LatAm Equity Strategy - Credit Suisse

DISCLOSURE APPENDIX CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, INFORMATION ON TRADE ALERTS, ANALYST MODEL PORTFOLIOS AND THE STATUS OF NON-U.S ANALYSTS. FOR OTHER IMPORTANT DISCLOSURES, visit www.credit-suisse.com/researchdisclosures or call +1 (877) 291-2683 US Disclosure: Credit Suisse 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.

CREDIT SUISSE SECURITIES RESEARCH & ANALYTICS BEYOND INFORMATION®

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01 September 2013

Americas/Brazil&Chile&Mexico

Equity Research

Strategy

LatAm Equity Strategy STRATEGY

Mexico Equities: stay underweight on sluggish

GDP, reform related risks and high valuation

■ Mexbol: why we are still Underweight. In this report we revisit our slight underweight recommendation on the Mexican market within a LatAm context. We conclude that it is still premature to take a more positive view on the Mexbol considering that, (i) consensus GDP expectations may still be too high, (ii) in spite of some recent stability, we have low conviction that EPS estimates have bottomed, (iii) unattractive valuation metrics, (iv) fiscal and TMT reforms still pose risks for some large index components, and (v) the Mexican Peso, even after recent depreciation, does not look especially inexpensive.

■ Weak GDP growth and reforms: two key themes. We make a small downward adjustment to our Mexbol Index target from 46,000 to 45,000. In this report we explore two important themes for investors in the Mexican market: the unexpected GDP growth slowdown this year and a status report on the reform process. For each of the four main reforms, we highlight the main affected stocks. We are positive on the long-term outlook for the Mexican economy but we would prefer to raise exposure to the equity market on the cusp of growth acceleration, after potential headwinds from the reform process have passed, or at a less expensive valuation.

■ Mexico stock picks. Our HOLT team has prepared a scorecard of the Mexbol index components based on a three factor model that considers quality, valuation, and momentum. Among names that rank highly on HOLT and also are rated Outperform by CS analysts, we highlight: Compartamos, Mexichem, ASUR and Grupo Mexico. Among names that score poorly on HOLT and are rated Neutral or Underperform by CS analysts, we identify Peñoles and Industrias CH. We also update our monthly model portfolios for both Mexico and Brazil in this report.

Exhibit 1: CS analyst recommendations & HOLT – names liked by both

Company Analyst

rating

Upside to

analyst TP

HOLT

score

HOLT ranking (out of

35 IPC stocks)

Compartamos Outperform 15% 11.0 2 / 35

Mexichem Outperform 50% 10.3 4 / 35

ASUR Outperform 13% 10.2 5 / 35

Grupo Mexico Outperform 36% 10.1 6 / 35

GAP Outperform 30% 9.8 8 / 35

Chedraui Outperform 39% 9.3 12 / 35

Televisa Outperform 19% 9.3 15 / 35

Source: Company data, Credit Suisse estimates, Credit Suisse HOLT

Research Analysts

Andrew T. Campbell, CFA

55 11 3701 6313

[email protected]

Daniel Federle

55 11 3701 6311

[email protected]

Andrei Sabah

52 55 5283 3810

[email protected]

01 September 2013

LatAm Equity Strategy 2

Table of contents Overview 3

Mexican stocks: where we see opportunity 3 GDP: where has the growth gone? 5 Earnings: pressured by weaker top line outlook 8 Valuation: Mexbol more expensive on lower EPS forecasts 10 Reform agenda: a brief recap and what companies are affected 11

Telco & media / competition reform – approved; most steps expected in 1Q14 11 Financial reform – improving Mexico's lending outlook, expected to be discussed in

2H13 12 Energy reform – we expect it to be debated and approved before yearend 13 Fiscal reform – still in the works, more light expected soon 16

A weaker Peso – who benefits? 18 Earnings impact – main stocks favorably / adversely affected by a weaker Peso 18

Brazil model portfolio 20 Mexico model portfolio 23

Performance Analysis 25 Appendix 1 – Brazil and Mexico stocks performance 28 Appendix 2 – Brazil and Mexico sectors performance 28 Appendix 3 – HOLT factor definitions 31

01 September 2013


Overview In this report we conclude that timing is still not right for an aggressive positioning in

Mexico within a LatAm portfolio. We reach this conclusion partly based on our concern

that a broader than expected GDP slowdown may still imply additional downside to GDP

and earnings estimates. At the same time, we continue with our mantra that what is good

for Mexico (in terms of the reform agenda) is not necessarily good for Mexican equities for

the short-term. This is against a backdrop of valuations that are still among the most

expensive in EM and P/E multiples that have not really become inexpensive due to

reduced earnings expectations.

At the same time, we recognize that the long-term outlook for Mexico is still bright based

on a reform agenda that has the potential to boost Mexico’s long-term growth rates,

especially owing to energy and fiscal reform. The country’s external and fiscal accounts

are largely in balance, core inflation remains at benign levels, and our economics team

expects a reduction to policy rates before yearend. The outlook is for credit to grow at

strong rates from the current low levels of penetration. There are many reasons to be

positive on the long-term case for Mexico.

Mexican stocks: where we see opportunity

To identify the most attractive stock ideas in Mexico, we have asked our HOLT team to

prepare a scorecard that ranks the IPC index components from top to bottom. HOLT uses

a proprietary methodology that eliminates accounting subjectivity by converting income

statement and balance sheet information into a CFROI® return, a measure that more

closely approximates a company’s underlying economics. The resulting returns are

objectively-based and can be viewed to assess the firm’s historical ability to create or

destroy wealth over time. The HOLT methodology is based on an evaluation of three

factors: quality, momentum and valuation (see Appendix 3 of this report for a more

detailed explanation of such factors).

We combine the highest ranked stocks with analyst Outperform ratings to identify seven of

the most attractive stock ideas. Several of these are linked into the reform process and its

subsequent changes. For example, Compartamos is a potential beneficiary of financial

reform through faster credit growth and more transparent consumer credit information.

Televisa’s subsidiary, Iusacell, seems like a prime candidate to benefit from telecom

reform. Grupo Mexico’s non-copper businesses are positioned to benefit from a pickup in

infrastructure spending and energy reform. We discuss the four main reforms relevant for

equity investors later in this report.

Exhibit 2: CS analyst recommendations & HOLT – stocks where both coincide

Company Analyst rating Upside to analyst

TP

HOLT score HOLT ranking (out

of 35 IPC stocks)

Outperform-rated names that rank highly on HOLT:

Compartamos Outperform 15% 11.0 2 / 35

Mexichem Outperform 50% 10.3 4 / 35

ASUR Outperform 13% 10.2 5 / 35

Grupo Mexico Outperform 36% 10.1 6 / 35

GAP Outperform 30% 9.8 8 / 35

Chedraui Outperform 39% 9.3 12 / 35

Televisa Outperform 19% 9.3 15 / 35

Neutral-rated names that rank poorly on HOLT:

ICHB Neutral 3% 7.8 29 / 35

Penoles Neutral 8% 7.3 32 / 35

Source: Company data, Credit Suisse estimates, Credit Suisse HOLT

01 September 2013


Exhibit 3: HOLT scorecard – IPC index – September 2013

2.0

2.8

1.8

2.3

1.8

4.2

2.3

4.6

3.9

3.2

4.5

3.1

4.1

2.8

3.1

4.5

4.2

3.1

3.7

3.1

3.3

2.6

4.0

2.6

2.8

1.9

2.9

3.0

2.0

2.6

4.1

1.5

2.6

2.2

3.5

4.2

3.5

3.9

2.6

3.7

4.7

1.8

3.1

4.0

2.1

2.1

3.4

3.1

3.0

4.3

2.9

3.8

3.1

2.6

4.7

1.3

3.4

3.8

2.5

1.6

2.9

2.8

2.0

1.6

2.5

3.6

1.9

3.0

1.8

3.1

4.1

3.5

3.4

3.8

3.8

4.5

2.3

2.5

4.4

1.9

2.2

3.9

3.9

2.4

2.8

3.0

3.0

2.6

1.8

2.1

3.5

2.3

1.7

4.8

3.6

2.0

2.5

3.6

3.7

2.1

3.6

1.1

1.9

2.91.4

Banregio Grupo Financiero (GFREGIOO)

Grupo Sanborns (GSNBRB1)

Promotora y Operadora de Infraestructura (PINFRA)

Controladora Comercial Mexicana (COMEUBC)

IEnova (IENOVA)

OHL Mexico (OHLMEX)

Compartamos (COMPARC)

America Movil (AMXL)

Mexichem (MEXCHEM)

Grupo Aeroportuario Del Sureste (ASURB)

Grupo Mexico (GMEXICOB)

Genomma Lab Internacional (LABB)

Grupo Aeroportuario Del Pacifico (GAPB)

El Puerto de Liverpool (LIVEPOL1)

Arca Continental (AC)

Grupo Elektra (ELEKTRA)

Grupo Comercial Chedraui (CHDRAUIB)

Santander Mexico (SANMEXB)

Grupo Televisa (TLVACPO)

Femsa (FMSAUBD)

Walmex (WALMEXV)

Bolsa Mexicana de Valores (BOLSAA)

Alpek (ALPEKA)

Coca-Cola Femsa (KOFL)

Gruma (GRUMAB)

Kimberly-Clark de Mexico (KIMBERA)

Banorte (GFNORTEO)

Alfa (ALFAA)

Inbursa (GFINBURO)

Empresas ICA (ICA)

Industrias CH (ICHB)

Alsea (ALSEA)

Industrias Peñoles (PENOLES)

Grupo Bimbo (BIMBOA)

Cemex (CMXCPO)

Operations Valuation Momentum

Source: Credit Suisse HOLT

In addition, later in this report we update our monthly model portfolio for Mexico. In this

portfolio, our main recommendation is a massive underweight in the Consumer sector due

to the weaker than expected consumer environment, high valuations, and potential

negative newsflow during the upcoming announcement of fiscal reform. On the other hand,

our main overweight sectors are Cement / Real Estate and Energy. We include in our

model portfolio shares like Cemex, IENova and ICA, which do not score highly on HOLT’s

scorecard but where our analysts maintain a favorable view. Please see the Model

Portfolio section of this report for more details.

01 September 2013


GDP: where has the growth gone? The Mexbol index is down about 13% YTD in USD terms. This is especially surprising

considering Mexico’s linkage to the USA and its improved outlook, as reflected in the 15%

increase in the S&P500. After such underpeformance, the Mexbol has given back all of the

outperformance to the S&P500 it had accumulated over the 2009-2012 period.

One major disappointment for equity investors this year has been the abrupt and

unexpected slowdown in Mexico’s GDP growth. After growing at about 4% the past two

years, Mexico's real GDP growth now appears on track to average around 1.3% this year

(CS estimate). This slowdown was glaringly evident on August 20 with the release of 2Q13

GDP figures.

Exhibit 4: Mexbol gave back the 'performance gap' vs. S&P 500 since 2007 rebased to July 2007 = 100

40

50

60

70

80

90

100

110

120

130

Jul-0

7

Jan-

08

Jul-0

8

Jan-

09

Jul-0

9

Jan-

10

Jul-1

0

Jan-

11

Jul-1

1

Jan-

12

Jul-1

2

Jan-

13

Jul-1

3

Mexbol

S&P 500

Source: Bloomberg, Credit Suisse estimates

Revised figures showed that the Mexican economy stagnated in 1Q13 q/q and actually

contracted 0.7% q/q in 2Q13 (seasonally adjusted). The economy had not fallen into

negative growth territory (on a sequential basis) since 2Q09. This was not expected in a

year when Mexico was supposed to enjoy a confidence shock driven by the new

administration’s market-friendly reform agenda.

