Deutsche Bank Markets Research
Global Periodical Date 18 October 2017 CEEMEA & Latam
Daybook
Pascal Moura Mairead Smith Head of Research Equity Focus Wednesday, 18 October 2017 (+971) 4 4283-864 (+44) 20 754-71054 [email protected] [email protected]
CEEMEA Companies Stock Performance(US$)–Gainers & Losers TARGET PRICE CHANGE (CEEMEA) Top 10 Ticker Price %Chg Naspers (Buy, TP ZAR3,552.00) - No easy choices Palm Hills PHDC EY 0.2 8.5 Naspers - New Tencent numbers & more DHERO but bigger holdco discount SODIC OCDI EY 0.9 5.7 Qatar Electricity & QEWS QD 49.4 4.2 LATAM Companies Ooredoo Group ORDS QD 23.7 4.2 RECOMMENDATION CHANGE Mechel MTL US 5.1 3.8 Transneft TRNFP RX 3258.4 3.8 Embraer (Hold, TP USD23.00) - Increasing competitive pressures - moving to Qatar National Bank QNBK QD 34.1 3.7 Hold Industries Qatar IQCD QD 26.1 3.7 Latam Airlines Sep Q 2017 Preview - Most profitable Sep Q in 7 years TMG Holding TMGH EY 0.5 3.6 Gulf Int'l Services GISS QD 5.1 3.1 COMPANY UPDATE B2W (Hold, TP BRL16.50) - First take on B2W market expansion Bottom 10 Ticker Price %Chg Orascom OC DU 7.3 -8.8 Vale (Buy, TP USD12.00) - 3Q17 Production Preview: Seasonal iron ore Mediclinic MDC LN 8.5 -5.1 improvement Mediclinic MEI SJ 8.5 -5.0 Pioneer PFG SJ 8.7 -4.7 SECTOR UPDATE Life HC LHC SJ 1.9 -4.6 Latam and CEEMEA Banks - Global valuation matrix – CEEMEA banks recover AngloGold Ashanti ANG SJ 9.2 -4.6 Harmony HAR SJ 1.7 -4.5 as Latam dips ING Bank Slaski ING PW 53.6 -4.5 Latin American Financials - 3Q17 preview: Brazil improves, but mixed trends in Mail.Ru MAIL LI 30.5 -3.8 Mexico and Andes Impala Platinum IMP SJ 2.3 -3.8
Integrated Oil/ Refining - 3Q Upstream: Inflection Points Stock Performance(US$)–Gainers & Losers Metals & Mining Alert - Daily prices and news: WSA raises 2017/18 global steel (LATAM) demand outlook Top 10 Ticker Price %Chg LatAM TMT - 3Q17 Results Preview Kimberly-Clark de KIMBERA MM 1.8 5.2 Cemex CX US 8.1 3.6 STRATEGY Liverpool LIVEPOLC MM 7.6 3.5 Grupo Bimbo BIMBOA MM 2.4 3.0 EM Daily - Argentina - Position for the upturn Chedraui CHDRAUIB 2.0 2.5 Grupo Aeromexico AEROMEX* 1.7 2.5 MACRO America Movil AMX US 18.3 2.2 Special Report - Colombia: Cyclical external correction, independents lead Gruma GRUMAB MM 13.9 1.9 election campaign Bancolombia CIB US 44.1 1.4 Gentera GENTERA* 1.3 1.4 Special Report - BRL - Can flows pick up the baton from carry? Brazil Update - Services were weaker than expected in August Bottom 10 Ticker Price %Chg B2W BTOW3 BS 6.1 -6.0 Embraer ERJ US 20.3 -5.2 VALUATION Lojas Americanas LAME4 BZ 5.7 -3.7 CEEMEA and Latam valuation tables Arezzo&Co ARZZ3 BS 16.3 -3.6 Natura NATU3 BS 9.5 -3.1 Multiplus MPLU3 BZ 12.0 -2.5 Porto Seguro PSSA3 BZ 11.9 -2.4 Vale VALE UN 10.3 -2.3 Santander Mexico BSMX US 9.1 -2.2 Smiles SMLE3 BZ 27.2 -2.1
Source::Bloomberg Finance LP
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Deutsche Bank AG/London Distributed on: 18/10/2017 04:27:04 GMT Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, 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. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 083/04/2017. 0bed7b6cf11c 18 October 2017 CEEMEA & Latam Daybook
+1 212 250-0664+1 11 2113 5185 +55 212 250-2524+1 212 250-8605+1 212 250-8640+1 212 250-7568+1 212 250 8191 +1 207 5474705 +44 207 54548490 +44 207 5411735 +44 207 5479118 +44 4 428 3261 +971 4 428 3938 +971 4 4283910 +971 4 361 1786 +971 +1 415 262 2028 +1 212 250 5528 +1 212 250 5528 +1 +1 212 250 7355 +1 212 250 8191 +1 22 579 8732 +48 207 5472094 +44 +1 212 250 8342 +1 +44 207 545 1400 +44 +1 212 250 5434 +1 212 250 5944 +1 212 250 9254 +1 11 2113 5976 +55 212 250 9619 +1 212 250 8949 +1 Construction, Infrastructure, Utilities Telco, Healthcare Chemicals/Consumer/Transport/Strategist Food&Beverage/Retailing Senior Economist Brazil Sovereign CreditHead of EM Analytics Head of EM DerivativeEM and Latam Strategist Latam FX Strategist Banks Economist Oil & Gas Internet Aerospace Defense Chief Economist Senior Economist countries Andean CorporatesHead of EM Utility Telecommunication Banks O&G Construction FX Strategist Building materialsBuilding Senior Economist Chile Mexico & Metals Mining & Financials/Banks Airline Retail TMT Programs Loyalty Athmane Benzerroug Marc Hammoud Aleksandar Stojanovski RibakovaElina Latam Todd Ryan WalmsleyLloyd Jose Yordan WaltonMyles Drausio Giacomelli Cesar Arias Jose Carlos de Faria Hongtao Jiang Jed Evans Guilherme Marone Eduardo Vieira Sebastian Brown Greece James Brand Robert Grindle KachkovskiIvan Tomasz Krukowski MuljiPriyal George Saravelos Middle East Ayache Ryan Xavier Marchand Sebastian Brown Chris Terry Chris Tito Labarta Michael Linenberg Marcel Moraes Masha Kahn Catherine O' Brien
Head of Company Research Research Company of Head Pascal Moura +971 44283864 +44 207 5474705 +44 212 3190315 +90 207 5411735 +44 22 579 8732 +48 207 545 7066 +44 +971 4 361 1732 +971 11 775 7292 +27 11 775 7299 +27 11 775 7013 +27 11 775 7268 +27 +43(1)53181-153 11 775 7049 +27 11 775 7267 +27 212 3190315 +90 212 3190324 +90 4 361 1734 +971 4 4283910 +971 +971 4 361 1734 +971 207 547 1340 +44 11 775 7069 +27 11 775 7369 +27 11 775 7433 +27 207 5458774 +44 +44 207 5411735 +44 11 775 7249 +27 +971 4 361 1732 +971 212 250 9619 +1 +971 4 4283910 +971 207 545 8170 +44 4 361 1786 +971 212 250-7063+1 Emerging EMEA/Latam Research EMEA/Latam Emerging Economist Banks, Strategy Construction, RE Mining & Metal Telco Economist Utility Banks, Strategy Financials Industrials O&G, Consumer, Economist Economist Oil & Gas Estate, Real Retail, Food Producer Producer Food Estate, Real Retail, Healthcare TMT Metals Mining & Paper Banks/Financials Insurance/Financials Industrial Metal & Mining & Metal Retail, Real Estate, Real Retail, Food Producer Financials Oil & Gas TMT Healthcare Commodities Transport Internet
Gautam Kalani Athmane Benzerroug George Buzhenitsa Marc Hammoud Ozturk Kubilay CE3 James Brand Kazim Andac KachkovskiIvan Tomasz Krukowski Mathias Pfeifenberger Stefan Swanepoel Larissa van-Deventer Munira Kharva Danelee Masia Turkey Kazim Andac Elina RibakovaElina Africa South Kushnir Pavel Caron Bramwell Sean Holmes LenakeLetlotlo John Kim Patrick Mann Russia / CIS George Buzhenitsa Ryan Eichstadt Ryan Ivan KachkovskiIvan Pavel Kushnir Pavel Masha Kahn Marc Hammoud Grant Sporre Aleksandar Stojanovski WalmsleyLloyd
Source: Deutsche Bank Deutsche Source:
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18 October 2017 CEEMEA & Latam Daybook
ASIAN MARKET TOP STORIES China Cement – Trip takeaways - the new order in China cement (Johnson Wan) http://pull.db-gmresearch.com/p/737-D9A9/68596178/cd520a6e-934a-4ff5-b2d4-54df923ebcdd_604.pdf
INITIATION OF COVERAGE Bright Scholar (BEDU.N, Buy) – Seizing the golden age of China education sector; initiating with Buy (Alvin Jiang) http://pull.db-gmresearch.com/p/790-0A1E/70029847/0900b8c08db1524c.pdf
RECOMMENDATION CHANGE GBST Holdings (GBT.AX, Buy) – Cheap and unloved. Upgrade to Buy. (Stuart McLachlan) http://pull.db-gmresearch.com/p/614-E385/63275861/0900b8c08d8de68f.pdf> Alliance Global (AGI.PS, Hold) – No longer compelling; downgrading to Hold (Aaron Salvador) http://pull.db-gmresearch.com/p/671-861E/64519630/0900b8c08d90df18.pdf>
ESTIMATES AND TARGET PRICE CHANGES China Oil & Gas Monthly – Gas demand exceptionally strong; Sep ethylene spreads reach 10yr high (Johnson Wan) http://pull.db-gmresearch.com/p/789-C3ED/65928490/89a76098-a8d5-11e7-a585-056cc5e4a602_604.pdf ANZ (ANZ.AX, Hold) – Partial progress in divesting wealth management (Anthony Hoo) http://pull.db-gmresearch.com/p/632-C71C/64914490/0900b8c08db0a31b.pdf> Challenger Financial (CGF.AX, Hold) – Improving distribution driving flows (Ross Curran) http://pull.db-gmresearch.com/p/243-DE8D/64876733/c31df03c-044a-4982-b4c8-3943b48bb561_604.pdf Oil Search (OSH.AX, Buy) – SepQ17 Report - PNG LNG continues to outperform (John Hirjee) http://pull.db-gmresearch.com/p/863-08DC/63164821/0900b8c08daaef58.pdf> Pact Group (PGH.AX, Buy) – Earnings estimates and valuation revised on new FX assumptions (Mark Wilson) http://pull.db-gmresearch.com/p/534-17A7/63165825/0900b8c08db0c434.pdf> St Barbara (SBM.AX, Buy) – 1Q18: Off to a flying start (Matthew Frydman) http://pull.db-gmresearch.com/p/836-CF75/64824246/0900b8c08da3f9dd.pdf> ACC (ACC.BO, Hold) – Near-term growth priced in, outlook remains challenging (Amit Murarka) http://pull.db-gmresearch.com/p/631-6248/65660433/0900b8c08db11e12.pdf> Bajaj Auto Limited (BAJA.NS, Hold) – 2QFY18 - operating beat driven by lower raw material costs (Amyn Pirani) http://pull.db-gmresearch.com/p/547-4AB0/66900822/89999843-b255-4748-b449-5b10e6a570d6_604.pdf Bajaj Finance (BJFN.NS, Hold) – 2Q FY18: growth stays strong; NIM tad lower; valuations stretched (Manish Karwa) http://pull.db-gmresearch.com/p/572-2EA2/63351530/0900b8c08daf97a3.pdf> Bajaj Finserv (BJFS.NS, Hold) – 2QFY18: strong operating performance; PAT growth slows (Manish Karwa) http://pull.db-gmresearch.com/p/571-16C3/64401317/0900b8c08db0dae2.pdf> Wipro (WIPR.BO, Hold) – Sept-Q: Revenue miss; margins surprise positively - Hold (Aniruddha Bhosale) http://pull.db-gmresearch.com/p/586-F9F3/68052047/0900b8c08db0cd0e.pdf DiGi (DSOM.KL, Sell) – 3QFY18 - Revenues continue to decline though margins remain robust (Srinivas Rao) http://pull.db-gmresearch.com/p/911-8584/64242421/0900b8c08db0efc2.pdf>
MACRO/STRATEGY DBDaily – A quiet session, new Fed chair likely to be announced by 3 November… (Phil Odonaghoe) http://pull.db-gmresearch.com/p/9268-9C8D/68619400/DB_DbDailyAPAC_2017-10-17_6db8288c-b2e3-11e7-94fb- ca85cddb0854_604.pdf Asia Credit Strategy – How much more can China SOEs tighten? (Harsh Agarwal) http://pull.db-gmresearch.com/p/6573-6652/61874052/Asia_Credit_Strategy.pdf> Data Flash (Australia) – RBA Minutes (October) (Phil Odonaghoe) http://pull.db-gmresearch.com/p/926-321A/62667958/f62c1d7a-7798-42d7-9973-177fb203ec00_604.pdf Data Flash (New Zealand) – New Zealand Q3-17 CPI (Phil Odonaghoe) http://pull.db-gmresearch.com/p/944-B0C7/61423684/5765e44a-2ed9-4c2d-94ff-c2ad9ddfc765_604.pdf Semi-Government Strategy (Australia) – Issuance update: QTC and WATC pull further ahead (Ken Crompton) http://pull.db-gmresearch.com/p/835-F489/62642094/Semi_Government_Strategy(Australia).pdf Indo Strategy – Sep17 trade: sustaining sizeable surplus (Heriyanto Irawan) http://pull.db-gmresearch.com/p/789-64DF/62968403/0900b8c08dafe28b.pdf>
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18 October 2017 CEEMEA & Latam Daybook
HONG KONG / CHINA Asia steel industry – Disruption on Hebei iron ore concentrate production (James Kan) http://pull.db-gmresearch.com/p/550-51EE/63453826/0900b8c08db0be5b.pdf> BAIC Motor (1958.HK, Buy) – Proposing to apply for A share dual-listing (Vincent Ha) http://pull.db-gmresearch.com/p/741-02E1/61887240/9ff38163-9e19-4a48-9d2b-3a714a4669dd_604.pdf China Education – August quarter preview: investing for the future (revised) (Alvin Jiang) http://pull.db-gmresearch.com/p/818-13EA/64779013/0900b8c08db13baf.pdf> China Healthcare – Monthly Hospital Rx Tracker, August 2017 (Jack Hu) http://pull.db-gmresearch.com/p/3183-B791/62878724/d0ab7754-b253-11e7-94fb-ca85cddb0854_604.pdf Chinese telecom sector – 3Q17 results: key issues to look out for (James Wang) http://pull.db-gmresearch.com/p/661-5E11/65098027/0900b8c08daa9b41.pdf> HK Telecom Trust (6823.HK, Buy) – What if the Belt-and-Road starts in HK? (Peter Milliken) http://pull.db-gmresearch.com/p/686-DAA0/64523950/9d7470ea-0ce6-45b2-8181-44dc9bffa2e6_604.pdf Hollysys Automation Technologies Ltd. (HOLI.OQ, Buy) – Investor Day – we walked away with stronger confidence (Sky Hong) http://pull.db-gmresearch.com/p/686-DAA0/64523950/9d7470ea-0ce6-45b2-8181-44dc9bffa2e6_604.pdf Weekly transaction data tracking – Mortgage interest rate continued to rise in September (Jeffrey Gao) http://pull.db-gmresearch.com/p/814-0474/61716576/0900b8c08dafd8ec.pdf>
JAPAN Household equipment sector – Impact of higher copper price on household equipment companies (Yoji Otani) http://pull.db-gmresearch.com/p/268-5F60/63131284/0900b8c08db0d7d0.pdf> Shin-Etsu Chemical (4063.T, Buy) – Takefu plant visit (Yu Yoshida) http://pull.db-gmresearch.com/p/254-3E1B/63061187/0900b8c08db02991.pdf
AUSTRALIA Global Iron Ore Sector – Disruption to Hebei iron ore concentrate production (Paul Young) http://pull.db-gmresearch.com/p/728-49BF/62200116/0900b8c08db09295.pdf> Orora (ORA.AX, Hold) – Maintains full year guidance for underlying earnings growth (Mark Wilson) http://pull.db-gmresearch.com/p/237-4E8B/63180349/0900b8c08db09a56.pdf> Rio Tinto (RIO.AX, Buy) – 3Q17: Pilbara back on track, copper downgraded (Paul Young) http://pull.db-gmresearch.com/p/991-74B6/64763522/0900b8c08da18cc6.pdf>
ASEAN Keppel REIT (KASA.SI, Hold) – 3Q results in line, reversions & occupancies tick down (Chien-Fie Man) http://pull.db-gmresearch.com/p/920-82AF/64764374/0900b8c08db11444.pdf> Telkom (TLKM.JK, Buy) – Ranked top in the 2300MHz spectrum auction (Raymond Kosasih) http://pull.db-gmresearch.com/p/725-0FA9/64791713/69761691-c3b0-421c-82f6-79c747a68514_604.pdf
ASIA - APAC Equities - APAC Research In Focus
UPCOMING DB CONFERENCES dbAccess China Environmental Protection and Clean Energy Corporate Day 13 Oct @Hong Kong dbAccess China Healthcare Corporate Day 27 Oct @Hong Kong dbAccess Indonesia Conference 7-9 Nov @Jakarta, Indonesia dbAccess Global Quant Conference 2017 14-15 Nov @Hong Kong dbAccess Thailand SET Corporate Day - 22-23 Nov @Singapore
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18 October 2017 CEEMEA & Latam Daybook
12.2 +5.0 +8.7 -
+14.2 +25.9 +14.0 Change
To 6.0 17.0 21.0 15.1 90.0 43.0 17.3 69.0 10.0 475.0 212.0
TARGET PRICETARGET 20.0 13.2 71.5 49.0 60.5 10.0 From 475.0 195.0
To Buy Buy Buy Buy Buy Buy Buy Buy Buy Hold Hold
From Buy Buy Buy Buy Buy Hold Hold Hold RECOMMENDATION
(%) BES I DB vs
0.8 1.4 IBES
0.5 - 26.8 - +10.0 +20.1 Change
DB EPS FY3 EPS DB To 2.0 7.1 3.1 4.8 0.4 0.7 1.4 23.0 22.2
1.8 5.9 4.3 0.4 From
(%) 15.3 11.9 IBES - DB vs
0.8 1.2 IBES
0.4 -
28.0 +7.6 +0.7 +7.8
- +14.1 +25.2 Change
DB EPS FY2 EPS DB To 1.3 6.0 2.6 0.3 0.3 0.6 1.3 19.6 17.4
1.2 5.5 3.5 0.3 0.6 1.1 19.4 From
(%) 40.9 28.4 43.6 28.7 29.9 60.3 IBES - - - - - DB vs
0.6 6.6 4.4 0.7 2.8 23.5 IBES
2.1 2.8 - - 18.6 +7.8 - +48.9 +17.3 Change
DB EPS FY1 EPS DB To 2.5 4.8 2.5 0.5 1.1 0.9 - 16.8 16.8
4.9 3.1 0.3 1.0 0.8 17.2 From
na
Taiwan Thailand Thailand China Chi Hong Kong COUNTRY Turkey Turkey Mexico China India
EPS changes Sino Biopharmaceutical Bangkok Bank BEST Medicine Hengrui Bajaj Corp Quanta Bangkok Life Assurance America Movil ASIA Country Garden Holdings Turkcell LATAM CEEMEA Turk Telekom NAME Source: Bloomberg Finance
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18 October 2017 CEEMEA & Latam Daybook
Solar Portfolio
