jonasfederighi.files.wordpress.com · UBS Investment Research 2009 Brazil Equities Handbook 2009...

UBS Investment Research

2009 Brazil Equities Handbook

2009 Brazil Equities Handbook

. . .

...

Global Equity Research

Americas

Equity Strategy

Regional Strategy

17 March 2009

www.ubs.com/investmentresearch

Pedro BatistaStrategist

[email protected]+55-21-3262 9849

Damian FraserStrategist

[email protected]+52-55-5282 7750

This report has been prepared by Banco UBS Pactual S.A. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 206. UBS 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. Customers of UBS in the United States can receive independent, third-party research on the company or companies covered in this report, at no cost to them, where such research is available. Customers can access this independent research at www.ubs.com/independentresearch or may call +1 877-208-5700 to request a copy of this research.

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2009 Brazil Equities Handbook 17 March 2009

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Contents Aerospace, Airlines & Transportation 10 Agriculture 29 Basic Materials 38 Consumer 65 Financials 84 Healthcare & Education 102 Oil, Gas & Chemicals 113 Real Estate 123 Telco, Cable, Computer & Software 150 Utilities 171 All individual stock data correct as at pricing date indicated below data tables.


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Index of Companies Company Ticker Sector UBS Analyst Team Company Website

Embraer ON EMBR3 Aerospace & Airlines Rodrigo Goes, CFA; Gustavo Moreira www.embraer.com.br

GOL ADR GOL Aerospace & Airlines Rodrigo Goes, CFA; Gustavo Moreira www.voegol.com.br

TAM PN TAMM4 Aerospace & Airlines Rodrigo Goes, CFA; Gustavo Moreira www.tam.com.br

Acucar Guarani ACGU3 Agriculture Gustavo Gattass; Pedro Medeiros; Rafael Espirito Santo www.acucarguarani.com.br

Cosan CSAN3 Agriculture Gustavo Gattass; Pedro Medeiros; Rafael Espirito Santo www.cosan.com.br

Heringer FHER3 Agriculture Gustavo Gattass; Pedro Medeiros; Rafael Espirito Santo www.heringer.com.br

São Martinho SMTO3 Agriculture Gustavo Gattass; Pedro Medeiros; Rafael Espirito Santo www.saomartinho.ind.br

Duratex PN DURA4 Basic Materials Edmo Chagas; Carlos Vasques www.duratex.com.br

Satipel SATI3 Basic Materials Edmo Chagas; Carlos Vasques www.satipel.com.br

Bradespar BRAP4 Basic Materials Edmo Chagas; Carlos Vasques www.bradespar.com.br

Vale (PN) VALE5 Basic Materials Edmo Chagas; Carlos Vasques www.cvrd.com.br

Magnesita Refratario MAGG3 Basic Materials Edmo Chagas; Carlos Vasques www.magnesita.com.br

MMX Mineracao MMXM3 Basic Materials Edmo Chagas; Carlos Vasques www.mmx.com.br

Aracruz PNB ARCZ6 Basic Materials Edmo Chagas; Carlos Vasques www.aracruz.com.br

Klabin PN KLBN4 Basic Materials Edmo Chagas; Carlos Vasques www.klabin.com.br

Suzano Papel SUZB5 Basic Materials Edmo Chagas; Carlos Vasques www.suzano.com.br

VCP PN VCPA4 Basic Materials Edmo Chagas; Carlos Vasques www.vcp.com.br

CSN CSNA3 Basic Materials Edmo Chagas; Carlos Vasques www.csn.com.br

Gerdau PN GGBR4 Basic Materials Edmo Chagas; Carlos Vasques www.gerdau.com.br

Metalurgica Gerdau GOAU4 Basic Materials Edmo Chagas; Carlos Vasques www.gerdau.com.br

Usiminas (PN) USIM5 Basic Materials Edmo Chagas; Carlos Vasques www.usiminas.com.br

Positivo POSI3 Computers & Software Carlos Sequeira, CFA; Antonio Junqueira www.positivoinformatica.com.br

Totvs TOTS3 Computers & Software Carlos Sequeira, CFA; Antonio Junqueira www.totvs.com.br

Localiza RENT3 Consumer Rodrigo Goes, CFA; Guilherme Arruda; Gustavo Moreira www.localiza.com.br

JBS JBSS3 Consumer Rodrigo Goes, CFA; Guilherme Arruda; Gustavo Moreira www.friboi.com.br

Perdigao ON PRGA3 Consumer Rodrigo Goes, CFA; Guilherme Arruda; Gustavo Moreira www.perdigao.com.br

Sadia PN SDIA4 Consumer Rodrigo Goes, CFA; Guilherme Arruda; Gustavo Moreira www.sadia.com.br

Pão de Açúcar PN PCAR4 Consumer Rodrigo Goes, CFA; Guilherme Arruda; Gustavo Moreira www.grupopaodeacucar.com.br

Lojas Renner PN LREN3 Consumer Rodrigo Goes, CFA; Guilherme Arruda; Gustavo Moreira www.lojasrenner.com.br

B2W BTOW3 Consumer Rodrigo Goes, CFA; Guilherme Arruda; Gustavo Moreira www.b2winc.com,br

Dufry South America DUFB11 Consumer Rodrigo Goes, CFA; Guilherme Arruda; Gustavo Moreira www.dufrysouthamerica.com.br

Lojas Americanas PN LAME4 Consumer Rodrigo Goes, CFA; Guilherme Arruda; Gustavo Moreira www.lojasamericanas.com.br

Banco ABC Brasil ABCB4 Financials Juan Partida, CFA; Eduardo Rosman; Eduardo Nishio www.abcbrasil.com.br

Banco do Brasil BBAS3 Financials Juan Partida, CFA; Eduardo Rosman; Eduardo Nishio www.bb.com.br

Cruzeiro do Sul CZRS4 Financials Juan Partida, CFA; Eduardo Rosman; Eduardo Nishio www.bcsul.com.br

Daycoval DAYC4 Financials Juan Partida, CFA; Eduardo Rosman; Eduardo Nishio www.daycoval.com.br

Banrisul BRSR6 Financials Juan Partida, CFA; Eduardo Rosman; Eduardo Nishio www.banrisul.com.br

BicBanco BICB4 Financials Juan Partida, CFA; Eduardo Rosman; Eduardo Nishio www.bicbanco.com.br

Sofisa SFSA4 Financials Juan Partida, CFA; Eduardo Rosman; Eduardo Nishio www.sofisa.com.br

Bradesco PN BBDC4 Financials Juan Partida, CFA; Eduardo Rosman; Eduardo Nishio www.bradesco.com.br

Itau PN ITAU4 Financials Juan Partida, CFA; Eduardo Rosman; Eduardo Nishio www.itau.com.br


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Company Ticker Sector UBS Analyst Team Company Website

BM&F Bovespa BVMF3 Financials Juan Partida, CFA; Eduardo Nishio; Eduardo Rosman http://ri.bmfbovespa.com.br

Redecard RDCD3 Financials Juan Partida, CFA; Eduardo Rosman; Eduardo Nishio www.redecard.com.br

Porto Seguro PSSA3 Financials Juan Partida, CFA; Eduardo Rosman; Eduardo Nishio www.portoseguro.com.br

SulAmerica SULA11 Financials Juan Partida, CFA; Eduardo Rosman; Eduardo Nishio www.sulamerica.com.br

GP Investments GPIV11 Financials Juan Partida, CFA; Eduardo Rosman; Eduardo Nishio www.gp.com.br

Estacio ESTC3 Healthcare & Education Eduardo Nishio; www.estacioparticipacoes.com.br

Amil Participações AMIL3 Healthcare & Education Eduardo Nishio; www.amilpar.com.br

DASA DASA3 Healthcare & Education Eduardo Nishio; www.diagnosticosdaamerica.com.br

OdontoPrev ODPV3 Healthcare & Education Eduardo Nishio; www.odontoprev.com.br

Tempo Participações TEMP3 Healthcare & Education Eduardo Nishio; www.tempopar.com.br

Braskem BRKM5 Oil, Gas & Chemicals Gustavo Gattass; Pedro Medeiros; Rafael Espirito Santo www.braskem.com.br

Ultrapar PN UGPA4 Oil, Gas & Chemicals Gustavo Gattass; Pedro Medeiros; Rafael Espirito Santo www.ultra.com.br

Providência PRVI3 Oil, Gas & Chemicals Gustavo Gattass; Pedro Medeiros; Rafael Espirito Santo www.providencia.com.br

OGX Petroleo e Gas OGXP3 Oil, Gas & Chemicals Gustavo Gattass; Pedro Medeiros; Rafael Espirito Santo www.ogx.com.br

Petrobras PETR4 Oil, Gas & Chemicals Gustavo Gattass; Pedro Medeiros; Rafael Espirito Santo www.petrobras.com.br

Lupatech LUPA3 Oil, Gas & Chemicals Gustavo Gattass; Pedro Medeiros; Rafael Espirito Santo www.lupatech.com.br

Brascan Residential BISA3 Real Estate Gordon Lee; Rodrigo Monteiro www.brascan.com.br

Cyrela CYRE3 Real Estate Gordon Lee; Rodrigo Monteiro www.cyrela.com.b

Even Construtora EVEN3 Real Estate Gordon Lee; Rodrigo Monteiro www.even.com.br

Gafisa GFSA3 Real Estate Gordon Lee; Rodrigo Monteiro www.gafisa.com.br

JHSF Participacoes JHSF3 Real Estate Gordon Lee; Rodrigo Monteiro www.jhsf.com.br

MRV MRVE3 Real Estate Gordon Lee; Rodrigo Monteiro www.mrv.com.br

PDG Realty PDGR3 Real Estate Gordon Lee; Rodrigo Monteiro www.pdgrealty.com.br

Rossi RSID3 Real Estate Gordon Lee; Rodrigo Monteiro www.rossiresidencial.com.br

Tecnisa TCSA3 Real Estate Gordon Lee; Rodrigo Monteiro www.tecnisa.com.br

BR Malls BRML3 Real Estate Gordon Lee; Rodrigo Monteiro www.brmalls.com.br

Iguatemi IGTA3 Real Estate Gordon Lee; Rodrigo Monteiro www.iguatemi.com.br

Lopes LPSB3 Real Estate Gordon Lee; Rodrigo Monteiro www.lopes.com.br

Multiplan MULT3 Real Estate Gordon Lee; Rodrigo Monteiro www.multiplan.com.br

NET Servicos NETC4 Telco & Cable Carlos Sequeira, CFA; Antonio Junqueira www.globocabo.com.br

Brasil Tel Part (PN) BRTP4 Telco & Cable Carlos Sequeira, CFA; Antonio Junqueira www.brasiltelecom.com.br

GVT Holding GVTT3 Telco & Cable Carlos Sequeira, CFA; Antonio Junqueira www.gvt.com.br

Telemar Op. (PN) TMAR5 Telco & Cable Carlos Sequeira, CFA; Antonio Junqueira www.telemar.com.br

Tele Norte Leste(PN) TNLP4 Telco & Cable Carlos Sequeira, CFA; Antonio Junqueira www.telemar.com.br

TIM Part. (PN) TCSL4 Telco & Cable Carlos Sequeira, CFA; Antonio Junqueira www.telecelularsul.com.br

Telemig Celular (PN) TMCP4 Telco & Cable Carlos Sequeira, CFA; Antonio Junqueira www.telemigcelular.com.br

Vivo Holdings (PN) VIVO4 Telco & Cable Carlos Sequeira, CFA; Antonio Junqueira www.telespcelular.com.br

ALL ALLL11 Transportation Rodrigo Goes, CFA; Gustavo Moreira www.all-logistica.com

CCR CCRO3 Transportation Rodrigo Goes, CFA; Pedro Batista; Gustavo Moreira www.ccrnet.com.br

LLX LLXL3 Transportation Rodrigo Goes, CFA; Gustavo Moreira www.llx.com.br

Log-In LOGN3 Transportation Rodrigo Goes, CFA; Gustavo Moreira www.loginlogistica.com.br

Santos Brasil STBP11 Transportation Rodrigo Goes, CFA; Gustavo Moreira www.santosbrasil.com.br


UBS 5

Company Ticker Sector UBS Analyst Team Company Website

Wilson Sons WSON11 Transportation Rodrigo Goes, CFA; Gustavo Moreira www.wilsonsons.com.br

AES Tiete (PN) GETI4 Utilities Gustavo Gattass; Rafael Espirito Santo; Pedro Medeiros www.aestiete.com.br

Cemig PN CMIG4 Utilities Gustavo Gattass; Rafael Espirito Santo; Pedro Medeiros www.cemig.com.br

Celesc ON CLSC3 Utilities Gustavo Gattass; Rafael Espirito Santo; Pedro Medeiros www.celesc.com.br

Cesp PN CESP6 Utilities Gustavo Gattass; Rafael Espirito Santo; Pedro Medeiros www.cesp.com.br

Coelce ON COCE3 Utilities Gustavo Gattass; Rafael Espirito Santo; Pedro Medeiros www.coelce.com.br

Copel PNB CPLE6 Utilities Gustavo Gattass; Rafael Espirito Santo; Pedro Medeiros www.copel.com

CPFL CPFE3 Utilities Gustavo Gattass; Rafael Espirito Santo; Pedro Medeiros www.cpfl.com.br

Eletrobras (PNB) ELET6 Utilities Gustavo Gattass; Rafael Espirito Santo; Pedro Medeiros www.eletrobras.gov.br

Energias do Brasil ENBR3 Utilities Gustavo Gattass; Rafael Espirito Santo; Pedro Medeiros www.energiasdobrasil.com.br

Equatorial EQTL3 Utilities Gustavo Gattass; Rafael Espirito Santo; Pedro Medeiros www.equatorialenergia.com.br

Eletropaulo PNB ELPL6 Utilities Gustavo Gattass; Rafael Espirito Santo; Pedro Medeiros www.eletropaulo.com.br

Light SA LIGT3 Utilities Gustavo Gattass; Rafael Espirito Santo; Pedro Medeiros www.light.com.br

MPX MPXE3 Utilities Gustavo Gattass; Rafael Espirito Santo; Pedro Medeiros www.mpx.com.br

Transmissao Paulista TRPL4 Utilities Gustavo Gattass; Rafael Espirito Santo; Pedro Medeiros www.cteep.com.br

Terna Part TRNA11 Utilities Gustavo Gattass; Rafael Espirito Santo; Pedro Medeiros www.terna.com.br

Tractebel TBLE3 Utilities Gustavo Gattass; Rafael Espirito Santo; Pedro Medeiros www.tractebelenergia.com.br

Sabesp SBSP3 Utilities Gustavo Gattass; Rafael Espirito Santo; Pedro Medeiros www.sabesp.com.br


UBS 6

Brazil Overview -National name: República Federativa do Brasil -President: Luiz Inácio Lula da Silva (2008) -Land area: 3,265,059 sq mi (8,456,511 sq km); total area: 3,286,470 sq mi (8,511,965 sq km) -Population (2008 est.): 191,908,598 (growth rate: 0.9%); birth rate: 16.0/1000; infant mortality rate: 26.6/1000; life expectancy: 72.5; density per sq mi: 22

-Labor force: 40.620 million (2008 est.) - IBGE -Largest cities: São Paulo, 18,333,000 (metro. area), 10,927,985 (city proper); Rio de Janeiro, 11,469,000 (metro. area), 6,094,183 (city proper); Salvador, 2,590,400; Belo Horizonte, 2,347,500; Recife, 1,485,500; Porto Alegre, 1,372,700 -Monetary unit: Real -Languages: Portuguese (official)

-GDP: R$2.889 trillion (2008 est.) / GDP - composition by sector: agriculture: 5.66%, industry: 23.6%, services: 55.2% (2007 est.) Table 1: Brazilian Income Profile - 2005

Income Breakdown (R$) Avg Monthly Income # of Families % 488 Up to 488 (1) 7,949,351 16% 732 From 488 to 732 599 6,747,421 14%

1,220 From 732 to 1220 940 10,181,484 21% 1,464 From 1220 to 1464 1,326 3,528,908 7% 1,952 From 1464 to 1952 1,667 5,086,643 10% 2,440 From 1952 to 2440 2,155 3,349,073 7% 3,660 From 2440 to 3660 2,941 4,571,410 9% 4,880 From 3660 to 4880 4,165 2,416,195 5% 7,320 From 4880 to 7320 5,875 2,236,892 5% 7,320 From 7320 13,295 2,467,262 5%

Total - Brasil 2,183 48,534,638 100%

Source: Brazilian Institute of Geography and Statistics (IBGE) and UBS Pactual

Geography Brazil covers almost half of the South American continent and it is bordered to the north, west and south by all South American countries except Chile and Ecuador; to the east is the Atlantic. The country is topographically quite flat and at no point do the highlands exceed 3,000m (10,000ft). The population is concentrated in the southeastern states of Minas Gerais, Rio de Janeiro and São Paulo. The city of São Paulo has a population of over 10.8 million, while over 6 million people live in the city of Rio de Janeiro.

Political structure

Brazil's Parliament is composed of 513 members in the Lower House and 81 in the Senate. The Congress is responsible for defining the legislation to which the President's decisions are subordinated. The President can resort to temporary decrees to push through legislation, but Brazil's Constitution gives Congress ample capacity to frustrate the Executive's wishes. The Lower House has members of 21 political parties, in a political system that is used to strengthen politicians at the expense of parties. All decisions taken by both powers are reviewed by an independent Judiciary (STF), composed of 11 members designated by the President (and approved by the Senate). The STF is the guardian of Brazil's Constitution and its members' mandates aren't similar to the President's.

Brazilian Background

Brazil experienced more than 20 years of military rule that ended in 1985. A new constitution was established in 1988. The government of Fernando Henrique Cardoso (‘95-‘02) succeeded in ending hyperinflation and advanced reforms to liberalise the economy, but public-debt indicators deteriorated amid low economic growth. The current government, under the president, Luiz Inacio Lula da Silva (Lula), has been successful in consolidating macroeconomic stability,


UBS 7

while stepping up social spending. However, the political environment is tending to hamper the implementation of deeper reforms needed to accelerate growth.

Foreign trade

Strong external demand and a more active export policy have contributed to booming export earnings since 2003, leading the trade surplus to swell and transforming the current account from a deficit of 4.6% of GDP in 2001 to a surplus for several years, albeit steadily declining. Stronger growth in the import bill than in export earnings, coupled with a wider services deficit caused this surplus to shrink to 0.1% of GDP in 2007 and led to a deficit in 2008.

Chart 1: Exports of goods and services (% of GDP) Chart 2: Current account/GDP in 12 months (%)

77.3 75.3 71.4

43.2 41.0 40.6 36.8 34.1 33.3 31.9 30.2 29.123.3 20.8 20.3

14.7

0102030405060708090

Hung

ary

Czec

h Rep

ublic

Thail

and

South

Kor

ea

Chile

Polan

d

China

Turke

y

Russ

ia

Mexic

o

Indon

esia

South

Afric

a

Arge

ntina

Colom

bia India

Braz

il

Current account balance - Percent of GDP

-6.00-5.00-4.00-3.00-2.00-1.000.001.002.003.00

Jan-

96

Jan-

97

Jan-

98

Jan-

99

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Jan-

04

Jan-

05

Jan-

06

Jan-

07

Jan-

08

Jan-

09

Source: World Bank and UBS Pactual Source: National Treasury and UBS Pactual

Chart 3: Brazilian Exports - destination Chart 4: Brazilian Exports - diversification

Brazilian exports - destination

NAFTA

European Union

Latin America (ex-Mexico)

Middle East

Asia (Ex- Middle East)

Africa

Other Countries

Non-commodities: 49.1%

Other Commodities: 10 1%

Sugar: 2.7%

Soy Complex: 8.6%

Meat Complex: 5.7%

Wood & Pulp: 3.3%

Iron Ore: 7.0%

Steel: 3.6%

Oil & Fuels: 10.0%

Source: Funcex and UBS Pactual Source: Secex and UBS Pactual

International Reserves (US$ Billion)

Brazil has made considerable progress in improving the fiscal and external sectors - especially the level of international reserves and the size of external debt.

Chart 5: International Reserves (US$ Billion) Chart 6:Public Debt Breakdown – International Federal Bonds

0

50

100

150

200

250

Dec-01

Jun-02

Dec-02

Jun-03

Dec-03

Jun-04

Dec-04

Jun-05

Dec-05

Jun-06

Dec-06

Jun-07

Dec-07

Jun-08

Dec-08

-6%

4%

14%

24%

34%

44%

54%

64%

Dec-9

9

Jun-

00

Dec-0

0

Jun-

01

Dec-0

1

Jun-

02

Dec-0

2

Jun-

03

Dec-0

3

Jun-

04

Dec-0

4

Jun-

05

Dec-0

5

Jun-

06

Dec-0

6

Jun-

07

Dec-0

7

Jun-

08

Dec-0

8

% of

Tota

l Inter

nal F

eder

al Bo

nds

Fixed Rate Selic Indexed Inflation Indexed FX Indexed

Source: Central Bank and UBS Pactual Source: National Treasury and UBS Pactual


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Chart 7: Net Public Debt (% GDP)

33.0

38.0

43.0

48.0

53.0

58.0

May-02

Sep-02

Jan-03

May-03

Sep-03

Jan-04

May-04

Sep-04

Jan-05

May-05

Sep-05

Jan-06

May-06

Sep-06

Jan-07

May-07

Sep-07

Jan-08

May-08

Sep-08

Jan-09

Source: Central Bank and UBS Pactual

Inflation / Interest rates

After having experienced more than 15 years of hyperinflation, Brazil achieved inflation stability. The commitment to pursue inflation targeting started with former president FHC. Its monetary reform, called “Plano Real” (1994) launched the current currency, and established the pillars of the monetary policy as inflation control, fiscal responsibility and monetary stability. In 1999, by decree, inflation targeting was created. It is annually set by the National Monetary Committee (CMN), using as a benchmark the IPCA, a price index of households’ consumption. The target is defined for the next two years, but can be revised during the period. The aim is to reach the mark, but band deviations of two percentage points are tolerated. Intending to achieve this goal, eight times per year the Monetary Policy Committee (Copom) joins to set the selic rate (Brazil’s Central Bank lending rate benchmark), having the price level as focal point. Currently, the selic rate stands as 11.25% y-o-y. As a result of the plans, inflation decelerated from 916.46% in 1994, to 5.9% in 2008. For 2009, the target is 4.9%.

Chart 8: IPCA - Annual Inflation vs Target vs Selic Rate

IPCA - Annual Inflation,Target and Interest Rate

1.0

3.0

5.0

7.0

9.0

11.0

13.0

15.0

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009F7.09.011.013.015.017.019.021.023.025.027.0IPCA IPCA -Target

Upper Band Lower BandSelic Rate


GDP Growth

From 2004 to 2007 the increase in Brazil’s GDP posted an average of 4.5% y-o-y, mainly driven by buoyant domestic demand growth. Rise in real income, labour market and a significant increase in the credit expansion were the main triggers, influenced by the decline in the selic rate. On the other hand, external demand has been contributing negatively to the GDP’s growth, as an increase in imports has overcome an increase in exports, mostly due to this domestic demand enlargement.


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Chart 9: GDP Growth

1.20%

5.14%3.97%

3.16%

5.71%

1.15%

4.31%

1.31%2.66%

5.67%

-0.03

0

0.03

0.06

2000 2001 2002 2003 2004 2005 2006 2007 2008e 2009e

Domestic demand External demand GDP


Table 2: Economic Indicators 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009F

GDP

Real Growth 4.3 1.3 2.7 1.2 5.7 3.2 4.0 5.7 5.1 1.20

Inflation

IPCA 6.00 7.70 12.50 9.30 7.60 5.70 3.14 4.46 5.90 4.90

IGPM 9.81 10.40 25.30 8.71 12.41 1.20 3.85 7.75 9.81 2.50

FX Rate

Nominal Variation 9.00 19.00 53.55 -18.18 -8.72 -11.81 -8.76 -17.1 31.9 2.8

R$/US$ 1.95 2.31 3.55 2.91 2.65 2.34 2.14 1.77 2.34 2.35

R$/US$ (average) 2.17 1.95 1.83 2.34

Interest Rates

End of period 15.75 19.00 25.00 16.50 17.75 18.00 13.25 11.25 13.75 8.75

Average 17.60 17.40 19.10 23.35 16.25 19.10 15.06 12.0 12.5 9.92

Real / Average(IPCA) 10.94 9.01 5.87 12.85 8.04 12.68 11.56 7.2 6.3 4.8

Real / Average (IGPM) 7.09 6.34 -4.95 13.47 3.42 17.69 10.79 3.9 2.5 7.2

Real (US$) - Ex Post 7.89 -1.34 -22.43 50.75 27.36 35.04 26.10 35.0 -14.7 6.9

Public Accounts

Primary Surplus - % GDP 3.24 3.35 3.55 3.89 4.18 4.35 3.80 3.9 4.1 3.8

Net Public Debt - % GDP 45.54 48.44 50.46 52.36 46.99 46.45 44.00 42.0 35.8 35.4

Source: UBS Pactual estimates


UBS 10

Aerospace, Airlines & Transportation

UBS 11

Embraer

Income statement (US$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 2,143.46 3,440.53 3,829.88 3,807.40 5,256.89 6,398.97 21.7 5,326.05 -16.8 5,654.00 6.2 Operating expenses (ex depn) (1,809.69) (2,837.86) (3,263.67) (3,449.19) (4,736.20) (5,790.64) 22.3 (4,824.31) -16.7 (5,112.24) 6.0 EBITDA (UBS) 333.77 602.67 566.21 358.22 520.69 608.33 16.8 501.74 -17.5 541.76 8.0 Depreciation (58.88) (59.69) (61.49) (64.24) (75.81) (72.33) -4.6 (84.28) 16.5 (89.38) 6.1 Operating income (EBIT, UBS) 274.89 542.99 504.72 293.98 444.88 536.00 20.5 417.47 -22.1 452.38 8.4 Other income & associates (9.36) (0.11) (0.73) 10.19 0.00 0.00 - 0.00 - 0.00 - Net interest (157.25) (50.25) (7.12) 140.00 55.08 (109.87) - 31.00 - 27.32 -11.8 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 108.27 492.63 496.88 444.17 499.96 426.13 -14.8 448.46 5.2 479.71 7.0 Tax 27.99 (112.14) (41.79) (44.41) (2.74) 1.54 - (50.23) - (53.73) 7.0 Profit after tax 136.26 380.49 455.08 399.75 497.21 427.67 -14.0 398.24 -6.9 425.98 7.0 Abnormal items (post-tax) 0.00 0.00 0.00 (0.03) 0.35 0.27 -21.8 0.00 - 0.00 - Minorities / pref dividends (0.22) (0.89) (9.62) (9.58) (8.21) (4.74) -42.4 0.00 - 0.00 - Net income (local GAAP) 136.04 379.60 445.46 390.14 489.35 423.20 -13.5 398.24 -5.9 425.98 7.0 Net Income (UBS) 136.04 379.60 445.46 390.17 489.00 422.93 -13.5 398.24 -5.8 425.98 7.0 Tax rate (%) 0.00 22.76 8.41 10.00 0.55 0.00 - 11.20 - 11.20 0.0 Pre-abnormal tax rate (%) 0.00 22.76 8.41 10.00 0.55 0.00 - 11.20 - 11.20 0.0 Per share (US$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 0.81 2.25 2.64 2.31 2.64 2.34 -11.4 2.20 -5.9 2.35 7.0 EPS (UBS) 0.81 2.25 2.64 2.31 2.64 2.34 -11.4 2.20 -5.8 2.35 7.0 Net DPS 0.40 1.10 1.18 0.84 0.88 1.25 41.4 1.09 -12.6 1.17 7.0 Cash EPS 1.15 2.60 3.00 2.69 3.05 2.74 -10.2 2.67 -2.6 2.85 6.8 BVPS 6.69 8.01 9.59 10.13 12.14 12.09 -0.4 12.56 3.9 13.72 9.2 Balance sheet (US$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 1,227.59 1,360.79 1,913.55 1,765.19 2,493.11 1,946.32 -21.9 2,012.39 3.4 2,018.81 0.3 Other current assets 2,068.19 2,514.73 2,701.97 2,994.53 3,148.30 3,524.06 11.9 3,189.00 -9.5 3,265.18 2.4 Total current assets 3,295.77 3,875.52 4,615.52 4,759.72 5,641.41 5,470.39 -3.0 5,201.38 -4.9 5,283.99 1.6 Net tangible fixed assets 402.66 381.27 381.48 412.62 565.98 727.01 28.5 792.73 9.0 943.36 19.0 Net intangible fixed assets 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Investments / other assets 2,219.33 1,861.78 1,928.56 2,038.05 1,658.73 2,045.31 23.3 2,045.31 0.0 2,045.31 0.0 Total assets 5,917.77 6,118.57 6,925.56 7,210.40 7,866.12 8,242.71 4.8 8,039.43 -2.5 8,272.66 2.9 Trade payables & other ST liabilities 1,658.11 1,802.82 2,179.13 2,507.61 2,393.98 2,747.15 14.8 2,455.93 -10.6 2,474.25 0.7 Short term debt 517.01 513.28 475.31 506.32 937.08 645.20 -31.1 645.20 0.0 645.20 0.0 Total current liabilities 2,175.13 2,316.10 2,654.44 3,013.93 3,331.06 3,392.35 1.8 3,101.13 -8.6 3,119.45 0.6 Long term debt 526.73 825.45 1,078.12 849.56 832.34 804.55 -3.3 804.55 0.0 804.55 0.0 Other long term liabilities 2,072.31 1,601.70 1,525.98 1,408.72 1,384.56 1,789.11 29.2 1,789.11 0.0 1,789.11 0.0 Total liabilities 4,774.16 4,743.24 5,258.53 5,272.21 5,547.97 5,986.01 7.9 5,694.79 -4.9 5,713.11 0.3 Equity & minority interests 1,143.61 1,375.32 1,667.03 1,938.19 2,318.15 2,256.69 -2.7 2,344.64 3.9 2,559.55 9.2 Total liabilities & equity 5,917.77 6,118.57 6,925.56 7,210.40 7,866.12 8,242.71 4.8 8,039.43 -2.5 8,272.66 2.9 Cash flow (US$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 136.04 379.60 445.46 390.14 489.35 423.20 -13.5 398.24 -5.9 425.98 7.0 Depreciation 58.88 59.69 61.49 64.24 75.81 72.33 -4.6 84.28 16.5 89.38 6.1 Net change in working capital 49.99 (681.89) 148.78 39.62 64.84 (54.22) - 43.84 - (57.87) - Other (operating) (5.28) 167.05 56.93 172.27 (634.30) 396.47 - 0.00 - 0.00 - Net cash from operations 239.64 (75.56) 712.66 666.27 (4.30) 837.79 - 526.35 -37.2 457.49 -13.1 Capital expenditure (64.77) (50.08) (58.65) (102.71) (225.75) (251.89) 11.6 (150.00) -40.4 (240.00) 60.0 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments (7.90) (60.96) (168.79) (515.77) 20.22 (59.22) - 0.00 - 0.00 - Cash from investing activities (72.67) (111.03) (227.44) (618.48) (205.53) (311.11) 51.4 (150.00) -51.8 (240.00) 60.0 Increase/(decrease) in debt 475.71 290.16 (911.53) (115.13) 295.90 (304.92) - 0.00 - 0.00 - Share issues / (repurchases) 3.96 3.25 0.00 6.13 3.60 (182.98) - 0.00 - 0.00 - Dividends paid (67.48) (185.54) (198.94) (141.45) (163.48) (225.70) 38.1 (197.32) -12.6 (211.07) 7.0 Other cash from financing (8.40) (4.68) 1,135.39 (3.96) (3.15) (75.62) - (112.97) - 0.00 - Cash from financing activities 403.79 103.19 24.92 (254.41) 132.88 (789.22) - (310.29) -60.7 (211.07) -32.0 Cash flow chge in cash & equivalents 570.76 (83.40) 510.14 (206.62) (76.95) (262.54) - 66.06 - 6.42 - FX / non cash items 3.84 216.59 42.63 58.26 804.87 (284.25) - (.00) - (.00) - Bal sheet chge in cash & equivalents 574.60 133.20 552.77 (148.36) 727.92 (546.79) - 66.06 - 6.42 - Core EBITDA 333.77 602.67 566.21 358.22 520.69 608.33 16.8 501.74 -17.5 541.76 8.0 Maintenance capital expenditure (32.38) (25.04) (29.32) (51.36) (112.87) (125.94) 11.6 (75.00) -40.4 (120.00) 60.0 Maintenance net working capital 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Operating free cash flow, pre-tax

301.38 577.63 536.89 306.86 407.82 482.38 18.3 426.74 -11.5 421.76 -1.2

Source: Company accounts, UBS estimates. (UBS) valuations are stated before goodwill-related charges and other adjustments for abnormal and economic items at the analysts' judgement. Note: For some companies, the data represents an extract of the full company accounts.

UBS 12

Global Equity Research Americas

Aerospace

12-month rating Buy *

12m price target US$16.00

Company profile Embraer is one of Brazil's fastest growing companies. It is the third-largest aircraft manufacturer in the world, with over one-third of the global regional jet market. About 95% of Embraer's products areexported, mainly to the United States. Revenues are 65% from salesof regional jets, and the remainder are mainly derived from theexecutive and military segments.

Value (EV/OpFCF & P/E)

12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

0.0x

5.0x

10.0x

15.0x

20.0x

EV/OpFCF (LHS) P/E (RHS)

Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)7.40%

7.60%

7.80%

8.00%

8.20%

8.40%

8.60%

18.0%

20.0%

22.0%

24.0%

26.0%

28.0%

30.0%

32.0%

EBIT margin (LHS) ROIC (RHS)

ROE v Price to book value

12/06 12/07 12/08(E) 12/09(E) 12/10(E)16.00%

17.14%

18.29%

19.43%

20.57%

21.71%

22.86%

24.00%

0.0x

1.0x

2.0x

3.0x

4.0x

ROE (LHS) Price to book value (RHS)

Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)3000

3500

4000

4500

5000

5500

6000

6500

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

Revenue (LHS) UBS EPS Growth (RHS)

Embraer

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) 16.2 16.7 17.4 5.0 5.3 5.0 P/E (UBS) 16.1 16.7 17.4 5.0 5.3 5.0 P/CEPS 12.9 14.3 15.0 4.3 4.4 4.1 Net dividend yield (%) 3.1 2.2 1.9 10.6 9.3 9.9 P/BV 3.4 3.8 3.8 1.0 0.9 0.9 EV/revenue (core) 1.5 1.8 1.5 0.3 0.3 0.3 EV/EBITDA (core) 10.2 18.8 15.4 2.6 3.4 3.1 EV/EBIT (core) 11.7 22.9 18.0 3.0 4.1 3.7 EV/OpFCF (core) 11.1 21.9 19.6 3.3 4.0 3.9 EV/op. invested capital 4.1 4.7 5.1 1.0 1.0 0.9

Enterprise value (US$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 7,038.78 8,500.50 2,150.93 2,150.93 2,150.93 + minority interests 63.91 68.71 68.86 71.54 78.10 + average net debt (cash) (384.72) (566.50) (610.13) (529.60) (565.84) + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 0.00 0.00 0.00 0.00 Core enterprise value 6,717.98 8,002.71 1,609.66 1,692.87 1,663.19 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 10.8 -0.6 38.1 21.7 -16.8 6.2 EBITDA (UBS) -9.1 -36.7 45.4 16.8 -17.5 8.0 EBIT (UBS) -11.0 -41.8 51.3 20.5 -22.1 8.4 EPS (UBS) 15.0 -12.4 14.3 -11.4 -5.8 7.0 Cash EPS 13.0 -10.4 13.3 -10.2 -2.6 6.8 Net DPS 1.3 -28.9 5.4 41.4 -12.6 7.0 BVPS 13.1 5.7 19.8 -0.4 3.9 9.2

Margins (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBITDA / revenue 15.6 9.4 9.9 9.5 9.4 9.6 EBIT / revenue 13.6 7.7 8.5 8.4 7.8 8.0 Net profit (UBS) / revenue 9.6 10.2 9.3 6.6 7.5 7.5

Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) 35.3 20.7 28.5 32.0 23.6 24.0 ROIC post tax - 18.7 28.3 32.0 20.9 21.3 Net ROE 23.3 22.3 23.7 19.1 17.9 17.9

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - - 4.9 - - Dividend cover (UBS EPS) 2.1 2.8 3.0 1.9 2.0 2.0 Div. payout ratio (%, UBS EPS) 47.9 36.3 33.4 53.4 49.5 49.5 Net debt / EBITDA NM NM NM NM NM NM

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital 2.7 2.7 3.4 3.8 3.0 3.0 Revenue / fixed assets 7.9 9.6 10.7 9.9 7.0 6.5 Revenue / net working capital 5.9 7.5 8.5 8.4 7.1 7.4

Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT 1.0 1.0 0.9 0.9 1.0 0.9 Capex / revenue (%) 2.6 2.7 4.3 3.9 2.8 4.2 Capex / depreciation 1.3 1.6 3.0 3.5 1.8 2.7

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity (13.9) (21.1) (31.2) (22.0) (24.0) (22.2) Net debt / (net debt + equity) (18.0) (27.9) (47.4) (29.4) (32.9) (29.8) Net debt (core) / EV -3.53 (5.7) (7.1) (37.9) (31.3) (34.0)

Source: Company accounts, UBS estimates. (UBS) valuations are stated before goodwill-related charges and other adjustments for abnormal and economic items at the analysts' judgement. Valuations: based on an average share price that year, (E): based on a share price of US$11.73 on 13 Mar 2009 19:40 EDT Market cap(E) may include forecast share issues/buybacks. Rodrigo Goes, CFA Analyst [email protected] +55-11-3383 2580

Gustavo Moreira Analyst [email protected] +55-11-3383 2366

UBS 13

GOL

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 1,400.59 1,960.89 2,669.09 3,802.02 4,938.33 6,434.87 30.3 6,085.06 -5.4 6,805.23 11.8 Operating expenses (ex depn) (1,025.34) (1,363.20) (2,012.76) (3,031.25) (4,839.73) (6,409.79) 32.4 (5,503.89) -14.1 (6,010.15) 9.2 EBITDA (UBS) 375.25 597.69 656.34 770.77 98.60 25.08 -74.6 581.17 2217.1 795.08 36.8 Depreciation (13.84) (21.39) (35.01) (69.31) (121.57) (185.72) 52.8 (135.25) -27.2 (151.26) 11.8 Operating income (EBIT, UBS) 361.40 576.30 621.32 701.46 (22.97) (160.64) 599.3 445.92 - 643.82 44.4 Other income & associates 0.00 0.00 0.00 12.01 (50.27) (61.81) 22.9 0.00 - 0.00 - Net interest (82.11) 10.98 96.17 85.50 172.96 (1,117.33) - (102.82) -90.8 (196.38) 91.0 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 279.29 587.28 717.49 798.96 99.71 (1,339.78) - 343.10 - 447.44 30.4 Tax (87.73) (202.57) (204.29) (229.83) 2.80 202.96 7143.4 (85.78) - (134.23) 56.5 Profit after tax 191.56 384.71 513.20 569.14 102.51 (1,136.82) - 257.33 - 313.21 21.7 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net income (local GAAP) 191.56 384.71 513.20 569.14 102.51 (1,136.82) - 257.33 - 313.21 21.7 Net Income (UBS) 191.56 384.71 513.20 569.14 102.51 (1,136.82) - 257.33 - 313.21 21.7 Tax rate (%) 31.41 34.49 28.47 28.77 0.00 0.00 - 25.00 - 30.00 20.0 Pre-abnormal tax rate (%) 31.41 34.49 28.47 28.77 0.00 0.00 - 25.00 - 30.00 20.0 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 1.17 2.04 2.63 2.90 0.51 (5.64) - 1.28 - 1.55 21.7 EPS (UBS) 1.17 2.04 2.63 2.90 0.51 (5.64) - 1.28 - 1.55 21.7 Net DPS 0.16 0.00 0.31 1.27 1.25 0.18 -85.6 0.00 - 0.00 - Cash EPS 1.25 2.16 2.81 3.25 1.11 (4.72) - 1.95 - 2.31 18.3 BVPS 1.67 6.10 9.33 11.23 11.75 7.72 -34.3 9.23 19.6 10.48 13.5 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 146.29 849.09 869.04 1,706.35 1,432.80 822.98 -42.6 755.56 -8.2 840.03 11.2 Other current assets 290.12 455.66 671.60 1,134.54 1,696.75 898.22 -47.1 909.31 1.2 966.18 6.3 Total current assets 436.41 1,304.75 1,540.64 2,840.89 3,129.55 1,721.20 -45.0 1,664.88 -3.3 1,806.21 8.5 Net tangible fixed assets 67.18 131.36 578.60 1,089.61 2,144.89 2,939.60 37.1 3,954.34 34.5 4,753.08 20.2 Net intangible fixed assets 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Investments / other assets 181.43 298.20 436.61 367.91 1,727.99 2,036.52 17.9 2,036.52 0.0 2,036.52 0.0 Total assets 685.02 1,734.30 2,555.84 4,298.41 7,002.42 6,697.32 -4.4 7,655.74 14.3 8,595.81 12.3 Trade payables & other ST liabilities 269.42 398.79 592.21 830.74 1,389.25 1,295.93 -6.7 1,228.64 -5.2 1,315.84 7.1 Short term debt 38.91 118.35 54.02 169.60 898.09 732.42 -18.4 735.01 0.4 737.66 0.4 Total current liabilities 308.33 517.14 646.23 1,000.35 2,287.34 2,028.35 -11.3 1,963.66 -3.2 2,053.50 4.6 Long term debt 0.00 0.00 0.00 988.96 1,842.68 2,592.90 40.7 3,311.69 27.7 3,911.06 18.1 Other long term liabilities 61.96 68.02 87.29 103.94 497.14 520.73 4.7 520.73 0.0 520.73 0.0 Total liabilities 370.28 585.16 733.51 2,093.25 4,627.16 5,141.98 11.1 5,796.08 12.7 6,485.29 11.9 Equity & minority interests 314.74 1,149.15 1,822.33 2,205.16 2,375.26 1,555.34 -34.5 1,859.66 19.6 2,110.52 13.5 Total liabilities & equity 685.02 1,734.30 2,555.84 4,298.41 7,002.42 6,697.32 -4.4 7,655.74 14.3 8,595.81 12.3 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 191.56 384.71 513.20 569.14 102.51 (1,136.82) - 257.33 - 313.21 21.7 Depreciation 13.84 21.39 35.01 69.31 121.57 185.72 52.8 135.25 -27.2 151.26 11.8 Net change in working capital (46.06) (96.17) (64.01) (165.88) 56.67 816.77 1341.2 0.00 - 0.00 - Other (operating) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations 159.35 309.93 484.21 472.57 280.75 (134.33) - 392.58 - 464.47 18.3 Capital expenditure (39.27) (85.42) (169.44) (500.18) (530.93) (531.99) 0.2 (1,150.00) 116.2 (950.00) -17.4 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities (39.27) (85.42) (169.44) (500.18) (530.93) (531.99) 0.2 (1,150.00) 116.2 (950.00) -17.4 Increase/(decrease) in debt 16.11 0.00 0.00 1,054.10 966.38 (115.10) - 690.00 - 570.00 - Share issues / (repurchases) 0.00 462.04 279.08 (1.74) 0.00 0.00 - 0.00 - 0.00 - Dividends paid (26.50) 0.00 (61.37) (249.10) (250.71) (36.26) -85.5 0.00 - 0.00 - Other cash from financing 0.17 127.07 (100.67) 73.11 (575.08) (407.78) - 0.00 - 0.00 - Cash from financing activities (10.22) 589.12 117.04 876.37 140.60 (559.14) - 690.00 - 570.00 -17.4 Cash flow chge in cash & equivalents 109.86 813.62 431.80 848.76 (109.58) (1,225.45) - (67.42) - 84.47 - FX / non cash items 26.98 (110.82) (411.86) (11.45) (163.96) 615.64 -89.2 (.00) -62.6 (.00) 2.0 Bal sheet chge in cash & equivalents 136.84 702.80 19.94 837.31 (273.55) (609.82) - (67.42) - 84.47 - Core EBITDA 375.25 597.69 656.34 770.77 98.60 25.08 -74.6 581.17 2217.1 795.08 36.8 Maintenance capital expenditure (38.39) (49.97) (81.16) (130.89) (214.57) (233.53) 8.8 (248.16) 6.3 (270.92) 9.2 Maintenance net working capital (2.48) (14.02) (21.71) (41.61) (34.81) 63.20 - 54.11 -14.4 58.06 7.3 Operating free cash flow, pre-tax

334.37 533.69 553.47 598.27 (150.79) (145.24) -3.7 387.12 - 582.22 50.4


UBS 14


Airlines


12m price target R$13.00

Company profile GOL is Latin America's and Brazil's first low-cost, low-fare airline. Local shares trade on the Bovespa under GOLL4 and ADRs trade onthe NYSE under GOL (combined liquidity of US$45m). GOL operateswith two flags (GOL and Varig) and is expected to end 2007 with afleet of 103 aircraft (79 with GOL and 24 with Varig). It currentlyretains market share of 54% in the domestic market and 24% in theinternational market (excluding foreign companies).


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

-5.0x

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)-60%

-40%

-20%

0%

20%

40%

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)2000

3000

4000

5000

6000

7000

-100%

-80%

-60%

-40%

-20%

0%

20%

40%


* Exception to core rating bands; See page208

GOL

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - 23.6 NM NM 6.6 5.4 P/E (UBS) - 23.6 NM NM 6.6 5.4 P/CEPS - 21.0 48.3 NM 4.3 3.7 Net dividend yield (%) - 1.9 2.3 2.1 0.0 0.0 P/BV - 6.1 4.6 1.1 0.9 0.8 EV/revenue (core) - 3.3 2.2 0.6 0.8 0.8 EV/EBITDA (core) - 16.5 >100 >100 7.9 6.6 EV/EBIT (core) - 18.1 NM NM 10.3 8.2 EV/OpFCF (core) - 21.2 NM NM 11.9 9.0 EV/op. invested capital - 8.9 3.7 0.8 0.9 0.9

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 13,377.70 10,729.60 1,707.89 1,707.89 1,707.89 + minority interests 0.00 0.00 0.00 0.00 0.00 + average net debt (cash) (681.40) 380.09 1,905.15 2,896.74 3,549.91 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 0.00 0.00 0.00 0.00 Core enterprise value 12,696.29 11,109.69 3,613.04 4,604.63 5,257.80 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 53.9 42.4 29.9 30.3 -5.4 11.8 EBITDA (UBS) 82.2 17.4 -87.2 -74.6 NM 36.8 EBIT (UBS) 83.3 12.9 - NM - 44.4 EPS (UBS) 68.5 10.3 -82.5 - - 21.7 Cash EPS 64.9 15.9 -65.9 - - 18.3 Net DPS - NM -1.6 -85.6 - - BVPS 133.2 20.4 4.6 -34.3 19.6 13.5

Margins (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBITDA / revenue 22.5 20.3 2.0 0.4 9.6 11.7 EBIT / revenue 21.2 18.4 -0.5 -2.5 7.3 9.5 Net profit (UBS) / revenue 14.5 15.0 2.1 NM 4.2 4.6

Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) NM 49.1 NM NM 8.7 10.6 ROIC post tax - 35.0 NM NM 6.5 7.4 Net ROE 58.4 28.3 4.5 (57.8) 15.1 15.8

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - - - 4.3 3.3 Dividend cover (UBS EPS) - 2.3 0.4 - - - Div. payout ratio (%, UBS EPS) - 43.8 NM - - - Net debt / EBITDA NM NM NM NM 5.7 4.8

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital 3.6 2.7 1.7 1.5 1.2 1.1 Revenue / fixed assets 7.7 4.6 3.1 2.5 1.8 1.6 Revenue / net working capital 36.4 19.8 16.2 NM NM NM


Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity (29.7) (24.8) 55.1 NM NM NM Net debt / (net debt + equity) (64.8) (33.1) 35.5 61.7 63.9 64.3 Net debt (core) / EV - (5.4) 3.4 52.7 62.9 67.5

Source: Company accounts, UBS estimates. (UBS) valuations are stated before goodwill-related charges and other adjustments for abnormal and economic items at the analysts' judgement. Valuations: based on an average share price that year, (E): based on a share price of R$8.45 on 13 Mar 2009 19:40 EDT Market cap(E) may include forecast share issues/buybacks. Rodrigo Goes, CFA Analyst [email protected] +55-11-3383 2580


UBS 15

TAM

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 3,667.00 4,520.00 5,633.29 7,329.60 8,131.30 10,537.67 29.6 10,958.24 4.0 11,953.66 9.1 Operating expenses (ex depn) (3,233.00) (3,834.00) (4,799.76) (6,017.20) (7,437.80) (9,629.24) 29.5 (9,722.14) 1.0 (10,473.89) 7.7 EBITDA (UBS) 434.00 686.00 833.53 1,312.40 693.50 908.43 31.0 1,236.10 36.1 1,479.77 19.7 Depreciation (204.00) (193.00) (206.66) (222.00) (276.30) (312.98) 13.3 (325.47) 4.0 (355.04) 9.1 Operating income (EBIT, UBS) 230.00 493.00 626.87 1,090.40 417.20 595.45 42.7 910.63 52.9 1,124.74 23.5 Other income & associates 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net interest 727.00 137.00 29.92 152.00 260.30 (2,760.88) - (164.78) -94.0 (276.59) 67.9 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 957.00 630.00 656.78 1,242.40 677.50 (2,165.43) - 745.84 - 848.14 13.7 Tax (304.00) (199.00) (221.95) (433.00) (208.90) 540.43 - (253.59) - (288.37) 13.7 Profit after tax 653.00 431.00 434.84 809.40 468.60 (1,625.00) - 492.26 - 559.77 13.7 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends 0.00 (1.00) 0.00 (0.40) 0.00 0.00 0.0 0.00 0.0 0.00 0.0 Net income (local GAAP) 653.00 430.00 434.84 809.00 468.60 (1,625.00) - 492.26 - 559.77 13.7 Net Income (UBS) 653.00 430.00 434.84 809.00 468.60 (1,625.00) - 492.26 - 559.77 13.7 Tax rate (%) 31.77 31.59 33.79 34.85 30.83 - - 34.00 - 34.00 0.0 Pre-abnormal tax rate (%) 31.77 31.59 33.79 34.85 30.83 - - 34.00 - 34.00 0.0 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 5.35 3.52 3.02 5.37 3.11 (10.79) - 3.27 - 3.72 13.7 EPS (UBS) 5.35 3.52 3.02 5.37 3.11 (10.79) - 3.27 - 3.72 13.7 Net DPS 0.00 0.00 0.00 0.00 0.00 0.52 - 0.17 -67.9 1.12 577.0 Cash EPS 7.02 5.10 4.45 6.85 4.95 (8.71) - 5.43 - 6.08 11.9 BVPS 0.43 (1.34) 4.36 10.17 13.06 3.84 -70.6 0.50 -86.9 1.52 202.4 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 172.32 296.86 995.45 2,452.98 2,606.88 2,027.51 -22.2 1,456.97 -28.1 1,363.79 -6.4 Other current assets 602.09 865.61 1,177.31 1,399.50 2,416.69 2,539.18 5.1 2,487.81 -2.0 2,610.61 4.9 Total current assets 774.41 1,162.47 2,172.76 3,852.48 5,023.57 4,566.69 -9.1 3,944.78 -13.6 3,974.40 0.8 Net tangible fixed assets 1,565.26 3,350.98 3,507.93 3,391.29 4,427.30 5,424.99 22.5 5,898.68 8.7 6,422.72 8.9 Net intangible fixed assets 291.36 317.39 230.55 55.58 75.02 87.65 16.8 87.65 0.0 87.65 0.0 Investments / other assets 157.42 147.44 140.88 358.05 449.46 854.58 90.1 854.58 0.0 854.58 0.0 Total assets 2,788.45 4,978.27 6,052.12 7,657.40 9,975.34 10,933.91 9.6 10,785.69 -1.4 11,339.35 5.1 Trade payables & other ST liabilities 577.32 1,006.98 1,292.15 1,745.69 1,809.35 2,139.94 18.3 2,155.18 0.7 2,191.33 1.7 Short term debt 389.02 464.58 487.54 617.75 1,250.61 1,347.67 7.8 1,360.77 1.0 1,374.14 1.0 Total current liabilities 966.34 1,471.56 1,779.69 2,363.44 3,059.96 3,487.60 14.0 3,515.96 0.8 3,565.47 1.4 Long term debt 1,063.49 2,847.70 2,687.07 2,772.71 3,765.24 5,628.81 49.5 5,954.36 5.8 6,305.59 5.9 Other long term liabilities 704.66 821.03 954.37 986.60 1,180.73 1,237.12 4.8 1,237.12 0.0 1,237.12 0.0 Total liabilities 2,734.49 5,140.28 5,421.13 6,122.76 8,005.92 10,353.53 29.3 10,707.43 3.4 11,108.18 3.7 Equity & minority interests 53.96 (162.01) 630.99 1,534.64 1,969.41 580.38 -70.5 78.27 -86.5 231.17 195.4 Total liabilities & equity 2,788.45 4,978.27 6,052.12 7,657.40 9,975.34 10,933.91 9.6 10,785.69 -1.4 11,339.35 5.1 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 653.00 430.00 434.84 809.00 468.60 (1,625.00) - 492.26 - 559.77 13.7 Depreciation 204.00 193.00 206.66 222.00 276.30 312.98 13.3 325.47 4.0 355.04 9.1 Net change in working capital 0.00 0.00 (26.74) 231.36 (953.53) 208.10 - 66.61 -68.0 (86.65) - Other (operating) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations 857.00 623.00 614.76 1,262.36 (208.63) (1,103.92) 429.1 884.34 - 828.16 -6.4 Capital expenditure 0.00 (122.29) (121.69) (99.00) (252.02) (726.51) 188.3 (799.16) 10.0 (879.08) 10.0 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities 0.00 (122.29) (121.69) (99.00) (252.02) (726.51) 188.3 (799.16) 10.0 (879.08) 10.0 Increase/(decrease) in debt (107.66) 1,859.77 (137.67) 215.85 1,625.39 934.00 - 13.11 - 13.37 - Share issues / (repurchases) 0.00 0.00 364.84 210.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid 0.00 0.00 0.00 0.00 0.00 (77.66) - (24.90) -67.9 (168.54) 577.0 Other cash from financing 0.00 (1,988.09) (12.73) (287.43) (2,501.03) (2,212.40) - 0.00 - 0.00 - Cash from financing activities (107.66) (128.31) 214.45 138.42 (875.64) (1,356.07) 54.9 (11.79) -99.1 (155.17) 1216.1 Cash flow chge in cash & equivalents 749.35 372.40 707.52 1,301.78 (1,336.29) (3,186.50) - 73.39 - (206.09) - FX / non cash items (622.84) (247.86) (8.93) 155.75 1,490.19 2,607.13 6.1 (643.93) - 112.90 -75.4 Bal sheet chge in cash & equivalents 126.51 124.54 698.59 1,457.53 153.90 (579.37) - (570.54) - (93.18) - Core EBITDA 434.00 686.00 833.53 1,312.40 693.50 908.43 31.0 1,236.10 36.1 1,479.77 19.7 Maintenance capital expenditure (75.00) (75.00) (75.00) (75.00) (75.00) (75.00) 0.0 (75.00) 0.0 (75.00) 0.0 Maintenance net working capital 7.52 7.52 (7.26) (7.36) (17.72) (20.77) 17.2 (28.43) 36.8 (35.91) 26.3 Operating free cash flow, pre-tax

366.52 618.52 751.27 1,230.04 600.78 812.66 35.3 1,132.67 39.4 1,368.86 20.9


UBS 16


Airlines



Company profile TAM is the leading Brazilian airline, retaining the largest share of thedomestic market, with half of the market, and more than 60% share of the international market. Passenger transportation in regularlyscheduled flights is TAM's core business, accounting for +600 dailyflights and 84% of total revenues during 2006, when the companytransported 25 million passengers. TAM's domestic network is in 48 cities and another 26 reached via alliances with regional carriers.Internationally, TAM reaches 12 cities with 468 weekly flights.


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

-5.0x

0.0x

5.0x

10.0x

15.0x

20.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)-200%

-100%

0%

100%

200%

300%

400%

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)6000

7000

8000

9000

10000

11000

12000

-60%

-40%

-20%

0%

20%

40%

60%

80%



TAM

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) 4.0 10.6 17.8 NM 4.6 4.1 P/E (UBS) 4.0 10.6 17.8 NM 4.6 4.1 P/CEPS 2.9 8.4 11.2 NM 2.8 2.5 Net dividend yield (%) 0.0 0.0 0.0 3.4 1.1 7.4 P/BV 2.9 5.6 4.2 4.0 30.2 10.0 EV/revenue (core) 0.9 1.4 1.2 0.6 0.7 0.7 EV/EBITDA (core) 6.7 7.7 14.4 6.6 6.2 5.7 EV/EBIT (core) 9.5 9.2 24.0 10.0 8.4 7.4 EV/OpFCF (core) 7.5 8.2 16.7 7.3 6.8 6.1 EV/op. invested capital - 3.8 2.9 1.2 1.3 1.3

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 8,493.62 8,340.12 2,284.05 2,284.05 2,284.05 + minority interests 2.74 2.63 2.73 2.73 2.73 + average net debt (cash) 1,558.32 1,673.23 3,678.97 5,403.56 6,087.05 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 0.00 0.00 0.00 0.00 Core enterprise value 10,054.69 10,015.98 5,965.75 7,690.34 8,373.83 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 20.9 30.1 10.9 29.6 4.0 9.1 EBITDA (UBS) 61.9 57.5 -47.2 31.0 36.1 19.7 EBIT (UBS) 171.7 73.9 -61.7 42.7 52.9 23.5 EPS (UBS) - 78.1 -42.1 - - 13.7 Cash EPS - 53.9 -27.8 - - 11.9 Net DPS - - - - -67.9 NM BVPS 57.0 133.1 28.4 -70.6 -86.9 NM

Margins (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBITDA / revenue 13.1 17.9 8.5 8.6 11.3 12.4 EBIT / revenue 8.8 14.9 5.1 5.7 8.3 9.4 Net profit (UBS) / revenue NM 11.0 5.8 NM 4.5 4.7

Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) - 41.4 12.2 12.0 15.9 18.0 ROIC post tax - 27.0 8.4 - 10.5 11.9 Net ROE -214.4 74.9 26.8 (127.7) 150.7 368.3

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - - 0.2 5.5 4.1 Dividend cover (UBS EPS) - - - - 19.8 3.3 Div. payout ratio (%, UBS EPS) - - - - 5.1 30.1 Net debt / EBITDA 2.7 0.7 3.5 5.4 4.7 4.3

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - 2.8 2.4 2.1 1.9 1.9 Revenue / fixed assets - 2.0 2.0 2.1 1.9 1.9 Revenue / net working capital - NM 62.3 20.9 29.9 31.8


Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity NM 61.1 NM NM NM NM Net debt / (net debt + equity) 80.8 38.0 55.1 89.5 98.7 96.5 Net debt (core) / EV 45.45 15.5 16.7 61.7 70.3 72.7



UBS 17

America Latina Logistica

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 892.80 947.70 1,087.00 1,726.07 2,112.10 2,494.28 18.1 2,724.54 9.2 3,136.71 15.1 Operating expenses (ex depn) (626.30) (649.80) (635.70) (992.84) (1,220.60) (1,397.80) 14.5 (1,565.37) 12.0 (1,758.18) 12.3 EBITDA (UBS) 270.90 351.10 457.90 686.95 872.00 1,079.89 23.8 1,159.17 7.3 1,378.53 18.9 Depreciation (76.90) (57.50) (127.80) (239.20) (188.60) (170.21) -9.8 (182.50) 7.2 (213.12) 16.8 Operating income (EBIT, UBS) 194.00 293.60 330.10 447.75 683.40 909.68 33.1 976.67 7.4 1,165.41 19.3 Other income & associates (5.00) (16.00) (14.90) (3.70) (1.10) 3.80 - 0.00 - 0.00 - Net interest (190.50) (142.80) (105.30) (337.43) (415.30) (628.14) 51.2 (604.97) -3.7 (600.27) -0.8 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax (1.50) 134.80 209.90 106.62 267.00 285.34 6.9 371.70 30.3 565.15 52.0 Tax 6.20 15.80 (38.60) (30.87) (49.40) (36.35) -26.4 (88.28) 142.9 (149.72) 69.6 Profit after tax 4.70 150.60 171.30 75.75 217.60 248.99 14.4 283.41 13.8 415.43 46.6 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net income (local GAAP) 4.70 150.60 171.30 75.75 217.60 248.99 14.4 283.41 13.8 415.43 46.6 Net Income (UBS) 4.70 150.60 171.30 75.75 217.60 248.99 14.4 283.41 13.8 415.43 46.6 Tax rate (%) 0.00 0.00 18.39 28.95 18.50 12.74 -31.2 23.75 86.5 26.49 11.5 Pre-abnormal tax rate (%) 0.00 0.00 18.39 28.95 18.50 12.74 -31.2 23.75 86.5 26.49 11.5 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 0.01 0.36 0.39 0.13 0.38 0.43 14.3 0.49 13.8 0.72 46.8 EPS (UBS) 0.01 0.36 0.39 0.13 0.38 0.43 14.3 0.49 13.8 0.72 46.8 Net DPS 0.00 0.87 0.83 0.04 0.03 0.09 240.9 0.11 21.6 0.12 13.8 Cash EPS 0.23 0.49 0.68 0.55 0.71 0.73 3.1 0.81 11.1 1.09 35.1 BVPS 0.75 1.67 2.12 4.26 4.41 4.75 7.8 5.17 8.9 5.77 11.5 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 253.70 764.90 1,006.20 1,739.10 1,815.80 2,451.20 35.0 2,386.31 -2.6 2,381.46 -0.2 Other current assets 174.70 207.90 277.00 431.50 456.60 581.78 27.4 607.13 4.4 652.50 7.5 Total current assets 428.40 972.80 1,283.20 2,170.60 2,272.40 3,032.98 33.5 2,993.44 -1.3 3,033.96 1.4 Net tangible fixed assets 552.90 671.30 850.60 2,840.60 3,511.90 4,008.50 14.1 4,354.76 8.6 4,766.01 9.4 Net intangible fixed assets 113.80 95.50 84.40 122.60 119.40 113.40 -5.0 113.40 0.0 113.40 0.0 Investments / other assets 372.20 409.80 437.10 3,752.40 3,739.60 3,471.80 -7.2 3,471.80 0.0 3,471.80 0.0 Total assets 1,467.30 2,149.40 2,655.30 8,886.20 9,643.30 10,626.68 10.2 10,933.40 2.9 11,385.17 4.1 Trade payables & other ST liabilities 263.70 377.40 513.70 784.20 1,267.80 1,092.91 -13.8 1,156.02 5.8 1,268.99 9.8 Short term debt 241.90 134.80 189.30 456.20 752.10 924.80 23.0 924.80 0.0 924.80 0.0 Total current liabilities 505.60 512.20 703.00 1,240.40 2,019.90 2,017.71 -0.1 2,080.82 3.1 2,193.79 5.4 Long term debt 555.70 801.50 913.80 3,898.40 3,778.70 4,385.10 16.0 4,385.10 0.0 4,385.10 0.0 Other long term liabilities 74.80 96.80 103.70 1,306.00 1,306.10 1,483.90 13.6 1,483.90 0.0 1,483.90 0.0 Total liabilities 1,136.10 1,410.50 1,720.50 6,444.80 7,104.70 7,886.71 11.0 7,949.82 0.8 8,062.79 1.4 Equity & minority interests 331.20 738.90 934.80 2,441.40 2,538.60 2,739.97 7.9 2,983.58 8.9 3,322.39 11.4 Total liabilities & equity 1,467.30 2,149.40 2,655.30 8,886.20 9,643.30 10,626.68 10.2 10,933.40 2.9 11,385.17 4.1 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 4.70 150.60 171.30 75.75 217.60 248.99 14.4 283.41 13.8 415.43 46.6 Depreciation 76.90 57.50 127.80 239.20 188.60 170.21 -9.8 182.50 7.2 213.12 16.8 Net change in working capital 42.30 80.50 0.00 (116.00) 173.10 (44.60) - 0.00 - 0.00 - Other (operating) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations 123.90 288.60 299.10 198.95 579.30 374.60 -35.3 465.91 24.4 628.54 34.9 Capital expenditure (103.20) (188.60) (255.20) (372.30) (791.60) (649.30) -18.0 (600.00) -7.6 (700.00) 16.7 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities (103.20) (188.60) (255.20) (372.30) (791.60) (649.30) -18.0 (600.00) -7.6 (700.00) 16.7 Increase/(decrease) in debt 151.80 138.70 166.80 3,251.50 0.00 0.00 - 0.00 - 0.00 - Share issues / (repurchases) 71.80 284.80 0.00 12.20 12.20 (92.30) - 0.00 - 0.00 - Dividends paid 0.00 (36.80) (36.80) (20.30) (15.00) (51.20) 241.3 (62.25) 21.6 (70.85) 13.8 Other cash from financing (42.30) 24.30 52.50 (2,340.85) 272.65 932.85 - 0.00 - 0.00 - Cash from financing activities 181.30 411.00 182.50 902.55 269.85 789.35 192.5 (62.25) - (70.85) 13.8 Cash flow chge in cash & equivalents 202.00 511.00 226.40 729.20 57.55 514.65 - (196.34) - (142.31) - FX / non cash items (1.20) 0.20 14.90 3.70 19.15 120.75 319.2 131.45 - 137.46 4.6 Bal sheet chge in cash & equivalents 200.80 511.20 241.30 732.90 76.70 635.40 - (64.89) - (4.85) - Core EBITDA 270.90 351.10 457.90 686.95 872.00 1,079.89 23.8 1,159.17 7.3 1,378.53 18.9 Maintenance capital expenditure (350.00) (350.00) (350.00) (350.00) (350.00) (350.00) 0.0 (350.00) 0.0 (350.00) 0.0 Maintenance net working capital 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Operating free cash flow, pre-tax

(79.10) 1.10 107.90 336.95 522.00 729.89 39.8 809.17 10.9 1,028.53 27.1


UBS 18


Transportation Services

12-month rating Neutral *


Company profile ALL is Latin America's largest independent logistics company andoperates 1,060 locomotives, 31,000 rail cars, and 1,000 highwayvehicles, covering an area that accounts for 75% of Mercosul's GDPand serving seven of the most active ports in Brazil and Argentina(through which approximately 78% of South America's grain exportsare shipped). The company offers a full range of logistics services, including rail transportation, domestic and international intermodaldoor-to-door transportation, dedicated fleet services, andwarehousing.


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

30.0x

0.0x

10.0x

20.0x

30.0x

40.0x

50.0x

60.0x

70.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)20.0%

25.0%

30.0%

35.0%

40.0%

40.0%

42.0%

44.0%

46.0%

48.0%

50.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

0.0x

0.5x

1.0x

1.5x

2.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)1000

1500

2000

2500

3000

3500

-100%

-50%

0%

50%

100%

150%

200%



America Latina Logistica

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - NM 64.9 21.1 18.6 12.6 P/E (UBS) - NM 64.9 21.1 18.6 12.6 P/CEPS - 28.0 34.8 12.5 11.3 8.4 Net dividend yield (%) - 0.2 0.1 1.0 1.2 1.3 P/BV - 3.6 5.6 1.9 1.8 1.6 EV/revenue (core) - 5.4 8.0 3.2 3.0 2.6 EV/EBITDA (core) - 13.5 19.3 7.4 7.0 5.9 EV/EBIT (core) - 20.7 24.6 8.8 8.3 7.0 EV/OpFCF (core) - 27.6 NM 11.0 10.1 8.0 EV/op. invested capital - 9.8 NM 4.4 3.6 3.1

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 7,933.52 14,131.62 5,253.78 5,253.78 5,253.78 + minority interests 0.00 0.00 0.00 0.00 0.00 + average net debt (cash) 1,356.20 2,665.25 2,786.85 2,891.14 2,926.01 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 0.00 0.00 0.00 0.00 Core enterprise value 9,289.72 16,796.87 8,040.63 8,144.93 8,179.80 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 23.5 58.8 22.4 18.1 9.2 15.1 EBITDA (UBS) 34.4 50.0 26.9 23.8 7.3 18.9 EBIT (UBS) 38.5 35.6 52.6 33.1 7.4 19.3 EPS (UBS) 18.1 -66.0 185.7 14.3 13.8 46.8 Cash EPS 12.6 -18.9 28.3 3.1 11.1 35.1 Net DPS - -95.8 -26.1 NM 21.6 13.8 BVPS 63.3 101.1 3.4 7.8 8.9 11.5



Coverage ratios (x) 5Yr Avg 12/04 12/05 12/08E 12/09E 12/10E EBIT / net interest 1.7 1.3 1.6 1.4 1.6 1.9 Dividend cover (UBS EPS) - 3.8 14.5 4.9 4.6 5.9 Div. payout ratio (%, UBS EPS) - 26.7 6.9 20.6 22.0 17.0 Net debt / EBITDA 2.0 3.8 3.1 2.6 2.5 2.1

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital 1.9 1.8 1.5 1.4 1.2 1.2 Revenue / fixed assets 1.2 0.9 0.6 0.6 0.6 0.7 Revenue / net working capital NM NM NM NM NM NM

Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT 0.2 0.8 0.8 0.8 0.8 0.9 Capex / revenue (%) 18.8 21.6 NM 26.0 22.0 22.3 Capex / depreciation 1.7 1.6 4.2 3.8 3.3 3.3

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity NM NM NM NM 98.0 88.1 Net debt / (net debt + equity) 46.0 51.7 51.7 51.1 49.5 46.8 Net debt (core) / EV - 14.6 15.9 34.7 35.5 35.8



UBS 19

CCR

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 1,130.30 1,458.05 1,967.64 2,144.97 2,353.02 2,751.01 16.9 3,169.10 15.2 3,792.21 19.7 Operating expenses (ex depn) (568.04) (710.55) (874.32) (951.79) (906.81) (1,003.08) 10.6 (1,078.43) 7.5 (1,290.48) 19.7 EBITDA (UBS) 562.26 747.50 1,093.32 1,193.19 1,446.20 1,747.93 20.9 2,090.67 19.6 2,501.73 19.7 Depreciation (211.39) (221.41) (312.44) (337.50) (318.79) (356.29) 11.8 (463.86) 30.2 (493.38) 6.4 Operating income (EBIT, UBS) 350.87 526.09 780.88 855.69 1,127.41 1,391.64 23.4 1,626.81 16.9 2,008.35 23.5 Other income & associates (.00) 0.00 2.27 (0.31) (4.38) 1.54 - 0.00 - 0.00 - Net interest (85.34) (149.86) (0.83) (193.59) (232.20) (281.07) 21.0 (443.37) 57.7 (432.57) -2.4 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 265.53 376.23 782.32 661.79 890.83 1,112.11 24.8 1,183.44 6.4 1,575.78 33.2 Tax (89.15) (113.48) (275.48) (109.93) (299.16) (383.45) 28.2 (402.37) 4.9 (535.77) 33.2 Profit after tax 176.38 262.75 506.84 551.86 591.67 728.66 23.2 781.07 7.2 1,040.02 33.2 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends 0.73 0.44 (7.39) (4.59) (8.09) (8.53) 5.5 (9.35) 9.6 (51.42) 449.8 Net income (local GAAP) 177.12 263.19 499.46 547.27 583.58 720.13 23.4 771.72 7.2 988.59 28.1 Net Income (UBS) 177.12 263.19 499.46 547.27 583.58 720.13 23.4 771.72 7.2 988.59 28.1 Tax rate (%) 33.57 30.16 35.21 16.61 33.58 34.48 2.7 34.00 -1.4 34.00 0.0 Pre-abnormal tax rate (%) 33.57 30.16 35.21 16.61 33.58 34.48 2.7 34.00 -1.4 34.00 0.0 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 2.09 2.61 1.24 1.36 1.45 1.79 23.4 1.91 7.2 2.45 28.1 EPS (UBS) 2.09 2.61 1.24 1.36 1.45 1.79 23.4 1.91 7.2 2.45 28.1 Net DPS 0.15 0.50 3.00 0.63 1.32 1.50 13.6 1.14 -24.3 1.23 8.0 Cash EPS 4.58 4.81 2.01 2.19 2.24 2.67 19.3 3.07 14.8 3.68 19.9 BVPS 1.88 2.67 13.63 3.89 4.01 4.39 9.4 5.26 19.8 6.83 29.7 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 128.44 523.89 337.54 627.10 780.38 196.23 -74.9 248.70 26.7 376.32 51.3 Other current assets 126.89 173.54 253.97 268.58 234.58 441.49 88.2 443.10 0.4 456.06 2.9 Total current assets 255.33 697.43 591.51 895.68 1,014.96 637.72 -37.2 691.79 8.5 832.38 20.3 Net tangible fixed assets 1,794.17 1,736.81 2,306.49 2,440.75 2,602.03 3,764.92 44.7 4,932.42 31.0 5,418.57 9.9 Net intangible fixed assets 8.09 4.53 262.15 245.60 236.28 518.49 119.4 518.49 0.0 518.49 0.0 Investments / other assets 226.03 438.31 264.39 243.65 375.44 688.59 83.4 796.77 15.7 910.34 14.3 Total assets 2,283.61 2,877.09 3,424.54 3,825.68 4,228.70 5,609.73 32.7 6,939.47 23.7 7,679.78 10.7 Trade payables & other ST liabilities 213.60 420.08 295.55 265.42 290.15 483.13 66.5 606.82 25.6 665.31 9.6 Short term debt 304.83 250.43 283.38 262.58 330.79 732.52 121.4 732.52 0.0 732.52 0.0 Total current liabilities 518.43 670.51 578.92 528.00 620.94 1,215.65 95.8 1,339.34 10.2 1,397.83 4.4 Long term debt 919.64 916.09 1,199.88 1,493.15 1,666.64 2,215.63 32.9 3,061.91 38.2 3,061.91 0.0 Other long term liabilities 197.58 206.51 255.51 225.12 303.91 379.80 25.0 379.80 0.0 379.80 0.0 Total liabilities 1,635.65 1,793.11 2,034.31 2,246.28 2,591.49 3,811.08 47.1 4,781.05 25.5 4,839.53 1.2 Equity & minority interests 647.96 1,083.98 1,390.23 1,579.40 1,637.21 1,798.65 9.9 2,158.43 20.0 2,840.24 31.6 Total liabilities & equity 2,283.61 2,877.09 3,424.54 3,825.68 4,228.70 5,609.73 32.7 6,939.47 23.7 7,679.78 10.7 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 177.12 263.19 499.46 547.27 583.58 720.13 23.4 771.72 7.2 988.59 28.1 Depreciation 211.39 221.41 312.44 337.50 318.79 356.29 11.8 463.86 30.2 493.38 6.4 Net change in working capital 1.06 159.83 (204.97) (44.74) 58.73 (92.03) - 22.21 - 0.40 -98.2 Other (operating) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations 389.57 644.44 606.93 840.03 961.10 984.39 2.4 1,257.79 27.8 1,482.38 17.9 Capital expenditure (222.59) (185.77) (355.20) (460.00) (535.60) (1,452.86) 171.3 (1,631.36) 12.3 (979.53) -40.0 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities (222.59) (185.77) (355.20) (460.00) (535.60) (1,452.86) 171.3 (1,631.36) 12.3 (979.53) -40.0 Increase/(decrease) in debt 0.00 0.00 0.00 0.00 241.69 1,093.83 - 846.28 - 0.00 - Share issues / (repurchases) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid (50.40) (201.55) (302.35) (556.31) (532.09) (604.55) 13.6 (457.52) -24.3 (494.30) 8.0 Other cash from financing 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities (50.40) (201.55) (302.35) (556.31) (290.40) 489.28 - 388.76 -20.5 (494.30) - Cash flow chge in cash & equivalents 116.58 257.11 (50.62) (176.28) 135.11 20.81 - 15.19 - 8.55 - FX / non cash items (173.71) 138.34 (135.73) 465.83 18.17 (604.96) - 37.27 - 119.07 219.4 Bal sheet chge in cash & equivalents (57.14) 395.45 (186.35) 289.56 153.28 (584.15) - 52.47 - 127.62 - Core EBITDA 562.26 747.50 1,093.32 1,193.19 1,446.20 1,747.93 20.9 2,090.67 19.6 2,501.73 19.7 Maintenance capital expenditure (101.73) (131.22) (177.09) (193.05) (211.77) (247.59) 16.9 (285.22) 15.2 (341.30) 19.7 Maintenance net working capital 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Operating free cash flow, pre-tax

460.54 616.28 916.23 1,000.14 1,234.43 1,500.34 21.5 1,805.45 20.3 2,160.43 19.7


UBS 20





Company profile CCR is Brazil's largest private toll road operator, with fiveconcessions that cover 35% of the concession revenues in thecountry. Among its six concessions CCR controls the two mosttravelled roads in Brazil: AutoBan, which links the city of São Paulo tothe interior of the state; and Nova Dutra, which links the city of SãoPaulo to the city of Rio de Janeiro. The group is controlled by threeBrazilian engeneering companies and has Portugal's Brisa as asignificant shareholder and operator. CCR is part of Brazil's NewMarket, which has additional corporate governance standards.


12/06 12/07 12/08 12/09E 12/10E0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)30.0%

35.0%

40.0%

45.0%

50.0%

55.0%

28.0%

30.0%

32.0%

34.0%

36.0%

38.0%

40.0%

42.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)35.00%

36.14%

37.29%

38.43%

39.57%

40.71%

41.86%

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)1500

2000

2500

3000

3500

4000

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%



CCR


Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 8,496.24 12,600.67 8,948.86 8,948.86 8,948.86 + minority interests 13.04 19.36 28.27 37.62 89.05 + average net debt (cash) 1,137.18 1,172.84 1,984.48 3,148.82 3,481.92 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 0.00 0.00 0.00 0.00 Core enterprise value 9,646.45 13,792.88 10,961.61 12,135.30 12,519.82 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 21.0 9.0 9.7 16.9 15.2 19.7 EBITDA (UBS) 26.1 9.1 21.2 20.9 19.6 19.7 EBIT (UBS) 31.4 9.6 31.8 23.4 16.9 23.5 EPS (UBS) - 9.6 6.6 23.4 7.2 28.1 Cash EPS 29.5 9.0 2.0 19.3 14.8 19.9 Net DPS 63.8 -79.0 109.5 13.6 -24.3 8.0 BVPS 27.1 -71.5 3.3 9.4 19.8 29.7



Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest NM 4.4 4.9 5.0 3.7 4.6 Dividend cover (UBS EPS) - 2.2 1.1 1.2 1.7 2.0 Div. payout ratio (%, UBS EPS) - 46.4 91.2 84.0 59.3 50.0 Net debt / EBITDA 1.3 0.9 0.8 1.6 1.7 1.4


Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT 1.2 1.2 1.1 1.1 1.1 1.1 Capex / revenue (%) 19.6 21.4 22.8 NM NM 25.8 Capex / depreciation 1.2 1.4 1.7 4.1 3.5 2.0

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity NM 71.5 74.3 NM NM NM Net debt / (net debt + equity) 50.8 41.9 42.9 60.9 62.6 55.4 Net debt (core) / EV 21.48 11.8 8.5 18.1 25.9 27.8


Pedro Batista Strategist [email protected] +55-21-3262 9849


UBS 21

LLX Logística

Income statement (US$m) - - - - 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues - - - - 0.00 0.00 - 0.00 - 60.20 - Operating expenses (ex depn) - - - - 0.00 (26.31) - (26.31) 0.0 (39.49) 50.1 EBITDA (UBS) - - - - 0.00 (26.31) - (26.31) 0.0 20.71 - Depreciation - - - - 0.00 0.00 - 0.00 - (22.49) - Operating income (EBIT, UBS) - - - - 0.00 (26.31) - (26.31) 0.0 (1.78) -93.2 Other income & associates - - - - 0.00 0.00 - 0.00 - 0.00 - Net interest - - - - 0.00 1.98 - (40.18) - (102.49) 155.1 Abnormal items (pre-tax) - - - - 0.00 0.00 - 0.00 - 0.00 - Profit before tax - - - - 0.00 (24.33) - (66.49) 173.3 (104.27) 56.8 Tax - - - - 0.00 8.27 - 22.61 173.3 35.45 56.8 Profit after tax - - - - 0.00 (16.06) - (43.89) 173.3 (68.82) 56.8 Abnormal items (post-tax) - - - - 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends - - - - 0.00 0.00 - 0.00 - 0.00 - Net income (local GAAP) - - - - 0.00 (16.06) - (43.89) 173.3 (68.82) 56.8 Net Income (UBS) - - - - 0.00 (16.06) - (43.89) 173.3 (68.82) 56.8 Tax rate (%) - - - - 0.00 0.00 - 0.00 - 0.00 - Pre-abnormal tax rate (%) - - - - 0.00 0.00 - 0.00 - 0.00 - Per share (US$) - - - - 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) - - - - 0.00 (0.04) - (0.12) 173.3 (0.19) 56.8 EPS (UBS) - - - - 0.00 (0.04) - (0.12) 173.3 (0.19) 56.8 Net DPS - - - - 0.00 0.00 - 0.00 - 0.00 - Cash EPS - - - - 0.00 (0.04) - (0.12) 173.3 (0.13) 5.6 BVPS - - - - 0.87 0.83 -5.1 0.70 -14.8 0.51 -27.3 Balance sheet (US$m) - - - - 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents - - - - 223.63 228.61 2.2 162.11 -29.1 212.83 31.3 Other current assets - - - - 3.06 3.06 0.0 3.06 0.0 3.51 14.8 Total current assets - - - - 226.69 231.66 2.2 165.17 -28.7 216.34 31.0 Net tangible fixed assets - - - - 68.27 361.37 429.4 1,296.71 258.8 1,938.98 49.5 Net intangible fixed assets - - - - 66.16 66.16 0.0 66.16 0.0 66.16 0.0 Investments / other assets - - - - 5.10 13.37 162.3 35.98 169.1 71.43 98.5 Total assets - - - - 366.21 672.56 83.7 1,564.01 132.5 2,292.91 46.6 Trade payables & other ST liabilities - - - - 40.11 40.11 0.0 40.11 0.0 40.11 0.0 Short term debt - - - - 0.00 0.00 - 0.00 - 0.00 - Total current liabilities - - - - 40.11 40.11 0.0 40.11 0.0 40.11 0.0 Long term debt - - - - 0.00 322.42 - 1,257.75 290.1 2,055.47 63.4 Other long term liabilities - - - - 13.92 13.92 0.0 13.92 0.0 13.92 0.0 Total liabilities - - - - 54.03 376.45 596.7 1,311.78 248.5 2,109.50 60.8 Equity & minority interests - - - - 312.17 296.11 -5.1 252.23 -14.8 183.41 -27.3 Total liabilities & equity - - - - 366.21 672.56 83.7 1,564.01 132.5 2,292.91 46.6 Cash flow (US$m) - - - - 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income - - - - 0.00 (16.06) - (43.89) 173.3 (68.82) 56.8 Depreciation - - - - 0.00 0.00 - 0.00 - 22.49 - Net change in working capital - - - - 0.00 0.00 - 0.00 - (0.45) - Other (operating) - - - - 0.00 0.00 - 0.00 - 0.00 - Net cash from operations - - - - 0.00 (16.06) - (43.89) 173.3 (46.78) 6.6 Capital expenditure - - - - 0.00 (293.11) - (935.33) 219.1 (664.77) -28.9 Net (acquisitions) / disposals - - - - 0.00 0.00 - 0.00 - 0.00 - Other changes in investments - - - - 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities - - - - 0.00 (293.11) - (935.33) 219.1 (664.77) -28.9 Increase/(decrease) in debt - - - - 0.00 322.42 - 935.33 - 797.72 - Share issues / (repurchases) - - - - 0.00 0.00 - 0.00 - 0.00 - Dividends paid - - - - 0.00 0.00 - 0.00 - 0.00 - Other cash from financing - - - - 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities - - - - 0.00 322.42 - 935.33 190.1 797.72 -14.7 Cash flow chge in cash & equivalents - - - - 0.00 13.25 - (43.89) - 86.17 - FX / non cash items - - - - - (8.27) - (22.61) 173.3 (35.45) 56.8 Bal sheet chge in cash & equivalents - - - - - 4.98 - (66.49) - 50.72 - Core EBITDA - - - - 0.00 (26.31) - (26.31) 0.0 20.71 - Maintenance capital expenditure - - - - 0.00 0.00 - 0.00 - (2.41) - Maintenance net working capital - - - - 0.00 0.00 - 0.00 - (0.45) - Operating free cash flow, pre-tax

- - - - 0.00 (26.31) - (26.31) 0.0 17.85 -


UBS 22



12-month rating Suspended

12m price target -

Company profile LLX encompasses three distinct and ambitious projects to developports and industrial complexes in the Southeast coast of Brazil. Projects include the greenfield development of two super-ports and one iron ore dedicated port. Port Açu is being constructed in NorthernRio de Janeiro State in a colossal area totaling 7,800 hectares; PortBrasil will be constructed in São Paulo State roughly 70Km south ofSantos covering 1,900 hectares of land; and Port Sudeste will be builtin Southern Rio de Janeiro State and will be 100% iron ore dedicated.


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Profitability

12/07 12/08(E) 12/09(E) 12/10(E)-4.00%

-3.00%

-2.00%

-1.00%

0.00%

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%



12/07 12/08(E) 12/09(E) 12/10(E)-35.0%

-30.0%

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

0.6x

0.7x

0.8x

0.9x

1.0x

1.1x


Growth (UBS EPS)

12/07 12/08(E) 12/09(E) 12/10(E)0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

0%

50%

100%

150%

200%


LLX Logística

Valuation (x) 5Yr Avg - 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - - - NM NM NM P/E (UBS) - - - NM NM NM P/CEPS - - - NM NM NM Net dividend yield (%) - - - 0.0 0.0 0.0 P/BV - - - 0.8 0.9 1.1 EV/revenue (core) - - - - - NM EV/EBITDA (core) - - - -6.5 -31.5 82.3 EV/EBIT (core) - - - NM NM NM EV/OpFCF (core) - - - NM NM NM EV/op. invested capital - - - 0.7 1.0 1.0

Enterprise value (US$m) - 12/07 12/08E 12/09E 12/10E Average market cap - - 234.83 234.83 234.83 + minority interests - 0.00 0.00 0.00 0.00 + average net debt (cash) - 223.63 (64.91) 594.72 1,469.14 + pension obligations and other - 0.00 0.00 0.00 0.00 - non-core asset value - 0.00 0.00 0.00 0.00 Core enterprise value - - 169.92 829.56 1,703.97 Growth (%) 5Yr Avg - 12/07 12/08E 12/09E 12/10E Revenue - - - - - - EBITDA (UBS) - - - - 0.0 - EBIT (UBS) - - - - 0.0 -93.2 EPS (UBS) - - - - 173.3 56.8 Cash EPS - - - - 173.3 5.6 Net DPS - - - - - - BVPS - - - -5.1 -14.8 -27.3

Margins (%) 5Yr Avg - 12/10 12/08E 12/09E 12/10E EBITDA / revenue - - - - - 34.4 EBIT / revenue - - - - - -3.0 Net profit (UBS) / revenue - - - - - NM

Return on capital (%) 5Yr Avg - 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) - - - NM NM NM ROIC post tax - - - NM NM NM Net ROE - - - (5.3) (16.0) (31.6)

Coverage ratios (x) 5Yr Avg - 12/07 12/08E 12/09E 12/10E EBIT / net interest - - - - - - Dividend cover (UBS EPS) - - - - - - Div. payout ratio (%, UBS EPS) - - - - - - Net debt / EBITDA - - - NM NM NM

Efficiency ratios (x) 5Yr Avg - 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - - - 0.0 0.0 0.0 Revenue / fixed assets - - - 0.0 0.0 0.0 Revenue / net working capital - - - 0.0 0.0 NM

Investment ratios (x) 5Yr Avg - 12/07 12/08E 12/09E 12/10E OpFCF / EBIT - - - 1.0 1.0 NM Capex / revenue (%) - - - - - NM Capex / depreciation - - - - - NM

Capital structure (%) 5Yr Avg - 12/07 12/08E 12/09E 12/10E Net debt / total equity - - (71.6) 31.7 NM NM Net debt / (net debt + equity) - - NM 24.1 81.3 90.9 Net debt (core) / EV - - - (38.2) 71.7 86.2



UBS 23

Log-In Logisitica Intermodal

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues - 293.00 319.40 344.90 348.80 428.34 22.8 460.71 7.6 528.12 14.6 Operating expenses (ex depn) - (289.00) (304.90) (316.90) (268.22) (369.09) 37.6 (386.46) 4.7 (432.56) 11.9 EBITDA (UBS) - 4.00 14.50 28.00 80.58 59.26 -26.5 74.25 25.3 95.56 28.7 Depreciation - (5.20) (5.70) (6.20) (6.60) (16.28) 146.6 (22.74) 39.7 (29.72) 30.7 Operating income (EBIT, UBS) - (1.20) 8.80 21.80 73.98 42.98 -41.9 51.51 19.8 65.85 27.8 Other income & associates - 2.70 0.00 0.00 4.97 0.42 -91.6 0.00 - 0.00 - Net interest - 37.90 26.50 32.50 (0.87) 32.79 - 9.10 -72.3 0.42 -95.4 Abnormal items (pre-tax) - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax - 39.40 35.30 54.30 78.08 76.19 -2.4 60.61 -20.4 66.27 9.3 Tax - (7.40) (15.90) (21.00) (27.32) 6.00 - (20.61) - (22.53) 9.3 Profit after tax - 32.00 19.40 33.30 50.76 82.19 61.9 40.00 -51.3 43.74 9.3 Abnormal items (post-tax) - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends - (0.80) (2.30) (1.80) (0.66) (0.01) -98.6 0.00 - 0.00 - Net income (local GAAP) - 31.20 17.10 31.50 50.10 82.18 64.0 40.00 -51.3 43.74 9.3 Net Income (UBS) - 34.00 20.40 37.10 50.60 102.55 102.7 50.21 -51.0 55.67 10.9 Tax rate (%) 0.00 18.78 45.04 38.67 34.99 0.00 - 34.00 - 34.00 0.0 Pre-abnormal tax rate (%) 0.00 18.78 45.04 38.67 34.99 0.00 - 34.00 - 34.00 0.0 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) - 0.34 0.19 0.34 0.55 0.90 64.0 0.44 -51.3 0.48 9.3 EPS (UBS) - 0.37 0.22 0.40 0.55 1.12 102.7 0.55 -51.0 0.61 10.9 Net DPS - 0.00 0.00 0.00 0.08 0.18 116.9 0.22 23.0 0.11 -51.3 Cash EPS - 0.43 0.28 0.47 0.62 1.30 107.7 0.80 -38.6 0.93 17.0 BVPS - 2.57 2.65 0.99 6.42 6.76 5.3 7.08 4.8 7.58 7.0 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents - 169.30 250.30 71.80 426.46 154.45 -63.8 96.29 -37.7 126.31 31.2 Other current assets - 118.40 295.90 103.40 140.09 136.02 -2.9 133.93 -1.5 141.50 5.7 Total current assets - 287.70 546.20 175.20 566.55 290.47 -48.7 230.22 -20.7 267.81 16.3 Net tangible fixed assets - 66.40 68.00 92.50 189.88 457.46 140.9 662.72 44.9 791.49 19.4 Net intangible fixed assets - 0.00 0.00 1.60 5.93 6.73 13.6 6.73 0.0 6.73 0.0 Investments / other assets 0.00 166.80 11.50 13.30 16.46 43.93 166.9 43.93 0.0 43.93 0.0 Total assets - 520.90 625.70 282.60 778.82 798.59 2.5 943.61 18.2 1,109.97 17.6 Trade payables & other ST liabilities - 116.80 281.90 133.00 147.97 90.27 -39.0 89.25 -1.1 92.94 4.1 Short term debt - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Total current liabilities - 116.80 281.90 133.00 147.97 90.27 -39.0 89.25 -1.1 92.94 4.1 Long term debt - 0.00 0.00 0.00 0.00 31.86 - 148.23 365.2 265.23 78.9 Other long term liabilities - 165.50 96.70 55.60 41.19 56.83 38.0 56.83 0.0 56.83 0.0 Total liabilities - 282.30 378.60 188.60 189.16 178.96 -5.4 294.31 64.5 415.01 41.0 Equity & minority interests - 238.60 247.10 94.00 589.66 619.63 5.1 649.29 4.8 694.96 7.0 Total liabilities & equity - 520.90 625.70 282.60 778.82 798.59 2.5 943.61 18.2 1,109.97 17.6 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income - 31.20 17.10 31.50 50.10 82.18 64.0 40.00 -51.3 43.74 9.3 Depreciation - 5.20 5.70 6.20 6.60 16.28 146.6 22.74 39.7 29.72 30.7 Net change in working capital - 0.00 (12.40) 43.60 (20.76) (54.60) 163.0 1.07 - (3.88) - Other (operating) - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations - 36.40 10.40 81.30 35.95 43.86 22.0 63.81 45.5 69.57 9.0 Capital expenditure - 1.40 (14.10) 95.90 (112.50) (288.00) 156.0 (228.00) -20.8 (158.49) -30.5 Net (acquisitions) / disposals - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities - 1.40 (14.10) 95.90 (112.50) (288.00) 156.0 (228.00) -20.8 (158.49) -30.5 Increase/(decrease) in debt - 0.00 0.00 0.00 0.97 31.86 - 116.37 - 117.00 - Share issues / (repurchases) - 0.00 0.00 0.00 443.33 (41.77) - 0.00 - 0.00 - Dividends paid - 0.00 0.00 0.00 (7.70) (16.70) 116.9 (20.55) 23.0 (10.00) -51.3 Other cash from financing - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities - 0.00 0.00 0.00 436.59 (26.61) - 95.82 - 107.00 11.7 Cash flow chge in cash & equivalents - 37.80 (3.70) 177.20 360.04 (270.75) - (68.36) - 18.09 - FX / non cash items - - 84.70 (355.70) (5.38) (1.26) -71.4 10.21 - 11.93 16.9 Bal sheet chge in cash & equivalents - - 81.00 (178.50) 354.66 (272.01) - (58.16) - 30.02 - Core EBITDA - 6.80 17.80 33.60 81.08 79.63 -1.8 84.46 6.1 107.49 27.3 Maintenance capital expenditure - (25.00) (25.00) (25.00) (25.00) (25.00) 0.0 (25.00) 0.0 (25.00) 0.0 Maintenance net working capital - (4.00) (4.00) (4.00) (4.00) (4.00) 0.0 (4.00) 0.0 (4.00) 0.0 Operating free cash flow, pre-tax

- (22.20) (11.20) 4.60 52.08 50.63 -2.8 55.46 9.5 78.49 41.5


UBS 24





Company profile Log-In is the first company in Brazil to offer a one-stop-shop intermodal logistical solutions for container handling andtransportation by land and sea. Specifically, Log-In: 1) retains a 25-year concession to operate the TVV container terminal; 2) providescoastal navigation services in Brazil and Argentina; and 3) provides acontainer 'Express Train' service. Logistics solutions also include: 1)two strategically-located intermodal terminals; 5) third-party trucking; and 6) logistical intelligence consultancy services.


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Profitability

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20.0%

25.0%

0%

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100%

150%

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250%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)0.0%

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15.0%

20.0%

25.0%

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)250

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Log-In Logisitica Intermodal

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - - 24.1 7.7 15.8 14.4 P/E (UBS) - - 23.8 6.2 12.6 11.4 P/CEPS - - 21.1 5.3 8.7 7.4 Net dividend yield (%) - - 0.6 2.6 3.3 1.6 P/BV - - 2.0 1.0 1.0 0.9 EV/revenue (core) - - 2.7 0.8 1.3 1.4 EV/EBITDA (core) - - 11.8 4.5 7.1 6.8 EV/EBIT (core) - - 12.8 5.6 9.7 9.4 EV/OpFCF (core) - - 18.4 7.1 10.8 9.3 EV/op. invested capital - - NM 1.1 1.0 0.9

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap - 1,205.07 631.88 631.88 631.88 + minority interests 3.50 0.04 0.20 0.20 0.20 + average net debt (cash) (161.05) (249.13) (274.52) (35.32) 95.43 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 (0.03) 0.00 0.00 0.00 Core enterprise value - 955.95 357.56 596.76 727.52 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - 8.0 1.1 22.8 7.6 14.6 EBITDA (UBS) - 93.1 187.8 -26.5 25.3 28.7 EBIT (UBS) - 147.7 NM -41.9 19.8 27.8 EPS (UBS) - 81.9 36.4 102.7 -51.0 10.9 Cash EPS - 65.9 32.1 107.7 -38.6 17.0 Net DPS - - - 116.9 23.0 -51.3 BVPS - -62.8 NM 5.3 4.8 7.0

Margins (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBITDA / revenue - 8.1 23.1 13.8 16.1 18.1 EBIT / revenue - 6.3 21.2 10.0 11.2 12.5 Net profit (UBS) / revenue - 10.8 14.5 23.9 10.9 10.5

Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) - NM NM 13.0 8.6 8.6 ROIC post tax - NM 51.9 13.0 5.7 5.7 Net ROE - 22.2 14.9 17.0 7.9 8.3

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - NM - - - Dividend cover (UBS EPS) - - 6.6 6.1 2.4 5.6 Div. payout ratio (%, UBS EPS) - - 15.2 16.3 40.9 18.0 Net debt / EBITDA - NM NM NM 0.7 1.5

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - NM 3.8 1.3 0.8 0.7 Revenue / fixed assets - 4.3 2.4 1.3 0.8 0.7 Revenue / net working capital - NM NM 22.6 10.2 11.3

Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT - 0.2 0.7 1.2 1.1 1.2 Capex / revenue (%) - NM NM NM NM NM Capex / depreciation - NM NM NM NM 5.3

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - (76.4) (72.4) (19.8) 8.0 20.0 Net debt / (net debt + equity) - NM NM (24.7) 7.4 16.7 Net debt (core) / EV - - (26.1) (76.8) (5.9) 13.1



UBS 25

Santos Brasil

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 222.48 299.42 353.57 418.29 488.20 719.77 47.4 679.72 -5.6 742.15 9.2 Operating expenses (ex depn) (157.98) (199.45) (238.65) (395.70) (264.90) (433.25) 63.6 (430.59) -0.6 (463.59) 7.7 EBITDA (UBS) 65.06 100.45 116.57 22.59 223.30 286.52 28.3 249.13 -13.0 278.56 11.8 Depreciation (15.40) (26.00) (32.90) (49.60) (66.40) (78.47) 18.2 (93.69) 19.4 (99.00) 5.7 Operating income (EBIT, UBS) 49.66 74.45 83.67 (27.01) 156.90 208.05 32.6 155.44 -25.3 179.56 15.5 Other income & associates 6.57 0.01 16.70 (24.83) (69.20) (67.80) -2.0 (64.80) -4.4 (64.80) 0.0 Net interest (8.86) (27.34) (21.65) (81.88) 32.70 (5.75) - 0.61 - 12.38 1943.9 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 47.37 47.11 78.72 (133.72) 120.40 134.49 11.7 91.25 -32.2 127.14 39.3 Tax (16.05) (16.02) (28.44) 35.00 (27.70) (59.90) 116.3 (31.03) -48.2 (43.23) 39.3 Profit after tax 31.32 31.10 50.28 (98.71) 92.70 74.59 -19.5 60.23 -19.3 83.91 39.3 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends 0.00 0.00 (1.95) (3.44) 0.00 0.00 - 0.00 - 0.00 - Net income (local GAAP) 31.32 31.10 48.33 (102.16) 92.70 74.59 -19.5 60.23 -19.3 83.91 39.3 Net Income (UBS) 31.32 31.10 48.33 (64.60) 157.20 143.59 -8.7 125.03 -12.9 148.71 18.9 Tax rate (%) 33.88 34.00 36.13 0.00 23.01 44.54 93.6 34.00 -23.7 34.00 0.0 Pre-abnormal tax rate (%) 33.88 34.00 36.13 0.00 14.98 29.44 96.5 19.88 -32.5 22.52 13.3 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 0.25 0.25 0.39 (0.82) 0.71 0.57 -19.5 0.46 -19.3 0.64 39.3 EPS (UBS) 0.25 0.25 0.39 (0.52) 1.20 1.09 -8.7 0.95 -12.9 1.13 18.9 Net DPS 0.00 0.00 0.06 0.00 0.27 0.15 -43.2 0.23 49.2 0.18 -19.3 Cash EPS 0.37 0.46 0.65 (0.12) 1.70 1.69 -0.7 1.67 -1.5 1.89 13.3 BVPS 1.14 1.33 1.64 8.35 7.98 8.74 9.5 8.97 2.7 9.43 5.1 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 29.18 72.14 72.57 486.80 355.70 161.29 -54.7 174.03 7.9 236.19 35.7 Other current assets 19.18 32.57 22.50 50.20 162.90 74.05 -54.5 71.53 -3.4 75.88 6.1 Total current assets 48.37 104.71 95.07 537.00 518.60 235.35 -54.6 245.56 4.3 312.06 27.1 Net tangible fixed assets 246.40 311.69 391.16 441.00 508.30 736.23 44.8 822.54 11.7 883.54 7.4 Net intangible fixed assets 5.23 4.96 5.92 288.40 219.60 418.80 90.7 354.00 -15.5 289.20 -18.3 Investments / other assets 25.45 19.57 17.52 67.40 85.60 55.40 -35.3 55.40 0.0 55.40 0.0 Total assets 325.45 440.92 509.67 1,333.80 1,332.10 1,445.77 8.5 1,477.50 2.2 1,540.20 4.2 Trade payables & other ST liabilities 11.95 35.95 42.25 45.60 105.10 87.38 -16.9 88.72 1.5 91.60 3.2 Short term debt 7.45 15.22 36.97 51.60 37.20 47.90 28.8 47.90 0.0 47.90 0.0 Total current liabilities 19.41 51.17 79.22 97.20 142.30 135.28 -4.9 136.62 1.0 139.50 2.1 Long term debt 132.04 179.49 189.49 146.10 105.10 157.90 50.2 157.90 0.0 157.90 0.0 Other long term liabilities 31.73 44.29 36.55 48.30 37.90 8.40 -77.8 8.40 0.0 8.40 0.0 Total liabilities 183.18 274.95 305.25 291.60 285.30 301.58 5.7 302.92 0.4 305.80 0.9 Equity & minority interests 142.27 165.98 204.41 1,042.20 1,046.80 1,144.19 9.3 1,174.58 2.7 1,234.40 5.1 Total liabilities & equity 325.45 440.92 509.67 1,333.80 1,332.10 1,445.77 8.5 1,477.50 2.2 1,540.20 4.2 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 31.32 31.10 48.33 (102.16) 92.70 74.59 -19.5 60.23 -19.3 83.91 39.3 Depreciation 15.40 26.00 32.90 87.15 130.90 147.47 12.7 158.49 7.5 163.80 3.4 Net change in working capital 2.61 10.65 15.63 (24.36) (53.20) 71.13 - 3.86 -94.6 (1.46) - Other (operating) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations 49.33 67.74 96.86 (39.36) 170.40 293.19 72.1 222.57 -24.1 246.25 10.6 Capital expenditure (60.70) (91.30) (112.30) (97.70) (126.20) (467.80) 270.7 (180.00) -61.5 (160.00) -11.1 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities (60.70) (91.30) (112.30) (97.70) (126.20) (467.80) 270.7 (180.00) -61.5 (160.00) -11.1 Increase/(decrease) in debt 5.77 55.17 6.09 (335.49) (55.40) 63.50 - 0.00 - 0.00 - Share issues / (repurchases) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid 0.00 0.00 (7.40) (0.40) (35.20) (20.00) -43.2 (29.84) 49.2 (24.09) -19.3 Other cash from financing 17.40 11.35 29.98 754.25 (89.40) (70.10) - 0.00 - 0.00 - Cash from financing activities 23.17 66.52 28.67 418.36 (180.00) (26.60) -85.2 (29.84) 12.2 (24.09) -19.3 Cash flow chge in cash & equivalents 11.80 42.97 13.24 281.30 (135.80) (201.21) - 12.74 - 62.16 - FX / non cash items (6.57) (0.01) (12.81) 132.93 4.70 6.80 44.7 0.00 - 0.00 - Bal sheet chge in cash & equivalents 5.23 42.96 0.43 414.23 (131.10) (194.41) - 12.74 - 62.16 - Core EBITDA 65.06 100.45 116.57 170.69 223.30 286.52 28.3 249.13 -13.0 278.56 11.8 Maintenance capital expenditure (0.10) (0.10) (0.10) (0.10) (0.10) (0.10) 0.0 (0.10) 0.0 (0.10) 0.0 Maintenance net working capital 0.00 0.00 0.00 0.00 0.00 0.00 0.0 0.00 0.0 0.00 0.0 Operating free cash flow, pre-tax

64.96 100.35 116.47 170.59 223.20 286.42 28.3 249.04 -13.1 278.46 11.8


UBS 26





Company profile Santos Brasil manages and operates TECON 1, the leading containerterminal in South America, located at the Port of Santos, in the Stateof São Paulo, Brazil. Santos Brasil has the right to manage andoperate TECON-1 under a 25-year lease with CODESP, which isrenewable by mutual agreement for another 25 years by means ofwritten notice given by the company, pursuant to the terms of thelease. According to CODESP, from 2001 to 2005, the number ofcontainers handled by TECON 1 grew at a compound annual rate of28.5%, and TECON 1's market share at the Port of Santos grew to44.6% from 33.9%.


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-15.7x

-4.3x

7.1x

18.6x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)300

400

500

600

700

800

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%



Santos Brasil

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - NM 37.1 11.9 14.8 10.6 P/E (UBS) - NM 21.9 6.2 7.1 6.0 P/CEPS - NM 15.4 4.0 4.1 3.6 Net dividend yield (%) - 0.0 1.0 2.2 3.4 2.7 P/BV - 2.9 3.3 0.8 0.8 0.7 EV/revenue (core) - 7.3 6.5 1.1 1.4 1.2 EV/EBITDA (core) - 17.9 14.3 2.8 3.7 3.2 EV/EBIT (core) - NM 20.3 3.9 6.0 5.0 EV/OpFCF (core) - 17.9 14.3 2.8 3.7 3.2 EV/op. invested capital - 5.5 4.0 0.8 0.8 0.7

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 3,121.63 3,434.90 889.49 889.49 889.49 + minority interests 0.10 0.00 2.40 2.40 2.40 + average net debt (cash) (67.61) (251.25) (84.45) 38.14 0.69 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 0.00 0.00 0.00 0.00 Core enterprise value 3,054.12 3,183.65 807.44 930.03 892.58 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 23.7 18.3 16.7 47.4 -5.6 9.2 EBITDA (UBS) -16.5 -80.6 NM 28.3 -13.0 11.8 EBIT (UBS) - - - 32.6 -25.3 15.5 EPS (UBS) - - - -8.7 -12.9 18.9 Cash EPS - - - -0.7 -1.5 13.3 Net DPS - -94.6 NM -43.2 49.2 -19.3 BVPS 75.1 NM -4.4 9.5 2.7 5.1

Margins (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBITDA / revenue 25.4 5.4 45.7 39.8 36.7 37.5 EBIT / revenue 18.1 -6.5 32.1 28.9 22.9 24.2 Net profit (UBS) / revenue 7.6 NM 32.2 19.9 18.4 20.0

Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) - NM 19.8 20.6 13.0 14.9 ROIC post tax - NM 16.8 14.5 10.4 11.5 Net ROE - (10.4) 15.1 13.1 10.8 12.3

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - - NM - - Dividend cover (UBS EPS) - - 4.5 7.2 4.2 6.2 Div. payout ratio (%, UBS EPS) - - 22.4 13.9 23.9 16.2 Net debt / EBITDA 0.6 NM NM 0.2 0.1 NM

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - 0.8 0.6 0.7 0.6 0.6 Revenue / fixed assets - 0.7 0.7 0.8 0.6 0.6 Revenue / net working capital - NM 15.6 32.4 NM NM

Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT 2.2 NM 1.4 1.4 1.6 1.6 Capex / revenue (%) 24.6 23.4 25.9 NM 26.5 21.6 Capex / depreciation 2.9 2.0 1.9 6.0 1.9 1.6

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity 59.4 (27.7) (20.4) 3.9 2.7 (2.5) Net debt / (net debt + equity) 11.0 (38.4) (25.6) 3.7 2.6 (2.5) Net debt (core) / EV - (2.2) (7.9) (10.5) 4.1 0.1



UBS 27

Wilson Sons

Income statement (US$m) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues - 217.80 285.10 334.15 410.95 493.49 20.1 444.54 -9.9 441.15 -0.8 Operating expenses (ex depn) - (169.90) (235.98) (257.95) (317.51) (389.13) 22.6 (348.73) -10.4 (337.24) -3.3 EBITDA (UBS) - 47.90 49.13 76.20 93.44 104.37 11.7 95.80 -8.2 103.91 8.5 Depreciation - (11.52) (13.96) (12.24) (19.07) (24.72) 29.6 (33.39) 35.1 (43.16) 29.3 Operating income (EBIT, UBS) - 36.38 35.17 63.96 74.37 79.65 7.1 62.41 -21.6 60.75 -2.7 Other income & associates - (1.46) 0.00 (2.82) 4.82 4.19 -13.0 0.00 - 0.00 - Net interest - 2.16 5.50 3.01 11.67 (12.16) - 3.36 - 2.04 -39.3 Abnormal items (pre-tax) - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax - 37.08 40.67 64.15 90.86 71.68 -21.1 65.77 -8.2 62.79 -4.5 Tax - (14.01) (14.30) (20.67) (26.17) (26.25) 0.3 (22.36) -14.8 (21.35) -4.5 Profit after tax - 23.07 26.37 43.48 64.70 45.43 -29.8 43.41 -4.5 41.44 -4.5 Abnormal items (post-tax) - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends - (2.66) (1.57) (0.81) (1.65) (0.37) -77.6 (0.34) -8.2 (0.32) -4.5 Net income (local GAAP) - 20.40 24.80 42.67 63.05 45.06 -28.5 43.07 -4.4 41.12 -4.5 Net Income (UBS) - 20.40 24.80 42.67 63.05 45.06 -28.5 43.07 -4.4 41.12 -4.5 Tax rate (%) - 37.79 35.17 32.22 28.80 36.62 27.2 34.00 -7.1 34.00 0.0 Pre-abnormal tax rate (%) - 37.79 35.17 32.22 28.80 36.62 27.2 34.00 -7.1 34.00 0.0 Per share (US$) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) - 0.34 0.41 0.71 0.89 0.63 -28.5 0.61 -4.4 0.58 -4.5 EPS (UBS) - 0.34 0.41 0.71 0.89 0.63 -28.5 0.61 -4.4 0.58 -4.5 Net DPS - 0.00 0.00 0.00 0.00 0.00 - 0.16 - 0.15 -4.4 Cash EPS - 0.53 0.64 0.91 1.15 0.98 -15.0 1.07 9.6 1.18 10.2 BVPS - 1.16 1.46 1.98 4.45 4.60 3.6 5.06 9.9 5.49 8.6 Balance sheet (US$m) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents - 66.50 43.20 54.60 197.69 186.14 -5.8 192.54 3.4 173.23 -10.0 Other current assets - 47.00 54.90 59.90 80.13 86.94 8.5 88.13 1.4 85.01 -3.5 Total current assets - 113.50 98.10 114.50 277.82 273.08 -1.7 280.67 2.8 258.24 -8.0 Net tangible fixed assets - 123.80 147.70 175.80 252.11 310.15 23.0 395.26 27.4 444.59 12.5 Net intangible fixed assets - 2.30 15.40 15.20 15.17 14.82 -2.3 14.82 0.0 14.82 0.0 Investments / other assets - 17.10 18.00 21.40 30.30 25.92 -14.5 25.92 0.0 25.92 0.0 Total assets - 256.70 279.20 326.90 575.40 623.97 8.4 716.67 14.9 743.58 3.8 Trade payables & other ST liabilities - 46.40 51.60 55.10 78.78 93.01 18.1 93.81 0.9 89.56 -4.5 Short term debt - 16.20 20.30 15.50 15.59 14.40 -7.6 14.40 0.0 14.40 0.0 Total current liabilities - 62.60 71.90 70.60 94.37 107.41 13.8 108.21 0.7 103.96 -3.9 Long term debt - 89.30 89.10 96.30 136.19 163.17 19.8 222.42 36.3 222.42 0.0 Other long term liabilities - 13.20 12.70 15.00 23.29 20.85 -10.5 20.85 0.0 20.85 0.0 Total liabilities - 165.10 173.70 181.90 253.85 291.43 14.8 351.48 20.6 347.23 -1.2 Equity & minority interests - 91.60 105.50 145.00 321.55 332.55 3.4 365.19 9.8 396.35 8.5 Total liabilities & equity - 256.70 279.20 326.90 575.40 623.97 8.4 716.67 14.9 743.58 3.8 Cash flow (US$m) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income - 20.40 24.80 42.67 63.05 45.06 -28.5 43.07 -4.4 41.12 -4.5 Depreciation - 11.52 13.96 12.24 19.07 24.72 29.6 33.39 35.1 43.16 29.3 Net change in working capital - 0.00 (2.70) (1.50) 3.45 (3.85) - 0.12 - (0.65) - Other (operating) - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations - 31.93 36.06 53.41 85.57 65.93 -22.9 76.58 16.1 83.63 9.2 Capital expenditure - (20.20) (36.20) (44.00) (99.20) (118.50) 19.5 (118.50) 0.0 (92.50) -21.9 Net (acquisitions) / disposals - (1.46) 0.00 (2.82) 4.82 4.19 -13.0 0.00 - 0.00 - Other changes in investments - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities - (21.66) (36.20) (46.82) (94.38) (114.31) 21.1 (118.50) 3.7 (92.50) -21.9 Increase/(decrease) in debt - 0.00 0.00 0.00 39.97 25.80 - 59.25 - 0.00 - Share issues / (repurchases) - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid - (1.00) (8.80) (8.26) (0.01) 0.00 - (11.27) - (10.77) -4.4 Other cash from financing - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities - (1.00) (8.80) (8.26) 39.96 25.80 -35.4 47.98 86.0 (10.77) - Cash flow chge in cash & equivalents - 9.26 (8.95) (1.67) 31.15 (22.58) - 6.06 - (19.64) - FX / non cash items - - (14.35) 13.07 111.94 11.03 -90.1 0.34 -96.9 0.32 -4.5 Bal sheet chge in cash & equivalents - - (23.30) 11.40 143.09 (11.55) - 6.40 - (19.31) - Core EBITDA - 47.90 49.13 76.20 93.44 104.37 11.7 95.80 -8.2 103.91 8.5 Maintenance capital expenditure - (13.83) (16.75) (14.69) (22.88) (29.66) 29.6 (40.07) 35.1 (51.80) 29.3 Maintenance net working capital - 0.00 (0.02) (0.01) 0.03 (0.03) - 0.00 - (0.01) - Operating free cash flow, pre-tax

- 34.07 32.35 61.50 70.58 74.68 5.8 55.74 -25.4 52.11 -6.5


UBS 28





Company profile Wilson Sons is one of the largest providers of integrated port andmaritime logistics and supply chain solutions, with 170 years ofexperience in the Brazilian market. It has a national network andprovides a complete set of services to participants in internationaltrade in the port and maritime sectors. Wilson Sons is the third largestcontainer terminal operator in Brazil and the largest towage operatorin South America. The company also offers logistics, ship agency,and offshore platform supply services.


