15%4,22 -15%5,3x 5,3x
5,3x4,6x 4,6x
4,6x
13,2x 13,2x
9,7x
13,2x 9,7x
2,2% 9,7x 2,2%
5,7% 2,2%5,7%
2,0x 1,8x
5,7%
2,0x 0,61,8x2,0x 0,50,6 1,8x 1,4x0,5 1,4x
1,1x1,4x Brazi
1,1x
1,1xl
Cosan
Cosan CSAN3
CSAN3 CSAN3
BuyBuy BRLBRLBuy 33,4233,42 BRL54,0 54,0 33,42
62% 62% 3,5 54,03,5 14,84 14,84
62% 0% 0% 3,5
-3% -3% -29%14,84-29%6,1x 6,1x
6,1x4,9x 4,9x
4,9x
12,4x 12,4x
9,9x
12,4x 9,9x
-5,0% 9,9x -5,0%
7,5% -5,0%
7,5%
0,6x 0,6x
7,5%
0,6x 3,60,6x0,6x 3,43,6 0,6x 3,1x3,4 3,1x
2,4x3,1x Brazi
2,4x
2,4xl
Adecoagro
Adecoagro
Adecoagro AGRO
AGROUSUS AGRO
BuyUS
Buy USDUSD
Buy 7,09 7,09 USD12,0 12,0 69%
7,09 69% 0,8 12,00,8 3,17 3,17
69% -1% -1% 0,8
-1% -1% -32%3,17 -32%4,9x 4,9x
4,9x4,8x 4,8x
4,8x
13,9x 13,9x
10,3x
13,9x 10,3x
n.a. 10,3x n.a.
n.a. n.a.1,2x
n.a. 1,1x
n.a.
1,2x 0,61,1x1,2x 0,60,6 1,1x 2,1x0,6 2,1x
2,1x2,1x Argent
2,1x
2,1x
ina
Biosev
Biosev BSEV3
BSEV3 BSEV3
BuyBuy BRLBRLBuy 3,25 3,25 BRL17,0 17,0 423%
3,25 423% 0,2 17,00,2 423%-2% -2% 0,2
-14% -14%-39% -39%2,2x 2,2x
2,2x1,9x 1,9x
1,9x
1,3x 1,3x1,0x1,3x 1,0x
-19,3% 1,0x -19,3%
-25,2% -19,3%
-25,2%
0,7x -25,2%
0,4x
0,7x 1,00,4x0,7x 0,91,0 0,4x 1,9x0,9 1,9x
1,6x1,9x Brazi
1,6x
1,6xl
Median
Median
Median -1,0% -1,0%-4,1% -4,1%-29,5% -29,5%5,3x 5,3x
5,3x4,8x 4,8x
4,8x
12,4x 12,4x
9,9x
12,4x 9,9x 9,9x 1,2x 1,1x
1,2x 1,1x1,2x 1,1x 1,9x 1,9x
1,6x1,9x 1,6x
1,6x
Company
Company
Company Ticker
Ticker Ticker
Rating
Rating Share
Share
Rating ShareShareShare
TargetTarget Upside
ShareUpsideMkt Cap
Target
Mkt CapADTV Upside
ADTV Performance
MktPerformance
Capin USD inADTV
USD EV/EBITDA
EV/EBITDA
EV/EBITDA P/E P/E P/E Div. Yield Div. Yield Div.P/BV
Yield P/BV Net Debt (USDP/BV
bn)
Net Debt (USD
Net bn)
Debt/EBITDA
Net Debt/EBITDA
Net Debt/EBITDA
Origin
Currency
Currency PricePrice
Currency Price (USD bn)
(USD bn)
(USD mn)
(USD mn)1day 1day
(USD
1month
bn)1month
(USD
YTD mn)
YTD2018E 2018E
2018E
2019E 2019E
2019E
2018E 2018E
2019E
2018E 2019E
2018E2019E2018E
2019E 2018E
2018E
2019E 2019E
2019E
2018E 2018E
2019E
2018E 2019E
2018E2019E2018E
2019E 2018E
2019E
2018E 2019E
2019E
Utilities
Utilities
Utilities
TRPL
TRPL TRPL4
TRPL4 TRPL4
BuyBuy BRL BRL
Buy 67,8767,87 BRL70,0 70,0 67,87
3% 3% 2,9 70,0
2,9 11,70 11,70
3% 0% 0% 2,9
4% 4% 3%11,70 3% 7,1x 7,1x
7,1x7,7x 7,7x
7,7x
9,8x 9,8x
9,8x
9,8x 9,8x
16,7% 9,8x 16,7%
10,2% 16,7%
10,2%
1,1x 10,2%
1,1x
1,1x 0,3
1,1x1,1x 0,20,3 1,1x 0,6x0,2 0,6x
0,6x0,6x Brazil
0,6x
0,6x
Engie
Engie EGIE3
EGIE3 EGIE3
Neutral
Neutral BRL BRL
Neutral 34,2534,25 BRL37,0 37,0 34,25
8% 8% 5,7 37,0
5,7 12,25 12,25
8% -1% -1% 5,7
2% 2% 13%12,2513%7,4x 7,4x
7,4x6,5x 6,5x
6,5x
10,6x 10,6x
10,0x
10,6x 10,0x
17,9% 10,0x 17,9%
10,5% 17,9%
10,5%
4,5x 10,5%
4,6x
4,5x 2,2
4,6x4,5x 2,32,2 4,6x 2,1x2,3 2,1x
1,9x2,1x Brazil
1,9x
1,9x
Taesa
Taesa TAEE11
TAEE11 TAEE11
BuyBuy BRL BRL
Buy 23,7123,71 BRL24,0 24,0 23,71
1% 1% 2,1 24,0
2,1 12,68 12,68
1% 0% 0% 2,1
3% 3% 6%12,68 6%10,7x 10,7x
10,7x
11,1x 11,1x
11,1x
9,2x 9,2x
11,8x
9,2x 11,8x
10,4% 11,8x 10,4%
7,7% 10,4%
7,7%
1,8x 1,8x
7,7%
1,8x 0,6
1,8x1,8x 0,70,6 1,8x 2,5x0,7 2,5x
2,8x2,5x Brazil
2,8x
2,8x
Sabesp
Sabesp
Sabesp SBSP3
SBSP3 SBSP3
BuyBuy BRL BRL
Buy 31,2231,22 BRL36,0 36,0 31,22
15% 15% 5,5 36,0
5,5 17,82 17,82
15% 0% 0% 5,5
10% 10% -20%17,82-20%5,0x 5,0x
5,0x4,5x 4,5x
4,5x
8,2x 8,2x
6,0x
8,2x 6,0x
3,1% 6,0x 3,1%
4,1% 3,1%
4,1%
1,1x 1,0x
4,1%
1,1x 2,0
1,0x1,1x 1,92,0 1,0x 1,4x1,9 1,4x
1,2x1,4x Brazil
1,2x
1,2x
Light
Light LIGT3
LIGT3 LIGT3
BuyBuy BRL BRL
Buy 15,7015,70 BRL18,0 18,0 15,70
15% 15% 0,8 18,0
0,8 6,43 6,43
15% 1% 1% 0,8
-2% -2% -19%6,43 -19%6,5x 6,5x
6,5x5,1x 5,1x
5,1x
15,3x 15,3x
6,3x
15,3x 6,3x
1,6% 6,3x 1,6%
4,0% 1,6%
4,0%
0,9x 0,8x
4,0%
0,9x 2,0
0,8x0,9x 1,92,0 0,8x 4,6x1,9 4,6x
3,6x4,6x Brazil
3,6x
3,6x
IEnova
IEnova
IEnova IENOVA*
IENOVA*
MMMM
IENOVA*
BuyBuy
MM MXNMXN
Buy 73,2973,29MXN
107,0 107,0 73,29
46% 46% 5,6107,0
5,6 7,97 7,97
46% -1% -1% 5,6
-3% -3% -23%7,97 -23%10,8x 10,8x
10,8x
10,4x 10,4x
10,4x
12,8x 12,8x
11,6x
12,8x 11,6x
0,0% 11,6x 0,0%
0,0% 0,0%
0,0%
1,2x 1,1x
0,0%
1,2x 2,5
1,1x1,2x 2,72,5 1,1x 3,4x2,7 3,4x
3,4x3,4x Mexico
3,4x
3,4x
Equatorial
Equatorial
Equatorial EQTL3
EQTL3 EQTL3
BuyBuy BRL BRL
Buy 71,9171,91 BRL71,0 71,0 71,91
-1% -1% 3,7 71,0
3,7 20,76 20,76
-1% 0% 0% 3,7
0% 0% -5%20,76 -5%11,6x 11,6x
11,6x
12,3x 12,3x
12,3x
21,1x 21,1x
18,7x
21,1x 18,7x
1,2% 18,7x 1,2%
1,3% 1,2%
1,3%
2,7x 2,4x
1,3%
2,7x 1,1
2,4x2,7x 1,81,1 2,4x 2,6x1,8 2,6x
3,8x2,6x Brazil
3,8x
3,8x
Energias
Energias
Energias do
dodo
Brasil
Brasil
Brasil ENBR3
ENBR3 ENBR3
BuyBuy BRL BRL
Buy 14,0314,03 BRL16,0 16,0 14,03
14% 14% 2,2 16,0
2,2 15,07 15,07
14% 2% 2% 2,2
1% 1% -11%15,07-11%5,9x 5,9x
5,9x6,7x 6,7x
6,7x
9,2x 9,2x
14,8x
9,2x 14,8x
n.a. 14,8x n.a.
n.a. n.a.1,1x
n.a. 1,1x
n.a.
1,1x 1,2
1,1x1,1x 1,31,2 1,1x 1,9x1,3 1,9x
2,2x1,9x Brazil
2,2x
2,2x
Eletropaulo
Eletropaulo
Eletropaulo ELPL3
ELPL3 ELPL3
BuyBuy BRL BRL
Buy 33,4033,40 BRL25,0 25,0 33,40
-25% -25% 1,4 25,0
1,4 0,16 0,16
-25%-4% -4% 1,4
2% 2% 74%0,16 74%13,9x 13,9x
13,9x
11,4x 11,4x
11,4x
n.a. n.a.
n.a.n.a. n.a.
