10 November 2016 Americas/ Equity Research General Merchandise Stores

Natura Cosméticos S.A. (NATU3) Rating (from NEUTRAL) UNDERPERFORM Price (10-Nov-16,R$) 26.15 DOWNGRADE RATING Target price (R$) (from 35.00) 26.00 52-week price range 33.71 - 21.18 Market cap (R$ m) 11,276.91 More Heavy Lifting Ahead; Downgrading to Enterprise value (R$ m) 13,389.22 *Stock ratings are relative to the coverage universe in each Underperform analyst's or each team's respective sector. ¹Target price is for 12 months. ■ Progress much slower than expected. More heavy lifting required. We Research Analysts have been bears regarding Natura for a long time but decided to become Tobias Stingelin, CFA more constructive, and hence upgraded the stock to Neutral on July 2016, as 5511 3701 6301 we thought that gradually the different initiatives that management was [email protected] implementing to stabilize the business in Brazil were gaining traction. Bruno Zanotta Unfortunately, however, the outlook is much more challenging than we 55 11 3701 6314 initially thought, and we believe that the sudden and unexpected resignation [email protected] of the company's CEO just highlight the complexity of the situation. We still Mariana Hernandes believe that some initiatives [i.e. investments in technology, the segmentation 55 11 3701 6306 [email protected] of its direct sales force, the sale of its products in the drugstore channel, e- Antonio Gonzalez, CFA commerce (B2C and Rede Natura], its entrance in the traditional and, a 52 55 5283 8921 tight grip on expenses) that have been implemented over the last few [email protected] quarters are steps in the right direction; however, in hindsight, and after a another very poor set of results, these initiatives are simply evolving too slowly. Productivity levels also remain too erratic, which combined with the long-lasting challenge in growing the consultant base evidences that activating the channel has been very tough, signaling outstanding issues with product & value proposition and innovation amidst a very difficult competitive environment. We believe there is still a lot of heavy lifting to stabilize the domestic operation and that the recovery will take longer than thought. ■ Downgrading to Underperform from Neutral on limited visibility and valuation grounds. We believe that earnings visibility is very low, but are cutting our 2016 and 2017 earnings by sizable 40% and 26%, respectively, to reflect a much tougher outlook, and as we believe that NATU3 will have to be more aggressive (i.e. prices, product portfolio, innovation, marketing, store openings, etc.) to stabilize market share. Our new blended target price is now R$26.0 (from R$35.0), which supports our downgrade to Underperform (from Neutral). We see the stock trading at 22.9x 2017e P/E. Share price performance Financial and valuation metrics

3 5 Year 12/15A 12/16E 12/17E 12/18E Revenue (R$ m) 7,899.0 7,840.3 7,939.9 8,910.1 3 0 EBITDA (R$ m) 1,495.9 1,322.8 1,374.8 1,600.9 2 5 EBIT (R$ m) 1,256.7 1,058.2 1,096.0 1,299.1 2 0 Net Income (R$ m) 513.4 257.8 492.4 557.0 1 5 EPS (CS adj.) (R$) 1.19 0.60 1.14 1.29 Jan - 1 6 A p r - 1 6 Ju l- 1 6 O ct - 1 6 Prev. EPS (R$) - 0.99 1.53 2.05 Dividend yield (%) 6.1 1.1 1.3 2.6 N A T U3 .SA SA O PA ULO SE BO VESPA IN D EX P/E (x) 22.0 43.7 22.9 20.2 On 10-Nov-2016 the SAO PAULO SE BOVESPA INDEX EV/EBITDA 9.4 10.1 9.5 8.1 closed at 61779.97752 P/B (x) 10.97 10.50 7.93 6.70 Daily Nov11, 2015 - Nov10, 2016, 11/11/15 = R$23.75 ROE stated-return on equity 47.7 24.5 39.4 35.9 Quarterly EPS Q1 Q2 Q3 Q4 ROIC (%) 19.59 20.95 22.83 26.59 2015A 0.28 0.27 0.31 0.34 Net debt (R$ m) 2,752 2,112 1,817 1,682 2016E -0.16 0.21 0.17 0.38 Net debt/EBITDA (12/15E, %) 255.4 188.5 123.6 97.2 2017E Capex (R$ m) -383 -301 -318 -356

Source: Company data, Thomson Reuters, Credit Suisse estimates

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. 10 November 2016

Substantially Cutting Earnings Estimates We are updating our earnings estimates to reflect: (1) NATU3's 3Q16 poor results, (2) new macro-economic assumptions and, (3) our new business assumptions. As a result of these changes, we are cutting our 2016 earnings estimates by sizable 40% and our 2017 estimates by another 26%. We are now 20% below Reuter's consensus for 2016 and 15% for 2017. We believe, however, that earnings visibility is extremely low, not only because of the still very challenging sales environment in Brazil, but also because of volatility in net interest expenses.

Figure 1: NATU3 — Changes to Projections R$ in millions, unless otherwise stated

2016 2017 ∆ 16/15 ∆ 17/16 New Old % Chg. New Old % Chg. Net Revenues 7,840 8,264 -5.1% 7,940 9,219 -13.9% -0.7% 1.3% Gross Profit 5,461 5,755 -5.1% 5,555 6,436 -13.7% -0.4% 1.7% Gross Margin (%) 69.7% 69.6% 1 bps 70.0% 69.8% 15 bps 24 bps 31 bps EBITDA 1,323 1,417 -6.6% 1,375 1,621 -15.2% -11.6% 3.9% EBITDA Margin (%) 16.9% 17.1% -27 bps 17.3% 17.6% -27 bps -207 bps 44 bps Net Income 258 428 -39.7% 492 661 -25.6% -49.8% 91.0% Net Margin (%) 3.3% 5.2% -189 bps 6.2% 7.2% -97 bps -321 bps 291 bps EPS 0.60 0.99 -39.7% 1.14 1.53 -25.6% -49.8% 91.0%

Source: Company data, Credit Suisse estimates

On a high level basis, the economic environment for 2016 has proved to be more challenging than expected and has not yet shown any clear trend of improvement at this stage. Needless to say that the macro situation has contributed to impose another burden on Natura's top line growth, but it is clearly not the only reason. We believe that the company has once more lost market share recently, albeit there are no official numbers available. Figure 2 shows sales trends for both Natura and Avon (AVP) since 1Q12 and they evidence the tough overall sales environment. We thought that Natura was on the right direction to stabilize and then gradually improve sales from 2Q16 onwards, but a very poor sales performance in 3Q16 indicates that the situation is more challenging and that the turnaround is evolving much more slowly than expected.

