Post on 25-Mar-2018
Santander ― Latin America Research Handbook
April 2014
Ana Reynal, CFA
Bruno Amorim, CFA
Hector Chavez
Arturo EspinosaAndres Soto
Jose Antonio Parra
Renan Manda
Rodrigo Ordoñez
Walter Chiarvesio
Latin America Research
LA
TIN
AM
ER
ICA
RE
SE
AR
CH
TE
AN
LA
TIN
AM
ER
ICA
RE
SE
AR
CH
TE
AN
Strategy
João Saad
Nicolas Schild
Thiago Silva
Walter Chiarvesio
Felipe Reis
Rodrigo Ordoñez
Bruno Mendonça
Francisco Errandonea
Rodrigo Ordoñez
Walter Chiarvesio
Reinaldo Santana
Andres Soto
Bruno Taveira
Mauricio Serna
Ronaldo Kasinsky
Agribusiness
João Noronha, CFA
Luis Miranda, CFA
Mauricio Serna
Bruno Giardino, CFA
Francisco Echeverria
Reinaldo Santana
Alex Sciacio, CFA
Rodrigo Ordoñez
Walter Chiarvesio
Jesus GomezHead of LatAm Research &
Equity Strategy
Coverage List
Gustavo AllevatoGustavo Allevato
Walter Chiarvesio
Andres Soto
Bruno Taveira
João Mamede
Mauricio Serna
Ronaldo Kasinsky
Henrique Navarro
Nicholas Schild
Renata Cabral
Corporate Access
Renan Manda
Jose Antonio Parra
Christian Audi
Education
Daniel Gewehr
Bruno Giardino, CFA
Food & Beverage
Luis Miranda, CFA
Oil, Gas &Petrochemicals
Christian Audi
Retailing
João Mamede
Transportation
Pedro Balcão
Capital Goods
Daniel Gewehr
Electric &Other Utilities
Maria Carolina Carneiro
Healthcare
Daniel Gewehr
Pulp & Forest Products
Alex Sciacio, CFA
Cement &Construction
Toe Matsumura /Fabiola Gama
Financial | BanksFinancial | Non Banks
Boris Molina
Metals & Mining
Felipe Reis
Real Estate
Fabiola Gama /Toe Matsumura
Telecom, Media &Technology
Valder Nogueira
LatAm Equity Strategy
Jesus Gomez
Stefano Rizzi
Brazil
Daniel Gewehr
João Noronha, CFA
Chile
Mexico
Argentina
Walter Chiarvesio
North Andean Countries
Andres Soto
Francisco Errandonea
Quant
Renata Cabral
Stefano Rizzi
Bruno Amorim, CFA
João Noronha, CFA
Jesus Gomez
Latin America Research
Strategy
Daniel Gewehr
Electric &Other Utilities
João Saad
Thiago Silva
Felipe Reis
Alex Sciacio, CFA
Technology, Media &Telecom
Bruno Mendonça
Consumer Goods
Bruno Taveira
Luis Miranda
Ronaldo Kasinsky
Valder Nogueira
Education
Daniel Gewehr
Financial | BanksFinancial | Non BanksAgribusiness
Christian Audi
Capital Goods
Daniel Gewehr
João Noronha, CFA
Healthcare
Chemicals & Oil
Christian Audi
Bruno Giardino, CFA
Alex Sciacio, CFA
Valder NogueiraHead of Brazil Research
Coverage List
Gustavo Allevato
Gustavo Allevato
Boris Molina
Renata Cabral
Henrique Navarro
Daniel GewehrBruno Giardino, CFA
Felipe Reis
Metals & Mining
Corporate Access
Renan Manda
Fabiola Gama
Real Estate
João Mamede
Transportation
Pedro Balcão
Maria Carolina Carneiro
Pulp & Forest Products
BR
AZ
ILR
ES
EA
RC
HT
EA
M
Latin America Research
Best Recent Calls:
Preference of Ultrapar over Cosan. Throughout 2013, we reiterated our preference for Ultrapar vs. Cosan based on the fuel distribution segment in Brazil—themost attractive in the world, in our view—representing a much more significant part of Ultrapar’s EBITDA (close to 70%) vs. only around 30% for Cosan. Ultraparoutperformed Cosan by close to 30% during the year.
Preference of São Martinho over Cosan. With an eye focused solely on the sugar and ethanol businesses, we also reiterated our preference for São Martinho vs.Cosan, driven by SMO’s stronger FCF generation as well as likely higher dividend going into 2014. SMO has outperformed Cosan by almost 10% since our post-Cancun conference report.
Corporate Access:
Differentiated corporate access included a well-timed roadshow with Cosan’s CFO right before the company’s Cosan Day events, which included, among other news,the information that the collapse of Cosan’s two shares into one would not happen in 2013.
Coverage List Corporate Access
AG
RIB
US
INE
SS
AG
RIB
US
INE
SS
Christian Audi (Sector Head)Christian Audi (Sector Head)
New York, USA
(+1) 212 350 3991 | caudi@santander.us
Gustavo Allevato, Brazil
(+55) 11 3012 6042
gallevato@santander.com.br
Coverage: Cosan | Cosan Limited | São MartinhoCoverage: Cosan | Cosan Limited | São Martinho
Sao Paulo, Brazil
(+55) 11 3012 5787 | dhgewehr@santander.com.br
Latin American Equities
Best Recent Calls:
Active portfolio rotation, with strong results. We initiated coverage of Mahle Metal Leve on July 18, 2013, with the stock gaining 21% in four months. The teamdowngraded Marcopolo in January 2013 at R$6.70. After a correction of 28%, we upgraded to Buy on January 2014.
Industry benchmark reports. Daniel Gewehr has been covering Capital Goods since 2001, on both the buy and sell-side, and has a deep understanding of theindustrial chain, as can be seen in his thematic reports like Weathering the South Storm—Does Expected BRL Devaluation Offsets Weaker Sales to Argentina?(February 11, 2014). The team recently created a one-stop-shop chart book for the sector, which offers a 360 º view of listed companies and its peers.
Corporate Access:
The best corporate access on the Street, including benchmark event Santander Capital Goods Trip. Daniel and his team have close access to management,hosting Non-Deal Road Shows/Events (and writing reports about them) with all Capital Goods companies under Santander’s coverage during 2013, namely Autometal,Iochpe, Marcopolo, Mahle, Randon, Romi, and Weg. In 2013, Daniel also conducted the Second Santander Capital Goods Trip, an opportunity to meet 21companies/sources meetings in five days, including eight site visits.
Coverage List Corporate Access
CA
PIT
AL
GO
OD
SC
AP
ITA
LG
OO
DS
Daniel Gewehr (Sector Head)Daniel Gewehr (Sector Head)
João Noronha CFA, Brazil
(+55) 11 3012 5734
jonoronha@santander.com.br
Luis Miranda CFA, Mexico
(+52) 55 5269 1926
lmiranda@santander.com.mx
Mauricio Serna, Mexico
(+52) 55 5269 1931
msernav@santander.com.mx
Coverage: Alfa | Autometal | Grupo Carso | Iochpe Maxion | Mahle Metal Leve | Marcopolo | Mexichem | Randon | Romi | WegCoverage: Alfa | Autometal | Grupo Carso | Iochpe Maxion | Mahle Metal Leve | Marcopolo | Mexichem | Randon | Romi | Weg
Latin American Equities
Best Recent Calls:
Out-of-consensus call on MRV. Taking a contrary view from the market, which did not believe in MRV’s turnaround, we reiterated our positive view on MRV in June2013, stating that the worst was behind MRV and that the company was approaching the margin inflection point. We called investors’ attention to the company’s solidcash flow generation and excessively discounted valuation. In four months’ time, the stock climbed over 50% versus 13% for the Ibovespa, and as of this date, the stockis trading 17% higher versus -5% for the Ibovespa since June 2013.
Cemex Latam Holdings: We initiated coverage of Cemex Latin Holdings with a Buy rating in April 2013. We argued that CLH deserved a valuation premium toCementos Argos at a time when the market had an opposite view. Three months after that, CLH had outperformed CEMARGOS by 11%.
Sector piece on Colombian cement companies. In October 2013, we introduced our YE2014 target prices for CLH and CEMARGOS and named those stocks our toppicks in Colombia. CLH’s stock has rallied 11% since then.
Corporate Access:
Timely corporate access/events. Among the events we hosted in 2013 we highlight: (i) Lunch meeting with PDG’s CEO, Mr. Carlos Piani. The event took place duringa critical period in the company’s restructuring process, providing timely information on PDG’s turnaround and short-term outlook; (ii) Road show with MRV’s IR Director,Ms. Monica Simão: hosted in September, when MRVE3 began to outperform the market due to improved results, the road show clarified skeptical investors’ inquiriesabout the company’s earnings recovery and intended pace of growth; and (iii) Road show with CEF (Caixa Economica Federal): following a period of much noiseconcerning the discontinuation of the French amortization system in mortgage origination, we were on the road with CEF to separate untruths from facts as well as toprovide an update on the development of MCMV program..