Exhibit 5: Mexico – GDP growth by activity in % growth y/y

Exhibit 6: Mexico – Consensus GDP growth estimates in % growth y/y

-12%

-8%

-4%

0%

4%

8%

12%

2Q06 2Q07 2Q08 2Q09 2Q10 2Q11 2Q12 2Q13

Total Agriculture

Industry Services

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13

E(GDP growth 2013) E(GDP growth 2014)

CSe:

1.3

CSe:

4.2

Source: INEGI, Credit Suisse estimates Source: Banxico, Credit Suisse estimates

In our conversations with investors, we believe many of them blame the slowdown on a

shortfall in government consumption during the transition to the new presidential

administration and high profile financial difficulties of some listed homebuilders. Both of

these issues presumably could be addressed in the short-term. Our chief Mexico

economist, Alonso Cervera, however, sees the issue as broader based. In particular, he

has highlighted the surprising slowdown in manufacturing exports as the most important

factor explaining the GDP disappointment.

01 September 2013


Slowdown was broader based than many investors realize

It is true that the new administration underspent, relative to the public sector budget, the

equivalent to 0.4% of GDP in the first half of 2013. Though the government will likely

spend these funds in the balance of the year, Mexico is undergoing a fiscal tightening in

2013 of 0.6% of GDP, as the fiscal deficit will narrow from 2.6% of GDP in 2012 to an

estimated deficit of 2.0% of GDP in 2013. At the same time, Alonso Cervera estimates the

contraction in the entire construction segment probably shaved just 0.1pp from headline

GDP. See Mexico's vehicle industry buffers the downturn for details.

Exhibit 7: Mexico – PMI index seasonally adjusted

Exhibit 8: Mexico – industrial production growth in % growth y/y, seasonally adjusted

44

46

48

50

52

54

56

Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jul-12 Jul-13

-9.0%

-7.0%

-5.0%

-3.0%

-1.0%

1.0%

3.0%

5.0%

7.0%

Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13

Source: INEGI, Credit Suisse estimates Source: INEGI, Credit Suisse estimates

The element that was perhaps overlooked by investors was the drastic slowdown this year

in Mexico’s non-oil exports (equal to 27% of GDP in 2012). These exports grew at a

healthy rate of about 10% y/y in the first half of 2012 and have slowed to only about 2% in

the first half of this year. The slowdown has occurred despite healthy vehicle exports to the

USA. Exports of non-vehicle manufacturing goods, such as televisions, computers,

machinery and electrical appliances, have been the culprits as explained in the report

Mexico: In need of stronger external demand.

Risk to growth estimates is still to the downside

From the equity perspective, we are concerned that market expectations for GDP growth

may still not be low enough. Industrial production and confidence indicators still do not

show clear signs of a rebound. The current GDP growth estimate from our macro team of

only 1.3% for 2013 is below consensus and the finance ministry’s revised forecast of 1.8%.

Our team’s forecast already accounts for a recovery in industrial output in the US and the

closing of the public spending gap in Mexico in 2H13.

Another concern is that growth estimates for 2014 could also be too high, especially if the

weakness in external demand proves to be more enduring. While market estimates for

2013 have come down, expectations of GDP growth around 4% in 2014 have held firm.

This continues to be our base case, but reaching such growth will require a substantial

acceleration compared to 2013 levels. This acceleration still has substantial uncertainty

around it.

https://plus.credit-suisse.com/u/aaF232

https://doc.research-and-analytics.csfb.com/docView?language=ENG&source=emfromsendlink&format=PDF&document_id=805578820&extdocid=805578820_1_eng_pdf&serialid=eSLKs1lFNHdxjCRS70nxtEQrr%2fngZsmS1Yas2OWU55U%3d

01 September 2013


Exhibit 9: Mexico – non-oil manufacturing exports in % growth y/y, 3-month moving average

Exhibit 10: Commercial bank lending to the private sector in % growth y/y

-35.0%

-25.0%

-15.0%

-5.0%

5.0%

15.0%

25.0%

35.0%

45.0%

Jul-06

Jan-0

7

Jul-0

7

Jan-0

8

Jul-0

8

Jan-0

9

Jul-0

9

Jan-1

0

Jul-1

0

Jan-1

1

Jul-11

Jan-1

2

Jul-1

2

Jan-1

3

Jul-1

3

-25%

-15%

-5%

5%

15%

25%

35%

45%

55%

65%

Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13

Private sector Corporate

Mortgage Consumer

Source: INEGI, Credit Suisse estimates Source: Banxico, Credit Suisse estimates

Exhibit 11: Mexico – unemployment rate in % and 1-year moving average

Exhibit 12: Mexico – producer and consumer confidence Producer confidence on LHS, consumer on RHS

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%


Unemployment rate 1-yr MA

75

80

85

90

95

100

105

110

115

30

35

40

45

50

55

60


Producer (lhs) Consumer (rhs)

Source: INEGI, Credit Suisse estimates Source: INEGI, Credit Suisse estimates

01 September 2013


Earnings: pressured by weaker top line outlook Not surprisingly, lower GDP growth forecasts have had a knock-on effect on consensus

earnings expectations in Mexico. Earnings estimates have been falling steadily and are

currently about 15% lower than where they started the year. This means Mexico’s

earnings have been cut by about the same magnitude as Chile’s, although not as severely

as Brazil’s. Delving a bit deeper, earnings have fallen mainly because of reduced top line

expectations. This makes sense given the GDP shortfall. It may also imply that estimates

could fall further if the market must adjust to even lower GDP expectations.

Exhibit 13: LatAm – consensus EPS 2013 estimates rebased to Jan 2013 = 100

Exhibit 14: LatAm – consensus EPS 2014 estimates rebased to Jan 2013 = 100

MEXBOL

60

70

80

90

100

110

Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13

60

70

80

90

100

110

Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Source: Bloomberg, Credit Suisse estimates Source: Bloomberg, Credit Suisse estimates

Exhibit 15: LatAm – consensus net sales 2013 estimates Rebased to Jan 2013 = 100

Exhibit 16: LatAm – consensus net sales 2014 estimates Rebases to Jan 2013 = 100

MEXBOL

85

90

95

100

105

110


85

90

95

100

105

110

Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Source: Bloomberg, Credit Suisse estimates Source: Bloomberg, Credit Suisse estimates

In terms of sectors, downgrades have taken place across the board. Financials and Health

Care have been among the least downgraded, but even those have not been revised up.

The hardest hit sector has been Industrials, which has been heavily influenced by Cemex.

Cemex earnings expectations were hit by lower than expected 1H13 results, especially

because of soft construction activity in Mexico, and Peso deprecation.

Industrials, Materials and Petrochemicals among hardest hit sectors

Other sectors with the sharpest downward revisions were Materials and

Energy/Petrochemicals. Within Materials, Minera Frisco and Peñoles have fairly low index

weightings, but they have been subject to substantial downgrades. Grupo Mexico

estimates have not been revised as severely, but have still declined, especially after weak

Asarco results in 2Q13. In Energy/Petrochemicals, both of the two sector components,

Mexichem and Alpek, have undergone downward revisions.

01 September 2013


Exhibit 17: Mexico – consensus EPS 2013 estimates by sector rebased to Jan 2013 = 100

30

40

50

60

70

80

90

100

110


Consumer Discretionary Consumer Staples Financials

Health Care Industrials Telecommunication Services

Energy Materials MEXBOL


Better EPS dynamic in recent weeks may not endure

In recent weeks, downward revisions seem to have slowed, causing Mexico to rise on the

earnings momentum scorecard prepared by our colleague, EEMEA strategist Alex

Redman. Our concern is this stability may be temporary, especially because early signs

are that 3Q13 results may still be plagued by soft economic activity. For 2014, we believe

most analysts have not yet factored in negative effects from fiscal reform. This impact,

such as the potential for higher taxes, has not been considered because analysts have not

had sufficient visibility to price it into their models. This is also the case for AMX, the

largest index component, where we have not considered asymmetric regulations into our

estimates for next year due to their uncertain impact. This could be an additional source of

downward revisions.

01 September 2013


Valuation: Mexbol more expensive on lower EPS forecasts We are lowering our target for the IPC index from 46,000 to 45,000 points. We base this

target on the bottoms-up method of assembling CS analysts' target prices. These, in turn,

are mostly derived from DCF analysis. Our IPC target fell mainly as a consequence of our

lower AMX target, which was partly offset by higher targets for Femsa and KOF.

In spite of the decline of 13% in USD terms YTD, we believe the valuation argument for

Mexico has not really improved over this time because (i) Mexico has corrected in line with

overall emerging markets, but has not declined more, and (ii) deterioration in the earnings

outlook has prevented any meaningful compression in Mexico’s P/E multiple.

Mexico still among the most expensive in emerging markets

For 2014, we estimate Mexico is trading at 16x P/E, 2.6x P/B and 8.0x EV/Ebitda. At these

levels, Mexico continues to be among the most expensive markets in EM, along with Chile

and the Philippines. Relative to Mexico’s own historical average P/E multiple, the market is

still above its five year historical average, despite significant downward pressure in the

index during the month of August.

Exhibit 18: Mexbol – 12 months forward P/E Exhibit 19: Mexbol – 12 months forward P/B

PE Fwd 12m

Average

-1stdev

+1stdev

8

10

12

14

16

18

20

Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13

PB Fwd 12m

Average

-1stdev

+1stdev

1.0

1.5

2.0

2.5

3.0

3.5

Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13

Source: Bloomberg, Credit Suisse estimates Source: Bloomberg, Credit Suisse estimates

On a price/book basis, the Mexbol trades above its historical average ratio. This is not

necessarily supported by improvement in ROEs, which have been steady in the 14-15%

range over the past four years. Returns have not recovered to pre-2009 financial crisis

levels.

Exhibit 20: Mexico – historical ROE evolution, 2005 – 2013E in %

16.0%

17.8%18.5% 19.2%

10.4%

14.3%15.3%

14.6% 14.4%

5.0%

7.5%

10.0%

12.5%

15.0%

17.5%

20.0%

2005 2006 2007 2008 2009 2010 2011 2012 2013

ROE


01 September 2013


Reform agenda: a brief recap and what companies are affected Four reform initiatives are most relevant for equity investors, in our opinion. These are:

telecom, financial, energy and fiscal reform. Of these four, the telecom reform is the most

advanced as the constitutional reform was already signed into law. Financial and energy

reform proposals have been announced, but their approval process has not started yet.

They are expected to be addressed in the second ordinary session of congress which

begins in September and lasts through December 15. Finally, the fiscal reform is greatly

anticipated and is expected to be announced by 8 September, as per local news.

Four reforms with the greatest impact for equity investors

We reiterate the view we have held throughout this year, as published in January in our

Latam 2013 Outlook, that overall, while much-needed reforms are essential to improve

Mexico's long term economic outlook, they are a risk factor for the Mexbol in the near

term. The reason is because reforms may imply negative consequences for large index

components like AMX, Femsa and Walmex.

Below we present a recap of the four main reforms and the companies that may either

benefit or suffer negative consequences:

Telco & media / competition reform – approved; most

steps expected in 1Q14

What has happened so far?

Among the first reforms presented by the Pact for Mexico, the reform of the TMT sector

has already been approved by Congress and became law on May 22, 2013. The final

version of the law had few changes versus what was initially presented by the “Pacto”

group.

The most important element of the law, in our view, is that it establishes a new institutional

framework to regulate the sector. It extinguishes the previous regulator (Cofetel) and

replaces it with a constitutionally autonomous regulator, Ifetel. This institutional framework

should give the regulator authority to pursue its objectives of increasing competition,

increasing access to services, and improving service quality. The law mentions specifically

several tools that will be at the regulator’s disposal to achieve these goals, such as

unbundling, oversight of spectrum allocation, and asymmetric rates.

At this point, the president has received a “short list” of potential candidates for Ifetel who

have met the qualification criteria, including passing technical exams. From that list, the

president has picked his first-best candidates and sent their names to the senate for

confirmation, in order to assume their positions at Ifetel. We expect this process to

conclude in the coming weeks.

What happens next?

Going forward, we believe there are two main developments to monitor: (i) passage of

secondary legislation and (ii) labeling of players with preponderant market shares.

Secondary laws. In order to be consistent with the constitutional reform already

enacted, it will be necessary for Congress to modify several existing laws through

secondary legislation. In particular, the current broadcasting and telecom laws

should be merged into a single document that acknowledges technological

convergence. Secondary legislation should be important because it may provide

the fine print about details not already covered in the constitutional text.

