GEA - Grupo Empresarial Antioqueño

Transcription

1 Equity Research BTG Pactual Global Research GEA - Grupo Empresarial SectorNote 14 March 2017 Dividends matter when you are a Holding company GEA - average dividend payment should increase by 8% YoY In the following weeks, Nutresa, Grupo Argos and Grupo Sura and their subsidiaries are expected to host their annual general shareholder meetings. Given the nature of Holding companies, its main cash flow stream comes from dividends paid from subsidiaries and the investment portfolios, so in this report we are trying to track how the dividends flow throughout the GEA group. The dividend proposals, subject to approval, imply, on average, an 8% YoY growth and a dividend yield of 2.24%. Grupo Nutresa (Neutral): Dividend yield is expected to reach 2.2% Daniel Guardiola Colombia - BTG Pactual Daniel.Guardiola@btgpactual.com + 57 (1) Alonso Aramburu New York BTG Pactual US Capital LLC alonso.aramburu@btgpactual.com Nutresa s Board is proposing to distribute in 2017 an annual dividend of COP534/share (monthly payments), up 7.2% YoY, which represents a payout ratio of 62.1% (above the last ten-year average of 54.2%) and a dividend yield of 2.24% (L10Y average of 1.52%). The company is expected to receive in 2017e tax-free US$18.2mn in annual dividends from Grupo Sura and Grupo Argos (22% of total dividend proposal), corresponding to 13% of total forecasted 2017 earnings. Grupo Argos (Neutral): Dividends received should expand by 80% YoY in 2017e Grupo Argos Board is proposing to distribute 75.5% of total individual earnings generated in 2016 (COP310/share), equivalent to 60% of expected dividends received (L4Y average of 78.3%), meaning an annual dividend yield of 1.6%. For 2017e, we expect GA s cash dividends received to grow 79.7% YoY on the back of expected fresh dividends from i) Odinsa (div. yield of 5.2% - despite having total equity commitments linked to 4G projects (COP692bn) and a contingency related to the AKF highway (COP230bn)); ii) Celsia (div. yield 2.9%); and iii) Opain (yield of 9.4%, though below the 14% annuity required to fully recover the investment according to our estimates). Last year, GA did not receive cash dividends from these three companies. We expect the cost of having a holding company with SG&A expenses to consume 30% of total dividends received in Grupo Sura (No rating): Management is proposing changes in bylaws The company s Board is proposing i) to modify the preferred dividend share issuance and placement regulation; and ii) to distribute a dividend payment of COP488/share for both share classes either in cash or in kind, implying a dividend yield of 1.3%. Grupo Sura is proposing to eliminate preferred shareholder s voting rights (70% threshold) in the case the company decides to modify the amount of outstanding preferred shares in exchange for i) increasing the minimum preferred div. yield from 0.5% to 1% and ii) offering inspection rights. According to management, this amendment will give the company additional flexibility with respect to its capital structure. In line with this proposal, Sura is offering investors to choose to receive the dividend payment in preferred shares (60-day VWAP with a 4% discount) or in cash. Grupo Sura s leverage is high at close to 5x net debt-to-dividends received, after the acquisition of RSA. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 6 Banco BTG Pactual S.A. does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Any U.S. person receiving this report and wishing to effect any transaction in a security discussed in this report should do so with BTG Pactual US Capital, LLC at , 601 Lexington Avenue. 57th Floor, New York NY

2 14 March 2017 page 2 Dividends matter when you are a holding company Chart 1: GEA Proposed cash per share dividend distribution Proposed Dividend distribution e YoY % CPI 2016 Grupo Suramericana (O) % 5.8% Grupo Suramericana (P) % 5.8% Bancolombia % 5.8% Nutresa % 5.8% Cementos Argos % 5.8% Celsia % 5.8% EPSA % 5.8% Odinsa n.a 5.8% Grupo Argos (O) % 5.8% Grupo Argos (P) % 5.8% Source: Company Reports and BTG Pactual Chart 2: GEA Div. yield 2017 Proposal Dividend Yield 6.00% 5.00% 4.00% 3.76% 3.43% 2.93% Proposed Dividend Yield CPI L12M 3.00% 2.00% 2.24% 2.21% 2.03% 1.64% 1.55% 1.31% 1.27% 1.00% 0.00% BANCOLOMBIA BANCOLOMBIA PF CELSIA NUTRESA CEMARGOS PF CEMARGOS GRUPO ARGOS PF GRUPO ARGOS SURA