0,0% n.a. 0,0%
0,0% 0,0%
0,0%
3,3x 3,3x
0,0%
3,3x 1,9
3,3x3,3x 1,91,9 3,3x 7,8x1,9 7,8x
6,5x7,8x Brazil
6,5x
6,5x
Sanepar
Sanepar
Sanepar SAPR11
SAPR11 SAPR11
BuyBuy BRL BRL
Buy 56,6556,65 BRL86,0 86,0 56,65
52% 52% 1,5 86,0
1,5 6,28 6,28
52% -2% -2% 1,5
3% 3% -14%6,28 -14%5,9x 5,9x
5,9x5,3x 5,3x
5,3x
6,8x 6,8x
5,7x
6,8x 5,7x
10,2% 5,7x 10,2%
8,8% 10,2%
8,8%
1,1x 1,0x
8,8%
1,1x 0,9
1,0x1,1x 1,00,9 1,0x 2,3x1,0 2,3x
2,1x2,3x Brazil
2,1x
2,1x
Inversiones
Inversiones
Inversiones Aguas
Aguas
Aguas
Metropolitanas
Metropolitanas
Metropolitanas IAMIAM
CI CI IAM
Neutral
Neutral
CI CLP CLP
Neutral1010,00
1010,00CLP
1.059,01.059,0 1010,00
5% 5% 1,51.059,0
1,5 1,34 1,34
5% -1% -1% 1,5
2% 2% -17%1,34 -17%6,2x 6,2x
6,2x5,9x 5,9x
5,9x
13,2x 13,2x
12,3x
13,2x 12,3x
7,6% 12,3x 7,6%
8,2% 7,6%
8,2%
1,7x 1,7x
8,2%
1,7x 1,4
1,7x1,7x 1,41,4 1,7x 3,0x1,4 3,0x
2,9x3,0x Chile
2,9x
2,9x
Copel
Copel
Copel CPLE6
CPLE6 CPLE6
Neutral
Neutral BRL BRL
Neutral 32,3432,34 BRL34,0 34,0 32,34
5% 5% 2,3 34,0
2,3 6,78 6,78
5% 2% 2% 2,3
12% 12% 16%6,78 16%6,0x 6,0x
6,0x4,7x 4,7x
4,7x
6,7x 6,7x
4,3x
6,7x 4,3x
7,4% 4,3x 11,7%
7,4% 7,4%
11,7%
0,6x 11,7%
0,5x
0,6x 2,2
0,5x0,6x 2,12,2 0,5x 2,9x2,1 2,9x
2,2x2,9x Brazil
2,2x
2,2x
Copasa
Copasa
Copasa CSMG3
CSMG3 CSMG3
BuyBuy BRL BRL
Buy 54,1754,17 BRL51,0 51,0 54,17
-6% -6% 1,8 51,0
1,8 8,91 8,91
-6% -2% -2% 1,8
5% 5% 16%8,91 16%6,6x 6,6x
6,6x5,8x 5,8x
5,8x
12,4x 12,4x
10,1x
12,4x 10,1x
8,5% 10,1x 8,5%
9,9% 8,5%
9,9%
1,1x 1,1x
9,9%
1,1x 0,8
1,1x1,1x 0,80,8 1,1x 2,1x0,8 2,1x
1,9x2,1x Brazil
1,9x
1,9x
Colbun
Colbun
Colbun COLBUN
COLBUN
CI CICOLBUN
Neutral
Neutral
CI CLP CLP
Neutral140,94140,94CLP
163,0 163,0 140,94
16% 16% 3,6163,0
3,6 1,80 1,80
16% 2% 2% 3,6
4% 4% -3%1,80 -3%7,4x 7,4x
7,4x6,3x 6,3x
6,3x
17,2x 17,2x
15,6x
17,2x 15,6x
5,8% 15,6x 5,8%
2,9% 5,8%
2,9%
1,0x 0,9x
2,9%
1,0x 0,7
0,9x1,0x 0,40,7 0,9x 1,2x0,4 1,2x
0,7x1,2x Chile
0,7x
0,7x
CESP
CESP CESP6
CESP6 CESP6
BuyBuy BRL BRL
Buy 21,0021,00 BRL20,0 20,0 21,00
-5% -5% 1,8 20,0
1,8 8,16 8,16
-5% -1% -1% 1,8
10% 10% 36%8,16 36%10,3x 10,3x
10,3x7,7x 7,7x
7,7x
20,0x 20,0x
21,0x
20,0x 21,0x
1,3% 21,0x 1,3%
1,2% 1,3%
1,2%
0,9x 0,9x
1,2%
0,9x (0,0)
0,9x0,9x (0,2)
(0,0) 0,9x -0,1x(0,2) -0,1x
-0,8x-0,1x -0,8x
Brazil
-0,8x
Cemig
Cemig
Cemig CMIG4
CMIG4 CMIG4
BuyBuy BRL BRL
Buy 12,7812,78 BRL10,0 10,0 12,78
-22% -22% 4,8 10,0
4,8 49,40 49,40
-22% 1% 1% 4,8
9% 9% 68%49,4068%10,5x 10,5x
10,5x9,1x 9,1x
9,1x
12,0x 12,0x
9,3x
12,0x 9,3x
2,1% 9,3x 2,1%
2,7% 2,1%
2,7%
1,2x 1,1x
2,7%
1,2x 4,4
1,1x1,2x 4,14,4 1,1x 5,0x4,1 5,0x
4,2x5,0x Brazil
4,2x
4,2x
Alupar
Alupar
Alupar ALUP11
ALUP11 ALUP11
BuyBuy BRL BRL
Buy 18,3018,30 BRL20,0 20,0 18,30
9% 9% 1,4 20,0
1,4 3,21 3,21
9% -1% -1% 1,4
-1% -1% -12%3,21 -12%n.a. n.a.
n.a.n.a. n.a.
n.a.
n.a. n.a.
n.a.n.a. n.a.
2,9% n.a. 2,9%
7,8% 2,9%
7,8%
1,3x 1,2x
7,8%
1,3x 0,8
1,2x1,3x 0,90,8 1,2x 2,6x0,9 2,6x
2,6x2,6x Brazil
2,6x
2,6x
Aes
AesTiete
Tiete
Tiete TIET11
TIET11 TIET11
Neutral
Neutral BRL BRL
Neutral 10,3410,34 BRL12,0 12,0 10,34
16% 16% 1,0 12,0
1,0 2,69 2,69
16% -1% -1% 1,0
0% 0% -26%2,69 -26%6,9x 6,9x
6,9x4,8x 4,8x
4,8x
14,8x 14,8x
9,1x
14,8x 9,1x
7,6% 9,1x 10,9%
7,6% 7,6%
10,9%
2,7x 10,9%
2,7x
2,7x 0,8
2,7x2,7x 0,70,8 2,7x 3,0x0,7 3,0x
1,9x3,0x Brazil
1,9x
1,9x
AES
AESGENER
GENER
GENER AESGENER
AESGENER
CIAESGENER
CI Neutral
Neutral
CI CLP CLP
Neutral186,73186,73CLP
221,7 221,7 186,73
19% 19% 2,2221,7
2,2 1,80 1,80
19% 0% 0% 2,2
2% 2% -11%1,80 -11%7,1x 7,1x
7,1x7,8x 7,8x
7,8x
6,6x 6,6x
8,6x
6,6x 8,6x
8,0% 8,6x 8,0%
5,4% 8,0%
5,4%
0,9x 0,8x
5,4%
0,9x 3,5
0,8x0,9x 3,63,5 0,8x 4,3x3,6 4,3x
4,7x4,3x Chile
4,7x
4,7x
Eneva
Eneva
Eneva ENEV3
ENEV3 ENEV3
BuyBuy BRL BRL
Buy 15,8015,80 BRL16,0 16,0 15,80
1% 1% 1,3 16,0
1,3 1,87 1,87
1% 0% 0% 1,3
9% 9% -3%1,87 -3%5,1x 5,1x
5,1x5,7x 5,7x
5,7x
8,0x 8,0x
11,2x
8,0x 11,2x
0,0% 11,2x 0,0%
0,0% 0,0%
0,0%
0,8x 0,8x
0,0%
0,8x 1,0
0,8x0,8x 0,91,0 0,8x 2,3x0,9 2,3x
2,4x2,3x Brazil
2,4x
2,4x
Omega
Omega
OmegaEnergia
Energia
Energia OMGE3
OMGE3 OMGE3
BuyBuy BRL BRL
Buy 16,4516,45 BRL20,0 20,0 16,45
22% 22% 0,5 20,0
0,5 1,07 1,07
22% -1% -1% 0,5
1% 1% -20%1,07 -20%8,2x 8,2x
8,2x8,9x 8,9x
8,9x
29,8x 29,8x
19,6x
29,8x 19,6x
3,2% 19,6x 3,2%
5,1% 3,2%
5,1%
1,1x 1,0x
5,1%
1,1x 0,4
1,0x1,1x 0,30,4 1,0x 3,5x0,3 3,5x
3,5x3,5x Brazil
3,5x
3,5x
Enel
EnelChile
Chile
Chile ENIC
ENIC
USUS ENIC
Neutral
Neutral
US USDUSD
Neutral 4,84 4,84 USD6,0 6,0 24%
4,84 24% 4,8 6,04,8 2,52 2,52
24% 0% 0% 4,8
8% 8% -13%2,52 -13%8,0x 8,0x
8,0x7,1x 7,1x
7,1x
12,9x 12,9x
10,7x
12,9x 10,7x
4,6% 10,7x 4,6%
5,0% 4,6%
5,0%
1,3x 1,2x
5,0%
1,3x 0,0
1,2x1,3x 0,00,0 1,2x 2,3x0,0 2,3x
1,9x2,3x Chile
1,9x
1,9x
Engie
EngieEnergia
Energia
Energia
Chile
Chile
Chile ECLECL
CI CI ECL
BuyCI
Buy CLP CLP
Buy 1293,80
1293,80CLP
1.328,01.328,0 1293,80
3% 3% 2,01.328,0
2,0 2,54 2,54
3% -1% -1% 2,0
3% 3% -10%2,54 -10%8,3x 8,3x
8,3x5,7x 5,7x
5,7x
13,3x 13,3x
8,8x
13,3x 8,8x
3,0% 8,8x 3,0%
4,5% 3,0%
4,5%
1,0x 0,9x
4,5%
1,0x 0,9
0,9x1,0x 0,70,9 0,9x 2,5x0,7 2,5x
1,5x2,5x Chile
1,5x
1,5x
Aguas
Aguas
AguasAndinas
Andinas
Andinas AGUAS/A
AGUAS/A
CI CIAGUAS/A
Neutral
Neutral
CI CLP CLP
Neutral377,76377,76CLP
482,0 482,0 377,76
28% 28% 3,4482,0
3,4 2,82 2,82
28% -1% -1% 3,4
2% 2% -11%2,82 -11%9,9x 9,9x
9,9x9,6x 9,6x
9,6x
15,4x 15,4x
15,1x
15,4x 15,1x
6,5% 15,1x 6,5%
6,6% 6,5%
6,6%
3,6x 3,6x
6,6%
3,6x 1,3
3,6x3,6x 1,41,3 3,6x 2,8x1,4 2,8x
2,8x2,8x Chile
2,8x
2,8x
Energisa
Energisa
Energisa ENGI11
ENGI11 ENGI11
BuyBuy BRL BRL
Buy 37,2437,24 BRL35,0 35,0 37,24
-6% -6% 3,3 35,0
3,3 6,61 6,61
-6% -1% -1% 3,3
2% 2% 19%6,61 19%5,3x 5,3x
5,3x5,3x 5,3x
5,3x
20,4x 20,4x
18,3x
20,4x 18,3x
2,5% 18,3x 2,5%
2,7% 2,5%
2,7%
3,1x 2,9x
2,7%
3,1x 0,2
2,9x3,1x 0,20,2 2,9x 0,3x0,2 0,3x
0,4x0,3x Brazil
0,4x
0,4x
Interconexión
Interconexión
Interconexión Eléctrica
Eléctrica
Eléctrica ISAISA
CBCB ISABuy
CB Buy COPCOP
Buy 13780,00
13780,00COP
17.700,0
17.700,013780,00
28% 28% 4,8
17.700,0
4,8 1,17 1,17
28% 0% 0% 4,8
7% 7% -5%1,17 -5%8,6x 8,6x
8,6x8,1x 8,1x
8,1x
10,8x 10,8x
9,8x
10,8x 9,8x
3,9% 9,8x 3,9%
6,5% 3,9%
6,5%
1,4x 1,4x
6,5%
1,4x 0,0
1,4x1,4x 0,00,0 1,4x 3,3x0,0 3,3x
3,0x3,3x Colombia
3,0x
3,0x
Median
Median
Median -0,5% -0,5% 2,4% 2,4%-9,9% -9,9%7,2x 7,2x
7,2x6,6x 6,6x
6,6x
12,8x 12,8x
10,7x
12,8x 10,7x 10,7x 1,1x 1,1x
1,1x 1,1x1,1x 1,1x 2,5x 2,5x