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01 September 2013


Preponderance rulings. By 1Q14, we believe one of Ifetel’s first tasks will be to

determine which companies are "preponderant" in their respective markets. The

law says players who have at least 50% market shares may receive this label.

The reason this ruling is relevant is because it will clear the way for Ifetel to apply

asymmetric measures on such preponderant players. This should be an important

phase for equity investors to determine how extensive such measures will be on

companies like AMX and Televisa.

What stocks may be affected?

The main beneficiaries should be smaller telcos who do not receive a preponderance label

and could benefit from restrictions placed on the larger players. The company most at risk

to negative newsflow should be América Móvil in our view.

Exhibit 21: Telecom / media reform – main beneficiaries / benefactors

Companies Negative / Positive Comments

Megacable, NII Holdings, Axtel, and other non-listed players - should

benefit from asymmetric measures imposed on preponderant players.

While this should be positive in general terms, the market should also

become more competitive overall.and other non-listed

Mixed impact as its position as a challenger in telecom (via Iusacell) may,

to some extent, offset more competition from new broadcast licenses and

a tougher pay TV market. Must offer requirement for free to air channels

is estimated to have ~2.5p.p. Ebitda margin hit.

Higher competition from 2 new broadcast tv entrants. Must offer

requirement (free to air channels) should not have significant impact on

financials.

More powerful regulator, likely asymmetric measures, potential unbundling of

parts of their network and more competition, especially with potential entrance

of MVNOs as the government sets up a wholesale wireless distribution

network in the mid-term.

Source: Credit Suisse

Financial reform – improving Mexico's lending

outlook, expected to be discussed in 2H13


In early May, President Peña Nieto introduced his financial reform initiative. We think the

five main elements of this proposal are:

1. Simplifying the execution of posted collateral, as the government seeks to

stimulate the banks to offer lower lending rates.

2. Enhancing SME credit, by allowing development banks to channel resources via

commercial banks (hence not directly competing with the latter).

3. The creation of a universal credit bureau, which will include information from non-

regulated, non-bank lenders (which currently do not report any such data). This is

especially positive for Compartamos and Findep, which compete head-to-head

with such type of lenders.

4. On the negative side, the potential for the CNBV (banking regulator) to limit

banks' proprietary trading, to pursue higher allocation of resources to lending.

01 September 2013


5. More competition from the implementation of portability of collateral, enabling

borrowers to transfer credit from one bank to another. Also, the reform requires

the antitrust authority to conduct a study of competition in the financial sector and

impose any appropriate corrective measures; this should not be highly concerning

for listed banks, however, given the presence of 2 larger, non-listed institutions.

For more details please see analyst Marcelo Telles' report, Financial reform: more pros

than cons.

What happens next?

Because this reform was only announced after the last session of congress concluded, so

far no action has been taken towards its approval. In contrast to the TMT and energy

reforms, the financial reform is not a constitutional one. This means the changes need to

be approved by a simple majority only, rather than 2/3 of Congress. This should make

approval relatively straightforward. Local news sources have reported that the financial

reform may take a backseat to higher priority reforms, namely energy and fiscal. In this

case, the financial reform may only be considered late this year or could even slip to next

year.


Our banks team was relieved to see the proposed reform did not take the route of rate

caps and mandatory lending. Overall, they believe the reform is constructive for the sector

and should be positive over the long-term for the listed financial institutions, such as GF

Banorte, Compartamos, Inbursa, Findep and Santander Mexico.

For the shorter-term, they basically see two negative aspects. First, the four month study

by anti-trust authorities on the competitive landscape could create some uncertainty,

especially for larger banks. Second, the level of interference the CNBV may have on

banks’ proprietary trading is still unclear. These elements of the reform that could increase

risks for shareholders of GFNorte and Santander

Energy reform – we expect it to be debated and

approved before yearend


In the case of energy reform each of the three main political parties presented its own

proposal during the month of August. This differs from other reforms which were

announced by the unified “Pacto” and were already born with implicit support from the

three main parties.

The energy proposal from the PAN is the most liberal in its range of solutions. It would

allow private companies to participate via concessions and effectively end the state’s

monopoly on oil, hydrocarbons, petrochemicals and electricity, without imposing

restrictions on the nationality of potential private sector investors in the future.

On the other hand, the least aggressive reform is from the PRD, which would only change

secondary laws without actually altering the Constitution.

The PRI's proposal stands in the middle. It would allow for risk sharing contracts with the

private sector for exploring and exploiting hydrocarbons, but it stops short of permitting

concessions. The proposal implicitly allows for the private sector to generate, transform,

and supply electricity, while the state would be in charge of the national electricity system

and of the transmission and distribution of electricity.

https://doc.research-and-analytics.csfb.com/docView?language=ENG&source=emfromsendlink&format=PDF&document_id=1016239391&extdocid=1016239391_1_eng_pdf&serialid=pDsviv0O%2fGblZKrUG0PNk1IOfecrfjJhOAez0ukHWag%3d

https://doc.research-and-analytics.csfb.com/docView?language=ENG&source=emfromsendlink&format=PDF&document_id=1016239391&extdocid=1016239391_1_eng_pdf&serialid=pDsviv0O%2fGblZKrUG0PNk1IOfecrfjJhOAez0ukHWag%3d

https://plus.credit-suisse.com/r/UdAsXw

https://plus.credit-suisse.com/u/mEOlVc

https://plus.credit-suisse.com/r/jTsQxh

01 September 2013


Exhibit 22: Energy reform – comparing the main characteristics of PRI, PAN, PRD proposals A

pp

roac

h t

o

elec

tric

ity

sect

or

Tre

atm

ent

of e

xces

s

oil

reve

nu

es

Ap

pro

ach

to

hyd

roca

rbo

ns

Tre

atm

ent

of t

he

con

stit

uti

on

Approach to Pemex's autonomy

Against changing key articles in the constitution.

Instead seeks to change 12 existing secondary

laws to strengthen the oil and electricity

monopolies, and to write a new law on an

excess oil fund.

Pemex maintains exclusive direction of the

petrol industry, thus guaranteeing the nation's

energetic security.

Eliminates prohibition on granting contracts for exploration and

exploitation of hydrocarbons. Maintains prohibition on granting

concessions (as "they do not ensure the authentic control by

the State of oil reserves"). Allows private sector to participate in

refining, transportation, warehousing and distribution of

hydrocarbons, through permits. Secondary legislation will

determine terms of oil contracts, but in principle, payments will

be a function of results and will be made either in cash or

"equivalents to a percentage of resources obtained.” Profit

sharing contracts will be progressive and they will be

administered by the state.

Removes prohibition on concessions and

contracts related to oil and hydrocarbons. The

PAN's proposal seeks to eliminate the state's

monopoly on oil, hydrocarbons and

petrochemicals, with no restriction on the

nationality of potential private investors.

Proposes creation of the excess oil revenues

fund. Pemex would contribute to this fund when

actual oil prices exceeded budget estimates by

up to 33%. Fund resources would be used to

compensate unexpected declines in oil

revenues, finance "priority“ projects in the oil or

other sectors, including mass transportation and

R&D.

No explicit mention of the creation of an oil fund. Proposal

states that tax revenues will increase as the sector grows.

Proposes the creation of the Mexican Oil Fund,

which would be in charge of registering oil and

hydrocarbon reserves, and to whom Pemex and

other operators would pay for exploration rights.

The state maintains exclusivity over the

generation, conduction, transformation,

distribution and supply of electric energy.

Allows private sector to generate, transform, and supply electricity,

while the state would be in charge of the national electricity

system and of the transmission and distribution of electricity.

Contract terms (state - private companies) would be set in

secondary legislation.

Similarly to the treatment given to hydrocarbons,

it would remove the state's exclusivity in

electricity and would allow for private sector

participation.

More liberal– +

Ap

pro

ach

to

Pem

ex's

sub

sid

iari

es Integrate all Pemex subsidiaries into a single

entity, to achieve economies of scale.Restructures Pemex and its subsidiaries into two divisions: i)

exploration and production and ii) industrial transformation.

Subsidiaries can compete with other private

companies and / or ally between themselves in

the production process.

Ap

pro

ach

to

Pem

ex's

auto

no

my It proposes to give Pemex full budgetary and

operational autonomy. Also seeks to change

Pemex's fiscal regime in a gradual fashion, by

lowering the tax rate on rights over hydrocarbons.

No explicit mention.No explicit mention about Pemex's autonomy.

The sector regulator would have full budgetary

and operational autonomy.

Both PRI and PAN propose changes to Article 27 (which currently states that oil / hydrocarbons are of the exclusive

dominion of the state, and that no concessions will be granted for oil or hydrocarbons, neither for any link in the

electricity supply chain), and to Article 28 (which says that the state has the exclusive monopoly on areas like oil and

hydrocarbons, and electricity, among others) of the Constitution.

Tre

atm

ent

of

the

oil

un

ion IProposes to reform Pemex's corporate

governance to allow for a greater participation of

“professional” board members (e.g., removing

representatives from oil union and the federal

government, including the minister of finance).

No explicit mention.Would remove members of the oil union from

Pemex's board of directors.

Source: Political parties' proposals, Credit Suisse

What happens next?

Our economist, Alonso Cervera, thinks that PAN and PRI will find some middle ground on

eventual constitutional changes, while possibly embracing some of the PRD's proposals in

the secondary laws, particularly on the gradual decline of the tax burden on Pemex. This

negotiated outcome would then be presented to Congress for approval in both houses.

01 September 2013


Because this is a constitutional reform, it would also require a minimum number of state

legislatures to approve it.

Although some investors were disappointed the PRI’s reform was not more ambitious, our

team feels that if approved, it will still be a massive achievement that would allow Mexico

to unlock vast potential in its energy sector. This sector has been exclusively run by the

state since 1938. Our macro team points to opinion polls which show that the majority of

Mexicans understand the need to reform the sector. This bodes well for eventual approval

of an important reform.

For more details on Mexico’s hydrocarbon history and potential, please refer to our energy

team's report, Change The Constitution - Change Mexico's Future.


Exhibit 23: Energy reform – main beneficiaries at an early / later stage

Companies Comments

Does not have any imminent new project with Pemex. Its opportunity

likely relies on being allowed to operate Pemex's existing, underutilized

ethylene crackers, but they would need to be able to secure the raw

material (ethane), which is only possible if natural gas extraction grows.

May need some years after the new rules start to have better visibility.

It builds and sells/leases jack-up oil rigs. It also offers drilling service. It is

positioning itself as the domestic E&P infrastructure developer. Through

its subsidiary Swecomex, the company has won interesting bids in the

last years—including platform leasing and oil well infrastructure—and is

poised to capture benefits within service providing for Pemex.

The company has partnered up with E&P companies for projects in the

US shale sector and Mexican mature oil fields. However, they are

relatively new in the industry and, therefore, we do not have enough

visibility regarding their strategy in Mexico to place them as an early-

stage beneficiary.

Largest private energy infrastructure operator, with a 29% participation in the

pipeline market in Mexico. Although it currently focuses on gas pipelines, with

the reform they could enter opportunities in oil pipelines and the storage

business, just to name a couple.

They do have some more specific projects with Pemex, but the most

advanced one is the MEG project, for which Pemex needs to secure the

availability of ethane. We believe visibility on the supply of such raw

materials will improve only after new rules for JVs, partnerships and

potentially asset disposals are created.

One of the largest domestic oil rig leaser of deep water jack-ups, and also

active in shallow water and land leasing. Service provider for Pemex in

land and water. With its 5 jack-ups and 2 modular equipment, the

company seems to be migrating toward E&P service providing in several

fronts.