PF SURA Source: Company reports, Bloomberg and BTG Pactual Chart 3: Grupo Argos cash dividends evolution 700,000 Cash Dividends received in COPMn 600, , ,000 30% 300, % 6.0% 10% 200, , % -10% - -30% e Celsia S.A. Odinsa S.A Cementos Argos S.A. Sura Common Grupo Nutresa S.A. EPSA Bancolombia S.A. Opain Sura pref Adjustments due to calendar effect Growth of cash Dividends Source: Company Reports and BTG Pactual 79.7% 70% 50% YoY growth % - total Dividends received Chart 4: Grupo Argos 2017e Dividends received breakdown Grupo Nutresa S.A. 6% Odinsa S.A 24% Sura Common 16% EPSA 6% Source: Company Reports and BTG Pactual Celsia S.A. 13% Cementos Argos S.A. 35% Chart 5: Nutresa Dividends as a % of earnings Figures in COP mn 700, % 12.8% 13.0% 11.8% 600, % 10.4% 11.0% 500, , % 300, , , % 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% - 0.0% e Dividends received Earnings Dividends received as a % of total earnings Source: Company Reports and BTG Pactual Div received as a % of earnings Chart 6: Grupo Sura preferred shareholders 0.80% 41.71% 0.71% 0.80% 1.16% 5.95% 2.32% 2.95% 8.86% 34.74% Source: Superfinanciera, Company Reports and BTG Pactual Protección Porvenir Colfondos Vanguard Ishares Fundación Suramericana Old Mutual ADIA BlackRock Others

3 14 March 2017 page 3 Chart 7: Colombian equities dividend yield Proposal to the General Shareholders meetings Dividend Yield 6.00% 5.42% 5.25% 5.25% 5.17% 5.14% 5.00% 3.90% 3.76% Proposed Dividend Yield 4.00% 3.44% 3.43% 3.14% CPI L12M 2.94% 2.93% 2.88% 3.00% 2.24% 2.21% 2.03% 2.00% 1.74% 1.64% 1.56% 1.55% 1.31% 1.27% 1.00% 0.31% 0.00% EEB AVAL AVAL PF BOGOTA Odinsa BVC BANCOLOMBIA ISA BANCOLOMBIA PF DAVIVIENDA PF AVIANCA PF CELSIA CONCONCRETO NUTRESA CEMARGOS PF CEMARGOS ECOPETROL GRUPO ARGOS PF CORFICOLOMBIANA GRUPO ARGOS SURA PF SURA ÉXITO Source: Company reports, Bloomberg and BTG Pactual Figure 1: GEA Cross-Holding structure as of 3Q % T.S 35.1% C.S 34.8% C.S/T.S 9.8% C.S/T.S Grupo Argos & Subsidiaries 7.5% T.S 2.8% C.S Grupo Sura Grupo Nutresa& Subsidiaries 9.7% T.S 12.3% C.S 29.2% T.S 35.8% C.S 2.6% T.S 3.1% C.S 10.3% T.S 12.7% C.S 46.8% T.S 55.3% C.S 52.9% C.S/T.S 6.3% T.S 4.9% C.S Cemargos Celsia 2.1% T.S 4.0% C.S 24.2% T.S 45.7% C.S 49.4% C.S/T.S Bancolombia AFP Proteccion 20.6% C.S/T.S 7.8% T.S 4.5%C.S 4.5% T.S 50% C.S/T.S 9.8% C.S/ T.S 11.9% C.S/T.S EPSA 98.5% C.S/T.S 30.0% C.S/T.S Odinsa 35% C.S/T.S OPAIN 16.8% C.S/T.S Enka Source: Superfinanciera, Company Reports and BTG Pactual

4 Grupo Argos GEA - Grupo Empresarial 14 March 2017 page 4 Grupo Argos Income Statement (COPmn) 12/ / / / / /2016E 12/2017E 12/2018E Revenue 5,786,283 6,681,155 7,629,359 9,147,300 12,579,678 14,665,226 15,515,404 16,939,342 Operating expenses (ex depn) (4,231,694) (5,065,612) (5,722,338) (6,864,401) (9,846,317) (10,743,811) (11,122,073) (12,145,469) EBITDA (BTG Pactual) 1,554,589 1,615,543 1,907,021 2,224,618 2,640,274 3,690,070 4,187,560 4,624,480 Depreciation (466,358) (527,096) (559,504) (561,446) (1,009,263) (1,141,779) (1,163,655) (1,270,451) Operating income (EBIT, BTG Pactual) 1,088,231 1,088,447 1,347,517 1,663,172 1,631,011 2,548,291 3,023,904 3,354,029 Other income & associates (487,630) (56,177) 80, Net Interest (202,352) (139,407) (314,811) (361,571) (714,035) (971,483) (1,053,929) (1,053,929) Abnormal items (pre-tax) Profit before tax 398, ,863 1,113,429 1,301, ,976 1,576,808 1,969,976 2,300,101 Tax (163,084) (163,606) (425,404) (371,546) (260,506) (411,600) (551,593) (598,026) Profit after tax 235, , , , ,470 1,165,207 1,418,383 1,702,075 Abnormal items (post-tax) Minorities / pref dividends (81,508) (385,319) (393,075) (408,921) (355,470) (683,086) (775,770) (846,967) Net Income (local GAAP) 153, , , , , , , ,107 Adjusted Net Income 153, , , , , , , ,107 Tax rate (%) Per Share 12/ / / / / /2016E 12/2017E 12/2018E EPS (local GAAP) EPS (BTG Pactual) Net DPS BVPS 14, , , , , , , , Cash Flow (COPmn) 12/ / / / / /2016E 12/2017E 12/2018E Net Income 153, , , , , , , ,107 Depreciation 466, , , ,446 1,009,263 1,141,779 1,163,655 1,270,451 Net change in working capital (165,767) (107,945) (36,224) (218,204) (850,794) (957,939) (158,537) (253,578) Other (operating) 384,706 28, ,469 1,248,294 1,565, Net cash from operations 838, ,633 1,151,699 2,112,669 2,024, ,962 1,647,731 1,871,980 Cash from investing activities (1,847,751) (151,153) (1,528,645) (3,807,222) (2,118,988) (1,191,343) (1,260,408) (1,376,083) Cash