Figure 2: Modest Sales Uplift in 2Q16 Reverted in 3Q16 Strongly R$ in millions, unless otherwise stated

Notes: since 1Q12 we use Avon’s Beauty segment to compare with Natura’s sales in Brazil. Based on net sales for Natura and constant currency sales for Avon. Sources: company reports and Credit Suisse estimates.

Natura Cosméticos S.A. (NATU3)2 10 November 2016

As we look into 2017, the economy might be less of a headwind, but the recovery will be only gradual and household consumption should remain under pressure. The competitive environment will not improve any time soon. More importantly, however, we believe that management will have to be meaningfully accelerating the "transformation" underway. The company's new CEO, Mr. João Paulo Ferreira, is a company veteran and from what he mentioned in the company's 3Q16 earnings call, Natura's current strategy will not radically change. The company will only strengthen some projects (the same message was conveyed by one of the company's controlling shareholders, Mr. Pedro Passos) and we expect to see more news on that front on the company's investor day on November 17. Reigniting Productivity and the Channel are Key Overall, we believe that the company will continue working to revitalize its direct sales channel (crucial) through new credit policies, a more robust digital platform, consultant segmentation, stronger innovation, changes in its product portfolio and value preposition (i.e. product positioning), etc. In our view, (1) another round of poor results, (2) the substantial cut in dividends (R$123 million YTD16 vs. R$686 million YTD15), (3) growing indebtness, (4) ongoing market share losses and, more recently, (4) the departure of the company's previous CEO, signal that sense of urgency to de facto transform the company accelerated once more at the shareholder level. Unfortunately, however, there is no easy fix as indicated by the company's erratic performance despite Natura's strong brand. We believe that the company will have to be much more aggressive in innovating, in offering a more attractive value preposition to its consultants and customers, mainly considering the economic and competitive environment. The expansion into traditional retail will eventually have to be accelerated and Natura will have to develop new competencies that it does not yet master. Natura's top line growth in Brazil has been week since 2Q14, ranging between 2% yoy growth (2Q14) and -5% (3Q15, 4Q15, 1Q16 and 3Q16). The weak economy and the increase in taxation are partially to blame, but clearly not the only reasons. Since 3Q14 there has been a material decline in units sold (Figure 3) only partially offset by higher average prices. It is hard to analyze average prices on a standalone basis, as they not only reflect plain vanilla price increases, but also changes in the sales mix and taxation; however, looking into Figure 3 below, it looks clear that as expected there is a negative correlation between prices and volumes, and this negative correlation just increased recently (-0.92 1Q13-3Q16; -0.94 2Q14-3Q16). It is also clear that average prices increased materially in the last two quarters. The change in average prices might be well partially explained by a change in mix, nevertheless, we believe that Brazilian consumers are probably trading down and not trading up in the current environment, which suggests that Natura's price and value preposition will have to be revised (in fact, in the company's 3Q16 conference call management confirmed that the company started to adapt its portfolio through the use of its different brands and price points, but the movement would be reinforced during 4Q16). Furthermore, Natura's product portfolio and pricing strategy, coupled with the competitive and macro- environment, might be also hindering channel growth, which declined 3% in 3Q16. The combination of all these factors, namely unit sales growth, average price growth and consultant growth has resulted in volatile and erratic productivity (red line in Figure 3), negatively impacting top line growth.

Natura Cosméticos S.A. (NATU3)3 10 November 2016

Figure 3: Wide Swings in Prices and Volumes; Productivity Down Again %

7% 6% 2% 4% 2% 2% 3% 7% 1% 4% 3% 1% 2% 3% 14% 4% 15% 12% 20% 3% 2% 3% 1% 13% 19% 7% 15% 3% 21% 6% 7% -1% -1% -2% 2% -2% -3% -6% -3% -3% -7% -15% -4% -18% -6% -11% -7% -11% -22% -2% -8% -15% -6% -8% Average Consultants Units -8% -3% Average Price Productivity -9% 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16

Source: Company data, Credit Suisse estimates Cutting Target Price; Downgrading to Underperform ■ Cutting target price to R$26.0 from R$35.0 and downgrading to Underperform. We are cutting our target price to reflect our new and more bearish assumptions. Moreover, we have also decided to value Natura's shares using a combination of DCF (50% weight) and P/E (50% weight), as we believe that visibility remains low. On one hand, while our DCF suggests some upside to the company's current share price, this hinges on our expectations that the Brazilian business will remain under pressure until 2017 and then gradually recover (top line and margins). Hence, we give management the benefit of the doubt that they will be able to stabilize and then improve the business considering the company's still strong brand and healthy balance sheet (Aesop and International operations are expected to continue doing well). On the other hand, visibility remains very low and we believe that consensus earnings will have to be further revised downwards, which will translate into a company trading at very high earnings multiples. Our blended target price of R$26.0 derives from the DCF (R$32.0 – 50% weight) and P/E (R$21.0 at 18x 2017 P/E – 50% weight). In regards to the DCF we are increasing our discount rate (Ke) to 14.9% from 14.5% to incorporate higher risk (Beta). We provide a sensitivity analysis to NATU3's DCF on Figure 4 using different discount rates and nominal growth assumptions (our base case DCF value is R$32.0).