Ear

ly s

tag

eL

ater

sta

ge

Mid

-ter

m

Source: Credit Suisse

https://doc.research-and-analytics.csfb.com/docView?language=ENG&source=emfromsendlink&format=PDF&document_id=1021431491&extdocid=1021431491_1_eng_pdf&serialid=n%2bzbbU6on6WbqRZHRyGF5LmmiJ%2f3jZMI0fHjA9g4sDU%3d

01 September 2013


Fiscal reform – still in the works, more light expected

soon


So far, no official announcement has been made on the fiscal reform proposal. As

negotiations are taking place behind closed doors, this is the major reform where details

are most opaque. In broad strokes, we know the government's main intentions should be

to broaden the tax base, reduce the public budget's dependency on oil revenues, increase

tax collections and increase efficiency by reducing corporate tax loopholes and attacking

tax evasion.

Some of the potential elements of the reform reported by the local press include:

A higher statutory income tax rate for the wealthier population brackets and

corporations, on a progressive basis.

Higher VAT rate and the introduction of a VAT on food and medicines.

Higher excise taxes on soft drinks, beer and cigarettes.

Introduction of a capital gains tax on stock market transactions.

What happens next?

The president will present the fiscal reform along with the 2014 budget initiative around 8

September, according to media reports. Similar to the financial reform, the fiscal reform

will not involve amending the constitution. We think that the fiscal reform will be eventually

approved by the PRI and the PVEM blocs in Congress. This will require that some

opposition legislators do not show up to the vote in the plenary session so that the PRI

and PVEM votes become a simple majority.


Higher corporate tax rates could be negative for the Mexbol overall. An increase in taxes

may be a negative for the short-term consumption environment. More specifically, we see

highest negative exposure is in the foods sector (e.g., Bimbo, Herdez), followed by

pharma (e.g., Genomma Lab) and retailers (e.g., Walmex, Chedraui). See analysts

Antonio González's and Alonso Cervera's Analyzing a Potential Fiscal Reform for further

details.

https://doc.research-and-analytics.csfb.com/docView?language=ENG&source=emfromsendlink&format=PDF&document_id=1002793251&extdocid=1002793251_1_eng_pdf&serialid=4DDD5o%2b5SMXJVV936z7HOZxVuzV4wI0lu9pti91ZAUc%3d

01 September 2013


Exhibit 24: Mexico retail and consumer goods – impact from a potential hike on VAT in food and medicine Darker (lighter) shading denotes a higher (lower) impact

Format

Segmentation*Geography

Price

Elasticity

VAT Exempt

Products

Overall

Risk

NANA35100 68

NANA3599 67

NA10022

51 58

3982

3545 50

21

913550 49

24543550 41

NANA48024

NA10

3524 23

NA10

3512

19

NANA35018

NA10

352

16

NANA48024

NANA35018

Source: Company data, Credit Suisse estimates

01 September 2013


A weaker Peso – who benefits? Like most major EM currencies, the Mexican Peso has depreciated because of the

increase in US yields in anticipation of Federal Reserve tapering. It has depreciated from

$12.93 to $13.38/US$ (3.5%) since the end of the second quarter. Compared to other

major LatAm currencies, the Peso has actually depreciated less this year than other

regional currencies like the BRL, PEN and COP. Looking from a REER perspective, the

depreciation in the Peso doesn't look severe enough to put the currency on inexpensive

grounds.

Exhibit 25: Emerging markets currencies performance rebased to 28 June 2013 = 100

95

100

105

110

115

120

28-Jun 5-Jul 12-Jul 19-Jul 26-Jul 2-Aug 9-Aug 16-Aug 23-Aug 30-Aug

Mexican Peso Brazilian Real

Chilean Peso Turkish Lira

South Korean Won Indian Rupee


Despite the recent selloff in the Peso, economist Alonso Cervera has maintained his

forecast of 12.25 MXN / USD for yearend 2013. He bases this expected appreciation on

the strong fundamentals of the Mexican economy and the prospect for game-changing

reforms to the oil, gas, and electricity sectors, which could increase FDI flows for these

sectors.

Exhibit 26: Mexican Peso – REER, 2005-2013 in % deviation from 10-year moving average

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

Jan

-05

Jun

-05

No

v-0

5

Ap

r-0

6

Sep

-06

Feb

-07

Jul-

07

De

c-0

7

May

-08

Oct

-08

Mar

-09

Au

g-0

9

Jan

-10

Jun

-10

No

v-1

0

Ap

r-1

1

Sep

-11

Feb

-12

Jul-

12

De

c-1

2

May

-13


Earnings impact – main stocks favorably / adversely affected by a weaker Peso

Although our base case is for some recovery in the Peso, we are conducting a sensitivity

analysis on main Mexican names within the CS coverage universe to determine which

companies are most positively / negatively affected in weak Peso environment. Our

sensitivity analysis is based on a yearend rate of MxN$13.35/US$ versus our current

forecast of $12.25 MXN / USD.

01 September 2013


By and large, the companies that benefit the most from a weak Peso are those with USD-

denominated revenue streams, low USD costs, and low foreign currency leverage.

Companies in the metals & mining and petrochemicals sectors stand out on the positive

side due to their USD-linked top line.

On the other hand, companies with local currency revenue streams, USD-linked costs and

foreign currency debt exposure are the companies most negatively affected by a weak

Peso. As an example, bottlers are among the most unfavorably impacted due to the costs

of sweetener and packaging, which are denominated in USD.

Exhibit 27: Mexico – Winners / losers from a weaker peso, assuming MXN/USD depreciation from 12.25 to 13.35 in %. Companies ordered by % impact on Ebitda, from the most favoured to the most adversely impacted.

Company% Revenues

in USD

% Cash costs

in USD

% Debt

in USD

Ebitda 2013

impact (%)

NI 2013

impact (%)Comments

ICH 100% 80% 0% 24% 70%Top line is essentially pegged to the dollar due to commodity prices, while operating costs

are only partly based in USD.

TERNIUM 100% 72% 75% 22% 29%Revenues are in USD due to exports, while operating costs are only partially in USD and FX

translation losses only partially offset.

GMEXICO 100% 70% 90% 13% 13%Top line is essentially pegged to the dollar due to commodity prices, while operating costs


MFRISCO 100% 70% 80% 12% -34%

Top line is essentially pegged to the dollar due to commodity prices, while operating costs

are only partly based in USD. Negative impact on net income due to high FX losses (on high

leverage).

PEÑOLES 100% 90% 10% 12% 36%Top line is essentially pegged to the dollar due to commodity prices, while operating costs


ALPEK 100% 99% 100% 10% 16%Practically all operations are dollarized, implying upside risk to Ebitda in Peso terms, but

positive impact would be partially offset by negative translation effect on USD debt.

MEXICHEM 70% 60% 31% 10% 21%Mexichem has positive impact due to export revenues which are partly offset by US

operating costs and US debt.

VESTA 78% 5% 100% 8% -81%Vesta has favourable effect on Ebitda due to high proportion of USD rent terms. However,

net income is negatively impacted by translation effect of USD debt (non-cash).

ASUR 23% 0% 0% 4% 5%Asur has net negative impact due to rental income (e.g., Cancun rents and other commercial

rents) that is denominated in USD while operating costs are locally based.

TELEVISA 17% 18% 47% 1% 1%

TV has a small positive effect on Ebitda as USD revenues (e.g., Univision royalties) almost

offset by content purchased in dollars and leasing of satellite transponders in USD. At net

income level, this is counterbalanced by negative translation effect, due to USD debt

exposure that exceeds value of debentures loaned to UVN.

AMX 19% 22% 45% 1% -17%

AMX has natural hedge on USD operations (Tracfone, Ecuador, Central America),

counterbalanced by USD handset costs. Impact on net income mostly comes from USD

debt exposure.

CX 21% 24% 80% 0% -638%

Cemex has natural hedge operationally with US exposure, but negative impact on net income

is significant due to a low net income base (-1% net margin expected in 2013) and its high

US$ debt exposure.

CHDRAUI 21% 22% 14% 0% -3%Revenues and costs related to US stores have natural hedge, but company is on slightly net

negative grounds due to the translation effect of USD debt.

GFAMSA 12% 16% 0% -1% -5%Famsa's Ebitda has small adverse effect as costs related to stores in the USA are almost

offset by USD revenues.

TV AZTECA 8% 21% 51% -2% -10%Negative impact on Ebitda as revenues from operations in USA and exports are insufficient

to offset costs of purchased content and leasing of satellite transponder capacity.

AC 10% 23% 0% -4% -7%AC gets slightly adverse impact due to USD-based sweetener and packaging costs. USD

revenues are generated in Ecuador and mostly have natural hedge.

KOF 0% 12% 48% -4% -14%Sweetener and packaging costs, based in USD, take a toll on KOF's Ebitda. Revenue

streams are in local currency.

ALSEA 0% 13% 0% -8% -29%Inputs like wheat and cheese are purchased in USD. While the company typically hedges

these costs, they do not currently have any hedges.

CULTIBA 6% 18% 41% -15% -50%Cultiba is negatively impacted as USD revenues (sugar exports) are insufficient to offset

costs from sweetener and packaging, which are USD-denominated.

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01 September 2013


Brazil model portfolio Brazil – Main Changes to September Portfolio

For September, we are increasing substantially our underweight on the Cyclicals sector in

order to take profits on FX-plays that performed strongly in August, while redistributing this

exposure to FX plays outside of Cyclicals (namely to the Petrochemicals and Foods

sectors). We also make a change in our domestic exposure by switching from Healthcare

to Software.

Stock-picking within FX plays. We are changing our preferences within FX plays. This

re-positioning is the result of recent stock performance and our effort to choose stocks

whose current FX level is not yet priced in and/or those with a better macro/micro

environment.

We are removing Suzano (SUZB5, +21% in August) and reducing Gerdau (GGBR4,

+18%) to increase exposure to Braskem (BRKM5, -0.2%) and Brasil Foods (BRFS3,

+14%). We believe the current FX rate is well reflected in the price of Gerdau in the face of

a possible downturn in domestic vehicle production. We believe current FX is also well

reflected in the price of Suzano ahead of a possible decline in pulp prices.

Adding to Foods and Petrochemicals. On the other hand, the prospect of very strong

results in 3Q13 for Brasil Foods and Braskem, boosted by depreciated BRL, should

become more evident in the weeks ahead. Such results are not completely priced in yet,

according to our analysts Vinicius Canheu / Andre Sobreira (Oil & Petrochemicals) and

Alexandre Amson (Foods). Both stocks are trading at attractive valuations. Braskem, at

4.1x 2014 EV/EBITDA is at a substantial discount to the Brazilian market. Brasil Foods

currently trades at 19.2x 2014 P/E and may face upward EPS revisions on the back of

synergy initiatives from new management.

Keeping exposure but changing the pick in Education. We are shifting our exposure

from Estacio (ESTC3, -0.3%) to Abril Educação (ABRE11, -6%). According to our analyst,

Clarissa Berman, ABRE offers a balanced risk-reward with 33% upside to the 12m TP of

R$44/share. Abril trades at a discount when compared to peers. Attractive returns and

cash flows deserve higher multiples. She believes execution risk and synergy capture are

already reflected in Abril's current valuation level.

Removing Qualicorp and adding Totvs. We are removing Qualicorp (QUAL3, +12%)

owing to a tougher macro scenario, likely lackluster 3Q results, lack of momentum, and

recent strong performance. We shift exposure to Totvs, as an alternative source of

domestic exposure. 2Q13 results for Totvs suggested a recovery in license sales may be

underway at a time when market expectations for growth have come down significantly.

Totvs should be an interesting play, resilient in a weak scenario and performing well in a

more positive scenario for economy in the event a stronger recovery amongst its industrial

clients.

