Equity Strategy

Brazil March 23, 2020

Follow the Leaders – Updating Brazil Buy List & Ibovespa Target

In this report we highlight our preference for stocks that are leaders in their sectors, have a strong balance sheet (low leverage risk) and preferably carry a strong cash position. We took the opportunity to add CPFL and Localiza to our recommended portfolio while removing Eletrobras and Marcopolo. We also analyze the recent trends in flows for the local market, set a new target for the Ibovespa given the weaker earnings outlook for 2020 and outline our expectations for the index rebalance that is scheduled for May.

◼ New Ibovespa YE20 target: 94,000 (weaker earnings and higher cost of equity).

◼ Brazil Buy List: adding RENT3 and CPFE3; removing POMO4 and ELET3.

◼ Ibovespa Rebalance: ENGI11, CPFE3, EZTC3, BEEF3 and PRIO3 to enter the index.

Our portfolio is balanced between defensive names and some rebounders. Our current portfolio has four stocks that we consider defensive for the COVID-19 crisis: Bradesco, Banco do Brasil, CPFL (recently added) and JBS (restricted). However, considering the recent correction in prices, we also have companies that could perform well in a cyclical recovery, which is our base case. Our economic team believes Brazil’s 2Q20 GDP could contract by 10% followed by a similar rebound in 3Q20. The stocks we include to play a potential rebound are: Lojas Renner, Localiza (recently added), Hapvida, Gerdau, EZTEC and Multiplan. All these companies fit well in our strategy of owning stocks that are best-in-class.

Adding RENT3. Localiza has consistently shown best-in-class execution, and it has been priced accordingly. The company is a sector leader, and we think that this recent sell-off has opened an interesting entry point, as we believe Localiza is well positioned operationally and financially to emerge stronger after this storm.

Adding CPFE3. The company has a top-quality management team and efficient disco concessions, and it is positioned among the wealthiest regions in the country, meaning that it has limited loss risk. We see CPFL as an interesting defensive alternative that unites resilient results with an attractive implied IRR of 12.0%, vs. the 4.7% yield on Brazilian Treasury Bonds, substantially above its historical spread levels.

The Brazil Buy List. The list includes 10 names: BBAS3, BBDC4, EZTC3, GGBR4, HAPV3, JBSS3, LREN3, MULT3, RENT3 and CPFE3. So far in 2020, the portfolio has lost 45%, the same as the Ibovespa. Since its inception in 2014, the portfolio has increased by 110%, while the Ibovespa has gained 8%.

Ibovespa target at 94,000 (YE20), down from 132,000. We lowered our earnings estimates to find a more accurate P/E for the Ibovespa, which we see above 11x, thus not so attractive. Our new earnings estimate or 2020 is 25% below current consensus. The combination of lower 2020 earnings and higher cost of equity drove our target downward. However, a potential steep recovery in 2021 (GDP + 5.5% YoY) could generate opportunities for investors who can look past 2020. Lastly, Ibovespa measured in U.S. dollars reached 12.300 points, down nearly 60% from peak levels reached in early 2020 and close to the levels reached in previous crisis.

Ibovespa rebalance: ENGI11, CPFE3, EZTC3, BEEF3 and PRIO3 to enter the index. We are seeing Utility names gaining the most in the index, as the large incumbent groups (financials and hard commodities) give STRATEGY TEAM ground once again. SMLS3 is expected to be deleted. Marcos Assumpção, CFA +55-11-3073-3021 Individual investors were the main buyers during the market sell-off. Individuals bought an additional 4% [email protected]

of their pre-sell-off holdings. Foreign investors were the main sellers during this period, reinforcing their Jorge Gabrich, CNPI underweight positions in Brazil and in emerging markets. +55-11-3073-3048 [email protected]

André Dibe Please refer to page 11 of this report for important disclosures, analyst certifications and additional information. Itaú BBA does and seeks to do business with Companies covered in this research report. 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 not consider this +55-11-3073-3222 report as the sole factor in making their investment decision. Itaú Corretora de Valores S.A. is the securities arm of Itaú Unibanco Group. Itaú BBA is a registered mark used [email protected] by Itaú Corretora de Valores S.A.