17-Oct-17 Companies RIC Buy/Sell Promoted Entry Price Current Price Performance MENA TELECOM EGYPT ETEL.CA Buy 01/10/2017 12.95 13.10 1.16% ETISALAT ETEL.AD Sell 01/10/2017 17.30 18.00 -4.05% SAUDI TELECOM COMPANY 7010.SE Buy 01/10/2017 70.50 69.20 -1.84% NMC HEALTH NMC.L Buy 01/10/2017 2,751.00 2,923.00 6.25% GULF INT'L SERVICES GISS.QA Buy 01/10/2017 19.99 18.70 -6.45% Russia TRANSNEFT TRNF_p.MM Buy 01/10/2017 177,400.00 179,350.00 1.10% KAZMUNAIGAS E&P KMGq.L Buy 01/10/2017 9.90 9.70 -2.02% South Africa BARCLAYS AFRICA GROUP BGAJ.J Buy 01/10/2017 13,900.00 14,523.00 4.48% STANDARD BANK SBKJ.J Buy 01/10/2017 15,781.00 16,616.00 5.29% HYPROP HYPJ.J Buy 01/10/2017 10,572.00 10,810.00 2.25%
Turkey AKBANK AKBNK.IS Buy 01/10/2017 9.40 9.47 0.74% VAKIFBANK VAKBN.IS Sell 01/10/2017 6.27 6.19 1.28% YAPI KREDI BANK YKBNK.IS Buy 01/10/2017 4.32 4.27 -1.16%
Source: Bloomberg Finance LP
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18 October 2017 CEEMEA & Latam Daybook
Rating Company Date Buy Naspers 17 October 2017 Forecast Change Sub-Saharan Africa South Africa Reuters Bloomberg Exchange Ticker Price at 16 Oct 2017 (ZAR) 3,253.00 Media NPNJn.J NPN SJ JNB NPNJn Price Target (ZAR) 3,552.00 ADR Ticker ISIN 52-week range (ZAR) 3,266.50 - 1,936.30 NPSNY US6315121003
No easy choices John Kim-sa Research Analyst (+27) 11 775-7013 [email protected] Longer-term investment case doesn't change but the holdco discount does Forex issues and lower levels of profitability are challenging Video Key changes Entertainment as Naspers continues to refine and grow e-Commerce. Management sees profitability in e-Commerce as key to closing the holding TP 3,544.00 to ↑ 0.2% 3,552.00 company discount. The timing of the turn in profitability is important and we Source: Deutsche Bank see FY20 as the turning point. Shorter-term, the ongoing waves of investment are deferring overall profitability in e-Commerce. Naspers' leading position in Price/price relative multiple emerging markets should enable the group to benefit as internet penetration continues to increase across its operating regions, creating 3600 additional markets and driving the next leg of revenue growth. Buy. 3200 2800 We increase our holdco discount from 30% to 35% as a result of our analysis 2400 Naspers has been a strong performer on the JSE but an underperformer vs 2000 TCNT 2017 YTD. NPN's holdco discount is growing over time and fx only 1600 explains part of the story in our view. Review of trading multiples in tech 10/15 4/16 10/16 4/17 suggest that NPN’s e-Commerce portfolio could struggle to keep pace with Naspers TCNT or RU and the law of large numbers reducing investor interest in the FTSE/JSE ALL SHARE (Rebased) rump. Naspers' current pace of investment could make cash an issue in FY20 Performance (%) 1m 3m 12m but its dual share class structure limits the effectiveness of shareholder Absolute 11.7 20.5 44.4 activism. We increase our holdco discount on listed shares from 30% to 35% to reflect these various challenges including cash/sustainability of growth, FTSE/JSE ALL SHARE 4.5 8.1 14.6 growing irrelevance of the e-Commerce portfolio, and benchmark issues. Source: Deutsche Bank We value Naspers at R3552 (was R3544) a share. BUY Our primary valuation methodology is sum-of-the-parts. We value the listed investments (Tencent, Mail.ru) at underlying target price and current share price, respectively, translated at a forward exchange rate. We apply a 35% (from previous 30%) holding company structure discount to these investments. For unlisted investments, we use a combination of fwd estimated EV/Sales and EV/EBITDA multiples, as well as acquisition prices. We see Tencent’s results and forex as key risks, given the importance of Tencent’s earnings to Naspers. Forecasts And Ratios Year End Mar 31 2017A 2018E 2019E 2020E Revenue (USDm) 6,098 7,080 8,160 9,411 EBITDA (USDm) 72 444 783 1,160 EBITA (USDm) -241 -15 289 629 PBT DB (USDm) 3,052 2,546 2,713 3,769 DB EPS (USD) 3.99 5.59 6.48 8.87 OLD DB EPS (USD) 3.99 5.11 6.25 8.16 % Change 0.0% 9.4% 3.7% 8.7% DB EPS growth (%) 36.6 40.1 15.9 36.9 P/E (DB EPS) (x) 39.0 43.8 37.8 27.6 EV/EBITDA (x) 789.0 210.5 116.9 76.4 DPS (USD) 0.46 0.44 0.47 0.51 Yield (%) 0.3 0.2 0.2 0.2 Source: Deutsche Bank estimates, company data 1 DB EPS is fully diluted and excludes non-recurring items
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18 October 2017 CEEMEA & Latam Daybook
Rating Company Date Buy Naspers 17 October 2017 Forecast Change Sub-Saharan Africa South Africa Reuters Bloomberg Exchange Ticker Price at 16 Oct 2017 (ZAR) 3,253.00 Media NPNJn.J NPN SJ JNB NPNJn Price Target (ZAR) 3,552.00 ADR Ticker ISIN 52-week range (ZAR) 3,266.50 - 1,936.30 NPSNY US6315121003
New Tencent numbers & more John Kim-sa Research Analyst DHERO but bigger holdco discount (+27) 11 775-7013 [email protected] FY18 remains a directional year for Naspers Forex issues and lower levels of profitability are challenging Video Price/price relative Entertainment as Naspers continues to refine and grow e-Commerce. Management sees profitability in e-Commerce as key to closing the holding 3600 company discount. The timing of the turn in profitability is important and we 3200 see FY20 as the turning point. Shorter-term, the ongoing waves of investment 2800 are deferring overall profitability in e-Commerce. Naspers' leading position in 2400 multiple emerging markets should enable the group to benefit as internet 2000 penetration continues to increase across its operating regions, creating 1600 additional markets and driving the next leg of revenue growth. Buy. 10/15 4/16 10/16 4/17 Naspers New FY18 diluted core HEPS of US$5.59 with new Tencent numbers and forex FTSE/JSE ALL SHARE (Rebased) We forecast new FY18 diluted core HEPS of US$5.59 per share (up 9% from Performance (%) 1m 3m 12m previous estimate of US$5.11) from the inclusion of updated Tencent forecasts Absolute 11.7 20.5 44.4 and forex view. We look for FY18 consolidated revenues of US$7.1bn, and an EBITDA margin of 6.3% with better EAI contribution to core HEPS (US$2.8bn, FTSE/JSE ALL SHARE 4.5 8.1 14.6 up 50% yr/yr). We’ve adjusted our FY18 ZAR/US$ exchange rate from 14.0x to Source: Deutsche Bank 13.1x. We include an analysis on Delivery Hero which brings NPN investment to €1bn+ in online food delivery. The asset operates in many markets with trend growth 50-70% yr/yr with sizable admin and marketing costs. We value Naspers at R3552 (was R3544) a share. BUY Our primary valuation methodology is sum-of-the-parts. We value the listed investments (Tencent, Mail.ru) at underlying target price and current share price, respectively, translated at a forward exchange rate. We apply a 35% (from previous 30%) holding company structure discount to these investments. For unlisted investments, we use a combination of fwd estimated EV/Sales and EV/EBITDA multiples, as well as acquisition prices. We see Tencent’s results and forex as key risks, given the importance of Tencent’s earnings to Naspers.
Forecasts And Ratios Year End Mar 31 2017A 2018E 2019E 2020E Revenue (USDm) 6,098 7,080 8,160 9,411 EBITDA (USDm) 72 444 783 1,160 EBITA (USDm) -241 -15 289 629 PBT DB (USDm) 3,052 2,546 2,713 3,769 DB EPS (USD) 3.99 5.59 6.48 8.87 DB EPS growth (%) 36.6 40.1 15.9 36.9 P/E (DB EPS) (x) 39.0 43.8 37.8 27.6 EV/EBITDA (x) 789.0 210.5 116.9 76.4 EV/EBITA (x) – – 317.0 140.9 DPS (USD) 0.46 0.44 0.47 0.51 Yield (%) 0.3 0.2 0.2 0.2 Source: Deutsche Bank estimates, company data 1 DB EPS is fully diluted and excludes non-recurring items 2 Multiples and yields calculations use average historical prices for past years and spot prices for current and future years, except P/B which uses ______the year end close
Deutsche Bank AG/London Page 8
17 October 2017 Aerospace Embraer
18 October 2017 CEEMEA & Latam Daybook
Rating Company Date Hold Embraer 17 October 2017 Recommendation Latin America Brazil Change Reuters Bloomberg Exchange Ticker Price at 16 Oct 2017 (USD) 21.42 Aerospace ERJ.N ERJ US NYS ERJ Target price 23.00 52-week range 24.46 - 17.58 Increasing competitive pressures - moving to Hold Valuation & Risks Myles Walton, CFA Bombardier-Airbus C-Series deal increases competitive environment for E-2 Following the announcement that Airbus has agreed to partner with Bombardier Research Analyst on the C Series program (planning to acquire 50.01% of the C Series Aircraft +1-617-217-6259 Limited Partnership, CSALP**), we see competitive pressures increasing for Louis Raffetto, CFA Embraer and its E-2 family of aircraft. As a result, we are lowering rating to a Hold Research Associate and reducing our price target on the ADR shares by $3 to $23. While Embraer's +1-617-217-6191 EJet family of aircraft have dominated the regional market over the last number of years, the addition of Airbus along with its deep pockets and sales, marketing, Emilee Deutchman procurement and customer service expertise to the already formidable C Series Research Associate aircraft likely starts to tilt the scales back in Bombardier's direction. +1-904-645-1028
Clouds moving in on commercial aviation; bizjets & defense still weak Key changes Embraer's business jet and defense businesses have struggled over the last TP 26.00 to 23.00 ↓ -11.5% few years while the commercial aviation business has been more reliable. Rating Buy to Hold ↓ Unfortunately, there have been no clear signs of major improvement in those Source: Deutsche Bank businesses this year despite the company wide restructuring program. While Price/price relative we wouldn't necessarily expect a quick and dramatic change in the commercial aviation market as a result of this deal, we do believe that it adds an additional 60 hurdle to the one well performing business segment which itself is about to enter 40 a transition period that could cause issues. 20
0 Valuation & Risks Jan '16 Jul '16 Jan '17 Jul '17 We are lowering our price target by $3 to $23 which is based on a modestly Embraer BOVESPA (Rebased) lower EV/EBITDA multiple of ~6.5x (was ~7x) times our 2018 estimates. This is a ~40% discount the commercial aero target EV/EBITDA and aligns with the Performance (%) 1m 3m 12m Absolute -10.2 10.6 17.4 current discount to peers which we believe is warranted given the increasing BOVESPA 1.5 17.5 24.5 competitive dynamics within commercial aviation along with the still uncertain Source: Deutsche Bank executive aviation environment. Downside risks: political & currency instability, bizjet market weakness, reduced order activity, & defense spending cuts. Upside risks: stronger than expected bizjet or EJet orders/deliveries, faster FCF recovery, **Deutsche Bank AG and/or affiliate(s) is increased demand for KC390 and other defense programs. acting as advisor to Airbus SE and have provided fairness opinion in relation to the potential acquisition of 50.01% of CSALP Forecasts and ratios from Bombardier Inc. and the Government Year End Dec 31 2015A 2016A 2017E 2018E 2019E of Quebec. Revenue (USDm) 5,928 6,218 5,784 5,489 5,851 EBITDA (USDm) 715 826 780 737 864 EPS (USD) 0.74 2.37 1.67 1.35 1.76 Source: Deutsche Bank estimates, company data
Deutsche Bank AG/London Page 9
18 October 2017 CEEMEA & Latam Daybook
Global Emerging Markets Industry Date Brazil 17 October 2017 Aerospace Latam Airlines Sep Q 2017 Preview Forecast Change
Michael Linenberg Research Analyst Most profitable Sep Q in 7 years (+1) 212 250-9254 [email protected]
Solid top-line growth drives strongest Sep Q in 7 years Catherine O’Brien We are projecting our Latam airline coverage universe to generate a Sep Q Research Analyst operating profit of $750 mm (34% higher y-o-y) and an operating margin of (+1) 212 250-8949 10.3% (+1.8 points y-o-y) which would be the sector's best showing in 7 years. [email protected] Underlying our forecast is top-line growth of 10.7% (vs. 13.3% in prior Q) which more than offsets the 8.5% increase in costs. The two drivers of top-line Matt Fallon growth: capacity +8.4% and unit revenue ("RASK") +2.2%. We favor Buy-rated names with the most exposure to economies that are expected to see the Research Associate greatest improvement over the next 12-18 months: AZUL, LTM, CPA & GOL. (+1) 212 250-7161 [email protected] A tale of two regions as Brazil outperforms, Mexico underperforms We are raising our Sep Q and 2017 earnings outlook for Azul and GOL as both Key Changes airlines are benefiting from an improving macro backdrop as well as significant ancillary growth driven primarily by loyalty programs and the implementation Company Target Price Rating of domestic bag fees. Conversely, we are lowering our earnings forecasts for GOL.N 20.00 to - 27.00(USD) Aeromexico and Volaris due to the impact of several natural disasters (e.g. four VLRS.N 13.00 to - Caribbean hurricanes and two earthquakes in Mexico), FX-driven demand 12.00(USD) weakness (notably northbound-US VFR/leisure traffic) and “pockets” of intense MPLU3.SA 55.00 to - pricing actions in the domestic market. Furthermore, of our universe of 7 50.00(BRL) airlines, only Aeromexico and Volaris are likely to see Sep Q margins contract. SMLE3.SA 80.00 to - 97.00(BRL) Not surprisingly, early cyclicals outperforming late cyclicals Like most transportation stocks, airline stocks tend to materially outperform Source: Deutsche Bank the market in the earlier stages of an economic cycle. Late cycle they are prone to underperformance given their sensitivity to the economy and the fact that investors have historically not been compensated for owning airline stocks heading into a recession. As such, Latam airline stocks with the most exposure to countries emerging from a recession (i.e. Brazil, Argentina) have been the best performers year-to-date, whereas names with the most exposure to regions which are arguably in the latter stages of economic recovery (i.e. Mexico, US) have lagged. (We would note that Avianca is a special situation; its lagging share price reflects several challenges unique to that company.) Loyalty programs benefitting from recovery, but lower rates impact results We saw strong points issued growth in 1H 2017 driven by improving consumer confidence, credit card spending, and air travel growth as the Brazilian economy rebounded. In 2H 2017, while we expect Smiles to continue to see points issued growth as its market share continues to “catch up” with GOL’s market share in Brazil, we are now forecasting a slight y-o-y decline at Multiplus. Furthermore, lower interest rates in Brazil will likely be positive for This report includes changes to price targets economic activity, but given the companies’ negative working capital requirements, interest income is an important contributor to net income which and/or estimates for several companies in will be negatively impacted by lower rates. We expect this to have a larger our Latam coverage universe. For details, impact on Multiplus as Smiles earns a higher rate of return on its pre- please see the Key Changes listed above, purchased tickets balance; as such, Smiles remains our top pick. Figures 5 – 7, and the Valuation and Risks Valuations not stretched; risk factors section on pages 8 – 10. On an EV/EBITDAR basis, Latam airlines are trading at 8.1x and 7.2x our 2017 and 2018 forecasts (with 2017 almost over), respectively (compared to the group’s historical trading range of 6x - 8x). Fuel price volatility is a key risk for the group. See pages 8 - 10 for more on valuation and key risk factors.