Coverage List Corporate Access
CE
ME
NT
&C
ON
ST
RU
CT
ION
CE
ME
NT
&C
ON
ST
RU
CT
ION
Toe Matsumura / Fabiola GamaToe Matsumura / Fabiola Gama
Mexico City, Mexico
(+52) 55 5257 8172
tmatsumura@santander.com.mx Andres Soto, USA
(+1) 212 407 0976
asoto@santander.us
Renan Manda, Brazil
(+55) 11 3012 6535
rmanda@santander.com.br
Rodrigo Ordoñez, Chile
(+56) 22 336 3358
rmanda@santander.com.br
Walter Chiarvesio, Argentina
(+54) 11 4341 1564
wchiarvesio@santaderrio.com.ar
Coverage: Ara | Cementos Argos | Cementos Pacasmayo | Cemex | Cemex LatAm Holdings | Cresud | Ferreycorp | GEO | Homex | ICA | IRSA | ParqueArauco | UrbiCoverage: Ara | Cementos Argos | Cementos Pacasmayo | Cemex | Cemex LatAm Holdings | Cresud | Ferreycorp | GEO | Homex | ICA | IRSA | ParqueArauco | Urbi
São Paulo, Brazil
(+55) 11 3012 7414
fpgama@santander.com.br
Latin American Equities
Best Recent Calls:
Reiterating preference for the outperformer Kroton. Bruno maintained Kroton as his top pick during the whole year, and the stock outperformed its peers for thesecond year in a row, appreciating 73%—even when Anhanguera’s discount to the merger’s share swap ratio started to widen. Bruno’s call was based on Kroton’sbest-in-class fundamentals and on a risk-return perspective.
Favoring SER and Estacio. Santander was a joint bookrunner of SER’s IPO, which rose 34% in two months. Bruno worked in the IPO and initiated coverage inDecember. He has also favored Estacio for most of the year, and the stock appreciated 47% in 2013.
Amongst the most significant sector pieces published over the last few months, we would highlight (i)The Quality Watchman series, an in-depth analysis of MEC’squality assessments; and (ii) coverage of main industry events: Private Education Congress and ABED’s Distance-Learning International Conference.
Corporate Access:
5th Santander Education Conference established itself as an insightful event, based on presentations by nonlisted companies and industry experts, in addition to alllisted higher education companies. The team also organized events with reputable industry sources.
Coverage List Corporate Access
ED
UC
AT
ION
ED
UC
AT
ION
Bruno Giardino, CFA (Sector Head)Bruno Giardino, CFA (Sector Head)
Sao Paulo, Brazil
(+55) 11 3012 5914 | bgiardino@santander.com.br
Daniel Gewehr, Brazil
(+55) 11 3012 5787
dhgewehr@santander.com.br
Coverage: Anhanguera | Estácio | Kroton | Ser EducacionalCoverage: Anhanguera | Estácio | Kroton | Ser Educacional
Latin American Equities
Best Recent Calls:
Negative view on Copel: Curbing market expectations on apparently low multiples. In September 2013 we released a report on integrated companies in which wehighlighted our view that Copel’s adjusted multiples should account for lower implied return, worse operating and regulatory performance, and less growth sustainabilityin the longer term.
Positive calls on Taesa and Alupar. In Santander’s LatAm Universe Book, published in early January, we highlighted the attractiveness of the two cases before thestart of rationing discussions, based on solid cash flow generation, higher than average operating parameters, and good IRRs. In our 4Q13 preview, with the two stocksoverdiscounted, we reiterated the calls, and in both reports we have published on the hydro situation (early February and end of February), we highlighted ourpreference toward TransCos, even in our nonrationing cases.
The team published a number of insightful thematic reports, among them Brazil Economics/Utilities/Strategy: Crying in (No) Rain—Talking about Rationing Again;February 2014, Brazil Utilities: Fifth Brazilian Utilities Day: Help on the Way but Uncertainties Remain, March 2014.
Corporate Events:
VII EuroLatAm Infrastructure & Utilities Conference in NY—Top Management from Cemig, Sabesp, TAESA, and Alupar—October 2013Cancun CEO Latam Conference—Top Management from Endesa, Enersis, Colbun, Cemig, TAESA, and Alupar.Fifth Brazilian Utilities Day—Top Management from Tractebel, CPFL, and AES; CCEE board member and Aneel representative—March 2014
Coverage List Corporate Access
EL
EC
TR
IC&
OT
HE
RU
TIL
ITIE
SE
LE
CT
RIC
&O
TH
ER
UT
ILIT
IES
Maria Carolina CarneiroMaria Carolina Carneiro
Sao Paulo, Brazil
(+55) 11 3012 6682 | macarneiro@santander.com.brNicholas Schild, Chile
(+56) 22 336 3361
nschild@santander.cl
Walter Chiarvesio, Argentina
(+54) 11 4341 1564
wchiarvesio@santaderrio.com.ar
Coverage: AES Gener | AES Tiete | Aguas Andinas | Alupar | Cemig | Cesp | Colbun | Comgas | Copasa | Copel | CPFL Energia | E-CL | Eletrobras |Eletropaulo | Endesa Chile | Energias do Brasil | Enersis | Eneva | Equatorial | IAM | Light | Renova Energia | Sabesp | Taesa | Tractebel |Transmissao Paulisa
Coverage: AES Gener | AES Tiete | Aguas Andinas | Alupar | Cemig | Cesp | Colbun | Comgas | Copasa | Copel | CPFL Energia | E-CL | Eletrobras |Eletropaulo | Endesa Chile | Energias do Brasil | Enersis | Eneva | Equatorial | IAM | Light | Renova Energia | Sabesp | Taesa | Tractebel |Transmissao Paulisa
Thiago Silva, Brazil
(+55) 11 3553 2555
thiagorsilva@santander.com.br
João Saad, Brazil
(+55) 11 3553 9666
jsaad@santander.com.br
Latin American Equities
Coverage List Corporate Access
FIN
AN
CIA
LS
|B
AN
KS
FIN
AN
CIA
LS
|B
AN
KS
Boris Molina (Sector Head)Boris Molina (Sector Head)
New York, USA
(+1) 212 350 3977 | bmolina@santander.us
Henrique Navarro, Brazil
(+55) 11 3012 5756
havieira@santander.com.br
Renata Cabral, Brazil
(+55) 11 3012 5731
rcabral@santander.com.br
Coverage: Banco de Chile | Banco do Brasil | Banco Macro | Banco Pine | Banorte | Banregio | BBVA Frances | BCI | Bradesco | Corpbanca | Credicorp |Davivienda | Gentera | GF Galicia | GF Inbursa | Grupo Aval | Intercorp | Itaú Unibanco | Itaúsa
Coverage: Banco de Chile | Banco do Brasil | Banco Macro | Banco Pine | Banorte | Banregio | BBVA Frances | BCI | Bradesco | Corpbanca | Credicorp |Davivienda | Gentera | GF Galicia | GF Inbursa | Grupo Aval | Intercorp | Itaú Unibanco | Itaúsa
Nicholas Schild, Chile
(+56) 22 336 3361
nschild@santander.cl
Best Recent Calls:
Remarkable report The End of the Repression: After recommending caution with respect to Brazilian banks for close to three years, Boris Molina and HenriqueNavarro published a report in October 2013 foreseeing a tapering of the policy of strong public sector loan growth, predicting a recovery in ROEs and market share atprivate banks, offering a more positive view on the sector, and naming Itaú Unibanco as their top pick in Brazilian banks. The latest data from the Brazilian CentralBanks indicates that their thesis was spot-on, with a recovery in spreads and a slowdown in public bank loan growth, as anticipated in the report.
Remarkable calls of the year: Boris was persistent in his call of a Buy rating on Davivienda in Colombia in 2013, correctly anticipating that Bancolombia wouldunderperform due to the need to increase capital to bolster capital ratios as the closing of the acquisition in Panama. His upgrade of Bancolombia to Buy in early 2014,ahead of the capital increase, also proved to be the right call, as the stock rallied ahead of the deal. In a similar way, Boris was ahead of the market with Banorte, witha Buy rating on Banorte before its capital increase in mid-2013, again anticipating a that the stock has overly discounted the share overhang. Likewise, in Mexico, histimely upgrade of Compartamos (Gentera) as a likely winner in the new regulatory environment in Mexico also paid off handsomely, while he correctly recommendedthat investors to stay way from Bolsa for the duration of the year on the weak cost outlook and regulatory uncertainties.
Latin American Equities
Best Recent Calls:
Top Insurance Coverage - Timely Recommendation on Brazilian Insurance Companies. Henrique is ranked in the top positions in accuracy and timing of hisrecommendations on insurance companies, according to Bloomberg analyst rank. He covers all four listed insurance Brazilian companies namely: BB Seguridade,Porto Seguro, SulAmerica and Brasil Insurance. His timely reports provides an in depth update and is precise in anticipate the insurance seasonal characteristics – softand hard cycle incorporating an extensive cross-check of views with possible impacts of industry leading indicators as: unemployment level vs. insurance penetrationand anticipated analysis of Brazilian rainy season vs. auto insurance market, which position his research apart from mainstream..Out of Consensus calls – Cielo and BM&F Bovespa. Henrique started 2014 with out of consensus call on Cielo, being the single analyst with underperformancerecommendation, anticipating the competitive environment for the acquiring industry for 2014. He also maintained an out of consensus view on BM&F Bovespa afterclose two years, maintaining the proved negative view on traded volumes. He changed his recommendation to hold on October 2013, with a more constructive viewdriven by the priced in impact on competition and attractive company’s dividend yield.