Equity Strategy – March 23, 2020

Contents

ADJUSTING PROFIT FORECASTS – LOWERING OUR TARGET ...... 3 SECTION 1

FOLLOW THE LEADERS – THE BRAZIL BUY LIST ...... 5 SECTION 2

THE IBOVESPA IS CHANGING – OUR TAKE ON REBALANCE ...... 7 SECTION 3

A NOTE ON FLOW DATA ...... 9 SECTION 4

Itaú BBA | 2

Equity Strategy – March 23, 2020

ADJUSTING PROFIT FORECASTS – LOWERING OUR TARGET SECTION 1

The P/E chart deceives in troubled times, as prices move faster than earnings estimates. The Ibovespa consensus earnings estimate takes into account the forecast for each index member and, for this reason, it includes a lagged component that can sometimes deceive in times of uncertainty. After assessing the impact of COVID-19 and the Oil Crisis on the local and global economy, we believe that the expected profit level for 2020 will be about 25% below current consensus. This brings the P/E above its long-term average of 11.3x, showing that it is not that attractive after all.

Ibovespa Historical P/E 12 Months Forward

15.0x 14.0x 13.0x 11.9x 12.0x 11.0x 10.0x 8.6x 9.0x 8.0x 7.0x 6.0x

5.0x

Jul-12

Jul-19

Oct-10

Apr-14

Oct-17

Jun-15

Jan-16

Mar-10

Feb-13

Mar-17

Feb-20

Dec-11

Sep-13

Nov-14

Aug-16

Dec-18

May-11 May-18

IBOV P/E 10 Yrs Avg. +-SD2 Itaú Adjusted IBOV P/E

Source: Itaú, Bloomberg

An argument to focus on 2021 and not 2020. We believe this to be a V-shaped recovery, which will certainly hurt 2020 profits but could have limited impact on next year. Our macro team recently revised its GDP estimates for 2020 to -0.7% from +1.8%, but it also noted that this is a temporary effect and that its new estimates for 2021 went to 5.5% from 3.0%. For this reason, an already liquid investor could choose to focus on the long term and search for opportunities, as in the longer term it does look cheap.

Ibovespa Historical P/E 24 Months Forward

20.0x

17.0x

14.0x

11.0x 8.9x 8.0x 8.6x

5.0x

Jul-12

Jul-19

Oct-17

Dec-11

Jan-16

Jun-15

Oct-10

Feb-13

Sep-13

Apr-14

Dec-18

Mar-17

Feb-20

May-11

Mar-10

Nov-14

Aug-16 May-18

IBOV P/E 10 Yrs Avg. +-SD2 Itaú Adjusted IBOV P/E

Source: Itaú, Bloomberg

If it is a V-shaped recovery, why lower the target? Our cost of equity is increasing, as the market has been pricing in a rising equity risk premium, while the interest rate parity relation has been flattish since our last change, indicating that the risk-free fundamentals remain the same. Our new cost of equity stands at 12% vs. our previous estimate of 11.25%, while the ERP is at 5.4% vs. 4.75%. The ERP is a mean reverting variable, and we would not rule out a rapid change once volatility subsides again.

Itaú BBA | 3

Equity Strategy – March 23, 2020

Implied Equity Risk Premium (ERP)

12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0% Jan-07 Jan-09 Jan-11 Jan-13 Jan-15 Jan-17 Jan-19

Implied ERP ERP Average

Source: Itaú, Bloomberg

Our target. As shown below, our model is much more sensitive to changes in our cost of equity than to our 2020 profit level. This is due to the V-shaped recovery already being included in our numbers.