Deutsche Bank AG/London Page 10
17 October 2017 Retail B2W
18 October 2017 CEEMEADeutsche & Latam BankDaybook Markets Research
Rating Company Date Hold B2W 17 October 2017 Company Update Latin America Brazil Reuters Bloomberg Exchange Ticker Price at 16 Oct 2017 (BRL) 20.38 Retail BTOW3.SA BTOW3 BS SAO BTOW3 Target price 16.50 52-week range 25.67 - 9.80 First take on B2W market expansion Valuation & Risks
Marcel Moraes B2W entering the C2C business B2W recently announced that they should launch a marketplace platform for pre- Research Analyst owned goods as well as an expansion of their "Prime" services. The move comes +1-904-271-2470 on the tail end of Amazon's announcement to enter the Brazilian market through Kaila Lopez a marketplace platform selling electronics and other goods, posing a threat to Research Associate B2W and other marketplace platforms (MELI, VVAR11, MGLU3). We believe the +1-904-645-1197 recent news may bring some relief to B2W share price, as the stock is down ~18% since the local press aired the news about Amazon entering the Brazilian market Price/price relative through marketplace, but we maintain our cautious outlook on BTOW3 and Hold rating as we understand that increased overlap among all the different players 30 will probably cause a tougher competitive environment, potentially threatening 20 B2W's goal of generating cash in the foreseeable future. 10
0 Prime expansion to benefit shipping business Jan '16 Jul '16 Jan '17 Jul '17 B2W's Submarino Prime, a program that waives shipping fees on individual B2W BOVESPA (Rebased) purchases for one flat annual fee, currently only serves three major cities. Management stated that this service will expand to 2,500 cities by the end of Performance (%) 1m 3m 12m November 2017, while the new Americanas Prime should launch by around Absolute -4.4 59.8 30.6 BOVESPA 1.5 17.5 24.5 the same time in the Southeastern and Southern states (~65% of the Brazilian Source: Deutsche Bank consumer market). Finally, the Prime program will expand to also serve all marketplace sellers, as the service only applies to direct sales today. The main benefit to the company will be the added revenue to their shipping arm, B2W Entrega, as sellers using their shipping platform will receive preference for the Prime services. The firm expects to add 1.0-1.2mn products to their delivery system.
Recent announcements indicate increased competition ahead Historically there has been little overlap between pure marketplace platforms in Brazil, such as MercadoLibre (MELI; NR), and the traditional e-commerce players B2W, Magazine Luiza (MGLU3; NR), and Cnova (owned by Via Varejo, VVAR11; NR). B2W and other 1P players have traditionally focused on new branded products, while MercadoLibre's strength derived from the sale of niche offerings and pre-owned goods. This situation began to shift one year ago, when large e-commerce companies launched their marketplace platforms. In our view, the recent announcements indicate that the overlap between these platforms should increase in coming years, potentially deteriorating the competitive environment, which may cause downward pressure on the take rates (intermediation fee charged from sellers) or force marketplace operators to offer incremental benefits to sellers. Even if increased competition leads to improved service level and
Deutsche Bank Securities Inc. Distributed on: 17/10/2017 19:51:07 GMT Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider
Deutschethis report Bank as AG/London only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONSPage 11 ARE LOCATED IN APPENDIX 1. MCI (P) 083/04/2017. 0bed7b6cf11c
18 October 2017 CEEMEA & Latam Daybook
Rating Company Date Buy Vale 17 October 2017 Forecast Change Global Emerging Markets Brazil Reuters Bloomberg Exchange Ticker Price at 17 Oct 2017 (USD) 10.26 Metals & Mining VALE.N VALE UN NYS VALE Target price 12.00 52-week range 11.64 - 5.84
3Q17 Production Preview: Seasonal Chris Terry Research Analyst iron ore improvement (+1) 212 250-5434 [email protected] 3Q17: Higher production across all divisions expected Vale's 3Q17 production report is due on October 19th pre market (3Q17 Jorge Beristain, CFA financial result due October 26th). We expect iron ore production of 95mt (+4% Research Analyst QoQ, +3% YoY). An increase in 3Q17 (vs 2Q17) should take YTD production to (+1) 203 863-2381 273mt on our forecasts; on-track to meet annual guidance of 360-380mt. [email protected] Separately, China's Hebei province recently suspended the supply of explosives (environmentally driven) to local mines which could potentially impact 10.2mt of iron ore concentrate production (3-4% of domestic supply) Corinne Blanchard from October to March. This should aid high-grade iron ore exporters such as Research Associate Vale (Iron ore c.80% of Vale's 2017E EBITDA). Maintain Buy and $12/sh PT. (+1) 904 645-2360 [email protected] Production on track In keeping with past quarters, we expect Vale to release 3Q17 production for key commodities on October 19th and a full financial update for 3Q17 on Key changes October 26th. We expect total 3Q17 iron ore production of 95mt and pellet EPS (USD) 1.10 to 1.11 ↑ 0.6% production of 12.3mt. Given maintenance shutdowns in 2Q17 at Sudbury, we Revenue 33,029 to 33,199 ↑ 0.5% expect both copper and nickel to improve in 3Q17. In coal, we forecast a (USDm) continued steady ramp-up. We forecast 3Q17 EBITDA of $4.2bn, a 54% Source: Deutsche Bank improvement vs 2Q17. Figure 2 contains key 3Q17 forecasts. Price/price relative Other key events for Vale – further blending, completion of asset sales Vale will continue to develop blending capacity in China and Malaysia in order 12 to mix high grade production from the Northern System given the ramp-up of 10 S11D. We expect the strategy to work favorably by providing a product mix 8 consistent with Chinese steel industry requirements. By YE17, Vale expects to 6 close its fertilizer deal with Mosaic ($1.25bn cash expected). Mitsui’s Project 4 Financing is also expected to be completed by YE17 which could result in Vale 2 receiving over $2bn for bridge shareholder loans provided to fund Nacala 10/15 4/16 10/16 4/17 capex. In base metals, Vale is evaluating VNC given it has been loss making. Vale BOVESPA (Rebased) $12/sh PT unchanged, set at 1 x NPV, stock trading at 4.2x 2018E EBITDA Performance (%) 1m 3m 12m Our 12-month $12/sh PT is based on 1x NPV. Using a 2018E iron ore price of Absolute -5.4 10.3 80.6 $61/t (close to spot) results in a 2018E FCF yield of 11% and an EV/2018E EBITDA of 4.2x. We see any potential share price weakness from the BOVESPA 0.6 16.9 21.5 upcoming November – March Chinese heating season as a Buying opportunity. Source: Deutsche Bank Key risks include operational challenges, permitting delays, project execution, lower-than-expected iron ore, nickel and copper prices, higher-than-expected oil prices and unfavorable BRL/USD FX (see page 5 for further details). Forecasts And Ratios Year End Dec 31 2015A 2016A 2017E 2018E Revenue (USDm) 25,128 27,488 33,199 35,488 EBITDA (USDm) 6,646 11,780 14,502 14,970 Net Income (USDm) -12,036 5,212 5,949 6,478 EPS (USD) -2.35 0.77 1.11 1.25 % Change -0.0% 0.0% 0.6% 0.0% P/E (x) – 6.7 9.3 8.2 EV/EBITDA (x) 8.6 4.3 4.6 4.2 Source: Deutsche Bank estimates, company data ______
Deutsche Bank AG/London Page 12
16 October 2017 Banking / Finance Latam and CEEMEA Banks
18 October 2017 CEEMEADeutsche & Latam BankDaybook Markets Research
Latin America Industry Date 16 October 2017 Banking / Finance Latam and CEEMEA Banks Periodical
Global valuation matrix - CEEMEA banks recover as Latam dips Tito Labarta CEEMEA banks outperform for the week Latam banks fell 0.3% last week, as losses in Mexico (-4.6%), Panama (-1.7%), and Research Analyst Colombia (-1.0%) offset gains in Brazil (+1.6%), Peru (+1.2%), and Chile (+1.1%). +1-212-250-5944 Meanwhile, CEEMEA banks rose 1.9% led by South Africa (+6.9%), Russia Kazim Andac (+2.4%), and Turkey (+0.7%). EM (+0.9%) outperformed DM (-0.2%) banks . YTD, Research Analyst Latam banks (+32.0%) continue to outperform EM (+18.9%) and DM (+10.9%). +44-207-545-0427 An excel version of this report is available upon request. Ryan Ayache Latam banks fell last week, led by losses in Mexico Research Analyst Mexican banks underperformed, with losses at Gentera (-6.8%), Credito Real +971-4-428-3261 (-4.9%), Banorte (-4.3%), and Santander Mexico (-1.9%), as MXN fell 2.0% following news that Margarita Zavala was leaving the PAN and registering as Ivan Kachkovski, CFA an independent candidate, as well as increasing uncertainties regarding the Research Analyst renegotiation of NAFTA. Meanwhile, Brazilian banks rose 1.6%, as gains at +44-20-754-11735 Santander Brasil (+4.5%), Banco do Brasil (+2.0%), and Bradesco (+1.2%) offset mild losses at Itau (-0.1%). Bradesco announced the resignation of Chairman Stefan Swanepoel Lázaro Brandão, who has been at the bank since 1942 and will be replaced by Research Analyst CEO Luiz Trabuco. We view this as part of the bank's natural succession planning +27-11-775-7483 and do not expect any major changes in the direction of the bank. Mr. Trabuco’s replacement will be announced at the next Board meeting and will likely come Top picks from a deep bench of seven Executive VPs with extensive experience. Finally, Bolsa Mexicana Buy (BOLSAA.MX),MXN30.32 Chilean banks rose as gains at Santander Chile (+2.6%) offset losses at Banco de Credito Real (CREAL.MX),MXN30.85 Buy Chile (-0.3%) and Credicorp gained 1.2%, given a 3.5% increase in copper prices. Credicorp (BAP.N),USD208.66 Buy Banco do Brasil (BBAS3.SA),BRL37.42 Buy Non-bank financials recovered 0.5% last week, +34.6% YTD Gains at Porto Seguro (+1.8%) and Cielo (+1.4%) offset losses at Bolsa Mexicana Bancolombia (CIB.N),USD44.80 Buy Source: Deutsche Bank (-3.4%) and B3 (-0.3%). Bolsa released September operating data, showing relatively weak volumes for the quarter with equities flat qoq (-1% yoy) at Ps13.5bn and derivatives down 46% qoq (-48% yoy) to 41.7k contracts. This offset a spike in debt listings (+31% qoq, +52% yoy), but point to a relatively weak 3Q17.
CEEMEA banks rally, led by a rebound in South African banks (+6.9%) South Africa outperformed, as ZAR gained 3.6% after the Supreme Court opened the way for the reinstatement of charges against President Zuma. Russian banks gained 2.4%, as oil prices rose 4.4%. We expect 3Q17 earnings at Turkish banks to fall 11% qoq with swap-adjusted NIMs narrowing further and slower credit growth. Finally, MENA banks fell 2.0%, as losses in Saudi Arabia (-3.6%), Egypt (-1.9%), and Kuwait (-0.3%) offset gains in UAE (+3.4%) and Kuwait (+1.4%).
Deutsche Bank Securities Inc. Distributed on: 17/10/2017 03:51:10 GMT Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider
Deutschethis report Bank as AG/London only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONSPage 13 ARE LOCATED IN APPENDIX 1. MCI (P) 083/04/2017. 0bed7b6cf11c 17 October 2017 Banking / Finance Latin American Financials
18 October 2017 CEEMEADeutsche & Latam BankDaybook Markets Research
Latin America Industry Date 17 October 2017 Banking / Finance Latin American Financials Results
3Q17 preview: Brazil improves, but mixed trends in Mexico and Andes Tito Labarta Latam financials: 3Q17 earnings calendar We provide a summary of our earnings estimates and expected reporting dates Research Analyst for the Latam Financials we cover. Bolsa Mexicana kicks off the earnings season +1-212-250-5944 today after the close, followed by Banorte on Thursday and Bladex on Friday. Our preferred names into the quarter are Banco do Brasil on improving trends, Top picks Banco do Brasil (BBAS3.SA),BRL37.50 Buy Credicorp on lower provisions, and Credito Real on stronger loan growth, while Credito Real (CREAL.MX),MXN30.90 Buy Bladex and Gentera may disappoint the most on weak loan growth. Credicorp (BAP.N),USD208.34 Buy Source: Deutsche Bank Brazilian banks should show continued gradual improvement We expect fairly steady results at the Brazilian banks, as asset quality continues to improve, leading to lower provisions. Expenses should also be under control and fees can grow at a good pace. However, loan growth remains weak and NIMs face pressure from lower interest rates. We think trends will show the most improvement at Banco do Brasil, on good efficiency and as provisions continue to fall given stable asset quality, while NIM remains resilient. Itau should remain the most profitable, followed by Bradesco.
Non-bank financials show mixed trends We expect weaker qoq trends at B3, but still good growth on a yoy basis, while Valuation & Risks: lower volumes at Bolsa should lead to a relatively weak quarter. Results at Cielo Our PTs are derived from the GGM with ROEs from 12-23% and COEs of 10-15%. may continue to disappoint on still weak revenue trends and lower prepayment Main upside risks: NIM expansion and income. Finally, underwriting trends and investment income can improve at Porto better efficiency. Main downside risks: Seguro, but net income should suffer from a higher tax rate this quarter. slower loan growth and asset quality deterioration. Banorte and Credito Real should post strongest results in Mexico We expect healthy trends at Banorte, given steady loan growth and asset quality, while NIM continues to increase. Meanwhile, results at Santander Mexico should be impacted by lower trading gains, weak loan growth, and slightly higher provisions. Credito Real can deliver better results than expected on good loan growth, NIM expansion, and stable asset quality. Finally, results are likely to disappoint at Gentera from still weak loan growth and higher expenses.
Credicorp should deliver solid results, downside risks at other Andean banks Credicorp should be able to deliver solid results despite still weak loan growth, as provisions decline from stable asset quality. Meanwhile, results at the Chilean banks should decline on lower inflation in the quarter. We also see downside risks at Bancolombia from still high provisions and lower NIM. Finally, Bladex could disappoint on still weak loan growth and NIM pressures.