Corporate Access:
Strong Corporate Access – Events and Road Show: Henrique and team have also close access to financial institutions management, hosting several events in 2013as: Mortgage Morning with top management from the largest Brazilian banks, Insurance Day with all of the Directors from Brazilian insurance companies present,Loyalty Day with listed and non-listed company’s top management. Henrique also hosted the first event with investors with ATS Brasil in March
Coverage List Corporate Access
FIN
AN
CIA
LS
|N
ON
BA
NK
SF
INA
NC
IAL
S|N
ON
BA
NK
SBoris Molina (Sector Head)Boris Molina (Sector Head)
New York, USA
(+1) 212 350 3977 | bmolina@santander.us
Coverage: AFP Habitat | BB Seguridade | BM&F Bovespa | Bolsa Mexicana de Valores | Brasil Insurance | CETIP | Cielo | Grupo Sura | Multiplus | PortoSeguro | Smiles | Sul America | Valid
Coverage: AFP Habitat | BB Seguridade | BM&F Bovespa | Bolsa Mexicana de Valores | Brasil Insurance | CETIP | Cielo | Grupo Sura | Multiplus | PortoSeguro | Smiles | Sul America | Valid
Henrique Navarro, Brazil
(+55) 11 3012 5756
havieira@santander.com.br
Renata Cabral, Brazil
(+55) 11 3012 5731
rcabral@santander.com.br
Nicholas Schild, Chile
(+56) 22 336 3361
nschild@santander.cl
Latin American Equities
Best Recent Calls:
We have maintained a strong conviction call for Gruma. The company was the best-performing stock in the sector in the last two years. We identified theturnaround and deleveraging process of the company.
For Ambev, we maintained a good flow of information on the corporate restructure process. Also, we maintained a cautious view on the stock due to valuationand identified a good entry point in late 2013, as volumes bottomed out at the end of the year. What’s more, our team fostered communication with nonpubliccompanies (Schin/Kirin).
We remain bearish on the bottlers in Mexico. The main reasons were (1) the expensive valuation levels and (2) expectation of more normalized growth. Theenvironment was further complicated by new excise taxes in Mexico.
Coverage List Corporate Access
FO
OD
&B
EV
ER
AG
EF
OO
D&
BE
VE
RA
GE
Luis Miranda, CFA (Sector Head)Luis Miranda, CFA (Sector Head)
Mexico City, Mexico
(+52) 55 5269 1926
lmiranda@santander.com.mx
Andres Soto, USA
(+1) 212 407 0976
asoto@santander.us
Bruno Taveira, Brazil
(+55) 11 3553 9602
btaveira@santander.com.br
João Mamede, Brazil
(+55) 11 3553 0699
jmamede@santander.com.br
Mauricio Serna, Mexico
(+52) 55 5269 1931
msernav@santander.com.mx
Ronaldo Kasinsky
(+55) 11 3553 2396
rkasinsky@santander.com.br
Coverage: AmBev | Andina | Arca Continental | Brasil Foods | CCU | Coca-Cola Femsa | Concha y Toro | FEMSA | Gruma | Grupo Bimbo | Grupo Herdez |Grupo Modelo | Grupo Nutresa | JBS | Marfrig | Minerva | Pesquera Exalmar
Coverage: AmBev | Andina | Arca Continental | Brasil Foods | CCU | Coca-Cola Femsa | Concha y Toro | FEMSA | Gruma | Grupo Bimbo | Grupo Herdez |Grupo Modelo | Grupo Nutresa | JBS | Marfrig | Minerva | Pesquera Exalmar
Latin American Equities
Best Recent Calls:
Industry benchmark Healthy Actions Required report. Daniel, who has experience as a buy-side analyst, produced unique industry reports such as BrazilianHealthcare: Healthy Actions Required-Takeaways from Our 7th Annual Trip, where he provided an in-depth update of his coverage and healthcare subsegments. Hisresearch incorporates an extensive cross-check of views on the healthcare sector, including nonlisted entities in the industry such as regulators, hospital providers,brokers, health consultants, and reinsurers, which position his research apart from mainstream.
Active healthcare portfolio rotation, with strong results. Daniel has been very timely in the case of OdontoPrev, upgrading the stock to buy on June 24, 2013.After the stock outperformed by 13%, Daniel downgraded it on January 9, 2014 (ODPV has corrected 12% since then). In October 2013, he changed his top pick toQualicorp from OdontoPrev.
Benchmark event: Healthcare Trip (already in its 7th edition). Daniel and team have close access to management, hosting Non-Deal Road Shows with all thehealthcare companies under coverage during 2013. Daniel also conducted the 7th Healthcare Trip with all listed companies.
Coverage beyond Brazil. Besides the coverage in Brazil, Daniel sponsors the coverage of Genomma in Mexico and ILC and Cruz Blanca Salud in Chile.
Coverage List Corporate Access
HE
ALT
HC
AR
EH
EA
LT
HC
AR
EDaniel Gewehr (Sector Head)Daniel Gewehr (Sector Head)
Sao Paulo, Brazil
(+55) 11 3012 5787 | dhgewehr@santander.com.br
Bruno Giardino CFA, Brazil
(+55) 11 3012 5914
bgiardino@santander.com.br
Francisco Echeverria, Chile
(+56) 22 336 3358
fecheverria@santander.cl
Coverage: DASA | Fleury | OdontoPrev | Qualicorp | Cruz Blanca Salud | Inversiones La Construcción | Genomma LabCoverage: DASA | Fleury | OdontoPrev | Qualicorp | Cruz Blanca Salud | Inversiones La Construcción | Genomma Lab
Reinaldo Santana, Mexico
(+52) 55 5269 1920
rsantana@santander.com.mx
Latin American Equities
Best Recent Calls:
Anticipating structural changes and turnarounds. 2013 was a turnaround year for the sector, with stocks going up significantly during the second half of the yearafter a long period of underperfomance. We were able to identify the trend and upgrade the sector in the middle of the year, enjoying most of the outperformance.
Alerting investors on Vale. In a sequence of roadshows during the year it become clear to us that the main factor driving Vale's shares was the top-down view ratherthan bottom up. With that, in spite of the company's good fundamentals and management achievements, we were able to alert investors about our skepticism on thestock given the negative expectations about iron ore prices and China.
Corporate Access:
During the year we organized some meetings with company CFOs, including those of Gerdau, Usiminas, and Magnesita.
Coverage List Corporate Access
ME
TA
LS
&M
ININ
GM
ETA
LS
&M
ININ
GFelipe Reis, Sector HeadFelipe Reis, Sector Head
Sao Paulo, Brazil
(+55) 11 3012 5758 | ffreis@santander.com.br
Alex Sciacio CFA, Brazil
(+55) 11 3012 5870
azsciacio@santander.com.br
Rodrigo Ordoñez, Chile
(+56) 22 336 3358
rordonez@santander.cl
Coverage: Buenaventura | CAP | CSN | Gerdau | Grupo Mexico | Magnesita | Siderar | Southern Copper | SQM | Ternium | Usiminas | Vale | VolcanCoverage: Buenaventura | CAP | CSN | Gerdau | Grupo Mexico | Magnesita | Siderar | Southern Copper | SQM | Ternium | Usiminas | Vale | Volcan
Walter Chiarvesio, Argentina
(+54) 11 4341 1564
wchiarvesio@santaderrio.com.ar
Latin American Equities
Best Recent Calls:
Early bird on IEnova in Mexico: Initiated coverage in mid-2013 with a strong-conviction Buy rating and the highest target price in the Street based on its strongfundamentals, defensive growth, and attractive non-energy-reform related opportunities. The stock has outperformed the Mexican Bolsa by 40% since ourinitiation report entitled The Right Stock, at the Right Time.
Ultrapar as Top Pick in Brazil: Reiterated the stock as our top pick in April 2013 based on the differentiated event with Ultrapar’s CEO (first meeting ever withinvestors in Rio); the stock hasoutperformed the Brazilian Bovespa by 17% since our report.
Braskem in Brazil: Upgraded the stock to Buy in April 2013 based on strong international spreads, a weakening BRL, and solid volumes; the stock hasoutperformed the Brazilian Bovespa by 16% since our upgrade.
Corporate Access:
Varied corporate access, including road shows in different geographic areas with CEO of Petrobras, CEO of Ultrapar, CEO of Queiroz Galvao, CEO of Sete Brasil,CFO of Allesat, as well as events with key industry associations: first meeting of President of Sindicom with investors in 2014; President of Abiplast, among others.