12/06 12/07 12/08 12/09E 12/10E0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)12.00%

13.14%

14.29%

15.43%

16.57%

17.71%

18.86%

20.00%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)250

300

350

400

450

500

-40%

-20%

0%

20%

40%

60%

80%



Wilson Sons

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - - 13.9 7.6 7.4 7.4 P/E (UBS) - - 13.9 7.6 7.4 7.4 P/CEPS - - 10.7 4.9 4.2 3.6 Net dividend yield (%) - - 0.0 0.0 3.5 3.6 P/BV - - 2.8 1.0 0.9 0.8 EV/revenue (core) - - 2.2 0.7 0.8 0.9 EV/EBITDA (core) - - 9.8 3.1 3.9 3.9 EV/EBIT (core) - - 12.3 4.1 5.9 6.7 EV/OpFCF (core) - - 13.0 4.3 6.6 7.8 EV/op. invested capital - - 3.9 1.1 1.0 0.9

Enterprise value (US$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap - 905.60 345.77 345.77 345.77 + minority interests 3.80 5.25 5.00 5.34 5.67 + average net debt (cash) 61.70 5.64 (27.24) 17.86 53.94 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 0.00 0.00 0.00 0.00 Core enterprise value - 916.49 323.54 368.97 405.38 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - 17.2 23.0 20.1 -9.9 -0.8 EBITDA (UBS) - 55.1 22.6 11.7 -8.2 8.5 EBIT (UBS) - 81.9 16.3 7.1 -21.6 -2.7 EPS (UBS) - 72.1 24.9 -28.5 -4.4 -4.5 Cash EPS - 41.7 26.4 -15.0 9.6 10.2 Net DPS - - - - - -4.4 BVPS - 35.5 124.0 3.6 9.9 8.6


Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) - 35.2 31.9 26.9 17.0 13.3 ROIC post tax - 23.8 22.7 17.0 11.2 8.8 Net ROE - 34.8 27.6 14.0 12.5 11.0

Coverage ratios (x) 5Yr Avg 12/07 12/07 12/08E 12/09E 12/10E EBIT / net interest - - - 6.6 - - Dividend cover (UBS EPS) - - NM - 3.8 3.8 Div. payout ratio (%, UBS EPS) - - 0.0 - 26.2 26.2 Net debt / EBITDA - 0.8 NM NM 0.5 0.6

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - 1.8 1.8 1.7 1.2 1.0 Revenue / fixed assets - 1.9 1.8 1.7 1.2 1.0 Revenue / net working capital - 82.5 NM NM NM NM

Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT - 1.0 0.9 0.9 0.9 0.9 Capex / revenue (%) - 13.2 24.1 24.0 26.7 21.0 Capex / depreciation - 3.6 5.2 4.8 3.5 2.1

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - 39.4 (14.3) (2.6) 12.1 16.0 Net debt / (net debt + equity) - 28.8 (17.0) (2.7) 11.0 14.0 Net debt (core) / EV - - 0.6 (8.4) 4.8 13.3



UBS 29

Agriculture

UBS 30

Acucar Guarani S.A.

Income statement (R$m) - - 04/05 04/06 04/07 04/08E % ch 04/09E % ch 04/10E % ch Revenues - - 366 490 1,125 * * * * * * Operating expenses (ex depn) - - (282) (358) (785) * * * * * * EBITDA (UBS) - - 84 131 340 * * * * * * Depreciation - - 0 (35) (77) * * * * * * Operating income (EBIT, UBS) - - 84 96 263 * * * * * * Other income & associates - - (35) (35) (137) * * * * * * Net interest - - 4 (7) (53) * * * * * * Abnormal items (pre-tax) - - 0 0 0 * - * - * - Profit before tax - - 52 54 73 * - * * * * Tax - - (24) (3) (31) * - * * * * Profit after tax - - 28 51 42 * - * * * * Abnormal items (post-tax) - - 0 0 0 * - * - * - Minorities / pref dividends - - 0 0 (8) * * * * * * Net income (local GAAP) - - 28 51 34 * - * * * * Net Income (UBS) - - 64 87 173 * * * * * * Tax rate (%) - - 46 5 43 * - * - * - Pre-abnormal tax rate (%) - - 27 3 15 * - * - * - Per share (R$) - - 04/05 04/06 04/07 04/08E % ch 04/09E % ch 04/10E % ch EPS (local GAAP) - - 0.17 0.31 0.20 * - * * * * EPS (UBS) - - 0.38 0.52 1.03 * * * * * * Net DPS - - - 0.07 0.00 * - * - * - Cash EPS - - 0.38 0.73 1.49 * * * * * * BVPS - - 1.71 1.94 2.90 * * * * * * Balance sheet (R$m) - - 04/05 04/06 04/07 04/08E % ch 04/09E % ch 04/10E % ch Cash and equivalents - - 35 48 6 * * * * * * Other current assets - - 127 156 226 * * * * * * Total current assets - - 162 204 232 * * * * * * Net tangible fixed assets - - 232 286 628 * * * * * * Net intangible fixed assets - - 58 24 200 * * * * * * Investments / other assets - - 22 11 183 * * * * * * Total assets - - 475 525 1,243 * * * * * * Trade payables & other ST liabilities - - 75 78 193 * * * * * * Short term debt - - 2 28 219 * * * * * * Total current liabilities - - 77 105 413 * * * * * * Long term debt - - 4 5 35 * * * * * * Other long term liabilities - - 108 90 311 * * * * * * Total liabilities - - 189 201 758 * * * * * * Equity & minority interests - - 286 324 485 * * * * * * Total liabilities & equity - - 475 525 1,243 * * * * * * Cash flow (R$m) - - 04/05 04/06 04/07 04/08E % ch 04/09E % ch 04/10E % ch Net income - - 28 51 34 * - * * * * Depreciation - - 36 71 216 * * * * * * Net change in working capital - - - 0 (92) * * * * * * Other (operating) - - - (18) (141) * - * - * - Net cash from operations - - - 105 16 * * * * * * Capital expenditure - - - (88) (420) * * * * * * Net (acquisitions) / disposals - - - 0 0 * - * - * - Other changes in investments - - - (1) (315) * - * - * - Cash from investing activities - - - (89) (734) * * * * * * Increase/(decrease) in debt - - - 23 437 * - * - * - Share issues / (repurchases) - - - (13) 239 * - * - * - Dividends paid - - - (12) 0 * - * - * - Other cash from financing - - - 0 0 * - * - * - Cash from financing activities - - - (2) 676 * * * * * * Cash flow chge in cash & equivalents - - - 14 (42) * - * - * - FX / non cash items - - - (1) 0 * - * - * * Bal sheet chge in cash & equivalents - - - 13 (42) * - * - * - Core EBITDA - - 84 131 340 * * * * * * Maintenance capital expenditure - - - 0 0 * * * * * * Maintenance net working capital - - - 0 0 * - * - * - Operating free cash flow, pre-tax

- - - 131 340 * * * * * *


UBS 31


Agriculture



Company profile The Guarani group is one of the largest sugarcane producers in Brazil. The company's main operations are spread among five mills,all located in São Paulo state. The company is part of the TereosGroup, one of the world's largest producers of sugar and ethanol.

Profitability

04/06 04/07 04/08(E) 04/09(E) 04/10(E)18.00%

19.00%

20.00%

21.00%

22.00%

23.00%

24.00%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

55.0%



04/06 04/07 04/08(E) 04/09(E) 04/10(E)20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

ROE (LHS)

Growth (UBS EPS)

04/06 04/07 04/08(E) 04/09(E) 04/10(E)300

429

557

686

814

943

1071

1200

20.0%

31.4%

42.9%

54.3%

65.7%

77.1%

88.6%



Acucar Guarani S.A.

Valuation (x) 5Yr Avg 04/06 04/07 04/08E 04/09E 04/10E P/E (local GAAP) - - - * * * P/E (UBS) - - - * * * P/CEPS - - - * * * Net dividend yield (%) - - - * * * P/BV - - - * * * EV/revenue (core) - - - * * * EV/EBITDA (core) - - - * * * EV/EBIT (core) - - - * * * EV/OpFCF (core) - - - * * * EV/op. invested capital - - - * * *

Enterprise value (R$m) 04/06 04/07 04/08E 04/09E 04/10E Average market cap - - * * * + minority interests 0 0 * * * + average net debt (cash) (22) 116 * * * + pension obligations and other 0 0 * * * - non-core asset value 0 0 * * * Core enterprise value - - * * * Growth (%) 5Yr Avg 04/06 04/07 04/08E 04/09E 04/10E Revenue - 33.8 129.7 * * * EBITDA (UBS) - 56.8 158.9 * * * EBIT (UBS) - 14.9 173.3 * * * EPS (UBS) - 36.3 98.3 * * * Cash EPS - 91.2 104.4 * * * Net DPS - - - - - - BVPS - 13.4 49.8 * * *

Margins (%) 5Yr Avg 04/06 04/07 04/08E 04/09E 04/10E EBITDA / revenue - 26.8 30.2 * * * EBIT / revenue - 19.6 23.4 * * * Net profit (UBS) / revenue - 17.8 15.4 * * *

Return on capital (%) 5Yr Avg 04/06 04/07 04/08E 04/09E 04/10E EBIT ROIC (UBS) - 34.0 50.5 * * * ROIC post tax - 33.0 43.0 * * * Net ROE - 28.6 42.7 * * *

Coverage ratios (x) 5Yr Avg 04/06 04/07 04/08E 04/09E 04/10E EBIT / net interest - 13.1 5.0 * * * Dividend cover (UBS EPS) - 7.3 - * - - Div. payout ratio (%, UBS EPS) - 13.6 - * - - Net debt / EBITDA - NM 0.7 * * *

Efficiency ratios (x) 5Yr Avg 04/06 04/07 04/08E 04/09E 04/10E Revenue / op. invested capital - 1.7 2.2 * * * Revenue / fixed assets - 1.6 2.0 * * * Revenue / net working capital - 7.5 20.3 * * *

Investment ratios (x) 5Yr Avg 04/06 04/07 04/08E 04/09E 04/10E OpFCF / EBIT - 1.4 1.3 * * * Capex / revenue (%) - 17.9 NM * * * Capex / depreciation - 2.5 5.5 * * *

Capital structure (%) 5Yr Avg 04/06 04/07 04/08E 04/09E 04/10E Net debt / total equity - (4.6) 51.0 * * * Net debt / (net debt + equity) - (4.9) 33.8 * * * Net debt (core) / EV - - - * * *

Source: Company accounts, UBS estimates. (UBS) valuations are stated before goodwill-related charges and other adjustments for abnormal and economic items at the analysts' judgement. Valuations: based on an average share price that year, (E): based on a share price of R$2.00 on 16 Mar 2009 21:47 EDT Market cap(E) may include forecast share issues/buybacks. Gustavo Gattass Analyst [email protected] +5521 3262 9299

Pedro Medeiros Analyst [email protected] +55-21-3262 8764

Rafael Espirito Santo Analyst [email protected] +55-21-3262 8636

UBS 32

Cosan

Income statement (R$m) 04/04 04/05 04/06 04/07 04/08 04/09E % ch 04/10E % ch 04/11E % ch Revenues 1,586 1,900 2,478 3,605 2,736 7,041 157.3 13,183 87.2 14,268 8.2 Operating expenses (ex depn) (1,231) (1,559) (1,960) (2,824) (2,563) (6,406) 149.9 (12,133) 89.4 (13,094) 7.9 EBITDA (UBS) 355 341 517 781 173 635 267.0 1,050 65.4 1,174 11.8 Depreciation (102) (112) (140) (193) (341) (376) 10.1 (199) -47.1 (212) 6.8 Operating income (EBIT, UBS) 253 229 377 588 (168) 259 - 851 228.6 962 13.0 Other income & associates (88) (91) (196) (179) (191) (212) 10.7 (304) 43.4 (294) -3.3 Net interest (132) (102) (245) 158 284 (730) - (419) -42.6 (478) 14.0 Abnormal items (pre-tax) 0 0 0 0 0 0 - 0 - 0 - Profit before tax 33 36 (64) 567 (75) (682) 804.9 129 - 190 47.8 Tax (8) (22) (1) (204) 46 241 420.0 (44) - (65) 47.8 Profit after tax 25 14 (65) 363 (29) (442) 1417.2 85 - 125 47.8 Abnormal items (post-tax) 0 0 0 0 0 0 - 0 - 0 - Minorities / pref dividends (1) 3 0 (6) 3 7 192.0 0 - 0 - Net income (local GAAP) 24 17 (65) 357 (27) (434) 1532.4 85 - 125 47.8 Net Income (UBS) 165 110 78 581 175 (212) - 389 - 419 7.9 Tax rate (%) 23 61 - 36 0 - - 34 - 34 0.0 Pre-abnormal tax rate (%) 4 17 1 26 0 - - 10 - 13 32.1 Per share (R$) 04/04 04/05 04/06 04/07 04/08 04/09E % ch 04/10E % ch 04/11E % ch EPS (local GAAP) 0.13 0.09 (0.35) 1.89 (0.10) (1.33) 1258.1 0.24 - 0.35 47.8 EPS (UBS) 0.88 0.59 0.41 3.08 0.64 (0.65) - 1.08 - 1.16 7.9 Net DPS 0.00 0.00 0.00 0.40 0.00 0.00 - 0.06 - 0.10 47.8 Cash EPS 1.42 1.19 1.16 4.09 1.89 0.50 -73.5 1.79 257.9 1.93 7.5 BVPS 3.20 4.06 7.22 8.63 12.20 11.44 -6.2 11.63 1.7 11.92 2.5 Balance sheet (R$m) 04/04 04/05 04/06 04/07 04/08 04/09E % ch 04/10E % ch 04/11E % ch Cash and equivalents 114 41 1,120 1,255 1,097 497 -54.7 393 -20.9 513 30.4 Other current assets 626 761 1,027 970 1,187 2,405 102.6 2,222 -7.6 2,301 3.5 Total current assets 740 802 2,147 2,225 2,283 2,901 27.1 2,615 -9.9 2,814 7.6 Net tangible fixed assets 1,235 1,395 1,523 2,013 2,771 3,818 37.8 5,063 32.6 5,822 15.0 Net intangible fixed assets 357 360 1,355 1,136 1,165 2,466 111.7 2,162 -12.3 1,869 -13.6 Investments / other assets 163 166 634 890 1,173 1,432 22.1 1,432 0.0 1,432 0.0 Total assets 2,495 2,722 5,659 6,263 7,393 10,618 43.6 11,273 6.2 11,936 5.9 Trade payables & other ST liabilities 599 440 480 465 453 1,069 136.2 1,060 -0.8 1,130 6.6 Short term debt 374 54 190 126 125 407 225.1 407 0.0 407 0.0 Total current liabilities 973 494 670 592 578 1,476 155.5 1,467 -0.6 1,537 4.7 Long term debt 404 847 2,072 2,770 2,136 3,779 76.9 4,379 15.9 4,879 11.4 Other long term liabilities 483 615 1,548 1,250 1,336 1,358 1.6 1,358 0.0 1,358 0.0 Total liabilities 1,861 1,956 4,290 4,612 4,050 6,613 63.3 7,204 8.9 7,774 7.9 Equity & minority interests 634 766 1,369 1,651 3,343 4,005 19.8 4,068 1.6 4,162 2.3 Total liabilities & equity 2,495 2,722 5,659 6,263 7,393 10,618 43.6 11,273 6.2 11,936 5.9 Cash flow (R$m) 04/04 04/05 04/06 04/07 04/08 04/09E % ch 04/10E % ch 04/11E % ch Net income 24 17 (65) 357 (27) (434) 1532.4 85 - 125 47.8 Depreciation 242 206 283 416 543 598 10.3 503 -16.0 506 0.7 Net change in working capital - (56) (84) 33 (93) (445) 378.8 353 - 181 -48.8 Other (operating) - (194) (556) (547) (399) (196) -51.0 (200) 2.2 (200) 0.0 Net cash from operations - (28) (422) 260 24 (476) - 740 - 612 -17.3 Capital expenditure - (122) (209) (683) (1,051) (1,196) 13.9 (1,444) 20.7 (971) -32.7 Net (acquisitions) / disposals - (110) (536) (84) (170) (1,734) 922.3 0 - 0 - Other changes in investments - 0 0 0 0 0 - 0 - 0 - Cash from investing activities - (232) (745) (767) (1,220) (2,930) 140.1 (1,444) -50.7 (971) -32.7 Increase/(decrease) in debt - 122 1,361 635 (635) 1,925 - 2,471 - 2,200 - Share issues / (repurchases) - 64 885 7 1,743 880 - 0 - 0 - Dividends paid - 0 0 0 (76) 0 - 0 - (21) - Other cash from financing - 0 0 0 0 0 - 0 - 0 - Cash from financing activities - 187 2,245 642 1,031 2,805 172.0 2,471 -11.9 2,179 -11.8 Cash flow chge in cash & equivalents - (73) 1,078 135 (165) (601) - 1,768 - 1,819 - FX / non cash items - 0 1 0 7 1 -78.8 (1,871) - (1,700) - Bal sheet chge in cash & equivalents - (73) 1,079 135 (158) (600) - (104) - 119 - Core EBITDA 348 276 309 854 398 683 71.7 1,050 53.7 1,174 11.8 Maintenance capital expenditure 0 0 0 0 0 0 0.0 0 0.0 0 0.0 Maintenance net working capital 0 0 0 0 0 0 - 0 - 0 - Operating free cash flow, pre-tax

348 276 309 854 398 683 71.7 1,050 53.7 1,174 11.8


UBS 33


Agriculture



Company profile Cosan is the world leader in ethanol supply and is among the topthree global sugar companies. Regarding exports, Cosan leads the market for both products. The company's current processing capacityamounts to 40.3 million tons of sugarcane per year, which is fourtimes higher than the second player in Brazil. Cosan's operations arespread among 17 mills, two refineries, and two port terminals, all of which are located in São Paulo state in the Southeast region of Brazil.


04/07 04/08 04/09E 04/10E 04/11E0.0x

5.0x

10.0x

15.0x

20.0x

-20.0x

-10.0x

0.0x

10.0x

20.0x

30.0x

40.0x

50.0x


Profitability

04/07 04/08 04/09(E) 04/10(E) 04/11(E)-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%



04/07 04/08 04/09(E) 04/10(E) 04/11(E)-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x


Growth (UBS EPS)

04/07 04/08 04/09(E) 04/10(E) 04/11(E)0

5000

10000

15000

-80%

-60%

-40%

-20%

0%

20%



Cosan

Valuation (x) 5Yr Avg 04/07 04/08 04/09E 04/10E 04/11E P/E (local GAAP) - 21.8 NM NM 45.0 30.5 P/E (UBS) - 13.4 43.6 NM 9.8 9.1 P/CEPS - 10.0 14.8 21.1 5.9 5.5 Net dividend yield (%) - 1.0 0.0 0.0 0.6 0.9 P/BV - 4.8 2.3 0.9 0.9 0.9 EV/revenue (core) - 2.6 2.6 0.6 0.4 0.4 EV/EBITDA (core) - 11.0 18.2 6.6 5.2 5.0 EV/EBIT (core) - 15.9 NM 17.5 6.4 6.1 EV/OpFCF (core) - 11.0 18.2 6.6 5.2 5.0 EV/op. invested capital - 3.3 1.9 0.8 0.7 0.7

Enterprise value (R$m) 04/07 04/08 04/09E 04/10E 04/11E Average market cap 7,741 6,117 3,469 3,469 3,469 + minority interests 0 0 0 0 0 + average net debt (cash) 1,637 1,130 1,066 2,011 2,423 + pension obligations and other 0 0 0 0 0 - non-core asset value 0 0 0 0 0 Core enterprise value 9,378 7,246 4,535 5,479 5,892 Growth (%) 5Yr Avg 04/07 04/08 04/09E 04/10E 04/11E Revenue - 45.5 -24.1 157.3 87.2 8.2 EBITDA (UBS) - 50.9 -77.8 NM 65.4 11.8 EBIT (UBS) - 55.8 - - NM 13.0 EPS (UBS) - NM -79.1 - - 7.9 Cash EPS - NM -53.7 -73.5 NM 7.5 Net DPS - - - - - 47.8 BVPS - 19.6 41.3 -6.2 1.7 2.5

Margins (%) 5Yr Avg 04/07 04/08 04/09E 04/10E 04/11E EBITDA / revenue - 21.7 6.3 9.0 8.0 8.2 EBIT / revenue - 16.3 -6.2 3.7 6.5 6.7 Net profit (UBS) / revenue - 16.1 6.4 NM 2.9 2.9

Return on capital (%) 5Yr Avg 04/07 04/08 04/09E 04/10E 04/11E EBIT ROIC (UBS) - 20.6 NM 4.3 10.7 11.2 ROIC post tax - 15.3 NM - 9.6 9.7 Net ROE - 38.9 7.1 (6.0) 10.3 10.9

Coverage ratios (x) 5Yr Avg 04/07 04/08 04/09E 04/10E 04/11E EBIT / net interest - - - 0.4 2.0 2.0 Dividend cover (UBS EPS) - 7.7 - - 18.3 13.4 Div. payout ratio (%, UBS EPS) - 13.1 - - 5.5 7.5 Net debt / EBITDA - 2.1 6.7 5.8 4.2 4.1

Efficiency ratios (x) 5Yr Avg 04/07 04/08 04/09E 04/10E 04/11E Revenue / op. invested capital - 1.3 0.7 1.2 1.7 1.7 Revenue / fixed assets - 1.2 0.8 1.4 2.0 1.9 Revenue / net working capital - 6.9 4.4 6.8 10.6 12.2

Investment ratios (x) 5Yr Avg 04/07 04/08 04/09E 04/10E 04/11E OpFCF / EBIT - 1.5 NM 2.6 1.2 1.2 Capex / revenue (%) - 19.0 NM 17.0 11.0 6.8 Capex / depreciation - 3.5 3.1 3.2 7.3 4.6

Capital structure (%) 5Yr Avg 04/07 04/08 04/09E 04/10E 04/11E Net debt / total equity - 99.5 34.9 92.1 NM NM Net debt / (net debt + equity) - 50.2 25.9 49.6 53.6 55.0 Net debt (core) / EV - 17.5 15.6 23.5 36.7 41.1




UBS 34

Fertilizantes Heringer

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 1,194 1,571 1,285 1,426 2,261 * * * * * * Operating expenses (ex depn) (1,078) (1,476) (1,326) (1,367) (2,178) * * * * * * EBITDA (UBS) 116 95 (40) 59 83 * * * * * * Depreciation (2) (2) (4) (6) (9) * * * * * * Operating income (EBIT, UBS) 114 93 (45) 52 74 * * * * * * Other income & associates 0 0 (3) 0 (1) * - * - * - Net interest (1) (4) (13) 4 31 * - * - * * Abnormal items (pre-tax) 0 0 0 0 0 * - * - * - Profit before tax 113 90 (61) 56 105 * * * * * * Tax (37) (26) 20 (14) (29) * * * * * * Profit after tax 76 63 (40) 42 75 * * * * * * Abnormal items (post-tax) 0 0 0 0 0 * - * - * - Minorities / pref dividends 0 0 0 0 0 * - * - * - Net income (local GAAP) 76 63 (40) 42 75 * * * * * * Net Income (UBS) 76 63 (40) 42 75 * * * * * * Tax rate (%) 33 29 0 26 28 * * * * * * Pre-abnormal tax rate (%) 33 29 0 26 28 * * * * * * Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 1.56 1.31 (0.83) 0.86 1.55 * * * * * * EPS (UBS) 1.56 1.31 (0.83) 0.86 1.55 * * * * * * Net DPS 0.00 0.00 0.00 0.00 0.14 * * * * * * Cash EPS 1.60 1.35 (0.74) 1.00 1.74 * * * * * * BVPS 2.39 4.68 3.85 4.60 10.15 * * * * * * Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 75 82 35 177 118 * * * * * * Other current assets 521 661 565 526 970 * * * * * * Total current assets 596 743 600 703 1,089 * * * * * * Net tangible fixed assets 22 47 80 85 182 * * * * * * Net intangible fixed assets 0 0 0 0 3 * * * * * * Investments / other assets 5 10 29 24 21 * * * * * * Total assets 623 800 709 811 1,295 * * * * * * Trade payables & other ST liabilities 464 465 427 565 787 * * * * * * Short term debt 25 86 59 16 4 * * * * * * Total current liabilities 489 551 486 581 792 * * * * * * Long term debt 0 0 7 3 9 * * * * * * Other long term liabilities 17 21 28 4 2 * * * * * * Total liabilities 506 573 522 588 802 * * * * * * Equity & minority interests 116 227 187 224 493 * * * * * * Total liabilities & equity 623 800 709 811 1,295 * * * * * * Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 76 63 (40) 42 75 * * * * * * Depreciation 2 2 4 6 9 * * * * * * Net change in working capital 0 0 122 67 (229) * - * * * * Other (operating) 0 0 (75) (18) (1) * - * - * - Net cash from operations 78 65 11 97 (145) * - * * * * Capital expenditure 0 0 (37) (12) (106) * * * * * * Net (acquisitions) / disposals 0 0 0 0 0 * - * - * - Other changes in investments 0 0 0 0 0 * - * - * - Cash from investing activities 0 0 (37) (12) (106) * * * * * * Increase/(decrease) in debt 0 0 (20) 63 (7) * - * - * - Share issues / (repurchases) 0 0 0 (6) 206 * - * - * - Dividends paid 0 0 0 0 (7) * * * * * * Other cash from financing 0 0 0 0 0 * - * - * - Cash from financing activities 0 0 (20) 58 193 * - * * * * Cash flow chge in cash & equivalents 78 65 (46) 143 (59) * - * - * - FX / non cash items - (58) 0 (1) 0 * - * - * - Bal sheet chge in cash & equivalents - 7 (46) 142 (59) * - * - * - Core EBITDA 116 95 (22) 52 125 * * * * * * Maintenance capital expenditure 0 0 0 0 0 * * * * * * Maintenance net working capital 0 0 0 0 0 * - * - * - Operating free cash flow, pre-tax

116 95 (22) 52 125 * * * * * *


UBS 35


Agriculture



Company profile Heringer is a fertilizer retailer with broad exposure to the main cropsdeveloped in the Brazilian agricultural market. Although it is a retailer,it is not particularly exposed to the chemical fertilizer cycle. Inaddition, the company does not simply trade commodity fertilizers, buthas a strong brand in the markets where it already operates, as wellas a growing specialty products business. Heringer is the third-largest player in Brazil, operating 13 mixing units in the country's mainregions with nearly 12% market share.


12/06 12/07 12/08 12/09E 12/10E0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

0.0x

5.0x

10.0x

15.0x

20.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)3.100%

3.200%

3.300%

3.400%

3.500%

3.600%

3.700%

31.00%

32.00%

33.00%

34.00%

35.00%

36.00%

37.00%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)20.300%

20.414%

20.529%

20.643%

20.757%

20.871%

20.986%

1.4x

1.6x

1.8x

2.0x

2.2x

2.4x

2.6x

2.8x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)1200

1400

1600

1800

2000

2200

2400

79.00%

79.20%

79.40%

79.60%

79.80%

80.00%

80.20%

80.40%



Fertilizantes Heringer

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - - 14.5 * * * P/E (UBS) - - 14.5 * * * P/CEPS - - 13.0 * * * Net dividend yield (%) - - 0.6 * * * P/BV - - 2.2 * * * EV/revenue (core) - - 0.4 * * * EV/EBITDA (core) - - 7.7 * * * EV/EBIT (core) - - 13.0 * * * EV/OpFCF (core) - - 7.7 * * * EV/op. invested capital - - 4.3 * * *

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap - 1,094 * * * + minority interests 0 0 * * * + average net debt (cash) (63) (132) * * * + pension obligations and other 0 0 * * * - non-core asset value 0 0 * * * Core enterprise value - 962 * * * Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - 10.9 58.5 * * * EBITDA (UBS) - - 41.9 * * * EBIT (UBS) - - 42.2 * * * EPS (UBS) - - 79.8 * * * Cash EPS - - 74.5 * * * Net DPS - - - * * * BVPS - 19.4 120.5 * * *



Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - - * - - Dividend cover (UBS EPS) - - 11.1 * * * Div. payout ratio (%, UBS EPS) - - 9.0 * * * Net debt / EBITDA - NM NM * * *


Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT - 1.0 1.7 * * * Capex / revenue (%) - 0.8 4.7 * * * Capex / depreciation - 1.8 NM * * *

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - (70.6) (21.4) * * * Net debt / (net debt + equity) - NM (27.3) * * * Net debt (core) / EV - - (13.7) * * *




UBS 36

São Martinho S.A.

Income statement (R$m) 04/04 04/05 04/06 04/07 04/08 04/09E % ch 04/10E % ch 04/11E % ch Revenues 518 648 793 827 712 807 13.2 1,048 29.9 1,258 20.0 Operating expenses (ex depn) (429) (484) (572) (582) (585) (657) 12.3 (759) 15.5 (906) 19.3 EBITDA (UBS) 89 164 221 244 127 149 17.6 289 93.2 352 22.0 Depreciation (71) (78) (87) (140) (190) (176) -7.4 (176) 0.0 (176) -0.1 Operating income (EBIT, UBS) 19 87 134 104 (63) (27) -57.8 113 - 176 56.5 Other income & associates (7) 1 2 11 1 3 299.6 0 - 0 - Net interest (41) (32) (28) (26) (7) (143) 2093.8 (105) -26.9 (111) 5.7 Abnormal items (pre-tax) 0 0 0 0 0 0 - 0 - 0 - Profit before tax (29) 55 107 89 (69) (167) 142.3 8 - 66 739.4 Tax 3 (20) (33) (32) 22 56 159.4 (3) - (22) 739.4 Profit after tax (26) 36 74 58 (47) (111) 134.5 5 - 43 739.4 Abnormal items (post-tax) 0 0 0 0 0 0 - 0 - 0 - Minorities / pref dividends 0 0 0 0 0 2 - 0 - 0 - Net income (local GAAP) (26) 36 74 58 (47) (109) 130.3 5 - 43 739.4 Net Income (UBS) (26) 36 74 58 (47) (109) 130.3 5 - 43 739.4 Tax rate (%) 0 35 30 36 0 0 - 34 - 34 0.0 Pre-abnormal tax rate (%) 0 35 30 36 0 0 - 34 - 34 0.0 Per share (R$) 04/04 04/05 04/06 04/07 04/08 04/09E % ch 04/10E % ch 04/11E % ch EPS (local GAAP) (0.23) 0.32 0.66 0.51 (0.42) (0.97) 130.3 0.05 - 0.38 739.4 EPS (UBS) (0.23) 0.32 0.66 0.51 (0.42) (0.97) 130.3 0.05 - 0.38 739.4 Net DPS 0.00 0.00 0.00 0.00 0.00 0.00 - 0.01 - 0.10 739.4 Cash EPS 0.40 1.00 1.43 1.75 1.26 0.59 -53.1 1.60 170.7 1.94 20.9 BVPS 7.80 8.03 8.28 14.79 14.38 13.62 -5.2 13.66 0.3 13.95 2.1 Balance sheet (R$m) 04/04 04/05 04/06 04/07 04/08 04/09E % ch 04/10E % ch 04/11E % ch Cash and equivalents 50 53 104 367 73 260 258.7 212 -18.7 175 -17.5 Other current assets 212 209 223 234 325 431 32.4 498 15.7 577 15.9 Total current assets 261 263 326 601 398 691 73.7 710 2.8 752 5.9 Net tangible fixed assets 1,246 1,240 1,238 1,939 2,292 2,379 3.8 2,376 -0.1 2,391 0.6 Net intangible fixed assets 0 0 1 8 74 85 15.5 85 0.0 85 0.0 Investments / other assets 118 100 81 95 152 176 15.2 176 0.0 176 0.0 Total assets 1,626 1,603 1,646 2,643 2,917 3,331 14.2 3,346 0.5 3,404 1.7 Trade payables & other ST liabilities 122 92 77 108 168 147 -12.4 159 7.9 184 15.8 Short term debt 51 41 55 110 145 366 152.4 366 0.0 366 0.0 Total current liabilities 173 133 132 218 313 513 64.0 524 2.3 550 4.8 Long term debt 210 187 186 241 531 717 35.1 717 0.0 717 0.0 Other long term liabilities 362 375 392 505 441 539 22.2 539 0.0 539 0.0 Total liabilities 745 695 710 964 1,284 1,769 37.7 1,780 0.7 1,805 1.4 Equity & minority interests 881 908 936 1,679 1,632 1,562 -4.3 1,566 0.2 1,599 2.1 Total liabilities & equity 1,626 1,603 1,646 2,643 2,917 3,331 14.2 3,346 0.5 3,404 1.7 Cash flow (R$m) 04/04 04/05 04/06 04/07 04/08 04/09E % ch 04/10E % ch 04/11E % ch Net income (26) 36 74 58 (47) (109) 130.3 5 - 43 739.4 Depreciation 71 78 87 140 190 176 -7.4 176 0.0 176 -0.1 Net change in working capital - 8 (6) 6 (76) (76) -0.6 (57) -24.1 (64) 11.1 Other (operating) - 19 7 16 (8) 74 - 0 - 0 - Net cash from operations - 140 163 220 59 65 10.5 124 90.5 155 25.5 Capital expenditure - (71) (86) (848) (610) (274) -55.0 (172) -37.1 (191) 10.8 Net (acquisitions) / disposals - 0 0 0 0 0 - 0 - 0 - Other changes in investments - 0 0 0 0 0 - 0 - 0 - Cash from investing activities - (71) (86) (848) (610) (274) -55.0 (172) -37.1 (191) 10.8 Increase/(decrease) in debt - (34) 14 110 325 407 - 0 - 0 - Share issues / (repurchases) - (7) (42) 714 20 24 - 0 - 0 - Dividends paid - 0 (2) 0 (20) 0 - 0 - (1) - Other cash from financing - 0 0 0 0 0 - 0 - 0 - Cash from financing activities - (40) (30) 824 325 431 32.7 0 - (1) - Cash flow chge in cash & equivalents - 29 47 196 (226) 222 - (49) - (37) - FX / non cash items - (25) 3 67 (68) (34) -49.8 0 - 0 - Bal sheet chge in cash & equivalents - 4 50 263 (294) 188 - (49) - (37) - Core EBITDA 89 164 221 244 127 149 17.6 289 93.2 352 22.0 Maintenance capital expenditure - 0 0 0 0 0 0.0 0 0.0 0 0.0 Maintenance net working capital - 0 0 0 0 0 - 0 - 0 - Operating free cash flow, pre-tax

- 164 221 244 127 149 17.6 288 93.3 352 22.0


UBS 37


Agriculture



Company profile The São Martinho group is one of the largest sugarcane producers inBrazil. The company's main operations are spread among two mills,Iracema and São Martinho, both located in São Paulo state. Thecompany was part of Copersucar, one of the world's largest traders ofsugar and ethanol and considered to be one of the operational benchmarcks in Brazil, as it presents above-average agricultural yields and high levels of mechanization.


04/07 04/08 04/09E 04/10E 04/11E0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

-60x

-40x

-20x

0x

20x

40x

60x


Profitability

04/07 04/08 04/09(E) 04/10(E) 04/11(E)-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%



04/07 04/08 04/09(E) 04/10(E) 04/11(E)-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

0.0x

0.5x

1.0x

1.5x

2.0x


Growth (UBS EPS)

04/07 04/08 04/09(E) 04/10(E) 04/11(E)600

700

800

900

1000

1100

1200

1300

-50%

0%

50%

100%

150%



São Martinho S.A.

Valuation (x) 5Yr Avg 04/07 04/08 04/09E 04/10E 04/11E P/E (local GAAP) - 52.7 NM NM NM 24.2 P/E (UBS) - 52.7 NM NM NM 24.2 P/CEPS - 15.3 18.2 15.6 5.8 4.8 Net dividend yield (%) - 0.0 0.0 0.0 0.1 1.0 P/BV - 1.8 1.6 0.7 0.7 0.7 EV/revenue (core) - 3.7 4.1 2.2 1.8 1.5 EV/EBITDA (core) - 12.6 22.8 11.8 6.6 5.5 EV/EBIT (core) - 29.6 NM NM 16.8 11.0 EV/OpFCF (core) - 12.6 22.8 11.8 6.6 5.5 EV/op. invested capital - 2.3 1.5 0.8 0.8 0.8

Enterprise value (R$m) 04/07 04/08 04/09E 04/10E 04/11E Average market cap 3,028 2,600 1,045 1,045 1,045 + minority interests 0 0 0 0 0 + average net debt (cash) 61 294 713 847 890 + pension obligations and other 0 0 0 0 0 - non-core asset value 0 0 0 0 0 Core enterprise value 3,089 2,894 1,758 1,892 1,935 Growth (%) 5Yr Avg 04/07 04/08 04/09E 04/10E 04/11E Revenue - 4.2 -13.8 13.2 29.9 20.0 EBITDA (UBS) - 10.7 -48.1 17.6 93.2 22.0 EBIT (UBS) - -21.8 - -57.8 - 56.5 EPS (UBS) - -22.6 - 130.3 - NM Cash EPS - 22.3 -27.8 -53.1 170.7 20.9 Net DPS - - - - - NM BVPS - 78.6 -2.8 -5.2 0.3 2.1

Margins (%) 5Yr Avg 04/07 04/08 04/09E 04/10E 04/11E EBITDA / revenue - 29.6 17.8 18.5 27.5 28.0 EBIT / revenue - 12.6 -8.9 -3.3 10.7 14.0 Net profit (UBS) / revenue - 7.0 NM NM 0.5 3.4

Return on capital (%) 5Yr Avg 04/07 04/08 04/09E 04/10E 04/11E EBIT ROIC (UBS) - 7.6 NM NM 4.7 7.1 ROIC post tax - 4.9 NM NM 3.1 4.7 Net ROE - 4.4 (2.9) (6.9) 0.3 2.8

Coverage ratios (x) 5Yr Avg 04/07 04/08 04/09E 04/10E 04/11E EBIT / net interest - 4.0 - - 1.1 1.6 Dividend cover (UBS EPS) - - - - 4.0 4.0 Div. payout ratio (%, UBS EPS) - - - - 25.0 25.0 Net debt / EBITDA - NM 4.8 5.5 3.0 2.6


Investment ratios (x) 5Yr Avg 04/07 04/08 04/09E 04/10E 04/11E OpFCF / EBIT - 2.3 NM NM 2.6 2.0 Capex / revenue (%) - NM NM NM 16.5 15.2 Capex / depreciation - 6.1 3.2 1.6 1.0 1.1

Capital structure (%) 5Yr Avg 04/07 04/08 04/09E 04/10E 04/11E Net debt / total equity - (1.0) 37.0 52.6 55.6 56.8 Net debt / (net debt + equity) - (1.0) 27.1 34.8 36.1 36.6 Net debt (core) / EV - 2.0 10.1 40.5 44.8 46.0




UBS 38

Basic Materials

UBS 39

Duratex

Income statement (R$m) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch Revenues 1,188 1,271 1,489 1,671 1,914 1,894 -1.0 2,293 21.1 2,428 5.9 Operating expenses (ex depn) (877) (920) (1,045) (1,112) (1,354) (1,352) -0.2 (1,644) 21.6 (1,758) 6.9 EBITDA (UBS) 311 351 444 558 559 542 -3.0 649 19.7 670 3.3 Depreciation (74) (80) (79) (80) (85) (101) 18.5 (117) 16.2 (134) 14.7 Operating income (EBIT, UBS) 237 270 365 478 474 442 -6.9 532 20.5 536 0.8 Other income & associates 9 12 8 (4) 24 0 - 0 - 0 - Net interest (55) (75) (40) (10) (49) (74) 52.0 (65) -12.5 (75) 15.1 Abnormal items (pre-tax) 0 0 0 0 0 0 - 0 - 0 - Profit before tax 191 208 333 464 450 367 -18.3 467 27.2 461 -1.2 Tax (65) (70) (107) (112) (81) (88) 9.3 (117) 32.6 (120) 2.7 Profit after tax 126 137 226 352 369 279 -24.3 350 25.4 341 -2.5 Abnormal items (post-tax) 0 0 0 0 0 0 - 0 - 0 - Minorities / pref dividends (1) 0 0 (31) (53) (40) -23.6 (65) 61.3 (64) -1.2 Net income (local GAAP) 125 137 226 321 316 239 -24.5 285 19.4 277 -2.9 Net Income (UBS) 125 137 226 321 316 239 -24.5 285 19.4 277 -2.9 Tax rate (%) 34 34 32 24 18 24 33.8 25 4.3 26 4.0 Pre-abnormal tax rate (%) 34 34 32 24 18 24 33.8 25 4.3 26 4.0 Per share (R$) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch EPS (local GAAP) 10.65 2.33 1.78 2.53 2.49 1.88 -24.5 2.25 19.4 2.19 -2.9 EPS (UBS) 10.65 2.33 1.78 2.53 2.49 1.88 -24.5 2.25 19.4 2.19 -2.9 Net DPS 4.66 1.16 0.81 0.02 0.02 0.99 4911.4 0.94 -4.4 1.12 19.4 Cash EPS 16.94 3.69 2.41 3.17 3.16 2.68 -15.4 3.17 18.5 3.24 2.2 BVPS 84.08 17.84 11.01 12.11 13.65 14.55 6.6 15.86 9.0 16.92 6.7 Balance sheet (R$m) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch Cash and equivalents 105 234 575 663 598 613 2.6 600 -2.2 452 -24.7 Other current assets 516 493 564 603 724 722 -0.3 869 20.4 915 5.3 Total current assets 622 727 1,139 1,266 1,322 1,335 1.0 1,469 10.0 1,367 -6.9 Net tangible fixed assets 1,143 1,170 1,190 1,317 1,875 2,034 8.5 2,235 9.9 2,736 22.4 Net intangible fixed assets 13 11 13 13 32 32 0.0 32 0.0 32 0.0 Investments / other assets 34 40 34 34 144 144 0.0 144 0.0 144 0.0 Total assets 1,812 1,947 2,375 2,630 3,373 3,546 5.1 3,881 9.4 4,280 10.3 Trade payables & other ST liabilities 173 170 242 295 398 403 1.2 493 22.5 529 7.3 Short term debt 172 148 359 246 435 455 4.6 485 6.6 576 18.6 Total current liabilities 345 319 601 541 833 858 3.0 978 14.1 1,105 12.9 Long term debt 143 440 259 425 649 679 4.6 724 6.6 859 18.6 Other long term liabilities 322 126 119 122 159 159 0.0 159 0.0 159 0.0 Total liabilities 810 884 979 1,087 1,641 1,696 3.3 1,862 9.8 2,123 14.0 Equity & minority interests 1,002 1,063 1,396 1,543 1,732 1,850 6.8 2,019 9.2 2,157 6.8 Total liabilities & equity 1,812 1,947 2,375 2,630 3,373 3,546 5.1 3,881 9.4 4,280 10.3 Cash flow (R$m) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch Net income 125 137 226 321 316 239 -24.5 285 19.4 277 -2.9 Depreciation 74 80 79 80 85 101 18.5 117 16.2 134 14.7 Net change in working capital (55) 21 0 16 (90) 7 - (57) - (10) -81.7 Other (operating) 39 98 13 0 0 0 - 0 - 0 - Net cash from operations 184 336 318 448 362 383 5.8 407 6.2 462 13.4 Capital expenditure (154) (108) (105) (222) (673) (260) -61.4 (318) 22.3 (635) 99.6 Net (acquisitions) / disposals 0 0 0 0 0 0 - 0 - 0 - Other changes in investments 0 0 0 0 0 0 - 0 - 0 - Cash from investing activities (154) (108) (105) (222) (673) (260) -61.4 (318) 22.3 (635) 99.6 Increase/(decrease) in debt (67) 273 30 111 243 20 - 30 - 90 - Share issues / (repurchases) (13) (30) (12) 0 0 0 - 0 - 0 - Dividends paid (55) (68) (65) (166) (135) (125) -7.3 (119) -4.4 (143) 19.4 Other cash from financing 0 0 0 0 0 0 - 0 - 0 - Cash from financing activities (135) 175 (46) (85) 57 (142) - (151) 6.5 (113) -25.0 Cash flow chge in cash & equivalents (105) 403 166 141 (254) (18) - (62) - (286) - FX / non cash items 109 (274) 174 (53) 190 34 -80.7 49 0.0 138 0.0 Bal sheet chge in cash & equivalents 4 129 341 88 (65) 15 - (13) - (148) - Core EBITDA 311 351 444 558 559 542 -3.0 649 19.7 670 3.3 Maintenance capital expenditure (74) (80) (79) (80) (85) (101) 18.5 (117) 16.2 (134) 14.7 Maintenance net working capital (55) 21 0 16 (90) 7 - (57) - (10) -81.7 Operating free cash flow, pre-tax

182 291 365 494 384 449 16.8 475 5.9 526 10.6


UBS 40


Forest Products



Company profile Duratex manufactures products for the building sector and its corebusiness activities are the production of wood-based panels, ceramics, and metal bathroom fittings. The company is a leader inboth wood products and metal bathroom fittings segments. Thecompany has 10 industrial plants in Brazil and two in Argentina. Thewood division has five factories in Brazil with a total capacity of880,000 m3, while the deca division has five plants in Brazil with atotal capacity of 14.5 million pieces a year, and two plants inArgentina with a capacity of 1.2 million pieces a year. It also has sixforestry units with a total area of 70,000ha of pine and eucalyptusplantations. CONTACTS: Paulo Setúbal –CEO- 55 11 3179-7333; Plínio do Amaral Pinheiro –CFO- 55 11 3179-7359; Álvaro Penteadode Castro –IR- 55 11 3179-7259.


12/07 12/08 12/09E 12/10E 12/11E0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

0.0x

5.0x

10.0x

15.0x

20.0x


Profitability

12/07 12/08 12/09(E) 12/10(E) 12/11(E)21.00%

22.14%

23.29%

24.43%

25.57%

26.71%

27.86%

29.00%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%



12/07 12/08 12/09(E) 12/10(E) 12/11(E)10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x


Growth (UBS EPS)

12/07 12/08 12/09(E) 12/10(E) 12/11(E)1400

1600

1800

2000

2200

2400

2600

-30.0%

-18.6%

-7.1%

4.3%

15.7%

27.1%

38.6%


Duratex


Enterprise value (R$m) 12/07 12/08 12/09E 12/10E 12/11E Average market cap 6,080 3,547 1,622 1,622 1,622 + minority interests 7 1 4 8 11 + average net debt (cash) 26 247 504 565 796 + pension obligations and other 0 0 0 0 0 - non-core asset value 0 0 0 0 0 Core enterprise value 6,113 3,794 2,130 2,195 2,429 Growth (%) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E Revenue 14.0 12.2 14.5 -1.0 21.1 5.9 EBITDA (UBS) 25.6 25.7 0.2 -3.0 19.7 3.3 EBIT (UBS) 30.3 30.9 -0.7 -6.9 20.5 0.8 EPS (UBS) -17.4 42.1 -1.5 -24.5 19.4 -2.9 Cash EPS -25.8 31.6 -0.1 -15.4 18.5 2.2 Net DPS -71.6 -97.5 -1.5 NM -4.4 19.4 BVPS -37.5 10.0 12.7 6.6 9.0 6.7



Coverage ratios (x) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E EBIT / net interest 13.1 NM 9.7 5.9 8.2 7.2 Dividend cover (UBS EPS) 27.0 NM NM 1.9 2.4 1.9 Div. payout ratio (%, UBS EPS) 39.1 0.8 0.8 52.3 41.9 51.5 Net debt / EBITDA 0.5 0.0 0.9 1.0 0.9 1.5



Capital structure (%) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E Net debt / total equity 17.5 0.5 28.1 28.2 30.2 45.5 Net debt / (net debt + equity) 13.2 0.5 21.9 22.0 23.3 31.4 Net debt (core) / EV 7.31 0.4 6.5 23.7 25.8 32.8

Source: Company accounts, UBS estimates. (UBS) valuations are stated before goodwill-related charges and other adjustments for abnormal and economic items at the analysts' judgement. Valuations: based on an average share price that year, (E): based on a share price of R$12.79 on 06 Mar 2009 19:39 EST Market cap(E) may include forecast share issues/buybacks. Edmo Chagas Analyst [email protected] +5521 3262 9226

Carlos Vasques Analyst [email protected] +55-21-3262 9670

UBS 41

Satipel Industrial S.A.

Income statement (R$m) - 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch Revenues - 307 340 419 520 678 30.3 773 14.0 928 20.2 Operating expenses (ex depn) - (217) (266) (285) (347) (466) 34.5 (529) 13.5 (639) 20.7 EBITDA (UBS) - 90 75 127 168 206 22.5 238 15.4 284 19.5 Depreciation - (37) (38) (41) (44) (62) 41.0 (65) 5.4 (71) 9.2 Operating income (EBIT, UBS) - 53 38 87 124 144 16.0 173 19.7 213 23.3 Other income & associates - (4) (5) (18) (3) 0 -82.0 (1) 13.3 (1) 20.5 Net interest - (11) (31) (4) (20) (19) -1.0 (27) 37.3 (26) -1.8 Abnormal items (pre-tax) - 0 0 0 0 0 - 0 - 0 - Profit before tax - 38 2 64 102 124 21.8 146 17.0 186 27.9 Tax - (11) (3) (16) (20) (25) 24.5 (33) 31.6 (47) 42.2 Profit after tax - 27 (1) 48 82 100 21.1 113 13.3 140 23.8 Abnormal items (post-tax) - 0 0 0 0 0 - 0 - 0 - Minorities / pref dividends - (4) (1) (2) (5) (2) -55.9 (3) 44.8 (4) 27.9 Net income (local GAAP) - 23 (2) 46 78 97 25.6 110 12.7 136 23.7 Net Income (UBS) - 23 (2) 46 78 97 25.6 110 12.7 136 23.7 Tax rate (%) - 29 175 25 20 20 2.3 23 12.5 25 11.1 Pre-abnormal tax rate (%) - 29 175 25 20 20 2.3 23 12.5 25 11.1 Per share (R$) - 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch EPS (local GAAP) - 0.22 (0.02) 0.42 0.72 0.90 25.6 1.01 12.7 1.25 23.7 EPS (UBS) - 0.22 (0.02) 0.42 0.72 0.90 25.6 1.01 12.7 1.25 23.7 Net DPS - 0.00 0.03 0.21 0.19 0.18 -7.0 0.22 25.6 0.25 12.7 Cash EPS - 0.56 0.33 0.80 1.12 1.47 31.2 1.61 9.9 1.91 18.3 BVPS - 3.98 2.28 4.45 4.80 5.52 15.0 6.31 14.3 7.31 15.8 Balance sheet (R$m) - 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch Cash and equivalents - 54 117 277 119 167 41.0 237 41.4 332 40.1 Other current assets - 89 88 99 139 202 45.3 207 2.7 249 20.5 Total current assets - 143 206 376 257 369 43.3 444 20.3 581 31.0 Net tangible fixed assets - 648 402 537 839 923 9.9 1,008 9.2 1,007 -0.1 Net intangible fixed assets - 0 0 0 0 0 - 0 - 0 - Investments / other assets - 39 20 21 31 31 0.0 31 0.0 31 0.0 Total assets - 830 627 935 1,128 1,322 17.3 1,482 12.1 1,618 9.2 Trade payables & other ST liabilities - 46 46 81 101 158 56.0 151 -4.4 182 20.2 Short term debt - 49 67 61 64 73 14.1 85 16.7 84 -0.5 Total current liabilities - 94 114 142 165 230 39.8 236 2.3 266 12.8 Long term debt - 184 195 245 362 413 14.1 482 16.7 480 -0.5 Other long term liabilities - 63 71 64 74 74 0.0 74 0.0 74 0.0 Total liabilities - 341 380 452 601 718 19.4 792 10.3 820 3.5 Equity & minority interests - 489 247 483 527 605 14.8 690 14.1 799 15.7 Total liabilities & equity - 830 627 935 1,128 1,322 17.3 1,482 12.1 1,618 9.2 Cash flow (R$m) - 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch Net income - 23 (2) 46 78 97 25.6 110 12.7 136 23.7 Depreciation - 37 38 41 44 62 41.0 65 5.4 71 9.2 Net change in working capital - (27) 1 24 (19) (6) -68.3 (12) 99.5 (12) -3.3 Other (operating) - 0 32 (47) 0 0 - 0 - 0 - Net cash from operations - 33 68 64 102 153 50.1 163 6.2 195 19.9 Capital expenditure - (54) (40) (171) (379) (145) -61.7 (150) 3.4 (70) -53.3 Net (acquisitions) / disposals - 0 0 0 0 0 - 0 - 0 - Other changes in investments - 0 0 0 0 0 - 0 - 0 - Cash from investing activities - (54) (40) (171) (379) (145) -61.7 (150) 3.4 (70) -53.3 Increase/(decrease) in debt - 1 30 44 120 60 - 81 - (3) - Share issues / (repurchases) - 0 0 228 0 0 - 0 - 0 - Dividends paid - 0 (3) (23) (10) (19) 94.0 (24) 25.6 (27) 12.7 Other cash from financing - 0 0 0 0 0 - 0 - 0 - Cash from financing activities - 1 27 248 110 41 -63.0 57 39.6 (30) - Cash flow chge in cash & equivalents - (20) 54 141 (167) 49 - 69 - 95 - FX / non cash items - - 9 19 8 0 - 0 - 0 - Bal sheet chge in cash & equivalents - - 63 160 (158) 49 - 69 - 95 - Core EBITDA - 90 75 127 168 206 22.5 238 15.4 284 19.5 Maintenance capital expenditure - (54) (40) (60) (55) (65) 18.2 (70) 7.7 (70) 0.0 Maintenance net working capital - (22) 1 19 (16) (5) -68.3 (10) 99.5 (10) -3.3 Operating free cash flow, pre-tax

- 15 36 87 98 136 39.4 158 16.1 205 29.5


UBS 42


Forest Products



Company profile Satipel is the second largest wood board producer in Brazil, with atotal capacity of 1,000,000 m3 at the end of 2007 (100% MDP; medium density particleboard) and about a 20% market share. It runstwo plants: one in the south region (200,000 m3), the other inSouthern region (800,000 m3). It is implementing a 600,000 m3expansion to be delivered in two phases; first in mid-2008 adding 350,000 m3 of MDF; medium density fiberboard, and second in mid-2009 adding 250,000 m3 of MDP. The company is about 80% self-sufficient in wood, allowing it to have competitive wood costs.


12/07 12/08 12/09E 12/10E 12/11E0.0x

5.0x

10.0x

15.0x

20.0x

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

30.0x


Profitability

12/07 12/08 12/09(E) 12/10(E) 12/11(E)19.00%

20.00%

21.00%

22.00%

23.00%

24.00%

13.00%

14.00%

15.00%

16.00%

17.00%

18.00%

19.00%



12/07 12/08 12/09(E) 12/10(E) 12/11(E)11.00%

12.14%

13.29%

14.43%

15.57%

16.71%

17.86%

19.00%

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x


Growth (UBS EPS)

12/07 12/08 12/09(E) 12/10(E) 12/11(E)300

400

500

600

700

800

900

1000

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%



Satipel Industrial S.A.

Valuation (x) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E P/E (local GAAP) - 28.7 11.9 4.5 4.0 3.2 P/E (UBS) - 28.7 11.9 4.5 4.0 3.2 P/CEPS - 15.2 7.6 2.7 2.5 2.1 Net dividend yield (%) - 1.8 2.3 4.4 5.6 6.3 P/BV - 2.7 1.8 0.7 0.6 0.6 EV/revenue (core) - 3.4 2.1 1.1 1.0 0.8 EV/EBITDA (core) - 11.1 6.6 3.7 3.2 2.5 EV/EBIT (core) - 16.3 8.9 5.2 4.4 3.4 EV/OpFCF (core) - 16.3 11.3 5.5 4.8 3.5 EV/op. invested capital - 2.4 1.4 0.7 0.7 0.6

Enterprise value (R$m) 12/07 12/08 12/09E 12/10E 12/11E Average market cap 1,327 934 442 442 442 + minority interests 0 0 0 0 0 + average net debt (cash) 87 168 313 325 282 + pension obligations and other 0 0 0 0 0 - non-core asset value 0 0 0 0 0 Core enterprise value 1,414 1,102 755 766 723 Growth (%) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E Revenue - 23.1 24.2 30.3 14.0 20.2 EBITDA (UBS) - 69.8 31.9 22.5 15.4 19.5 EBIT (UBS) - 130.6 43.6 16.0 19.7 23.3 EPS (UBS) - - 69.0 25.6 12.7 23.7 Cash EPS - 145.9 39.9 31.2 9.9 18.3 Net DPS - NM -10.4 -7.0 25.6 12.7 BVPS - 95.1 7.9 15.0 14.3 15.8



Coverage ratios (x) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E EBIT / net interest - 21.0 6.3 7.4 6.5 8.1 Dividend cover (UBS EPS) - 2.0 3.7 5.0 4.5 4.9 Div. payout ratio (%, UBS EPS) - 50.7 26.9 19.9 22.2 20.2 Net debt / EBITDA - 0.2 1.8 1.5 1.4 0.8


Investment ratios (x) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E OpFCF / EBIT - 1.0 0.8 0.9 0.9 1.0 Capex / revenue (%) - NM NM 21.4 19.4 7.5 Capex / depreciation - 4.2 8.6 2.3 2.3 1.0

Capital structure (%) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E Net debt / total equity - 6.0 58.4 52.7 47.9 29.2 Net debt / (net debt + equity) - 5.7 37.1 34.7 32.6 22.7 Net debt (core) / EV - 6.2 15.3 41.5 42.4 38.9



UBS 43

Bradespar

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 0 0 0 0 0 0 - 0 - 0 - Operating expenses (ex depn) (18) (64) (17) (40) (11) (16) 55.6 (16) 0.0 (16) 0.0 EBITDA (UBS) (18) (64) (17) (40) (11) (16) 55.6 (16) 0.0 (16) 0.0 Depreciation 0 0 0 0 0 0 - 0 - 0 - Operating income (EBIT, UBS) (18) (64) (17) (40) (11) (16) 55.6 (16) 0.0 (16) 0.0 Other income & associates 301 359 634 768 895 1,274 42.3 1,433 12.6 1,214 -15.3 Net interest (366) (121) 21 36 35 23 -33.8 48 109.3 50 4.1 Abnormal items (pre-tax) 0 0 0 0 0 0 - 0 - 0 - Profit before tax (82) 174 637 764 919 1,280 39.3 1,465 14.4 1,248 -14.8 Tax (5) 0 0 1 4 (6) - (9) 58.7 (8) -14.8 Profit after tax (87) 174 637 764 923 1,274 38.0 1,455 14.2 1,240 -14.8 Abnormal items (post-tax) 0 0 0 0 0 0 - 0 - 0 - Minorities / pref dividends (27) 0 0 0 0 0 - 0 - 0 - Net income (local GAAP) (114) 174 637 764 923 1,274 38.0 1,455 14.2 1,240 -14.8 Net Income (UBS) (114) 174 637 764 923 1,274 38.0 1,455 14.2 1,240 -14.8 Tax rate (%) - 0 0 - - 0 - 1 38.7 1 0.0 Pre-abnormal tax rate (%) - 0 0 - - (33) - 133 - 89 -33.1 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) (0.33) 0.50 1.82 2.19 2.64 3.64 38.0 4.16 14.2 3.55 -14.8 EPS (UBS) (0.33) 0.50 1.82 2.19 2.64 3.64 38.0 4.16 14.2 3.55 -14.8 Net DPS 0.23 0.13 0.51 0.61 1.23 0.40 -67.2 0.00 - 0.77 - Cash EPS (0.33) 0.50 1.82 2.19 2.64 3.64 38.0 4.16 14.2 3.55 -14.8 BVPS 2.57 6.40 7.58 9.01 11.03 14.08 27.7 17.79 26.4 21.25 19.4 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 2 57 206 367 313 598 90.9 622 4.1 647 3.9 Other current assets 1 54 92 0 0 0 0.0 0 0.0 0 0.0 Total current assets 3 110 298 367 313 598 90.9 623 4.1 647 3.9 Net tangible fixed assets 0 0 0 0 0 0 - 0 - 0 - Net intangible fixed assets 0 0 0 0 0 0 - 0 - 0 - Investments / other assets 1,113 2,249 2,847 3,067 3,817 4,598 20.5 5,872 27.7 7,058 20.2 Total assets 1,117 2,360 3,145 3,434 4,130 5,197 25.8 6,495 25.0 7,705 18.6 Trade payables & other ST liabilities 1 112 155 205 203 203 0.0 203 0.0 203 0.0 Short term debt 7 0 235 0 0 0 - 0 - 0 - Total current liabilities 7 112 390 205 203 203 0.0 203 0.0 203 0.0 Long term debt 7 0 0 0 0 0 - 0 - 0 - Other long term liabilities 0 9 105 77 71 71 0.0 71 0.0 71 0.0 Total liabilities 14 120 495 282 274 274 0.0 274 0.0 274 0.0 Equity & minority interests 1,102 2,240 2,650 3,152 3,856 4,923 27.7 6,221 26.4 7,431 19.4 Total liabilities & equity 1,117 2,360 3,145 3,434 4,130 5,197 25.8 6,495 25.0 7,705 18.6 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income (114) 174 637 764 923 1,274 38.0 1,455 14.2 1,240 -14.8 Depreciation 0 0 0 0 0 0 - 0 - 0 - Net change in working capital (145) 58 5 142 (2) 0 - 0 - 0 - Other (operating) 0 0 0 212 73 24 -66.8 24 0.0 24 0.0 Net cash from operations (259) 232 642 1,118 994 1,298 30.6 1,480 14.0 1,264 -14.6 Capital expenditure 0 0 0 0 0 0 - 0 - 0 - Net (acquisitions) / disposals 0 0 0 0 0 0 - 0 - 0 - Other changes in investments 0 0 0 0 0 0 - 0 - 0 - Cash from investing activities 0 0 0 0 0 0 - 0 - 0 - Increase/(decrease) in debt (1,841) (14) 235 (235) 0 0 - 0 - 0 - Share issues / (repurchases) 0 0 0 0 0 0 - 0 - 0 - Dividends paid (80) (47) (180) (213) (432) (142) -67.2 0 - (270) - Other cash from financing 0 0 0 0 0 0 - 0 - 0 - Cash from financing activities (1,921) (61) 55 (448) (432) (142) -67.2 0 - (270) - Cash flow chge in cash & equivalents (2,180) 172 697 670 563 1,157 - 1,480 - 994 - FX / non cash items 2,022 (117) (548) (510) (616) (872) 41.5 (1,455) 66.9 (970) -33.4 Bal sheet chge in cash & equivalents (158) 54 149 161 (53) 285 - 24 - 24 - Core EBITDA 494 659 1,101 1,449 2,110 2,614 23.9 2,692 3.0 2,488 -7.6 Maintenance capital expenditure 0 0 0 0 0 0 - 0 - 0 - Maintenance net working capital (145) 58 5 142 (2) 0 - 0 - 0 - Operating free cash flow, pre-tax

349 717 1,106 1,590 2,108 2,614 24.0 2,692 3.0 2,488 -7.6


UBS 44


Investment Services



Company profile Bradespar is a holding company that owns controlling stakes inCVRD (5.5%) and CPFL (9%). The company's free-float is approximately 71.7% of total shares outstanding (98% of the PNshares) with the remaining shares held by the controlling group(24.5%) and Espirito Santo Group (3.8%). The controlling group iscomposed of the same shareholders that control Banco Bradescoand includes Deus Companhia Comercial de Participações, NovaCidade de Deus Participações S.A., the Bradesco Foundation, andNCF Participações.


12/06 12/07 12/08 12/09E 12/10E0.00x

1.00x

2.00x

3.00x

4.00x

5.00x

6.00x

7.00x

0.0x

5.0x

10.0x

15.0x


Profitability

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

ROIC (RHS)


12/06 12/07 12/08(E) 12/09(E) 12/10(E)16.0%

18.0%

20.0%

22.0%

24.0%

26.0%

28.0%

30.0%

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x

4.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)-1.20

-1.00

-0.80

-0.60

-0.40

-0.20

0.00

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%



Bradespar

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) 2.5 8.8 14.7 5.9 5.2 6.1 P/E (UBS) 2.5 8.8 14.7 5.9 5.2 6.1 P/CEPS 2.5 8.8 14.7 5.9 5.2 6.1 Net dividend yield (%) 2.9 3.2 3.2 1.9 0.0 3.6 P/BV 1.6 2.1 3.5 1.5 1.2 1.0 EV/revenue (core) 1.8 1.9 3.0 1.4 1.3 NM EV/EBITDA (core) 5.0 4.5 6.3 2.7 2.6 0.0 EV/EBIT (core) 5.7 5.3 7.4 3.2 3.1 NM EV/OpFCF (core) 4.6 4.1 6.3 2.7 2.6 NM EV/op. invested capital NM NM NM NM NM 0.4

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 6,706 13,547 7,522 7,522 7,522 + minority interests 0 0 0 0 0 + average net debt (cash) (169) (340) (456) (610) (635) + pension obligations and other 0 0 0 0 0 - non-core asset value (1) (1) (1) (1) (6,961) Core enterprise value 6,536 13,206 7,066 6,911 (73) Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - - - - - - EBITDA (UBS) - 136.5 -73.9 55.6 0.0 0.0 EBIT (UBS) - 136.5 -73.9 55.6 0.0 0.0 EPS (UBS) - 20.0 20.8 38.0 14.2 -14.8 Cash EPS - 20.0 20.8 38.0 14.2 -14.8 Net DPS 148.5 18.3 102.8 -67.2 - - BVPS 26.9 18.9 22.4 27.7 26.4 19.4

Margins (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBITDA / revenue - - - - - - EBIT / revenue - - - - - - Net profit (UBS) / revenue - - - - - -

Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) NM NM 5.9 9.3 9.3 9.3 ROIC post tax - - - 12.4 NM 1.1 Net ROE 4.2 26.3 26.3 29.0 26.1 18.2

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - - - - - Dividend cover (UBS EPS) - 3.6 2.1 9.0 - 4.6 Div. payout ratio (%, UBS EPS) - 27.8 46.8 11.1 - 21.8 Net debt / EBITDA NM 9.1 NM NM NM NM

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital 0.0 0.0 0.0 0.0 0.0 0.0 Revenue / fixed assets 0.0 0.0 0.0 - - - Revenue / net working capital 0.0 0.0 0.0 0.0 0.0 0.0

Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT NM NM NM NM NM NM Capex / revenue (%) - - - - - - Capex / depreciation - - - - - -

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity 21.7 (11.6) (8.1) (12.2) (10.0) (8.7) Net debt / (net debt + equity) 11.4 (13.2) (8.8) (13.8) (11.1) (9.5) Net debt (core) / EV 11.06 (2.6) (2.6) (6.5) (8.8) NM



UBS 45

Cia. Vale do Rio Doce (PN)

Income statement (US$m) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch Revenues 8,066 12,802 19,653 32,242 37,769 25,922 -31.4 28,003 8.0 33,479 19.6 Operating expenses (ex depn) (4,706) (6,741) (10,071) (15,800) (17,708) (12,086) -31.7 (13,657) 13.0 (15,495) 13.5 EBITDA (UBS) 3,360 6,061 9,582 16,442 20,061 13,836 -31.0 14,346 3.7 17,984 25.4 Depreciation (238) (619) (997) (2,186) (2,962) (3,018) 1.9 (3,531) 17.0 (3,584) 1.5 Operating income (EBIT, UBS) 3,122 5,442 8,585 14,256 17,099 10,818 -36.7 10,816 0.0 14,400 33.1 Other income & associates 1,011 886 1,384 1,372 769 600 -22.0 600 0.0 700 16.7 Net interest (589) (138) (604) 1,262 (1,756) (581) -66.9 (224) -61.5 (362) 61.6 Abnormal items (pre-tax) 0 0 0 0 0 0 - 0 - 0 - Profit before tax 3,544 6,190 9,365 16,890 16,111 10,837 -32.7 11,192 3.3 14,738 31.7 Tax (749) (880) (1,432) (3,201) (2,161) (1,767) -18.2 (2,062) 16.7 (2,842) 37.8 Profit after tax 2,795 5,310 7,933 13,689 13,950 9,070 -35.0 9,129 0.7 11,895 30.3 Abnormal items (post-tax) 0 0 0 0 0 0 - 0 - 0 - Minorities / pref dividends (223) (459) (579) (802) (266) (163) -38.8 (168) 3.3 (221) 31.7 Net income (local GAAP) 2,572 4,851 7,354 12,887 13,685 8,907 -34.9 8,962 0.6 11,674 30.3 Net Income (UBS) 2,572 4,851 7,354 12,887 13,685 8,907 -34.9 8,962 0.6 11,674 30.3 Tax rate (%) 21 14 15 19 13 16 21.6 18 13.0 19 4.7 Pre-abnormal tax rate (%) 25 17 18 21 14 17 22.6 19 12.8 20 4.0 Per share (US$) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch EPS (local GAAP) 0.48 0.91 1.38 2.41 2.56 1.67 -34.9 1.68 0.6 2.19 30.3 EPS (UBS) 0.48 0.91 1.38 2.41 2.56 1.67 -34.9 1.68 0.6 2.19 30.3 Net DPS 0.29 0.24 0.26 0.35 0.47 0.47 0.0 0.47 0.0 0.50 7.5 Cash EPS 0.53 1.02 1.56 2.82 3.12 2.23 -28.4 2.34 4.8 2.86 22.1 BVPS 1.59 2.57 4.00 6.76 9.70 10.90 12.4 12.11 11.1 13.79 13.9 Balance sheet (US$m) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch Cash and equivalents 1,249 1,041 4,448 1,046 15,578 17,551 12.7 14,266 -18.7 12,629 -11.5 Other current assets 2,641 3,734 8,492 10,334 9,388 6,722 -28.4 7,425 10.4 8,561 15.3 Total current assets 3,890 4,775 12,940 11,380 24,966 24,274 -2.8 21,691 -10.6 21,190 -2.3 Net tangible fixed assets 9,063 14,166 38,007 54,625 56,439 62,221 10.2 71,370 14.7 80,795 13.2 Net intangible fixed assets 0 0 0 0 0 0 - 0 - 0 - Investments / other assets 2,762 3,703 10,007 10,712 9,715 10,215 5.1 10,715 4.9 11,315 5.6 Total assets 15,715 22,644 60,954 76,717 91,120 96,709 6.1 103,776 7.3 113,300 9.2 Trade payables & other ST liabilities 1,599 2,030 5,853 8,661 5,323 4,343 -18.4 4,780 10.1 5,097 6.6 Short term debt 856 1,295 1,459 1,422 959 1,343 40.0 1,343 0.0 1,343 0.0 Total current liabilities 2,455 3,325 7,312 10,083 6,282 5,686 -9.5 6,123 7.7 6,441 5.2 Long term debt 3,232 3,715 21,122 17,608 18,229 17,845 -2.1 17,845 0.0 17,845 0.0 Other long term liabilities 1,849 2,409 10,036 13,195 12,046 12,046 0.0 12,046 0.0 12,046 0.0 Total liabilities 7,536 9,449 38,470 40,886 36,557 35,577 -2.7 36,014 1.2 36,331 0.9 Equity & minority interests 8,179 13,195 22,484 35,831 54,563 61,132 12.0 67,762 10.8 76,969 13.6 Total liabilities & equity 15,715 22,644 60,954 76,717 91,120 96,709 6.1 103,776 7.3 113,300 9.2 Cash flow (US$m) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch Net income 2,572 4,851 7,354 12,887 13,685 8,907 -34.9 8,962 0.6 11,674 30.3 Depreciation 238 619 997 2,186 2,962 3,018 1.9 3,531 17.0 3,584 1.5 Net change in working capital (92) (707) 325 (223) (1,049) 1,686 - (265) - (819) 208.8 Other (operating) (78) (611) (163) (659) 604 400 -33.8 400 0.0 400 0.0 Net cash from operations 2,640 4,152 8,514 14,191 16,202 14,011 -13.5 12,627 -9.9 14,839 17.5 Capital expenditure (2,056) (3,361) (6,316) (9,177) (11,015) (10,094) -8.4 (13,466) 33.4 (2,604) -80.7 Net (acquisitions) / disposals 141 (800) (17,875) 0 0 0 - 0 - 0 - Other changes in investments (530) 0 0 0 0 0 - 0 - 0 - Cash from investing activities (2,445) (4,161) (24,190) (9,177) (11,015) (10,094) -8.4 (13,466) 33.4 (2,604) -80.7 Increase/(decrease) in debt 375 922 17,571 (3,551) 158 0 - 0 - 19,188 - Share issues / (repurchases) 0 0 0 0 0 0 - 0 - 0 - Dividends paid (675) (1,300) (1,365) (1,885) (2,500) (2,500) 0.0 (2,500) 0.0 (2,688) 7.5 Other cash from financing 0 0 0 0 0 0 - 0 - 0 - Cash from financing activities (300) (378) 16,206 (5,436) (2,342) (2,500) 6.7 (2,500) 0.0 16,500 - Cash flow chge in cash & equivalents (105) (387) 529 (422) 2,845 1,417 - (3,339) - 28,735 - FX / non cash items 769 179 2,878 (2,980) 11,687 556 -95.2 54 -90.3 (30,372) - Bal sheet chge in cash & equivalents 664 (208) 3,407 (3,402) 14,532 1,974 - (3,285) - (1,637) - Core EBITDA 3,360 6,061 9,582 16,442 20,061 13,836 -31.0 14,346 3.7 17,984 25.4 Maintenance capital expenditure (380) (757) (1,259) (2,202) (2,299) (1,800) -21.7 (1,680) -6.7 (2,009) 19.6 Maintenance net working capital (42) (707) 325 (223) (1,049) 1,686 - (265) - (819) 208.8 Operating free cash flow, pre-tax

2,938 4,597 8,648 14,017 16,713 13,722 -17.9 12,401 -9.6 15,156 22.2


UBS 46


Mining



Company profile Vale is a diversified mining company based in Brazil. It is the world'slargest iron ore producer; with capacity of approximately 300 milliontonnes per year in 2007 and a market share of about 32% of theseaborne trade; and the world's No. 2 nickel producer. It also hasexposure to copper, bauxite, alumina, aluminum, manganese, potash,kaolin, steel, and ferro-alloys, and cargo transportation. CVRDgenerates about 90% of its sales in U.S. dollars (about 50% of itscosts are in USD).


12/07 12/08 12/09E 12/10E 12/11E0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x


Profitability

12/07 12/08 12/09(E) 12/10(E) 12/11(E)37.00%

38.29%

39.57%

40.86%

42.14%

43.43%

44.71%

46.00%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%



12/07 12/08 12/09(E) 12/10(E) 12/11(E)0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

0.2x

0.3x

0.4x

0.5x

0.7x

0.8x

0.9x

1.0x


Growth (UBS EPS)

12/07 12/08 12/09(E) 12/10(E) 12/11(E)20000

25000

30000

35000

40000

-40%

-20%

0%

20%

40%

60%

80%



Cia. Vale do Rio Doce (PN)


Enterprise value (US$m) 12/07 12/08 12/09E 12/10E 12/11E Average market cap 101,597 116,137 59,447 59,447 59,447 + minority interests 2,555 2,766 2,928 3,096 3,317 + average net debt (cash) 17,984 3,610 1,637 3,279 5,740 + pension obligations and other 0 0 0 0 0 - non-core asset value (2,500) (2,500) (2,500) (7,212) (7,812) Core enterprise value 119,636 120,012 61,512 58,611 60,693 Growth (%) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E Revenue 56.7 64.1 17.1 -31.4 8.0 19.6 EBITDA (UBS) 71.9 71.6 22.0 -31.0 3.7 25.4 EBIT (UBS) 71.6 66.1 19.9 -36.7 0.0 33.1 EPS (UBS) 70.3 75.2 6.2 -34.9 0.6 30.3 Cash EPS 70.9 80.5 10.4 -28.4 4.8 22.1 Net DPS -11.9 38.1 32.6 0.0 0.0 7.5 BVPS 59.4 69.1 43.4 12.4 11.1 13.9



Coverage ratios (x) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E EBIT / net interest - - 10.2 19.6 NM NM Dividend cover (UBS EPS) 3.6 6.8 5.5 3.6 3.6 4.3 Div. payout ratio (%, UBS EPS) 65.1 14.6 18.3 28.1 27.9 23.0 Net debt / EBITDA 1.2 1.1 0.2 0.1 0.3 0.4


Investment ratios (x) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E OpFCF / EBIT 1.0 1.0 1.0 1.3 1.1 1.1 Capex / revenue (%) 29.4 28.5 29.2 NM NM 7.8 Capex / depreciation 5.4 4.2 3.7 3.3 3.8 0.7




UBS 47

Magnesita Refratarios S.A.

Income statement (R$m) - - - 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues - - - 1,117 1,199 1,423 18.8 2,305 61.9 2,426 5.3 Operating expenses (ex depn) - - - (869) (981) (1,015) 3.5 (1,706) 68.2 (1,793) 5.1 EBITDA (UBS) - - - 247 218 409 87.6 598 46.4 633 5.8 Depreciation - - - (50) (52) (64) 23.4 (81) 27.1 (83) 2.3 Operating income (EBIT, UBS) - - - 197 166 345 107.6 517 50.0 550 6.4 Other income & associates - - - (9) 0 (250) - (264) 5.8 (264) 0.0 Net interest - - - 19 7 (151) - (241) 59.6 (230) -4.4 Abnormal items (pre-tax) - - - 0 0 0 - 0 - 0 - Profit before tax - - - 207 173 (55) - 13 - 56 340.9 Tax - - - (41) (48) (4) -91.6 (4) 2.4 (18) 340.9 Profit after tax - - - 166 125 (59) - 9 - 38 340.9 Abnormal items (post-tax) - - - 0 (15) 47 - 0 - 0 - Minorities / pref dividends - - - (8) (2) 0 -94.9 0 0.0 0 0.0 Net income (local GAAP) - - - 159 108 (12) - 9 - 38 344.9 Net Income (UBS) - - - 159 123 190 54.3 273 43.4 302 10.9 Tax rate (%) - - - 20 28 0 - 32 - 32 0.0 Pre-abnormal tax rate (%) - - - 20 28 2 -92.5 1 -28.2 6 280.9 Per share (R$) - - - 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) - - - 0.88 0.60 (0.06) - 0.04 - 0.18 344.9 EPS (UBS) - - - 0.87 0.68 0.89 30.5 1.27 43.4 1.41 10.9 Net DPS - - - - 0.00 0.01 - 0.04 344.9 0.09 100.0 Cash EPS - - - 1.15 0.96 1.18 22.8 1.65 39.3 1.79 8.9 BVPS - - - 4.25 4.48 6.54 46.0 6.57 0.5 6.71 2.0 Balance sheet (R$m) - - - 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents - - - 203 345 527 52.9 660 25.1 844 27.9 Other current assets - - - 584 564 843 49.4 1,117 32.5 1,139 1.9 Total current assets - - - 787 909 1,370 50.7 1,777 29.7 1,983 11.6 Net tangible fixed assets - - - 413 395 609 54.0 623 2.3 730 17.2 Net intangible fixed assets - - - 5 8 1,053 12995.4 789 -25.1 525 -33.5 Investments / other assets - - - 36 1,008 1,017 0.9 1,017 0.0 1,017 0.0 Total assets - - - 1,241 2,320 4,049 74.5 4,206 3.9 4,254 1.2 Trade payables & other ST liabilities - - - 200 190 236 24.1 386 63.8 406 5.2 Short term debt - - - 111 720 228 -68.4 228 0.0 228 0.0 Total current liabilities - - - 311 910 463 -49.1 614 32.4 634 3.3 Long term debt - - - 62 38 2,048 5308.2 2,048 0.0 2,048 0.0 Other long term liabilities - - - 97 105 133 26.8 133 0.0 133 0.0 Total liabilities - - - 470 1,052 2,644 151.2 2,794 5.7 2,814 0.7 Equity & minority interests - - - 771 1,268 1,405 10.8 1,411 0.5 1,440 2.0 Total liabilities & equity - - - 1,241 2,320 4,049 74.5 4,206 3.9 4,254 1.2 Cash flow (R$m) - - - 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income - - - 159 108 (12) - 9 - 38 344.9 Depreciation - - - 50 52 313 506.8 345 10.1 347 0.5 Net change in working capital - - - 85 22 (202) - (124) -38.5 (2) -98.6 Other (operating) - - - 0 (15) (1,103) 7275.9 0 - 0 - Net cash from operations - - - 294 167 (1,003) - 230 - 383 67.0 Capital expenditure - - - (57) (64) (85) 34.0 (95) 11.3 (190) 100.0 Net (acquisitions) / disposals - - - 0 0 0 - 0 - 0 - Other changes in investments - - - 0 0 0 - 0 - 0 - Cash from investing activities - - - (57) (64) (85) 34.0 (95) 11.3 (190) 100.0 Increase/(decrease) in debt - - - 0 0 0 - 0 - 0 - Share issues / (repurchases) - - - 0 0 0 - 0 - 0 - Dividends paid - - - (32) 0 (2) - (10) 344.9 (19) 100.0 Other cash from financing - - - 0 0 0 - 0 - 0 - Cash from financing activities - - - (32) 0 (2) - (10) 344.9 (19) 100.0 Cash flow chge in cash & equivalents - - - 206 103 (1,091) - 125 - 174 - FX / non cash items - - - - 39 1,273 -55.2 8 - 10 28.6 Bal sheet chge in cash & equivalents - - - - 142 182 - 133 - 184 - Core EBITDA - - - 247 218 409 87.6 598 46.4 633 5.8 Maintenance capital expenditure - - - (50) (52) (64) 23.4 (81) 27.1 (83) 2.3 Maintenance net working capital - - - 0 179 198 10.8 176 -10.8 24 -86.3 Operating free cash flow, pre-tax

- - - 197 345 543 57.5 694 27.8 575 -17.2


UBS 48


Mining



Company profile Magnesita is the leading producer of refractory products in SouthAmerica. It is also the only fully vertically integrated magnesite anddolomite refractory producer in the world. The company activitiesincludes mining, production, and marketing of a large array ofrefractory materials. Magnesita S.A. have and installed capacity ofapprox. 590 Ktpy through 10 industrials facilities in Brazil and 1 inArgentina.


12/06 12/07 12/08 12/09E 12/10E0.00x

1.00x

2.00x

3.00x

4.00x

5.00x

0.00x

1.00x

2.00x

3.00x

4.00x

5.00x

6.00x

7.00x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)5.0%

10.0%

15.0%

20.0%

25.0%

21.00%

22.00%

23.00%

24.00%

25.00%

26.00%

27.00%

28.00%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)14.00%

15.14%

16.29%

17.43%

18.57%

19.71%

20.86%

22.00%

0.9x

0.9x

0.9x

0.9x

0.9x

0.9x

0.9x

0.9x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)500

1000

1500

2000

2500

-30.0%

-18.6%

-7.1%

4.3%

15.7%

27.1%

38.6%



Magnesita Refratarios S.A.

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - - - NM NM 33.0 P/E (UBS) - - - 6.6 4.6 4.2 P/CEPS - - - 5.0 3.6 3.3 Net dividend yield (%) - - - 0.2 0.8 1.5 P/BV - - - 0.9 0.9 0.9 EV/revenue (core) - - - 1.5 1.2 1.1 EV/EBITDA (core) - - - 5.4 4.7 4.2 EV/EBIT (core) - - - 6.4 5.4 4.8 EV/OpFCF (core) - - - 4.1 4.0 4.6 EV/op. invested capital - - - 1.5 1.3 1.3

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap - - 1,124 1,124 1,124 + minority interests 0 454 0 0 0 + average net debt (cash) (76) 192 1,081 1,682 1,524 + pension obligations and other 0 0 0 0 0 - non-core asset value (4) (4) (4) 0 0 Core enterprise value - - 2,201 2,807 2,649 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - - 7.3 18.8 61.9 5.3 EBITDA (UBS) - - -11.9 87.6 46.4 5.8 EBIT (UBS) - - -15.8 107.6 50.0 6.4 EPS (UBS) - - -22.4 30.5 43.4 10.9 Cash EPS - - -16.2 22.8 39.3 8.9 Net DPS - - - - NM 100.0 BVPS - - 5.5 46.0 0.5 2.0


Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) - - 22.9 23.7 24.2 27.6 ROIC post tax - - 16.6 23.2 23.9 26.0 Net ROE - - 15.5 17.1 19.4 21.2

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - - 2.3 2.2 2.4 Dividend cover (UBS EPS) - - - NM 28.5 15.8 Div. payout ratio (%, UBS EPS) - - - 1.1 3.5 6.3 Net debt / EBITDA - NM 1.9 4.3 2.7 2.3

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - - 1.7 1.0 1.1 1.2 Revenue / fixed assets - - 2.9 1.4 1.5 1.8 Revenue / net working capital - - 3.2 2.9 3.4 3.3


Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - (3.8) 32.6 NM NM 99.4 Net debt / (net debt + equity) - (4.0) 33.7 55.4 53.4 49.9 Net debt (core) / EV - - - 49.1 59.9 57.5



UBS 49

MMX Mineracao e Metalicos

Income statement (US$m) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues - - - - 83 432 423.7 505 16.8 619 22.5 Operating expenses (ex depn) - - - - (63) (692) 998.7 (403) -41.8 (492) 22.3 EBITDA (UBS) - - - - 20 (30) - 102 - 126 23.4 Depreciation - - - - (1) (46) 4480.2 (11) -76.3 (24) 118.7 Operating income (EBIT, UBS) - - - - 19 (76) - 92 - 103 12.0 Other income & associates - - - - (1) (31) 2960.4 (44) 44.3 (44) 0.0 Net interest - - - - (21) (181) 745.9 (88) -51.4 (128) 45.4 Abnormal items (pre-tax) - - - - 0 0 - 0 - 0 - Profit before tax - - - - (4) (287) 7504.7 (40) -85.9 (69) 71.5 Tax - - - - (2) (7) 180.5 7 - 17 136.0 Profit after tax - - - - (6) (294) 4630.4 (33) -88.8 (52) 57.2 Abnormal items (post-tax) - - - - 0 0 - 0 - 0 - Minorities / pref dividends - - - - (3) 14 - 2 -86.2 (1) - Net income (local GAAP) - - - - (9) (281) 2882.8 (31) -88.9 (53) 70.1 Net Income (UBS) - - - - (8) (250) 2873.6 13 - (9) - Tax rate (%) - 0 0 0 0 0 - 0 - 0 - Pre-abnormal tax rate (%) - 0 0 0 0 0 - 0 - 0 - Per share (US$) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) - - - - (0.03) (0.92) 2882.8 (0.10) -88.9 (0.17) 70.1 EPS (UBS) - - - - (0.03) (0.82) 2873.6 0.04 - (0.03) - Net DPS - - 0.00 0.00 0.00 0.00 - 0.05 - 0.01 -88.9 Cash EPS - - - - (0.02) (0.67) 2656.8 0.08 - 0.05 -37.5 BVPS - - 0.00 - 0.38 0.69 80.2 0.63 -8.2 0.47 -26.7 Balance sheet (US$m) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents - - 0 - 1 118 11820.5 35 -70.6 27 -21.4 Other current assets - - 0 - 2 157 6738.6 154 -1.8 157 2.0 Total current assets - - 0 - 3 274 8266.2 189 -31.3 184 -2.2 Net tangible fixed assets - - 0 - 199 476 139.9 788 65.4 1,336 69.6 Net intangible fixed assets - - 0 - 224 281 25.4 237 -15.7 193 -18.7 Investments / other assets - 0 0 0 0 83 - 83 0.0 83 0.0 Total assets - - 0 - 426 1,114 161.7 1,296 16.3 1,796 38.6 Trade payables & other ST liabilities - - 0 - 1 34 3900.0 31 -7.3 32 3.8 Short term debt - - 0 - 61 492 705.6 322 -34.4 487 51.1 Total current liabilities - - 0 - 62 525 749.0 354 -32.7 519 46.9 Long term debt - - 0 - 244 380 55.6 752 98.0 1,137 51.1 Other long term liabilities - - 0 - 0 0 - 0 - 0 - Total liabilities - - 0 - 306 905 195.8 1,106 22.2 1,656 49.8 Equity & minority interests - - 0 - 120 209 74.5 190 -9.1 140 -26.5 Total liabilities & equity - - 0 - 426 1,114 161.7 1,296 16.3 1,796 38.6 Cash flow (US$m) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income - - - - (9) (281) 2882.8 (31) -88.9 (53) 70.1 Depreciation - - - - 2 76 3720.3 55 -28.0 68 23.4 Net change in working capital - - 0 - (1) (8) 429.6 0 - (2) - Other (operating) - - 0 - 0 0 - 0 - 0 - Net cash from operations - - - - (9) (212) 2291.4 24 - 13 -46.7 Capital expenditure - - 0 - (199) (73) -63.1 (322) 340.4 (572) 77.4 Net (acquisitions) / disposals - - 0 - 0 0 - 0 - 0 - Other changes in investments - - 0 - 0 0 - 0 - 0 - Cash from investing activities - - 0 - (199) (73) -63.1 (322) 340.4 (572) 77.4 Increase/(decrease) in debt - - 0 - 0 0 - 1,827 - 2,760 - Share issues / (repurchases) - - 0 - 0 0 - 0 - 0 - Dividends paid - - 0 - 0 0 - (14) - (2) -88.9 Other cash from financing - - 0 - 0 0 - 0 - 0 - Cash from financing activities - - 0 - 0 0 - 1,813 - 2,759 52.2 Cash flow chge in cash & equivalents - - - - (207) (285) - 1,515 - 2,200 - FX / non cash items - - - - - 402 - (1,598) - (2,207) -84.0 Bal sheet chge in cash & equivalents - - - - - 117 - (83) - (7) - Core EBITDA - - - - 20 (30) - 102 - 126 23.4 Maintenance capital expenditure - - 0 - (1) (13) 2347.0 (8) -36.0 (12) 42.5 Maintenance net working capital - - 0 - 0 0 - 0 - 0 - Operating free cash flow, pre-tax

- - - - 19 (43) - 94 - 114 21.6


UBS 50


Mining



Company profile MMX is a mining company developing Brazil-based iron ore and logistiics projects. Its core business is the production of iron ore, pigiron, and semi-finished steel. The projects are gradually beingimplemented, heading to an expected full operation by 2011. Due tothe high quality of its iron ore reserves, MMX should produce high-quality iron ore (high grade, low impurities) at low production costs. MMX is part of Brazil's Novo Mercado, and its shares offer 100% tag-along rights.


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

-40.0x

-30.0x

-20.0x

-10.0x

0.0x

10.0x

20.0x

30.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)-200%

-150%

-100%

-50%

0%

50%

0.0x

5.0x

10.0x

15.0x

20.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)0

100

200

300

400

500

600

700

Revenue (LHS)


MMX Mineracao e Metalicos

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - - NM NM NM NM P/E (UBS) - - NM NM 25.9 NM P/CEPS - - NM NM 14.1 21.5 Net dividend yield (%) - 0.0 0.0 0.0 4.2 0.5 P/BV - - 15.1 1.7 1.7 2.3 EV/revenue (core) - - NM 2.5 2.8 3.2 EV/EBITDA (core) - - >100 -36.1 13.6 15.4 EV/EBIT (core) - - NM NM 15.2 19.0 EV/OpFCF (core) - - NM NM 14.8 17.1 EV/op. invested capital - - - 1.6 1.3 1.3

Enterprise value (US$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 625 1,803 353 353 353 + minority interests - 3 (14) (2) 1 + average net debt (cash) - 304 754 1,040 1,597 + pension obligations and other - 0 0 0 0 - non-core asset value - 0 0 0 0 Core enterprise value - 2,110 1,093 1,391 1,951 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - - - NM 16.8 22.5 EBITDA (UBS) - - - - - 23.4 EBIT (UBS) - - - - - 12.0 EPS (UBS) - - - NM - - Cash EPS - - - NM - -37.5 Net DPS - - - - - -88.9 BVPS - - - 80.2 -8.2 -26.7

Margins (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBITDA / revenue - - 23.7 NM 20.3 20.4 EBIT / revenue - - 22.5 -17.6 18.1 16.6 Net profit (UBS) / revenue - - NM NM 2.6 NM

Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) - - - NM 8.4 6.9 ROIC post tax - - - NM 8.4 6.9 Net ROE - - (7.2) (153.0) 6.4 (5.3)

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - 0.9 - 1.0 0.8 Dividend cover (UBS EPS) - - - - 0.9 - Div. payout ratio (%, UBS EPS) - - - - 107.9 - Net debt / EBITDA - - NM NM NM NM

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - - - 0.6 0.5 0.4 Revenue / fixed assets - - - 0.7 0.6 0.5 Revenue / net working capital - - - 6.9 4.1 5.0

Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT - - 1.0 0.6 1.0 1.1 Capex / revenue (%) - - NM 16.9 NM NM Capex / depreciation - - NM 1.6 NM NM

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - - NM NM NM NM Net debt / (net debt + equity) - - 72.3 78.2 84.3 91.9 Net debt (core) / EV - - 14.4 69.0 74.8 81.9



UBS 51

Aracruz Celulose

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 3,066 3,411 3,291 3,655 3,647 3,344 -8.3 3,414 2.1 3,617 5.9 Operating expenses (ex depn) (1,531) (1,735) (1,701) (1,968) (1,968) (2,113) 7.4 (1,998) -5.5 (2,144) 7.3 EBITDA (UBS) 1,535 1,676 1,590 1,688 1,679 1,230 -26.8 1,416 15.1 1,473 4.0 Depreciation (314) (465) (548) (638) (669) (679) 1.5 (690) 1.7 (710) 2.9 Operating income (EBIT, UBS) 1,221 1,211 1,042 1,050 1,010 551 -45.4 726 31.7 763 5.0 Other income & associates (29) 6 (30) 0 (9) 23 - 0 - 0 - Net interest 182 62 297 184 329 (5,666) - (811) -85.7 (728) -10.2 Abnormal items (pre-tax) 0 0 0 0 0 0 - 0 - 0 - Profit before tax 1,374 1,280 1,309 1,233 1,330 (5,092) - (85) -98.3 35 - Tax (504) (211) (141) (106) (286) 1,367 - 21 -98.4 (11) - Profit after tax 870 1,069 1,168 1,128 1,044 (3,724) - (64) -98.3 24 - Abnormal items (post-tax) 0 0 0 0 0 0 - 0 - 0 - Minorities / pref dividends 0 0 0 (1) (2) 0 - 0 -82.4 0 - Net income (local GAAP) 870 1,069 1,168 1,126 1,042 (3,724) - (64) -98.3 24 - Net Income (UBS) 870 1,069 1,168 1,126 1,042 (3,724) - (64) -98.3 24 - Tax rate (%) 37 17 11 9 21 0 - 0 - 31 - Pre-abnormal tax rate (%) 37 17 11 9 21 0 - 0 - 31 - Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 0.84 1.04 1.13 1.09 1.01 (3.61) - (0.06) -98.3 0.02 - EPS (UBS) 0.84 1.04 1.13 1.09 1.01 (3.61) - (0.06) -98.3 0.02 - Net DPS 0.24 0.35 0.33 0.53 0.55 0.42 -23.4 0.05 -88.5 0.05 0.0 Cash EPS 1.15 1.49 1.66 1.71 1.66 (2.95) - 0.61 - 0.71 17.1 BVPS 2.65 3.33 4.03 4.67 5.20 1.40 -73.0 1.30 -7.8 1.27 -2.0 Balance sheet (R$m) 12/03 12/09 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 1,075 1,269 1,301 1,240 874 1,473 68.4 1,629 10.6 1,694 3.9 Other current assets 1,098 1,025 1,236 1,473 1,501 1,580 5.3 1,418 -10.3 1,542 8.7 Total current assets 2,172 2,294 2,537 2,713 2,376 3,053 28.5 3,047 -0.2 3,235 6.2 Net tangible fixed assets 4,724 5,723 4,410 6,459 6,975 7,515 7.7 7,471 -0.6 7,549 1.0 Net intangible fixed assets 95 587 400 0 0 0 - 0 - 0 - Investments / other assets 1,010 270 1,108 457 630 853 35.3 853 0.0 853 0.0 Total assets 8,002 8,874 8,456 9,628 9,981 11,421 14.4 11,371 -0.4 11,637 2.3 Trade payables & other ST liabilities 729 556 602 620 640 416 -35.0 381 -8.5 408 7.3 Short term debt 1,164 434 684 333 285 750 162.6 770 2.7 821 6.6 Total current liabilities 1,893 990 1,286 952 925 1,165 25.9 1,151 -1.3 1,229 6.8 Long term debt 2,918 3,895 2,365 3,225 2,805 8,266 194.7 8,344 0.9 8,558 2.6 Other long term liabilities 452 549 649 632 881 535 -39.3 535 0.0 535 0.0 Total liabilities 5,263 5,433 4,299 4,809 4,611 9,966 116.1 10,029 0.6 10,322 2.9 Equity & minority interests 2,739 3,441 4,157 4,820 5,369 1,455 -72.9 1,342 -7.7 1,315 -2.0 Total liabilities & equity 8,002 8,874 8,456 9,628 9,981 11,421 14.4 11,371 -0.4 11,637 2.3 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 870 1,069 1,168 1,126 1,042 (3,724) - (64) -98.3 24 - Depreciation 314 465 548 638 669 679 1.5 690 1.7 710 2.9 Net change in working capital (165) 55 (166) (781) (1,262) (1,190) -5.7 (646) -45.7 (788) 21.9 Other (operating) 29 (6) (586) (38) (44) (25) -43.2 127 - (96) - Net cash from operations 1,049 1,583 964 945 406 (4,259) - 108 - (150) - Capital expenditure (1,237) (1,144) (627) (106) (286) 581 - 21 -96.3 (11) - Net (acquisitions) / disposals 0 0 0 0 0 0 - 0 - 0 - Other changes in investments (844) (3) 32 0 0 0 - 0 - 0 - Cash from investing activities (2,082) (1,147) (595) (106) (286) 581 - 21 -96.3 (11) - Increase/(decrease) in debt (1,111) (306) (1,280) (423) (467) 5,926 - 98 - 265 - Share issues / (repurchases) 0 0 0 0 0 0 - 0 - 0 - Dividends paid (251) (365) (344) (544) (566) (433) -23.4 (50) -88.5 (50) 0.0 Other cash from financing 0 0 0 0 0 0 - 0 - 0 - Cash from financing activities (1,362) (671) (1,624) (967) (1,033) 5,492 - 48 -99.1 215 346.9 Cash flow chge in cash & equivalents (2,395) (235) (1,255) (128) (912) 1,814 - 177 - 54 - FX / non cash items 2,489 430 1,287 67 547 (1,215) - (20) -98.3 10 - Bal sheet chge in cash & equivalents 95 194 32 (61) (365) 598 - 157 - 64 - Core EBITDA 1,535 1,676 1,590 1,688 1,679 1,230 -26.8 1,416 15.1 1,473 4.0 Maintenance capital expenditure (411) (1,144) (548) (542) (561) (577) 2.9 (598) 3.6 (611) 2.1 Maintenance net working capital (165) 55 0 0 0 0 - 0 - 0 - Operating free cash flow, pre-tax

959 588 1,042 1,146 1,118 653 -41.6 818 25.3 862 5.3


UBS 52


Paper Products


12m price target -

Company profile Aracruz is the world's leading supplier of eucalyptus pulp (BEKP) to the global paper industry, with 7.5% of global capacity of hardwoodpulp (BHKP) and 31% of bleached eucalyptus kraft pulp (BEKP). Itscurrent nominal capacity is 3 million tpy, 30% of Brazil's total marketpulp output. It has 247,000 ha of eucalyptus plantations, including128,000 ha of native forest. It is controlled by Safra, VCP, and agroup of Norwegian investors led by Erling Lorentzen.


12/06 12/07 12/08 12/09E 12/10E0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

-40x

-20x

0x

20x

40x

60x

80x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)10.0%

15.0%

20.0%

25.0%

30.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)-150%

-100%

-50%

0%

50%

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)3200

3300

3400

3500

3600

3700

-100%

-80%

-60%

-40%

-20%

0%


Aracruz Celulose

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) NM 10.2 12.1 NM NM 59.9 P/E (UBS) NM 10.2 12.1 NM NM 59.9 P/CEPS 8.9 6.5 7.3 NM 2.3 1.9 Net dividend yield (%) 3.8 4.7 4.5 30.4 3.5 3.5 P/BV 2.6 2.4 2.3 1.0 1.1 1.1 EV/revenue (core) 3.5 3.7 4.0 1.9 2.6 2.5 EV/EBITDA (core) 7.4 8.1 8.8 5.1 6.3 6.1 EV/EBIT (core) 10.7 13.0 14.6 11.4 12.3 11.8 EV/OpFCF (core) 13.4 11.9 13.2 9.6 10.9 10.5 EV/op. invested capital 2.0 2.2 2.0 0.8 1.0 1.0

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 11,528 12,580 1,424 1,424 1,424 + minority interests 1 3 4 5 5 + average net debt (cash) 2,115 2,267 4,879 7,514 7,585 + pension obligations and other 0 0 0 0 0 - non-core asset value (38) (90) (26) (6) (6) Core enterprise value 13,606 14,759 6,282 8,937 9,008 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 15.8 11.1 -0.2 -8.3 2.1 5.9 EBITDA (UBS) 17.8 6.1 -0.5 -26.8 15.1 4.0 EBIT (UBS) 14.6 0.8 -3.7 -45.4 31.7 5.0 EPS (UBS) NM -3.5 -7.5 - -98.3 - Cash EPS 58.5 2.8 -3.0 - - 17.1 Net DPS 31.4 58.2 3.9 -23.4 -88.5 0.0 BVPS 21.7 15.9 11.4 -73.0 -7.8 -2.0

Margins (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBITDA / revenue 47.4 46.2 46.0 36.8 41.5 40.7 EBIT / revenue 33.1 28.7 27.7 16.5 21.3 21.1 Net profit (UBS) / revenue 25.3 30.8 28.6 NM NM 0.7

Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) 19.0 17.1 13.8 6.7 8.2 8.6 ROIC post tax - 15.6 10.9 6.7 8.2 5.9 Net ROE 25.3 25.1 20.5 (109.3) (4.6) 1.8

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - - 0.1 0.9 1.0 Dividend cover (UBS EPS) 2.4 2.1 1.8 - - 0.5 Div. payout ratio (%, UBS EPS) NM 48.3 54.2 - - NM Net debt / EBITDA 1.9 1.4 1.3 6.1 5.3 5.2


Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT 0.8 1.1 1.1 1.2 1.1 1.1 Capex / revenue (%) 25.7 2.9 7.8 NM NM 0.3 Capex / depreciation 1.8 0.2 0.4 NM NM 0.0

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity 88.9 48.1 41.3 NM NM NM Net debt / (net debt + equity) 44.6 32.5 29.2 83.9 84.8 85.4 Net debt (core) / EV 24.66 15.5 15.4 77.7 84.1 84.2



UBS 53

Klabin

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 2,970 2,729 2,706 2,713 2,796 3,058 9.3 3,298 7.8 3,542 7.4 Operating expenses (ex depn) (2,020) (1,739) (1,952) (2,004) (2,055) (2,329) 13.3 (2,484) 6.6 (2,622) 5.6 EBITDA (UBS) 951 990 755 709 741 729 -1.6 814 11.6 920 13.0 Depreciation (297) (232) (245) (243) (244) (408) 67.3 (419) 2.7 (408) -2.7 Operating income (EBIT, UBS) 654 759 509 466 497 321 -35.5 395 23.0 512 29.8 Other income & associates 890 (54) (90) 2 14 1 -94.8 0 - 0 - Net interest (415) (110) (66) 132 345 (875) - (276) -68.5 (292) 5.8 Abnormal items (pre-tax) 0 0 0 0 0 0 - 0 - 0 - Profit before tax 1,128 594 353 601 856 (554) - 119 - 220 85.6 Tax (125) (110) (18) (113) (219) 195 - (28) - (53) 85.6 Profit after tax 1,003 485 335 488 637 (359) - 90 - 167 85.6 Abnormal items (post-tax) 0 0 0 0 0 0 - 0 - 0 - Minorities / pref dividends (2) (29) (26) (14) (15) (11) -29.3 (5) -52.8 (5) 0.0 Net income (local GAAP) 1,001 456 309 474 622 (369) - 85 - 162 90.6 Net Income (UBS) 1,001 456 309 474 622 (369) - 85 - 162 90.6 Tax rate (%) 11 18 5 19 26 - - 24 - 24 0.0 Pre-abnormal tax rate (%) 11 18 5 19 26 - - 24 - 24 0.0 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 1.09 0.50 0.34 0.52 0.68 (0.40) - 0.09 - 0.18 90.6 EPS (UBS) 1.09 0.50 0.34 0.52 0.68 (0.40) - 0.09 - 0.18 90.6 Net DPS 0.00 0.44 0.20 0.13 0.31 0.27 -12.1 0.13 -51.8 0.13 0.0 Cash EPS 1.41 0.75 0.60 0.78 0.94 0.04 -95.5 0.55 1191.2 0.62 13.0 BVPS 1.98 2.30 2.45 2.68 2.99 2.46 -17.7 2.42 -1.5 2.47 1.9 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 634 1,125 1,468 2,290 2,099 1,772 -15.5 1,792 1.1 1,864 4.0 Other current assets 847 908 759 852 963 1,237 28.4 1,332 7.7 1,424 6.9 Total current assets 1,481 2,033 2,227 3,142 3,062 3,009 -1.7 3,124 3.8 3,289 5.3 Net tangible fixed assets 1,768 1,900 2,050 2,677 4,424 4,413 -0.2 4,294 -2.7 4,198 -2.2 Net intangible fixed assets 102 60 25 0 0 0 - 0 - 0 - Investments / other assets 474 376 394 304 524 491 -6.4 491 0.0 491 0.0 Total assets 3,825 4,368 4,696 6,123 8,010 7,913 -1.2 7,909 -0.1 7,977 0.9 Trade payables & other ST liabilities 488 433 398 466 887 466 -47.5 492 5.6 513 4.3 Short term debt 422 405 612 606 243 299 22.8 299 0.0 299 0.0 Total current liabilities 910 838 1,011 1,073 1,131 765 -32.4 791 3.4 812 2.7 Long term debt 813 1,218 1,175 2,387 3,862 4,602 19.2 4,602 0.0 4,602 0.0 Other long term liabilities 285 145 168 91 147 150 1.9 150 0.0 150 0.0 Total liabilities 2,007 2,201 2,354 3,550 5,140 5,517 7.3 5,543 0.5 5,564 0.4 Equity & minority interests 1,818 2,167 2,342 2,573 2,870 2,396 -16.5 2,366 -1.2 2,413 2.0 Total liabilities & equity 3,825 4,368 4,696 6,123 8,010 7,913 -1.2 7,909 -0.1 7,977 0.9 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 1,001 456 309 474 622 (369) - 85 - 162 90.6 Depreciation 297 232 245 243 244 408 67.3 419 2.7 408 -2.7 Net change in working capital 24 (116) 183 (64) 420 (811) - (70) -91.4 (71) 2.0 Other (operating) 0 0 0 0 0 0 - 0 - 0 - Net cash from operations 1,322 571 737 653 1,286 (772) - 435 - 499 14.8 Capital expenditure (166) (259) (375) (836) (1,856) (612) -67.0 (300) -51.0 (312) 4.0 Net (acquisitions) / disposals 0 0 0 0 0 0 - 0 - 0 - Other changes in investments 0 0 0 0 0 0 - 0 - 0 - Cash from investing activities (166) (259) (375) (836) (1,856) (612) -67.0 (300) -51.0 (312) 4.0 Increase/(decrease) in debt 12 1,149 598 1,205 1,113 795 - 0 - 0 - Share issues / (repurchases) 0 0 0 0 0 0 - 0 - 0 - Dividends paid 0 (400) (180) (121) (283) (249) -12.1 (120) -51.8 (120) 0.0 Other cash from financing (654) (571) (437) 0 0 0 - 0 - 0 - Cash from financing activities (642) 178 (19) 1,084 830 546 -34.2 (120) - (120) 0.0 Cash flow chge in cash & equivalents 514 491 344 901 259 (838) - 15 - 67 - FX / non cash items 0 0 0 (79) (451) 512 - 5 -99.0 5 0.0 Bal sheet chge in cash & equivalents 514 491 344 822 (192) (326) - 20 - 72 - Core EBITDA 951 990 755 709 741 729 -1.6 814 11.6 920 13.0 Maintenance capital expenditure (110) (256) (100) (1) (1) (1) 0.0 (1) 0.0 (1) 0.0 Maintenance net working capital 24 (116) 183 0 0 0 - 0 - 0 - Operating free cash flow, pre-tax

865 618 838 708 740 728 -1.6 813 11.7 919 13.1


UBS 54


Paper Products

12-month rating Sell *


Company profile Klabin is Brazil's leading packaging paper manufacturer, withproduction capacity of 1.6mtpa. The company focuses on packagingpaper, coated carton board products, corrugated boxes, industrialbags, and wood. The company is undergoing expansion in which it expects to grow board production by 350ktpa and kraftliner by 50ktpa,bringing total capacity to 2.0mtpa by early 2008.