Deutsche Bank Securities Inc. Distributed on: 17/10/2017 13:30:11 GMT Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider
Deutschethis report Bank as AG/London only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONSPage 14 ARE LOCATED IN APPENDIX 1. MCI (P) 083/04/2017. 0bed7b6cf11c 17 October 2017 Oil & Gas Exploration & Production Integrated Oil/Refining
18 October 2017 CEEMEADeutsche & Latam BankDaybook Markets Research
Latin America Industry Date North America Integrated Oil/ 17 October 2017 Industrials Industry Update Integrated Oil Refining
3Q Upstream: Inflection Points
Ryan Todd Upstream Preview: E&Ps mostly unharmed, prefer EOG and DVN Although a steady stream of post-hurricane operations updates and pre- Research Analyst announcements (8 of the 17 E&Ps under coverage have pre-announced) has +1-212-250-8342 certainly removed some of the drama entering 3Q results, we still see plenty of David Fernandez opportunities for the group to show that operations are on (or back on?) track Research Associate following a noisy 2Q, that implied 4Q acceleration (6.2% sequential growth vs. +1-212-250-3191 4.6% in 3Q) is achievable, that current spacing assumptions are supportable, and to address ways to demonstrate "capital disciplined" growth in 2018. We prefer Joe McKay DVN and EOG. Research Associate +1-212-250-5717 Focus on capital discipline (implicit growth reduction?) comes into focus Although we expect few to provide explicit guidance, the early outlook for 2018 is Cheryl Kniatt likely to be a significant area of focus, particularly given: a) the growing investor Research Associate debate/pressure on capital discipline/returns vs. growth, and b) the rally in crude +1-212-250-4461 price, which is +20% since late June. Across the large-cap space, we expect a broad commitment to spend within cash flow (with various exceptions), and Top picks would expect budgets at present to largely anticipate a $50-$55/bbl world. We Concho Resources (CXO.N),USD133.27 Buy see annualized 4Q17 capital budgets as running ~4% in excess of CFO at the Devon Energy (DVN.N),USD35.85 Buy strip in 2018 (ex-EOG), with PXD/HES/QEP, as most exposed. We also look for EOG Resources (EOG.N),USD97.21 Buy clarity on potential response to a higher than expected crude price, including Source: Deutsche Bank additional drilling activity (EOG), buyback (COP), de-levering (CLR) and dividend growth (MRO).
4Q17 trajectory and the implication for 2018 Valuation and Risks With company production having slightly underwhelmed through the first Companies in our integrated/large-cap space are valued on either a EV/DACF half of the year (a significant factor in improved crude price sentiment) and multiple (CVX.N, XOM.N, COP.N, and hurricane-driven outages in 3Q, the implications for 4Q17 production are material OXY.N or on a blended NAV, EV/DACF acceleration to hit FY estimates. At the midpoint of FY guidance, we see implied multiple methodology. NAVs assume $60/ sequential L48 growth of 6.2% in 4Q17, vs. 4.6% in 3Q17 and 2.2% in 2Q17, bbl, $57/bbl, and $3.25/mcf for Brent, WTI and Henry Hub pricing resp. Primary raising the risk of disappointment at the corporate level (or possibly re-heightened downside risks include a decline in global oil fears around crude). OXY, MUR, QEP and NBL show the most aggressive demand and a decrease in the underlying acceleration vs. prior run rates. We expect the trajectory to continue the debate commodity. Upside risks include increased on 2018 US crude growth, with recent market sentiment moving sub-800 Mb/d, demand and increased operator efficiency. Companies in our refining coverage are and DBe at ~900 Mb/d. mostly valued under a 2018 multiple-based (EV/EBITDA) SOTP valuation. Upside risks Shares discounting $51/bbl long-term, but show ~9% downside to $50/bbl in include widening crude diffs, and gasoline 2018 inventory draws while key downside risks include tepid gasoline and distillate demand.
Deutsche Bank Securities Inc. Distributed on: 17/10/2017 09:54:36 GMT Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider
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18 October 2017 CEEMEADeutsche & Latam BankDaybook Markets Research
North America Periodical Date United States 17 October 2017 Industrials Metals & Mining Metals & Mining Periodical Alert
Jorge Beristain, CFA Chris Terry Daily prices and news: WSA raises Research Analyst Research Analyst (+1) 203 863-2381 (+1) 212 250-5434 2017/18 global steel demand outlook [email protected]@db.com
Industrials (/lb): aluminum $0.97 (+0.1%), copper $3.24 (+3.7%), lead $1.15 Jeremy Kliewer Sathish Kasinathan (+0.4%), molybdenum $7.14 (+0.0%); nickel $5.38 (+1.6%); zinc $1.45 (-1.3%); Research Associate Research Associate Precious (/oz): gold $1,295 (-0.7%), silver $17.23 (-1.1%); Steel (/mt): China (+1) 904 527-6532 (+1) 203 863-2358 HRC $645 (+2.9%), SHFE Rebar $579 (+2.4%), MB Scrap Index $295 (-3.2%); [email protected] [email protected] Bulks: iron ore (/dmt) $63 (+0.7%), coking coal (/mt) $182 (-0.1%), freight (BCI) 2,980 (+3.8%); Energy: Brent (/bbl) $57.82 (+1.1%), WTI (/bbl) $51.87 (+0.8%), natural gas (/mmBtu) $2.95 (-1.8%), thermal coal (/t) $93 (+0.2%). Corinne Blanchard Research Associate World Steel Association (WSA) expects global steel demand to rise 2.8% YoY (+1) 904 645-2360 (vs. April outlook for +1.3%) to 1.62bn tons in 2017 and +1.6% (vs. 0.9%) to [email protected]
1.65bn tons in 2018. WSA sees best balance of risks since WFC. Chinese consumption to be up 3.0% YoY (or 12.4% unadjusted) at 766m tons in 2017 Focus stocks and flat in 2018, as government resumes its economic rebalancing efforts and Barrick (ABX.N),USD16.24 Buy Price Target strengthens environmental protection. The US economic fundamentals remain USD19.00 robust supported by strong consumer spending and rising business Nucor (NUE.N),USD57.21 Buy Price Target confidence, with demand set to rise 4.8% (DBe 4.0%) to 96m tons in 2017 and USD70.00 1.1% (2.5%) to 97m tons in 2018. (WSA, DB) Pan American Silver (PAAS.OQ),USD16.98 Buy Price Target USD20.00 Demand for copper could be boosted by Electric Vehicles (EV), which require Reliance Steel & Alum. (RS.N),USD75.15 Buy 3-4x more copper compared to traditional fossil-fuel powered vehicles. Several Price Target USD95.00 factors are driving the price right now, from rising PMI’s globally to China’s Teck (TECK.N),USD23.00 Buy Price Target strong imports. Copper price is up 3.7% DoD to $3.24/lb. In September, China USD28.00 imported 430kt refined copper (+10% MoM) and 1.5mt of copper concentrates Vale (VALE.N),USD10.50 Buy Price Target (+2%). International Copper Association expects copper demand from EV’s to USD12.00 Source: Deutsche Bank rise from 185kt today to 1.74mt by 2027, with fewer deposits being discovered. (Mining.com) Price performance %WTD %YTD Crude steel output at members of China Iron & Steel Association (CISA) 3M LME aluminum 0.1% 26.2% averaged 1.87mt/day during Sept 21-30 (+1.1% sequentially, +8.9% YoY). 3M LME copper 3.7% 28.9% Finished steel inventory at mills totaled 12.1mt (-4.9%, -7.2%). CISA estimated 3M LME lead 0.4% 26.0% China’s total output at 2.4mt/day (+1%, +5.5%). Output in October is expected 3M LME molybdenum 0.0% 5.0% to drop as steel mills have begun production cuts. (SBB) 3M LME nickel 1.6% 18.4% 3M LME zinc -1.3% 24.0% NA Service Center steel shipments increased to 3.4m st (+1% MoM on days- Comex gold -0.7% 12.4% adj. basis, flat YoY) in September. Inventories rose 75kt (+1% MoM) to 9.0m st Comex silver -1.1% 8.2% (+3% YoY), vs. 10-year avg. decline of 96kt, implying 2.6 months of supply China HRC 2.9% 16.0% (+0.3 MoM). US SC shipment trend remains stable, up 3% YTD to 29.6m st, SHFE rebar 2.4% 38.0% including flat products of 22.5m st (+2% YoY), longs (3.9m st, +10%), stainless Iron ore (62% Fe) 0.7% -20.2% (1.4m, +4%) and pipe/tubes (1.7m, -5%). (MSCI) Coking coal, FOB Aus -0.1% -19.7% SQM announces end of conciliation stage in arbitration process related to Freight (BCI) 3.8% 115.2% Salar of Atacama. The conciliation stage has concluded without an agreement Brent 1.1% 1.8% between SQM and CORFO, hence the arbitration is expected to continue its WTI 0.8% -3.4% normal course. SQM remains convinced that it has fulfilled its obligations in Natgas -1.8% -20.9% the contract and expects to reach an agreement which will be beneficial to Thermal (Newcastle) 0.2% 5.6% both parties. (Company) Source: MB, Bloomberg Finance LP and Deutsche Bank
______Deutsche Bank Securities Inc. Distributed on: 17/10/2017 11:48:27 GMT The views expressed above accurately reflect the personal views of the authors about the subject companies and its(their) securities. The authors have not and will not receive any compensation for providing a specific recommendation or view. Deutsche Bank 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. Prices are current as of the end of the previous trading session unless otherwise indicated and are sourced Deutschefrom local Bank exchanges AG/London via Reuters, Bloomberg and other vendors. FOR OTHER IMPORTANT DISCLOSURES PLEASEPage 16
VISIT http://gm.db.com/ger/disclosure/DisclosureDirectory.eqsr; MCI (P) 083/04/2017. 0bed7b6cf11c 17 October 2017 Telecom LatAM TMT
18 October 2017 CEEMEA & Latam Daybook
Latin America Industry Date Brazil 17 October 2017 Mexico LatAM TMT Telecom Results
3Q17 Results Preview
Masha Kahn, CFA Expect a strong quarter for LatAM TMT stocks We publish our preview for Latin American telecom stocks under coverage - Research Analyst America Movil, Telefonica Brasil, TIM Brasil and Megacable. We see strong +1-212-250-9619 momentum for all companies given structural growth drivers - improved pricing in cable/fiber (Megacable in MX, AMX in Colombia, Vivo in Brazil), continued Top picks America Movil (AMX.N),USD18.34 Buy migration from pre-paid to post-paid (Vivo, AMX, TIM) and tax efficiencies for Megacable (MEGACPO.MX),MXN73.77 Buy Brazilian carriers. TIM Participacoes (TSU.N),USD19.08 Buy Telefonica Brasil (VIV.N),USD16.06 Buy TIM Brasil - Top pick into 3Q results. Buy US$22 PT - 16% upside Source: Deutsche Bank On a short-term basis we think TIM Brasil performs the best with another beat and raise quarter ahead. It is rare to see a telco grow EBITDA at 15% but we think Companies featured TIM Brasil can do this two quarters in a row. We think consensus expectations America Movil (AMX.N),USD18.34 Buy for 2H17E and 2018 are still low for TIM and will move higher. 2016A 2017E 2018E EPS (MXN) 0.13 1.29 0.98 Telefonica Brasil - Buy, 27% upside to US$21 PT P/E (x) 90.6 13.6 18.0 Vivo is unlikely to surprise as much due to tougher YoY comps given DBe 150m EV/EBITDA (x) 5.9 6.4 6.2 roaming revenues from Nextel deal in 3Q16. However, stripping that out organic Megacable (MEGACPO.MX),MXN73.77 Buy mobile net service revenue growth should accelerate to ~6% YoY (vs 5% in 2Q17). 2016A 2017E 2018E The company is just starting to utilize tax efficiencies and upgraded their pre- EPS (MXN) 4.20 4.66 5.21 paid and control packaged to VAS packages (~20% of ARPU allocated to content) P/E (x) 17.0 15.8 14.1 but will see a greater effect once it introduces tax efficient VAS into its post-paid EV/EBITDA (x) 9.3 8.6 7.7 offering. Also recent price increases in post-paid make us more optimistic in terms TIM Participacoes (TSU.N),USD19.08 Buy of 2018E outlook for Telefonica Brasil. 2016A 2017E 2018E EPS (BRL) 0.31 0.45 0.62 America Movil -Buy, 19% upside to US$21 PT P/E (x) 24.3 27.0 19.4 AMXis still facing very easy YoY comps and should see service revenue growth EV/EBITDA (x) 4.1 5.6 5.2 accelerate from 3.1% in 1Q17 and 4.2% YoY in 2Q17 to 4.4% in 3Q17E on our Telefonica Brasil (VIV.N),USD16.06 Buy estimates. We think Mexico, Argentina, Chile and Peru will continue to surprise 2016A 2017E 2018E to the upside, but Brazil will still lag vs peers (we think Brazil is a 2H18E story for EPS (BRL) 2.42 2.55 3.25 AMX). The key number to watch is the EBITDA margin in Mexico that declined P/E (x) 16.9 19.9 15.6 sequentially in 2Q17 and we think should rebound in 3Q17E. EV/EBITDA (x) 5.2 6.2 5.8 Source: Deutsche Bank
Megacable - Buy, 27% upside to MXN 94 PT Megacableis seeing good momentum in both B2C and corporate businesses with its Metrocarrier/SME business growing at 30+% YoY with more acceleration yet to come. We think consensus is yet to incorporate potential upside from Megacable's partnership with Red Compartida that will help generate additional revenues and expand fiber footprint significantly. On the B2C side, pricing power has come back with some price increases in June (followed another one recently/
Deutsche Bank AG/London Page 17
17 October 2017 EM Daily
18 October 2017 CEEMEADeutsche & Latam BankDaybook Markets Research
Asia Emerging Markets Date Global 17 October 2017 Latin America EM Daily
Argentina - Position for the upturn
Drausio Giacomelli To watch BRL: Economic Activity (Aug'17,MoM). Previously 0.40%. DB expects -0.20%. Strategist BRL: FGV Inflation IGP-10 (Oct'17,MoM). Previously 0.39%. DB expects 0.45%. +1-212-250-7355 COP: Trade Balance(Aug'17). Prev. USD-520.1mn. DB expects USD-1000mn. Hongtao Jiang ZAR: CPI (Sep'17, YoY). Previously 4.8%. DB expects 4.9% Strategist +1-212-250-2524
Argentina - Position for the upturn Jed Evans Argentina's FX and fixed income markets have had a relatively muted response Strategist to the recent upside surprises in both domestic activity and better-than-expected +1-212-250-8605 primary results / electoral polls since the PASO. In this report we review recent macro developments and outlook in Argentina, and discuss how to position for Figure 1: FX Best/Worst Performers this stage in the cycle. In our view, this muted response is natural at this stage of Daily Return (%) the cycle and the policy priorities of this administration. The need to fund widening 0. 67% MXN current account deficits and anchor disinflation requires tighter monetary policy PHP 0. 12% for longer, which weighs on fixed income. ARS 0. 00%
RON Although this mix still supports carry, an overvalued currency requires more active 0. 00% management of USD shorts. The choice of instrument in the short-end of local HUF -0. 53% markets is important given wide dispersion in valuations. The macro dynamics COP -0. 55% favors floating rates over fixed rate instruments given both supply and monetary TRY -1.03% policy risks. At the mid-section of the curve (up to 22s), the flat forward curve ZAR -1. 15% implied by the BOTEs and the adverse carry/roll and skew also underscore our Source: Bloomberg Finance LP preference for floaters. BOPOM 20s offer superior liquidity and remain a popular choice in positioning for carry, but valuation looks very rich according to our analysis. A back-loaded fiscal adjustment, which would pick up after presidential Figure 2: CDS Best/Worst elections in 2019 (assuming the incumbent is re-elected) is consistent with a back- Performers loaded real depreciation – not appreciation – in longer tenors. This argues for a Daily Return (%) preference of external bonds for duration exposure. MX 0. 34% CR 0. 32% While valuation in credit looks tight vs. its current credit standing, there is still SV 0. 31% scope for further tightening due to a). Potential multiple-notch credit ascension BR 0. 20% if politics stay on track; b). The flattening of spread / quality curve in EM credit CZ 0. 00% markets under the long-term constructive external backdrop of continued inflows; RU -0. 04% and c). Alternative opportunities (with spread pickup) offered by EUR bonds, TR -0. 09% select local law USD bonds, and select provincial bonds. While we retain our ZA -0. 18% long-held constructive view on GDP Warrants on our belief that the government Source: Bloomberg Finance LP will eventually go with the market-friendly resolution on the choice of base case GDP, we would only look to buy on dips given the uncertainty in growth (near
Deutsche Bank Securities Inc. Distributed on: 18/10/2017 00:12:08 GMT
DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 083/04/2017. Deutsche Bank AG/London Page 18
0bed7b6cf11c
18 October 2017 CEEMEADeutsche & Latam BankDaybook Research
Emerging Markets Economics Special Report Date Colombia Foreign Exchange 17 October 2017
Rates Credit Cesar Arias
Economist (+1) 212 250-0664 Colombia: Cyclical external correction, [email protected]
independents lead election campaign Guilherme Marone
Cyclical improvement in external deficits, structural vulnerabilities remain Strategist Large external imbalances are narrowing and currency volatility is falling, but (+1) 212 250-8640 both improvements are contingent on commodity prices and risk appetite. We [email protected] expect the current account deficit to moderate to 3.5% of GDP in 2018-2019 from 5.4% in 2015-2016, but remain well above the Latin American average of Sebastian A. Brown 2.3%. In our view, Dutch disease and high fiscal deficits would prevent a faster Strategist correction of Colombia’s structural external vulnerabilities. (+1) 212 250-8191 Cautious market approach to the COP despite lower volatility [email protected]
Currency stability seems well-supported by improved terms of trade, balanced external flows and the range-bound trajectory of global oil prices. Our Hongtao Jiang valuation models suggest that the USD/COP cross could be undervalued by up Strategist to 9%, while spot returns have trailed those of other Latin American currencies (+1) 212 250-2524 so far this year. We think that there is merit in the market’s cautious approach [email protected] towards COP. The country remains a large net external debtor and a high share of portfolio inflows renders it vulnerable to sudden shifts in investor sentiment.