Natura Cosméticos S.A. (NATU3)4 10 November 2016

Figure 4: NATU3 — DCF Sensitivity Analysis 32.0 7.0% 7.5% 8.0% 8.5% 9.0% 12.9% 43.0 46.0 50.0 54.0 61.0 13.4% 39.0 42.0 45.0 49.0 54.0 13.9% 37.0 39.0 41.0 44.0 48.0 14.4% 34.0 36.0 38.0 41.0 44.0 14.9% 32.0 34.0 36.0 38.0 40.0 15.4% 30.0 32.0 33.0 35.0 37.0 15.9% 29.0 30.0 31.0 33.0 34.0 16.4% 27.0 28.0 29.0 31.0 32.0 16.9% 26.0 27.0 28.0 29.0 30.0

Source: Credit Suisse estimates

■ Expensive based on multiples. Based on 2017e P/E, we see Natura trading at hefty 22.9x, which is a premium to some domestic players (i.e. LREN3 and HYPE3) that we believe are currently better prepared to deliver consistent earnings growth without having to undergo a "transformation". We believe that on a relative basis the outlook for both LREN3 and HYPE3 is more favorable at this point.

Figure 5: Natura is trading at a premium to both LREN3 and HYPE3

Country of Market Cap Market Cap P/E EV/EBITDA Price Domicile (LCU mn) (USD mn) 2016E 2017E 2016E 2017E Brazilian Companies (Retail and Consumption) AmBev BR 18.0 283,074 87,539 23.0x 19.5x 12.9x 11.9x Raia Drogasil SA BR 66.0 21,119 6,531 45.1x 37.5x 21.3x 18.4x S.A. BR 23.6 15,152 4,686 24.9x 21.2x 12.6x 11.1x Hypermarcas S.A. BR 25.0 15,806 4,888 22.9x 15.7x 13.4x 11.6x CIA Hering S.A. BR 17.8 2,867 886 12.7x 11.6x 11.4x 10.3x Marisa S.A. BR 6.5 1,329 411 n.m. n.m. 6.4x 5.3x Natura Cosméticos S.A. BR 26.2 11,277 3,487 43.7x 22.9x 10.1x 9.5x S.A. BR 18.8 21,901 6,773 92.2x 41.1x 9.5x 7.9x BR 13.3 4,546 1,406 n.m. n.m. 4.5x 6.2x

LatAm Companies (Retail and Consumption) Walmex MX 40.4 705,441 35,699 25.0x 22.8x 13.5x 12.4x Soriana MX 48.7 87,696 4,438 19.6x 19.4x 9.4x 9.1x Grupo Sanborns MX 23.1 53,367 2,701 14.9x 13.1x 7.8x 7.0x Chedraui MX 42.1 40,619 2,056 19.7x 17.0x 8.3x 7.4x Grupo Famsa MX 7.9 4,519 229 6.0x 6.2x 17.1x 14.7x Falabella CL 5129.0 12,486,372 19,246 22.8x 20.9x 13.5x 12.5x

Source: IBES, Company data, Credit Suisse estimates

■ Less expensive on multiples when compared to international peers. Based on both P/E and FV/EBITDA 2017e NATU3's multiples look less expensive vs. some international peers (Exhibits 6 and 7). Nevertheless, based on historical forward earnings multiples NATU3 is currently trading above its historical average (exhibit 8).

Natura Cosméticos S.A. (NATU3)5 10 November 2016

Figure 6: HPC Companies: 2017e P/E Figure 7: HPC Companies: 2017e FV/EBITDA

SHISEIDO CO LTD 34.4x AMOREPACIFIC CORP 16.3x

AMOREPACIFIC CORP 28.3x L'OREAL 13.6x

FANCL CORP 26.0x ESTEE LAUDER COMPANIES-… 12.3x

INTER PARFUMS INC 24.6x SHISEIDO CO LTD 12.2x

L'OREAL 23.1x INTER PARFUMS INC 11.7x

NATURA COSMETICOS SA 22.9x COTY INC-CL A 11.6x

POLA ORBIS HOLDINGS INC 22.7x GENOMMA LAB… 10.7x

ESTEE LAUDER COMPANIES-… 20.7x POLA ORBIS HOLDINGS INC 10.2x

KOSE CORP 19.5x NATURA COSMETICOS SA 9.5x

COTY INC-CL A 17.5x KOSE CORP 9.0x

GENOMMA LAB… 16.8x FANCL CORP 7.7x

AVON PRODUCTS INC 15.7x AVON PRODUCTS INC 7.5x

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

Figure 8: NATU3 – 12-month Forward Earnings 24x CS 22x 22.9x P/E NTM 20x + 1 St. Dev. 18x 18.1 Average 16.7 16x

14x - 1 St. Dev.

12x

10x Nov-12 Jul-13 Mar-14 Nov-14 Jul-15 Mar-16 Nov-16

Source: Company data, Credit Suisse estimates, Bloomberg 3Q16 Conference Call Highlights We decided to include our notes from Natura's 3Q16 conference call in this report, as they provide for instance some comments from the company's controlling shareholders.  Some words from the controlling shareholder ("no big change in strategy, but some projects will be strengthened") - For the first time in years, the company had one of its controlling shareholders speaking in the call, namely Mr. Pedro Passos. He started the call thanking the outgoing CEO Mr. Roberto Lima for its contribution to the company over the last two years, confirming that the company evolved in its strategy to expand into more channels (i.e. drugstores, retail, etc.) and also to digitalize the company. Mr. Passos mentioned that the previous CEO was already expected to stay for a shorter period of time, and that his biggest contribution for the company was the establishment of a new senior and motivated executive committee. The company is clearly undergoing several challenges in 2016 and the outlook is expected to improve in 2017, but according to Mr. Passos the most important message is that the controlling shareholders feel comfortable that the company has no a young and motivated team that should help in the transformation of Natura over the next few Natura Cosméticos S.A. (NATU3)6 10 November 2016