from financing activities 1,187,398 (103,759) (1,042,200) 3,328,659 2,978,518 (260,786) (276,433) (293,019) Bal sheet chge in cash & equivalents (78,743) 485,484 58,893 (175,829) 528,219 (786,167) 110, ,878 Balance Sheet (COPmn) 12/ / / / / /2016E 12/2017E 12/2018E Cash and equivalents 982,571 1,468,055 1,526,948 1,351,119 1,879,338 1,093,171 1,204,060 1,406,938 Other current assets 1,270,632 1,289,023 1,320,148 2,233,246 3,671,945 5,008,616 5,313,495 5,801,145 Total current assets 2,253,203 2,757,078 2,847,096 3,584,365 5,551,283 6,101,786 6,517,555 7,208,083 Net tangible fixed assets 21,531,615 22,416,637 22,954,841 28,267,106 33,383,209 33,432,773 33,529,526 33,635,159 Net intangible fixed assets Investments / other assets 1,609,296 1,626,119 1,613,398 2,448,013 2,840,521 2,840,521 2,840,521 2,840,521 Total assets 25,394,114 26,799,834 27,415,335 34,299,484 41,775,013 42,375,080 42,887,602 43,683,763 Trade payables & other ST liabilities 837, , ,605 1,437,499 2,025,404 2,404,135 2,550,477 2,784,549 Short term debt 2,786,474 1,696, ,096 2,016,618 3,853,682 3,853,682 3,853,682 3,853,682 Total current liabilities 3,623,732 2,444,056 1,667,701 3,454,117 5,879,086 6,257,817 6,404,159 6,638,231 Long term debt 3,897,405 5,049,808 4,959,470 7,668,975 9,320,426 9,320,426 9,320,426 9,320,426 Other long term liabilities 1,574,544 1,654,512 1,605,859 2,789,031 3,685,702 3,685,702 3,685,702 3,685,702 Total liabilities 9,095,681 9,148,376 8,233,030 13,912,123 18,885,214 19,263,945 19,410,287 19,644,359 Equity & minority interests 16,298,433 17,651,458 19,182,305 20,387,361 22,889,799 23,111,135 23,477,314 24,039,403 Total liabilities & equities 25,394,114 26,799,834 27,415,335 34,299,484 41,775,013 42,375,080 42,887,602 43,683,763 Company Profile: Grupo Argos is an infrastructure holding company with active participation in cement, energy, ports/logistics, and real estate/urban development firmt. It is the controlling shareholder of Cementos Argos, Celsia, Odinsa, and Situm (real estate), and owns 50% of Compas (ports) and Pactia. Financial ratios 12/ / /2016E 12/2017E 12/2018E EBITDA margin 24.3% 21.0% 25.2% 27.0% 27.3% Operating margin 18.2% 13.0% 17.4% 19.5% 19.8% Net margin 5.7% 2.4% 3.3% 4.1% 5.0% RoE 3.9% 2.1% 3.2% 4.2% 5.5% RoIC 6.4% 5.2% 7.3% 8.6% 9.4% EBITDA / net interest 6.2x 3.7x 3.8x 4.0x 4.4x Net debt / EBITDA 3.7x 4.3x 3.3x 2.9x 2.5x Total debt / EBITDA 4.4x 5.0x 3.6x 3.1x 2.8x Net debt / (net debt + equity) 29.0% 33.0% 34.3% 33.8% 32.9% Source: Company reports and BTG Pactual estimates. Valuations: based on the last share price of that year(e) based on share price as of 13 March 2017

5 Nutresa GEA - Grupo Empresarial 14 March 2017 page 5 Nutresa Income Statement (COPmn) 12/ / / / / /2016E 12/2017E 12/2018E Revenue 5,057,383 5,305,782 5,898,466 6,481,813 7,945,417 8,677,812 8,988,280 9,615,818 Operating expenses (ex depn) (4,489,251) (4,634,687) (5,065,639) (5,646,112) (6,969,863) (7,618,269) (7,909,802) (8,390,616) EBITDA (BTG Pactual) 568, , , , ,554 1,059,543 1,078,478 1,225,201 Depreciation (135,636) (149,983) (182,600) (159,598) (192,869) (208,117) (257,684) (310,711) Operating income (EBIT, BTG Pactual) 432, , , , , , , ,490 Other income & associates 14,147 23,434 (6,185) 59,350 46,677 48,202 36,573 44,891 Net Interest (77,074) (58,426) (88,904) (158,776) (225,068) (313,702) (289,210) (248,185) Abnormal items (pre-tax) Profit before tax 369, , , , , , , ,196 Tax (113,919) (138,457) (174,487) 24,853 (167,140) (159,386) (151,087) (173,627) Profit after tax 255, , , , , , , ,568 Abnormal items (post-tax) (12,014) (6,335) (192) 0 0 Minorities / pref dividends (2,138) (2,156) (416) (2,290) (2,667) (3,905) (3,445) (3,685) Net Income (local GAAP) 253, , , , , , , ,883 Adjusted Net Income 253, , , , , , , ,883 Tax rate (%) Per Share 12/ / / / / /2016E 12/2017E 12/2018E EPS (local GAAP) , , EPS (BTG Pactual) , , Net DPS BVPS 14, , , , , , , , Cash Flow (COPmn) 12/ / / / / /2016E 12/2017E 12/2018E Net Income 253, , , , , , , ,883 Depreciation 135, , , , , , , ,711 Net change in working capital (32,432) 78,300 (60,738) (216,841) (258,862) (82,703) 172,899 (41,131) Other (operating) Net cash from operations 356, , , , , , , ,464 Cash from investing activities 0 0 (1,360,874) (349,090) (1,145,871) (374,322) (359,531) (384,633) Cash from financing activities (59,090) (154,888) 1,124,174 (51,233) 737,410 91,724 (472,959) (398,630) Bal sheet chge in cash & equivalents 59,698 98, ,666 (23,615) (105,799) 85,199 18,607 27,571 Balance Sheet (COPmn) 12/ / / / / /2016E 12/2017E 12/2018E Cash and equivalents 193, , , , , , , ,441 Other current assets 1,252,497 1,237,656 1,582,622 1,768,782 2,256,809 2,527,918 2,460,154 2,606,853 Total current assets 1,445,584 1,529,468 1,998,100 2,160,645 2,542,873 2,899,181 2,850,024 3,024,294 Net tangible fixed assets 1,009,855 1,135,785 1,456,074 2,963,335 3,383,722 3,442,072 3,543,919 3,617,841 Net intangible fixed assets 4,997,935 5,891,856 6,650,769 6,156,363 6,631,509 6,966,192 7,047,741 7,047,741 Investments / other assets 477, , , , , , , ,643 Total assets 7,931,169 8,951,564 10,580,498 11,817,386 13,178,052 13,984,088 14,118,327 14,366,518 Trade payables & other ST liabilities 643, , , ,277 1,189,442 1,377,847 1,482,983 1,588,551 Short term debt , ,480 1,059, , , ,795 Total current liabilities 643, ,730 1,398,546 1,415,757 2,249,102 2,240,772 2,289,409 2,362,346 Long term debt 679, ,354 1,589,149 1,688,797 2,034,604 2,552,204 2,385,102 2,288,592 Other long term liabilities 117, , , , , , , ,744 Total liabilities 1,440,330 1,526,312 3,150,427 3,785,713 5,135,208 5,649,720 5,531,255 5,507,682 Equity & minority interests 6,490,839 7,425,252 7,430,071 8,031,673 8,042,844 8,334,367 8,587,072 8,858,836 Total liabilities & equities 7,931,169 8,951,564 10,580,498 11,817,386 13,178,052 13,984,088 14,118,327 14,366,518 Company Profile: Grupo Nutresa (created in 1920) is a Colombian company involved in the packaged food sector that process, distributes and market food products mainly in the Americas. It is the fifth largest publicly traded food company in Latin America, with a market cap of US$ 3.7 Bn, LTM revenues of US$ 2.9 Bn (3Q16) and LTM EBITDA of US$ 348mn (3Q16). The Group has direct operations (plants and distribution centers) in 14 countries.nutresa operates through eight business units and 45 production plants: i) cold cuts, ii) biscuits, iii) chocolates, iv) coffee, v) TMLUC (Tres Montes Lucchetti), vi) ice cream, vii) pasta, and viii) retail food. Financial ratios 12/ / /2016E 12/2017E 12/2018E EBITDA margin 12.9% 12.3% 12.2% 12.0% 12.7% Operating margin 10.4% 9.9% 9.8% 9.1% 9.5% Net margin 9.2% 5.5% 4.9% 4.6% 5.6% RoE 7.8% 5.4% 5.2% 4.9% 6.2% RoIC 7.4% 7.7% 7.8% 7.4% 8.2% EBITDA / net interest 5.3x 4.3x 3.4x 3.7x 4.9x Net debt / EBITDA 2.1x 2.9x 2.9x 2.6x 2.2x Total debt / EBITDA 2.6x 3.2x 3.2x 3.0x 2.5x Net debt / (net debt + equity) 17.9% 25.9% 26.8% 24.6% 23.0% Source: Company reports and BTG Pactual estimates. Valuations: based on the last share price of that year(e) based on share price as of 13 March 2017

6 14 March 2017 page 6 Required Disclosures This report has been prepared by BTG Pactual US Capital LLC. The figures contained in performance charts refer to the past; past performance is not a reliable indicator of future results. BTG Pactual Rating Buy Neutral Sell Definition Coverage *1 IB Services *2 Expected total return 10% above the company s sector average. Expected total return between +10% and -10% the company s sector average. Expected total return 10% below the company s sector average. 50% 50% 45% 40% 5% 40% 1: Percentage of companies under coverage globally within the 12-month rating category. 2: Percentage of companies within the 12-month rating category for which investment banking (IB) services were provided within the past 12 months. Absolute return requirements Besides the abovementioned relative return requirements, the listed absolute return requirements must be followed: a) a Buy rated stock must have an expected total return above 15% b) a Neutral rated stock can not have an expected total return below -5% c) a stock with expected total return above 50% must be rated Buy Analyst Certification Each research analyst primarily responsible for the content of this investment research report, in whole or in part, certifies that: (i) all of the views expressed accurately reflect his or her personal views about those securities or issuers, and such recommendations were elaborated independently, including in relation to BTG Pactual US or its affiliates, as the case may be; (ii) no part of his or her compensation was, is, or will be, directly or indirectly, related to any specific recommendations or views contained herein or linked to the price of any of the securities discussed herein. The