Latin America. Juliette Alves, Charles Biderman Pavillon Cambon, Paris. For Professional Investors only

Transcription

1 Latin America Juliette Alves, Charles Biderman Pavillon Cambon, Paris For Professional Investors only

2 2 PRECONCEIVED IDEAS Myths Commodities dependent Violent and unstable Underdeveloped Small market Realities Domestic oriented Abundance of natural resources The lowest geopolitical risk in EM Top-tier companies, many regional and international leaders Large homogeneous economy

3 3 PRECONCEIVED IDEAS ON THE STOCK MARKET Myth: "There is little growth in Latin America" Long-term equity return vs. GDP-per capita growth in real terms Source: Citi Research, Haver, CEIC, Datastream

4 4 WHY INVEST IN LATIN AMERICA? Key risks Our approach Companies that do well despite the macro Limited net FX exposure Exporters and diversified companies Currency Political Fund flows Sentiment-driven Companies with pricing power Favour private sector with limited regulatory risk Limited exposure to SOEs Volatility creates entry points

5 5 BRAZIL: ELECTION YEAR Brazil Bovespa Index: Price, in local currency Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Source: Factset, data as of 24/10/2014 Past performance is no guarantee of future results.

6 6 DILMA ROUSSEFF RE-ELECTED What did you expect? Monetary policy Failed to control inflation Uses CB to stimulate the economy Regulated prices Price controls in energy, transportation to limit the impact of inflation Fiscal policy Fiscal adjustment in 2015 likely Investment Wide use of BNDES funding Intervention to regulate private sector returns Market perception Interventionist and dogmatic

7 OUTLOOK: SAME CHALLENGES REMAIN Government spending has surged under Partido dos Trabalhadores (PT) Consumer spending will likely contract Source: BCA Research, 10/09/2014 Past performance is no guarantee of future results.

8 8 MAIN CHALLENGE: LACK OF INFRASTRUCTURE Brazil: GDP and infrastructure quality rankings (ranking out of 144 countries, inverted scale) Low investment, low productivity 140 # #114 #120 #123 #131 0 GDP Quality of overall infrastructure Quality of roads Quality of air transport infrastructure Quality of port infrastructure Investment will be key to reactivate growth Source: The World Economic Forum Global Competitiveness Report 2014 (left) / BCA Reasearch (right)

9 9 BUT THE MARKET DOESN T EXPECT MUCH ANYWAY Brazil Bovespa Index: , Price in constant purchasing power of October Jan-96 May-98 Sep-00 Jan-03 May-05 Sep-07 Jan-10 May-12 Sep-14 Source: Citibank Past performance is no guarantee of future results.

10 10 OUR EXPOSURE TO BRAZIL Our selection of franchises Global companies Domestic Megatrends 15% EPS growth is forecast in 2015, limited impact from the political environment The material presented in this document is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The contents of this document should not be treated as advice in relation to any potential investment. Forward looking data included is estimated and it is not a reliable guide to future performance.

11 11 DOMESTIC MEGATRENDS: CIELO (BRAZIL) Brazilian merchant acquirer operating transactions through credit/debit cards and mobile phones Over 50% market share Growth led by transition to electronic transactions Sector: Information Technology Market cap.: USD 25.7bn EPS growth 5 yrs (est.)*: 14% ROE: 95.5% Dividend yield: 3.4% Data updated as at 30/09/2014 / Source: Company report (right) *EPS growth 5 years is a Comgest estimate. Market Cap is calculated as of end of last calendar quarter while ROE and dividend yield are calculated as of end of last fiscal year. Past performance is not a reliable guide to future performance. The value of investments may go down as well as up. Forward looking data included is estimated and it is not a reliable guide to future performance. The material presented in this document is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The contents of this document should not be treated as advice in relation to any potential investment.

12 12 VOLATILITY CREATES OPPORTUNITIES Source: BCA Research The material presented in this document is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The contents of this document should not be treated as advice in relation to any potential investment. Past performance is not a reliable guide to future performance.