2,2x2,5x 2,2x
2,2x
Company
Company
Company Ticker
Ticker Ticker
Rating
Rating ShareShare
Rating ShareShareShare
TargetTarget Upside
ShareUpsideMkt Cap
Target
Mkt CapADTV Upside
ADTV Performance
MktPerformance
Capin USD inADTV
USD EV/EBITDA
EV/EBITDA
EV/EBITDA P/E P/E P/E Div. Yield Div. Yield Div.P/BV
Yield P/BV Net Debt (USDP/BV
bn)
Net Debt (USD
Net bn)
Debt/EBITDA
Net Debt/EBITDA
Net Debt/EBITDA
Origin
Currency
Currency PricePrice
Currency Price (USD bn)
(USD bn)
(USD mn)
(USD mn)1day 1day
(USD
1month
bn)1month(USD
YTD mn)
YTD2018E 2018E
2018E
2019E 2019E
2019E
2018E 2018E
2019E
2018E 2019E
2018E2019E2018E
2019E 2018E
2018E
2019E 2019E
2019E
2018E 2018E
2019E
2018E 2019E
2018E2019E2018E
2019E 2018E
2019E
2018E 2019E
2019E
Mining
Mining
Mining
Volcan
Volcan
Volcan VOLCABC1
VOLCABC1
PEVOLCABC1
PE BuyBuyPE PENPEN
Buy 0,77 0,77 PEN1,6 1,6 113%
0,77 113% 0,9 1,60,9 0,48 0,48
113% 2% 2% 0,9
8% 8% -42%0,48 -42%5,2x 5,2x
5,2x4,3x 4,3x
4,3x
15,5x 15,5x
8,6x
15,5x 8,6x
2,7% 8,6x 2,7%
3,0% 2,7%
3,0%
1,4x 1,3x
3,0%
1,4x 0,7
1,3x1,4x 0,70,7 1,3x 2,3x0,7 2,3x
1,8x2,3x 1,8x
Peru
1,8x
Vale
Vale VALE
VALE
USUS VALEBuyUS
Buy USDUSD
Buy 13,0413,04 USD
20,0 20,0 13,04
53% 53% 67,8 20,0
67,8 336,78 336,78
53% 0% 0% 67,8
-10% -10%11%
336,7811%4,9x 4,9x
4,9x4,2x 4,2x
4,2x
8,5x 8,5x
5,7x8,5x 5,7x
5,1% 5,7x 11,8%
5,1% 5,1%
11,8%
1,5x 11,8%
1,4x
1,5x 14,5
1,4x1,5x 12,1
14,5 1,4x 0,9x12,1 0,9x
0,6x0,9x Brazil
0,6x
0,6x
SQM
SQM SQM
SQM
USUS SQMBuyUS
Buy USDUSD
Buy 43,3443,34 USD
57,1 57,1 43,34
32% 32% 11,4 57,1
11,4 32,70 32,70
32% 0% 0% 11,4
-1% -1% -21%32,70-21%12,5x 12,5x
12,5x
11,2x 11,2x
11,2x
23,4x 23,4x
20,3x
23,4x 20,3x
4,2% 20,3x 4,2%
2,4% 4,2%
2,4%
5,2x 4,6x
2,4%
5,2x 0,4
4,6x5,2x 0,20,4 4,6x 0,4x0,2 0,4x
0,2x0,4x Chile
0,2x
0,2x
Southern
Southern
Southern Copper
Copper
Copper SCCO
SCCO
USUS SCCO
SellUS
Sell USDUSD
Sell 32,0832,08 USD
30,0 30,0 32,08
-6% -6% 24,8 30,0
24,8 37,87 37,87
-6% 0% 0% 24,8
-13% -13%-31%37,87-31%8,1x 8,1x
8,1x8,6x 8,6x
8,6x
14,8x 14,8x
16,3x
14,8x 16,3x
3,7% 16,3x 3,7%
1,8% 3,7%
1,8%
3,7x 3,2x
1,8%
3,7x 4,9
3,2x3,7x 5,04,9 3,2x 1,3x5,0 1,3x
1,5x1,3x 1,5x
Peru
1,5x
Grupo
GrupoMexico
Mexico
Mexico GMEXICOB
GMEXICOBMMGMEXICOB
MM Neutral
Neutral
MM MXNMXN
Neutral 40,7840,78MXN
43,0 43,0 40,78
5% 5% 15,7 43,0
15,7 21,91 21,91
5% -1% -1%15,7
-6% -6% -34%21,91-34%6,1x 6,1x
6,1x6,1x 6,1x
6,1x
11,6x 11,6x
9,1x
11,6x 9,1x
6,4% 9,1x 6,4%
4,4% 6,4%
4,4%
1,3x 1,2x
4,4%
1,3x 8,4
1,2x1,3x 8,18,4 1,2x 1,7x8,1 1,7x
1,6x1,7x Mexico
1,6x
1,6x
Cerro
CerroVerde
Verde
Verde CVERDEC1
CVERDEC1
PECVERDEC1
PE Neutral
Neutral
PE USDUSD
Neutral 21,3021,30 USD
31,0 31,0 21,30
46% 46% 7,5 31,0
7,5 0,06 0,06
46% 0% 0% 7,5
-1% -1% -27%0,06 -27%5,5x 5,5x
5,5x4,5x 4,5x
4,5x
13,1x 13,1x
9,8x
13,1x 9,8x
3,8% 9,8x 3,8%
8,1% 3,8%
8,1%
1,4x 1,3x
8,1%
1,4x 0,6
1,3x1,4x 0,20,6 1,3x 0,4x0,2 0,4x
0,1x0,4x 0,1x
Peru
0,1x
Buenaventura
Buenaventura
Buenaventura BVNBVN
USUS BVNBuyUS
Buy USDUSD
Buy 15,1915,19 USD
16,9 16,9 15,19
11% 11% 3,9 16,9
3,9 17,10 17,10
11% 0% 0% 3,9
9% 9% 9%17,10 9%14,3x 14,3x
14,3x
12,4x 12,4x
12,4x
44,6x 44,6x
19,9x
44,6x 19,9x
0,4% 19,9x 0,4%
0,3% 0,4%
0,3%
1,3x 1,2x
0,3%
1,3x 0,3
1,2x1,3x 0,20,3 1,2x 1,0x0,2 1,0x
0,5x1,0x 0,5x
Peru
0,5x
Bradespar
Bradespar
Bradespar BRAP4
BRAP4 BRAP4
Neutral
Neutral BRL BRL
Neutral 30,0030,00 BRL12,0 12,0 30,00
-60% -60% n.a. 12,0
n.a. 20,60 20,60
-60%-1% -1% n.a.
-14% -14% -8%20,60 -8% n.a. n.a.
n.a.n.a. n.a.
n.a.
n.a. n.a.n.a.n.a. n.a.
n.a. n.a. n.a.
n.a. n.a.n.a. n.a.
n.a.
n.a. n.a.
n.a.n.a. n.a.n.a. n.a. n.a.n.a. n.a.
n.a. n.a. Brazil
n.a.
n.a.
Fresnillo
Fresnillo
Fresnillo FRES
FRES
LN LN FRES
BuyLN
Buy GBPGBP
Buy 8,41 8,41 GBP12,4 12,4 47%
8,41 47% 7,8 12,4
7,8 18,73 18,73
47% 2% 2% 7,8
0% 0% -42%18,73-42%7,0x 7,0x
7,0x6,2x 6,2x
6,2x
17,2x 17,2x
15,1x
17,2x 15,1x
3,8% 15,1x 3,8%
1,9% 3,8%
1,9%
2,5x 2,2x
1,9%
2,5x (0,1)
2,2x2,5x (0,3)
(0,1) 2,2x -0,1x(0,3) -0,1x
-0,2x-0,1x Mexico
-0,2x
-0,2x
Median
Median
Median 0,2% 0,2%-0,9% -0,9%-27,2% -27,2%6,6x 6,6x
6,6x6,2x 6,2x
6,2x
15,2x 15,2x
12,4x
15,2x 12,4x 12,4x 1,5x 1,3x
1,5x 1,3x1,5x 1,3x 1,1x 1,1x
1,0x1,1x 1,0x
1,0x
Metals
Metals
Usiminas
Usiminas
Usiminas USIM5
USIM5 USIM5
BuyBuy BRL BRL
Buy 9,65 9,65 BRL14,0 14,0 45%
9,65 45% 3,1 14,0
3,1 44,49 44,49
45% 2% 2% 3,1
3% 3% -9%44,49 -9%5,4x 5,4x
5,4x4,5x 4,5x
4,5x
15,3x 15,3x
10,9x
15,3x 10,9x
0,0% 10,9x 0,0%
0,0% 0,0%
0,0%
0,8x 0,8x
0,0%
0,8x 0,8
0,8x0,8x 0,60,8 0,8x 1,3x0,6 1,3x
0,8x1,3x Brazil
0,8x
0,8x
Ternium
Ternium
Ternium TXTX
USUS TXBuy
USBuy USDUSD
Buy 28,6828,68 USD
36,0 36,0 28,68
26% 26% 5,6 36,0
5,6 14,50 14,50
26% 3% 3% 5,6
-6% -6% -6%14,50 -6%2,9x 2,9x
2,9x3,6x 3,6x
3,6x
4,4x 4,4x
5,7x4,4x 5,7x
0,0% 5,7x 0,0%
4,4% 0,0%
4,4%
1,0x 0,9x
4,4%
1,0x 2,0
0,9x1,0x 1,82,0 0,9x 0,7x1,8 0,7x
0,8x0,7x Argentina
0,8x
0,8x
Gerdau
Gerdau
Gerdau GGBR4
GGBR4 GGBR4
BuyBuy BRL BRL
Buy 15,3415,34 BRL23,0 23,0 15,34
50% 50% 6,7 23,0
6,7 59,78 59,78
50% -1% -1% 6,7
-1% -1% 8%59,78 8% 5,1x 5,1x
5,1x4,4x 4,4x
4,4x
10,4x 10,4x
7,6x
10,4x 7,6x
2,0% 7,6x 2,0%
1,9% 2,0%
1,9%
1,0x 0,9x
1,9%
1,0x 2,5
0,9x1,0x 1,72,5 0,9x 1,5x1,7 1,5x
0,9x1,5x Brazil
0,9x
0,9x
CSN
CSN CSNA3
CSNA3 CSNA3
Neutral
Neutral BRL BRL
Neutral 9,07 9,07 BRL11,0 11,0 21%
9,07 21% 3,2 11,0
3,2 18,66 18,66
21% -1% -1% 3,2
-4% -4% -8%18,66 -8%5,0x 5,0x
5,0x6,4x 6,4x
6,4x
4,5x 4,5x
5,6x4,5x 5,6x
0,0% 5,6x 0,0%
0,0% 0,0%
0,0%
1,6x 1,2x
0,0%
1,6x 6,7
1,2x1,6x 6,06,7 1,2x 3,3x6,0 3,3x
4,0x3,3x Brazil
4,0x
4,0x
Median
Median
Median 0,4% 0,4%-2,5% -2,5%-7,0% -7,0%5,1x 5,1x
5,1x4,5x 4,5x
4,5x
7,5x 7,5x
6,7x
7,5x 6,7x 6,7x 1,0x 0,9x
1,0x 0,9x1,0x 0,9x 1,4x 1,4x
0,9x1,4x 0,9x
0,9x
Pulp
Pulpand
and
andpaper
paper
paper
&&Forestry
Forestry
& Forestry
Suzano
Suzano
SuzanoPapel
Papel
Papel
eeCelulose
Celulose
e Celulose SUZB3
SUZB3 SUZB3
BuyBuy BRL BRL
Buy 37,5737,57 BRL65,0 65,0 37,57
73% 73% 13,0 65,0
13,0 59,57 59,57
73% 3% 3% 13,0
-7% -7% 72%59,5772%8,2x 8,2x
8,2x3,8x 3,8x
3,8x
46,0x 46,0x
3,5x
46,0x 3,5x
1,3% 3,5x 1,3%
1,3% 1,3%
1,3%
4,0x 1,9x
1,3%
4,0x 2,3
1,9x4,0x 9,02,3 1,9x 1,3x9,0 1,3x
1,6x1,3x Brazil
1,6x
1,6x
Klabin
Klabin KLBN11
KLBN11 KLBN11
BuyBuy BRL BRL
Buy 16,0016,00 BRL27,0 27,0 16,00
69% 69% 4,4 27,0
4,4 20,37 20,37
69% 0% 0% 4,4
-12% -12%-19%20,37-19%7,5x 7,5x
7,5x6,0x 6,0x
6,0x
n.a. n.a.