12/06 12/07 12/08 12/09E 12/10E0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

-10.0x

0.0x

10.0x

20.0x

30.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

0.0x

0.5x

1.0x

1.5x

2.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)2400

2600

2800

3000

3200

3400

3600

20.0%

31.4%

42.9%

54.3%

65.7%

77.1%

88.6%



Klabin

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) 5.7 9.3 9.2 NM 28.9 15.2 P/E (UBS) 5.7 9.3 9.2 NM 28.9 15.2 P/CEPS 5.6 6.1 6.6 63.0 4.9 4.3 Net dividend yield (%) 4.1 2.8 4.9 10.1 4.9 4.9 P/BV 1.5 1.8 2.1 1.1 1.1 1.1 EV/revenue (core) 1.3 1.8 2.6 1.7 1.7 1.5 EV/EBITDA (core) 4.3 7.1 9.7 7.1 7.0 5.6 EV/EBIT (core) 6.2 10.8 14.5 16.1 14.5 10.1 EV/OpFCF (core) 5.0 7.1 9.7 7.1 7.0 5.6 EV/op. invested capital 1.4 1.9 2.0 1.1 1.1 1.0

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 4,399 5,724 2,459 2,459 2,459 + minority interests 105 120 135 143 148 + average net debt (cash) 511 1,355 2,568 3,118 3,072 + pension obligations and other 0 0 0 0 0 - non-core asset value 0 0 0 0 (491) Core enterprise value 5,014 7,199 5,162 5,721 5,189 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue -0.9 0.2 3.1 9.3 7.8 7.4 EBITDA (UBS) -8.0 -6.0 4.5 -1.6 11.6 13.0 EBIT (UBS) -8.0 -8.5 6.6 -35.5 23.0 29.8 EPS (UBS) - 53.2 31.3 - - 90.6 Cash EPS 52.8 29.3 20.8 -95.5 NM 13.0 Net DPS 41.7 -32.7 133.7 -12.1 -51.8 0.0 BVPS 22.8 9.6 11.4 -17.7 -1.5 1.9

Margins (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBITDA / revenue 31.5 26.1 26.5 23.8 24.7 26.0 EBIT / revenue 21.8 17.2 17.8 10.5 12.0 14.5 Net profit (UBS) / revenue 14.4 17.5 22.2 NM 2.6 4.6

Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) 23.2 17.8 13.6 6.8 7.9 10.3 ROIC post tax - 14.5 10.1 - 6.0 7.8 Net ROE 21.8 20.1 23.9 (14.8) 3.8 7.2

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - - 0.4 1.4 1.8 Dividend cover (UBS EPS) - 3.9 2.2 - 0.7 1.4 Div. payout ratio (%, UBS EPS) - 25.6 45.5 - 141.1 74.0 Net debt / EBITDA 1.1 1.0 2.7 4.3 3.8 3.3


Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT 1.2 1.5 1.5 2.3 2.1 1.8 Capex / revenue (%) 12.9 NM NM 20.0 9.1 8.8 Capex / depreciation 1.3 3.4 7.6 1.5 0.7 0.8




UBS 55

Suzano Papel e Celulose

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 2,415 2,730 2,787 2,891 3,410 3,946 15.7 3,947 0.0 4,165 5.5 Operating expenses (ex depn) (1,476) (1,680) (1,874) (1,883) (2,263) (2,548) 12.6 (2,603) 2.1 (2,741) 5.3 EBITDA (UBS) 939 1,049 913 1,009 1,146 1,398 21.9 1,345 -3.8 1,424 5.9 Depreciation (192) (200) (251) (318) (368) (446) 21.1 (446) -0.1 (439) -1.6 Operating income (EBIT, UBS) 747 849 662 691 778 952 22.3 899 -5.5 986 9.6 Other income & associates 88 145 129 0 (212) (50) -76.5 (60) 19.7 1 - Net interest 130 (194) (144) (41) 250 (1,359) - (336) -75.2 (299) -11.1 Abnormal items (pre-tax) 0 0 0 0 0 0 - 0 - 0 - Profit before tax 965 801 647 649 816 (457) - 503 - 687 36.6 Tax (223) (198) (147) (151) (277) 106 - (131) - (179) 36.6 Profit after tax 742 603 500 498 539 (351) - 372 - 509 36.6 Abnormal items (post-tax) 0 0 0 0 0 0 - 0 - 0 - Minorities / pref dividends 0 0 0 0 0 0 - 0 - 0 - Net income (local GAAP) 742 603 500 498 539 (351) - 372 - 509 36.6 Net Income (UBS) 742 603 500 498 539 (351) - 372 - 509 36.6 Tax rate (%) 23 25 23 23 34 - - 26 - 26 0.0 Pre-abnormal tax rate (%) 22 24 23 23 34 - - 26 - 26 0.0 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 2.71 2.11 1.75 1.59 1.72 (1.11) - 1.18 - 1.62 36.6 EPS (UBS) 2.71 2.11 1.75 1.59 1.72 (1.11) - 1.18 - 1.62 36.6 Net DPS 0.49 0.63 0.35 0.42 0.53 0.35 -33.0 0.29 -18.9 0.30 3.5 Cash EPS 4.15 2.81 2.63 2.60 2.89 0.30 -89.5 2.60 755.3 3.01 15.8 BVPS 15.44 9.63 10.90 12.76 13.97 12.26 -12.2 13.16 7.3 14.48 10.0 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 1,092 1,086 1,082 1,500 1,326 1,443 8.9 1,831 26.8 2,196 19.9 Other current assets 851 1,121 1,335 1,481 1,788 2,114 18.2 2,114 0.0 2,221 5.0 Total current assets 1,943 2,207 2,417 2,981 3,113 3,557 14.3 3,945 10.9 4,416 12.0 Net tangible fixed assets 2,960 3,460 4,085 5,948 6,858 6,750 -1.6 6,645 -1.6 6,616 -0.4 Net intangible fixed assets 309 298 348 0 0 0 - 0 - 0 - Investments / other assets 2,396 27 489 1,232 1,485 1,369 -7.9 1,369 0.0 1,370 0.0 Total assets 7,607 5,992 7,340 10,161 11,457 11,676 1.9 11,958 2.4 12,402 3.7 Trade payables & other ST liabilities 486 379 456 411 588 636 8.0 636 0.0 664 4.4 Short term debt 1,229 790 982 585 738 881 19.5 881 0.0 881 0.0 Total current liabilities 1,715 1,169 1,438 997 1,326 1,517 14.4 1,517 0.0 1,545 1.9 Long term debt 1,507 1,888 2,547 4,858 4,900 5,456 11.3 5,456 0.0 5,456 0.0 Other long term liabilities 163 189 245 293 839 849 1.2 849 0.0 849 0.0 Total liabilities 3,384 3,246 4,230 6,147 7,065 7,822 10.7 7,822 0.0 7,850 0.4 Equity & minority interests 4,224 2,746 3,109 4,013 4,392 3,854 -12.2 4,137 7.3 4,552 10.0 Total liabilities & equity 7,607 5,992 7,340 10,161 11,457 11,676 1.9 11,958 2.4 12,402 3.7 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 742 603 500 498 539 (351) - 372 - 509 36.6 Depreciation 192 200 251 318 368 446 21.1 446 -0.1 439 -1.6 Net change in working capital 594 (376) (138) 0 (144) (214) 48.4 0 -99.9 (79) 31824.7 Other (operating) (709) 58 (218) 0 113 0 - 0 - 0 - Net cash from operations 819 486 394 816 877 (118) - 818 - 869 6.2 Capital expenditure (651) (618) (524) 0 (1,293) (487) -62.3 (400) -17.9 (410) 2.5 Net (acquisitions) / disposals 0 90 15 0 0 0 - 0 - 0 - Other changes in investments (21) (113) (737) 0 0 0 - 0 - 0 - Cash from investing activities (673) (641) (1,245) 0 (1,293) (487) -62.3 (400) -17.9 (410) 2.5 Increase/(decrease) in debt (959) (58) 852 1,914 195 699 - 0 - 0 - Share issues / (repurchases) 0 (2) 0 0 0 0 - 0 - 0 - Dividends paid (135) (179) (101) (119) (166) (111) -33.0 (90) -18.9 (93) 3.5 Other cash from financing 881 173 76 0 0 0 - 0 - 0 - Cash from financing activities (213) (66) 827 1,795 29 588 1899.7 (90) - (93) 3.5 Cash flow chge in cash & equivalents (66) (221) (25) 2,612 (386) (17) - 328 - 366 - FX / non cash items 660 215 20 (2,193) 212 135 -36.3 60 -55.9 (1) - Bal sheet chge in cash & equivalents 594 (6) (4) 418 (175) 118 - 387 - 365 - Core EBITDA 939 1,049 913 1,009 1,146 1,398 21.9 1,345 -3.8 1,424 5.9 Maintenance capital expenditure (651) (200) (251) (1) (1) (1) 0.0 (1) 0.0 (1) 0.0 Maintenance net working capital (864) (48) (102) 0 0 0 - 0 - 0 - Operating free cash flow, pre-tax

(576) 801 560 1,008 1,145 1,397 22.0 1,344 -3.8 1,423 5.9

Source: Company accounts, UBS estimates. (UBS) valuations are stated before goodwill-related charges and other adjustments for abnormal and economic items at the analysts' judgement.

UBS 56


Paper Products



Company profile Suzano is the third-largest pulp producer and the leading producer offine papers in Brazil (together with Votorantim and InternationalPaper). Its sales capacity is 1.6 million tpy of pulp, fine paper, andcardboards. The group also controls 50% of Ripasa and is expandingpulp capacity by 1Mtpy by late 2007.


12/06 12/07 12/08 12/09E 12/10E0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

-10.0x

-5.0x

0.0x

5.0x

10.0x

15.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)22.00%

22.50%

23.00%

23.50%

24.00%

24.50%

9.50%

10.00%

10.50%

11.00%

11.50%

12.00%

12.50%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

0.2x

0.3x

0.4x

0.5x

0.7x

0.8x

0.9x

1.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)2000

2500

3000

3500

4000

4500

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%



Suzano Papel e Celulose

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) 7.7 9.3 14.5 NM 8.3 6.1 P/E (UBS) 7.7 9.3 14.5 NM 8.3 6.1 P/CEPS 4.3 5.7 8.6 32.4 3.8 3.3 Net dividend yield (%) 4.1 2.8 2.1 3.6 2.9 3.0 P/BV 0.9 1.2 1.8 0.8 0.7 0.7 EV/revenue (core) 1.6 2.4 3.3 1.8 1.8 1.7 EV/EBITDA (core) 4.5 6.9 9.9 5.1 5.4 4.8 EV/EBIT (core) 5.8 10.1 14.6 7.5 8.1 7.0 EV/OpFCF (core) 15.0 6.9 9.9 5.1 5.4 4.8 EV/op. invested capital 0.9 1.1 1.5 0.9 0.9 0.8

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 4,435 7,811 3,097 3,097 3,097 + minority interests 0 0 0 0 0 + average net debt (cash) 3,265 4,128 4,603 4,700 4,324 + pension obligations and other 0 0 0 0 0 - non-core asset value (750) (557) (530) (531) (531) Core enterprise value 6,949 11,382 7,170 7,266 6,890 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 10.2 3.7 17.9 15.7 0.0 5.5 EBITDA (UBS) 6.6 10.5 13.7 21.9 -3.8 5.9 EBIT (UBS) 1.8 4.3 12.7 22.3 -5.5 9.6 EPS (UBS) 36.0 -9.4 8.2 - - 36.6 Cash EPS 24.4 -1.2 11.2 -89.5 NM 15.8 Net DPS 18.9 17.7 26.5 -33.0 -18.9 3.5 BVPS -0.4 17.1 9.4 -12.2 7.3 10.0


Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) 16.3 11.1 10.1 11.6 11.0 12.1 ROIC post tax - 8.5 6.7 - 8.1 9.0 Net ROE 14.3 14.0 12.8 (8.5) 9.3 11.7

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - 16.7 - 0.7 2.7 3.3 Dividend cover (UBS EPS) 4.2 3.8 3.3 - 4.1 5.5 Div. payout ratio (%, UBS EPS) 27.2 26.3 30.7 - 24.2 18.3 Net debt / EBITDA 2.8 3.9 3.8 3.5 3.4 2.9



Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity 76.9 98.2 98.2 NM NM 91.0 Net debt / (net debt + equity) 43.3 49.6 49.5 55.9 52.1 47.6 Net debt (core) / EV 59.49 47.0 36.3 64.2 64.7 62.8



UBS 57

Votorantim Celulose e Papel

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 2,548 2,981 2,772 2,892 2,614 2,462 -5.8 2,882 17.1 3,410 18.3 Operating expenses (ex depn) (1,390) (1,625) (1,679) (1,780) (1,858) (1,763) -5.1 (1,931) 9.5 (2,269) 17.5 EBITDA (UBS) 1,158 1,356 1,093 1,112 756 699 -7.6 951 36.1 1,142 20.1 Depreciation (287) (360) (425) (394) (278) (297) 6.8 (324) 9.1 (338) 4.3 Operating income (EBIT, UBS) 871 996 668 718 478 402 -16.0 627 56.1 804 28.2 Other income & associates 145 14 (15) (42) (80) (633) 691.3 (187) -70.4 (149) -20.4 Net interest (98) (144) (121) (8) 572 (1,286) - (316) -75.4 (287) -9.2 Abnormal items (pre-tax) 0 0 0 0 0 0 - 0 - 0 - Profit before tax 918 866 532 668 970 (1,517) - 124 - 368 197.2 Tax (67) (76) 19 (12) (133) 263 - (27) - (64) 136.3 Profit after tax 851 790 551 656 837 (1,254) - 97 - 304 214.4 Abnormal items (post-tax) 0 0 0 0 0 0 - 0 - 0 - Minorities / pref dividends 0 0 0 0 0 0 - 0 - 0 - Net income (local GAAP) 851 790 551 656 837 (1,254) - 97 - 304 214.4 Net Income (UBS) 851 790 551 656 837 (1,254) - 97 - 304 214.4 Tax rate (%) 7 9 0 2 14 0 - 22 - 17 -20.5 Pre-abnormal tax rate (%) 9 10 0 2 14 0 - 18 - 18 0.0 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 4.44 4.12 2.88 3.22 4.10 (6.14) - 0.47 - 1.49 214.4 EPS (UBS) 4.44 4.12 2.88 3.22 4.10 (6.14) - 0.47 - 1.49 214.4 Net DPS 0.59 1.66 1.16 1.18 1.33 1.43 7.4 0.15 -89.7 0.15 0.0 Cash EPS 5.94 6.00 5.09 5.15 5.46 (4.69) - 2.06 - 3.14 52.6 BVPS 17.82 20.44 21.72 25.06 27.59 20.74 -24.8 36.74 77.2 38.08 3.7 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 1,143 400 1,166 1,479 1,316 420 -68.1 2,263 439.0 894 -60.5 Other current assets 760 789 872 1,049 743 778 4.7 886 13.9 1,047 18.2 Total current assets 1,903 1,189 2,038 2,528 2,059 1,198 -41.8 3,149 162.8 1,942 -38.3 Net tangible fixed assets 3,304 3,652 3,931 4,112 6,506 7,620 17.1 7,946 4.3 8,009 0.8 Net intangible fixed assets 74 73 78 0 0 0 - 0 - 0 - Investments / other assets 2,052 2,075 2,616 2,625 2,436 1,452 -40.4 6,465 345.2 6,316 -2.3 Total assets 7,333 6,989 8,663 9,264 11,001 10,270 -6.6 17,560 71.0 16,266 -7.4 Trade payables & other ST liabilities 470 467 550 800 691 373 -46.0 411 10.2 484 17.6 Short term debt 1,248 790 270 668 543 1,442 165.6 1,442 0.0 1,442 0.0 Total current liabilities 1,718 1,257 820 1,468 1,234 1,815 47.1 1,853 2.1 1,926 3.9 Long term debt 1,927 1,510 3,007 2,506 2,119 2,170 2.4 6,155 183.6 4,515 -26.6 Other long term liabilities 273 305 674 174 2,016 2,052 1.8 2,052 0.0 2,052 0.0 Total liabilities 3,918 3,072 4,501 4,148 5,369 6,037 12.4 10,060 66.6 8,493 -15.6 Equity & minority interests 3,415 3,917 4,162 5,116 5,632 4,233 -24.8 7,500 77.2 7,773 3.7 Total liabilities & equity 7,333 6,989 8,663 9,264 11,001 10,270 -6.6 17,560 71.0 16,266 -7.4 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 851 790 551 656 837 (1,254) - 97 - 304 214.4 Depreciation 287 360 425 394 278 297 6.8 324 9.1 338 4.3 Net change in working capital (79) (32) 0 38 150 (40) - (70) 74.2 (89) 26.9 Other (operating) 0 0 0 0 344 (1) - 3,200 - 0 - Net cash from operations 1,059 1,118 976 1,089 1,609 (998) - 3,551 - 553 -84.4 Capital expenditure (454) (619) (572) (542) (894) (830) -7.2 (650) -21.7 (400) -38.5 Net (acquisitions) / disposals 3 (215) (23) 0 0 0 - 0 - 0 - Other changes in investments 233 (64) (558) 0 0 0 - 0 - 0 - Cash from investing activities (218) (898) (1,153) (542) (894) (830) -7.2 (650) -21.7 (400) -38.5 Increase/(decrease) in debt (265) (875) 977 (103) (512) 950 - 3,985 - (1,640) - Share issues / (repurchases) 21 (5) (25) 0 0 0 - 0 - 0 - Dividends paid (114) (319) (223) (1) (1) (1) 7.4 0 -89.7 0 0.0 Other cash from financing (80) 13 158 0 0 0 - 0 - 0 - Cash from financing activities (438) (1,186) 887 (104) (513) 949 - 3,985 320.1 (1,640) - Cash flow chge in cash & equivalents 403 (966) 710 442 202 (879) - 6,885 - (1,487) - FX / non cash items 311 223 56 (129) (365) (17) -95.4 (5,043) 29818.1 119 - Bal sheet chge in cash & equivalents 714 (743) 766 313 (163) (896) - 1,843 - (1,368) - Core EBITDA 1,158 1,356 1,093 1,141 881 699 -20.7 951 36.1 1,142 20.1 Maintenance capital expenditure (239) (272) (291) (1) (1) (1) 0.0 (1) 0.0 (1) 0.0 Maintenance net working capital (79) (32) 0 0 0 0 - 0 - 0 - Operating free cash flow, pre-tax

840 1,052 802 1,140 880 698 -20.8 950 36.2 1,141 20.1


UBS 58


Paper Products


12m price target -

Company profile VCP is one of Brazil's leading pulp and paper producers. Thecompany owns about 900kt of market pulp capacity, and 600kt ofpaper capacity, including its 50% stake in Ripasa. It is also expandingpulp capacity by 1.1Mtpy by early 2009. VCP is controlled by the Moraes family, which owns one of the largest private groups in Brazil,Votorantim.


12/06 12/07 12/08 12/09E 12/10E0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

-5.0x

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)14.0%

16.0%

18.0%

20.0%

22.0%

24.0%

26.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

0.0x

0.5x

1.0x

1.5x

2.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)2200

2400

2600

2800

3000

3200

3400

3600

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%


Votorantim Celulose e Papel

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) 10.1 10.7 11.1 NM 20.0 6.4 P/E (UBS) 10.1 10.7 11.1 NM 20.0 6.4 P/CEPS 6.2 6.7 8.3 NM 4.6 3.0 Net dividend yield (%) 3.2 3.4 2.9 15.1 1.6 1.6 P/BV 1.5 1.4 1.6 0.5 0.3 0.2 EV/revenue (core) 2.5 2.5 2.7 1.5 2.1 2.0 EV/EBITDA (core) 5.9 6.4 8.0 5.4 6.2 6.0 EV/EBIT (core) 8.6 9.7 11.7 9.3 9.5 8.5 EV/OpFCF (core) 7.5 6.4 8.0 5.4 6.3 6.0 EV/op. invested capital 1.5 1.6 1.5 0.6 0.9 1.0

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 6,845 9,274 1,933 1,933 1,933 + minority interests 0 0 0 0 0 + average net debt (cash) 1,903 1,521 2,269 4,263 5,198 + pension obligations and other 0 0 0 0 0 - non-core asset value (1,500) (3,743) (458) (258) (258) Core enterprise value 7,248 7,052 3,745 5,939 6,874 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 12.4 4.3 -9.6 -5.8 17.1 18.3 EBITDA (UBS) 7.5 1.8 -32.0 -7.6 36.1 20.1 EBIT (UBS) 5.6 7.5 -33.4 -16.0 56.1 28.2 EPS (UBS) 21.5 11.8 27.6 - - NM Cash EPS 16.2 1.0 6.2 - - 52.6 Net DPS 25.1 1.0 12.9 7.4 -89.7 0.0 BVPS 14.5 15.4 10.1 -24.8 77.2 3.7


Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) 17.7 15.7 10.0 6.9 9.2 11.4 ROIC post tax - 15.4 8.6 6.9 7.6 9.3 Net ROE 17.4 14.1 15.6 (25.4) 1.6 4.0

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest NM NM - - 1.9 2.8 Dividend cover (UBS EPS) 3.6 2.7 3.1 - 3.2 10.1 Div. payout ratio (%, UBS EPS) 32.7 36.6 32.4 - 31.0 9.9 Net debt / EBITDA 1.9 1.5 1.8 4.6 5.6 4.4


Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT 1.2 1.6 1.8 1.7 1.5 1.4 Capex / revenue (%) 22.7 18.7 NM NM 22.6 11.7 Capex / depreciation 1.7 1.4 3.2 2.8 2.0 1.2




UBS 59

Cia. Siderurgica Nacional

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 6,977 9,800 10,037 9,040 11,485 14,162 23.3 14,160 0.0 15,648 10.5 Operating expenses (ex depn) (4,177) (5,192) (5,415) (5,424) (6,724) (7,632) 13.5 (8,848) 15.9 (9,459) 6.9 EBITDA (UBS) 2,800 4,607 4,622 3,616 4,760 6,530 37.2 5,312 -18.6 6,189 16.5 Depreciation (717) (833) (924) (961) (1,133) (1,360) 20.0 (1,388) 2.0 (1,354) -2.5 Operating income (EBIT, UBS) 2,083 3,774 3,698 2,655 3,627 5,170 42.5 3,924 -24.1 4,835 23.2 Other income & associates 813 182 (63) (68) 35 (398) - (160) -59.8 (150) -6.3 Net interest (1,817) (1,151) (761) (900) 316 (3,202) - (369) -88.5 (417) 13.1 Abnormal items (pre-tax) 0 0 0 0 0 0 - 0 - 0 - Profit before tax 1,078 2,805 2,874 1,687 3,979 1,570 -60.5 3,395 116.3 4,268 25.7 Tax (47) (823) (714) (519) (1,015) (354) -65.1 (859) 142.8 (1,217) 41.6 Profit after tax 1,031 1,982 2,160 1,168 2,964 1,216 -59.0 2,536 108.6 3,051 20.3 Abnormal items (post-tax) 0 0 0 0 0 0 - 0 - 0 - Minorities / pref dividends 0 0 0 0 0 0 - (339) - (304) -10.5 Net income (local GAAP) 1,031 1,982 2,160 1,168 2,964 1,216 -59.0 2,197 80.7 2,747 25.1 Net Income (UBS) 1,031 1,982 2,160 1,168 2,964 1,216 -59.0 2,197 80.7 2,747 25.1 Tax rate (%) 4 29 25 31 25 23 -11.6 25 12.3 29 12.6 Pre-abnormal tax rate (%) 4 29 24 29 25 19 -24.3 24 28.7 28 13.9 Per share (R$) 12/09 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 1.20 2.30 2.65 1.51 3.83 1.51 -60.5 2.73 80.7 3.42 25.1 EPS (UBS) 1.20 2.30 2.65 1.51 3.83 1.51 -60.5 2.73 80.7 3.42 25.1 Net DPS 2.79 2.62 2.97 2.69 0.96 2.63 174.6 3.73 41.8 1.57 -57.8 Cash EPS 2.03 3.27 3.78 2.75 5.29 3.20 -39.4 4.46 39.2 5.10 14.4 BVPS 8.63 7.73 7.93 7.91 9.74 13.21 35.7 12.67 -4.1 14.69 16.0 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 3,880 3,671 3,845 2,623 3,846 10,636 176.5 10,283 -3.3 12,096 17.6 Other current assets 2,896 4,937 4,319 5,305 4,550 4,279 -6.0 4,295 0.4 4,587 6.8 Total current assets 6,775 8,609 8,164 7,928 8,396 14,915 77.6 14,578 -2.3 16,682 14.4 Net tangible fixed assets 13,134 13,667 13,950 14,216 15,522 19,358 24.7 20,740 7.1 21,763 4.9 Net intangible fixed assets 406 353 0 0 0 0 - 0 - 0 - Investments / other assets 2,206 2,076 2,334 2,885 3,134 3,126 -0.3 2,966 -5.1 2,816 -5.1 Total assets 22,522 24,705 24,448 25,028 27,052 37,399 38.2 38,284 2.4 41,261 7.8 Trade payables & other ST liabilities 2,156 4,390 3,355 3,237 5,016 9,981 99.0 10,017 0.4 10,105 0.9 Short term debt 2,387 1,772 1,464 1,080 1,828 3,068 67.8 3,068 0.0 3,068 0.0 Total current liabilities 4,543 6,163 4,820 4,318 6,844 13,049 90.7 13,085 0.3 13,173 0.7 Long term debt 6,571 6,697 7,334 8,345 6,931 7,945 14.6 8,895 12.0 9,853 10.8 Other long term liabilities 3,983 5,189 5,822 6,236 5,730 5,772 0.7 5,772 0.0 5,772 0.0 Total liabilities 15,096 18,049 17,975 18,899 19,505 26,765 37.2 27,752 3.7 28,798 3.8 Equity & minority interests 7,426 6,655 6,472 6,129 7,547 10,634 40.9 10,532 -1.0 12,464 18.3 Total liabilities & equity 22,522 24,705 24,448 25,028 27,052 37,399 38.2 38,284 2.4 41,261 7.8 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 1,031 1,982 2,160 1,168 2,964 1,216 -59.0 2,197 80.7 2,747 25.1 Depreciation 717 833 924 961 1,133 1,360 20.0 1,388 2.0 1,354 -2.5 Net change in working capital 595 (2,075) 527 (466) 1,105 7,004 534.0 20 -99.7 (204) - Other (operating) (868) (296) (442) 447 0 (58) - (75) 30.4 0 - Net cash from operations 1,474 444 3,169 2,110 5,202 9,522 83.1 3,530 -62.9 3,897 10.4 Capital expenditure (832) (531) (936) (1,495) (1,620) (2,666) 64.6 (2,212) -17.0 (2,228) 0.7 Net (acquisitions) / disposals 0 0 0 0 0 0 - 0 - 0 - Other changes in investments (112) (97) (33) 0 0 0 - 0 - 0 - Cash from investing activities (944) (627) (969) (1,495) (1,620) (2,666) 64.6 (2,212) -17.0 (2,228) 0.7 Increase/(decrease) in debt 1,289 590 329 627 (666) 0 - 0 - 958 - Share issues / (repurchases) 0 0 0 0 0 0 - 0 - 0 - Dividends paid (800) (752) (2,423) (2,081) (742) (2,116) 185.1 (3,000) 41.8 (1,266) -57.8 Other cash from financing (315) 0 0 0 0 0 - 0 - 0 - Cash from financing activities 174 (162) (2,094) (1,454) (1,408) (2,116) 50.2 (3,000) 41.8 (308) -89.7 Cash flow chge in cash & equivalents 704 (345) 106 (839) 2,174 4,741 - (1,682) - 1,362 - FX / non cash items 1,893 137 68 (383) (950) 2,049 -78.5 1,329 - 451 19.2 Bal sheet chge in cash & equivalents 2,597 (208) 174 (1,222) 1,223 6,790 - (353) - 1,813 - Core EBITDA 2,800 4,607 4,622 3,616 4,760 6,530 37.2 5,312 -18.6 6,189 16.5 Maintenance capital expenditure (306) (120) (807) (952) (1,246) (928) -25.5 (750) -19.2 (847) 13.0 Maintenance net working capital (100) (90) 37 (34) (87) (535) 512.6 0 - (297) - Operating free cash flow, pre-tax

2,394 4,397 3,852 2,630 3,427 5,067 47.8 4,562 -10.0 5,044 10.5


UBS 60


Steel



Company profile CSN operates an integrated steel mill with 5.6 million tonnes ofcapacity, as well as its own iron ore operations. CSN is one of thelargest producers of galvanized steel and Brazil's only producer of tinplate (one of the five largest in the world). CSN is expanding its Casade Pedra iron ore mine to over 50 million tonnes per year by 2012.Due to its integrated business model, CSN operating margins aregenerally higher than those of its peers. CSN's controllingshareholder is Vicunha, with 41% of the total (and voting) shares.


12/06 12/07 12/08 12/09E 12/10E0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)24.0%

26.0%

28.0%

30.0%

32.0%

34.0%

36.0%

38.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)8000

9143

10286

11429

12571

13714

14857

-100%

-50%

0%

50%

100%

150%

200%



Cia. Siderurgica Nacional


Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 17,051 26,805 24,946 24,946 24,946 + minority interests 5 5 2,700 2,700 2,700 + average net debt (cash) 6,802 4,913 377 1,680 1,253 + pension obligations and other 0 1,200 1,200 1,200 1,200 - non-core asset value (4,000) (4,000) (4,500) (4,500) (4,500) Core enterprise value 19,858 28,923 24,723 26,026 25,599 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 18.3 -9.9 27.0 23.3 0.0 10.5 EBITDA (UBS) 17.0 -21.8 31.6 37.2 -18.6 16.5 EBIT (UBS) 17.2 -28.2 36.6 42.5 -24.1 23.2 EPS (UBS) - -43.0 153.8 -60.5 80.7 25.1 Cash EPS 66.9 -27.3 92.4 -39.4 39.2 14.4 Net DPS 53.2 -9.5 -64.3 174.6 41.8 -57.8 BVPS 8.5 -0.3 23.2 35.7 -4.1 16.0



Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - 2.9 - 1.5 10.2 11.2 Dividend cover (UBS EPS) - 0.6 4.0 0.6 0.7 2.2 Div. payout ratio (%, UBS EPS) - 178.2 25.0 174.0 136.6 46.1 Net debt / EBITDA 1.7 1.9 1.0 0.1 0.3 0.1



Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity 96.2 NM 65.1 3.5 16.0 6.6 Net debt / (net debt + equity) 48.3 52.6 39.4 3.4 14.2 6.5 Net debt (core) / EV 40.64 34.3 17.0 1.5 6.5 4.9



UBS 61

Gerdau

Income statement (R$m) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch Revenues 19,597 21,246 25,884 30,614 40,466 30,739 -24.0 37,460 21.9 43,206 15.3 Operating expenses (ex depn) (13,987) (16,204) (18,930) (24,365) (30,539) (23,918) -21.7 (28,793) 20.4 (33,128) 15.1 EBITDA (UBS) 5,610 5,041 6,954 6,249 9,927 6,821 -31.3 8,667 27.1 10,078 16.3 Depreciation (767) (839) (1,137) (1,435) (1,710) (1,822) 6.6 (2,058) 12.9 (2,175) 5.7 Operating income (EBIT, UBS) 4,843 4,203 5,817 4,813 8,217 4,999 -39.2 6,609 32.2 7,903 19.6 Other income & associates (237) 162 (1,107) 120 122 100 -18.2 126 26.0 126 0.0 Net interest (176) (30) 440 333 (1,526) (665) -56.4 (925) 39.2 (885) -4.4 Abnormal items (pre-tax) 0 0 0 0 0 0 - 0 - 0 - Profit before tax 4,430 4,334 5,150 5,266 6,813 4,434 -34.9 5,810 31.0 7,144 23.0 Tax (1,195) (1,089) (889) (956) (1,572) (977) -37.9 (1,452) 48.6 (1,786) 23.0 Profit after tax 3,235 3,245 4,261 4,310 5,241 3,457 -34.0 4,358 26.0 5,359 23.0 Abnormal items (post-tax) 0 0 0 0 0 0 - 0 - 0 - Minorities / pref dividends (404) (464) (930) (757) (1,050) (665) -36.7 (871) 31.0 (1,072) 23.0 Net income (local GAAP) 2,832 2,781 3,332 3,553 4,191 2,792 -33.4 3,486 24.9 4,287 23.0 Net Income (UBS) 2,832 2,781 3,332 3,553 4,191 2,792 -33.4 3,486 24.9 4,287 23.0 Tax rate (%) 27 25 17 18 23 22 -4.5 25 13.5 25 0.0 Pre-abnormal tax rate (%) 26 26 18 19 24 23 -6.3 26 13.3 25 -0.4 Per share (R$) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch EPS (local GAAP) 3.18 3.12 2.49 2.66 2.93 1.95 -33.4 2.44 24.9 3.00 23.0 EPS (UBS) 3.18 3.12 2.49 2.66 2.93 1.95 -33.4 2.44 24.9 3.00 23.0 Net DPS 0.95 1.21 0.69 0.65 0.61 0.61 0.0 0.69 13.8 0.46 -33.7 Cash EPS 4.04 4.07 3.35 3.73 4.13 3.23 -21.8 3.88 20.1 4.52 16.5 BVPS 4.55 6.02 7.82 9.52 13.64 14.96 9.7 16.70 11.7 19.24 15.2 Balance sheet (R$m) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch Cash and equivalents 2,042 5,465 6,379 5,139 8,094 7,446 -8.0 6,371 -14.4 7,966 25.0 Other current assets 7,514 6,664 8,705 10,174 12,502 13,115 4.9 15,769 20.2 18,037 14.4 Total current assets 9,556 12,129 15,084 15,313 20,596 20,561 -0.2 22,140 7.7 26,004 17.5 Net tangible fixed assets 7,927 8,694 13,374 15,828 18,089 20,578 13.8 22,890 11.2 24,273 6.0 Net intangible fixed assets 0 0 517 6,043 8,931 8,931 0.0 8,931 0.0 8,931 0.0 Investments / other assets 1,180 1,057 2,688 4,293 5,782 5,953 3.0 6,384 7.2 6,771 6.1 Total assets 18,664 21,879 31,663 41,478 53,398 56,022 4.9 60,344 7.7 65,978 9.3 Trade payables & other ST liabilities 3,276 2,859 3,914 4,048 4,846 4,913 1.4 5,869 19.5 6,803 15.9 Short term debt 1,971 1,330 2,277 2,539 4,753 4,753 0.0 4,753 0.0 4,753 0.0 Total current liabilities 5,248 4,189 6,191 6,587 9,599 9,666 0.7 10,622 9.9 11,556 8.8 Long term debt 4,405 6,321 7,600 13,364 14,259 14,259 0.0 14,259 0.0 14,259 0.0 Other long term liabilities 1,398 1,228 3,068 4,884 4,895 4,895 0.0 4,895 0.0 4,895 0.0 Total liabilities 11,051 11,739 16,860 24,836 28,753 28,819 0.2 29,776 3.3 30,710 3.1 Equity & minority interests 7,613 10,141 14,803 16,642 24,645 27,203 10.4 30,568 12.4 35,269 15.4 Total liabilities & equity 18,664 21,879 31,663 41,478 53,398 56,022 4.9 60,344 7.7 65,978 9.3 Cash flow (R$m) 12/07 12/05 12/09 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch Net income 2,832 2,781 3,332 3,553 4,191 2,792 -33.4 3,486 24.9 4,287 23.0 Depreciation 767 839 1,137 1,435 1,710 1,822 6.6 2,058 12.9 2,175 5.7 Net change in working capital (1,656) 613 (380) 469 (1,484) (617) -58.4 (2,003) 224.4 (1,596) -20.3 Other (operating) 820 115 0 0 2,800 0 - 0 - 0 - Net cash from operations 2,762 4,348 4,089 5,457 7,217 3,997 -44.6 3,541 -11.4 4,865 37.4 Capital expenditure (1,176) (1,647) (2,200) (2,993) (2,811) (4,310) 53.4 (4,370) 1.4 (3,558) -18.6 Net (acquisitions) / disposals 0 0 0 0 0 0 - 0 - 0 - Other changes in investments (980) (120) (2,194) (9,125) (2,773) 0 - 0 - 0 - Cash from investing activities (2,156) (1,767) (4,395) (12,117) (5,583) (4,310) -22.8 (4,370) 1.4 (3,558) -18.6 Increase/(decrease) in debt 476 1,607 9,878 6,025 3,108 0 - 0 - 0 - Share issues / (repurchases) 466 524 0 0 0 0 - 0 - 0 - Dividends paid (843) (1,076) (928) (875) (871) (871) 0.0 (991) 13.8 (657) -33.7 Other cash from financing (324) (658) 0 0 0 0 - 0 - 0 - Cash from financing activities (225) 398 8,950 5,151 2,237 (871) - (991) 13.8 (657) -33.7 Cash flow chge in cash & equivalents 381 2,979 8,644 (1,509) 3,871 (1,184) - (1,820) - 650 - FX / non cash items 644 444 (7,730) 270 (916) 536 - 745 39.0 946 26.9 Bal sheet chge in cash & equivalents 1,025 3,423 914 (1,240) 2,954 (648) - (1,075) - 1,596 - Core EBITDA 5,610 5,041 6,954 6,249 9,927 6,821 -31.3 8,667 27.1 10,078 16.3 Maintenance capital expenditure (767) (839) (585) (601) (619) (535) -13.6 (650) 21.6 (725) 11.5 Maintenance net working capital (322) (200) 0 0 0 0 - 0 - 0 - Operating free cash flow, pre-tax

4,521 4,002 6,369 5,648 9,308 6,287 -32.5 8,017 27.5 9,353 16.7


UBS 62


Steel



Company profile Annual capacity of 25 million tonnes, GGB is Brazil's largest longsteel producer, with 46% share of the domestic market.Headquartered in Bz, the company has a presence in Argentina,Peru, Canada, Chile, Colombia,Venezuela, MEX,Cen. America, USA,and Uruguay. It also has a 40% stake in Sidenor, a Spanish specialty producer. GGB is mostly a mini mill operator focused on civilconstruction, industrial, and agricultural industries. About 20% of thecompany's capacity is integrated. The GGB family controls 79% of thevoting shares and 43% of the total capital of Gerdau S.A. The freefloat is 46%.


12/07 12/08 12/09E 12/10E 12/11E0.00x

2.00x

4.00x

6.00x

8.00x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x


Profitability

12/07 12/08 12/09(E) 12/10(E) 12/11(E)14.00%

15.00%

16.00%

17.00%

18.00%

19.00%

20.00%

21.00%

10.0%

15.0%

20.0%

25.0%

30.0%



12/07 12/08 12/09(E) 12/10(E) 12/11(E)5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

0.5x

0.6x

0.6x

0.7x

0.7x

0.8x

0.8x

0.9x


Growth (UBS EPS)

12/07 12/08 12/09(E) 12/10(E) 12/11(E)25000

30000

35000

40000

45000

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%



Gerdau


Enterprise value (R$m) 12/07 12/08 12/09E 12/10E 12/11E Average market cap 29,630 36,745 16,432 16,432 16,432 + minority interests 8,000 4,000 4,000 4,000 4,000 + average net debt (cash) 7,131 10,841 11,242 12,103 11,843 + pension obligations and other 300 300 300 300 300 - non-core asset value (1) (1) (1) (1) (1) Core enterprise value 45,061 51,884 31,973 32,835 32,574 Growth (%) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E Revenue 23.0 18.3 32.2 -24.0 21.9 15.3 EBITDA (UBS) 23.4 -10.1 58.9 -31.3 27.1 16.3 EBIT (UBS) 23.2 -17.3 70.7 -39.2 32.2 19.6 EPS (UBS) 20.1 6.6 10.2 -33.4 24.9 23.0 Cash EPS 17.5 11.6 10.5 -21.8 20.1 16.5 Net DPS 9.2 -5.7 -7.0 0.0 13.8 -33.7 BVPS 32.5 21.8 43.3 9.7 11.7 15.2



Coverage ratios (x) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E EBIT / net interest - - 5.6 7.7 7.3 9.1 Dividend cover (UBS EPS) 3.3 4.1 4.8 3.2 3.5 6.5 Div. payout ratio (%, UBS EPS) 31.4 24.6 20.8 31.2 28.4 15.3 Net debt / EBITDA 1.0 1.7 1.1 1.7 1.5 1.1






UBS 63

Metalurgica Gerdau

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues - - - 25,883.91 30,613.53 40,466.05 32.2 30,739.26 -24.0 37,460.20 21.9 Operating expenses (ex depn) - - 0.00 (20,056.48) (24,449.53) (30,289.75) 23.9 (23,741.38) -21.6 (28,586.78) 20.4 EBITDA (UBS) - - - 5,827.43 6,164.00 10,176.30 65.1 6,997.88 -31.2 8,873.42 26.8 Depreciation - - 0.00 (1,380.43) (1,435.25) (1,948.05) 35.7 (1,822.29) -6.5 (2,057.75) 12.9 Operating income (EBIT, UBS) - - - 4,447.00 4,728.75 8,228.25 74.0 5,175.59 -37.1 6,815.67 31.7 Other income & associates - - 0.00 243.55 120.40 277.57 130.5 100.00 -64.0 125.00 25.0 Net interest - - 0.00 500.50 381.63 (1,476.75) - (603.16) -59.2 (857.69) 42.2 Abnormal items (pre-tax) - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax - - - 5,191.05 5,230.78 7,029.06 34.4 4,672.43 -33.5 6,082.97 30.2 Tax - - 0.00 (899.60) (839.68) (1,336.63) 59.2 (927.02) -30.6 (1,392.10) 50.2 Profit after tax - - - 4,291.45 4,391.10 5,692.43 29.6 3,745.41 -34.2 4,690.88 25.2 Abnormal items (post-tax) - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends - - 0.00 (2,756.00) (2,682.35) (3,725.40) 38.9 (2,382.94) -36.0 (3,102.32) 30.2 Net income (local GAAP) - - - 1,535.45 1,708.75 1,967.03 15.1 1,362.47 -30.7 1,588.56 16.6 Net Income (UBS) - - - 1,535.45 1,708.75 1,967.03 15.1 1,362.47 -30.7 1,588.56 16.6 Tax rate (%) 0.00 0.00 - 17.33 16.05 19.02 18.5 19.84 4.3 22.89 15.3 Pre-abnormal tax rate (%) 0.00 0.00 - 18.18 16.43 19.80 20.5 20.27 2.4 23.37 15.2 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) - - - 4.10 4.57 4.77 4.4 3.30 -30.7 3.85 16.6 EPS (UBS) - - - 4.10 4.57 4.77 4.4 3.30 -30.7 3.85 16.6 Net DPS - - - 1.51 1.47 0.95 -35.6 0.95 0.0 1.10 16.3 Cash EPS - - - 7.79 8.40 9.49 12.9 7.72 -18.7 8.84 14.5 BVPS - - 0.00 18.04 22.76 20.73 -8.9 21.92 5.7 23.31 6.4 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents - - - 6,250.00 5,067.95 5,353.29 5.6 5,074.07 -5.2 4,305.03 -15.2 Other current assets - - 0.00 8,911.00 10,425.96 12,504.57 19.9 13,117.71 4.9 15,771.16 20.2 Total current assets - - - 15,161.00 15,493.90 17,857.86 15.3 18,191.77 1.9 20,076.20 10.4 Net tangible fixed assets - - - 13,375.00 15,827.94 19,353.84 22.3 21,841.95 12.9 24,153.97 10.6 Net intangible fixed assets - - - 0.00 0.00 0.00 - 0.00 - 0.00 - Investments / other assets 0.00 0.00 0.00 3,316.00 10,439.09 14,486.74 38.8 14,657.49 1.2 15,088.66 2.9 Total assets - - - 31,852.00 41,760.94 51,698.45 23.8 54,691.22 5.8 59,318.83 8.5 Trade payables & other ST liabilities - - - 3,980.00 4,114.68 4,765.10 15.8 4,883.56 2.5 5,833.11 19.4 Short term debt - - - 2,328.00 2,575.93 4,779.03 85.5 4,779.03 0.0 4,779.03 0.0 Total current liabilities - - - 6,308.00 6,690.61 9,544.13 42.6 9,662.59 1.2 10,612.14 9.8 Long term debt - - 0.00 7,487.00 13,273.19 14,629.81 10.2 14,629.81 0.0 14,629.81 0.0 Other long term liabilities - - 0.00 3,159.00 4,981.98 5,411.36 8.6 5,411.36 0.0 5,411.36 0.0 Total liabilities - - - 16,954.00 24,945.78 29,585.30 18.6 29,703.75 0.4 30,653.30 3.2 Equity & minority interests - - - 14,898.00 16,815.15 22,113.15 31.5 24,987.47 13.0 28,665.52 14.7 Total liabilities & equity - - - 31,852.00 41,760.94 51,698.45 23.8 54,691.22 5.8 59,318.83 8.5 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income - - - 1,535.45 1,708.75 1,967.03 15.1 1,362.47 -30.7 1,588.56 16.6 Depreciation - - 0.00 1,380.43 1,435.25 1,948.05 35.7 1,822.29 -6.5 2,057.75 12.9 Net change in working capital - - 0.00 0.00 2,030.66 (899.00) - (565.43) -37.1 (2,010.07) 255.5 Other (operating) - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations - - - 2,915.88 5,174.67 3,016.07 -41.7 2,619.33 -13.2 1,636.24 -37.5 Capital expenditure - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net (acquisitions) / disposals - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Increase/(decrease) in debt - - 0.00 0.00 6,034.13 3,559.72 - 0.00 - 0.00 - Share issues / (repurchases) - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid - - 0.00 (415.00) (403.96) (390.33) -3.4 (390.33) 0.0 (453.84) 16.3 Other cash from financing - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities - - 0.00 (415.00) 5,630.17 3,169.38 -43.7 (390.33) - (453.84) 16.3 Cash flow chge in cash & equivalents - - - 2,500.88 10,804.84 6,185.45 - 2,229.00 - 1,182.40 - FX / non cash items - - - - (11,986.89) (5,900.11) -50.8 (2,508.22) -57.5 (1,951.43) -22.2 Bal sheet chge in cash & equivalents - - - - (1,182.05) 285.34 - (279.23) - (769.03) - Core EBITDA - - - 5,827.43 6,164.00 10,176.30 65.1 6,997.88 -31.2 8,873.42 26.8 Maintenance capital expenditure - - 0.00 (2,200.25) (2,992.80) (2,810.77) -6.1 (4,310.41) 53.4 (4,369.77) 1.4 Maintenance net working capital - - 0.00 0.00 2,030.66 (899.00) - (565.43) -37.1 (2,010.07) 255.5 Operating free cash flow, pre-tax

- - - 3,627.18 5,201.86 6,466.52 24.3 2,122.04 -67.2 2,493.58 17.5


UBS 64


Steel



Company profile Metalúrgica Gerdau is a holding company whose main asset is its45% stake in Gerdau, the largest long steel producer in the Americas.Gerdau is headquartered in Brazil, and the company has operationsin Argentina, Peru, Canada, Chile, Colombia, the United States,Uruguay, and Mexico. It also has a 40% stake in Sidenor, a Spanishspecialty producer. Gerdau is mostly a mini mill operator focused oncivil construction, industrial, and agricultural industries.


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

0.00x

1.00x

2.00x

3.00x

4.00x

5.00x

6.00x

7.00x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)14.00%

15.00%

16.00%

17.00%

18.00%

19.00%

20.00%

21.00%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

0.5x

0.6x

0.7x

0.8x

1.0x

1.1x

1.2x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)20000

25000

30000

35000

40000

45000

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%



Metalurgica Gerdau

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - 4.8 6.3 3.2 4.6 3.9 P/E (UBS) - 4.8 6.3 3.2 4.6 3.9 P/CEPS - 2.5 3.4 1.6 2.0 1.7 Net dividend yield (%) - 7.7 5.1 6.2 6.2 7.3 P/BV - 1.1 1.3 0.7 0.7 0.6 EV/revenue (core) - 1.0 1.0 0.8 1.1 0.9 EV/EBITDA (core) - 4.4 5.1 3.4 5.0 4.0 EV/EBIT (core) - 5.8 6.6 4.2 6.7 5.2 EV/OpFCF (core) - 7.1 6.0 5.3 16.3 14.2 EV/op. invested capital - - 1.8 1.6 1.4 1.2

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 7,156.26 10,695.37 6,064.96 6,064.96 6,064.96 + minority interests 17,506.00 17,506.00 17,506.00 17,506.00 17,506.00 + average net debt (cash) 1,203.99 3,013.67 10,824.82 11,110.03 11,801.68 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value (0.10) (0.10) (0.10) (0.10) (0.10) Core enterprise value 25,866.15 31,214.94 34,395.68 34,680.89 35,372.54 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - - 18.3 32.2 -24.0 21.9 EBITDA (UBS) - - 5.8 65.1 -31.2 26.8 EBIT (UBS) - - 6.3 74.0 -37.1 31.7 EPS (UBS) - - 11.3 4.4 -30.7 16.6 Cash EPS - - 7.8 12.9 -18.7 14.5 Net DPS - - -2.7 -35.6 0.0 16.3 BVPS - - 26.1 -8.9 5.7 6.4


Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) - - 26.8 39.3 21.0 24.0 ROIC post tax - - 22.4 31.5 16.7 18.4 Net ROE - 61.9 30.5 26.6 15.5 17.0

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - - 5.8 8.7 8.1 Dividend cover (UBS EPS) - 2.7 3.1 5.0 3.5 3.5 Div. payout ratio (%, UBS EPS) - 36.8 32.2 19.8 28.6 28.6 Net debt / EBITDA - 0.6 1.7 1.4 2.0 1.7






UBS 65

Consumer

UBS 66

Localiza Rent a Car

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 532.10 634.40 876.90 1,145.40 1,531.60 1,884.32 23.0 2,445.70 29.8 2,951.52 20.7 Operating expenses (ex depn) (379.80) (424.30) (591.10) (832.20) (1,127.74) (1,375.45) 22.0 (1,834.27) 33.4 (2,234.76) 21.8 EBITDA (UBS) 152.30 210.10 285.80 313.20 403.86 508.87 26.0 611.43 20.2 716.76 17.2 Depreciation (41.00) (35.90) (50.60) (58.60) (58.06) (72.50) 24.9 (80.96) 11.7 (92.86) 14.7 Operating income (EBIT, UBS) 111.30 174.20 235.20 254.60 345.80 436.37 26.2 530.47 21.6 623.90 17.6 Other income & associates (0.01) 0.21 0.17 0.00 0.60 (0.10) - 0.00 - 0.00 - Net interest 40.68 (43.02) (84.42) (65.00) (74.40) (120.65) 62.2 (189.07) 56.7 (200.14) 5.9 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 151.97 131.39 150.95 189.60 272.00 315.62 16.0 341.40 8.2 423.76 24.1 Tax (46.20) (40.74) (44.03) (50.90) (81.40) (90.45) 11.1 (93.88) 3.8 (116.53) 24.1 Profit after tax 105.77 90.65 106.92 138.70 190.60 225.17 18.1 247.51 9.9 307.23 24.1 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends 0.00 (0.14) (0.22) (0.20) (0.30) (0.20) -33.3 0.00 - 0.00 - Net income (local GAAP) 105.77 90.52 106.70 138.50 190.30 224.97 18.2 247.51 10.0 307.23 24.1 Net Income (UBS) 105.77 90.52 106.70 138.50 190.30 224.97 18.2 247.51 10.0 307.23 24.1 Tax rate (%) 30.40 31.00 29.17 26.85 29.93 28.66 -4.2 27.50 -4.0 27.50 0.0 Pre-abnormal tax rate (%) 30.40 31.00 29.17 26.85 29.93 28.66 -4.2 27.50 -4.0 27.50 0.0 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 6.89 5.89 1.69 0.69 0.95 1.13 18.2 1.24 10.0 1.54 24.1 EPS (UBS) 6.89 5.89 1.69 0.69 0.95 1.13 18.2 1.24 10.0 1.54 24.1 Net DPS 1.72 0.00 1.89 0.56 0.29 0.34 18.2 0.37 10.0 0.46 24.1 Cash EPS 9.56 8.23 4.00 1.50 1.24 1.49 19.8 1.64 10.4 2.00 21.8 BVPS 1.32 1.59 2.08 3.19 3.06 3.51 14.9 4.38 24.7 5.45 24.6 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 159.26 129.35 70.76 162.20 189.50 83.08 -56.2 89.93 8.2 106.39 18.3 Other current assets 435.76 666.97 993.57 1,382.50 1,637.09 2,117.14 29.3 2,555.30 20.7 3,010.19 17.8 Total current assets 595.02 796.32 1,064.33 1,544.70 1,826.59 2,200.22 20.5 2,645.23 20.2 3,116.58 17.8 Net tangible fixed assets 18.58 24.00 45.51 66.60 76.00 91.65 20.6 108.81 18.7 129.13 18.7 Net intangible fixed assets 4.70 4.70 4.70 6.20 6.20 6.20 0.0 6.20 0.0 6.20 0.0 Investments / other assets 44.09 38.56 54.99 52.20 48.01 64.30 33.9 64.30 0.0 64.30 0.0 Total assets 662.40 863.57 1,169.53 1,669.70 1,956.80 2,362.37 20.7 2,824.54 19.6 3,316.21 17.4 Trade payables & other ST liabilities 126.74 141.87 60.14 314.10 346.70 407.39 17.5 496.30 21.8 572.92 15.4 Short term debt 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Total current liabilities 126.74 141.87 60.14 314.10 346.70 407.39 17.5 496.30 21.8 572.92 15.4 Long term debt 227.23 346.50 610.10 585.20 957.40 1,208.00 26.2 1,408.00 16.6 1,608.00 14.2 Other long term liabilities 65.19 81.69 104.55 126.50 41.40 44.80 8.2 44.80 0.0 44.80 0.0 Total liabilities 419.17 570.06 774.79 1,025.80 1,345.50 1,660.19 23.4 1,949.10 17.4 2,225.72 14.2 Equity & minority interests 243.23 293.51 394.74 643.90 611.30 702.18 14.9 875.44 24.7 1,090.50 24.6 Total liabilities & equity 662.40 863.57 1,169.53 1,669.70 1,956.80 2,362.37 20.7 2,824.54 19.6 3,316.21 17.4 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 105.77 90.52 106.70 138.50 190.30 224.97 18.2 247.51 10.0 307.23 24.1 Depreciation 41.00 35.90 50.60 58.60 58.06 72.50 24.9 80.96 11.7 92.86 14.7 Net change in working capital 67.03 (30.84) (57.87) 183.34 (60.79) 24.00 - 37.19 54.9 30.02 -19.3 Other (operating) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations 213.80 95.58 99.43 380.44 187.57 321.47 71.4 365.67 13.7 430.11 17.6 Capital expenditure (288.96) (501.92) (712.23) (954.64) (1,072.27) (1,438.02) 34.1 (1,716.68) 19.4 (2,028.56) 18.2 Net (acquisitions) / disposals 206.50 238.90 354.50 520.70 751.10 895.65 19.2 1,232.11 37.6 1,507.07 22.3 Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities (82.46) (263.02) (357.73) (433.94) (321.17) (542.37) 68.9 (484.56) -10.7 (521.48) 7.6 Increase/(decrease) in debt (40.50) 119.27 263.60 (24.90) 372.20 250.60 - 200.00 - 200.00 - Share issues / (repurchases) 0.00 0.00 0.00 101.48 0.00 0.00 - 0.00 - 0.00 - Dividends paid (26.44) 0.00 (119.41) (112.49) (57.09) (67.49) 18.2 (74.25) 10.0 (92.17) 24.1 Other cash from financing 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities (66.94) 119.27 144.19 (35.91) 315.11 183.11 -41.9 125.75 -31.3 107.83 -14.2 Cash flow chge in cash & equivalents 64.40 (48.17) (114.10) (89.41) 181.51 (37.79) - 6.85 - 16.46 - FX / non cash items 12.39 18.25 55.52 180.86 (154.21) (68.63) -55.5 0.00 - (.00) - Bal sheet chge in cash & equivalents 76.80 (29.92) (58.59) 91.44 27.30 (106.42) - 6.85 - 16.46 - Core EBITDA 152.30 210.10 285.80 313.20 403.86 508.87 26.0 611.43 20.2 716.76 17.2 Maintenance capital expenditure (41.00) (35.90) (50.60) (58.60) (58.06) (72.50) 24.9 (80.96) 11.7 (92.86) 14.7 Maintenance net working capital 67.03 (30.84) (57.87) 183.34 (60.79) 24.00 - 37.19 54.9 30.02 -19.3 Operating free cash flow, pre-tax

178.33 143.36 177.33 437.94 285.01 460.37 61.5 567.66 23.3 653.92 15.2


UBS 67


Consumer Services



Company profile Localiza is Latin America's largest car rental company, with over46,000 vehicles on its fleet in fiscal 2006. The company leads theBrazilian car rental market, with a market share of 20% in 2006, morethan two times larger than its second competitor (Unidas). Localizaoperates under four different segments: daily rentals; fleetmanagement; franchising; and used car sales. The franchisingsegment has units in Brazil and in eight countries in Latin America.The company trades on Brazil's Novo Mercado segment, with specialdisclosure, corporate governance, and tag-along requirements.


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)20.50%

21.00%

21.50%

22.00%

22.50%

23.00%

23.50%

24.00%

25.00%

26.00%

27.00%

28.00%

29.00%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)24.0%

26.0%

28.0%

30.0%

32.0%

34.0%

36.0%

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

7.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)500

1000

1500

2000

2500

3000

-80%

-60%

-40%

-20%

0%

20%

40%



Localiza Rent a Car


Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 2,897.23 4,028.87 1,623.60 1,623.60 1,623.60 + minority interests 0.10 0.20 0.20 0.20 0.20 + average net debt (cash) 423.00 767.90 1,124.92 1,318.07 1,501.61 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 0.00 0.00 0.00 0.00 Core enterprise value 3,320.33 4,796.97 2,748.72 2,941.87 3,125.42 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 24.5 30.6 33.7 23.0 29.8 20.7 EBITDA (UBS) 20.3 9.6 28.9 26.0 20.2 17.2 EBIT (UBS) 21.9 8.2 35.8 26.2 21.6 17.6 EPS (UBS) -11.8 -61.2 -9.6 18.2 10.0 24.1 Cash EPS -21.7 -62.6 -17.1 19.8 10.4 21.8 Net DPS - -70.2 -49.2 18.2 10.0 24.1 BVPS 31.9 53.7 -4.3 14.9 24.7 24.6


Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) - 25.4 28.3 27.2 26.4 26.1 ROIC post tax - 18.6 19.8 19.4 19.1 18.9 Net ROE 30.7 26.7 30.3 34.3 31.4 31.3

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - 3.9 4.6 3.6 2.8 3.1 Dividend cover (UBS EPS) - 1.9 3.3 3.3 3.3 3.3 Div. payout ratio (%, UBS EPS) - 53.5 30.0 30.0 30.0 30.0 Net debt / EBITDA 1.3 1.4 1.9 2.2 2.2 2.1


Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT 1.2 1.7 0.8 1.1 1.1 1.0 Capex / revenue (%) NM NM NM NM NM NM Capex / depreciation NM NM NM NM NM NM

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity 79.9 65.7 NM NM NM NM Net debt / (net debt + equity) 44.7 39.7 55.7 61.6 60.1 57.9 Net debt (core) / EV - 12.7 16.0 40.9 44.8 48.0

Source: Company accounts, UBS estimates. (UBS) valuations are stated before goodwill-related charges and other adjustments for abnormal and economic items at the analysts' judgement. Valuations: based on an average share price that year, (E): based on a share price of R$8.05 on 13 Mar 2009 19:40 EDT Market cap(E) may include forecast share issues/buybacks. Guilherme Arruda Analyst [email protected] +55-21-3262 9871

Rodrigo Goes, CFA Analyst [email protected] +55-11-3383 2580


UBS 68

JBS S.A.

Income statement (R$m) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues - 3,158.00 3,577.10 3,967.55 14,141.65 30,323.06 114.4 41,097.03 35.5 43,115.43 4.9 Operating expenses (ex depn) - (2,871.24) (3,231.57) (3,402.61) (13,545.23) (29,143.76) 115.2 (39,362.20) 35.1 (41,163.62) 4.6 EBITDA (UBS) - 286.76 345.53 564.95 596.43 1,179.30 97.7 1,734.83 47.1 1,951.81 12.5 Depreciation - (17.06) (42.43) (89.38) (256.93) (427.50) 66.4 (476.43) 11.4 (493.42) 3.6 Operating income (EBIT, UBS) - 269.70 303.10 475.57 339.50 751.80 121.4 1,258.40 67.4 1,458.39 15.9 Other income & associates - (0.20) 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net interest - (117.50) (219.30) (204.15) (403.04) (311.08) -22.8 (376.20) 20.9 (418.16) 11.2 Abnormal items (pre-tax) - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax - 152.00 83.80 271.42 (63.54) 440.72 - 882.20 100.2 1,040.23 17.9 Tax - (51.70) (28.50) (92.28) (104.92) (116.66) 11.2 (264.66) 126.9 (312.07) 17.9 Profit after tax - 100.30 55.30 179.14 (168.46) 324.06 - 617.54 90.6 728.16 17.9 Abnormal items (post-tax) - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends - 7.00 0.10 1.21 3.43 0.96 -72.0 0.00 - 0.00 - Net income (local GAAP) - 107.30 55.40 180.35 (165.03) 325.02 - 617.54 90.0 728.16 17.9 Net Income (UBS) - 107.30 55.40 180.35 (165.03) 531.62 - 797.54 50.0 908.16 13.9 Tax rate (%) - 34.01 34.01 34.00 0.00 26.47 - 30.00 13.3 30.00 0.0 Pre-abnormal tax rate (%) - 34.01 34.01 34.00 0.00 (20.41) - 9.60 - 12.70 32.3 Per share (R$) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) - 0.13 0.07 0.21 (0.15) 0.23 - 0.44 90.0 0.52 17.9 EPS (UBS) - 0.13 0.07 0.21 (0.15) 0.38 - 0.57 50.0 0.65 13.9 Net DPS - 0.00 0.00 0.00 0.00 0.00 - 0.11 - 0.32 192.6 Cash EPS - 0.15 0.12 0.32 0.09 0.68 700.7 0.91 32.8 1.00 10.0 BVPS - 0.53 0.44 0.22 2.12 4.01 88.7 4.44 10.7 4.63 4.4 Balance sheet (R$m) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents - 231.53 374.30 261.07 1,381.70 2,649.42 91.8 2,086.09 -21.3 2,086.09 0.0 Other current assets - 1,025.79 1,261.04 1,989.48 3,378.04 6,284.07 86.0 8,019.79 27.6 8,363.51 4.3 Total current assets - 1,257.32 1,635.34 2,250.55 4,759.74 8,933.49 87.7 10,105.88 13.1 10,449.60 3.4 Net tangible fixed assets - - 872.75 1,150.41 2,731.61 4,149.37 51.9 4,402.94 6.1 4,639.52 5.4 Net intangible fixed assets - 0.00 0.00 0.10 0.10 0.10 0.0 0.10 0.0 0.10 0.0 Investments / other assets - 0.74 16.37 63.88 956.85 1,419.70 48.4 1,239.70 -12.7 1,059.70 -14.5 Total assets - - 2,524.46 3,464.94 8,448.31 14,502.65 71.7 15,748.61 8.6 16,148.91 2.5 Trade payables & other ST liabilities - 214.78 397.39 445.63 1,391.00 2,286.37 64.4 3,069.18 34.2 3,193.04 4.0 Short term debt - 777.17 1,028.03 653.64 2,384.84 1,949.94 -18.2 1,949.94 0.0 1,949.94 0.0 Total current liabilities - 991.95 1,425.43 1,099.26 3,775.84 4,236.31 12.2 5,019.12 18.5 5,142.97 2.5 Long term debt - 326.21 671.59 2,039.98 1,364.80 3,701.71 171.2 3,701.71 0.0 3,701.71 0.0 Other long term liabilities - 55.40 49.97 142.55 252.98 799.50 216.0 799.50 0.0 799.50 0.0 Total liabilities - 1,373.57 2,146.98 3,281.79 5,393.62 8,737.52 62.0 9,520.33 9.0 9,644.18 1.3 Equity & minority interests - - 377.47 183.14 3,054.69 5,765.13 88.7 6,228.29 8.0 6,504.73 4.4 Total liabilities & equity - - 2,524.46 3,464.94 8,448.31 14,502.65 71.7 15,748.61 8.6 16,148.91 2.5 Cash flow (R$m) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income - 107.30 55.40 180.35 (165.03) 325.02 - 617.54 90.0 728.16 17.9 Depreciation - 17.06 42.43 89.38 256.93 427.50 66.4 476.43 11.4 493.42 3.6 Net change in working capital - 0.00 0.00 0.00 0.00 0.00 - (952.92) - (219.86) -76.9 Other (operating) - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations - 124.36 97.83 269.73 91.90 752.52 718.9 141.06 -81.3 1,001.72 610.2 Capital expenditure - (129.90) 0.00 0.00 0.00 0.00 - (550.00) - (550.00) 0.0 Net (acquisitions) / disposals - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities - (129.90) 0.00 0.00 0.00 0.00 - (550.00) - (550.00) 0.0 Increase/(decrease) in debt - 1,103.39 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Share issues / (repurchases) - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid - (0.10) (263.74) 0.00 0.00 0.00 - (154.38) - (451.72) 192.6 Other cash from financing - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities - 1,103.29 (263.74) 0.00 0.00 0.00 - (154.38) - (451.72) 192.6 Cash flow chge in cash & equivalents - 1,097.74 (165.92) 269.73 91.90 752.52 - (563.33) - 0.00 - FX / non cash items - - 308.68 (382.95) 1,028.74 515.19 4982.7 0.00 - 0.00 - Bal sheet chge in cash & equivalents - - 142.77 (113.23) 1,120.63 1,267.71 - (563.33) - 0.00 - Core EBITDA - 286.76 345.53 564.95 596.43 1,179.30 97.7 1,734.83 47.1 1,951.81 12.5 Maintenance capital expenditure - (17.06) (50.91) (104.30) (146.04) (265.08) 81.5 (355.72) 34.2 (376.11) 5.7 Maintenance net working capital - 0.00 (12.57) (11.71) (305.22) (485.44) 59.0 (323.22) -33.4 (60.55) -81.3 Operating free cash flow, pre-tax

- 269.70 282.04 448.93 145.16 428.77 195.4 1,055.89 146.3 1,515.15 43.5


UBS 69


Food Products



Company profile JBS is the world's largest beef producer. It is the leading player inBrazil and Argentina, with share in domestic markets and exports of5.4% and 14.7%, respectively, in 2006. Following the acquisition ofSwift in mid 2007, the company has become also the leading name inAustralia and a top-3 player in US' beef and pork industries.


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

-60.0x

-48.6x

-37.1x

-25.7x

-14.3x

-2.9x

8.6x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)-20%

0%

20%

40%

60%

80%

0.0x

1.0x

2.0x

3.0x

4.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)0

10000

20000

30000

40000

50000

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%



JBS S.A.

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - - NM 20.3 10.7 9.1 P/E (UBS) - - NM 12.4 8.3 7.3 P/CEPS - - NM 6.9 5.2 4.7 Net dividend yield (%) - - 0.0 0.0 2.3 6.8 P/BV - - 3.7 1.2 1.1 1.0 EV/revenue (core) - - 0.7 0.3 0.2 0.2 EV/EBITDA (core) - - 15.5 7.1 5.3 4.9 EV/EBIT (core) - - 27.2 11.1 7.2 6.6 EV/OpFCF (core) - - NM 19.5 8.6 6.3 EV/op. invested capital - - 2.6 1.3 1.1 1.0

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap - 7,656.79 6,598.11 6,598.11 6,598.11 + minority interests 0.01 0.01 0.01 0.01 0.01 + average net debt (cash) 1,878.93 2,400.24 2,685.08 3,283.90 3,565.56 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value (0.01) (829.99) (940.25) (760.25) (580.25) Core enterprise value - 9,227.05 8,342.95 9,121.77 9,583.43 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - 10.9 NM 114.4 35.5 4.9 EBITDA (UBS) - 63.5 5.6 97.7 47.1 12.5 EBIT (UBS) - 56.9 -28.6 121.4 67.4 15.9 EPS (UBS) - NM - - 50.0 13.9 Cash EPS - 175.7 -73.1 NM 32.8 10.0 Net DPS - - - - - 192.6 BVPS - -51.5 NM 88.7 10.7 4.4

Margins (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBITDA / revenue - 14.2 4.2 3.9 4.2 4.5 EBIT / revenue - 12.0 2.4 2.5 3.1 3.4 Net profit (UBS) / revenue - 4.5 NM 1.8 1.9 2.1

Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) - 21.8 9.4 12.1 14.9 15.7 ROIC post tax - 14.4 9.4 14.6 13.5 13.7 Net ROE - 64.4 (10.2) 12.1 13.3 14.3

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - 2.3 0.8 2.4 3.3 3.5 Dividend cover (UBS EPS) - - - - 5.2 2.0 Div. payout ratio (%, UBS EPS) - - - - 19.4 49.7 Net debt / EBITDA - 4.3 4.0 2.5 2.1 1.8



Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - NM 77.5 52.1 57.2 54.8 Net debt / (net debt + equity) - 93.0 43.7 34.2 36.4 35.4 Net debt (core) / EV - - 26.0 32.2 36.0 37.2




UBS 70

Perdigao

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 3,825.19 4,883.25 5,145.18 5,209.76 6,633.38 11,890.92 79.3 13,475.67 13.3 15,140.69 12.4 Operating expenses (ex depn) (3,441.95) (4,289.38) (4,489.48) (4,858.24) (5,838.50) (10,766.75) 84.4 (11,958.60) 11.1 (13,428.61) 12.3 EBITDA (UBS) 383.25 593.87 655.70 351.52 794.88 1,124.17 41.4 1,517.07 34.9 1,712.08 12.9 Depreciation (98.66) (105.37) (117.39) (150.21) (291.88) (427.58) 46.5 (519.87) 21.6 (562.67) 8.2 Operating income (EBIT, UBS) 284.59 488.50 538.31 201.31 503.00 696.59 38.5 997.20 43.2 1,149.41 15.3 Other income & associates (3.78) (28.28) (4.46) 2.32 0.00 (1,520.87) - 0.00 - 0.00 - Net interest (135.40) (91.79) (82.73) (129.33) (56.93) (352.09) 518.5 (480.37) 36.4 (458.84) -4.5 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 145.41 368.44 451.13 74.31 446.07 (1,176.36) - 516.83 - 690.57 33.6 Tax (16.33) (72.82) (90.16) 50.05 (99.69) 279.66 - (139.54) - (186.45) 33.6 Profit after tax 129.07 295.62 360.96 124.36 346.38 (896.70) - 377.28 - 504.12 33.6 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends (5.53) 0.00 0.00 (7.12) (4.77) (0.28) -94.1 0.00 - 0.00 - Net income (local GAAP) 123.55 295.62 360.96 117.23 341.60 (896.99) - 377.28 - 504.12 33.6 Net Income (UBS) 123.55 295.62 360.96 117.23 341.60 87.31 -74.4 377.28 332.1 504.12 33.6 Tax rate (%) 11.23 19.76 19.99 0.00 22.35 0.00 - 27.00 - 27.00 0.0 Pre-abnormal tax rate (%) 11.14 18.52 19.99 0.00 22.35 0.00 - 27.00 - 27.00 0.0 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 0.92 2.21 2.69 0.71 2.06 (4.33) - 1.82 - 2.44 33.6 EPS (UBS) 0.92 2.21 2.69 0.71 2.06 0.42 -79.5 1.82 332.1 2.44 33.6 Net DPS 0.23 0.55 0.67 0.18 0.51 0.00 - 0.46 - 0.61 33.6 Cash EPS 1.66 2.99 3.57 1.78 3.82 2.49 -34.8 4.33 74.2 5.15 18.9 BVPS 0.11 20.90 26.35 12.68 18.22 16.30 -10.5 17.67 8.4 19.49 10.3 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 648.52 273.07 817.68 1,120.49 1,831.54 859.00 -53.1 612.57 -28.7 465.23 -24.1 Other current assets 1,018.07 995.71 1,370.93 1,724.54 2,794.83 4,113.07 47.2 4,489.85 9.2 4,910.77 9.4 Total current assets 1,666.59 1,268.78 2,188.61 2,845.03 4,626.36 4,972.07 7.5 5,102.43 2.6 5,376.00 5.4 Net tangible fixed assets 987.12 994.95 1,200.55 1,725.87 2,977.86 3,123.97 4.9 3,404.11 9.0 3,661.44 7.6 Net intangible fixed assets 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Investments / other assets 125.30 261.04 243.06 258.52 590.87 1,104.68 87.0 1,104.68 0.0 1,104.68 0.0 Total assets 2,779.01 2,524.77 3,632.22 4,829.42 8,195.09 9,200.73 12.3 9,611.21 4.5 10,142.11 5.5 Trade payables & other ST liabilities 508.77 529.00 581.25 704.57 1,160.28 1,395.30 20.3 1,522.83 9.1 1,675.64 10.0 Short term debt 811.59 507.88 548.66 546.98 1,365.30 1,285.78 -5.8 1,285.78 0.0 1,285.78 0.0 Total current liabilities 1,320.36 1,036.87 1,129.91 1,251.55 2,525.58 2,681.08 6.2 2,808.61 4.8 2,961.42 5.4 Long term debt 584.90 388.34 1,125.37 1,287.07 1,792.02 2,765.79 54.3 2,765.79 0.0 2,765.79 0.0 Other long term liabilities 110.56 129.44 154.14 146.91 162.06 380.16 134.6 380.16 0.0 380.16 0.0 Total liabilities 2,015.82 1,554.65 2,409.42 2,685.53 4,479.65 5,827.03 30.1 5,954.55 2.2 6,107.36 2.6 Equity & minority interests 763.19 970.12 1,222.80 2,143.88 3,715.44 3,373.70 -9.2 3,656.66 8.4 4,034.75 10.3 Total liabilities & equity 2,779.01 2,524.77 3,632.22 4,829.42 8,195.09 9,200.73 12.3 9,611.21 4.5 10,142.11 5.5 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 123.55 295.62 360.96 117.23 341.60 (896.99) - 377.28 - 504.12 33.6 Depreciation 98.66 105.37 117.39 150.21 291.88 427.58 46.5 519.87 21.6 562.67 8.2 Net change in working capital 1.76 22.73 (367.58) (82.44) (733.97) (515.57) -29.8 (249.26) -51.7 (268.10) 7.6 Other (operating) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations 223.97 423.72 110.78 185.01 (100.49) (984.97) 880.2 647.89 - 798.69 23.3 Capital expenditure (77.08) (113.20) (323.00) (675.52) (953.74) (800.00) -16.1 (800.00) 0.0 (820.00) 2.5 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities (77.08) (113.20) (323.00) (675.52) (953.74) (800.00) -16.1 (800.00) 0.0 (820.00) 2.5 Increase/(decrease) in debt (397.12) (500.28) 777.83 160.01 1,323.27 894.25 - 0.00 - 0.00 - Share issues / (repurchases) 87.55 206.93 252.68 882.08 1,610.46 (342.15) - 282.96 - 378.09 - Dividends paid (30.89) (73.90) (90.24) (29.31) (85.40) 0.00 - (94.32) - (126.03) 33.6 Other cash from financing 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities (340.46) (367.25) 940.26 1,012.78 2,848.33 552.10 -80.6 188.64 -65.8 252.06 33.6 Cash flow chge in cash & equivalents (193.58) (56.72) 728.04 522.27 1,794.10 (1,232.88) - 36.53 - 230.74 - FX / non cash items (62.15) (318.73) (183.43) (219.45) (1,083.06) 260.34 - (282.96) - (378.09) 33.6 Bal sheet chge in cash & equivalents (255.73) (375.45) 544.61 302.81 711.04 (972.54) - (246.43) - (147.34) - Core EBITDA 383.25 593.87 655.70 351.52 794.88 1,092.20 37.4 1,480.89 35.6 1,663.74 12.3 Maintenance capital expenditure (98.66) (105.37) (117.39) (150.21) (291.88) (427.58) 46.5 (519.87) 21.6 (562.67) 8.2 Maintenance net working capital 1.76 22.73 (367.58) (82.44) (733.97) (515.57) -29.8 (249.26) -51.7 (268.10) 7.6 Operating free cash flow, pre-tax

286.34 511.23 170.73 118.87 (230.97) 149.05 - 711.76 377.5 832.97 17.0


UBS 71


Food Products



Company profile Perdigão is the second largest company of processed and frozenmeat in Brazil, with 25% and 35% market share in the first half of2006, respectively. In addition, Perdigão is one of Brazil mainexporters of poultry and pork meats, with country's market shares of17% and 19% in 2005, respectively. In all of its businesses Perdigãohas a strong distribution reach, large scale, and established brandequity. After recent acquisition of Batavia the company entered thedairy products industry, reducing exposure to the meat industry.


12/06 12/07 12/08 12/09E 12/10E0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

0.0x

20.0x

40.0x

60.0x

80.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

1.4x

1.5x

1.6x

1.7x

1.8x

1.9x

2.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)2000

4000

6000

8000

10000

12000

14000

16000

-100%

-50%

0%

50%

100%

150%

200%



Perdigao

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) 26.5 34.2 17.1 NM 16.4 12.2 P/E (UBS) 26.5 34.2 17.1 70.7 16.4 12.2 P/CEPS 6.6 13.5 9.2 12.0 6.9 5.8 Net dividend yield (%) 2.8 0.7 1.5 0.0 1.5 2.0 P/BV 21.2 1.9 1.9 1.8 1.7 1.5 EV/revenue (core) 0.4 0.7 1.1 0.7 0.7 0.6 EV/EBITDA (core) 3.7 10.2 8.8 7.7 6.4 5.8 EV/EBIT (core) 4.9 17.8 13.9 12.1 9.5 8.4 EV/OpFCF (core) 7.0 NM NM NM 13.3 11.6 EV/op. invested capital - 1.5 1.8 1.5 1.4 1.3

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 2,755.04 5,948.82 6,169.42 6,169.42 6,169.42 + minority interests 39.01 0.10 0.51 0.51 0.51 + average net debt (cash) 784.96 1,019.67 2,259.18 3,315.78 3,512.67 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value (1.00) (1.00) (1.00) (1.00) (1.00) Core enterprise value 3,578.01 6,967.59 8,428.11 9,484.71 9,681.60 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 15.6 1.3 27.3 79.3 13.3 12.4 EBITDA (UBS) 4.8 -46.4 126.1 41.4 34.9 12.9 EBIT (UBS) -1.3 -62.6 149.9 38.5 43.2 15.3 EPS (UBS) 88.8 -71.0 163.3 -79.5 NM 33.6 Cash EPS 28.3 -50.1 114.0 -34.8 74.2 18.9 Net DPS 84.1 -73.8 191.4 - - 33.6 BVPS NM -51.9 43.6 -10.5 8.4 10.3



Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest 3.2 1.6 8.8 2.0 2.1 2.5 Dividend cover (UBS EPS) 4.1 4.4 4.0 - 4.0 4.0 Div. payout ratio (%, UBS EPS) 24.5 22.6 25.0 - 25.0 25.0 Net debt / EBITDA 1.7 2.0 1.7 2.8 2.3 2.1


Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT 0.7 0.6 NM 0.2 0.7 0.7 Capex / revenue (%) 5.9 13.0 14.4 6.7 5.9 5.4 Capex / depreciation 2.4 4.5 3.3 1.9 1.5 1.5





UBS 72

Sadia

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 5,292.12 6,379.22 7,318.44 6,876.70 8,623.19 10,981.47 27.3 12,846.57 17.0 14,350.06 11.7 Operating expenses (ex depn) (4,592.35) (5,545.25) (6,416.27) (6,313.65) (7,525.31) (9,726.79) 29.3 (11,310.40) 16.3 (12,699.56) 12.3 EBITDA (UBS) 699.77 833.97 902.17 563.05 1,082.74 1,230.72 13.7 1,536.17 24.8 1,650.50 7.4 Depreciation (137.06) (189.56) (194.66) (266.33) (351.82) (464.00) 31.9 (629.27) 35.6 (653.17) 3.8 Operating income (EBIT, UBS) 562.71 644.42 707.51 296.72 730.92 766.72 4.9 906.90 18.3 997.33 10.0 Other income & associates (84.10) (57.52) 44.74 38.85 141.28 13.18 -90.7 0.00 - 0.00 - Net interest 148.71 (32.62) 43.45 106.47 (1.09) (1,232.30) 112541.7 (1,689.30) 37.1 (603.70) -64.3 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 627.32 554.28 795.70 442.03 871.11 (452.40) - (782.40) 72.9 393.63 - Tax (129.88) (123.91) (132.93) (51.02) (183.10) 182.19 - 78.24 -57.1 (122.03) - Profit after tax 497.45 430.37 662.76 391.02 688.01 (270.21) - (704.16) 160.6 271.61 - Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends 0.35 0.27 1.11 0.81 1.20 0.87 -27.4 0.00 - 0.00 - Net income (local GAAP) 497.80 430.64 663.87 391.83 689.21 (269.34) - (704.16) 161.4 271.61 - Net Income (UBS) 497.80 430.64 659.26 323.20 512.45 (269.34) - (704.16) 161.4 271.61 - Tax rate (%) 20.70 22.36 16.71 11.54 21.02 - - - - 31.00 - Pre-abnormal tax rate (%) 18.80 20.48 18.20 25.36 39.69 - - - - 31.00 - Per share (R$) 12/03 12/04 12/05 12/04 12/07 12/06E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 0.73 0.63 0.97 0.57 1.01 (0.39) - (1.03) 161.4 0.40 - EPS (UBS) 0.73 0.63 0.97 0.47 0.75 (0.39) - (1.03) 161.4 0.40 - Net DPS 0.98 0.28 0.13 0.17 0.30 0.00 - 0.00 - 0.10 - Cash EPS 0.93 0.91 1.25 0.86 1.27 0.29 -77.5 (0.11) - 1.35 - BVPS 3.49 4.17 5.22 5.77 4.26 3.73 -12.5 2.70 -27.7 3.00 11.1 Balance sheet (R$m) 12/03 12/04 12/07 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 2,374.00 2,319.94 2,626.92 2,447.83 2,369.30 3,850.84 62.5 2,728.43 -29.1 2,583.26 -5.3 Other current assets 1,639.71 1,805.43 1,753.94 2,218.82 2,194.70 2,888.65 31.6 3,258.27 12.8 3,585.51 10.0 Total current assets 4,013.71 4,125.37 4,380.86 4,666.65 4,564.00 6,739.49 47.7 5,986.71 -11.2 6,168.77 3.0 Net tangible fixed assets 957.46 1,057.66 1,666.21 2,333.44 3,020.80 4,214.93 39.5 4,385.67 4.1 4,532.49 3.3 Net intangible fixed assets 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Investments / other assets 516.50 542.79 475.76 576.26 596.60 1,113.06 86.6 1,113.06 0.0 1,113.06 0.0 Total assets 5,487.67 5,725.82 6,522.83 7,576.35 8,181.40 12,067.48 47.5 11,485.43 -4.8 11,814.32 2.9 Trade payables & other ST liabilities 881.81 859.17 986.21 985.29 1,238.90 1,349.71 8.9 1,471.81 9.0 1,596.99 8.5 Short term debt 1,415.34 1,817.16 1,395.37 1,216.96 989.60 3,835.91 287.6 3,835.91 0.0 3,835.91 0.0 Total current liabilities 2,297.15 2,676.33 2,381.57 2,202.25 2,228.50 5,185.61 132.7 5,307.72 2.4 5,432.90 2.4 Long term debt 1,502.99 1,101.83 1,714.53 2,677.54 2,688.03 3,931.37 46.3 3,931.37 0.0 3,931.37 0.0 Other long term liabilities 200.11 169.65 201.26 237.24 319.80 365.53 14.3 365.53 0.0 365.53 0.0 Total liabilities 4,000.26 3,947.81 4,297.36 5,117.03 5,236.33 9,482.52 81.1 9,604.62 1.3 9,729.80 1.3 Equity & minority interests 1,487.41 1,778.01 2,225.47 2,459.32 2,945.07 2,584.97 -12.2 1,880.81 -27.2 2,084.51 10.8 Total liabilities & equity 5,487.67 5,725.82 6,522.83 7,576.35 8,181.40 12,067.48 47.5 11,485.43 -4.8 11,814.32 2.9 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 497.80 430.64 663.87 391.83 689.21 (269.34) - (704.16) 161.4 271.61 - Depreciation 137.06 189.56 194.66 266.33 351.82 464.00 31.9 629.27 35.6 653.17 3.8 Net change in working capital 138.82 (183.20) 133.11 (397.01) 201.45 (451.35) - (247.52) -45.2 (202.05) -18.4 Other (operating) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations 773.67 437.00 991.64 261.16 1,242.48 (256.69) - (322.41) 25.6 722.73 - Capital expenditure (123.48) (308.36) (762.53) (889.72) (1,090.62) (1,620.58) 48.6 (800.00) -50.6 (800.00) 0.0 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities (123.48) (308.36) (762.53) (889.72) (1,090.62) (1,620.58) 48.6 (800.00) -50.6 (800.00) 0.0 Increase/(decrease) in debt (289.33) 0.66 190.91 784.60 (216.87) 4,089.65 - 0.00 - 0.00 - Share issues / (repurchases) 225.77 290.43 445.80 234.71 452.14 (364.40) - (704.16) - 203.70 - Dividends paid (668.73) (187.86) (85.79) (112.89) (206.76) 0.00 - 0.00 - (67.90) - Other cash from financing 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities (732.29) 103.22 550.91 906.42 28.51 3,725.25 12965.4 (704.16) - 135.80 - Cash flow chge in cash & equivalents (82.10) 231.86 780.02 277.86 180.37 1,847.98 - (1,826.57) - 58.53 - FX / non cash items 1,143.31 (285.92) (473.04) (456.95) (258.90) (366.44) 41.5 704.16 - (203.70) - Bal sheet chge in cash & equivalents 1,061.22 (54.06) 306.98 (179.09) (78.53) 1,481.54 - (1,122.41) - (145.17) - Core EBITDA 557.98 782.74 842.14 551.21 999.61 1,217.84 21.8 1,536.17 26.1 1,607.20 4.6 Maintenance capital expenditure (137.06) (189.56) (194.66) (266.33) (351.82) (464.00) 31.9 (629.27) 35.6 (653.17) 3.8 Maintenance net working capital 138.82 (183.20) 133.11 (397.01) 201.45 (451.35) - (247.52) -45.2 (202.05) -18.4 Operating free cash flow, pre-tax

559.73 409.99 780.59 (112.13) 849.24 302.48 -64.4 659.39 118.0 751.98 14.0


UBS 73


Food Products



Company profile Sadia is a leader in the Brazilian processed and frozen meat industry,with 25% and 38% market share in the first half of 2006, respectively.In addition to leading the domestic market, Sadia is one of Brazil mainexporters of poultry and pork meats, with market shares of 26% and17% in 2005, respectively. In all of its businesses Sadia has a strongdistribution reach, large scale, and established brand equity.


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

-10.0x

-5.0x

0.0x

5.0x

10.0x

15.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)-40.0%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)4000

6000

8000

10000

12000

14000

16000

-100%

-50%

0%

50%

100%

150%

200%



Sadia

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) 5.9 10.8 9.0 NM NM 7.0 P/E (UBS) 6.4 13.1 12.1 NM NM 7.0 P/CEPS 4.1 7.2 7.2 9.8 NM 2.1 Net dividend yield (%) 14.0 2.7 3.3 0.0 0.0 3.6 P/BV 0.8 1.1 2.1 0.7 1.0 0.9 EV/revenue (core) 0.5 0.7 0.8 0.4 0.5 0.5 EV/EBITDA (core) 5.0 9.2 7.3 3.9 4.4 4.5 EV/EBIT (core) 6.3 17.2 9.9 6.2 7.4 7.2 EV/OpFCF (core) 8.5 NM 8.6 15.7 10.2 9.6 EV/op. invested capital - 1.6 1.8 0.9 1.0 1.0

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 4,313.35 6,189.63 2,434.99 2,434.99 2,434.99 + minority interests 0.96 34.57 38.87 38.87 38.87 + average net debt (cash) 839.51 1,113.31 2,375.75 4,347.18 4,843.64 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value (55.59) (65.80) (96.87) (96.87) (96.87) Core enterprise value 5,098.24 7,271.71 4,752.74 6,724.16 7,220.62 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 12.9 -6.0 25.4 27.3 17.0 11.7 EBITDA (UBS) 8.4 -37.6 92.3 13.7 24.8 7.4 EBIT (UBS) 0.8 -58.1 146.3 4.9 18.3 10.0 EPS (UBS) 9.1 -51.0 58.6 - 161.4 - Cash EPS 14.0 -31.0 46.6 -77.5 - - Net DPS 12.6 31.6 83.2 - - - BVPS 18.1 10.6 -26.2 -12.5 -27.7 11.1

Margins (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBITDA / revenue 11.3 8.2 12.6 11.2 12.0 11.5 EBIT / revenue 8.3 4.3 8.5 7.0 7.1 7.0 Net profit (UBS) / revenue 7.0 4.7 5.9 NM NM 1.9

Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) - 9.2 18.2 14.5 13.7 14.3 ROIC post tax - 6.8 11.0 - - 9.8 Net ROE 25.5 13.8 19.1 (9.9) (32.1) 14.0

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - NM 0.6 0.5 1.7 Dividend cover (UBS EPS) 3.4 2.9 2.5 - - 4.0 Div. payout ratio (%, UBS EPS) 51.3 34.9 40.3 - - 25.0 Net debt / EBITDA 1.5 2.6 1.2 3.2 3.3 3.1

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - 2.1 2.1 2.1 1.9 2.1 Revenue / fixed assets 5.1 3.4 3.2 3.0 3.0 3.2 Revenue / net working capital - 6.9 7.9 8.8 7.7 7.6

Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT 0.7 NM 1.2 0.4 0.7 0.8 Capex / revenue (%) 7.4 12.9 12.6 14.8 6.2 5.6 Capex / depreciation 2.4 3.3 3.1 3.5 1.3 1.2





UBS 74

Pão de Açúcar (CBD)

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 10,806.34 12,565.02 13,413.40 13,880.40 14,902.89 18,035.39 21.0 19,613.07 8.7 21,630.56 10.3 Operating expenses (ex depn) (9,947.75) (11,581.65) (12,306.95) (12,993.96) (13,876.87) (16,690.01) 20.3 (18,161.85) 8.8 (19,943.54) 9.8 EBITDA (UBS) 858.59 983.37 1,106.44 886.44 1,026.01 1,345.38 31.1 1,451.22 7.9 1,687.02 16.2 Depreciation (454.37) (489.57) (625.28) (547.94) (550.70) (593.15) 7.7 (598.68) 0.9 (626.23) 4.6 Operating income (EBIT, UBS) 404.21 493.80 481.16 338.50 475.32 752.22 58.3 852.54 13.3 1,060.79 24.4 Other income & associates (3.52) 71.27 1.49 (389.85) (51.40) (17.57) -65.8 (25.30) 44.0 (30.72) 21.4 Net interest (180.33) (288.00) (236.85) (220.63) (211.17) (313.65) 48.5 (247.58) -21.1 (211.88) -14.4 Abnormal items (pre-tax) (4.48) 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 215.89 277.07 245.80 (271.98) 212.75 421.01 97.9 579.65 37.7 818.19 41.2 Tax 9.74 49.54 (52.99) (1.47) (11.40) (121.71) 967.3 (168.27) 38.3 (236.52) 40.6 Profit after tax 225.63 326.61 192.81 (273.45) 201.35 299.30 48.6 411.38 37.4 581.67 41.4 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends 0.00 43.22 64.18 358.97 9.54 (2.07) - (10.60) 411.6 (21.66) 104.2 Net income (local GAAP) 225.63 369.83 256.99 85.52 210.88 297.23 40.9 400.78 34.8 560.02 39.7 Net Income (UBS) 230.11 369.83 256.99 268.98 376.55 415.27 10.3 520.78 25.4 680.02 30.6 Tax rate (%) 0.00 0.00 21.56 0.00 0.00 28.91 - 29.03 0.4 28.91 -0.4 Pre-abnormal tax rate (%) 0.00 0.00 20.23 0.00 0.00 0.88 - 8.33 850.4 14.24 71.0 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 1.99 3.26 2.26 0.75 0.93 1.31 40.9 1.76 34.8 2.46 39.7 EPS (UBS) 2.03 3.26 2.26 2.36 1.65 1.83 10.3 2.29 25.4 2.99 30.6 Net DPS 0.00 0.00 0.00 0.00 0.00 0.22 - 0.33 48.5 0.44 34.8 Cash EPS 6.05 7.57 7.77 7.18 4.08 4.43 8.8 4.92 11.0 5.74 16.7 BVPS 16.61 17.84 18.71 21.28 22.03 24.31 10.4 25.75 5.9 27.77 7.8 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 981.91 1,179.47 1,710.84 1,281.51 1,064.13 1,893.03 77.9 1,884.09 -0.5 1,981.01 5.1 Other current assets 2,238.22 3,086.99 3,199.54 3,596.91 3,945.00 4,468.42 13.3 4,773.06 6.8 5,152.39 7.9 Total current assets 3,220.13 4,266.46 4,910.38 4,878.42 5,009.13 6,361.45 27.0 6,657.15 4.6 7,133.40 7.2 Net tangible fixed assets 4,641.05 5,494.62 4,841.63 4,871.98 5,495.03 5,536.90 0.8 5,831.43 5.3 6,198.07 6.3 Net intangible fixed assets 0.00 0.00 0.00 0.10 0.10 0.10 0.0 0.10 0.0 0.10 0.0 Investments / other assets 1,078.73 1,279.14 1,171.21 1,921.87 2,241.94 2,192.43 -2.2 2,192.43 0.0 2,192.43 0.0 Total assets 8,939.90 11,040.22 10,923.21 11,672.37 12,746.21 14,090.89 10.5 14,681.12 4.2 15,524.01 5.7 Trade payables & other ST liabilities 1,466.20 1,944.11 2,128.84 2,537.83 2,885.80 3,413.33 18.3 3,677.08 7.7 4,060.15 10.4 Short term debt 1,387.76 1,921.44 1,179.21 1,949.11 1,466.91 389.04 -73.5 389.04 0.0 389.04 0.0 Total current liabilities 2,853.96 3,865.55 3,308.04 4,486.93 4,352.71 3,802.37 -12.6 4,066.12 6.9 4,449.19 9.4 Long term debt 1,081.07 1,400.46 1,615.33 719.13 1,698.94 3,129.46 84.2 3,129.46 0.0 3,129.46 0.0 Other long term liabilities 1,236.45 1,371.65 1,460.08 1,495.67 1,544.64 1,521.79 -1.5 1,521.79 0.0 1,521.79 0.0 Total liabilities 5,171.48 6,637.66 6,383.45 6,701.73 7,596.30 8,453.61 11.3 8,717.36 3.1 9,100.43 4.4 Equity & minority interests 3,768.42 4,402.56 4,539.76 4,970.64 5,149.91 5,637.28 9.5 5,963.75 5.8 6,423.57 7.7 Total liabilities & equity 8,939.90 11,040.22 10,923.21 11,672.37 12,746.21 14,090.89 10.5 14,681.12 4.2 15,524.01 5.7 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 225.63 369.83 256.99 85.52 210.88 297.23 40.9 400.78 34.8 560.02 39.7 Depreciation 454.37 489.57 625.28 547.94 550.70 593.15 7.7 598.68 0.9 626.23 4.6 Net change in working capital - - - (211.95) 57.33 (6.22) - (40.89) 557.3 3.74 - Other (operating) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations - - - 421.52 818.91 884.16 8.0 958.57 8.4 1,189.99 24.1 Capital expenditure - - - (578.30) (1,173.74) (635.03) -45.9 (893.21) 40.7 (992.87) 11.2 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities - - - (578.30) (1,173.74) (635.03) -45.9 (893.21) 40.7 (992.87) 11.2 Increase/(decrease) in debt (446.96) 853.08 (527.37) (126.30) 497.62 352.64 - 0.00 - 0.00 - Share issues / (repurchases) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid (54.79) (84.06) (62.05) (20.31) 0.00 (50.03) - (74.31) 48.5 (100.19) 34.8 Other cash from financing 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities (501.75) 769.02 (589.42) (146.61) 497.62 302.61 -39.2 (74.31) - (100.19) 34.8 Cash flow chge in cash & equivalents - - - (303.39) 142.79 551.75 - (8.94) - 96.92 - FX / non cash items - - - (125.93) (360.17) 277.15 - 0.00 - (.00) - Bal sheet chge in cash & equivalents (153.25) 197.56 531.37 (429.33) (217.38) 828.90 - (8.94) - 96.92 - Core EBITDA 858.59 983.37 1,106.44 886.44 1,026.01 1,345.38 31.1 1,451.22 7.9 1,687.02 16.2 Maintenance capital expenditure (454.37) (489.57) (625.28) (547.94) (550.70) (593.15) 7.7 (598.68) 0.9 (626.23) 4.6 Maintenance net working capital - - - (211.95) 57.33 (6.22) - (40.89) 557.3 3.74 - Operating free cash flow, pre-tax

- - - 126.55 532.64 746.00 40.1 811.65 8.8 1,064.53 31.2


UBS 75


Food Retailers & Wholesalers



Company profile Pão de Açúcar is the second largest retailer in Brazil with a marketshare of 6.6%. The company has 549 stores with 85% of them on theRio-São Paulo area with average store size is 2,200 sqm. Itsbusiness is based on a multiformat structure with a diverse mix (26%non-food) and a balance between supermarkets and hypermarkets.


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

0.0x

5.0x

10.0x

15.0x

20.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

5.00%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)4.00%

5.14%

6.29%

7.43%

8.57%

9.71%

10.86%

12.00%

0.6x

0.7x

0.8x

0.9x

1.0x

1.1x

1.2x

1.3x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)10000

12000

14000

16000

18000

20000

22000

-40.0%

-28.6%

-17.1%

-5.7%

5.7%

17.1%

28.6%



Pão de Açúcar (CBD)

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) 19.1 48.4 35.0 24.1 17.9 12.8 P/E (UBS) 12.3 15.4 19.6 17.3 13.8 10.6 P/CEPS 4.3 5.1 8.0 7.1 6.4 5.5 Net dividend yield (%) 0.0 0.0 0.0 0.7 1.0 1.4 P/BV 1.6 1.7 1.5 1.3 1.2 1.1 EV/revenue (core) - 0.6 0.6 0.5 0.5 0.4 EV/EBITDA (core) - 10.0 8.0 6.6 6.4 5.5 EV/EBIT (core) - 26.2 17.3 11.8 10.9 8.7 EV/OpFCF (core) - NM 15.4 11.9 11.4 8.7 EV/op. invested capital - 1.5 1.2 1.3 1.3 1.2

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 8,280.99 7,377.16 7,176.61 7,176.61 7,176.61 + minority interests 287.39 128.42 137.82 105.30 105.30 + average net debt (cash) 443.07 908.59 1,689.22 2,106.80 2,111.27 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value (155.84) (188.16) (113.38) (113.38) (113.38) Core enterprise value 8,855.61 8,226.00 8,890.27 9,275.33 9,279.80 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 10.1 3.5 7.4 21.0 8.7 10.3 EBITDA (UBS) 5.7 -19.9 15.7 31.1 7.9 16.2 EBIT (UBS) 3.4 -29.6 40.4 58.3 13.3 24.4 EPS (UBS) 0.4 4.5 -30.0 10.3 25.4 30.6 Cash EPS 4.7 -7.6 -43.3 8.8 11.0 16.7 Net DPS - - - - 48.5 34.8 BVPS 7.6 13.8 3.5 10.4 5.9 7.8



Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest 1.8 1.3 2.1 2.4 3.4 5.0 Dividend cover (UBS EPS) - - - 8.3 7.0 6.8 Div. payout ratio (%, UBS EPS) - - - 12.0 14.3 14.7 Net debt / EBITDA 1.7 1.6 2.0 1.2 1.1 0.9



Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity 37.9 27.9 40.8 28.8 27.4 23.9 Net debt / (net debt + equity) 27.8 22.3 29.5 22.7 21.8 19.6 Net debt (core) / EV - 5.0 11.0 19.0 22.7 22.8


Guilherme Arruda Analyst [email protected] +55-21-3262 9871


UBS 76

Lojas Renner

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 823.92 953.80 1,136.43 1,436.11 1,751.73 1,956.42 11.7 2,044.67 4.5 2,292.17 12.1 Operating expenses (ex depn) (751.50) (846.29) (996.96) (1,252.34) (1,465.73) (1,642.43) 12.1 (1,749.07) 6.5 (1,934.83) 10.6 EBITDA (UBS) 72.43 107.51 139.48 183.76 286.00 313.99 9.8 295.61 -5.9 357.34 20.9 Depreciation (44.97) (48.66) (33.73) (38.72) (49.71) (62.03) 24.8 (71.24) 14.9 (82.57) 15.9 Operating income (EBIT, UBS) 27.45 58.86 105.74 145.05 236.29 251.96 6.6 224.37 -11.0 274.78 22.5 Other income & associates 0.08 (2.71) (17.18) (4.54) (3.98) (13.95) 250.9 0.00 - 0.00 - Net interest 33.08 (1.29) 20.59 (6.91) (14.03) (10.11) -27.9 (18.11) 79.1 (16.48) -9.0 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 60.61 54.86 109.16 133.60 218.29 227.90 4.4 206.25 -9.5 258.29 25.2 Tax (4.08) (2.40) (28.87) (34.78) (62.42) (65.45) 4.9 (57.97) -11.4 (72.60) 25.2 Profit after tax 56.53 52.45 80.29 98.82 155.86 162.45 4.2 148.28 -8.7 185.70 25.2 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net income (local GAAP) 56.53 52.45 80.29 98.82 155.86 162.45 4.2 148.28 -8.7 185.70 25.2 Net Income (UBS) 56.53 52.45 80.29 98.82 155.86 162.45 4.2 148.28 -8.7 185.70 25.2 Tax rate (%) 6.73 4.38 26.45 26.03 28.60 28.72 0.4 28.11 -2.1 28.11 0.0 Pre-abnormal tax rate (%) 6.73 4.38 26.93 26.13 28.60 28.72 0.4 28.11 -2.1 28.11 0.0 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 0.47 0.43 0.66 0.81 1.28 1.34 4.2 1.22 -8.7 1.53 25.2 EPS (UBS) 0.47 0.43 0.66 0.81 1.28 1.34 4.2 1.22 -8.7 1.53 25.2 Net DPS 0.12 0.11 0.17 0.20 0.00 0.00 - 0.61 - 0.76 25.2 Cash EPS 0.84 0.83 0.94 1.13 1.69 1.85 9.2 1.81 -2.2 2.21 22.2 BVPS 0.79 1.22 4.26 4.48 4.80 5.85 22.0 6.74 15.1 7.61 13.0 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 85.23 99.75 276.52 287.20 296.43 178.70 -39.7 241.07 34.9 241.07 0.0 Other current assets 355.14 445.79 524.20 659.53 776.86 927.28 19.4 977.79 5.4 1,081.03 10.6 Total current assets 440.37 545.54 800.71 946.74 1,073.29 1,105.98 3.0 1,218.87 10.2 1,322.10 8.5 Net tangible fixed assets 174.66 164.79 194.13 280.37 335.18 409.11 22.1 420.87 2.9 458.48 8.9 Net intangible fixed assets 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Investments / other assets 26.66 32.00 64.59 36.87 40.89 44.02 7.6 44.02 0.0 44.02 0.0 Total assets 641.69 742.33 1,059.42 1,263.97 1,449.36 1,559.11 7.6 1,683.75 8.0 1,824.61 8.4 Trade payables & other ST liabilities 255.86 316.39 431.80 534.27 632.98 448.73 -29.1 465.71 3.8 500.23 7.4 Short term debt 51.44 58.29 63.18 156.94 189.51 317.91 67.8 317.91 0.0 317.91 0.0 Total current liabilities 307.30 374.68 494.98 691.21 822.49 766.64 -6.8 783.62 2.2 818.14 4.4 Long term debt 231.14 212.35 0.00 0.00 0.00 29.66 - 29.66 0.0 29.66 0.0 Other long term liabilities 7.38 6.97 46.87 28.80 43.94 51.31 16.8 51.31 0.0 51.31 0.0 Total liabilities 545.81 594.00 541.85 720.01 866.43 847.61 -2.2 864.59 2.0 899.11 4.0 Equity & minority interests 95.88 148.33 517.58 543.97 582.93 711.49 22.1 819.16 15.1 925.49 13.0 Total liabilities & equity 641.69 742.33 1,059.42 1,263.97 1,449.36 1,559.11 7.6 1,683.75 8.0 1,824.61 8.4 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 56.53 52.45 80.29 98.82 155.86 162.45 4.2 148.28 -8.7 185.70 25.2 Depreciation 44.97 48.66 33.73 38.72 49.71 62.03 24.8 71.24 14.9 82.57 15.9 Net change in working capital (1.24) (30.13) 37.00 (32.86) (18.61) (334.68) 1698.7 (33.54) -90.0 (68.71) 104.9 Other (operating) 1.00 1.00 1.00 1.00 1.00 1.00 0.0 1.00 0.0 1.00 0.0 Net cash from operations 101.26 71.98 152.03 105.67 187.96 (109.20) - 186.99 - 200.55 7.3 Capital expenditure (44.67) (38.78) (63.07) (124.96) (104.51) (135.96) 30.1 (83.00) -39.0 (120.18) 44.8 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities (44.67) (38.78) (63.07) (124.96) (104.51) (135.96) 30.1 (83.00) -39.0 (120.18) 44.8 Increase/(decrease) in debt (46.78) (11.93) (207.46) 93.76 32.56 158.06 - 0.00 - 0.00 - Share issues / (repurchases) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid (14.13) (13.11) (20.07) (24.71) 0.00 0.00 - (74.14) - (92.85) 25.2 Other cash from financing 1.00 1.00 1.00 1.00 1.00 1.00 - 1.00 - 1.00 - Cash from financing activities (59.91) (24.04) (226.54) 70.06 33.56 159.06 373.9 (73.14) - (91.85) 25.6 Cash flow chge in cash & equivalents (3.32) 9.16 (137.58) 50.77 117.01 (86.09) - 30.85 - (11.48) - FX / non cash items 21.96 5.36 314.34 (40.08) (107.78) (31.64) -70.6 31.53 - 11.48 -63.6 Bal sheet chge in cash & equivalents 18.64 14.52 176.77 10.69 9.23 (117.73) - 62.37 - 0.00 - Core EBITDA 72.43 107.51 139.48 183.76 286.00 313.99 9.8 295.61 -5.9 357.34 20.9 Maintenance capital expenditure (44.97) (48.66) (33.73) (38.72) (49.71) (62.03) 24.8 (71.24) 14.9 (82.57) 15.9 Maintenance net working capital (1.24) (30.13) 37.00 (32.86) (18.61) (334.68) 1698.7 (33.54) -90.0 (68.71) 104.9 Operating free cash flow, pre-tax

26.21 28.73 142.75 112.18 217.69 (82.71) - 190.83 - 206.06 8.0


UBS 77


Retailers, Apparel



Company profile Lojas Renner is one of the top three largest apparel retailers in Braziland was listed in Bovespa Novo Mercado in May 2005, the first Brazilian true corporation with pulverized control: 94.3% free float.Lojas Renner sells quality apparel under 11 private label brands,which are organized under the 'Lifestyle concept', each of whichtargets a specific style/occasion. Of the stores, 91% are in shopping malls where the company is able to target families of different agegroups. The company has about 1.5% share of Brazilian apparelsales and counted 81 stores by June 2006.


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

30.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)9.00%

10.00%

11.00%

12.00%

13.00%

14.00%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)16.0%

18.0%

20.0%

22.0%

24.0%

26.0%

28.0%

0.0x

1.1x

2.3x

3.4x

4.6x

5.7x

6.9x

8.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)1200

1400

1600

1800

2000

2200

2400

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%



Lojas Renner

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - 29.5 26.5 11.6 12.7 10.1 P/E (UBS) - 29.5 26.5 11.6 12.7 10.1 P/CEPS - 21.2 20.1 8.4 8.6 7.0 Net dividend yield (%) - 0.8 0.0 0.0 3.9 4.9 P/BV - 5.4 7.1 2.6 2.3 2.0 EV/revenue (core) - 1.9 2.3 1.0 1.0 0.9 EV/EBITDA (core) - 14.9 14.0 6.1 6.8 5.5 EV/EBIT (core) - 18.9 17.0 7.6 9.0 7.2 EV/OpFCF (core) - 24.4 18.4 NM 10.6 9.6 EV/op. invested capital - 7.7 9.0 2.8 2.2 2.0

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 2,911.04 4,132.76 1,877.23 1,877.23 1,877.23 + minority interests 0.00 0.00 0.00 0.00 0.00 + average net debt (cash) (171.80) (118.59) 30.97 137.68 106.50 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value (1.00) (1.00) (1.00) (1.00) (1.00) Core enterprise value 2,738.25 4,013.17 1,907.20 2,013.91 1,982.72 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 18.2 26.4 22.0 11.7 4.5 12.1 EBITDA (UBS) 30.4 31.8 55.6 9.8 -5.9 20.9 EBIT (UBS) 60.4 37.2 62.9 6.6 -11.0 22.5 EPS (UBS) - 23.1 57.6 4.2 -8.7 25.2 Cash EPS - 20.6 49.4 9.2 -2.2 22.2 Net DPS - 23.1 - - - 25.2 BVPS 92.8 5.1 7.2 22.0 15.1 13.0


Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) - 41.0 53.1 37.2 24.8 28.1 ROIC post tax - 30.3 37.9 26.5 17.9 20.2 Net ROE -15.5 18.6 27.7 25.1 19.4 21.3

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - 21.1 16.8 24.9 12.4 16.7 Dividend cover (UBS EPS) - 4.0 - - 2.0 2.0 Div. payout ratio (%, UBS EPS) - 25.0 - - 50.0 50.0 Net debt / EBITDA 0.5 NM NM 0.5 0.4 0.3


Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT 0.9 0.8 0.9 NM 0.9 0.7 Capex / revenue (%) 5.8 8.7 6.0 6.9 4.1 5.2 Capex / depreciation 1.4 3.2 2.1 2.2 1.2 1.5

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity NM (23.9) (18.3) 23.7 13.0 11.5 Net debt / (net debt + equity) 17.6 (31.5) (22.5) 19.2 11.5 10.3 Net debt (core) / EV - (6.3) (3.0) 1.6 6.8 5.4




UBS 78

B2W

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues - - 1,022.59 1,666.60 2,357.56 3,046.91 29.2 3,477.00 14.1 4,173.94 20.0 Operating expenses (ex depn) - - (915.68) (1,478.38) (2,022.53) (2,592.28) 28.2 (2,958.20) 14.1 (3,551.15) 20.0 EBITDA (UBS) - - 106.91 188.22 335.03 454.63 35.7 518.80 14.1 622.80 20.0 Depreciation - - (11.75) (16.98) (33.24) (62.39) 87.7 (76.52) 22.6 (81.93) 7.1 Operating income (EBIT, UBS) - - 95.15 171.24 301.79 392.24 30.0 442.29 12.8 540.87 22.3 Other income & associates - - (8.61) 43.44 (45.90) (33.78) -26.4 (32.55) -3.6 (32.10) -1.4 Net interest - - (45.34) (72.05) (159.97) (234.33) 46.5 (226.73) -3.2 (211.72) -6.6 Abnormal items (pre-tax) - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax - - 41.20 142.62 95.92 124.13 29.4 183.01 47.4 297.05 62.3 Tax - - 14.82 0.11 (33.54) (40.37) 20.4 (59.32) 46.9 (96.88) 63.3 Profit after tax - - 56.02 142.73 62.39 83.77 34.3 123.69 47.7 200.17 61.8 Abnormal items (post-tax) - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net income (local GAAP) - - 56.02 142.73 62.39 83.77 34.3 123.69 47.7 200.17 61.8 Net Income (UBS) - - 56.02 142.73 111.53 124.69 11.8 167.48 34.3 245.54 46.6 Tax rate (%) - - 0.00 0.00 0.00 0.00 - 32.41 - 32.62 0.6 Pre-abnormal tax rate (%) - - 0.00 0.00 0.00 0.00 - 8.48 - 17.34 104.4 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) - - 0.49 1.26 0.56 0.76 36.4 1.12 47.7 1.82 61.8 EPS (UBS) - - 0.49 1.26 1.00 1.13 13.6 1.52 34.3 2.23 46.6 Net DPS - - - 0.00 0.02 0.13 558.6 0.52 288.7 0.58 10.5 Cash EPS - - 0.60 1.41 1.29 1.70 31.3 2.21 30.4 2.97 34.2 BVPS - - 2.40 3.28 2.88 2.73 -5.1 3.73 36.5 5.38 44.3 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents - - 50.05 305.90 115.57 591.34 411.7 591.34 0.0 591.34 0.0 Other current assets - - 686.71 1,418.55 1,939.77 2,112.33 8.9 2,311.08 9.4 2,630.16 13.8 Total current assets - - 736.77 1,724.44 2,055.34 2,703.67 31.5 2,902.42 7.4 3,221.50 11.0 Net tangible fixed assets - - 64.44 289.02 372.49 460.10 23.5 483.59 5.1 526.88 9.0 Net intangible fixed assets - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Investments / other assets 0.00 0.00 185.38 61.29 52.23 65.52 25.4 65.52 0.0 65.52 0.0 Total assets - - 986.59 2,074.75 2,480.06 3,229.30 30.2 3,451.53 6.9 3,813.90 10.5 Trade payables & other ST liabilities - - 375.54 1,016.47 813.88 805.09 -1.1 917.26 13.9 1,097.56 19.7 Short term debt - - 231.06 601.82 1,223.18 1,616.21 32.1 1,616.21 0.0 1,616.21 0.0 Total current liabilities - - 606.60 1,618.29 2,037.05 2,421.29 18.9 2,533.47 4.6 2,713.77 7.1 Long term debt - - 49.71 73.94 107.57 493.18 358.5 493.18 0.0 493.18 0.0 Other long term liabilities - - 57.77 10.94 12.92 13.45 4.1 13.45 0.0 13.45 0.0 Total liabilities - - 714.08 1,703.16 2,157.54 2,927.91 35.7 3,040.09 3.8 3,220.39 5.9 Equity & minority interests - - 272.51 371.59 322.52 301.38 -6.6 411.44 36.5 593.51 44.3 Total liabilities & equity - - 986.59 2,074.75 2,480.06 3,229.30 30.2 3,451.53 6.9 3,813.90 10.5 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income - - 56.02 142.73 62.39 83.77 34.3 123.69 47.7 200.17 61.8 Depreciation - - 11.75 16.98 33.24 62.39 87.7 76.52 22.6 81.93 7.1 Net change in working capital - - 311.18 (90.90) (723.82) (181.34) -74.9 (86.58) -52.3 (138.78) 60.3 Other (operating) - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations - - 378.95 68.81 (628.19) (35.19) -94.4 113.63 - 143.32 26.1 Capital expenditure - - 0.00 (241.56) (116.71) (150.00) 28.5 (100.00) -33.3 (125.22) 25.2 Net (acquisitions) / disposals - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities - - 0.00 (241.56) (116.71) (150.00) 28.5 (100.00) -33.3 (125.22) 25.2 Increase/(decrease) in debt - - 280.77 394.99 654.99 778.63 - 0.00 - 0.00 - Share issues / (repurchases) - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid - - - 0.00 (2.28) (14.77) 548.3 (57.42) 288.7 (63.47) 10.5 Other cash from financing - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities - - - 394.99 652.71 763.86 17.0 (57.42) - (63.47) 10.5 Cash flow chge in cash & equivalents - - - 222.24 (92.19) 578.67 - (43.80) - (45.38) - FX / non cash items - - - 33.60 (98.14) (102.90) 4.8 43.80 - 45.38 3.6 Bal sheet chge in cash & equivalents - - - 255.85 (190.33) 475.78 - 0.00 - 0.00 - Core EBITDA - - 106.91 188.22 335.03 454.63 35.7 518.80 14.1 622.80 20.0 Maintenance capital expenditure - - (11.75) (16.98) (33.24) (62.39) 87.7 (76.52) 22.6 (81.93) 7.1 Maintenance net working capital - - 311.18 (90.90) (723.82) (181.34) -74.9 (86.58) -52.3 (138.78) 60.3 Operating free cash flow, pre-tax

- - 406.33 80.33 (422.04) 210.90 - 355.71 68.7 402.09 13.0


UBS 79


Retailers, Broadline



Company profile B2W is a merger of Americanas.com and Submarino, two formerleaders of the Brazilian e-commerce sector. The company sells abroad mix of products through a diversified portfolio of flagshipportals, which allows for segmentation and higher customers' loyalty.