Elections 2018: Dissatisfaction and polarization favor independents Public dissatisfaction with the political system after successive corruption scandals and polarizing peace controversies is increasing the appeal of independents. Democratic institutions and macroeconomic management do not seem to be at risk. However, the tone of the campaign and electoral outcome could have implications for the economy and asset prices. Political polarization is weighing on business confidence, the economic recovery and could call for a more decisive monetary stimulus. Weakened commitment to the fiscal rule, entitlement reforms and controlling the costs of peace could trigger market corrections and resume pressure on sovereign ratings. Rates strategy: Gearing towards accommodation We have been recommending two positions in Colombia: an overweight in the front end, as a monetary policy play, and a swap spread compression in the long end of the curve. After a frustrating July/August, when we almost touched the stops, these views finally started working, although slowly. Trades: Buy COLTES 20 (target 5.20) and receive IBR 1Y1Y sector (target 4.50). We also keep the overweight in the long end of Coltes (vs IBR), as flows have been favorable, but tightening the stops. FX strategy: A good entry point for a short COP position The COP’s twin deficits and the prospects of near zero real rates would eventually lead to a correction of the COP, which with elections drawing near and an easing cycle in the pipeline, begins to seem increasingly likely. Because a sudden rally of oil prices is always a risk on short COP positions, we recommend buying RUB/COP. The RUB ranks particularly well among EM/FX on metrics such as balance of payments, the current stage of its business cycle, and the economy’s real rates. Credit strategy: Stay overweight despite recent underperformance We moved Colombia to overweight (from neutral) last month to position for its potential outperformance. However, such a scenario has not materialized as Colombia credit trajectory during the past month has been in line with the EM investment grade average. This came in contrast to its solid performance of local bonds and the COP. We nevertheless see the catalysts for outperformance drawing from cyclical improvements in both activity and external deficits and alleviated fiscal pressure, and hence retain overweight.
______DeutscheDeutsche Bank Bank AG/London Securities Inc. Distributed on: 17/10/2017 20:18:27Page GMT 19
DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 083/04/2017. 0bed7b6cf11c
18 October 2017 CEEMEADeutsche & Latam BankDaybook Markets Research
Emerging Markets Economics Special Report Date Foreign Exchange 17 October 2017
FX Spot Sebastian A. Brown Strategist (+1) 212 250-8191 BRL - Can flows pick up the baton from [email protected]
carry?
BRL’s outperformance likely to continue The BRL’s recent outperformance on the back of the Brazilian government’s successful auctions of exploration rights and energy concessions are not due to a one-off. BRL drivers: from carry to capital flows Our expectation of an increase of growth-driven capital flows into Brazil lead us to believe that BoP strength rather than the BRL’s carry could now hold the baton as a driver of the BRL’s strength. Significant FDI inflows in the pipeline We expect FDI inflows into Brazil to remain positive and even strengthen further if China’s plans to invest over USD 20bn next year comes to fruition. Increasingly stable external financing mix As FDI inflows strengthen portfolio flows have weakened significantly which (at least on the fixed income front) has been surprising. Yet the end result has been an improvement of the stability of Brazil’s external financing profile. Light foreign positioning on equities and improving growth prospects The economic upturn and the under-allocation of foreigners into Brazil’s local equity markets are together likely to result in further foreign inflows into Brazil especially as the BCB continues easing monetary conditions Long BRL, pick your funding We recommend being long BRL/CLP as the CLP’s rally has the peso well above estimated fair value especially as inflation weakens. Also, if the EUR resumes an appreciation phase we think the USD/BRL could test 3.0. A more conservative implementation would fund a long BRL position with a basket of USD and EUR.
______DeutscheDeutsche Bank Bank AG/London Securities Inc. Distributed on: 17/10/2017 06:00:00Page GMT 20
DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 083/04/2017. 0bed7b6cf11c 17 October 2017 Brazil Update
18 October 2017 CEEMEADeutsche & Latam BankDaybook Research
Latin America Economics Date Brazil Brazil Update 17 October 2017
Services were weaker than expected in August Jose Carlos Faria Highlights: Chief Economist ■ Services declined 1.0% MoM in August, worse than expected +55-11-2113-5185 ■ More reports about a minimalist pension reform
■ We expect the August IBC-Br to fall 0.2% MoM
Deutsche Bank AG/London Distributed on: 17/10/2017 17:57:07 GMT
DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 083/04/2017. Deutsche Bank AG/London Page 21
0bed7b6cf11c 18 October 2017 CEEMEA & Latam Daybook
Economic Calendar Country GMT Release DB Expected Actual Consensus Previous
Monday, 16 October BR 07:00 FGV CPI IPC-S (Oct) 0.15% 0.14% CZ 07:00 PPI (Sep) -1.40% TR 07:00 Unemployment rate (Jul) 10.2%rate CZ 08:00 Current account balance(and BoP) (Aug), CZK, bn -CZK27.4bn RO 08:00 Current account balance (Aug), EUR, m -EUR3,631.0m PL 12:00 Current account balance(and BoP) (Aug), EUR, m -EUR878.0m PE 12:00* GDP (Aug), nsa -2.20% -1.60% BR 12:00* Tax Collections (Sep), BRL, m BRL102.0m BRL104,206.0m PE 12:00* Unemployment (Sep) 6.5%rate 6.7%rate US 12:30 NY Fed Empire State Survey (Oct), Index 20 20.7 24.4 PL 13:00 Central budget balance(Ytd) (Sep), PLN, bn PLN4.9bn
Tuesday, 17 October HU 07:00 Construction (Aug), nsa -22.60% HU 07:00 Current account balance(monthly) (Aug), EUR, m EUR10.3m IL 10:00 GDP saar (final) (Q2), saar 1.40% PL 12:00 Avg. gross wages (Sep), nsa -6.60% CO 12:00 Industrial production (Aug) -6.20% RU 12:00* Industrial production (Sep)* -1.50% CO 12:00 Retail sales (Aug) -3.10% US 12:30 Export Prices (Sep), sa 0.40% 0.6% (2.3%) US 12:30 Import Prices (Sep), sa 0.60% 0.6% (2.1%) US 12:30 Non-Petroleum Import Prices (Sep), sa 0.3% (1.0%) US 13:15 Capacity Utilization (Sep) 74.1%rate 76.2%rate 76.1%rate US 13:15 IP (Sep) -2.00% 0.20% -0.9% (1.5%) US 14:00 NAHB Housing Market Index (Oct), Index 64 64 64 US 20:00 Net Foreign Sec Purchase (Aug), USD, bn, chg USD1.3bn
Wednesday, 18 October BR 07:00 FGV Inflation IGP-10 (Oct) 0.45% 0.39% BR 07:30 Economic Activity (Aug) 0.00% 0.40% ZA 08:00 CPI (Sep) 0.3% (4.9%) 0.1% (4.8%) RU 11:00* PPI (Sep)* -4.70% ZA 11:00 Retail sales (Aug) -1.80% PL 12:00 Industrial production (Sep), nsa -8.80% PL 12:00 Retail sales (Sep) -7.60% CO 12:00 Trade Balance (Aug), USD, m -USD1,000.0m -USD520.1m US 12:30 Building Permits (Sep), k 1,200.0k 1,245.0k 1,300.0k US 12:30 Housing Starts (Sep), k 1,200.0k 1,180.0k 1,180.0k RU 13:00 Disposable income (Sep) -0.30% RU 13:00 Retail sales (Sep) -1.90% RU 13:00 Unemployment rate (Sep) 4.9%rate RU 13:00 Weekly CPI (Oct) 0.00%
Thursday, 19 October IL 06:00 12M fwd avg CPI forecasts (Sep) -0.60% HU 07:00 Avg. gross wages (Aug), nsa -13.10% EG 10:00* Merchandise trade balance (Aug), USD, m -USD2,350.0m -USD3,497.0m TR 12:00 CBT FX reserves (Oct), USD, bn USD93.7bn US 12:30 Continuing Claims (Oct), k 1,889.0k US 12:30 Initial Jobless Claims (Oct), k 240.0k 243.0k US 12:30 Philly Fed (Oct), Index 20 22 23.8 Source: Deutsche Bank
Page 22 Deutsche Bank AG/London
18 October 2017 CEEMEA & Latam Daybook
Indices Region/Country Index Price local Vol ($m) Price Performance in %($ Terms) 17-Oct-17 1D 1 W 1 M Ytd 3 Y 5 Y 10 Y EM MSCI EMF 60,070.44 na -0.3 1.0 3.0 26.1 27.4 33.8 13.2 EMEA MSCI EMEA 529.40 na -0.5 1.1 2.7 8.3 13.7 20.0 3.4 LatAm MSCI LatAm 86,288.64 na -0.3 -0.3 1.0 20.0 21.0 17.5 9.9 Asia MSCI Asia 910.74 na -0.2 1.3 3.4 31.5 33.4 44.2 18.9 CEEMA Czech Republic PX 1,055.99 26 0.2 0.7 0.2 34.5 12.2 -8.5 -50.7 Greece ASE 761.82 45 -0.9 0.4 -3.5 32.2 -24.7 -21.1 -87.9 Hungary BSE 38,909.78 39 -1.1 2.7 0.2 36.4 101.3 63.2 -6.3 Israel TA-25 1,444.59 170 -0.5 -0.3 2.4 7.7 7.1 26.8 38.7 Poland WIG 64,854.15 241 -1.4 0.5 -0.2 45.6 12.9 26.8 -26.1 Russia RTS$ 1,146.62 499 -1.0 1.0 2.1 -0.5 6.9 -24.3 -46.9 Turkey ISE 100 106,990.87 1408 -0.4 3.6 -7.2 31.2 -13.5 -26.0 -39.2 Bahrain BHSEASI 1,282.73 2 0.3 0.9 -1.3 5.1 -11.4 20.0 -50.9 Egypt CASE 13,525.48 41 0.0 -2.2 -0.5 13.2 -36.1 -19.6 -52.9 Jordan ASEGI 2,099.21 4 -0.2 0.0 -1.7 -3.3 0.2 10.1 -38.0 Kuwait KWSEIDX 6,648.30 40 0.2 0.6 -3.9 17.2 -14.3 4.0 -53.3 Oman MSM30 5,088.71 6 -0.1 -0.8 1.8 -12.0 -26.0 -10.9 -34.3 Qatar DSM20 8,229.27 47 -0.8 -0.3 -1.7 -21.2 -36.4 -3.6 -4.7 Saudi Arabia TASI 6,992.30 657 0.2 -0.7 -5.6 -3.0 -26.7 2.7 -10.7 UAE, Abu Dhabi ADSMI 4,488.72 26 -0.8 0.4 0.9 -1.3 -5.9 69.0 NA UAE, Dubai DFMGI 3,643.37 128 -0.4 1.0 0.3 3.2 -14.7 121.7 -21.5 South Africa JSE All Share 57,882.67 1510 -1.3 2.2 2.1 17.1 0.0 -0.5 -5.0 ASIA China HSCCI 4,396.24 536 0.1 0.4 0.9 21.7 -0.3 5.7 -32.4 China A-Shares SHASHR 3,531.32 24110 -0.7 -1.1 -0.5 13.9 33.2 51.2 -36.8 India BSE 30 32,609.16 52 -0.5 2.6 -0.4 27.9 18.0 42.5 5.8 Indonesia JSE CI 5,947.33 465 -0.4 0.2 -0.4 25.4 8.9 22.8 86.2 Korea KOSPI 2,484.37 4616 -0.2 2.3 4.0 30.5 23.0 24.0 1.5 Malaysia KLCI 1,748.99 219 -0.5 -0.8 -2.9 13.1 -24.2 -24.3 1.8 Pakistan KSE 29,158.71 92 -0.5 -0.2 -4.1 -12.1 29.3 139.3 63.3 Philippines MSE CI 8,497.74 168 0.5 1.5 3.8 20.1 6.2 25.4 94.5 Taiwan TWSE 10,723.15 3744 -0.6 2.3 0.9 24.1 26.9 39.0 21.2 Thailand SET 1,724.47 1743 -0.3 1.4 3.8 20.9 10.4 22.5 101.1 LATAM Argentina MERVAL 26,622.44 27 -1.9 -1.2 9.9 44.2 23.4 194.0 116.8 Brazil BOVESPA 76,201.25 1997 -0.5 -0.3 -1.0 30.4 5.4 -18.5 NA Chile IPSA 5,483.30 188 -0.7 1.1 5.8 42.1 37.2 -3.6 29.4 Colombia IGBC 11,030.57 na -0.9 -0.1 -2.8 11.2 -41.0 -54.1 -26.2 Mexico IPC 50,140.52 669 1.4 -1.3 -6.6 19.9 -17.5 -20.7 -12.6 Peru IBVL 19,694.52 625 -0.4 2.5 8.7 30.9 9.3 -27.3 -18.1 Venezuela BVC 561.75 108 2.1 5.8 41.3 -98.2 11476.7 64314.8 326318.5 Source: Bloomberg Finance LP