Ibovespa Year-End 2020 Target

Brazil Ke 11.2% 11.5% 11.7% 12.0% 12.2% 12.5% 12.7% -7.3% 106,100 99,400 93,500 88,200 83,600 79,400 75,600 -5.3% 108,400 101,500 95,500 90,200 85,400 81,100 77,200 -3.3% 110,600 103,700 97,500 92,100 87,200 82,800 78,800 -1.3% 112,900 105,800 99,500 94,000 89,000 84,500 80,400 0.7% 115,200 108,000 101,500 95,900 90,800 86,200 82,100 2.7% 117,500 110,100 103,600 97,800 92,600 87,900 83,700 4.7% 119,800 112,200 105,600 99,700 94,400 89,600 85,300

Source: Itaú, Bloomberg

How is the growth broken down? Commodities companies and domestics are the most affected by these events, and they are consequently likely to see a higher level of recovery in 2021. Before, commodities were expected to show significant growth due to Vale’s weak base last year, but now they are expected to see a much more modest number, especially as Petrobras contributes negatively to the aggregate. As for domestics, we see a possible hit of around 20% on profits (average), but pent-up demand could lead to an earnings rebound in 2021. Banks should be affected by: i) a reduction in loan-book growth (average growth of 3% vs. 10% previously); ii) an increase in delinquency rates and loan-loss provisions; and iii) declining fee revenues. Lastly, we believe that higher spreads (to account for increased risks) and cost-cutting initiatives will only partially mitigate the earnings pressure.

Ibovespa Growth Per Sector

YoY Growth (%) 2020 2021 Domestics 1.0% 49% Financials -5.4% 14% Commodities 5.3% 77% Total -1.3% 39%

Source: Itaú, Bloomberg

Itaú BBA | 4

Equity Strategy – March 23, 2020

FOLLOW THE LEADERS – THE BRAZIL BUY LIST SECTION 2

Leaders are more prepared to weather the potential recession. In periods of high uncertainty, we recommend that investors protect their portfolios by choosing companies that will be able to navigate the crisis and eventually emerge in a stronger relative position. We are looking for companies that are leaders in their respective markets (scale helps, and it matters), have low leverage positions (cost of debt tends to increase in uncertain times, namely for more leveraged companies) and have a comfortable cash position, as liquidity will be key if companies suffer from a sudden decline in profitability, and liquidity could allow for attractive M&A transactions.

Our portfolio is balanced between defensive names and some rebounders. Our current portfolio has four stocks that we consider defensive for this crisis: Bradesco, Banco do Brasil, CPFL (recently added) and JBS (restricted). However, considering the recent correction in prices, we also have companies that could perform well in a cyclical recovery, which is our base case. Our economic team believes that Brazil’s 2Q20 GDP could contract by 10%, followed by a similar rebound in 3Q20. The stocks we include for a potential rebound are: Lojas Renner, Localiza (recently added), Hapvida, Gerdau, EZTEC and Multiplan. All these companies fit well in the leader category.

Names to avoid: some sectors could be permanently affected by the crisis. In our view, the severity of this crisis has the potential to change consumer behavior. Here are some trends that could be intensified following the COVID-19 crisis and the potential consequences for specific sectors: i) home-office working arrangements – companies could optimize their work spaces, negatively impacting corporate real estate demand; ii) online shopping – we believe the COVID-19 crisis could cause an indefinite surge in online consumption of goods and services, leading to a decline in brick-and-mortar sales (malls included); and iii) the use of video conferencing and other meeting tools, which improve the online work experience and reduce corporate travel expenses.

Adding RENT3. We see that Localiza has consistently shown best-in-class execution, and hence it has been priced accordingly. The company is a segment leader, and we think that this recent sell-off has made an interesting entry point, as we believe Localiza is well positioned operationally and financially to emerge stronger after this storm.

Removing ELET3. We added ELET3 on January 21, focusing on its privatization (along with efficiency drivers). Since then, the theme has faced several difficulties in Congress, and the relationship between government branches has deteriorated significantly. The COVID-19 crisis has further reduced the likelihood of progress in the short to medium term in this regard. We note, however, that this theme will certainly be revisited once we see improvement resume in these drivers. Eletrobrás has fallen by 61% since its inclusion, underperforming the Ibovespa by 15.8%.

Removing POMO4. We added POMO4 on February 3, when we were searching for companies with high upside potential in a scenario of stretched valuations. For this year, our Capital Goods team projected a rebound in volumes and pricing power combined with higher margins. We still see Marcopolo as a good recovery story, but this scenario is likely to materialize over a longer horizon, as the company is likely to face some volatility in the short term. The stock price has fallen by 53% since inclusion, underperforming the Ibovespa by 8.7%.