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

0.0x

20.0x

40.0x

60.0x

80.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)9.50%

10.00%

10.50%

11.00%

11.50%

12.00%

12.50%

13.00%

22.00%

23.14%

24.29%

25.43%

26.57%

27.71%

28.86%

30.00%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

30.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)1000

1500

2000

2500

3000

3500

4000

4500

-50%

0%

50%

100%

150%

200%



B2W

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - 38.6 NM 28.9 19.6 12.1 P/E (UBS) - 38.6 NM 19.4 14.5 9.9 P/CEPS - 34.5 59.8 13.0 9.9 7.4 Net dividend yield (%) - 0.0 0.0 0.6 2.4 2.6 P/BV - 14.8 26.8 8.0 5.9 4.1 EV/revenue (core) - 3.5 4.0 1.2 1.1 0.9 EV/EBITDA (core) - 30.8 28.5 8.3 7.6 6.3 EV/EBIT (core) - NM NM 9.7 8.9 7.3 EV/OpFCF (core) - NM NM 18.0 11.1 9.8 EV/op. invested capital - 9.9 8.4 2.3 2.1 2.0

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 5,500.70 8,747.64 2,424.86 2,424.86 2,424.86 + minority interests 0.01 0.01 0.01 0.01 0.01 + average net debt (cash) 300.29 792.52 1,366.61 1,518.04 1,518.04 + pension obligations and other 0.10 0.10 0.10 0.10 0.10 - non-core asset value 0.00 0.00 0.00 0.00 0.00 Core enterprise value 5,801.10 9,540.27 3,791.58 3,943.01 3,943.01 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - 63.0 41.5 29.2 14.1 20.0 EBITDA (UBS) - 76.1 78.0 35.7 14.1 20.0 EBIT (UBS) - 80.0 76.2 30.0 12.8 22.3 EPS (UBS) - 154.8 -20.9 13.6 34.3 46.6 Cash EPS - 135.7 -8.2 31.3 30.4 34.2 Net DPS - - - NM NM 10.5 BVPS - 36.4 -12.2 -5.1 36.5 44.3



Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - 2.4 1.9 1.7 2.0 2.6 Dividend cover (UBS EPS) - - NM 8.4 2.9 3.9 Div. payout ratio (%, UBS EPS) - - 2.0 11.8 34.3 25.9 Net debt / EBITDA - 2.0 3.6 3.3 2.9 2.4


Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT - 0.5 NM 0.5 0.8 0.7 Capex / revenue (%) - 14.5 5.0 4.9 2.9 3.0 Capex / depreciation - NM 3.5 2.4 1.3 1.5

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - 99.5 NM NM NM NM Net debt / (net debt + equity) - 49.9 79.0 83.4 78.7 71.9 Net debt (core) / EV - 5.2 8.3 36.0 38.5 38.5




UBS 80

Dufry South America (DSA)

Income statement (US$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 162.60 198.50 282.42 376.58 513.53 * * * * * * Operating expenses (ex depn) (136.54) (171.61) (244.26) (322.61) (412.91) * * * * * * EBITDA (UBS) 26.06 26.89 38.17 53.97 100.62 * * * * * * Depreciation (3.01) (3.09) (3.19) (16.60) (19.35) * * * * * * Operating income (EBIT, UBS) 23.06 23.80 34.98 37.38 81.27 * * * * * * Other income & associates (0.70) 1.52 1.97 0.00 0.00 * - * - * - Net interest (0.07) (0.01) 0.91 0.10 (2.06) * - * * * * Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 * - * - * - Profit before tax 22.29 25.31 37.86 37.47 79.21 * * * * * * Tax (5.83) (6.22) (6.82) (3.50) (12.94) * * * * * * Profit after tax 16.46 19.09 31.04 33.97 66.27 * * * * * * Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 * - * - * - Minorities / pref dividends 0.00 0.00 0.00 0.00 0.00 * - * - * - Net income (local GAAP) 16.46 19.09 31.04 33.97 66.27 * * * * * * Net Income (UBS) 16.46 19.09 31.04 44.95 80.95 * * * * * * Tax rate (%) 26.17 24.57 18.01 0.00 0.00 * - * * * * Pre-abnormal tax rate (%) 26.17 24.57 18.01 0.00 0.00 * - * * * * Per share (US$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 0.25 0.29 0.48 0.52 1.02 * * * * * * EPS (UBS) 0.25 0.29 0.48 0.69 1.25 * * * * * * Net DPS - - 0.00 0.00 0.41 * * * * * * Cash EPS 0.30 0.34 0.53 0.95 1.54 * * * * * * BVPS 0.36 0.33 0.48 8.31 9.21 * * * * * * Balance sheet (US$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 3.45 3.27 2.80 27.36 69.67 * * * * * * Other current assets 54.64 55.51 78.94 89.36 140.53 * * * * * * Total current assets 58.08 58.78 81.74 116.72 210.21 * * * * * * Net tangible fixed assets 13.53 13.69 18.74 15.44 21.29 * * * * * * Net intangible fixed assets 0.36 0.26 0.31 581.89 567.21 * * * * * * Investments / other assets 0.60 0.24 2.88 2.29 7.78 * * * * * * Total assets 72.57 72.97 103.67 716.35 806.48 * * * * * * Trade payables & other ST liabilities 35.60 35.57 52.28 74.41 92.69 * * * * * * Short term debt 11.26 14.01 14.89 5.97 11.95 * * * * * * Total current liabilities 46.85 49.58 67.17 80.39 104.64 * * * * * * Long term debt 0.00 0.00 3.00 3.00 0.00 * - * - * - Other long term liabilities 2.56 2.12 1.99 93.05 99.02 * * * * * * Total liabilities 49.41 51.70 72.17 176.43 203.66 * * * * * * Equity & minority interests 23.16 21.27 31.50 539.92 602.82 * * * * * * Total liabilities & equity 72.57 72.97 103.67 716.35 806.48 * * * * * * Cash flow (US$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 16.46 19.09 31.04 33.97 66.27 * * * * * * Depreciation 3.01 3.09 3.19 16.60 19.35 * * * * * * Net change in working capital - 0.05 (4.78) 0.69 (29.42) * * * * * * Other (operating) 0.00 0.00 0.00 0.00 0.00 * - * - * - Net cash from operations - 22.24 29.44 51.26 56.20 * * * * * * Capital expenditure - (3.25) (8.24) (2.34) (10.51) * * * * * * Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 * - * - * - Other changes in investments 0.00 0.00 0.00 0.00 0.00 * - * - * - Cash from investing activities - (3.25) (8.24) (2.34) (10.51) * * * * * * Increase/(decrease) in debt - - 1.95 2.10 (0.50) * - * - * - Share issues / (repurchases) - - 0.00 0.00 0.00 * - * - * - Dividends paid - - 0.00 0.00 (26.51) * * * * * * Other cash from financing - - 0.00 0.00 0.00 * - * - * - Cash from financing activities - - 1.95 2.10 (27.01) * * * * * * Cash flow chge in cash & equivalents - - 23.16 51.02 18.68 * - * - * - FX / non cash items - - (23.62) (26.47) 23.63 * * * - * * Bal sheet chge in cash & equivalents - (0.18) (0.46) 24.56 42.31 * - * - * - Core EBITDA 26.06 26.89 38.17 53.97 100.62 * * * * * * Maintenance capital expenditure (3.01) (3.09) (3.19) (5.62) (4.67) * * * * * * Maintenance net working capital - 0.05 (4.78) 0.69 (29.42) * * * * * * Operating free cash flow, pre-tax

- 23.85 30.19 49.04 66.54 * * * * * *


UBS 81





Company profile Dufry South America (DSA) is the leading travel retailer in SouthAmerica, with a 22% market share in 2006, and around 80% of salescoming from airport stores. The company has 84 duty free and dutypaid stores in airports, cruise lines, and downtown, and is controlled by Dufry AG, the world's third largest travel retailer. DSA comprisesonly voting shares, with 100% tag-along rights.


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

0.0x

5.0x

10.0x

15.0x

20.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)8.00%

9.14%

10.29%

11.43%

12.57%

13.71%

14.86%

16.00%

12.50%

13.00%

13.50%

14.00%

14.50%

15.00%

15.50%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)13.50%

14.00%

14.50%

15.00%

15.50%

16.00%

1.2x

1.4x

1.6x

1.8x

2.0x

2.2x

2.4x

2.6x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)300

350

400

450

500

550

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%



Dufry South America (DSA)

Valuation (x) 5Yr Avg 12/10 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - 24.5 21.8 * * * P/E (UBS) - 18.5 17.8 * * * P/CEPS - 13.5 14.4 * * * Net dividend yield (%) - 0.0 1.8 * * * P/BV - 1.5 2.4 * * * EV/revenue (core) - 2.2 2.7 * * * EV/EBITDA (core) - 15.3 13.9 * * * EV/EBIT (core) - 22.0 17.2 * * * EV/OpFCF (core) - 16.8 21.0 * * * EV/op. invested capital - 2.9 2.6 * * *

Enterprise value (US$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 842.18 1,455.51 * * * + minority interests 0.01 0.01 * * * + average net debt (cash) (18.56) (61.37) * * * + pension obligations and other 0.10 0.10 * * * - non-core asset value 0.00 0.00 * * * Core enterprise value 823.73 1,394.25 * * * Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - 33.3 36.4 * * * EBITDA (UBS) - 41.4 86.4 * * * EBIT (UBS) - 6.9 117.4 * * * EPS (UBS) - 44.8 80.1 * * * Cash EPS - 79.8 63.0 * * * Net DPS - - - * * * BVPS - NM 10.9 * * *



Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - NM - - - Dividend cover (UBS EPS) - - 3.1 * * * Div. payout ratio (%, UBS EPS) - - 32.7 * * * Net debt / EBITDA - NM NM * * *


Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT - 1.3 0.8 * * * Capex / revenue (%) - 0.6 2.0 * * * Capex / depreciation - 0.1 0.5 * * *

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - (3.4) (9.0) * * * Net debt / (net debt + equity) - (3.5) (9.9) * * * Net debt (core) / EV - (2.3) (4.4) * * *




UBS 82

Lojas Americanas

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 1,938.14 2,278.13 2,767.11 3,784.09 5,731.30 7,176.33 25.2 8,011.46 11.6 9,177.19 14.6 Operating expenses (ex depn) (1,720.93) (2,003.38) (2,436.16) (3,328.97) (5,011.80) (6,242.68) 24.6 (6,928.42) 11.0 (7,927.35) 14.4 EBITDA (UBS) 217.20 274.75 330.95 455.12 719.50 933.65 29.8 1,083.04 16.0 1,249.84 15.4 Depreciation (42.25) (50.72) (62.99) (86.43) (152.60) (223.08) 46.2 (234.44) 5.1 (235.85) 0.6 Operating income (EBIT, UBS) 174.95 224.03 267.96 368.69 566.90 710.57 25.3 848.61 19.4 1,013.99 19.5 Other income & associates 13.53 (19.64) 78.33 (61.79) 0.40 (29.04) - (44.02) 51.6 (23.88) -45.8 Net interest (49.32) (128.63) (170.59) (126.47) (366.00) (469.20) 28.2 (526.05) 12.1 (479.28) -8.9 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 139.15 75.77 175.71 180.44 201.30 212.33 5.5 278.53 31.2 510.83 83.4 Tax (15.30) (6.38) 8.95 (51.52) (69.53) (87.20) 25.4 (98.73) 13.2 (171.86) 74.1 Profit after tax 123.85 69.39 184.66 128.91 131.77 125.13 -5.0 179.80 43.7 338.97 88.5 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends (7.98) (5.25) (8.52) (5.39) (28.83) (34.03) 18.0 (49.17) 44.5 (87.01) 76.9 Net income (local GAAP) 115.87 64.13 176.14 123.52 102.94 91.10 -11.5 130.63 43.4 251.96 92.9 Net Income (UBS) 115.87 64.13 176.14 123.52 148.57 144.39 -2.8 186.11 28.9 309.28 66.2 Tax rate (%) 11.00 8.42 0.00 28.56 34.54 41.07 18.9 35.45 -13.7 33.64 -5.1 Pre-abnormal tax rate (%) 10.90 8.37 0.00 28.56 11.87 15.60 31.4 15.37 -1.4 23.36 52.0 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 1.71 0.96 2.58 0.31 0.14 0.13 -11.4 0.18 43.4 0.35 92.9 EPS (UBS) 1.71 0.96 2.58 0.31 0.20 0.20 -2.7 0.26 28.9 0.43 66.2 Net DPS 0.00 0.58 1.55 0.12 0.04 0.03 -11.4 0.06 100.7 0.12 92.9 Cash EPS 2.34 1.72 3.50 0.53 0.41 0.51 22.1 0.58 14.4 0.75 29.6 BVPS 0.31 0.28 0.44 0.45 0.39 0.54 35.8 0.54 1.2 0.65 20.5 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 850.92 636.29 766.49 1,228.66 1,203.39 1,852.70 54.0 1,852.70 0.0 1,852.70 0.0 Other current assets 606.03 939.20 1,239.46 2,512.99 3,532.26 4,173.65 18.2 4,577.23 9.7 5,086.09 11.1 Total current assets 1,456.96 1,575.49 2,005.96 3,741.64 4,735.64 6,026.35 27.3 6,429.94 6.7 6,938.79 7.9 Net tangible fixed assets 187.05 243.08 313.19 724.72 1,202.54 1,534.74 27.6 1,445.97 -5.8 1,419.94 -1.8 Net intangible fixed assets 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Investments / other assets 181.29 244.32 446.02 264.28 232.62 286.18 23.0 286.18 0.0 286.18 0.0 Total assets 1,825.29 2,062.90 2,765.16 4,730.64 6,170.80 7,847.27 27.2 8,162.09 4.0 8,644.90 5.9 Trade payables & other ST liabilities 639.33 789.46 962.64 1,856.51 1,916.24 2,140.46 11.7 2,396.01 11.9 2,713.65 13.3 Short term debt 797.29 393.08 514.04 1,204.14 2,581.25 3,301.67 27.9 3,301.67 0.0 3,301.67 0.0 Total current liabilities 1,436.62 1,182.55 1,476.68 3,060.65 4,497.50 5,442.13 21.0 5,697.68 4.7 6,015.32 5.6 Long term debt 19.04 481.66 722.62 956.37 1,094.99 1,717.60 56.9 1,717.60 0.0 1,717.60 0.0 Other long term liabilities 152.16 200.65 253.64 207.71 141.66 165.28 16.7 165.28 0.0 165.28 0.0 Total liabilities 1,607.81 1,864.86 2,452.93 4,224.73 5,734.14 7,325.02 27.7 7,580.57 3.5 7,898.21 4.2 Equity & minority interests 217.48 198.03 312.23 505.91 436.66 522.25 19.6 581.52 11.3 746.70 28.4 Total liabilities & equity 1,825.29 2,062.90 2,765.16 4,730.64 6,170.80 7,847.27 27.2 8,162.09 4.0 8,644.90 5.9 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 115.87 64.13 176.14 123.52 102.94 91.10 -11.5 130.63 43.4 251.96 92.9 Depreciation 42.25 50.72 62.99 86.43 152.60 223.08 46.2 234.44 5.1 235.85 0.6 Net change in working capital (64.88) (183.04) (127.09) (379.66) (959.54) (417.17) -56.5 (148.03) -64.5 (191.22) 29.2 Other (operating) - - 0.00 0.00 (27.87) (15.13) -45.7 54.40 - 84.26 54.9 Net cash from operations - - 112.04 (169.70) (731.86) (118.13) -83.9 271.43 - 380.85 40.3 Capital expenditure (51.29) (106.75) (133.11) (167.70) (1,236.19) (611.27) -50.6 (200.49) -67.2 (285.03) 42.2 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities (51.29) (106.75) (133.11) (167.70) (1,236.19) (611.27) -50.6 (200.49) -67.2 (285.03) 42.2 Increase/(decrease) in debt 107.78 0.00 0.00 0.00 1,515.74 1,343.03 - 0.00 - 0.00 - Share issues / (repurchases) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid (69.52) (38.48) (105.68) (49.41) (25.74) (22.77) -11.5 (45.72) 100.7 (88.19) 92.9 Other cash from financing 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities 38.26 (38.48) (105.68) (49.41) 1,490.00 1,320.25 -11.4 (45.72) - (88.19) 92.9 Cash flow chge in cash & equivalents - - (126.75) (386.81) (478.05) 590.85 - 25.23 - 7.63 - FX / non cash items - - 256.95 848.97 452.78 58.47 -87.1 (25.23) - (7.63) -69.7 Bal sheet chge in cash & equivalents 40.40 (214.63) 130.20 462.16 (25.27) 649.32 - 0.00 - 0.00 - Core EBITDA 217.20 274.75 330.95 455.12 719.50 933.65 29.8 1,083.04 16.0 1,249.84 15.4 Maintenance capital expenditure (42.25) (50.72) (62.99) (86.43) (152.60) (223.08) 46.2 (234.44) 5.1 (235.85) 0.6 Maintenance net working capital (64.88) (183.04) (127.09) (379.66) (959.54) (417.17) -56.5 (148.03) -64.5 (191.22) 29.2 Operating free cash flow, pre-tax

110.07 40.99 140.87 (10.97) (392.64) 293.40 - 700.58 138.8 822.77 17.4


UBS 83





Company profile Lojas Americanas is a multi-channel Brazilian local retailer. Thecompany has complementary distribution channels (traditional retailthrough 237 stores, e-commerce, TV, catalogs and kiosks via its53.25% stake in B2W), complementary store formats, broad productmix, diversified customer base, and country-wide presence.


12/06 12/07 12/08 12/09E 12/10E0.0x

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Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)9.00%

9.50%

10.00%

10.50%

11.00%

11.50%

15.0%

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12/06 12/07 12/08(E) 12/09(E) 12/10(E)20.0%

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60.0%

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80.0%

5.0x

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Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)2000

3143

4286

5429

6571

7714

8857

-100%

-50%

0%

50%

100%



Lojas Americanas

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) 7.0 28.6 NM 53.6 37.4 19.4 P/E (UBS) 7.0 28.6 74.1 33.8 26.2 15.8 P/CEPS 4.2 16.8 36.5 13.3 11.6 9.0 Net dividend yield (%) 10.6 1.4 0.2 0.5 0.9 1.8 P/BV 9.6 19.7 38.3 12.5 12.4 10.3 EV/revenue (core) - 1.9 2.4 1.2 1.1 1.0 EV/EBITDA (core) - 15.5 19.2 9.4 8.4 7.3 EV/EBIT (core) - 19.1 24.4 12.4 10.8 9.0 EV/OpFCF (core) - NM NM 30.0 13.0 11.1 EV/op. invested capital - 6.9 6.4 2.7 2.5 2.4

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 6,156.73 11,102.89 4,929.37 4,929.37 4,929.37 + minority interests 174.99 1,042.69 1,042.69 1,042.69 1,042.69 + average net debt (cash) 701.01 1,702.36 2,819.72 3,166.57 3,166.57 + pension obligations and other 0.01 0.01 0.01 0.01 0.01 - non-core asset value (0.10) (0.10) (0.10) (0.10) (0.10) Core enterprise value 7,032.64 13,847.85 8,791.69 9,138.54 9,138.54 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 24.5 36.8 51.5 25.2 11.6 14.6 EBITDA (UBS) 33.6 37.5 58.1 29.8 16.0 15.4 EBIT (UBS) 36.0 37.6 53.8 25.3 19.4 19.5 EPS (UBS) -32.4 -88.0 -34.1 -2.7 28.9 66.2 Cash EPS -28.2 -85.0 -21.5 22.1 14.4 29.6 Net DPS - -92.0 -71.5 -11.4 100.7 92.9 BVPS 8.6 1.8 -12.5 35.8 1.2 20.5





Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT 0.3 NM NM 0.4 0.8 0.8 Capex / revenue (%) 4.2 4.4 21.6 8.5 2.5 3.1 Capex / depreciation 1.9 1.9 8.1 2.7 0.9 1.2

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity 79.0 NM NM NM NM NM Net debt / (net debt + equity) 54.7 73.8 89.5 89.0 88.9 86.9 Net debt (core) / EV - 10.0 12.3 32.1 34.7 34.7




UBS 84

Financials

UBS 85

Banco ABC Brasil S.A.Per share (R$) 12/07 12/08 12/09E 12/10E 12/11EEPS (stated) 0.88 1.11 0.98 1.23 1.36EPS (UBS adjusted) 1.10 1.18 0.98 1.23 1.36GOPS 1.40 2.35 2.58 2.99 3.23DPS 0.32 0.50 0.24 0.31 0.34BVPS (stated) 8.00 8.56 9.30 10.22 11.24BVPS (adjusted) 8.00 8.56 9.30 10.22 11.24Income statement (R$m)Net interest income 258 390 456 512 551Other income 54 54 47 60 64Total revenues 312 444 503 571 615Expenses (176) (171) (187) (205) (221)Operating profit 136 274 316 366 394Provisions and other items (14) (80) (105) (102) (102)Profit before tax 121 195 211 264 292Pre-exceptional net income 122 161 132 167 185Capital dynamics (R$m)Risk-weighted assets 4,702 6,562 6,785 7,478 8,315Tier one capital 1,085 1,162 1,261 1,386 1,525Total capital 1,085 1,182 1,261 1,386 1,525Tier one ratio 23.1% 17.7% 18.6% 18.5% 18.3%Total capital ratio 23.1% 18.0% 18.6% 18.5% 18.3%Net profit after tax 98 150 132 167 185Tier 1 requirementLess: Working capital requirementLess: Dividends 43 68 33 42 46Surplus capital generatedSurplus capital generation ratioBalance sheet (R$m)Assets 5,666 7,684 8,401 9,112 10,070Customer loans 3,887 4,708 4,868 5,365 5,966Customer deposits 1,744 2,502 2,574 2,703 2,838Funds under managementLoans : assets 68.6% 61.3% 57.9% 58.9% 59.2%Deposits : assets 30.8% 32.6% 30.6% 29.7% 28.2%Loans : deposits 222.9% 188.2% 189.1% 198.5% 210.2%Shareholders equity : assets 19.16% 15.12% 15.01% 15.21% 15.14%Asset quality (R$m)Non-performing assets 14 30 39 38 39Total risk reserves 40 105 163 214 293NPAs : loans 0.35% 0.64% 0.80% 0.70% 0.65%NPA coverage 294% 347% 418% 569% 756%Provision charge : average loans 0.44% 1.86% 2.20% 2.00% 1.80%Net NPLs : shareholders' funds -2.4% -6.4% -9.8% -12.7% -16.7%ProfitabilityNet interest margin (avg assets) 5.46% 5.84% 5.67% 5.84% 5.75%Provisions : operating profit 10.1% 29.1% 33.3% 27.9% 25.9%RoE 12.8% 13.4% 10.9% 12.6% 12.7%RoAdjERoRWA 2.48% 2.66% 1.98% 2.34% 2.34%RoA 2.07% 2.25% 1.65% 1.91% 1.93%ProductivityCost : income ratio 56.5% 38.4% 37.1% 35.9% 35.9%Costs : average assets 3.7% 2.6% 2.3% 2.3% 2.3%Compensation expense ratio 33.8% 29.3% 25.7% 24.8% 25.0%MomentumRevenue growth +56.7% +42.7% +13.1% +13.6% +7.7% Operating profit growth +51.7% +101.8% +15.5% +15.9% +7.7% Net profit growth +42.0% +32.2% -17.6% +26.1% +10.8% Dividend growth -8.1% +55.7% -51.0% +26.1% +10.8% Value*UBS bank valuationLeveraged P/ERisk tendency P/EMerger P/E

Market capitalization (R$m) 1,827 1,076 583 583 583

Conventional valuationMarket cap./Revenues 1.9x 1.3x 1.2x 1.0x 0.9xMarket cap./Operating profit 4.3x 2.1x 1.8x 1.6x 1.5xP/E (stated) 4.9x 3.9x 4.4x 3.5x 3.2xP/E (UBS adjusted) 3.9x 3.6x 4.4x 3.5x 3.2xDividend yield 7.44% 11.59% 5.67% 7.15% 7.92%P/BV (stated) 0.5x 0.5x 0.5x 0.4x 0.4xP/BV (adjusted) 0.5x 0.5x 0.5x 0.4x 0.4xSource: UBS estimates, * Historical, current, & future valuations are based on a share price of R$4.30 as at close on 17 Mar 2009

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Rev. growth (LHS) Op. profit growth (RHS)

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Balance Sheet Growth

Value (P/Adj. BVPS & P/Adj. EPS)

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RoE (LHS) RoRWA (RHS)

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07 08 09E 10E 11E-10.0%+0.0%+10.0%+20.0%+30.0%+40.0%+50.0%+60.0%+70.0%

Assets (LHS)Customer Deposits (LHS)Customer Loans (RHS)

Banco ABC Brasil is a Brazilian bank focused on corporate banking andcontrolled by the Arab Banking Corporation. The bank focuses onproviding credit, fixed income capital markets, and treasury products tomid-size companies and large corporations. The bank has a welldiversified funding base to finance the expansion of its loan portfolio,relying on time deposits placed in the domestic market, credit lines fromthe BNDES, and foreign sources of funding.

UBS 86

Banco do BrasilPer share (R$) 12/06 12/07 12/08E 12/09E 12/10EEPS (stated) 2.45 2.04EPS (UBS adjusted) 2.45 2.04GOPS 4.62 4.85DPS 0.87 0.82BVPS (stated) 8.22 9.80BVPS (adjusted) 7.06 8.75Income statement (R$m)Net interest income 17,403 20,464Other income 10,607 10,158Total revenues 28,011 30,621Expenses (16,348) (18,615)Operating profit 11,663 12,006Provisions and other items (6,244) (5,380)Profit before tax 5,540 6,907Pre-exceptional net income 5,924 4,779Capital dynamics (R$m)Risk-weighted assets 172,547 215,067Tier one capital 19,958 22,803Total capital 29,984 32,795Tier one ratio 11.6% 10.6%Total capital ratio 17.4% 15.2%Net profit after tax 6,044 5,060Tier 1 requirementLess: Working capital requirementLess: Dividends 2,155 2,023Surplus capital generatedSurplus capital generation ratioBalance sheet (R$m)Assets 296,356 357,750Customer loans 133,157 160,739Customer deposits 158,841 188,282Funds under managementLoans : assets 44.9% 44.9%Deposits : assets 53.6% 52.6%Loans : deposits 83.8% 85.4%Shareholders equity : assets 7.00% 6.78%Asset quality (R$m)Non-performing assets 4,497 5,967Total risk reserves 8,635 10,342NPAs : loans 3.38% 3.71%NPA coverage 192% 173%Provision charge : average loans 5.31% 3.66%Net NPLs : shareholders' funds -19.9% -18.0%ProfitabilityNet interest margin (avg assets) 6.34% 6.26%Provisions : operating profit 53.5% 44.8%RoE 32.1% 22.5%RoAdjERoRWA 3.86% 2.61%RoA 2.20% 1.55%ProductivityCost : income ratio 58.4% 60.8%Costs : average assets 6.0% 5.7%Compensation expense ratio 42.6% 45.0%MomentumRevenue growth +6.0% +9.3% NM NM NMOperating profit growth +5.8% +2.9% NM NM NMNet profit growth +50.2% -19.3% NM NM NMDividend growth +51.8% -5.6% NM NM NMValue*UBS bank valuationLeveraged P/ERisk tendency P/EMerger P/E

Market capitalization (R$m) 43,575 67,095 59,118 36,754 36,754

Conventional valuationMarket cap./Revenues 1.3x 1.2xMarket cap./Operating profit 3.1x 3.1xP/E (stated) 5.9x 7.1xP/E (UBS adjusted) 5.9x 7.1xDividend yield 5.96% 5.62%P/BV (stated) 1.8x 1.5xP/BV (adjusted) 2.1x 1.7xSource: UBS estimates, * Historical, current, & future valuations are based on a share price of R$14.53 as at close on 17 Mar 2009

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Banco UBS Pactual S.A. is acting asto Banco do Brasil on its announced50% acquisition of BancoVotorantim.

UBS 87

Banco Cruzeiro do Sul SAPer share (R$) 12/06 12/07 12/08E 12/09E 12/10EEPS (stated) 1.06 1.71 1.35 0.94 1.28EPS (UBS adjusted) 1.06 1.71 1.35 0.94 1.28GOPS 1.61 1.25 2.39 1.95 2.79DPS 0.08 0.44 0.11 0.23 0.32BVPS (stated) 3.42 7.21 8.03 8.74 9.70BVPS (adjusted) 3.42 7.21 8.03 8.74 9.70Income statement (R$m)Net interest income 360 604 690 623 777Other income 35 106 92 52 72Total revenues 395 710 782 676 849Expenses (323) (550) (434) (393) (444)Operating profit 73 160 347 283 405Provisions and other items (7) (16) (27) (66) (109)Profit before tax 66 329 321 216 296Pre-exceptional net income 48 51 196 136 186Capital dynamics (R$m)Risk-weighted assets 1,662 3,304 5,720 7,800 9,474Tier one capital 247 1,034 1,153 1,256 1,395Total capital 261 1,048 1,167 1,269 1,409Tier one ratio 14.9% 31.3% 20.2% 16.1% 14.7%Total capital ratio 15.7% 31.7% 20.4% 16.3% 14.9%Net profit after tax 48 236 196 136 186Tier 1 requirementLess: Working capital requirementLess: Dividends 4 64 16 34 47Surplus capital generatedSurplus capital generation ratioBalance sheet (R$m)Assets 2,132 4,311 5,171 6,887 8,166Customer loans 230 517 1,031 3,386 5,339Customer deposits 700 1,622 2,266 2,792 3,266Funds under managementLoans : assets 10.8% 12.0% 19.9% 49.2% 65.4%Deposits : assets 32.8% 37.6% 43.8% 40.5% 40.0%Loans : deposits 32.9% 31.8% 45.5% 121.2% 163.5%Shareholders equity : assets 11.94% 24.30% 22.56% 18.42% 17.25%Asset quality (R$m)Non-performing assets 4 11 26 85 133Total risk reserves 8 16 32 72 129NPAs : loans 1.61% 2.14% 2.50% 2.50% 2.50%NPA coverage 212% 146% 125% 85% 96%Provision charge : average loans 2.98% 4.17% 3.46% 3.00% 2.50%Net NPLs : shareholders' funds -1.6% -0.5% -0.6% 1.0% 0.3%ProfitabilityNet interest margin (avg assets) 16.50% 18.75% 14.55% 10.34% 10.33%Provisions : operating profit 9.2% 9.7% 7.7% 23.5% 26.9%RoE 22.8% 36.3% 17.7% 11.2% 13.9%RoAdjERoRWA 3.64% 10.21% 4.80% 2.18% 2.33%RoA 3.23% 7.57% 4.21% 2.26% 2.48%ProductivityCost : income ratio 81.6% 77.5% 55.6% 58.2% 52.3%Costs : average assets 14.8% 17.1% 9.2% 6.5% 5.9%Compensation expense ratio 29.7% 25.4% 19.6% 24.4% 19.6%MomentumRevenue growth +72.2% +79.6% +10.2% -13.6% +25.6% Operating profit growth +90.6% +120.2% +117.5% -18.7% +43.3% Net profit growth +75.2% +6.6% >+200% -30.6% +36.7% Dividend growth -65.4% >+200% -75.1% +114.5% +36.7% Value*UBS bank valuationLeveraged P/ERisk tendency P/EMerger P/E

Market capitalization (R$m) 2,146 1,104 805 805


-20.0%+0.0%

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+100.0%

06 07 08E 09E 10E-40.0%-20.0%+0.0%+20.0%+40.0%+60.0%+80.0%+100.0%+120.0%+140.0%


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Banco Cruzeiro do Sul (BCSUL) is focused primarily on the payrolllending business, offering loans to individuals employed in the publicsector and to beneficiaries and retirees of the Brazilian National PensionSystem (INSS). The bank currently has agreements with over 282 publicsector entities to offer paycheck-deductible loans and has a very well-diversified and nationwide origination platform (mainly through third-partybank correspondents). The bank ended 1Q07 with assets of R$2.1 billionand R$1.8 billion loans.

UBS 88

Banco Daycoval SAPer share (R$) 12/06 12/07 12/08E 12/09E 12/10EEPS (stated) 0.51 0.99 0.97 0.76 1.03EPS (UBS adjusted) 0.51 0.99 0.97 0.76 1.03GOPS 0.95 1.53 1.97 1.98 2.03DPS 0.17 0.23 0.42 0.23 0.36BVPS (stated) 2.61 7.27 7.33 7.87 8.54BVPS (adjusted) 2.61 7.27 7.33 7.87 8.54Income statement (R$m)Net interest income 288 520 698 656 666Other income 20 24 49 40 45Total revenues 308 543 747 695 711Expenses (148) (224) (309) (256) (261)Operating profit 160 319 438 439 450Provisions and other items (36) (61) (165) (221) (160)Profit before tax 124 258 272 219 290Pre-exceptional net income 108 212 224 169 228Capital dynamics (R$m)Risk-weighted assets 2,144 4,235 5,247 5,440 6,234Tier one capital 438 1,517 1,628 1,746 1,895Total capital 438 1,517 1,628 1,746 1,895Tier one ratio 20.4% 35.8% 31.0% 32.1% 30.4%Total capital ratio 20.4% 35.8% 31.0% 32.1% 30.4%Net profit after tax 85 207 216 169 228Tier 1 requirementLess: Working capital requirementLess: Dividends 28 48 93 51 80Surplus capital generatedSurplus capital generation ratioBalance sheet (R$m)Assets 3,088 6,557 7,150 7,775 8,866Customer loans 1,639 3,476 3,577 3,574 4,082Customer deposits 1,349 2,332 2,531 2,762 3,124Funds under managementLoans : assets 53.1% 53.0% 50.0% 46.0% 46.0%Deposits : assets 43.7% 35.6% 35.4% 35.5% 35.2%Loans : deposits 121.5% 149.1% 141.3% 129.4% 130.7%Shareholders equity : assets 14.18% 23.14% 22.76% 22.46% 21.37%Asset quality (R$m)Non-performing assets 24 37 107 125 122Total risk reserves 44 75 189 267 293NPAs : loans 1.46% 1.08% 3.00% 3.50% 3.00%NPA coverage 185% 199% 176% 213% 239%Provision charge : average loans 2.72% 2.38% 4.67% 6.18% 4.18%Net NPLs : shareholders' funds -4.7% -2.4% -5.0% -8.1% -9.0%ProfitabilityNet interest margin (avg assets) 13.38% 11.94% 9.78% 9.32% 8.00%Provisions : operating profit 22.3% 19.1% 37.6% 50.3% 35.5%RoE 21.2% 21.1% 13.8% 10.0% 12.5%RoAdjERoRWA 4.73% 6.48% 4.56% 3.17% 3.91%RoA 3.24% 4.29% 3.16% 2.27% 2.75%ProductivityCost : income ratio 45.2% 30.9% 38.6% 34.3% 36.7%Costs : average assets 5.6% 4.6% 4.5% 3.4% 3.1%Compensation expense ratio 18.2% 17.4% 16.2% 17.7% 18.2%MomentumRevenue growth +46.5% +76.4% +37.5% -6.9% +2.2% Operating profit growth +40.2% +100.0% +37.2% +0.4% +2.4% Net profit growth +17.8% +96.0% +5.5% -24.2% +34.8% Dividend growth -50.3% +35.4% +82.1% -45.2% +57.3% Value*UBS bank valuationLeveraged P/ERisk tendency P/EMerger P/E



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Banco Daycoval is a mid-size bank (R$6.8 billion in assets as of 4Q08)focused on the middle market and retail segment in Brazil. The bankstarted operating in 1989, and its portfolio mostly consists of overdraftaccounts, working capital lines, and discount of receivables. The bankhas also entered the consumer segment in 2004, offering payrolldeductible and, more recently in 2006, developed its car financingoperations. Banco Daycoval ended 4Q08 with a total loan portfolio ofR$3.7 billion.

UBS 89

Banrisul S.A.Per share (R$) 12/06 12/07 12/08E 12/09E 12/10EEPS (stated) 1.32 3.05 1.33 1.16 1.46EPS (UBS adjusted) 1.32 3.05 1.33 1.16 1.46GOPS 2.84 2.26 2.24 3.00 3.25DPS 0.77 0.62 0.40 0.41 0.51BVPS (stated) 4.73 6.83 7.49 8.25 9.19BVPS (adjusted) 4.73 6.83 7.49 8.25 9.19Income statement (R$m)Net interest income 1,506 1,627 1,968 2,380 2,561Other income 833 804 718 763 803Total revenues 2,339 2,431 2,686 3,144 3,363Expenses (1,561) (1,644) (1,769) (1,916) (2,035)Operating profit 778 787 917 1,228 1,329Provisions and other items (241) (223) (296) (551) (476)Profit before tax 537 571 620 682 858Pre-exceptional net income 275 373 458 476 596Capital dynamics (R$m)Risk-weighted assets 6,422 8,523 16,695 19,611 22,826Tier one capital 1,293 2,684 2,937 3,373 3,760Total capital 1,294 2,687 2,939 3,373 3,760Tier one ratio 20.1% 31.5% 17.6% 17.2% 16.5%Total capital ratio 20.2% 31.5% 17.6% 17.2% 16.5%Net profit after tax 362 917 545 476 596Tier 1 requirementLess: Working capital requirementLess: Dividends 210 220 163 167 209Surplus capital generatedSurplus capital generation ratioBalance sheet (R$m)Assets 15,649 20,480 26,277 29,557 33,587Customer loans 6,357 8,024 11,449 13,035 14,941Customer deposits 10,353 12,366 14,161 16,214 18,578Funds under managementLoans : assets 40.6% 39.2% 43.6% 44.1% 44.5%Deposits : assets 66.2% 60.4% 53.9% 54.9% 55.3%Loans : deposits 61.4% 64.9% 80.9% 80.4% 80.4%Shareholders equity : assets 8.28% 13.64% 11.66% 11.41% 11.19%Asset quality (R$m)Non-performing assets 432 300 412 652 598Total risk reserves 844 892 1,004 1,077 1,147NPAs : loans 6.80% 3.74% 3.60% 5.00% 4.00%NPA coverage 195% 297% 244% 165% 192%Provision charge : average loans 3.91% 3.11% 3.04% 4.50% 3.40%Net NPLs : shareholders' funds -31.8% -21.2% -19.3% -12.6% -14.6%ProfitabilityNet interest margin (avg assets) 10.83% 9.73% 9.04% 9.16% 8.11%Provisions : operating profit 31.0% 28.4% 32.3% 44.9% 35.8%RoE 29.7% 44.8% 15.7% 14.8% 16.7%RoAdjERoRWA 5.70% 12.27% 4.32% 2.62% 2.81%RoA 2.43% 5.07% 2.33% 1.70% 1.89%ProductivityCost : income ratio 63.9% 65.4% 60.9% 57.2% 60.5%Costs : average assets 10.5% 9.1% 7.6% 6.9% 6.4%Compensation expense ratio 48.3% 50.5% 48.2% 42.4% 40.5%MomentumRevenue growth +3.5% +3.9% +10.5% +17.0% +7.0% Operating profit growth +3.4% +1.2% +16.6% +33.8% +8.2% Net profit growth +6.2% +35.9% +22.7% +3.8% +25.2% Dividend growth -10.6% -19.1% -35.6% +1.9% +25.2% Value*UBS bank valuationLeveraged P/ERisk tendency P/EMerger P/E

Market capitalization (R$m) 4,595 3,379 2,372 2,372


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Banrisul is a regional retail bank in Brazil, controlled by the state of RioGrande do Sul (the fourth largest state economy in Brazil). The bank ispresent in 80% of the state's municipalities, reaching over 10 millionpeople through the largest distribution network in the region. Banrisulholds a strong deposit franchise and ended 2008 with R$11.5 billion inloans and R$25.2 billion in total assets.

UBS 90

Banco Industrial e Comercial S.A.Per share (R$) 12/07 12/08 12/09E 12/10E 12/11EEPS (stated) 1.03 1.17 1.05 1.29 1.54EPS (UBS adjusted) 1.03 1.17 1.05 1.29 1.54GOPS 1.24 1.45 1.63 1.97 2.33DPS 0.46 0.46 0.36 0.40 0.46BVPS (stated) 5.62 6.06 6.75 7.64 8.72BVPS (adjusted) 5.62 6.06 6.75 7.64 8.72Income statement (R$m)Net interest income 691 1,037 1,114 1,202 1,358Other income 67 69 64 63 67Total revenues 758 1,106 1,177 1,266 1,425Expenses (367) (457) (462) (484) (529)Operating profit 391 649 715 781 896Provisions and other items (139) (279) (292) (264) (281)Profit before tax 252 371 425 519 616Pre-exceptional net income 188 323 293 360 428Capital dynamics (R$m)Risk-weighted assets 9,209 9,906 10,733 12,038 13,251Tier one capital 1,563 1,658 1,851 2,098 2,398Total capital 1,784 1,856 2,048 2,296 2,596Tier one ratio 17.0% 16.7% 17.2% 17.4% 18.1%Total capital ratio 19.4% 18.7% 19.1% 19.1% 19.6%Net profit after tax 188 323 293 360 428Tier 1 requirementLess: Working capital requirementLess: Dividends 54 127 101 113 127Surplus capital generatedSurplus capital generation ratioBalance sheet (R$m)Assets 11,009 12,007 13,112 14,823 16,656Customer loans 7,618 8,066 8,623 9,602 10,484Customer deposits 4,411 4,444 4,657 5,284 5,865Funds under managementLoans : assets 69.2% 67.2% 65.8% 64.8% 62.9%Deposits : assets 40.1% 37.0% 35.5% 35.7% 35.2%Loans : deposits 172.7% 181.5% 185.2% 181.7% 178.7%Shareholders equity : assets 14.20% 14.03% 14.32% 14.33% 14.56%Asset quality (R$m)Non-performing assets 54 126 259 259 262Total risk reserves 133 311 336 345 355NPAs : loans 0.71% 1.56% 3.00% 2.70% 2.50%NPA coverage 248% 247% 130% 133% 135%Provision charge : average loans 2.30% 3.56% 3.50% 2.90% 2.80%Net NPLs : shareholders' funds -5.1% -11.0% -4.1% -4.0% -3.8%ProfitabilityNet interest margin (avg assets) 7.49% 9.01% 8.87% 8.61% 8.63%Provisions : operating profit 35.5% 43.0% 40.8% 33.8% 31.4%RoE 17.4% 19.9% 16.5% 18.0% 18.8%RoAdjE 17.4% 19.9% 16.5% 18.0% 18.8%RoRWA 2.68% 3.38% 2.84% 3.16% 3.39%RoA 1.97% 2.80% 2.34% 2.58% 2.72%ProductivityCost : income ratio 48.5% 41.3% 39.3% 38.3% 37.1%Costs : average assets 4.0% 4.0% 3.7% 3.5% 3.4%Compensation expense ratio 25.3% 20.5% 19.5% 18.6% 18.0%MomentumRevenue growth +64.5% +45.9% +6.5% +7.5% +12.6% Operating profit growth +89.1% +66.1% +10.2% +9.3% +14.6% Net profit growth +79.5% +71.6% -9.1% +22.7% +18.9% Dividend growth +12.9% -0.8% -20.8% +11.4% +13.2% Value*UBS bank valuationLeveraged P/ERisk tendency P/EMerger P/E

Market capitalization (R$m) 3,278 1,979 996 996 996


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Banco Industrial e Comercial (BicBanco) is a mid-size bank specializedSME lending business, operating through 39 branches in 18 states ofBrazil. The bank has been controlled by the Bezerra de Menezes familysince its inception in 1938. BicBanco enjoys a diversified product andfunding structure, having trade finance loans accounting for 20% of itsportfolio and developed various sources of funding in the internationalcapital markets. The bank ended 2008 with a total loan portfolio of R$8.1

billion.

UBS 91

Banco Sofisa S.A.Per share (R$) 12/06 12/07 12/08E 12/09E 12/10EEPS (stated) 0.41 0.52 0.69 0.62 0.87EPS (UBS adjusted) 0.50 0.71 0.69 0.62 0.87GOPS 0.50 0.70 1.12 1.31 1.58DPS 0.19 0.13 0.17 0.16 0.22BVPS (stated) 2.89 5.63 5.93 6.39 7.05BVPS (adjusted) 2.89 5.63 5.93 6.39 7.05Income statement (R$m)Net interest income 121 254 376 397 454Other income 11 11 19 20 27Total revenues 132 264 395 416 481Expenses (77) (169) (229) (223) (248)Operating profit 55 95 166 193 233Provisions and other items (5) (14) (53) (86) (72)Profit before tax 50 81 118 112 166Pre-exceptional net income 55 100 103 92 129Capital dynamics (R$m)Risk-weighted assets 1,407 3,891 4,177 4,294 4,785Tier one capital 298 829 851 919 1,016Total capital 323 854 875 944 1,042Tier one ratio 21.2% 21.3% 20.4% 21.4% 21.2%Total capital ratio 22.9% 22.0% 21.0% 22.0% 21.8%Net profit after tax 45 76 103 92 129Tier 1 requirementLess: Working capital requirementLess: Dividends 21 19 26 23 32Surplus capital generatedSurplus capital generation ratioBalance sheet (R$m)Assets 1,859 4,036 4,339 4,428 4,905Customer loans 915 2,616 2,698 2,686 3,013Customer deposits 1,235 2,525 1,550 1,672 1,828Funds under managementLoans : assets 49.2% 64.8% 62.2% 60.7% 61.4%Deposits : assets 66.4% 62.6% 35.7% 37.8% 37.3%Loans : deposits 74.1% 103.6% 174.1% 160.7% 164.8%Shareholders equity : assets 17.14% 21.17% 20.18% 21.33% 21.22%Asset quality (R$m)Non-performing assets 9 6 21 44 41Total risk reserves 20 30 72 139 193NPAs : loans 0.94% 0.22% 0.78% 1.65% 1.37%NPA coverage 233% 520% 339% 312% 468%Provision charge : average loans 0.55% 0.78% 1.99% 3.20% 2.52%Net NPLs : shareholders' funds -3.6% -2.9% -5.8% -10.0% -14.6%ProfitabilityNet interest margin (avg assets) 7.15% 8.60% 8.99% 9.05% 9.73%Provisions : operating profit 8.6% 14.5% 31.9% 44.6% 30.9%RoE 14.9% 12.9% 11.9% 10.1% 13.0%RoAdjERoRWA 3.29% 2.86% 2.56% 2.17% 2.84%RoA 2.66% 2.57% 2.46% 2.10% 2.76%ProductivityCost : income ratio 58.4% 64.0% 57.9% 53.6% 51.6%Costs : average assets 4.5% 5.7% 5.5% 5.1% 5.3%Compensation expense ratio 37.0% 36.4% 35.3% 34.6% 32.1%MomentumRevenue growth +13.9% +100.7% +49.4% +5.4% +15.6% Operating profit growth +27.4% +73.4% +74.9% +16.1% +20.6% Net profit growth -10.3% +82.7% +3.5% -11.0% +40.0% Dividend growth -54.9% -32.2% +36.9% -10.7% +40.0% Value*UBS bank valuationLeveraged P/ERisk tendency P/EMerger P/E



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Sofisa is a mid-size bank (R$2.2 billion in assets as of 1Q07) focused onthe middle market segment in Brazil. Its loan portfolio mostly comprisesshort-term lending in local currency, with overdraft accounts, workingcapital lines and discount of receivables the main products. The bankalso decided to tap the consumer segment, and started offering payrollloans and car financing in the beginning of 2007. As of 1Q07, the bankhad R$1.3 billion outstanding loans.

UBS 92

Banco BradescoPer share (R$) 12/07 12/08 12/09E 12/10E 12/11EEPS (stated) 2.66 2.48 2.44 2.74EPS (UBS adjusted) 2.66 2.48 2.44 2.74GOPS 5.01 5.76 6.27 6.99DPS 0.91 0.84 0.84 0.93BVPS (stated) 10.03 11.26 12.70 14.33BVPS (adjusted) 10.24 10.99 12.35 13.89Income statement (R$m)Net interest income 21,866 22,009 28,073 31,203Other income 9,194 13,227 10,404 11,286Total revenues 31,060 35,237 38,477 42,489Expenses (15,897) (17,556) (18,929) (20,396)Operating profit 15,163 17,680 19,549 22,093Provisions and other items (5,498) (7,287) (9,455) (10,414)Profit before tax 9,689 10,390 10,071 11,653Pre-exceptional net income 7,037 7,630 7,624 8,700Capital dynamics (R$m)Risk-weighted assets 296,736 293,797 325,207 375,363Tier one capital 30,375 38,245 43,242 48,987Total capital 41,448 47,737 52,735 58,479Tier one ratio 10.2% 13.0% 13.3% 13.1%Total capital ratio 14.0% 16.2% 16.2% 15.6%Net profit after tax 7,860 7,620 7,602 8,673Tier 1 requirementLess: Working capital requirementLess: Dividends 2,758 2,582 2,605 2,928Surplus capital generatedSurplus capital generation ratioBalance sheet (R$m)Assets 341,184 454,413 501,162 562,635Customer loans 131,307 173,423 193,056 223,512Customer deposits 98,323 164,493 189,167 217,542Funds under management 0 0Loans : assets 38.5% 38.2% 38.5% 39.7%Deposits : assets 28.8% 36.2% 37.7% 38.7%Loans : deposits 133.5% 105.4% 102.1% 102.7%Shareholders equity : assets 8.90% 7.61% 7.90% 8.06%Asset quality (R$m)Non-performing assets 6,222 8,752 10,039 11,399Total risk reserves 7,826 9,666 11,791 14,291NPAs : loans 4.74% 5.05% 5.20% 5.10%NPA coverage 126% 110% 117% 125%Provision charge : average loans 4.83% 4.78% 5.16% 5.00%Net NPLs : shareholders' funds -5.3% -2.6% -4.4% -6.4%ProfitabilityNet interest margin (avg assets) 7.21% 5.53% 5.88% 5.87%Provisions : operating profit 36.3% 41.2% 48.4% 47.1%RoE 28.6% 23.5% 20.5% 20.4%RoAdjE 28.3% 23.5% 21.1% 21.0%RoRWA 3.09% 2.59% 2.46% 2.48%RoA 2.59% 1.92% 1.59% 1.63%ProductivityCost : income ratio 51.2% 49.8% 49.2% 48.0%Costs : average assets 5.2% 4.4% 4.0% 3.8%Compensation expense ratio 30.2% 28.8% 28.5% 27.2%MomentumRevenue growth +12.5% +13.4% +9.2% +10.4% NMOperating profit growth +13.4% +16.6% +10.6% +13.0% NMNet profit growth +10.4% +8.4% -0.1% +14.1% NMDividend growth -36.4% -7.6% -0.6% +10.8% NMValue*UBS bank valuationLeveraged P/ERisk tendency P/EMerger P/E


Conventional valuationMarket cap./Revenues 2.1x 1.9x 1.7x 1.6xMarket cap./Operating profit 4.4x 3.8x 3.4x 3.0xP/E (stated) 8.2x 8.7x 8.9x 7.9xP/E (UBS adjusted) 8.2x 8.7x 8.9x 7.9xDividend yield 4.20% 3.88% 3.86% 4.27%P/BV (stated) 2.2x 1.9x 1.7x 1.5xP/BV (adjusted) 2.1x 2.0x 1.8x 1.6xSource: UBS estimates, * Historical, current, & future valuations are based on a share price of R$21.67 as at close on 17 Mar 2009

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Bradesco is Brazil's second largest private financial group, with nearly18% market share of number of branches. The group has sizableoperations in the insurance, pension funds, asset management, andcredit cards areas, although retail banking remains the largest business.Bradesco is controlled by local investors and the group has expanded itspresence in Brazil through organic growth and acquisitions, more

recently focusing on consumer finance.

UBS 93

Banco Itau HoldingPer share (R$) 12/06 12/07 12/08E 12/09E 12/10EEPS (stated) 1.43 2.80EPS (UBS adjusted) 1.43 2.80GOPS 4.88 5.61DPS 0.50 0.94BVPS (stated) 7.87 9.67BVPS (adjusted) 8.20 10.07Income statement (R$m)Net interest income 18,910 21,153Other income 9,991 10,727Total revenues 28,901 31,880Expenses (13,594) (15,202)Operating profit 15,306 16,678Provisions and other items (6,453) (6,177)Profit before tax 9,234 10,501Pre-exceptional net income 6,770 6,956Capital dynamics (R$m)Risk-weighted assets 176,781 207,726Tier one capital 28,021 31,055Total capital 30,559 37,992Tier one ratio 15.9% 14.9%Total capital ratio 17.3% 18.3%Net profit after tax 4,990 8,251Tier 1 requirementLess: Working capital requirementLess: Dividends 1,495 2,830Surplus capital generatedSurplus capital generation ratioBalance sheet (R$m)Assets 209,691 294,876Customer loans 84,148 115,548Customer deposits 61,173 81,592Funds under management 179,807 217,377Loans : assets 40.1% 39.2%Deposits : assets 29.2% 27.7%Loans : deposits 137.6% 141.6%Shareholders equity : assets 11.24% 9.82%Asset quality (R$m)Non-performing assets 5,006 5,444Total risk reserves 7,431 7,926NPAs : loans 5.95% 4.71%NPA coverage 148% 146%Provision charge : average loans 8.91% 6.19%Net NPLs : shareholders' funds -10.3% -8.6%ProfitabilityNet interest margin (avg assets) 10.48% 8.38%Provisions : operating profit 42.2% 37.0%RoE 21.9% 31.9%RoAdjE 20.9% 30.6%RoRWA 3.58% 4.38%RoA 2.37% 3.32%ProductivityCost : income ratio 47.0% 47.7%Costs : average assets 7.5% 6.0%Compensation expense ratio 26.4% 27.3%MomentumRevenue growth +26.8% +10.3% NM NM NMOperating profit growth +34.1% +9.0% NM NM NMNet profit growth +24.8% +2.7% NM NM NMDividend growth +86.7% +89.1% NM NM NMValue*UBS bank valuationLeveraged P/ERisk tendency P/EMerger P/E


Conventional valuationMarket cap./Revenues 2.5x 2.3xMarket cap./Operating profit 4.7x 4.3xP/E (stated) 16.8x 8.6xP/E (UBS adjusted) 16.8x 8.6xDividend yield 2.08% 3.93%P/BV (stated) 3.1x 2.5xP/BV (adjusted) 2.9x 2.4xSource: UBS estimates, * Historical, current, & future valuations are based on a share price of R$24.04 as at close on 17 Mar 2009

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Itau is Brazil's second largest private sector bank, with over 9% marketshare of assets, 12 million retail banking customers, and a solidpresence in the credit cards, asset management, and insuranceindustries. Itau has expanded through organic growth and acquisitions,more recently entering into joint ventures with local retailers to build aconsumer finance franchise. The bank is controlled by local investorsthrough the listed holding company Itausa.

UBS 94

Porto SeguroPer share (R$) 12/06 12/07 12/08E 12/09E 12/10EEPS (stated)EPS (UBS adjusted) 0.67 0.61 1.28 1.27 1.65GOPSDPSBVPS (stated) 6.63 7.87 8.68 9.57 10.73BVPS (adjusted)Income statement (R$m)Net interest incomeOther incomeTotal revenuesExpensesOperating profitProvisions and other itemsProfit before taxPre-exceptional net income 460 420 293 293 379Capital dynamics (R$m)Risk-weighted assetsTier one capitalTotal capitalTier one ratioTotal capital ratioNet profit after taxTier 1 requirementLess: Working capital requirementLess: DividendsSurplus capital generatedSurplus capital generation ratioBalance sheet (R$m)AssetsCustomer loansCustomer depositsFunds under managementLoans : assetsDeposits : assetsLoans : depositsShareholders equity : assetsAsset quality (R$m)Non-performing assetsTotal risk reservesNPAs : loansNPA coverageProvision charge : average loansNet NPLs : shareholders' fundsProfitabilityNet interest margin (avg assets)Provisions : operating profitRoE 35.1% 25.1% 15.4% 14.0% 16.3%RoAdjERoRWARoA 8.96% 6.84% 4.39% 3.85% 4.24%ProductivityCost : income ratioCosts : average assetsCompensation expense ratioMomentumRevenue growth NM NM NM NM NMOperating profit growth NM NM NM NM NMNet profit growth +80.1% -8.7% -30.2% -0.1% +29.5% Dividend growth NM NM NM NM NMValue*UBS bank valuationLeveraged P/ERisk tendency P/EMerger P/E


Conventional valuationMarket cap./RevenuesMarket cap./Operating profitP/E (stated)P/E (UBS adjusted) 16.0x 17.5x 8.3x 8.4x 6.5xDividend yieldP/BV (stated) 1.6x 1.4x 1.2x 1.1x 1.0xP/BV (adjusted)Source: UBS estimates, * Historical, current, & future valuations are based on a share price of R$10.65 as at close on 17 Mar 2009

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Porto Seguro is the fourth largest insurance company in Brazil and thelargest underwriter of auto insurance, its core business (accounting fornearly two-thirds of revenues), with c20% market share in this segment.The company also sells life, health, and other P&C insurance, mostlythrough a wide network of independent agents. Porto Seguro iscontrolled by local investors and its capital is composed only of votingshares. The company was IPOed in November 2004 in the Novo

Mercado.

UBS 95

SulAmericaPer share (R$) 12/06 12/07 12/08E 12/09E 12/10EEPS (stated) 2.23 3.82 4.65 4.56 5.45EPS (UBS adjusted)GOPSDPS 0.29 0.76 1.16 1.14 1.36BVPS (stated) 13.53 20.91 24.21 27.63 31.71BVPS (adjusted)Income statement (R$m)Net interest incomeOther incomeTotal revenuesExpensesOperating profitProvisions and other itemsProfit before tax 381 674 828 769 911Pre-exceptional net income 153 310 436 428 511Capital dynamics (R$m)Risk-weighted assetsTier one capitalTotal capitalTier one ratioTotal capital ratioNet profit after tax 153 310 436 428 511Tier 1 requirementLess: Working capital requirementLess: Dividends 20 62 109 107 128Surplus capital generatedSurplus capital generation ratioBalance sheet (R$m)AssetsCustomer loansCustomer depositsFunds under managementLoans : assetsDeposits : assetsLoans : depositsShareholders equity : assetsAsset quality (R$m)Non-performing assetsTotal risk reservesNPAs : loansNPA coverageProvision charge : average loansNet NPLs : shareholders' fundsProfitabilityNet interest margin (avg assets)Provisions : operating profitRoE 18.0% 21.5% 20.5% 17.5% 18.4%RoAdjERoRWARoAProductivityCost : income ratioCosts : average assetsCompensation expense ratioMomentumRevenue growth NM NM NM NM NMOperating profit growth NM NM NM NM NMNet profit growth >+200% +102.3% +40.4% -1.8% +19.3% Dividend growth NM +163.8% +52.3% -1.8% +19.3% Value*UBS bank valuationLeveraged P/ERisk tendency P/EMerger P/E

Market capitalization (R$m) 2,840 2,313 1,875 1,875

Conventional valuationMarket cap./RevenuesMarket cap./Operating profitP/E (stated) 8.9x 5.2x 4.3x 4.3x 3.6xP/E (UBS adjusted)Dividend yield 1.46% 3.85% 5.86% 5.75% 6.86%P/BV (stated) 1.5x 0.9x 0.8x 0.7x 0.6xP/BV (adjusted)Source: UBS estimates, * Historical, current, & future valuations are based on a share price of R$19.84 as at close on 17 Mar 2009

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SulAmerica is Brazil's second largest insurance group and the biggest'independent' insurer in the country, with approximately 15% marketshare. SulAmerica is a holding company controlled by Larragoiti familythat operates through seven subsidiaries in the life and non-life insurancebusinesses. Health and auto insurance are the company's most relevantoperations. The group also operates in the asset management andprivate pension plan businesses. In 2002, ING became a strategicpartner, holding 49% of the total shares through direct and indirect stakes

in SASA.

UBS 96

BM&F Bovespa

Income statement (R$m) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues - 468 532 797 1,359 1,543 13.6 1,395 -9.6 1,732 24.1 Operating expenses (ex depn) - (395) (408) (441) (510) (658) 29.0 (481) -27.0 (500) 4.0 EBITDA (UBS) - 73 124 356 848 885 4.3 915 3.4 1,232 34.7 Depreciation - (22) (20) (32) (33) (32) -3.2 (33) 5.3 (39) 15.5 Operating income (EBIT, UBS) - 52 104 324 815 853 4.6 881 3.3 1,193 35.4 Other income & associates - (22) (11) (12) 9 (306) - (785) 156.1 (1,085) 38.2 Net interest - 188 260 289 317 297 -6.4 306 3.2 312 2.0 Abnormal items (pre-tax) - 0 0 0 0 (25) - 0 - 0 - Profit before tax - 218 354 600 1,141 818 -28.3 402 -50.8 420 4.5 Tax - (26) (37) (202) (367) (194) -47.1 (35) -82.2 (14) -60.5 Profit after tax - 192 317 398 774 624 -19.4 368 -41.1 407 10.6 Abnormal items (post-tax) - 0 0 0 0 0 - 0 - 0 - Minorities / pref dividends - 1 0 (1) (3) (1) -49.2 (1) 10.0 (2) 10.0 Net income (local GAAP) - 193 317 397 772 623 -19.3 366 -41.2 405 10.6 Net Income (UBS) - 193 317 397 772 963 24.7 894 -7.1 1,131 26.5 Tax rate (%) - 12 10 34 32 0 - 0 - 0 - Pre-abnormal tax rate (%) - 12 10 34 32 0 - 0 - 0 - Per share (R$) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) - 0.09 0.15 0.19 0.37 0.30 -19.3 0.18 -41.2 0.20 10.6 EPS (UBS) - 0.09 0.15 0.19 0.37 0.47 24.7 0.43 -7.1 0.55 26.5 Net DPS - 0.00 0.00 0.00 0.00 0.26 - 0.30 18.2 0.41 35.5 Cash EPS - 0.10 0.16 0.21 0.39 0.49 23.6 0.45 -6.7 0.57 26.1 BVPS - 0.81 0.89 1.12 1.41 9.51 574.0 9.64 1.4 9.78 1.4 Balance sheet (R$m) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents - 1,706 1,959 2,641 3,324 2,068 -37.8 2,301 11.2 2,547 10.7 Other current assets - 33 28 25 82 157 90.2 175 12.0 218 24.1 Total current assets - 1,739 1,987 2,666 3,406 2,225 -34.7 2,476 11.3 2,765 11.7 Net tangible fixed assets - 226 226 247 263 1,570 496.2 1,620 3.2 1,672 3.2 Net intangible fixed assets - 15 12 12 9 16,079 174896.4 16,082 0.0 16,085 0.0 Investments / other assets - 97 133 250 393 587 49.2 596 1.5 606 1.7 Total assets - 2,078 2,358 3,175 4,072 20,461 402.5 20,774 1.5 21,128 1.7 Trade payables & other ST liabilities - 246 352 693 1,075 915 -14.9 949 3.7 1,007 6.2 Short term debt - 0 0 0 0 0 - 0 - 0 - Total current liabilities - 246 352 693 1,075 915 -14.9 949 3.7 1,007 6.2 Long term debt - 0 0 0 0 0 - 0 - 0 - Other long term liabilities - 179 173 195 100 98 -1.9 108 10.0 118 10.0 Total liabilities - 425 526 888 1,175 1,013 -13.8 1,056 4.3 1,126 6.6 Equity & minority interests - 1,653 1,833 2,287 2,897 19,448 571.2 19,718 1.4 20,003 1.4 Total liabilities & equity - 2,078 2,358 3,175 4,072 20,461 402.5 20,774 1.5 21,128 1.7 Cash flow (R$m) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income - 193 317 397 772 623 -19.3 366 -41.2 405 10.6 Depreciation - 22 20 32 33 32 -3.2 33 5.3 39 15.5 Net change in working capital - 0 16 4 (3) 0 - (18) - (35) 100.0 Other (operating) - 0 0 0 0 0 - 0 - 0 - Net cash from operations - 214 353 432 802 654 -18.4 382 -41.6 408 6.9 Capital expenditure - - 21 29 29 62 109.9 84 36.0 91 8.6 Net (acquisitions) / disposals - 0 0 0 0 0 - 0 - 0 - Other changes in investments - 0 0 0 0 0 - 0 - 0 - Cash from investing activities - - 21 29 29 62 109.9 84 36.0 91 8.6 Increase/(decrease) in debt - 0 0 0 0 0 - 0 - 0 - Share issues / (repurchases) - 0 0 0 0 0 - 0 - 0 - Dividends paid - 0 0 0 0 (529) - (626) 18.2 (848) 35.5 Other cash from financing - 0 0 0 0 0 - 0 - 0 - Cash from financing activities - 0 0 0 0 (529) - (626) 18.2 (848) 35.5 Cash flow chge in cash & equivalents - - 374 461 831 187 - (160) - (349) - FX / non cash items - - (121) 222 (149) (1,442) 313.2 393 - 595 53.1 Bal sheet chge in cash & equivalents - - 253 683 682 (1,256) - 232 - 246 - Core EBITDA - 73 124 356 848 1,027 21.1 915 -11.0 1,232 34.7 Maintenance capital expenditure - - (21) (29) (29) (62) 109.9 (84) 36.0 (91) 8.6 Maintenance net working capital - 0 16 4 (3) 0 - (18) - (35) 100.0 Operating free cash flow, pre-tax

- - 119 331 816 966 18.3 813 -15.8 1,105 35.9


UBS 97


Diversified Financial



Company profile BM&F Bovespa is the result of the merger of BM&F futures exchangeand the Bovespa Holdings stock exchange in the 1H08. The Bovespa is a vertically integrated exchange, offering post-trade services, such as clearing and settlement, risk management, central counterparty,and central depositary of securities through CBLC subsidiary. TheBM&F is the only futures exchange operating in Brazil, the largest inLatin America, and operates a vertically integrated model, providing arange of trading and settlement services on derivatives contracts.


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BM&F Bovespa

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - - 63.6 22.3 38.0 34.3 P/E (UBS) - - 63.6 14.4 15.6 12.3 P/CEPS - - 60.5 13.9 14.9 11.8 Net dividend yield (%) - - 0.0 3.8 4.5 6.1 P/BV - - 16.9 0.7 0.7 0.7 EV/revenue (core) - - NM 7.3 8.4 6.7 EV/EBITDA (core) - - 54.0 11.0 12.9 9.4 EV/EBIT (core) - - NM 13.2 13.4 9.7 EV/OpFCF (core) - - NM 11.7 14.5 10.4 EV/op. invested capital - - NM 1.3 0.7 0.7

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap - 48,684 13,797 13,797 13,797 + minority interests 6 14 16 17 19 + average net debt (cash) (2,300) (2,889) (2,538) (2,048) (2,274) + pension obligations and other 0 0 0 0 0 - non-core asset value 0 0 0 0 0 Core enterprise value - 45,809 11,275 11,766 11,542 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - 49.8 70.6 13.6 -9.6 24.1 EBITDA (UBS) - 187.0 138.3 4.3 3.4 34.7 EBIT (UBS) - NM 151.7 4.6 3.3 35.4 EPS (UBS) - 25.2 94.6 24.7 -7.1 26.5 Cash EPS - 27.3 87.8 23.6 -6.7 26.1 Net DPS - - - - 18.2 35.5 BVPS - 24.8 26.4 NM 1.4 1.4


Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) - NM NM 9.9 5.0 6.8 ROIC post tax - NM NM 9.9 5.0 6.8 Net ROE - 19.3 29.9 8.6 4.6 5.7

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - - - - - Dividend cover (UBS EPS) - - - 1.8 1.4 1.3 Div. payout ratio (%, UBS EPS) - - - 54.6 69.5 74.4 Net debt / EBITDA - NM NM NM NM NM

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - NM NM 0.2 0.1 0.1 Revenue / fixed assets - 3.2 5.1 0.2 0.1 0.1 Revenue / net working capital - NM NM NM NM NM

Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT - 1.0 1.0 1.1 0.9 0.9 Capex / revenue (%) - NM NM NM NM NM Capex / depreciation - NM NM NM NM NM

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - NM NM (10.0) (11.0) (12.0) Net debt / (net debt + equity) - NM NM (11.1) (12.3) (13.6) Net debt (core) / EV - - (6.3) (22.5) (17.4) (19.7)

Source: Company accounts, UBS estimates. (UBS) valuations are stated before goodwill-related charges and other adjustments for abnormal and economic items at the analysts' judgement. Valuations: based on an average share price that year, (E): based on a share price of R$6.75 on 16 Mar 2009 21:47 EDT Market cap(E) may include forecast share issues/buybacks. Juan Partida, CFA Analyst [email protected] +52 55 5282 7728

Eduardo Nishio Analyst [email protected] +55-21-3262 9748

Eduardo Rosman Analyst [email protected] +55 21 3262 8859

UBS 98

Redecard SA

Income statement (R$m) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch Revenues 1,138 1,493 1,730 2,045 2,589 2,741 5.9 2,837 3.5 3,089 8.9 Operating expenses (ex depn) (600) (706) (764) (777) (831) (854) 2.8 (920) 7.8 (1,082) 17.6 EBITDA (UBS) 538 787 966 1,269 1,758 1,887 7.4 1,916 1.5 2,007 4.7 Depreciation (78) (157) (134) (114) (119) (132) 10.4 (143) 8.7 (153) 6.9 Operating income (EBIT, UBS) 460 630 831 1,155 1,638 1,755 7.2 1,773 1.0 1,853 4.5 Other income & associates 0 0 0 0 0 0 - 0 - 0 - Net interest 0 0 0 0 0 0 - 0 - 0 - Abnormal items (pre-tax) 0 0 0 0 0 0 - 0 - 0 - Profit before tax 460 630 831 1,155 1,638 1,755 7.2 1,773 1.0 1,853 4.5 Tax (158) (219) (280) (386) (536) (588) 9.8 (594) 1.0 (621) 4.5 Profit after tax 302 412 552 769 1,102 1,167 5.9 1,179 1.0 1,232 4.5 Abnormal items (post-tax) 0 0 0 0 0 0 - 0 - 0 - Minorities / pref dividends 0 0 0 0 0 0 - 0 - 0 - Net income (local GAAP) 302 412 552 769 1,102 1,167 5.9 1,179 1.0 1,232 4.5 Net Income (UBS) 302 412 552 769 1,102 1,167 5.9 1,179 1.0 1,232 4.5 Tax rate (%) 34 35 34 33 33 34 2.5 34 0.0 34 0.0 Pre-abnormal tax rate (%) 34 35 34 33 33 34 2.5 34 0.0 34 0.0 Per share (R$) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch EPS (local GAAP) 0.16 0.22 0.29 1.14 1.64 1.73 5.9 1.75 1.0 1.83 4.5 EPS (UBS) 0.16 0.22 0.29 1.14 1.64 1.73 5.9 1.75 1.0 1.83 4.5 Net DPS 0.16 0.21 0.32 0.52 1.48 1.65 11.7 1.66 1.0 1.74 4.5 Cash EPS 0.20 0.30 0.37 1.31 1.82 1.93 6.3 1.97 1.8 2.06 4.8 BVPS 0.08 0.09 0.10 0.77 1.07 1.16 8.1 1.25 7.5 1.34 7.3 Balance sheet (R$m) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch Cash and equivalents 0 0 0 0 0 0 - 0 - 0 - Other current assets 6,018 8,100 10,282 13,176 14,400 17,853 24.0 21,628 21.1 25,863 19.6 Total current assets 6,018 8,100 10,282 13,176 14,400 17,853 24.0 21,628 21.1 25,863 19.6 Net tangible fixed assets 235 205 176 197 214 228 6.8 238 4.2 245 2.8 Net intangible fixed assets 0 0 0 0 0 0 - 0 - 0 - Investments / other assets 46 62 55 39 31 630 1919.9 806 28.0 1,140 41.4 Total assets 6,299 8,367 10,513 13,412 14,645 18,711 27.8 22,672 21.2 27,248 20.2 Trade payables & other ST liabilities 5,704 7,746 9,889 12,450 13,698 17,698 29.2 21,592 22.0 26,097 20.9 Short term debt 393 362 376 361 195 195 0.0 195 0.0 195 0.0 Total current liabilities 6,097 8,108 10,265 12,811 13,893 17,893 28.8 21,787 21.8 26,291 20.7 Long term debt 0 0 0 0 0 0 - 0 - 0 - Other long term liabilities 149 196 184 81 29 37 29.2 45 22.0 55 20.9 Total liabilities 6,246 8,304 10,449 12,892 13,922 17,930 28.8 21,832 21.8 26,346 20.7 Equity & minority interests 53 63 64 520 723 781 8.1 840 7.5 902 7.3 Total liabilities & equity 6,299 8,367 10,513 13,412 14,645 18,711 27.8 22,672 21.2 27,248 20.2 Cash flow (R$m) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch Net income 302 412 552 769 1,102 1,167 5.9 1,179 1.0 1,232 4.5 Depreciation 78 157 134 114 119 132 10.4 143 8.7 153 6.9 Net change in working capital 0 0 0 0 0 0 - 0 - 0 - Other (operating) 0 0 0 0 0 0 - 0 - 0 - Net cash from operations 380 569 686 883 1,222 1,299 6.3 1,322 1.8 1,386 4.8 Capital expenditure 0 0 0 0 0 0 - 0 - 0 - Net (acquisitions) / disposals 0 0 0 0 0 0 - 0 - 0 - Other changes in investments 0 0 0 0 0 0 - 0 - 0 - Cash from investing activities 0 0 0 0 0 0 - 0 - 0 - Increase/(decrease) in debt 0 0 0 0 0 0 - 0 - 0 - Share issues / (repurchases) 0 0 0 0 0 0 - 0 - 0 - Dividends paid (303) (402) (599) (353) (993) (1,109) 11.7 (1,120) 1.0 (1,171) 4.5 Other cash from financing 0 0 0 0 0 0 - 0 - 0 - Cash from financing activities (303) (402) (599) (353) (993) (1,109) 11.7 (1,120) 1.0 (1,171) 4.5 Cash flow chge in cash & equivalents 78 167 87 530 229 190 - 202 - 215 - FX / non cash items - (167) (87) (530) (229) (190) 203.1 (202) 6.5 (215) 6.2 Bal sheet chge in cash & equivalents - 0 0 0 0 0 - 0 - 0 - Core EBITDA 538 787 966 1,269 1,758 1,887 7.4 1,916 1.5 2,007 4.7 Maintenance capital expenditure (106) (114) (95) (129) (140) (146) 4.5 (153) 4.5 (160) 4.5 Maintenance net working capital 548 145 (173) 528 202 (375) - 41 - (705) - Operating free cash flow, pre-tax

980 819 697 1,668 1,819 1,366 -24.9 1,804 32.1 1,142 -36.7


UBS 99


Diversified Financial



Company profile Redecard has been the main merchant acquirer and paymentprocessor for MasterCard and Diners Club International brandedcards in Brazil. Its activities include affiliating merchants to acceptcredit and debit cards, and capturing, transmitting, processing, andsettling transactions carried out with these brands.


12/07 12/08 12/09E 12/10E 12/11E0.0x

5.0x

10.0x

15.0x

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

30.0x


Profitability

12/07 12/08 12/09(E) 12/10(E) 12/11(E)54.0%

56.0%

58.0%

60.0%

62.0%

64.0%

66.0%

165.0%

170.0%

175.0%

180.0%

185.0%

190.0%



12/07 12/08 12/09(E) 12/10(E) 12/11(E)50%

100%

150%

200%

250%

300%

10.0x

15.0x

20.0x

25.0x

30.0x

35.0x

40.0x

45.0x


Growth (UBS EPS)

12/07 12/08 12/09(E) 12/10(E) 12/11(E)1800

2000

2200

2400

2600

2800

3000

3200

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%


Redecard SA

Valuation (x) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E P/E (local GAAP) - 28.3 16.7 13.7 13.5 12.9 P/E (UBS) - 28.3 16.7 13.7 13.5 12.9 P/CEPS - 24.7 15.1 12.3 12.1 11.5 Net dividend yield (%) - 1.6 5.4 7.0 7.0 7.3 P/BV - 41.9 25.5 20.4 19.0 17.7 EV/revenue (core) - NM 7.4 6.0 5.8 5.3 EV/EBITDA (core) - 17.5 10.6 8.6 8.4 8.0 EV/EBIT (core) - 19.2 11.4 9.2 9.1 8.7 EV/OpFCF (core) - 13.3 10.3 11.8 8.9 14.1 EV/op. invested capital - NM NM NM NM NM

Enterprise value (R$m) 12/07 12/08 12/09E 12/10E 12/11E Average market cap 21,785 18,414 15,949 15,949 15,949 + minority interests 0 0 0 0 0 + average net debt (cash) 369 278 195 195 195 + pension obligations and other 0 0 0 0 0 - non-core asset value 0 0 0 0 0 Core enterprise value 22,154 18,691 16,144 16,144 16,144 Growth (%) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E Revenue - 18.2 26.6 5.9 3.5 8.9 EBITDA (UBS) - 31.4 38.5 7.4 1.5 4.7 EBIT (UBS) - 39.0 41.8 7.2 1.0 4.5 EPS (UBS) - NM 43.3 5.9 1.0 4.5 Cash EPS - NM 38.4 6.3 1.8 4.8 Net DPS - 64.4 181.5 11.7 1.0 4.5 BVPS - NM 39.0 8.1 7.5 7.3


Return on capital (%) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E EBIT ROIC (UBS) - NM NM NM NM NM ROIC post tax - NM NM NM NM NM Net ROE - 263.4 177.4 155.2 145.4 141.5

Coverage ratios (x) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E EBIT / net interest - - - - - - Dividend cover (UBS EPS) - 2.2 1.1 1.1 1.1 1.1 Div. payout ratio (%, UBS EPS) - 45.9 90.1 95.0 95.0 95.0 Net debt / EBITDA - 0.3 0.1 0.1 0.1 0.1

Efficiency ratios (x) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E Revenue / op. invested capital - 3.1 2.9 2.9 2.8 2.9 Revenue / fixed assets - 11.0 12.6 12.4 12.2 12.8 Revenue / net working capital - 3.7 3.6 6.4 29.8 NM






UBS 100

GP Investments

Income statement (US$m) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues - 1 40 44 369 468 26.8 122 -74.0 404 231.5 Operating expenses (ex depn) - (1) (8) (24) (47) (55) 17.7 (60) 7.4 (113) 89.8 EBITDA (UBS) - 0 32 20 322 413 28.2 62 -84.9 291 367.1 Depreciation - 0 0 0 0 0 - 0 - 0 - Operating income (EBIT, UBS) - 0 32 20 322 413 28.2 62 -84.9 291 367.1 Other income & associates - 7 6 0 0 0 - 0 - 0 - Net interest - (1) (2) 25 37 (3) - 14 - 181 1154.3 Abnormal items (pre-tax) - 0 0 0 0 0 - 0 - 0 - Profit before tax - 6 36 44 359 410 14.2 77 -81.3 472 515.3 Tax - 0 0 (1) (4) (2) -51.4 0 - 0 - Profit after tax - 6 36 43 355 408 14.9 77 -81.2 472 515.3 Abnormal items (post-tax) - 0 0 0 0 0 - 0 - 0 - Minorities / pref dividends - 0 0 (17) (170) (277) 62.9 33 - 31 -4.5 Net income (local GAAP) - 6 36 26 185 131 -29.1 109 -16.7 503 359.7 Net Income (UBS) - 6 36 26 185 131 -29.1 109 -16.7 503 359.7 Tax rate (%) - 0 0 3 1 0 -57.4 0 - 0 - Pre-abnormal tax rate (%) - 0 0 3 1 0 -57.4 0 - 0 - Per share (US$) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) - - 0.24 0.18 1.25 0.76 -39.3 0.63 -16.7 13.57 2046.8 EPS (UBS) - - 0.24 0.18 1.25 0.76 -39.3 0.63 -16.7 13.57 2046.8 Net DPS - - 0.00 0.00 1.50 0.20 -86.4 0.16 -19.6 0.73 342.6 Cash EPS - - 0.30 0.22 1.56 0.82 -47.7 0.67 -18.2 15.08 2156.2 BVPS - 0.16 0.28 3.14 1.20 6.07 404.5 6.87 13.2 85.16 1140.3 Balance sheet (US$m) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents - 2 30 313 200 172 -13.7 192 11.3 2,307 1102.8 Other current assets - 18 28 17 92 90 -1.6 99 9.3 157 58.9 Total current assets - 20 58 329 291 263 -9.9 291 10.6 2,464 748.1 Net tangible fixed assets - 1 1 1 3 5 50.0 5 10.6 8 47.8 Net intangible fixed assets - 0 0 0 0 0 - 0 - 0 - Investments / other assets - 4 23 174 1,185 1,322 11.5 1,443 9.2 1,651 14.5 Total assets - 24 82 504 1,479 1,589 7.4 1,738 9.4 4,123 137.2 Trade payables & other ST liabilities - 4 19 18 19 19 0.0 19 0.0 19 0.0 Short term debt - 1 6 0 4 4 0.0 4 0.0 4 0.0 Total current liabilities - 5 25 18 23 23 0.0 23 0.0 23 0.0 Long term debt - 0 0 7 200 428 113.6 452 5.5 611 35.3 Other long term liabilities - 0 22 0 0 0 - 0 - 0 - Total liabilities - 5 47 25 223 451 102.0 474 5.3 634 33.6 Equity & minority interests - 19 35 479 1,256 1,138 -9.4 1,264 11.0 3,489 176.1 Total liabilities & equity - 24 82 504 1,479 1,589 7.4 1,738 9.4 4,123 137.2 Cash flow (US$m) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income - 6 36 26 185 131 -29.1 109 -16.7 503 359.7 Depreciation - 0 0 0 0 0 - 0 - 0 - Net change in working capital - 0 11 0 69 68 -2.1 76 12.4 134 76.5 Other (operating) - 0 0 0 0 0 - 0 - 0 - Net cash from operations - 6 47 26 254 199 -21.8 185 -6.8 637 243.6 Capital expenditure - 0 0 0 0 0 - 0 - 0 - Net (acquisitions) / disposals - 0 0 0 0 0 - 0 - 0 - Other changes in investments - 0 0 0 0 0 - 0 - 0 - Cash from investing activities - 0 0 0 0 0 - 0 - 0 - Increase/(decrease) in debt - 0 0 0 0 0 - 0 - 0 - Share issues / (repurchases) - 0 0 0 0 0 - 0 - 0 - Dividends paid - 0 0 0 0 0 - 0 - 0 - Other cash from financing - 0 0 0 0 0 - 0 - 0 - Cash from financing activities - 0 0 0 (46) (33) -29.1 (27) -16.7 (126) 359.7 Cash flow chge in cash & equivalents - 6 47 26 208 166 - 158 - 511 - FX / non cash items - - (19) 257 (321) (193) -18.7 (139) -61.5 1,604 - Bal sheet chge in cash & equivalents - - 28 282 (113) (27) - 20 - 2,115 - Core EBITDA - 0 32 20 322 413 28.2 62 -84.9 291 367.1 Maintenance capital expenditure - 0 0 0 0 0 - 0 - 0 - Maintenance net working capital - 0 0 0 0 0 - 0 - 0 - Operating free cash flow, pre-tax

- 0 32 20 322 413 28.2 62 -84.9 291 367.1


UBS 101


Investment Services



Company profile GP Investments is a Bermuda-based company that consolidated partof the private equity activities of the Brazilian 'GP Group' in LatinAmerica and controls the asset management business of the group inBrazil. GP Investments is the General Partner ('GP') of the privateequity fund raised in 2004 (GPCP 3), the most recent fund (GPCP4)and of all other private equity funds to be raised by the group. Since 1993 and up to 2007, the GP Group has raised almost US$3.0 billionthrough five private equity funds. The most recent one, GPCP 4, hadUS$1.3 billion of committed capital raised on July 2007.


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

30.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

-400%

-200%

0%

200%

400%

600%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

0.0x

2.0x

4.0x

6.0x

8.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)0

100

200

300

400

500

-50.0%

-40.0%

-30.0%

-20.0%

-10.0%

0.0%


GP Investments

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - 31.7 7.6 3.3 3.7 0.2 P/E (UBS) - 31.7 7.6 3.3 3.7 0.2 P/CEPS - 25.4 6.1 3.0 3.5 0.1 Net dividend yield (%) - 0.0 15.7 8.2 7.1 33.0 P/BV - 1.8 7.9 0.4 0.3 0.0 EV/revenue (core) - 7.7 0.6 NM NM NM EV/EBITDA (core) - 17.2 0.7 -0.8 -10.2 -5.5 EV/EBIT (core) - 17.2 0.7 NM NM NM EV/OpFCF (core) - 17.2 0.7 NM NM NM EV/op. invested capital - NM 4.9 NM NM NM

Enterprise value (US$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 627 1,141 398 398 398 + minority interests 54 397 424 141 351 + average net debt (cash) (165) (151) 132 261 (714) + pension obligations and other 0 0 0 0 0 - non-core asset value (174) (1,174) (1,296) (1,433) (1,641) Core enterprise value 343 213 (342) (633) (1,607) Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - 10.6 NM 26.8 -74.0 NM EBITDA (UBS) - -37.5 NM 28.2 -84.9 NM EBIT (UBS) - -37.5 NM 28.2 -84.9 NM EPS (UBS) - -27.9 NM -47.7 -18.2 NM Cash EPS - -27.9 NM -47.7 -18.2 NM Net DPS - - - -86.4 -19.6 NM BVPS - NM -61.7 NM 13.2 NM

Margins (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBITDA / revenue - 45.0 NM NM 51.1 72.0 EBIT / revenue - 45.0 87.2 88.2 51.1 72.0 Net profit (UBS) / revenue - 58.8 50.2 28.0 NM NM

Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) - NM NM NM 63.3 NM ROIC post tax - NM NM NM 63.3 NM Net ROE - 12.8 39.3 17.0 10.3 24.8

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - - NM - - Dividend cover (UBS EPS) - - 1.0 4.0 4.1 20.8 Div. payout ratio (%, UBS EPS) - - 95.9 25.0 24.6 4.8 Net debt / EBITDA - NM 0.0 0.6 4.2 NM

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - NM 8.6 5.0 1.2 3.2 Revenue / fixed assets - NM NM NM 24.5 NM Revenue / net working capital - 11.1 10.3 6.5 1.6 3.7

Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT - 1.0 1.0 1.0 1.0 1.0 Capex / revenue (%) - 0.0 0.0 0.0 0.0 0.0 Capex / depreciation - - - - - -

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - (63.7) 0.3 22.8 20.8 (48.5) Net debt / (net debt + equity) - NM 0.7 21.0 18.7 NM Net debt (core) / EV - (48.1) (70.6) (38.5) (41.3) 44.5




UBS 102

Healthcare & Education

UBS 103

Amil Participações S.A.

Income statement (R$m) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues - 1,763 2,209 2,527 3,330 4,263 28.0 4,710 10.5 5,209 10.6 Operating expenses (ex depn) - (1,689) (2,115) (2,437) (3,110) (4,009) 28.9 (4,450) 11.0 (4,859) 9.2 EBITDA (UBS) - 75 94 90 221 254 15.3 260 2.1 350 34.7 Depreciation - (7) (7) (10) (23) (30) 30.1 (43) 43.8 (72) 67.9 Operating income (EBIT, UBS) - 68 86 80 198 225 13.5 217 -3.4 278 28.1 Other income & associates - (4) (4) (4) (31) (35) 14.9 (36) 1.7 (36) 0.0 Net interest - 11 29 10 2 59 3180.8 72 22.3 60 -16.8 Abnormal items (pre-tax) - 0 0 0 0 0 - 0 - 0 - Profit before tax - 76 112 86 169 248 47.0 253 2.0 302 19.2 Tax - 8 (7) (13) (30) (50) 66.0 (49) -2.0 (60) 23.0 Profit after tax - 83 105 73 139 199 43.0 204 3.0 242 18.3 Abnormal items (post-tax) - 0 0 0 0 0 - 0 - 0 - Minorities / pref dividends - 0 0 0 0 0 - 0 - 0 - Net income (local GAAP) - 83 105 73 139 199 43.0 204 3.0 242 18.3 Net Income (UBS) - 102 133 99 215 255 18.8 264 3.4 294 11.6 Tax rate (%) - 0 0 0 0 20 - 19 -3.9 20 3.2 Pre-abnormal tax rate (%) - 0 0 0 0 10 - 9 -7.8 13 46.2 Per share (R$) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) - 0.29 0.36 0.25 0.45 0.55 21.8 0.57 3.0 0.67 18.3 EPS (UBS) - 0.35 0.46 0.34 0.70 0.71 1.3 0.73 3.4 0.82 11.6 Net DPS - 0.00 0.00 0.00 0.00 0.04 - 0.14 284.7 0.20 44.2 Cash EPS - 0.38 0.49 0.38 0.77 0.79 2.2 0.85 7.6 1.02 19.5 BVPS - 0.45 0.58 0.56 3.11 3.52 13.3 3.89 10.5 4.33 11.2 Balance sheet (R$m) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents - 184 256 351 1,185 1,230 3.8 1,277 3.9 1,416 10.9 Other current assets - 72 98 122 321 333 3.7 343 3.0 364 6.0 Total current assets - 256 354 473 1,506 1,562 3.7 1,620 3.7 1,780 9.9 Net tangible fixed assets - 150 171 202 222 358 61.5 602 67.9 725 20.4 Net intangible fixed assets - 33 29 59 321 383 19.4 347 -9.4 311 -10.4 Investments / other assets - 139 171 154 122 137 12.3 109 -20.5 99 -9.2 Total assets - 577 725 887 2,171 2,441 12.5 2,678 9.7 2,915 8.8 Trade payables & other ST liabilities - 253 348 473 761 862 13.3 966 12.1 1,046 8.2 Short term debt - 0 0 3 13 17 33.8 17 0.0 17 0.0 Total current liabilities - 253 348 475 774 879 13.7 984 11.9 1,063 8.1 Long term debt - 0 0 8 45 47 5.2 47 0.0 47 0.0 Other long term liabilities - 161 166 201 232 246 5.7 246 0.0 246 0.0 Total liabilities - 414 514 685 1,050 1,172 11.6 1,276 8.9 1,356 6.2 Equity & minority interests - 163 210 202 1,120 1,269 13.3 1,402 10.5 1,559 11.2 Total liabilities & equity - 577 725 887 2,171 2,441 12.5 2,678 9.7 2,915 8.8 Cash flow (R$m) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income - 83 105 73 139 199 43.0 204 3.0 242 18.3 Depreciation - 12 12 17 48 64 33.9 79 24.0 108 37.0 Net change in working capital - - 19 25 (123) (40) -67.2 19 - 3 -86.1 Other (operating) - - 16 80 253 110 -56.6 82 -25.6 53 -34.9 Net cash from operations - - 152 194 316 332 5.0 384 15.8 406 5.7 Capital expenditure - - (34) (85) (66) (195) 197.7 (322) 65.1 (231) -28.3 Net (acquisitions) / disposals - - 0 0 0 0 - 0 - 0 - Other changes in investments - - 5 7 (265) (67) - 36 - 36 - Cash from investing activities - - (30) (78) (330) (263) -20.5 (286) 9.1 (195) -31.8 Increase/(decrease) in debt - - 7 59 58 (12) - 0 - 0 - Share issues / (repurchases) - - (57) (81) 792 0 - 0 - 0 - Dividends paid - - 0 0 0 (13) - (50) 284.7 (72) 44.2 Other cash from financing - - 0 0 (1) 0 - 0 - 0 - Cash from financing activities - - (50) (22) 849 (24) - (50) 104.3 (72) 44.2 Cash flow chge in cash & equivalents - - 73 94 834 45 - 48 - 139 - FX / non cash items - - 0 0 0 0 - 0 - 0 - Bal sheet chge in cash & equivalents - - 73 94 834 45 - 48 - 139 - Core EBITDA - 105 140 133 330 309 -6.5 335 8.5 409 22.1 Maintenance capital expenditure - (7) (7) (10) (23) (30) 30.1 (43) 43.8 (72) 67.9 Maintenance net working capital - 0 0 0 0 0 - 0 - 0 - Operating free cash flow, pre-tax

- 98 132 122 307 279 -9.3 292 4.7 337 15.3


UBS 104


Healthcare Providers



Company profile Amil is one of the leading managed care companies in Brazil, holdingnearly a 6% market share in Brazil's highly fragmented privatehealthcare sector, with operations across the most relevant Brazilianstates. The company was founded nearly 30 years ago and holds ahigh-quality proprietary provider network, strong brand, diversifiedproduct offering, and strong management of medical costs.


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)2.50%

3.00%

3.50%

4.00%

4.50%

5.00%

5.50%

6.00%

-400%

-200%

0%

200%

400%

600%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)2000

2500

3000

3500

4000

4500

5000

5500

-50%

0%

50%

100%

150%



Amil Participações S.A.

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - - 35.8 10.6 10.3 8.7 P/E (UBS) - - 23.2 8.3 8.0 7.2 P/CEPS - - 20.9 7.4 6.9 5.8 Net dividend yield (%) - - 0.0 0.6 2.4 3.4 P/BV - - 5.2 1.7 1.5 1.4 EV/revenue (core) - - 1.5 0.2 0.2 0.2 EV/EBITDA (core) - - 15.4 3.1 2.7 2.0 EV/EBIT (core) - - 25.8 4.3 4.2 3.0 EV/OpFCF (core) - - 16.6 3.5 3.1 2.5 EV/op. invested capital - - NM NM 6.3 4.2

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap - 5,832 2,108 2,108 2,108 + minority interests 0 0 0 0 0 + average net debt (cash) (298) (734) (1,146) (1,189) (1,283) + pension obligations and other 0 0 0 0 0 - non-core asset value 0 0 0 0 0 Core enterprise value - 5,098 962 919 826 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - 14.4 31.8 28.0 10.5 10.6 EBITDA (UBS) - -3.7 144.7 15.3 2.1 34.7 EBIT (UBS) - -7.7 147.9 13.5 -3.4 28.1 EPS (UBS) - -25.9 104.8 1.3 3.4 11.6 Cash EPS - -22.3 105.0 2.2 7.6 19.5 Net DPS - - - - NM 44.2 BVPS - -3.9 NM 13.3 10.5 11.2



Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - - - - - Dividend cover (UBS EPS) - - - 19.8 5.3 4.1 Div. payout ratio (%, UBS EPS) - - - 5.1 18.8 24.3 Net debt / EBITDA - NM NM NM NM NM

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - NM NM NM NM 26.3 Revenue / fixed assets - 11.0 8.3 6.6 5.6 5.2 Revenue / net working capital - NM NM NM NM NM


Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - NM NM (91.8) (86.5) (86.7) Net debt / (net debt + equity) - NM NM NM NM NM Net debt (core) / EV - - (14.4) NM NM NM

Source: Company accounts, UBS estimates. (UBS) valuations are stated before goodwill-related charges and other adjustments for abnormal and economic items at the analysts' judgement. Valuations: based on an average share price that year, (E): based on a share price of R$5.85 on 13 Mar 2009 19:40 EDT Market cap(E) may include forecast share issues/buybacks. Eduardo Nishio Analyst [email protected] +55-21-3262 9748

UBS 105

Diagnosticos da America

Income statement (R$m) - - - 12/07 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues - - - 671 859 1,128 31.3 1,324 17.4 1,546 16.7 Operating expenses (ex depn) - - - (533) (679) (865) 27.4 (1,022) 18.1 (1,189) 16.4 EBITDA (UBS) - - - 138 179 262 46.3 302 15.2 357 18.0 Depreciation - - - (60) (73) (105) 43.6 (139) 32.2 (166) 19.7 Operating income (EBIT, UBS) - - - 78 106 157 48.2 163 3.8 190 16.4 Other income & associates - - - (31) (55) (73) 33.3 (67) -8.1 (60) -10.3 Net interest - - - (11) (22) (127) 464.8 (81) -36.0 (88) 8.9 Abnormal items (pre-tax) - - - 0 0 0 - 0 - 0 - Profit before tax - - - 36 29 (43) - 15 - 41 178.5 Tax - - - (19) 28 (8) - (8) 0.5 (15) 76.4 Profit after tax - - - 17 57 (51) - 7 - 27 309.1 Abnormal items (post-tax) - - - 0 0 0 - 0 - 0 - Minorities / pref dividends - - - 0 0 (1) 125.0 0 - 0 - Net income (local GAAP) - - - 17 56 (52) - 7 - 27 309.1 Net Income (UBS) - - - 47 110 20 -82.0 74 273.3 87 18.0 Tax rate (%) - - - 54 0 0 - 56 - 36 -36.7 Pre-abnormal tax rate (%) - - - 29 0 29 - 10 -64.6 14 42.3 Per share (R$) - - - 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) - - - 0.29 0.98 (0.91) - 0.11 - 0.46 309.1 EPS (UBS) - - - 0.81 1.91 0.34 -82.0 1.28 273.3 1.52 18.0 Net DPS - - - 0.01 0.23 0.00 - 0.13 - 0.36 178.5 Cash EPS - - - 1.86 3.19 2.18 -31.7 3.71 70.3 4.41 19.1 BVPS - - - 8.17 8.93 8.02 -10.2 8.00 -0.2 8.11 1.3 Balance sheet (R$m) - - - 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents - - - 333 47 520 1009.4 494 -5.1 531 7.4 Other current assets - - - 188 290 348 20.1 407 17.0 466 14.7 Total current assets - - - 521 336 868 158.0 901 3.8 997 10.7 Net tangible fixed assets - - - 347 496 634 27.8 702 10.7 714 1.7 Net intangible fixed assets - - - 121 247 182 -26.6 115 -37.0 54 -52.7 Investments / other assets - - - 30 138 175 26.6 175 0.0 175 0.0 Total assets - - - 1,019 1,218 1,859 52.6 1,892 1.8 1,940 2.5 Trade payables & other ST liabilities - - - 103 152 174 14.7 203 16.7 227 11.8 Short term debt - - - 67 104 223 115.9 225 0.5 228 1.7 Total current liabilities - - - 170 255 397 55.7 428 7.6 455 6.5 Long term debt - - - 276 303 839 177.0 843 0.5 857 1.7 Other long term liabilities - - - 104 148 161 9.0 161 0.0 161 0.0 Total liabilities - - - 550 706 1,397 98.0 1,431 2.5 1,473 2.9 Equity & minority interests - - - 469 513 462 -9.9 461 -0.2 467 1.3 Total liabilities & equity - - - 1,019 1,218 1,859 52.6 1,892 1.8 1,940 2.5 Cash flow (R$m) - - - 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income - - - 17 56 (52) - 7 - 27 309.1 Depreciation - - - 90 127 177 39.9 206 16.5 227 10.0 Net change in working capital - - - (8) (53) (36) -32.1 (30) -16.0 (36) 19.0 Other (operating) - - - (5) (26) (70) 163.6 (81) 16.3 (88) 8.9 Net cash from operations - - - 93 104 19 -81.4 101 427.0 129 27.3 Capital expenditure - - - (181) (403) (224) -44.2 (207) -7.9 (178) -13.8 Net (acquisitions) / disposals - - - 0 0 0 - 0 - 0 - Other changes in investments - - - 0 0 0 - 0 - 0 - Cash from investing activities - - - (181) (403) (224) -44.2 (207) -7.9 (178) -13.8 Increase/(decrease) in debt - - - 189 63 656 - 5 - 18 - Share issues / (repurchases) - - - 0 0 0 - 0 - 0 - Dividends paid - - - (1) (13) 0 - (7) - (21) 178.5 Other cash from financing - - - 4 9 14 - 19 - 24 - Cash from financing activities - - - 193 59 670 1038.1 17 -97.5 21 25.8 Cash flow chge in cash & equivalents - - - 105 (240) 465 - (88) - (28) - FX / non cash items - - - - (46) 9 - 62 608.2 64 3.6 Bal sheet chge in cash & equivalents - - - - (286) 473 - (26) - 37 - Core EBITDA - - - 168 198 274 38.5 302 10.5 357 18.0 Maintenance capital expenditure - - - (85) (215) (159) -26.3 (119) -25.0 (124) 3.9 Maintenance net working capital - - - (85) (138) (174) 26.0 (204) 17.3 (239) 17.6 Operating free cash flow, pre-tax

- - - (2) (155) (59) -62.3 (20) -65.3 (7) -68.0


UBS 106





Company profile DASA is the largest private medical diagnostics company in LatinAmerica offering a portfolio of over 3,000 clinical analysis andimaging tests. Its main clients are health-plan providers, self-insured, HMO, public services, medical cooperatives, reference market, thegovernment, individuals, and hospitals. DASA's strategic pillarsincorporate multi-brand, multi-product, multi-region, multi-payer, and multi-market.


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

0.0x

5.0x

10.0x

15.0x

20.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)11.00%

11.50%

12.00%

12.50%

13.00%

13.50%

14.00%

15.00%

15.50%

16.00%

16.50%

17.00%

17.50%

18.00%

18.50%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2.0x

2.5x

3.0x

3.5x

4.0x

4.5x

5.0x

5.5x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)400

600

800

1000

1200

1400

1600

-100%

-50%

0%

50%

100%

150%



Diagnosticos da America

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - NM 43.2 NM NM 51.0 P/E (UBS) - 57.6 22.2 68.9 18.5 15.6 P/CEPS - 25.3 13.3 10.9 6.4 5.4 Net dividend yield (%) - 0.0 0.5 0.0 0.5 1.5 P/BV - 5.7 4.8 3.0 3.0 2.9 EV/revenue (core) - - 3.1 1.6 1.4 1.2 EV/EBITDA (core) - - 13.3 6.6 6.4 5.4 EV/EBIT (core) - - 24.7 11.5 11.8 10.1 EV/OpFCF (core) - - NM NM NM NM EV/op. invested capital - - 3.9 1.9 1.9 1.9

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 2,639 2,437 1,360 1,360 1,360 + minority interests 0 1 2 2 2 + average net debt (cash) - 185 451 558 564 + pension obligations and other 0 0 0 0 0 - non-core asset value 0 0 0 0 0 Core enterprise value - 2,622 1,813 1,920 1,926 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - - 28.0 31.3 17.4 16.7 EBITDA (UBS) - - 30.3 46.3 15.2 18.0 EBIT (UBS) - - 36.4 48.2 3.8 16.4 EPS (UBS) - - 134.7 -82.0 NM 18.0 Cash EPS - - 71.7 -31.7 70.3 19.1 Net DPS - - NM - - 178.5 BVPS - - 9.2 -10.2 -0.2 1.3


Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) - - 15.7 16.8 16.0 18.5 ROIC post tax - - 15.7 12.0 14.4 15.8 Net ROE - - 22.3 4.1 16.0 18.8

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - 7.2 4.7 1.2 2.0 2.1 Dividend cover (UBS EPS) - NM 8.2 - 9.9 4.2 Div. payout ratio (%, UBS EPS) - 1.1 12.2 - 10.1 23.8 Net debt / EBITDA - 0.1 2.0 2.1 1.9 1.6


Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT - NM NM NM NM NM Capex / revenue (%) - 26.9 NM 19.9 15.6 11.5 Capex / depreciation - 3.0 5.5 2.1 1.5 1.1

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - 2.1 70.0 NM NM NM Net debt / (net debt + equity) - 2.1 41.2 54.1 55.5 54.4 Net debt (core) / EV - - 7.0 24.9 29.0 29.3


UBS 107

OdontoPrev

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 90 116 143 182 259 313 20.8 339 8.3 369 8.9 Operating expenses (ex depn) (82) (98) (118) (159) (207) (241) 16.4 (263) 9.4 (286) 8.5 EBITDA (UBS) 8 18 25 23 52 72 38.5 76 4.6 83 10.0 Depreciation (1) (1) (1) (1) (2) (2) 25.7 (2) 6.4 (3) 25.0 Operating income (EBIT, UBS) 7 17 24 22 51 70 38.9 74 4.6 81 9.6 Other income & associates 0 0 0 0 (5) (11) 120.6 (20) 88.2 (21) 6.3 Net interest 3 3 4 6 24 22 -8.4 21 -3.1 21 -0.2 Abnormal items (pre-tax) 0 0 0 0 0 0 - 0 - 0 - Profit before tax 10 20 29 27 70 82 17.1 75 -8.3 81 7.7 Tax (3) (8) (11) (11) (22) (23) 8.1 (21) -8.7 (23) 10.0 Profit after tax 6 12 18 17 48 59 21.1 54 -8.1 58 6.8 Abnormal items (post-tax) 0 0 0 0 0 0 - 0 - 0 - Minorities / pref dividends 0 0 0 0 0 0 - 0 - 0 - Net income (local GAAP) 6 12 18 17 48 59 21.1 54 -8.1 58 6.8 Net Income (UBS) 6 12 18 17 52 66 28.6 67 0.9 71 6.7 Tax rate (%) 34 39 39 39 31 28 -7.7 28 -0.5 29 2.1 Pre-abnormal tax rate (%) 34 39 39 39 31 29 -6.2 29 1.5 30 1.6 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 0.34 0.64 0.94 0.66 1.90 2.32 22.2 2.13 -8.1 2.26 5.8 EPS (UBS) 0.34 0.64 0.94 0.66 2.02 2.63 29.8 2.65 0.9 2.80 5.7 Net DPS 0.17 0.29 1.52 0.25 0.72 0.82 13.3 0.64 -22.0 0.68 6.8 Cash EPS 0.39 0.69 0.99 0.71 2.09 2.71 29.8 2.74 1.1 2.91 6.2 BVPS 0.75 1.13 0.55 7.69 8.92 10.10 13.2 11.59 14.8 13.06 12.7 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 13 24 21 205 210 208 -0.9 232 11.8 293 26.1 Other current assets 11 18 20 30 46 52 13.7 49 -6.6 53 9.2 Total current assets 24 42 41 235 256 260 1.7 281 8.1 346 23.2 Net tangible fixed assets 2 3 3 7 8 9 15.1 11 25.0 14 25.0 Net intangible fixed assets 1 1 1 1 28 64 130.5 80 25.5 59 -26.4 Investments / other assets 9 4 3 2 15 18 18.0 18 0.0 18 0.0 Total assets 37 49 48 244 306 350 14.4 390 11.2 436 12.0 Trade payables & other ST liabilities 13 19 24 27 45 49 9.1 48 -1.5 52 8.6 Short term debt 0 0 0 0 0 0 - 0 - 0 - Total current liabilities 13 19 24 27 45 49 9.1 48 -1.5 52 8.6 Long term debt 0 0 0 0 0 0 - 0 - 0 - Other long term liabilities 8 6 8 13 29 32 12.0 33 1.5 34 4.1 Total liabilities 20 26 32 40 73 81 10.2 81 -0.4 86 6.8 Equity & minority interests 16 24 16 204 233 269 15.7 309 14.7 350 13.4 Total liabilities & equity 37 49 48 244 306 350 14.4 390 11.2 436 12.0 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 6 12 18 17 48 59 21.1 54 -8.1 58 6.8 Depreciation 1 1 1 1 6 13 96.3 22 74.8 24 8.2 Net change in working capital (2) 1 (3) 6 (2) 2 - (3) - 0 - Other (operating) 0 0 0 0 0 0 - 0 - 0 - Net cash from operations 6 14 16 24 53 73 37.8 73 -0.3 82 11.6 Capital expenditure 2 1 2 5 2 5 131.1 4 -14.1 5 25.0 Net (acquisitions) / disposals 0 0 0 0 (32) (30) -5.5 (36) 20.5 0 - Other changes in investments 0 0 0 0 0 0 - 0 - 0 - Cash from investing activities 2 1 2 5 (29) (25) -15.7 (32) 27.6 5 - Increase/(decrease) in debt 0 0 0 0 0 0 - 0 - 0 - Share issues / (repurchases) 0 0 0 186 0 0 - 0 - 0 - Dividends paid (3) (5) (29) (5) (18) (21) 12.2 (16) -22.0 (17) 6.8 Other cash from financing 0 0 0 0 0 0 - 0 - 0 - Cash from financing activities (3) (5) (29) 181 (18) (21) 12.2 (16) -22.0 (17) 6.8 Cash flow chge in cash & equivalents 4 9 (11) 210 5 28 - 25 - 70 - FX / non cash items - 1 8 (26) 0 (30) 24835.6 (1) -96.8 (9) 876.9 Bal sheet chge in cash & equivalents - 10 (3) 184 5 (2) - 24 - 61 - Core EBITDA 12 23 31 46 60 75 24.5 77 2.2 85 11.0 Maintenance capital expenditure (2) (1) (2) (5) (2) (5) 131.1 (4) -14.1 (5) 25.0 Maintenance net working capital 2 (1) 3 (6) 2 (2) - 3 - 0 - Operating free cash flow, pre-tax

12 21 32 35 60 68 13.6 75 10.7 79 5.8


UBS 108





Company profile OdontoPrev is Brazil's largest dental benefits company in the fastgrowing and still fragmented industry of dental plans. OdontoPrevwas created in 1987 by a group of dentists and captured a leadingmarket position through a combination of organic growth andacquisitions, implemented by an experienced management team.


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

0.0x

10.0x

20.0x

30.0x

40.0x

50.0x

60.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

24.0%

0%

100%

200%

300%

400%

500%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)14.0%

16.0%

18.0%

20.0%

22.0%

24.0%

26.0%

28.0%

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)100

150

200

250

300

350

400

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%



OdontoPrev

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - 51.3 25.6 10.3 11.2 10.6 P/E (UBS) - 51.3 24.0 9.1 9.0 8.6 P/CEPS - 47.7 23.3 8.8 8.8 8.2 Net dividend yield (%) - 0.7 1.5 3.4 2.7 2.9 P/BV - 4.4 5.4 2.4 2.1 1.8 EV/revenue (core) - 3.5 4.0 1.3 1.1 0.9 EV/EBITDA (core) - 14.0 17.1 5.4 4.9 3.7 EV/EBIT (core) - 28.0 19.7 5.5 5.0 3.8 EV/OpFCF (core) - 18.3 17.3 6.0 5.1 4.0 EV/op. invested capital - NM NM 9.6 5.5 4.8

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 845 1,239 611 611 611 + minority interests 0 0 0 0 0 + average net debt (cash) (205) (210) (208) (232) (293) + pension obligations and other 0 0 0 0 0 - non-core asset value 0 0 0 0 0 Core enterprise value 640 1,029 403 379 318 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - 27.6 42.1 20.8 8.3 8.9 EBITDA (UBS) - -8.6 125.7 38.5 4.6 10.0 EBIT (UBS) - -10.5 131.5 38.9 4.6 9.6 EPS (UBS) - -29.6 NM 29.8 0.9 5.7 Cash EPS - -27.9 192.7 29.8 1.1 6.2 Net DPS - -83.3 184.4 13.3 -22.0 6.8 BVPS - NM 15.9 13.2 14.8 12.7



Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - - - - - Dividend cover (UBS EPS) - 2.6 2.8 3.2 4.1 4.1 Div. payout ratio (%, UBS EPS) - 38.4 35.8 31.3 24.1 24.4 Net debt / EBITDA - NM NM NM NM NM

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - NM 23.2 7.5 4.9 5.5 Revenue / fixed assets - NM 12.2 5.8 4.2 4.5 Revenue / net working capital - NM NM NM NM NM

Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT - 1.6 1.2 1.0 1.0 1.0 Capex / revenue (%) - NM NM NM NM NM Capex / depreciation - NM NM NM NM NM

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - NM (90.2) (77.2) (75.2) (83.7) Net debt / (net debt + equity) - NM NM NM NM NM Net debt (core) / EV - (32.0) (20.4) (51.6) (61.4) (92.1)


UBS 109

Tempo Participações

Income statement (R$m) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues - 321 412 491 565 714 26.3 779 9.1 842 8.0 Operating expenses (ex depn) - (308) (387) (466) (639) (675) 5.7 (720) 6.6 (761) 5.7 EBITDA (UBS) - 13 25 25 (73) 39 - 60 52.5 81 35.9 Depreciation - (7) (7) (7) (6) (5) -26.5 (5) 0.0 (5) 7.7 Operating income (EBIT, UBS) - 5 18 18 (80) 34 - 55 59.7 76 38.3 Other income & associates - 0 0 (1) (2) (3) 54.2 0 - 0 - Net interest - (2) 0 2 0 33 57257.2 25 -25.3 26 3.9 Abnormal items (pre-tax) - 0 0 0 0 0 - 0 - 0 - Profit before tax - 3 18 20 (81) 65 - 80 22.7 102 27.5 Tax - 6 (6) (6) (9) (25) 171.0 (23) -8.9 (29) 27.5 Profit after tax - 10 13 14 (91) 40 - 57 42.1 73 27.5 Abnormal items (post-tax) - 0 0 0 0 0 - 0 - 0 - Minorities / pref dividends - 0 0 0 0 0 - 0 - 0 - Net income (local GAAP) - 10 13 14 (91) 40 - 57 42.1 73 27.5 Net Income (UBS) - 10 13 14 (7) 57 - 71 25.0 86 21.6 Tax rate (%) - 0 32 29 0 38 - 28 -25.7 28 0.0 Pre-abnormal tax rate (%) - 0 30 28 0 13 - 11 -13.2 15 38.2 Per share (R$) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) - 0.06 0.07 0.08 (0.53) 0.24 - 0.33 40.9 0.42 25.3 EPS (UBS) - 0.06 0.08 0.08 (0.04) 0.33 - 0.41 23.9 0.49 19.5 Net DPS - 0.00 0.00 0.00 0.00 0.00 - 0.02 - 0.08 337.1 Cash EPS - 0.10 0.12 0.12 (.00) 0.36 - 0.44 22.0 0.52 18.6 BVPS - - - - 2.73 2.97 8.9 3.22 8.3 3.53 9.6 Balance sheet (R$m) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents - - - - 404 248 -38.6 336 35.5 417 24.1 Other current assets - - - - 104 153 46.7 134 -12.3 141 5.2 Total current assets - - - - 509 401 -21.1 471 17.3 559 18.7 Net tangible fixed assets - - - - 5 24 407.7 26 7.7 28 7.8 Net intangible fixed assets - - - - 56 210 275.3 204 -2.8 184 -9.8 Investments / other assets - 0 0 0 63 47 -24.7 47 0.0 47 0.0 Total assets - - - - 632 683 8.0 748 9.6 818 9.4 Trade payables & other ST liabilities - - - - 72 104 43.6 119 15.1 126 5.2 Short term debt - - - - 54 2 -97.1 0 - 0 - Total current liabilities - - - - 127 105 -16.9 119 13.4 126 5.2 Long term debt - - - - 2 3 104.0 3 -19.6 2 -24.4 Other long term liabilities - - - - 37 66 78.4 66 0.0 66 0.0 Total liabilities - - - - 166 175 5.7 188 7.7 194 2.9 Equity & minority interests - - - - 467 508 8.9 560 10.2 624 11.5 Total liabilities & equity - - - - 632 683 8.0 748 9.6 818 9.4 Cash flow (R$m) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income - 10 13 14 (91) 40 - 57 42.1 73 27.5 Depreciation - 7 7 7 6 5 -26.5 5 0.0 5 7.7 Net change in working capital - - - - 0 (32) - 25 - (4) - Other (operating) - - - - 0 61 - 19 -68.9 20 2.9 Net cash from operations - - - - (84) 74 - 105 42.9 93 -11.6 Capital expenditure - - - - 0 (26) - (7) -74.7 (7) 8.0 Net (acquisitions) / disposals - - - - 0 0 - 0 - 0 - Other changes in investments - - - - 0 0 - 0 - 0 - Cash from investing activities - - - - 0 (26) - (7) -74.7 (7) 8.0 Increase/(decrease) in debt - - - - 1 (51) - (2) - (1) - Share issues / (repurchases) - - - - 0 5 - 9 - 10 - Dividends paid - - - - 0 0 - (3) - (14) 344.8 Other cash from financing - - - - 0 0 - 0 - 0 - Cash from financing activities - - - - 1 (47) - 4 - (5) - Cash flow chge in cash & equivalents - - - - (83) 1 - 102 - 81 - FX / non cash items - - - - - (157) - (14) -90.9 0 - Bal sheet chge in cash & equivalents - - - - - (156) - 88 - 81 - Core EBITDA - 13 30 39 55 66 19.4 81 22.6 101 25.8 Maintenance capital expenditure - - - - (1) (15) 1375.0 (7) -55.7 (7) 8.0 Maintenance net working capital - - - - 1 0 - 0 - 0 - Operating free cash flow, pre-tax

- - - - 55 51 -7.4 74 45.3 94 27.3


UBS 110





Company profile Tempo is a holding company composed of three operationalsubsidiaries within the healthcare (Gama Saúde), dental plan (GamaOdonto), and service assistance (USS) segments. The company is aleading player in each of the sectors it operates in, offeringcustomized solutions for the insurance and benefits markets. Thecombined units have strong commercial synergies, high operationalleverage to membership growth, and low capex requirements.