Deutsche Bank AG/London Page 23
18 October 2017 CEEMEA & Latam Daybook
Currencies Country Currency Last Price Price Performance Forecasts 17-Oct-17 1D 1 W 1 M Ytd 3 Y 5 Y 3M 6M 12M EMEA
Czech Republic CZK 21.9 0.4 0.4 0.5 -14.1 1.8 15.3 21.9 21.8 21.4 Hungary HUF 262.3 0.5 0.4 1.4 -10.5 9.5 23.0 265.3 264.7 260.0 Israel ILS 3.5 0.5 0.5 -0.3 -8.4 -5.7 -8.2 3.5 3.5 3.4 Poland PLN 3.6 0.5 -0.2 0.5 -13.8 8.9 14.6 3.6 3.6 3.6 Russia RUB 57.5 0.4 -0.7 -0.9 -6.2 41.3 86.0 56.6 56.8 57.0 Turkey TRY 3.7 1.0 0.4 5.7 4.4 63.8 104.0 3.8 3.8 3.9 South Africa ZAR 13.5 1.1 -0.9 1.2 -1.9 21.3 55.1 12.4 12.3 12.0
ASIA China CNY 6.6 0.4 0.6 0.9 -4.8 8.0 5.4 6.9 7.0 7.1 India INR 65.0 0.4 -0.2 1.4 -4.3 5.7 22.6 66.0 66.0 66.0 Indonesia IDR 13,506.5 0.2 -0.1 1.9 0.4 11.3 40.3 13,820.0 13,940.0 14,180.0 Korea KRW 1,132.5 0.4 -0.2 0.5 -6.2 6.2 2.6 1,170.0 1,190.0 1,200.0 Malaysia MYR 4.2 0.2 0.0 0.8 -5.8 28.8 38.5 4.4 4.4 4.6 Pakistan PKR 105.4 0.2 0.2 0.0 0.8 2.4 10.0 na na na Philippines PHP 51.3 -0.1 0.0 0.5 3.3 14.3 23.7 52.6 52.9 53.5 Taiwan TWD 30.2 0.2 -0.1 0.4 -6.3 -0.7 2.9 31.2 31.5 31.9 Thailand THB 33.1 0.2 -0.3 0.1 -7.6 2.2 8.1 33.7 33.9 34.2
LATAM Argentina ARS 17.3 0.0 -0.5 2.1 8.5 104.5 265.7 18.3 19.0 20.3 Brazil BRL 3.2 0.4 0.4 1.6 -2.3 29.9 55.9 3.2 3.2 3.3 Chile CLP 622.9 0.5 -0.6 -0.5 -6.6 6.1 31.3 632.0 633.0 640.0 Mexico MXN 19.1 -0.2 2.0 7.5 -7.6 41.1 48.1 18.2 19.1 18.8 Colombia COP 2,947.2 0.4 -0.2 1.5 -1.8 42.6 63.2 2,990.1 3,005.0 3,034.7 Peru PEN 3.2 0.1 -0.4 0.0 -3.2 11.9 25.4 3.2 3.2 3.2
Other Nations Euro EUR 0.9 0.5 0.9 1.8 -10.4 8.6 11.2 0.8 0.8 0.8 UK GBP 0.8 0.8 0.2 2.6 -6.5 22.2 21.9 0.8 0.8 0.8 Switzerland CHF 1.0 0.7 0.8 2.1 -3.7 3.6 5.9 0.9 0.9 0.9 Japan JPY 112.4 0.6 0.1 0.8 -3.9 5.3 41.2 117.0 118.0 120.0 Hong Kong HKD 7.8 0.0 0.0 -0.1 0.7 0.6 0.3 7.8 7.8 7.8 Source: Bloomberg Financial LP
Page 24 Deutsche Bank AG/London
18 October 2017 CEEMEA & Latam Daybook
Commodities Price local Performance (% ) Forecasts
17-Oct-17 1D 1 W 1 M Ytd 3 Y 5 Y 10 Y 2016E 2017E 2018E
BASE METAL
Aluminium ($/mt) 2,140.0 0.2 0.5 2.0 26.4 9.7 9.4 -14.4 1788 1728 1670
Copper ($/mt) 7,027.0 -1.5 3.3 8.1 26.9 3.3 -13.5 -12.7 5900 5725 6800
Nickel ($/mt) 11,702.5 -0.9 5.8 5.2 17.4 -28.1 -30.6 -62.8 10625 11250 12500
Iron Ore($/mt) 52.7 -15.3 -16.2 -30.0 -32.5 -37.2 -53.9 na 69 54 56
Zinc ($/mt) 3,130.0 -5.8 -5.3 4.5 22.1 34.7 66.8 2.8 3100 2538 2100
Tin ($/mt) 20,775.0 -0.2 -0.2 0.1 -1.5 3.1 -3.0 26.7 20510 19613 19408
OIL
WTI (Oil) 51.9 0.0 1.1 4.0 -3.4 -36.6 -43.7 -40.8 54 60 62
PRECIOUS METAL
Gold ($/Oz.) 1,284.6 -0.8 -0.5 -3.4 11.5 4.2 -26.5 68.9 1203 1255 1288
Palladium Spot $/Oz 982.5 0.8 2.0 6.2 44.3 23.9 53.6 165.7 748 783 850
Platinum Spot $/Oz 934.6 0.4 0.2 -5.1 3.4 -26.1 -43.1 -34.0 996 1125 1250
Silver Spot $/Oz 17.0 -1.5 -1.2 -4.6 6.6 -2.4 -48.5 24.5 17.2 18.5 19.0 Source: Bloomberg Financial LP
Deutsche Bank AG/London Page 25
18 October 2017 CEEMEA & Latam Daybook
8 E 8 NA NA NA NA NA NA NA 21.9 32.6 31.6 31.3 25.7 98.0 42.0 26.3 33.0 50. 43.7 17.5 32.9 24.0 62.8 94.8 22.2 71.7 32.6 30.4 49.2 13.2 18.5 28.9 23.9 56.2
201
E 7 NA NA NA NA NA NA (% GDP) 23.3 31.8 31.8 31.9 26.9 84.8 42.2 26.6 35.6 55.8 45.4 17.8 33.3 24.5 69.8 95.3 24.3 72.0 33.6 36.3 50.1 41.0 13.0 19.3 31.1 24.7 62.1 201 Total Ext Debt
E 8 NA NA NA NA
43.1 38.5 38.7 50.1 79.5 25.6 46.2 45.2 27.6 16.6 33.3 45.0 56.7 45.5 36.2 95.2 71.5 60.0 53.9 15.7 19.1 52.1 27.7 19.0 42.1 67.4 28.5 42.6 65.6 201
E 7 NA NA NA NA (% GDP) 44.2 38.1 38.0 45.2 76.3 23.6 45.2 46.2 25.5 17.3 33.3 44.8 54.8 44.9 36.6 72.8 60.4 53.3 15.2 15.6 51.7 28.4 19.1 41.6 69.1 27.4 41.5 66.3 100.4 201 Total Govt Debt
4 3 0 E - - 8 2.8 0.4 1.9 5.5 7.6 2.9 3.4 2.0 3.5 3.7 3.1 5.4 3.5 2.8 1.3 3.1 9.9 2.4 2.5 2.9 2.2 9.5 3.3 1.5 1.4 3.0 0.1 0.3 0.7 ------15.7
- 201
2 4 E - 7 3.6 3.6 1.3 3.5 2.3 2.5 2.7 2.1 9.5 3.6 2.2 3. 1.7 3.2 2.6 0.5 2.0 6.2 8.1 2.9 3.7 2.4 3.0 3.8 3.2 5.7 0.1 0.3 0.7 0.3 ------(% GDP) 14.2 10.9 01 - - 2 Fiscal Balance Balance Fiscal
E .3 8 3.2 1.9 1.4 6.8 2.8 4.5 1.5 1.4 3.5 1.4 4.5 3.3 2.3 1.4 2.1 1.1 2.2 3.8 0.3 2.6 3.5 2 3.0 3.2 3.5 1.1 5.1 2.5 2.0 8.6 1.2 1.0 ------11.9
201
E 7 2.9 1.9 1.2 6.8 2.2 4.7 1.2 1.6 3.5 0.6 3.4 3.4 1.7 1.6 3.3 1.2 1.8 5.1 0.5 3.0 3.6 3.0 3.5 2.9 3.5 1.3 5.7 2.7 1.0 9.4 1.5 1.2 ------(% GDP) 12.7 CA BalanceCA 201
E 8 2.0 1.4 0.4 2.5 0.5 6.5 1.9 3.7 4.0 4.4 8.4 3.3 2.7 4.5 3.2 2.1 2.5 3.4 1.5 1.6 3.4 2.8 3.1 3.7 2.4 5.8 3.1 2.2 16.9 17.6 16.9 109.2 201 2068.5
CPI
8 E 7 (YoY %) 8. 2.2 1.5 0.3 2.3 0.1 6.5 1.8 3.9 4.0 5.2 3.3 1.7 3.3 3.9 2.2 3.5 3.2 0.8 0.5 3.5 2.3 4.4 5.8 3.1 7.2 2.3 2.4 10.8 27.1 44.6 29.9 720.5 201
E 14 14 10 7 NA NA NA NA NA NA NA 6201 8540 1928 3854 9762 2982 6748 9797 6139 6671 8005 13764 40515 13649 10683 10525 29339 24028 87180 30650 18116 201 231284 113454 GDP per Capita ($)
E 7 NA NA NA NA NA NA NA 135 353 519 352 836 313 313 566 447 610 261 303 212 252 191 1294 3954 4965 2519 1009 1496 2033 1569 ($bn) 18700 27619 12038 201 GDP Nominal
E .8 8 4.1 2.5 2.3 4.0 2.8 6.0 2.3 4.9 2.4 2.0 0.7 3.7 2.7 6.3 7.5 4.8 2.7 5.0 5.7 2.2 3.6 2.8 2.6 2.8 3.0 4.1 3.5 3.6 3.6 3.4 1 1.6 1.7 -
201
E 7 7.4 1.6 2.0 2.7 2.9 6.0 1.1 4.7 2.2 2.2 1.8 4.8 2.7 6.7 6.5 5.0 2.9 5.5 6.4 2.2 3.7 2.7 0.7 1.5 3.8 3.5 3.8 3.6 3.6 3.9 2.0 1.6 0.8 (YoY %) - GDP Growth 201
s
a
Deutsche Bank, IMF Bank, Deutsche
Macro Data US Europe Japan Source: ASIA LATAM EM Mexico Peru Venezuela CEEMEA Brazil Chile Colombia Taiwan Thailand LATAM Argentin Korea Malaysia Philippine ASIA China India Indonesia South AfricaSouth Turkey United Emirates Arab Kazakhstan Poland Russia Arabia Saudi Egypt Hungary Israel Country CEEMEA Republic Czech
Page 26 Deutsche Bank AG/London
18 October 2017 CEEMEA & Latam Daybook
Interest Rates Yield Change in bps (%) 1 M 1 Y Czech Republic CZK_SW05/6MF/ICAP 0.91 -12 33 Hungary HUF_SW05/6MF 1.12 -26 -35 Israel ILS_SW05 0.82 -10 5 Poland PLN_SW05/6MF/ICAP 2.28 -14 29 Russia RUB_SW05/ICAP 6.80 -33 -140 Saudi Arabia SAR_SW05 3.05 -51 -16 South Africa - ZAR_SW05 7.35 -12 -118 Turkey TRY_SW05 10.77 -15 103
Argentina - ARG ARS BONAR V 3.82 292 84 Brazil - BRL PRE 5Y 10.84 66 -154 Chile - CLP SWAP 5Y 3.38 -7 -72 Colombia - COP_USD_SWAP 5Y 5.14 -18 -161 Mexico - MXN TIIE 5Y 7.16 -11 168 Peru - PEN Nominal/PERUGB AUG 20 4.14 -25 -124 Source: Deutsche Bank
Country Risk 10Yr Credit Default Swap(Bps) (CEEMEA)
Source: Deutsche Bank
Country Risk 10Yr Credit Default Swap(Bps)
Source: Deutsche Bank
Deutsche Bank AG/London Page 27
18 October 2017 CEEMEA & Latam Daybook
P/BV valuation – By Countries GEM Country Current P/BV Current P/BV versus Current P/BV relative to country's 10-year EM P/BV , versus 10- historical average P/BV year historical average
EM 1.82 5.3% 0.0% DM 2.33 18.6% 9.4% US 3.18 28.8% 18.3% Brazil 1.74 3.4% -0.8% Chile 1.94 -5.4% -11.0% China 2.07 7.6% 4.2% Colombia 1.33 -21.6% -26.2% Czech Republic 1.37 -23.5% -26.4% Egypt 3.13 43.8% 37.5% Greece 0.51 -55.2% -56.8% Hungary 1.91 48.4% 41.9% India 3.22 3.5% -2.2% Indonesia 2.98 -16.9% -21.4% Korea 1.23 1.3% -4.0% Malaysia 1.66 -17.5% -23.1% Mexico 2.63 -4.9% -11.8% Peru 2.48 -21.9% -23.9% Philippines 2.56 -5.7% -13.4% Poland 1.55 10.1% 4.3% Qatar 1.48 -26.3% -30.2% Russia 0.77 -20.6% -22.2% South Africa 2.57 4.2% -3.2% Taiwan 2.15 17.9% 10.0% Thailand 2.18 5.5% -2.2% Turkey 1.49 -5.6% -11.3% UAE 1.65 24.9% 16.1% Source: Deutsche Bank
P/BV valuation – By EM Sector GEM Sector Current P/BV Current P/BV versus Current P/BV relative to EM sector's 10-year historical P/BV , versus 10-year average P/BV historical average EM 1.82 5.3% 0.0% Consumer Discretionary 2.30 7.6% 0.4% Consumer Staples 3.96 10.7% 1.8% Energy 0.91 -24.3% -25.7% Financials 1.32 -14.7% -18.5% Health Care 3.99 10.1% 0.9% Industrial 1.54 -6.2% -10.6% Information Technology 3.34 53.0% 42.7% Materials 1.54 -4.4% -7.5% Real Estate 1.62 19.7% 7.8% Telco 2.06 -11.8% -17.0% Utilities 1.15 -0.2% -7.0% Source: Deutsche Bank
Page 28 Deutsche Bank AG/London
18 October 2017 CEEMEA & Latam Daybook
CEEMEA valuation 10/17/17 Daily YTD Price EV/EBITDA (x) P/E (x) P/BV (x) Div Yld % (US$ m) Company Ticker Rating Price Change % Change % Target 2017E 2018E 2017E 2018E 2017E 2017E Mkt Cap
Banks Abu Dhabi Comm Bank ADCB.AD Buy 7.37 -0.8 6.8 8.80 15.6 16.3 9.3 8.2 1.3 5.7 10396 Akbank AKBNK.IS Hold 9.61 -1.2 17.7 10.40 16.6 16.1 7.1 6.6 1.1 2.3 10441 Al Rajhi Bank 1120.SE Buy 64.30 0.9 2.1 71.50 16.3 16.4 11.9 11.1 1.9 3.5 27861 Alawwal bank 1040.SE Hold 11.88 2.1 -14.8 12.50 8.7 13.0 12.1 7.5 1.0 2.1 3621 Alinma Bank 1150.SE Hold 17.98 -0.8 19.1 17.00 9.2 11.1 14.8 11.7 1.3 3.3 7138 Arab National Bank 1080.SE Hold 24.00 1.7 8.4 26.25 12.7 12.6 7.9 7.4 1.0 3.7 6400 Bank Saint-Petersburg BSPB.MM Sell 54.00 -2.0 -13.8 32.00 5.2 NA na na 0.4 NA 413 Banque Saudi Fransi 1050.SE Hold 28.25 1.1 8.3 32.25 13.0 13.3 8.6 8.1 1.1 3.7 9045 Barclays Africa Group BGAJ.J Buy 146 -3.0 -12.1 175.00 15.2 14.3 7.9 7.5 1.1 7.2 9167 Capitec Bank CPIJ.J Sell 933 -2.9 36.8 360.00 25.7 25.4 28.7 24.7 6.8 1.3 8020 CIB COMI.CA Hold 75.50 -0.4 6.2 73.00 36.3 33.1 10.6 9.2 3.0 2.1 4937 Dubai Islamic Bank DISB.DU Buy 6.16 -0.8 10.6 7.30 22.4 21.1 8.5 8.7 1.7 7.5 8271 Emirates NBD ENBD.DU Buy 8.48 0.0 -0.1 12.75 16.7 16.0 6.5 6.1 1.0 5.5 12831 First Abu Dhabi Bank FAB.AD Hold 10.35 -1.4 8.1 11.40 12.2 12.5 10.9 10.1 1.2 5.0 30582 Garanti GARAN.IS Buy 10.27 -0.6 29.1 11.40 16.2 16.0 7.1 6.4 1.1 2.9 11716 Halkbank HALKB.IS Hold 11.71 -1.6 20.1 15.00 16.7 15.3 3.8 3.6 0.6 1.7 3976 Isbank ISCTR.IS Hold 6.89 -1.3 27.4 7.70 14.2 13.7 5.8 5.4 0.8 3.8 8422 National Bank of Kuwait NBKK.KW Buy 785 -0.2 22.0 850.00 11.1 13.9 14.6 10.7 0.0 3.4 15106 NCB 1180.SE Hold 48.60 -1.0 14.1 48.00 17.5 17.2 10.4 9.8 1.7 3.3 25878 Nedbank NEDJ.J Buy 215 -1.5 -7.8 225.00 14.6 14.6 9.1 8.5 1.3 5.8 7660 Qatar National Bank QNBK.QA Buy 124 3.7 -14.3 150.00 20.7 19.1 8.8 8.1 1.6 3.6 31506 RAKBANK RAKB.AD Hold 4.95 1.0 0.0 5.05 10.8 11.9 9.9 9.0 1.1 6.1 2259 Riyad Bank 1010.SE Hold 11.12 0.7 -3.7 10.50 9.0 10.0 9.9 8.7 0.9 5.8 8895 Samba Financial Group 1090.SE Hold 22.12 -0.7 -9.1 24.00 11.1 11.6 8.7 8.0 1.0 4.3 11180 Saudi British Bank 1060.SE Buy 26.30 0.0 5.2 29.00 13.1 13.1 9.4 8.9 1.2 2.9 10519 Sberbank SBER.MM Buy 197 -0.6 21.3 215.00 20.2 19.6 7.0 6.2 1.3 0.0 75179 Standard Bank SBKJ.J Buy 169 -2.6 13.5 170.00 16.3 16.3 10.8 10.1 1.7 5.1 20382 TCS TCSq.L Sell 17.25 1.8 63.5 7.30 31.1 29.8 16.8 14.0 4.7 1.7 3151 Vakifbank VAKBN.IS Hold 6.27 -0.5 38.1 6.90 15.8 14.7 4.7 4.4 0.7 0.8 4258 VTB VTBRq.L Sell 2.12 -0.6 -11.2 0.80 2.3 NA na na 0.5 0.0 13732 Yapi Kredi Bank YKBNK.IS Hold 4.43 -0.3 23.7 4.80 12.2 12.4 5.7 5.0 0.7 0.0 5231