8,4xn.a. 8,4x
4,2% 8,4x 4,2%
4,6% 4,2%
4,6%
2,8x 2,3x
4,6%
2,8x 3,2
2,3x2,8x 2,83,2 2,3x 3,1x2,8 3,1x
2,3x3,1x Brazil
2,3x
2,3x
Fibria
Fibria FIBR3
FIBR3 FIBR3
BuyBuy BRL BRL
Buy 66,8466,84 BRL71,0 71,0 66,84
6% 6% 9,5 71,0
9,5 33,66 33,66
6% 0% 0% 9,5
-3% -3% 29%33,6629%6,1x 6,1x
6,1x5,3x 5,3x
5,3x
7,3x 7,3x
7,6x7,3x 7,6x
0,0% 7,6x 0,0%
0,0% 0,0%
0,0%
1,9x 1,7x
0,0%
1,9x 2,5
1,7x1,9x 1,82,5 1,7x 1,3x1,8 1,3x
0,9x1,3x Brazil
0,9x
0,9x
Duratex
Duratex
Duratex DTEX3
DTEX3 DTEX3
BuyBuy BRL BRL
Buy 11,9511,95 BRL13,0 13,0 11,95
9% 9% 2,1 13,0
2,1 4,45 4,45
9% 2% 2% 2,1
-6% -6% 11%4,45 11%8,4x 8,4x
8,4x8,2x 8,2x
8,2x
24,4x 24,4x
17,1x
24,4x 17,1x
1,5% 17,1x 1,5%
2,0% 1,5%
2,0%
1,6x 1,5x
2,0%
1,6x 0,4
1,5x1,6x 0,30,4 1,5x 1,3x0,3 1,3x
0,8x1,3x Brazil
0,8x
0,8x
Copec
Copec COPEC
COPEC
CI CI COPEC
BuyBuy
CI CLP CLP
Buy 8848,90
8848,90CLP
12.000,0
12.000,0 8848,90
36% 36% 16,9
12.000,0
16,9 9,22 9,22
36% 1% 1% 16,9
-8% -8% -17%9,22 -17%7,9x 7,9x
7,9x7,2x 7,2x
7,2x
13,4x 13,4x
11,7x
13,4x 11,7x
2,4% 11,7x 2,4%
3,1% 2,4%
3,1%
1,5x 1,4x
3,1%
1,5x 6,4
1,4x1,5x 6,46,4 1,4x 2,1x6,4 2,1x
1,9x2,1x Chile
1,9x
1,9x
CMPC
CMPC CMPC
CMPC
CCCC CMPC
Neutral
Neutral
CC CLP CLP
Neutral2256,40
2256,40CLP
2.786,02.786,0 2256,40
23% 23% 8,32.786,0
8,3 6,71 6,71
23% 1% 1% 8,3
-7% -7% -1%6,71 -1%6,0x 6,0x
6,0x5,9x 5,9x
5,9x
14,8x 14,8x
11,9x
14,8x 11,9x
2,6% 11,9x 2,6%
2,4% 2,6%
2,4%
1,0x 0,9x
2,4%
1,0x 2,8
0,9x1,0x 2,22,8 0,9x 1,5x2,2 1,5x
1,2x1,5x Chile
1,2x
1,2x
Median
Median
Median 1,0% 1,0%-6,9% -6,9%4,9% 4,9%7,7x 7,7x
7,7x6,0x 6,0x
6,0x
14,8x 14,8x
10,1x
14,8x 10,1x 10,1x 1,8x 1,6x
1,8x 1,6x1,8x 1,6x 1,4x 1,4x
1,4x1,4x 1,4x
1,4x
Company
Company
Company Ticker
Ticker Ticker
Rating
Rating Share
Share
Rating ShareShareShare
TargetTarget Upside
ShareUpsideMkt Cap
Target
Mkt CapADTV Upside
ADTV Performance
MktPerformance
Capin USD inADTV
USD EV/EBITDA
EV/EBITDA
EV/EBITDA P/E P/E P/E Div. Yield Div. Yield Div.P/BV
Yield P/BV Net Debt (USDP/BV
bn)
Net Debt (USD
Net bn)
Debt/EBITDA
Net Debt/EBITDA
Net Debt/EBITDA
Origin
Currency
Currency PricePrice
Currency Price (USD bn)
(USD bn)
(USD mn)
(USD mn)1day 1day
(USD
1month
bn)1month
(USD
YTD mn)
YTD2018E 2018E
2018E
2019E 2019E
2019E
2018E 2018E
2019E
2018E 2019E
2018E2019E2018E
2019E 2018E
2018E
2019E 2019E
2019E
2018E 2018E
2019E
2018E 2019E
2018E2019E2018E
2019E 2018E
2019E
2018E 2019E
2019E
Industrials,
Industrials,
Industrials, Cement
Cement
Cement
and
andHeavy
Heavy
and Contruction
Heavy
Contruction
Contruction
Grupo
Grupo
GrupoArgos
Argos
Argos GRUPOARG
GRUPOARGCB
GRUPOARG
CB Neutral
NeutralCB COPCOP
Neutral16440,00
16440,00COP
19.900,0
19.900,016440,00
21% 21% 4,4
19.900,0
4,4 2,97 2,97
21% 0% 0% 4,4
6% 6% -25%2,97 -25%8,8x 8,8x
8,8x7,1x 7,1x
7,1x
15,0x 15,0x
9,3x
15,0x 9,3x
2,1% 9,3x 2,1%
2,2% 2,1%
2,2%
0,8x 0,8x
2,2%
0,8x 4,2
0,8x0,8x 3,94,2 0,8x 3,3x3,9 3,3x
2,8x3,3x Colombia
2,8x
2,8x
Cemex
Cemex
CemexLatAm
LatAm
LatAmHoldings
Holdings
Holdings CLHCLH
CBCB CLHBuyCB
Buy COPCOP
Buy 4000,00
4000,00COP
7.000,07.000,0 4000,00
75% 75% 0,77.000,0
0,7 0,57 0,57
75% -4% -4% 0,7
-26% -26%-66%0,57 -66%5,9x 5,9x
5,9x5,6x 5,6x
5,6x
8,7x 8,7x
9,4x
8,7x 9,4x
n.a. 9,4x n.a.
n.a. n.a.0,4x
n.a. 0,4x
n.a.
0,4x 0,8
0,4x0,4x 0,80,8 0,4x 3,1x0,8 3,1x
3,0x3,1x Colombia
3,0x
3,0x
Cemex
Cemex
Cemex CXCX
USUS CXBuy
USBuy USDUSD
Buy 4,62 4,62 USD9,5 9,5 106%
4,62 106% 6,8 9,56,8 52,23 52,23
106%-2% -2% 6,8
-7% -7% -38%52,23-38%5,6x 5,6x
5,6x4,7x 4,7x
4,7x
8,1x 8,1x
7,0x
8,1x 7,0x
0,0% 7,0x 0,0%
2,1% 0,0%
2,1%
0,7x 0,6x
2,1%
0,7x 9,6
0,6x0,7x 8,69,6 0,6x 3,6x8,6 3,6x
2,9x3,6x Mexico
2,9x
2,9x
Cementos
Cementos
Cementos Argos
Argos
Argos CEMARGOS
CEMARGOS
CB
CEMARGOS
CB Neutral
NeutralCB COPCOP
Neutral6980,00
6980,00COP
10.000,0
10.000,0 6980,00
43% 43% 3,0
10.000,0
3,0 1,21 1,21
43% -1% -1% 3,0
0% 0% -42%1,21 -42%11,1x 11,1x
11,1x9,1x 9,1x
9,1x
70,2x 70,2x
26,0x
70,2x 26,0x
3,8% 26,0x 3,8%
1,3% 3,8%
1,3%
1,3x 1,2x
1,3%
1,3x 2,1
1,2x1,3x 2,02,1 1,2x 4,4x2,0 4,4x
3,4x4,4x Colombia
3,4x
3,4x
Graña
Grañayy Montero
yMontero
Montero GRAM
GRAM
USUS GRAM
BuyUS
Buy USDUSD
Buy 3,13 3,13 USD7,4 7,4 136%
3,13 136% 0,4 7,40,4 0,33 0,33
136%-2% -2% 0,4
2% 2% 13%0,33 13%4,7x 4,7x
4,7x6,1x 6,1x
6,1x
22,8x 22,8x
8,1x
22,8x 8,1x
1,9% 8,1x 1,9%
0,4% 1,9%
0,4%
0,6x 0,6x
0,4%
0,6x 0,5
0,6x0,6x 0,50,5 0,6x 2,2x0,5 2,2x
3,0x2,2x 3,0x
Peru
3,0x
Median
Median
Median -1,2% -1,2%-3,4% -3,4%-40,0% -40,0%
7,4x 7,4x
7,4x6,4x 6,4x
6,4x
11,8x 11,8x
9,4x
11,8x 9,4x 9,4x 0,8x 0,7x
0,8x 0,7x0,8x 0,7x 3,4x 3,4x
2,9x3,4x 2,9x
2,9x
Telecom
Telecom
Telecom and
andand
media
media
media
Valid
Valid VLID3
VLID3 VLID3
BuyBuy BRL BRL
Buy 18,1218,12 BRL26,0 26,0 18,12
43% 43% 0,3 26,0
0,3 2,28 2,28
43% -1% -1% 0,3
10% 10% -15%2,28 -15%5,4x 5,4x
5,4x5,1x 5,1x
5,1x
12,9x 12,9x
9,0x
12,9x 9,0x
3,2% 9,0x 3,2%
6,4% 3,2%
6,4%
1,2x 1,2x
6,4%
1,2x 0,1
1,2x1,2x 0,10,1 1,2x 1,3x0,1 1,3x
1,0x1,3x Brazil
1,0x
1,0x
Totvs
Totvs TOTS3
TOTS3 TOTS3
Neutral
Neutral BRL BRL
Neutral 28,0028,00 BRL30,0 30,0 28,00
7% 7% 1,2 30,0
1,2 5,04 5,04
7% -3% -3% 1,2
8% 8% -20%5,04 -20%13,1x 13,1x
13,1x
11,8x 11,8x
11,8x
21,7x 21,7x
18,4x
21,7x 18,4x
1,1% 18,4x 1,1%
2,3% 1,1%
2,3%
3,3x 3,1x
2,3%
3,3x 0,0
3,1x3,3x 0,00,0 3,1x 0,4x0,0 0,4x
0,1x0,4x Brazil
0,1x
0,1x
Time
TimeFor
For
ForFun
FunFun
(T4F)
(T4F)(T4F) SHOW3
SHOW3 SHOW3
BuyBuy BRL BRL
Buy 7,00 7,00 BRL15,0 15,0 114%
7,00 114% 0,1 15,0
0,1 0,31 0,31
114%-1% -1% 0,1
1% 1% -16%0,31 -16%2,8x 2,8x
2,8x2,0x 2,0x
2,0x
7,2x 7,2x
6,3x
7,2x 6,3x
0,0% 6,3x 0,0%
0,0% 0,0%
0,0%
1,3x 1,1x
0,0%
1,3x (0,1)
1,1x1,3x (0,1)
(0,1) 1,1x -2,5x(0,1) -2,5x
-2,8x-2,5x -2,8x
Brazil
-2,8x
TIM
TIMPart
Part
Part TIMP3
TIMP3 TIMP3
BuyBuy BRL BRL
Buy 12,0812,08 BRL16,0 16,0 12,08
32% 32% 7,5 16,0
7,5 14,79 14,79
32% 0% 0% 7,5
-1% -1% -20%14,79-20%4,7x 4,7x
4,7x4,3x 4,3x
4,3x
16,8x 16,8x
12,6x
16,8x 12,6x
0,4% 12,6x 0,4%
3,6% 0,4%
3,6%
1,5x 1,4x
3,6%
1,5x 0,3
1,4x1,5x 0,00,3 1,4x 0,2x0,0 0,2x
0,0x0,2x Brazil
0,0x
0,0x
Oi
OiS.A.