research analyst responsible for this report is registered/qualified as a research analysts by FINRA. It is possible that research analysts contributing to this report are employed by a non-us broker-dealer. In this case the analysts will not be registered/qualified as research analysts under FINRA rules and therefore will not be subject to the restrictions contained in the FINRA rules regarding communications with a subject company, public appearances, and financial interest in the securities of the subject company. Part of the analyst compensation comes from the profits of BTG Pactual US or its affiliates as a whole and/or its affiliates and, consequently, revenues arisen from transactions held by BTG Pactual US or its affiliates. Statement of Risk Grupo Argos S.A. [COGRUPARG] - We believe the key risks are competition and risks inherent to investing in emerging market countries. Potential emerging market related risks include, but are not limited to, the volatile nature of the currency, regulatory and sociopolitical risk, and abrupt potential changes in the cost of capital and economic growth outlook. Valuations can also be affected by "contagion" from developments in other emerging markets. Grupo Nutresa [CONUTRE] - We believe the key risks are commodities volatility, USD/COP fluctuation, an already announced inorganic growth strategy and the competitive environment. In addition, risks inherent to investing in emerging market countries. Potential emerging market related risks include, but are not limited to, the volatile nature of the currency, regulatory and sociopolitical risk, and abrupt potential changes in the cost of capital and economic growth outlook. Valuations can also be affected by "contagion" from developments in other emerging markets. Valuation Methodology Grupo Argos S.A. [COGRUPARG] - Our target price for Grupo Argos is based on a sum-of-the-parts methodology which reflects an analysis of DCF (Celsia and EPSA), cashflow to investors (Odinsa), market value (Cementos Argos and Grupo Argos portfolio i.e. stakes in listed companies; Sura common and preferred shares, Nutresa and Bancolombia) and, finally, the spin-off values of Situm and Compas. In addition we are applying a 10% holding discount. Grupo Nutresa [CONUTRE] - Our target price for Nutresa is based on a discounted cash flow methodology which uses an equity risk premium of 5.75% and a perpetuity rate of 4%. We use further support from a comparables analysis. Company Disclosures Company Name Reuters 12-mo rating Price Price date Grupo Argos 1, 2, 4, 6, 18, 19, 20 ARG.CN Neutral COP19, Nutresa 1, 2, 4, 6, 18, 19, 20, 22 NUTRESA.SA Neutral COP23, Within the past 12 months, BTG Pactual US or its affiliates has received compensation for investment banking services from this company/entity. 2. BTG Pactual US or its affiliates expect to receive or intend to seek compensation for investment banking services and/or products and services other than investment services from this company/entity within the next three months. 4. This company/entity is, or within the past 12 months has been, a client of BTG Pactual US or its affiliates, and investment banking services are being, or have been, provided. 6. BTG Pactual US and/or its affiliates receive compensation for any services rendered or presents any commercial relationships with this company, entity or person, entities or funds which represents the same interest of this company/entity. 18. As of the end of the month immediately preceding the date of publication of this report, neither BTG Pactual US nor its affiliates or subsidiaries beneficially owned 1% or more of a class of this company`s common equity securities.

7 14 March 2017 page Neither BTG Pactual US nor its affiliates or subsidiaries have managed or co-managed a public offering of securities for the company. 20. Neither BTG Pactual US nor its affiliates or subsidiaries engaged in market making activities in the subject company s securities at the time this research was report was published. 22. BTG Pactual US or its affiliates or subsidiaries do not expect to receive or intends to seek compensation for investment banking services from the companies within the next 3 months. Grupo Argos Stock Price (COP) Price Target (COP) Buy Neutral Sell No Rating 14-Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar-17 Source: BTG Pactual and Economatica. Prices as of 13 March 2017 Nutresa Stock Price (COP) Price Target (COP) 0.0 Buy Neutral Sell No Rating 14-Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar-17 Source: BTG Pactual and Economatica. Prices as of 13 March 2017