Coverage List Corporate Access
OIL
,G
AS
&P
ET
RO
CH
EM
ICA
LS
OIL
,G
AS
&P
ET
RO
CH
EM
ICA
LS
Christian Audi (Sector Head)Christian Audi (Sector Head)
New York, USA
(+1) 212 350 3991 | caudi@santander.us
Gustavo Allevato, Brazil
(+55) 11 3012 6042
gallevato@santander.com.br
Walter Chiarvesio, Argentina
(+54) 11 4341 1564
wchiarvesio@santaderrio.com.ar
Coverage: Braskem | Ecopetrol | HRT | IEnova | Lupatech | OGX | Pacific Rubiales | Petrobras | Queiroz Galvão E&P | Tenaris | UltraparCoverage: Braskem | Ecopetrol | HRT | IEnova | Lupatech | OGX | Pacific Rubiales | Petrobras | Queiroz Galvão E&P | Tenaris | Ultrapar
Latin American Equities
Best Recent Calls:
Klabin: perfectly timing the equity offering overhang and share rebound. Our out-of-consensus negative read on the conditions proposed for Klabin’s equityoffering proved correct, and the stock declined 20% since the announcement in June. In August, with the stock reaching two-year lows, we upgraded Klabin to Buy,as we understood that the overhangs were already fairly priced in. Since the report, the stock price increased 25%.
Fibria: curbing market enthusiasm on pulp prices. After hosting a meeting with Fibria’s CFO and commercial director, we reiterated our cautious view on the stock,which was trading close to four-year highs based on the expectations that pulp prices would rise further. Our counter-consensus view materialized, pulp pricescorrected, and Fibria’s ADR’s declined 18%.
Suzano: a farsighted call on delayed capex and challenging FCF outlook. Back in September, we were early birds in highlighting Suzano’s delayed capex issuesand flagged that consensus was too bullish on 2014 FCF estimates—a view that indeed was borne out in March, when a 60% higher-than-consensus capex wasannounced. Since then, Suzano has consistently underperformed the Ibovespa and its main peers.
Duratex: pounding the table on unjustified stock underperformance. Following our meeting with Duratex’s management at Santander’s Brazil Conference inAugust, we reiterated our Buy rating, as the stock’s steep 20% decline was unjustified. Three weeks after our report, the stock had rebounded 20%.
Coverage List Corporate Access
PU
LP
&F
OR
ES
TP
RO
DU
CT
SP
UL
P&
FO
RE
ST
PR
OD
UC
TS
Alex Sciacio, CFA (Sector Head)Alex Sciacio, CFA (Sector Head)
Sao Paulo, Brazil
(+55) 11 3012 5870 | azsciacio@santander.com.br
Felipe Reis, Brazil
(+55) 11 3012 5758
ffreis@santander.com.br
Rodrigo Ordoñez, Chile
(+56) 22 336 3358
rordonez@santander.cl
Coverage: CMPC | Copec | Duratex | Fibria | Klabin | SuzanoCoverage: CMPC | Copec | Duratex | Fibria | Klabin | Suzano
Latin American Equities
Best Recent Calls:
EZTec as a high-quality asset has paid off. In early 2013 we named EZTec as our top pick among the Brazilian homebuilders due to still inexpensive valuation vis-à-vis its profitability level and the expected pickup in earnings driven mainly by the EZTowers project and reliable execution. By November, 2013, the stock was up26% YTD, at which point we downgraded the stock purely on rich valuation. After the downgrade the stock declined 13% by year-end.
Increases in TP for Fibra Uno and Vesta. In 1Q14 we published reports on Fibra Uno and Vesta, reinforcing our positive view on both names. We believe Fibra Unowill grow as it integrates properties and continues with organic growth. We expect Vesta to grow as it spends cash still available from its last follow-on to develop itspipeline, which includes a major project with Nissan.
Corporate Access:Timely corporate access/events. Among the events we hosted in 2013 we highlight: (i) Lunch meeting with PDG’s CEO, Mr. Carlos Piani: The event took placeduring a critical period in the company’s restructuring process, providing timely information on PDG’s turnaround and short-term outlook; (ii) Road show with MRV’s IRDirector, Ms. Monica Simão: Hosted in September, when MRVE3 began to outperform the market due to improved results, the road show clarified skeptical investors’inquiries about the company’s earnings recovery and intended pace of growth; and (iii) Road show with CEF: following much noise concerning the discontinuation ofthe French amortization system in mortgage origination, we were on the road with CEF to separate untruths from facts as well as to provide an update on thedevelopment of MCMV program.
Property tour in Mexico City: We had a property tour in January of 2014, which included properties of Fibra Macquarie, Fibra Terrafina, and Fibra Danhos; the tourwas useful to a major European client in making an investment decision.
Coverage List Corporate Access
RE
AL
ES
TA
TE
RE
AL
ES
TA
TE
Fabiola Gama / Toe MatsumuraFabiola Gama / Toe Matsumura
Mexico City, Mexico
(+52) 55 5257 8172
tmatsumura@santander.com.mx
São Paulo, Brazil
(+55) 11 3012 7414
fpgama@santander.com.br Renan Manda, Brazil
(+55) 11 3012 6535
rmanda@santander.com.br
Jose Antonio Parra, Mexico
(+52) 55 5269 1904
japarrat@santander.com.mx
Coverage: BR Malls | BR Properties | Cyrela Brazil Realty | Direcional Engenharia | Even | EZ Tec | Fibra Uno | Helbor | Iguatemi | MRV Engenharia |Multiplan | PDG Realty | Rodobens | Rossi Residencial | Tecnisa | Vesta
Coverage: BR Malls | BR Properties | Cyrela Brazil Realty | Direcional Engenharia | Even | EZ Tec | Fibra Uno | Helbor | Iguatemi | MRV Engenharia |Multiplan | PDG Realty | Rodobens | Rossi Residencial | Tecnisa | Vesta
Latin American Equities
Best Recent Calls:
We anticipated the sector de-rating in Brazil. In our December 12, 2013, Brazil Retail & Consumer Goods report, Uncertainties to Continue for a While Longer, werevised our sector outlook and highlighted our negative view on the consumption environment in Brazil for 2014. We also noted the demanding valuation at which moststocks were trading and we recommended selectivity. In February this year, retailers strongly underperformed, followed by a de-rating, with the sector’s average 2014EP/E dropping from 19x to 16x.
We prefer Mexico over Brazil—Liverpool and Lojas Americanas are our top picks. We recently published the report Mariachi or Samba—Dancing to DifferentBeats in which we highlight our more constructive view on Mexico over Brazil, as we expect economic activity to recover throughout 2014, especially in the second halfof the year. Our top pick in the region is Liverpool, as we think this department store chain is well positioned to take advantage of the positive structural changes in theMexican apparel segment. In Brazil, our top pick is Lojas Americanas, as we believe this Brazilian retail chain’s model provides one of the best alternatives for thechallenging economic environment the country is experiencing. We like the company´s defensive profile (resilient sales mix and low dependence on credit) and itstrack record of good results.
Corporate Access:We hosted a conference with listed and nonlisted retailers. The event allowed buy-side analysts to interact with companies that usually do not speak to theinvestor community.
Coverage List Corporate Access
RE
TA
ILIN
GR
ETA
ILIN
GJoão Mamede (Sector Head)João Mamede (Sector Head)
Andres Soto, USA
(+1) 212 407 0976
asoto@santander.us
Bruno Taveira, Brazil
(+55) 11 3553 9602
btaveira@santander.com.br
Mauricio Serna, Mexico
(+52) 55 5269 1931
msernav@santander.com.mx
Ronaldo Kasinsky
(+55) 11 3553 2396
rkasinsky@santander.com.br
Sao Paulo, Brazil
(+55) 11 3553 0699
mamede@santander.com.br
Reinaldo Santana, Mexico
(+52) 55 5269 1920
rsantana@santander.com.mx
Coverage: Almacenes Exito | Alsea | B2W | CBD | Cencosud | Chedraui | Cia Hering | Comerci | Falabella | Grupo Famsa | Grupo Sanborns | Hypermarcas |IMC | Kimberly Clark | Liverpool | Lojas Americanas | Lojas Renner | Natura | Ripley | Saraiva | Soriana | Sports World | Unicasa Móveis | ViaVarejo | Walmex
Coverage: Almacenes Exito | Alsea | B2W | CBD | Cencosud | Chedraui | Cia Hering | Comerci | Falabella | Grupo Famsa | Grupo Sanborns | Hypermarcas |IMC | Kimberly Clark | Liverpool | Lojas Americanas | Lojas Renner | Natura | Ripley | Saraiva | Soriana | Sports World | Unicasa Móveis | ViaVarejo | Walmex
Latin American Equities
Best Recent Calls:
The go-to team to understand corporate events, including the Oi-PT amalgamation and the potential sale of TIM Brasil. We closely analyzed and have beensuccessfully guiding investors in understanding the intricacies of the main corporate events in the sector. We first detected the major side effects on all parties of theproposed Oi-PT merger and have carefully guided investors on the non-obvious steps that may (or may not) lead to a potential M&A involving TIM Brasil through an in-market consolidation or through the entry of a new player.
The early bird on the TIM M&A news flow. We now have a more cautious stance. In late July we called investors’ attention to upcoming (September) changes inTelecom Italia’s controlling group (Telco) that could led to M&A noise on TIM Brasil. From its low ~R$8/share in late July, TIMP3 rose almost 60% through late January.We grew more cautious on the stock before the peak price on the grounds that the intricacies of doing an in-market consolidation deal (where the most value could beadded vs. entry of a newcomer) would make it unlikely to materialize.