S.A.
S.A. OIBR3
OIBR3 OIBR3
BuyBuy BRL BRL
Buy 1,32 1,32 BRL3,9 3,9 195%
1,32 195% 0,2 3,90,2 6,04 6,04
195%-2% -2% 0,2
-24% -24%-59%6,04 -59%3,5x 3,5x
3,5x3,8x 3,8x
3,8x
n.a. n.a.
n.a.n.a. n.a.
n.a. n.a. n.a.
n.a. n.a.0,1x
n.a. 0,2x
n.a.
0,1x 5,0
0,2x0,1x 4,55,0 0,2x 3,0x4,5 3,0x
2,6x3,0x Brazil
2,6x
2,6x
Telefonica
Telefonica
Telefonica Brasil
Brasil
Brasil VIVT4
VIVT4 VIVT4
BuyBuy BRL BRL
Buy 47,9047,90 BRL60,0 60,0 47,90
25% 25% 20,8 60,0
20,8 22,28 22,28
25% 1% 1% 20,8
4% 4% -9%22,28 -9%5,5x 5,5x
5,5x5,3x 5,3x
5,3x
16,1x 16,1x
15,3x
16,1x 15,3x
5,6% 15,3x 5,6%
6,1% 5,6%
6,1%
1,2x 1,2x
6,1%
1,2x 1,3
1,2x1,2x 1,21,3 1,2x 0,3x1,2 0,3x
0,3x0,3x Brazil
0,3x
0,3x
Axtel***
Axtel***
Axtel*** AXTELCPO
AXTELCPO
MMAXTELCPO
MM Neutral
Neutral
MM MXNMXN
Neutral n/a n/a MXN4,0 4,0 n.a.
n/a n.a. n.a. 4,0n.a. n.a. n.a. n.a. n.a.
n.a. n.a. n.a. n.a. n.a. n.a.
n.a.n.a. n.a.
n.a.
n.a. n.a.
n.a.n.a. n.a.
n.a. n.a. n.a.
n.a. n.a.n.a.
n.a. n.a.
n.a.
n.a. 0,3n.a.n.a. n.a.0,3 n.a. 2,1xn.a. 2,1x
n.a.2,1x Mexico
n.a.
n.a.
Linx
Linx LINX3
LINX3 LINX3
BuyBuy BRL BRL
Buy 31,1431,14 BRL36,0 36,0 31,14
16% 16% 1,3 36,0
1,3 10,07 10,07
16% -3% -3% 1,3
22% 22% 25%10,07 25%29,9x 29,9x
29,9x
25,3x 25,3x
25,3x
42,0x 42,0x
43,4x
42,0x 43,4x
0,4% 43,4x 0,4%
0,8% 0,4%
0,8%
4,3x 4,1x
0,8%
4,3x (0,1)
4,1x4,3x (0,1)
(0,1) 4,1x -1,4x(0,1) -1,4x
-1,5x-1,4x -1,5x
Brazil
-1,5x
SONDA
SONDA
SONDA SONDA
SONDA
CI CI SONDA
Neutral
Neutral
CI CLP CLP
Neutral1074,00
1074,00CLP
1.341,01.341,0 1074,00
25% 25% 1,41.341,0
1,4 1,42 1,42
25% -2% -2% 1,4
5% 5% -18%1,42 -18%8,3x 8,3x
8,3x7,4x 7,4x
7,4x
18,0x 18,0x
15,5x
18,0x 15,5x
2,6% 15,5x 2,6%
3,1% 2,6%
3,1%
1,7x 1,6x
3,1%
1,7x 0,1
1,6x1,7x 0,00,1 1,6x 0,4x0,0 0,4x
0,1x0,4x Chile
0,1x
0,1x
America
America
America Movil
Movil
Movil AMXL
AMXL
MMMM AMXL
Neutral
Neutral
MM MXNMXN
Neutral 14,3714,37MXN
13,5 13,5 14,37
-6% -6% 46,7 13,5
46,7 32,73 32,73
-6% 4% 4% 46,7
6% 6% -16%32,73-16%5,1x 5,1x
5,1x4,8x 4,8x
4,8x
16,8x 16,8x
14,1x
16,8x 14,1x
2,2% 14,1x 2,2%
2,4% 2,2%
2,4%
2,8x 2,6x
2,4%
2,8x 27,0
2,6x2,8x 25,4
27,0 2,6x 1,9x25,4 1,9x
1,8x1,9x Mexico
1,8x
1,8x
Entel
Entel ENTEL
ENTEL
CI CI ENTEL
Neutral
Neutral
CI CLP CLP
Neutral5576,20
5576,20CLP
7.300,07.300,0 5576,20
31% 31% 2,57.300,0
2,5 2,10 2,10
31% 0% 0% 2,5
2% 2% -27%2,10 -27%6,6x 6,6x
6,6x5,6x 5,6x
5,6x
34,9x 34,9x
16,7x
34,9x 16,7x
0,6% 16,7x 0,6%
0,6% 0,6%
0,6%
1,2x 1,2x
0,6%
1,2x 2,4
1,2x1,2x 2,42,4 1,2x 3,3x2,4 3,3x
2,8x3,3x Chile
2,8x
2,8x
Televisa
Televisa
Televisa TLEVICPO
TLEVICPO
MMMM
TLEVICPO
Neutral
Neutral
MM MXNMXN
Neutral 54,1154,11MXN
75,0 75,0 54,11
39% 39% 7,8 75,0
7,8 9,97 9,97
39% 3% 3% 7,8
-6% -6% -28%9,97 -28%6,5x 6,5x
6,5x6,1x 6,1x
6,1x
25,3x 25,3x
27,4x
25,3x 27,4x
1,0% 27,4x 1,0%
0,6% 1,0%
0,6%
1,7x 1,6x
0,6%
1,7x 4,1
1,6x1,7x 3,74,1 1,6x 2,3x3,7 2,3x
2,0x2,3x Mexico
2,0x
2,0x
Median
Median
Median -1,0% -1,0% 4,2% 4,2%-18,5% -18,5%
5,5x 5,5x
5,5x5,3x 5,3x
5,3x
17,4x 17,4x
15,4x
17,4x 15,4x 15,4x 1,5x 1,4x
1,5x 1,4x1,5x 1,4x 0,9x 0,9x
0,3x0,9x 0,3x
0,3x
Airlines
Airlines
Airlines && Mileage
&
Mileage
Mileage
Multiplus
Multiplus
Multiplus MPLU3
MPLU3 MPLU3
No No
Rating
Rating BRLNo
BRLRating24,8624,86 BRLn/a n/a 24,86
n.a. n.a. 1,0 n/a1,0 2,54 2,54
n.a. -1% -1% 1,0
-3% -3% -35%2,54 -35%5,0x 5,0x
5,0x5,0x 5,0x
5,0x
11,1x 11,1x
11,2x
11,1x 11,2x
9,4% 11,2x 9,4%
8,9% 9,4%
18,6x
8,9% 18,6x
8,9%
18,6x (0,5)
18,6x
18,6x (0,5)
(0,5) 18,6x-3,9x(0,5) -3,9x
-4,4x-3,9x -4,4x
Brazil
-4,4x
Smiles
Smiles
Smiles SMLS3
SMLS3 SMLS3
Neutral
Neutral BRL BRL
Neutral 43,5543,55 BRL50,0 50,0 43,55
15% 15% 1,4 50,0
1,4 13,79 13,79
15% -2% -2% 1,4
15% 15% -49%13,79-49%5,9x 5,9x
5,9x4,5x 4,5x
4,5x
9,2x 9,2x
8,2x
9,2x 8,2x
2,7% 8,2x 2,7%
3,1% 2,7%
3,1%
5,3x 3,6x
3,1%
5,3x (0,5)
3,6x5,3x (0,6)
(0,5) 3,6x -2,5x(0,6) -2,5x
-2,7x-2,5x -2,7x
Brazil
-2,7x
LATAM**
LATAM**
LATAM** LTMLTM
USUS LTMBuyUS
Buy USDUSD
Buy 10,4310,43 USD
14,0 14,0 10,43
34% 34% 6,4 14,0
6,4 5,07 5,07
34% 1% 1% 6,4
13% 13% -25%5,07 -25%7,0x 7,0x
7,0x5,9x 5,9x
5,9x
30,7x 30,7x
14,2x
30,7x 14,2x
2,1% 14,2x 2,1%
2,1% 2,1%
2,1%
1,7x 1,6x
2,1%
1,7x 9,6
1,6x1,7x 9,49,6 1,6x 4,2x9,4 4,2x
3,7x4,2x Chile
3,7x
3,7x
GOL**
GOL**
GOL** GOLL4
GOLL4 GOLL4
BuyBuy BRL BRL
Buy 22,0022,00 BRL24,0 24,0 22,00
9% 9% 2,0 24,0
2,0 31,38 31,38
9% 4% 4% 2,0
6% 6% 28%31,38 28%9,1x 9,1x
9,1x6,4x 6,4x
6,4x
n.a. n.a.
15,5x
n.a. 15,5x
0,0% 15,5x 0,0%
0,0% 0,0%
-1,5x
0,0% -1,7x
0,0%
-1,5x 3,6
-1,7x
-1,5x 3,53,6 -1,7x 5,2x3,5 5,2x
4,2x5,2x Brazil
4,2x
4,2x
Copa**
Copa**
Copa** CPA
CPA
USUS CPABuyUS
Buy USDUSD
Buy 77,4077,40 USD
125,0 125,0 77,40
61% 61% 3,3125,0
3,3 43,40 43,40
61% -3% -3% 3,3
-4% -4% -41%43,40-41%6,5x 6,5x
6,5x5,6x 5,6x
5,6x
8,8x 8,8x
8,2x
8,8x 8,2x
4,5% 8,2x 4,5%
4,9% 4,5%
4,9%
1,4x 1,3x
4,9%
1,4x 1,1
1,3x1,4x 0,91,1 1,3x 1,5x0,9 1,5x
1,2x1,5x 1,2x
Peru
1,2x
Avianca
Avianca
Avianca Holdings
Holdings
Holdings AVHAVH
USUS AVHBuyUS
Buy USDUSD
Buy 4,47 4,47 USD
10,0 10,0 124%
4,47 124% 0,6 10,0
0,6 0,42 0,42
124%-7% -7% 0,6
-15% -15%-41%0,42 -41%7,5x 7,5x
7,5x7,8x 7,8x
7,8x
n.a. n.a.