8 14 March 2017 page 8 Global Disclaimer This report has been prepared by BTG Pactual US Capital LLC ( BTG Pactual US, ), a broker-dealer registered with the U.S. Securities and Exchange Commission and a member of the Financial Industry Regulatory Authority and the Securities Investor Protection Corporation, and BTG Pactual US is distributing this report in the United States. BTG Pactual US is an affiliate of Banco BTG Pactual S.A, a Brazilian regulated bank, responsible for the distribution of this report in Brazil. BTG Pactual US assumes responsibility for this research for purposes of U.S. law. 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Corredores de Bolsa, a Chilean broker dealer registered with Superintendencia Valores Y Seguros (SVS) in Chile and responsible for the distribution of this report in Chile and BTG Pactual Perú S.A. Sociedad Agente de Bolsa ( BTG Pactual Peru ), formerly known as Celfin Capital S.A. Sociedad Agente de Bolsa, registered with Superintendencia de Mercado de Valores (SMV) of Peru, is responsible for the distribution of this report in Peru. BTG Pactual Chile and BTG Pactual Peru acquisition by BTG Pactual S.A. was approved by the Brazilian Central Bank on November 14th, BTG Pactual S.A. Comisionista de Bolsa ( BTG Pactual Colombia ) formerly known as Bolsa y Renta S.A. Comisionista de Bolsa, is a Colombian broker dealer register with the Superintendencia Financeira de Colombia. BTG Pactual Colombia acquisition by BTG Pactual S.A. was approved by Brazilian Central Bank on December 21st, References herein to BTG Pactual include Banco BTG Pactual S.A., BTG Pactual US Capital LLC, BTG Pactual Europe LLP, BTG Pactual Chile, BTG Pactual Peru and BTG Pactual Colombia. This report is for distribution only under such circumstances as may be permitted by applicable law. This report is not directed at you if BTG Pactual is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to you. You should satisfy yourself before reading it that BTG Pactual is permitted to provide research material concerning investments to you under relevant legislation and regulations. Nothing in this report constitutes a representation that any investment strategy or recommendation contained herein is suitable or appropriate to a recipient s individual circumstances or otherwise constitutes a personal recommendation. It is published solely for information purposes, it does not constitute an advertisement and is not to be construed as a solicitation, offer, invitation or inducement to buy or sell any securities or related financial instruments in any jurisdiction. Prices in this report are believed to be reliable as of the date on which this report was issued and are derived from one or more of the following: (i) sources as expressly specified alongside the relevant data; (ii) the quoted price on the main regulated market for the security in question; (iii) other public sources believed to be reliable; or (iv) BTG Pactual 's proprietary data or data available to BTG Pactual. All other information herein is believed to be reliable as of the date on which this report was issued and has been obtained from public sources believed to be reliable. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, except with respect to information concerning Banco BTG Pactual S.A., its subsidiaries and affiliates, nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in the report. In all cases, investors should conduct their own investigation and analysis of such information before taking or omitting to take any action in relation to securities or markets that are analyzed in this report. BTG Pactual does not undertake that investors will obtain profits, nor will it share with investors any investment profits nor accept any liability for any investment losses. Investments involve risks and investors should exercise prudence in making their investment decisions. BTG Pactual accepts no fiduciary duties to recipients of this report and in communicating this report is not acting in a fiduciary capacity. The report should not be regarded by recipients as a substitute for the exercise of their own judgment. Opinions, estimates, and projections