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)-5.0%

0.0%

5.0%

10.0%

15.0%

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)300

400

500

600

700

800

900

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

24.0%



Tempo Participações

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - - NM 12.8 9.1 7.2 P/E (UBS) - - NM 9.0 7.3 6.1 P/CEPS - - NM 8.3 6.8 5.8 Net dividend yield (%) - - 0.0 0.0 0.6 2.7 P/BV - - 2.5 1.0 0.9 0.9 EV/revenue (core) - - 1.4 0.3 0.3 0.2 EV/EBITDA (core) - - 14.4 3.3 2.8 1.3 EV/EBIT (core) - - NM 6.3 4.1 1.8 EV/OpFCF (core) - - 14.4 4.2 3.0 1.4 EV/op. invested capital - - - 1.2 0.9 0.6

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap - 1,164 512 512 512 + minority interests - 0 0 0 0 + average net debt (cash) - (348) (296) (288) (374) + pension obligations and other - 0 0 0 0 - non-core asset value - (22) (1) (1) (1) Core enterprise value - 794 216 223 137 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - 19.1 15.2 26.3 9.1 8.0 EBITDA (UBS) - -0.2 - - 52.5 35.9 EBIT (UBS) - 2.5 - - 59.7 38.3 EPS (UBS) - 12.5 - - 23.9 19.5 Cash EPS - 5.5 - - 22.0 18.6 Net DPS - - - - - NM BVPS - - - 8.9 8.3 9.6

Margins (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBITDA / revenue - 5.1 NM 5.5 7.6 9.6 EBIT / revenue - 3.8 -14.1 4.8 7.0 9.0 Net profit (UBS) / revenue - 3.0 NM 8.0 9.1 10.3

Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) - - - 19.1 22.4 35.0 ROIC post tax - - - 16.7 20.0 29.8 Net ROE - - (1.5) 11.7 13.3 14.6

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - - - - - Dividend cover (UBS EPS) - - - - 22.3 6.1 Div. payout ratio (%, UBS EPS) - - - - 4.5 16.4 Net debt / EBITDA - - 4.7 NM NM NM

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - - - 4.0 3.2 3.9 Revenue / fixed assets - - - 4.8 3.4 3.8 Revenue / net working capital - - - 17.6 24.3 55.4

Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT - - NM 1.5 1.4 1.2 Capex / revenue (%) - - 0.0 3.6 0.8 0.8 Capex / depreciation - - 0.0 5.5 1.4 1.4

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - - (74.6) (47.9) (59.6) (66.5) Net debt / (net debt + equity) - - NM (92.0) NM NM Net debt (core) / EV - - (43.8) NM NM NM


UBS 111

Estacio Participacoes S.A.

Income statement (R$m) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues - 635 762 829 860 985 14.6 1,101 11.8 1,194 8.4 Operating expenses (ex depn) - (651) (711) (739) (764) (885) 15.7 (975) 10.2 (1,046) 7.3 EBITDA (UBS) - (16) 51 90 96 101 5.3 127 25.7 149 17.2 Depreciation - (19) (21) (22) (30) (46) 53.7 (44) -4.5 (47) 5.8 Operating income (EBIT, UBS) - (35) 30 68 66 54 -17.0 82 51.5 102 23.3 Other income & associates - (1) 0 0 (15) (12) -23.4 0 - 0 - Net interest - (9) (7) (1) 15 34 132.7 30 -12.4 36 22.7 Abnormal items (pre-tax) - 0 0 0 0 0 - 0 - 0 - Profit before tax - (45) 23 68 65 77 18.0 112 46.2 138 23.1 Tax - 0 0 (8) (12) (9) -23.8 (8) -10.2 (11) 32.9 Profit after tax - (45) 23 60 53 68 27.1 104 53.6 127 22.4 Abnormal items (post-tax) - 0 0 0 0 0 - 0 - 0 - Minorities / pref dividends - 0 0 0 0 0 - 0 - 0 - Net income (local GAAP) - (45) 23 60 53 68 27.1 104 53.6 127 22.4 Net Income (UBS) - (45) 23 60 75 91 21.7 115 25.6 138 20.4 Tax rate (%) - 0 0 12 18 12 -35.4 7 -38.6 8 7.9 Pre-abnormal tax rate (%) - 0 0 12 18 12 -35.4 7 -38.6 8 7.9 Per share (R$) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) - (0.68) 0.35 0.89 0.68 0.86 27.1 1.33 53.6 1.62 22.4 EPS (UBS) - (0.68) 0.35 0.89 0.95 1.16 21.7 1.46 25.6 1.75 20.4 Net DPS - 0.00 0.00 0.00 0.00 0.00 - 0.43 - 0.81 88.0 Cash EPS - (0.40) 0.65 1.22 1.34 1.75 30.8 2.02 15.4 2.35 16.3 BVPS - 0.30 0.61 1.41 5.16 6.02 16.7 6.92 14.8 7.73 11.7 Balance sheet (R$m) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents - 5 11 6 229 279 21.6 287 2.9 335 16.7 Other current assets - 42 77 85 120 141 17.3 66 -52.8 69 3.6 Total current assets - 47 87 90 349 419 20.1 353 -15.8 403 14.2 Net tangible fixed assets - 155 156 156 223 282 26.7 298 5.5 313 5.3 Net intangible fixed assets - 0 0 0 0 0 - 0 - 0 - Investments / other assets - 0 0 7 1 3 166.7 3 0.0 3 0.0 Total assets - 202 244 254 573 705 23.0 654 -7.2 720 10.1 Trade payables & other ST liabilities - 109 131 120 142 184 29.2 63 -65.8 65 3.8 Short term debt - 51 55 8 0 1 300.0 1 0.0 1 0.0 Total current liabilities - 161 186 128 142 184 29.6 64 -65.5 66 3.7 Long term debt - 7 4 1 0 0 - 0 0.0 0 0.0 Other long term liabilities - 15 13 30 25 47 85.8 47 0.0 47 0.0 Total liabilities - 182 203 160 168 232 38.2 111 -52.2 113 2.1 Equity & minority interests - 20 41 94 405 473 16.7 543 14.8 607 11.7 Total liabilities & equity - 202 244 254 573 705 23.0 654 -7.2 720 10.1 Cash flow (R$m) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income - (45) 23 60 53 68 27.1 104 53.6 127 22.4 Depreciation - 19 21 22 30 46 53.7 44 -4.5 47 5.8 Net change in working capital - 0 (7) (17) (17) 45 - (47) - 0 -99.9 Other (operating) - 0 0 0 0 0 - 0 - 0 - Net cash from operations - (26) 36 64 67 160 139.3 102 -36.1 174 71.0 Capital expenditure - 0 (21) (22) (39) (60) 55.4 (60) 0.0 (63) 4.5 Net (acquisitions) / disposals - 0 0 0 (56) (30) -46.0 0 - 0 - Other changes in investments - 0 0 0 0 0 - 0 - 0 - Cash from investing activities - 0 (21) (22) (94) (90) -4.5 (60) -33.4 (63) 4.5 Increase/(decrease) in debt - 0 0 0 0 0 - 0 - 0 - Share issues / (repurchases) - 0 0 0 0 0 - 0 - 0 - Dividends paid - 0 0 0 0 0 - (34) - (64) 88.0 Other cash from financing - 0 0 0 0 0 - 0 - 0 - Cash from financing activities - 0 0 0 0 0 - (34) - (64) 88.0 Cash flow chge in cash & equivalents - (26) 16 42 (28) 69 - 8 - 48 - FX / non cash items - - (10) (48) 251 (20) - 0 - 0 - Bal sheet chge in cash & equivalents - - 5 (5) 224 50 - 8 - 48 - Core EBITDA - (16) 51 90 96 101 5.3 127 25.7 149 17.2 Maintenance capital expenditure - (19) (21) (22) (30) (46) 53.7 (44) -4.5 (47) 5.8 Maintenance net working capital - 0 (7) (17) (17) 0 - 0 - 0 - Operating free cash flow, pre-tax

- (35) 23 51 49 54 11.9 82 51.5 102 23.3


UBS 112


Consumer Services



Company profile Estacio is the largest private post-secondary educational company inBrazil controlled by the private equity group GP. Investments, offering mainly traditional and technical undergraduate programs. Thecompany operates the largest university in the country, with over198,000 students enrolled in 1Q08.


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

30.0x

0.0x

5.0x

10.0x

15.0x

20.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)10.0%

21.4%

32.9%

44.3%

55.7%

67.1%

78.6%

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x

4.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)700

800

900

1000

1100

1200

0%

50%

100%

150%

200%



Estacio Participacoes S.A.


Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap - 1,474 989 989 989 + minority interests 0 0 0 0 0 + average net debt (cash) 4 (113) (254) (283) (311) + pension obligations and other 0 0 0 0 0 - non-core asset value 0 0 0 0 0 Core enterprise value - 1,362 735 706 678 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - 8.8 3.8 14.6 11.8 8.4 EBITDA (UBS) - 76.8 6.4 5.3 25.7 17.2 EBIT (UBS) - 124.1 -3.6 -17.0 51.5 23.3 EPS (UBS) - 158.9 6.7 21.7 25.6 20.4 Cash EPS - 87.2 9.3 30.8 15.4 16.3 Net DPS - - - - - 88.0 BVPS - 131.3 NM 16.7 14.8 11.7



Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - NM - - - - Dividend cover (UBS EPS) - - - - 3.4 2.2 Div. payout ratio (%, UBS EPS) - - - - 29.6 46.2 Net debt / EBITDA - 0.0 NM NM NM NM

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - 8.9 6.3 5.3 4.9 4.5 Revenue / fixed assets - 5.3 4.5 3.9 3.8 3.9 Revenue / net working capital - NM NM NM NM NM


Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - 4.0 (56.5) (58.7) (52.6) (55.0) Net debt / (net debt + equity) - 3.8 NM NM NM NM Net debt (core) / EV - - (8.3) (34.5) (40.0) (45.8)


UBS 113

Oil, Gas & Chemicals

UBS 114

Petroleo BrasileiroPer share (US$) 12/06 12/07 12/08E 12/09E 12/10EEPS 0.73 0.75 2.42 1.45 1.75CEPS 0.94 1.06 3.13 2.20 2.55Net DPS 0.21 0.21 0.49 0.43 0.53BVPS 5.05 7.43 7.01 7.66 8.51Profit & loss (US$ m)Sales 72,347 87,735 115,686 72,861 93,707EBITDA 17,188 15,897 20,981 11,994 15,843EBIT 20,861 21,441 27,206 18,625 22,825PBT 19,161 19,299 29,516 17,906 22,031Net Profit 12,826 13,138 21,241 12,711 15,394Cash flow (US$ m)EBIT 20,861 21,441 27,206 18,625 22,825Depreciation & amortisation (3,673) (5,544) (6,226) (6,631) (6,982)Change in NWC 716 (491) (2,522) (230) (1,700)Other (operating) 3,173 7,258 5,713 9,294 8,475Operational cash flow 21,077 22,664 24,171 21,057 22,618Tax paid (5,691) (5,888) (8,187) (4,995) (6,437)Capital expenditure (14,643) (20,978) (25,417) (21,440) (21,440)Net interest (175) 873 595 194 177Dividends paid (3,144) (3,860) (3,926) (4,237) (3,627)Net (acquisitions) / disposals (398) (3,283) (145) 0 0Other items (984) 14,188 19,374 14,241 11,357Change in net debt (3,958) 3,716 6,466 4,820 2,647Operating free cash flow (OpFCF) (US$ m)Core EBITDA 24,534 26,985 33,432 25,256 17,743Less: Maintenance capex 0 0 0 0 0Less: Maintenance NWC 0 0 0 0 0OpFCF 24,534 26,985 33,432 25,256 17,743Balance sheet (US$ m)Net tangible fixed assets 58,897 84,523 82,601 91,962 100,787Net intangible fixed assets 0 0 0 0 0Net working capital 5,465 5,689 6,660 6,581 7,959Total invested capital (IC) 64,362 90,212 89,261 98,543 108,746Financial & other fixed assets 9,387 14,406 12,337 11,733 11,158Net cash / (debt) (18,733) (24,676) (26,606) (30,340) (31,918)Provisions (233) (382) (326) (310) (295)Minority interests (1,966) (2,332) (1,534) (1,655) (1,774)Shareholders’ funds 44,299 65,179 61,508 67,202 74,685ProfitabilityEBITDA margin 23.8% 18.1% 18.1% 16.5% 16.9% EBIT margin 28.8% 24.4% 23.5% 25.6% 24.4% EBIT RoIC 36.1% 27.7% 30.3% 19.8% 22.0% Net RoE 33.2% 24.0% 33.5% 19.8% 21.7% Interest cover (EBIT) >100x NM NM NM NMDividend cover (net) 3.5x 3.5x 5.0x 3.3x 3.3x ProductivityLabour % salesDepreciation % sales (5.1%) (6.3%) (5.4%) (9.1%) (7.5%)Capex % sales 20.2% 23.9% 22.0% 29.4% 22.9% Invested capital turnover 1.3x 1.1x 1.3x 0.8x 0.9x Tax rate 29.7% 30.5% 27.7% 27.9% 29.2% Net debt / total equity 40.5% 36.6% 42.2% 44.1% 41.7% MomentumSales growth +28.4% +21.3% +31.9% -37.0% +28.6% EBIT growth +23.1% +2.8% +26.9% -31.5% +22.5% Net earnings growth +25.9% +2.4% +61.7% -40.2% +21.1% Dividend growth +22.6% +0.6% +131.0% -11.1% +21.1% Value*Market capitalisation (US$ m) 87,760 125,286 104,552 104,552 104,552Plus: Core net debt / (cash) 18,733 21,705 25,641 28,473 31,129Plus: Pension provisions - - - - - Plus: Buy out of minorities 2,163 2,565 1,688 1,821 1,952Less: Non-core assets (2,610) (4,090) (2,994) (2,847) (2,707)Enterprise value (EV, avg) 106,046 145,466 128,887 131,999 134,925EV/Sales (core) 1.47x 1.66x 1.11x 1.81x 1.44x EV/EBITDA (core) 4.3x 5.4x 3.9x 5.2x 7.6x EV/EBIT (core) 5.1x 6.8x 4.7x 7.1x 5.9x EV/OpFCF 4.3x 5.4x 3.9x 5.2x 7.6x EV/Invested capital 1.8x 1.9x 1.4x 1.4x 1.3x P/CE 10.6x 13.4x 3.8x 5.4x 4.7x P/E 13.7x 19.1x 4.9x 8.2x 6.8x Dividend yield (net) 2.10% 1.48% 4.10% 3.65% 4.42%P/BV (average) 2.0x 1.9x 1.7x 1.6x 1.4x Source: UBS estimates, * Historical valuations are based on an `average for the year' share price. Current & future valuations are based on a share price of R$27.19 on 16/03/2009

-50.0%-40.0%-30.0%-20.0%-10.0%+0.0%

+10.0%+20.0%+30.0%+40.0%

06 07 08E 09E 10E-40.0%-30.0%-20.0%-10.0%+0.0%+10.0%+20.0%+30.0%

Sales growth (LHS) EBIT growth (RHS)

0.0x 1.0x 2.0x 3.0x 4.0x 5.0x 6.0x 7.0x 8.0x

06 07 08E 09E 10E0.0x

5.0x

10.0x

15.0x

20.0x

25.0x


Profitability (EBIT margins & RoIC)

Momentum (Sales & EBIT growth)

Geographic exposure (Sales)


0%0%

#N/A #N/A

0.0%5.0%

10.0%15.0%20.0%25.0%30.0%35.0%

06 07 08E 09E 10E0.0%5.0%10.0%15.0%20.0%25.0%30.0%35.0%40.0%

EBIT margin (LHS) EBIT RoIC (RHS)

Petrobras is a mixed-capital corporation that began operations in Brazilin 1954, and it is linked to Brazil's Ministry of Mines and Energy.Petrobras is the largest publicly traded oil company in Latin America. Itoperates in the exploration, development, production, refining,processing, trading, and transportation of crude oil, oil products, naturalgas, and other fluid hydrocarbons.

UBS 115

Braskem

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 2,542.00 11,044.00 11,607.00 11,720.00 17,266.00 17,687.71 2.4 16,654.77 -5.8 19,971.08 19.9 Operating expenses (ex depn) (2,080.00) (8,494.00) (9,517.00) (10,074.00) (14,529.00) (15,255.72) 5.0 (14,227.28) -6.7 (17,582.59) 23.6 EBITDA (UBS) 462.00 2,550.00 2,090.00 1,646.00 2,737.00 2,431.99 -11.1 2,427.50 -0.2 2,388.49 -1.6 Depreciation (73.00) (361.00) (404.00) (525.00) (721.00) (713.00) -1.1 (700.00) -1.8 (700.00) 0.0 Operating income (EBIT, UBS) 389.00 2,189.00 1,686.00 1,121.00 2,016.00 1,718.99 -14.7 1,727.50 0.5 1,688.49 -2.3 Other income & associates 88.00 (580.97) (443.33) (568.18) (275.40) (3,759.39) 1265.1 (1,382.92) -63.2 (1,374.13) -0.6 Net interest (777.00) (907.00) (534.00) (568.00) (605.00) (540.07) -10.7 (874.77) 62.0 (986.74) 12.8 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax (300.00) 701.03 708.67 (15.18) 1,135.60 (2,580.46) - (530.19) -79.5 (672.39) 26.8 Tax (7.00) 12.00 (87.00) 97.00 (347.00) 364.67 - 159.06 -56.4 201.72 26.8 Profit after tax (307.00) 713.03 621.67 81.82 788.60 (2,215.80) - (371.14) -83.3 (470.67) 26.8 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends (19.00) (23.00) 54.00 (2.00) (241.00) (44.00) -81.7 0.00 - 0.00 - Net income (local GAAP) (326.00) 690.03 675.67 79.82 547.60 (2,259.80) - (371.14) -83.6 (470.67) 26.8 Net Income (UBS) (274.00) 1,195.76 1,177.19 518.58 1,131.84 (1,636.48) - 243.86 - 144.33 -40.8 Tax rate (%) 0.00 0.00 12.28 0.00 30.56 0.00 - 0.00 - 0.00 - Pre-abnormal tax rate (%) 0.00 0.00 8.72 0.00 20.93 0.00 - 0.00 - 0.00 - Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) (.00) 0.01 1.54 0.18 1.27 (4.43) - (0.73) -83.6 (0.92) 26.8 EPS (UBS) (.00) 0.01 2.68 1.19 2.61 (3.21) - 0.48 - 0.28 -40.8 Net DPS 0.00 0.00 0.90 0.10 0.71 0.00 - 0.00 - 0.00 - Cash EPS (.00) 0.02 4.37 2.93 4.78 (1.81) - 1.85 - 1.65 -10.5 BVPS 8.74 17.33 18.99 17.74 19.21 8.08 -57.9 7.36 -9.0 6.43 -12.5 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 1,052.00 1,697.00 2,103.00 1,782.00 2,139.00 1,593.93 -25.5 1,438.44 -9.8 1,037.10 -27.9 Other current assets 2,061.00 2,677.00 2,140.00 3,056.00 3,761.00 3,627.34 -3.6 3,878.51 6.9 4,650.80 19.9 Total current assets 3,113.00 4,374.00 4,243.00 4,838.00 5,900.00 5,221.27 -11.5 5,316.95 1.8 5,687.90 7.0 Net tangible fixed assets 4,509.00 4,899.00 5,360.00 6,326.00 8,576.00 10,523.18 22.7 10,841.63 3.0 11,200.04 3.3 Net intangible fixed assets 1,513.00 2,493.00 2,145.00 1,731.00 2,687.00 2,244.00 -16.5 1,629.00 -27.4 1,014.00 -37.8 Investments / other assets 4,221.00 2,782.00 2,957.00 2,987.00 3,729.00 3,149.67 -15.5 3,308.73 5.0 3,510.44 6.1 Total assets 13,356.00 14,548.00 14,705.00 15,882.00 20,892.00 21,138.11 1.2 21,096.31 -0.2 21,412.38 1.5 Trade payables & other ST liabilities 1,132.00 2,370.00 2,953.00 3,122.00 3,276.00 3,200.59 -2.3 3,422.21 6.9 4,103.65 19.9 Short term debt 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Total current liabilities 1,132.00 2,370.00 2,953.00 3,122.00 3,276.00 3,200.59 -2.3 3,422.21 6.9 4,103.65 19.9 Long term debt 7,344.00 5,651.00 5,004.00 6,294.00 8,382.00 11,825.21 41.1 11,825.21 0.0 11,825.21 0.0 Other long term liabilities 2,245.00 2,172.00 2,048.00 2,065.00 2,879.00 1,987.00 -31.0 2,094.71 5.4 2,200.02 5.0 Total liabilities 10,721.00 10,193.00 10,005.00 11,481.00 14,537.00 17,012.80 17.0 17,342.13 1.9 18,128.87 4.5 Equity & minority interests 2,635.00 4,355.00 4,700.00 4,401.00 6,355.00 4,125.31 -35.1 3,754.18 -9.0 3,283.51 -12.5 Total liabilities & equity 13,356.00 14,548.00 14,705.00 15,882.00 20,892.00 21,138.11 1.2 21,096.31 -0.2 21,412.38 1.5 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income (326.00) 690.03 675.67 79.82 547.60 (2,259.80) - (371.14) -83.6 (470.67) 26.8 Depreciation 125.00 866.73 905.52 963.76 1,305.24 1,336.32 2.4 1,315.00 -1.6 1,315.00 0.0 Net change in working capital 0.00 431.00 1,013.00 (490.00) (818.00) 366.25 - (29.55) - (90.86) 207.5 Other (operating) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations (201.00) 1,987.76 2,594.19 553.58 1,034.84 (557.22) - 914.31 - 753.47 -17.6 Capital expenditure (176.00) (584.00) (918.00) (895.00) (2,402.00) (1,739.18) -27.6 (1,018.45) -41.4 (1,058.40) 3.9 Net (acquisitions) / disposals 0.00 0.00 (54.00) (256.00) (1,346.00) (663.00) -50.7 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities (176.00) (584.00) (972.00) (1,151.00) (3,748.00) (2,402.18) -35.9 (1,018.45) -57.6 (1,058.40) 3.9 Increase/(decrease) in debt 0.00 (1,693.00) (647.00) 1,290.00 2,088.00 3,443.21 - 0.00 - 0.00 - Share issues / (repurchases) 0.00 1,516.00 0.00 105.00 1,133.00 1,192.00 - 0.00 - 0.00 - Dividends paid 0.00 (13.00) (219.00) (293.90) (41.00) (308.00) 651.2 0.00 - 0.00 - Other cash from financing 23.00 (633.76) (294.19) (505.68) (453.84) (1,452.21) - 0.00 - 0.00 - Cash from financing activities 23.00 (823.76) (1,160.19) 595.42 2,726.16 2,875.00 5.5 0.00 - 0.00 - Cash flow chge in cash & equivalents (354.00) 580.00 462.00 (2.00) 13.00 (84.40) - (104.14) - (304.93) - FX / non cash items - 65.00 (56.00) (319.00) 344.00 (460.67) - (51.35) -92.0 (96.41) 281.3 Bal sheet chge in cash & equivalents - 645.00 406.00 (321.00) 357.00 (545.07) - (155.49) - (401.34) - Core EBITDA 462.00 2,550.00 2,090.00 1,646.00 2,737.00 2,431.99 -11.1 2,427.50 -0.2 2,388.49 -1.6 Maintenance capital expenditure (176.00) (582.31) (608.75) (545.62) (590.89) (595.56) 0.8 (778.45) 30.7 (818.40) 5.1 Maintenance net working capital 0.00 (66.26) (28.33) (6.83) (24.40) (51.70) 111.9 (22.62) -56.3 (20.53) -9.2 Operating free cash flow, pre-tax

286.00 1,901.43 1,452.92 1,093.55 2,121.71 1,784.74 -15.9 1,626.43 -8.9 1,549.55 -4.7


UBS 116


Chemicals, Commodity



Company profile Braskem is LatAm's leading ethylene and poliolefin producer withworldscale assets that integrate heavy feed crackers into secondgeneration plants. The company originates from the privatization ofCopene, a heavy feed cracker in the NE of Brazil, in 2001. Over the last years it has acquired a number of second generation plants tointegrate its ethylene production and in April 2007 it acquired anothercracker in the South of Brazil.Braskem is controlled by Brazil'sOdebrecht group. At present it has 2.4mmtons of Ethylene capacity,1.1mmtons of Propylene, 1.8mmtons of PE and 740ktons of PP.


12/06 12/07 12/08 12/09E 12/10E0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

-5.0x

0.0x

5.0x

10.0x

15.0x

20.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)7.00%

8.00%

9.00%

10.00%

11.00%

12.00%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)-40.0%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

0.5x

0.6x

0.6x

0.7x

0.7x

0.8x

0.8x

0.9x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)8000

10000

12000

14000

16000

18000

20000

-100%

-50%

0%

50%

100%

150%


Braskem

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - NM 12.8 NM NM NM P/E (UBS) - 12.6 6.2 NM 10.0 16.8 P/CEPS - 5.1 3.4 NM 2.6 2.9 Net dividend yield (%) - 0.7 4.4 0.0 0.0 0.0 P/BV - 0.8 0.8 0.6 0.6 0.7 EV/revenue (core) - 0.7 0.8 0.6 0.8 0.7 EV/EBITDA (core) - 5.2 5.3 4.4 5.3 5.5 EV/EBIT (core) - 7.7 7.3 6.3 7.5 7.8 EV/OpFCF (core) - 7.9 6.9 6.1 7.9 8.5 EV/op. invested capital - 1.0 1.3 0.8 0.8 0.8

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 5,225.79 6,604.70 2,509.91 2,509.91 2,509.91 + minority interests 24.20 2,330.00 0.00 0.00 0.00 + average net debt (cash) 3,706.50 5,377.50 8,237.14 10,309.02 10,587.44 + pension obligations and other 1,297.00 1,210.00 1,250.00 1,357.71 1,463.02 - non-core asset value (1,662.00) (891.00) (1,177.00) (1,272.44) (1,393.47) Core enterprise value 8,591.49 14,631.20 10,820.05 12,904.21 13,166.89 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - 1.0 47.3 2.4 -5.8 19.9 EBITDA (UBS) - -21.2 66.3 -11.1 -0.2 -1.6 EBIT (UBS) - -33.5 79.8 -14.7 0.5 -2.3 EPS (UBS) - -55.2 100.5 - - -40.8 Cash EPS - -32.9 63.1 - - -10.5 Net DPS - -88.5 NM - - - BVPS - -6.6 8.3 -57.9 -9.0 -12.5

Margins (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBITDA / revenue - 14.0 15.9 13.7 14.6 12.0 EBIT / revenue - 9.6 11.7 9.7 10.4 8.5 Net profit (UBS) / revenue - 4.4 6.6 NM 1.5 0.7

Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) - 12.8 17.9 11.9 11.0 10.7 ROIC post tax - 12.8 14.2 11.9 11.0 10.7 Net ROE - 11.6 22.3 (33.1) 6.2 4.1

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - 2.3 3.4 3.2 2.0 1.7 Dividend cover (UBS EPS) - 14.1 4.1 - - - Div. payout ratio (%, UBS EPS) - 7.1 24.4 - - - Net debt / EBITDA - 2.8 2.4 4.3 4.4 4.6

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - 1.3 1.5 1.2 1.1 1.3 Revenue / fixed assets - 1.5 1.8 1.5 1.3 1.6 Revenue / net working capital - NM 42.3 25.4 24.6 26.5


Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - NM NM NM NM NM Net debt / (net debt + equity) - 51.6 53.0 71.7 73.9 77.1 Net debt (core) / EV - 43.1 36.8 76.1 79.9 80.4




UBS 117

Ultrapar

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 4,000.31 4,784.25 4,693.85 4,794.05 19,921.31 28,189.76 41.5 41,049.42 45.6 47,564.68 15.9 Operating expenses (ex depn) (3,508.42) (4,053.20) (4,148.50) (4,279.15) (19,154.17) (27,169.15) 41.8 (39,646.52) 45.9 (45,758.20) 15.4 EBITDA (UBS) 498.45 736.64 546.02 516.22 779.43 1,041.55 33.6 1,402.91 34.7 1,806.49 28.8 Depreciation (146.61) (171.86) (186.82) (185.09) (258.03) (289.09) 12.0 (333.80) 15.5 (353.98) 6.0 Operating income (EBIT, UBS) 351.84 564.78 359.20 331.13 521.40 752.46 44.3 1,069.11 42.1 1,452.51 35.9 Other income & associates 0.23 (16.83) (1.08) (18.27) (25.85) (53.73) 107.8 (176.00) 227.6 (188.00) 6.8 Net interest (57.25) (44.98) (27.34) 30.57 (119.41) (125.30) 4.9 (287.72) 129.6 (315.16) 9.5 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 294.83 502.97 330.78 343.44 376.13 573.43 52.5 605.39 5.6 949.35 56.8 Tax (44.85) (83.09) (28.80) (56.02) (93.24) (158.89) 70.4 (133.19) -16.2 (208.86) 56.8 Profit after tax 249.98 419.88 301.98 287.42 282.89 414.54 46.5 472.20 13.9 740.49 56.8 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends (3.60) (5.40) (2.80) (5.36) (101.00) (3.20) -96.8 0.00 - 0.00 - Net income (local GAAP) 246.38 414.48 299.18 282.06 181.89 411.34 126.1 472.20 14.8 740.49 56.8 Net Income (UBS) 246.64 415.31 300.05 282.81 217.13 484.67 123.2 648.20 33.7 928.49 43.2 Tax rate (%) 15.21 16.52 8.71 16.31 24.79 27.71 11.8 22.00 -20.6 22.00 0.0 Pre-abnormal tax rate (%) 15.20 16.49 8.68 16.28 22.67 24.57 8.4 17.04 -30.6 18.36 7.7 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 1.84 3.09 2.23 2.10 1.36 3.07 126.7 3.53 14.8 5.52 56.4 EPS (UBS) 1.84 3.10 2.24 2.11 1.62 3.62 123.8 4.84 33.7 6.92 42.9 Net DPS 0.58 1.51 1.17 1.08 0.59 1.70 186.3 1.76 3.7 2.77 56.8 Cash EPS 2.93 4.38 3.63 3.49 3.54 5.78 63.3 7.34 26.9 9.56 30.3 BVPS 19.47 22.97 22.01 23.77 33.81 57.55 70.2 36.65 -36.3 39.41 7.5 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 554.09 558.38 1,250.92 1,070.08 1,622.92 1,982.09 22.1 649.76 -67.2 1,119.36 72.3 Other current assets 608.88 697.91 637.38 737.00 4,072.79 2,808.60 -31.0 4,048.89 44.2 4,194.17 3.6 Total current assets 1,162.97 1,256.29 1,888.30 1,807.07 5,695.70 4,790.68 -15.9 4,698.65 -1.9 5,313.53 13.1 Net tangible fixed assets 968.56 1,047.43 1,072.73 1,172.79 2,335.78 3,011.44 28.9 4,032.64 33.9 4,254.96 5.5 Net intangible fixed assets 102.66 99.80 98.29 112.26 570.12 922.90 61.9 1,546.90 67.6 1,358.90 -12.2 Investments / other assets 118.08 175.24 571.96 757.73 622.90 590.54 -5.2 590.54 0.0 590.54 0.0 Total assets 2,352.27 2,578.76 3,631.27 3,849.84 9,224.50 9,315.56 1.0 10,868.73 16.7 11,517.92 6.0 Trade payables & other ST liabilities 251.23 303.96 286.47 315.84 1,190.36 1,009.50 -15.2 2,326.57 130.5 2,605.52 12.0 Short term debt 325.88 293.04 153.71 115.55 1,818.66 1,636.48 -10.0 1,636.48 0.0 1,636.48 0.0 Total current liabilities 577.11 597.00 440.18 431.39 3,009.02 2,645.99 -12.1 3,963.06 49.8 4,242.00 7.0 Long term debt 306.27 258.09 1,278.61 1,381.85 1,359.23 1,731.33 27.4 1,731.33 0.0 1,731.33 0.0 Other long term liabilities 80.00 94.97 92.72 70.00 220.68 219.86 -0.4 219.86 0.0 219.86 0.0 Total liabilities 963.37 950.06 1,811.51 1,883.23 4,588.92 4,597.18 0.2 5,914.25 28.6 6,193.20 4.7 Equity & minority interests 1,388.89 1,628.70 1,819.77 1,966.61 4,635.58 4,718.37 1.8 4,954.48 5.0 5,324.72 7.5 Total liabilities & equity 2,352.27 2,578.76 3,631.27 3,849.84 9,224.50 9,315.56 1.0 10,868.73 16.7 11,517.92 6.0 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 246.38 414.48 299.18 282.06 181.89 411.34 126.1 472.20 14.8 740.49 56.8 Depreciation 146.87 172.69 187.69 185.83 293.27 362.42 23.6 509.80 40.7 541.98 6.3 Net change in working capital (89.92) (107.85) 33.46 (20.51) (928.23) (422.91) -54.4 (940.91) 122.5 (110.21) -88.3 Other (operating) (154.52) 71.42 (407.98) (229.97) 646.63 (77.35) - 1,000.00 - 0.00 - Net cash from operations 148.80 550.74 112.35 217.41 193.56 273.50 41.3 1,041.09 280.7 1,172.26 12.6 Capital expenditure (206.93) (267.68) (218.69) (318.90) (694.60) (880.87) 26.8 (994.00) 12.8 (576.30) -42.0 Net (acquisitions) / disposals 0.00 0.00 0.00 (1.20) (1,660.90) 1,171.50 - (1,161.00) - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities (206.93) (267.68) (218.69) (320.10) (2,355.50) 290.63 - (2,155.00) - (576.30) -73.3 Increase/(decrease) in debt 48.68 (81.02) 881.19 65.08 1,680.48 189.93 - 0.00 - 0.00 - Share issues / (repurchases) 0.00 0.00 47.20 0.00 999.00 0.00 - 0.00 - 0.00 - Dividends paid (80.10) (132.30) (129.50) (148.60) (65.70) (398.10) 505.9 (218.41) -45.1 (126.36) -42.1 Other cash from financing 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities (31.42) (213.32) 798.89 (83.52) 2,613.78 (208.17) - (218.41) 4.9 (126.36) -42.1 Cash flow chge in cash & equivalents (89.55) 69.75 692.55 (186.20) 451.84 355.97 - (1,332.33) - 469.60 - FX / non cash items 5.70 (65.46) 0.00 5.35 101.00 3.20 -96.8 (.00) - 0.00 - Bal sheet chge in cash & equivalents (83.85) 4.29 692.55 (180.85) 552.84 359.17 - (1,332.33) - 469.60 - Core EBITDA 498.45 736.64 546.02 516.22 779.43 1,041.55 33.6 1,402.91 34.7 1,806.49 28.8 Maintenance capital expenditure (244.59) (233.19) (192.46) (173.19) (224.77) (238.22) 6.0 (311.38) 30.7 (327.36) 5.1 Maintenance net working capital 28.10 29.18 28.13 20.39 42.07 89.93 113.8 115.75 28.7 124.05 7.2 Operating free cash flow, pre-tax

281.96 532.63 381.68 363.42 596.73 893.26 49.7 1,207.28 35.2 1,603.18 32.8


UBS 118


Chemicals, Commodity



Company profile Ultrapar is a Brazilian industrial group that focuses on three keymarkets: petrochemicals (ethylene oxide, ethylene glycol andspecialities production); LPG distribution; and logistics for hazardousmaterials. Ultrapar went public in 1999 and is jointly controlled by thePery Igel family and its management team. Ultrapar shareholders'agreement and bylaws ensure that minority shareholders will receive equal treatment in the event of any change in control of the company.


12/06 12/07 12/08 12/09E 12/10E0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

0.0x

10.0x

20.0x

30.0x

40.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

11.00%

12.29%

13.57%

14.86%

16.14%

17.43%

18.71%

20.00%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)0.0%

5.0%

10.0%

15.0%

20.0%

1.0x

1.2x

1.4x

1.6x

1.8x

2.0x

2.2x

2.4x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)0

10000

20000

30000

40000

50000

-50%

0%

50%

100%

150%


Ultrapar


Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 3,079.87 5,145.20 7,453.98 7,453.98 7,453.98 + minority interests 37.41 39.28 42.80 42.80 42.80 + average net debt (cash) 118.06 991.15 1,470.35 2,051.89 2,483.25 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 0.00 0.00 0.00 0.00 Core enterprise value 3,235.34 6,175.63 8,967.13 9,548.67 9,980.03 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 12.5 2.1 NM 41.5 45.6 15.9 EBITDA (UBS) 1.4 -5.5 51.0 33.6 34.7 28.8 EBIT (UBS) -2.5 -7.8 57.5 44.3 42.1 35.9 EPS (UBS) 6.1 -5.7 -23.2 123.8 33.7 42.9 Cash EPS 8.0 -3.9 1.6 63.3 26.9 30.3 Net DPS 36.1 -8.2 -44.7 186.3 3.7 56.8 BVPS 8.6 8.0 42.2 70.2 -36.3 7.5



Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - 4.4 6.0 3.7 4.6 Dividend cover (UBS EPS) 2.9 2.0 2.7 2.1 2.7 2.5 Div. payout ratio (%, UBS EPS) 40.5 51.0 36.7 47.0 36.4 40.0 Net debt / EBITDA 0.2 0.8 2.0 1.3 1.9 1.2



Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity 6.5 21.7 33.5 29.4 54.9 42.2 Net debt / (net debt + equity) 7.4 18.1 25.3 22.8 35.6 29.8 Net debt (core) / EV -0.67 3.6 16.0 16.4 21.5 24.9




UBS 119

Providência

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 301.72 477.95 495.84 501.54 453.26 565.16 24.7 659.07 16.6 - - Operating expenses (ex depn) (197.51) (339.70) (324.86) (369.80) (344.04) (419.30) 21.9 (481.34) 14.8 - - EBITDA (UBS) 104.21 138.25 170.98 131.74 109.22 145.87 33.6 177.73 21.8 - - Depreciation (24.63) (25.51) (29.81) (28.75) (28.79) (37.61) 30.6 (42.02) 11.7 - - Operating income (EBIT, UBS) 79.59 112.74 141.17 102.99 80.43 108.26 34.6 135.71 25.4 - - Other income & associates (9.93) (22.50) (38.53) (25.44) (16.94) (22.79) 34.5 (22.79) 0.0 - - Net interest 11.37 13.49 25.22 31.98 (32.73) (13.26) -59.5 0.00 - - - Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 (33.49) 0.00 - 0.00 - - - Profit before tax 81.02 103.73 127.87 109.52 (2.74) 72.21 - 112.92 56.4 - - Tax (14.16) (25.86) (24.10) (15.32) 10.17 (9.51) - (21.15) 122.5 - - Profit after tax 66.86 77.87 103.77 94.20 7.43 62.70 743.8 91.77 46.4 - - Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - - - Minorities / pref dividends 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - - - Net income (local GAAP) 66.86 77.87 103.77 94.20 7.43 62.70 743.8 91.77 46.4 - - Net Income (UBS) 71.68 96.28 122.14 112.79 50.76 85.49 68.4 114.57 34.0 - - Tax rate (%) 17.48 24.93 18.85 13.99 0.00 13.17 - 18.73 42.3 - - Pre-abnormal tax rate (%) 16.50 21.17 16.48 11.96 0.00 10.01 - 15.58 55.7 - - Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 0.78 0.91 1.21 1.10 0.09 0.73 743.8 1.07 46.4 - - EPS (UBS) 0.84 1.13 1.43 1.32 0.59 1.00 68.4 1.34 34.0 - - Net DPS 0.42 0.41 0.29 0.39 2.64 0.37 -86.1 0.50 36.0 - - Cash EPS 1.13 1.42 1.78 1.65 0.93 1.44 54.8 1.83 27.2 - - BVPS 4.16 5.11 6.04 6.75 5.44 5.81 6.7 6.31 8.6 - - Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 113.08 94.31 208.59 292.57 244.30 338.73 38.7 443.82 31.0 - - Other current assets 108.70 209.93 171.14 166.87 149.73 195.19 30.4 207.24 6.2 - - Total current assets 221.78 304.25 379.73 459.45 394.04 533.92 35.5 651.06 21.9 - - Net tangible fixed assets 103.33 128.77 101.82 83.87 223.05 181.44 -18.7 145.42 -19.9 - - Net intangible fixed assets 85.90 67.84 49.80 31.70 246.79 223.99 -9.2 201.20 -10.2 - - Investments / other assets 5.55 15.47 11.18 30.01 92.83 92.83 0.0 92.83 0.0 - - Total assets 416.56 516.32 542.54 605.02 956.70 1,032.18 7.9 1,090.51 5.7 - - Trade payables & other ST liabilities 31.96 26.09 3.21 6.95 55.07 99.19 80.1 114.88 15.8 - - Short term debt 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - - - Total current liabilities 31.96 26.09 3.21 6.95 55.07 99.19 80.1 114.88 15.8 - - Long term debt 0.00 0.00 0.00 0.00 409.18 409.18 0.0 409.18 0.0 - - Other long term liabilities 28.46 52.79 22.57 20.41 26.63 26.63 0.0 26.63 0.0 - - Total liabilities 60.41 78.88 25.78 27.36 490.87 535.00 9.0 550.68 2.9 - - Equity & minority interests 356.15 437.44 516.76 577.66 465.83 497.18 6.7 539.83 8.6 - - Total liabilities & equity 416.56 516.32 542.54 605.02 956.70 1,032.18 7.9 1,090.51 5.7 - - Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 66.86 77.87 103.77 94.20 7.43 62.70 743.8 91.77 46.4 - - Depreciation 29.45 43.92 48.18 47.34 50.01 60.41 20.8 64.81 7.3 - - Net change in working capital (29.42) (74.64) 15.49 10.58 56.33 (28.86) - (7.67) -73.4 - - Other (operating) 0.00 0.00 0.00 0.00 (11.55) (0.10) -99.1 0.00 - - - Net cash from operations 66.89 47.15 167.44 152.12 102.22 94.15 -7.9 148.91 58.2 - - Capital expenditure (6.23) (51.92) (3.22) (12.35) (109.05) (14.00) -87.2 (6.00) -57.1 - - Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 (13.61) 18.00 - 0.00 - - - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - - - Cash from investing activities (6.23) (51.92) (3.22) (12.35) (122.66) 4.00 - (6.00) - - - Increase/(decrease) in debt 0.00 0.00 0.00 0.00 (77.47) 0.00 - 0.00 - - - Share issues / (repurchases) 0.00 0.00 0.00 0.00 388.75 0.00 - 0.00 - - - Dividends paid (7.34) (63.11) (24.45) (33.30) (221.78) (3.72) -98.3 (31.35) 743.8 - - Other cash from financing 9.91 49.10 (25.49) (22.49) (117.34) 0.00 - 0.00 - - - Cash from financing activities 2.56 (14.00) (49.94) (55.79) (27.84) (3.72) -86.7 (31.35) 743.8 - - Cash flow chge in cash & equivalents 63.22 (18.77) 114.28 83.98 (48.27) 94.43 - 111.56 - - - FX / non cash items 0.00 0.00 0.00 0.00 (.00) (.00) - (6.47) - - - Bal sheet chge in cash & equivalents 63.22 (18.77) 114.28 83.98 (48.27) 94.43 - 105.09 - - - Core EBITDA 104.21 138.25 170.98 131.74 109.22 145.87 33.6 177.73 21.8 - - Maintenance capital expenditure (2.00) (2.00) (2.00) (2.00) (5.00) (6.00) 20.0 (6.00) 0.0 - - Maintenance net working capital 0.00 0.00 (2.07) (6.33) (4.37) (4.18) -4.2 (5.34) 27.7 - - Operating free cash flow, pre-tax

102.21 136.25 166.92 123.41 99.85 135.69 35.9 166.39 22.6 - -


UBS 120


Clothing & Fabrics



Company profile Providência is LatAm's leading nonwoven producer and Brazil's thirdlarger PVC transformer. The company's nonwoven business suppliesfabrics for a number of hygiene and industrial applications, while its PVC arm makes PVC pipes and connections for infrastructure andhousehold construction. In June 2007, the company announced theacquisition of one of its key nonwoven competitors in Brazil, giving itroughly 65ktons of annual production capacity. The company iscontrolled by four private equity groups that acquired it from thefounding family during 2007.


12/06 12/07 12/08 12/09E 12/10E0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)16.00%

17.00%

18.00%

19.00%

20.00%

21.00%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)400

450

500

550

600

650

700

-60%

-40%

-20%

0%

20%

40%

60%

80%


Providência

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - - NM 3.6 2.4 - P/E (UBS) - - 21.5 2.6 2.0 - P/CEPS - - 13.7 1.8 1.4 - Net dividend yield (%) - - 20.7 14.0 19.0 - P/BV - - 2.3 0.5 0.4 - EV/revenue (core) - - 2.2 0.6 0.4 - EV/EBITDA (core) - - 9.3 2.3 1.4 - EV/EBIT (core) - - 12.6 3.2 1.8 - EV/OpFCF (core) - - 10.2 2.5 1.5 - EV/op. invested capital - - 2.2 0.6 0.5 -

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap - 1,091.78 224.19 224.19 224.19 + minority interests 0.00 0.00 0.00 0.00 - + average net debt (cash) (250.58) (63.85) 117.66 17.90 - + pension obligations and other 0.00 0.00 0.00 0.00 - - non-core asset value 0.00 (12.00) 0.00 0.00 - Core enterprise value - 1,015.93 341.85 242.09 - Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 20.2 1.1 -9.6 24.7 16.6 - EBITDA (UBS) 12.7 -23.0 -17.1 33.6 21.8 - EBIT (UBS) 11.3 -27.1 -21.9 34.6 25.4 - EPS (UBS) 8.7 -7.7 -55.0 68.4 34.0 - Cash EPS 10.4 -6.8 -43.8 54.8 27.2 - Net DPS - 36.2 NM -86.1 36.0 - BVPS 25.1 11.8 -19.4 6.7 8.6 -

Margins (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBITDA / revenue 31.6 26.3 24.1 25.8 27.0 - EBIT / revenue 25.4 20.5 17.7 19.2 20.6 - Net profit (UBS) / revenue 24.9 22.5 11.2 15.1 17.4 -

Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) - 34.7 17.6 18.1 25.3 - ROIC post tax - 30.6 17.6 16.3 21.4 - Net ROE - 20.6 9.7 17.8 22.1 -

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - 2.5 8.2 - - Dividend cover (UBS EPS) - 3.4 0.2 2.7 2.7 - Div. payout ratio (%, UBS EPS) - 29.5 NM 36.7 37.2 - Net debt / EBITDA NM NM 1.5 0.5 NM -

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - 1.7 1.0 0.9 1.2 - Revenue / fixed assets - 3.8 1.5 1.3 1.8 - Revenue / net working capital - 3.1 3.6 5.9 7.0 -

Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT 1.2 1.2 1.2 1.3 1.2 - Capex / revenue (%) - 2.5 24.1 2.5 0.9 - Capex / depreciation - 0.4 3.8 0.4 0.1 -

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity (33.1) (50.6) 35.4 14.2 (6.4) - Net debt / (net debt + equity) (55.6) NM 26.1 12.4 (6.9) - Net debt (core) / EV - - (6.3) 34.4 7.4 -




UBS 121

Lupatech

Income statement (R$m) - - 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues - - 173.17 223.59 386.98 * * * * * * Operating expenses (ex depn) - - (124.70) (175.75) (300.79) * * * * * * EBITDA (UBS) - - 48.47 47.84 86.18 * * * * * * Depreciation - - (6.33) (7.25) (14.48) * * * * * * Operating income (EBIT, UBS) - - 42.13 40.59 71.71 * * * * * * Other income & associates - - (7.38) (9.29) (85.80) * * * * * * Net interest - - (1.20) 3.19 (19.00) * * * * * * Abnormal items (pre-tax) - - 0.00 0.00 0.00 * - * - * - Profit before tax - - 33.56 34.50 (33.10) * - * * * * Tax - - (2.73) (10.69) (16.44) * * * * * * Profit after tax - - 30.83 23.80 (49.54) * - * * * * Abnormal items (post-tax) - - 0.00 0.00 0.00 * - * - * - Minorities / pref dividends - - 1.20 0.00 0.00 * - * - * - Net income (local GAAP) - - 32.04 23.80 (49.54) * - * * * * Net Income (UBS) - - 32.04 27.28 0.50 * * * * * * Tax rate (%) - - 8.12 31.00 0.00 * - * * * * Pre-abnormal tax rate (%) - - 8.12 28.17 97.07 * * * * * * Per share (R$) - - 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) - - 0.18 0.54 (1.07) * - * * * * EPS (UBS) - - 0.18 0.62 0.01 * * * * * * Net DPS - - 0.04 0.13 0.00 * - * * * * Cash EPS - - 0.21 0.79 0.32 * * * * * * BVPS - - 1.50 5.39 5.41 * * * * * * Balance sheet (R$m) - - 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents - - 30.64 204.27 238.32 * * * * * * Other current assets - - 69.21 164.92 326.34 * * * * * * Total current assets - - 99.86 369.19 564.65 * * * * * * Net tangible fixed assets - - 49.89 71.91 183.68 * * * * * * Net intangible fixed assets - - 3.70 128.80 359.58 * * * * * * Investments / other assets - - 0.00 0.00 0.00 * - * - * - Total assets - - 153.44 569.90 1,107.91 * * * * * * Trade payables & other ST liabilities - - 42.76 55.34 107.34 * * * * * * Short term debt - - 0.00 0.00 0.00 * - * - * - Total current liabilities - - 42.76 55.34 107.34 * * * * * * Long term debt - - 42.29 268.83 743.83 * * * * * * Other long term liabilities - - 0.00 0.00 0.00 * - * - * - Total liabilities - - 85.05 324.18 851.17 * * * * * * Equity & minority interests - - 68.38 245.72 256.74 * * * * * * Total liabilities & equity - - 153.44 569.90 1,107.91 * * * * * * Cash flow (R$m) - - 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income - - 32.04 23.80 (49.54) * - * * * * Depreciation - - 6.33 10.72 64.51 * * * * * * Net change in working capital - - (14.59) (65.17) (86.92) * * * * * * Other (operating) - - 0.00 0.00 (1.55) * - * - * - Net cash from operations - - 23.78 (30.65) (73.49) * - * * * * Capital expenditure - - (21.61) (27.53) (61.93) * * * * * * Net (acquisitions) / disposals - - (2.79) (164.44) (333.96) * * * - * - Other changes in investments - - 0.00 0.00 0.00 * - * - * - Cash from investing activities - - (24.39) (191.97) (395.88) * * * * * * Increase/(decrease) in debt - - 26.08 226.55 475.00 * - * - * - Share issues / (repurchases) - - 8.50 159.32 61.00 * - * - * - Dividends paid - - (4.19) (7.67) (5.83) * - * - * * Other cash from financing - - (9.07) 18.05 (26.74) * - * - * - Cash from financing activities - - 21.33 396.24 503.43 * - * - * * Cash flow chge in cash & equivalents - - 20.71 173.62 34.05 * - * - * - FX / non cash items - - - 0.00 0.00 * - * - * - Bal sheet chge in cash & equivalents - - - 173.62 34.05 * - * - * - Core EBITDA - - 48.47 47.84 86.18 * * * * * * Maintenance capital expenditure - - (20.00) (14.75) (28.00) * * * * * * Maintenance net working capital - - 0.41 2.28 4.73 * * * * * * Operating free cash flow, pre-tax

- - 28.88 35.37 62.91 * * * * * *


UBS 122


Oil Drilling, Equipment & Services


12m price target -

Company profile Lupatech is Brazil's only listed company with significant exposure tothe oil service and equipment sector. The company controls a diversified portfolio of operations that originated from the productionof flow valves for industrial usages and from a parts manufacturingunit that focuses on precision casting and still injection (mostly for theautomotive sector). The company was listed in 2006 and has sincethen completed seven acquisitions that have increased its portfolio ofservices and equipment for LatAm's oil, gas, and petrochemicalsectors.

Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)18.000%

18.100%

18.200%

18.300%

18.400%

18.500%

18.600%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)0.0%

5.0%

10.0%

15.0%

20.0%

3.0x

4.0x

5.0x

6.0x

7.0x

8.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)150

200

250

300

350

400

-100%

-80%

-60%

-40%

-20%

0%


Lupatech

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - 44.4 NM * * * P/E (UBS) - 38.7 NM * * * P/CEPS - 30.6 NM * * * Net dividend yield (%) - 0.5 0.0 * * * P/BV - 4.5 7.9 * * * EV/revenue (core) - 5.1 5.8 * * * EV/EBITDA (core) - 23.8 25.9 * * * EV/EBIT (core) - 28.0 NM * * * EV/OpFCF (core) - NM NM * * * EV/op. invested capital - 5.8 4.2 * * *

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 1,099.15 1,948.25 * * * + minority interests 0.00 0.00 * * * + average net debt (cash) 38.11 285.04 * * * + pension obligations and other 0.00 0.00 * * * - non-core asset value 0.00 0.00 * * * Core enterprise value 1,137.26 2,233.29 * * * Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - 29.1 73.1 * * * EBITDA (UBS) - -1.3 80.2 * * * EBIT (UBS) - -3.7 76.7 * * * EPS (UBS) - NM -98.3 * * * Cash EPS - NM -58.8 * * * Net DPS - NM - - * * BVPS - NM 0.5 * * *



Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - 3.8 * * * Dividend cover (UBS EPS) - 4.9 - * * * Div. payout ratio (%, UBS EPS) - 20.5 - * * * Net debt / EBITDA - 1.3 5.9 * * *



Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - 26.3 NM * * * Net debt / (net debt + equity) - 20.8 66.3 * * * Net debt (core) / EV - 3.4 12.8 * * *




UBS 123

Real Estate

UBS 124

Brascan Residential Properties

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 323.31 524.44 361.48 411.26 418.52 * * * * * * Operating expenses (ex depn) (222.07) (384.02) (323.52) (366.86) (245.00) * * * * * * EBITDA (UBS) 101.23 140.42 37.96 44.40 173.52 * * * * * * Depreciation (2.37) (3.57) (1.42) (0.87) 0.00 * - * * * * Operating income (EBIT, UBS) 98.87 136.85 36.55 43.53 173.52 * * * * * * Other income & associates 0.00 0.00 0.07 (0.39) 7.36 * - * - * - Net interest 22.49 6.84 (13.11) 54.39 (4.43) * - * * * * Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 * - * - * - Profit before tax 121.35 143.70 23.50 97.53 176.45 * * * * * * Tax (18.90) (46.57) (1.73) (2.10) (21.87) * * * * * * Profit after tax 102.45 97.13 21.77 95.43 154.59 * * * * * * Abnormal items (post-tax) 0.00 0.00 2.99 85.87 (4.86) * - * - * - Minorities / pref dividends (14.72) (16.10) 0.00 0.00 0.00 * - * - * - Net income (local GAAP) 87.73 81.03 24.76 181.30 149.73 * * * * * * Net Income (UBS) 87.73 81.03 21.77 95.43 154.59 * * * * * * Tax rate (%) 15.58 32.40 7.36 2.16 12.39 * * * * * * Pre-abnormal tax rate (%) 15.58 32.40 7.36 2.16 12.39 * * * * * * Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 1.10 1.02 0.13 0.98 0.88 * * * * * * EPS (UBS) 1.10 1.02 0.12 0.52 0.90 * * * * * * Net DPS 0.28 0.85 0.00 0.00 0.00 * - * * * * Cash EPS 1.13 1.06 0.18 0.52 0.90 * * * * * * BVPS 3.20 3.50 2.32 5.84 6.40 * * * * * * Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 190.65 170.95 17.88 328.69 466.55 * * * * * * Other current assets 590.27 760.37 524.90 818.12 778.83 * * * * * * Total current assets 780.92 931.31 542.78 1,146.81 1,245.38 * * * * * * Net tangible fixed assets 1.16 1.48 1.76 2.52 11.13 * * * * * * Net intangible fixed assets 1.44 5.51 1.68 2.77 0.00 * - * - * - Investments / other assets 330.78 287.42 247.66 338.27 352.78 * * * * * * Total assets 1,114.30 1,225.73 793.88 1,490.37 1,609.28 * * * * * * Trade payables & other ST liabilities 295.36 310.94 193.94 208.95 137.00 * * * * * * Short term debt 124.31 158.09 121.94 89.33 86.72 * * * * * * Total current liabilities 419.66 469.03 315.88 298.28 223.72 * * * * * * Long term debt 65.39 106.93 18.64 37.28 151.43 * * * * * * Other long term liabilities 282.28 221.51 128.36 75.13 49.60 * * * * * * Total liabilities 767.33 797.47 462.88 410.69 424.75 * * * * * * Equity & minority interests 346.97 428.26 331.00 1,079.68 1,184.53 * * * * * * Total liabilities & equity 1,114.30 1,225.73 793.88 1,490.37 1,609.28 * * * * * * Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 87.73 81.03 24.76 181.30 149.73 * * * * * * Depreciation 2.37 3.57 1.42 0.87 0.00 * - * * * * Net change in working capital (87.70) (122.62) 0.00 0.00 0.00 * - * * * * Other (operating) 43.44 (37.28) 0.00 0.00 0.00 * - * - * - Net cash from operations 45.83 (75.30) 26.17 182.16 149.73 * * * * * - Capital expenditure (9.12) (0.67) 0.00 0.00 0.00 * - * * * * Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 * - * - * - Other changes in investments 7.47 9.92 0.00 0.00 0.00 * - * - * - Cash from investing activities (1.65) 9.26 0.00 0.00 0.00 * - * * * * Increase/(decrease) in debt (8.88) 75.33 0.00 0.00 0.00 * - * - * - Share issues / (repurchases) 0.00 38.77 0.00 0.00 0.00 * - * - * - Dividends paid (22.71) (67.76) 0.00 0.00 0.00 * - * * * * Other cash from financing 0.00 0.00 0.00 0.00 0.00 * - * - * - Cash from financing activities (31.58) 46.34 0.00 0.00 0.00 * - * * * * Cash flow chge in cash & equivalents 12.60 (19.71) 26.17 182.16 149.73 * - * - * - FX / non cash items 0.00 0.00 (179.24) 128.65 (11.87) * * * - * - Bal sheet chge in cash & equivalents 12.60 (19.71) (153.06) 310.81 137.86 * - * - * - Core EBITDA 101.23 140.42 37.96 44.40 173.52 * * * * * * Maintenance capital expenditure (9.12) (0.67) 0.00 0.00 0.00 * - * * * * Maintenance net working capital (87.70) (122.62) 0.00 0.00 0.00 * - * * * * Operating free cash flow, pre-tax

4.41 17.13 37.96 44.40 173.52 * * * * * -


UBS 125


Home Construction



Company profile Brascan Residential Properties (BRP) is one of the largest developersof mainstream, high-end, and luxury residential buildings in SaoPaulo and Rio de Janeiro. The company was born from the spin-off of BISA's (Brascan Imobiliária S.A., BRP's holding company) residential arm in 2005, following a similar strategy by BAM, which spun off itsresidential operations into Brookfield Homes. The company'sbusiness model allows it to be a fully integrated developer,participating in the purchase, design, development, and management of real estate projects targetting the middle and upper classsegments.


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

0.0x

10.0x

20.0x

30.0x

40.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

0.0%

5.0%

10.0%

15.0%

20.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)13.600%

13.650%

13.700%

13.750%

13.800%

13.850%

13.900%

13.950%

1.8x

2.0x

2.2x

2.4x

2.6x

2.8x

3.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)408.0

410.0

412.0

414.0

416.0

418.0

420.0

0%

50%

100%

150%

200%



Brascan Residential Properties

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - 18.7 16.0 * * * P/E (UBS) - 35.5 15.5 * * * P/CEPS - 35.2 15.5 * * * Net dividend yield (%) - 0.0 0.0 * * * P/BV - 3.1 2.2 * * * EV/revenue (core) - 7.3 5.7 * * * EV/EBITDA (core) - 67.8 13.7 * * * EV/EBIT (core) - NM 13.7 * * * EV/OpFCF (core) - NM 13.7 * * * EV/op. invested capital - 4.6 2.6 * * *

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 3,049.91 2,598.26 * * * + minority interests 0.00 0.00 * * * + average net debt (cash) (39.69) (215.24) * * * + pension obligations and other 0.00 0.00 * * * - non-core asset value 0.00 0.00 * * * Core enterprise value 3,010.22 2,383.02 * * * Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 8.9 13.8 1.8 * * * EBITDA (UBS) -20.6 16.9 NM * * * EBIT (UBS) -20.5 19.1 NM * * * EPS (UBS) -13.6 199.2 75.3 * * * Cash EPS -14.3 183.5 73.7 * * * Net DPS - - - - * * BVPS 21.5 151.8 9.7 * * *

Margins (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBITDA / revenue 23.5 10.8 41.5 * * * EBIT / revenue 22.9 10.6 41.5 * * * Net profit (UBS) / revenue 19.4 23.2 36.9 * * *


Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - NM - - - Dividend cover (UBS EPS) - - - * * * Div. payout ratio (%, UBS EPS) - - - * * * Net debt / EBITDA 0.1 NM NM * * *

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - 0.6 0.5 * * * Revenue / fixed assets - NM NM * * * Revenue / net working capital - 0.9 0.7 * * *

Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT - 1.0 1.0 * * * Capex / revenue (%) - 0.0 0.0 * * * Capex / depreciation - 0.0 - * * *

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity 8.4 (18.7) (19.3) * * * Net debt / (net debt + equity) 1.3 (23.0) (23.9) * * * Net debt (core) / EV - (1.3) (9.0) * * *

Source: Company accounts, UBS estimates. (UBS) valuations are stated before goodwill-related charges and other adjustments for abnormal and economic items at the analysts' judgement. Valuations: based on an average share price that year, (E): based on a share price of R$1.87 on 13 Mar 2009 19:40 EDT Market cap(E) may include forecast share issues/buybacks. Rodrigo Monteiro Analyst [email protected] +5521 3262 9208

Gordon Lee Analyst [email protected] +1-212-713 1094

UBS 126

Cyrela Brazil Realty

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 323.31 524.44 - 1,116.68 1,707.30 2,605.05 52.6 3,382.85 29.9 4,685.32 38.5 Operating expenses (ex depn) (222.07) (384.02) - (844.27) (1,336.61) (2,053.48) 53.6 (2,602.35) 26.7 (3,509.22) 34.8 EBITDA (UBS) 101.23 140.42 - 272.41 370.69 551.57 48.8 780.50 41.5 1,176.11 50.7 Depreciation (2.37) (3.57) - (3.56) (6.92) (4.66) -32.6 (5.11) 9.6 (5.11) 0.0 Operating income (EBIT, UBS) 98.87 136.85 - 268.85 363.77 546.91 50.3 775.39 41.8 1,171.00 51.0 Other income & associates 0.00 0.00 - 0.00 0.00 0.00 - 0.00 - 0.00 - Net interest 22.49 6.84 - 80.84 25.23 (21.47) - 16.80 - 34.05 102.6 Abnormal items (pre-tax) 0.00 0.00 - 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 121.35 143.70 - 349.69 389.01 525.44 35.1 792.19 50.8 1,205.05 52.1 Tax (18.90) (46.57) - (58.01) (55.71) (95.10) 70.7 (89.21) -6.2 (119.41) 33.8 Profit after tax 102.45 97.13 - 291.68 333.30 430.34 29.1 702.98 63.4 1,085.65 54.4 Abnormal items (post-tax) 0.00 0.00 - (25.43) 113.13 (19.73) - 0.00 - 0.00 - Minorities / pref dividends (14.72) (16.10) - (23.97) (24.58) (50.10) 103.8 (87.65) 74.9 (129.02) 47.2 Net income (local GAAP) 87.73 81.03 - 242.28 421.85 360.51 -14.5 615.33 70.7 956.63 55.5 Net Income (UBS) 87.73 81.03 - 267.71 308.72 380.24 23.2 615.33 61.8 956.63 55.5 Tax rate (%) 15.58 32.40 0.00 16.59 14.32 18.10 26.4 11.26 -37.8 9.91 -12.0 Pre-abnormal tax rate (%) 15.58 32.40 0.00 16.59 14.32 18.10 26.4 11.26 -37.8 9.91 -12.0 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 1.10 1.02 - 0.68 1.19 1.01 -14.5 1.73 70.7 2.69 55.5 EPS (UBS) 1.10 1.02 - 0.75 0.87 1.07 23.2 1.73 61.8 2.69 55.5 Net DPS 0.28 0.85 - 0.00 0.00 0.05 - 0.36 599.5 0.61 72.0 Cash EPS 1.13 1.06 - 0.76 0.89 1.08 21.9 1.74 61.2 2.70 55.0 BVPS 1.76 1.93 3.43 5.48 5.82 6.79 16.6 8.16 20.2 10.24 25.5 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 190.65 170.95 516.98 560.64 682.80 782.99 14.7 1,080.64 38.0 1,420.35 31.4 Other current assets 590.27 760.37 740.23 1,741.93 2,698.47 3,812.67 41.3 3,220.39 -15.5 3,541.86 10.0 Total current assets 780.92 931.31 1,257.21 2,302.57 3,381.27 4,595.65 35.9 4,301.03 -6.4 4,962.21 15.4 Net tangible fixed assets 105.22 88.04 110.11 143.84 10.52 23.57 124.0 30.69 30.2 38.39 25.1 Net intangible fixed assets 1.44 5.51 0.01 0.53 68.89 89.56 30.0 89.56 0.0 89.56 0.0 Investments / other assets 330.78 287.42 407.87 595.54 1,262.89 1,428.79 13.1 1,622.31 13.5 1,916.58 18.1 Total assets 1,218.36 1,312.29 1,775.19 3,042.49 4,723.57 6,137.58 29.9 6,043.59 -1.5 7,006.74 15.9 Trade payables & other ST liabilities 295.36 310.94 307.97 586.31 831.20 813.39 -2.1 581.54 -28.5 539.94 -7.2 Short term debt 124.31 158.09 95.13 57.24 90.27 245.65 172.1 312.17 27.1 406.24 30.1 Total current liabilities 419.66 469.03 403.10 643.54 921.47 1,059.04 14.9 893.71 -15.6 946.18 5.9 Long term debt 65.39 106.93 108.71 67.49 728.53 1,482.34 103.5 1,415.27 -4.5 1,458.37 3.0 Other long term liabilities 282.28 221.51 166.06 282.60 804.05 903.44 12.4 465.45 -48.5 465.13 -0.1 Total liabilities 767.33 797.47 677.87 993.63 2,454.04 3,444.81 40.4 2,774.43 -19.5 2,869.68 3.4 Equity & minority interests 451.04 514.82 1,097.32 2,048.85 2,269.52 2,692.77 18.6 3,269.16 21.4 4,137.06 26.5 Total liabilities & equity 1,218.36 1,312.29 1,775.19 3,042.49 4,723.57 6,137.58 29.9 6,043.59 -1.5 7,006.74 15.9 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 87.73 81.03 - 242.28 421.85 360.51 -14.5 615.33 70.7 956.63 55.5 Depreciation 2.37 3.57 - 3.56 6.92 4.66 -32.6 5.11 9.6 5.11 0.0 Net change in working capital (87.70) (122.62) - 0.00 0.00 (80.95) - (271.08) 234.9 (657.66) 142.6 Other (operating) 43.44 (37.28) - 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations 45.83 (75.30) - 245.85 428.76 284.22 -33.7 349.35 22.9 304.08 -13.0 Capital expenditure (9.12) (0.67) - 0.00 (.00) (3.00) 2999900.0 (12.23) 307.6 (12.81) 4.7 Net (acquisitions) / disposals 0.00 0.00 - 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 7.47 9.92 - 0.00 0.00 0.41 - (66.47) - (15.27) - Cash from investing activities (1.65) 9.26 - 0.00 (.00) (2.59) 2592804.6 (78.70) 2935.3 (28.08) -64.3 Increase/(decrease) in debt (8.88) 75.33 - 0.00 0.00 (34.09) - (0.54) - 137.17 - Share issues / (repurchases) 0.00 38.77 - 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid (22.71) (67.76) - 0.00 0.00 (18.10) - (126.58) 599.5 (217.75) 72.0 Other cash from financing 0.00 0.00 - 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities (31.58) 46.34 - 0.00 0.00 (52.19) - (127.13) 143.6 (80.58) -36.6 Cash flow chge in cash & equivalents 12.60 (19.71) - 245.85 428.76 229.44 - 143.52 - 195.42 - FX / non cash items 0.00 0.00 - (202.19) (306.61) (129.25) 7.2 154.13 - 144.29 -6.4 Bal sheet chge in cash & equivalents 12.60 (19.71) 346.03 43.66 122.16 100.19 - 297.65 - 339.71 - Core EBITDA 101.23 140.42 - 272.41 370.69 551.57 48.8 780.50 41.5 1,176.11 50.7 Maintenance capital expenditure (9.12) (0.67) - - - (3.00) - (12.23) 307.6 (12.81) 4.7 Maintenance net working capital (87.70) (122.62) - 0.00 0.00 (80.95) - (271.08) 234.9 (657.66) 142.6 Operating free cash flow, pre-tax

4.41 17.13 - - - 467.62 - 497.19 6.3 505.64 1.7


UBS 127


Home Construction



Company profile Cyrela Brazil Realty (CBR) is a result of a merger between CyrelaVancouver and Brazil Realty. Founded in 1961, Cyrela is one ofBrazil's largest development companies, focused mainly in the citiesof Sao Paulo and Rio de Janeiro. The company is engaged indeveloping luxury residential and commercial units, targeted at theupper and upper-middle segments. CONTACTS: Luis Largman -CFO/IR Director (+55 11 4502 3153).


12/06 12/07 12/08 12/09E 12/10E0.0x

2.0x

4.0x

6.0x

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25.0x

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Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)19.00%

20.00%

21.00%

22.00%

23.00%

24.00%

25.00%

16.0%

18.0%

20.0%

22.0%

24.0%

26.0%

28.0%

30.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)10.0%

15.0%

20.0%

25.0%

30.0%

0.0x

1.0x

2.0x

3.0x

4.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)0

1000

2000

3000

4000

5000

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%



Cyrela Brazil Realty

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - 26.3 19.2 7.2 4.2 2.7 P/E (UBS) - 23.8 26.2 6.8 4.2 2.7 P/CEPS - 23.5 25.7 6.7 4.2 2.7 Net dividend yield (%) - 0.0 0.0 0.7 4.9 8.4 P/BV - 3.3 3.9 1.1 0.9 0.7 EV/revenue (core) - 5.3 5.0 1.4 1.2 0.8 EV/EBITDA (core) - 21.9 22.9 6.4 5.4 3.3 EV/EBIT (core) - 22.1 23.3 6.5 5.4 3.4 EV/OpFCF (core) - - - 7.6 8.4 7.8 EV/op. invested capital - 5.1 4.5 1.2 1.2 1.0

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 5,664.43 8,066.54 2,578.44 2,578.44 2,578.44 + minority interests 663.21 625.52 481.87 867.74 867.74 + average net debt (cash) (374.53) (149.95) 540.50 795.90 545.53 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 (56.04) (56.04) (56.04) (56.04) Core enterprise value 5,953.11 8,486.07 3,544.77 4,186.04 3,935.67 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 39.8 - 52.9 52.6 29.9 38.5 EBITDA (UBS) 24.9 - 36.1 48.8 41.5 50.7 EBIT (UBS) 25.4 - 35.3 50.3 41.8 51.0 EPS (UBS) -5.0 - 15.3 23.2 61.8 55.5 Cash EPS -5.7 - 16.4 21.9 61.2 55.0 Net DPS - - - - NM 72.0 BVPS 38.8 59.9 6.3 16.6 20.2 25.5



Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - - 25.5 - - Dividend cover (UBS EPS) - - - 21.0 4.9 4.4 Div. payout ratio (%, UBS EPS) - - - 4.8 20.6 22.8 Net debt / EBITDA - NM 0.4 1.7 0.8 0.4

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - 1.0 0.9 0.9 0.9 1.1 Revenue / fixed assets - 8.8 15.3 27.1 29.0 NM Revenue / net working capital - 1.4 1.1 1.1 1.2 1.7

Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT - - - 0.9 0.6 0.4 Capex / revenue (%) - 0.0 0.0 0.1 0.4 0.3 Capex / depreciation - 0.0 0.0 0.6 2.4 2.5

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity (5.2) (21.3) 6.0 35.1 19.8 10.7 Net debt / (net debt + equity) (18.1) (28.8) 6.2 28.1 18.2 10.9 Net debt (core) / EV - (6.3) (1.8) 15.2 19.0 13.9

Source: Company accounts, UBS estimates. (UBS) valuations are stated before goodwill-related charges and other adjustments for abnormal and economic items at the analysts' judgement. Valuations: based on an average share price that year, (E): based on a share price of R$7.25 on 13 Mar 2009 19:40 EDT Market cap(E) may include forecast share issues/buybacks. Gordon Lee Analyst [email protected] +1-212-713 1094

UBS 128

Even

Income statement (R$m) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues - 50.89 73.90 205.45 428.45 * * * * * * Operating expenses (ex depn) - (42.86) (61.87) (172.13) (375.25) * * * * * * EBITDA (UBS) - 8.03 12.03 33.32 53.20 * * * * * * Depreciation - (0.05) (0.06) (0.14) (3.05) * * * * * * Operating income (EBIT, UBS) - 7.99 11.97 33.18 50.15 * * * * * * Other income & associates - 0.00 0.00 0.00 0.00 * - * - * - Net interest - (1.73) (4.23) (2.40) 0.39 * - * * * * Abnormal items (pre-tax) - 0.00 0.00 0.00 0.00 * - * - * - Profit before tax - 6.26 7.74 30.79 50.55 * * * * * * Tax - (2.36) (4.17) (2.34) (16.13) * * * * * * Profit after tax - 3.90 3.57 28.44 34.41 * * * * * * Abnormal items (post-tax) - 0.00 0.00 0.00 22.59 * - * - * - Minorities / pref dividends - (0.70) (1.54) (5.88) (4.49) * * * * * * Net income (local GAAP) - 3.20 2.03 22.57 52.51 * * * * * * Net Income (UBS) - 3.20 2.03 22.57 29.92 * * * * * * Tax rate (%) - 37.67 53.88 7.61 31.92 * * * * * * Pre-abnormal tax rate (%) - 37.67 53.88 7.61 31.92 * * * * * * Per share (R$) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) - 0.03 0.02 0.25 0.37 * * * * * * EPS (UBS) - 0.03 0.02 0.25 0.21 * * * * * * Net DPS - 0.00 0.00 0.00 0.00 * - * * * * Cash EPS - 0.04 0.02 0.25 0.24 * * * * * * BVPS - 0.19 0.21 1.35 4.67 * * * * * * Balance sheet (R$m) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents - 1.42 8.25 22.87 182.43 * * * * * * Other current assets - 85.95 126.37 331.56 794.37 * * * * * * Total current assets - 87.37 134.62 354.42 976.80 * * * * * * Net tangible fixed assets - 0.32 0.63 4.52 7.28 * * * * * * Net intangible fixed assets - 0.00 0.00 0.00 0.00 * - * - * - Investments / other assets - 5.91 7.51 56.37 121.56 * * * * * * Total assets - 93.60 142.76 415.32 1,105.64 * * * * * * Trade payables & other ST liabilities - 48.75 52.28 107.99 117.09 * * * * * * Short term debt - 10.83 25.47 79.70 24.14 * * * * * * Total current liabilities - 59.58 77.75 187.69 141.23 * * * * * * Long term debt - 8.50 6.95 9.96 178.49 * * * * * * Other long term liabilities - 5.29 33.55 82.90 113.12 * * * * * * Total liabilities - 73.37 118.25 280.54 432.83 * * * * * * Equity & minority interests - 20.23 24.51 134.77 672.81 * * * * * * Total liabilities & equity - 93.60 142.76 415.32 1,105.64 * * * * * * Cash flow (R$m) - 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income - 3.20 2.03 22.57 52.51 * * * * * * Depreciation - 0.05 0.06 0.14 3.05 * * * * * * Net change in working capital - 0.00 0.00 0.00 0.00 * - * * * * Other (operating) - 0.00 0.00 0.00 0.00 * - * - * - Net cash from operations - 3.25 2.09 22.70 55.56 * - * * * * Capital expenditure - 0.00 0.00 0.00 0.00 * - * * * * Net (acquisitions) / disposals - 0.00 0.00 0.00 0.00 * - * - * - Other changes in investments - 0.00 0.00 0.00 0.00 * - * - * - Cash from investing activities - 0.00 0.00 0.00 0.00 * - * - * - Increase/(decrease) in debt - 0.00 0.00 0.00 0.00 * - * - * - Share issues / (repurchases) - 0.00 0.00 0.00 0.00 * - * - * - Dividends paid - 0.00 0.00 0.00 0.00 * - * * * * Other cash from financing - 0.00 0.00 0.00 0.00 * - * - * - Cash from financing activities - 0.00 0.00 0.00 0.00 * - * * * * Cash flow chge in cash & equivalents - 3.25 2.09 22.70 55.56 * - * - * - FX / non cash items - - 4.75 (8.09) 104.01 * * * - * * Bal sheet chge in cash & equivalents - - 6.84 14.62 159.56 * - * - * - Core EBITDA - 8.03 12.03 33.32 53.20 * * * * * * Maintenance capital expenditure - 0.00 0.00 0.00 0.00 * - * * * * Maintenance net working capital - 0.00 0.00 0.00 0.00 * - * * * * Operating free cash flow, pre-tax

- 8.03 12.03 33.32 53.20 * - * * * *


UBS 129


Real Estate



Company profile EVEN is one of the leading residential developers in Sao Paulo,ranked as the third largest developer and the fourth largestconstruction company in the metropolitan region during 2005,according to data released by EMBRAESP. EVEN, which wascreated in 2002 from the merger of ABC Construtora and Terepins &Kalili (developers with over 25 years' experience), focuses mainly onresidential projects for the upper, middle, and emerging incomesegments. It will also occasionally and opportunistically developprojects for the commercial market.


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

-5.0x

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)10.00%

11.00%

12.00%

13.00%

14.00%

15.00%

16.00%

17.00%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

2.6x

2.8x

3.0x

3.2x

3.4x

3.6x

3.8x

4.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)150

200

250

300

350

400

450

-15.0%

-10.0%

-5.0%

0.0%



Even

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - - 41.7 * * * P/E (UBS) - - 73.2 * * * P/CEPS - - 66.5 * * * Net dividend yield (%) - - 0.0 * * * P/BV - - 3.3 * * * EV/revenue (core) - - 5.3 * * * EV/EBITDA (core) - - 42.3 * * * EV/EBIT (core) - - NM * * * EV/OpFCF (core) - - NM * * * EV/op. invested capital - - 5.0 * * *

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap - 2,188.38 * * * + minority interests 10.99 18.26 * * * + average net debt (cash) 45.48 43.50 * * * + pension obligations and other 0.00 0.00 * * * - non-core asset value 0.00 0.00 * * * Core enterprise value - 2,250.13 * * * Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - 178.0 108.5 * * * EBITDA (UBS) - 177.0 59.7 * * * EBIT (UBS) - 177.3 51.1 * * * EPS (UBS) - NM -13.1 * * * Cash EPS - NM -4.8 * * * Net DPS - - - - * * BVPS - NM NM * * *



Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - 13.8 - * * * Dividend cover (UBS EPS) - - - * * * Div. payout ratio (%, UBS EPS) - - - * * * Net debt / EBITDA - 2.0 0.4 * * *

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - 1.6 1.0 * * * Revenue / fixed assets - NM NM * * * Revenue / net working capital - 1.4 1.0 * * *


Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - 49.6 3.0 * * * Net debt / (net debt + equity) - 35.0 3.0 * * * Net debt (core) / EV - - 1.9 * * *



UBS 130

Gafisa

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 323.31 524.44 493.90 684.60 1,172.17 1,606.92 37.1 2,724.39 69.5 4,120.99 51.3 Operating expenses (ex depn) (222.07) (384.02) (428.62) (616.98) (1,018.54) (1,429.41) 40.3 (2,209.98) 54.6 (3,358.29) 52.0 EBITDA (UBS) 101.23 140.42 65.28 67.62 153.63 177.51 15.5 514.41 189.8 762.70 48.3 Depreciation (2.37) (3.57) (2.59) (4.30) (14.82) (14.50) -2.2 (30.84) 112.6 (31.54) 2.3 Operating income (EBIT, UBS) 98.87 136.85 62.69 63.32 138.81 163.00 17.4 483.57 196.7 731.16 51.2 Other income & associates 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net interest 22.49 6.84 (27.97) (10.08) 14.16 46.90 231.3 (97.73) - (146.25) 49.7 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 121.35 143.70 34.72 53.24 152.96 209.91 37.2 385.84 83.8 584.91 51.6 Tax (18.90) (46.57) (6.26) (6.27) (30.95) (17.05) -44.9 (59.47) 248.7 (118.16) 98.7 Profit after tax 102.45 97.13 28.47 46.97 122.02 192.86 58.1 326.38 69.2 466.76 43.0 Abnormal items (post-tax) 0.00 0.00 (1.02) 27.18 (3.89) (25.03) 543.6 16.00 - 16.00 0.0 Minorities / pref dividends (14.72) (16.10) 0.00 0.00 (5.91) (43.44) 634.9 (45.01) 3.6 (158.94) 253.2 Net income (local GAAP) 87.73 81.03 27.44 74.15 112.22 124.39 10.8 297.37 139.1 323.81 8.9 Net Income (UBS) 87.73 81.03 28.47 74.15 112.22 124.39 10.8 297.37 139.1 323.81 8.9 Tax rate (%) 15.58 32.40 18.02 11.78 20.23 8.12 -59.8 15.41 89.7 20.20 31.1 Pre-abnormal tax rate (%) 15.58 32.40 18.02 11.78 20.23 8.12 -59.8 15.41 89.7 20.20 31.1 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/07E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 1.10 1.02 0.37 0.72 0.84 0.93 10.8 2.23 139.1 2.43 8.9 EPS (UBS) 1.10 1.02 0.39 0.72 0.84 0.93 10.8 2.23 139.1 2.43 8.9 Net DPS 0.28 0.85 0.00 0.00 0.00 0.00 - 0.54 - 0.53 -2.2 Cash EPS 1.13 1.06 0.42 0.76 0.95 1.04 9.3 2.47 136.3 2.67 8.3 BVPS 7.01 7.67 4.06 7.93 11.50 16.37 42.3 17.94 9.6 19.72 9.9 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 190.65 170.95 133.89 266.49 514.45 814.36 58.3 144.49 -82.3 742.59 413.9 Other current assets 590.27 760.37 709.24 1,093.08 1,596.90 3,203.24 100.6 4,033.61 25.9 4,242.92 5.2 Total current assets 780.92 931.31 843.13 1,359.57 2,111.34 4,017.60 90.3 4,178.10 4.0 4,985.52 19.3 Net tangible fixed assets 105.22 88.04 6.41 6.93 27.41 52.66 92.1 93.79 78.1 136.86 45.9 Net intangible fixed assets 1.44 5.51 0.00 1.21 0.00 15.63 - 15.63 0.0 15.63 0.0 Investments / other assets 330.78 287.42 134.71 126.50 811.74 1,812.79 123.3 2,221.95 22.6 2,334.75 5.1 Total assets 1,218.36 1,312.29 984.25 1,494.22 2,950.49 5,898.68 99.9 6,509.46 10.4 7,472.75 14.8 Trade payables & other ST liabilities 295.36 310.94 253.22 312.40 508.68 1,030.08 102.5 908.64 -11.8 799.06 -12.1 Short term debt 124.31 158.09 54.41 28.34 68.72 84.44 22.9 188.45 123.2 455.91 141.9 Total current liabilities 419.66 469.03 307.62 340.74 577.40 1,114.53 93.0 1,097.10 -1.6 1,254.98 14.4 Long term debt 65.39 106.93 262.53 267.10 620.64 1,811.49 191.9 2,227.53 23.0 2,627.51 18.0 Other long term liabilities 282.28 221.51 113.94 72.29 204.47 469.29 129.5 427.05 -9.0 436.13 2.1 Total liabilities 767.33 797.47 684.09 680.13 1,402.51 3,395.30 142.1 3,751.68 10.5 4,318.61 15.1 Equity & minority interests 451.04 514.82 300.16 814.08 1,547.99 2,503.38 61.7 2,757.78 10.2 3,154.14 14.4 Total liabilities & equity 1,218.36 1,312.29 984.25 1,494.22 2,950.49 5,898.68 99.9 6,509.46 10.4 7,472.75 14.8 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 87.73 81.03 27.44 74.15 112.22 124.39 10.8 297.37 139.1 323.81 8.9 Depreciation 2.37 3.57 2.59 4.30 14.82 14.50 -2.2 30.84 112.6 31.54 2.3 Net change in working capital (87.70) (122.62) 0.00 0.00 0.00 (268.03) - (1,419.20) 429.5 (438.62) -69.1 Other (operating) 43.44 (37.28) 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations 45.83 (75.30) 30.03 78.45 127.04 (129.14) - (1,090.99) 744.8 (83.27) -92.4 Capital expenditure (9.12) (0.67) 0.00 0.00 0.00 (13.52) - (55.97) 314.0 (58.62) 4.7 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 7.47 9.92 0.00 0.00 0.00 121.89 - 438.26 - 179.34 - Cash from investing activities (1.65) 9.26 0.00 0.00 0.00 108.37 - 382.29 252.8 120.72 -68.4 Increase/(decrease) in debt (8.88) 75.33 0.00 0.00 0.00 113.92 - 520.06 - 667.43 - Share issues / (repurchases) 0.00 38.77 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid (22.71) (67.76) 0.00 0.00 0.00 0.00 - (71.97) - (70.40) -2.2 Other cash from financing 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities (31.58) 46.34 0.00 0.00 0.00 113.92 - 448.09 293.3 597.04 33.2 Cash flow chge in cash & equivalents 12.60 (19.71) 30.03 78.45 127.04 93.15 - (260.61) - 634.49 - FX / non cash items 0.00 0.00 (67.08) 54.15 120.91 206.76 224.5 (409.26) -53.8 (36.39) -91.1 Bal sheet chge in cash & equivalents 12.60 (19.71) (37.05) 132.60 247.95 299.92 - (669.87) - 598.10 - Core EBITDA 101.23 140.42 65.28 67.62 153.63 177.51 15.5 514.41 189.8 762.70 48.3 Maintenance capital expenditure (9.12) (0.67) 0.00 0.00 0.00 (13.52) - (55.97) 314.0 (58.62) 4.7 Maintenance net working capital (87.70) (122.62) 0.00 0.00 0.00 (268.03) - (1,419.20) 429.5 (438.62) -69.1 Operating free cash flow, pre-tax

4.41 17.13 65.28 67.62 153.63 (104.04) - (960.77) 823.4 265.46 -


UBS 131


Home Construction



Company profile During its more than 50-year history, Gafisa has been focused mainlyon the development and construction for the residential segment inBrazil. The company is probably the most geographically diversifiedhomebuilder in the country, although still very focused in the states ofSao Paulo and Rio de Janeiro. Gafisa has built and sold over 800developments throughout its existence, consolidating one of the best-known brands among real estate products.


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

30.0x

0.0x

10.0x

20.0x

30.0x

40.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)5.00%

6.29%

7.57%

8.86%

10.14%

11.43%

12.71%

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)0

1000

2000

3000

4000

5000

0%

20%

40%

60%

80%

100%

120%

140%



Gafisa

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - 35.7 35.4 9.3 3.9 3.6 P/E (UBS) - 35.7 35.4 9.3 3.9 3.6 P/CEPS - 33.8 31.3 8.3 3.5 3.3 Net dividend yield (%) - 0.0 0.0 0.0 6.2 6.1 P/BV - 3.3 2.6 0.5 0.5 0.4 EV/revenue (core) - 3.8 3.3 1.3 1.2 1.0 EV/EBITDA (core) - 38.4 25.4 11.7 6.2 5.2 EV/EBIT (core) - NM 28.1 12.7 6.5 5.4 EV/OpFCF (core) - NM 25.4 NM NM 14.9 EV/op. invested capital - 3.9 3.3 0.8 0.8 0.8

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 2,487.77 3,780.78 1,119.12 1,119.12 1,119.12 + minority interests 0.00 17.22 325.37 370.37 529.32 + average net debt (cash) 106.00 101.93 628.24 1,676.53 2,306.16 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 0.00 0.00 0.00 0.00 Core enterprise value 2,593.77 3,899.94 2,072.73 3,166.03 3,954.60 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 23.7 38.6 71.2 37.1 69.5 51.3 EBITDA (UBS) -11.8 3.6 127.2 15.5 189.8 48.3 EBIT (UBS) -12.7 1.0 119.2 17.4 196.7 51.2 EPS (UBS) -6.0 87.6 16.7 10.8 139.1 8.9 Cash EPS -5.6 82.0 24.8 9.3 136.3 8.3 Net DPS - - - - - -2.2 BVPS 10.3 95.4 45.0 42.3 9.6 9.9



Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - 6.3 - - 4.9 5.0 Dividend cover (UBS EPS) - - - - 4.1 4.6 Div. payout ratio (%, UBS EPS) - - - - 24.2 21.7 Net debt / EBITDA 0.7 0.4 1.1 6.1 4.4 3.1

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - 1.0 1.0 0.7 0.7 0.8 Revenue / fixed assets - NM NM NM NM NM Revenue / net working capital - 1.1 1.3 1.0 1.0 1.3

Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT - 1.1 1.1 NM NM 0.4 Capex / revenue (%) - 0.0 0.0 0.8 2.1 1.4 Capex / depreciation - 0.0 0.0 0.9 1.8 1.9

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity 17.6 3.6 11.3 43.2 82.4 74.2 Net debt / (net debt + equity) 12.4 3.4 10.3 33.2 48.8 47.1 Net debt (core) / EV - 4.1 2.6 30.3 53.0 58.3


UBS 132

JHSF Participacoes SA

Income statement (R$m) - - - 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues - - - 134.60 281.06 * * * * * * Operating expenses (ex depn) - - - (71.40) (162.18) * * * * * * EBITDA (UBS) - - - 63.20 118.88 * * * * * * Depreciation - - - (1.90) (16.12) * * * * * * Operating income (EBIT, UBS) - - - 61.30 102.76 * * * * * * Other income & associates - - - 0.00 (31.33) * - * - * - Net interest - - - 0.10 (2.91) * * * - * * Abnormal items (pre-tax) - - - 0.00 0.00 * - * - * - Profit before tax - - - 61.40 68.52 * * * * * * Tax - - - (11.10) (11.85) * * * * * * Profit after tax - - - 50.30 56.67 * * * * * * Abnormal items (post-tax) - - - 0.00 36.33 * * * * * * Minorities / pref dividends - - - (14.00) (9.77) * - * - * - Net income (local GAAP) - - - 36.30 83.23 * * * * * * Net Income (UBS) - - - 36.30 46.91 * * * * * * Tax rate (%) - - - 18.08 17.29 * * * * * * Pre-abnormal tax rate (%) - - - 18.08 17.29 * * * * * * Per share (R$) - - - 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) - - - 0.09 0.20 * * * * * * EPS (UBS) - - - 0.09 0.11 * * * * * * Net DPS - - - 0.00 0.01 * * * * * * Cash EPS - - - 0.10 0.15 * * * * * * BVPS - - - 0.26 1.84 * * * * * * Balance sheet (R$m) - - - 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents - - - 75.80 169.04 * * * * * * Other current assets - - - 129.50 398.21 * * * * * * Total current assets - - - 205.30 567.25 * * * * * * Net tangible fixed assets - - - 246.20 333.48 * * * * * * Net intangible fixed assets - - - 8.60 60.55 * * * * * * Investments / other assets - - - 6.30 212.93 * * * * * * Total assets - - - 466.40 1,174.21 * * * * * * Trade payables & other ST liabilities - - - 240.30 176.34 * * * * * * Short term debt - - - 8.20 8.61 * * * * * * Total current liabilities - - - 248.50 184.95 * * * * * * Long term debt - - - 1.00 120.15 * * * * * * Other long term liabilities - - - 54.50 70.50 * * * * * * Total liabilities - - - 304.00 375.60 * * * * * * Equity & minority interests - - - 162.40 798.61 * * * * * * Total liabilities & equity - - - 466.40 1,174.21 * * * * * * Cash flow (R$m) - - - 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income - - - 36.30 83.23 * * * * * * Depreciation - - - 1.90 16.12 * * * * * * Net change in working capital - - - 0.00 (90.47) * * * * * * Other (operating) - - - 0.00 0.00 * - * - * - Net cash from operations - - - 38.20 8.89 * * * * * * Capital expenditure - - - 0.00 (41.30) * * * * * * Net (acquisitions) / disposals - - - 0.00 0.00 * - * - * - Other changes in investments - - - 0.00 0.00 * - * - * - Cash from investing activities - - - 0.00 (41.30) * * * * * * Increase/(decrease) in debt - - - 0.00 (9.33) * - * - * - Share issues / (repurchases) - - - 0.00 0.00 * - * - * - Dividends paid - - - 0.00 (3.91) * * * * * * Other cash from financing - - - 0.00 0.00 * - * - * - Cash from financing activities - - - 0.00 (13.25) * - * - * * Cash flow chge in cash & equivalents - - - 38.20 (45.65) * - * - * - FX / non cash items - - - - 138.90 * - * * * * Bal sheet chge in cash & equivalents - - - - 93.24 * - * - * - Core EBITDA - - - 63.20 118.88 * * * * * * Maintenance capital expenditure - - - 0.00 (41.30) * * * * * * Maintenance net working capital - - - 0.00 (90.47) * * * * * * Operating free cash flow, pre-tax

- - - 63.20 (12.89) * * * - * *


UBS 133


Home Construction


12m price target -

Company profile JHSF is one of the leading real estate developers in Brazil, focusing historically on the development of high-end and luxury residentialprojects, as well as shopping malls. More recently, in 2007, thecompany entered the luxury hotel business with the acquisition of theFasano brand, further developing the concept of mixed-used real estate projects. During its 34 years of experience in the industry,JHSF has developed a unique expertise in the real estate market,having built over six million square meters throughout its history.


12/06 12/07 12/08 12/09E 12/10E0.0x

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Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)34.0%

36.0%

38.0%

40.0%

42.0%

44.0%

46.0%

30.80%

31.00%

31.20%

31.40%

31.60%

31.80%

32.00%

32.20%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)9.80%

10.00%

10.20%

10.40%

10.60%

10.80%

11.00%

11.20%

4.2x

4.4x

4.6x

4.8x

5.0x

5.2x

5.4x

5.6x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)50

100

150

200

250

300

18.60%

18.80%

19.00%

19.20%

19.40%

19.60%

19.80%

20.00%


JHSF Participacoes SA

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - - 47.7 * * * P/E (UBS) - - NM * * * P/CEPS - - 63.1 * * * Net dividend yield (%) - - 0.1 * * * P/BV - - 5.1 * * * EV/revenue (core) - - NM * * * EV/EBITDA (core) - - 32.5 * * * EV/EBIT (core) - - NM * * * EV/OpFCF (core) - - NM * * * EV/op. invested capital - - NM * * *

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap - 3,903.18 * * * + minority interests - 15.03 * * * + average net debt (cash) - (53.44) * * * + pension obligations and other 0.00 0.00 * * * - non-core asset value 0.00 0.00 * * * Core enterprise value - 3,864.77 * * * Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - - 108.8 * * * EBITDA (UBS) - - 88.1 * * * EBIT (UBS) - - 67.6 * * * EPS (UBS) - - 19.3 * * * Cash EPS - - 52.4 * * * Net DPS - - - * * * BVPS - - NM * * *


Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) - - 31.7 * * * ROIC post tax - - 26.2 * * * Net ROE - - 10.6 * * *

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - 24.6 * - - Dividend cover (UBS EPS) - - 12.0 * * * Div. payout ratio (%, UBS EPS) - - 8.3 * * * Net debt / EBITDA - NM NM * * *

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - - 0.9 * * * Revenue / fixed assets - - 0.9 * * * Revenue / net working capital - - 5.1 * * *

Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT - 1.0 NM * * * Capex / revenue (%) - 0.0 14.7 * * * Capex / depreciation - 0.0 2.6 * * *

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - (41.0) (5.0) * * * Net debt / (net debt + equity) - NM (5.4) * * * Net debt (core) / EV - - (1.4) * * *



UBS 134

MRV Engenharia e Participacoes SA

Income statement (R$m) - - 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues - - - 92.48 384.12 1,081.34 181.5 1,825.08 68.8 2,569.83 40.8 Operating expenses (ex depn) - - - (75.89) (299.96) (823.96) 174.7 (1,441.93) 75.0 (2,143.33) 48.6 EBITDA (UBS) - - - 16.59 84.16 257.38 205.8 383.15 48.9 426.50 11.3 Depreciation - - - (0.18) (0.28) 0.00 - 0.00 - 0.00 - Operating income (EBIT, UBS) - - - 16.41 83.88 257.38 206.8 383.15 48.9 426.50 11.3 Other income & associates - - - 0.99 (53.00) 0.00 - 0.00 - 0.00 - Net interest - - - (3.07) 36.68 40.84 11.4 (3.83) - 3.34 - Abnormal items (pre-tax) - - - 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax - - - 14.33 67.56 298.22 341.4 379.32 27.2 429.84 13.3 Tax - - - (1.42) (23.86) (52.33) 119.4 (73.33) 40.1 (101.30) 38.1 Profit after tax - - - 12.91 43.71 245.89 462.6 305.99 24.4 328.54 7.4 Abnormal items (post-tax) - - - 0.00 58.32 0.00 - 0.00 - 0.00 - Minorities / pref dividends - - - 0.00 (0.91) (12.67) 1297.1 (1.36) -89.2 (4.81) 253.0 Net income (local GAAP) - - - 12.91 101.12 233.22 130.6 304.63 30.6 323.73 6.3 Net Income (UBS) - - - 12.91 42.80 233.22 444.9 304.63 30.6 323.73 6.3 Tax rate (%) - - 0.00 9.89 35.31 17.55 -50.3 19.33 10.2 23.57 21.9 Pre-abnormal tax rate (%) - - 0.00 9.89 35.31 17.55 -50.3 19.33 10.2 23.57 21.9 Per share (R$) - - 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) - - - 0.10 0.74 1.71 130.6 2.24 30.6 2.38 6.3 EPS (UBS) - - - 0.10 0.31 1.71 444.9 2.24 30.6 2.38 6.3 Net DPS - - - 0.00 0.00 0.00 - 0.46 - 0.63 35.8 Cash EPS - - - 0.10 0.32 1.71 441.4 2.24 30.6 2.38 6.3 BVPS - - - 0.73 10.16 11.89 17.0 13.67 15.0 15.42 12.8 Balance sheet (R$m) - - 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents - - - 9.37 606.13 205.16 -66.2 297.25 44.9 986.66 231.9 Other current assets - - - 304.52 1,051.58 1,990.13 89.3 2,258.42 13.5 2,039.76 -9.7 Total current assets - - - 313.89 1,657.71 2,195.29 32.4 2,555.67 16.4 3,026.42 18.4 Net tangible fixed assets - - - 2.11 13.84 43.71 215.8 51.10 16.9 58.83 15.1 Net intangible fixed assets - - - 0.00 0.00 0.00 - 0.00 - 0.00 - Investments / other assets - - 0.00 64.09 233.05 495.23 112.5 550.32 11.1 523.64 -4.8 Total assets - - - 380.09 1,904.60 2,734.23 43.6 3,157.09 15.5 3,608.89 14.3 Trade payables & other ST liabilities - - - 143.09 416.78 515.40 23.7 433.44 -15.9 423.27 -2.3 Short term debt - - - 47.60 15.35 0.00 - 72.05 - 115.54 60.4 Total current liabilities - - - 190.69 432.12 515.40 19.3 505.50 -1.9 538.81 6.6 Long term debt - - - 17.39 7.09 399.67 5535.6 590.21 47.7 764.17 29.5 Other long term liabilities - - - 74.63 75.11 130.69 74.0 129.69 -0.8 130.88 0.9 Total liabilities - - - 282.71 514.33 1,045.77 103.3 1,225.39 17.2 1,433.87 17.0 Equity & minority interests - - - 97.39 1,390.27 1,688.47 21.4 1,931.70 14.4 2,175.02 12.6 Total liabilities & equity - - - 380.09 1,904.60 2,734.23 43.6 3,157.09 15.5 3,608.89 14.3 Cash flow (R$m) - - 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income - - - 12.91 101.12 233.22 130.6 304.63 30.6 323.73 6.3 Depreciation - - - 0.18 0.28 0.00 - 0.00 - 0.00 - Net change in working capital - - - 0.00 0.00 (188.64) - (406.34) 115.4 236.37 - Other (operating) - - - 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations - - - 13.09 101.40 44.59 -56.0 (101.72) - 560.09 - Capital expenditure - - - 0.00 0.00 (1.78) - (7.38) 314.0 (7.73) 4.7 Net (acquisitions) / disposals - - - 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments - - - 0.00 0.00 (0.33) - (1.36) - 10.91 - Cash from investing activities - - - 0.00 0.00 (2.11) - (8.75) 314.5 3.18 - Increase/(decrease) in debt - - - 0.00 0.00 54.14 - 262.59 - 217.46 - Share issues / (repurchases) - - - 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid - - - 0.00 0.00 0.00 - (62.76) - (85.22) 35.8 Other cash from financing - - - 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities - - - 0.00 0.00 54.14 - 199.83 269.1 132.23 -33.8 Cash flow chge in cash & equivalents - - - 13.09 101.40 96.62 - 89.37 - 695.50 - FX / non cash items - - - - 495.37 (497.60) - 2.73 - (6.10) - Bal sheet chge in cash & equivalents - - - - 596.76 (400.98) - 92.09 - 689.41 - Core EBITDA - - - 16.59 84.16 257.38 205.8 383.15 48.9 426.50 11.3 Maintenance capital expenditure - - - 0.00 0.00 (1.78) - (7.38) 314.0 (7.73) 4.7 Maintenance net working capital - - - 0.00 0.00 (188.64) - (406.34) 115.4 236.37 - Operating free cash flow, pre-tax

- - - 16.59 84.16 66.96 -20.4 (30.58) - 655.13 -


UBS 135


Home Construction



Company profile MRV is the largest low-income residential developer in terms of unitsdeveloped and cities present. Founded in 1979 by Mário Menin,Rubens Souza, and Vega Engenharia, MRV has passed throughownership changes until the recently announced partnership withAutonomy (a London-based hedge fund) in January 2007. MRVoperates in every stage of a typical development-land acquisition, development, construction, and sales.


12/06 12/07 12/08 12/09E 12/10E0.0x

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6.00x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)14.0%

16.0%

18.0%

20.0%

22.0%

24.0%

17.00%

17.50%

18.00%

18.50%

19.00%

19.50%

20.00%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)0.0%

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Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)0

500

1000

1500

2000

2500

3000

0.0%

5.0%

10.0%

15.0%

20.0%

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30.0%

35.0%



MRV Engenharia e Participacoes SA

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - - 45.5 5.5 4.2 4.0 P/E (UBS) - - NM 5.5 4.2 4.0 P/CEPS - - NM 5.5 4.2 4.0 Net dividend yield (%) - - 0.0 0.0 4.9 6.6 P/BV - - 3.3 0.8 0.7 0.6 EV/revenue (core) - - NM 1.1 0.9 0.6 EV/EBITDA (core) - - 51.2 4.5 4.3 3.5 EV/EBIT (core) - - NM 4.5 4.3 3.5 EV/OpFCF (core) - - NM 17.4 NM 2.3 EV/op. invested capital - - 9.0 0.9 0.8 0.7

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap - 4,567.49 1,285.26 1,285.26 1,285.26 + minority interests 0.00 8.40 71.65 71.65 71.65 + average net debt (cash) 55.61 (264.04) (194.59) 279.76 129.04 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 0.00 0.00 0.00 0.00 Core enterprise value - 4,311.85 1,162.32 1,636.67 1,485.94 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - - NM 181.5 68.8 40.8 EBITDA (UBS) - - NM NM 48.9 11.3 EBIT (UBS) - - NM NM 48.9 11.3 EPS (UBS) - - NM NM 30.6 6.3 Cash EPS - - NM NM 30.6 6.3 Net DPS - - - - - 35.8 BVPS - - NM 17.0 15.0 12.8



Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - 5.3 - - NM - Dividend cover (UBS EPS) - - - - 4.9 3.8 Div. payout ratio (%, UBS EPS) - - - - 20.6 26.3 Net debt / EBITDA - 3.4 NM 0.8 1.0 NM

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - - 0.8 0.8 0.9 1.2 Revenue / fixed assets - - NM NM NM NM Revenue / net working capital - - 1.0 1.0 1.1 1.5

Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT - 1.0 1.0 0.3 NM 1.5 Capex / revenue (%) - 0.0 0.0 0.2 0.4 0.3 Capex / depreciation - 0.0 0.0 - - -

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - 57.1 (42.0) 11.5 18.9 (4.9) Net debt / (net debt + equity) - 36.3 (73.1) 10.7 16.4 (5.4) Net debt (core) / EV - - (6.1) (16.7) 17.1 8.7


UBS 136

PDG Realty

Income statement (R$m) - - 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues - - 82.64 198.36 552.02 1,236.51 124.0 2,417.80 95.5 2,844.96 17.7 Operating expenses (ex depn) - - (58.13) (144.54) (424.06) (923.67) 117.8 (1,853.67) 100.7 (2,222.55) 19.9 EBITDA (UBS) - - 24.51 53.83 127.96 312.84 144.5 564.13 80.3 622.41 10.3 Depreciation - - 0.00 (0.45) (26.95) (29.85) 10.8 (49.05) 64.4 (46.20) -5.8 Operating income (EBIT, UBS) - - 24.51 53.38 101.01 282.99 180.2 515.08 82.0 576.21 11.9 Other income & associates - - 0.00 0.00 74.53 32.07 -57.0 6.14 -80.8 6.24 1.6 Net interest - - (0.31) (0.89) (18.50) 15.25 - (6.73) - 34.10 - Abnormal items (pre-tax) - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax - - 24.21 52.49 157.04 330.31 110.3 514.50 55.8 616.56 19.8 Tax - - (2.99) (7.14) (19.06) (42.65) 123.8 (68.87) 61.5 (102.41) 48.7 Profit after tax - - 21.22 45.35 137.98 287.66 108.5 445.63 54.9 514.15 15.4 Abnormal items (post-tax) - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends - - (0.39) (1.75) (18.11) (43.33) 139.2 (66.48) 53.4 (47.46) -28.6 Net income (local GAAP) - - 20.83 43.60 119.87 244.33 103.8 379.15 55.2 466.69 23.1 Net Income (UBS) - - 20.83 43.60 119.87 244.33 103.8 379.15 55.2 466.69 23.1 Tax rate (%) - - 12.34 13.60 12.14 12.91 6.4 13.39 3.7 16.61 24.1 Pre-abnormal tax rate (%) - - 12.34 13.60 12.14 12.91 6.4 13.39 3.7 16.61 24.1 Per share (R$) - - 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) - - 0.19 0.39 0.82 1.67 103.8 2.60 55.2 3.20 23.1 EPS (UBS) - - 0.19 0.39 0.82 1.67 103.8 2.60 55.2 3.20 23.1 Net DPS - - 0.00 0.00 0.00 0.12 - 0.49 315.7 0.82 66.4 Cash EPS - - 0.19 0.40 1.01 1.88 86.8 2.93 56.2 3.51 19.8 BVPS - - - 2.32 9.24 10.65 15.3 12.72 19.4 15.05 18.4 Balance sheet (R$m) - - 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents - - - 37.94 721.76 323.52 -55.2 727.62 124.9 2,043.22 180.8 Other current assets - - - 330.71 1,232.43 1,755.24 42.4 2,049.58 16.8 1,631.05 -20.4 Total current assets - - - 368.64 1,954.18 2,078.76 6.4 2,777.20 33.6 3,674.27 32.3 Net tangible fixed assets - - - 0.90 4.99 33.16 564.9 87.84 164.9 145.09 65.2 Net intangible fixed assets - - - 1.24 8.82 271.80 2982.7 225.80 -16.9 182.80 -19.0 Investments / other assets - - 0.00 148.27 595.06 871.85 46.5 1,002.82 15.0 791.72 -21.1 Total assets - - - 519.04 2,563.05 3,255.56 27.0 4,093.65 25.7 4,793.88 17.1 Trade payables & other ST liabilities - - - 79.16 439.94 535.35 21.7 554.19 3.5 560.69 1.2 Short term debt - - - 60.34 145.71 107.37 -26.3 197.51 84.0 258.28 30.8 Total current liabilities - - - 139.51 585.65 642.72 9.7 751.70 17.0 818.97 8.9 Long term debt - - - 52.41 345.17 686.49 98.9 1,047.06 52.5 1,290.12 23.2 Other long term liabilities - - - 65.70 227.90 190.30 -16.5 191.19 0.5 192.75 0.8 Total liabilities - - - 257.62 1,158.72 1,519.51 31.1 1,989.95 31.0 2,301.83 15.7 Equity & minority interests - - - 261.42 1,404.33 1,736.05 23.6 2,103.71 21.2 2,492.05 18.5 Total liabilities & equity - - - 519.04 2,563.05 3,255.56 27.0 4,093.65 25.7 4,793.88 17.1 Cash flow (R$m) - - 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income - - 20.83 43.60 119.87 244.33 103.8 379.15 55.2 466.69 23.1 Depreciation - - 0.00 0.45 26.95 29.85 10.8 49.05 64.4 46.20 -5.8 Net change in working capital - - 0.00 0.00 0.00 (113.71) - (405.58) 256.7 637.69 - Other (operating) - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations - - 20.83 44.05 146.81 160.46 9.3 22.62 -85.9 1,150.58 4986.6 Capital expenditure - - 0.00 0.00 0.00 (13.95) - (57.73) 314.0 (60.46) 4.7 Net (acquisitions) / disposals - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments - - 0.00 0.00 0.00 15.20 - (49.47) - (257.75) - Cash from investing activities - - 0.00 0.00 0.00 1.26 - (107.20) - (318.21) 196.8 Increase/(decrease) in debt - - 0.00 0.00 0.00 52.19 - 450.71 - 303.82 - Share issues / (repurchases) - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid - - 0.00 0.00 0.00 (17.28) - (71.83) 315.7 (119.56) 66.4 Other cash from financing - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities - - 0.00 0.00 0.00 34.91 - 378.88 985.4 184.26 -51.4 Cash flow chge in cash & equivalents - - 20.83 44.05 146.81 196.63 - 294.30 - 1,016.63 - FX / non cash items - - - - 537.01 (594.87) - 109.81 - 298.96 172.3 Bal sheet chge in cash & equivalents - - - - 683.82 (398.24) - 404.10 - 1,315.59 - Core EBITDA - - 24.51 53.83 127.96 312.84 144.5 564.13 80.3 622.41 10.3 Maintenance capital expenditure - - 0.00 0.00 0.00 (13.95) - (57.73) 314.0 (60.46) 4.7 Maintenance net working capital - - 0.00 0.00 0.00 (113.71) - (405.58) 256.7 637.69 - Operating free cash flow, pre-tax

- - 24.51 53.83 127.96 185.18 44.7 100.82 -45.6 1,199.64 1089.9


UBS 137


Building Materials



Company profile Through co-development and private equity activities, we think PDGoffers perhaps the most diversified exposure to Brazil's residentialsector. This diversification spans product (residential, retail), pricepoint (from low-income to luxury), and geography.