years. In short, Mr. Passos wanted to show support to the new team and mentioned that there will be no change in the ongoing plan, but a bigger emphasis on some areas (i.e. strengthen direct sales, keep growing in Latam and develop its Omnichannel strategy). Mr. Passos was not available for Q&A.  Final remarks from the outgoing CEO ("biggest contribution was building a new senior management team") – The outgoing CEO, Mr. Roberto Lima, said that his biggest contribution for the company was the "construction" of a solid executive team combining internal and external resources.  The tough macro-economic environment has been especially harsh on sales in which the company is strong (fragrances, body and face care).  The new CEO, Mr. Joao Paulo, mentioned that some of its current responsibilities will be transferred to people that he has been preparing for some time.  The strategy to reignite the channel will not change, focused on segmentation, digitalization, etc. That said, management recognized that the changes being implemented by the company have not been able to address the changes taking place in the market. Natura is trying to adapt to the changes taking place in the marketplace in regards to the trade down. The company has a priority to increase the penetration of its products in households again, and this should be achieved leveraging on its product mix rather than simply reducing prices.  The decline in the channel was primarily a function of the low level of client activity in the quarter, as well as a strict credit concession criteria.  There is no major cannibalization between sales in the drugstore channel and direct sales. The entrance in the channel was well thought and because of that the company will remain with the Sou brand and another brand,  The increase in selling expenses in 3Q16 is mostly related to higher investments in the relaunch of some of the company's iconic brands, whose sales are expected to be positively impacted going forward.  Innovation is crucial and it will remain that way. The main ventures for the year are Ekos, Tododia, Humor and their sales should improve going forward.  Natura was already expecting volumes to decline following its price increases. The impact on volume and prices, however, was different than expected because of a change in its sales mix (mostly trade down). The launch of the Humor brand is part of a strategy to focus on lower price points (no prestige market).  The four B&M stores are performing above expectations and the company wants to grow fast in the channel.  The target continues to grow market share, although short-term this has not been the case.  Cash flow generation has been mostly negatively impacted by the weak demand, which has not offset expenses. Weak demand has resulted in higher inventories, negatively impacting WC.  Capex for the year will be around R$300 million. No guidance was provided for 2017, but the company hinted that there is no reason to expect a significant increase. Capex is now more focused on systems and technology, as well as on international operations.  The dividend policy already changed. The company paid very little dividends in 2016 and already did not anticipate dividends for the year as it was used to do.  There is no reliable information about the market in 2016. As of 1H16 the market was declining in nominal terms, and this did not change in 3Q16.  Omnichannel is a priority, but so is the company's core direct sales business as well. In the next 5 years the new channels might represent up to 10% of sales.

Natura Cosméticos S.A. (NATU3)7 10 November 2016

Figure 9: NATU3 - Corporate Summary R$ in millions, unless otherwise stated

BASICS COMPANY DESCRIPTION Ticker NATU3.SA Sector Consumer Staples Natura is Brazil's leading personal care company, with an established direct selling business.The company also operates Price (BRL) 26.2 Personal Products in many other Latin American countries such as Argentina, Colombia, Peru and Mexico. Target Price (BRL) 26.0 Recommendation UNDERPERFORM Upside/Downside -0.6% Market Cap (BRL mn) 11,277 Div. Yield 1.1% POSITIVES Free Float (BRL mn) 34% TRS 0.5% -- Brand preference (46%) still well above share (13%) SHAREHOLDING STRUCTURE ON TOTAL -- Investments inc ourse to stop market share erosion Lisis Participações 96.0 22.3% 96.0 22.3% -- The new CEO has mandate to hurry projects in place Utopia Participações 91.6 21.2% 91.6 21.2% Passos Participações 22.6 5.2% 22.6 5.2% NEGATIVES Anp Participações 22.6 5.2% 22.6 5.2% -- Competitive environment has deteriorated and Natura has reacted too slowly Others 49.9 11.6% 49.9 11.6% -- Recent tax increase and FX depreciation are likely to impact earnings Free Float 148.6 34.5% -- Consultants have working capital constraints and competition for their pockets is increasing Total 431.2 100.0% 282.6 100.0%

EXHIBIT 1 - EBITDA AND EBITDA MARGIN EXHIBIT 2 - SHAREHOLDER STRUCTURE

EBITDA EBIT Margin Lisis Participações 1,601 22% Free Float 20.4% 1,323 1,375 35% 18.6% 1,610 15.9% 1,516 14.6% 13.5% 13.8% 1,496 Utopia Participações 21% Others 12%Anp Participações Passos 5% Participações 2013A 2014A 2015A 2016E 2017E 2018E 5%