Corporate Access:
Custom-made and out-of-the-box corporate access. We moved away from the main tream large/group events and shifted our corporate strategy focus to small andcustom-designed meetings with key industry specialists (in the telecom and tech sectors), selecting for these meetings company officials, legal/fiscal advisors, andprivate companies.
Coverage List Corporate Access
TE
LE
CO
M,M
ED
IA&
TE
CH
NO
LO
GY
TE
LE
CO
M,M
ED
IA&
TE
CH
NO
LO
GY
Valder Nogueira (Sector Head)Valder Nogueira (Sector Head)
Sao Paulo, Brazil
(+55) 11 3012 5747 | jvalder@santander.com.br
Bruno Mendonça, Brazil
(+55) 11 3012 5759
brmendonca@santander.com.br
Rodrigo Ordoñez, Chile
(+56) 22 336 3358
rordonez@santander.cl
Walter Chiarvesio, Argentina
(+54) 11 4341 1564
wchiarvesio@santaderrio.com.ar
Coverage Telecom: America Movil | Entel | Oi | Telecom Argentina | Telefonica Brasil | TIM Participações
Coverage Media: Televisa
Coverage Technology: Linx | Positivo Informatica | Sonda | Totvs
Coverage Telecom: America Movil | Entel | Oi | Telecom Argentina | Telefonica Brasil | TIM Participações
Coverage Media: Televisa
Coverage Technology: Linx | Positivo Informatica | Sonda | Totvs
Latin American Equities
Coverage List Corporate Access
TR
AN
SP
OR
TA
TIO
NT
RA
NS
PO
RTA
TIO
NPedro Balcão (Sector Head)Pedro Balcão (Sector Head)
Sao Paulo, Brazil
(+55) 11 3012 5765 | pbalcao@santander.com.br
Ana Reynal CFA, Mexico
(+52) 55 5269 1900
areynal@santander.com.mx
Bruno Amorim CFA, Brazil
(+55) 11 3012 6016
bamorim@santander.com.br
Coverage: ALL | Arteris | Asur | CCR | Copa | Ecorodovias | Embraer | GAP | Gol | JSL | LatAm | Localiza | OHL Mexico | OMA | Santos Brasil | Tegma |
Triunfo | Volaris
Coverage: ALL | Arteris | Asur | CCR | Copa | Ecorodovias | Embraer | GAP | Gol | JSL | LatAm | Localiza | OHL Mexico | OMA | Santos Brasil | Tegma |
Triunfo | Volaris
Jose Antonio Parra, Mexico
(+52) 55 5269 1904
japarrat@santander.com.mx
Euro-LatAm edge knowledge. Not only do we have a consistent analysis across LatAm, but we also work closely with our Infrastructure team in Europe.
Best Recent Calls:.Infrastructure: During the year, we have insisted on two calls: (i) that toll roads are bond proxies and therefore there was a significant risk for Brazilian names;and (ii) Overweight Mexico vs. Underweight Brazil, based on different momentum in long-term interest rates in the twocountries and expensive valuations in Brazil (IRR below risk free) vs. reasonable valuations in Mexico (IRR above Ke). Thus, we have maintained a negative stance onCCR and a positive one on OHL Mexico.Mexican Airports: We downgraded Mexican airports in January 2013 and then upgraded the sector (with an in-depth report) in November 2013, with OMA as top pick.We find GAP’s valuation reasonable but were concerned about the conflict among shareholders; with respect to ASUR, we identified a real risk of tariff falls and a richvaluation.Negative on airlines due to the challenging macro scenario that, in our view, should more than offset the correct conservative management stance on capacity. Copawas the exception. It was always our only Buy. We were the only analysts to publish a report on Volaris alerting the market to a price war in Mexico. Please see ourinitiation of coverage last December.Negative on Santos Brasil, due to a different view on competition and renewal of concession from consensus.Positive on Localiza. Throughout the year, we kept our 2013 earnings estimate clearly above the consensus, which proved correct as lower revenue was offset bylower depreciation, lower-than-expected financials, and a recovery in car sales in 2H13.Downgrade of Tegma in January 2013 was in anticipation of a very bad performance of Integrated logistics. We upgraded it to Buy on January 9, 2014.JSL: In-depth initiation of coverage in December 2012 with a Buy rating.Corporate Access:Access to top management and benchmark events, including the one EuroLatam InfraConference on the Street. During 2013, we had several interesting events,including: (i) a Brazilian Infrastructure trip, including site visits and meetings with top management and government officials; (ii) the VII EuroLatam InfraConference,with the presence of main companies in the sector in LatAm and Europe.(iii) At our Cancun conference, almost all LatAm Transportation and Infra companies were present and represented by top management.
Latin American Equities
Coverage List Corporate Access
Best Recent Calls:
Our out-of-consensus call of playing the Fed relief rally following the tapering talks correction in June by overweighting Brazil vs. Mexico generated outperformance ofmore than 26% in USD terms through October 2013. Our more negative than consensus view on Chilean equities due to political volatility and weak flow dynamicsmaterialized, as the country was one of the worst-performing LatAm markets of 2013.
Underweight stance toward consumption sectors toward end of 1H13 due to stretched valuations and macro headwinds, especially for food retailers in Mexico anddiscretionary retailers in Brazil, was consistent with strong underperformance. Strong overweight in education and investment-related sectors, such as cement &construction and infrastructure, materialized, as they were the best-performing sectors in 2013.
Our staple publication LatAm All Stars, in which we outline our top 10 large/mid- and small-cap top picks, outperformed the benchmark by more than 9% in 2013. Top-performing calls were Gruma, IEnova , Bancolombia, and Cementos Argos. On the quantitative front, we accurately predicted vast majority of additions/deletions forrebalancing of MSCI LatAm indices.
Outlook:
The top-down view for LatAm remains challenging in the short term. As outlined in our Funds & Flows weekly reports, our case for more supportive equity flows in2H14 remains, as better relative valuations in EM vs. DM coupled with lower headline risk stemming from China should continue to serve as a catalyst for investors,especially among institutional foreign investors that remain underweight LatAm.
We continue to prefer Mexico and Colombia to Brazil and Peru. We remain neutral on Chile and Argentina.
Top Picks:
Ambev, Banorte, Braskem, IEnova, Ultrapar, Copa, Gruma, OMA, and Parque Arauco.
LA
TA
MS
TR
AT
EG
YL
ATA
MS
TR
AT
EG
YJesus Gomez (Head of LatAm Research, Strategist)Jesus Gomez (Head of LatAm Research, Strategist)
New York, USA
(+1) 212 350 3992 | jgomez@santander.us
Andres Soto, USA
(+1) 212 407 0976
asoto@santander.us
Arturo Espinosa, Mexico
(+52) 55 5269 1924
aespinosa@santander.com.mx
Daniel Gewehr, Brazil
(+55) 11 3012 5787
dhgewehr@santander.com.br
Francisco Errandonea, Chile
(+56) 22 336 3357
ferrando@santander.cl
Hector Chavez, Mexico
(+52) 55 5269 1925
hchavez@santander.com.mx
Walter Chiarvesio, Argentina
(+54) 11 4341 1564
wchiarvesio@santaderrio.com.ar
João Noronha, Brazil
(+55) 11 3012 5734
jonoronha@santander.com.br
Stefano Rizzi, USA
(+1) 212 350 3979
srizzi@santander.us
Latin America Research
Best Recent Calls:
Hold recommendations on Southern Copper, GMEXICO, and Volcan.
Buy recommendation on Argentina following electoral results in mid-term elections. Top picks: Banco Macro and YPF.
2013 Sector Outlook:
Cautious view on base metal companies.
Coverage List Corporate Access
AR
GE
NT
INA
ST
RA
TE
GY
AR
GE
NT
INA
ST
RA
TE
GY
Walter Chiarvesio (Strategist)Walter Chiarvesio (Strategist)
Buenos Aires, Argentina
(+54) 11 4341 1564 | wchiarvesio@santaderrio.com.ar
Christian Audi, USA
(+1) 212 350 3991
caudi@santander.us
Boris Molina, USA
(+1) 212 350 3977
bmolina@santander.us
Rodrigo Park, Argentina
(+54) 11 4341 1080
rpark@santanderrio.com.ar
Latin America Research
Best Recent Calls:
Differentiated thematic reports. Daniel, who has experience as a buy-side analyst, produced unique strategy reports such as Hey Competition, Can You Jump aWide Moat?Our Approach to Competitive Advantages of Listed Companies, offering a different perspective regarding investment screening of Brazilian listedcompanies. Daniel also published the reports Moving out of Comfort Zone and Playing the Hurdle Races, where he suggested out-of consensus picks and scenariosfor Brazil equities.
Adopting a more cautious view on Brazilian equity market since 2013 has paid off. Daniel built a recommended portfolio which outperformed the benchmark by16 pp in LTM, helped by its bottom-up construction acquired in his 13 years’ experience in sector coverage.
Complete line of strategy products. Daniel offers one-stop-shop coverage of Brazilian strategy, with products including the Chart Book, thematic reports,Quantitative Portfolio, Small Caps Portfolio, Brazil Investor trip, and Weekly News Flow, among others.