expressed herein constitute the current judgment of the analyst responsible for the substance of this report as of the date on which the report was issued and are therefore subject to change without notice and may differ or be contrary to opinions expressed by other business areas or groups of BTG Pactual as a result of using different assumptions and criteria. Because the personal views of analysts may differ from one another, Banco BTG Pactual S.A., its subsidiaries and affiliates may have issued or may issue reports that are inconsistent with, and/or reach different conclusions from, the information presented herein. Any such opinions, estimates, and projections must not be construed as a representation that the matters referred to therein will occur. Prices and availability of financial instruments are indicative only and subject to change without notice. Research will initiate, update and cease coverage solely at the discretion of BTG Pactual Investment Bank Research Management. The analysis contained herein is based on numerous assumptions. Different assumptions could result in materially different results. The analyst(s) responsible for the preparation of this report may interact with trading desk personnel, sales personnel and other constituencies for the purpose of gathering, synthesizing and interpreting market information. BTG Pactual is under no obligation to update or keep current the information contained herein, except when terminating coverage of the companies discussed in the report. BTG Pactual relies on information barriers to control the flow of information contained in one or more areas within BTG Pactual, into other areas, units, groups or affiliates of BTG Pactual. The compensation of the analyst who prepared this report is determined by research management and senior management (not including investment banking). Analyst compensation is not based on investment banking revenues, however, compensation may relate to the revenues of BTG Pactual Investment Bank as a whole, of which investment banking, sales and trading are a part. The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. Options, derivative products and futures are not suitable for all investors, and trading in these instruments is considered risky. Mortgage and asset-backed securities may involve a high degree of risk and may be highly volatile in response to fluctuations in interest rates and other market conditions. Past performance is not necessarily indicative of future results. If a financial instrument is denominated in a currency other than an investor s currency, a change in rates of exchange may adversely affect the value or price of or the income derived from any security or related instrument mentioned in this report, and the reader of this report assumes any currency risk. This report does not take into account the investment objectives, financial situation or particular needs of any particular investor. Investors should obtain independent financial advice based on their own particular circumstances before making an investment decision on the basis of the information contained herein. For investment advice, trade execution or other enquiries, clients should contact their local sales representative. Neither BTG Pactual nor any of its affiliates, nor any of their respective directors, employees or agents, accepts any liability for any loss or damage arising out of the use of all or any part of this report. Notwithstanding any other statement in this report, BTG Pactual UK does not seek to exclude or restrict any duty or liability that it may have to a client under the regulatory system in the UK (as such term is defined in the rules of the Financial Conduct Authority). Any prices stated in this report are for information purposes only and do not represent valuations for individual securities or other instruments. There is no representation that any transaction can or could have been effected at those prices and any prices do not necessarily reflect BTG Pactual internal books and records or theoretical model-based valuations and may be based on certain assumptions. Different assumptions, by BTG Pactual S.A., BTG Pactual US, BTG Pactual UK, BTG Pactual Chile and BTG Pactual Peru and Bolsa y Renta S.A. or any other source, may yield substantially different results. This report may not be reproduced or redistributed to any other person, in