2013A 2014A 2015A 2016E 2017E 2018E 2013A 2014A 2015A 2016E 2017E 2018E FINANCIAL METRICS (BRL mn) 2013A 2014A 2015A 2016E 2017E 2018E OPERATING METRICS 2013A 2014A 2015A 2016E 2017E 2018E Net Revenue 7,010 7,408 7,899 7,840 7,940 8,910 # of consultants (per. Avg.) 1,655 1,789 1,929 2,005 2,043 2,144 COGS (2,111) (2,262) (2,416) (2,379) (2,385) (2,636) Productivity ('000 R$/consultant-year) 5.70 5.55 5.59 5.42 5.36 5.69 SG&A (3,492) (3,787) (4,292) (4,424) (4,472) (4,989) Units sold (million) 558 537 528 490 492 513 EBIT 1,427 1,380 1,257 1,058 1,096 1,299 Avg. Price (R$/unit) 16.7 18.2 19.8 21.2 21.1 22.3 EBIT Margin 20.4% 18.6% 15.9% 13.5% 13.8% 14.6% EBITDA 1,528 1,516 1,496 1,323 1,375 1,601 EBITDA 1,610 1,516 1,496 1,323 1,375 1,601 Brazil 1,557 1,448 1,251 949 914 990 EBITDA Margin 23.0% 20.5% 18.9% 16.9% 17.3% 18.0% Argentina, Chile and Peru 53 68 170 257 311 404 EBITDA - Brazil 1,557 1,448 1,251 949 914 990 Mexico and Colombia 14 53 90 135 166 224 Net Financial Expense (158) (268) (382) (634) (357) (480) 2013A 2014A 2015A 2016E 2017E 2018E Income Tax (410) (355) (353) (152) (233) (247) LEVERAGE 2013A 2014A 2015A 2016E 2017E 2018E Net Income 854 748 513 258 492 559 Net Debt/ EBITDA 1.0x 1.5x 1.8x 1.6x 1.3x 1.1x Net Margin 12.2% 10.1% 6.5% 3.3% 6.2% 6.3% Net Debt/ Equity 1.4x 2.0x 2.6x 1.9x 1.2x 1.0x # of shares (mn) 431 431 431 431 431 431 Net Debt/ Total Assets 0.3x 0.3x 0.3x 0.3x 0.2x 0.2x EPS (BRL) 2.0 1.7 1.2 0.6 1.1 1.3 CAPEX/ Op. Cash Flow 48.4% 45.0% 37.8% 31.5% 31.1% 29.9% NOPLAT 952 933 774 690 741 889 2013A 2014A 2015A 2016E 2017E 2018E D&A Expense (193) (190) (239) (265) (279) (303) RETURN/YIELD 2013A 2014A 2015A 2016E 2017E 2018E Gross CAPEX (554) (506) (383) (301) (318) (356) After-tax ROIC 43.7% 32.5% 24.9% 21.9% 23.2% 26.9% ∆ Working Capital (215) (194) 252 (171) (15) (109) WACC 14.0% 14.0% 14.0% 14.0% 14.0% 14.0% FCFF 122 251 551 1,204 697 766 Cost of Equity (Ke) 14.9% 14.9% 14.9% 14.9% 14.9% 14.9% Dividends (856) (757) (686) (123) (144) (295) ROE 68.7% 65.9% 47.7% 24.5% 39.4% 35.9% Total Assets 6,248 7,200 9,395 7,549 7,629 8,066 FCFF Yield 0.6% 1.6% 3.9% 9.0% 5.3% 5.9% Cash, BoP 1,643 1,309 1,696 2,784 1,500 1,500 Div. Yield -4.8% -5.5% -6.1% -1.1% -1.3% -2.6% Cash, EoP 1,309 1,696 2,784 1,500 1,500 1,500 2013A 2014A 2015A 2016E 2017E 2018E Gross Debt 2,894 3,981 5,536 3,612 3,317 3,182 VALUATION 2013A 2014A 2015A 2016E 2017E 2018E Net Debt 1,585 2,285 2,752 2,112 1,817 1,682 EV/ EBITDA 12.1x 10.6x 9.4x 10.1x 9.5x 8.1x Book Value 1,168 1,149 1,078 1,121 1,469 1,731 EV/ IC 7.4x 5.2x 4.5x 4.2x 4.1x 3.8x Market Cap (EoP) 17,840 13,735 11,277 11,277 11,277 11,277 P/E 20.9x 18.4x 22.0x 43.7x 22.9x 20.2x EV 19,425 16,020 14,029 13,389 13,094 12,959 P/B 15.3x 12.0x 10.5x 10.1x 7.7x 6.5x Invested Capital 2,636 3,105 3,120 3,167 3,220 3,385 EV/ Sales 2.8x 2.2x 1.8x 1.7x 1.6x 1.5x

Source: Company data, Credit Suisse estimates

Natura Cosméticos S.A. (NATU3)8 10 November 2016

Companies Mentioned (Price as of 10-Nov-2016) AmBev (ABEV3.SA, R$18.01) Amorepacific Corp (090430.KS, W380,000) Avon Products Inc (AVP.N, $5.58) B2W (BTOW3.SA, R$13.3) CIA Hering S.A. (HGTX3.SA, R$17.78) Chedraui (CHDRAUIB.MX, MXN42.14) Coty Inc (COTY.N, $18.98) Estee Lauder Companies Inc (EL.N, $78.98) Falabella (FAL.SN, CLP$5129.0) Fancl Corporation (4921.T, ¥1,501) Genomma Lab Internacional (LABB.MX, MXN23.99) Grupo Famsa (GFAMSAA.MX, MXN7.93) Grupo Sanborns (GSNBRB1.MX, MXN23.09) Hypermarcas S.A. (HYPE3.SA, R$25.0) Inter Parfums (IPAR.OQ, $31.8) KOSE (4922.T, ¥8,590) L'Oreal (OREP.PA, €158.95) Lojas Americanas S.A. (LAME4.SA, R$18.83) Lojas Renner S.A. (LREN3.SA, R$23.57) Marisa S.A. (AMAR3.SA, R$6.51) Natura Cosméticos S.A. (NATU3.SA, R$26.15, UNDERPERFORM, TP R$26.0) Pola Orbis Holdings (4927.T, ¥7,960) Raia Drogasil SA (RADL3.SA, R$65.96) Shiseido (4911.T, ¥2,746) Soriana (SORIANAB.MX, MXN48.72) S.A (VVAR11.SA, R$9.07) Walmex (WALMEX.MX, MXN40.4)

Disclosure Appendix Analyst Certification Tobias Stingelin, CFA, Bruno Zanotta, Mariana Hernandes and Antonio Gonzalez, CFA each certify, with respect to the companies or securities that the individual analyzes, that (1) the views expressed in this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

3-Year Price and Rating History for Natura Cosméticos S.A. (NATU3.SA)

NATU3.SA Closing Price Target Price Target Price Closing Price NATU3.SA Date (R$) (R$) Rating 45 21-Feb-14 34.32 42.00 N 17-Jul-14 38.45 43.00 17-Mar-15 25.85 25.00 U 35 29-Jan-16 22.41 23.00 29-Jul-16 33.30 35.00 N 25 * Asterisk signifies initiation or assumption of coverage.

15 01- Jan- 2015 01- Jan- 2016

N EU T RA L U N D ERPERFO RM The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities As of December 10, 2012 Analysts’ stock rating are defined as follows: Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark* over the next 12 months. Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months. Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months. *Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin American and non-Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, the expected total return (ETR) calculation includes 12-month rolling dividend yield. An Outperform rating is assigned where an ETR is greater than or equal to 7.5%; Underperform where an ETR less than or equal to 5%. A Neutral may be assigned where the ETR is between -5% and 15%. The overlapping rating range allows analysts to assign a rating that puts ETR in the context of associated risks. Prior to 18 May 2015, ETR ranges for Outperform and Underperform ratings did not overlap with Neutral thresholds between 15% and 7.5%, which was in operation from 7 July 2011.

