Latin America - ViewOn · *EPS growth 5 years is a Comgest estimate. Market Cap is calculated as of end of last calendar quarter while ROE and dividend yield are calculated as of

For Professional Investors only

27.11.2014 Pavillon Cambon, Paris

Latin America Juliette Alves, Charles Biderman

PRECONCEIVED IDEAS

Myths Realities

Commodities dependent

Violent and unstable

Underdeveloped

Small market

Domestic oriented

Abundance of natural resources

The lowest geopolitical risk in EM

Top-tier companies, many regional

and international leaders

Large homogeneous economy

2

PRECONCEIVED IDEAS ON THE STOCK MARKET

Myth: "There is little growth in Latin America"

Long-term equity return vs. GDP-per capita growth in real terms

Source: Citi Research, Haver, CEIC, Datastream

3

WHY INVEST IN LATIN AMERICA?

Key risks

Currency Political Fund flows

Sentiment-driven

Our approach

Companies that do well despite the macro

Limited net FX exposure

Exporters and diversified companies

Companies with pricing power

Favour private sector with limited regulatory risk

Limited exposure to SOEs

Volatility creates entry points

4

BRAZIL: ELECTION YEAR

Brazil Bovespa Index: Price, in local currency

Source: Factset, data as of 24/10/2014

Past performance is no guarantee of future results.

40000

45000

50000

55000

60000

65000

Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14

5

DILMA ROUSSEFF RE-ELECTED What did you expect?

Monetary policy

Regulated prices

Fiscal policy

Investment

Market perception

Failed to control inflation

Uses CB to stimulate the economy

Price controls in energy, transportation

to limit the impact of inflation

Fiscal adjustment in 2015 likely

Wide use of BNDES funding

Intervention to regulate private sector returns

Interventionist and dogmatic

6

2015 OUTLOOK: SAME CHALLENGES REMAIN

Government spending has surged

under Partido dos Trabalhadores (PT) Consumer spending will likely contract

Source: BCA Research, 10/09/2014


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MAIN CHALLENGE: LACK OF INFRASTRUCTURE Brazil: GDP and infrastructure quality rankings

(ranking out of 144 countries, inverted scale) Low investment, low productivity

Source: The World Economic Forum Global Competitiveness Report 2014 (left) / BCA Reasearch (right)

#7

#114

#120 #123

#131

0

20

40

60

80

100

120

140

GDP Quality of overallinfrastructure

Quality of roads Quality of airtransport

infrastructure

Quality of portinfrastructure

Investment will be key to reactivate growth

8

BUT THE MARKET DOESN’T EXPECT MUCH ANYWAY

Brazil Bovespa Index: 1996 – 2014, Price in constant purchasing power of October 2014

Source: Citibank


-

20 000

40 000

60 000

80 000

100 000

120 000

Jan-96 May-98 Sep-00 Jan-03 May-05 Sep-07 Jan-10 May-12 Sep-14

9

OUR EXPOSURE TO BRAZIL

Our selection of franchises

Global companies Domestic Megatrends

15% EPS growth is forecast in 2015, limited impact from the political environment

The material presented in this document is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The contents of this document

should not be treated as advice in relation to any potential investment. Forward looking data included is estimated and it is not a reliable guide to future performance.

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DOMESTIC MEGATRENDS: CIELO (BRAZIL)

Brazilian merchant acquirer operating transactions

through credit/debit cards and mobile phones

Over 50% market share

Growth led by transition to electronic transactions

Sector: Information Technology

Market cap.: USD 25.7bn

EPS growth 5 yrs (est.)*: 14%

ROE: 95.5%

Dividend yield: 3.4%

Data updated as at 30/09/2014 / Source: Company report (right)

*EPS growth 5 years is a Comgest estimate. Market Cap is calculated as of end of last calendar quarter while ROE and dividend yield are calculated as of end of last fiscal year. Past performance is not a reliable guide to

future performance. The value of investments may go down as well as up. Forward looking data included is estimated and it is not a reliable guide to future performance. The material presented in this document is for

information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The contents of this document should not be treated as advice in relation to any potential investment.

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http://cielo.riweb.com.br/Default.aspx

VOLATILITY CREATES OPPORTUNITIES

Source: BCA Research

The material presented in this document is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

The contents of this document should not be treated as advice in relation to any potential investment. Past performance is not a reliable guide to future performance.