01 September 2013


Exhibit 28: Brazil – CS portfolio summary

13E 14E 13E 14E

ITAUUNIBANCO ITUB4 O 19.0% BRL 29.00 40.00 38% 60,951 1.6x 8.7x 7.3x 1.6x 1.4x 18%

PETROBRAS PBR O 15.0% USD 13.52 25.00 85% 88,181 0.4x 7.4x 6.4x 5.4x 4.8x 7%

VALE VALE N 8.0% USD 14.41 22.00 53% 75,408 0.9x 6.7x 13.3x 5.0x 5.9x 14%

BRADESCO BBDC4 N 6.0% BRL 27.71 36.36 31% 52,289 1.4x 9.0x 7.9x 1.4x 1.2x 15%

BRF FOODS BRFS3 O 6.0% BRL 55.20 55.00 0% 20,184 3.0x 24.1x 19.7x 13.5x 11.0x 12%

CIELO CIEL3 O 5.0% BRL 58.41 65.00 11% 19,244 12.7x 17.0x 15.2x 10.4x 9.6x 75%

BRASKEM BRKM5 O 4.0% BRL 17.55 21.00 20% 5,333 1.4x 8.8x 6.7x 5.2x 4.1x 16%

LIGHT LIGT3 O 4.0% BRL 18.00 20.00 11% 1,538 1.1x 8.7x 10.9x 5.9x 6.7x 13%

AMBEV AMBV4 N 3.0% BRL 83.20 83.00 0% 109,578 8.8x 23.5x 21.7x 14.8x 13.5x 38%

CYRELA REALT CYRE3 O 3.0% BRL 15.72 20.50 30% 2,745 1.2x 8.0x 7.0x 8.7x 7.6x 15%

TOTVS TOTS3 N 3.0% BRL 37.40 43.00 15% 2,561 5.7x 20.9x 17.5x 14.0x 12.2x 27%

MILLS MILS3 O 3.0% BRL 29.60 37.00 25% 1,579 3.6x 17.4x 14.5x 9.2x 7.7x 21%

ABRIL EDUCAÇÃO ABRE11 N 3.0% BRL 33.00 44.00 33% 2,874 1.7x 17.1x 10.5x 9.1x 7.4x 10%

COSAN CSAN3 O 2.5% BRL 41.58 59.00 42% 7,096 1.3x 26.5x 14.0x 7.9x 6.1x 5%

METAL LEVE LEVE3 N 2.0% BRL 27.55 30.00 9% 1,481 2.5x 16.5x 13.9x 8.6x 7.9x 15%

MINERVA BEEF3 O 2.0% BRL 10.80 18.00 67% 663 1.2x 8.2x 8.6x 4.9x 5.0x 14%

SMILES SMLE3 O 2.0% BRL 27.50 41.00 49% 1,408 3.1x 18.8x 15.2x 25.6x 18.8x 16%

BRMALLS BRML3 O 2.0% BRL 18.10 26.50 46% 3,467 1.0x 19.8x 14.9x 12.2x 10.6x 5%

IGUATEMI IGTA3 O 2.0% BRL 22.00 29.00 32% 1,628 1.7x 21.3x 15.0x 13.2x 9.7x 8%

CESP CESP6 O 2.0% BRL 21.25 24.00 13% 2,743 0.7x 5.4x 4.0x 3.0x 2.8x 12%

BMFBOVESPA BVMF3 O 2.0% BRL 11.69 13.50 15% 10,014 1.2x 18.7x 15.5x 13.3x 11.8x 6%

GERDAU GGBR4 O 1.5% BRL 17.15 18.00 5% 11,728 1.1x 40.4x 24.2x 10.2x 8.5x 3%

Portfolio mean 2.3x 12.9x 11.1x 7.0x 6.2x 17%

Ibovespa 0.6x 12.4x 9.9x 7.3x 6.7x 12%

Upside

(%)

Last

Close

Target

PriceCompany Ticker CurrencyRating

CS

Weight

Mkt Cap

(mn)

13

P / B

13E

ROE

P / E EV / EBITDA

Source: Bloomberg data, Credit Suisse estimates Note: For the Banks, EV/EBITDA fields stand for P/B

01 September 2013


Exhibit 29: Brazil – CS portfolio for September

SectorsIBX100

Weight

CS

Weight

Active

WeightRating Portfolio

Financials 24.0% 27.0% 3.0% OVERWEIGHT

Banks 21.0% 25.0% 4.0% OVERWEIGHT Bradesco (6.0%), Itaú (19.0%)

Exchanges 3.0% 2.0% -1.0% UNDERWEIGHT BVMF (2.0%)

Utilities 5.8% 6.0% 0.2% MARKETWEIGHT CESP (2.0%), Light (4.0%)

Telecom 2.3% 0.0% -2.3% UNDERWEIGHT No exposure

Transportation 2.1% 0.0% -2.1% UNDERWEIGHT

Aerospace 1.5% 0.0% -1.5% UNDERWEIGHT No exposure

Airlines 0.1% 0.0% -0.1% UNDERWEIGHT No exposure

Car Rental 0.5% 0.0% -0.5% UNDERWEIGHT No exposure

Media/Technology/Services 0.6% 5.0% 4.4% OVERWEIGHT Smiles (2.0%); Totvs (3.0%)

Healthcare 1.0% 0.0% -1.0% UNDERWEIGHT No exposure

Education 1.9% 3.0% 1.1% OVERWEIGHT Abril Educacao (3.0%)

Industrials 1.3% 2.0% 0.7% OVERWEIGHT Mahle Metal Leve (2.0%)

Agribusiness 0.5% 2.5% 2.0% OVERWEIGHT Cosan (2.5%)

Oil & gas 12.0% 15.0% 3.0% OVERWEIGHT Petrobras (15.0%)

Cyclicals 16.5% 9.5% -7.0% UNDERWEIGHT

Mining 11.4% 8.0% -3.4% UNDERWEIGHT Vale (8.0%)

Pulp & paper 1.7% 0.0% -1.7% UNDERWEIGHT No exposure

Steel 3.4% 1.5% -1.9% UNDERWEIGHT Gerdau (1.5%)

Consumption 22.3% 16.0% -6.3% UNDERWEIGHT

Retail 4.9% 0.0% -4.9% UNDERWEIGHT No exposure

Beverage & Tobacco 8.9% 3.0% -5.9% UNDERWEIGHT Ambev (3.0%)

Foods 6.2% 8.0% 1.8% OVERWEIGHT Brasil Foods (6.0%), Minerva (2.0%)

Payment Process 2.1% 5.0% 2.9% OVERWEIGHT Cielo (5.0%)

Building Materials 0.3% 0.0% -0.3% UNDERWEIGHT No exposure

Real Estate 3.4% 7.0% 3.6% OVERWEIGHT

Homebuilder 1.6% 3.0% 1.4% OVERWEIGHT Cyrela (3.0%)

Properties 1.8% 4.0% 2.2% OVERWEIGHT BR Malls (2.0%); Iguatemi (2%)

Infrastructure 3.0% 3.0% 0.0% MARKETWEIGHT

Logistics 0.7% 3.00% 2.3% OVERWEIGHT Mills (3%)

Toll Roads 2.3% 0.0% -2.3% UNDERWEIGHT No exposure

Petrochemical 0.5% 4.0% 3.5% OVERWEIGHT Braskem (4.0%)

Fuel Distribution 3.0% 0.0% -3.0% UNDERWEIGHT No exposure

Total 100.00% 100.0%

Source: Bloomberg data, Credit Suisse estimates

01 September 2013


Mexico model portfolio Mexico – Main changes to September portfolio

This month, our changes are mostly tactical. While we maintain our underweight stance in

both the Consumer and Financials sectors, we trim slightly the magnitude of our

underweight in both. We finance this by reducing our exposure to Cyclicals and Telecoms.

Our revised allocation is indexed to the new IPC composition, which will be valid beginning

September 2.

Banks: reducing underweight. We act on analyst Marcelo Telles' recommendation to

add Inbursa to the portfolio, and reduce our exposure to Banorte from over- to

underweight. Telles reinstated coverage on Inbursa in August and he believes it is a

misunderstood investment story. The bank’s strategic initiatives to diversify away from

commercial lending have been very successful. Inbursa also has shown better

performance on monthly data published by the banking regulator. Meanwhile, our

exposure to Banorte versus the benchmark declines partly because we chose not to

accompany the increase Banorte’s weighting in the revised IPC.

Retail: reducing underweight. We add back Sanborns to our portfolio. Sanborns is

among the best performing operations in the retail sector, and has significant upside of

32% to Antonio Gonzalez’s target price. Our large underweight in Walmex diminishes due

to the index rebalancing whereby the stock loses nearly 4 p.p. of index weight. A smaller

underweight seems warranted after the stock’s underperformance in August. From a

fundamental standpoint, analyst Antonio González continues to rate the shares

Underperform and points to a persistently weak SSS growth trend at Walmex.

Real Estate: stay overweight, but changing our picks. We keep our exposure to Real

Estate but we switch our exposure from Fibra Inn to Vesta. We remove Fibra Inn partly on

concerns about the level of cap rates for new acquisitions. Analyst Vanessa Quiroga

recently reduced her Ebitda margin estimates and target price to consider a higher WACC.

On the other hand, Vesta's business outlook looks strong due to momentum in the

Mexican auto and aerospace sectors, where most of Vesta’s pipeline is concentrated.

Cement: less overweight. Cemex is one of the stocks which gains the most weight in the

IPC index rebalance. We choose not to add to Cemex, thereby allowing that to reduce our

overweight. Analyst Vanessa Quiroga maintains a positive view on the shares, but

exposure to Egypt could put pressure in the short-term. Cemex's results in Mexico may be

restrained by delays in the launching of the National Infrastructure Plan. In addition, we

point out that Cemex ranks poorly on the HOLT scorecard.

Petrochemicals: going to market weight. By dropping Alpek from our portfolio, but

maintaining our position in Mexichem, we are moving to neutral weight in the sector.

Analysts Vanessa Quiroga and Santiago Perez-Teuffer think Alpek is going through a

period of weak operational momentum and rate the shares as Neutral. While Alpek should

be favorably exposed to the energy reform, the direct impact on the company should only

come at a later stage of development of the energy industry.

01 September 2013


Exhibit 30: Mexico – CS portfolio summary

13E 14E 13E 14E

América Móvil AMXL N 12.4% USD 19.30 26.50 37% 69,154 3.9x 9.9x 8.9x 4.9x 4.8x 39%

Grupo Mexico GMEXICOB O 10.1% USD 38.20 52.00 36% 22,247 2.5x 14.1x 15.5x 6.6x 6.1x 18%

Televisa TLEVICPO O 9.2% USD 25.15 30.00 19% 14,366 2.6x 23.4x 23.6x 7.4x 7.1x 11%

Cemex CEMEXCPO O 8.0% USD 11.24 11.54 3% 12,912 1.2x n.a 36.5x 9.5x 8.4x -2%

Banorte GFNORTEO O 7.6% MXN 83.49 90.00 8% 17,324 1.9x 17.2x 13.8x 1.9x 1.7x 10%

Femsa FEMSAUBD U 7.3% MXN 126.48 130.00 3% 33,856 2.2x 24.1x 20.3x 11.3x 9.9x 9%

Walmex WALMEXV U 5.0% MXN 32.04 37.00 15% 42,348 3.9x 21.1x 17.6x 11.5x 10.0x 18%

IEnova IENOVA* O 4.5% USD 49.71 55.00 11% 4,291 1.9x 28.8x 29.2x n.a. n.a. 7%

Fibra Hotel FIHO12 O 3.0% MXN 24.00 27.00 13% 544 1.2x n.a 23.3x 16.0x 7.0x 2%

GAP PAC.N O 3.0% MXN 50.04 65.00 30% 2,837 1.7x 14.7x 15.4x 11.8x 11.7x 12%

Inbursa GFINBURO O 3.0% MXN 28.48 36.00 26% 14,204 2.2x 24.4x 15.7x 2.2x 1.9x 9%

Vesta VESTA O 3.0% MXN 26.11 32.00 23% 982 1.4x 49.7x 32.9x 25.0x 21.0x 3%

Mexichem MEXCHEM* O 2.7% MXN 53.20 80.00 50% 8,358 2.4x 18.5x 16.4x 8.1x 7.4x 13%

ASUR ASURB O 2.5% MXN 149.95 169.00 13% 3,108 0.3x 1.9x 1.9x 12.9x 12.1x 13%

ICA ICA* O 2.0% MXN 27.45 36.00 31% 1,242 1.3x n.a n.a 14.3x 11.4x -6%

Compartamos COMPARC* O 2.0% MXN 23.43 27.00 15% 2,831 3.9x 17.2x 14.7x 3.9x 3.3x 23%