The Brazil Buy List. The list includes 10 names: BBAS3, BBDC4, EZTC3, GGBR4, HAPV3, JBSS3, LREN3, MULT3, RENT3 and CPFE3. So far in 2020, the portfolio has lost 45%, the same as its benchmark, the Ibovespa. Since inception in 2014, the portfolio has increased by 110%, while the Ibovespa has gained 7.8%.

Itaú BBA | 5

Equity Strategy – March 23, 2020

The Brazil Buy List

EV/EBITDA P/E Div Yield Company Ticker Sector Rec Target Price Upside (%) 2020 2021 2020 2021 2020 2021 Banco do Brasil BBAS3 Banking OP 63.0 184.7% 1.4x 1.3x 3.9x 3.5x 9.6% 11.3% Bradesco BBDC4 Banking OP 47.0 166.0% 2.6x 2.4x 6.0x 5.6x 9.1% 9.9% Localiza RENT3 Transportation OP 58.0 140.7% 9.9x 8.7x 15.6x 12.9x 1.5% 1.8% Eztec EZTC3 Real Estate OP 49.5 78.8% 17.3x 10.5x n.m. n.m. 1.6% 2.5% Gerdau GGBR4 Steel OP 25.0 189.4% 3.6x 3.5x 5.6x 5.7x 4.7% 4.6% Hapvida HAPV3 Healthcare OP 71.0 85.9% 13.6x 11.2x 23.6x 19.8x 1.9% 2.2% JBS JBSS3 Food & Beverage RESTRICTED RESTRICTED - RESTRICTED RESTRICTED RESTRICTED RESTRICTED - - Lojas Renner LREN3 Consumer Goods OP 58.0 93.3% 12.2x 10.6x 20.8x 18.2x 1.9% 2.2% Multiplan MULT3 Real Estate OP 38.7 121.0% 12.7x 10.7x 19.7x 15.7x 2.5% 3.2% CPFL Energia CPFE3 Utilities OP 39.0 66.0% 6.8x 6.4x 9.2x 9.4x 5.5% 5.3%

Source: Itaú

Itaú BBA | 6

Equity Strategy – March 23, 2020

THE IBOVESPA IS CHANGING – OUR TAKE ON REBALANCE SECTION 3

The silver lining is a more diverse benchmark. The higher volatility we are experiencing now has not been enough to stop the movement toward greater diversity and less sector concentration we’ve seen in the Ibovespa. The next Ibovespa rebalance is in May, with previews coming in April, and we expect the index to set a record for the number of members.

Number of Ibovespa Members

73 73 72 71 71 70 69 69 69 68 68 68 68 68 68 68 67 66 66 66 66 66 66 65 65 65 64 64 64 64 63 63 61 61 59 59 59 59 59 58 56

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

Jan-15

Jan-16

Jan-17

Jan-18

Jan-19

Jan-20

Sep-06

Sep-07

Sep-08

Sep-09

Sep-10

Sep-11

Sep-12

Sep-13

Sep-14

Sep-15

Sep-16

Sep-17

Sep-18

Sep-19

May-06

May-07

May-08

May-09

May-10

May-11

May-12

May-13

May-14

May-15

May-16

May-17

May-18 May-19 May-20 Source: Itaú, B3

ENGI11, CPFE3, EZTC3, BEEF3 and PRIO3 to enter the index. We are seeing Utility names gaining in the index, as the large incumbent groups (financials and hard commodities) give ground once again. SMLS3 is expected to be deleted. Once again, as noted in previous rebalances, OIBR3 would likely be added to the index if it was not for the judicial recovery procedures and its penny-stock status.