Corporate Access:
During 2013-14, the Brazil Equity Strategy team has provided investors with the possibility to meet (1) political experts (Eurasia Group, Marcelo Marinis, and AlbertoAlmeida); (2) industry scholars (Claudio Frischtak); and (3) a range of cross-checks and industry sources, such as (a) IBOPE (Brazilian specialist on shopping malls);and (b) Mr. Marcelo Cherto (retail franchise consultant).Santander’s Strategy Team also hosted the 7th Brazil Trip, a unique investor event focused on nonlisted sources in order to cross-check main market sectors.
Coverage List Corporate Access
BR
AZ
ILS
TR
AT
EG
YB
RA
ZIL
ST
RA
TE
GY
Daniel Gewehr (Strategist)Daniel Gewehr (Strategist)
Sao Paulo, Brazil
(+55) 11 3012 5787 | dhgewehr@santander.com.br
João Noronha, Brazil
(+55) 11 3012 5734
jonoronha@santander.com.br
Pedro Balcão Brazil
(+55) 11 3012 5765
pbalcao@santander.com.br
Valder Nogueira, Brazil
(+55) 11 3012 5747
jvalder@santander.com.br
Christian Audi, USA
(+1) 212 350 3991
caudi@santander.us
Latin American Equities
Coverage List Corporate Access
Best Recent Calls:
On June 20, 2013, we rated Endesa as Buy, on our assumption that hydrology had limited downside, and that even in the case of a dry year, Endesa’s resultswere not going to suffer, because of the entry of new efficient coal capacity and the disciplined commercial policy of the company. Back then this was an out-of-consensus call as, historically, Endesa’s results have had a correlation with the level of rains in Chile. We have reiterated the call on a quarterly basis, and sincethen the stock has been one of the best performers in the market, outperforming the local benchmark by 12%.
We offer on-the-ground coverage of the Chilean elections since the primary elections, with a series of reports on the candidates’ main proposals.
Corporate Access:
We organized the XV edition of our CEO conference in Santiago , which we have now expanded with additional days in Lima, Bogotá, and Medellin. We hosted 26events, such as meetings with CEOs, government officials, and consultants, as well as site visits, with a reduced group of international investors..
CH
ILE
ST
RA
TE
GY
CH
ILE
ST
RA
TE
GY
Francisco Errandonea (Strategist)Francisco Errandonea (Strategist)
Santiago, Chile
(+56) 22 336 3357 | ferrando@santander.cl
Nicholas Schild, Chile
(+56) 22 336 3361
nschild@santander.cl
Rodrigo Ordoñez, Chile
(+56) 22 336 3358
rordonez@santander.cl
Francisco Echeverria, Chile
(+56) 22 336 3358
fecheverria@santander.cl
Latin American Equities
Coverage List Corporate Access
ME
XIC
OS
TR
AT
EG
YM
EX
ICO
ST
RA
TE
GY
Hector Chavez (Strategist)Hector Chavez (Strategist)
Mexico City, Mexico
(+52) 55 5269 1925 | hchavez@santander.com.mx
Arturo Espinosa, Mexico
(+52) 55 5269 1924
aespinosa@santander.com.mx
David Franco, Mexico
(+52) 55 5269 1932
dafranco@santander.com.mx
Luis Miranda CFA, Mexico
(+52) 55 5269 1926
lmiranda@santander.com.mx
Reinaldo Santana, Mexico
(+52) 55 5269 1920
rsantana@santander.com.mx
Ana Reyna CFA, Mexico
(+52) 55 5269 1900
areynal@santander.com.mx
Toe Matsumura, Mexico
(+52) 55 5257 8172
tmatsumura@santander.com.mx
Best Recent Calls:Evaluation of 2013 strategy: During the beginning of 1H13, we recommended a cautious investment strategy due to high valuation and increased downside risks.The Mexican IPC registered a decrease of 18% in 1H13 from a maximum of around 46,000 points to a minimum 37,517 points. After reaching this minimum level anddespite valuations remaining expensive, we called for a more aggressive investment strategy. In the second half of the year, the IPC rebounded 14% to 42,727 pointsby year end.
During 2013, our Mexican Model Portfolio outperformed the Mexican stock market by 331 bps (with a positive 1.07% return vs. -2.24% for the IPC).
In our January 2014 strategy report (Market View: Volatility Risks Suggest a Defensive Strategy), we highlighted that 2014 would be a complicated year for Mexicanequities because of stubbornly high valuations and the volatility in GEM currencies and stock markets that the U.S. Fed’s tapering process would generate. To date,the Mexico IPC Index is down 6.9% in U.S. dollars.
Since mid-2013, we have been very negative on the TMT sector due to the strong competitive environment facing AMX in its various markets and because ofregulatory risk in Mexico. We also have been quite cautious on the food retailer sector due to a very weak consumer environment since mid-2013 and the expectednegative effect that the fiscal reform would have on the Mexican consumer environment in 1H14. These two sectors have underperformed the Mexican Mexico IPC inthe past 12 months.
We have had strong conviction on Fibra Uno, which despite a significant correction in 1H13 due to higher interest rates, outperformed the Mexican market by 1,070bps. In 1Q14, Fibra Uno also outperformed the Mexican market by 514 bps.
Latin American Equities
Best Recent Calls:
Cemex Latam Holdings: We initiated coverage of CLH with a Buy rating in April 2013. We argued that CLH deserved a valuation premium to Cementos Argos at atime when then market had an opposite view. Three months after that, CLH had outperformed CEMARGOS by 11%.
Sector piece on Colombian cement companies. In October 2013, we introduced our YE2014 target prices for CLH and CEMARGOS and named those stocks ourtop picks in Colombia. CLH’s stock has rallied 11% since then.
Almacenes Exito: We downgraded the stock to Hold in July 2013. Over the next six months, the stock performed in line with the COLCAP index. On March 3, 2014,we upgraded to Buy, arguing that the stock was undervalued vs. other retailers in the region. The stock has rallied 10% since our upgrade.
Corporate Access:
During the week of August 26, we organized the XV Annual Andean Trip. A five-day agenda included 25 meetings with the CEOs and CFOs of the mostrepresentative companies, government officials, and political and economic analysts in Colombia, Peru, and Chile.
During the year we have organized several bespoke trips to Colombia and Peru.
Coverage List Corporate Access
NO
RT
HA
ND
EA
NC
OU
NT
RIE
SS
TR
AT
EG
YN
OR
TH
AN
DE
AN
CO
UN
TR
IES
ST
RA
TE
GY
Andres Soto (Strategist)Andres Soto (Strategist)
New York, USA
(+1) 212 407 0976| asoto@santander.us
Luis Miranda CFA, Mexico
(+52) 55 5269 1926
lmiranda@santander.com.mx
Christian Audi, USA
(+1) 212 350 3991
caudi@santander.us
Boris Molina, USA
(+1) 212 350 3977
bmolina@santander.us
Latin America Research
Corporate Debt
Mariana Emsenhuber
Isidro Arrieta
Victor Schmutzler
Aaron HolsbergHead of LatAm Credit Research
Coverage List Corporate Access
CR
ED
ITR
ES
EA
RC
HC
RE
DIT
RE
SE
AR
CH
Latin America Research
Best Recent Calls:
We Overweighted Braskem bonds (’20, ’21, ’22, and ’41), based on our conviction that Braskem is an improving credit whose investment-grade rating is increasinglysecure. Recent results have indeed shown steady improvement, and this remain a core pick.
We Overweighted Gerdau bonds (’17, ’20, ’21, and ‘23), similarly considering it cheap to investment-grade peers and in view of its improving credit metrics and steadynet debt reduction. Then the bonds tightened 50-75 bp and we took our gain, moving this to Market Weight in February 2014.
We Underweighted GVO bonds (’18 and ’22) in May 2013, and in second half 2014 these bonds fell from 90-95 to the current level of 55-60 on severe credit concerns.Our main sector pieces on LatAm credit were the briefing books prepared in September following our research trip to Mexico and in October following our AndeanInvestor Conference.
Corporate Access:
Events included investor trips to Brazil (April), Mexico (September), and Peru and Chile (October), as well as breakfast with Javer and dinner with Geo in March forMexican Homebuilding Day, and two forums where investors met with senior analysts from Moody’s and S&P.