Sanborns GSNBRB1.MX O 2.0% MXN 28.07 37.00 32% 9,057 2.4x 20.0x 16.7x 19.9x 17.4x 12%

Peñoles PENOLES N 1.7% USD 407.80 440.00 8% 12,126 3.2x 28.4x 31.8x 9.3x 8.7x 11%

Alfa ALFAA N.C 5.4%

Kimberly-Clark KIMBERA N.C 2.3%

Grupo Bimbo * BIMBOA N.C 1.9%

Grupo Elektra * ELEKTRA* N.C 1.4%

Portfolio mean (covered companies) 2.0x 13.8x 15.9x 6.8x 5.9x 12%

Mexbol Mexbol 2.2x 18.6x 14.1x 8.9x 7.7x 17%

Company Ticker RatingCS

Weight

Target

Price

13E

ROEP / E EV / EBITDA

Upside

(%)Currency

Last

Close

Mkt Cap

(US$ mn)

13

P / B

Source: Bloomberg data, Credit Suisse estimates Note: For the Banks, EV/EBITDA fields stand for P/B

Exhibit 31: Mexico – CS Portfolio for September

SectorsIPC

Weight

CS

Weight

Active

WeightRating Portfolio

Telecom 23.2% 21.6% -1.5% UNDERWEIGHT

Telecom 16.4% 12.4% -3.9% UNDERWEIGHT América Móvil (12.4%)

Media 6.8% 9.2% 2.4% OVERWEIGHT Televisa (9.2%)

Conglomerates 5.4% 5.4% 0.0% MARKETWEIGHT Alfa (5.4%)

Energy 0.5% 4.5% 4.0% OVERWEIGHT Ienova (4.5%)

Airports 2.1% 5.5% 3.4% OVERWEIGHT ASUR (2.5%), GAP (3.0%)

Cement & Construction 9.9% 16.0% 6.1% OVERWEIGHT

Cement 7.1% 8.0% 0.9% OVERWEIGHT Cemex (8.0%)

Real Estate 0.0% 6.0% 6.0% OVERWEIGHT Fibra Hotel (3.0%), Vesta (3.0%)

Infrastructure 2.8% 2.0% -0.8% UNDERWEIGHT ICA (2.0%)

Consumption 33.1% 19.9% -13.2% UNDERWEIGHT

Retail 11.5% 8.5% -3.0% UNDERWEIGHT Walmex (5.0%), Sanborns (2.0%), Elektra (1.4%)

Packaged goods 5.6% 4.2% -1.4% UNDERWEIGHT Grupo Bimbo (1.9%), Kimberly (2.3%)

Beverage 16.0% 7.3% -8.7% UNDERWEIGHT Femsa (7.3%)

Financials 15.0% 12.6% -2.4% UNDERWEIGHT

Banks 14.5% 12.6% -1.9% UNDERWEIGHT Banorte (7.6%), Inbursa (3.0%), Compartamos (2.0%)

Exchanges 0.5% 0.0% -0.5% UNDERWEIGHT No exposure

Cyclicals 10.9% 14.5% 3.6% OVERWEIGHT

Metals&Mining 8.3% 11.8% 3.5% OVERWEIGHT Grupo Mexico (10.1%), Peñoles (1.7%)

Petrochemicals 2.6% 2.7% 0.1% MARKETWEIGHT Mexichem (2.7%)

Total 100.0% 100.0% Source: BMV, Credit Suisse

01 September 2013


Performance Analysis

Brazil. In August, the IBX-100 index increased by 1.89% in local currency terms, based on

our fixed-weight index, posting a second consecutive month of strong performance. In

August, in local currency terms, the positive performance was especially noteworthy

relative to Mexico, as Brazil outperformed Mexico by 491bps.

The three top-performing sectors in Brazil were explained by BRL depreciation and

improvement of China’s backdrop: (1) Steels (+20.8%), on the back of double-digit

performance across the board; (2) Pulp & Paper (+13.1%), due to by sharp appreciation of

Suzano’s shares; and (3) Mining (+11.0%), given Vale’s performance.

The worst three sectors were (1) Building Materials (-7.5%), fully explained by Duratex; (2)

Properties (-7.3%), stemming from weak performance of Aliansce and BR Malls; and (3)

Utilities (-6.7%), thanks to poor figures of MPX (-29.5%) and water companies, Copasa (-

20.6%) and Sabesp (-16.3%).

Our August model portfolio outperformed its benchmark by 191bps, increasing 3.80% in

the month. Sector selection contributed with 91bps to portfolio’s performance and stock

selection with 124bps, whereas the interaction of sector and stock selection took away

23bps.

The largest positive contribution to our sector selection performance arose from our

underweight in Beverage & Tobacco and in Retail, adding 36bps and 22bps, and from our

overweight in Logistics, contributing with 19bps. The biggest drags, in turn, came from our

underweight in Mining, cutting 37 bps, and from our overweight in Properties and

Agribusiness, which trimmed 15bps and 6bps from the result.

Stock selection plus the interaction between it and sector allocation’s main positive

contributions came from CESP and Light, which increased the performance by 61bps.

01 September 2013


Exhibit 32: Performance Analysis – CS Portfolio for August – Brazil

Sectors IBX Return W * R

(IBX)CS Return

W * R

(CS)

Excess

Return

Sector

Selection

Stock

Selection

Sector +

StockPerformance

Financials 0.47% 0.12% 0.13% 0.03% -0.34% 0.03% -0.14% 0.00% -0.12%

Banks 0.93% 0.21% 0.44% 0.11% -0.49% -0.03% -0.11% -0.01% -0.15%

Exchanges -2.70% -0.09% -3.73% -0.07% -1.03% 0.06% -0.03% 0.01% 0.03%

Utilities -6.67% -0.40% 3.51% 0.21% 10.19% 0.00% 0.61% 0.00% 0.61%

Telecom -3.48% -0.09% 0.00% 0.00% 3.48% 0.14% 0.09% -0.09% 0.14%

Transportation 0.14% 0.00% 0.00% 0.00% -0.14% 0.03% 0.00% 0.00% 0.03%

Aerospace 0.93% 0.01% 0.00% 0.00% -0.93% 0.01% -0.01% 0.01% 0.01%

Airlines 8.18% 0.01% 0.00% 0.00% -8.18% -0.01% -0.01% 0.01% -0.01%

Car Rental -4.15% -0.02% 0.00% 0.00% 4.15% 0.03% 0.02% -0.02% 0.03%

Media/Technology/Services -0.38% 0.00% -0.63% -0.01% -0.26% -0.03% 0.00% 0.00% -0.03%

Healthcare 0.08% 0.00% 11.68% 0.35% 11.60% -0.03% 0.16% 0.19% 0.32%

Education -0.52% -0.01% -0.34% -0.01% 0.18% -0.05% 0.00% 0.00% -0.04%

Industrials 3.83% 0.02% 6.68% 0.13% 2.85% 0.03% 0.02% 0.04% 0.08%

Agribusiness -1.40% -0.01% -2.24% -0.06% -0.84% -0.06% 0.00% -0.02% -0.09%

Oil & gas 0.60% 0.08% 3.13% 0.47% 2.53% -0.03% 0.33% 0.05% 0.35%

Cyclicals 13.17% 2.27% 14.45% 2.10% 1.28% -0.22% -0.05% 0.14% -0.13%

Mining 11.03% 1.36% 10.48% 0.84% -0.55% -0.39% -0.07% 0.02% -0.44%

Pulp & paper 13.08% 0.19% 20.82% 0.62% 7.75% 0.17% 0.12% 0.12% 0.40%

Steel 20.82% 0.72% 18.08% 0.63% -2.74% 0.01% -0.09% 0.00% -0.09%

Consumption 0.02% 0.00% 6.74% 0.88% 6.72% 0.79% 0.35% -0.15% 1.00%

Retail -2.55% -0.13% 0.00% 0.00% 2.55% 0.22% 0.13% -0.13% 0.22%

Beverage & Tobacco -3.94% -0.36% -3.27% -0.10% 0.67% 0.36% 0.06% -0.04% 0.38%

Foods 11.87% 0.46% 15.62% 0.78% 3.75% 0.12% 0.14% 0.04% 0.30%

Payment Process 3.86% 0.06% 3.86% 0.19% 0.00% 0.07% 0.00% 0.00% 0.07%

Building Materials -7.50% -0.02% 0.00% 0.00% 7.50% 0.03% 0.02% -0.02% 0.03%

Real Estate -0.04% 0.00% -5.74% -0.40% -5.70% -0.09% -0.24% -0.12% -0.45%

Homebuilder 8.46% 0.17% -3.50% -0.10% -11.96% 0.07% -0.24% -0.12% -0.29%

Properties -7.32% -0.17% -7.42% -0.30% -0.10% -0.15% 0.00% 0.00% -0.16%

Infrastructure -1.15% -0.03% 3.86% 0.12% 5.01% 0.30% 0.05% -0.21% 0.14%

Logistics 9.18% 0.04% 3.86% 0.12% -5.32% 0.19% -0.02% -0.14% 0.03%

Toll Roads -2.99% -0.07% 0.00% 0.00% 2.99% 0.11% 0.07% -0.07% 0.11%

Petrochemical -0.17% 0.00% -0.17% 0.00% 0.00% -0.03% 0.00% 0.00% -0.03%

Fuel Distribution -2.98% -0.08% 0.00% 0.00% 2.98% 0.12% 0.08% -0.08% 0.12%

Total 1.89% 1.89% 3.80% 3.80% 1.91% 0.91% 1.24% -0.23% 1.91%


01 September 2013


Mexico. In August, the IPC posted a weak return of -3.1%, falling to 39,492 points. The

index was principally dragged by negative performance in the Retail sector, which lost

7.6% due to pressure on Walmex on lower IPC weighting and disappointment from

potential Suburbia divestment news. AMX (-4.3% on newsflow from KPN acquisition) and

the Beverages sector (-4.6%, mainly due to KOF) also contributed to the IPC's poor

performance. On the positive side, Cemex (+3.1%) and Banorte (+2.9%) were the largest

favorable contributions to performance.

Our model portfolio delivered 51bps of outperformance relative to the index. Performance

analysis shows that sector selection contributed 83bps to our performance, while our stock

picking generated a gain of 58bps. The interaction of sector and stock selection, however,

took 90bps off from our performance.

The largest positive contributor to sector selection was our underweight in the Consumer

sector and especially in Retail. All retailers lost value in the month, led by Walmex (-8.3%);

which was a massive underweight for us. Also within the Consumer sector, our

underweight in Beverages contributed favorably to our sector selection. This was

supplemented by favorable stock selection within Beverages, as we were only exposed to

Femsa (-0.7%), which outperformed the overall Beverages sector (-4.6%);

On the other hand, the biggest drag to our sector selection was our Underweight in

Financials and especially Banks.