Ibovespa Weight Changes and Trade Pressure

Biggest liquidity-adjusted weight increases Biggest liquidity-adjusted weight decreases Weight Chg ADTV Pressure Weight Chg ADTV Pressure Ticker Ticker (bps) (BRL th) (days) (bps) (BRL th) (days) ENGI11 94 76,179 3.78 VIVT4 -34 134,153 -0.78 CPFE3 37 98,106 1.15 SMLS3 -7 32,793 -0.69 BPAC11 40 189,759 0.64 BBDC3 -24 112,246 -0.66 EZTC3 22 114,675 0.57 RADL3 -18 172,015 -0.33 NTCO3 65 400,509 0.50 PCAR3 -2 23,583 -0.23 BEEF3 14 94,066 0.45 KLBN11 -7 116,293 -0.19 PRIO3 13 135,770 0.29 MRVE3 -4 122,723 -0.10

Source: Itaú, B3

Itaú BBA | 7

Equity Strategy – March 23, 2020

Ibovespa Sector Distribution

33.0% Financials 33.8% 24.5% Hard Commodities 24.7% Retail 10.8% 10.5% Food & Beverage 7.2% 7.3% 7.4% Utilities 6.2% 4.1% Transportation 4.1% 3.7% Health Care 3.7% 3.1% Industrials 3.2% TMT 2.7% 3.1% 1.4% Education 1.4% Homebuilders 0.8% 0.6% 1.2% Real Estate 1.3% 0.00% 10.00% 20.00% 30.00% 40.00%

Itau BBA Estimate Current

Source: Itaú, B3

Itaú BBA | 8

Equity Strategy – March 23, 2020

A NOTE ON FLOW DATA SECTION 4

Individual investors were the main buyers during the market sell-off. Individuals bought an additional 4% of their pre-sell-off holdings. Foreign investors were the main sellers during this period, reinforcing their underweight positions in Brazil and in emerging markets.

Cumulative Flow Since COVID-19 Sell-Off

5% 4% 3% 2% 1% 0%

Equity Equity Assets -1%

-2% % of Investor Type TotalType Investor of % -3% 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Individuals Institutional Investors Foreign Investors

Source: Itaú, B3

Institutional investors kept receiving inflows from retail investors. Retail investors continued to increase their investments in funds (in general), with equity funds receiving the largest inflows in March to date. This leads us to believe that institutional investors decided to lay low as foreign investors kept selling. We note, however, that we are unable to know the exact amount of outflows due to the delayed withdrawal mechanism requested by fund’s investors, which could play an important role in the months to come.

Fund Inflow Month-to-Date (BRL in Billions)

3.9 3.5

2.0

0.6 0.3

-1.8

Fixed Income Equity Hedge FX Pension ETF

Source: Anbima, Itaú

Ibovespa measured in U.S. dollars is starting to look attractive again. The Ibovespa is down nearly 60% YTD, when measured in USD, and has reached 12,300 points. This is below the trough reached during the 2008-09 crisis and is very close to the bottom reached during the 2015-16 recession. This implies a positive technical position, given that foreign investors reduced their exposure to Brazil throughout 2019 and intensified the trend in 2020. In a highly uncertain and volatile scenario, global investors are unlikely to make strong bets on emerging market countries (flight to quality and flight to liquidity seems to be the priority), but we believe this could change quickly if and when the outlook for global GDP growth becomes clearer.

Itaú BBA | 9

Equity Strategy – March 23, 2020

Ibovespa in USD

50,000

45,000

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018 2019 2020 Source: Economatica, Itaú

Itaú BBA | 10

Equity Strategy – March 23, 2020

DISCLAIMER

Itaú BBA is a registered trademark used by Itaú Unibanco S.A.

Ratings: Definitions, Dispersion and Banking Relations

Ratings (1) Definition (2) Coverage (3) Banking Relation (4)

The analyst expects the stock to perform better than Outperform 62% 68% market average.

The analyst expects the stock to perform in line with Market Perform 32% 35% market average.

The analyst expects the stock to perform below market Underperform 6% 7% average.

1. The ratings employed in this document (Outperform, Market Perform, and Underperform) basically correspond to Purchase, Hold, and Sell, respectively. 2. The ratings represent the analyst’s assessment of the medium-term share price performance relative to the market average. These ratings may be reviewed by the analyst based on new developments or simply due to variations in share prices (such changes may occur at any time). Companies are grouped into sectors, based on similar characteristics. Sectors: (i) Banks and Financial Services; (ii) Consumer Goods & Retail + Food & Beverage (iii) Healthcare + Education; (iv) Steel & Mining + Pulp & Paper; (v) Oil, Gas & Petrochemicals + Agribusiness; (vi) Real Estate & Construction; (vii) Telecommunications, Media and Technology; (viii) Transportation, Capital Goods and Logistics; (ix) Public Utility Services; and (x) Strategy. 3. Percentage of companies covered by Itaú Unibanco S.A. in this rating category. 4. Percentage of companies included in this rating category that were provided investment bank services by Itaú Unibanco S.A. or any of its affiliated companies.