Coverage List Corporate Access
CO
RP
OR
AT
ED
EB
TC
OR
PO
RA
TE
DE
BT
Aaron Holsberg (Sector Head)Aaron Holsberg (Sector Head)
New York, USA
(+1) 212 350 0978 | aholsberg@santander.us
Isidro Arrieta, USA
(+1) 212 407 0982
iarrieta@santander.us
Mariana Emsenhuber, Brazil
(+55) 11 3012 5776
memsenhuber@santander.com.br
Victor Schmutzler, Brazil
(+55) 11 3553 2529
vschmutzler@santander.com.br
Coverage: Arauco | Arcor | Grupo Bimbo | Braskem | Camposol | Cemex | Cencosud | CMPC | CNO | Colbun | Copeinca | CSN | E-CL | EEB | Fibria | Gerdau |GVO | ICA | MABE | Marfrig | Minerva | ODB Drilling | Pacific Rubiales | Sigma | Suzano | Usiminas | Votorantim
Coverage: Arauco | Arcor | Grupo Bimbo | Braskem | Camposol | Cemex | Cencosud | CMPC | CNO | Colbun | Copeinca | CSN | E-CL | EEB | Fibria | Gerdau |GVO | ICA | MABE | Marfrig | Minerva | ODB Drilling | Pacific Rubiales | Sigma | Suzano | Usiminas | Votorantim
Latin America Research
MA
CR
OS
TR
AT
EG
YM
AC
RO
ST
RA
TE
GY
Adriana Dupita
Cristiano Souza
David Franco
Fernanda Consorte
Hector Chavez
Juan Pablo Cabrera
Marcela Bension
Martin Mansur
Mauricio Molan
Rafael Camarena
Rodrigo Park
Salvador Orozco
Sergio Galvan
Tatiana Pinheiro
Rates & FX (Local-Market Strategy)
Alejandro Estevez Bretón
Alejandro Rivera
David Franco
David Duong
Juan Pablo Cabrera
Economics
Alejandro Estevez BretónHead of LatAm Macro Strategy
Coverage List Corporate Access
Latin America Research
EC
ON
OM
ICS
EC
ON
OM
ICS
New York, USA
(+1) 212 350 3917 | aestevez@santander.us
Alejandro Estevez BretónAlejandro Estevez Bretón
Best Recent Calls:
Our Brazilian team consistently had a lower-than-consensus GDP forecast for 2013 starting in late 2012 and almost matched the actual number (2.30% vs. 2.28%actual).
Our Mexico team started cutting its GDP forecasts in 2Q13, earlier than the consensus, based on the poor performance of some sectors, and had a few sizablereductions later in the year, with the final forecast virtually meeting the actual number (1.2% vs. 1.1%).
Our Mexico team anticipated the first Banxico rate cut early in February, way before the consensus started to move, effectively matching both the timing andmagnitude of the actual move (50-bp cut in March 2013).
Macro forecasts for USD/BRL were quite accurate in 2013, closely tracking both the quarterly and end-of-year numbers (ranked 2nd among 37 contributors onBloomberg).
Macro forecasts for USD/ARS were quite accurate in 2013, closely tracking both the quarterly and end-of-year numbers (ranked 1st among 17 contributors onBloomberg).
Coverage List Corporate Access
Hector Chavez, Mexico
(+52) 55 5269 1925
hchavez@santander.com.mx
Juan Pablo Cabrera, Chile
(+56) 22 336 3389
jcabrera@santander.cl
Mauricio Molan, Brazil
(+55) 11 3012 5724
mmolan@santander.com.br
Latin America Research
EC
ON
OM
ICS
(co
nti
nu
ed
)E
CO
NO
MIC
S(c
on
tin
ued
)
Coverage List Corporate Access
Adriana Dupita, Brazil
(+55) 11 3012 5726
adupita@santander.com.br
Cristiano Souza, Brazil
(+55) 11 3012 5180
cristiano.souza@santander.com.br
David Franco, Mexico
(+52) 55 5269 1932
dafranco@santander.com.mx
Fernando Consorte, Brazil
(+55) 11 3012 7114
fernanda.consorte@santander.com.br
Carlos Martin Mansur, Argentina
(+54) 11 4341 1096
cmansur@santanderrio.com.ar
Rafael Camarena, Mexico
(+52) 55 5269 1927
rcamarena@santander.com.mx
Rodrigo Park, Argentina
(+54) 11 4341 1080
rpark@santanderrio.com.ar
Sergio Galvan, Argentina
(+54) 11 4341 1728
sgalvan@santanderrio.com.ar
Tatiana Pinheiro, Brazil
(+55) 11 3012 5179
tatiana.pinheiro@santander.com.br
Salvador Orozco, Mexico
(+52) 55 5269 1933
sorozco@santander.com.mx
Latin America Research
RA
TE
S&
FX
(LO
CA
L-
MA
RK
ET
ST
RA
TE
GY
)R
AT
ES
&F
X(L
OC
AL
-M
AR
KE
TS
TR
AT
EG
Y)
Best Recent Calls:
FX:
(1) We went short BRL/ long MXN (opened on January 30 and closed on April 1 for a 3.8% return) on political consensus to push forward reforms in Mexico,while overall macro policy continued to deteriorate in Brazil. A partial resolution to the U.S. fiscal cliff and a substantial reduction in risks in Europe would helpthe MXN, while FX intervention would prevent BRL from moving below 2.
(2) We went short USD/BRL the next trading day after the Central Bank announced an FX intervention program (opened on August 23 and closed on September5 for a 2% return), as we thought the BRL had weakened too much and positioning was already far too crowded with long USD positions. We thought theintervention would be successful to reverse the recent losses seen in the BRL.
(3) We went long USD/COP (opened on September 24 and closed on November 12 for a 2% return), as the market seemed to move too quickly to price in thepossibility that BanRep would let its reserve accumulation program expire.
Bonds:
We bought Mexican MBonos Dec. ‘15s without FX hedge in November 2012 (opened on November 20, 2012, and closed it on September 5, 2013, for a return,including MXN gains, of 8.8%) given Banxico’s recent hawkish tone at the time, which we though would be reversed due to softening economic momentum andphasing out of the supply shock affecting inflation. Our view was that Banxico was likely to sound much less hawkish over coming months and might even opt for arate cut in 1H13.
Coverage List Corporate Access
New York, USA
(+1) 212 350 3917 | aestevez@santander.us
Alejandro Estevez BretónAlejandro Estevez Bretón
Alejandro Rivera, USA
(+1) 212 350 0734
arivera@santander.us
David Duong, USA
(+1) 212 404 0979
dduong@santander.us
Juan Pablo Cabrera, Chile
(+55) 22 336 3389
jcabrera@santander.cl
David Franco, Mexico
(+52) 55 5269 1932
dafranco@santander.com.mx
Latin America Research
Best Recent Calls:
September 2013: Detailed commentary on Argentina judicial proceedings and impact assessment , suggesting good short-term performance despite legal uncertainty.
Flagged potential for Venezuela to underperform after recent rally, given falling liquid reserves that could prompt issuance (PDVSA issued October 2013) and overalllack of economic policy implementation. Benchmark 27s dropped 10 pts in under two months after the recommendation
November 2013: Trade idea to rotate out of Brazil front end to Colombia front end (Sell Brazil 19s vs. Buy Colom 17s) just before Fitch upgrade of Colombia.
Coverage List Corporate Access
SO
VE
RE
IGN
DE
BT
SO
VE
RE
IGN
DE
BT
New York, USA
(+1) 212 350 3917 | aestevez@santander.us
Alejandro Estevez BretónAlejandro Estevez Bretón
Alejandro Rivera, USA
(+1) 212 350 0734
arivera@santander.us
David Duong, USA
(+1) 212 404 0979
dduong@santander.us
Juan Pablo Cabrera, Chile
(+55) 22 336 3389
jcabrera@santander.cl
David Franco, Mexico
(+52) 55 5269 1932
dafranco@santander.com.mx
Latin America Research
Latin American CEO Conference
Mexico Day
Healthcare Trip
Capital Goods Trip
Education Conference
Utilities Conference
Brazil Day
Mexico Day
Equity Conference
Annual Brazil Conference
Andean Trip
EuroLatAm Infrastructure & Utilities Conference
Corporate Access
Coverage List Corporate Access
Latin America Research
Latin American CEO ConferenceLatin American CEO Conference
LAWRENCE SUMMERS FELIPE CALDERÓN ERNESTO ZEDILLO
FERNANDO H. CARDOSO CARLOS SLIM LUIS VIDEGARAY
Coverage List Corporate Access
2014 LatAm Conference at a Glance
3,662 One-on-One Meetings
145 Participating Companies
367 Investors
Latin America Research
US ConferencesUS Conferences
Coverage List Corporate Access
Latin America Research
Europe ConferencesEurope Conferences
Coverage List Corporate Access
Latin America Research
Brazil ConferencesBrazil Conferences
Coverage List Corporate Access
Latin America Research
Brazil ConferencesBrazil Conferences
Coverage List Corporate Access
Latin America Research
Brazil ConferencesBrazil Conferences