Exhibit 33: Performance Analysis – CS Portfolio for August – Mexico

Sectors IPC Return W * R

(IPC)CS Return

W * R

(CS)Excess Return

Sector

SelectionStock Selection Sector + Stock Performance

Telecom -3.71% -0.93% -3.76% -0.88% -0.05% 0.06% -0.05% -0.01% 0.00%

Telecom -4.32% -0.76% -4.32% -0.60% 0.00% 0.05% 0.00% 0.00% 0.05%

Media -2.24% -0.16% -2.94% -0.27% -0.70% 0.02% -0.05% -0.01% -0.05%

Conglomerates 2.93% 0.13% 2.93% 0.13% 0.00% 0.00% 0.00% 0.00% 0.00%

Energy 0.00% 0.00% -1.70% -0.07% -1.70% 0.12% 0.00% -0.07% 0.05%

Airports -0.43% -0.01% -0.28% -0.01% 0.15% 0.09% 0.00% 0.00% 0.10%

Cement & Construction 2.67% 0.18% -1.91% -0.31% -4.59% 0.19% -0.02% -0.38% -0.21%

Cement 3.06% 0.17% 3.06% 0.24% 0.00% 0.16% 0.00% 0.00% 0.16%

Homebuilder & Real Estate -3.28% -0.01% -9.74% -0.58% -6.46% -0.01% -0.02% -0.37% -0.40%

Infrastructure 2.25% 0.03% 1.70% 0.03% -0.54% 0.05% -0.01% 0.00% 0.04%

Consumption -6.45% -2.27% -5.97% -1.11% 0.48% 0.49% 0.52% -0.36% 0.65%

Retail -7.58% -1.07% -7.36% -0.60% 0.22% 0.27% 0.03% -0.01% 0.29%

Packaged goods -8.32% -0.50% -9.95% -0.47% -1.63% 0.07% -0.10% 0.02% -0.01%

Beverage -4.63% -0.70% -0.71% -0.04% 3.93% 0.15% 0.59% -0.37% 0.37%

Financials 0.31% 0.04% 2.60% 0.28% 2.29% -0.07% 0.30% -0.09% 0.14%

Banks 0.65% 0.09% 2.60% 0.28% 1.95% -0.10% 0.26% -0.05% 0.11%

Exchanges -8.09% -0.04% 0.00% 0.00% 8.09% 0.03% 0.04% -0.04% 0.03%

Cyclicals -1.62% -0.21% -3.26% -0.59% -1.65% -0.05% -0.17% 0.00% -0.23%

Metals&Mining 0.57% 0.06% -1.87% -0.24% -2.44% 0.09% -0.25% -0.06% -0.22%

Petrochemicals -9.59% -0.27% -6.79% -0.35% 2.80% -0.15% 0.08% 0.06% 0.00%

Total -3.06% -3.06% -2.56% -2.56% 0.51% 0.83% 0.58% -0.90% 0.51% Source: Bloomberg, Credit Suisse

01 September 2013


Appendix 1 – Brazil and Mexico stocks performance

Exhibit 34: Brazil – Top 10 Leaders/Laggards MTD (%) Exhibit 35: Mexico – Top 10 Leaders/Laggards MTD (%)

-54.5

-43.0

-29.5

-20.6

-16.3

-15.5

-15.4

-15.1

-14.4

-12.5

18.4

19.3

20.8

25.0

28.3

28.4

31.5

32.1

41.8

49.0

OGXP3

OSXB3

MPXE3

CSMG3

SBSP3

OIBR4

OIBR3

MRFG3

MPLU3

RADL3

USIM5

ELPL4

SUZB5

PDGR3

BTOW3

MRVE3

MMXM3

CSNA3

CCXC3

LLXL3

-11.8

-11.6

-11.0

-10.1

-9.9

-8.3

-8.1

-7.8

-6.3

-5.7

1.6

1.7

2.1

2.7

2.9

2.9

3.1

10.7

29.4

31.1

KOFL

AC*

MEXCHEM*

BIMBOA

KIMBERA

WALMEXV

BOLSAA

CHDRAUIB

ICHB

ELEKTRA*

PE&OLES*

ICA*

GRUMAB

OHLMEX*

GFNORTEO

ALFAA

CEMEXCPO

AZTECACP

MFRISCOA

HOMEX*

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

Appendix 2 – Brazil and Mexico sectors performance

Exhibit 36: Brazil: Sector Performance (August)

-7.3% -6.7%-4.2% -3.9% -3.5% -3.0% -3.0% -2.7% -2.5% -1.4% -0.5% -0.4% -0.2%

0.1% 0.8% 0.9% 0.9% 1.9%3.8% 3.9%

8.2% 8.5% 9.2%11.0%11.9%13.1%

20.8%

Pro

pert

ies

Util

ities

Car

Ren

tal

Bev

erag

e &

Tob

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Tel

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Tol

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s

Edu

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Med

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echn

olog

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ervi

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Pet

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re

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as

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ospa

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IBX

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01 September 2013


Exhibit 37: Mexico: Sector Performance (August)

-9.6%-8.3% -8.1% -7.6%

-4.6% -4.3%-3.0% -2.2%

-0.4%

0.6% 0.6%2.2% 2.9% 3.1%

11.3%

Pet

roch

emic

als

Pac

kage

d go

ods

Exc

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Ret

ail

Bev

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Tel

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C

Med

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Infr

astr

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es

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ent

Hom

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lder

& R

eal E

stat

e


Exhibit 38: Brazil: Sector Performance YTD

-23.7%-20.9%

-17.5%-17.3%

-9.3% -8.7% -8.1% -7.5% -1.3% -7.1% -6.5% -6.1% -5.6% -3.8%

0.5% 1.3% 3.4%10.1%

16.1% 16.5%

26.5% 27.3%32.4%

37.3%

Airl

ines

Oil

& g

as

Rea

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ate

Min

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Util

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Car

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IBX

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01 September 2013


Exhibit 39: Mexico: Sector Performance YTD

-92.9%

-31.3% -25.6%-18.2% -17.5% 0.8% -12.5% -12.3% -7.0% -4.5% -3.1%

8.1% 9.5% 13.9% 16.7%

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01 September 2013


Appendix 3 – HOLT factor definitions

Quality (33% weight): This factor focuses on a company’s track record of generating cash and managing growth,

independent of future expectations. Firms that score well have earned high CFROI® returns and demonstrated

the ability to grow profitable businesses, or willingness to shrink bad ones.

CFROI® LFY (50%) - The ratio of gross cash flow to gross investments translated into an internal rate of return

recognizing the finite economic life of depreciating assets and the residual value of non-depreciating assets.

CFROI calculated for the last reported fiscal year is used.

Managing for Value (30%) - Managing For Value comprises the CFROI® - Discount Rate spread multiplied by

the Real asset growth (inflation adjusted gross investments). The aim is to identify whether the company's growth

is 'good' or sustainable growth. Growth into businesses that earn a CFROI above the firms cost of capital is value

creating, while growth into negative spread businesses is value destructive.

Change in Value Creation (20%) - Measures the improvement in ‘economic profit’ in the last reported year

compared with the previous year. A positive value indicates that the company has either increased the CFROI

spread over the discount rate, or grew into a positive spread business. Spread * Growth Rate less prior year

Spread.

Momentum (33% weight): The momentum factor is a gauge of market sentiment. Stocks that score well will have

near-term forecasted CFROI levels that are increasing as a result of upward revisions in EPS estimates, while

also having positive price momentum.

CFROI® Key Momentum, 13-wk (60%) - The CFROI® key momentum measures the improvement in forecasted

CFROI® that follow any changes in underlying consensus EPS revisions.

Price Momentum (52-week) (30%) - Price Momentum (1 year) measures the percentage change in market

value over past 52 weeks.

Daily Liquidity Average (10%) - Daily Liquidity Average measures the number of shares traded for the last

quarter divided by 63 trading days multiplied by the current week-end price, divided by market cap.

Valuation (34% weight): The valuation factor evaluates the stock price warranted by the HOLT DCF model, based

on forecasted cash flows, relative to the stock’s current market price, while also considering HOLT’s valuation

proprietary metrics. Does the stock look aggressively priced or cheap?

% Change to Best Price (50%) - Percent to Best measures the difference between the HOLT default warranted

price and the current market price of the stock. HOLT valuation allows for the direct comparison of firms across

regions, sectors, and accounting standards by using an adjusted DCF model, incorporating different

standardizing techniques to dispel the effect of accounting standards on valuation levels.

Economic P/E (30%) - HOLT’s version of a price-to-earnings ratio, measures firm value relative to the cash flow

generated by all capital providers. Through normalizing the VCR by dividing by CFROI®, the factor becomes

more comparable across companies and industries. Economic P/E = (Enterprise Value / Inflation Adjusted Net

Assets) / CFROI

Value/Cost (10%) - VCR is analogous to Price/Book, but with a number of adjustments that reduce volatility and

better reflect the true firm value: Gross Investment includes inflation adjustments for old plant and inventory,

capitalized R&D, and capitalized operating leases; HOLT Debt includes stock option claim, pension debt,

preferred stock, and liabilities related to capitalized operating leases. VCR = (Market Value of Equity + Minority

Interest + HOLT Debt) / Inflation Adjusted Net Assets

Dividend Yield (LTM Dividends Paid / Current Price) (10%) - Last 12 months dividends paid, divided by the

latest share price.

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Companies Mentioned (Price as of 30-Aug-2013)

ALSEA, S.A.B. DE C.V (ALSEA.MX, $33.79) Alfa (ALFAA.MX, $33.75) AmBev (AMBV4.SA, R$83.2) America Movil (AMX.N, $19.3) Asesor de Activos Prisma SAP (FINN13.MX, $16.03) BM&F Bovespa SA (BVMF3.SA, R$11.69) BR Properties (BRPR3.SA, R$18.15) Banco do Brasil (BBAS3.SA, R$23.05) Bolsa Mexicana de Valores (BOLSAA.MX, $31.49) Bradesco (BBDC4.SA, R$27.71) Brasil Foods S.A. (BRFS3.SA, R$55.2) Braskem (BRKM5.SA, R$17.55) Cemex (CX.N, $11.24) Cetip (CTIP3.SA, R$23.4) Cielo (CIEL3.SA, R$58.41) Companhia Siderurgica Nacional (CSNA3.SA, R$8.42) Compartamos SAB de CV (COMPARC.MX, $23.43) Concentradora Fibra Hotelera (FIHO12.MX, $24.0) Cyrela Brazil Realty (CYRE3.SA, R$15.72) EVEN CONSTRUCTORA E INCORPORADORA (EVEN3.SA, R$8.01) Embraer (EMBR3.SA, R$19.58) Empresas ICA (ICA.MX, $27.45) Energias do Brasil (ENBR3.SA, R$10.7) Fibria (FIBR3.SA, R$27.58) Fomento Economico Mexicano SAB de CV (FMSAUBD.MX, $126.48) Gerdau (GGBR4.SA, R$17.15) Gol Linhas Aerea (GOLL4.SA, R$8.46) Grupo Bimbo (BIMBOA.MX, $38.85) Grupo Elektra (ELEKTRA.MX, $436.35) Grupo Financiero Banorte (GFNORTEO.MX, $83.49) Grupo Mexico (GMEXICOB.MX, $38.2) Industrias Penoles S.A.B. DE C.V. (PENOLES.MX, $407.8) International Meal Company Holdings (IMCH3.SA, R$16.3) Itau Unibanco (ITUB4.SA, R$29.0) JSL (JSLG3.SA, R$14.1) Kimberly-Clark (KIMBERA.MX, $37.86) LLX (LLXL3.SA, R$1.43) MMX (MMXM3.SA, R$2.17) Marcopolo (POMO4.SA, R$6.64) Marisa S.A. (AMAR3.SA, R$19.1) Mexichem (MEXCHEM.MX, $53.2) Multiplus (MPLU3.SA, R$26.06) OGX (OGXP3.SA, R$0.3) OHL Brasil (ARTR3.SA, R$21.52) ORGANIZACION CULTIBA, S.A.B. DE CV (CULTIBAB.MX, $31.82) OSX (OSXB3.SA, R$0.73) Petrobras (PBR.N, $13.52) Promotora y Operadora de Infraestructura, S.A.B. d (PINFRA.MX, $130.36) QGEP Participacoes SA (QGEP3.SA, R$11.66) QUALICORP (QUAL3.SA, R$18.65) Santos Brasil S.A. (STBP11.SA, R$23.0) Smiles (SMLE3.SA, R$27.5) Soriana (SORIANAB.MX, $41.57) Souza Cruz (CRUZ3.SA, R$25.0) Suzano (SUZB5.SA, R$9.4) Tegma (TGMA3.SA, R$21.0) Telefonica Brasil (VIVT4.SA, R$46.48) Televisa (TV.N, $25.15) Tractebel Energia (TBLE3.SA, R$34.2) Vale (VALE.N, $14.41) Walmex (WALMEXV.MX, $32.04)

Disclosure Appendix

Important Global Disclosures

Andrew T. Campbell, CFA, Daniel Federle and Andrei Sabah each certify, with respect to the companies or securities that the individual analyzes, that (1) the views expressed in this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities

As of December 10, 2012 Analysts’ stock rating are defined as follows:

Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark*over the next 12 months.