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Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)16.0%

18.0%

20.0%

22.0%

24.0%

26.0%

28.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

24.0%

26.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)12.0%

14.0%

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18.0%

20.0%

22.0%

24.0%

0.0x

0.5x

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Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)0

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0%

20%

40%

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80%

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120%



PDG Realty


Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap - 2,364.22 1,471.73 1,471.73 1,471.73 + minority interests - 54.66 180.51 246.99 294.45 + average net debt (cash) 74.82 (78.03) 119.73 493.65 11.07 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 (21.66) (23.77) 0.00 0.00 Core enterprise value - 2,319.20 1,748.21 2,212.37 1,777.24 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - 140.0 178.3 124.0 95.5 17.7 EBITDA (UBS) - 119.6 137.7 144.5 80.3 10.3 EBIT (UBS) - 117.8 89.2 180.2 82.0 11.9 EPS (UBS) - 109.4 108.3 103.8 55.2 23.1 Cash EPS - 111.5 152.6 86.8 56.2 19.8 Net DPS - - - - NM 66.4 BVPS - - NM 15.3 19.4 18.4



Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - NM 6.6 - NM - Dividend cover (UBS EPS) - - - 14.1 5.3 3.9 Div. payout ratio (%, UBS EPS) - - - 7.1 18.9 25.6 Net debt / EBITDA - 1.4 NM 1.5 0.9 NM

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - - 0.9 0.8 1.0 1.2 Revenue / fixed assets - - NM 7.8 7.8 8.9 Revenue / net working capital - - 1.1 1.2 1.8 2.2


Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - 28.6 (16.4) 27.1 24.6 (19.9) Net debt / (net debt + equity) - 22.6 (20.6) 23.2 21.8 (29.1) Net debt (core) / EV - - (3.4) 6.8 22.3 0.6


UBS 138

Rossi Residencial

Income statement (R$m) 12/03 12/04 12/05 12/06 12/10 12/08E % ch 12/09E % ch 12/10E % ch Revenues - - 361.48 411.26 732.88 1,136.31 55.0 1,855.38 63.3 2,183.59 17.7 Operating expenses (ex depn) - - (323.52) (366.86) (608.11) (1,031.29) 69.6 (1,588.63) 54.0 (1,812.67) 14.1 EBITDA (UBS) - - 37.96 44.40 124.77 105.03 -15.8 266.76 154.0 370.92 39.0 Depreciation - - (1.42) (0.87) (1.33) (2.04) 54.0 (2.59) 26.7 (2.71) 4.7 Operating income (EBIT, UBS) - - 36.55 43.53 123.44 102.99 -16.6 264.17 156.5 368.21 39.4 Other income & associates - - 0.00 0.00 (4.15) (3.79) -8.6 0.00 - 0.00 - Net interest - - (13.11) 54.39 38.83 27.56 -29.0 4.79 -82.6 3.63 -24.3 Abnormal items (pre-tax) - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax - - 23.43 97.92 158.12 126.75 -19.8 268.96 112.2 371.84 38.3 Tax - - (1.73) (2.10) (25.89) (17.92) -30.8 (33.34) 86.0 (56.65) 69.9 Profit after tax - - 21.70 95.82 132.23 108.83 -17.7 235.63 116.5 315.19 33.8 Abnormal items (post-tax) - - 2.99 (85.87) 2.64 0.98 -62.7 0.00 - 0.00 - Minorities / pref dividends - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net income (local GAAP) - - 24.69 9.95 134.87 109.81 -18.6 235.63 114.6 315.19 33.8 Net Income (UBS) - - 21.70 95.82 132.23 108.83 -17.7 235.63 116.5 315.19 33.8 Tax rate (%) 0.00 0.00 7.38 2.15 16.37 14.14 -13.6 12.39 -12.4 15.23 22.9 Pre-abnormal tax rate (%) 0.00 0.00 7.38 2.15 16.37 14.14 -13.6 12.39 -12.4 15.23 22.9 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) - - 0.51 0.09 0.70 0.57 -18.6 1.23 114.6 1.64 33.8 EPS (UBS) - - 0.45 0.87 0.69 0.57 -17.7 1.23 116.5 1.64 33.8 Net DPS - - 0.00 0.00 0.00 0.00 - 0.22 - 0.39 81.5 Cash EPS - - 0.48 0.87 0.69 0.58 -17.0 1.24 114.9 1.65 33.5 BVPS - - 6.05 9.76 6.09 7.02 15.1 8.02 14.4 9.27 15.5 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents - - 17.88 328.69 255.87 263.18 2.9 393.60 49.6 630.68 60.2 Other current assets - - 524.90 818.12 1,327.77 1,886.78 42.1 1,768.88 -6.2 1,745.12 -1.3 Total current assets - - 542.78 1,146.81 1,583.64 2,149.95 35.8 2,162.48 0.6 2,375.80 9.9 Net tangible fixed assets - - 1.76 2.52 2.22 3.98 79.1 4.22 6.1 4.48 6.0 Net intangible fixed assets - - 1.68 2.77 3.64 4.95 36.1 4.95 0.0 4.95 0.0 Investments / other assets 0.00 0.00 247.66 338.27 634.28 804.13 26.8 1,287.02 60.1 1,500.53 16.6 Total assets - - 793.88 1,490.37 2,223.78 2,963.02 33.2 3,458.67 16.7 3,885.75 12.3 Trade payables & other ST liabilities - - 193.94 208.95 335.71 478.90 42.7 385.26 -19.6 382.47 -0.7 Short term debt - - 121.94 89.33 116.12 67.35 -42.0 172.85 156.6 220.49 27.6 Total current liabilities - - 315.88 298.28 451.83 546.25 20.9 558.11 2.2 602.95 8.0 Long term debt - - 18.64 37.28 364.59 780.25 114.0 1,125.52 44.3 1,268.70 12.7 Other long term liabilities - - 128.36 75.13 236.03 288.13 22.1 232.84 -19.2 232.61 -0.1 Total liabilities - - 462.88 410.69 1,052.45 1,614.63 53.4 1,916.48 18.7 2,104.26 9.8 Equity & minority interests - - 331.00 1,079.68 1,171.33 1,348.39 15.1 1,542.20 14.4 1,781.49 15.5 Total liabilities & equity - - 793.88 1,490.37 2,223.78 2,963.02 33.2 3,458.67 16.7 3,885.75 12.3 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income - - 24.69 9.95 134.87 109.81 -18.6 235.63 114.6 315.19 33.8 Depreciation - - 1.42 0.87 1.33 2.04 54.0 2.59 26.7 2.71 4.7 Net change in working capital - - 0.00 0.00 0.00 (150.44) - (513.91) 241.6 (192.77) -62.5 Other (operating) - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations - - 26.11 10.81 136.19 (38.59) - (275.70) 614.5 125.13 - Capital expenditure - - 0.00 0.00 0.00 (0.68) - (2.83) 314.0 (2.96) 4.7 Net (acquisitions) / disposals - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities - - 0.00 0.00 0.00 (0.68) - (2.83) 314.0 (2.96) 4.7 Increase/(decrease) in debt - - 0.00 0.00 0.00 67.68 - 450.77 - 190.81 - Share issues / (repurchases) - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid - - 0.00 0.00 0.00 0.00 - (41.83) - (75.89) 81.5 Other cash from financing - - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities - - 0.00 0.00 0.00 67.68 - 408.95 504.2 114.91 -71.9 Cash flow chge in cash & equivalents - - 26.11 10.81 136.19 28.41 - 130.42 - 237.08 - FX / non cash items - - - 300.00 (209.02) (21.10) -43.1 0.00 - 0.00 - Bal sheet chge in cash & equivalents - - - 310.81 (72.83) 7.31 - 130.42 - 237.08 - Core EBITDA - - 37.96 44.40 124.77 105.03 -15.8 266.76 154.0 370.92 39.0 Maintenance capital expenditure - - 0.00 0.00 0.00 (0.68) - (2.83) 314.0 (2.96) 4.7 Maintenance net working capital - - 0.00 0.00 0.00 (150.44) - (513.91) 241.6 (192.77) -62.5 Operating free cash flow, pre-tax

- - 37.96 44.40 124.77 (46.09) - (249.99) 442.4 175.19 -


UBS 139


Home Construction



Company profile Rossi Residencial is one of the largest homebuilders in Brazil. Thecompany holds regional offices in São Paulo, Rio de Janeiro, PortoAlegre, Campinas, Belo Horizonte, and Salvador (Northeast office), and actively operates in 37 cities across the country. The company'smain focus is the middle/low-middle residential segment, alreadyresponsible for over 75% of Rossi’s land bank position.


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

30.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)0

500

1000

1500

2000

2500

-50%

0%

50%

100%

150%



Rossi Residencial

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - NM 27.5 5.8 2.7 2.0 P/E (UBS) - 13.6 28.1 5.9 2.7 2.0 P/CEPS - 13.5 27.8 5.8 2.7 2.0 Net dividend yield (%) - 0.0 0.0 0.0 6.5 11.8 P/BV - 1.2 3.2 0.5 0.4 0.4 EV/revenue (core) - 4.3 4.1 0.8 0.7 0.6 EV/EBITDA (core) - 39.4 24.3 8.9 4.8 3.8 EV/EBIT (core) - NM 24.5 9.0 4.8 3.8 EV/OpFCF (core) - NM 24.3 NM NM 8.0 EV/op. invested capital - 2.7 2.7 0.6 0.6 0.6

Enterprise value (R$m) 12/06 12/07 12/09E 12/09E 12/10E Average market cap 1,789.68 3,018.86 526.73 526.73 526.73 + minority interests 0.00 0.00 0.00 0.00 0.00 + average net debt (cash) (39.69) 11.38 404.63 744.60 881.64 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 0.00 0.00 0.00 0.00 Core enterprise value 1,749.99 3,030.24 931.37 1,271.33 1,408.37 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - 13.8 78.2 55.0 63.3 17.7 EBITDA (UBS) - 16.9 181.0 -15.8 154.0 39.0 EBIT (UBS) - 19.1 183.6 -16.6 156.5 39.4 EPS (UBS) - 92.9 -20.5 -17.7 116.5 33.8 Cash EPS - 82.7 -20.5 -17.0 114.9 33.5 Net DPS - - - - - 81.5 BVPS - 61.2 -37.5 15.1 14.4 15.5



Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - - - - - Dividend cover (UBS EPS) - - - - 5.6 4.2 Div. payout ratio (%, UBS EPS) - - - - 17.8 24.1 Net debt / EBITDA - NM 1.8 5.6 3.4 2.3

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - 0.6 0.7 0.7 0.9 0.9 Revenue / fixed assets - NM NM NM NM NM Revenue / net working capital - 0.9 0.9 0.9 1.3 1.6

Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT - 1.0 1.0 NM NM 0.5 Capex / revenue (%) - 0.0 0.0 0.1 0.2 0.1 Capex / depreciation - 0.0 0.0 0.3 1.1 1.1

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - (18.7) 19.2 43.3 58.7 48.2 Net debt / (net debt + equity) - (23.0) 16.1 30.2 37.0 32.5 Net debt (core) / EV - (2.3) 0.4 43.4 58.6 62.6



UBS 140

Tecnisa

Income statement (R$m) - - 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues - - 143.43 202.98 338.20 * * * * * * Operating expenses (ex depn) - - (113.49) (156.11) (275.70) * * * * * * EBITDA (UBS) - - 29.94 46.87 62.50 * * * * * * Depreciation - - (0.46) (0.35) 0.99 * - * * * * Operating income (EBIT, UBS) - - 29.48 46.52 63.49 * * * * * * Other income & associates - - 0.00 0.00 0.00 * - * - * - Net interest - - 0.53 1.61 19.72 * * * * * - Abnormal items (pre-tax) - - 0.00 0.00 0.00 * - * - * - Profit before tax - - 30.01 48.14 83.21 * * * * * * Tax - - (3.39) (8.82) (9.50) * * * * * * Profit after tax - - 26.62 39.32 73.72 * * * * * * Abnormal items (post-tax) - - 0.00 0.00 39.01 * - * - * - Minorities / pref dividends - - (1.31) (4.70) (2.19) * * * * * * Net income (local GAAP) - - 25.31 34.62 110.53 * * * * * * Net Income (UBS) - - 25.31 34.62 71.52 * * * * * * Tax rate (%) - - 11.29 18.32 11.41 * * * * * * Pre-abnormal tax rate (%) - - 11.29 18.32 11.41 * * * * * * Per share (R$) - - 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) - - 0.25 0.35 0.76 * * * * * * EPS (UBS) - - 0.25 0.35 0.49 * * * * * * Net DPS - - 0.00 0.00 0.00 * - * * * * Cash EPS - - 0.26 0.35 0.48 * * * * * * BVPS - - 0.00 0.00 5.27 * * * * * * Balance sheet (R$m) - - 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents - - 0.00 0.00 71.05 * * * * * * Other current assets - - 0.00 0.00 812.81 * * * * * * Total current assets - - 0.00 0.00 883.86 * * * * * * Net tangible fixed assets - - 0.00 0.00 5.46 * * * * * * Net intangible fixed assets - - 0.00 0.00 0.68 * * * * * * Investments / other assets - - 0.00 0.00 231.95 * * * * * * Total assets - - 0.00 0.00 1,121.94 * * * * * * Trade payables & other ST liabilities - - 0.00 0.00 132.09 * * * * * * Short term debt - - 0.00 0.00 58.87 * * * * * * Total current liabilities - - 0.00 0.00 190.96 * * * * * * Long term debt - - 0.00 0.00 20.39 * * * * * * Other long term liabilities - - 0.00 0.00 129.99 * * * * * * Total liabilities - - 0.00 0.00 341.34 * * * * * * Equity & minority interests - - 0.00 0.00 780.60 * * * * * * Total liabilities & equity - - 0.00 0.00 1,121.94 * * * * * * Cash flow (R$m) - - 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income - - 25.31 34.62 110.53 * * * * * * Depreciation - - 0.46 0.35 (0.99) * - * * * * Net change in working capital - - 0.00 0.00 0.00 * - * * * * Other (operating) - - 0.00 0.00 0.00 * - * - * - Net cash from operations - - 25.77 34.96 109.54 * - * * * * Capital expenditure - - 0.00 0.00 0.00 * - * * * * Net (acquisitions) / disposals - - 0.00 0.00 0.00 * - * - * - Other changes in investments - - 0.00 0.00 0.00 * - * - * - Cash from investing activities - - 0.00 0.00 0.00 * - * * * * Increase/(decrease) in debt - - 0.00 0.00 0.00 * - * - * - Share issues / (repurchases) - - 0.00 0.00 0.00 * - * - * - Dividends paid - - 0.00 0.00 0.00 * - * * * * Other cash from financing - - 0.00 0.00 0.00 * - * - * - Cash from financing activities - - 0.00 0.00 0.00 * - * * * * Cash flow chge in cash & equivalents - - 25.77 34.96 109.54 * - * - * - FX / non cash items - - - (34.96) (38.49) * * * * * - Bal sheet chge in cash & equivalents - - - 0.00 71.05 * - * - * - Core EBITDA - - 29.94 46.87 62.50 * * * * * * Maintenance capital expenditure - - 0.00 0.00 0.00 * - * * * * Maintenance net working capital - - 0.00 0.00 0.00 * - * * * * Operating free cash flow, pre-tax

- - 29.94 46.87 62.50 * - * - * -


UBS 141


Real Estate



Company profile


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

30.0x

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)17.00%

18.00%

19.00%

20.00%

21.00%

22.00%

23.00%

16.60%

16.80%

17.00%

17.20%

17.40%

17.60%

17.80%

18.00%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)17.80%

18.00%

18.20%

18.40%

18.60%

18.80%

19.00%

19.20%

1.4x

1.6x

1.8x

2.0x

2.2x

2.4x

2.6x

2.8x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)150

200

250

300

350

35.00%

36.14%

37.29%

38.43%

39.57%

40.71%

41.86%



Tecnisa

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - - 15.1 * * * P/E (UBS) - - 23.3 * * * P/CEPS - - 23.6 * * * Net dividend yield (%) - - 0.0 * * * P/BV - - 2.2 * * * EV/revenue (core) - - 5.0 * * * EV/EBITDA (core) - - 26.8 * * * EV/EBIT (core) - - 26.4 * * * EV/OpFCF (core) - - 26.8 * * * EV/op. invested capital - - 4.6 * * *

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap - 1,658.68 * * * + minority interests 0.00 14.09 * * * + average net debt (cash) 0.00 4.10 * * * + pension obligations and other 0.00 0.00 * * * - non-core asset value 0.00 0.00 * * * Core enterprise value - 1,676.87 * * * Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - 41.5 66.6 * * * EBITDA (UBS) - 56.5 33.3 * * * EBIT (UBS) - 57.8 36.5 * * * EPS (UBS) - 36.8 42.1 * * * Cash EPS - 35.7 38.7 * * * Net DPS - - - - * * BVPS - - - * * *



Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - - - - * Dividend cover (UBS EPS) - - - * * * Div. payout ratio (%, UBS EPS) - - - * * * Net debt / EBITDA - 0.0 0.1 * * *

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - - 0.9 * * * Revenue / fixed assets - - NM * * * Revenue / net working capital - - 1.0 * * *


Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - - 1.1 * * * Net debt / (net debt + equity) - - 1.1 * * * Net debt (core) / EV - - 0.2 * * *



UBS 142

BR Malls Participacoes S. A.

Income statement (R$m) - - - 12/05 12/06 12/07E % ch 12/08E % ch 12/09E % ch Revenues - - - - 95.28 * * * * * * Operating expenses (ex depn) - - - - (36.06) * * * * * * EBITDA (UBS) - - - - 59.23 * * * * * * Depreciation - - - - (14.52) * * * * * * Operating income (EBIT, UBS) - - - - 44.71 * * * * * * Other income & associates - - - - (0.65) * * * - * - Net interest - - - - (1.40) * * * * * * Abnormal items (pre-tax) - - - - 0.00 * - * - * - Profit before tax - - - - 42.66 * - * - * * Tax - - - - (9.42) * * * * * * Profit after tax - - - - 33.24 * - * - * * Abnormal items (post-tax) - - - - 0.00 * - * - * - Minorities / pref dividends - - - - (0.79) * - * - * - Net income (local GAAP) - - - - 32.46 * - * - * * Net Income (UBS) - - - - 32.46 * - * - * * Tax rate (%) - - - 0.00 22.08 * - * - * * Pre-abnormal tax rate (%) - - - 0.00 22.08 * - * - * * Per share (R$) - - - 12/05 12/06 12/07E % ch 12/08E % ch 12/09E % ch EPS (local GAAP) - - - - 0.32 * - * - * * EPS (UBS) - - - - 0.32 * - * - * * Net DPS - - - - - * - * - * * Cash EPS - - - - 0.47 * * * * * * BVPS - - - - 3.62 * * * * * * Balance sheet (R$m) - - - 12/05 12/06 12/07E % ch 12/08E % ch 12/09E % ch Cash and equivalents - - - - 112.22 * * * * * * Other current assets - - - - 37.74 * * * * * * Total current assets - - - - 149.96 * * * * * * Net tangible fixed assets - - - - 166.04 * * * * * * Net intangible fixed assets - - - - 322.35 * * * * * * Investments / other assets - - - 0.00 42.90 * * * * * * Total assets - - - - 681.25 * * * * * * Trade payables & other ST liabilities - - - - 61.25 * * * * * * Short term debt - - - - 25.19 * * * * * * Total current liabilities - - - - 86.44 * * * * * * Long term debt - - - - 39.34 * * * * * * Other long term liabilities - - - - 37.69 * * * * * * Total liabilities - - - - 163.47 * * * * * * Equity & minority interests - - - - 517.78 * * * * * * Total liabilities & equity - - - - 681.25 * * * * * * Cash flow (R$m) - - - 12/05 12/06 12/07E % ch 12/08E % ch 12/09E % ch Net income - - - - 32.46 * - * - * * Depreciation - - - - 14.52 * * * * * * Net change in working capital - - - - - * - * * * * Other (operating) - - - - - * - * - * - Net cash from operations - - - - - * - * - * * Capital expenditure - - - - - * - * * * * Net (acquisitions) / disposals - - - - - * - * - * - Other changes in investments - - - - - * - * - * - Cash from investing activities - - - - - * - * * * * Increase/(decrease) in debt - - - - - * - * - * - Share issues / (repurchases) - - - - - * - * - * - Dividends paid - - - - - * - * - * * Other cash from financing - - - - - * - * - * - Cash from financing activities - - - - - * - * * * * Cash flow chge in cash & equivalents - - - - - * - * - * - FX / non cash items - - - - - * - * - * * Bal sheet chge in cash & equivalents - - - - - * - * - * - Core EBITDA - - - - 59.23 * * * * * * Maintenance capital expenditure - - - - - * - * * * * Maintenance net working capital - - - - - * - * * * * Operating free cash flow, pre-tax

- - - - - * - * * * *


UBS 143


Real Estate



Company profile BR Malls is the result of a partnership started in October 2006between Ecisa and two private equity firms: GP Investments andEquity International Properties (EIP). Through various transactionsannounced since then, BR Malls has managed to become the largestshopping center owner in the industry, both in terms of leasable areaand number of malls under management.


12/06 12/07 12/08 12/09E 12/10E0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x


Profitability

12/05 12/06 12/07(E) 12/08(E) 12/09(E)46.20%

46.40%

46.60%

46.80%

47.00%

47.20%

47.40%

47.60%

EBIT margin (LHS)


12/05 12/06 12/07(E) 12/08(E) 12/09(E)5.40%

5.60%

5.80%

6.00%

6.20%

6.40%

6.60%

6.80%

ROE (LHS)

Growth (UBS EPS)

12/05 12/06 12/07(E) 12/08(E) 12/09(E)94.40

94.60

94.80

95.00

95.20

95.40

95.60

95.80

Revenue (LHS)


BR Malls Participacoes S. A.


Enterprise value (R$m) 12/05 12/06 12/07E 12/08E 12/09E Average market cap - - * * * + minority interests - - * * * + average net debt (cash) - (47.69) * * * + pension obligations and other - - * * * - non-core asset value - - * * * Core enterprise value - - * * * Growth (%) 5Yr Avg 12/05 12/06 12/07E 12/08E 12/09E Revenue - - - * * * EBITDA (UBS) - - - * * * EBIT (UBS) - - - * * * EPS (UBS) - - - - - * Cash EPS - - - * * * Net DPS - - - - - * BVPS - - - * * *

Margins (%) 5Yr Avg 12/05 12/06 12/07E 12/08E 12/09E EBITDA / revenue - - 62.2 * * * EBIT / revenue - - 46.9 * * * Net profit (UBS) / revenue - - 34.1 * * *

Return on capital (%) 5Yr Avg 12/05 12/06 12/07E 12/08E 12/09E EBIT ROIC (UBS) - - - * * * ROIC post tax - - - * * * Net ROE - - 6.3 * * *

Coverage ratios (x) 5Yr Avg 12/05 12/06 12/07E 12/08E 12/09E EBIT / net interest - - NM * * * Dividend cover (UBS EPS) - - - - * * Div. payout ratio (%, UBS EPS) - - - - * * Net debt / EBITDA - - NM * * *

Efficiency ratios (x) 5Yr Avg 12/05 12/06 12/07E 12/08E 12/09E Revenue / op. invested capital - - - * * * Revenue / fixed assets - - - * * * Revenue / net working capital - - - * * *

Investment ratios (x) 5Yr Avg 12/05 12/06 12/07E 12/08E 12/09E OpFCF / EBIT - - - * * * Capex / revenue (%) - - - * * * Capex / depreciation - - - * * *

Capital structure (%) 5Yr Avg 12/05 12/06 12/07E 12/08E 12/09E Net debt / total equity - - (9.2) * * * Net debt / (net debt + equity) - - (10.2) * * * Net debt (core) / EV - - - * * *



UBS 144

Iguatemi

Income statement (R$m) - - - 12/05 12/06 12/07E % ch 12/08E % ch 12/09E % ch Revenues - - - 103.63 119.72 * * * * * * Operating expenses (ex depn) - - - (49.67) (31.43) * * * * * * EBITDA (UBS) - - - 54.17 91.54 * * * * * * Depreciation - - - (16.98) (21.78) * * * * * * Operating income (EBIT, UBS) - - - 37.19 69.75 * * * * * * Other income & associates - - - 11.66 3.00 * - * - * - Net interest - - - (22.64) (8.12) * - * * * - Abnormal items (pre-tax) - - - 0.00 0.00 * - * - * - Profit before tax - - - 26.21 64.64 * * * * * * Tax - - - (5.30) (16.85) * * * * * * Profit after tax - - - 20.91 47.79 * * * * * * Abnormal items (post-tax) - - - 0.00 0.00 * - * - * - Minorities / pref dividends - - - (0.95) (1.23) * * * * * * Net income (local GAAP) - - - 19.95 46.56 * * * * * * Net Income (UBS) - - - 19.95 46.56 * * * * * * Tax rate (%) - - - 20.22 26.06 * * * * * * Pre-abnormal tax rate (%) - - - 20.22 26.06 * * * * * * Per share (R$) - - - 12/05 12/06 12/07E % ch 12/08E % ch 12/09E % ch EPS (local GAAP) - - - 0.33 0.76 * * * * * * EPS (UBS) - - - 0.33 0.76 * * * * * * Net DPS - - - 0.00 0.00 * - * * * * Cash EPS - - - 0.61 1.12 * * * * * * BVPS - - - 4.83 4.32 * * * * * * Balance sheet (R$m) - - - 12/05 12/06 12/07E % ch 12/08E % ch 12/09E % ch Cash and equivalents - - - 42.64 59.28 * * * * * * Other current assets - - - 14.37 22.48 * * * * * * Total current assets - - - 57.01 81.76 * * * * * * Net tangible fixed assets - - - 305.83 380.09 * * * * * * Net intangible fixed assets - - - 2.14 0.08 * * * * * * Investments / other assets - - - 79.75 35.57 * * * * * * Total assets - - - 444.74 497.50 * * * * * * Trade payables & other ST liabilities - - - 44.31 63.76 * * * * * * Short term debt - - - 11.89 23.87 * * * * * * Total current liabilities - - - 56.19 87.62 * * * * * * Long term debt - - - 16.34 52.16 * * * * * * Other long term liabilities - - - 74.31 91.49 * * * * * * Total liabilities - - - 146.84 231.27 * * * * * * Equity & minority interests - - - 297.89 266.23 * * * * * * Total liabilities & equity - - - 444.74 497.50 * * * * * * Cash flow (R$m) - - - 12/05 12/06 12/07E % ch 12/08E % ch 12/09E % ch Net income - - - 19.95 46.56 * * * * * * Depreciation - - - 16.98 21.78 * * * * * * Net change in working capital - - - 0.00 0.00 * - * * * * Other (operating) - - - 0.00 0.00 * - * - * - Net cash from operations - - - 36.93 68.34 * * * * * * Capital expenditure - - - 0.00 0.00 * - * * * * Net (acquisitions) / disposals - - - 0.00 0.00 * - * - * - Other changes in investments - - - 0.00 0.00 * - * - * - Cash from investing activities - - - 0.00 0.00 * - * * * * Increase/(decrease) in debt - - - 0.00 0.00 * - * - * - Share issues / (repurchases) - - - 0.00 0.00 * - * - * - Dividends paid - - - 0.00 0.00 * - * * * * Other cash from financing - - - 0.00 0.00 * - * - * - Cash from financing activities - - - 0.00 0.00 * - * * * * Cash flow chge in cash & equivalents - - - 36.93 68.34 * - * - * - FX / non cash items - - - - (51.70) * * * * * * Bal sheet chge in cash & equivalents - - - - 16.64 * - * - * - Core EBITDA - - - 54.17 91.54 * * * * * * Maintenance capital expenditure - - - 0.00 0.00 * - * * * * Maintenance net working capital - - - 0.00 0.00 * - * * * * Operating free cash flow, pre-tax

- - - 54.17 91.54 * - * * * *


UBS 145


Real Estate



Company profile Iguatemi is fully owned by La Fonte Participações and La FonteTelecom, two subsidiaries of the Jereissati group. The company is aleading player in the Brazilian shopping malls sector, with anestimated market share of 5% (based on GLA) and a portfolio of 11different malls that combine approximately 347,000 square meters(roughly 4% of Brazil's total), 151,000 of which belongs to Iguatemialone.

Profitability

12/05 12/06 12/07(E) 12/08(E) 12/09(E)30.0%

35.0%

40.0%

45.0%

50.0%

55.0%

60.0%

24.20%

24.40%

24.60%

24.80%

25.00%

25.20%

25.40%

25.60%



12/05 12/06 12/07(E) 12/08(E) 12/09(E)15.80%

16.00%

16.20%

16.40%

16.60%

16.80%

17.00%

17.20%

ROE (LHS)

Growth (UBS EPS)

12/05 12/06 12/07(E) 12/08(E) 12/09(E)95.0

100.0

105.0

110.0

115.0

120.0

132.60%

132.80%

133.00%

133.20%

133.40%

133.60%

133.80%

134.00%



Iguatemi


Enterprise value (R$m) 12/05 12/06 12/07E 12/08E 12/09E Average market cap - - * * * + minority interests 0.00 0.00 * * * + average net debt (cash) - 1.16 * * * + pension obligations and other 0.00 0.00 * * * - non-core asset value 0.00 0.00 * * * Core enterprise value - - * * * Growth (%) 5Yr Avg 12/05 12/06 12/07E 12/08E 12/09E Revenue - - 15.5 * * * EBITDA (UBS) - - 69.0 * * * EBIT (UBS) - - 87.5 * * * EPS (UBS) - - 133.3 * * * Cash EPS - - 85.0 * * * Net DPS - - - - * * BVPS - - -10.5 * * *

Margins (%) 5Yr Avg 12/05 12/06 12/07E 12/08E 12/09E EBITDA / revenue - 52.3 NM * * * EBIT / revenue - 35.9 58.3 * * * Net profit (UBS) / revenue - 19.3 38.9 * * *


Coverage ratios (x) 5Yr Avg 12/05 12/06 12/07E 12/08E 12/09E EBIT / net interest - 1.6 8.6 - - * Dividend cover (UBS EPS) - - - * * * Div. payout ratio (%, UBS EPS) - - - * * * Net debt / EBITDA - NM 0.2 * * *

Efficiency ratios (x) 5Yr Avg 12/05 12/06 12/07E 12/08E 12/09E Revenue / op. invested capital - - 0.4 * * * Revenue / fixed assets - - 0.3 * * * Revenue / net working capital - - NM * * *


Capital structure (%) 5Yr Avg 12/05 12/06 12/07E 12/08E 12/09E Net debt / total equity - (4.8) 6.3 * * * Net debt / (net debt + equity) - (5.1) 6.0 * * * Net debt (core) / EV - - - * * *



UBS 146

Lopes

Income statement (R$m) - - - 12/05 12/06 12/07E % ch 12/08E % ch 12/09E % ch Revenues - - - 64.26 82.01 * * * * * * Operating expenses (ex depn) - - - (29.70) (41.30) * * * * * * EBITDA (UBS) - - - 34.56 40.71 * * * * * * Depreciation - - - (1.11) (1.29) * * * * * * Operating income (EBIT, UBS) - - - 33.45 39.41 * * * * * * Other income & associates - - - 0.00 0.00 * - * - * - Net interest - - - 1.52 1.35 * * * * * * Abnormal items (pre-tax) - - - 0.00 0.00 * - * - * - Profit before tax - - - 34.98 40.77 * * * * * * Tax - - - (6.98) (8.22) * * * * * * Profit after tax - - - 27.99 32.55 * * * * * * Abnormal items (post-tax) - - - 0.00 0.00 * - * - * - Minorities / pref dividends - - - (0.95) (1.12) * * * * * * Net income (local GAAP) - - - 27.04 31.43 * * * * * * Net Income (UBS) - - - 27.04 31.43 * * * * * * Tax rate (%) - - - 19.97 20.17 * * * * * * Pre-abnormal tax rate (%) - - - 19.97 20.17 * * * * * * Per share (R$) - - - 12/05 12/06 12/07E % ch 12/08E % ch 12/09E % ch EPS (local GAAP) - - - 0.55 0.64 * * * * * * EPS (UBS) - - - 0.55 0.64 * * * * * * Net DPS - - - 0.00 0.00 * - * - * * Cash EPS - - - 0.57 0.66 * * * * * * BVPS - - - 0.53 0.18 * * * * * * Balance sheet (R$m) - - - 12/05 12/06 12/07E % ch 12/08E % ch 12/09E % ch Cash and equivalents - - - 12.07 2.23 * * * * * * Other current assets - - - 11.84 12.77 * * * * * * Total current assets - - - 23.91 15.01 * * * * * * Net tangible fixed assets - - - 4.04 6.28 * * * * * * Net intangible fixed assets - - - 0.00 1.35 * * * * * * Investments / other assets - - - 16.76 2.94 * * * * * * Total assets - - - 44.71 25.58 * * * * * * Trade payables & other ST liabilities - - - 15.50 16.62 * * * * * * Short term debt - - - 0.00 0.52 * * * * * * Total current liabilities - - - 15.50 17.14 * * * * * * Long term debt - - - 0.00 0.00 * - * - * - Other long term liabilities - - - 3.74 0.00 * - * * * * Total liabilities - - - 19.24 17.14 * * * * * * Equity & minority interests - - - 25.47 8.44 * * * * * * Total liabilities & equity - - - 44.71 25.58 * * * * * * Cash flow (R$m) - - - 12/05 12/06 12/07E % ch 12/08E % ch 12/09E % ch Net income - - - 27.04 31.43 * * * * * * Depreciation - - - 1.11 1.29 * * * * * * Net change in working capital - - - 11.01 8.92 * * * * * - Other (operating) - - - 0.00 0.00 * - * - * - Net cash from operations - - - 39.15 41.64 * * * * * * Capital expenditure - - - (1.11) (1.29) * * * * * * Net (acquisitions) / disposals - - - 0.00 0.00 * - * - * - Other changes in investments - - - 0.00 0.00 * - * - * - Cash from investing activities - - - (1.11) (1.29) * * * * * * Increase/(decrease) in debt - - - 0.00 0.00 * - * - * - Share issues / (repurchases) - - - 0.00 0.00 * - * - * - Dividends paid - - - 0.00 0.00 * - * - * * Other cash from financing - - - 0.00 0.00 * - * - * - Cash from financing activities - - - 0.00 0.00 * - * - * * Cash flow chge in cash & equivalents - - - 38.05 40.35 * - * - * - FX / non cash items - - - - (50.19) * - * - * - Bal sheet chge in cash & equivalents - - - - (9.84) * - * - * - Core EBITDA - - - 34.56 40.71 * * * * * * Maintenance capital expenditure - - - (1.11) (1.29) * * * * * * Maintenance net working capital - - - 11.01 8.92 * * * * * - Operating free cash flow, pre-tax

- - - 44.46 48.33 * - * - * *


UBS 147


Real Estate



Company profile With over 70 years of experience in the real estate market in Brazil,Lopes is the country's largest provider of residential brokerageservices and currently focuses most of its operations in the state of Sao Paulo. In July 2006, the company initiated its geographicexpansion strategy by kicking off its operations in Rio de Janeiro witha team of nearly 250 brokers, and since then has made several otheracquisitions that further consolidates its position in Brazil's mainresidential markets.


12/05 12/06 12/07 12/08 12/09E0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

0.0x

10.0x

20.0x

30.0x

40.0x


Profitability

12/05 12/06 12/07(E) 12/08(E) 12/09(E)47.00%

48.00%

49.00%

50.00%

51.00%

52.00%

53.00%

390.80%

391.00%

391.20%

391.40%

391.60%

391.80%

392.00%

392.20%



12/05 12/06 12/07(E) 12/08(E) 12/09(E)184.40%

184.60%

184.80%

185.00%

185.20%

185.40%

185.60%

185.80%

ROE (LHS)

Growth (UBS EPS)

12/05 12/06 12/07(E) 12/08(E) 12/09(E)55.0

60.0

65.0

70.0

75.0

80.0

85.0

15.40%

15.60%

15.80%

16.00%

16.20%

16.40%

16.60%

16.80%



Lopes

Valuation (x) 5Yr Avg 12/05 12/06 12/07E 12/08E 12/09E P/E (local GAAP) - - 37.8 * * * P/E (UBS) - - 37.8 * * * P/CEPS - - 36.3 * * * Net dividend yield (%) - - 0.0 * * * P/BV - - NM * * * EV/revenue (core) - - NM * * * EV/EBITDA (core) - - 28.2 * * * EV/EBIT (core) - - 29.2 * * * EV/OpFCF (core) - - 23.8 * * * EV/op. invested capital - - NM * * *

Enterprise value (R$m) 12/05 12/06 12/07E 12/08E 12/09E Average market cap - 1,155.79 * * * + minority interests 0.00 0.00 * * * + average net debt (cash) - (6.89) * * * + pension obligations and other 0.00 0.00 * * * - non-core asset value 0.00 0.00 * * * Core enterprise value - 1,148.90 * * * Growth (%) 5Yr Avg 12/05 12/06 12/07E 12/08E 12/09E Revenue - - 27.6 * * * EBITDA (UBS) - - 17.8 * * * EBIT (UBS) - - 17.8 * * * EPS (UBS) - - 16.2 * * * Cash EPS - - 16.3 * * * Net DPS - - - - - * BVPS - - -66.9 * * *


Return on capital (%) 5Yr Avg 12/05 12/06 12/07E 12/08E 12/09E EBIT ROIC (UBS) - - NM * * * ROIC post tax - - NM * * * Net ROE - - 185.2 * * *

Coverage ratios (x) 5Yr Avg 12/05 12/06 12/07E 12/08E 12/09E EBIT / net interest - - - - - - Dividend cover (UBS EPS) - - - - * * Div. payout ratio (%, UBS EPS) - - - - * * Net debt / EBITDA - NM NM * * *

Efficiency ratios (x) 5Yr Avg 12/05 12/06 12/07E 12/08E 12/09E Revenue / op. invested capital - - 8.1 * * * Revenue / fixed assets - - 14.1 * * * Revenue / net working capital - - NM * * *


Capital structure (%) 5Yr Avg 12/05 12/06 12/07E 12/08E 12/09E Net debt / total equity - (47.3) (20.3) * * * Net debt / (net debt + equity) - (89.9) (25.4) * * * Net debt (core) / EV - - (0.6) * * *



UBS 148

Multiplan

Income statement (R$m) - - - 12/05 12/06 12/07E % ch 12/08E % ch 12/09E % ch Revenues - - - - 252.97 * * * * * * Operating expenses (ex depn) - - - - (128.67) * * * * * * EBITDA (UBS) - - - - 124.30 * * * * * * Depreciation - - - - (100.96) * * * * * * Operating income (EBIT, UBS) - - - - 23.35 * * * * * * Other income & associates - - - - (0.58) * * * - * - Net interest - - - - (33.61) * - * * * * Abnormal items (pre-tax) - - - - 0.00 * - * - * - Profit before tax - - - - (10.84) * - * * * * Tax - - - - (13.29) * * * * * * Profit after tax - - - - (24.14) * * * - * * Abnormal items (post-tax) - - - - 0.00 * - * - * - Minorities / pref dividends - - - - (8.05) * - * - * - Net income (local GAAP) - - - - (32.19) * * * - * * Net Income (UBS) - - - - (32.19) * * * - * * Tax rate (%) - - - - 0.00 * - * * * * Pre-abnormal tax rate (%) - - - - 0.00 * - * * * * Per share (R$) - - - 12/05 12/06 12/07E % ch 12/08E % ch 12/09E % ch EPS (local GAAP) - - - - (0.22) * * * - * * EPS (UBS) - - - - (0.22) * * * - * * Net DPS - - - - 0.00 * - * - * * Cash EPS - - - - 0.47 * * * * * * BVPS - - - - 8.17 * * * * * * Balance sheet (R$m) - - - 12/05 12/06 12/07E % ch 12/08E % ch 12/09E % ch Cash and equivalents - - - - 10.60 * * * * * * Other current assets - - - - 63.75 * * * * * * Total current assets - - - - 74.35 * * * * * * Net tangible fixed assets - - - - 612.39 * * * * * * Net intangible fixed assets - - - - 494.16 * * * * * * Investments / other assets - - - - 101.80 * * * * * * Total assets - - - - 1,282.70 * * * * * * Trade payables & other ST liabilities - - - - 97.72 * * * * * * Short term debt - - - - 23.59 * - * - * * Total current liabilities - - - - 121.31 * * * * * * Long term debt - - - - 34.43 * * * * * * Other long term liabilities - - - - 148.03 * * * * * * Total liabilities - - - - 303.77 * * * * * * Equity & minority interests - - - - 978.93 * * * * * * Total liabilities & equity - - - - 1,282.70 * * * * * * Cash flow (R$m) - - - 12/05 12/06 12/07E % ch 12/08E % ch 12/09E % ch Net income - - - - (32.19) * * * - * * Depreciation - - - - 100.96 * * * * * * Net change in working capital - - - - 0.00 * - * * * * Other (operating) - - - - 0.00 * - * - * - Net cash from operations - - - - 68.77 * * * * * * Capital expenditure - - - - 0.00 * - * * * * Net (acquisitions) / disposals - - - - 0.00 * - * - * - Other changes in investments - - - - 0.00 * - * - * - Cash from investing activities - - - - 0.00 * - * * * * Increase/(decrease) in debt - - - - 0.00 * - * - * - Share issues / (repurchases) - - - - 0.00 * - * - * - Dividends paid - - - - 0.00 * - * - * * Other cash from financing - - - - 0.00 * - * - * - Cash from financing activities - - - - 0.00 * - * * * * Cash flow chge in cash & equivalents - - - - 68.77 * - * - * - FX / non cash items - - - - - * - * * * * Bal sheet chge in cash & equivalents - - - - - * - * - * - Core EBITDA - - - - 124.30 * * * * * * Maintenance capital expenditure - - - - 0.00 * - * * * * Maintenance net working capital - - - - 0.00 * - * * * * Operating free cash flow, pre-tax

- - - - 124.30 * - * * * *


UBS 149


Real Estate



Company profile


12/06 12/07 12/08 12/09E 12/10E0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

0.0x

5.0x

10.0x

15.0x

20.0x


Profitability

12/05 12/06 12/07(E) 12/08(E) 12/09(E)8.40%

8.60%

8.80%

9.00%

9.20%

9.40%

9.60%

9.80%

EBIT margin (LHS)


12/05 12/06 12/07(E) 12/08(E) 12/09(E)-5.00%

-4.00%

-3.00%

-2.00%

-1.00%

0.00%

ROE (LHS)

Growth (UBS EPS)

12/05 12/06 12/07(E) 12/08(E) 12/09(E)252.20

252.40

252.60

252.80

253.00

253.20

253.40

253.60

Revenue (LHS)


Multiplan


Enterprise value (R$m) 12/05 12/06 12/07E 12/08E 12/09E Average market cap - - * * * + minority interests - 0.08 * * * + average net debt (cash) - 47.43 * * * + pension obligations and other - 0.00 * * * - non-core asset value - 0.00 * * * Core enterprise value - - * * * Growth (%) 5Yr Avg 12/05 12/06 12/07E 12/08E 12/09E Revenue - - - * * * EBITDA (UBS) - - - * * * EBIT (UBS) - - - * * * EPS (UBS) - - - * - * Cash EPS - - - * * * Net DPS - - - - - * BVPS - - - * * *

Margins (%) 5Yr Avg 12/05 12/06 12/07E 12/08E 12/09E EBITDA / revenue - - 49.1 * * * EBIT / revenue - - 9.2 * * * Net profit (UBS) / revenue - - NM * * *

Return on capital (%) 5Yr Avg 12/05 12/06 12/07E 12/08E 12/09E EBIT ROIC (UBS) - - - * * * ROIC post tax - - - * * * Net ROE - - (3.3) * * *

Coverage ratios (x) 5Yr Avg 12/05 12/06 12/07E 12/08E 12/09E EBIT / net interest - - 0.7 - - - Dividend cover (UBS EPS) - - - - * * Div. payout ratio (%, UBS EPS) - - - - * * Net debt / EBITDA - - 0.4 * * *

Efficiency ratios (x) 5Yr Avg 12/05 12/06 12/07E 12/08E 12/09E Revenue / op. invested capital - - - * * * Revenue / fixed assets - - - * * * Revenue / net working capital - - - * * *

Investment ratios (x) 5Yr Avg 12/05 12/06 12/07E 12/08E 12/09E OpFCF / EBIT - - 5.3 * * * Capex / revenue (%) - - 0.0 * * * Capex / depreciation - - 0.0 * * *

Capital structure (%) 5Yr Avg 12/05 12/06 12/07E 12/08E 12/09E Net debt / total equity - - 4.8 * * * Net debt / (net debt + equity) - - 4.6 * * * Net debt (core) / EV - - - * * *



UBS 150

Telco, Cable, Computer & Software

UBS 151

NET Servicos de Comunicacao

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 1,245.42 1,392.70 1,593.08 1,936.04 2,893.83 3,676.16 27.0 4,212.75 14.6 4,627.59 9.8 Operating expenses (ex depn) (938.95) (1,016.34) (1,143.03) (1,420.61) (2,147.31) (2,709.79) 26.2 (3,092.42) 14.1 (3,415.84) 10.5 EBITDA (UBS) 306.48 376.36 450.06 515.43 746.52 966.37 29.5 1,120.32 15.9 1,211.74 8.2 Depreciation (263.41) (243.32) (211.39) (195.30) (484.61) (618.95) 27.7 (735.96) 18.9 (748.66) 1.7 Operating income (EBIT, UBS) 43.07 133.04 238.66 320.13 261.90 347.42 32.7 384.36 10.6 463.09 20.5 Other income & associates (5.69) 12.16 (13.53) (5.32) (8.04) (0.47) -94.1 0.00 - 0.00 - Net interest (215.18) (282.69) (101.33) (116.13) (115.22) (272.44) 136.4 (68.22) -75.0 (51.84) -24.0 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax (177.80) (137.49) 123.81 198.69 138.65 74.51 -46.3 316.14 324.3 411.25 30.1 Tax (90.42) 92.27 2.02 (116.87) (142.29) 4.51 - (87.28) - (116.49) 33.5 Profit after tax (268.21) (45.23) 125.83 81.82 (3.64) 79.02 - 228.86 189.6 294.76 28.8 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends (0.17) (0.17) (0.17) 0.12 (0.25) 0.00 - 0.00 - 0.00 - Net income (local GAAP) (268.38) (45.39) 125.66 81.94 (3.89) 79.02 - 228.86 189.6 294.76 28.8 Net Income (UBS) (268.38) (45.39) 125.66 81.94 (3.89) 79.02 - 228.86 189.6 294.76 28.8 Tax rate (%) 0.00 0.00 0.00 58.82 102.63 0.00 - 27.61 - 28.33 2.6 Pre-abnormal tax rate (%) 0.00 0.00 0.00 58.93 102.63 0.00 - 27.61 - 28.33 2.6 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) (1.39) (0.24) 0.03 0.28 (0.01) 0.23 - 0.68 189.6 0.87 28.8 EPS (UBS) (1.39) (0.24) 0.03 0.28 (0.01) 0.23 - 0.68 189.6 0.87 28.8 Net DPS 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.17 - Cash EPS (0.03) 1.03 0.09 0.95 1.43 2.06 43.6 2.85 38.2 3.08 8.1 BVPS (0.84) (1.08) 2.36 4.24 8.17 8.32 1.8 8.99 8.1 9.70 7.8 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 201.71 324.73 404.13 506.46 569.61 936.46 64.4 1,009.24 7.8 1,296.50 28.5 Other current assets 245.69 288.49 284.43 301.58 384.86 432.57 12.4 469.25 8.5 506.83 8.0 Total current assets 447.39 613.23 688.56 808.04 954.46 1,369.02 43.4 1,478.50 8.0 1,803.33 22.0 Net tangible fixed assets 1,019.07 898.71 912.82 1,213.02 1,835.38 2,294.15 25.0 2,394.01 4.4 2,336.81 -2.4 Net intangible fixed assets 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Investments / other assets 635.13 717.78 720.91 1,169.21 2,296.60 2,116.83 -7.8 2,116.83 0.0 2,116.83 0.0 Total assets 2,101.60 2,229.72 2,322.29 3,190.27 5,086.44 5,780.00 13.6 5,989.33 3.6 6,256.96 4.5 Trade payables & other ST liabilities 361.25 325.85 278.58 431.99 586.90 651.58 11.0 632.05 -3.0 662.14 4.8 Short term debt 1,321.85 1,604.47 139.38 8.65 24.67 80.58 226.7 80.58 0.0 80.58 0.0 Total current liabilities 1,683.10 1,930.32 417.96 440.64 611.56 732.16 19.7 712.64 -2.7 742.72 4.2 Long term debt 0.00 0.00 650.00 900.70 1,099.97 1,536.70 39.7 1,536.70 0.0 1,536.70 0.0 Other long term liabilities 580.48 506.99 632.69 608.51 636.40 693.70 9.0 693.70 0.0 693.70 0.0 Total liabilities 2,263.58 2,437.31 1,700.64 1,949.84 2,347.93 2,962.55 26.2 2,943.03 -0.7 2,973.11 1.0 Equity & minority interests (161.99) (207.59) 621.65 1,240.43 2,738.50 2,817.45 2.9 3,046.30 8.1 3,283.85 7.8 Total liabilities & equity 2,101.60 2,229.72 2,322.29 3,190.27 5,086.44 5,780.00 13.6 5,989.33 3.6 6,256.96 4.5 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income (268.38) (45.39) 125.66 81.94 (3.89) 79.02 - 228.86 189.6 294.76 28.8 Depreciation 263.41 243.32 211.39 195.30 484.61 618.95 27.7 735.96 18.9 748.66 1.7 Net change in working capital (156.10) (78.20) (43.21) 136.26 102.31 16.87 -83.5 (56.21) - (7.49) -86.7 Other (operating) (2.08) (3.99) 0.17 (0.50) 0.25 0.00 - 0.00 - 0.00 - Net cash from operations (163.16) 115.73 294.01 413.00 583.28 714.84 22.6 908.61 27.1 1,035.93 14.0 Capital expenditure (67.88) (123.03) (188.60) (489.50) (764.70) (960.50) 25.6 (835.82) -13.0 (691.46) -17.3 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities (67.88) (123.03) (188.60) (489.50) (764.70) (960.50) 25.6 (835.82) -13.0 (691.46) -17.3 Increase/(decrease) in debt 23.64 282.62 (815.09) 119.97 215.30 492.63 - 0.00 - 0.00 - Share issues / (repurchases) 0.00 0.00 638.75 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - (57.21) - Other cash from financing 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities 23.64 282.62 (176.34) 119.97 215.30 492.63 128.8 0.00 - (57.21) - Cash flow chge in cash & equivalents (207.39) 275.32 (70.94) 43.47 33.87 246.97 - 72.79 - 287.25 - FX / non cash items 353.01 (152.29) 150.33 58.86 29.27 119.88 309.5 0.00 - 0.00 - Bal sheet chge in cash & equivalents 145.62 123.03 79.40 102.33 63.15 366.85 - 72.79 - 287.25 - Core EBITDA 306.48 376.36 450.06 515.43 746.52 966.37 29.5 1,120.32 15.9 1,211.74 8.2 Maintenance capital expenditure (67.88) (123.03) (188.60) (489.50) (764.70) (960.50) 25.6 (835.82) -13.0 (691.46) -17.3 Maintenance net working capital (156.10) (78.20) (43.21) 136.26 102.31 16.87 -83.5 (56.21) - (7.49) -86.7 Operating free cash flow, pre-tax

82.50 175.13 218.24 162.19 84.13 22.74 -73.0 228.29 904.0 512.80 124.6


UBS 152


Broadcasting



Company profile NET is the leading provider of pay TV services in Brazil, with a clientbase of around 2.9 million subscribers. It has more than 44,000 km ofcable network spread over the country's main metropolitan regionsand passes 9.5 million homes. The company also offers broadbandInternet access to some 2.06 million clients. At the end of 2004, NETstarted offering digital pay TV services to its clients. The companylaunched telephony services by the beginning of 2006.


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Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)6.0%

8.0%

10.0%

12.0%

14.0%

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18.0%

18.0%

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26.0%

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12/06 12/07 12/08(E) 12/09(E) 12/10(E)-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

0.0x

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Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)0

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NET Servicos de Comunicacao

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) 75.0 67.2 NM 70.9 24.5 19.0 P/E (UBS) 75.0 67.2 NM 70.9 24.5 19.0 P/CEPS NM 19.9 19.6 8.0 5.8 5.4 Net dividend yield (%) 0.0 0.0 0.0 0.0 0.0 1.0 P/BV 9.8 4.4 3.4 2.0 1.8 1.7 EV/revenue (core) 2.2 2.8 3.2 1.7 1.5 1.3 EV/EBITDA (core) 8.8 10.5 12.5 6.4 5.6 5.0 EV/EBIT (core) 25.4 16.9 NM 17.9 16.3 13.1 EV/OpFCF (core) 21.2 NM NM NM 27.4 11.8 EV/op. invested capital 3.3 5.4 7.3 3.8 3.4 3.2

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 5,013.10 8,849.26 5,602.10 5,602.10 5,602.10 + minority interests 0.10 0.10 0.10 0.10 0.10 + average net debt (cash) 394.07 478.96 617.93 644.43 464.40 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value (0.10) (0.10) (0.10) (0.10) (0.10) Core enterprise value 5,407.17 9,328.22 6,220.03 6,246.52 6,066.50 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 13.9 21.5 49.5 27.0 14.6 9.8 EBITDA (UBS) 30.3 14.5 44.8 29.5 15.9 8.2 EBIT (UBS) - 34.1 -18.2 32.7 10.6 20.5 EPS (UBS) - NM - - 189.6 28.8 Cash EPS - NM 51.3 43.6 38.2 8.1 Net DPS - - - - - - BVPS 66.7 80.0 92.7 1.8 8.1 7.8

Margins (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBITDA / revenue 24.4 26.6 25.8 26.3 26.6 26.2 EBIT / revenue 7.2 16.5 9.1 9.5 9.1 10.0 Net profit (UBS) / revenue NM 4.2 NM 2.1 5.4 6.4

Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) 12.8 32.0 20.6 21.4 20.7 24.2 ROIC post tax - 13.1 NM 21.4 15.0 17.4 Net ROE 100.0 8.8 (0.2) 2.8 7.8 9.3

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - 2.8 2.3 1.3 5.6 8.9 Dividend cover (UBS EPS) - - - - - 5.2 Div. payout ratio (%, UBS EPS) - - - - - 19.4 Net debt / EBITDA 2.4 0.8 0.7 0.7 0.5 0.3



Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity (8.9) 32.5 20.3 24.2 20.0 9.8 Net debt / (net debt + equity) 73.5 24.5 16.9 19.5 16.6 8.9 Net debt (core) / EV 30.96 7.3 5.1 9.9 10.3 7.7

Source: Company accounts, UBS estimates. (UBS) valuations are stated before goodwill-related charges and other adjustments for abnormal and economic items at the analysts' judgement. Valuations: based on an average share price that year, (E): based on a share price of R$16.54 on 13 Mar 2009 19:40 EDT Market cap(E) may include forecast share issues/buybacks. Carlos Sequeira, CFA Analyst [email protected] +5521 3262 9223

Antonio Junqueira Analyst [email protected] +55 21 3262 9278

UBS 153

GVT Holding SA

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 379.60 542.40 654.20 768.50 980.61 1,318.98 34.5 1,642.99 24.6 1,883.67 14.6 Operating expenses (ex depn) (328.10) (413.50) (464.40) (511.35) (622.13) (823.38) 32.3 (1,022.89) 24.2 (1,167.93) 14.2 EBITDA (UBS) 51.50 128.90 189.80 257.15 358.48 495.60 38.2 620.10 25.1 715.74 15.4 Depreciation (152.00) (176.10) (194.90) (199.77) (203.46) (286.72) 40.9 (340.17) 18.6 (364.76) 7.2 Operating income (EBIT, UBS) (100.50) (47.20) (5.10) 57.38 155.02 208.88 34.7 279.93 34.0 350.98 25.4 Other income & associates 0.60 1.70 1.80 (36.96) (4.07) (7.43) 82.5 20.00 - 0.00 - Net interest (111.50) (55.40) 70.70 (85.56) 53.13 (103.14) - (19.35) -81.2 (19.16) -1.0 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax (211.40) (100.90) 67.40 (65.14) 204.08 98.31 -51.8 280.58 185.4 331.82 18.3 Tax 209.20 26.50 57.00 (4.95) (69.75) (21.00) -69.9 (64.53) 207.3 (63.90) -1.0 Profit after tax (2.20) (74.40) 124.40 (70.08) 134.33 77.31 -42.5 216.04 179.5 267.92 24.0 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net income (local GAAP) (2.20) (74.40) 124.40 (70.08) 134.33 77.31 -42.5 216.04 179.5 267.92 24.0 Net Income (UBS) (2.20) (74.40) 124.40 (70.08) 134.33 77.31 -42.5 216.04 179.5 267.92 24.0 Tax rate (%) 0.00 0.00 0.00 0.00 34.18 21.36 -37.5 23.00 7.7 19.26 -16.3 Pre-abnormal tax rate (%) 0.00 0.00 0.00 0.00 34.18 21.36 -37.5 23.00 7.7 19.26 -16.3 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) (0.02) (0.55) 0.93 (0.52) 1.00 0.57 -42.8 1.60 179.5 1.98 24.0 EPS (UBS) (0.02) (0.55) 0.93 (0.52) 1.00 0.57 -42.8 1.60 179.5 1.98 24.0 Net DPS 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.42 - Cash EPS 1.18 0.80 2.51 1.02 2.65 2.84 7.1 4.34 52.8 4.93 13.7 BVPS 0.77 0.23 1.21 0.64 13.56 14.13 4.2 15.81 11.9 17.48 10.5 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 7.00 16.50 65.60 42.20 564.11 251.37 -55.4 283.81 12.9 364.94 28.6 Other current assets 99.20 183.10 184.70 221.60 383.15 536.15 39.9 629.75 17.5 710.43 12.8 Total current assets 106.20 199.60 250.30 263.80 947.25 787.52 -16.9 913.56 16.0 1,075.37 17.7 Net tangible fixed assets 1,263.80 1,155.40 1,102.30 1,093.20 1,463.66 1,834.47 25.3 1,987.20 8.3 2,093.35 5.3 Net intangible fixed assets 0.00 0.00 0.00 0.00 12.08 12.19 0.8 12.19 0.0 12.19 0.0 Investments / other assets 240.70 256.90 330.80 328.10 260.89 296.88 13.8 296.88 0.0 296.88 0.0 Total assets 1,610.70 1,611.90 1,683.40 1,685.10 2,683.88 2,931.06 9.2 3,209.82 9.5 3,477.79 8.3 Trade payables & other ST liabilities 106.00 121.60 129.80 171.90 234.96 359.26 52.9 421.98 17.5 476.04 12.8 Short term debt 314.40 75.10 171.00 94.80 29.96 40.71 35.9 40.71 0.0 40.71 0.0 Total current liabilities 420.40 196.70 300.80 266.70 264.92 399.97 51.0 462.69 15.7 516.75 11.7 Long term debt 1,024.20 1,239.20 1,050.40 1,106.00 424.52 432.98 2.0 432.98 0.0 432.98 0.0 Other long term liabilities 68.20 146.30 178.20 230.20 266.68 286.37 7.4 286.37 0.0 286.37 0.0 Total liabilities 1,512.80 1,582.20 1,529.40 1,602.90 956.12 1,119.33 17.1 1,182.05 5.6 1,236.11 4.6 Equity & minority interests 97.90 29.70 154.00 82.20 1,727.76 1,811.73 4.9 2,027.78 11.9 2,241.69 10.5 Total liabilities & equity 1,610.70 1,611.90 1,683.40 1,685.10 2,683.88 2,931.06 9.2 3,209.82 9.5 3,477.79 8.3 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income (2.20) (74.40) 124.40 (70.08) 134.33 77.31 -42.5 216.04 179.5 267.92 24.0 Depreciation 152.00 176.10 194.90 199.77 203.46 286.72 40.9 340.17 18.6 364.76 7.2 Net change in working capital 0.00 (44.00) 6.60 5.20 (98.48) (28.70) -70.9 (30.88) 7.6 (26.62) -13.8 Other (operating) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations 149.80 57.70 325.90 134.88 239.31 335.33 40.1 525.33 56.7 606.07 15.4 Capital expenditure (39.60) (133.00) (141.50) (191.70) (566.30) (650.00) 14.8 (492.90) -24.2 (470.92) -4.5 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities (39.60) (133.00) (141.50) (191.70) (566.30) (650.00) 14.8 (492.90) -24.2 (470.92) -4.5 Increase/(decrease) in debt 0.00 (24.30) (92.90) (20.60) (746.32) 19.21 - 0.00 - 0.00 - Share issues / (repurchases) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - (54.01) - Other cash from financing 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities 0.00 (24.30) (92.90) (20.60) (746.32) 19.21 - 0.00 - (54.01) - Cash flow chge in cash & equivalents 110.20 (99.60) 91.50 (77.42) (1,073.31) (295.46) - 32.44 - 81.14 - FX / non cash items - 109.10 (42.40) 54.02 1,595.22 (17.27) - 0.00 - 0.00 - Bal sheet chge in cash & equivalents - 9.50 49.10 (23.40) 521.91 (312.74) - 32.44 - 81.14 - Core EBITDA 51.50 128.90 189.80 257.15 358.48 495.60 38.2 620.10 25.1 715.74 15.4 Maintenance capital expenditure (39.60) (133.00) (141.50) (191.70) (566.30) (650.00) 14.8 (492.90) -24.2 (470.92) -4.5 Maintenance net working capital 0.00 (44.00) 6.60 5.20 (98.48) (28.70) -70.9 (30.88) 7.6 (26.62) -13.8 Operating free cash flow, pre-tax

11.90 (48.10) 54.90 70.65 (306.30) (183.11) -40.2 96.32 - 218.21 126.5


UBS 154


Fixed-Line Communications



Company profile GVT is Brazil's leading competitive local exchange carrier. It wasauthorized to offer telecommunications services in the south andmidwest of Brazil in 1999. The company operates in 62 cities in itsoriginal authorization region and three cities in the southeast: SãoPaulo; Rio; and Belo Horizonte. It has deployed a state-of-the-art fiber-ring NGN network that allows for rapid data throughput (up to 20Mbps DSL connections) and high-quality signals. As of June 2007,the company ended with 810,000 fixed lines in service and 186,000DSL lines.


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Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - - 32.2 47.0 16.8 13.6 P/E (UBS) - - 32.2 47.0 16.8 13.6 P/CEPS - - 12.2 9.5 6.2 5.5 Net dividend yield (%) - - 0.0 0.0 0.0 1.6 P/BV - - 2.4 1.9 1.7 1.5 EV/revenue (core) - - 4.1 2.7 2.2 1.9 EV/EBITDA (core) - - 11.2 7.1 5.9 5.0 EV/EBIT (core) - - 25.8 16.8 13.1 10.3 EV/OpFCF (core) - - NM NM NM 16.5 EV/op. invested capital - - 2.8 1.9 1.7 1.6

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap - 4,107.48 3,451.27 3,451.27 3,451.27 + minority interests 0.00 0.00 0.00 0.00 0.00 + average net debt (cash) 1,157.20 (109.63) 56.35 206.10 149.32 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 0.00 0.00 0.00 0.00 Core enterprise value - 3,997.85 3,507.62 3,657.37 3,600.59 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - 17.5 27.6 34.5 24.6 14.6 EBITDA (UBS) - 35.5 39.4 38.2 25.1 15.4 EBIT (UBS) - - 170.2 34.7 34.0 25.4 EPS (UBS) - - - -42.8 179.5 24.0 Cash EPS - -59.4 160.5 7.1 52.8 13.7 Net DPS - - - - - - BVPS - -46.6 NM 4.2 11.9 10.5

Margins (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBITDA / revenue - 33.5 36.6 37.6 37.7 38.0 EBIT / revenue - 7.5 15.8 15.8 17.0 18.6 Net profit (UBS) / revenue - NM 13.7 5.9 13.1 14.2

Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) - 4.5 10.9 11.6 13.3 15.5 ROIC post tax - 4.5 7.2 9.1 10.2 12.5 Net ROE - (59.3) 14.8 4.4 11.3 12.6

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - 0.7 - 2.0 14.5 18.3 Dividend cover (UBS EPS) - - - - - 5.0 Div. payout ratio (%, UBS EPS) - - - - - 20.2 Net debt / EBITDA - 4.5 NM 0.4 0.3 0.2


Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT - 1.2 NM NM 0.3 0.6 Capex / revenue (%) - 24.9 NM NM NM 25.0 Capex / depreciation - 1.0 2.8 2.3 1.4 1.3

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - NM (6.3) 12.3 9.4 4.9 Net debt / (net debt + equity) - 93.4 (6.8) 10.9 8.6 4.6 Net debt (core) / EV - - (2.7) 1.6 5.6 4.1



UBS 155

Telemar Norte Leste Op. (PN)

Income statement (R$m) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch Revenues 15,613.50 16,764.60 16,871.90 17,572.30 18,665.35 30,860.03 65.3 31,423.14 1.8 32,081.67 2.1 Operating expenses (ex depn) (9,140.98) (10,069.30) (10,721.40) (11,042.00) (12,559.00) (20,281.12) 61.5 (20,020.32) -1.3 (20,619.82) 3.0 EBITDA (UBS) 6,472.52 6,695.30 6,150.50 6,530.30 6,106.35 10,578.90 73.2 11,402.82 7.8 11,461.85 0.5 Depreciation (3,375.50) (3,404.90) (3,205.40) (2,662.30) (2,839.20) (5,933.89) 109.0 (6,064.82) 2.2 (5,995.04) -1.2 Operating income (EBIT, UBS) 3,097.02 3,290.40 2,945.10 3,868.00 3,267.15 4,645.01 42.2 5,337.99 14.9 5,466.81 2.4 Other income & associates (92.70) (54.00) (11.10) 41.30 16.45 0.00 - 0.00 - 0.00 - Net interest (1,594.10) (1,247.63) (1,102.66) (296.70) (1,321.85) (2,580.94) 95.3 (2,108.22) -18.3 (1,891.29) -10.3 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 1,410.22 1,988.77 1,831.34 3,612.60 1,961.75 2,064.07 5.2 3,229.77 56.5 3,575.51 10.7 Tax (518.50) (271.70) (216.90) (920.80) (495.50) (701.78) 41.6 (1,098.12) 56.5 (1,215.67) 10.7 Profit after tax 891.72 1,717.07 1,614.44 2,691.80 1,466.25 1,362.28 -7.1 2,131.65 56.5 2,359.84 10.7 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends 0.00 0.00 0.00 0.00 (4.40) 0.00 - 0.00 - 0.00 - Net income (local GAAP) 891.72 1,717.07 1,614.44 2,691.80 1,461.85 1,362.28 -6.8 2,131.65 56.5 2,359.84 10.7 Net Income (UBS) 891.72 1,717.07 1,614.44 2,691.80 1,461.85 1,362.28 -6.8 2,131.65 56.5 2,359.84 10.7 Tax rate (%) 36.77 13.66 11.84 25.49 25.26 34.00 34.6 34.00 0.0 34.00 0.0 Pre-abnormal tax rate (%) 36.77 13.65 11.84 25.56 25.25 34.00 34.7 34.00 0.0 34.00 0.0 Per share (R$) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch EPS (local GAAP) 3.70 7.19 6.77 11.28 5.67 4.32 -23.8 6.76 56.5 7.49 10.7 EPS (UBS) 3.70 7.19 6.77 11.28 5.67 4.32 -23.8 6.76 56.5 7.49 10.7 Net DPS 4.23 5.91 4.61 2.73 19.35 4.64 -76.0 3.67 -20.7 6.76 84.1 Cash EPS 17.73 21.46 20.20 22.44 16.69 23.15 38.7 26.01 12.3 26.51 1.9 BVPS 42.37 45.09 49.99 57.76 31.68 52.03 64.3 57.79 11.1 61.18 5.9 Balance sheet (R$m) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch Cash and equivalents 1,523.00 1,600.00 3,999.00 6,080.00 8,606.00 3,955.46 -54.0 6,716.41 69.8 9,063.31 34.9 Other current assets 5,351.00 5,702.50 5,329.00 5,627.00 7,678.00 11,965.04 55.8 12,224.74 2.2 12,411.08 1.5 Total current assets 6,874.00 7,302.50 9,328.00 11,707.00 16,284.00 15,920.50 -2.2 18,941.15 19.0 21,474.39 13.4 Net tangible fixed assets 14,597.00 13,783.50 13,035.00 12,914.00 15,513.00 23,415.18 50.9 23,218.06 -0.8 22,714.86 -2.2 Net intangible fixed assets 0.00 0.00 0.00 0.00 0.00 0.10 - 0.10 0.0 0.10 0.0 Investments / other assets 3,407.00 3,706.00 4,254.00 4,602.00 8,289.00 19,388.22 133.9 18,548.22 -4.3 17,708.22 -4.5 Total assets 24,878.00 24,792.00 26,617.00 29,223.00 40,086.00 58,724.01 46.5 60,707.54 3.4 61,897.58 2.0 Trade payables & other ST liabilities 4,622.00 4,464.00 3,904.00 4,900.00 5,452.00 9,870.55 81.0 10,040.37 1.7 10,162.22 1.2 Short term debt 1,914.00 2,245.00 1,726.00 1,395.00 3,702.00 4,372.70 18.1 4,372.70 0.0 4,372.70 0.0 Total current liabilities 6,536.00 6,709.00 5,630.00 6,295.00 9,154.00 14,243.25 55.6 14,413.07 1.2 14,534.92 0.8 Long term debt 5,856.00 4,664.00 5,969.00 6,512.00 17,472.00 21,965.20 25.7 21,965.20 0.0 21,965.20 0.0 Other long term liabilities 2,377.00 2,659.00 3,089.00 2,634.00 3,451.00 6,116.60 77.2 6,116.60 0.0 6,116.60 0.0 Total liabilities 14,769.00 14,032.00 14,688.00 15,441.00 30,077.00 42,325.05 40.7 42,494.87 0.4 42,616.72 0.3 Equity & minority interests 10,109.00 10,760.00 11,929.00 13,782.00 10,009.00 16,398.96 63.8 18,212.67 11.1 19,280.86 5.9 Total liabilities & equity 24,878.00 24,792.00 26,617.00 29,223.00 40,086.00 58,724.01 46.5 60,707.54 3.4 61,897.58 2.0 Cash flow (R$m) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch Net income 891.72 1,717.07 1,614.44 2,691.80 1,461.85 1,362.28 -6.8 2,131.65 56.5 2,359.84 10.7 Depreciation 3,375.50 3,404.90 3,205.40 2,662.30 2,839.20 5,933.89 109.0 6,064.82 2.2 5,995.04 -1.2 Net change in working capital (140.00) (149.50) 162.50 364.00 (1,986.00) (62.59) -96.8 (89.88) 43.6 (64.49) -28.2 Other (operating) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations 4,127.22 4,972.47 4,982.34 5,718.10 2,315.05 7,233.59 212.5 8,106.60 12.1 8,290.39 2.3 Capital expenditure (1,995.00) (2,398.00) (2,307.00) (2,329.00) (8,077.40) (5,554.80) -31.2 (5,027.70) -9.5 (4,651.84) -7.5 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities (1,995.00) (2,398.00) (2,307.00) (2,329.00) (8,077.40) (5,554.80) -31.2 (5,027.70) -9.5 (4,651.84) -7.5 Increase/(decrease) in debt (864.00) (861.00) 786.00 212.00 13,267.00 5,163.90 - 0.00 - 0.00 - Share issues / (repurchases) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid (1,018.00) (1,410.00) (1,100.00) (651.11) (4,986.21) (1,461.00) -70.7 (1,157.94) -20.7 (2,131.65) 84.1 Other cash from financing 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities (1,882.00) (2,271.00) (314.00) (439.11) 8,280.79 3,702.90 -55.3 (1,157.94) - (2,131.65) 84.1 Cash flow chge in cash & equivalents 250.22 303.47 2,361.34 2,949.99 2,518.44 5,381.69 - 1,920.95 - 1,506.90 - FX / non cash items 268.78 (226.47) 37.66 (868.99) 7.56 (10,032.23) - 840.00 - 840.00 0.0 Bal sheet chge in cash & equivalents 519.00 77.00 2,399.00 2,081.00 2,526.00 (4,650.54) - 2,760.95 - 2,346.90 - Core EBITDA 6,472.52 6,695.30 6,150.50 6,530.30 6,106.35 10,578.90 73.2 11,402.82 7.8 11,461.85 0.5 Maintenance capital expenditure (1,995.00) (2,398.00) (2,307.00) (2,329.00) (8,077.40) (5,554.80) -31.2 (5,027.70) -9.5 (4,651.84) -7.5 Maintenance net working capital (140.00) (149.50) 162.50 364.00 (1,986.00) (62.59) -96.8 (89.88) 43.6 (64.49) -28.2 Operating free cash flow, pre-tax

4,337.52 4,147.80 4,006.00 4,565.30 (3,957.05) 4,961.51 - 6,285.24 26.7 6,745.52 7.3


UBS 156





Company profile Telemar Norte Leste, which trades only in Brazil (ticker TMAR5), isthe incumbent wireline telecom operating company and serves 104million people in 17 states in the northern, northeastern, andsoutheastern regions of Brazil, including Rio de Janeiro. As ofSeptember 2008, the company had 13.9 million telephone lines inservice. Telemar Norte Leste's parent holding company, Tele NorteLeste, owns a 81% stake and trades separately under ADR tickerTNE.


12/07 12/08 12/09E 12/10E 12/11E0.00x

2.00x

4.00x

6.00x

8.00x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x


Profitability

12/07 12/08 12/09(E) 12/10(E) 12/11(E)14.00%

15.29%

16.57%

17.86%

19.14%

20.43%

21.71%

23.00%

14.0%

16.0%

18.0%

20.0%

22.0%

24.0%

26.0%



12/07 12/08 12/09(E) 12/10(E) 12/11(E)8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x


Growth (UBS EPS)

12/07 12/08 12/09(E) 12/10(E) 12/11(E)10000

15000

20000

25000

30000

35000

-60%

-40%

-20%

0%

20%

40%

60%

80%



Telemar Norte Leste Op. (PN)

Valuation (x) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E P/E (local GAAP) 10.0 4.9 13.6 11.2 7.2 6.5 P/E (UBS) 10.0 4.9 13.6 11.2 7.2 6.5 P/CEPS 2.7 2.5 4.6 2.1 1.9 1.8 Net dividend yield (%) 7.9 4.9 25.2 9.6 7.6 14.0 P/BV 1.1 1.0 2.4 0.9 0.8 0.8 EV/revenue (core) 1.1 0.9 1.4 1.2 1.2 1.1 EV/EBITDA (core) 2.8 2.4 4.2 3.5 3.2 2.9 EV/EBIT (core) 5.7 4.1 7.8 8.1 6.8 6.2 EV/OpFCF (core) 4.3 3.5 NM 7.6 5.8 5.0 EV/op. invested capital 1.1 1.0 1.5 1.5 1.2 1.1

Enterprise value (R$m) 12/07 12/08 12/09E 12/10E 12/11E Average market cap 13,168.35 18,369.25 15,255.68 15,255.68 15,255.68 + minority interests 0.00 12.50 0.00 0.00 0.00 + average net debt (cash) 2,761.50 7,197.50 22,237.90 21,001.96 18,448.04 + pension obligations and other 0.00 0.00 0.10 0.10 0.10 - non-core asset value (0.10) (0.10) (0.10) (0.10) (0.10) Core enterprise value 15,929.75 25,579.15 37,493.58 36,257.64 33,703.72 Growth (%) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E Revenue 6.4 4.2 6.2 65.3 1.8 2.1 EBITDA (UBS) 1.9 6.2 -6.5 73.2 7.8 0.5 EBIT (UBS) 10.6 31.3 -15.5 42.2 14.9 2.4 EPS (UBS) 37.6 66.7 -49.7 -23.8 56.5 10.7 Cash EPS 6.4 11.1 -25.6 38.7 12.3 1.9 Net DPS -6.2 -40.8 NM -76.0 -20.7 84.1 BVPS 7.0 15.5 -45.2 64.3 11.1 5.9



Coverage ratios (x) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E EBIT / net interest 4.3 13.1 2.5 1.8 2.5 2.9 Dividend cover (UBS EPS) 1.7 4.1 0.3 0.9 1.8 1.1 Div. payout ratio (%, UBS EPS) 80.1 24.2 NM 107.2 54.3 90.3 Net debt / EBITDA 0.8 0.3 2.1 2.1 1.7 1.5


Investment ratios (x) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E OpFCF / EBIT 1.3 1.2 NM 1.1 1.2 1.2 Capex / revenue (%) 13.2 13.3 NM 18.0 16.0 14.5 Capex / depreciation 0.7 0.9 2.8 0.9 0.8 0.8

Capital structure (%) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E Net debt / total equity 45.6 13.3 NM NM NM 89.6 Net debt / (net debt + equity) 30.2 11.7 55.7 57.7 51.9 47.3 Net debt (core) / EV 29.05 17.3 28.1 59.3 57.9 54.7



UBS 157

Tele Norte Leste Part. (PN)

Income statement (R$m) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch Revenues 15,838.70 16,747.90 16,871.60 17,584.60 18,735.70 30,860.03 64.7 31,423.14 1.8 32,081.67 2.1 Operating expenses (ex depn) (9,182.40) (9,982.00) (10,769.80) (11,084.00) (12,663.40) (20,281.12) 60.2 (20,020.32) -1.3 (20,619.82) 3.0 EBITDA (UBS) 6,656.30 6,765.90 6,101.80 6,500.60 6,072.30 10,578.90 74.2 11,402.82 7.8 11,461.85 0.5 Depreciation (3,502.30) (3,351.10) (3,147.10) (2,605.20) (2,808.60) (5,880.06) 109.4 (5,855.51) -0.4 (5,655.88) -3.4 Operating income (EBIT, UBS) 3,154.00 3,414.80 2,954.70 3,895.40 3,263.70 4,698.85 44.0 5,547.31 18.1 5,805.97 4.7 Other income & associates (17.70) 16.40 146.50 250.80 (3.55) 0.00 - 0.00 - 0.00 - Net interest (1,641.30) (1,615.30) (1,289.80) (424.00) (1,378.75) (2,535.55) 83.9 (2,077.98) -18.0 (1,851.63) -10.9 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 1,495.00 1,815.90 1,811.40 3,722.20 1,881.40 2,163.30 15.0 3,469.32 60.4 3,954.34 14.0 Tax (575.20) (371.20) (210.00) (877.30) (552.45) (735.52) 33.1 (1,179.57) 60.4 (1,344.48) 14.0 Profit after tax 919.80 1,444.70 1,601.40 2,844.90 1,328.95 1,427.78 7.4 2,289.75 60.4 2,609.87 14.0 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends (172.40) (329.40) (291.90) (486.60) (270.75) (780.22) 188.2 (1,220.85) 56.5 (1,351.54) 10.7 Net income (local GAAP) 747.40 1,115.30 1,309.50 2,358.30 1,058.20 647.56 -38.8 1,068.90 65.1 1,258.32 17.7 Net Income (UBS) 747.40 1,115.30 1,309.50 2,358.30 1,058.20 647.56 -38.8 1,068.90 65.1 1,258.32 17.7 Tax rate (%) 38.47 20.44 11.59 23.57 29.36 34.00 15.8 34.00 0.0 34.00 0.0 Pre-abnormal tax rate (%) 41.80 21.07 12.74 24.99 29.10 34.00 16.8 34.00 0.0 34.00 0.0 Per share (R$) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch EPS (local GAAP) 1.97 2.92 3.43 6.17 2.77 1.69 -38.8 2.80 65.1 3.29 17.7 EPS (UBS) 1.97 2.92 3.43 6.17 2.77 1.69 -38.8 2.80 65.1 3.29 17.7 Net DPS 2.11 2.88 5.04 0.86 6.74 2.80 -58.5 2.37 -15.3 5.31 124.0 Cash EPS 11.19 11.69 11.66 12.99 10.12 17.08 68.7 18.11 6.1 18.09 -0.1 BVPS 20.94 20.99 23.56 28.05 25.10 24.97 -0.5 25.40 1.7 23.38 -8.0 Balance sheet (R$m) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch Cash and equivalents 5,472.00 3,771.00 4,687.00 6,690.00 9,498.00 5,204.19 -45.2 8,142.16 56.5 10,537.86 29.4 Other current assets 5,640.00 6,067.00 5,687.00 6,034.00 8,036.00 11,960.48 48.8 12,220.08 2.2 12,406.35 1.5 Total current assets 11,112.00 9,838.00 10,374.00 12,724.00 17,534.00 17,164.67 -2.1 20,362.23 18.6 22,944.21 12.7 Net tangible fixed assets 14,810.00 13,812.00 13,042.00 12,982.00 15,428.00 22,728.65 47.3 21,900.84 -3.6 20,896.80 -4.6 Net intangible fixed assets 0.00 0.00 0.00 0.00 0.00 0.10 - 0.10 0.0 0.10 0.0 Investments / other assets 3,390.00 3,614.00 4,374.00 4,547.00 8,103.00 19,388.22 139.3 18,548.22 -4.3 17,708.22 -4.5 Total assets 29,312.00 27,264.00 27,790.00 30,253.00 41,065.00 59,281.64 44.4 60,811.40 2.6 61,549.33 1.2 Trade payables & other ST liabilities 4,930.00 4,667.00 3,794.00 4,856.00 5,474.00 9,620.06 75.7 9,766.65 1.5 9,925.63 1.6 Short term debt 3,059.00 4,052.00 2,092.00 2,036.00 4,047.00 4,717.70 16.6 4,717.70 0.0 4,717.70 0.0 Total current liabilities 7,989.00 8,719.00 5,886.00 6,892.00 9,521.00 14,337.76 50.6 14,484.35 1.0 14,643.33 1.1 Long term debt 8,955.00 5,802.00 7,478.00 7,354.00 16,495.00 22,543.20 36.7 22,543.20 0.0 22,543.20 0.0 Other long term liabilities 2,545.00 2,819.00 3,311.00 2,852.00 3,638.00 6,116.60 68.1 6,116.60 0.0 6,116.60 0.0 Total liabilities 19,489.00 17,340.00 16,675.00 17,098.00 29,654.00 42,997.56 45.0 43,144.15 0.3 43,303.13 0.4 Equity & minority interests 9,823.00 9,924.00 11,115.00 13,155.00 11,411.00 16,284.08 42.7 17,667.25 8.5 18,246.20 3.3 Total liabilities & equity 29,312.00 27,264.00 27,790.00 30,253.00 41,065.00 59,281.64 44.4 60,811.40 2.6 61,549.33 1.2 Cash flow (R$m) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/11E % ch 12/11E % ch Net income 747.40 1,115.30 1,309.50 2,358.30 1,058.20 647.56 -38.8 1,068.90 65.1 1,258.32 17.7 Depreciation 3,502.30 3,351.10 3,147.10 2,605.20 2,808.60 5,880.06 109.4 5,855.51 -0.4 5,655.88 -3.4 Net change in working capital 82.00 (316.00) 21.00 352.00 (1,989.00) (308.52) -84.5 (113.00) -63.4 (27.29) -75.8 Other (operating) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations 4,331.70 4,150.40 4,477.60 5,315.50 1,877.80 6,219.10 231.2 6,811.41 9.5 6,886.91 1.1 Capital expenditure (1,995.00) (2,398.00) (2,307.00) (2,329.00) (8,077.40) (5,554.80) -31.2 (5,027.70) -9.5 (4,651.84) -7.5 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities (1,995.00) (2,398.00) (2,307.00) (2,329.00) (8,077.40) (5,554.80) -31.2 (5,027.70) -9.5 (4,651.84) -7.5 Increase/(decrease) in debt (146.00) (2,160.00) (284.00) (180.00) 11,152.00 6,718.90 - 0.00 - 0.00 - Share issues / (repurchases) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid (800.00) (1,100.00) (1,927.10) (330.00) (2,576.46) (1,070.00) -58.5 (906.59) -15.3 (2,030.91) 124.0 Other cash from financing 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities (946.00) (3,260.00) (2,211.10) (510.00) 8,575.54 5,648.90 -34.1 (906.59) - (2,030.91) 124.0 Cash flow chge in cash & equivalents 1,390.70 (1,507.60) (40.50) 2,476.50 2,375.94 6,313.19 - 877.12 - 204.16 - FX / non cash items (243.70) (193.40) 956.50 (473.50) 432.06 (10,607.01) - 2,060.85 - 2,191.54 6.3 Bal sheet chge in cash & equivalents 1,147.00 (1,701.00) 916.00 2,003.00 2,808.00 (4,293.81) - 2,937.97 - 2,395.70 - Core EBITDA 6,656.30 6,765.90 6,101.80 6,500.60 6,072.30 10,578.90 74.2 11,402.82 7.8 11,461.85 0.5 Maintenance capital expenditure (1,995.00) (2,398.00) (2,307.00) (2,329.00) (8,077.40) (5,554.80) -31.2 (5,027.70) -9.5 (4,651.84) -7.5 Maintenance net working capital 82.00 (316.00) 21.00 352.00 (1,989.00) (308.52) -84.5 (113.00) -63.4 (27.29) -75.8 Operating free cash flow, pre-tax

4,743.30 4,051.90 3,815.80 4,523.60 (3,994.10) 4,715.58 - 6,262.11 32.8 6,782.72 8.3


UBS 158





Company profile Tele Norte Leste (TNE) is a holding company formed from thebreakup of the Telebrás system in May 1998. It owns 82% of TelemarNorte Leste (TMAR5), the incumbent fixed-line telephone operator insoutheastern and northeastern Brazil, with 13.9 million lines in service. This is the second largest network of fixed lines in LatinAmerica, just after Telmex. In June 2002, TNE launched a GSMmobile operator in its concession region under the brand name Oi. Asof September 2008, Oi had 21.9 million clients.


12/07 12/08 12/09E 12/10E 12/11E0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

0.0x

5.0x

10.0x

15.0x

20.0x


Profitability

12/07 12/08 12/09(E) 12/10(E) 12/11(E)14.00%

15.29%

16.57%

17.86%

19.14%

20.43%

21.71%

23.00%

17.00%

18.14%

19.29%

20.43%

21.57%

22.71%

23.86%

25.00%



12/07 12/08 12/09(E) 12/10(E) 12/11(E)0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

1.0x

1.1x

1.2x

1.3x

1.5x

1.6x

1.7x

1.8x


Growth (UBS EPS)

12/07 12/08 12/09(E) 12/10(E) 12/11(E)10000

15000

20000

25000

30000

35000

-100%

-50%

0%

50%

100%



Tele Norte Leste Part. (PN)

Valuation (x) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E P/E (local GAAP) 22.1 5.7 13.4 17.9 10.9 9.2 P/E (UBS) 22.1 5.7 13.4 17.9 10.9 9.2 P/CEPS 3.2 2.7 3.7 1.8 1.7 1.7 Net dividend yield (%) 6.8 2.4 18.2 9.2 7.8 17.5 P/BV 1.6 1.3 1.5 1.2 1.2 1.3 EV/revenue (core) 1.4 1.1 1.2 1.3 1.3 1.2 EV/EBITDA (core) 3.5 3.0 3.8 3.8 3.5 3.4 EV/EBIT (core) 7.1 5.0 7.1 8.6 7.2 6.7 EV/OpFCF (core) 5.4 4.3 NM 8.6 6.4 5.7 EV/op. invested capital 1.3 1.2 1.3 1.6 1.3 1.3

Enterprise value (R$m) 12/07 12/08 12/09E 12/10E 12/11E Average market cap 13,444.67 14,130.05 11,621.59 11,621.59 11,621.59 + minority interests 2,433.49 2,176.16 6,736.48 7,957.33 9,308.87 + average net debt (cash) 3,791.50 6,872.00 22,006.32 20,587.73 17,920.89 + pension obligations and other 0.00 0.00 0.10 0.10 0.10 - non-core asset value (0.10) (0.10) (0.10) (0.10) (0.10) Core enterprise value 19,669.55 23,178.11 40,364.38 40,166.64 38,851.35 Growth (%) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E Revenue 5.9 4.2 6.5 64.7 1.8 2.1 EBITDA (UBS) 1.1 6.5 -6.6 74.2 7.8 0.5 EBIT (UBS) 12.1 31.8 -16.2 44.0 18.1 4.7 EPS (UBS) 82.4 80.1 -55.1 -38.8 65.1 17.7 Cash EPS 5.7 11.4 -22.1 68.7 6.1 -0.1 Net DPS -9.9 -82.9 NM -58.5 -15.3 124.0 BVPS 5.8 19.0 -10.5 -0.5 1.7 -8.0



Coverage ratios (x) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E EBIT / net interest 3.5 9.7 2.4 1.9 2.7 3.1 Dividend cover (UBS EPS) 2.0 7.1 0.4 0.6 1.2 0.6 Div. payout ratio (%, UBS EPS) 120.4 14.0 NM 165.2 84.8 161.4 Net debt / EBITDA 0.9 0.4 1.8 2.1 1.7 1.5


Investment ratios (x) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E OpFCF / EBIT 1.3 1.2 NM 1.0 1.1 1.2 Capex / revenue (%) 13.1 13.2 NM 18.0 16.0 14.5 Capex / depreciation 0.6 0.9 2.9 0.9 0.9 0.8

Capital structure (%) 5Yr Avg 12/07 12/08 12/10E 12/11E 12/11E Net debt / total equity 53.3 20.5 96.8 NM NM 91.7 Net debt / (net debt + equity) 38.9 20.2 53.5 69.8 66.3 65.2 Net debt (core) / EV 27.72 19.3 29.6 54.5 51.3 46.1



UBS 159

Telesp Fixed (PN)

Income statement (R$m) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch Revenues 13,308.63 14,395.20 14,643.05 14,727.55 15,945.60 16,346.97 2.5 16,398.19 0.3 16,522.20 0.8 Operating expenses (ex depn) (7,270.45) (7,842.90) (7,735.14) (8,512.80) (9,398.85) (9,816.85) 4.4 (9,976.99) 1.6 (10,111.78) 1.4 EBITDA (UBS) 6,038.18 6,552.30 6,907.91 6,214.75 6,546.75 6,530.13 -0.3 6,421.20 -1.7 6,410.42 -0.2 Depreciation (2,768.85) (2,716.40) (2,676.10) (2,699.10) (2,766.05) (2,764.71) 0.0 (2,678.20) -3.1 (2,559.47) -4.4 Operating income (EBIT, UBS) 3,269.33 3,835.90 4,231.81 3,515.65 3,780.70 3,765.42 -0.4 3,743.00 -0.6 3,850.95 2.9 Other income & associates 40.10 37.70 23.60 131.70 (8.40) 0.00 - 0.00 - 0.00 - Net interest (404.21) (460.30) (331.06) (307.00) (244.49) (254.75) 4.2 (182.67) -28.3 (115.87) -36.6 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 2,905.22 3,413.30 3,924.35 3,340.35 3,527.81 3,510.67 -0.5 3,560.32 1.4 3,735.08 4.9 Tax (724.07) (871.40) (1,108.10) (977.40) (1,081.95) (968.45) -10.5 (982.30) 1.4 (1,038.95) 5.8 Profit after tax 2,181.15 2,541.90 2,816.25 2,362.95 2,445.86 2,542.22 3.9 2,578.02 1.4 2,696.13 4.6 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net income (local GAAP) 2,181.15 2,541.90 2,816.25 2,362.95 2,445.86 2,542.22 3.9 2,578.02 1.4 2,696.13 4.6 Net Income (UBS) 2,181.15 2,541.90 2,816.25 2,362.95 2,445.86 2,542.22 3.9 2,578.02 1.4 2,696.13 4.6 Tax rate (%) 24.92 25.53 28.24 29.26 30.67 27.59 -10.1 27.59 0.0 27.82 0.8 Pre-abnormal tax rate (%) 24.92 25.53 28.24 29.26 30.67 27.59 -10.1 27.59 0.0 27.82 0.8 Per share (R$) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch EPS (local GAAP) 4.41 5.15 5.56 4.67 4.84 5.03 3.9 5.10 1.4 5.33 4.6 EPS (UBS) 4.41 5.15 5.56 4.67 4.84 5.03 3.9 5.10 1.4 5.33 4.6 Net DPS 8.47 6.87 6.61 7.19 5.44 4.77 -12.3 4.84 1.4 5.06 4.6 Cash EPS 10.01 10.65 10.85 10.01 10.30 10.49 1.8 10.39 -1.0 10.39 0.0 BVPS 23.06 20.67 20.96 19.58 19.86 20.11 1.3 20.37 1.3 20.63 1.3 Balance sheet (R$m) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch Cash and equivalents 238.58 463.50 213.00 933.30 1,741.00 2,039.75 17.2 2,716.20 33.2 3,266.05 20.2 Other current assets 3,923.29 4,649.40 4,466.00 4,268.90 4,718.80 4,745.50 0.6 4,758.18 0.3 4,797.67 0.8 Total current assets 4,161.87 5,112.90 4,679.00 5,202.20 6,459.80 6,785.25 5.0 7,474.38 10.2 8,063.72 7.9 Net tangible fixed assets 13,369.39 12,358.00 11,651.50 11,142.30 11,721.40 11,356.69 -3.1 10,810.25 -4.8 10,398.67 -3.8 Net intangible fixed assets 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Investments / other assets 1,220.51 1,378.30 1,815.40 2,580.10 1,810.80 1,810.80 0.0 1,810.80 0.0 1,810.80 0.0 Total assets 18,751.77 18,849.20 18,145.90 18,924.60 19,992.00 19,952.74 -0.2 20,095.43 0.7 20,273.19 0.9 Trade payables & other ST liabilities 3,397.96 4,890.40 4,433.10 4,968.90 5,328.00 5,161.62 -3.1 5,175.42 0.3 5,218.37 0.8 Short term debt 765.85 541.10 1,828.50 806.20 518.80 518.80 0.0 518.80 0.0 518.80 0.0 Total current liabilities 4,163.81 5,431.50 6,261.60 5,775.10 5,846.80 5,680.42 -2.8 5,694.22 0.2 5,737.17 0.8 Long term debt 2,226.31 2,150.90 509.60 2,503.00 3,217.40 3,217.40 0.0 3,217.40 0.0 3,217.40 0.0 Other long term liabilities 961.40 1,062.60 764.60 741.30 882.10 882.10 0.0 882.10 0.0 882.10 0.0 Total liabilities 7,351.52 8,645.00 7,535.80 9,019.40 9,946.30 9,779.92 -1.7 9,793.72 0.1 9,836.67 0.4 Equity & minority interests 11,400.25 10,204.20 10,610.10 9,905.20 10,045.70 10,172.81 1.3 10,301.71 1.3 10,436.52 1.3 Total liabilities & equity 18,751.77 18,849.20 18,145.90 18,924.60 19,992.00 19,952.74 -0.2 20,095.43 0.7 20,273.19 0.9 Cash flow (R$m) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch Net income 2,181.15 2,541.90 2,816.25 2,362.95 2,445.86 2,542.22 3.9 2,578.02 1.4 2,696.13 4.6 Depreciation 2,768.85 2,716.40 2,676.10 2,699.10 2,766.05 2,764.71 0.0 2,678.20 -3.1 2,559.47 -4.4 Net change in working capital (235.53) 766.33 (273.90) 732.90 (90.80) (193.07) 112.6 1.11 - 3.46 211.3 Other (operating) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations 4,714.47 6,024.63 5,218.45 5,794.95 5,121.11 5,113.86 -0.1 5,257.34 2.8 5,259.07 0.0 Capital expenditure (1,338.00) (1,673.00) (1,720.90) (1,992.50) (2,342.50) (2,400.00) 2.5 (2,131.76) -11.2 (2,147.89) 0.8 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities (1,338.00) (1,673.00) (1,720.90) (1,992.50) (2,342.50) (2,400.00) 2.5 (2,131.76) -11.2 (2,147.89) 0.8 Increase/(decrease) in debt (344.47) (300.16) (353.90) 971.10 427.00 0.00 - 0.00 - 0.00 - Share issues / (repurchases) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid (4,188.80) (3,390.00) (3,347.80) (3,636.60) (2,752.94) (2,415.11) -12.3 (2,449.12) 1.4 (2,561.33) 4.6 Other cash from financing 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities (4,533.27) (3,690.16) (3,701.70) (2,665.50) (2,325.94) (2,415.11) 3.8 (2,449.12) 1.4 (2,561.33) 4.6 Cash flow chge in cash & equivalents (1,156.80) 661.47 (204.15) 1,136.95 452.67 298.75 - 676.45 - 549.85 - FX / non cash items 1,180.45 (436.55) (46.35) (416.65) 355.03 (.00) - 0.00 - (.00) - Bal sheet chge in cash & equivalents 23.65 224.92 (250.50) 720.30 807.70 298.75 - 676.45 - 549.85 - Core EBITDA 6,038.18 6,552.30 6,907.91 6,214.75 6,546.75 6,530.13 -0.3 6,421.20 -1.7 6,410.42 -0.2 Maintenance capital expenditure (1,338.00) (1,673.00) (1,720.90) (1,992.50) (2,342.50) (2,400.00) 2.5 (2,131.76) -11.2 (2,147.89) 0.8 Maintenance net working capital (235.53) 766.33 (273.90) 732.90 (90.80) (193.07) 112.6 1.11 - 3.46 211.3 Operating free cash flow, pre-tax

4,464.65 5,645.63 4,913.11 4,955.15 4,113.45 3,937.05 -4.3 4,290.54 9.0 4,266.00 -0.6


UBS 160





Company profile Telesp Fixed (TSP) is the incumbent provider of local and longdistance fixed-line telecom services in the state of São Paulo. This isthe wealthiest state in Brazil, responsible for 34% of the country'sGDP. As of September 2008, it had 12 million lines in service. Telespgrowth is limited by the maturity of its market and the lack of a mobileoperation. On the other hand, it has generally paid the highestdividends of the group. Telesp Fixed shares are the least liquidamong the Brazilian fixed-line incumbents.


12/07 12/08 12/09E 12/10E 12/11E0.00x

1.00x

2.00x

3.00x

4.00x

5.00x

6.00x

7.00x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x


Profitability

12/07 12/08 12/09(E) 12/10(E) 12/11(E)22.60%

22.80%

23.00%

23.20%

23.40%

23.60%

23.80%

24.00%

28.00%

29.14%

30.29%

31.43%

32.57%

33.71%

34.86%



12/07 12/08 12/09(E) 12/10(E) 12/11(E)22.00%

23.00%

24.00%

25.00%

26.00%

27.00%

1.8x

2.0x

2.2x

2.4x

2.6x

2.8x

3.0x


Growth (UBS EPS)

12/07 12/08 12/09(E) 12/10(E) 12/11(E)14000

14500

15000

15500

16000

16500

17000

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%



Telesp Fixed (PN)


Enterprise value (R$m) 12/07 12/08 12/09E 12/10E 12/09E Average market cap 28,353.09 23,248.07 22,256.96 22,256.96 22,256.96 + minority interests 0.00 0.00 0.00 0.00 0.00 + average net debt (cash) 2,250.50 2,185.55 1,845.82 1,358.22 745.07 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 0.00 0.00 0.00 0.00 Core enterprise value 30,603.59 25,433.62 24,102.78 23,615.18 23,002.03 Growth (%) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/10E Revenue 5.7 0.6 8.3 2.5 0.3 0.8 EBITDA (UBS) 4.0 -10.0 5.3 -0.3 -1.7 -0.2 EBIT (UBS) 9.5 -16.9 7.5 -0.4 -0.6 2.9 EPS (UBS) 9.8 -16.0 3.5 3.9 1.4 4.6 Cash EPS 2.7 -7.8 3.0 1.8 -1.0 0.0 Net DPS 1.9 8.7 -24.3 -12.3 1.4 4.6 BVPS -5.8 -6.6 1.4 1.3 1.3 1.3



Coverage ratios (x) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E EBIT / net interest 8.9 11.5 15.5 14.8 20.5 NM Dividend cover (UBS EPS) 0.6 0.6 0.9 1.1 1.1 1.1 Div. payout ratio (%, UBS EPS) 161.2 153.9 112.6 95.0 95.0 95.0 Net debt / EBITDA 0.4 0.4 0.3 0.3 0.2 0.1






UBS 161

TIM Part. (PN)

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 1,087.99 6,253.84 8,411.05 10,116.11 12,441.67 13,068.72 5.0 13,768.72 5.4 15,099.71 9.7 Operating expenses (ex depn) (704.53) (5,654.68) (6,882.20) (7,623.65) (9,571.76) (10,137.81) 5.9 (10,431.13) 2.9 (11,268.24) 8.0 EBITDA (UBS) 383.46 599.16 1,528.86 2,492.46 2,869.91 2,930.92 2.1 3,337.59 13.9 3,831.46 14.8 Depreciation (209.13) (1,458.76) (1,901.35) (2,284.89) (2,323.67) (2,397.62) 3.2 (2,488.74) 3.8 (2,431.60) -2.3 Operating income (EBIT, UBS) 174.34 (859.61) (372.50) 207.57 546.24 533.29 -2.4 848.85 59.2 1,399.86 64.9 Other income & associates 8.54 34.33 (38.25) 2.53 (24.42) (3.45) -85.9 10.00 - 0.00 - Net interest 38.07 (173.15) (381.09) (342.96) (278.85) (333.59) 19.6 (270.00) -19.1 (188.32) -30.3 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 220.94 (998.43) (791.83) (132.86) 242.96 196.26 -19.2 588.85 200.0 1,211.54 105.7 Tax (42.42) (111.40) (133.14) (168.83) (166.84) (152.18) -8.8 (149.94) -1.5 (323.26) 115.6 Profit after tax 178.52 (1,109.83) (924.97) (301.68) 76.13 44.08 -42.1 438.91 895.8 888.28 102.4 Abnormal items (post-tax) (27.96) 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends (29.76) (70.11) (21.46) 0.00 0.00 0.00 - 0.00 - 0.00 - Net income (local GAAP) 120.80 (1,179.94) (946.44) (301.68) 76.13 44.08 -42.1 438.91 895.8 888.28 102.4 Net Income (UBS) 148.76 (1,179.94) (946.44) (301.68) 76.13 44.08 -42.1 438.91 895.8 888.28 102.4 Tax rate (%) 19.20 0.00 0.00 0.00 68.67 77.54 12.9 25.46 -67.2 26.68 4.8 Pre-abnormal tax rate (%) 18.83 0.00 0.00 0.00 68.67 77.54 12.9 25.46 -67.2 26.68 4.8 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 0.34 (0.51) (0.41) (0.13) 0.03 0.02 -42.4 0.19 895.8 0.38 102.4 EPS (UBS) 0.42 (0.51) (0.41) (0.13) 0.03 0.02 -42.4 0.19 895.8 0.38 102.4 Net DPS 0.08 0.00 0.00 0.05 0.19 0.09 -53.1 0.02 -79.3 0.19 895.8 Cash EPS 1.00 0.12 0.41 0.85 1.03 1.04 1.1 1.25 19.9 1.42 13.4 BVPS 2.59 10.87 3.76 3.40 3.33 3.33 0.1 3.50 5.1 3.69 5.5 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 418.72 918.83 1,772.60 1,193.48 1,172.67 183.77 -84.3 986.29 436.7 1,728.46 75.2 Other current assets 333.92 2,138.35 2,691.77 3,249.54 4,088.18 4,002.98 -2.1 4,143.41 3.5 4,561.84 10.1 Total current assets 752.64 3,057.18 4,464.37 4,443.02 5,260.85 4,186.75 -20.4 5,129.70 22.5 6,290.30 22.6 Net tangible fixed assets 676.89 8,973.50 9,712.32 9,108.49 8,725.82 9,745.69 11.7 9,549.26 -2.0 9,231.62 -3.3 Net intangible fixed assets 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Investments / other assets 207.19 796.41 775.71 648.60 559.66 559.05 -0.1 559.05 0.0 559.05 0.0 Total assets 1,636.71 12,827.10 14,952.39 14,200.11 14,546.33 14,491.49 -0.4 15,238.01 5.2 16,080.96 5.5 Trade payables & other ST liabilities 375.60 3,411.80 4,128.72 3,794.36 4,234.72 3,251.23 -23.2 3,602.92 10.8 3,996.50 10.9 Short term debt 42.75 1,079.59 259.62 340.76 804.01 1,245.36 54.9 1,245.36 0.0 1,245.36 0.0 Total current liabilities 418.35 4,491.39 4,388.34 4,135.12 5,038.73 4,496.59 -10.8 4,848.28 7.8 5,241.86 8.1 Long term debt 39.43 151.26 1,654.50 1,879.68 1,341.86 1,696.23 26.4 1,696.23 0.0 1,696.23 0.0 Other long term liabilities 74.43 151.11 179.83 298.93 415.25 494.47 19.1 494.47 0.0 494.47 0.0 Total liabilities 532.21 4,793.76 6,222.67 6,313.73 6,795.84 6,687.28 -1.6 7,038.97 5.3 7,432.55 5.6 Equity & minority interests 1,104.50 8,033.34 8,729.73 7,886.38 7,750.49 7,804.21 0.7 8,199.04 5.1 8,648.41 5.5 Total liabilities & equity 1,636.71 12,827.10 14,952.39 14,200.11 14,546.33 14,491.49 -0.4 15,238.01 5.2 16,080.96 5.5 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 120.80 (1,179.94) (946.44) (301.68) 76.13 44.08 -42.1 438.91 895.8 888.28 102.4 Depreciation 209.13 1,458.76 1,901.35 2,284.89 2,323.67 2,397.62 3.2 2,488.74 3.8 2,431.60 -2.3 Net change in working capital 78.73 0.00 163.50 (892.13) (398.28) (898.28) 125.5 211.25 - (24.85) - Other (operating) 0.00 0.00 21.46 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations 408.66 278.82 1,139.88 1,091.08 2,001.52 1,543.42 -22.9 3,138.91 103.4 3,295.04 5.0 Capital expenditure (211.80) (2,973.00) (2,551.00) (1,587.70) (1,930.20) (3,400.00) 76.1 (2,292.31) -32.6 (2,113.96) -7.8 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities (211.80) (2,973.00) (2,551.00) (1,587.70) (1,930.20) (3,400.00) 76.1 (2,292.31) -32.6 (2,113.96) -7.8 Increase/(decrease) in debt 1.36 - 1,628.58 694.44 (494.81) 174.82 - 109.79 - 122.87 - Share issues / (repurchases) 0.00 - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid (28.77) - 0.00 (118.00) (450.80) (212.80) -52.8 (44.08) -79.3 (438.91) 895.8 Other cash from financing 0.00 - 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities (27.41) - 1,628.58 576.44 (945.61) (37.98) -96.0 65.71 - (316.05) - Cash flow chge in cash & equivalents 169.45 - 217.46 79.82 (874.29) (1,894.57) - 912.31 - 865.03 - FX / non cash items (183.57) - 636.31 (658.94) 853.48 905.67 -34.3 (109.79) - (122.87) - Bal sheet chge in cash & equivalents (14.11) 500.11 853.77 (579.12) (20.81) (988.89) - 802.52 - 742.17 - Core EBITDA 383.46 599.16 1,528.86 2,492.46 2,869.91 2,930.92 2.1 3,337.59 13.9 3,831.46 14.8 Maintenance capital expenditure (211.80) (2,973.00) (2,551.00) (1,587.70) (1,930.20) (3,400.00) 76.1 (2,292.31) -32.6 (2,113.96) -7.8 Maintenance net working capital 78.73 0.00 163.50 (892.13) (398.28) (898.28) 125.5 211.25 - (24.85) - Operating free cash flow, pre-tax

250.40 (2,373.84) (858.65) 12.63 541.43 (1,367.37) - 1,256.54 - 1,692.66 34.7


UBS 162


Wireless Communications



Company profile TIM Participações, controlled by Telecom Italia, is the second biggestmobile operator in Brazil. TIM operates the only nationwide GSMnetwork in the country. Its main competitors are the leader Vivo,controlled by Telefónica and Portugal Telecom, and America Movil'sClaro. At September 2008, TIM Participações had 35.2 million clientsand a market share of 25.4%.


12/06 12/07 12/08 12/09E 12/10E0.00x

2.00x

4.00x

6.00x

8.00x

-60.0x

-48.6x

-37.1x

-25.7x

-14.3x

-2.9x

8.6x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

0.0%

5.0%

10.0%

15.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)-5.0%

0.0%

5.0%

10.0%

15.0%

0.6x

0.8x

1.0x

1.2x

1.4x

1.6x

1.8x

2.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)9000

10000

11000

12000

13000

14000

15000

16000

-100%

-50%

0%

50%

100%

150%



TIM Part. (PN)

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) NM NM NM NM 16.9 8.3 P/E (UBS) NM NM NM NM 16.9 8.3 P/CEPS 11.5 8.0 6.8 3.0 2.5 2.2 Net dividend yield (%) 1.2 0.7 2.8 2.9 0.6 5.9 P/BV 1.2 2.0 2.1 0.9 0.9 0.9 EV/revenue (core) 0.9 1.6 1.4 0.7 0.7 0.6 EV/EBITDA (core) 4.6 6.6 6.0 3.2 2.9 2.3 EV/EBIT (core) NM NM NM 17.4 11.5 6.4 EV/OpFCF (core) NM NM NM NM 7.8 5.3 EV/op. invested capital 1.1 1.9 2.0 1.0 1.0 0.9

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 15,922.87 16,247.07 7,406.41 7,406.41 7,406.41 + minority interests 0.00 0.00 0.00 0.00 0.00 + average net debt (cash) 584.24 1,000.08 1,865.51 2,356.55 1,584.21 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 0.00 0.00 0.00 0.00 Core enterprise value 16,507.11 17,247.15 9,271.92 9,762.96 8,990.62 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 83.5 20.3 23.0 5.0 5.4 9.7 EBITDA (UBS) 63.1 63.0 15.1 2.1 13.9 14.8 EBIT (UBS) 8.0 - 163.2 -2.4 59.2 64.9 EPS (UBS) - -68.1 - -42.4 NM 102.4 Cash EPS 0.1 107.7 20.6 1.1 19.9 13.4 Net DPS -5.4 - NM -53.1 -79.3 NM BVPS 8.4 -9.7 -2.0 0.1 5.1 5.5

Margins (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBITDA / revenue 25.4 24.6 23.1 22.4 24.2 25.4 EBIT / revenue 3.4 2.1 4.4 4.1 6.2 9.3 Net profit (UBS) / revenue NM NM 0.6 0.3 3.2 5.9

Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) NM 2.4 6.4 5.6 8.3 14.2 ROIC post tax - 2.4 2.0 1.3 6.2 10.4 Net ROE -2.9 (3.6) 1.0 0.6 5.5 10.5

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - 0.6 2.0 1.6 3.1 7.4 Dividend cover (UBS EPS) - - 0.2 0.2 10.0 2.0 Div. payout ratio (%, UBS EPS) - - NM NM 10.0 49.4 Net debt / EBITDA 0.2 0.4 0.3 0.9 0.6 0.3

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital 1.2 1.2 1.4 1.4 1.4 1.5 Revenue / fixed assets 1.1 1.1 1.4 1.4 1.4 1.6 Revenue / net working capital NM NM NM 43.2 21.3 27.3

Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT 3.8 0.1 1.0 NM 1.5 1.2 Capex / revenue (%) 27.6 15.7 15.5 26.0 16.6 14.0 Capex / depreciation 1.2 0.7 0.8 1.4 0.9 0.9

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity (4.6) 13.0 12.6 35.3 23.8 14.0 Net debt / (net debt + equity) 3.8 11.5 11.2 26.1 19.3 12.3 Net debt (core) / EV 2.51 3.5 5.8 20.1 24.1 17.6



UBS 163

Telemig Celular Part. (PN)

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 1,097.29 1,154.01 1,148.93 1,193.48 1,377.40 1,501.99 9.0 1,655.30 10.2 1,783.85 7.8 Operating expenses (ex depn) (607.79) (675.16) (717.74) (844.81) (925.41) (1,127.03) 21.8 (1,253.04) 11.2 (1,346.46) 7.5 EBITDA (UBS) 489.51 478.85 431.19 348.67 451.99 374.96 -17.0 402.26 7.3 437.39 8.7 Depreciation (271.12) (270.26) (224.86) (194.98) (207.49) (260.54) 25.6 (249.52) -4.2 (249.57) 0.0 Operating income (EBIT, UBS) 218.39 208.59 206.32 153.69 244.50 114.42 -53.2 152.74 33.5 187.82 23.0 Other income & associates (16.67) (20.12) (22.01) (16.64) (16.55) (8.86) -46.5 (16.00) 80.6 (6.00) -62.5 Net interest 41.61 74.79 92.78 37.95 31.29 52.65 68.3 56.33 7.0 78.31 39.0 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 243.33 263.26 277.09 174.99 259.23 158.21 -39.0 193.07 22.0 260.13 34.7 Tax (64.56) (70.30) (70.82) (39.43) (88.01) (70.55) -19.8 (71.08) 0.8 (90.49) 27.3 Profit after tax 178.77 192.96 206.27 135.57 171.22 87.66 -48.8 121.98 39.2 169.65 39.1 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends (30.62) (33.40) (32.14) (22.15) (22.82) (4.00) -82.5 (8.51) 112.7 (10.83) 27.3 Net income (local GAAP) 148.15 159.56 174.13 113.41 148.41 83.66 -43.6 113.48 35.6 158.82 40.0 Net Income (UBS) 148.15 159.56 174.13 113.41 148.41 83.66 -43.6 113.48 35.6 158.82 40.0 Tax rate (%) 26.53 26.70 25.56 22.53 33.95 44.59 31.3 36.82 -17.4 34.78 -5.5 Pre-abnormal tax rate (%) 26.53 26.70 25.56 22.53 33.95 44.59 31.3 36.82 -17.4 34.78 -5.5 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 4.30 4.60 4.96 3.17 4.10 2.31 -43.6 3.13 35.6 4.39 40.0 EPS (UBS) 4.30 4.60 4.96 3.17 4.10 2.31 -43.6 3.13 35.6 4.39 40.0 Net DPS 0.70 1.12 2.72 2.71 0.96 1.41 47.5 0.58 -59.0 1.57 171.3 Cash EPS 12.18 12.38 11.38 8.61 9.83 9.51 -3.3 10.03 5.5 11.28 12.5 BVPS 25.16 28.59 29.30 31.22 33.97 40.27 18.6 42.83 6.3 45.65 6.6 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 642.71 960.55 706.33 527.77 730.63 1,082.95 48.2 1,145.06 5.7 1,271.88 11.1 Other current assets 266.57 348.89 332.75 370.34 424.61 638.20 50.3 714.25 11.9 759.75 6.4 Total current assets 909.28 1,309.44 1,039.08 898.12 1,155.23 1,721.16 49.0 1,859.31 8.0 2,031.63 9.3 Net tangible fixed assets 550.93 603.28 674.80 752.39 839.10 821.05 -2.2 819.82 -0.1 819.99 0.0 Net intangible fixed assets 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Investments / other assets 240.88 213.61 308.25 337.74 344.82 218.20 -36.7 218.20 0.0 218.20 0.0 Total assets 1,701.10 2,126.33 2,022.12 1,988.24 2,339.16 2,760.40 18.0 2,897.33 5.0 3,069.82 6.0 Trade payables & other ST liabilities 194.63 452.43 551.64 446.07 638.78 852.37 33.4 888.23 4.2 947.80 6.7 Short term debt 202.43 214.85 48.90 171.04 0.00 141.40 - 141.40 0.0 141.40 0.0 Total current liabilities 397.06 667.28 600.54 617.11 638.78 993.77 55.6 1,029.63 3.6 1,089.20 5.8 Long term debt 286.67 267.95 187.32 0.00 147.93 24.30 -83.6 24.30 0.0 24.30 0.0 Other long term liabilities 33.11 66.79 47.68 93.24 143.32 68.10 -52.5 68.10 0.0 68.10 0.0 Total liabilities 716.83 1,002.02 835.54 710.35 930.02 1,086.17 16.8 1,122.03 3.3 1,181.60 5.3 Equity & minority interests 984.27 1,124.31 1,186.58 1,277.89 1,409.13 1,674.23 18.8 1,775.30 6.0 1,888.21 6.4 Total liabilities & equity 1,701.10 2,126.33 2,022.12 1,988.24 2,339.16 2,760.40 18.0 2,897.33 5.0 3,069.82 6.0 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 148.15 159.56 174.13 113.41 148.41 83.66 -43.6 113.48 35.6 158.82 40.0 Depreciation 271.12 270.26 224.86 194.98 207.49 260.54 25.6 249.52 -4.2 249.57 0.0 Net change in working capital (11.78) 175.48 115.35 (143.17) 138.44 (.00) - (40.19) 1569115.9 14.08 - Other (operating) 30.62 33.40 32.14 22.15 22.82 104.00 355.8 8.51 -91.8 10.83 27.3 Net cash from operations 438.11 638.69 546.49 187.38 517.16 448.20 -13.3 331.32 -26.1 433.29 30.8 Capital expenditure (67.40) (301.00) (276.70) (252.60) (293.30) (230.28) -21.5 (248.30) 7.8 (249.74) 0.6 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities (67.40) (301.00) (276.70) (252.60) (293.30) (230.28) -21.5 (248.30) 7.8 (249.74) 0.6 Increase/(decrease) in debt (360.90) (6.29) (246.58) (65.18) (23.11) 17.77 - 0.00 - 0.00 - Share issues / (repurchases) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid (24.04) (38.85) (95.27) (97.20) (34.58) (51.00) 47.5 (20.91) -59.0 (56.74) 171.3 Other cash from financing 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities (384.94) (45.15) (341.85) (162.38) (57.69) (33.23) -42.4 (20.91) -37.1 (56.74) 171.3 Cash flow chge in cash & equivalents (14.24) 292.55 (72.06) (227.60) 166.16 184.69 - 62.11 - 126.82 - FX / non cash items 70.95 25.29 (182.16) 49.04 36.69 167.64 356.9 0.00 - 0.00 - Bal sheet chge in cash & equivalents 56.71 317.83 (254.22) (178.56) 202.85 352.33 - 62.11 - 126.82 - Core EBITDA 489.51 478.85 431.19 348.67 451.99 374.96 -17.0 402.26 7.3 437.39 8.7 Maintenance capital expenditure (67.40) (301.00) (276.70) (252.60) (293.30) (230.28) -21.5 (248.30) 7.8 (249.74) 0.6 Maintenance net working capital (11.78) 175.48 115.35 (143.17) 138.44 (.00) - (40.19) 1569115.9 14.08 - Operating free cash flow, pre-tax

410.33 353.33 269.84 (47.10) 297.13 144.68 -51.3 113.77 -21.4 201.73 77.3


UBS 164





Company profile Telemig Celular is the leading provider of mobile service in the stateof Minas Gerais, Brazil. The company stemmed from 1998 breakup ofTelebrás system and is controlled by the Citigroup and Brazilianpension funds. TMB and sister company TCN are the only mobileoperators in Brazil not controlled by an international operator or afixed line incumbent, so they are viewed as a potential takeovertarget. Telemig competes with Telecom Italia Mobile (TIM), AmericaMovil (AMX), and Oi, mobile arm of fixed-line incumbent Telemar.Telemig operates a GSM network.