Natura Cosméticos S.A. (NATU3)9 10 November 2016

Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances. Not Rated (NR) : Credit Suisse Equity Research does not have an investment rating or view on the stock or any other securities related to the company at this time. Not Covered (NC) : Credit Suisse Equity Research does not provide ongoing coverage of the company or offer an investment rating or investment view on the equity security of the company or related products. Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward. Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation: Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months. Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months. Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months. *An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors. Credit Suisse's distribution of stock ratings (and banking clients) is:

Global Ratings Distribution Rating Versus universe (%) Of which banking clients (%) Outperform/Buy* 43% (63% banking clients) Neutral/Hold* 39% (61% banking clients) Underperform/Sell* 15% (55% banking clients) Restricted 3% *For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors. Important Global Disclosures Credit Suisse’s research reports are made available to clients through our proprietary research portal on CS PLUS. Credit Suisse research products may also be made available through third-party vendors or alternate electronic means as a convenience. Certain research products are only made available through CS PLUS. The services provided by Credit Suisse’s analysts to clients may depend on a specific client’s preferences regarding the frequency and manner of receiving communications, the client’s risk profile and investment, the size and scope of the overall client relationship with the Firm, as well as legal and regulatory constraints. To access all of Credit Suisse’s research that you are entitled to receive in the most timely manner, please contact your sales representative or go to https://plus.credit-suisse.com . Credit Suisse’s policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the market that may have a material impact on the research views or opinions stated herein. Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: http://www.csfb.com/research-and- analytics/disclaimer/managing_conflicts_disclaimer.html . Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research:

Target Price and Rating Valuation Methodology and Risks: (12 months) for Natura Cosméticos S.A. (NATU3.SA) Method: Our target price of R$26.00/share and UNDERPERFORM rating for Natura are supported by a 10-year DCF (discounted cash flow) model that considers a Ke (cost of equity) of 14.9% and a nominal perpetual growth of 7.0%. Risk: Risks to our R$26.00/share target price and/or UNDERPERFORM rating for Natura include an unexpected recovery in competitive position, resulting in better-than-expected top line/ earnings growth; further delays/ fiscal benefits regarding IPI tax; and abnormal financial income from currency effects in the international operation.

Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures for the definitions of abbreviations typically used in the target price method and risk sections. See the Companies Mentioned section for full company names The subject company (ABEV3.SA, LAME4.SA, BTOW3.SA, WALMEX.MX, SORIANAB.MX, GSNBRB1.MX, CHDRAUIB.MX, GFAMSAA.MX, OREP.PA, LABB.MX) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse. Credit Suisse provided investment banking services to the subject company (ABEV3.SA, LAME4.SA, BTOW3.SA, WALMEX.MX) within the past 12 months. Credit Suisse has managed or co-managed a public offering of securities for the subject company (ABEV3.SA) within the past 12 months. Credit Suisse has received investment banking related compensation from the subject company (ABEV3.SA, LAME4.SA, BTOW3.SA, WALMEX.MX) within the past 12 months Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (NATU3.SA, LREN3.SA, ABEV3.SA, HYPE3.SA, VVAR11.SA, AMAR3.SA, LAME4.SA, BTOW3.SA, WALMEX.MX, SORIANAB.MX, GSNBRB1.MX, CHDRAUIB.MX, GFAMSAA.MX, FAL.SN, 4911.T, OREP.PA, 4927.T, 4922.T, LABB.MX) within the next 3 months.

Natura Cosméticos S.A. (NATU3) 10 10 November 2016

As of the end of the preceding month, Credit Suisse beneficially own 1% or more of a class of common equity securities of (HYPE3.SA). Credit Suisse beneficially holds >0.5% long position of the total issued share capital of the subject company (090430.KS). Credit Suisse beneficially holds >0.5% short position of the total issued share capital of the subject company (HYPE3.SA). For other important disclosures concerning companies featured in this report, including price charts, please visit the website at https://rave.credit- suisse.com/disclosures or call +1 (877) 291-2683. For date and time of production, dissemination and history of recommendation for the subject company(ies) featured in this report, disseminated within the past 12 months, please refer to the link: https://rave.credit-suisse.com/disclosures/view/report?i=269979&v=-m2rops1qb8tquplrmhknso7t . Important Regional Disclosures Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report. The analyst(s) involved in the preparation of this report may participate in events hosted by the subject company, including site visits. Credit Suisse does not accept or permit analysts to accept payment or reimbursement for travel expenses associated with these events. Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares. Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report. For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit https://www.credit- suisse.com/sites/disclaimers-ib/en/canada-research-policy.html. The following disclosed European company/ies have estimates that comply with IFRS: (OREP.PA). Credit Suisse has sent extracts of this research report to the subject company (NATU3.SA) prior to publication for the purpose of verifying factual accuracy. Based on information provided by the subject company, factual changes have been made as a result. Credit Suisse has acted as lead manager or syndicate member in a public offering of securities for the subject company (ABEV3.SA, VVAR11.SA, WALMEX.MX) within the past 3 years. Principal is not guaranteed in the case of equities because equity prices are variable. Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that. Tobias Stingelin, CFA & Bruno Zanotta & Mariana Hernandes each certify that (1) The views expressed in this report solely and exclusively reflect my personal opinions and have been prepared independently, including with respect to Banco de Investimentos Credit Suisse (Brasil) S.A. or its affiliates ("Credit Suisse"). (2) Part of my compensation is based on various factors, including the total revenues of Credit Suisse, but no part of my compensation has been, is, or will be related to the specific recommendations or views expressed in this report. In addition, Credit Suisse declares that: Credit Suisse has provided, and/or may in the future provide investment banking, brokerage, asset management, commercial banking and other financial services to the subject company/companies or its affiliates, for which they have received or may receive customary fees and commissions, and which constituted or may constitute relevant financial or commercial interests in relation to the subject company/companies or the subject securities. Tobias Stingelin, CFA is the responsible analyst for this report according to Instruction CVM 483 This research report is authored by: Casa de Bolsa Credit Suisse (Mexico), S.A...... Antonio Gonzalez, CFA Banco de Investments Credit Suisse (Brasil) SA or its affiliates...... Tobias Stingelin, CFA ; Bruno Zanotta ; Mariana Hernandes To the extent this is a report authored in whole or in part by a non-U.S. analyst and is made available in the U.S., the following are important disclosures regarding any non-U.S. analyst contributors: The non-U.S. research analysts listed below (if any) are not registered/qualified as research analysts with FINRA. The non-U.S. research analysts listed below may not be associated persons of CSSU and therefore may not be subject to the NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. Casa de Bolsa Credit Suisse (Mexico), S.A...... Antonio Gonzalez, CFA Banco de Investments Credit Suisse (Brasil) SA or its affiliates...... Tobias Stingelin, CFA ; Bruno Zanotta ; Mariana Hernandes For Credit Suisse disclosure information on other companies mentioned in this report, please visit the website at https://rave.credit- suisse.com/disclosures or call +1 (877) 291-2683.