whole or in part, for any purpose, without the prior written consent of BTG Pactual and BTG Pactual accepts no liability whatsoever for the actions of third parties in this respect. Additional information relating to the financial instruments discussed in this report is available upon request. BTG Pactual and its affiliates have in place arrangements to manage conflicts of interest that may arise between them and their respective clients and among their different clients. BTG Pactual and its affiliates are involved in a full range of financial and related services including banking, investment banking and the provision of investment services. As such, any of BTG Pactual or its affiliates may have a material interest or a conflict of interest in any services provided to clients by BTG Pactual or such affiliate. Business areas within BTG Pactual and among its affiliates operate independently of each other and restrict access by the particular individual(s) responsible for handling client affairs to certain areas of information where this is necessary in order to manage conflicts of interest or material interests. Any of BTG Pactual and its affiliates may: (a) have disclosed this report to companies that are analyzed herein and subsequently amended this report prior to publication; (b) give investment advice or provide other services to another person about or concerning any securities that are discussed in this report, which advice may not necessarily be consistent with or similar to the information in this report; (c) trade (or have traded) for its own account (or for or on behalf of clients), have either a long or short position in the securities that are discussed in this report (and may buy or sell such securities), with the securities that are discussed in this report; and/or (d) buy and sell units in a collective investment scheme where it is the trustee or operator (or an adviser) to the scheme, which units may reference securities that are discussed in this report. United Kingdom and EEA: Where this report is disseminated in the United Kingdom or elsewhere in the EEA by BTG Pactual UK, this report is issued by BTG Pactual UK only to, and is directed by BTG Pactual UK at, those who are the intended recipients of this report. This report has been classified as investment research and should not be considered a form of advertisement or financial promotion under the provisions of FSMA 2000 (Sect. 21(8)). Dubai: This research report does not constitute or form part of any offer to issue or sell, or any solicitation of any offer to subscribe for or purchase, any securities or investment products in the UAE (including the Dubai International Financial Centre) and accordingly should not be construed as such. Furthermore, this information is being made available on the basis that the recipient acknowledges and understands that the entities and securities to which it may relate have not been approved, licensed by or registered with the UAE Central Bank, Emirates Securities and Commodities Authority or the Dubai Financial Services Authority or any other relevant licensing authority or governmental agency in the UAE. The content of this report has not been approved by or filed with the UAE Central Bank or Dubai Financial Services Authority. United Arab Emirates Residents: This research report, and the information contained herein, does not constitute, and is not intended to constitute, a public offer of securities in the United Arab Emirates and accordingly should not be construed as such. The securities are only being offered to a limited number of sophisticated investors in the UAE who (a) are willing and able to conduct an independent investigation of the risks involved in an investment in such securities, and (b) upon their specific request. The securities have not been approved by or licensed or registered with the UAE Central Bank or any other relevant licensing authorities or governmental agencies in the UAE. This research report is for the use of the named addressee only and should not be given or shown to any other person (other than employees, agents or consultants in connection with the addressee's consideration thereof). No transaction will be concluded in the UAE and any enquiries regarding the securities should be made with BTG Pactual CTVM S.A. at , Avenida Brigadeiro Faria Lima, 3477, 14th floor, São Paulo, SP, Brazil,