13 13 MID CAP OPPORTUNITY: ALPARGATAS (BRAZIL) Created and developed Havaianas brand 244 M pairs of Havaianas sold in 2013 and 50% market share in Brazil Havaianas is among the 10 most valuable brands in Brazil with growing recognition internationally Diversification strategy: leverage Havaianas in the apparel segment Sector: Cons. Discretionary Market cap.: USD 1.9bn EPS growth 5 yrs (est.)*: 14% ROE: 17.8% Dividend yield: 1.8% Data updated as at 30/09/2014 *EPS growth 5 years is a Comgest estimate. Market Cap is calculated as of end of last calendar quarter while ROE and dividend yield are calculated as of end of last fiscal year. Past performance is not a reliable guide to future performance. The value of investments may go down as well as up. Forward looking data included is estimated and it is not a reliable guide to future performance. The material presented in this document is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The contents of this document should not be treated as advice in relation to any potential investment.

14 14 MEXICO: THE REVIVAL OF A GIANT Reforms unlock growth Energy Education Labour flexibility Telecom / Media monopolies +1% to potential GDP growth

15 15 MEXICO: THE REVIVAL OF A GIANT Dependence on the US turns positive as the manufacturing sector is leading the recovery Manufacturing exports (USD bn), Mexico and US Industrial production, base 100 = 2007 Manufacturing wages (USD per hour) Source: Morgan Stanley Latam Economics, October 2014

16 16 NEW MEXICAN DYNAMISM: HOTELES CITY EXPRESS 1st limited-services hotel chain dedicated to traveling businessmen Present in major industrial areas in Mexico 90% of internal bookings, 30% through corporate contracts Experience and commitment from the management Reference shareholders: IFC World Bank hold 9% Sector: Cons. Discretionary Market cap.: USD 505m EPS growth 5 yrs (est.)*: 33% ROE: 2.1% Dividend yield: 0.0% Data updated as at 30/09/2014 *EPS growth 5 years is a Comgest estimate. Market Cap is calculated as of end of last calendar quarter while ROE and dividend yield are calculated as of end of last fiscal year. Past performance is not a reliable guide to future performance. The value of investments may go down as well as up. Forward looking data included is estimated and it is not a reliable guide to future performance. The material presented in this document is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The contents of this document should not be treated as advice in relation to any potential investment.

17 17 NEW MEXICAN GROWTH: BOLSA MEXICANA DE VALORES (MEXICO) Vertical integration and low dependence on trading volumes Monopoly in Mexico, competition from ADRs is an incentive to innovate and provide low prices Increasing pension funds participation in the market Long-term growth potential for the equity market Sector: Financial Services Market cap.: USD 1.3bn EPS growth 5 yrs (est.)*: 15% ROE: 14.0% Dividend yield: 3.6% 120% 80% 40% 0% Market Cap to GDP 2012 Chile Colombia Brazil Peru Mexico Argentina Data updated as at 30/09/2014 *EPS growth 5 years is a Comgest estimate. Market Cap is calculated as of end of last calendar quarter while ROE and dividend yield are calculated as of end of last fiscal year. Past performance is not a reliable guide to future performance. The value of investments may go down as well as up. Forward looking data included is estimated and it is not a reliable guide to future performance. The material presented in this document is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The contents of this document should not be treated as advice in relation to any potential investment.

18 18 ANDEAN REGION: THE MOST DYNAMIC IN LATAM The Chilean model replicated in Peru and Colombia: strong pension funds, investmentled growth, sound macro policies Regionalisation Annual GDP growth (%) Joker: when Argentina is back in the game Chile Peru Colombia Source: Factset (right)

19 19 FALABELLA (CHILE) Leader in Chile and in the Andean region in all retail formats Cautious consumer credit growth to sustain sales Strong cash generation in Chile used to finance its expansion in the region Sector: Cons. Discretionary Market cap.: USD 18.5bn EPS growth 5 yrs (est.)*: 19% ROE: 14.7% Dividend yield: 1.1% Data updated as at 30/09/2014 *EPS growth 5 years is a Comgest estimate. Market Cap is calculated as of end of last calendar quarter while ROE and dividend yield are calculated as of end of last fiscal year. Past performance is not a reliable guide to future performance. The value of investments may go down as well as up. Forward looking data included is estimated and it is not a reliable guide to future performance. The material presented in this document is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The contents of this document should not be treated as advice in relation to any potential investment.