Material Information

1. This report was prepared by Itaú Unibanco, a company regulated by the Brazilian Securities and Exchange Commission (CVM), and distributed by Itau Unibanco, Itaú Corretora de Valores S.A. and Itaú BBA. Itaú BBA is a registered trademark used by Itaú Unibanco. 2. This report does not constitute an offer to buy or sell any financial instrument or to participate in any particular trading strategy under any jurisdiction. The information herein was deemed reasonable on the date of publication and was obtained from reliable public sources. Neither Itaú Unibanco nor any of its affiliated companies (“Grupo Itaú Unibanco”) ensure or guarantee, either expressly or implicitly, that the information contained herein is accurate or complete. Furthermore, this report is not a complete or summarized representation of investment strategies, markets or developments thereof. The opinions, estimates and/or forecasts provided in this report reflect the current opinion of the analyst responsible for the content herein on the date of publication and are, therefore, subject to change without notice. The prices and availability of the financial instruments are merely indicative and subject to change beyond the control of Itaú Unibanco. Neither Itaú Unibanco nor any of its affiliated companies are obligated to update, amend or otherwise alter this report, or to inform readers of any changes in its content, except upon termination of coverage of the securities issuers discussed herein. 3. The analyst responsible for preparing this document, highlighted in bold, hereby certifies that all opinions expressed in this report accurately, solely and exclusively reflect his/her personal views and opinions regarding all of the issuers and securities analyzed herein, provided in this document independently and autonomously, including from Itaú Unibanco, Itaú Corretora, Itaú BBA, and any of their affiliated companies. Whereas the personal opinions of investment analysts may diverge, Itaú Unibanco, Itaú Corretora, Itaú BBA and/or any of their affiliated companies may have published or eventually publish other reports that are inconsistent and/or reach different conclusions than those provided herein. 4. The analyst responsible for preparing this report is not registered and/or not qualified as a survey analyst at the NYSE or FINRA, nor is such analyst in any way associated with Itau BBA USA Securities, Inc. and is, therefore, not subject to the provisions of Rule 2242 on communications with researched companies, public appearances and transactions involving securities held in a research analyst account. 5. Part of the analysts’ compensation is determined based on the total top line of Itaú Unibanco and some of its affiliated companies, including revenues arising from investment bank services. Nonetheless, the analyst responsible for the content in this report hereby certifies that no part of his/her compensation is or will be directly or indirectly conditioned to any specific recommendations or opinions herein. 6. The financial instruments discussed in this document may not be suitable for all investors. This report does not take under consideration the specific investment objectives, financial situation or needs of any particular investor. Investors who intend to purchase or trade the securities covered in this report must seek out the applicable information and documents in order to decide whether to invest in such securities. Investors must independently seek out financial, accounting, legal, economic and market guidance, based on their personal characteristics, before making any investment decision regarding the securities of the issuers analyzed in this report. Each investor must make the final investment decision based on a range of related risks, fees and commissions. In the event that a financial instrument is expressed in currencies other than the one used by the investor, exchange rate variations may adversely affect the price, value or profitability. Financial instrument yields may vary, ultimately increasing or decreasing the price or value of financial instruments, either directly or indirectly. Past performance is not necessarily indicative of future results, and this report does not ensure or guarantee, either expressly or implicitly, any possible future performance or any other aspect thereof. Itaú Unibanco and its affiliated companies may not be held liable for eventual losses, either direct or indirect, arising from the use of this report or its content. Upon using the content herein, investors undertake to irrevocably and irreparably hold Itaú Unibanco and/or any of its affiliated companies harmless against any claims, complaints, and/or losses. 7. This report may not be reproduced or redistributed to third parties, either in whole or in part, for any reason whatsoever, without prior written consent from Itaú Unibanco. This report and its contents are confidential. 8. In accordance with the rules of the Brazilian Securities and Exchange Commission, the analysts responsible for this report have described scenarios of potential conflict of interest in the “Relevant Information” chart below.