12/06 12/07 12/08 12/09E 12/10E0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

0.0x

5.0x

10.0x

15.0x

20.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)5.00%

6.14%

7.29%

8.43%

9.57%

10.71%

11.86%

13.00%

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)1000

1114

1229

1343

1457

1571

1686

1800

-60%

-40%

-20%

0%

20%

40%



Telemig Celular Part. (PN)

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) 11.0 13.9 11.6 20.1 14.8 10.6 P/E (UBS) 11.0 13.9 11.6 20.1 14.8 10.6 P/CEPS 3.8 5.1 4.8 4.9 4.6 4.1 Net dividend yield (%) 4.0 6.2 2.0 3.0 1.2 3.4 P/BV 1.4 1.4 1.4 1.2 1.1 1.0 EV/revenue (core) 1.2 1.2 1.2 0.9 0.7 0.5 EV/EBITDA (core) 3.2 4.1 3.5 3.5 2.8 2.1 EV/EBIT (core) 7.0 9.4 6.5 11.4 7.3 4.8 EV/OpFCF (core) 5.4 NM 5.3 9.0 9.8 4.5 EV/op. invested capital 1.6 1.8 1.8 1.7 1.4 1.2

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 1,561.94 1,699.07 1,661.77 1,661.77 1,661.77 + minority interests 266.47 289.86 289.86 289.86 289.86 + average net debt (cash) (381.67) (402.17) (646.53) (833.01) (1,042.77) + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 0.00 0.00 0.00 0.00 Core enterprise value 1,446.73 1,586.76 1,305.11 1,118.62 908.86 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 5.9 3.9 15.4 9.0 10.2 7.8 EBITDA (UBS) -3.0 -19.1 29.6 -17.0 7.3 8.7 EBIT (UBS) -5.6 -25.5 59.1 -53.2 33.5 23.0 EPS (UBS) 12.2 -36.2 29.4 -43.6 35.6 40.0 Cash EPS 2.2 -24.3 14.1 -3.3 5.5 12.5 Net DPS 38.6 -0.1 -64.8 47.5 -59.0 171.3 BVPS 8.7 6.6 8.8 18.6 6.3 6.6



Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - - - - - Dividend cover (UBS EPS) 3.2 1.2 4.3 1.6 5.4 2.8 Div. payout ratio (%, UBS EPS) 43.6 85.7 23.3 61.0 18.4 35.7 Net debt / EBITDA NM NM NM NM NM NM


Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT 1.3 NM 1.2 1.3 0.7 1.1 Capex / revenue (%) 17.7 21.2 21.3 15.3 15.0 14.0 Capex / depreciation 0.8 1.3 1.4 0.9 1.0 1.0

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity (18.9) (27.9) (41.4) (54.8) (55.2) (58.6) Net debt / (net debt + equity) (33.3) (46.8) (90.0) NM NM NM Net debt (core) / EV -15.25 (26.4) (25.3) (49.5) (74.5) NM



UBS 165

Vivo Holdings (PN)

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 6,046.36 7,341.00 11,254.20 10,953.40 13,481.40 16,041.24 19.0 17,200.96 7.2 18,961.31 10.2 Operating expenses (ex depn) (3,770.99) (4,752.20) (8,230.50) (8,356.90) (9,999.00) (11,312.85) 13.1 (12,610.06) 11.5 (13,844.42) 9.8 EBITDA (UBS) 2,275.36 2,588.80 3,023.70 2,596.50 3,482.40 4,728.38 35.8 4,590.90 -2.9 5,116.89 11.5 Depreciation (1,220.70) (1,273.80) (2,245.10) (2,394.20) (2,636.40) (3,004.65) 14.0 (3,044.62) 1.3 (2,916.71) -4.2 Operating income (EBIT, UBS) 1,054.66 1,315.00 778.60 202.30 846.00 1,723.73 103.8 1,546.28 -10.3 2,200.19 42.3 Other income & associates (29.30) (51.10) (96.60) (289.00) (18.90) (29.40) 55.6 (20.00) -32.0 (12.00) -40.0 Net interest (1,133.50) (1,095.50) (913.10) (748.10) (443.60) (514.52) 16.0 (522.09) 1.5 (351.27) -32.7 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax (108.14) 168.40 (231.10) (834.80) 383.50 1,179.81 207.6 1,004.20 -14.9 1,836.92 82.9 Tax (236.30) (327.00) (362.90) 859.00 (331.50) (594.96) 79.5 (348.23) -41.5 (628.63) 80.5 Profit after tax (344.44) (158.60) (594.00) 24.20 52.00 584.85 1024.7 655.97 12.2 1,208.29 84.2 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends (295.80) (331.60) 0.00 (8.00) (22.80) (81.01) 255.3 (45.39) -44.0 (63.53) 40.0 Net income (local GAAP) (640.24) (490.20) (594.00) 16.20 29.20 503.84 1625.5 610.58 21.2 1,144.76 87.5 Net Income (UBS) (640.24) (490.20) (594.00) 16.20 29.20 503.84 1625.5 610.58 21.2 1,144.76 87.5 Tax rate (%) 0.00 194.18 0.00 0.00 86.44 50.43 -41.7 34.68 -31.2 34.22 -1.3 Pre-abnormal tax rate (%) 0.00 194.18 0.00 0.00 86.67 50.43 -41.8 34.68 -31.2 34.22 -1.3 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) (1.37) (0.89) (0.42) 0.01 0.02 1.37 6652.2 1.66 21.2 3.11 87.5 EPS (UBS) (1.37) (0.89) (0.42) 0.01 0.02 1.37 6652.2 1.66 21.2 3.11 87.5 Net DPS 0.00 0.00 0.00 0.00 0.01 0.34 2834.0 0.58 69.7 1.24 114.3 Cash EPS 1.24 1.42 1.16 1.67 1.85 9.52 415.1 9.92 4.2 11.02 11.1 BVPS 7.24 7.75 6.02 5.81 5.75 23.10 301.4 24.17 4.7 26.04 7.7 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 2,161.70 1,154.00 1,496.50 947.10 1,775.00 796.68 -55.1 1,861.43 133.6 2,908.95 56.3 Other current assets 3,075.30 3,174.30 5,447.00 4,224.90 4,597.90 6,323.87 37.5 6,744.34 6.6 7,484.50 11.0 Total current assets 5,237.00 4,328.30 6,943.50 5,172.00 6,372.90 7,120.55 11.7 8,605.77 20.9 10,393.44 20.8 Net tangible fixed assets 5,234.30 5,603.00 8,329.40 8,088.20 7,961.70 9,519.05 19.6 9,054.57 -4.9 8,792.45 -2.9 Net intangible fixed assets 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Investments / other assets 3,002.00 4,199.90 4,122.20 4,281.90 3,756.60 4,825.10 28.4 4,825.10 0.0 4,825.10 0.0 Total assets 13,473.30 14,131.20 19,395.10 17,542.10 18,091.20 21,464.70 18.6 22,485.45 4.8 24,010.99 6.8 Trade payables & other ST liabilities 2,300.30 2,739.70 4,256.50 4,109.60 4,893.20 5,769.91 17.9 6,348.39 10.0 7,123.56 12.2 Short term debt 3,993.30 2,897.00 1,734.90 1,590.30 1,984.00 2,375.90 19.8 2,375.90 0.0 2,375.90 0.0 Total current liabilities 6,293.60 5,636.70 5,991.40 5,699.90 6,877.20 8,145.81 18.4 8,724.29 7.1 9,499.46 8.9 Long term debt 2,285.90 2,066.20 3,917.90 2,910.00 2,397.40 3,577.30 49.2 3,577.30 0.0 3,577.30 0.0 Other long term liabilities 379.60 577.80 891.80 560.30 519.00 534.10 2.9 534.10 0.0 534.10 0.0 Total liabilities 8,959.10 8,280.70 10,801.10 9,170.20 9,793.60 12,257.21 25.2 12,835.69 4.7 13,610.86 6.0 Equity & minority interests 4,514.20 5,850.50 8,594.00 8,371.90 8,297.60 9,207.49 11.0 9,649.75 4.8 10,400.14 7.8 Total liabilities & equity 13,473.30 14,131.20 19,395.10 17,542.10 18,091.20 21,464.70 18.6 22,485.45 4.8 24,010.99 6.8 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income (640.24) (490.20) (594.00) 16.20 29.20 503.84 1625.5 610.58 21.2 1,144.76 87.5 Depreciation 1,220.70 1,273.80 2,245.10 2,394.20 2,636.40 3,004.65 14.0 3,044.62 1.3 2,916.71 -4.2 Net change in working capital (578.40) 340.40 (755.80) 1,075.20 410.50 (849.26) - 158.01 - 35.01 -77.8 Other (operating) 295.80 331.60 0.00 8.00 21.80 81.01 271.6 45.39 -44.0 63.53 40.0 Net cash from operations 297.86 1,455.60 895.30 3,493.60 3,097.90 2,740.24 -11.5 3,858.60 40.8 4,160.00 7.8 Capital expenditure (755.30) (1,395.20) (2,222.20) (2,120.80) (1,993.50) (6,100.00) 206.0 (2,580.14) -57.7 (2,654.58) 2.9 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities (755.30) (1,395.20) (2,222.20) (2,120.80) (1,993.50) (6,100.00) 206.0 (2,580.14) -57.7 (2,654.58) 2.9 Increase/(decrease) in debt 1,818.40 (1,316.00) 689.60 (1,152.50) (118.90) 1,571.80 - 0.00 - 0.00 - Share issues / (repurchases) (903.00) 2,054.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid 0.00 0.00 0.00 0.00 (16.80) (125.96) 649.8 (213.70) 69.7 (457.90) 114.3 Other cash from financing 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities 915.40 738.00 689.60 (1,152.50) (135.70) 1,445.84 - (213.70) - (457.90) 114.3 Cash flow chge in cash & equivalents 457.96 798.40 (637.30) 220.30 968.70 (1,913.92) - 1,064.75 - 1,047.51 - FX / non cash items 15.14 (1,806.10) 979.80 (769.70) (140.80) 935.60 - 0.00 - 0.00 - Bal sheet chge in cash & equivalents 473.10 (1,007.70) 342.50 (549.40) 827.90 (978.32) - 1,064.75 - 1,047.51 - Core EBITDA 2,275.36 2,588.80 3,023.70 2,596.50 3,482.40 4,728.38 35.8 4,590.90 -2.9 5,116.89 11.5 Maintenance capital expenditure (755.30) (1,395.20) (2,222.20) (2,120.80) (1,993.50) (6,100.00) 206.0 (2,580.14) -57.7 (2,654.58) 2.9 Maintenance net working capital (578.40) 340.40 (755.80) 1,075.20 410.50 (849.26) - 158.01 - 35.01 -77.8 Operating free cash flow, pre-tax

941.66 1,534.00 45.70 1,550.90 1,899.40 (2,220.88) - 2,168.77 - 2,497.32 15.1


UBS 166





Company profile VIVO Holdings (VIV) is the largest listed mobile company in Braziland the second largest in Latin America, after América Movil. It wasspun off in the privatization of the Telebrás system in July 1998. In2006, all VIVO assets (TCP, TRO, CRT, TBE, TSD) were mergedand the former stocks of the group were swapped into VIV. Thecompany is controlled by Telefonica/Portugal Telecom and hasaround 30% market share of mobile services in Brazil overall,operating a CDMA/GSM network. The company launched the GSMnetwork in January 2007.


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Vivo Holdings (PN)

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) NM NM NM 26.6 21.9 11.7 P/E (UBS) NM NM NM 26.6 21.9 11.7 P/CEPS 24.8 18.8 19.1 3.8 3.7 3.3 Net dividend yield (%) 0.0 0.0 0.0 0.9 1.6 3.4 P/BV 7.3 5.4 6.1 1.6 1.5 1.4 EV/revenue (core) 1.5 1.4 1.2 1.1 1.1 0.9 EV/EBITDA (core) 4.9 5.8 4.7 3.8 4.0 3.4 EV/EBIT (core) 14.3 NM 19.3 10.3 12.0 7.9 EV/OpFCF (core) 11.7 9.8 8.6 NM 8.5 7.0 EV/op. invested capital 1.5 1.4 1.6 1.6 1.6 1.5

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 11,267.64 12,728.96 13,395.70 13,395.70 13,395.70 + minority interests 0.10 480.36 480.36 480.36 480.36 + average net debt (cash) 3,854.75 3,079.80 3,881.46 4,624.14 3,568.01 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 (0.10) (0.10) (0.10) (0.10) Core enterprise value 15,122.49 16,289.01 17,757.42 18,500.11 17,443.97 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 34.1 -2.7 23.1 19.0 7.2 10.2 EBITDA (UBS) 15.7 -14.1 34.1 35.8 -2.9 11.5 EBIT (UBS) -28.3 -74.0 NM 103.8 -10.3 42.3 EPS (UBS) - - 80.2 NM 21.2 87.5 Cash EPS - 44.4 10.6 NM 4.2 11.1 Net DPS - - - NM 69.7 114.3 BVPS -9.2 -3.6 -0.9 NM 4.7 7.7

Margins (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBITDA / revenue 33.3 23.7 25.8 29.5 26.7 27.0 EBIT / revenue 13.3 1.8 6.3 10.7 9.0 11.6 Net profit (UBS) / revenue NM 0.1 0.2 3.1 3.5 6.0

Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) 10.9 1.9 8.1 15.4 13.0 19.2 ROIC post tax - 1.9 1.1 7.6 8.5 12.7 Net ROE -14.3 0.2 0.4 6.0 7.0 12.4

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - 0.3 1.9 3.4 3.0 6.3 Dividend cover (UBS EPS) - - 1.7 4.0 2.9 2.5 Div. payout ratio (%, UBS EPS) - - 57.5 25.0 35.0 40.0 Net debt / EBITDA 1.5 1.4 0.7 1.1 0.9 0.6

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital 1.0 1.0 1.3 1.4 1.4 1.7 Revenue / fixed assets 1.3 1.3 1.7 1.8 1.9 2.1 Revenue / net working capital 14.7 16.8 NM NM 36.2 50.1

Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT 1.2 7.7 2.2 NM 1.4 1.1 Capex / revenue (%) 17.5 19.4 14.8 NM 15.0 14.0 Capex / depreciation 0.9 0.9 0.8 2.0 0.8 0.9




UBS 167

Positivo Informatica

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 95.13 213.32 614.09 1,161.57 1,776.86 1,988.76 11.9 2,024.39 1.8 2,107.12 4.1 Operating expenses (ex depn) (94.75) (189.62) (508.88) (989.50) (1,493.20) (1,754.03) 17.5 (1,794.88) 2.3 (1,895.31) 5.6 EBITDA (UBS) 6.34 28.99 110.22 178.89 284.81 236.40 -17.0 230.31 -2.6 211.82 -8.0 Depreciation (4.50) (11.77) (8.42) (6.12) (11.08) (18.09) 63.2 (17.93) -0.9 (19.61) 9.4 Operating income (EBIT, UBS) 1.83 17.22 101.80 172.77 273.73 218.31 -20.2 212.38 -2.7 192.20 -9.5 Other income & associates 0.03 0.03 0.09 0.01 (0.20) 5.96 - 6.00 0.6 6.00 0.0 Net interest (0.74) (4.53) (6.28) (12.75) 4.75 (19.64) - 13.11 - 30.88 135.5 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 1.13 12.73 95.60 160.02 278.28 204.64 -26.5 231.49 13.1 229.09 -1.0 Tax 1.02 (4.66) (29.82) (50.98) (88.35) (59.19) -33.0 (78.71) 33.0 (77.89) -1.0 Profit after tax 2.15 8.07 65.78 109.04 189.93 145.45 -23.4 152.79 5.0 151.20 -1.0 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net income (local GAAP) 2.15 8.07 65.78 109.04 189.93 145.45 -23.4 152.79 5.0 151.20 -1.0 Net Income (UBS) 2.15 8.07 65.78 109.04 189.93 145.45 -23.4 152.79 5.0 151.20 -1.0 Tax rate (%) 0.00 36.60 31.19 31.86 31.75 28.92 -8.9 34.00 17.5 34.00 0.0 Pre-abnormal tax rate (%) 0.00 36.60 31.19 31.86 31.75 28.92 -8.9 34.00 17.5 34.00 0.0 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 0.02 0.09 0.75 1.24 2.16 1.67 -22.9 1.75 5.0 1.73 -1.0 EPS (UBS) 0.02 0.09 0.75 1.24 2.16 1.67 -22.9 1.75 5.0 1.73 -1.0 Net DPS 0.00 0.01 0.07 0.30 0.36 0.86 140.9 0.11 -86.8 0.14 22.4 Cash EPS 0.08 0.23 0.85 1.31 2.29 1.88 -18.0 1.96 4.4 1.96 0.1 BVPS 0.46 0.57 1.53 3.64 6.03 7.63 26.5 10.06 31.8 12.47 24.0 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 1.32 5.25 5.25 62.23 38.09 180.97 375.1 193.07 6.7 355.66 84.2 Other current assets 42.59 107.85 227.87 480.81 849.87 999.40 17.6 1,041.31 4.2 1,109.70 6.6 Total current assets 43.91 113.10 233.11 543.04 887.96 1,180.37 32.9 1,234.38 4.6 1,465.36 18.7 Net tangible fixed assets 3.58 3.65 6.11 10.84 20.84 38.15 83.0 46.78 22.6 55.08 17.8 Net intangible fixed assets 18.23 17.42 18.88 23.02 31.50 40.89 29.8 43.58 6.6 46.10 5.8 Investments / other assets 4.31 7.56 14.42 6.82 4.32 18.82 335.8 18.82 0.0 18.82 0.0 Total assets 70.04 141.72 272.52 583.71 944.61 1,278.23 35.3 1,343.55 5.1 1,585.36 18.0 Trade payables & other ST liabilities 20.83 58.66 100.58 242.55 387.56 489.06 26.2 442.90 -9.4 474.21 7.1 Short term debt 1.93 2.78 24.83 8.62 14.37 100.00 595.7 0.00 - 0.00 - Total current liabilities 22.75 61.45 125.42 251.17 401.93 589.06 46.6 442.90 -24.8 474.21 7.1 Long term debt 0.00 0.00 8.28 0.00 0.00 0.00 - 0.00 - 0.00 - Other long term liabilities 6.84 30.35 4.84 13.06 13.26 24.06 81.5 24.06 0.0 24.06 0.0 Total liabilities 29.60 91.80 138.53 264.23 415.19 613.12 47.7 466.96 -23.8 498.27 6.7 Equity & minority interests 40.44 49.92 134.00 319.48 529.42 665.11 25.6 876.59 31.8 1,087.10 24.0 Total liabilities & equity 70.04 141.72 272.52 583.71 944.61 1,278.23 35.3 1,343.55 5.1 1,585.36 18.0 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 2.15 8.07 65.78 109.04 189.93 145.45 -23.4 152.79 5.0 151.20 -1.0 Depreciation 4.50 11.77 8.42 6.12 11.08 18.09 63.2 17.93 -0.9 19.61 9.4 Net change in working capital 0.00 (27.43) (78.10) (110.98) (224.05) (48.02) -78.6 (88.08) 83.4 (37.08) -57.9 Other (operating) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations 6.65 (7.60) (3.90) 4.18 (23.04) 115.51 - 82.64 -28.5 133.72 61.8 Capital expenditure 0.00 (8.30) (12.96) (17.79) (29.60) (45.51) 53.8 (29.24) -35.7 (30.44) 4.1 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities 0.00 (8.30) (12.96) (17.79) (29.60) (45.51) 53.8 (29.24) -35.7 (30.44) 4.1 Increase/(decrease) in debt - 0.86 30.33 29.80 41.98 39.72 - (1.17) - 10.38 - Share issues / (repurchases) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid 0.00 (0.65) (6.49) (26.55) (31.28) (74.80) 139.1 (9.85) -86.8 (12.06) 22.4 Other cash from financing 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities - 0.21 23.83 3.25 10.70 (35.08) - (11.02) -68.6 (1.67) -84.8 Cash flow chge in cash & equivalents - (15.69) 6.98 (10.36) (41.94) 34.92 - 42.37 - 101.61 - FX / non cash items - 19.61 (6.98) 67.35 17.80 107.97 14.9 (30.28) 10.5 60.98 4.1 Bal sheet chge in cash & equivalents - 3.93 0.00 56.98 (24.14) 142.88 - 12.10 - 162.59 - Core EBITDA 6.34 28.99 110.22 178.89 284.81 236.40 -17.0 230.31 -2.6 211.82 -8.0 Maintenance capital expenditure (0.10) (8.30) (12.96) (17.79) (29.60) (45.51) 53.8 (29.24) -35.7 (30.44) 4.1 Maintenance net working capital 0.00 (27.43) (78.10) (110.98) (224.05) (48.02) -78.6 (88.08) 83.4 (37.08) -57.9 Operating free cash flow, pre-tax

6.24 (6.74) 19.16 50.12 31.16 142.87 358.5 112.99 -20.9 144.29 27.7


UBS 168


Computers



Company profile Positivo is the largest assembler and seller of personal computers inBrazil. It was spun off as an IPO in December 2006 from the Postivogroup, which is also involved in education, printing, and publishing inBrazil. Positivo sells PCs and notebooks primarily to final consumersvia retail stores, and directly to schools and the public sector. In the3Q 2008, Positivo has sold 437,000 PCs.


12/06 12/07 12/08 12/09E 12/10E0.00x

1.00x

2.00x

3.00x

4.00x

5.00x

6.00x

0.0x

5.0x

10.0x

15.0x

20.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)8.00%

9.14%

10.29%

11.43%

12.57%

13.71%

14.86%

16.00%

10.0%

21.4%

32.9%

44.3%

55.7%

67.1%

78.6%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

7.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)800

1000

1200

1400

1600

1800

2000

2200

-40%

-20%

0%

20%

40%

60%

80%



Positivo Informatica

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - 18.7 17.4 5.0 4.8 4.8 P/E (UBS) - 18.7 17.4 5.0 4.8 4.8 P/CEPS - 17.7 16.4 4.5 4.3 4.3 Net dividend yield (%) - 1.3 0.9 10.2 1.3 1.6 P/BV - 6.4 6.2 1.1 0.8 0.7 EV/revenue (core) - 1.7 1.8 0.3 0.3 0.2 EV/EBITDA (core) - 11.3 11.5 2.9 2.6 2.2 EV/EBIT (core) - 11.7 11.9 3.1 2.8 2.4 EV/OpFCF (core) - NM NM 4.8 5.3 3.2 EV/op. invested capital - 9.5 8.5 1.3 0.9 0.7

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 2,035.83 3,302.56 737.52 737.52 737.52 + minority interests 0.00 0.00 0.00 0.00 0.00 + average net debt (cash) (12.87) (38.66) (52.34) (137.02) (274.37) + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value (0.20) (0.20) (1.00) (1.00) (1.00) Core enterprise value 2,022.76 3,263.70 684.17 599.50 462.15 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - 89.2 53.0 11.9 1.8 4.1 EBITDA (UBS) - 62.3 59.2 -17.0 -2.6 -8.0 EBIT (UBS) - 69.7 58.4 -20.2 -2.7 -9.5 EPS (UBS) - 65.8 74.2 -22.9 5.0 -1.0 Cash EPS - 55.2 74.6 -18.0 4.4 0.1 Net DPS - NM 17.8 140.9 -86.8 22.4 BVPS - 138.4 65.7 26.5 31.8 24.0


Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) - NM 71.0 40.1 33.6 27.2 ROIC post tax - 55.1 48.5 28.5 22.2 18.0 Net ROE - 48.1 44.7 24.4 19.8 15.4

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - 13.5 - 11.1 - - Dividend cover (UBS EPS) - 4.1 6.1 1.9 15.5 12.5 Div. payout ratio (%, UBS EPS) - 24.4 16.5 51.4 6.4 8.0 Net debt / EBITDA - NM NM NM NM NM

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - 5.4 4.6 3.7 3.2 3.0 Revenue / fixed assets - NM NM NM 23.9 22.0 Revenue / net working capital - 6.4 5.1 4.1 3.7 3.4


Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - (16.8) (4.5) (12.2) (22.0) (32.7) Net debt / (net debt + equity) - (20.2) (4.7) (13.9) (28.2) (48.6) Net debt (core) / EV - (0.6) (1.2) (7.7) (22.9) (59.4)



UBS 169

Totvs

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues - 183.13 311.78 376.30 495.92 693.38 39.8 908.03 31.0 997.81 9.9 Operating expenses (ex depn) - (161.42) (260.78) (330.69) (387.35) (554.98) 43.3 (701.09) 26.3 (760.59) 8.5 EBITDA (UBS) - 21.71 51.00 45.61 108.56 138.40 27.5 206.93 49.5 237.22 14.6 Depreciation - (2.65) (8.05) (39.64) (54.97) (79.71) 45.0 (112.27) 40.9 (107.28) -4.5 Operating income (EBIT, UBS) - 19.07 42.95 5.96 53.59 58.70 9.5 94.66 61.3 129.94 37.3 Other income & associates - (0.48) 0.53 (0.20) (0.17) (0.16) -2.4 (31.20) 19278.9 (17.00) -45.5 Net interest - 0.90 1.29 6.65 6.76 (10.13) - (18.63) 83.8 (5.08) -72.7 Abnormal items (pre-tax) - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax - 19.49 44.77 12.41 60.19 48.40 -19.6 44.83 -7.4 107.86 140.6 Tax - (7.10) (13.85) 4.12 (13.89) (5.06) -63.6 (3.59) -29.0 (18.67) 419.9 Profit after tax - 12.38 30.92 16.53 46.30 43.34 -6.4 41.24 -4.8 89.19 116.3 Abnormal items (post-tax) - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends - 0.03 (0.13) (0.19) (0.71) (0.62) -12.3 (0.20) -67.7 (0.20) 0.0 Net income (local GAAP) - 12.41 30.79 16.34 45.59 42.72 -6.3 41.04 -3.9 88.99 116.8 Net Income (UBS) - 12.41 30.79 16.34 75.88 89.30 17.7 101.02 13.1 146.28 44.8 Tax rate (%) - 36.45 30.94 - 23.07 10.45 -54.7 8.01 -23.4 17.31 116.1 Pre-abnormal tax rate (%) - 36.45 30.94 - (27.25) (85.78) 214.7 (125.79) 46.6 (35.81) -71.5 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) - 0.47 1.15 0.61 1.71 1.37 -19.7 1.32 -3.9 2.86 116.8 EPS (UBS) - 0.47 1.15 0.61 2.84 2.87 0.9 3.24 13.1 4.70 44.8 Net DPS - 0.00 0.18 0.28 0.85 0.95 12.4 0.96 1.1 1.44 50.4 Cash EPS - 0.56 1.45 2.10 4.90 5.43 10.7 6.85 26.2 8.14 18.9 BVPS - 1.60 2.85 13.09 21.54 15.53 -27.9 16.63 7.1 18.33 10.2 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents - 16.96 22.11 98.55 275.96 153.61 -44.3 272.05 77.1 400.13 47.1 Other current assets - 43.28 56.52 100.68 159.86 180.08 12.6 189.20 5.1 211.07 11.6 Total current assets - 60.24 78.63 199.23 435.82 333.69 -23.4 461.25 38.2 611.20 32.5 Net tangible fixed assets - 12.10 14.22 19.35 22.21 48.61 118.9 46.29 -4.8 44.77 -3.3 Net intangible fixed assets - 0.00 0.00 186.08 254.72 608.77 139.0 526.88 -13.5 449.08 -14.8 Investments / other assets 0.00 9.19 30.38 18.36 36.93 60.49 63.8 60.49 0.0 60.49 0.0 Total assets - 81.53 123.23 423.02 749.68 1,051.55 40.3 1,094.90 4.1 1,165.54 6.5 Trade payables & other ST liabilities - 29.99 37.91 69.64 134.43 148.40 10.4 157.22 5.9 174.63 11.1 Short term debt - 0.87 0.57 0.34 0.61 3.01 395.7 3.01 0.0 3.01 0.0 Total current liabilities - 30.85 38.48 69.99 135.04 151.41 12.1 160.22 5.8 177.64 10.9 Long term debt - 0.35 0.00 0.00 0.94 362.15 38509.2 362.15 0.0 362.15 0.0 Other long term liabilities - 7.50 8.34 2.83 36.29 49.70 36.9 49.70 0.0 49.70 0.0 Total liabilities - 38.71 46.82 72.81 172.27 563.26 227.0 572.08 1.6 589.50 3.0 Equity & minority interests - 42.83 76.41 350.20 577.41 488.29 -15.4 522.82 7.1 576.04 10.2 Total liabilities & equity - 81.53 123.23 423.02 749.68 1,051.55 40.3 1,094.90 4.1 1,165.54 6.5 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income - 12.41 30.79 16.34 45.59 42.72 -6.3 41.04 -3.9 88.99 116.8 Depreciation - 2.65 8.05 39.64 54.97 79.71 45.0 112.27 40.9 107.28 -4.5 Net change in working capital - 0.00 (11.72) (27.48) (15.43) 37.22 - (0.30) - (4.46) 1385.6 Other (operating) - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations - 15.06 27.11 28.50 85.14 159.65 87.5 153.02 -4.2 191.81 25.4 Capital expenditure - (5.86) (8.69) (10.25) (10.72) (18.36) 71.3 (19.07) 3.9 (18.96) -0.6 Net (acquisitions) / disposals - 0.00 (35.00) (206.00) (7.72) (536.42) 6849.4 (9.00) -98.3 (9.00) 0.0 Other changes in investments - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities - (5.86) (43.69) (216.25) (18.43) (554.78) 2909.4 (28.07) -94.9 (27.96) -0.4 Increase/(decrease) in debt - 0.00 (0.65) (0.23) 1.20 363.62 - 0.00 - 0.00 - Share issues / (repurchases) - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid - 0.00 (4.90) (7.50) (22.56) (29.58) 31.1 (29.91) 1.1 (44.97) 50.4 Other cash from financing - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities - 0.00 (5.55) (7.73) (21.36) 334.04 - (29.91) - (44.97) 50.4 Cash flow chge in cash & equivalents - 9.20 (22.13) (195.47) 45.35 (61.10) - 95.04 - 118.88 - FX / non cash items - - 27.27 271.92 132.06 (61.25) - 23.40 - 9.20 -60.7 Bal sheet chge in cash & equivalents - - 5.14 76.44 177.41 (122.35) - 118.44 - 128.08 - Core EBITDA - 21.71 51.00 45.61 108.56 138.40 27.5 206.93 49.5 237.22 14.6 Maintenance capital expenditure - (5.86) (8.69) (10.25) (10.72) (18.36) 71.3 (19.07) 3.9 (18.96) -0.6 Maintenance net working capital - 0.00 (11.72) (27.48) (15.43) 37.22 - (0.30) - (4.46) 1385.6 Operating free cash flow, pre-tax

- 15.85 30.59 7.88 82.42 157.26 90.8 187.56 19.3 213.80 14.0


UBS 170


Software



Company profile Totvs develops Enterprise Resource Planning (ERP) and otherenterprise software for mid/small-sized companies in Brazil and Latin America. It has sales offices in Brazil, Mexico, Argentina, Bolivia,Chile, Puerto Rico, Paraguay, and Portugal. Totvs trades on Brazil'sNovo Mercado segment with special disclosure, corporategovernance, and tag-along requirements. In September 2008, it acquired Datasul (its main local competitor) and reached 40% ofBrazil's market share.


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

0.0x

10.0x

20.0x

30.0x

40.0x

50.0x

60.0x

70.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

2.0x

2.2x

2.4x

2.6x

2.8x

3.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)200

314

429

543

657

771

886

-60%

-40%

-20%

0%

20%

40%

60%



Totvs

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - 63.9 33.9 29.9 31.1 14.3 P/E (UBS) - 63.9 20.3 14.3 12.6 8.7 P/CEPS - 18.6 11.8 7.6 6.0 5.0 Net dividend yield (%) - 0.7 1.5 2.3 2.3 3.5 P/BV - 3.0 2.7 2.6 2.5 2.2 EV/revenue (core) - 2.6 2.7 1.8 1.6 1.3 EV/EBITDA (core) - 21.6 12.5 9.0 6.9 5.5 EV/EBIT (core) - NM 25.4 21.3 15.1 10.1 EV/OpFCF (core) - NM 16.5 7.9 7.6 6.1 EV/op. invested capital - 6.9 4.9 2.5 2.2 2.3

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 1,043.56 1,542.92 1,276.92 1,276.92 1,276.92 + minority interests 0.75 2.40 4.59 4.79 4.99 + average net debt (cash) (59.87) (186.31) (31.43) 152.33 29.07 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 0.00 0.00 0.00 0.00 Core enterprise value 984.43 1,359.00 1,250.08 1,434.05 1,310.99 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - 20.7 31.8 39.8 31.0 9.9 EBITDA (UBS) - -10.6 138.0 27.5 49.5 14.6 EBIT (UBS) - -86.1 NM 9.5 61.3 37.3 EPS (UBS) - -46.9 NM 0.9 13.1 44.8 Cash EPS - 44.2 133.7 10.7 26.2 18.9 Net DPS - 53.1 NM 12.4 1.1 50.4 BVPS - NM 64.5 -27.9 7.1 10.2


Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) - 4.2 19.3 11.7 14.4 22.5 ROIC post tax - - 24.6 21.7 32.5 30.5 Net ROE - 7.7 16.4 16.9 20.2 26.9

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - - 5.8 5.1 25.6 Dividend cover (UBS EPS) - 2.2 3.4 3.0 3.4 3.3 Div. payout ratio (%, UBS EPS) - 45.9 29.7 33.1 29.6 30.7 Net debt / EBITDA - NM NM 1.5 0.4 NM



Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - (28.0) (47.5) 43.3 17.8 (6.1) Net debt / (net debt + equity) - (39.1) (91.3) 30.4 15.2 (6.5) Net debt (core) / EV - (6.1) (13.7) (2.5) 10.6 2.2



UBS 171

Utilities

UBS 172

AES Tiete (PN)

Income statement (R$m) 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch Revenues 1,386.96 1,463.88 1,593.95 1,633.45 2.5 1,722.28 5.4 1,801.89 4.6 Operating expenses (ex depn) (290.11) (365.05) (348.22) (360.40) 3.5 (374.27) 3.8 (390.12) 4.2 EBITDA (UBS) 1,096.85 1,098.83 1,245.73 1,273.04 2.2 1,348.01 5.9 1,411.77 4.7 Depreciation (66.86) (65.21) (65.33) (65.13) -0.3 (65.13) 0.0 (68.38) 5.0 Operating income (EBIT, UBS) 1,030.00 1,033.61 1,180.40 1,207.91 2.3 1,282.89 6.2 1,343.39 4.7 Other income & associates (0.11) (0.05) (2.02) (2.09) 3.1 (2.15) 2.8 (2.24) 4.5 Net interest (110.60) (119.87) (190.14) (186.78) -1.8 (182.73) -2.2 (171.79) -6.0 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 919.29 913.70 988.24 1,019.05 3.1 1,098.02 7.7 1,169.36 6.5 Tax (301.11) (304.59) (334.97) (336.35) 0.4 (364.75) 8.4 (389.01) 6.7 Profit after tax 618.19 609.11 653.27 682.70 4.5 733.26 7.4 780.35 6.4 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net income (local GAAP) 618.19 609.11 653.27 682.70 4.5 733.26 7.4 780.35 6.4 Net Income (UBS) 618.19 609.11 653.27 682.70 4.5 733.26 7.4 780.35 6.4 Tax rate (%) 32.75 33.34 33.90 33.01 -2.6 33.22 0.6 33.27 0.1 Pre-abnormal tax rate (%) 32.75 33.34 33.90 33.01 -2.6 33.22 0.6 33.27 0.1 Per share (R$) 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch EPS (local GAAP) 1.62 1.60 1.71 1.77 3.2 1.87 6.0 1.99 6.4 EPS (UBS) 1.62 1.60 1.71 1.77 3.2 1.87 6.0 1.99 6.4 Net DPS 1.62 1.60 1.71 1.77 3.2 1.87 6.0 1.99 6.4 Cash EPS 1.80 1.77 1.88 1.94 2.7 2.04 5.4 2.17 6.3 BVPS 1.25 1.31 1.81 1.78 -1.3 1.76 -1.3 1.76 0.0 Balance sheet (R$m) 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch Cash and equivalents 690.33 81.22 940.37 1,012.73 7.7 1,073.45 6.0 1,721.18 60.3 Other current assets 234.80 978.61 315.52 328.57 4.1 339.79 3.4 341.95 0.6 Total current assets 925.13 1,059.83 1,255.88 1,341.30 6.8 1,413.24 5.4 2,063.13 46.0 Net tangible fixed assets 1,225.09 1,208.77 1,171.41 1,167.18 -0.4 1,165.69 -0.1 1,163.82 -0.2 Net intangible fixed assets 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Investments / other assets 242.72 234.85 246.82 246.82 0.0 246.82 0.0 246.82 0.0 Total assets 2,392.95 2,503.45 2,674.11 2,755.30 3.0 2,825.76 2.6 3,473.77 22.9 Trade payables & other ST liabilities 511.35 604.63 628.49 647.20 3.0 658.83 1.8 1,250.20 89.8 Short term debt 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Total current liabilities 511.35 604.63 628.49 647.20 3.0 658.83 1.8 1,250.20 89.8 Long term debt 1,372.23 1,299.19 1,279.42 1,341.90 4.9 1,400.73 4.4 1,457.36 4.0 Other long term liabilities 33.95 98.59 77.43 77.43 0.0 77.43 0.0 77.43 0.0 Total liabilities 1,917.53 2,002.41 1,985.34 2,066.52 4.1 2,136.98 3.4 2,784.99 30.3 Equity & minority interests 475.42 501.04 688.78 688.78 0.0 688.78 0.0 688.78 0.0 Total liabilities & equity 2,392.95 2,503.45 2,674.11 2,755.30 3.0 2,825.76 2.6 3,473.77 22.9 Cash flow (R$m) 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % ch Net income 618.19 609.11 653.27 682.70 4.5 733.26 7.4 780.35 6.4 Depreciation 66.86 65.21 65.33 65.13 -0.3 65.13 0.0 68.38 5.0 Net change in working capital (25.75) (19.67) 117.74 (13.05) - (11.22) -14.0 (2.16) -80.8 Other (operating) 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations 659.29 654.65 836.34 734.78 -12.1 787.17 7.1 846.57 7.5 Capital expenditure (46.50) (52.50) (58.00) (60.90) 5.0 (63.64) 4.5 (66.50) 4.5 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities (46.50) (52.50) (58.00) (60.90) 5.0 (63.64) 4.5 (66.50) 4.5 Increase/(decrease) in debt (61.34) (149.35) 0.00 0.00 - 0.00 - 0.00 - Share issues / (repurchases) 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid (618.19) (609.11) (653.27) (682.70) 4.5 (733.26) 7.4 (780.35) 6.4 Other cash from financing 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities (679.53) (758.46) (653.27) (682.70) 4.5 (733.26) 7.4 (780.35) 6.4 Cash flow chge in cash & equivalents (66.74) (156.31) 125.06 (8.82) - (9.74) - (0.28) - FX / non cash items (37.87) (452.80) 734.08 81.19 -97.5 70.46 -37.9 648.01 4986.2 Bal sheet chge in cash & equivalents (104.61) (609.11) 859.14 72.36 - 60.72 - 647.73 - Core EBITDA 1,096.85 1,098.83 1,245.73 1,273.04 2.2 1,348.01 5.9 1,411.77 4.7 Maintenance capital expenditure (46.50) (52.50) (58.00) (60.90) 5.0 (63.64) 4.5 (66.50) 4.5 Maintenance net working capital (25.75) (19.67) 117.74 (13.05) - (11.22) -14.0 (2.16) -80.8 Operating free cash flow, pre-tax (OpFCF) 1,024.60 1,026.66 1,305.47 1,199.09 -8.1 1,273.15 6.2 1,343.11 5.5


UBS 173


Electric Utilities



Company profile AES Tiete is a pure generation company located in the state of Sao Paulo and controlled by AES. The company currently has 2,651 MWof installed capacity and an assured energy of 1,275 average MW. Itis fully contracted, with a long-term bilateral contract with Eletropaulountil 2015 at a high tariff adjusted by inflation.


12/07 12/08 12/09E 12/10E 12/11E0.00x

1.00x

2.00x

3.00x

4.00x

5.00x

6.00x

7.00x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x


Profitability

12/07 12/08 12/09(E) 12/10(E) 12/11(E)69.00%

70.00%

71.00%

72.00%

73.00%

74.00%

75.00%

0%

50%

100%

150%

200%



12/07 12/08 12/09(E) 12/10(E) 12/11(E)90.0%

95.0%

100.0%

105.0%

110.0%

115.0%

120.0%

125.0%

7.0x

8.0x

9.0x

10.0x

11.0x

12.0x

13.0x


Growth (UBS EPS)

12/07 12/08 12/09(E) 12/10(E) 12/11(E)1300

1400

1500

1600

1700

1800

1900

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%



AES Tiete (PN)

Valuation (x) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E P/E (local GAAP) 8.0 10.3 9.0 9.5 8.9 8.4 P/E (UBS) 8.0 10.3 9.0 9.5 8.9 8.4 P/CEPS 6.9 9.3 8.2 8.7 8.2 7.7 Net dividend yield (%) 12.6 9.7 11.1 10.6 11.2 11.9 P/BV 8.0 12.6 8.6 9.4 9.5 9.5 EV/revenue (core) 4.1 4.8 4.0 4.2 3.9 3.6 EV/EBITDA (core) 5.3 6.3 5.1 5.4 5.0 4.5 EV/EBIT (core) 5.7 6.7 5.4 5.7 5.2 4.8 EV/OpFCF (core) 5.2 6.8 4.9 5.7 5.3 4.8 EV/op. invested capital - 4.8 4.7 6.7 6.6 8.9

Enterprise value (R$m) 12/07 12/08 12/09E 12/10E 12/11E Average market cap 6,291.44 5,891.61 6,385.77 6,385.77 6,385.77 + minority interests 0.00 0.00 0.00 0.00 0.00 + average net debt (cash) 671.39 499.97 495.02 328.22 32.20 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value (2.10) (2.10) (2.10) (2.10) (2.10) Core enterprise value 6,960.73 6,389.48 6,878.69 6,711.89 6,415.87 Growth (%) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E Revenue 17.1 5.5 8.9 2.5 5.4 4.6 EBITDA (UBS) 15.8 0.2 13.4 2.2 5.9 4.7 EBIT (UBS) 17.2 0.4 14.2 2.3 6.2 4.7 EPS (UBS) 32.6 -1.5 7.2 3.2 6.0 6.4 Cash EPS 26.7 -1.6 6.5 2.7 5.4 6.3 Net DPS 34.3 -1.5 7.2 3.2 6.0 6.4 BVPS 2.9 5.4 37.4 -1.3 -1.3 0.0

Margins (%) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E EBITDA / revenue NM NM NM NM NM NM EBIT / revenue 71.9 70.6 74.1 73.9 74.5 74.6 Net profit (UBS) / revenue 37.3 41.6 41.0 41.8 42.6 43.3

Return on capital (%) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E EBIT ROIC (UBS) - 72.0 NM NM NM NM ROIC post tax - 48.0 56.9 NM NM NM Net ROE - 124.8 109.8 99.1 106.5 113.3

Coverage ratios (x) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E EBIT / net interest 7.2 8.6 6.2 6.5 7.0 7.8 Dividend cover (UBS EPS) 1.0 1.0 1.0 1.0 1.0 1.0 Div. payout ratio (%, UBS EPS) 97.4 100.0 100.0 100.0 100.0 100.0 Net debt / EBITDA 1.1 1.1 0.3 0.3 0.2 NM

Efficiency ratios (x) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E Revenue / op. invested capital - 1.0 1.2 1.6 1.7 2.5 Revenue / fixed assets - 1.2 1.3 1.4 1.5 1.5 Revenue / net working capital - 30.1 52.3 NM NM NM


Capital structure (%) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E Net debt / total equity NM NM 49.2 47.8 47.5 (38.3) Net debt / (net debt + equity) 67.7 70.9 33.0 32.3 32.2 (62.1) Net debt (core) / EV 19.51 9.6 7.8 7.2 4.9 0.5




UBS 174

Cia. Energetica de Minas Gerais

Income statement (R$m) 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 8,235.62 9,681.27 10,245.91 10,529.39 2.8 9,840.92 -6.5 10,555.85 7.3 Operating expenses (ex depn) (5,648.39) (6,619.29) (6,505.07) (6,460.03) -0.7 (6,171.08) -4.5 (6,815.37) 10.4 EBITDA (UBS) 2,587.23 3,061.98 3,740.85 4,069.36 8.8 3,669.84 -9.8 3,740.47 1.9 Depreciation (551.91) (552.38) (778.14) (692.89) -11.0 (624.69) -9.8 (645.59) 3.3 Operating income (EBIT, UBS) 2,035.33 2,509.61 2,962.70 3,376.47 14.0 3,045.15 -9.8 3,094.88 1.6 Other income & associates 1,065.18 (213.50) (248.84) (335.47) 34.8 23.20 - 36.45 57.2 Net interest (627.27) (49.67) (356.11) (179.93) -49.5 (233.37) 29.7 (216.82) -7.1 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 2,473.24 2,246.44 2,357.75 2,861.07 21.3 2,834.98 -0.9 2,914.52 2.8 Tax (470.53) (527.60) (622.30) (981.51) 57.7 (909.33) -7.4 (782.82) -13.9 Profit after tax 2,002.71 1,718.84 1,735.45 1,879.55 8.3 1,925.66 2.5 2,131.70 10.7 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends 0.70 0.00 0.00 0.00 - 0.00 - 0.00 - Net income (local GAAP) 2,003.40 1,718.84 1,735.45 1,879.55 8.3 1,925.66 2.5 2,131.70 10.7 Net Income (UBS) 2,003.40 1,718.84 1,735.45 1,879.55 8.3 1,925.66 2.5 2,131.70 10.7 Tax rate (%) 19.02 23.49 26.39 34.31 30.0 32.08 -6.5 26.86 -16.3 Pre-abnormal tax rate (%) 19.02 23.49 26.39 34.31 30.0 32.08 -6.5 26.86 -16.3 Per share (R$) 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 8.24 7.07 3.57 3.79 6.2 3.88 2.5 4.30 10.7 EPS (UBS) 8.24 7.07 3.57 3.79 6.2 3.88 2.5 4.30 10.7 Net DPS 6.76 4.90 1.78 1.89 6.2 1.94 2.5 2.15 10.7 Cash EPS 10.51 9.34 5.17 5.18 0.3 5.14 -0.9 5.60 8.9 BVPS 29.54 29.63 17.25 18.87 9.4 20.81 10.3 22.96 10.3 Balance sheet (R$m) 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 1,344.14 1,149.97 1,908.30 2,769.57 45.1 3,410.59 23.1 4,578.31 34.2 Other current assets 3,853.70 6,992.50 4,165.23 2,969.36 -28.7 2,757.82 -7.1 2,582.59 -6.4 Total current assets 5,197.84 8,142.46 6,073.52 5,738.93 -5.5 6,168.41 7.5 7,160.89 16.1 Net tangible fixed assets 8,898.37 10,683.92 11,359.53 11,659.03 2.6 12,117.34 3.9 12,180.24 0.5 Net intangible fixed assets 61.98 0.00 0.00 0.00 - 0.00 - 0.00 - Investments / other assets 5,681.40 1,963.12 4,935.89 4,756.81 -3.6 4,768.52 0.2 4,843.43 1.6 Total assets 19,839.59 20,789.50 22,368.94 22,154.77 -1.0 23,054.27 4.1 24,184.56 4.9 Trade payables & other ST liabilities 4,573.75 2,424.55 1,880.26 1,787.05 -5.0 1,848.69 3.4 2,004.90 8.4 Short term debt 1,145.93 1,336.28 1,401.35 1,358.28 -3.1 1,362.00 0.3 1,376.68 1.1 Total current liabilities 5,719.68 3,760.83 3,281.61 3,145.32 -4.2 3,210.69 2.1 3,381.58 5.3 Long term debt 5,235.28 6,690.29 6,826.03 6,668.17 -2.3 6,698.14 0.4 6,759.40 0.9 Other long term liabilities 1,680.27 3,132.52 3,871.13 2,975.73 -23.1 2,817.07 -5.3 2,649.35 -6.0 Total liabilities 12,635.23 13,583.63 13,978.77 12,789.22 -8.5 12,725.89 -0.5 12,790.34 0.5 Equity & minority interests 7,204.35 7,205.87 8,390.18 9,365.55 11.6 10,328.38 10.3 11,394.23 10.3 Total liabilities & equity 19,839.59 20,789.50 22,368.94 22,154.77 -1.0 23,054.27 4.1 24,184.56 4.9 Cash flow (R$m) 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 2,003.40 1,718.84 1,735.45 1,879.55 8.3 1,925.66 2.5 2,131.70 10.7 Depreciation 551.91 552.38 778.14 692.89 -11.0 624.69 -9.8 645.59 3.3 Net change in working capital (125.89) (294.85) 0.00 0.00 - (11.91) - (36.18) 203.8 Other (operating) (1,453.91) (378.48) 0.00 0.00 - 0.00 - 0.00 - Net cash from operations 975.51 1,597.88 2,513.59 2,572.44 2.3 2,538.43 -1.3 2,741.11 8.0 Capital expenditure (1,337.00) (1,399.00) 0.00 (1,155.00) - (1,083.00) -6.2 (708.49) -34.6 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities (1,337.00) (1,399.00) 0.00 (1,155.00) - (1,083.00) -6.2 (708.49) -34.6 Increase/(decrease) in debt 851.20 1,512.31 0.00 0.00 - 0.00 - 0.00 - Share issues / (repurchases) 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid (697.91) (2,858.56) (867.72) (939.78) 8.3 (962.83) 2.5 (1,065.85) 10.7 Other cash from financing 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities 153.29 (1,346.26) (867.72) (939.78) 8.3 (962.83) 2.5 (1,065.85) 10.7 Cash flow chge in cash & equivalents (208.21) (1,147.37) 1,645.87 477.67 - 492.60 - 966.77 - FX / non cash items 656.12 953.20 (887.54) 383.61 - 148.41 -80.4 200.94 9.0 Bal sheet chge in cash & equivalents 447.91 (194.17) 758.33 861.28 - 641.02 - 1,167.72 - Core EBITDA 2,587.23 3,061.98 3,740.85 4,069.36 8.8 3,669.84 -9.8 3,740.47 1.9 Maintenance capital expenditure (475.60) (494.56) (10.00) (462.00) 4520.0 (433.20) -6.2 (283.40) -34.6 Maintenance net working capital 20.84 22.48 0.00 0.00 - (4.76) - (14.47) 203.8 Operating free cash flow, pre-tax (OpFCF) 2,132.46 2,589.90 3,730.85 3,607.36 -3.3 3,231.88 -10.4 3,442.61 6.5


UBS 175


Electric Utilities



Company profile Cemig is an integrated electric utility company that serves the State ofMinas Gerais in Brazil. It has about 6,568 MW of installed generationcapacity (almost all hydro). In 2006, the company sold about 20 TWhto end consumers (8% of Brazil's demand), with 33% of this energygoing to industry. Cemig also holds a 55% stake in the state's gasdistributor, and it has assets in the telecom sector (data transmissionand cable TV). The company is controlled by the State of MinasGerais.


12/06 12/07 12/08 12/09E 12/10E0.00x

2.00x

4.00x

6.00x

8.00x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)24.00%

25.29%

26.57%

27.86%

29.14%

30.43%

31.71%

33.00%

18.00%

19.00%

20.00%

21.00%

22.00%

23.00%

24.00%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)18.00%

19.00%

20.00%

21.00%

22.00%

23.00%

24.00%

0.0x

0.5x

1.0x

1.5x

2.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)9400

9600

9800

10000

10200

10400

10600

-50.0%

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%



Cia. Energetica de Minas Gerais


Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 15,554.48 17,773.50 15,542.40 15,542.40 15,542.40 + minority interests 23.83 0.00 0.00 0.00 0.00 + average net debt (cash) 6,331.51 4,844.41 4,014.22 3,137.57 2,508.04 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value (2,468.72) 0.00 0.00 0.00 0.00 Core enterprise value 19,441.10 22,617.91 19,556.61 18,679.97 18,050.43 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 17.3 17.6 5.8 2.8 -6.5 7.3 EBITDA (UBS) 29.0 18.3 22.2 8.8 -9.8 1.9 EBIT (UBS) 43.2 23.3 18.1 14.0 -9.8 1.6 EPS (UBS) - -14.2 -49.5 6.2 2.5 10.7 Cash EPS - -11.1 -44.7 0.3 -0.9 8.9 Net DPS 37.8 -27.6 -63.6 6.2 2.5 10.7 BVPS 6.1 0.3 -41.8 9.4 10.3 10.3



Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest 11.8 NM 8.0 17.5 12.5 13.7 Dividend cover (UBS EPS) - 1.4 2.0 2.0 2.0 2.0 Div. payout ratio (%, UBS EPS) - 69.3 50.0 50.0 50.0 50.0 Net debt / EBITDA 2.5 2.2 1.7 1.3 1.3 1.0




Source: Company accounts, UBS estimates. (UBS) valuations are stated before goodwill-related charges and other adjustments for abnormal and economic items at the analysts' judgement. Valuations: based on an average share price that year, (E): based on a share price of R$31.95 on 13 Mar 2009 19:40 EDT Market cap(E) may include forecast share issues/buybacks. Pedro Batista Strategist [email protected] +55-21-3262 9849


UBS 176

Celesc

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues - 2,644.66 2,994.46 3,269.69 3,350.56 * * * * * * Operating expenses (ex depn) - (2,398.13) (2,586.88) (2,966.46) (2,958.11) * * * * * * EBITDA (UBS) - 246.53 407.58 303.23 392.45 * * * * * * Depreciation 0.00 (86.48) (92.09) (99.65) (98.00) * * * * * * Operating income (EBIT, UBS) - 160.06 315.49 203.59 294.45 * * * * * * Other income & associates 0.00 14.68 (45.77) 30.04 93.59 * * * * * * Net interest (0.01) 51.97 26.01 49.75 28.84 * - * * * * Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 * - * - * - Profit before tax - 226.70 295.73 283.37 416.88 * * * * * * Tax 0.00 (53.03) (88.26) (69.74) (118.96) * * * * * * Profit after tax - 173.67 207.47 213.64 297.91 * * * * * * Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 * - * - * - Minorities / pref dividends 0.00 0.00 0.00 0.00 0.00 * - * - * - Net income (local GAAP) - 173.67 207.47 213.64 297.91 * * * * * * Net Income (UBS) - 173.67 207.47 213.64 297.91 * * * * * * Tax rate (%) - 23.39 29.85 24.61 28.54 * * * * * * Pre-abnormal tax rate (%) - 23.39 29.85 24.61 28.54 * * * * * * Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) - 4.50 5.38 5.54 7.72 * * * * * * EPS (UBS) - 4.50 5.38 5.54 7.72 * * * * * * Net DPS 0.00 1.28 1.28 1.38 1.93 * * * * * * Cash EPS - 6.74 7.77 8.12 10.26 * * * * * * BVPS 42.42 42.42 48.04 31.27 38.99 * * * * * * Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 921.02 175.63 204.18 129.45 438.31 * * * * * * Other current assets - 1,045.45 1,041.95 1,141.00 1,054.13 * * * * * * Total current assets - 1,221.08 1,246.13 1,270.45 1,492.45 * * * * * * Net tangible fixed assets 0.00 1,156.13 1,256.12 1,412.28 1,604.05 * * * * * * Net intangible fixed assets 0.00 0.00 0.00 0.00 0.00 * - * - * - Investments / other assets 0.00 740.64 856.51 862.71 834.23 * * * * * * Total assets - 3,117.85 3,358.75 3,545.44 3,930.72 * * * * * * Trade payables & other ST liabilities 0.00 689.51 763.20 890.90 1,013.07 * * * * * * Short term debt 0.00 52.08 84.30 69.70 0.00 * - * - * - Total current liabilities 0.00 741.59 847.50 960.60 1,013.07 * * * * * * Long term debt 0.00 1,162.02 1,137.11 823.79 865.06 * * * * * * Other long term liabilities 0.00 293.23 331.07 555.07 548.69 * * * * * * Total liabilities 0.00 2,196.83 2,315.68 2,339.46 2,426.82 * * * * * * Equity & minority interests - 921.02 1,043.08 1,205.98 1,503.90 * * * * * * Total liabilities & equity - 3,117.85 3,358.75 3,545.44 3,930.72 * * * * * * Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income - 173.67 207.47 213.64 297.91 * * * * * * Depreciation 0.00 86.48 92.09 99.65 98.00 * * * * * * Net change in working capital 0.00 0.00 (41.70) 238.09 212.37 * - * * * * Other (operating) 0.00 0.00 0.00 0.00 0.00 * - * - * - Net cash from operations - 260.15 257.86 551.38 608.29 * * * * * * Capital expenditure 0.00 0.00 (249.05) (321.63) (264.40) * * * * * * Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 * - * - * - Other changes in investments 0.00 0.00 0.00 0.00 0.00 * - * - * - Cash from investing activities 0.00 0.00 (249.05) (321.63) (264.40) * * * * * * Increase/(decrease) in debt 0.00 0.00 (79.10) (88.26) 0.00 * - * - * - Share issues / (repurchases) 0.00 0.00 0.00 0.00 0.00 * - * - * - Dividends paid 0.00 (49.40) (49.20) (53.41) (74.48) * * * * * * Other cash from financing 0.00 0.00 0.00 0.00 0.00 * - * - * - Cash from financing activities 0.00 (49.40) (128.30) (141.67) (74.48) * * * * * * Cash flow chge in cash & equivalents - 210.75 (119.49) 88.08 269.41 * - * - * - FX / non cash items - (956.13) 148.04 (162.80) 39.45 * * * * * * Bal sheet chge in cash & equivalents 0.00 (745.39) 28.55 (74.72) 308.86 * - * - * - Core EBITDA - 246.53 407.58 303.23 392.45 * * * * * * Maintenance capital expenditure 0.00 (0.10) (249.05) (321.63) (264.40) * * * * * * Maintenance net working capital 0.00 0.00 (41.70) 238.09 212.37 * - * * * * Operating free cash flow, pre-tax

- 246.43 116.84 219.70 340.43 * * * * * *


UBS 177


Electric Utilities


12m price target -

Company profile Celesc is a holding company with distribution and generation assetsin the Brazilian electricity sector. The company is owned by the stateof Santa Catarina, having a market share of 5.12% in the distributionsegment. In 2005, it sold about 13,700 GWh in 2005 (24% forresidential, 15% for commercial, 43% for industrial, and 18% forothers).


12/06 12/07 12/08 12/09E 12/10E0.00x

1.00x

2.00x

3.00x

4.00x

5.00x

6.00x

7.00x

0.00x

1.00x

2.00x

3.00x

4.00x

5.00x

6.00x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)5.50%

6.00%

6.50%

7.00%

7.50%

8.00%

8.50%

9.00%

9.00%

10.00%

11.00%

12.00%

13.00%

14.00%

15.00%

16.00%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)17.00%

18.00%

19.00%

20.00%

21.00%

22.00%

0.9x

1.0x

1.0x

1.0x

1.0x

1.0x

1.1x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)3240

3260

3280

3300

3320

3340

3360

0.0%

10.0%

20.0%

30.0%

40.0%


Celesc

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - 5.9 4.9 * * * P/E (UBS) - 5.9 4.9 * * * P/CEPS - 4.1 3.7 * * * Net dividend yield (%) 3.4 4.2 5.1 * * * P/BV 0.5 1.1 1.0 * * * EV/revenue (core) - 0.4 0.5 * * * EV/EBITDA (core) - 4.4 4.4 * * * EV/EBIT (core) - 6.5 5.9 * * * EV/OpFCF (core) - 6.0 5.1 * * * EV/op. invested capital - 0.7 0.9 * * *

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 1,271.12 1,461.24 * * * + minority interests 0.00 0.00 * * * + average net debt (cash) 57.99 274.16 * * * + pension obligations and other (.00) (.00) * * * - non-core asset value 0.00 0.00 * * * Core enterprise value 1,329.12 1,735.40 * * * Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - 9.2 2.5 * * * EBITDA (UBS) - -25.6 29.4 * * * EBIT (UBS) - -35.5 44.6 * * * EPS (UBS) - 3.0 39.4 * * * Cash EPS - 4.6 26.4 * * * Net DPS - 8.6 39.4 * * * BVPS -7.3 -34.9 24.7 * * *



Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - - * * * Dividend cover (UBS EPS) - 4.0 4.0 * * * Div. payout ratio (%, UBS EPS) - 25.0 25.0 * * * Net debt / EBITDA - 2.5 1.1 * * *


Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT - 1.1 1.2 * * * Capex / revenue (%) - 9.8 7.9 * * * Capex / depreciation 2.1 3.2 2.7 * * *

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity 14.7 63.4 28.4 * * * Net debt / (net debt + equity) 16.3 38.8 22.1 * * * Net debt (core) / EV 25.87 4.4 15.8 * * *




UBS 178

Centrais Elet. Brasileiras (PN)

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 17,666.82 19,979.07 19,443.48 20,292.90 22,390.62 24,703.54 10.3 25,535.77 3.4 27,290.54 6.9 Operating expenses (ex depn) (10,884.38) (14,297.35) (15,088.51) (15,571.37) (19,094.78) (19,346.60) 1.3 (20,977.51) 8.4 (21,961.74) 4.7 EBITDA (UBS) 6,782.43 5,681.71 4,354.97 4,721.53 3,295.84 5,356.94 62.5 4,558.26 -14.9 5,328.80 16.9 Depreciation (1,857.66) (1,178.44) (1,166.71) (2,006.81) (2,033.92) (2,205.76) 8.4 (2,194.37) -0.5 (2,217.70) 1.1 Operating income (EBIT, UBS) 4,924.78 4,503.27 3,188.26 2,714.72 1,261.93 3,151.17 149.7 2,363.88 -25.0 3,111.10 31.6 Other income & associates (2,069.33) (1,055.00) (861.24) (162.86) 539.34 219.07 -59.4 233.03 6.4 225.51 -3.2 Net interest (1,541.65) (828.36) (736.04) (842.40) 336.12 289.22 -14.0 608.60 110.4 587.64 -3.4 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 1,313.79 2,619.91 1,590.98 1,709.46 2,137.39 3,659.46 71.2 3,205.51 -12.4 3,924.25 22.4 Tax (900.10) (1,320.29) (620.61) (562.99) (585.30) (1,607.98) 174.7 (1,494.40) -7.1 (1,656.55) 10.9 Profit after tax 413.69 1,299.63 970.36 1,146.46 1,552.09 2,051.48 32.2 1,711.11 -16.6 2,267.70 32.5 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends (90.57) (6.31) 4.22 14.85 (4.23) 0.74 - 0.00 - 0.00 - Net income (local GAAP) 323.12 1,293.31 974.59 1,161.32 1,547.86 2,052.23 32.6 1,711.11 -16.6 2,267.70 32.5 Net Income (UBS) 323.12 1,293.31 974.59 1,161.32 2,160.19 2,754.82 27.5 2,560.50 -7.1 3,067.43 19.8 Tax rate (%) 68.51 50.39 39.01 32.93 27.38 43.94 60.5 46.62 6.1 42.21 -9.5 Pre-abnormal tax rate (%) 80.23 54.19 61.56 32.93 41.73 53.99 29.4 53.27 -1.3 47.00 -11.8 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 0.60 2.41 1.73 2.06 1.37 1.82 32.6 1.51 -16.6 2.01 32.5 EPS (UBS) 0.60 2.41 1.73 2.06 1.91 2.44 27.5 2.27 -7.1 2.72 19.8 Net DPS 2.32 2.73 0.00 2.57 0.34 1.29 275.8 1.29 0.0 1.29 0.0 Cash EPS 4.06 4.60 3.79 5.61 3.71 4.39 18.3 4.21 -4.1 4.68 11.2 BVPS 63.10 65.00 67.03 137.82 141.59 73.19 -48.3 74.71 2.1 76.72 2.7 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 2,788.06 2,657.20 3,817.84 5,459.14 7,918.61 11,460.87 44.7 17,445.72 52.2 23,852.99 36.7 Other current assets 9,393.14 9,247.07 8,993.44 9,626.28 10,592.55 8,624.66 -18.6 6,311.79 -26.8 5,698.02 -9.7 Total current assets 12,181.19 11,904.27 12,811.28 15,085.42 18,511.17 20,085.53 8.5 23,757.51 18.3 29,551.01 24.4 Net tangible fixed assets 80,132.46 79,720.08 78,674.38 56,183.55 57,105.93 57,656.26 1.0 56,903.79 -1.3 56,178.15 -1.3 Net intangible fixed assets 14.57 13.94 45.31 0.00 0.00 0.00 - 0.00 - 0.00 - Investments / other assets 26,449.03 27,430.74 28,916.65 35,706.94 34,521.43 35,783.60 3.7 35,894.24 0.3 35,716.27 -0.5 Total assets 118,777.26 119,069.03 120,447.62 106,975.91 110,138.53 113,525.39 3.1 116,555.54 2.7 121,445.43 4.2 Trade payables & other ST liabilities 6,223.52 6,935.36 6,812.70 8,143.41 9,695.49 9,406.55 -3.0 7,395.46 -21.4 6,839.26 -7.5 Short term debt 3,181.01 3,190.35 2,230.60 1,435.47 753.89 0.00 - 0.00 - 0.00 - Total current liabilities 9,404.53 10,125.71 9,043.30 9,578.88 10,449.37 9,406.55 -10.0 7,395.46 -21.4 6,839.26 -7.5 Long term debt 34,387.37 32,492.92 28,132.11 3,978.39 3,761.57 9,752.81 159.3 9,635.19 -1.2 10,825.49 12.4 Other long term liabilities 6,844.00 6,332.21 7,309.12 15,338.30 15,578.73 11,431.83 -26.6 14,879.58 30.2 16,867.67 13.4 Total liabilities 50,635.90 48,950.84 44,484.53 28,895.57 29,789.67 30,591.19 2.7 31,910.23 4.3 34,532.42 8.2 Equity & minority interests 68,141.36 70,118.20 75,963.09 78,080.34 80,348.86 82,934.21 3.2 84,645.31 2.1 86,913.01 2.7 Total liabilities & equity 118,777.26 119,069.03 120,447.62 106,975.91 110,138.53 113,525.39 3.1 116,555.54 2.7 121,445.43 4.2 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 323.12 1,293.31 974.59 1,161.32 1,547.86 2,052.23 32.6 1,711.11 -16.6 2,267.70 32.5 Depreciation 1,857.66 1,178.44 1,166.71 2,006.81 2,033.92 2,205.76 8.4 2,194.37 -0.5 2,217.70 1.1 Net change in working capital (37.56) 218.10 (886.78) (509.63) 604.25 0.00 - 0.00 - 0.00 - Other (operating) 4,054.88 4,586.85 2,939.95 2,082.99 0.00 304.85 - 717.79 135.5 614.48 -14.4 Net cash from operations 6,198.11 7,276.71 4,194.46 4,741.47 4,186.02 4,562.84 9.0 4,623.27 1.3 5,099.88 10.3 Capital expenditure (3,116.00) (4,000.00) (4,000.00) (4,000.00) (3,077.84) (2,716.92) -11.7 (1,278.93) -52.9 (1,324.54) 3.6 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments (50.00) (200.00) (200.00) (200.00) (116.35) (605.95) - (162.97) - (167.53) - Cash from investing activities (3,166.00) (4,200.00) (4,200.00) (4,200.00) (3,194.19) (3,322.87) 4.0 (1,441.90) -56.6 (1,492.07) 3.5 Increase/(decrease) in debt (1,406.36) (1,389.78) 542.00 400.00 0.00 3,363.15 - 3,473.11 - 3,621.25 - Share issues / (repurchases) 0.00 0.00 3,542.07 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid 0.00 (361.60) (426.00) (465.26) (386.96) (513.06) 32.6 (427.78) -16.6 (566.92) 32.5 Other cash from financing 440.67 (1,392.46) 710.68 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities (965.69) (3,143.84) 4,368.75 (65.26) (386.96) 2,850.09 - 3,045.34 6.9 3,054.33 0.3 Cash flow chge in cash & equivalents 2,066.42 (67.13) 4,363.21 476.21 604.86 4,090.06 - 6,226.70 - 6,662.14 - FX / non cash items (960.87) (63.72) (3,202.58) 1,165.09 1,854.61 (547.80) - (241.85) - (254.88) -35.0 Bal sheet chge in cash & equivalents 1,105.55 (130.85) 1,160.64 1,641.30 2,459.47 3,542.26 - 5,984.85 - 6,407.27 - Core EBITDA 6,782.43 5,681.71 4,354.97 4,721.53 3,295.84 5,356.94 62.5 4,558.26 -14.9 5,328.80 16.9 Maintenance capital expenditure (1,068.27) (1,323.26) (357.38) (1,547.66) (3,194.19) (1,661.44) -48.0 (1,441.90) -13.2 (1,492.07) 3.5 Maintenance net working capital 182.91 161.62 29.00 116.51 604.25 0.00 - 0.00 - 0.00 - Operating free cash flow, pre-tax

5,897.07 4,520.08 4,026.59 3,290.39 705.89 3,695.50 423.5 3,116.36 -15.7 3,836.74 23.1


UBS 179


Electric Utilities



Company profile Eletrobras is Brazil's largest generation and transmission companywith 37% of the country’s generation market and 58% of Brazil’stransmission assets. Eletrobras is a holding company that controlsfive major generators (Furnas, Chesf, Eletronorte, Eletronuclear, andCGTEE), one pure transmission company (Eletrosul), and minoritystakes in other utilities. Eletrobras also acts as a financing agency forthe state-owned utilities in the sector and is the holder of Brazil’s 50%stake in bi-national project Itaipu; Paraguay’s ANDE holds the other 50%.


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

0.1x

0.2x

0.2x

0.3x

0.3x

0.4x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)19000

20286

21571

22857

24143

25429

26714

-10.0%

0.0%

10.0%

20.0%

30.0%



Centrais Elet. Brasileiras (PN)


Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 25,593.91 27,439.21 26,014.00 26,014.00 26,014.00 + minority interests 273.17 424.18 287.29 287.29 287.29 + average net debt (cash) 25,280.95 (8,367.00) 206.30 (4,327.10) (7,543.73) + pension obligations and other 3,409.26 0.00 0.00 0.00 0.00 - non-core asset value (20,647.15

) (4,053.92) (4,053.92) (4,053.92) (4,053.92)

Core enterprise value 33,910.15 15,442.46 22,453.67 17,920.27 14,703.64 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 4.2 4.4 10.3 10.3 3.4 6.9 EBITDA (UBS) -0.6 8.4 -30.2 62.5 -14.9 16.9 EBIT (UBS) 24.6 -14.9 -53.5 149.7 -25.0 31.6 EPS (UBS) 0.1 19.2 -7.0 27.5 -7.1 19.8 Cash EPS -11.1 48.0 -33.8 18.3 -4.1 11.2 Net DPS 2.9 - -86.7 NM 0.0 0.0 BVPS 22.2 105.6 2.7 -48.3 2.1 2.7



Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest 3.6 3.2 - - - - Dividend cover (UBS EPS) - 0.8 5.6 1.9 1.8 2.1 Div. payout ratio (%, UBS EPS) - 125.2 17.9 52.8 56.8 47.4 Net debt / EBITDA 5.0 NM NM NM NM NM



Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity 38.0 (0.1) (4.2) (2.1) (9.2) (15.0) Net debt / (net debt + equity) 27.0 (0.1) (4.4) (2.1) (10.2) (17.7) Net debt (core) / EV 97.46 74.6 (54.2) 0.9 (24.1) (51.3)




UBS 180

Cia. Energetica de Sao Paulo

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 1,728.52 1,917.09 1,839.87 2,060.34 2,183.75 2,504.93 14.7 2,719.32 8.6 2,898.52 6.6 Operating expenses (ex depn) (371.63) (447.27) (768.08) (766.49) (683.78) (1,093.59) 59.9 (925.20) -15.4 (965.04) 4.3 EBITDA (UBS) 1,356.89 1,469.82 1,071.79 1,293.85 1,499.97 1,411.34 -5.9 1,794.12 27.1 1,933.48 7.8 Depreciation (461.91) (475.63) (478.94) (480.66) (479.06) (480.86) 0.4 (480.00) -0.2 (480.00) 0.0 Operating income (EBIT, UBS) 894.97 994.19 592.85 813.19 1,020.91 930.48 -8.9 1,314.12 41.2 1,453.48 10.6 Other income & associates (46.83) (38.90) (93.68) (67.32) (254.65) 48.97 - 0.00 - 0.00 - Net interest 273.00 (815.93) (591.97) (889.30) (314.28) (1,317.69) 319.3 (796.51) -39.6 (737.67) -7.4 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 1,121.14 139.36 (92.80) (143.43) 451.98 (338.25) - 517.61 - 715.82 38.3 Tax (493.46) (105.30) (102.97) 25.07 (273.39) 138.54 - (129.40) - (178.95) 38.3 Profit after tax 627.68 34.06 (195.76) (118.37) 178.59 (199.71) - 388.21 - 536.86 38.3 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net income (local GAAP) 627.68 34.06 (195.76) (118.37) 178.59 (199.71) - 388.21 - 536.86 38.3 Net Income (UBS) 627.68 34.06 (195.76) (118.37) 178.59 (199.71) - 388.21 - 536.86 38.3 Tax rate (%) 44.01 75.56 0.00 0.00 60.49 0.00 - 25.00 - 25.00 0.0 Pre-abnormal tax rate (%) 44.01 75.56 0.00 0.00 60.49 0.00 - 25.00 - 25.00 0.0 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 1.92 0.36 (2.07) (0.36) 0.55 (0.61) - 1.19 - 1.64 38.3 EPS (UBS) 1.92 0.36 (2.07) (0.36) 0.55 (0.61) - 1.19 - 1.64 38.3 Net DPS 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash EPS 3.33 5.40 3.00 1.11 2.01 0.86 -57.2 2.65 208.8 3.10 17.1 BVPS 21.70 21.80 21.57 30.98 31.53 30.72 -2.6 31.61 2.9 32.84 3.9 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 45.33 223.29 132.83 328.57 735.91 229.79 -68.8 461.76 101.0 633.41 37.2 Other current assets 410.84 634.07 588.51 720.55 560.83 546.04 -2.6 572.45 4.8 577.83 0.9 Total current assets 456.16 857.36 721.34 1,049.12 1,296.75 775.83 -40.2 1,034.21 33.3 1,211.24 17.1 Net tangible fixed assets - 17,797.01 17,700.14 17,450.70 17,321.03 17,309.28 -0.1 17,009.28 -1.7 16,709.28 -1.8 Net intangible fixed assets 47.88 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Investments / other assets 1,241.54 1,250.17 1,052.89 1,175.16 1,030.02 954.79 -7.3 954.79 0.0 954.79 0.0 Total assets - 19,904.54 19,474.37 19,674.98 19,647.80 19,039.90 -3.1 18,998.28 -0.2 18,875.31 -0.6 Trade payables & other ST liabilities 407.53 437.61 435.56 503.37 749.07 535.20 -28.6 602.43 12.6 676.81 12.3 Short term debt 0.00 2,373.11 2,367.66 1,868.42 1,205.19 1,066.97 -11.5 1,066.97 0.0 1,066.97 0.0 Total current liabilities 407.53 2,810.72 2,803.22 2,371.78 1,954.26 1,602.17 -18.0 1,669.40 4.2 1,743.78 4.5 Long term debt 10,598.82 8,185.73 7,530.63 5,340.08 5,472.05 5,177.81 -5.4 4,777.81 -7.7 4,177.81 -12.6 Other long term liabilities 1,677.28 1,767.51 2,075.70 1,816.66 1,896.44 2,200.08 16.0 2,200.08 0.0 2,200.08 0.0 Total liabilities 12,683.63 12,763.95 12,409.55 9,528.52 9,322.75 8,980.06 -3.7 8,647.29 -3.7 8,121.67 -6.1 Equity & minority interests - 7,140.59 7,064.83 10,146.46 10,325.05 10,059.84 -2.6 10,351.00 2.9 10,753.64 3.9 Total liabilities & equity - 19,904.54 19,474.37 19,674.98 19,647.80 19,039.90 -3.1 18,998.28 -0.2 18,875.31 -0.6 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 627.68 34.06 (195.76) (118.37) 178.59 (199.71) - 388.21 - 536.86 38.3 Depreciation 461.91 475.63 478.94 480.66 479.06 480.86 0.4 480.00 -0.2 480.00 0.0 Net change in working capital (118.00) 0.00 (43.53) (182.46) 230.99 (35.17) - (20.27) -42.4 (4.13) -79.6 Other (operating) - 52.40 (140.07) 161.92 0.00 (74.79) - 0.00 - 0.00 - Net cash from operations - 562.09 99.58 341.75 888.64 171.19 -80.7 847.94 395.3 1,012.74 19.4 Capital expenditure - (184.00) (75.00) (235.14) (185.90) (179.36) -3.5 (180.00) 0.4 (180.00) 0.0 Net (acquisitions) / disposals - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities - (184.00) (75.00) (235.14) (185.90) (179.36) -3.5 (180.00) 0.4 (180.00) 0.0 Increase/(decrease) in debt - 0.00 (111.17) (100.43) (7,534.06) (432.46) - (400.00) - (600.00) - Share issues / (repurchases) - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid - 0.00 0.00 0.00 0.00 (65.50) - (35.96) -45.1 (61.09) 69.9 Other cash from financing - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities - 0.00 (111.17) (100.43) (7,534.06) (497.96) -93.4 (435.96) -12.4 (661.09) 51.6 Cash flow chge in cash & equivalents - 378.09 (86.59) 6.18 (6,831.32) (506.13) - 231.98 - 171.65 - FX / non cash items - (200.12) (3.88) 189.56 7,238.66 0.00 -100.0 0.00 - 0.00 - Bal sheet chge in cash & equivalents (90.59) 177.97 (90.46) 195.74 407.34 (506.13) - 231.98 - 171.65 - Core EBITDA 1,356.89 1,469.82 1,071.79 1,293.85 1,499.97 1,411.34 -5.9 1,794.12 27.1 1,933.48 7.8 Maintenance capital expenditure (91.20) (184.00) (75.00) (235.14) (160.00) (160.00) 0.0 (160.00) 0.0 (167.20) 4.5 Maintenance net working capital (0.47) 0.00 (43.53) (182.46) 2.90 12.95 346.6 12.58 -2.8 11.61 -7.8 Operating free cash flow, pre-tax

1,265.22 1,285.82 953.27 876.25 1,342.87 1,264.29 -5.9 1,646.70 30.2 1,777.89 8.0


UBS 181


Electric Utilities



Company profile Cesp is a pure hydro power generator with 6 power plants totaling aninstalled capacity of 7,456 MW and assured energy of 3,916 avg MW,which represents approximately 8% of Brazilian assured capacity andplaces the company as the second largest generation company in thecountry, after Eletrobras. The company is almost fully contracted until2012 at relatively low prices. In our estimates, the average real sellingprice (2005 constant Reais) are in the range of R$65 - 80/MWh until 2012.


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

-60x

-40x

-20x

0x

20x

40x

60x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)30.0%

35.0%

40.0%

45.0%

50.0%

55.0%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)-2.00%

0.00%

2.00%

4.00%

6.00%

0.3x

0.4x

0.5x

0.6x

0.7x

0.8x

0.9x

1.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)1800

2000

2200

2400

2600

2800

3000

-100%

-80%

-60%

-40%

-20%

0%

20%

40%



Cia. Energetica de Sao Paulo

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - NM 57.1 NM 11.6 8.4 P/E (UBS) - NM 57.1 NM 11.6 8.4 P/CEPS - 18.5 15.5 16.1 5.2 4.4 Net dividend yield (%) - 0.0 0.0 0.0 0.0 0.0 P/BV - 0.7 1.0 0.4 0.4 0.4 EV/revenue (core) - 7.3 7.6 4.2 3.8 3.3 EV/EBITDA (core) - 11.7 11.1 7.4 5.7 4.9 EV/EBIT (core) - 18.6 16.3 11.3 7.8 6.5 EV/OpFCF (core) - 17.2 12.4 8.3 6.2 5.4 EV/op. invested capital - 0.9 1.0 0.6 0.6 0.6

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 6,688.28 10,196.46 4,519.50 4,519.50 4,519.50 + minority interests 0.00 1.00 1.00 1.00 1.00 + average net debt (cash) 8,419.10 6,450.46 5,978.16 5,699.00 4,997.19 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 0.00 0.00 0.00 0.00 Core enterprise value 15,107.38 16,647.92 10,498.66 10,219.50 9,517.69 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 2.6 12.0 6.0 14.7 8.6 6.6 EBITDA (UBS) -3.6 20.7 15.9 -5.9 27.1 7.8 EBIT (UBS) -6.4 37.2 25.5 -8.9 41.2 10.6 EPS (UBS) - -82.6 - - - 38.3 Cash EPS - -63.1 81.5 -57.2 NM 17.1 Net DPS - - - - - - BVPS 11.9 43.6 1.8 -2.6 2.9 3.9

Margins (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBITDA / revenue 71.3 62.8 68.7 56.3 66.0 66.7 EBIT / revenue 46.5 39.5 46.8 37.1 48.3 50.1 Net profit (UBS) / revenue NM NM 8.2 NM 14.3 18.5

Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) - 4.8 6.2 5.8 8.3 9.3 ROIC post tax - 4.8 2.4 5.8 6.2 7.0 Net ROE -7.2 (1.4) 1.7 (2.0) 3.8 5.1

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - 0.9 3.2 0.7 1.6 2.0 Dividend cover (UBS EPS) - - - - - - Div. payout ratio (%, UBS EPS) - - - - - - Net debt / EBITDA 7.4 5.3 4.0 4.3 3.0 2.4

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - 0.1 0.1 0.2 0.2 0.2 Revenue / fixed assets - 0.1 0.1 0.1 0.2 0.2 Revenue / net working capital 18.6 11.1 NM NM NM NM

Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT 1.3 1.1 1.3 1.4 1.3 1.2 Capex / revenue (%) - 11.4 8.5 7.2 6.6 6.2 Capex / depreciation - 0.5 0.4 0.4 0.4 0.4

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity NM 67.8 57.5 59.8 52.0 42.9 Net debt / (net debt + equity) 56.7 40.4 36.5 37.4 34.2 30.0 Net debt (core) / EV - 55.7 38.7 56.9 55.8 52.5




UBS 182

Cia. Energetica do Ceara

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 1,082.21 1,334.28 1,581.52 1,691.33 1,787.85 1,934.39 8.2 2,177.19 12.6 2,411.99 10.8 Operating expenses (ex depn) (745.38) (1,110.84) (1,221.67) (1,158.71) (1,324.87) (1,409.28) 6.4 (1,555.26) 10.4 (1,667.01) 7.2 EBITDA (UBS) 336.83 223.45 359.85 532.61 462.98 525.11 13.4 621.93 18.4 744.98 19.8 Depreciation (123.04) (128.86) (104.55) (109.56) (111.08) (116.98) 5.3 (124.40) 6.3 (129.65) 4.2 Operating income (EBIT, UBS) 213.79 94.58 255.30 423.05 351.90 408.13 16.0 497.53 21.9 615.34 23.7 Other income & associates (4.59) (5.92) (21.98) (5.21) 7.10 (8.41) - (9.95) 18.3 (12.31) 23.7 Net interest (45.35) (33.44) (5.67) (10.75) (7.84) (44.43) 467.0 (74.70) 68.1 (87.89) 17.7 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 163.84 55.23 227.66 407.10 351.16 355.29 1.2 412.88 16.2 515.14 24.8 Tax (19.86) (18.71) (38.54) (108.85) (106.42) (101.42) -4.7 (114.55) 12.9 (156.76) 36.9 Profit after tax 143.99 36.52 189.11 298.25 244.74 253.87 3.7 298.34 17.5 358.38 20.1 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net income (local GAAP) 143.99 36.52 189.11 298.25 244.74 253.87 3.7 298.34 17.5 358.38 20.1 Net Income (UBS) 143.99 36.52 189.11 298.25 244.74 253.87 3.7 298.34 17.5 358.38 20.1 Tax rate (%) 12.12 33.88 16.93 26.74 30.31 28.55 -5.8 27.74 -2.8 30.43 9.7 Pre-abnormal tax rate (%) 12.12 33.88 16.93 26.74 30.31 28.55 -5.8 27.74 -2.8 30.43 9.7 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 1.85 0.47 2.43 3.83 3.14 3.26 3.7 3.83 17.5 4.60 20.1 EPS (UBS) 1.85 0.47 2.43 3.83 3.14 3.26 3.7 3.83 17.5 4.60 20.1 Net DPS 0.44 0.45 2.93 3.64 2.99 3.10 3.7 3.64 17.5 4.37 20.1 Cash EPS 3.43 2.12 3.77 5.24 4.57 4.76 4.2 5.43 14.0 6.27 15.4 BVPS 23.66 23.85 15.27 16.24 10.92 14.35 31.4 18.55 29.3 23.68 27.7 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 176.26 86.42 177.80 77.54 12.36 243.66 1870.7 672.65 176.1 1,114.18 65.6 Other current assets 405.03 444.18 662.06 646.36 781.60 724.14 -7.4 777.70 7.4 773.28 -0.6 Total current assets 581.29 530.60 839.86 723.90 793.97 967.79 21.9 1,450.35 49.9 1,887.46 30.1 Net tangible fixed assets 275.07 374.72 889.84 1,065.07 1,249.56 1,480.58 18.5 1,519.44 2.6 1,560.38 2.7 Net intangible fixed assets 607.94 568.59 172.29 161.45 146.23 131.27 -10.2 117.57 -10.4 105.03 -10.7 Investments / other assets 983.71 912.57 498.43 560.18 388.15 391.90 1.0 378.20 -3.5 365.67 -3.3 Total assets 2,448.01 2,386.48 2,400.41 2,510.59 2,577.91 2,971.54 15.3 3,465.56 16.6 3,918.53 13.1 Trade payables & other ST liabilities 283.52 337.42 650.54 827.45 880.80 750.41 -14.8 779.41 3.9 770.45 -1.1 Short term debt 247.77 100.66 99.25 102.88 210.85 165.73 -21.4 192.82 16.3 205.06 6.3 Total current liabilities 531.29 438.08 749.79 930.32 1,091.65 916.14 -16.1 972.23 6.1 975.51 0.3 Long term debt 441.32 390.50 406.53 321.67 354.52 678.83 91.5 789.79 16.3 839.92 6.3 Other long term liabilities 337.97 411.58 510.18 478.14 281.29 259.13 -7.9 259.13 0.0 259.13 0.0 Total liabilities 1,310.58 1,240.16 1,666.49 1,730.13 1,727.46 1,854.10 7.3 2,021.15 9.0 2,074.57 2.6 Equity & minority interests 1,137.43 1,146.33 733.92 780.46 850.45 1,117.44 31.4 1,444.41 29.3 1,843.97 27.7 Total liabilities & equity 2,448.01 2,386.48 2,400.41 2,510.59 2,577.91 2,971.54 15.3 3,465.56 16.6 3,918.53 13.1 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 143.99 36.52 189.11 298.25 244.74 253.87 3.7 298.34 17.5 358.38 20.1 Depreciation 123.04 128.86 104.55 109.56 111.08 116.98 5.3 124.40 6.3 129.65 4.2 Net change in working capital (90.42) 0.00 244.69 313.87 (50.95) (114.75) 125.2 (24.56) -78.6 (4.53) -81.5 Other (operating) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations 176.61 165.38 538.35 721.68 304.87 256.10 -16.0 398.17 55.5 483.49 21.4 Capital expenditure (147.82) (150.00) (174.41) (42.69) (261.00) (316.11) 21.1 (135.86) -57.0 (145.51) 7.1 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities (147.82) (150.00) (174.41) (42.69) (261.00) (316.11) 21.1 (135.86) -57.0 (145.51) 7.1 Increase/(decrease) in debt 103.47 0.00 0.00 21.34 261.00 316.11 - 135.86 - 60.30 - Share issues / (repurchases) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid (33.87) (34.70) (227.77) (283.35) (232.52) (241.20) 3.7 (283.44) 17.5 (340.48) 20.1 Other cash from financing 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities 69.60 (34.70) (227.77) (262.01) 28.48 74.91 163.1 (147.58) - (280.18) 89.9 Cash flow chge in cash & equivalents 98.40 (19.32) 136.18 416.98 72.35 14.91 - 114.73 - 57.80 - FX / non cash items - (70.52) (44.79) (517.25) (137.52) 216.39 - 314.26 23.2 383.73 22.3 Bal sheet chge in cash & equivalents - (89.84) 91.39 (100.27) (65.17) 231.29 - 429.00 - 441.53 - Core EBITDA 336.83 223.45 359.85 532.61 462.98 525.11 13.4 621.93 18.4 744.98 19.8 Maintenance capital expenditure (147.82) (150.00) (174.41) (42.69) (261.00) (316.11) 21.1 (135.86) -57.0 (145.51) 7.1 Maintenance net working capital (90.42) 0.00 244.69 313.87 (50.95) (114.75) 125.2 (24.56) -78.6 (4.53) -81.5 Operating free cash flow, pre-tax

98.60 73.45 430.14 803.80 151.03 94.26 -37.6 461.51 389.6 594.93 28.9


UBS 183


Electric Utilities



Company profile Coelce is a pure distribution company in the Brazilian electricitysector. The company is controlled by Endesa and located in the stateof Ceará (in the northeast region of the country). In terms of energysales, it sold about 6,400 GWh in 2005 (34% for residential, 19% forcommercial, 24% for industrial, 9% for rural, and 14% for others).


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

30.0x

0.00x

2.00x

4.00x

6.00x

8.00x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)18.00%

19.14%

20.29%

21.43%

22.57%

23.71%

24.86%

26.00%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)1400

1600

1800

2000

2200

2400

2600

-20.0%

0.0%

20.0%

40.0%

60.0%



Cia. Energetica do Ceara


Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 1,582.36 2,153.88 1,609.35 1,609.35 1,609.35 + minority interests 0.00 0.00 0.00 0.00 0.00 + average net debt (cash) 432.71 657.90 782.16 648.90 318.77 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 0.00 0.00 0.00 0.00 Core enterprise value 2,015.07 2,811.78 2,391.51 2,258.25 1,928.12 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - 6.9 5.7 8.2 12.6 10.8 EBITDA (UBS) - 48.0 -13.1 13.4 18.4 19.8 EBIT (UBS) - 65.7 -16.8 16.0 21.9 23.7 EPS (UBS) - 57.7 -17.9 3.7 17.5 20.1 Cash EPS - 38.9 -12.7 4.2 14.0 15.4 Net DPS - 24.4 -17.9 3.7 17.5 20.1 BVPS - 6.3 -32.7 31.4 29.3 27.7



Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - NM NM 9.2 6.7 7.0 Dividend cover (UBS EPS) - 1.1 1.1 1.1 1.1 1.1 Div. payout ratio (%, UBS EPS) - 95.0 95.0 95.0 95.0 95.0 Net debt / EBITDA - 0.7 1.2 1.1 0.5 NM



Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - 44.5 65.0 53.8 21.5 (3.8) Net debt / (net debt + equity) - 30.8 39.4 35.0 17.7 (3.9) Net debt (core) / EV - 21.5 23.4 32.7 28.7 16.5




UBS 184

Cia. Paranaense de Energia

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 2,990.82 3,925.77 4,853.54 4,940.81 5,422.29 5,490.42 1.3 5,191.12 -5.5 5,427.89 4.6 Operating expenses (ex depn) (2,385.45) (2,878.00) (3,605.65) (2,903.19) (3,412.51) (3,424.91) 0.4 (3,670.00) 7.2 (4,033.01) 9.9 EBITDA (UBS) 605.37 1,047.78 1,247.89 2,037.62 2,009.78 2,065.51 2.8 1,521.11 -26.4 1,394.88 -8.3 Depreciation (292.34) (308.91) (328.91) (372.40) (422.05) (404.91) -4.1 (433.87) 7.2 (450.66) 3.9 Operating income (EBIT, UBS) 313.03 738.87 918.98 1,665.23 1,587.73 1,660.60 4.6 1,087.24 -34.5 944.22 -13.2 Other income & associates 134.32 (105.88) (55.63) (104.89) (41.05) (79.31) 93.2 (7.75) -90.2 (11.03) 42.3 Net interest (82.57) (60.31) (146.35) 240.02 20.24 108.99 438.4 (21.35) - (46.54) 118.0 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 364.78 572.68 717.00 1,800.36 1,566.93 1,690.28 7.9 1,058.14 -37.4 886.65 -16.2 Tax (193.65) (198.43) (198.20) (557.68) (460.32) (477.91) 3.8 (275.72) -42.3 (226.58) -17.8 Profit after tax 171.14 374.24 518.80 1,242.68 1,106.61 1,212.38 9.6 782.42 -35.5 660.07 -15.6 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends 0.00 0.00 (16.42) 0.00 0.00 0.00 - 0.00 - 0.00 - Net income (local GAAP) 171.14 374.24 502.38 1,242.68 1,106.61 1,212.38 9.6 782.42 -35.5 660.07 -15.6 Net Income (UBS) 171.14 374.24 502.38 1,242.68 1,106.61 1,212.38 9.6 782.42 -35.5 660.07 -15.6 Tax rate (%) 53.09 34.65 27.64 30.98 29.38 28.27 -3.8 26.06 -7.8 25.55 -1.9 Pre-abnormal tax rate (%) 53.09 34.75 27.13 30.98 29.38 28.27 -3.8 26.06 -7.8 25.55 -1.9 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 0.63 1.37 1.84 4.54 4.04 4.43 9.6 2.86 -35.5 2.41 -15.6 EPS (UBS) 0.63 1.37 1.84 4.54 4.04 4.43 9.6 2.86 -35.5 2.41 -15.6 Net DPS 0.16 0.35 0.45 1.14 1.01 1.11 9.6 0.71 -35.5 0.60 -15.6 Cash EPS 1.69 2.50 3.04 5.90 5.59 5.91 5.8 4.44 -24.8 4.06 -8.7 BVPS 17.75 18.93 19.08 23.30 26.44 30.28 14.5 32.43 7.1 34.24 5.6 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 348.88 519.24 1,131.77 1,504.00 1,540.87 1,859.45 20.7 2,376.29 27.8 2,752.53 15.8 Other current assets 1,042.26 1,113.84 1,338.48 1,474.42 1,581.03 1,773.97 12.2 1,787.92 0.8 1,864.88 4.3 Total current assets 1,391.14 1,633.08 2,470.24 2,978.43 3,121.90 3,633.41 16.4 4,164.21 14.6 4,617.41 10.9 Net tangible fixed assets 5,275.88 5,399.17 5,991.29 7,081.64 7,207.00 7,530.26 4.5 7,719.03 2.5 7,902.08 2.4 Net intangible fixed assets 0.00 0.13 5.38 0.00 0.00 0.00 - 0.00 - 0.00 - Investments / other assets 2,518.32 2,846.91 2,472.10 1,874.55 2,031.12 2,115.08 4.1 2,068.43 -2.2 2,073.03 0.2 Total assets 9,185.34 9,879.28 10,939.01 11,934.62 12,360.02 13,278.75 7.4 13,951.67 5.1 14,592.52 4.6 Trade payables & other ST liabilities 910.61 1,327.51 1,981.51 1,948.09 1,788.50 1,688.78 -5.6 1,741.21 3.1 1,778.78 2.2 Short term debt 358.53 920.43 347.86 928.51 264.51 242.34 -8.4 242.34 0.0 242.34 0.0 Total current liabilities 1,269.14 2,247.94 2,329.36 2,876.60 2,053.01 1,931.12 -5.9 1,983.55 2.7 2,021.12 1.9 Long term debt 2,292.87 1,700.86 2,316.00 1,668.42 1,837.94 2,254.34 22.7 2,261.51 0.3 2,339.44 3.4 Other long term liabilities 765.10 749.42 663.03 1,013.34 1,232.30 806.08 -34.6 832.58 3.3 862.87 3.6 Total liabilities 4,327.11 4,698.22 5,308.39 5,558.35 5,123.25 4,991.54 -2.6 5,077.64 1.7 5,223.43 2.9 Equity & minority interests 4,858.23 5,181.06 5,630.61 6,376.27 7,236.77 8,287.21 14.5 8,874.03 7.1 9,369.09 5.6 Total liabilities & equity 9,185.34 9,879.28 10,939.01 11,934.62 12,360.02 13,278.75 7.4 13,951.67 5.1 14,592.52 4.6 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 171.14 374.24 502.38 1,242.68 1,106.61 1,212.38 9.6 782.42 -35.5 660.07 -15.6 Depreciation 292.34 308.91 328.91 372.40 422.05 404.91 -4.1 433.87 7.2 450.66 3.9 Net change in working capital 111.49 347.31 283.10 0.00 (90.81) 83.34 - 63.38 -23.9 (38.79) - Other (operating) (246.48) (30.00) (40.80) 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations 328.49 1,000.47 1,073.59 1,615.08 1,437.85 1,700.63 18.3 1,279.68 -24.8 1,071.94 -16.2 Capital expenditure (239.87) (404.22) (437.30) (313.63) (260.30) (525.93) 102.0 (594.55) 13.0 (604.83) 1.7 Net (acquisitions) / disposals 11.20 (6.26) (10.65) 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities (228.67) (410.48) (447.95) (313.63) (260.30) (525.93) 102.0 (594.55) 13.0 (604.83) 1.7 Increase/(decrease) in debt (116.63) (46.87) 106.99 0.00 0.00 0.00 - 0.00 - 0.00 - Share issues / (repurchases) 0.01 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid (0.01) (47.97) (99.88) (310.67) (276.65) (303.09) 9.6 (195.61) -35.5 (165.02) -15.6 Other cash from financing (0.21) (216.35) 366.81 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities (116.85) (311.18) 373.92 (310.67) (276.65) (303.09) 9.6 (195.61) -35.5 (165.02) -15.6 Cash flow chge in cash & equivalents (17.02) 278.80 999.56 990.78 900.89 871.61 - 489.52 - 302.09 - FX / non cash items 165.99 (108.45) (387.03) (618.54) (864.03) (553.03) 156.3 27.32 - 74.15 - Bal sheet chge in cash & equivalents 148.96 170.36 612.53 372.24 36.87 318.58 - 516.84 - 376.24 - Core EBITDA 605.37 1,047.78 1,247.89 2,037.62 2,009.78 2,065.51 2.8 1,521.11 -26.4 1,394.88 -8.3 Maintenance capital expenditure (174.96) (160.47) (145.27) (125.45) (104.12) (210.37) 102.0 (237.82) 13.0 (241.93) 1.7 Maintenance net working capital 2.11 (24.66) (23.31) 0.00 (36.33) 33.34 - 25.35 -23.9 (15.52) - Operating free cash flow, pre-tax

432.52 862.65 1,079.31 1,912.17 1,869.33 1,888.48 1.0 1,308.64 -30.7 1,137.43 -13.1


UBS 185


Electric Utilities



Company profile Copel is a state-controlled vertically integrated utility serving the stateof Paraná. Copel's concession area covers 98% of the state, with apopulation of 8.4 million. The company's major customers areindustrial (40%) and residential (25%). Copel's 4,550 MW of capacitygenerates more than enough energy to meet retail demand, so thecompany currently sells surplus to Brazil's interconnected system.Copel holds 6% of the national genco market and 5% of the nationaldistribution market.


12/06 12/07 12/08 12/09E 12/10E0.00x

1.00x

2.00x

3.00x

4.00x

5.00x

6.00x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

5.0%

10.0%

15.0%

20.0%

25.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

0.5x

0.6x

0.7x

0.8x

0.9x

1.0x

1.1x

1.2x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)4800

4900

5000

5100

5200

5300

5400

5500

-50%

0%

50%

100%

150%



Cia. Paranaense de Energia

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) 5.0 4.9 7.0 4.9 7.6 9.0 P/E (UBS) 5.0 4.9 7.0 4.9 7.6 9.0 P/CEPS NM 3.8 5.0 3.7 4.9 5.3 Net dividend yield (%) 2.6 5.1 3.6 5.1 3.3 2.8 P/BV 0.7 1.0 1.1 0.7 0.7 0.6 EV/revenue (core) 1.5 1.5 1.6 1.3 1.2 1.1 EV/EBITDA (core) 5.0 3.7 4.4 3.4 4.2 4.2 EV/EBIT (core) 7.0 4.5 5.5 4.2 5.8 6.2 EV/OpFCF (core) 5.9 3.9 4.7 3.7 4.8 5.1 EV/op. invested capital 0.8 1.1 1.2 0.8 0.7 0.6

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 6,134.03 7,713.93 5,916.53 5,916.53 5,916.53 + minority interests 0.00 0.00 0.00 0.00 0.00 + average net debt (cash) 1,385.04 1,064.92 1,020.10 411.69 (86.21) + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 0.00 0.00 0.00 0.00 Core enterprise value 7,519.07 8,778.85 6,936.62 6,328.22 5,830.32 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 16.6 1.8 9.7 1.3 -5.5 4.6 EBITDA (UBS) 31.3 63.3 -1.4 2.8 -26.4 -8.3 EBIT (UBS) 42.5 81.2 -4.7 4.6 -34.5 -13.2 EPS (UBS) - 147.4 -10.9 9.6 -35.5 -15.6 Cash EPS - 94.3 -5.4 5.8 -24.8 -8.7 Net DPS - 152.6 -10.9 9.6 -35.5 -15.6 BVPS 7.8 22.1 13.5 14.5 7.1 5.6



Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - - - NM 20.3 Dividend cover (UBS EPS) - 4.0 4.0 4.0 4.0 4.0 Div. payout ratio (%, UBS EPS) - 25.0 25.0 25.0 25.0 25.0 Net debt / EBITDA 1.7 0.5 0.3 0.3 0.1 NM

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital 0.6 0.7 0.7 0.7 0.6 0.6 Revenue / fixed assets 0.7 0.8 0.8 0.7 0.7 0.7 Revenue / net working capital NM NM NM NM 78.7 81.7


Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity 37.8 17.1 7.8 7.7 1.4 (1.8) Net debt / (net debt + equity) 26.7 14.6 7.2 7.1 1.4 (1.9) Net debt (core) / EV 36.06 18.4 12.1 14.7 6.5 (1.5)




UBS 186

CPFL Energia

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 6,057.07 6,736.25 7,738.91 7,911.95 9,409.54 9,519.37 1.2 9,945.78 4.5 10,596.56 6.5 Operating expenses (ex depn) (4,545.79) (5,064.62) (5,611.06) (5,174.96) (6,064.65) (6,603.74) 8.9 (6,947.41) 5.2 (7,271.93) 4.7 EBITDA (UBS) 1,511.28 1,671.63 2,127.85 2,736.99 3,344.89 2,915.63 -12.8 2,998.36 2.8 3,324.63 10.9 Depreciation (279.44) (277.33) (302.25) (326.39) (323.34) (400.29) 23.8 (429.04) 7.2 (452.60) 5.5 Operating income (EBIT, UBS) 1,231.85 1,394.30 1,825.60 2,410.60 3,021.55 2,515.35 -16.8 2,569.33 2.1 2,872.03 11.8 Other income & associates (766.46) (495.86) (271.21) 49.84 (30.65) (19.78) -35.5 0.00 - 0.00 - Net interest (652.90) (345.63) (156.41) (289.35) (514.39) (750.93) 46.0 (449.50) -40.1 (550.97) 22.6 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax (187.51) 552.82 1,397.98 2,171.09 2,476.51 1,744.64 -29.6 2,119.83 21.5 2,321.05 9.5 Tax (109.01) (252.73) (336.33) (767.00) (833.08) (624.72) -25.0 (720.74) 15.4 (789.16) 9.5 Profit after tax (296.52) 300.09 1,061.65 1,404.10 1,643.44 1,119.93 -31.9 1,399.09 24.9 1,531.89 9.5 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends (0.87) (21.17) (40.37) 0.00 0.00 (7.25) - 0.00 - 0.00 - Net income (local GAAP) (297.39) 278.92 1,021.28 1,404.10 1,643.44 1,112.67 -32.3 1,399.09 25.7 1,531.89 9.5 Net Income (UBS) 87.56 389.30 1,146.99 1,404.10 1,643.44 1,112.67 -32.3 1,399.09 25.7 1,531.89 9.5 Tax rate (%) - 45.72 24.06 35.33 33.64 35.81 6.4 34.00 -5.0 34.00 0.0 Pre-abnormal tax rate (%) 55.21 38.11 22.07 35.33 33.64 35.81 6.4 34.00 -5.0 34.00 0.0 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) (0.07) 0.62 2.22 2.93 3.42 2.32 -32.3 2.92 25.7 3.19 9.5 EPS (UBS) 0.02 0.86 2.49 2.93 3.42 2.32 -32.3 2.92 25.7 3.19 9.5 Net DPS 0.01 0.33 1.96 2.37 3.25 2.20 -32.3 2.77 25.7 3.03 9.5 Cash EPS 0.09 1.48 3.14 3.61 4.10 3.15 -23.1 3.81 20.8 4.14 8.6 BVPS 7.54 9.07 10.41 10.54 10.33 11.23 8.8 11.38 1.3 11.54 1.4 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 374.61 817.72 1,052.16 201.94 1,106.31 1,270.18 14.8 1,612.72 27.0 1,559.52 -3.3 Other current assets 2,001.07 2,404.94 2,718.13 2,844.61 5,525.08 5,223.40 -5.5 4,923.85 -5.7 4,965.74 0.9 Total current assets 2,375.68 3,222.67 3,770.29 3,046.55 6,631.39 6,493.58 -2.1 6,536.57 0.7 6,525.26 -0.2 Net tangible fixed assets 3,908.60 4,291.18 4,647.84 5,861.70 8,964.38 9,432.41 5.2 9,883.38 4.8 10,171.78 2.9 Net intangible fixed assets 2,164.05 2,403.89 2,659.07 2,313.08 0.00 0.00 - 0.00 - 0.00 - Investments / other assets 3,602.12 2,700.39 2,774.25 2,661.24 0.00 0.00 - 0.00 - 0.00 - Total assets 12,050.45 12,618.12 13,851.44 13,882.56 15,595.77 15,926.00 2.1 16,419.95 3.1 16,697.04 1.7 Trade payables & other ST liabilities 1,259.28 1,593.34 2,363.92 1,823.52 1,611.81 1,007.18 -37.5 1,339.10 33.0 1,415.62 5.7 Short term debt 1,253.69 1,403.90 1,775.36 1,539.29 0.00 0.00 - 0.00 - 0.00 - Total current liabilities 2,512.97 2,997.24 4,139.28 3,362.80 1,611.81 1,007.18 -37.5 1,339.10 33.0 1,415.62 5.7 Long term debt 5,111.46 4,628.65 4,187.04 4,939.06 6,247.61 6,935.13 11.0 7,031.63 1.4 7,146.28 1.6 Other long term liabilities 829.75 759.23 728.57 722.75 2,693.39 2,497.93 -7.3 2,493.51 -0.2 2,502.84 0.4 Total liabilities 8,454.18 8,385.12 9,054.89 9,024.61 10,552.81 10,440.24 -1.1 10,864.24 4.1 11,064.73 1.8 Equity & minority interests 3,596.26 4,233.00 4,796.55 4,857.95 5,042.96 5,485.76 8.8 5,555.71 1.3 5,632.31 1.4 Total liabilities & equity 12,050.45 12,618.12 13,851.44 13,882.56 15,595.77 15,926.00 2.1 16,419.95 3.1 16,697.04 1.7 Cash flow (R$m) 12/03 12/04 12/05 12/08 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income (297.39) 278.92 1,021.28 1,404.10 1,643.44 1,112.67 -32.3 1,399.09 25.7 1,531.89 9.5 Depreciation 664.39 387.71 427.96 326.39 323.34 400.29 23.8 429.04 7.2 452.60 5.5 Net change in working capital 49.61 (60.57) (71.48) (137.73) 0.00 0.00 - 0.00 - 0.00 - Other (operating) 24.32 7.72 (220.85) (76.19) 35.84 309.55 - 127.99 - 158.66 - Net cash from operations 440.93 613.78 1,156.91 1,516.56 2,002.62 1,822.51 -9.0 1,956.11 7.3 2,143.15 9.6 Capital expenditure (564.38) (605.72) (626.50) (822.39) (782.00) (1,196.00) 52.9 (828.00) -30.8 (782.00) -5.6 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities (564.38) (605.72) (626.50) (822.39) (782.00) (1,196.00) 52.9 (828.00) -30.8 (782.00) -5.6 Increase/(decrease) in debt (1,565.03) (243.19) 306.82 664.42 0.00 0.00 - 0.00 - 0.00 - Share issues / (repurchases) 1,550.00 0.00 652.75 0.01 0.00 0.00 - 0.00 - 0.00 - Dividends paid (59.22) (109.52) (574.76) (1,624.27) (1,561.00) (1,057.04) -32.3 (1,329.13) 25.7 (1,455.30) 9.5 Other cash from financing 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities (74.24) (352.71) 384.80 (959.84) (1,561.00) (1,057.04) -32.3 (1,329.13) 25.7 (1,455.30) 9.5 Cash flow chge in cash & equivalents (197.70) (344.65) 915.21 (265.66) (340.39) (430.53) - (201.02) - (94.15) - FX / non cash items 395.65 787.76 (680.77) (584.56) 1,244.76 594.40 - 543.57 - 40.95 - Bal sheet chge in cash & equivalents 197.95 443.11 234.44 (850.23) 904.37 163.87 - 342.54 - (53.20) - Core EBITDA 1,511.28 1,671.63 2,127.85 2,736.99 3,344.89 2,915.63 -12.8 2,998.36 2.8 3,324.63 10.9 Maintenance capital expenditure (237.56) (268.54) (382.76) (547.69) (601.49) (1,196.00) 98.8 (828.00) -30.8 (782.00) -5.6 Maintenance net working capital (8.66) 6.76 9.59 9.83 13.00 0.00 - 0.00 - 0.00 - Operating free cash flow, pre-tax

1,265.06 1,409.85 1,754.69 2,199.13 2,756.40 1,719.63 -37.6 2,170.36 26.2 2,542.63 17.2


UBS 187


Electric Utilities



Company profile CPFL Energia is the largest private company in the Brazilianelectricity sector, with a 13% market share in the energy distributionmarket and an assured generation capacity of 800 MW. The companyoperates in the generation (CPFL Geração), distribution (Paulista,Piratininga, RGE, Juaguari, Mococa, Leste Paulista, Sul Paulista andSanta Cruz), and commercialization (CPFL Brasil) businesses. Theassured energy in the generation segment should increase from itscurrent 800 MW to approximately 1,082 MW by 2010 through theplants already under construction.