5,7xn.a. 5,7x
1,0% 5,7x 1,0%
2,6% 1,0%
2,6%
0,5x 0,4x
2,6%
0,5x 4,0
0,4x0,5x 4,34,0 0,4x 4,6x4,3 4,6x
4,8x4,6x Colombia
4,8x
4,8x
Median
Median
Median -1,3% -1,3% 1,5% 1,5%-37,9% -37,9%
6,7x 6,7x
6,7x5,8x 5,8x
5,8x
10,1x 10,1x
9,7x
10,1x 9,7x 9,7x 1,5x 1,4x
1,5x 1,4x1,5x 1,4x 2,8x 2,8x
2,4x2,8x 2,4x
2,4x
Capital
Capital
CapitalGoods
Goods
Goods
Randon
Randon
Randon RAPT4
RAPT4 RAPT4
Neutral
Neutral BRL BRL
Neutral 9,17 9,17 BRL9,0 9,0 9,17
-2% -2% 0,8 9,00,8 5,01 5,01
-2% -2% -2% 0,8
4% 4% 10%5,01 10%10,9x 10,9x
10,9x9,3x 9,3x
9,3x
19,9x 19,9x
13,4x
19,9x 13,4x
1,1% 13,4x 1,1%
3,4% 1,1%
3,4%
2,1x 1,9x
3,4%
2,1x 0,3
1,9x2,1x 0,20,3 1,9x 2,3x0,2 2,3x
1,9x2,3x Brazil
1,9x
1,9x
Marcopolo
Marcopolo
Marcopolo POMO4
POMO4 POMO4
BuyBuy BRL BRL
Buy 4,13 4,13 BRL5,5 5,5 33%
4,13 33% 1,0 5,51,0 2,83 2,83
33% -2% -2% 1,0
-1% -1% -11%2,83 -11%18,5x 18,5x
18,5x
13,2x 13,2x
13,2x
25,8x 25,8x
14,0x
25,8x 14,0x
1,1% 14,0x 1,1%
3,6% 1,1%
3,6%
1,8x 1,7x
3,6%
1,8x 0,1
1,7x1,8x 0,10,1 1,7x 2,0x0,1 2,0x
1,1x2,0x Brazil
1,1x
1,1x
Iochpe-Maxion
Iochpe-Maxion
Iochpe-Maxion MYPK3
MYPK3 MYPK3
BuyBuy BRL BRL
Buy 22,8722,87 BRL33,0 33,0 22,87
44% 44% 0,9 33,0
0,9 5,28 5,28
44% -4% -4% 0,9
0% 0% -11%5,28 -11%5,0x 5,0x
5,0x4,1x 4,1x
4,1x
19,8x 19,8x
8,7x
19,8x 8,7x
2,0% 8,7x 2,0%
2,0% 2,0%
2,0%
1,3x 1,1x
2,0%
1,3x 0,5
1,1x1,3x 0,40,5 1,1x 1,7x0,4 1,7x
1,3x1,7x Brazil
1,3x
1,3x
Embraer
Embraer
Embraer ERJERJ
USUS ERJBuyUS
Buy USDUSD
Buy 21,3321,33 USD
26,0 26,0 21,33
22% 22% 3,9 26,0
3,9 21,24 21,24
22% -2% -2% 3,9
-1% -1% -11%21,24-11%6,2x 6,2x
6,2x5,1x 5,1x
5,1x
19,1x 19,1x
12,1x
19,1x 12,1x
2,2% 12,1x 2,2%
3,5% 2,2%
3,5%
0,9x 0,9x
3,5%
0,9x 1,3
0,9x0,9x 1,21,3 0,9x 1,9x1,2 1,9x
1,4x1,9x Brazil
1,4x
1,4x
TUPY
TUPY TUPY3
TUPY3 TUPY3
BuyBuy BRL BRL
Buy 21,8021,80 BRL25,0 25,0 21,80
15% 15% 0,8 25,0
0,8 3,10 3,10
15% -1% -1% 0,8
5% 5% 8%3,10 8% 5,9x 5,9x
5,9x5,3x 5,3x
5,3x
10,8x 10,8x
8,9x
10,8x 8,9x
6,2% 8,9x 10,2%
6,2% 6,2%
10,2%
1,7x 10,2%
1,8x
1,7x 0,2
1,8x1,7x 0,30,2 1,8x 1,4x0,3 1,4x
1,4x1,4x Brazil
1,4x
1,4x
WEG
WEG WEGE3
WEGE3 WEGE3
Neutral
Neutral BRL BRL
Neutral 17,3717,37 BRL21,0 21,0 17,37
21% 21% 9,4 21,0
9,4 15,54 15,54
21% -1% -1% 9,4
-8% -8% -19%15,54-19%20,4x 20,4x
20,4x
17,6x 17,6x
17,6x
27,7x 27,7x
24,5x
27,7x 24,5x
1,8% 24,5x 1,8%
2,0% 1,8%
2,0%
5,0x 4,5x
2,0%
5,0x (0,1)
4,5x5,0x (0,1)
(0,1) 4,5x -0,2x(0,1) -0,2x
-0,1x-0,2x -0,1x
Brazil
-0,1x
Median
Median
Median -1,9% -1,9% 0,2% 0,2%-11,3% -11,3%
6,2x 6,2x
6,2x5,3x 5,3x
5,3x
19,8x 19,8x
12,1x
19,8x 12,1x 12,1x 1,7x 1,7x
1,7x 1,7x1,7x 1,7x 1,9x 1,9x
1,4x1,9x 1,4x
1,4x
Company Ticker Rating Share Share Target Upside Mkt Cap ADTV EV/EBITDA P/E Div. Yield P/BV Net Debt/EBITDA
Currency Price (USD bn) (USD mn) 2018E 2019E 2018E 2019E 2018E 2019E 2018E 2019E 2018E 2019E
Food and Beverage
Vina Concha y Toro CONCHA CI Buy CLP 1331.30
1372,90 1,500.0
1.500,0 13%
9% 1.5
1,5 1.60
1,70 13.8x
14,1x 10.7x
10,9x 21.6x
22,3x 15.4x
15,9x 1.9%
1,8% 2.6%
2,5% 1.8x
1,9x 1.8x
1,8x 2.8x
2,8x 2.1x
2,1x
Arca Continental AC* MM Buy MXN 105.24
104,84 145.0
145,0 38% 9.1
9,0 6.37
6,73 8.5x
8,9x 7.8x
7,6x 14.5x
20,7x 13.1x
16,0x 2.6%
2,1% 3.3%
2,3% 2.0x
1,7x 1.8x
1,6x 0.9x
1,3x 0.7x
1,0x
Minerva BEEF3 Buy BRL 5.71
5,14 14.0
14,0 145%
172% 0.3
0,3 3.23
3,01 5.0x
5,0x 4.7x
4,7x 4.2x
3,8x 4.6x
4,1x 0.8%
0,9% 3.7%
4,1% 13.8x
12,4x 12.8x
11,5x 4.1x
4,1x 3.9x
3,9x
Marfrig MRFG3 Buy BRL 6.38
5,81 8.5
8,5 33%
46% 1.0
0,9 5.93
5,29 5.9x
5,8x 2.9x
3,1x n.a. 6.4x
8,1x -2.4%
-4,1% 3.8%
2,4% 3.8x
7,0x 2.4x
4,2x 3.8x
4,0x 1.8x
2,1x
M. Dias Branco MDIA3 Neutral BRL 43.00
43,30 45.0
45,0 5%
4% 3.8
3,8 5.54
6,11 15.3x
15,4x 11.1x
11,2x 25.2x
25,5x 19.3x
19,5x 1.1%
1,1% 1.3%
1,3% 2.5x
2,6x 2.4x
2,5x 0.7x
0,7x 0.6x
0,6x
JBS JBSS3 Neutral
Buy BRL 11.15
12,00 10.0
15,0 -10%
25% 8.0
8,2 25.26
27,39 5.6x
5,4x 5.8x
5,0x 8.6x
6,6x 9.2x
5,9x 2.9%
3,8% 2.7%
4,2% 1.0x
1,1x 1.0x
1,1x 3.0x
3,2x 3.1x
3,0x
Herdez HERDEZ* MM Buy MXN 39.65
41,33 46.0
46,0 16%
11% 0.8
0,9 0.72
0,74 4.9x
5,1x 8.6x
8,9x 14.3x
14,9x 11.9x
12,4x 4.6%
4,4% 2.5%
2,4% 2.0x
2,1x 1.1x
1,1x 2.5x
2,5x -2.6x
-2,6x
Grupo Bimbo BIMBOA MM Buy MXN 38.12
38,45 55.0
55,0 44%
43% 8.8
8,9 5.46
5,70 7.7x
7,7x n.a. 18.8x
18,9x 16.3x
16,4x 5.3%
5,3% 6.1%
6,1% 2.4x
2,5x 2.2x
2,2x 2.2x
2,2x n.a.