Consumer Discretionary Al Tayyar 1810.SE Buy 33.05 -0.1 -9.9 45.00 6.8 6.3 9.4 9.3 1.1 3.0 1848 Alhokair 4240.SE Hold 41.45 1.0 12.7 42.00 12.3 11.5 19.5 19.2 3.0 0.0 2321 Cyfrowy Polsat CPS.WA Hold 25.30 -2.0 19.3 28.00 7.1 6.7 14.8 12.8 1.3 1.3 4491 Herfy 6002.SE Buy 49.90 -0.2 -36.0 70.00 10.8 9.8 14.0 12.7 3.6 4.3 861 Imperial IPLJ.J Hold 198 -3.6 10.7 205.00 6.0 5.5 13.8 11.6 2.0 4.4 2861 Jarir Marketing 4190.SE Hold 146 -1.6 26.2 137.00 16.0 14.7 16.4 15.3 7.7 4.8 3504 LPP LPPP.WA Hold 8,136 -3.1 66.3 7,000.00 18.0 15.5 36.2 30.9 6.0 0.4 4140 Mr Price MRPJ.J Buy 185 -1.5 18.2 192.00 13.3 11.9 21.5 18.8 7.0 3.7 3516 Naspers NPNJn.J Buy 3,267 -0.7 65.3 3,552.00 1,463.5 240.2 39.0 43.9 7.0 0.3 104717 Richemont CFRJ.J Buy 121 -1.2 35.9 105.00 17.4 14.3 29.9 23.6 2.8 2.0 50708 SACO 4008.SE Hold 110 0.0 29.1 90.00 14.9 13.3 19.5 17.4 4.9 4.1 704 STAR SRRJ.J Buy 25.00 -0.4 14.6 24.00 14.3 12.7 26.2 24.4 1.6 1.9 6412 Steinhoff SNHJ.J Hold 60.00 -1.8 -14.2 70.00 9.6 8.4 12.2 10.7 1.0 0.8 18996 Super Group SPGJ.J Buy 41.13 -2.6 8.5 46.00 6.2 5.0 11.7 10.9 1.7 1.6 1065 The Foschini Group Ltd TFGJ.J Hold 138 -2.8 -11.3 142.00 8.4 8.3 13.6 13.0 3.2 5.1 2184 Truworths TRUJ.J Buy 75.74 -3.8 -3.1 92.00 7.8 7.3 12.7 10.9 3.6 5.9 2412 Woolworths Holdings Ltd WHLJ.J Hold 59.80 -3.3 -14.2 61.00 8.6 8.7 17.7 14.8 3.0 5.3 4272
Consumer Staples Almarai 2280.SE Sell 57.80 -0.3 6.9 48.00 17.4 16.4 25.9 24.3 4.0 1.2 15412 AVI AVIJ.J Buy 97.45 -1.7 8.7 110.00 11.9 10.7 18.5 17.3 6.5 3.9 2355 BidCorp BIDJ.J Hold 311 -2.4 29.1 305.00 15.7 14.1 22.2 23.2 4.4 1.6 7665 British American Tobacco BTIJ.J Buy 864 0.0 13.2 600.00 13.8 na 18.1 na 0.2 3.5 110538 Clicks Group Ltd CLSJ.J Hold 158 -3.3 39.5 127.00 17.9 16.0 32.0 28.0 13.0 2.0 2791 Eurocash EUR.WA Buy 38.12 -2.2 12.4 42.00 12.4 10.8 30.1 23.8 4.6 1.9 1470 Lenta LNTAq.L Hold 5.97 -2.0 -27.2 6.80 7.4 6.5 12.6 10.7 2.3 0.0 2905 Magnit MGNTq.L Hold 38.19 -1.0 -12.9 44.00 10.9 9.5 20.2 17.3 4.7 2.5 18056 Magnit MGNT.MM Hold 9,332 -1.4 -8.9 10,800.00 9.4 8.3 17.2 14.8 4.0 2.9 15347 Massmart MSMJ.J Hold 114 -3.2 -7.8 119.00 8.3 7.6 20.2 17.7 3.6 2.5 1835 Othaim 4001.SE Hold 118 -0.8 19.8 116.00 14.8 12.8 18.9 16.7 3.7 1.7 1416 Pick'n Pay Stores PIKJ.J Hold 60.10 -0.7 -3.9 62.00 10.9 9.9 28.6 21.7 7.2 2.7 2155 Pioneer PFGJ.J Buy 117 -4.7 -22.5 130.00 12.9 8.8 22.7 14.7 3.3 2.7 1629 Shoprite SHPJ.J Hold 213 -2.9 26.6 204.00 11.3 10.3 19.4 18.7 4.3 2.5 8597 Spar Group Limited SPPJ.J Hold 172 -2.9 -11.5 167.00 11.9 10.9 18.0 16.4 5.3 3.6 2462 Tiger Brands TBSJ.J Hold 392 -1.8 0.4 410.00 12.8 11.5 18.6 16.6 3.8 2.7 4837 X5 Retail Group PJPq.L Buy 41.06 -0.8 26.5 57.00 8.2 6.7 17.8 13.5 3.9 0.8 11149 EV/EBITDA for Banks has been replaced by ROE The Daily and YTD % Price changes refer to the change in US dollar value of the stock Source: Deutsche Bank, Companies
Deutsche Bank AG/London Page 29
18 October 2017 CEEMEA & Latam Daybook
CEEMEA valuation 10/17/17 Daily YTD Price EV/EBITDA (x) P/E (x) P/BV (x) Div Yld % (US$ m) Company Ticker Rating Price Change % Change % Target 2017E 2018E 2017E 2018E 2017E 2017E Mkt Cap
Diversified Financials Alexander Forbes AFHJ.J Buy 6.93 -1.4 -11.1 7.70 na na 11.0 10.2 na 5.2 593 Brait BATJ.J Buy 55.15 -2.9 -35.8 64.00 na na na na na NA 2075 Coronation CMLJ.J Sell 71.92 -3.3 4.0 64.00 12.3 12.3 16.4 14.6 12.3 6.1 1870 FirstRand FSRJ.J Hold 52.58 -2.5 0.8 50.00 3.0 3.0 10.8 11.3 2.7 4.9 21922 Investec INLJ.J Buy 98.83 -1.0 11.0 101.50 1.3 1.3 11.4 9.2 1.4 4.2 6522 Investec INVP.L Buy 560 -0.8 11.6 580.00 0.0 0.0 12.4 9.6 0.0 4.3 6543 JSE JSEJ.J Buy 136 -0.2 -15.8 144.00 10.9 8.6 14.8 12.3 3.8 4.1 865 Moscow Exchange MOEX.MM Buy 120 -1.4 2.2 185.00 5.4 5.1 11.0 10.7 2.1 6.6 4672 Peregrine PGRJ.J Buy 29.50 -2.0 0.2 31.75 na na 12.9 10.1 na 4.4 463 RMB Holdings Ltd RMHJ.J Buy 64.26 -2.2 -1.4 63.00 2.4 2.4 11.7 11.1 2.2 5.0 6744 Transaction Capital TCPJ.J Buy 14.94 -1.3 5.3 15.75 2.9 2.9 15.6 13.5 2.7 2.4 664
Energy Dana Gas DANA.AD Hold 0.73 -2.7 35.2 0.62 20.9 21.4 na na 0.5 0.0 1385 Gazprom GAZP.MM Hold 125 -1.9 -13.7 115.00 3.7 3.6 3.7 3.4 0.2 6.8 48104 Gazprom Neft SIBN.MM Hold 233 -1.1 16.1 220.00 4.0 3.5 4.4 3.6 0.7 4.6 19131 Gulf Int'l Services GISS.QA Buy 18.70 3.1 -39.9 27.00 9.4 7.7 32.0 13.9 0.9 5.1 955 KazMunaiGas E&P KMGq.L Buy 9.66 0.3 25.6 12.00 0.1 0.1 6.4 11.0 0.6 1.5 3959 LUKOIL LKOH.MM Buy 3,003 -0.9 -7.2 3,800.00 3.3 3.3 6.6 6.6 0.7 6.3 37235 Novatek NVTKq.L Hold 117 -1.4 -9.6 102.00 10.9 10.4 15.2 12.8 2.8 2.1 35422 Rosneft ROSN.MM Buy 328 0.6 -13.2 390.00 5.3 4.5 6.3 5.2 1.0 3.0 60457 Sasol SOLJ.J Hold 392 -1.0 0.2 360.00 6.0 7.1 11.0 12.2 1.1 4.0 17798 Surgutneftegaz SNGS.MM Hold 29.60 -1.1 1.9 29.00 3.2 3.6 4.6 5.7 0.4 2.0 22356 Surgutneftegaz SNGS_p.MM Buy 29.81 -0.7 -0.9 32.00 3.2 3.7 4.6 5.7 0.4 2.0 22515 Tatneft TATN.MM Buy 425 -1.4 6.2 520.00 4.4 4.8 6.9 7.5 1.3 5.5 16648 TMK TRMKq.L Buy 5.32 -2.0 4.3 7.00 6.6 7.1 12.1 19.6 1.7 2.9 1398 Transneft TRNF_p.MM Buy 187,350 3.8 0.9 245,000.00 3.8 3.6 6.2 6.1 0.8 4.3 23211
Health Care Aspen APNJ.J Hold 316 -3.0 13.5 305.00 15.5 13.5 21.4 17.9 3.0 0.9 10715 IDH IDHC.L Hold 3.93 1.7 16.4 3.21 16.6 13.9 26.4 21.7 4.6 3.6 590 Life HC LHCJ.J Hold 26.21 -4.6 -18.0 30.60 9.1 8.7 14.5 15.9 2.7 4.2 2491 MDMG MDMGq.L Buy 10.50 0.0 11.9 13.80 10.8 10.6 16.4 16.6 3.2 1.7 786 Mediclinic MEIJ.J Hold 114 -5.0 -10.3 150.00 12.9 11.0 20.6 16.2 0.0 1.2 6268 Mediclinic International MDCM.L Hold 646 -5.1 -10.5 860.00 12.9 11.0 20.5 16.2 0.0 1.2 6266 Netcare NTCJ.J Hold 25.15 -2.7 -19.5 29.20 8.9 8.4 13.3 12.6 2.8 4.0 2555 NMC Health NMC.L Buy 2,843 -2.6 96.9 2,820.00 24.3 19.1 38.8 27.8 7.1 0.5 7709 SPIMACO 2070.SE Buy 30.20 -0.5 -26.0 50.00 16.7 15.4 14.3 13.4 1.2 3.3 966
Industrials Arabtec Holding ARTC.DU Hold 2.98 -0.7 -44.2 2.96 16.1 14.2 na 85.2 3.1 0.0 1217 Barloworld BAWJ.J Hold 131 -2.1 13.4 128.00 5.1 4.7 13.7 11.3 1.4 2.9 2059 Bidvest BVTJ.J Hold 177 -2.0 -0.7 168.00 7.7 7.9 14.7 14.1 2.7 3.0 4379 DP World DPW.DI Buy 22.80 -0.9 30.2 28.00 9.8 9.0 15.0 13.5 2.0 1.8 18924 Drake & Scull DSI.DU Hold 1.90 -2.6 -1.1 0.40 na 35.6 na 58.5 3.6 0.0 1165 Enka Insaat ENKAI.IS Hold 5.36 -1.0 -4.6 5.70 7.3 6.9 10.6 10.1 1.0 2.0 6115 Global Ports GLPRq.L Hold 3.94 0.0 -1.5 4.50 6.8 6.1 8.8 8.0 1.9 0.0 753 Globaltrans GLTRq.L Buy 9.39 -0.6 48.3 9.50 5.3 4.6 11.9 9.8 2.0 9.3 1678 Industries Qatar IQCD.QA Buy 95.00 3.7 -19.2 125.00 47.3 39.4 14.9 13.5 1.5 4.2 15787 Orascom Construction OC.DI Buy 7.30 -8.8 39.3 7.60 3.8 4.3 7.5 7.9 2.3 0.0 860 Tekfen Holding TKFEN.IS Hold 12.82 -1.1 90.1 10.70 6.2 6.0 8.1 7.9 1.7 2.4 1288
Insurance Discovery DSYJ.J Sell 144 -0.9 28.0 125.00 na na 19.9 17.2 na 1.3 6898 Liberty LBHJ.J Buy 110 -2.7 1.2 125.00 na na 10.9 9.6 na 6.5 2288 MMI MMIJ.J Hold 19.17 -3.1 -17.2 20.00 na na 9.6 8.9 na 8.2 2286 Old Mutual OMLJ.J Buy 35.31 -1.7 4.5 44.00 na na 0.1 0.1 na 340.7 12524 RMI RMIJ.J Hold 40.69 -0.8 4.2 41.00 na na 15.5 12.8 na 2.9 4495 Sanlam SLMJ.J Buy 71.75 -1.9 16.3 84.00 na na 15.2 13.2 na 4.1 10915
Santam SNTJ.J Hold 257 -1.7 11.7 285.00 na na na na na na na EV/EBITDA for Banks has been replaced by ROE The Daily and YTD % Price changes refer to the change in US dollar value of the stock Source: Deutsche Bank, Companies
Page 30 Deutsche Bank AG/London
18 October 2017 CEEMEA & Latam Daybook
CEEMEA valuation 10/17/17 Daily YTD Price EV/EBITDA (x) P/E (x) P/BV (x) Div Yld % (US$ m) Company Ticker Rating Price Change % Change % Target 2017E 2018E 2017E 2018E 2017E 2017E Mkt Cap
Materials Alrosa ALRS.MM Buy 79.37 -2.4 -13.2 97.00 5.2 4.7 9.6 8.6 1.8 4.4 9961 Amplats AMSJ.J Buy 367 -1.1 41.6 375.00 9.1 12.7 32.1 55.6 2.4 0.0 7160 AngloGold Ashanti ANGJ.J Hold 124 -4.6 -17.0 130.00 6.0 4.9 na 18.0 1.4 0.0 3814 Antofagasta PLC ANTO.L Sell 1,012 -2.9 60.3 800.00 7.1 6.8 18.8 18.4 1.8 3.0 13144 Erdemir EREGL.IS Sell 8.44 -1.4 57.3 7.30 5.6 6.4 8.0 9.9 1.8 9.5 8024 Evraz EVRE.L Hold 321 -1.2 54.5 295.00 4.5 5.3 5.8 7.5 5.0 7.2 5945 Gold Fields GFIJ.J Hold 56.12 -1.1 31.2 52.00 4.3 4.7 16.2 26.9 1.1 2.0 3424 Harmony HARJ.J Sell 23.46 -4.5 -24.2 20.00 7.3 3.7 13.6 17.4 0.4 4.3 764 Impala Platinum IMPJ.J Buy 31.59 -3.8 -24.7 35.00 7.7 9.9 na na 0.5 0.2 1686 KGHM KGH.WA Hold 126 -1.1 58.0 131.00 4.8 3.8 7.0 5.6 1.3 1.2 6992 Lonmin Plc LONJ.J Sell 14.92 -3.2 -35.2 9.50 0.5 na na na 0.2 0.0 313 Ma'aden 1211.SE Sell 49.90 0.2 28.0 31.00 23.4 17.5 81.3 43.9 2.2 0.0 15548 Magnitogorsk Steel MAGNq.L Hold 10.50 -0.9 50.4 7.80 4.8 5.3 8.5 11.0 1.6 2.4 8962 Mechel MTL.N Sell 5.14 3.8 -10.3 3.71 4.6 5.2 2.0 2.8 na 0.0 1498 Nampak NPKJ.J Buy 18.54 -1.5 1.8 22.50 5.0 4.3 8.6 8.4 1.1 0.0 883 NLMK NLMKq.L Sell 23.60 -0.2 26.9 16.80 6.2 7.5 10.7 14.4 2.1 7.0 14144 Norilsk Nickel NKELyq.L Hold 18.74 -0.6 11.6 18.40 8.7 7.6 12.0 10.7 8.3 10.1 29420 Northam NHMJ.J Hold 46.60 -1.1 17.3 48.00 22.0 16.0 na na 2.0 0.0 1212 Pfleiderer Group SA PFLP.WA Hold 43.95 -2.8 38.2 46.00 6.3 5.9 20.4 15.3 2.7 2.3 789 PHOSAGRO PHORq.L Hold 13.95 -1.8 -8.5 13.00 6.9 6.4 9.4 8.9 3.1 5.3 5420 Polymetal POLYP.L Hold 892 -1.4 11.5 870.00 8.2 7.5 14.6 13.2 4.1 2.1 4994 RBPlat RBPJ.J Hold 31.39 0.1 -10.1 31.00 28.2 428.2 346.1 na 0.5 0.0 449 SABIC 2010.SE Hold 98.20 -0.1 7.4 95.00 7.7 7.2 15.3 14.7 1.7 4.1 78555 Severstal SVSTq.L Hold 15.52 -1.7 2.1 14.20 5.5 5.5 8.1 8.6 3.7 9.2 12607 Sibanye Gold SGLJ.J Hold 16.25 -2.6 -34.8 15.50 6.2 5.0 na 28.0 1.5 1.9 2207 United Company RUSAL 0486.HK Sell 5.43 -1.3 64.3 4.32 8.7 7.8 6.8 5.9 2.3 2.8 10566