Itaú BBA | 11

Equity Strategy – March 23, 2020

Additional note for reports distributed in the (i) United Kingdom and Europe: This material is provided for informational purposes only and does not constitute an offer to buy or sell any financial instrument or to participate in any particular trading strategy. The financial instruments discussed in this document may not be suitable for all investors and are intended solely for Eligible Counterparties and Professional Clients, as defined by the Financial Conduct Authority. This report does not take under consideration the specific goals, financial situation or needs of any particular client. Clients must independently seek out financial, legal, accounting, economic, loan, and market guidance, based on their personal characteristics and objectives, before making any investment decision based on the information contained herein. Upon accessing this material, readers acknowledge the applicable laws in their jurisdiction regarding the provision and sale of financial products. Furthermore, readers acknowledge that this material contains proprietary and information for your exclusive use only. Itau BBA International plc (IBBAInt) may not be held liable for any losses, either direct or indirect, eventually arising from the use of this material and its content, and is not obligated to update the information contained herein. The reader also acknowledges the inherent risks related to the financial instruments discussed in this document. Due to international regulations, not all financial services/instruments may be available to all clients. Such restrictions must be taken into consideration in all potential investment decisions. Past performance and estimates are not indicative of future results. The information herein was obtained from internal and external sources, and was deemed reliable until the date of publication. However, IBBAInt does not ensure or guarantee that the information obtained from third parties or public sources is accurate or complete. Additional information regarding the financial products discussed in this report are available upon request. Itau BBA International plc has registered offices at 20th floor, 20 Primrose Street, London, United Kingdom, EC2A 2EW and is authorized by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (FRN 575225). The business activities of the Lisbon branch of Itau BBA International plc are regulated by Banco de Portugal. Itau BBA International plc has branch offices in France, Germany and Spain, duly authorized to carry out limited activities, and all business activities are regulated by Banque de France, Bundesanstalt fur Finanzdienstleistungsaufsicht (BaFin) and Banco de España, respectively. Contact your relationship manager if you have any questions; (ii) USA: Itaú BBA USA Securities, Inc., a company affiliated with FINRA/SIPC, is responsible for distributing this report and the content herein. Any U.S. investor who receives this report and intends to trade any of the securities addressed herein must do so through Itau BBA USA Securities, Inc. at 540 Madison Avenue, 24th Floor, New York, NY 10022.; (iii) Middle East: This report is distributed by Itau Middle East Limited. Itau Middle East Limited is regulated by the Dubai Financial Services Authority, headquartered at Suite 305, Level 3, Al Fattan Currency House, Dubai International Financial Centre, P.O. Box 482034, Dubai, United Arab Emirates. This material is intended solely for Professional Clients (as defined by the DFSA Conduct of Business module) and no other persons may make decisions based on its content; (iv) Brazil: Itaú Corretora de Valores S.A., a subsidiary of Itaú Unibanco S.A., is authorized by the Central Bank of Brazil and sanctioned by the CVM to distribute this report. Contact the Customer Service channel for more information: 4004-3131* (capital and metropolitan regions) or 0800-722-3131 (other locations) during business hours (BRT). If additional service is required after contacting the aforementioned channels, contact: 0800-570-0011 (business hours) or write to P.O. Box 67.600, São Paulo – SP, CEP (Postal Code) 03162-971.* (local costs apply)

Relevant Information – Analysts

Disclosure Items Analysts 1 2 3 4 Marcos Assumpção Jorge Gabrich André Dibe

1. The securities analyst(s) involved in preparing this report are associated with individuals who work for the issuers addressed herein. 2. The securities analyst(s) spouse(s) or partner(s) hold, either directly or indirectly, on their own behalf or on behalf of third parties, stock and/or other securities discussed in this report. 3. The securities analyst(s), spouse(s) or partner(s) are directly or indirectly involved in the purchase, sale or intermediation of the securities discussed in this report. 4. The securities analyst(s), respective spouse(s) or partner(s) hold, either directly or indirectly, any financial interest related to the securities issuers analyzed in this report.

Itaú BBA | 12