Gruma GRUMAB MM Buy MXN 229.37
217,90 305.0
305,0 33%
40% 4.9
4,7 8.57
8,94 9.6x
9,2x 9.1x
8,7x 17.6x
16,7x 16.5x
15,7x 2.2%
2,4% 2.6%
2,8% 3.6x
3,4x 3.2x
3,0x 1.5x
1,5x 1.3x
1,3x
FEMSA FMX US No Rating USD 86.80
84,61 n/a n.a. n.a. 38.61
44,22 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
Coca-Cola FEMSA KOF US Neutral USD 60.58
60,63 90.0
90,0 49%
48% 126.4
126,5 6.79
6,72 63.3x
63,3x 60.4x
60,3x n.a. n.a. -0.3%
-0,3% -0.3%
-0,3% 19.9x
19,9x 18.7x
18,7x 1.4x
1,4x 1.2x
1,2x
CCU CCU CI Sell CLP 8800.00
8762,40 9,000.0
9.000,0 2%
3% 4.9
4,7 5.42
4,81 5.8x
5,8x 8.7x
8,7x 10.9x
10,8x 18.4x
18,3x 4.6%
4,6% 2.7%
2,7% 2.6x
2,6x 2.4x
2,4x -0.1x
-0,1x -0.1x
-0,1x
BRF BRFS3 Neutral BRL 22.50
22,68 21.0
25,0 10%
-7% 4.8
4,7 27.37
32,06 17,1x
9.9x 8.0x
7,6x n.a. 52,4x
n.a. -2.2%
-2,8% 0.2%
0,5% 1.9x
2,0x 1.9x
2,0x 3.6x
6,5x 2.9x
2,9x
Andina ANDINAB CI Neutral CLP 2357.20
2552,10 3,400.0
3.400,0 44%
33% 3.3
3,5 2.48
3,09 8.1x
8,7x 7.2x
7,7x 17.3x
18,7x 14.8x
16,0x 3.5%
3,2% 4.0%
3,7% 2.8x
3,0x 2.8x
3,0x 1.6x
1,6x 1.4x
1,4x
Ambev ABEV3 Neutral BRL 16.50
16,32 17.0
17,0 3%
4% 68.2
65,9 79.58
84,39 11.6x
11,4x 10.7x
10,6x 20.1x
19,9x 17.4x
17,2x 4.5%
4,5% 6.1%
6,2% 4.8x
4,7x 4.9x
4,8x -0.3x
-0,3x -0.3x
-0,3x
Nutresa NUTRESA CB Neutral COP 23400.00
23500,00 29,000.0
29.000,0 24%
23% 3.4
3,4 0.75
0,70 11.7x
11,7x 10.2x
10,2x 21.2x
21,3x 18.1x
18,2x 2.4%
2,4% 2.5%
2,5% 1.2x
1,2x 1.1x
1,1x 2.2x
2,2x 1.7x
1,7x
Alicorp ALICORC1 PE Buy PEN n/a 13.0
13,0 n.a. n.a. 1.14
1,15 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 2.1x
2,1x 1.6x
1,6x
Andina ANDINAB CI Neutral CLP 2357.20
2552,10 3,400.0
3.400,0 44%
33% 3.3
3,5 2.48
3,09 8.1x
8,7x 7.2x
7,7x 17.3x
18,7x 14.8x
16,0x 3.5%
3,2% 4.0%
3,7% 2.8x
3,0x 2.8x
3,0x 1.6x
1,6x 1.4x
1,4x
Alsea ALSEA* MM Buy MXN 48.96
51,21 70.0
70,0 43%
37% 2.0
2,1 7.47
8,05 9.1x
9,4x 8.2x
8,5x 37.2x
38,9x 28.5x
29,8x 0.9%
0,8% 2.0%
1,9% 3.7x
3,9x 3.5x
3,7x 2.6x
2,6x 2.3x
2,3x
Lala LALAB MM Neutral MXN 17.00
20,18 24.5
24,5 44%
21% 2.1
2,5 1.36
1,39 8.0x
8,9x 7.0x
7,8x 19.6x
23,3x 14.0x
16,6x 3.6%
3,0% 3.6%
3,0% 1.6x
1,9x 1.5x
1,8x 3.2x
3,2x 2.7x
2,7x
Median 8.5x
8,9x 8.4x
8,6x 17.4x
18,8x 15.4x
16,0x 2.6x
2,6x 2.4x
2,5x 2.1x
2,1x 1.4x
1,4x
Company Ticker Rating Share Share Target Upside Mkt Cap ADTV EV/EBITDA P/E Div. Yield P/BV Net Debt/EBITDA
Currency Price (USD bn) (USD mn) 2018E 2019E 2018E 2019E 2018E 2019E 2018E 2019E 2018E 2019E
Banks
Santander Mexico BSMXB MM Buy MXN 24.62
25,32 39.0
31,0 58%
22% 8.2
8,5 7.81
9,25 n.a. n.a. 8.5x
8,8x 8.7x
8,9x 5.5%
5,4% 5.8%
5,6% 1.4x
1,4x 1.3x
1,3x n.a. n.a.
Santander Chile BSAN CI Neutral CLP 51.43
52,44 52.0
52,0 -1%
1% 14.5
14,5 7.79
7,77 n.a. n.a. 15.8x
16,2x 14.8x
15,1x 4.1%
4,0% 4.4%
4,3% 3.0x
3,0x 2.8x
2,8x n.a. n.a.
Santander Brasil SANB11 Neutral BRL 41.78
43,42 37.5
47,0 -10%
8% 41.5
42,2 17.52
18,69 n.a. n.a. 12.8x
13,3x 11.6x
12,1x 3.0%
2,9% 3.2%
3,1% 1881.6x
1917,1x 1665.9x
1697,4x n.a. n.a.
Itau Unibanco ITUB4 Buy BRL 34.61
35,78 52.0
42,0 50%
17% 59.2
89,7 171.06
184,99 n.a. n.a. 13,7x
8.8x 11,9x
7.7x 7.9%
5,1% 7.8%
5,0% 2.1x
3,3x 2.1x
3,3x n.a. n.a.
Intercorp Financial Services IFS PE Buy USD 39.00
41,36 48.0
48,0 23%
16% 4.4
4,7 0.58
0,70 n.a. n.a. 12.2x
12,9x 10,3x
9.7x 3.6%
3,4% 4.1%
3,8% 2.0x
2,2x 1.8x
1,9x n.a. n.a.
Inbursa GFINBURO MM Neutral MXN 26.67
27,01 35.0
28,0 31%
4% 8.8
8,9 4.69
4,84 n.a. n.a. 10.5x
10,6x 10,0x
9.9x 1.8%
1,8% 2.0%
1,9% 1.2x
1,2x 1.1x
1,1x n.a. n.a.
Grupo Galicia GGAL AR Buy ARS 104,85
93.20 163.0
163,0 75%
55% 3.7
4,0 4.60
4,05 n.a. n.a. 11.1x
12,5x 8.6x
9,7x 0.3%
0,3% 0.9%
0,8% 2.5x
2,8x 2.0x
2,2x n.a. n.a.
Gentera GENTERA* MM Buy MXN 13.87
14,14 24.0
19,0 73%
34% 1.1
1,1 3.34
3,67 n.a. n.a. 7.7x
7,9x 7.1x
7,2x 6.4%
6,3% 7.4%
7,3% 1.3x
1,4x 1.2x
1,3x n.a. n.a.
Davivienda PFDAVVND CB Buy COP 32780.00
33400,00 38,000.0
38.000,0 16%
14% 4.7
4,8 1.14
0,89 n.a. n.a. 10,0x
9.8x 8.3x
8,5x 2.4%
2,4% 3.1%
3,0% 1.3x
1,4x 1.2x
1,2x n.a. n.a.
Credicorp BAP US Buy USD 223.67
218,54 238.0
238,0 6%
9% 17.8
17,4 37.22
37,08 n.a. n.a. 14.0x
13,7x 12.2x
11,9x 2.0%
2,0% 2.5%
2,6% 2.4x
2,4x 2.1x
2,1x n.a. n.a.
ItauCorpbanca ITAUCORP CI Neutral CLP 6.32
6,46 7.5
7,5 19%
16% 4.8
4,9 3.69
3,50 n.a. n.a. 16.5x
16,9x 13.3x
13,6x 0.7%
0,7% 2.4%
2,4% 1.0x
1,0x 0.9x
0,9x n.a. n.a.
Bradesco BBDC4 Buy BRL 36.80
38,84 38.0
48,0 24%
3% 64.8
66,8 131.15
145,01 n.a. n.a. 12.8x
13,5x 10.5x
11,1x 3.8%
3,6% 4.4%
4,2% 2.1x
2,2x 1.9x
2,0x n.a. n.a.
Banrisul BRSR6 Neutral BRL 20.90
22,05 19.0
23,0 -9%
4% 2.2
2,3 6.24
7,81 n.a. n.a. 8.1x
8,2x 7.3x
7,5x 4.9%
8,8% 5.5%
5,4% 1.2x
1,3x 1.1x
1,2x n.a. n.a.
Regional RA MM Neutral MXN 88.88
87,60 134.0
109,0 51%
24% 1.4
1,4 3.12
3,09 n.a. n.a. 9.3x
9,2x 8.4x
8,3x 1.9%
1,9% 3.2%
3,3% 1.7x
1,6x 1.5x
1,4x n.a. n.a.
BanBajio BBAJIOO MM Buy MXN 38.04
36,92 51.0
43,0 34%
16% 2.2
2,2 5.34
5,52 n.a. n.a. 9.0x
8,8x 8.7x
8,4x 1.7%
1,8% 3.3%
3,4% 1.6x
1,5x 1.4x
1,4x n.a. n.a.
Banorte GFNORTEO MM Buy MXN 97.00
91,68 163.0
122,0 68%
33% 13.3
12,6 56.18
62,94 n.a. n.a. 8.8x
8,4x 7.3x
6,9x 4.5%
4,8% 5.7%
6,0% 1.6x
1,5x 1.4x
1,3x n.a. n.a.
Bancolombia PFBCOLO CB Neutral COP 33320.00
32420,00 32,500.0
32.500,0 -2%
0% 10.0
9,8 5.50
4,79 n.a. n.a. 11.1x
10,8x 8.8x
8,6x 3.1%
3,2% 3.6%
3,7% 1.3x
1,3x 1.2x
1,2x n.a. n.a.
Banco Pine PINE4 Neutral BRL 2.45
2,30 4.0
4,0 63%
74% 0.1
0,1 0.03
0,04 n.a. n.a. 3.3x
3,1x n.a. 16.9%
18,0% n.a. 0.2x
0,2x n.a. n.a. n.a.
Banco Macro BMA AR Buy ARS 170.00
159,25 312.0
312,0 84%
96% 3.1
2,8 2.62
1,59 n.a. n.a. 8.4x
7,9x 6.7x
6,2x 1.5%
1,6% 2.4%
2,5% 1.9x
1,8x 1.6x
1,5x n.a. n.a.
Banco do Brasil BBAS3 Neutral BRL 44.45
44,08 39.0
52,0 -12%
18% 33.1
32,1 138.56
148,97 n.a. n.a. 9.3x
9,3x 6.4x
6,4x 4.1%
4,1% 5.2%
5,2% 1.2x
1,2x 1.1x
1,1x n.a. n.a.
Banco ABC ABCB4 Buy BRL 16.00
16,64 19.0
22,0 19%
32% 0.8
0,8 1.31
1,67 n.a. n.a. 6.8x
7,0x 6.1x
6,0x 6.6%
6,4% 7.4%
7,5% 0.9x
0,9x 0.8x
0,8x n.a. n.a.
Median 10,0x
9.3x 8.6x
8,7x 1.6x
1,5x 1.4x
1,4x
Financials ex-banks
SulAmerica SULA11 Neutral BRL 25.38
28,86 24.5
30,0 -3%
4% 2.6
2,9 7.54
9,93 n.a. n.a. 11.4x
12,2x 10.0x
11,1x 2.2%
2,1% 2.5%
2,2% 1.6x
1,8x 1.4x
1,6x n.a. n.a.
Porto Seguro PSSA3 Neutral BRL 53.58
52,50 52.0
52,0 -3%
-1% 4.6
4,4 11.01
10,87 n.a. n.a. 14.4x
14,1x 12.6x
12,3x 6.4%
6,5% 4.8%
4,9% 2.4x
2,3x 2.2x
2,2x n.a. n.a.
Cielo CIEL3 Neutral BRL 9.27
9,26 11.0
11,0 19% 6.6
6,5 32.01
38,13 4.6x
4,6x 5.7x
5,7x 7.1x
7,1x 9.4x
9,4x 13.9%
13,9% 9.9%
9,9% 1.6x
1,6x 1.6x
1,6x 0.6x
0,6x 0.6x
0,6x
Grupo Aval PFAVAL CB Neutral COP 1060.00
1000,00 1,260.0
1.260,0 19%
26% 7.4
7,0 1.77
1,87 n.a. n.a. 11.0x
10,4x 9.4x
8,8x 5.3%
5,6% 5.9%
6,2% 1.4x
1,3x 1.3x
1,2x n.a. n.a.
Grupo Sura GRUPOSUR CB Neutral COP 32500.00
32880,00 41,900.0
41.900,0 29%
27% 5.9
6,0 5.58
5,53 n.a. n.a. 10,0x
9.9x 8.2x
8,3x 1.6%
1,6% 1.7%
1,7% 0.7x
0,7x 0.7x
0,7x n.a. n.a.
B3 B3SA3 Buy BRL 26.59
27,70 27.0
32,0 16%
2% 14.3
14,5 66.04
72,84 16.0x
16,1x 14.0x
14,5x 17.6x
18,6x 16.3x
16,6x 2.9%
2,9% 3.7%
3,6% 2.2x
2,3x 2.1x
2,2x -0.7x
-0,7x -0.8x
-0,8x
IRB Brasil RE IRBR3 Neutral BRL 73.89
76,00 65.0
72,0 -12%
-5% 6.1
6,1 14.30
16,10 n.a. n.a. 20.0x
19,7x 16.9x
16,4x 3.7%
3,8% 4.4%
4,6% 7.1x
7,2x 6.4x
6,5x n.a. n.a.