Real Estate Aldar Properties ALDR.AD Buy 2.48 -0.8 -5.7 3.00 8.1 8.5 10.0 10.8 0.8 4.4 5309 Attacq ATTJ.J Buy 19.08 -2.5 15.1 22.00 29.3 26.6 20.5 17.7 1.0 0.0 997 Damac Properties DAMAC.DU Hold 3.95 0.3 71.7 3.25 5.4 5.2 6.5 6.4 1.6 6.3 6506 Dar Al Arkan 4300.SE Hold 6.69 -1.5 8.8 6.00 18.4 16.7 27.7 22.7 0.4 0.0 1927 Emaar Economic City 4220.SE Hold 12.98 0.3 -24.3 12.10 60.3 44.7 75.9 46.8 1.3 0.0 2942 Emaar Malls EMAA.DU Hold 2.34 -0.4 -11.4 2.90 13.0 11.5 15.1 13.5 1.8 4.3 8291 Emaar Properties EMAR.DU Buy 8.71 0.1 22.0 10.70 9.0 8.3 10.1 9.4 1.4 2.4 16978 Emira Property Fund EMIJ.J Hold 13.57 -2.8 -3.2 14.50 12.3 12.1 14.1 10.6 0.8 0.0 503 Emlak REIT EKGYO.IS Hold 2.59 -1.4 -17.0 3.31 5.1 5.2 5.6 5.5 0.8 0.0 2673 Equites EQUJ.J Buy 21.75 1.0 40.3 21.50 18.9 13.0 7.8 17.8 1.5 0.0 480 Etalon Group ETLNGq.L Buy 4.19 -1.6 31.1 3.40 11.9 5.1 17.7 6.4 1.2 1.2 1224 Fortress FFBJ.J Hold 40.34 -1.3 27.2 42.00 20.3 19.3 10.3 17.4 0.9 0.0 3135 Fortress Income Fund Ltd FFAJ.J Hold 17.38 -1.8 6.9 18.80 12.4 12.0 5.5 8.2 0.4 0.0 1478 Growthpoint GRTJ.J Hold 25.41 -1.5 0.0 27.00 13.3 12.5 17.0 13.1 0.9 0.0 5404 Hyprop HYPJ.J Buy 110 -1.5 -4.5 125.00 17.3 17.5 18.9 15.1 1.1 0.0 2021 LSR LSRGq.L Hold 2.98 -0.3 -13.6 2.60 6.2 5.5 8.9 6.6 1.3 9.1 1535 Octodec Investments Ltd OCTJ.J Hold 23.54 -1.7 8.8 24.00 11.3 11.4 7.8 7.3 0.8 0.0 445 Palm Hills Developments PHDC.CA Buy 3.45 8.5 14.3 3.70 8.9 7.4 10.1 8.7 1.1 0.0 451 Redefine Properties Ltd RDFJ.J Buy 10.86 -1.9 -1.1 13.00 16.7 15.2 11.9 10.9 0.9 0.0 3795 Resilient Property Income Fund Ltd RESJ.J Hold 141 -1.6 25.7 140.00 34.9 33.7 17.2 22.7 1.7 0.0 4210 SA Corporate Real Estate Fund SACJ.J Hold 5.00 -2.5 -9.3 5.80 12.8 12.8 10.9 10.3 0.9 0.0 863 SODIC OCDI.CA Buy 15.80 5.7 9.1 16.40 7.8 4.7 10.7 7.4 1.3 0.0 303 TMG Holding TMGH.CA Buy 9.30 3.6 5.2 10.60 11.5 11.1 16.1 14.3 0.7 1.6 1088 Vukile Property Fund Ltd VKEJ.J Hold 20.05 -1.1 9.4 20.00 13.8 11.9 11.1 13.0 1.1 0.0 1026
Telecommunication Services Digi Communications DIGI.BX Hold 37.50 -0.7 -4.2 45.00 5.5 4.8 14.5 14.0 9.1 0.0 961 Etisalat ETEL.AD Sell 17.90 -0.6 -4.8 15.10 6.2 6.0 14.8 14.4 3.4 5.1 42383 MegaFon MFONq.L Buy 11.44 -1.5 21.1 15.50 5.3 5.0 15.6 12.9 3.0 4.9 6815 Mobily 7020.SE Sell 15.42 0.1 -35.7 12.00 5.6 5.4 na na 0.8 0.0 3166 MTN Group MTNJ.J Buy 125 -2.1 1.3 130.00 6.8 6.3 28.9 20.5 2.1 5.5 16967 MTS MBT.N Buy 10.54 0.1 15.7 12.50 4.9 4.7 10.4 10.5 4.4 8.7 10313 Ooredoo Group ORDS.QA Hold 86.40 4.2 -15.2 107.00 4.0 3.5 12.9 10.9 1.2 4.6 7602 Ooredoo Oman ORDS.OM Buy 0.50 0.4 -24.0 1.15 1.8 na 6.9 na 1.3 10.0 849 Saudi Telecom Company 7010.SE Buy 68.50 -0.4 -5.5 80.00 5.0 5.0 12.7 13.3 2.2 5.8 36531 Telecom Egypt ETEL.CA Buy 13.07 0.5 15.4 16.90 6.0 5.2 7.4 6.3 0.7 7.7 1264 Telkom SA Ltd TKGJ.J Hold 54.59 -3.5 -24.8 63.00 3.0 3.4 9.2 9.9 1.0 7.7 2086 Turk Telekom TTKOM.IS Hold 6.81 0.9 23.6 6.00 5.6 5.1 13.1 10.6 4.6 0.0 6474 Turkcell TCELL.IS Buy 14.11 2.8 38.6 17.00 6.7 5.9 12.6 10.5 2.3 10.0 8406 Vodacom VODJ.J Buy 154 -2.5 3.2 166.00 8.0 7.4 17.3 16.0 9.4 5.1 16851
Utilities CEZ CEZP.PR Buy 458 0.6 23.9 500.00 7.3 7.3 12.6 17.9 0.9 7.2 11139 Qatar Electricity & Water QEWC.QA Hold 180 4.2 -20.9 215.00 13.4 12.8 12.4 11.2 2.2 4.2 5429 Saudi Electricity Company 5110.SE Hold 23.68 2.3 5.8 17.10 12.0 12.1 39.9 39.4 1.5 0.6 26309 EV/EBITDA for Banks has been replaced by ROE The Daily and YTD % Price changes refer to the change in US dollar value of the stock Source: Deutsche Bank, Companies
Deutsche Bank AG/London Page 31
18 October 2017 CEEMEA & Latam Daybook
Latam valuation 10/17/17 Daily YTD Price EV/EBITDA (x) P/E (x) P/BV (x) Div Yld % (US$ m) Company Ticker Rating Price Change % Change % Target 2017E 2018E 2017E 2018E 2017E 2017E Mkt Cap
Banks Banco de Chile BCH.N Hold 93.41 -0.9 32.6 87.00 19.0 19.1 16.5 15.3 3.1 3.6 15198 Banco do Brasil BBAS3.SA Buy 37.56 -0.2 36.8 39.00 12.1 13.1 8.1 6.8 1.1 2.8 33854 Bancolombia CIB.N Buy 44.05 1.4 20.1 52.00 12.1 13.2 11.6 9.9 1.4 2.9 10592 Banorte GFNORTEO.MX Hold 119 0.6 26.3 123.00 16.0 16.9 13.9 12.1 2.7 4.4 17350 Bladex BLX.N Hold 28.95 -1.6 -1.7 25.00 8.5 9.3 13.1 11.6 1.1 5.4 1138 Bradesco BBD.N Hold 11.49 -0.1 31.9 8.00 17.1 18.2 10.9 9.8 2.0 3.0 69918 Credicorp BAP.N Buy 207 -0.6 34.4 242.00 17.9 18.0 14.1 12.3 2.4 2.2 16522 Itau Unibanco ITUB.N Hold 13.98 -0.1 36.0 11.00 20.1 21.0 11.6 10.2 2.3 3.8 90851 Santander Brasil BSBR.N Hold 9.62 -1.4 8.2 8.00 12.7 16.2 14.0 12.2 2.1 6.1 36378 Santander Chile BSAC.N Hold 31.06 -1.5 42.0 29.00 18.6 17.9 16.0 15.3 2.9 3.6 14633 Santander Mexico BSMX.N Hold 9.08 -2.2 26.3 11.00 16.0 15.7 12.9 12.0 2.0 3.7 12308
Consumer Discretionary Arezzo&Co ARZZ3.SA Hold 51.75 -3.6 111 32.00 20.8 18.2 31.3 28.0 6.8 2.9 1446 B2W BTOW3.SA Hold 19.24 -6.0 93.0 16.50 14.9 12.2 na na 2.3 0.0 2788 Cia Hering HGTX3.SA Hold 29.33 -0.6 98.5 23.00 17.7 15.3 18.4 17.9 3.8 4.6 1488 Falabella FAL.SN Hold 6,095 -0.6 22.7 7,215.00 18.0 17.0 27.8 25.1 3.3 1.4 23819 Liverpool LIVEPOLC1.MX Buy 144 3.5 4.4 204.00 11.0 9.6 18.6 14.9 2.2 0.6 10145 Lojas Americanas LAME4.SA Hold 17.99 -3.7 8.3 18.80 12.3 10.7 83.8 40.3 13.0 0.1 8124 Lojas Renner LREN3.SA Hold 35.95 -1.6 58.8 32.60 18.4 15.6 36.8 29.6 8.5 1.0 8042 Megacable MEGACPO.MX Buy 74.00 0.5 15.4 94.00 8.7 7.9 15.8 14.1 2.6 2.2 3332 Multiplus MPLU3.SA Buy 38.08 -2.5 15.3 50.00 7.7 6.7 12.3 11.2 24.7 8.1 1943 Smiles SMLE3.SA Buy 86.50 -2.1 97.9 97.00 14.3 13.2 17.8 17.0 19.9 5.3 3370
Consumer Staples Almacenes Exito IMI.CN Buy 15,860 -0.3 8.4 23,400.00 6.7 6.2 32.7 20.2 0.8 1.3 2409 AmBev ABEV.N Hold 6.83 -0.1 39.1 5.95 16.8 14.5 29.3 24.8 7.9 3.7 107257 Arca Continental AC.MX Hold 126 0.6 26.4 106.00 10.4 7.9 23.4 18.2 3.1 1.9 11663 BRF S.A. BRFS.N Hold 14.08 -1.3 -4.6 15.50 9.9 8.0 29.7 15.9 2.6 0.4 11250 CBD-GPA PCAR4.SA Buy 76.85 -0.6 43.6 109.00 8.7 7.9 34.4 23.8 2.5 0.4 6413 CCU CCU.N Hold 27.75 -0.4 32.3 25.00 10.6 9.7 25.2 21.9 2.8 2.2 5127 Cencosud CEN.SN Hold 1,910 -0.5 8.7 2,000.00 9.3 8.7 19.1 18.4 1.3 1.6 8716 Chedraui CHDRAUIB.MX Hold 37.73 2.5 10.0 40.00 6.7 5.7 17.7 15.5 1.3 0.0 1906 Coca-Cola Femsa KOF.N Hold 71.19 0.7 12.0 80.00 9.2 8.1 19.6 17.9 2.5 2.5 14956 Concha y Toro VCO.N Buy 36.98 -1.0 14.2 38.00 11.9 9.6 19.4 14.6 1.7 2.2 1381 Embotelladora Andina AKOb.N Buy 29.32 -0.6 30.5 32.00 10.3 9.0 26.1 22.1 3.4 2.4 4626 Femsa FMX.N Buy 93.03 -0.1 22.1 114.00 10.0 8.3 24.0 20.9 2.8 1.4 33288 Gruma GRUMAB.MX Buy 265 1.9 9.1 310.00 9.6 8.7 15.9 14.5 2.8 1.1 6013 Grupo Bimbo BIMBOA.MX Buy 45.79 3.0 5.5 58.00 10.0 8.2 28.1 20.4 3.3 0.7 11285 Kimberly-Clark de Mexico KIMBERA.MX Buy 34.09 5.2 -1.2 45.00 12.9 11.1 22.0 18.0 15.0 4.6 5511 Minerva BEEF3.SA Buy 11.65 -1.7 -1.9 24.25 6.5 5.2 21.1 34.1 6.4 5.6 828 Natura NATU3.SA Hold 30.30 -3.1 34.7 26.50 10.4 9.2 30.1 24.1 9.8 0.9 4110 Soriana SORIANAB.MX Hold 40.97 -1.2 -1.4 44.00 7.4 6.6 16.5 14.3 1.3 0.0 3864 Wal-Mart de Mexico WALMEX.MX Hold 43.77 1.0 27.9 47.00 13.8 12.7 24.8 22.3 5.1 5.6 40049
Diversified Financials B3 BVMF3.SA Buy 23.94 0.0 48.5 23.00 17.9 15.0 22.1 20.6 0.7 7.9 15499 Bolsa Mexicana BOLSAA.MX Buy 30.38 -0.4 20.5 40.00 10.8 10.2 16.8 15.9 na 4.1 944 Credito Real CREAL.MX Buy 30.62 -0.7 21.2 36.00 1.3 1.3 6.8 5.9 1.2 0.8 629 Gentera GENTERA.MX Hold 24.53 1.4 -20.4 35.00 2.5 2.5 9.9 8.7 2.2 3.1 2088
Energy Petrobras PETR4.SA Hold 16.13 -0.3 11.0 20.80 5.3 4.5 19.2 8.3 0.8 0.2 66186 Petrobras PETR3.SA Hold 16.61 -0.6 0.3 20.80 6.3 5.4 19.8 8.6 1.1 0.1 97425
Industrials Avianca Holdings S.A. AVH.N Hold 7.34 -0.7 -23.9 8.00 16.2 15.4 6.7 5.4 5.4 2.3 7350 Azul S.A. AZUL.N Buy 27.00 -0.2 25.6 31.00 27.3 21.1 161.8 61.1 12.8 0.0 8484 Copa Holdings, S.A. CPA.N Buy 127 -2.1 39.4 137.00 9.8 9.7 15.1 14.9 2.8 1.5 5370 Embraer ERJ.N Hold 20.31 -5.2 6.4 23.00 6.2 6.8 3.0 3.7 0.9 3.3 3757 GOL S.A. GOL.N Buy 22.59 -1.1 65.9 27.00 20.4 18.8 142.0 91.7 na 0.1 7848 Grupo Aeromexico AEROMEX.MX Hold 32.52 2.5 -10.0 35.00 7.4 5.7 210.1 9.9 1.5 0.0 1202 LATAM Airlines Group S.A. LTM.N Buy 13.62 -1.9 67.0 15.00 9.5 8.3 38.7 15.2 2.7 0.8 8259 Volaris VLRS.N Hold 10.88 -1.7 -27.7 12.00 132.4 65.9 na 112.6 20.0 0.0 11009
Information Technology Cielo CIEL3.SA Hold 21.95 -1.8 -19.5 26.00 12.8 11.8 15.3 14.7 4.0 3.2 18758
Insurance Porto Seguro PSSA3.SA Buy 37.70 -2.4 43.4 38.00 na na 12.3 11.0 1.8 3.3 3832
Materials Antofagasta PLC ANTO.L Sell 1,012 -2.9 60.3 800.00 7.1 6.8 18.8 18.4 1.8 3.0 13144 Cemex CX.N Buy 8.09 3.6 0.7 11.40 7.7 6.6 16.9 11.3 1.3 0.0 11603 Vale VALE.N Buy 10.26 -2.3 34.6 12.00 4.9 4.6 9.3 8.2 1.3 5.4 53092
Telecommunication Services America Movil AMX.N Buy 18.34 2.2 45.9 21.00 6.4 6.1 13.6 18.0 4.8 1.7 60281 Telefonica Brasil VIV.N Buy 16.05 -0.1 24.9 21.00 6.6 6.1 19.9 15.6 1.2 4.9 27104 TIM Participacoes TSU.N Buy 19.08 0.5 62.7 22.00 5.1 4.5 27.0 19.4 1.6 0.5 9236 EV/EBITDA for Banks has been replaced by ROE The Daily and YTD % Price changes refer to the change in US dollar value of the stock Source: Deutsche Bank, Companies
Page 32 Deutsche Bank AG/London
18 October 2017 CEEMEA & Latam Daybook
Appendix1
Important Disclosures
*Other information available upon request
Prices are current as of the end of the previous trading session unless otherwise indicated and are sourced from local exchanges via Reuters, Bloomberg and other vendors . Other information is sourced from Deutsche Bank, subject companies, and other sources. For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/DisclosureDirectory.eqsr. Aside from within this report, important conflict disclosures can also be found at https://gm.db.com/equities under the "Disclosures Lookup" and "Legal" tabs. Investors are strongly encouraged to review this information before investing.
Analyst Certification The views expressed in this report accurately reflect the personal views of the undersigned lead analyst about the subject issuers and the securities of those issuers. In addition, the undersigned lead analyst has not and will not receive any compensation for providing a specific recommendation or view in this report. Pascal Moura/Mairead Smith
Equity rating key Equity rating dispersion and banking relationships Buy: Based on a current 12- month view of total 1600 share-holder return (TSR = percentage change in 1400 46 % 47 % share price from current price to projected target price 1200 plus pro-jected dividend yield ) , we recommend that 1000 investors buy the stock. 800 600 37 % 32 % Sell: Based on a current 12-month view of total share- 400 7 % holder return, we recommend that investors sell the 200 17 % stock 0 Buy Hold Sell Hold: We take a neutral view on the stock 12-months out and, based on this time horizon, do not Companies Covered Cos. w/ Banking Relationship recommend either a Buy or Sell. Global Universe Newly issued research recommendations and target prices supersede previously published research.
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