Natura Cosméticos S.A. (NATU3) 11 10 November 2016

This report is produced by subsidiaries and affiliates of Credit Suisse operating under its Global Markets Division. For more information on our structure, please use the following link: https://www.credit-suisse.com/who-we-are This report may contain material that is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject Credit Suisse or its affiliates ("CS") to any registration or licensing requirement within such jurisdiction. All material presented in this report, unless specifically indicated otherwise, is under copyright to CS. None of the material, nor its content, nor any copy of it, may be altered in any way, transmitted to, copied or distributed to any other party, without the prior express written permission of CS. All trademarks, service marks and logos used in this report are trademarks or service marks or registered trademarks or service marks of CS or its affiliates.The information, tools and material presented in this report are provided to you for information purposes only and are not to be used or considered as an offer or the solicitation of an offer to sell or to buy or subscribe for securities or other financial instruments. CS may not have taken any steps to ensure that the securities referred to in this report are suitable for any particular investor. CS will not treat recipients of this report as its customers by virtue of their receiving this report. The investments and services contained or referred to in this report may not be suitable for you and it is recommended that you consult an independent investment advisor if you are in doubt about such investments or investment services. Nothing in this report constitutes investment, legal, accounting or tax advice, or a representation that any investment or strategy is suitable or appropriate to your individual circumstances, or otherwise constitutes a personal recommendation to you. CS does not advise on the tax consequences of investments and you are advised to contact an independent tax adviser. Please note in particular that the bases and levels of taxation may change. Information and opinions presented in this report have been obtained or derived from sources believed by CS to be reliable, but CS makes no representation as to their accuracy or completeness. CS accepts no liability for loss arising from the use of the material presented in this report, except that this exclusion of liability does not apply to the extent that such liability arises under specific statutes or regulations applicable to CS. This report is not to be relied upon in substitution for the exercise of independent judgment. CS may have issued, and may in the future issue, other communications that are inconsistent with, and reach different conclusions from, the information presented in this report. Those communications reflect the different assumptions, views and analytical methods of the analysts who prepared them and CS is under no obligation to ensure that such other communications are brought to the attention of any recipient of this report. Some investments referred to in this report will be offered solely by a single entity and in the case of some investments solely by CS, or an associate of CS or CS may be the only market maker in such investments. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. Information, opinions and estimates contained in this report reflect a judgment at its original date of publication by CS and are subject to change without notice. The price, value of and income from any of the securities or financial instruments mentioned in this report can fall as well as rise. The value of securities and financial instruments is subject to exchange rate fluctuation that may have a positive or adverse effect on the price or income of such securities or financial instruments. Investors in securities such as ADR's, the values of which are influenced by currency volatility, effectively assume this risk. Structured securities are complex instruments, typically involve a high degree of risk and are intended for sale only to sophisticated investors who are capable of understanding and assuming the risks involved. The market value of any structured security may be affected by changes in economic, financial and political factors (including, but not limited to, spot and forward interest and exchange rates), time to maturity, market conditions and volatility, and the credit quality of any issuer or reference issuer. Any investor interested in purchasing a structured product should conduct their own investigation and analysis of the product and consult with their own professional advisers as to the risks involved in making such a purchase. Some investments discussed in this report may have a high level of volatility. High volatility investments may experience sudden and large falls in their value causing losses when that investment is realised. Those losses may equal your original investment. Indeed, in the case of some investments the potential losses may exceed the amount of initial investment and, in such circumstances, you may be required to pay more money to support those losses. Income yields from investments may fluctuate and, in consequence, initial capital paid to make the investment may be used as part of that income yield. Some investments may not be readily realisable and it may be difficult to sell or realise those investments, similarly it may prove difficult for you to obtain reliable information about the value, or risks, to which such an investment is exposed. This report may provide the addresses of, or contain hyperlinks to, websites. Except to the extent to which the report refers to website material of CS, CS has not reviewed any such site and takes no responsibility for the content contained therein. Such address or hyperlink (including addresses or hyperlinks to CS's own website material) is provided solely for your convenience and information and the content of any such website does not in any way form part of this document. Accessing such website or following such link through this report or CS's website shall be at your own risk. This report is issued and distributed in European Union (except Switzerland): by Credit Suisse Securities (Europe) Limited, One Cabot Square, London E14 4QJ, England, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Germany: Credit Suisse Securities (Europe) Limited Niederlassung Frankfurt am Main regulated by the Bundesanstalt fuer Finanzdienstleistungsaufsicht ("BaFin"). United States and Canada: Credit Suisse Securities (USA) LLC; Switzerland: Credit Suisse AG; Brazil: Banco de Investimentos Credit Suisse (Brasil) S.A or its affiliates; Mexico: Banco Credit Suisse (México), S.A. (transactions related to the securities mentioned in this report will only be effected in compliance with applicable regulation); Japan: by Credit Suisse Securities (Japan) Limited, Financial Instruments Firm, Director-General of Kanto Local Finance Bureau ( Kinsho) No. 66, a member of Japan Securities Dealers Association, The Financial Futures Association of Japan, Japan Investment Advisers Association, Type II Financial Instruments Firms Association; Hong Kong: Credit Suisse (Hong Kong) Limited; Australia: Credit Suisse Equities (Australia) Limited; Thailand: Credit Suisse Securities (Thailand) Limited, regulated by the Office of the Securities and Exchange Commission, Thailand, having registered address at 990 Abdulrahim Place, 27th Floor, Unit 2701, Rama