12/06 12/07 12/08 12/09E 12/10E0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)24.00%

25.29%

26.57%

27.86%

29.14%

30.43%

31.71%

33.00%

22.00%

23.00%

24.00%

25.00%

26.00%

27.00%

28.00%

29.00%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)15.0%

20.0%

25.0%

30.0%

35.0%

2.4x

2.5x

2.6x

2.7x

2.8x

2.9x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)6000

7000

8000

9000

10000

11000

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%



CPFL Energia


Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 13,527.36 16,200.87 14,327.56 14,327.56 14,327.56 + minority interests 2.12 88.13 94.58 94.58 94.58 + average net debt (cash) 5,593.32 6,304.27 6,399.13 5,884.98 5,670.24 + pension obligations and other 122.95 0.00 0.00 0.00 0.00 - non-core asset value (873.57) 0.00 0.00 0.00 0.00 Core enterprise value 18,372.18 22,593.27 20,821.26 20,307.12 20,092.37 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 24.4 2.2 18.9 1.2 4.5 6.5 EBITDA (UBS) 30.5 28.6 22.2 -12.8 2.8 10.9 EBIT (UBS) 32.8 32.0 25.3 -16.8 2.1 11.8 EPS (UBS) - 17.6 17.0 -32.3 25.7 9.5 Cash EPS - 14.7 13.6 -23.1 20.8 8.6 Net DPS - 20.7 37.5 -32.3 25.7 9.5 BVPS 21.9 1.2 -2.0 8.8 1.3 1.4






Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity NM NM NM NM 97.5 99.2 Net debt / (net debt + equity) 61.0 56.4 50.9 51.2 49.8 50.2 Net debt (core) / EV - 30.4 27.9 30.7 29.0 28.2




UBS 188

Energias do Brasil

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues - 3,702.69 3,865.24 3,984.76 4,513.48 4,734.47 4.9 4,457.66 -5.8 4,807.55 7.8 Operating expenses (ex depn) - (2,927.41) (2,960.49) (2,925.08) (3,401.37) (3,393.66) -0.2 (2,957.83) -12.8 (3,210.03) 8.5 EBITDA (UBS) - 775.28 904.75 1,059.69 1,112.11 1,340.81 20.6 1,499.82 11.9 1,597.52 6.5 Depreciation - (226.41) (231.97) (273.53) (306.34) (430.69) 40.6 (272.04) -36.8 (281.73) 3.6 Operating income (EBIT, UBS) - 548.87 672.78 786.15 805.77 910.12 13.0 1,227.79 34.9 1,315.79 7.2 Other income & associates - (31.56) 58.85 (9.53) (1.48) (0.59) -60.5 0.00 - 0.00 - Net interest - (229.09) (186.53) (196.73) (166.87) (190.57) 14.2 (253.09) 32.8 (256.92) 1.5 Abnormal items (pre-tax) - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax - 288.23 545.11 579.89 637.41 718.97 12.8 974.70 35.6 1,058.87 8.6 Tax - (9.72) (102.61) (148.51) (141.56) (259.97) 83.6 (232.14) -10.7 (253.74) 9.3 Profit after tax - 278.50 442.50 431.38 495.85 459.00 -7.4 742.56 61.8 805.13 8.4 Abnormal items (post-tax) - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends - (171.63) (3.09) (37.26) (56.06) (79.66) 42.1 (174.24) 118.7 (184.03) 5.6 Net income (local GAAP) - 106.88 439.41 394.12 439.79 379.35 -13.7 568.33 49.8 621.10 9.3 Net Income (UBS) - 106.88 439.41 394.12 439.79 379.35 -13.7 568.33 49.8 621.10 9.3 Tax rate (%) 0.00 3.37 18.82 25.61 22.21 36.16 62.8 23.82 -34.1 23.96 0.6 Pre-abnormal tax rate (%) 0.00 3.37 18.82 25.61 22.21 36.16 62.8 23.82 -34.1 23.96 0.6 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) - 0.65 2.67 2.39 2.67 2.30 -13.7 3.44 49.8 3.76 9.3 EPS (UBS) - 0.65 2.67 2.39 2.67 2.30 -13.7 3.44 49.8 3.76 9.3 Net DPS - 0.00 0.00 0.00 1.33 1.15 -13.7 1.72 49.8 1.88 9.3 Cash EPS - 2.02 4.07 4.05 4.52 4.91 8.6 5.09 3.7 5.47 7.4 BVPS 7.54 8.30 21.30 22.46 23.97 25.31 5.6 28.76 13.6 32.52 13.1 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents - 380.54 481.29 596.32 689.16 808.97 17.4 1,211.90 49.8 1,709.07 41.0 Other current assets 1,229.02 1,521.83 1,690.92 2,159.30 2,029.55 1,395.52 -31.2 1,449.45 3.9 1,495.75 3.2 Total current assets - 1,902.37 2,172.20 2,755.62 2,718.71 2,204.49 -18.9 2,661.35 20.7 3,204.82 20.4 Net tangible fixed assets 2,840.12 3,487.65 4,594.87 4,854.85 5,079.72 5,624.36 10.7 5,806.41 3.2 5,952.05 2.5 Net intangible fixed assets 9.49 357.07 1.05 160.24 193.51 158.12 -18.3 158.12 0.0 158.12 0.0 Investments / other assets 2,277.05 2,014.82 2,187.30 1,949.59 1,727.46 2,075.44 20.1 2,075.44 0.0 2,075.44 0.0 Total assets - 7,761.91 8,955.42 9,720.30 9,719.39 10,062.41 3.5 10,701.32 6.3 11,390.43 6.4 Trade payables & other ST liabilities 846.65 895.47 1,250.89 1,573.83 1,608.27 1,004.33 -37.6 1,021.36 1.7 1,040.69 1.9 Short term debt 973.74 960.40 984.50 844.31 342.80 0.00 - 0.00 - 0.00 - Total current liabilities 1,820.39 1,855.87 2,235.39 2,418.13 1,951.07 1,004.33 -48.5 1,021.36 1.7 1,040.69 1.9 Long term debt 2,276.00 2,894.87 2,189.18 2,460.81 2,601.58 2,798.55 7.6 2,852.10 1.9 2,900.78 1.7 Other long term liabilities 748.91 798.25 442.01 473.45 516.71 426.98 -17.4 426.98 0.0 426.98 0.0 Total liabilities 4,845.30 5,548.99 4,866.58 5,352.39 5,069.37 4,229.86 -16.6 4,300.45 1.7 4,368.45 1.6 Equity & minority interests - 2,212.92 4,088.84 4,367.91 4,650.02 5,832.55 25.4 6,400.87 9.7 7,021.97 9.7 Total liabilities & equity - 7,761.91 8,955.42 9,720.30 9,719.39 10,062.41 3.5 10,701.32 6.3 11,390.43 6.4 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income - 106.88 439.41 394.12 439.79 379.35 -13.7 568.33 49.8 621.10 9.3 Depreciation - 226.41 231.97 273.53 306.34 430.69 40.6 272.04 -36.8 281.73 3.6 Net change in working capital - (54.40) 0.00 0.00 0.00 0.00 - (64.40) - (26.97) -58.1 Other (operating) - 432.24 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations - 711.13 671.38 667.65 746.13 810.04 8.6 775.96 -4.2 875.86 12.9 Capital expenditure - (1,051.10) 0.00 0.00 (557.99) (423.51) -24.1 (287.59) -32.1 (270.79) -5.8 Net (acquisitions) / disposals - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities - (1,051.10) 0.00 0.00 (557.99) (423.51) -24.1 (287.59) -32.1 (270.79) -5.8 Increase/(decrease) in debt - (3,163.67) 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Share issues / (repurchases) - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid - (21.27) 0.00 0.00 (219.90) (189.67) -13.7 (284.16) 49.8 (310.55) 9.3 Other cash from financing - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities - (3,184.95) 0.00 0.00 (219.90) (189.67) -13.7 (284.16) 49.8 (310.55) 9.3 Cash flow chge in cash & equivalents - (3,524.92) 671.38 667.65 (31.75) 196.86 - 204.21 - 294.52 - FX / non cash items - 3,604.33 (570.63) (552.62) 124.59 (77.04) -85.8 198.71 111.0 202.66 6.1 Bal sheet chge in cash & equivalents - 79.42 100.74 115.04 92.83 119.82 - 402.92 - 497.18 - Core EBITDA - 775.28 904.75 1,059.69 1,112.11 1,340.81 20.6 1,499.82 11.9 1,597.52 6.5 Maintenance capital expenditure - (97.86) (10.00) (10.00) (557.99) (423.51) -24.1 (287.59) -32.1 (270.79) -5.8 Maintenance net working capital - (12.66) 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Operating free cash flow, pre-tax

- 664.76 894.75 1,049.69 554.12 917.31 65.5 1,212.24 32.2 1,326.72 9.4


UBS 189


Electric Utilities



Company profile Energias do Brasil is a holding company, with a 5.7% market share inthe energy distribution market (through Bandeirante, Escelsa, andEnersul), an active commercialization arm (Enertrade), and assured energy of approximately 473 MW in the generation segment,increasing to 824 MW after ongoing projects are concluded.


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)14.0%

16.0%

18.0%

20.0%

22.0%

24.0%

26.0%

28.0%

11.00%

12.14%

13.29%

14.43%

15.57%

16.71%

17.86%

19.00%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)8.00%

9.00%

10.00%

11.00%

12.00%

13.00%

0.5x

0.6x

0.8x

0.9x

1.0x

1.1x

1.3x

1.4x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)3600

3800

4000

4200

4400

4600

4800

5000

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%



Energias do Brasil

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - 12.3 11.9 9.8 6.6 6.0 P/E (UBS) - 12.3 11.9 9.8 6.6 6.0 P/CEPS - 7.2 7.0 4.6 4.4 4.1 Net dividend yield (%) - 0.0 4.2 5.1 7.6 8.3 P/BV - 1.3 1.3 0.9 0.8 0.7 EV/revenue (core) - - 2.2 1.8 1.9 1.6 EV/EBITDA (core) - - 8.8 6.2 5.5 4.9 EV/EBIT (core) - - 12.1 9.2 6.7 6.0 EV/OpFCF (core) - - 17.6 9.1 6.8 6.0 EV/op. invested capital - - 1.5 1.3 1.2 1.1

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 4,834.81 5,239.20 3,729.38 3,729.38 3,729.38 + minority interests - 2,662.21 2,662.21 2,662.21 2,662.21 + average net debt (cash) - 1,852.81 1,950.98 1,888.22 1,503.04 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 0.00 0.00 0.00 0.00 Core enterprise value - 9,754.21 8,342.57 8,279.81 7,894.63 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - 3.1 13.3 4.9 -5.8 7.8 EBITDA (UBS) - 17.1 4.9 20.6 11.9 6.5 EBIT (UBS) - 16.9 2.5 13.0 34.9 7.2 EPS (UBS) - -10.4 11.6 -13.7 49.8 9.3 Cash EPS - -0.7 11.8 8.6 3.7 7.4 Net DPS - - - -13.7 49.8 9.3 BVPS - 5.5 6.7 5.6 13.6 13.1



Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - 4.0 4.8 4.8 4.9 5.1 Dividend cover (UBS EPS) - - 2.0 2.0 2.0 2.0 Div. payout ratio (%, UBS EPS) - - 50.0 50.0 50.0 50.0 Net debt / EBITDA - 2.6 2.0 1.5 1.1 0.7



Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - 62.0 48.5 34.1 25.6 17.0 Net debt / (net debt + equity) - 42.2 36.3 32.3 25.7 18.2 Net debt (core) / EV - - 19.0 23.4 22.8 19.0




UBS 190

Equatorial Energia

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues - 526.13 665.44 855.62 878.97 2,295.51 161.2 2,305.03 0.4 2,424.58 5.2 Operating expenses (ex depn) - (440.86) (476.99) (441.00) (491.04) (1,546.72) 215.0 (1,569.29) 1.5 (1,661.62) 5.9 EBITDA (UBS) - 85.27 188.45 414.62 387.94 748.79 93.0 735.74 -1.7 762.96 3.7 Depreciation - (40.38) (49.86) (56.90) (67.01) (166.92) 149.1 (190.07) 13.9 (202.69) 6.6 Operating income (EBIT, UBS) - 44.88 138.60 357.72 320.93 581.87 81.3 545.68 -6.2 560.27 2.7 Other income & associates - (1.67) 0.71 (4.38) (9.61) (2.74) -71.5 (12.90) 371.5 (13.28) 2.9 Net interest - (74.26) (21.65) (35.60) (17.50) 4.94 - (168.17) - (171.15) 1.8 Abnormal items (pre-tax) - 159.77 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax - 128.72 117.65 317.74 293.81 584.07 98.8 364.62 -37.6 375.85 3.1 Tax - 0.00 241.88 (53.96) (67.95) (175.49) 158.2 (87.97) -49.9 (96.11) 9.3 Profit after tax - 128.72 359.53 263.78 225.86 408.58 80.9 276.65 -32.3 279.74 1.1 Abnormal items (post-tax) - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends - 3.86 (127.97) (61.43) (62.79) (148.97) 137.3 (109.96) -26.2 (114.86) 4.5 Net income (local GAAP) - 132.58 231.56 202.34 163.07 259.61 59.2 166.69 -35.8 164.88 -1.1 Net Income (UBS) - (27.18) 231.56 202.34 164.68 259.61 57.6 166.69 -35.8 164.88 -1.1 Tax rate (%) 0.00 0.00 0.00 16.98 23.13 30.05 29.9 24.13 -19.7 25.57 6.0 Pre-abnormal tax rate (%) 0.00 0.00 0.00 16.98 23.00 30.05 30.6 24.13 -19.7 25.57 6.0 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) - 1.26 2.19 1.92 1.54 2.46 59.2 1.58 -35.8 1.56 -1.1 EPS (UBS) - (0.26) 2.19 1.92 1.56 2.46 57.6 1.58 -35.8 1.56 -1.1 Net DPS - 0.00 0.00 1.82 1.82 1.47 -19.4 2.69 83.3 1.50 -44.2 Cash EPS - 0.13 2.67 2.46 2.19 4.04 84.1 3.38 -16.4 3.48 3.0 BVPS - 2.66 4.97 6.85 6.88 16.60 141.2 17.23 3.8 18.04 4.7 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents - 143.72 154.30 316.24 376.94 595.51 58.0 718.70 20.7 744.33 3.6 Other current assets - 205.58 250.13 178.91 244.66 870.93 256.0 774.48 -11.1 798.23 3.1 Total current assets - 349.31 404.43 495.14 621.60 1,466.44 135.9 1,493.18 1.8 1,542.56 3.3 Net tangible fixed assets - 503.80 628.75 474.85 570.89 1,832.24 220.9 1,903.62 3.9 1,965.94 3.3 Net intangible fixed assets - 249.73 246.92 238.83 237.22 248.97 5.0 248.97 0.0 248.97 0.0 Investments / other assets 0.00 42.52 277.97 219.87 204.84 684.95 234.4 681.12 -0.6 677.80 -0.5 Total assets - 1,145.36 1,558.06 1,428.70 1,634.55 4,232.60 158.9 4,326.89 2.2 4,435.27 2.5 Trade payables & other ST liabilities - 151.08 318.23 280.56 333.81 525.27 57.4 530.92 1.1 542.26 2.1 Short term debt - 38.67 31.78 30.85 26.64 117.96 342.8 119.45 1.3 120.10 0.5 Total current liabilities - 189.76 350.01 311.41 360.45 643.23 78.5 650.38 1.1 662.36 1.8 Long term debt - 543.21 472.56 369.38 497.05 1,115.49 124.4 1,143.83 2.5 1,165.59 1.9 Other long term liabilities - 76.96 60.82 25.20 50.23 720.88 1335.1 713.45 -1.0 702.74 -1.5 Total liabilities - 809.92 883.39 705.98 907.73 2,479.60 173.2 2,507.66 1.1 2,530.68 0.9 Equity & minority interests - 335.44 674.67 722.71 726.82 1,753.00 141.2 1,819.22 3.8 1,904.59 4.7 Total liabilities & equity - 1,145.36 1,558.06 1,428.70 1,634.55 4,232.60 158.9 4,326.89 2.2 4,435.27 2.5 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income - 132.58 231.56 202.34 163.07 259.61 59.2 166.69 -35.8 164.88 -1.1 Depreciation - 40.38 49.86 56.90 68.62 166.92 143.3 190.07 13.9 202.69 6.6 Net change in working capital - (69.05) (131.46) (35.93) (62.51) 50.70 - 61.44 21.2 (32.50) - Other (operating) - 56.53 25.05 28.77 30.76 63.86 107.6 48.56 -24.0 51.75 6.6 Net cash from operations - 160.45 175.00 252.09 199.94 541.09 170.6 466.75 -13.7 386.82 -17.1 Capital expenditure - (4.62) (172.67) (117.09) (200.00) (380.00) 90.0 (226.14) -40.5 (254.31) 12.5 Net (acquisitions) / disposals - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities - (4.62) (172.67) (117.09) (200.00) (380.00) 90.0 (226.14) -40.5 (254.31) 12.5 Increase/(decrease) in debt - 0.00 0.00 13.76 (14.58) 126.18 - 205.62 - 153.73 - Share issues / (repurchases) - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid - 0.00 0.00 (192.23) (192.23) (154.92) -19.4 (284.00) 83.3 (158.35) -44.2 Other cash from financing - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities - 0.00 0.00 (178.47) (206.81) (28.74) -86.1 (78.38) 172.8 (4.62) -94.1 Cash flow chge in cash & equivalents - 155.82 2.33 (43.47) (206.87) 132.35 - 162.22 - 127.90 - FX / non cash items - - 8.24 205.41 267.58 86.21 - (39.03) - (102.27) -78.7 Bal sheet chge in cash & equivalents - - 10.57 161.94 60.71 218.56 - 123.19 - 25.63 - Core EBITDA - 85.27 188.45 414.62 387.94 748.79 93.0 735.74 -1.7 762.96 3.7 Maintenance capital expenditure - (4.62) (172.67) (117.09) (200.00) (380.00) 90.0 (226.14) -40.5 (254.31) 12.5 Maintenance net working capital - (69.05) (131.46) (35.93) (62.51) 50.70 - 61.44 21.2 (32.50) - Operating free cash flow, pre-tax

- 11.60 (115.67) 261.60 125.42 419.48 234.5 571.04 36.1 476.15 -16.6


UBS 191


Electric Utilities



Company profile Equatorial Energia is a holding company that controls Cemar andLight (through a 25% stake at RME - controlling company). Cemar is a pure distribution company in the Brazilian electricity sector locatedin the state of Maranhão, being the fifth largest distribution companyin the Northeast region in terms of energy sales. Light is an integratedcompany located in the state of Rio de Janeiro with distribution,generation, and commercialization businesses.


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)0

500

1000

1500

2000

2500

-40%

-20%

0%

20%

40%

60%



Equatorial Energia


Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 1,696.12 1,997.93 1,430.52 1,430.52 1,430.52 + minority interests 0.00 177.73 654.05 654.05 654.05 + average net debt (cash) 256.51 363.68 1,068.47 1,069.03 1,060.28 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 0.00 0.00 0.00 0.00 Core enterprise value 1,952.63 2,539.33 3,153.04 3,153.60 3,144.84 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - 28.6 2.7 161.2 0.4 5.2 EBITDA (UBS) - 120.0 -6.4 93.0 -1.7 3.7 EBIT (UBS) - 158.1 -10.3 81.3 -6.2 2.7 EPS (UBS) - -12.6 -18.6 57.6 -35.8 -1.1 Cash EPS - -7.9 -10.6 84.1 -16.4 3.0 Net DPS - - 0.0 -19.4 83.3 -44.2 BVPS - 37.7 0.6 141.2 3.8 4.7



Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - 10.0 18.3 - 3.2 3.3 Dividend cover (UBS EPS) - 1.1 0.9 1.7 0.6 1.0 Div. payout ratio (%, UBS EPS) - 95.0 116.7 59.7 170.4 96.0 Net debt / EBITDA - 0.2 0.4 0.9 0.7 0.7

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - 0.9 1.0 1.4 1.0 1.0 Revenue / fixed assets - 1.1 1.2 1.6 1.1 1.1 Revenue / net working capital - NM NM 17.9 7.8 9.7






UBS 192

Eletropaulo

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 6,462.27 7,564.90 7,491.24 7,329.92 6,961.58 7,601.82 9.2 8,215.88 8.1 9,048.93 10.1 Operating expenses (ex depn) (5,060.54) (8,159.12) (6,709.71) (5,646.07) (5,185.03) (5,736.04) 10.6 (6,305.18) 9.9 (6,908.18) 9.6 EBITDA (UBS) 1,401.73 (594.22) 781.54 1,683.84 1,776.54 1,865.78 5.0 1,910.70 2.4 2,140.75 12.0 Depreciation (269.30) (268.78) (296.39) (313.03) (330.46) (365.72) 10.7 (370.40) 1.3 (384.33) 3.8 Operating income (EBIT, UBS) 1,132.43 (863.00) 485.14 1,370.82 1,446.09 1,500.05 3.7 1,540.30 2.7 1,756.42 14.0 Other income & associates (222.63) (803.08) (288.70) (304.44) (202.42) (121.25) -40.1 (69.73) -42.5 (73.51) 5.4 Net interest (117.76) 60.29 (358.05) (342.28) (108.85) (154.56) 42.0 (129.70) -16.1 (220.97) 70.4 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 792.03 (1,605.80) (161.60) 724.10 1,134.82 1,224.24 7.9 1,340.87 9.5 1,461.95 9.0 Tax (219.50) (61.47) (269.46) (350.73) (422.19) (406.51) -3.7 (424.01) 4.3 (454.34) 7.2 Profit after tax 572.53 (1,667.27) (431.07) 373.37 712.63 817.73 14.7 916.85 12.1 1,007.61 9.9 Abnormal items (post-tax) (486.25) (486.25) (340.88) (320.93) 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net income (local GAAP) 86.27 (2,153.52) (771.94) 52.44 712.63 817.73 14.7 916.85 12.1 1,007.61 9.9 Net Income (UBS) 572.53 (1,667.27) (431.07) 373.37 712.63 817.73 14.7 916.85 12.1 1,007.61 9.9 Tax rate (%) 27.71 - - 48.44 37.20 33.21 -10.7 31.62 -4.8 31.08 -1.7 Pre-abnormal tax rate (%) 27.71 - - 48.44 37.20 33.21 -10.7 31.62 -4.8 31.08 -1.7 Per share (R$) 12/03 12/04 12/05 12/04 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 2.06 (51.48) (11.15) 0.31 4.26 4.89 14.7 5.48 12.1 6.02 9.9 EPS (UBS) 13.69 (39.85) (6.23) 2.23 4.26 4.89 14.7 5.48 12.1 6.02 9.9 Net DPS 0.00 0.00 0.00 0.00 4.05 4.81 19.0 5.20 8.1 5.72 9.9 Cash EPS 20.12 (33.43) (1.95) 4.10 6.23 7.07 13.5 7.69 8.8 8.32 8.1 BVPS 31.67 31.75 28.25 13.12 19.85 20.72 4.4 21.00 1.3 21.30 1.4 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 448.69 192.26 513.21 1,172.33 1,332.59 1,663.97 24.9 2,047.90 23.1 2,168.22 5.9 Other current assets 2,151.01 2,674.31 2,786.81 2,850.94 2,311.40 2,351.37 1.7 2,224.93 -5.4 2,316.53 4.1 Total current assets 2,599.70 2,866.58 3,300.02 4,023.26 3,643.99 4,015.33 10.2 4,272.83 6.4 4,484.75 5.0 Net tangible fixed assets 5,133.91 5,146.27 5,114.77 5,078.48 6,624.35 6,705.72 1.2 6,746.92 0.6 6,792.71 0.7 Net intangible fixed assets 62.95 59.16 18.87 8.91 10.34 0.72 -93.1 0.72 0.0 0.72 0.0 Investments / other assets 3,753.12 3,353.39 2,656.27 2,100.69 1,873.87 1,982.54 5.8 1,867.11 -5.8 1,834.12 -1.8 Total assets 11,549.69 11,425.40 11,089.93 11,211.34 12,152.54 12,704.31 4.5 12,887.58 1.4 13,112.30 1.7 Trade payables & other ST liabilities 1,915.99 1,903.04 2,610.47 2,758.75 2,307.09 2,324.43 0.8 2,403.07 3.4 2,474.25 3.0 Short term debt 3,766.48 1,214.55 886.39 764.42 921.92 911.65 -1.1 941.95 3.3 976.55 3.7 Total current liabilities 5,682.47 3,117.59 3,496.87 3,523.17 3,229.01 3,236.08 0.2 3,345.02 3.4 3,450.80 3.2 Long term debt 1,519.81 4,076.86 3,628.70 3,909.46 3,632.85 4,118.60 13.4 4,147.10 0.7 4,215.65 1.7 Other long term liabilities 2,154.81 2,032.82 2,009.04 1,582.67 1,968.89 1,881.95 -4.4 1,881.95 0.0 1,881.95 0.0 Total liabilities 9,357.09 9,227.26 9,134.61 9,015.29 8,830.75 9,236.63 4.6 9,374.07 1.5 9,548.40 1.9 Equity & minority interests 2,192.60 2,198.14 1,955.33 2,196.05 3,321.79 3,467.68 4.4 3,513.52 1.3 3,563.90 1.4 Total liabilities & equity 11,549.69 11,425.40 11,089.93 11,211.34 12,152.54 12,704.31 4.5 12,887.58 1.4 13,112.30 1.7 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 86.27 (2,153.52) (771.94) 52.44 712.63 817.73 14.7 916.85 12.1 1,007.61 9.9 Depreciation 269.30 268.78 296.39 313.03 330.46 365.72 10.7 370.40 1.3 384.33 3.8 Net change in working capital 328.86 2.85 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other (operating) 595.90 1,075.55 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations 1,280.33 (806.34) (475.55) 365.47 1,043.09 1,183.45 13.5 1,287.25 8.8 1,391.94 8.1 Capital expenditure (217.31) (335.06) 0.00 0.00 0.00 (411.60) - (411.60) 0.0 (430.12) 4.5 Net (acquisitions) / disposals (31.74) (14.40) 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities (249.04) (349.46) 0.00 0.00 0.00 (411.60) - (411.60) 0.0 (430.12) 4.5 Increase/(decrease) in debt (1,438.49) (467.70) 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Share issues / (repurchases) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid (41.44) (94.98) 0.00 0.00 (677.00) (805.68) 19.0 (871.01) 8.1 (957.23) 9.9 Other cash from financing 126.47 (177.55) 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities (1,353.46) (740.22) 0.00 0.00 (677.00) (805.68) 19.0 (871.01) 8.1 (957.23) 9.9 Cash flow chge in cash & equivalents (322.17) (1,896.01) (475.55) 365.47 366.09 (33.82) - 4.64 - 4.59 - FX / non cash items 478.95 1,639.58 796.50 293.64 (205.83) 365.21 27.1 379.29 - 115.73 -96.1 Bal sheet chge in cash & equivalents 156.78 (256.43) 320.95 659.11 160.26 331.38 - 383.93 - 120.32 - Core EBITDA 1,401.73 (594.22) 781.54 1,683.84 1,776.54 1,865.78 5.0 1,910.70 2.4 2,140.75 12.0 Maintenance capital expenditure (189.53) (173.53) (10.00) (10.00) (10.00) (411.60) 4016.0 (411.60) 0.0 (430.12) 4.5 Maintenance net working capital (6.35) (5.40) 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Operating free cash flow, pre-tax

1,205.84 (773.15) 771.54 1,673.84 1,766.54 1,454.18 -17.7 1,499.10 3.1 1,710.63 14.1


UBS 193


Electric Utilities



Company profile Eletropaulo is the electricity distributor for the greater São Pauloregion, one of Brazil's richest and most densely populated areas. Thecompany is the second-largest distributor in the region, with a 12.2%market share in Brazil. Eletropaulo was privatized in April 1998, whenit was sold to Rio-based distributor Light - which in turn was controlledby EdF, AES, Houston, and CSN. Since then, Eletropaulo operationshave been consolidated under AES management.


12/06 12/07 12/08 12/09E 12/10E0.00x

1.00x

2.00x

3.00x

4.00x

5.00x

6.00x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)18.00%

18.50%

19.00%

19.50%

20.00%

20.50%

21.00%

21.00%

22.00%

23.00%

24.00%

25.00%

26.00%

27.00%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)10.0%

15.0%

20.0%

25.0%

30.0%

0.0x

0.5x

1.0x

1.5x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)6000

6500

7000

7500

8000

8500

9000

9500

0%

20%

40%

60%

80%

100%



Eletropaulo

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - NM 6.9 6.3 5.6 5.1 P/E (UBS) - 10.7 6.9 6.3 5.6 5.1 P/CEPS - 5.8 4.7 4.3 4.0 3.7 Net dividend yield (%) - 0.0 13.8 15.7 17.0 18.7 P/BV - 1.8 1.5 1.5 1.5 1.4 EV/revenue (core) - 1.1 1.2 1.1 1.1 1.1 EV/EBITDA (core) - 4.6 4.6 4.5 4.6 4.7 EV/EBIT (core) - 5.7 5.6 5.5 5.8 5.7 EV/OpFCF (core) - 4.7 4.6 5.7 5.9 5.9 EV/op. invested capital - 1.4 1.3 1.2 1.3 1.5

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 3,860.29 4,920.73 5,120.60 5,120.60 5,120.60 + minority interests 0.00 0.00 0.00 0.00 0.00 + average net debt (cash) 2,213.19 1,914.88 2,281.19 3,236.32 4,456.87 + pension obligations and other 1,745.61 1,260.52 917.85 506.63 512.07 - non-core asset value 0.00 0.00 0.00 0.00 0.00 Core enterprise value 7,819.10 8,096.14 8,319.65 8,863.55 10,089.54 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 6.0 -2.2 -5.0 9.2 8.1 10.1 EBITDA (UBS) 12.3 115.5 5.5 5.0 2.4 12.0 EBIT (UBS) 14.3 182.6 5.5 3.7 2.7 14.0 EPS (UBS) - - 90.9 14.7 12.1 9.9 Cash EPS - - 52.0 13.5 8.8 8.1 Net DPS - - - 19.0 8.1 9.9 BVPS -19.0 -53.5 51.3 4.4 1.3 1.4

Margins (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBITDA / revenue 13.1 23.0 25.5 24.5 23.3 23.7 EBIT / revenue 9.0 18.7 20.8 19.7 18.7 19.4 Net profit (UBS) / revenue NM 5.1 10.2 10.8 11.2 11.1

Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) 8.6 23.7 23.8 22.5 23.0 26.8 ROIC post tax - 12.2 15.0 15.0 15.7 18.4 Net ROE -13.8 18.0 25.8 24.1 26.3 28.5

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - 3.3 12.3 9.1 11.5 7.6 Dividend cover (UBS EPS) - - 1.1 1.0 1.1 1.1 Div. payout ratio (%, UBS EPS) - - 95.0 98.5 95.0 95.0 Net debt / EBITDA 5.3 2.1 1.8 1.8 1.6 1.4

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital 1.0 1.3 1.1 1.1 1.2 1.4 Revenue / fixed assets 1.3 1.4 1.2 1.1 1.2 1.3 Revenue / net working capital 14.7 54.6 NM NM NM NM


Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity NM NM 97.0 97.1 86.6 84.9 Net debt / (net debt + equity) 68.4 61.5 49.2 49.3 46.4 45.9 Net debt (core) / EV - 28.3 23.7 27.4 36.5 44.2




UBS 194

Light SA

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues - - - 5,425.08 5,575.75 * * * * * * Operating expenses (ex depn) - - - - - - - - - - - EBITDA (UBS) - - - 737.88 1,104.97 * * * * * * Depreciation - - - (321.08) (327.96) * * * * * * Operating income (EBIT, UBS) - - - 416.80 777.01 * * * * * * Other income & associates - - - 8.60 11.31 * - * - * - Net interest - - - (326.86) (315.97) * * * * * * Abnormal items (pre-tax) - - - 0.00 0.00 * - * - * - Profit before tax - - - 98.54 472.36 * * * * * * Tax - - - (249.03) 604.89 * - * * * * Profit after tax - - - (150.49) 1,077.24 * * * * * * Abnormal items (post-tax) - - - 0.00 0.00 * - * - * - Minorities / pref dividends - - - 0.00 0.00 * - * - * - Net income (local GAAP) - - - (150.49) 1,077.24 * * * * * * Net Income (UBS) - - - (150.49) 1,077.24 * * * * * * Tax rate (%) 0.00 0.00 0.00 252.73 0.00 * - * * * * Pre-abnormal tax rate (%) 0.00 0.00 0.00 252.73 0.00 * - * * * * Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) - - - (0.74) 5.29 * * * * * * EPS (UBS) - - - (0.74) 5.29 * * * * * * Net DPS - - 0.00 0.00 0.00 * - * * * * Cash EPS - - - 0.84 6.91 * * * * * * BVPS 6.86 - 8.00 7.41 13.11 * * * * * * Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents - - 397.24 695.11 490.21 * * * * * * Other current assets - - 2,377.37 2,692.62 2,428.13 * * * * * * Total current assets - - 2,774.61 3,387.73 2,918.34 * * * * * * Net tangible fixed assets - - 3,317.97 3,929.41 3,973.21 * * * * * * Net intangible fixed assets - - 99.12 41.75 53.27 * * * * * * Investments / other assets 0.00 0.00 1,880.96 1,199.84 1,991.80 * * * * * * Total assets - - 8,072.66 8,558.74 8,936.62 * * * * * * Trade payables & other ST liabilities - - 1,410.15 1,247.55 1,596.69 * * * * * * Short term debt - - 170.97 495.24 140.42 * * * * * * Total current liabilities - - 1,581.12 1,742.79 1,737.12 * * * * * * Long term debt - - 2,337.00 2,739.54 1,811.51 * * * * * * Other long term liabilities - - 2,526.93 2,567.90 2,719.72 * * * * * * Total liabilities - - 6,445.04 7,050.23 6,268.35 * * * * * * Equity & minority interests - - 1,627.61 1,508.51 2,668.27 * * * * * * Total liabilities & equity - - 8,072.66 8,558.74 8,936.62 * * * * * * Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income - - - (150.49) 1,077.24 * * * * * * Depreciation - - - 321.08 327.96 * * * * * * Net change in working capital - - (194.18) 364.54 557.91 * * * * * - Other (operating) - - 71.14 0.00 0.00 * - * - * - Net cash from operations - - - 535.13 1,963.11 * * * * * * Capital expenditure - - (86.26) (290.74) (338.53) * * * * * * Net (acquisitions) / disposals - - 0.00 0.00 0.00 * - * - * - Other changes in investments - - 0.00 0.00 0.00 * - * - * - Cash from investing activities - - (86.26) (290.74) (338.53) * * * * * * Increase/(decrease) in debt - - 0.00 (267.00) (153.21) * - * - * - Share issues / (repurchases) - - 0.00 0.00 0.00 * - * - * - Dividends paid - - 0.00 0.00 0.00 * - * * * * Other cash from financing - - 0.00 0.00 0.00 * - * - * - Cash from financing activities - - 0.00 (267.00) (153.21) * - * * * * Cash flow chge in cash & equivalents - - - (22.61) 1,471.38 * - * - * - FX / non cash items - - - 320.48 (1,676.28) * - * * * * Bal sheet chge in cash & equivalents - - - 297.87 (204.90) * - * - * - Core EBITDA - - - 737.88 1,104.97 * * * * * * Maintenance capital expenditure - - - (290.74) (338.53) * * * * * * Maintenance net working capital - - 364.54 364.54 557.91 * * * * * - Operating free cash flow, pre-tax

- - - 811.68 1,324.36 * * * * * *


UBS 195


Electric Utilities



Company profile


12/06 12/07 12/08 12/09E 12/10E0.00x

1.00x

2.00x

3.00x

4.00x

5.00x

6.00x

-25.0x

-20.0x

-15.0x

-10.0x

-5.0x

0.0x

5.0x

10.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)6.00%

7.14%

8.29%

9.43%

10.57%

11.71%

12.86%

14.00%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

2.1x

2.1x

2.2x

2.2x

2.3x

2.3x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)5350

5400

5450

5500

5550

5600

Revenue (LHS)


Light SA

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - NM 5.3 * * * P/E (UBS) - NM 5.3 * * * P/CEPS - 20.1 4.0 * * * Net dividend yield (%) - 0.0 0.0 * * * P/BV - 2.3 2.1 * * * EV/revenue (core) - 0.8 1.2 * * * EV/EBITDA (core) - 6.1 6.2 * * * EV/EBIT (core) - 10.9 8.8 * * * EV/OpFCF (core) - 5.6 5.2 * * * EV/op. invested capital - 1.1 1.7 * * *

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 2,245.30 4,868.11 * * * + minority interests 0.00 0.00 * * * + average net debt (cash) 2,325.20 2,000.70 * * * + pension obligations and other 0.00 0.00 * * * - non-core asset value (34.83) (13.16) * * * Core enterprise value 4,535.67 6,855.65 * * * Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/04E Revenue - - 2.8 * * * EBITDA (UBS) - - 49.7 * * * EBIT (UBS) - - 86.4 * * * EPS (UBS) - - - * * * Cash EPS - - NM * * * Net DPS - - - - * * BVPS 22.3 -7.3 76.9 * * *

Margins (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBITDA / revenue - 13.6 19.8 * * * EBIT / revenue - 7.7 13.9 * * * Net profit (UBS) / revenue - NM 19.3 * * *

Return on capital (%) 5Yr Avg 12/06 12/07 12/07E 12/09E 12/10E EBIT ROIC (UBS) - 10.4 19.1 * * * ROIC post tax - NM 19.1 * * * Net ROE - (9.6) 51.6 * * *

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - 1.3 2.5 * * * Dividend cover (UBS EPS) - - - * * * Div. payout ratio (%, UBS EPS) - - - * * * Net debt / EBITDA - 3.4 1.3 * * *



Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - NM 54.8 * * * Net debt / (net debt + equity) - 62.7 35.4 * * * Net debt (core) / EV - 51.3 29.2 * * *




UBS 196

MPX

Income statement (R$m) - - - 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues - - - - - 0.10 - 0.10 0.0 0.10 0.0 Operating expenses (ex depn) - - - - - - - - - - - EBITDA (UBS) - - - - - 0.01 - 0.01 0.0 - - Depreciation - - - - - (0.01) - (0.01) 0.0 - - Operating income (EBIT, UBS) - - - - - 0.00 - 0.00 - 0.00 - Other income & associates - - - - - 0.00 - 0.00 - 0.00 - Net interest - - - - - 200.29 - 188.02 -6.1 180.50 -4.0 Abnormal items (pre-tax) - - - - - 0.00 - 0.00 - 0.00 - Profit before tax - - - - - 200.29 - 188.02 -6.1 180.50 -4.0 Tax - - - - - (68.10) - (63.93) -6.1 (61.37) -4.0 Profit after tax - - - - - 132.19 - 124.09 -6.1 119.13 -4.0 Abnormal items (post-tax) - - - - - 0.00 - 0.00 - 0.00 - Minorities / pref dividends - - - - - 0.00 - 0.00 - 0.00 - Net income (local GAAP) - - - - - 132.19 - 124.09 -6.1 119.13 -4.0 Net Income (UBS) - - - - - 132.19 - 124.09 -6.1 119.13 -4.0 Tax rate (%) - - - - - 34.00 - 34.00 0.0 34.00 0.0 Pre-abnormal tax rate (%) - - - - - 34.00 - 34.00 0.0 34.00 0.0 Per share (R$) - - - 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) - - - - - 19.35 - 18.17 -6.1 17.44 -4.0 EPS (UBS) - - - - - 19.35 - 18.17 -6.1 17.44 -4.0 Net DPS - - - - - 0.00 - 0.00 - 0.00 - Cash EPS - - - - - 19.35 - 18.17 -6.1 - - BVPS - - - - - 297.49 - 315.66 6.1 333.10 5.5 Balance sheet (R$m) - - - 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents - - - - - 1,835.64 - 746.76 -59.3 (1,373.73) - Other current assets - - - - - 0.10 - 0.10 0.0 0.10 0.0 Total current assets - - - - - 1,835.74 - 746.86 -59.3 (1,373.63) - Net tangible fixed assets - - - - - 800.27 - 5,809.93 626.0 15,240.45 162.3 Net intangible fixed assets - - - - - 0.00 - 0.00 - 0.00 - Investments / other assets - - - 0.00 0.00 0.00 - 0.00 - 0.00 - Total assets - - - - - 2,636.01 - 6,556.79 148.7 13,866.82 111.5 Trade payables & other ST liabilities - - - - - 0.00 - 0.00 - 0.00 - Short term debt - - - - - 0.00 - 0.00 - 0.00 - Total current liabilities - - - - - 0.00 - 0.00 - 0.00 - Long term debt - - - - - 603.72 - 4,400.40 628.9 11,591.30 163.4 Other long term liabilities - - - - - 0.00 - 0.00 - 0.00 - Total liabilities - - - - - 603.72 - 4,400.40 628.9 11,591.30 163.4 Equity & minority interests - - - - - 2,032.29 - 2,156.39 6.1 2,275.52 5.5 Total liabilities & equity - - - - - 2,636.01 - 6,556.79 148.7 13,866.82 111.5 Cash flow (R$m) - - - 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income - - - - - 132.19 - 124.09 -6.1 119.13 -4.0 Depreciation - - - - - 0.01 - 0.01 0.0 - - Net change in working capital - - - - - 0.00 - 0.00 - 0.00 - Other (operating) - - - - - 0.00 - 0.00 - 0.00 - Net cash from operations - - - - - 132.20 - 124.10 -6.1 - - Capital expenditure - - - - - (787.25) - (4,834.65) 514.1 (8,887.47) 83.8 Net (acquisitions) / disposals - - - - - 0.00 - 0.00 - 0.00 - Other changes in investments - - - - - 0.00 - 0.00 - 0.00 - Cash from investing activities - - - - - (787.25) - (4,834.65) 514.1 (8,887.47) 83.8 Increase/(decrease) in debt - - - - - 590.44 - 3,625.99 - 6,665.60 - Share issues / (repurchases) - - - - - 0.00 - 0.00 - 0.00 - Dividends paid - - - - - 0.00 - 0.00 - 0.00 - Other cash from financing - - - - - 0.00 - 0.00 - 0.00 - Cash from financing activities - - - - - 590.44 - 3,625.99 514.1 6,665.60 83.8 Cash flow chge in cash & equivalents - - - - - (64.61) - (1,084.56) - - - FX / non cash items - - - - - - - (4.32) - - - Bal sheet chge in cash & equivalents - - - - - - - (1,088.88) - (2,120.49) - Core EBITDA - - - - - 0.01 - 0.01 0.0 - - Maintenance capital expenditure - - - - - (0.01) - (0.01) 0.0 (0.01) 0.0 Maintenance net working capital - - - - - 0.00 - 0.00 - 0.00 - Operating free cash flow, pre-tax

- - - - - 0.00 - 0.00 - - -


UBS 197


Electric Utilities


12m price target -

Company profile MPX is a private company with the largest portfolio of generationprojects (total installed capacity of 9,851MW) being developed inBrazil and Chile. The projects are based on different energy sources, predominantly coal thermal generation (installed capacity 9,200MW),with an integrated business model, which encompasses theownership of coal mines and logistics infrastructure. The companybegan activities in 2001 and is controlled by EBX group.


12/06 12/07 12/08 12/09E 12/10E0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

0.0x

5.0x

10.0x

15.0x

20.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)-1.20%

-1.00%

-0.80%

-0.60%

-0.40%

-0.20%

0.00%

-1.20%

-1.00%

-0.80%

-0.60%

-0.40%

-0.20%

0.00%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)4.50%

5.00%

5.50%

6.00%

6.50%

7.00%

0.5x

0.5x

0.5x

0.5x

0.6x

0.6x

0.6x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)-0.60

-0.40

-0.20

0.00

0.20

0.40

0.60

-7.00%

-6.00%

-5.00%

-4.00%

-3.00%

-2.00%

-1.00%

0.00%


MPX

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - - - 9.0 9.6 10.0 P/E (UBS) - - - 9.0 9.6 10.0 P/CEPS - - - 9.0 9.6 - Net dividend yield (%) - - - 0.0 0.0 0.0 P/BV - - - 0.6 0.6 0.5 EV/revenue (core) - - - NM NM NM EV/EBITDA (core) - - - <-100 >100 - EV/EBIT (core) - - - - - - EV/OpFCF (core) - - - - - - EV/op. invested capital - - - - 0.7 0.9

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap - 6,657.34 1,190.47 1,190.47 1,190.47 + minority interests - - 0.00 0.00 0.00 + average net debt (cash) - - (1,231.92) 1,210.86 8,309.34 + pension obligations and other - - 0.00 0.00 0.00 - non-core asset value - - 0.00 0.00 0.00 Core enterprise value - - (41.45) 2,401.33 9,499.81 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - - - - 0.0 0.0 EBITDA (UBS) - - - - 0.0 - EBIT (UBS) - - - - - - EPS (UBS) - - - - -6.1 -4.0 Cash EPS - - - - -6.1 - Net DPS - - - - - - BVPS - - - - 6.1 5.5

Margins (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBITDA / revenue - - - 10.0 10.0 - EBIT / revenue - - - 0.0 0.0 0.0 Net profit (UBS) / revenue - - - NM NM NM

Return on capital (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT ROIC (UBS) - - - - 0.0 0.0 ROIC post tax - - - - 0.0 0.0 Net ROE - - - 6.5 5.9 5.4

Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - - - - - Dividend cover (UBS EPS) - - - - - - Div. payout ratio (%, UBS EPS) - - - - - - Net debt / EBITDA - - - NM NM -

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - - - - 0.0 0.0 Revenue / fixed assets - - - - 0.0 0.0 Revenue / net working capital - - - - 1.0 1.0

Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT - - - - - - Capex / revenue (%) - - - NM NM NM Capex / depreciation - - - NM NM -

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - - - (60.6) NM NM Net debt / (net debt + equity) - - - NM 62.9 85.1 Net debt (core) / EV - - - NM 50.4 87.5




UBS 198

Transmissao Paulista

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues - 1,097.99 1,205.21 1,323.00 1,315.41 1,567.90 19.2 1,680.60 7.2 1,864.50 10.9 Operating expenses (ex depn) - (517.89) (576.98) (1,092.71) (186.54) (262.94) 41.0 (392.82) 49.4 (432.22) 10.0 EBITDA (UBS) - 580.10 628.23 230.29 1,128.88 1,304.97 15.6 1,287.78 -1.3 1,432.28 11.2 Depreciation - (164.57) (169.40) (169.42) (172.66) (181.99) 5.4 (213.93) 17.6 (260.47) 21.8 Operating income (EBIT, UBS) - 415.53 458.83 60.88 956.22 1,122.98 17.4 1,073.85 -4.4 1,171.81 9.1 Other income & associates - 5.82 (1.27) (31.85) 78.21 7.53 -90.4 0.00 - 0.00 - Net interest - 79.20 140.15 130.91 86.83 (53.22) - (76.87) 44.4 (97.00) 26.2 Abnormal items (pre-tax) - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax - 500.55 597.71 159.94 1,121.26 1,077.28 -3.9 996.98 -7.5 1,074.80 7.8 Tax - (151.77) (129.44) (42.18) (265.78) (254.78) -4.1 (254.23) -0.2 (277.73) 9.2 Profit after tax - 348.78 468.28 117.75 855.48 822.50 -3.9 742.75 -9.7 797.07 7.3 Abnormal items (post-tax) - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net income (local GAAP) - 348.78 468.28 117.75 855.48 822.50 -3.9 742.75 -9.7 797.07 7.3 Net Income (UBS) - 348.78 468.28 117.75 855.48 822.50 -3.9 742.75 -9.7 797.07 7.3 Tax rate (%) 0.00 30.32 21.66 26.38 23.70 23.65 -0.2 25.50 7.8 25.84 1.3 Pre-abnormal tax rate (%) 0.00 30.32 21.66 26.38 23.70 23.65 -0.2 25.50 7.8 25.84 1.3 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) - 2.34 3.14 0.79 5.73 5.51 -3.9 4.98 -9.7 5.34 7.3 EPS (UBS) - 2.34 3.14 0.79 5.73 5.51 -3.9 4.98 -9.7 5.34 7.3 Net DPS - 0.50 1.60 0.36 5.44 5.23 -3.9 3.46 -33.9 5.07 46.5 Cash EPS - 3.44 4.27 1.92 6.89 6.73 -2.3 6.41 -4.8 7.08 10.5 BVPS - 42.61 44.13 25.09 26.45 28.16 6.5 29.63 5.2 29.89 0.9 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents - 543.99 684.92 514.47 190.58 284.26 49.2 342.30 20.4 669.13 95.5 Other current assets - 589.05 666.97 730.09 656.43 879.18 33.9 905.06 2.9 902.69 -0.3 Total current assets - 1,133.04 1,351.88 1,244.56 847.00 1,163.44 37.4 1,247.37 7.2 1,571.82 26.0 Net tangible fixed assets - 3,494.82 3,623.35 3,879.57 4,140.00 4,301.11 3.9 5,313.62 23.5 6,083.76 14.5 Net intangible fixed assets - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Investments / other assets 0.00 4.25 0.00 92.92 193.10 345.34 78.8 480.90 39.3 622.55 29.5 Total assets - 4,632.11 4,975.23 5,217.05 5,180.11 5,809.89 12.2 7,041.89 21.2 8,278.14 17.6 Trade payables & other ST liabilities - 204.68 441.98 784.42 251.99 318.62 26.4 442.90 39.0 880.48 98.8 Short term debt - 44.77 10.30 0.06 132.19 0.00 - 0.00 - 0.00 - Total current liabilities - 249.45 452.28 784.47 384.18 318.62 -17.1 442.90 39.0 880.48 98.8 Long term debt - 248.59 234.55 232.77 543.26 1,005.43 85.1 1,894.34 88.4 2,654.28 40.1 Other long term liabilities - 438.79 461.10 454.30 303.86 281.38 -7.4 281.38 0.0 281.38 0.0 Total liabilities - 936.83 1,147.93 1,471.54 1,231.30 1,605.44 30.4 2,618.63 63.1 3,816.14 45.7 Equity & minority interests - 3,695.28 3,827.30 3,745.51 3,948.81 4,204.45 6.5 4,423.26 5.2 4,461.99 0.9 Total liabilities & equity - 4,632.11 4,975.23 5,217.05 5,180.11 5,809.89 12.2 7,041.89 21.2 8,278.14 17.6 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income - 348.78 468.28 117.75 855.48 822.50 -3.9 742.75 -9.7 797.07 7.3 Depreciation - 164.57 169.40 169.42 172.66 181.99 5.4 213.93 17.6 260.47 21.8 Net change in working capital - 0.00 0.00 (78.98) (351.52) (45.13) -87.2 0.00 - 0.00 - Other (operating) - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net cash from operations - 513.35 637.68 208.19 676.63 959.36 41.8 956.68 -0.3 1,057.54 10.5 Capital expenditure - 0.00 0.00 6.98 (153.10) (36.98) -75.8 (20.50) -44.6 5.07 - Net (acquisitions) / disposals - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities - 0.00 0.00 6.98 (153.10) (36.98) -75.8 (20.50) -44.6 5.07 - Increase/(decrease) in debt - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Share issues / (repurchases) - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid - (75.00) (239.35) (54.35) (812.71) (781.38) -3.9 (516.86) -33.9 (757.22) 46.5 Other cash from financing - 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities - (75.00) (239.35) (54.35) (812.71) (781.38) -3.9 (516.86) -33.9 (757.22) 46.5 Cash flow chge in cash & equivalents - 438.35 398.33 160.81 (289.19) 141.00 - 419.32 - 305.39 - FX / non cash items - - (257.40) (331.26) (34.71) (47.32) -21.0 (361.27) 231.4 21.44 -40.9 Bal sheet chge in cash & equivalents - - 140.93 (170.45) (323.90) 93.68 - 58.04 - 326.83 - Core EBITDA - 580.10 628.23 230.29 1,128.88 1,304.97 15.6 1,287.78 -1.3 1,432.28 11.2 Maintenance capital expenditure - (10.00) (10.00) (50.00) (57.00) (75.83) 33.0 (151.50) 99.8 (133.80) -11.7 Maintenance net working capital - 0.00 0.00 6.98 (153.10) (36.98) -75.8 (20.50) -44.6 5.07 - Operating free cash flow, pre-tax

- 570.10 618.23 187.27 918.77 1,192.15 29.8 1,115.78 -6.4 1,303.54 16.8


UBS 199


Electric Utilities



Company profile Transmissão Paulista (CTEEP) is the largest private-owned transmission company in Brazil, operating 11,780 km of transmissionlines and 102 substations, totaling 38,500 MVA of capacity. Thecompany operates under an extremely low-risk environment, in whichrevenues are fixed (adjusted annually by IGP-M) and determined bythe regulator (Aneel), based on its existing infrastructure, regardlessof the actually energy volume transmitted by the company.


12/06 12/07 12/08 12/09E 12/10E0.0x

5.0x

10.0x

15.0x

20.0x

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

30.0x

35.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)0.0%

11.4%

22.9%

34.3%

45.7%

57.1%

68.6%

80.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

0.8x

0.9x

1.0x

1.1x

1.3x

1.4x

1.5x

1.6x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)1200

1300

1400

1500

1600

1700

1800

1900

-80%

-60%

-40%

-20%

0%

20%



Transmissao Paulista

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) - 30.3 6.2 8.0 8.8 8.2 P/E (UBS) - 30.3 6.2 8.0 8.8 8.2 P/CEPS - 12.4 5.1 6.5 6.8 6.2 Net dividend yield (%) - 1.5 15.4 11.9 7.9 11.6 P/BV - 1.0 1.3 1.6 1.5 1.5 EV/revenue (core) - 2.8 3.9 4.6 4.4 4.0 EV/EBITDA (core) - 16.0 4.5 5.5 5.7 5.3 EV/EBIT (core) - NM 5.3 6.4 6.9 6.4 EV/OpFCF (core) - 19.7 5.6 6.0 6.6 5.8 EV/op. invested capital - 1.1 1.3 1.5 1.4 1.2

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 3,870.29 4,954.40 6,584.43 6,584.43 6,584.43 + minority interests 0.00 0.00 0.00 0.00 0.00 + average net debt (cash) (188.84) 151.69 579.35 797.69 953.70 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 0.00 0.00 0.00 0.00 Core enterprise value 3,681.45 5,106.09 7,163.78 7,382.12 7,538.13 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - 9.8 -0.6 19.2 7.2 10.9 EBITDA (UBS) - -63.3 NM 15.6 -1.3 11.2 EBIT (UBS) - -86.7 NM 17.4 -4.4 9.1 EPS (UBS) - -74.9 NM -3.9 -9.7 7.3 Cash EPS - -55.0 NM -2.3 -4.8 10.5 Net DPS - -77.3 NM -3.9 -33.9 46.5 BVPS - -43.1 5.4 6.5 5.2 0.9

Margins (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBITDA / revenue - 17.4 NM NM NM NM EBIT / revenue - 4.6 72.7 71.6 63.9 62.8 Net profit (UBS) / revenue - 8.9 65.0 52.5 44.2 42.7


Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - - - 21.1 14.0 12.1 Dividend cover (UBS EPS) - 2.2 1.1 1.1 1.4 1.1 Div. payout ratio (%, UBS EPS) - 46.2 95.0 95.0 69.6 95.0 Net debt / EBITDA - NM 0.4 0.6 1.2 1.4


Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT - 3.1 1.0 1.1 1.0 1.1 Capex / revenue (%) - NM 11.6 2.4 1.2 NM Capex / depreciation - NM 0.9 0.2 0.1 NM

Capital structure (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Net debt / total equity - (7.5) 12.3 17.2 35.1 44.5 Net debt / (net debt + equity) - (8.1) 10.9 14.6 26.0 30.8 Net debt (core) / EV - (5.1) 3.0 8.1 10.8 12.7




UBS 200

Terna Participacoes

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 160.43 383.04 460.16 500.47 508.69 626.49 23.2 698.34 11.5 738.84 5.8 Operating expenses (ex depn) (28.46) (72.55) (65.44) (64.89) (66.39) (93.82) 41.3 (111.85) 19.2 (116.88) 4.5 EBITDA (UBS) 131.97 310.49 394.72 435.58 442.30 532.67 20.4 586.50 10.1 621.96 6.0 Depreciation (29.74) (61.72) (70.56) (65.83) (68.10) (129.22) 89.8 (123.82) -4.2 (122.01) -1.5 Operating income (EBIT, UBS) 102.23 248.77 324.16 369.74 374.20 403.46 7.8 462.68 14.7 499.95 8.1 Other income & associates 0.00 0.03 1.00 1.65 1.91 0.03 -98.4 0.00 - 0.00 - Net interest (68.55) (150.63) (101.96) (127.52) (65.46) (146.22) 123.4 (137.71) -5.8 (94.60) -31.3 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 33.68 98.17 223.20 243.88 310.65 257.27 -17.2 324.96 26.3 405.35 24.7 Tax (10.69) (29.55) (27.25) (99.10) (96.40) (82.99) -13.9 (31.63) -61.9 (40.61) 28.4 Profit after tax 22.99 68.62 195.95 144.78 214.25 174.28 -18.7 293.34 68.3 364.74 24.3 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net income (local GAAP) 22.99 68.62 195.95 144.78 214.25 174.28 -18.7 293.34 68.3 364.74 24.3 Net Income (UBS) 22.99 68.62 195.95 144.78 214.25 174.28 -18.7 293.34 68.3 364.74 24.3 Tax rate (%) 31.74 30.10 12.21 40.63 31.03 32.26 4.0 9.73 -69.8 10.02 2.9 Pre-abnormal tax rate (%) 31.74 30.10 12.21 40.63 31.03 32.26 4.0 9.73 -69.8 10.02 2.9 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 0.33 0.98 2.80 1.65 2.44 1.99 -18.7 3.35 68.3 4.16 24.3 EPS (UBS) 0.33 0.98 2.80 1.65 2.44 1.99 -18.7 3.35 68.3 4.16 24.3 Net DPS 0.25 1.21 4.68 0.00 2.32 0.97 -58.4 1.40 45.2 3.29 134.8 Cash EPS 0.75 1.86 3.81 2.40 3.22 3.46 7.5 4.76 37.5 5.55 16.7 BVPS 6.01 11.43 10.12 15.01 15.74 16.79 6.6 18.73 11.6 19.60 4.6 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 185.39 317.50 166.90 520.67 316.65 312.45 -1.3 105.75 -66.2 163.76 54.8 Other current assets 71.76 100.62 151.11 127.92 75.79 122.55 61.7 129.05 5.3 131.22 1.7 Total current assets 257.15 418.12 318.02 648.59 392.44 435.00 10.8 234.80 -46.0 294.98 25.6 Net tangible fixed assets 2,058.01 2,082.14 2,038.75 2,089.87 2,306.85 2,314.64 0.3 2,276.25 -1.7 2,235.85 -1.8 Net intangible fixed assets 20.97 18.98 16.80 20.93 13.00 490.69 3674.0 450.69 -8.2 412.68 -8.4 Investments / other assets 1.60 11.33 34.11 3.65 3.77 2.57 -31.9 2.57 0.0 2.57 0.0 Total assets 2,337.72 2,530.56 2,407.68 2,763.04 2,716.06 3,242.90 19.4 2,964.31 -8.6 2,946.08 -0.6 Trade payables & other ST liabilities 127.53 117.16 192.33 130.49 92.73 45.37 -51.1 46.11 1.6 46.51 0.9 Short term debt 6.24 211.44 85.20 123.74 118.67 646.29 444.6 646.29 0.0 646.29 0.0 Total current liabilities 133.77 328.60 277.53 254.23 211.40 691.65 227.2 692.39 0.1 692.80 0.1 Long term debt 595.33 1,158.11 1,207.60 1,182.67 1,112.11 1,032.47 -7.2 582.75 -43.6 488.01 -16.3 Other long term liabilities 1,081.42 41.80 35.47 10.38 12.03 46.94 290.2 46.94 0.0 46.94 0.0 Total liabilities 1,810.52 1,528.51 1,520.60 1,447.28 1,335.54 1,771.06 32.6 1,322.09 -25.4 1,227.75 -7.1 Equity & minority interests 527.21 1,002.05 887.07 1,315.75 1,380.52 1,471.83 6.6 1,642.22 11.6 1,718.33 4.6 Total liabilities & equity 2,337.72 2,530.56 2,407.68 2,763.04 2,716.06 3,242.90 19.4 2,964.31 -8.6 2,946.08 -0.6 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 22.99 68.62 195.95 144.78 214.25 174.28 -18.7 293.34 68.3 364.74 24.3 Depreciation 29.74 61.72 70.56 65.83 68.10 129.22 89.8 123.82 -4.2 122.01 -1.5 Net change in working capital 0.00 (38.06) (47.55) 0.00 43.21 (29.03) - (5.76) -80.2 (1.77) -69.2 Other (operating) 20.21 47.23 (0.39) (0.56) (15.07) 24.12 - 11.03 -54.3 8.47 -23.2 Net cash from operations 72.94 139.51 218.58 210.06 310.48 298.58 -3.8 422.43 41.5 493.45 16.8 Capital expenditure (827.30) (90.40) (25.49) (12.56) (37.20) (760.37) 1944.0 (45.33) -94.0 (43.60) -3.8 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities (827.30) (90.40) (25.49) (12.56) (37.20) (760.37) 1944.0 (45.33) -94.0 (43.60) -3.8 Increase/(decrease) in debt 0.00 0.00 0.00 0.00 (50.08) (76.89) - (460.74) - (103.21) - Share issues / (repurchases) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid (17.71) (84.98) (327.52) 0.00 (203.54) (84.67) -58.4 (122.95) 45.2 (288.64) 134.8 Other cash from financing 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities (17.71) (84.98) (327.52) 0.00 (253.62) (161.56) -36.3 (583.69) 261.3 (391.85) -32.9 Cash flow chge in cash & equivalents (772.07) (35.87) (134.43) 197.50 19.67 (623.35) - (206.60) - 58.00 - FX / non cash items - 167.98 (16.17) 156.27 (223.69) 619.15 - (0.10) - 0.00 -23.9 Bal sheet chge in cash & equivalents - 132.11 (150.60) 353.77 (204.02) (4.19) - (206.70) - 58.00 - Core EBITDA 131.97 310.49 394.72 435.58 442.30 532.67 20.4 586.50 10.1 621.96 6.0 Maintenance capital expenditure (3.27) (3.51) (3.71) (3.83) (4.00) (4.24) 6.0 (4.45) 5.0 (4.65) 4.5 Maintenance net working capital 0.00 0.70 (3.98) (3.30) (4.07) (2.90) -28.9 (3.86) 33.3 (3.73) -3.3 Operating free cash flow, pre-tax

128.69 307.69 387.03 428.44 434.22 525.54 21.0 578.18 10.0 613.58 6.1


UBS 201


Electric Utilities



Company profile Terna is Brazil's second largest private transmission player in termsof revenues, having 11% of the system's revenues, and it is thelargest private player in new concessions. It controls threetransmission lines with a total extension of 3,330 km and 23substations. The lines connect Brazil's Southeastern grid (where mostof the consumption of the country is) with the Northern system (in thecase of Novatrans) and with the Northeastern system (in the case ofTSN and Munirah). The company is controlled by Italy's Terna SpA,with a 66% stake.


12/06 12/07 12/08 12/09E 12/10E0.00x

2.00x

4.00x

6.00x

8.00x

0.0x

5.0x

10.0x

15.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)62.0%

64.0%

66.0%

68.0%

70.0%

72.0%

74.0%

15.00%

15.50%

16.00%

16.50%

17.00%

17.50%

18.00%

18.50%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

1.0x

1.1x

1.2x

1.3x

1.5x

1.6x

1.7x

1.8x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)450

500

550

600

650

700

750

-60%

-40%

-20%

0%

20%

40%

60%

80%



Terna Participacoes


Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 2,078.08 2,462.08 1,928.08 1,928.08 1,928.08 + minority interests 0.00 0.00 0.00 0.00 0.00 + average net debt (cash) 955.82 849.94 1,140.22 1,244.79 1,046.91 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 0.00 0.00 0.00 0.00 Core enterprise value 3,033.90 3,312.01 3,068.30 3,172.88 2,975.00 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue - 8.8 1.6 23.2 11.5 5.8 EBITDA (UBS) - 10.4 1.5 20.4 10.1 6.0 EBIT (UBS) - 14.1 1.2 7.8 14.7 8.1 EPS (UBS) - -41.0 48.0 -18.7 68.3 24.3 Cash EPS - -36.9 34.1 7.5 37.5 16.7 Net DPS - - - -58.4 45.2 134.8 BVPS - 48.3 4.9 6.6 11.6 4.6

Margins (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBITDA / revenue - NM NM NM NM NM EBIT / revenue - 73.9 73.6 64.4 66.3 67.7 Net profit (UBS) / revenue - 28.9 42.1 27.8 42.0 49.4


Coverage ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E EBIT / net interest - 2.9 5.7 2.8 3.4 5.3 Dividend cover (UBS EPS) - - 1.1 2.1 2.4 1.3 Div. payout ratio (%, UBS EPS) - - 95.0 48.6 41.9 79.1 Net debt / EBITDA - 1.8 2.1 2.6 1.9 1.6

Efficiency ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue / op. invested capital - 0.2 0.2 0.2 0.2 0.3 Revenue / fixed assets - 0.2 0.2 0.2 0.3 0.3 Revenue / net working capital - NM NM 20.8 8.7 8.8

Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT - 1.2 1.2 1.3 1.2 1.2 Capex / revenue (%) - 2.5 7.3 NM 6.5 5.9 Capex / depreciation - 0.2 0.5 5.9 0.4 0.4





UBS 202

Tractebel Energia

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 1,830.94 2,469.93 2,599.85 2,733.85 3,043.43 3,417.80 12.3 3,624.33 6.0 4,204.83 16.0 Operating expenses (ex depn) (930.87) (1,199.07) (1,182.07) (1,138.84) (1,185.35) (1,259.60) 6.3 (1,423.01) 13.0 (1,706.12) 19.9 EBITDA (UBS) 900.07 1,270.86 1,417.77 1,595.01 1,858.08 2,158.20 16.2 2,201.31 2.0 2,498.70 13.5 Depreciation (206.30) (230.23) (214.85) (215.11) (235.87) (262.88) 11.5 (272.01) 3.5 (289.54) 6.4 Operating income (EBIT, UBS) 693.77 1,040.63 1,202.93 1,379.90 1,622.21 1,895.31 16.8 1,929.30 1.8 2,209.16 14.5 Other income & associates 2.43 (3.04) 3.56 3.29 (1.46) (0.92) -37.2 0.00 - 0.00 - Net interest (35.69) (176.56) (102.43) (156.21) (134.65) (279.13) 107.3 (216.38) -22.5 (203.40) -6.0 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 660.50 861.04 1,104.05 1,226.98 1,486.10 1,615.26 8.7 1,712.92 6.0 2,005.77 17.1 Tax (143.35) (85.84) (183.96) (247.83) (439.71) (470.80) 7.1 (476.44) 1.2 (581.67) 22.1 Profit after tax 517.15 775.19 920.10 979.15 1,046.39 1,144.47 9.4 1,236.48 8.0 1,424.10 15.2 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net income (local GAAP) 517.15 775.19 920.10 979.15 1,046.39 1,144.47 9.4 1,236.48 8.0 1,424.10 15.2 Net Income (UBS) 517.15 775.19 920.10 979.15 1,046.39 1,144.47 9.4 1,236.48 8.0 1,424.10 15.2 Tax rate (%) 21.70 9.97 16.66 20.20 29.59 29.15 -1.5 27.81 -4.6 29.00 4.3 Pre-abnormal tax rate (%) 21.70 9.97 16.66 20.20 29.59 29.15 -1.5 27.81 -4.6 29.00 4.3 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 0.79 1.19 1.41 1.50 1.60 1.75 9.4 1.89 8.0 2.18 15.2 EPS (UBS) 0.79 1.19 1.41 1.50 1.60 1.75 9.4 1.89 8.0 2.18 15.2 Net DPS 0.77 1.13 1.34 1.43 0.84 0.96 15.3 1.04 8.0 1.20 15.2 Cash EPS 1.11 1.54 1.74 1.83 1.96 2.16 9.8 2.31 7.2 2.63 13.6 BVPS 5.61 6.01 4.12 4.24 4.32 5.18 20.0 6.03 16.5 7.01 16.3 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 347.05 677.54 309.14 256.84 794.09 462.94 -41.7 854.18 84.5 1,219.41 42.8 Other current assets 578.00 551.43 555.17 535.21 470.26 676.55 43.9 907.16 34.1 1,080.61 19.1 Total current assets 925.05 1,228.96 864.31 792.05 1,264.35 1,139.49 -9.9 1,761.34 54.6 2,300.02 30.6 Net tangible fixed assets 4,749.00 4,536.43 4,353.47 4,226.21 4,688.32 6,060.83 29.3 6,370.95 5.1 6,656.63 4.5 Net intangible fixed assets 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Investments / other assets 458.27 439.76 487.58 520.85 645.42 601.88 -6.7 595.13 -1.1 588.39 -1.1 Total assets 6,132.31 6,205.15 5,705.36 5,539.11 6,598.09 7,802.20 18.2 8,727.42 11.9 9,545.03 9.4 Trade payables & other ST liabilities 730.95 880.57 859.71 882.53 1,283.76 724.23 -43.6 963.97 33.1 1,038.86 7.8 Short term debt 279.73 301.07 274.43 343.91 177.58 0.00 - 0.00 - 0.00 - Total current liabilities 1,010.69 1,181.64 1,134.15 1,226.44 1,461.35 724.23 -50.4 963.97 33.1 1,038.86 7.8 Long term debt 2,025.56 1,693.03 1,249.33 933.60 1,635.65 2,695.97 64.8 2,825.04 4.8 2,926.92 3.6 Other long term liabilities 494.27 543.53 635.92 614.50 684.24 1,000.97 46.3 1,000.97 0.0 1,000.97 0.0 Total liabilities 3,530.51 3,418.20 3,019.40 2,774.54 3,781.24 4,421.18 16.9 4,789.98 8.3 4,966.75 3.7 Equity & minority interests 2,601.80 2,786.96 2,685.96 2,764.57 2,816.85 3,381.02 20.0 3,937.44 16.5 4,578.28 16.3 Total liabilities & equity 6,132.31 6,205.15 5,705.36 5,539.11 6,598.09 7,802.20 18.2 8,727.42 11.9 9,545.03 9.4 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 517.15 775.19 920.10 979.15 1,046.39 1,144.47 9.4 1,236.48 8.0 1,424.10 15.2 Depreciation 206.30 230.23 214.85 215.11 235.87 262.88 11.5 272.01 3.5 289.54 6.4 Net change in working capital 0.00 0.00 (57.83) 62.49 311.77 (247.20) - (211.56) -14.4 (126.36) -40.3 Other (operating) 5.00 5.00 5.00 5.00 6.00 7.00 16.7 8.00 14.3 9.00 12.5 Net cash from operations 728.46 1,010.43 1,082.11 1,261.74 1,600.02 1,167.16 -27.1 1,304.93 11.8 1,596.28 22.3 Capital expenditure (220.30) (38.00) (44.00) (65.69) (157.15) (341.40) 117.2 (575.39) 68.5 (568.48) -1.2 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities (220.30) (38.00) (44.00) (65.69) (157.15) (341.40) 117.2 (575.39) 68.5 (568.48) -1.2 Increase/(decrease) in debt 0.00 0.00 (199.41) 0.00 212.92 195.29 - 0.00 - 0.00 - Share issues / (repurchases) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid (502.27) (736.43) (874.09) (930.19) (546.00) (629.46) 15.3 (680.06) 8.0 (783.26) 15.2 Other cash from financing 5.00 5.00 5.00 5.00 6.00 7.00 - 8.00 - 9.00 - Cash from financing activities (497.27) (731.43) (1,068.50) (925.19) (327.08) (427.17) 30.6 (672.06) 57.3 (774.26) 15.2 Cash flow chge in cash & equivalents 10.89 240.99 (30.39) 270.87 1,115.79 398.59 - 57.49 - 253.54 - FX / non cash items (24.97) 89.50 (338.01) (323.17) (578.54) (729.74) 57.2 333.75 - 111.69 -95.2 Bal sheet chge in cash & equivalents (14.08) 330.49 (368.40) (52.30) 537.25 (331.15) - 391.24 - 365.23 - Core EBITDA 900.07 1,270.86 1,417.77 1,595.01 1,858.08 2,158.20 16.2 2,201.31 2.0 2,498.70 13.5 Maintenance capital expenditure (220.30) (38.00) (44.00) (65.69) (53.90) (78.06) 44.8 (83.39) 6.8 (90.48) 8.5 Maintenance net working capital 0.00 0.00 (57.83) 62.49 311.77 (247.20) - (211.56) -14.4 (126.36) -40.3 Operating free cash flow, pre-tax

679.78 1,232.86 1,315.94 1,591.81 2,115.94 1,832.94 -13.4 1,906.37 4.0 2,281.86 19.7


UBS 203


Electric Utilities



Company profile Tractebel is Brazil's largest private generation company, with a totalinstalled capacity of 6,144 MW, corresponding to a total assured energy of 3,341 Avg. MW spread out between 7 hydro plants and 5thermal plants. The energy generated by Tractebel is currentlycontracted with distribution companies through bilateral/pool contracts(47%), trading companies (17%), and free consumers (36%). Tractebel Energia, formerly known as Gerasul, was created inNovember 1997 as a spin-off of Eletrobras’ subsidiary Eletrosul.


12/06 12/07 12/08 12/09E 12/10E0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)49.00%

50.00%

51.00%

52.00%

53.00%

54.00%

55.00%

56.00%

30.0%

32.0%

34.0%

36.0%

38.0%

40.0%

42.0%

44.0%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)32.00%

33.00%

34.00%

35.00%

36.00%

37.00%

38.00%

1.5x

2.0x

2.5x

3.0x

3.5x

4.0x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)2000

2500

3000

3500

4000

4500

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%



Tractebel Energia

Valuation (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E P/E (local GAAP) 4.2 11.5 12.9 10.1 9.4 8.1 P/E (UBS) 4.2 11.5 12.9 10.1 9.4 8.1 P/CEPS 64.6 9.4 10.5 8.2 7.7 6.8 Net dividend yield (%) 9.0 8.3 4.0 5.4 5.9 6.8 P/BV 2.0 4.1 4.8 3.4 2.9 2.5 EV/revenue (core) 3.4 4.9 5.1 4.3 3.8 3.3 EV/EBITDA (core) 6.5 8.4 8.4 6.7 6.2 5.5 EV/EBIT (core) 7.9 9.7 9.6 7.7 7.1 6.2 EV/OpFCF (core) 6.9 8.4 7.4 7.9 7.1 6.0 EV/op. invested capital - 3.5 4.2 3.1 2.4 2.3

Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 11,257.90 13,500.43 11,591.42 11,591.42 11,591.42 + minority interests 0.00 0.00 0.00 0.00 0.00 + average net debt (cash) 2,108.07 2,085.56 2,948.76 2,016.03 2,179.48 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value 0.00 0.00 0.00 0.00 0.00 Core enterprise value 13,365.98 15,585.99 14,540.18 13,607.45 13,770.89 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 18.7 5.2 11.3 12.3 6.0 16.0 EBITDA (UBS) 29.2 12.5 16.5 16.2 2.0 13.5 EBIT (UBS) 37.8 14.7 17.6 16.8 1.8 14.5 EPS (UBS) - 6.4 6.9 9.4 8.0 15.2 Cash EPS NM 5.2 7.4 9.8 7.2 13.6 Net DPS - 6.4 -41.3 15.3 8.0 15.2 BVPS -8.1 2.9 1.9 20.0 16.5 16.3










UBS 204

Sabesp

Income statement (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Revenues 4,109.88 4,397.07 4,953.36 5,527.33 5,970.84 6,256.53 4.8 6,609.77 5.6 7,010.64 6.1 Operating expenses (ex depn) (2,033.42) (2,470.55) (2,667.81) (2,987.43) (3,271.89) (3,372.32) 3.1 (3,450.34) 2.3 (3,579.77) 3.8 EBITDA (UBS) 2,076.47 1,926.53 2,285.55 2,539.91 2,698.95 2,884.21 6.9 3,159.43 9.5 3,430.87 8.6 Depreciation (564.46) (598.91) (595.98) (642.17) (622.55) (649.02) 4.3 (738.81) 13.8 (806.61) 9.2 Operating income (EBIT, UBS) 1,512.01 1,327.62 1,689.57 1,897.74 2,076.40 2,235.19 7.6 2,420.62 8.3 2,624.26 8.4 Other income & associates (89.58) (69.04) (60.54) (86.03) (35.18) 0.00 - 0.00 - 0.00 - Net interest (346.48) (503.70) (447.00) (563.26) (560.96) (1,098.52) 95.8 (828.26) -24.6 (885.66) 6.9 Abnormal items (pre-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Profit before tax 1,075.96 754.87 1,182.03 1,248.44 1,480.27 1,136.66 -23.2 1,592.36 40.1 1,738.60 9.2 Tax (242.64) (241.84) (316.38) (375.78) (431.57) (260.99) -39.5 (433.12) 66.0 (472.90) 9.2 Profit after tax 833.32 513.03 865.65 872.67 1,048.70 875.68 -16.5 1,159.24 32.4 1,265.70 9.2 Abnormal items (post-tax) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Minorities / pref dividends 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Net income (local GAAP) 833.32 513.03 865.65 872.67 1,048.70 875.68 -16.5 1,159.24 32.4 1,265.70 9.2 Net Income (UBS) 833.32 513.03 865.65 872.67 1,048.70 875.68 -16.5 1,159.24 32.4 1,265.70 9.2 Tax rate (%) 22.55 32.04 26.77 30.10 29.15 22.96 -21.2 27.20 18.5 27.20 0.0 Pre-abnormal tax rate (%) 22.55 32.04 26.77 30.10 29.15 22.96 -21.2 27.20 18.5 27.20 0.0 Per share (R$) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch EPS (local GAAP) 3.66 2.26 3.81 3.83 4.60 3.84 -16.5 5.09 32.4 5.56 9.2 EPS (UBS) 3.66 2.26 3.81 3.83 4.60 3.84 -16.5 5.09 32.4 5.56 9.2 Net DPS 17.70 5.41 1.53 1.41 1.95 0.96 -50.7 1.27 32.4 1.39 9.2 Cash EPS 6.13 4.89 6.42 6.65 7.34 6.69 -8.8 8.33 24.5 9.10 9.2 BVPS 33.31 34.95 37.29 39.99 42.94 44.89 4.5 48.58 8.2 52.61 8.3 Balance sheet (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Cash and equivalents 281.01 105.56 280.17 328.21 465.00 23.15 -95.0 90.69 291.8 7.97 -91.2 Other current assets 876.71 1,124.23 1,445.21 1,684.58 1,759.52 1,640.63 -6.8 1,710.83 4.3 1,792.65 4.8 Total current assets 1,157.72 1,229.79 1,725.39 2,012.79 2,224.52 1,663.78 -25.2 1,801.52 8.3 1,800.62 0.0 Net tangible fixed assets 14,063.25 14,040.92 14,116.10 14,332.62 14,567.86 15,626.39 7.3 16,758.60 7.2 18,096.46 8.0 Net intangible fixed assets 48.95 39.10 20.53 10.04 3.47 1.91 -45.0 1.91 0.0 1.91 0.0 Investments / other assets 1,260.75 1,474.00 1,573.15 1,738.27 1,867.52 2,099.36 12.4 2,114.97 0.7 2,131.51 0.8 Total assets 16,530.67 16,783.81 17,435.17 18,093.71 18,663.38 19,391.44 3.9 20,677.00 6.6 22,030.51 6.5 Trade payables & other ST liabilities 731.32 604.08 893.55 1,249.46 1,712.62 1,218.83 -28.8 1,213.36 -0.4 1,218.44 0.4 Short term debt 997.00 1,496.81 798.41 852.48 742.11 1,261.38 70.0 1,343.66 6.5 1,422.32 5.9 Total current liabilities 1,728.32 2,100.89 1,691.97 2,101.94 2,454.74 2,480.21 1.0 2,557.02 3.1 2,640.77 3.3 Long term debt 6,267.27 5,553.84 6,161.32 5,795.47 5,308.36 5,641.02 6.3 6,009.00 6.5 6,360.78 5.9 Other long term liabilities 958.14 1,177.49 1,099.33 1,084.07 1,116.28 1,041.65 -6.7 1,041.65 0.0 1,041.65 0.0 Total liabilities 8,953.73 8,832.22 8,952.62 8,981.47 8,879.37 9,162.88 3.2 9,607.67 4.9 10,043.19 4.5 Equity & minority interests 7,576.94 7,951.59 8,482.55 9,112.24 9,784.01 10,228.56 4.5 11,069.33 8.2 11,987.31 8.3 Total liabilities & equity 16,530.67 16,783.81 17,435.17 18,093.71 18,663.38 19,391.44 3.9 20,677.00 6.6 22,030.51 6.5 Cash flow (R$m) 12/03 12/04 12/05 12/06 12/07 12/08E % ch 12/09E % ch 12/10E % ch Net income 833.32 513.03 865.65 872.67 1,048.70 875.68 -16.5 1,159.24 32.4 1,265.70 9.2 Depreciation 564.46 598.91 595.98 642.17 622.55 649.02 4.3 738.81 13.8 806.61 9.2 Net change in working capital 77.49 (145.74) (225.72) 43.77 14.01 (135.85) - (75.68) -44.3 (76.73) 1.4 Other (operating) 0.00 0.00 0.00 0.00 0.00 510.67 - 189.17 -63.0 254.32 34.4 Net cash from operations 1,475.26 966.20 1,235.91 1,558.60 1,685.26 1,899.51 12.7 2,011.55 5.9 2,249.90 11.8 Capital expenditure (594.00) (601.00) (678.00) (880.00) (881.70) (1,636.96) 85.7 (1,871.02) 14.3 (2,144.47) 14.6 Net (acquisitions) / disposals 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Other changes in investments 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from investing activities (594.00) (601.00) (678.00) (880.00) (881.70) (1,636.96) 85.7 (1,871.02) 14.3 (2,144.47) 14.6 Increase/(decrease) in debt (660.86) (213.61) (90.92) (311.80) 0.00 90.69 - 245.49 - 159.57 - Share issues / (repurchases) 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Dividends paid (4,032.71) (1,230.32) (348.22) (320.97) (444.08) (218.92) -50.7 (289.81) 32.4 (316.43) 9.2 Other cash from financing 0.00 0.00 0.00 0.00 0.00 0.00 - 0.00 - 0.00 - Cash from financing activities (4,693.57) (1,443.93) (439.13) (632.76) (444.08) (128.23) -71.1 (44.32) -65.4 (156.86) 253.9 Cash flow chge in cash & equivalents (3,812.31) (1,078.73) 118.78 45.84 359.48 134.32 - 96.21 - (51.42) - FX / non cash items 3,678.65 903.27 55.84 2.19 (222.69) (576.17) - (28.66) -82.5 (31.29) 29.4 Bal sheet chge in cash & equivalents (133.66) (175.46) 174.62 48.03 136.79 (441.85) - 67.54 - (82.72) - Core EBITDA 2,076.47 1,926.53 2,285.55 2,539.91 2,698.95 2,884.21 6.9 3,159.43 9.5 3,430.87 8.6 Maintenance capital expenditure (356.40) (360.60) (406.80) (528.00) (529.02) (982.18) 85.7 (1,122.61) 14.3 (1,286.68) 14.6 Maintenance net working capital 77.49 (145.74) (225.72) 43.77 14.01 (135.85) - (75.68) -44.3 (76.73) 1.4 Operating free cash flow, pre-tax

1,797.55 1,420.18 1,653.03 2,055.67 2,183.95 1,766.18 -19.1 1,961.14 11.0 2,067.46 5.4


UBS 205


Water Utilities



Company profile Sabesp is a water and sewage utility company that serves 367municipalities in the state of São Paulo. The company serves 22.8million people in the state of São Paulo with water and 18.7 millionwith sewage collection. Sabesp also sells water wholesale to sixmunicipalities in the metropolitan area of São Paulo. Sabesp'sbusiness includes planning, providing, and operating basic sanitationservices throughout the territory of São Paulo.


12/06 12/07 12/08 12/09E 12/10E0.00x

2.00x

4.00x

6.00x

8.00x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x


Profitability

12/06 12/07 12/08(E) 12/09(E) 12/10(E)33.00%

34.00%

35.00%

36.00%

37.00%

38.00%

11.50%

12.00%

12.50%

13.00%

13.50%

14.00%



12/06 12/07 12/08(E) 12/09(E) 12/10(E)8.00%

8.50%

9.00%

9.50%

10.00%

10.50%

11.00%

11.50%

0.0x

0.1x

0.2x

0.3x

0.4x

0.5x

0.6x


Growth (UBS EPS)

12/06 12/07 12/08(E) 12/09(E) 12/10(E)5000

5500

6000

6500

7000

7500

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%



Sabesp


Enterprise value (R$m) 12/06 12/07 12/08E 12/09E 12/10E Average market cap 6,150.44 9,321.12 5,185.64 5,185.64 5,185.64 + minority interests 0.00 0.00 0.00 0.00 0.00 + average net debt (cash) 7,416.04 6,949.23 7,147.44 7,738.61 8,177.36 + pension obligations and other 0.00 0.00 0.00 0.00 0.00 - non-core asset value (148.85) (134.89) (139.05) (154.66) (171.21) Core enterprise value 13,417.63 16,135.46 12,194.03 12,769.59 13,191.79 Growth (%) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E Revenue 10.1 11.6 8.0 4.8 5.6 6.1 EBITDA (UBS) 7.4 11.1 6.3 6.9 9.5 8.6 EBIT (UBS) 8.0 12.3 9.4 7.6 8.3 8.4 EPS (UBS) - 0.7 20.2 -16.5 32.4 9.2 Cash EPS - 3.5 10.3 -8.8 24.5 9.2 Net DPS -22.0 -8.0 38.4 -50.7 32.4 9.2 BVPS 5.9 7.3 7.4 4.5 8.2 8.3





Investment ratios (x) 5Yr Avg 12/06 12/07 12/08E 12/09E 12/10E OpFCF / EBIT 1.1 1.1 1.1 0.8 0.8 0.8 Capex / revenue (%) 14.6 15.9 14.8 26.2 28.3 NM Capex / depreciation 1.1 1.4 1.4 2.5 2.5 2.7






UBS 206

Statement of Risk

We believe the key risks are additional competition and regulatory issues. In addition, there are potential risks inherent in investing in emerging market countries. Potential emerging market related risks include, but are not limited to, the volatile nature of the currency, regulatory and socio-political risk, and abrupt potential changes in the cost of capital and economic growth outlook. Valuations can also be affected by "contagion" from developments in other emerging markets.

Analyst Certification

Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect to each security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers; 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 by that research analyst in the research report.


UBS 207

Required Disclosures This report has been prepared by Banco UBS Pactual S.A., an affiliate of UBS AG. UBS AG, its subsidiaries, branches and affiliates are referred to herein as UBS.

For information on the ways in which UBS manages conflicts and maintains independence of its research product; historical performance information; and certain additional disclosures concerning UBS research recommendations, please visit www.ubs.com/disclosures. The figures contained in performance charts refer to the past; past performance is not a reliable indicator of future results. Additional information will be made available upon request.

UBS Investment Research: Global Equity Rating Allocations

UBS 12-Month Rating Rating Category Coverage1 IB Services2

Buy Buy 53% 36%Neutral Hold/Neutral 36% 34%Sell Sell 10% 20%UBS Short-Term Rating Rating Category Coverage3 IB Services4

Buy Buy less than 1% 43%Sell Sell less than 1% 22%

1:Percentage of companies under coverage globally within the 12-month rating category. 2:Percentage of companies within the 12-month rating category for which investment banking (IB) services were provided within the past 12 months. 3:Percentage of companies under coverage globally within the Short-Term rating category. 4:Percentage of companies within the Short-Term rating category for which investment banking (IB) services were provided within the past 12 months. Source: UBS. Rating allocations are as of 31 December 2008. UBS Investment Research: Global Equity Rating Definitions

UBS 12-Month Rating Definition Buy FSR is > 6% above the MRA. Neutral FSR is between -6% and 6% of the MRA. Sell FSR is > 6% below the MRA. UBS Short-Term Rating Definition

Buy Buy: Stock price expected to rise within three months from the time the rating was assigned because of a specific catalyst or event.

Sell Sell: Stock price expected to fall within three months from the time the rating was assigned because of a specific catalyst or event.


UBS 208

KEY DEFINITIONS Forecast Stock Return (FSR) is defined as expected percentage price appreciation plus gross dividend yield over the next 12 months. Market Return Assumption (MRA) is defined as the one-year local market interest rate plus 5% (a proxy for, and not a forecast of, the equity risk premium). Under Review (UR) Stocks may be flagged as UR by the analyst, indicating that the stock's price target and/or rating are subject to possible change in the near term, usually in response to an event that may affect the investment case or valuation. Short-Term Ratings reflect the expected near-term (up to three months) performance of the stock and do not reflect any change in the fundamental view or investment case. EXCEPTIONS AND SPECIAL CASES UK and European Investment Fund ratings and definitions are: Buy: Positive on factors such as structure, management, performance record, discount; Neutral: Neutral on factors such as structure, management, performance record, discount; Sell: Negative on factors such as structure, management, performance record, discount. Core Banding Exceptions (CBE): Exceptions to the standard +/-6% bands may be granted by the Investment Review Committee (IRC). Factors considered by the IRC include the stock's volatility and the credit spread of the respective company's debt. As a result, stocks deemed to be very high or low risk may be subject to higher or lower bands as they relate to the rating. When such exceptions apply, they will be identified in the Company Disclosures table in the relevant research piece. Research analysts contributing to this report who are employed by any non-US affiliate of UBS Securities LLC are not registered/qualified as research analysts with NASD and NYSE and therefore are not subject to the restrictions contained in the NASD and NYSE rules on communications with a subject company, public appearances, and trading securities held by a research analyst account. The name of each affiliate and analyst employed by that affiliate contributing to this report, if any, follows. Banco UBS Pactual S.A.: Pedro Batista. UBS Casa de Bolsa S.A.: Damian Fraser.


UBS 209

Company Disclosures

Company Name Reuters 12-mo rating Short-term rating Price Price dateAcucar Guarani S.A.2c, 4, 6a, 13, 16a, 20 ACGU3.SA Buy (CBE) N/A R$2.00 17 Mar 2009AES Tiete (PN)16b, 20 GETI4.SA Buy (CBE) N/A R$17.00 17 Mar 2009America Latina Logistica2c, 16a, 20 ALLL11.SA Neutral (CBE) N/A R$9.57 17 Mar 2009Amil Participações S.A.2c, 20 AMIL3.SA Buy (CBE) N/A R$5.79 17 Mar 2009Aracruz Celulose16b, 20 ARCZ6.SA Suspended N/A R$1.50 17 Mar 2009B2W20 BTOW3.SA Neutral (CBE) N/A R$23.30 17 Mar 2009Banco ABC Brasil S.A.2c, 4, 6a, 16a, 20 ABCB4.SA Neutral (CBE) N/A R$4.35 17 Mar 2009Banco Bradesco16b, 20 BBDC4.SA Buy (CBE) N/A R$22.20 17 Mar 2009Banco Cruzeiro do Sul SA2a, 4, 5, 6a, 16a, 20 CZRS4.SA Neutral (CBE) N/A R$5.47 17 Mar 2009

Banco Daycoval SA2c, 4, 6a, 20 DAYC4.SA Suspended N/A R$3.90 17 Mar 2009Banco do Brasil2c, 3a, 3b, 3c, 3e, 3g, 4, 5, 6a, 20, 22 BBAS3.SA Buy (CBE) N/A R$14.98 17 Mar 2009

Banco Industrial e Comercial S.A.2c, 4, 13, 16a, 20 BICB4.SA Buy (CBE) N/A R$3.55 17 Mar 2009

Banco Itau Holding2c, 16b, 20 ITAU4.SA Buy (CBE) N/A R$24.64 17 Mar 2009Banco Sofisa S.A.2a, 4, 16a, 20 SFSA4.SA Neutral (CBE) N/A R$3.48 17 Mar 2009Banrisul S.A.2c, 4, 6a, 16a, 20 BRSR6.SA Buy (CBE) N/A R$6.30 17 Mar 2009BM&F Bovespa20 BVMF3.SA Buy (CBE) N/A R$6.87 17 Mar 2009BR Malls Participacoes S. A.2c, 3f, 4, 6a, 20 BRML3.SA Buy (CBE) N/A R$12.99 17 Mar 2009

Bradespar2a, 4, 5, 20 BRAP4.SA Buy (CBE) N/A R$22.47 17 Mar 2009Brascan Residential Properties2c, 6b, 7, 20 BISA3.SA Buy (CBE) N/A R$1.85 17 Mar 2009

Brasil Telecom Part (PN)16b, 20 BRTP4.SA Neutral (CBE) N/A R$15.63 17 Mar 2009Braskem2b, 16b, 20 BRKM5.SA Neutral (CBE) N/A R$4.59 17 Mar 2009Celesc20 CLSC6.SA Suspended N/A R$31.78 17 Mar 2009Centrais Elet. Brasileiras (PN)2b, 16b, 20, 22 ELET6.SA Buy (CBE) N/A R$23.80 17 Mar 2009

Cia. de Concessoes Rodoviarias - CCR2a, 4, 16a, 20 CCRO3.SA Buy (CBE) N/A R$22.37 17 Mar 2009

Cia. de Transmissao de Energia Paulista20 TRPL4.SA Buy (CBE) N/A R$44.10 17 Mar 2009

Cia. Energetica de Minas Gerais13, 16b, 20 CMIG4.SA Buy (CBE) N/A R$32.35 17 Mar 2009

Cia. Energetica de Sao Paulo2c, 5, 20 CESP6.SA Neutral (CBE) N/A R$14.12 17 Mar 2009

Cia. Energetica do Ceara20 COCE5.SA Buy (CBE) N/A R$20.50 17 Mar 2009Cia. Paranaense de Energia16b, 20 CPLE6.SA Sell (CBE) N/A R$21.72 17 Mar 2009Cia. Providência Indústria e Comércio2c, 16a, 20 PRVI3.SA Buy (CBE) N/A R$2.75 17 Mar 2009

Cia. Siderurgica Nacional5, 16b, 20 CSNA3.SA Neutral (CBE) N/A R$31.90 17 Mar 2009Cia. Vale do Rio Doce (PN)2c, 16b, 20, 22 VALE5.SA Buy (CBE) N/A R$27.05 17 Mar 2009

Cosan2c, 13, 20 CSAN3.SA Neutral (CBE) N/A R$10.75 17 Mar 2009CPFL Energia2b, 4, 6a, 16a, 18a, 20 CPFE3.SA Buy (CBE) N/A R$29.71 17 Mar 2009Cyrela Brazil Realty2c, 5, 6b, 7, 16b, 20 CYRE3.SA Neutral (CBE) N/A R$7.60 17 Mar 2009Diagnosticos da America2c, 4, 6a, 16a, 20 DASA3.SA Buy (CBE) N/A R$24.80 17 Mar 2009

Dufry South America (DSA)2c, 20 DUFB11.SA Buy (CBE) N/A R$15.20 17 Mar 2009Duratex20 DURA4.SA Buy (CBE) N/A R$13.40 17 Mar 2009Eletropaulo2c, 20 ELPL6.SA Buy (CBE) N/A R$30.10 17 Mar 2009Embraer2c, 4, 16b, 20 ERJ.N Buy (CBE) N/A US$12.07 17 Mar 2009Energias do Brasil2b, 13, 20 ENBR3.SA Neutral (CBE) N/A R$23.10 17 Mar 2009Equatorial Energia2c, 4, 6a, 12, 13, 16a, 18b, 20 EQTL3.SA Buy (CBE) N/A R$13.79 17 Mar 2009


UBS 210

Company Name Reuters 12-mo rating Short-term rating Price Price dateEstacio Participacoes S.A.2c, 20 ESTC3.SA Buy (CBE) N/A R$12.75 17 Mar 2009Even Construtora e Incorporadora S.A.2c, 4, 6a, 16a, 20 EVEN3.SA Buy (CBE) N/A R$2.05 17 Mar 2009

Fertilizantes Heringer2c, 4, 6a, 16a, 20 FHER3.SA Buy (CBE) N/A R$3.05 17 Mar 2009Gafisa2c, 13, 16b, 20 GFSA3.SA Neutral (CBE) N/A R$9.39 17 Mar 2009Gerdau6b, 7, 16b, 20 GGBR4.SA Buy (CBE) N/A R$11.20 17 Mar 2009GOL2b, 16b, 20 GOLL4.SA Buy (CBE) N/A R$7.95 17 Mar 2009GP Investments4, 6a, 20 GPIV11.SA Buy (CBE) N/A R$5.65 17 Mar 2009GVT Holding SA2c, 20 GVTT3.SA Buy (CBE) N/A R$26.65 17 Mar 2009Iguatemi2c, 4, 6a, 16a, 20 IGTA3.SA Buy (CBE) N/A R$13.49 17 Mar 2009JBS S.A.2a, 4, 13, 20 JBSS3.SA Buy (CBE) N/A R$4.65 17 Mar 2009JHSF Participacoes SA2c, 4, 6a, 16a, 16b, 20 JHSF3.SA Suspended N/A R$1.68 17 Mar 2009

Klabin16b, 20 KLBN4.SA Sell (CBE) N/A R$2.75 17 Mar 2009Light SA12, 20 LIGT3.SA Buy (CBE) N/A R$25.19 17 Mar 2009LLX Logística13, 20 LLXL3.SA Suspended N/A R$1.37 17 Mar 2009Localiza Rent a Car2a, 4, 6a, 16a, 20 RENT3.SA Buy (CBE) N/A R$8.09 17 Mar 2009Log-In Logisitica Intermodal2c, 20 LOGN3.SA Buy (CBE) N/A R$6.60 17 Mar 2009Lojas Americanas2a, 4, 20 LAME4.SA Neutral (CBE) N/A R$7.01 17 Mar 2009Lojas Renner20 LREN3.SA Buy (CBE) N/A R$15.48 17 Mar 2009Lopes2c, 4, 6a, 13, 16a, 20 LPSB3.SA Buy (CBE) N/A R$5.88 17 Mar 2009Lupatech2a, 4, 5, 6a, 13, 20 LUPA3.SA Suspended N/A R$21.50 17 Mar 2009Magnesita Refratarios S.A.4, 20 MAGG3.SA Buy (CBE) N/A R$6.08 17 Mar 2009Metalurgica Gerdau20 GOAU4.SA Buy (CBE) N/A R$14.60 17 Mar 2009MMX Mineracao e Metalicos20 MMXM3.SA Buy (CBE) N/A R$2.98 17 Mar 2009MPX2c, 4, 6a, 16a, 20 MPXE3.SA Suspended N/A R$181.00 17 Mar 2009MRV Engenharia e Participacoes SA2a, 4, 5, 6a, 16a, 20 MRVE3.SA Neutral (CBE) N/A R$10.06 17 Mar 2009

Multiplan Empreendimentos Imobiliarios2c, 4, 6a, 16a, 20 MULT3.SA Buy (CBE) N/A R$15.01 17 Mar 2009

NET Servicos de Comunicacao2c, 16b, 20, 22 NETC4.SA Buy (CBE) N/A R$16.25 17 Mar 2009

OdontoPrev2c, 4, 6a, 13, 20 ODPV3.SA Buy (CBE) N/A R$23.95 17 Mar 2009OGX Petroleo e Gas Participacoes S.A.2a, 4, 12, 13, 20 OGXP3.SA Buy (CBE) N/A R$652.50 17 Mar 2009

Pão de Açúcar (CBD)2c, 16b, 20 PCAR4.SA Neutral (CBE) N/A R$31.53 17 Mar 2009PDG Realty2c, 4, 6a, 12, 13, 16a, 20 PDGR3.SA Buy (CBE) N/A R$10.60 17 Mar 2009Perdigao2a, 4, 5, 16b, 20 PRGA3.SA Neutral (CBE) N/A R$32.70 17 Mar 2009Petroleo Brasileiro2c, 4, 16b, 20 PETR4.SA Buy (CBE) N/A R$27.98 17 Mar 2009Porto Seguro2a, 4, 6a, 16a, 20 PSSA3.SA Neutral (CBE) N/A R$10.90 17 Mar 2009Positivo Informatica2c, 4, 16a, 20 POSI3.SA Buy (CBE) N/A R$8.90 17 Mar 2009Redecard SA16b, 20 RDCD3.SA Neutral (CBE) N/A R$24.50 17 Mar 2009Rossi Residencial4, 6a, 13, 16a, 16b, 20 RSID3.SA Neutral (CBE) N/A R$3.42 17 Mar 2009Sabesp16b, 20 SBSP3.SA Buy (CBE) N/A R$24.20 17 Mar 2009Sadia16b, 20 SDIA4.SA Sell (CBE) N/A R$2.98 17 Mar 2009Santos Brasil4, 16a, 20 STBP11.SA Neutral (CBE) N/A R$6.65 17 Mar 2009São Martinho S.A.2c, 4, 6a, 16a, 20 SMTO3.SA Neutral (CBE) N/A R$10.55 17 Mar 2009Satipel Industrial S.A.2c, 4, 6a, 12, 20 SATI3.SA Buy (CBE) N/A R$4.02 17 Mar 2009SulAmerica2c, 4, 6a, 20 SULA11.SA Buy (CBE) N/A R$19.30 17 Mar 2009Suzano Papel e Celulose16b, 20 SUZB5.SA Buy (CBE) N/A R$10.15 17 Mar 2009TAM2c, 4, 6a, 16a, 16b, 20 TAMM4.SA Buy (CBE) N/A R$15.51 17 Mar 2009Tecnisa2c, 4, 20 TCSA3.SA Buy (CBE) N/A R$2.93 17 Mar 2009Telemar Norte Leste Op. (PN)4, 20 TMAR5.SA Buy (CBE) N/A R$50.99 17 Mar 2009Telemig Celular Part. (PN)16b, 20 TMCP4.SA Neutral (CBE) N/A R$45.36 17 Mar 2009Telesp Fixed (PN)16b, 20, 22 TLPP4.SA Buy (CBE) N/A R$45.60 17 Mar 2009Tempo Participações2c, 4, 6a, 20 TEMP3.SA Neutral (CBE) N/A R$3.00 17 Mar 2009


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Company Name Reuters 12-mo rating Short-term rating Price Price dateTerna Participacoes2c, 4, 20 TRNA11.SA Buy (CBE) N/A R$22.09 17 Mar 2009TIM Part. (PN)16b, 20 TCSL4.SA Neutral (CBE) N/A R$3.14 17 Mar 2009Totvs20 TOTS3.SA Buy (CBE) N/A R$40.50 17 Mar 2009Tractebel Energia2b, 4, 16a, 16b, 20 TBLE3.SA Neutral (CBE) N/A R$17.44 17 Mar 2009Ultrapar2b, 3d, 4, 5, 6a, 16b, 20 UGPA4.SA Buy (CBE) N/A R$55.90 17 Mar 2009Usinas Siderurgicas de MG2c, 4, 6a, 16b, 20 USIM5.SA Neutral (CBE) N/A R$23.30 17 Mar 2009

Vivo Holdings (PN)16b, 20 VIVO4.SA Neutral (CBE) N/A R$36.71 17 Mar 2009Votorantim Celulose e Papel16b, 20 VCPA4.SA Suspended N/A R$10.32 17 Mar 2009Wilson Sons2c, 4, 16a, 20 WSON11.SA Buy (CBE) N/A R$11.25 17 Mar 2009

Source: UBS. All prices as of local market close. Ratings in this table are the most current published ratings prior to this report. They may be more recent than the stock pricing date 2a. UBS AG, its affiliates or subsidiaries has acted as manager/co-manager in the underwriting or placement of securities of

this company/entity or one of its affiliates within the past 12 months. 2b. UBS AG, its affiliates or subsidiaries has acted as manager/co-manager in the underwriting or placement of securities of

this company/entity or one of its affiliates within the past five years. 2c. UBS AG, its affiliates or subsidiaries has acted as manager/co-manager in the underwriting or placement of securities of

this company/entity or one of its affiliates within the past three years. 3a. Banco UBS Pactual S.A. is acting as advisor to Banco do Brasil on its announced acquisition of Banco do Estado do

Piaui SA(BEP) 3b. Banco UBS Pactual S.A. is acting as advisor to Banco do Brasil on its discussions to acquire BRB Banco de Brasilia 3c. Banco UBS Pactual S.A. is acting as advisor to Banco do Brasil SA on its announced acquisition of Banco do Estado de

Santa Catarina S.A. and BESC S.A. Crédito Imobiliário. 3d. Banco UBS Pactual S.A. is acting as advisor to Ultrapar Participações S.A. on its announced agreement to acquire the

Texaco-Branded Fuels Marketing Business in Brazil from Chevron Corporation. 3e. Banco UBS Pactual S.A. is acting as co-advisor to Banco do Brasil on its announced negotiations to acquire Banco

Nossa Caixa. 3f. Banco UBS Pactual S.A. is acting as exclusive financial advisor to Campinas Shopping on the sale of Campinas

Shopping to BR Malls Participacoes, SA. 3g. Banco UBS Pactual S.A. is acting as to Banco do Brasil on its announced 50% acquisition of Banco Votorantim. 4. Within the past 12 months, UBS AG, its affiliates or subsidiaries has received compensation for investment banking

services from this company/entity. 5. UBS AG, its affiliates or subsidiaries expect to receive or intend to seek compensation for investment banking services

from this company/entity within the next three months. 6a. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and investment banking

services are being, or have been, provided. 6b. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-investment

banking securities-related services are being, or have been, provided. 7. Within the past 12 months, UBS Securities LLC has received compensation for products and services other than

investment banking services from this company/entity. 12. A director or an employee of UBS AG, its affiliates or subsidiaries is a director of this company. 13. UBS AG, its affiliates or subsidiaries beneficially owned 1% or more of a class of this company`s common equity

securities as of last month`s end (or the prior month`s end if this report is dated less than 10 days after the most recent month`s end).

16a. Banco UBS Pactual S.A. makes a market in the securities of this company. 16b. UBS Securities LLC makes a market in the securities and/or ADRs of this company. 18a. Banco UBS Pactual S.A. is acting in an investment banking capacity 18b. Banco UBS Pactual S.A. manages a Private Equity Fund which owns a 50% interest in Brasil Energia I, which owns

more than a 50% interest in Equatorial Energia. 20. Because UBS believes this security presents significantly higher-than-normal risk, its rating is deemed Buy if the FSR

exceeds the MRA by 10% (compared with 6% under the normal rating system).


UBS 212

22. UBS AG, its affiliates or subsidiaries held other significant financial interests in this company/entity as of last month`s end (or the prior month`s end if this report is dated less than 10 working days after the most recent month`s end).

Brazil Regulation 388 Analyst Certification: Except as provided above, each research analyst primarily responsible for the content of this investment research report, in whole or in part, certifies that: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers, and such recommendations were elaborated independently, including in relation to Banco UBS Pactual S.A. and/or its affiliates, as the case may be; (2) no relationship is maintained with any person who works for the subject companies which securities are mentioned on this research; (3) Banco UBS Pactual S.A. and/or its affiliates (including the funds, portfolios and investment clubs in securities managed by them) do not own directly or indirectly 1% or more of the total capital of the subject companies or are involved in the acquisition, alienation or intermediation of such securities in the market; (4) does not hold, directly or indirectly securities of the subject companies which represent 5% or more of his or her net worth, and is not involved in the acquisition, alienation or intermediation of such securities in the market; (5) neither the analyst nor Banco UBS Pactual S.A. and/or its affiliates receive compensation for any services rendered or presents any commercial relationships with any of the subject companies or person, entity or any kind of funds which represents the same interest of the subject companies; (6) no part of any of the research analyst's compensation was, is, or will be directly or indirectly related to the pricing of any of the securities issued by any of the subject companies and/or to the specific recommendations or views expressed by the research analyst in this research although part of the analyst's compensation comes from the profits of Banco UBS Pactual S.A. and/or its affiliates and, consequently, revenues arisen from transactions held by Banco UBS Pactual S.A. and/or its affiliates. Unless otherwise indicated, please refer to the Valuation and Risk sections within the body of this report. For a complete set of disclosure statements associated with the companies discussed in this report, including information on valuation and risk, please contact UBS Securities LLC, 1285 Avenue of Americas, New York, NY 10019, USA, Attention: Publishing Administration.


UBS 213

Global Disclaimer This report has been prepared by Banco UBS Pactual S.A., an affiliate of UBS AG. UBS AG, its subsidiaries, branches and affiliates are referred to herein as UBS. In certain countries, UBS AG is referred to as UBS SA. This report is for distribution only under such circumstances as may be permitted by applicable law. Nothing in this report constitutes a representation that any investment strategy or recommendation contained herein is suitable or appropriate to a recipient’s individual circumstances or otherwise constitutes a personal recommendation. It is published solely for information purposes, it does not constitute an advertisement and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments in any jurisdiction. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, except with respect to information concerning UBS AG, its subsidiaries and affiliates, nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in the report. UBS does not undertake that investors will obtain profits, nor will it share with investors any investment profits nor accept any liability for any investment losses. Investments involve risks and investors should exercise prudence in making their investment decisions. The report should not be regarded by recipients as a substitute for the exercise of their own judgement. Any opinions expressed in this report are subject to change without notice and may differ or be contrary to opinions expressed by other business areas or groups of UBS as a result of using different assumptions and criteria. Research will initiate, update and cease coverage solely at the discretion of UBS Investment Bank Research Management. The analysis contained herein is based on numerous assumptions. Different assumptions could result in materially different results. The analyst(s) responsible for the preparation of this report may interact with trading desk personnel, sales personnel and other constituencies for the purpose of gathering, synthesizing and interpreting market information. UBS is under no obligation to update or keep current the information contained herein. UBS relies on information barriers to control the flow of information contained in one or more areas within UBS, into other areas, units, groups or affiliates of UBS. The compensation of the analyst who prepared this report is determined exclusively by research management and senior management (not including investment banking). Analyst compensation is not based on investment banking revenues, however, compensation may relate to the revenues of UBS Investment Bank as a whole, of which investment banking, sales and trading are a part. The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. Options, derivative products and futures are not suitable for all investors, and trading in these instruments is considered risky. Mortgage and asset-backed securities may involve a high degree of risk and may be highly volatile in response to fluctuations in interest rates and other market conditions. Past performance is not necessarily indicative of future results. Foreign currency rates of exchange may adversely affect the value, price or income of any security or related instrument mentioned in this report. For investment advice, trade execution or other enquiries, clients should contact their local sales representative. Neither UBS nor any of its affiliates, nor any of UBS' or any of its affiliates, directors, employees or agents accepts any liability for any loss or damage arising out of the use of all or any part of this report. For financial instruments admitted to trading on an EU regulated market: UBS AG, its affiliates or subsidiaries (excluding UBS Securities LLC and/or UBS Capital Markets LP) acts as a market maker or liquidity provider (in accordance with the interpretation of these terms in the UK) in the financial instruments of the issuer save that where the activity of liquidity provider is carried out in accordance with the definition given to it by the laws and regulations of any other EU jurisdictions, such information is separately disclosed in this research report. UBS and its affiliates and employees may have long or short positions, trade as principal and buy and sell in instruments or derivatives identified herein. Any prices stated in this report are for information purposes only and do not represent valuations for individual securities or other instruments. There is no representation that any transaction can or could have been effected at those prices and any prices do not necessarily reflect UBS's internal books and records or theoretical model-based valuations and may be based on certain assumptions. Different assumptions, by UBS or any other source, may yield substantially different results. United Kingdom and the rest of Europe: Except as otherwise specified herein, this material is communicated by UBS Limited, a subsidiary of UBS AG, to persons who are eligible counterparties or professional clients and is only available to such persons. The information contained herein does not apply to, and should not be relied upon by, retail clients. UBS Limited is authorised and regulated by the Financial Services Authority (FSA). UBS research complies with all the FSA requirements and laws concerning disclosures and these are indicated on the research where applicable. France: Prepared by UBS Limited and distributed by UBS Limited and UBS Securities France SA. UBS Securities France S.A. is regulated by the Autorité des Marchés Financiers (AMF). Where an analyst of UBS Securities France S.A. has contributed to this report, the report is also deemed to have been prepared by UBS Securities France S.A. Germany: Prepared by UBS Limited and distributed by UBS Limited and UBS Deutschland AG. UBS Deutschland AG is regulated by the Bundesanstalt fur Finanzdienstleistungsaufsicht (BaFin). Spain: Prepared by UBS Limited and distributed by UBS Limited and UBS Securities España SV, SA. UBS Securities España SV, SA is regulated by the Comisión Nacional del Mercado de Valores (CNMV). Turkey: Prepared by UBS Menkul Degerler AS on behalf of and distributed by UBS Limited. Russia: Prepared and distributed by UBS Securities CJSC. Switzerland: Distributed by UBS AG to persons who are institutional investors only. Italy: Prepared by UBS Limited and distributed by UBS Limited and UBS Italia Sim S.p.A.. UBS Italia Sim S.p.A. is regulated by the Bank of Italy and by the Commissione Nazionale per le Società e la Borsa (CONSOB). Where an analyst of UBS Italia Sim S.p.A. has contributed to this report, the report is also deemed to have been prepared by UBS Italia Sim S.p.A.. South Africa: UBS South Africa (Pty) Limited (Registration No. 1995/011140/07) is a member of the JSE Limited, the South African Futures Exchange and the Bond Exchange of South Africa. UBS South Africa (Pty) Limited is an authorised Financial Services Provider. Details of its postal and physical address and a list of its directors are available on request or may be accessed at http:www.ubs.co.za. United States: Distributed to US persons by either UBS Securities LLC or by UBS Financial Services Inc., subsidiaries of UBS AG; or by a group, subsidiary or affiliate of UBS AG that is not registered as a US broker-dealer (a 'non-US affiliate'), to major US institutional investors only. UBS Securities LLC or UBS Financial Services Inc. accepts responsibility for the content of a report prepared by another non-US affiliate when distributed to US persons by UBS Securities LLC or UBS Financial Services Inc. All transactions by a US person in the securities mentioned in this report must be effected through UBS Securities LLC or UBS Financial Services Inc., and not through a non-US affiliate. Canada: Distributed by UBS Securities Canada Inc., a subsidiary of UBS AG and a member of the principal Canadian stock exchanges & CIPF. A statement of its financial condition and a list of its directors and senior officers will be provided upon request. 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UBS Bank, SA, Sucursal em Portugal, is regulated by Comissão do Mercado de Valores Mobiliários (CMVM). Where an analyst of UBS Bank, SA, Sucursal em Portugal has contributed to this report, the report is also deemed to have been prepared by UBS Bank, SA, Sucursal em Portugal. The disclosures contained in research reports produced by UBS Limited shall be governed by and construed in accordance with English law. UBS specifically prohibits the redistribution of this material in whole or in part without the written permission of UBS and UBS accepts no liability whatsoever for the actions of third parties in this respect. © UBS 2009. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved.

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