20 20 WHY INVEST WITH COMGEST IN LATIN AMERICA? The material presented in this document is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The contents of this document should not be treated as advice in relation to any potential investment.

21 21 WHY INVEST WITH COMGEST IN LATIN AMERICA? Strong, stable EPS growth (%) Jan-11 Jan-12 Jan-13 Jan-14 MSCI EM Latin America - EPS Growth NTM Comgest Growth Latin America - EPS Growth NTM Source: Factset/Comgest. Portfolio as of 30/09/2014 Past performance is no guarantee of future results. Indices are used for comparative purposes only. They are not a reliable guide to the future performance of this investment. Forward looking data included is estimated and it is not a reliable guide to future performance.

22 22 COMGEST GROWTH LATIN AMERICA Performance* (net, in EUR) Cumulative performance since inception (%) 130 % change Dec 2009 Dec 2010 Dec 2011 Dec 2012 Dec 2013 Fund MSCI Emerging Markets Latin America - NR Rolling performance (%) QTD YTD 1 Year 3 Years annualised Inception annualised Portfolio Index *Net performance in EUR as of 31/10/2014 Source: FactSet/Comgest / Past performance is no guarantee of future results. Indices are used for comparative purposes only, they are not a reliable guide to the future performance of this investment. Performance calculation based on NAV to NAV variation expressed in euros Morningstar, Inc. All rights reserved. Ratings and awards mentioned in this document can change at any time and do not constitute a buy recommendation.

23 23 CONCLUSION Despite its challenges the region remains attractive A great universe for a quality growth investor with attractive opportunities ahead Our selection should offer a portfolio of strong and visible EPS growth Copacabana Beach

24 24 IMPORTANT INFORMATION This document has been prepared for professional investors only and may only be used by these investors. This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The contents of this document should not be treated as advice in relation to any potential investment. The securities discussed herein may not be held in the portfolio at the time you receive this presentation. Performance figures are provided net of all fees unless otherwise stated and are calculated on a time-weighted, total return basis. Funds which specialise in a particular region or market sector may entail higher risks than those which hold a very broad spread of investments. Past investment results are not necessarily indicative of future investment results. The value of all investments and the income derived therefrom can decrease as well as increase. This may be partly due to exchange rate fluctuations in investments that have an exposure to currencies other than the base currency of the Fund. Reference to market indices or other measures of relative market performance over a specified period of time are provided for your information only. Reference to an index does not imply that the portfolio will achieve returns, volatility or other results similar to the index. The composition of the index will not reflect the manner in which a portfolio is constructed. The information and any opinions have been obtained from or are based on information from sources believed to be reliable, but accuracy can not be guaranteed. No liability is accepted by Comgest in relation to the accuracy or completeness of the information contained in this document. The information in this document is not comprehensive and is presented for informational purposes only. All opinions and estimates constitute our judgment as of the date of this presentation and are subject to change without notice. Comgest does not provide tax or legal advice to its clients and all investors are strongly urged to consult their own tax or legal advisors concerning any potential investment. Before making any investment decision, investors are advised to check the investment horizon and category of the Fund in relation to any objectives or constraints they may have. Investors must read the latest Fund prospectus and the Key Investor Information Document ( KIID ), available at our offices and on our website Investors shall undertake to respect the legal, regulatory and deontological measures relative to the fight against money laundering, as well as the texts that govern their application, and if modified investors shall ensure compliance with the applicable texts. This material is in no case an offer for people living in a specific jurisdiction which does not authorize the distribution of the Funds mentioned herein. The investment professionals listed in this document are employed either by Comgest S.A., Comgest Asset Management International Limited, Comgest Far East Limited, Nippon Comgest Inc, Comgest Singapore Pte. Ltd. Comgest S.A. is regulated by the Autorité des Marchés Financiers (AMF). Comgest Far East Limited is regulated by the Hong Kong Securities and Futures Commission. Comgest Asset Management International Limited is regulated by the Central Bank of Ireland. Nippon Comgest Inc. is regulated by the Financial Service Agency of Japan (registered with Kanto Local Finance Bureau (No. Kinsho 1696)). Comgest Singapore Pte Ltd, created 18 August 2010, is a Licensed Fund Management Company & Exempt Financial Advisor (for Institutional and Accredited Investors) regulated by the Monetary Authority of Singapore.