Coverage List Corporate Access
Latin America Coverage List ( 1 of 3 )
Coverage ListCoverage List
Coverage List Corporate Access
Agribusiness Education Financials | Banks
Cosan Anhanguera Banco de ChileCosan Limited Estácio Banco do BrasilSão Martinho Kroton Banco MacroCapital Goods SER Educacional Banco PineAlfa Electric & Other Utilities BancolombiaAutometal AES Gener BanorteGrupo Carso AES Tiete BanregioIochpe Maxion Aguas Andinas BBVA FrancesMahle Metal Leve Alupar BCIMarcopolo Cemig BradescoMexichem Cesp CorpBancaRandon Colbun CredicorpRomi Comgas DaviviendaWeg Copasa GenteraCement & Construction Copel GF GaliciaAra CPFL Energia GF InbursaCementos Argos E-CL Grupo AvalCementos Pacasmayo Eletrobras IntercorpCemex Eletropaulo Itaú UnibancoCemex LatAm Holdings Endesa Chile ItaúsaCresud Energias do BrasilFerreycorp EnersisGeo EnevaHomex EquatorialICA IAMIrsa LightOHL Mexico Renova EnergiaParque Arauco SabespUrbi Taesa
TractebelTransmissao Paulista
Latin America Coverage List ( 2 of 3 )
Coverage ListCoverage List
Coverage List Corporate Access
Financials | Non Banks Food & Beverage (ctd) Oil, Gas & Petrochemicals
AFP Habitat JBS Braskem
BB Seguridade Marfrig Ecopetrol
BM&F Bovespa Minerva HRT
Bolsa Mexicana de Valores Pesquera Exalmar IEnova
Brasil Insurance Health Care Lupatech
CETIP Dasa OGX
Cielo Fleury Pacific Rubiales
Grupo Sura OdontoPrev Petrobras
Multiplus Qualicorp Queiroz Galvão E&P
Porto Seguro Cruz Blanca Salud Tenaris
Smiles Inversiones La Construcción Ultrapar
Sul America Genomma Lab Pulp & Forest Products
Valid Metals & Mining CMPC
Food & Beverage Buenaventura Copec
Ambev CAP Duratex
Andina CSN Fibria
Arca Continental Gerdau Klabin
Brasil Foods Grupo Mexico Suzano
CCU Magnesita Real Estate
Coca-Cola FEMSA Siderar BR Malls
Concha y Toro Southern Copper BR Properties
FEMSA SQM Cyrela Brazil Realty
Gruma Ternium Direcional Engenharia
Grupo Bimbo Usiminas Even
Grupo Herdez Vale EZ Tec
Grupo Modelo Volcan Fibra Uno
Grupo Nutresa Helbor
Latin America Coverage List ( 3 of 3 )
Coverage ListCoverage List
Analyst ListCoverage ListCoverage List Corporate Access
Real Estate (ctd) Retail & Consumer Goods (ctd) Transportation
Iguatemi Lojas Americanas ALL
MRV Engenharia Lojas Renner Arteris
Multiplan Natura Asur
PDG Realty Ripley CCR
Rodobens Saraiva Copa Holdings
Rossi Residencial Soriana Ecorodovias
Tecnisa Sports World Embraer
Vesta Unicasa Móveis GAP
Retail & Consumer Goods Via Varejo Gol
Almacenes Exito Walmex JSL
Alsea Telecom, Media & Technology LATAM Airlines
B2W America Movil Localiza
CBD Entel OMA
Cencosud Linx Santos Brasil
Chedraui Oi Tegma
Cia Hering Positivo Informatica Triunfo
Comerci Sonda Volaris
Falabella Telecom Argentina
Grupo Famsa Telefonica Brasil
Grupo Sanborns Televisa
Hypermarcas TIM Participações
IMC Totvs
Kimberly Clark
Liverpool
Santander Latin AmericaResearch Team
Head of LatAm Equities: Ignacio Mendive
CATEGORY: INDUSTRIES
SECTOR TEAM LEADER OTHER TEAM MEMBERS
Corporate Debt Aaron Holsberg Mariana Emsenhuber, Victor Schmutzler
Sovereign DebtAlejandro Estevez-Breton
Alejandro Rivera, David Duong, Juan Pablo Cabrera
Local Markets StrategyAlejandro Estevez-Breton
Alejandro Rivera, David Duong, Juan Pablo Cabrera
SECTOR TEAM LEADER OTHER TEAM MEMBERS
LatAm Sales Patryck Pimpao
Alex Pallin, Axel Timmermann , Carlos Prates, Fabio Faraggi,Fernando Sanchez, Geoffrey Knoell, Jose Acuna, MariaLopez Tolentino, Mirella Borin, Nico Drohojowsky, PabloOrvananos, Santiago Mosquera, Victoria Santaella
LatAm Trading Marcio SouzaAlejandro Chavez, Benson O´Hara, Christopher Cohane,Daniel Ciotti, Darrin Cummings, James Tallarico, JasonNardella, Maury Mischel, Michael Hill, Tomas Lyon
CATEGORY: FIXED INCOME
CATEGORY: COUNTRIES
SECTOR TEAM LEADER OTHER TEAM MEMBERS
Argentina Walter Chiarvesio
Brazil Daniel Gewehr João Noronha, Valder Nogueira
Chile Francisco Errandonea Francisco Echeverria, Nicolas Schild, Rodrigo Ordoñez
Mexico Hector ChavezAna Reynal, Arturo Espinosa, David Franco, Luis Miranda,Mauricio Serna, Reinaldo Santana, Toe Matsumura
North Andean Countries Andres Soto Boris Molina, Christian Audi, Luis Miranda
CATEGORY: SALES & TRADING
CATEGORY: ECONOMICS & STRATEGY
SECTOR TEAM LEADER OTHER TEAM MEMBERS
Agribusiness Christian Audi Gustavo Allevato
Capital Goods Daniel Gewehr João Noronha, Luis Miranda, Mauricio Serna
Cement & ConstructionToe Matsumura &Fabiola Gama
Andres Soto, Jose Antonio Parra, Renan Manda, RodrigoOrdoñez, Walter Chiarvesio
Electric & Other UtilitiesMaria CarolinaCarneiro
João Saad, Nicholas Schild, Thiago Silva, Walter Chiarvesio
Financials |Banks Boris Molina Henrique Navarro, Nicholas Schild, Renata Cabral
Financials | Nonbanks Boris Molina Henrique Navarro, Nicholas Schild, Renata Cabral
Food & Beverage Luis MirandaAndres Soto, Bruno Taveira, João Mamede, Mauricio Serna,Ronaldo Kasinsky
Healthcare Daniel Gewehr Bruno Giardino, Francisco Echeverría, Reinaldo Santana
Metals & Mining Felipe Reis Alex Sciacio, Rodrigo Ordoñez, Walter Chiarvesio
Oil, Gas & Petrochemicals Christian Audi Gustavo Allevato, Walter Chiarvesio
Pulp & Forest Products Alex Sciacio Felipe Reis, Rodrigo Ordoñez
Real EstateFabiola Gama &Toe Matsumura
Renan Manda, Jose Antonio Parra
Retailing Joao MamedeReinaldo Santana, Andres Soto, Bruno Taveira, MauricioSerna, Ronaldo Kasinsky
Telecom, Media &Technology
Valder NogueiraBruno Mendonça, Francisco Errandonea, Rodrigo Ordoñez,Walter Chiarvesio
Transportation Pedro Balcão Ana Reynal, Bruno Amorim
SECTOR TEAM LEADER OTHER TEAM MEMBERS
EconomicsAlejandro Estevez-Breton
Adriana Dupita, Cristiano Souza, David Franco, FernandaConsorte, Hector Chavez, Juan Pablo Cabrera, MarcelaBension, Martin Mansur, Mauricio Molan, Pablo Correa,Rafael Camarena, Rodrigo Park, Salvador Orozco, SergioGalván, Tatiana Pinheiro
Equity Strategy Jesus GomezAnders Soto, Arturo Espinosa, Daniel Gewehr, FranciscoErrandonea, Hector Chavez, João Noronha, Stefano Rizzi,Walter Chiarvesio
Santander Brazil ResearchTeam
When placing your votes for the All-Brazil Research team, please select the Team Leaders only.Once again, thank you for your consideration.
SECTOR TEAM LEADER OTHER TEAM MEMBERS
Agribusiness Christian Audi Gustavo Allevato
Capital Goods Daniel Gewehr João Noronha
Chemicals & Oil Christian Audi Gustavo Allevato
Education Bruno Giardino Daniel Gewehr
Electric & Other Utilities Maria Carolina Carneiro Thiago Silva, João Saad
Financials/Banks Henrique Navarro Boris Molina, Renata Cabral
Financial Nonbanks Henrique Navarro Boris Molina, Renata Cabral
Food & Beverage João MamedeRonaldo Kasinsky, Bruno Taveira,
Luis Miranda
Metals & Mining Felipe Reis Alex Sciacio
Pulp & Paper Alex Sciacio Felipe Reis
Retailing João MamedeRonaldo Kasinsky, Bruno Taveira,
Luis Miranda
Technology, Media &
TelecommunicationsValder Nogueira Bruno Mendonça
Transportation Pedro Balcão Reis Bruno Amorim
Category: INDUSTRIES
SECTOR TEAM LEADER OTHER TEAM MEMBERS
Economics Mauricio Molan
Adriana Dupita, Cristiano Souza, FernandaConsorte, Juan Pablo Cabrera, TatianaPinheiro
Equity Strategy Daniel Gewehr João Noronha, Jesus Gomez
Category: ECONOMICS & STRATEGY
SECTOR TEAM LEADER OTHER TEAM MEMBERS
Corporate Debt Victor SchmutzlerMariana Emsenhuber, Aaron Holsberg,Alejandro Estevez
Sovereign DebtAlejandro Estevez-Breton
Alejandro Rivera, Brendan Hurley, DavidDuong
Category: FIXED INCOME
SECTOR TEAM LEADER OTHER TEAM MEMBERS
Brazil Sales Fernando SanchezCarlos Prates, Mirella Borin, EduardoToledo
Brazil Trading Fernando Sanchez
Vito Madio Mastrorosa, Carlos AugustoFaria, Lucas Gonçalves, Daniel Ciotti, CesarTashiro , Vinicius Nogueira, Ana Paula VonHauenschild , Anderson Souza , DayanePereira , Fernando Ferez
Category: SALES & TRADING
p.43