IV Road, Silom, Bangrak, Bangkok10500, Thailand, Tel. +66 2614 6000; Malaysia: Credit Suisse Securities (Malaysia) Sdn Bhd, Credit Suisse AG, Singapore Branch; India: Credit Suisse Securities (India) Private Limited (CIN no.U67120MH1996PTC104392) regulated by the Securities and Exchange Board of India as Research Analyst (registration no. INH 000001030) and as Stock Broker (registration no. INB230970637; INF230970637; INB010970631; INF010970631), having registered address at 9th Floor, Ceejay House, Dr.A.B. Road, Worli, Mumbai - 18, India, T- +91-22 6777 3777; South Korea: Credit Suisse Securities (Europe) Limited, Seoul Branch; Taiwan: Credit Suisse AG Taipei Securities Branch; Indonesia: PT Credit Suisse Securities Indonesia; Philippines: Credit Suisse Securities (Philippines ) Inc., and elsewhere in the world by the relevant authorised affiliate of the above. Additional Regional Disclaimers Hong Kong: Credit Suisse (Hong Kong) Limited ("CSHK") is licensed and regulated by the Securities and Futures Commission of Hong Kong under the laws of Hong Kong, which differ from Australian laws. CSHKL does not hold an Australian financial services licence (AFSL) and is exempt from the requirement to hold an AFSL under the Corporations Act 2001 (the Act) under Class Order 03/1103 published by the ASIC in respect of financial services provided to Australian wholesale clients (within the meaning of section 761G of the Act). Research on Taiwanese securities produced by Credit Suisse AG, Taipei Securities Branch has been prepared by a registered Senior Business Person. Malaysia: Research provided to residents of Malaysia is authorised by the Head of Research for Credit Suisse Securities (Malaysia) Sdn Bhd, to whom they should direct any queries on +603 2723 2020. Singapore: This report has been prepared and issued for distribution in Singapore to institutional investors, accredited investors and expert investors (each as defined under the Financial Advisers Regulations) only, and is also distributed by Credit Suisse AG, Singapore branch to overseas investors (as defined under the Financial Advisers Regulations). By virtue of your status as an institutional investor, accredited investor, expert investor or overseas investor, Credit Suisse AG, Singapore branch is exempted from complying with certain compliance requirements under the Financial Advisers Act, Chapter 110 of Singapore (the "FAA"), the Financial Advisers Regulations and the relevant Notices and Guidelines issued thereunder, in respect of any financial advisory service which Credit Suisse AG, Singapore branch may provide to you. UAE: This information is being distributed by Credit Suisse AG (DIFC Branch), duly licensed and regulated by the Dubai Financial Services Authority (“DFSA”). Related financial services or products are only made available to Professional Clients or Market Counterparties, as defined by the DFSA, and are not intended for any other persons. Credit Suisse AG (DIFC Branch) is located on Level 9 East, The Gate Building, DIFC, Dubai, United Arab Emirates. EU: This report has been produced by subsidiaries and affiliates of Credit Suisse operating under its Global Markets Division This research may not conform to Canadian disclosure requirements. In jurisdictions where CS is not already registered or licensed to trade in securities, transactions will only be effected in accordance with applicable securities legislation, which will vary from jurisdiction to jurisdiction and may require that the trade be made in accordance with applicable exemptions from registration or licensing requirements. Non-US customers wishing to effect a transaction should contact a CS entity in their local jurisdiction unless governing law permits otherwise. US customers wishing to effect a transaction should do so only by contacting a representative at Credit Suisse Securities (USA) LLC in the US. Please note that this research was originally prepared and issued by CS for distribution to their market professional and institutional investor customers. Recipients who are not market professional or institutional investor customers of CS should seek the advice of their independent financial advisor prior to taking any investment decision based on this report or for any necessary explanation of its contents. This research may relate to investments or services of a person outside of the UK or to other matters which are not authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority or in respect of which the protections of the Prudential Regulation Authority and Financial Conduct Authority for private customers and/or the UK compensation scheme may not be available, and further details as to where this may be the case are available upon request in respect of this report. CS may provide various services to US municipal entities or obligated persons ("municipalities"), including suggesting individual transactions or trades and entering into such transactions. Any services CS provides to municipalities are not viewed as "advice" within the meaning of Section 975 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. CS is providing any such services and related information solely on an arm's length basis and not as an advisor or fiduciary to the municipality. In connection with the provision of the any such services, there is no agreement, direct or indirect, between any municipality (including the officials,management, employees or agents thereof) and CS for CS to provide advice to the municipality. Municipalities should consult with their financial, accounting and legal advisors regarding any such services provided by CS. In addition, CS is not acting for direct or indirect compensation to solicit the municipality on behalf of an unaffiliated broker, dealer, municipal securities dealer, municipal advisor, or investment adviser for the purpose of obtaining or retaining an engagement by the municipality for or in connection with Municipal Financial Products, the issuance of municipal securities, or of an investment adviser to provide investment advisory services to or on behalf of the municipality. If this report is being distributed by a financial institution other than Credit Suisse AG, or its affiliates, that financial institution is solely responsible for distribution. Clients of that institution should contact that institution to effect a transaction in the securities mentioned in this report or require further information. This report does not constitute investment advice by Credit Suisse to the clients of the distributing financial institution, and neither Credit Suisse AG, its affiliates, and their respective officers, directors and employees accept any liability whatsoever for any direct or consequential loss arising from their use of this report or its content. Principal is not guaranteed. Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that. Copyright © 2016 CREDIT SUISSE AG and/or its affiliates. All rights reserved. Investment principal on bonds can be eroded depending on sale price or market price. In addition, there are bonds on which investment principal can be eroded due to changes in redemption amounts. Care is required when investing in such instruments. When you purchase non-listed Japanese fixed income securities (Japanese government bonds, Japanese municipal bonds, Japanese government guaranteed bonds, Japanese corporate bonds) from CS as a seller, you will be requested to pay the purchase price only.

Natura Cosméticos S.A. (NATU3) 12