BB Seguridade BBSE3 Buy BRL 26.83
27,29 33.0
33,0 23%
21% 14.1
14,0 25.61
30,83 n.a. n.a. 13.5x
13,9x 13.3x
13,7x 10,1%
5.7% 6.1%
6,0% 5.5x
7,6x 5.1x
6,9x n.a. n.a.
Wiz WIZS3 Neutral BRL 7.30
7,11 10.0
10,0 37%
41% 0.3
0,3 1.21
1,23 0.0x
0,0x 0.0x
0,0x 0.0x
0,0x 0.0x
0,0x 13.7%
14,0% 14.2%
14,5% 31.6x
30,8x 26.6x
25,9x n.a. n.a.
Median 4.6x
4,6x 5.7x
5,7x 11.4x
12,2x 10.0x
11,1x 2.2x
2,3x 2.1x
2,2x -0.1x
0,0x -0.1x
-0,1x
Company Ticker Rating Share Share Target Upside Mkt Cap ADTV EV/EBITDA P/E Div. Yield P/BV Net Debt/EBITDA
Currency Price (USD bn) (USD mn) 2018E 2019E 2018E 2019E 2018E 2019E 2018E 2019E 2018E 2019E
Housing
Tecnisa TCSA3 Neutral BRL 1.26
1,37 2.1
2,1 67%
53% 0.1
0,1 0.63
0,77 n.a. n.a. n.a. n.a. 0.0%
0,0% 0.0%
0,0% 0.5x
0,5x 0.5x
0,6x -2.8x
-2,8x -5.7x
-5,7x
MRV MRVE3 Buy BRL 12.25
11,96 18.0
18,0 47%
51% 1.4
1,4 13.57
15,02 7.9x
7,7x 5.8x
5,7x 7.9x
7,7x 5.7x
5,6x 6.3%
6,5% 12.3%
12,6% 0.9x
0,9x 0.9x
0,9x 0.5x
0,5x 0.0x
0,0x
Lopes LPSB3 Neutral
Buy BRL 4.29
4,93 3.6
6,7 -16%
36% 0.1
0,2 0.40
0,48 3.5x
n.a. 14,0x
2.8x 17.4x
n.a. 11.2x
n.a. -0.3%
0,0% 6.1%
0,0% 10,2x
0.7x 0.7x
8,9x -0.8x
-2,2x -0.9x
-0,5x
Helbor HBOR3 Neutral BRL 1.36
1,59 2.0
2,0 47%
26% 0.2
0,2 0.48
0,69 n.a. 33.5x
35,2x n.a. 25.1x
29,4x 0.0%
0,0% 0.0%
0,0% 0.5x
0,6x 0.5x
0,5x -35.4x
-35,4x 17.8x
17,8x
Javer JAVER* MM Buy MXN 16.90
16,90 20.2
20,2 19% 0.2
0,2 0.02
0,03 6.7x
6,7x 5.7x
5,7x 12.1x
12,1x 9.1x
9,1x 0.0%
0,0% 3.4%
3,4% 2.1x
2,1x 1.8x
1,8x 2.1x
2,1x 1.6x
1,6x
Gafisa GFSA3 Neutral BRL 13.96
16,20 17.0
17,0 22%
5% 0.2
0,2 4.24
5,13 n.a. 14.3x
15,5x n.a. 24.8x
28,7x 0.0%
0,0% 0.0%
0,0% 0.5x
0,6x 0.5x
0,6x -17.5x
-17,5x 7.1x
7,1x
Eztec EZTC3 Neutral BRL 23.46
24,69 23.0
23,0 -2%
-7% 1.0
1,0 2.71
3,02 n.a. 21.7x
23,1x 31.5x
33,2x 15.4x
16,2x 4.8%
4,6% 7.1%
6,8% 1.5x
1,6x 1.5x
1,6x -16.4x
-16,4x -4.8x
-4,8x
Even EVEN3 Buy BRL 5.37
6,08 7.0
7,0 30%
15% 0.3
0,3 1.06
1,45 n.a. 45.2x
48,6x n.a. 18.2x
20,6x 0.0%
0,0% 3.9%
3,4% 0.6x
0,7x 0.6x
0,7x -14.5x
-14,5x 13.1x
13,1x
Direcional DIRR3 Buy BRL 7.31
7,68 7.5
7,5 -2%
3% 0.3
0,3 1.53
1,75 59.5x
61,6x 14.6x
15,2x n.a. 13.4x
14,1x 3.9%
3,7% 5.2%
5,0% 0.7x
0,8x 0.7x
0,7x 13.4x
13,4x 2.5x
2,5x
Cyrela CYRE3 Buy BRL 14.34
15,21 16.0
16,0 12%
5% 1.4
1,5 11.04
12,82 37.2x
39,1x 12.9x
13,6x 29.5x
31,2x 10.5x
11,2x 8.0%
7,5% 16.8%
15,8% 1.0x
1,0x 1.1x
1,1x 4.8x
4,8x 1.1x
1,1x
Consorcio ARA ARA* MM Neutral MXN n/a 7.0
7,0 n.a. n.a. 0.25
0,25 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. -0.1x
-0,1x 0.0x
0,0x
Brasil Brokers BBRK3 Neutral BRL 5.40
7,00 2.1
2,1 -61%
-70% 0.3
0,3 0.35
0,32 12.4x
16,4x 12,8x
9.7x 24.8x
32,1x 17.4x
22,6x 2.9%
2,3% 5.0%
3,8% 1.9x
2,4x 1.8x
2,4x -1.5x
-1,5x -1.3x
-1,3x
Median 10.1x
16,4x 13.6x
14,6x 21.1x
31,2x 14.4x
16,2x 0.7x
0,9x 0.7x
0,9x -1.2x
-1,9x 0.5x
0,5x
Commercial Properties
Parque Arauco PARAUCO CI Buy CLP 1565.10
1602,40 n.a n.a. 2.1
2,1 1.71
1,73 16.9x
17,2x 15.2x
15,4x 17.7x
18,1x 15.7x
16,0x 1.4%
1,4% 3.2%
3,1% 1.6x
1,7x 1.6x
1,6x 5.6x
5,6x 4.9x
4,9x
Multiplan MULT3 Buy BRL 23.05
23,79 23.3
23,3 -2%
1% 1.2
1,2 13.59
15,74 5.6x
5,8x 4.9x
5,0x 10.0x
10,3x 8.8x
9,1x 5.0%
4,9% 5.7%
5,5% 0.8x
0,9x 0.8x
0,8x 0.7x
0,7x 0.3x
0,3x
Iguatemi IGTA3 Buy BRL 39.36
39,55 42.0
42,0 7%
6% 1.8
1,8 10.81
12,62 15.3x
15,4x 13.5x
13,5x 25.8x
25,9x 22.3x
22,4x 1.7%
1,7% 2.1%
2,1% 2.4x
2,4x 2.3x
2,3x 2.6x
2,6x 2.0x
2,0x
Fibra Uno FUNO11 MM Buy MXN 21.36
21,94 36.5
36,5 71%
66% 4.0
4,1 14.50
14,00 10.8x
11,0x 10.1x
10,2x 10.1x
10,3x 9.0x
9,2x 10.3%
10,0% 11.9%
11,6% 0.6x
0,6x 0.6x
0,6x 4.6x
4,6x 4.3x
4,3x
IRSA IyR IRS US Buy USD 12.99
13,04 27.7
27,7 113%
112% 0.0
0,0 1.64
1,41 5.5x
5,5x 3.4x
3,4x 0.0x
0,0x 0.0x
0,0x 0.4%
0,4% 0.4%
0,4% 1.0x
1,1x 0.8x
0,9x 6.9x
6,9x 4.5x
4,5x
IRSA Propiedades Comerciales IRCP US Buy USD 20.80
19,47 47.0
47,0 126%
141% 0.7
0,6 0.19
0,18 43.7x
42,4x 25.7x
25,0x 36.1x
35,0x 52.4x
50,9x 0.1%
0,1% 0.1%
0,1% 2.6x
2,6x 2.2x
2,2x 2.9x
2,9x 2.1x
2,1x
Fibra MQ FIBRAMQ MM Buy MXN 19.12
17,61 30.0
30,0 57%
70% 0.5
0,5 1.42
1,50 8.7x
8,4x 8.3x
8,0x 4.0x
3,7x 7.0x
6,4x 8.4%
9,1% 8.9%
9,7% 0.4x
0,4x 0.4x
0,4x 5.0x
5,0x 4.7x
4,7x
CCP CCPR3 Neutral BRL 8.90
8,43 15.0
15,0 69%
78% 0.2
0,2 0.11
0,15 9.6x
9,5x 8.8x
8,7x 12.1x
11,4x 8.3x
7,8x 2.1%
2,2% 2.8%
2,9% 0.8x
0,8x 0.8x
0,7x 5.5x
5,5x 5.0x
5,0x
Terrafina TERRA13 MM Buy MXN 24.13
25,41 n.a n.a. 0.7
0,8 1.78
1,82 11.8x
12,3x n.a. n.a. n.a. 9.2%
8,7% n.a. 0.7x
0,8x n.a. 3.3x
3,3x n.a.
BR Malls BRML3 Buy BRL 12.22
13,14 13.0
13,0 -1%
6% 2.7
2,9 19.67
23,13 13.0x
13,9x 11.9x
12,6x 18.0x
19,4x 15.6x
16,8x 1.4%
1,3% 3.0%
2,8% 1.0x
1,1x 1.0x
1,0x 1.8x
1,8x 1.5x
1,5x
Celsia CELSIA CB Neutral COP 4000.00
3930,00 5,050.0
5.050,0 26%
28% 0.9
0,9 0.44
0,36 7.8x
7,7x 7.8x
7,7x 23.6x
23,1x 23.7x
23,3x 4.3%
4,3% 4.6%
4,7% 0.9x
0,9x 0.9x
0,9x 2.7x
2,7x 2.7x
2,7x
Aliansce ALSC3 Buy BRL 17.55
18,67 19.0
19,0 8%
2% 0.9
1,0 2.51
2,75 13.3x
13,9x 12.0x
12,6x 30.8x
32,8x 22.4x
23,8x 1.5%
1,4% 2.2%
2,1% 1.4x
1,5x 1.4x
1,4x 3.8x
3,8x 3.2x
3,2x
Fibra Shop FSHOP13 MM Buy MXN 8.45
8,32 16.0
16,0 89%
92% 0.2
0,2 0.17
0,14 12.5x
12,5x 12.0x
12,0x 9.5x
9,3x 8.2x
8,1x 10.7%
10,8% 11.7%
11,9% 0.4x
0,4x 0.4x
0,4x 8.0x
8,0x 7.8x
7,8x
Vesta VESTA* MM Buy MXN 24.49
26,33 33.0
33,0 35%
25% 0.7
0,8 2.11
2,12 13.5x
14,1x 13.0x
13,5x n.a. n.a. 4.6%
4,3% 5.7%
5,3% 0.7x
0,8x 0.7x
0,8x 5.6x
5,6x 6.1x
6,1x
Median 11.8x
12,3x 11.0x
11,1x 14.9x
14,8x 12.3x
12,6x 0.9x
0,9x 0.9x
0,9x 3.8x
3,8x 3.7x
3,7x
206