01 September 2013


Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months.

Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months.

*Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractiv e, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin Ame rican and non-Japan Asia stocks, ratings are based on a stock’s total return relative to the average total retu rn of the relevant country or regional benchmark; Australia, New Zealand are, and prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, 12 -month rolling yield is incorporated in the absolute total return calculation and a 15% and a 7.5% threshold replace the 10-15% level in the Outperform and Underperform stock rating definitions, respectively. The 15% and 7.5% thresholds replace the +10-15% and -10-15% levels in the Neutral stock rating definition, respectively. Prior to 10th December 2012, Japanese ratings were based on a stock’s total return relative to the average total return of the relevant country or regional benchmark.

Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances.

Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.

Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation:

Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months.

Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months.

Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months.

*An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors.

Credit Suisse's distribution of stock ratings (and banking clients) is:

Global Ratings Distribution

Rating Versus universe (%) Of which banking clients (%)

Outperform/Buy* 42% (55% banking clients)

Neutral/Hold* 41% (49% banking clients)

Underperform/Sell* 15% (40% banking clients)

Restricted 3%

*For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperf orm, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors.

Credit Suisse’s policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the market that may have a material impact on the research views or opinions stated herein.

Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: http://www.csfb.com/research and analytics/disclaimer/managing_conflicts_disclaimer.html

Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot be used, by any taxpayer for the purposes of avoiding any penalties.

Please refer to the firm's disclosure website at www.credit-suisse.com/researchdisclosures for the definitions of abbreviations typically used in the target price method and risk sections.

See the Companies Mentioned section for full company names

The subject company (ALFAA.MX, AMX.N, ARTR3.SA, BBAS3.SA, BBDC4.SA, FMSAUBD.MX, COMPARC.MX, CSNA3.SA, CTIP3.SA, CX.N, CYRE3.SA, ENBR3.SA, GFNORTEO.MX, IMCH3.SA, JSLG3.SA, PBR.N, GMEXICOB.MX, ICA.MX, MEXCHEM.MX, MMXM3.SA, PENOLES.MX, PINFRA.MX, QUAL3.SA, SUZB5.SA, TV.N, VALE.N, WALMEXV.MX, OGXP3.SA, CULTIBAB.MX, FIBR3.SA, SMLE3.SA, MPLU3.SA, LLXL3.SA, OSXB3.SA) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse.

Credit Suisse provided investment banking services to the subject company (ALFAA.MX, AMX.N, ARTR3.SA, BBAS3.SA, FMSAUBD.MX, IMCH3.SA, PBR.N, GMEXICOB.MX, ICA.MX, MEXCHEM.MX, MMXM3.SA, PINFRA.MX, QUAL3.SA, WALMEXV.MX, OGXP3.SA, CULTIBAB.MX, SMLE3.SA, LLXL3.SA, OSXB3.SA) within the past 12 months.

Credit Suisse provided non-investment banking services to the subject company (AMX.N, GFNORTEO.MX, GMEXICOB.MX) within the past 12 months

01 September 2013


Credit Suisse has managed or co-managed a public offering of securities for the subject company (ALFAA.MX, AMX.N, ARTR3.SA, BBAS3.SA, FMSAUBD.MX, PBR.N, GMEXICOB.MX, ICA.MX, MEXCHEM.MX, PINFRA.MX, WALMEXV.MX, CULTIBAB.MX, SMLE3.SA) within the past 12 months.

Credit Suisse has received investment banking related compensation from the subject company (ALFAA.MX, AMX.N, ARTR3.SA, BBAS3.SA, FMSAUBD.MX, IMCH3.SA, PBR.N, GMEXICOB.MX, ICA.MX, MEXCHEM.MX, MMXM3.SA, PINFRA.MX, QUAL3.SA, WALMEXV.MX, OGXP3.SA, CULTIBAB.MX, SMLE3.SA, LLXL3.SA, OSXB3.SA) within the past 12 months

Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (ALFAA.MX, ALSEA.MX, AMX.N, ARTR3.SA, BBAS3.SA, BBDC4.SA, BOLSAA.MX, BRPR3.SA, FMSAUBD.MX, COMPARC.MX, CRUZ3.SA, CSNA3.SA, CTIP3.SA, CX.N, CYRE3.SA, ENBR3.SA, GFNORTEO.MX, IMCH3.SA, JSLG3.SA, PBR.N, GGBR4.SA, GMEXICOB.MX, ICA.MX, MEXCHEM.MX, MMXM3.SA, PENOLES.MX, PINFRA.MX, QUAL3.SA, SUZB5.SA, TV.N, VALE.N, WALMEXV.MX, OGXP3.SA, CULTIBAB.MX, FIBR3.SA, SMLE3.SA, MPLU3.SA, LLXL3.SA, OSXB3.SA) within the next 3 months.

Credit Suisse has received compensation for products and services other than investment banking services from the subject company (AMX.N, GFNORTEO.MX, GMEXICOB.MX) within the past 12 months

As of the date of this report, Credit Suisse makes a market in the following subject companies (AMX.N, CX.N, PBR.N, TV.N, VALE.N).

As of the end of the preceding month, Credit Suisse beneficially own 1% or more of a class of common equity securities of (CTIP3.SA, CYRE3.SA, IMCH3.SA, ICA.MX, PINFRA.MX, QUAL3.SA, STBP11.SA, TGMA3.SA, SMLE3.SA).

Credit Suisse has a material conflict of interest with the subject company (CSNA3.SA) . The analyst Ivano Westin has a relationship with a natural person who may provide remunerated services to one or more of the companies covered in this report. I, Ivano Westin, hold directly or indirectly, securities referenced in the research reports I prepare [VALE, CSNA3].

Credit Suisse has a material conflict of interest with the subject company (GGBR4.SA) . The analyst Ivano Westin has a relationship with a natural person who may provide remunerated services to one or more of the companies covered in this report

Credit Suisse has a material conflict of interest with the subject company (MMXM3.SA) . The analyst Ivano Westin has a relationship with a natural person who may provide remunerated services to one or more of the companies covered in this report

Credit Suisse has a material conflict of interest with the subject company (VALE.N) . The analyst Ivano Westin has a relationship with a natural person who may provide remunerated services to one or more of the companies covered in this report. I, Ivano Westin, hold directly or indirectly, securities referenced in the research reports I prepare [VALE].

Important Regional Disclosures

Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report.

The analyst(s) involved in the preparation of this report have not visited the material operations of the subject company (ALFAA.MX, ALSEA.MX, AMAR3.SA, AMBV4.SA, AMX.N, ARTR3.SA, BBAS3.SA, BBDC4.SA, BOLSAA.MX, BRFS3.SA, BRKM5.SA, BRPR3.SA, CIEL3.SA, EVEN3.SA, FMSAUBD.MX, BVMF3.SA, COMPARC.MX, CRUZ3.SA, CSNA3.SA, CTIP3.SA, CX.N, CYRE3.SA, ENBR3.SA, GFNORTEO.MX, IMCH3.SA, ITUB4.SA, JSLG3.SA, PBR.N, POMO4.SA, GGBR4.SA, GMEXICOB.MX, ICA.MX, MEXCHEM.MX, MMXM3.SA, PENOLES.MX, PINFRA.MX, QGEP3.SA, QUAL3.SA, SORIANAB.MX, STBP11.SA, SUZB5.SA, TBLE3.SA, TV.N, VALE.N, VIVT4.SA, WALMEXV.MX, TGMA3.SA, OGXP3.SA, CULTIBAB.MX, FIHO12.MX, FINN13.MX, FIBR3.SA, SMLE3.SA, MPLU3.SA, LLXL3.SA, OSXB3.SA, GOLL4.SA) within the past 12 months

Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares.

Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report.

For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit http://www.csfb.com/legal_terms/canada_research_policy.shtml.

As of the date of this report, Credit Suisse acts as a market maker or liquidity provider in the equities securities that are the subject of this report.

Principal is not guaranteed in the case of equities because equity prices are variable.

Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that.

Andrew T. Campbell, CFA & Daniel Federle each certify that (1) The views expressed in this report solely and exclusively reflect my personal opinions and have been prepared independently, including with respect to Banco de Investimentos Credit Suisse (Brasil) S.A. or its affiliates ("Credit Suisse"). (2) Part of my compensation is based on various factors, including the total revenues of Credit Suisse, but no part of my compensation has been, is, or will be related to the specific recommendations or views expressed in this report. In addition, Credit Suisse declares that: Credit Suisse has provided, and/or may in the future provide investment banking, brokerage, asset management, commercial banking and other financial services to the subject company/companies or its affiliates, for which they have received or may receive customary fees and commissions, and which constituted or may constitute relevant financial or commercial interests in relation to the subject company/companies or the subject securities.

Andrew T. Campbell, CFA is the responsible analyst for this report according to Instruction CVM 483

To the extent this is a report authored in whole or in part by a non-U.S. analyst and is made available in the U.S., the following are important disclosures regarding any non-U.S. analyst contributors: The non-U.S. research analysts listed below (if any) are not registered/qualified as research analysts with FINRA. The non-U.S. research analysts listed below may not be associated persons of CSSU and therefore may not be subject to the

01 September 2013


NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Casa de Bolsa Credit Suisse (Mexico), S.A ........................................................................................................................................ Andrei Sabah

Banco de Investments Credit Suisse (Brasil) SA or its affiliates. ...................................................... Andrew T. Campbell, CFA ; Daniel Federle

Important Credit Suisse HOLT Disclosures

With respect to the analysis in this report based on the Credit Suisse HOLT methodology, Credit Suisse certifies that (1) the views expressed in this report accurately reflect the Credit Suisse HOLT methodology and (2) no part of the Firm’s compensation was, is, or will be directly related to the specific views disclosed in this report.

The Credit Suisse HOLT methodology does not assign ratings to a security. It is an analytical tool that involves use of a set of proprietary quantitative algorithms and warranted value calculations, collectively called the Credit Suisse HOLT valuation model, that are consistently applied to all the companies included in its database. Third-party data (including consensus earnings estimates) are systematically translated into a number of default algorithms available in the Credit Suisse HOLT valuation model. The source financial statement, pricing, and earnings data provided by outside data vendors are subject to quality control and may also be adjusted to more closely measure the underlying economics of firm performance. The adjustments provide consistency when analyzing a single company across time, or analyzing multiple companies across industries or national borders. The default scenario that is produced by the Credit Suisse HOLT valuation model establishes the baseline valuation for a security, and a user then may adjust the default variables to produce alternative scenarios, any of which could occur.

Additional information about the Credit Suisse HOLT methodology is available on request.

The Credit Suisse HOLT methodology does not assign a price target to a security. The default scenario that is produced by the Credit Suisse HOLT valuation model establishes a warranted price for a security, and as the third-party data are updated, the warranted price may also change. The default variable may also be adjusted to produce alternative warranted prices, any of which could occur.

CFROI®, HOLT, HOLTfolio, ValueSearch, AggreGator, Signal Flag and “Powered by HOLT” are trademarks or service marks or registered trademarks or registered service marks of Credit Suisse or its affiliates in the United States and other countries. HOLT is a corporate performance and valuation advisory service of Credit Suisse.

For Credit Suisse disclosure information on other companies mentioned in this report, please visit the website at www.credit-suisse.com/researchdisclosures or call +1 (877) 291-2683.

01 September 2013


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Investment principal on bonds can be eroded depending on sale price or market price. In addition, there are bonds on which investment principal can be eroded due to changes in redemption amounts. Care is required when investing in such instruments.

When you purchase non-listed Japanese fixed income securities (Japanese government bonds, Japanese municipal bonds, Japanese government guaranteed bonds, Japanese corporate bonds) from CS as a seller, you will be requested to pay the purchase price only.

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LatAm Equity Strategy - Credit Suisse

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