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MID CAP OPPORTUNITY: ALPARGATAS (BRAZIL)

Created and developed Havaianas brand

244 M pairs of Havaianas sold in 2013 and 50% market share in Brazil

Havaianas is among the 10 most valuable brands in Brazil with growing recognition internationally

Diversification strategy: leverage Havaianas in the apparel segment

Sector: Cons. Discretionary



ROE: 17.8%


Data updated as at 30/09/2014




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MEXICO: THE REVIVAL OF A GIANT

Reforms unlock growth

Energy

Education

Labour flexibility

Telecom / Media monopolies

+1% to potential GDP growth

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MEXICO: THE REVIVAL OF A GIANT

Dependence on the US turns positive as the manufacturing sector is leading the recovery

Source: Morgan Stanley Latam Economics, October 2014

Manufacturing exports (USD bn), Mexico and US

Industrial production, base 100 = 2007 Manufacturing wages (USD per hour)

15

NEW MEXICAN DYNAMISM: HOTELES CITY EXPRESS

1st limited-services hotel chain dedicated to traveling businessmen

Present in major industrial areas in Mexico

90% of internal bookings, 30% through corporate contracts

Experience and commitment from the management

Reference shareholders: IFC – World Bank hold 9%


Market cap.: USD 505m


ROE: 2.1%






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NEW MEXICAN GROWTH: BOLSA MEXICANA DE VALORES (MEXICO)

Vertical integration and low dependence on trading volumes

Monopoly in Mexico, competition from ADRs is an incentive to

innovate and provide low prices

Increasing pension funds’ participation in the market

Long-term growth potential for the equity market

Sector: Financial Services



ROE: 14.0%






0%

40%

80%

120%

Chile Colombia Brazil Peru Mexico Argentina

Market Cap to GDP 2012

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ANDEAN REGION: THE MOST DYNAMIC IN LATAM

The Chilean model replicated in Peru and

Colombia: strong pension funds, investment-

led growth, sound macro policies

Regionalisation

Joker: when Argentina is back in the game

Annual GDP growth 2004 – 2013 (%)

-2

0

2

4

6

8

10

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Chile Peru Colombia

Source: Factset (right)

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FALABELLA (CHILE)

Leader in Chile and in the Andean region in all

retail formats

Cautious consumer credit growth to sustain sales

Strong cash generation in Chile used to finance

its expansion in the region




ROE: 14.7%






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WHY INVEST WITH COMGEST IN LATIN AMERICA?

The material presented in this document is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

The contents of this document should not be treated as advice in relation to any potential investment.

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WHY INVEST WITH COMGEST IN LATIN AMERICA?

Strong, stable EPS growth

Source: Factset/Comgest. Portfolio as of 30/09/2014

Past performance is no guarantee of future results. Indices are used for comparative purposes only. They are not a reliable guide to the future performance of this investment. Forward looking data

included is estimated and it is not a reliable guide to future performance.

0

5

10

15

20

25

30

Jan-11 Jan-12 Jan-13 Jan-14

MSCI EM Latin America - EPS Growth NTM Comgest Growth Latin America - EPS Growth NTM

21

(%)

COMGEST GROWTH LATIN AMERICA Performance* (net, in EUR)

*Net performance in EUR as of 31/10/2014

Source: FactSet/Comgest / Past performance is no guarantee of future results. Indices are used for comparative purposes only, they are not a reliable guide to the future performance of this investment. Performance calculation

based on NAV to NAV variation expressed in euros. © 2014 Morningstar, Inc. All rights reserved. Ratings and awards mentioned in this document can change at any time and do not constitute a buy recommendation.

Cumulative performance since inception (%)

Rolling performance (%)

QTD YTD 1 Year 3 Years

annualised

Inception

annualised

Portfolio 1.53 9.35 4.10 5.74 3.74

Index 0.70 11.29 2.35 -0.62 0.18

22

Dec

2009

Dec

2010

Dec

2011

Dec

2012

Dec

2013

85

90

95

100

105

110

115

120

125

130% change

Fund MSCI Emerging Markets Latin America - NR

CONCLUSION

Despite its challenges the region remains attractive

A great universe for a quality growth investor with attractive opportunities ahead

Our selection should offer a portfolio of strong and visible EPS growth

Copacabana Beach

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

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Documents

Latin America - ViewOn · *EPS growth 5 years is a Comgest estimate. Market Cap is calculated as of end of last calendar quarter while ROE and dividend yield are calculated as of