Equity Research - Brazil Focus List

Thursday, October 1, 2009

Strategy
Upsides in Short Supply
For the month of October we are sticking to our strategy of favoring sectors
and companies with greater exposure to the domestic market in our stock
picking. On a year-to-date basis, the Ibovespa index is one of the best
performers in the world, climbing 63.8% (+114.6% in USD terms), and at
current levels we see limited upside for the market (our YE10 target for the
Ibovespa is 67,000).

We hold to our view that the global economy’s growth may take some time to
return to pre-crisis levels, as current economic indicators still point to uncertain
conclusions. On the other hand, the Brazilian economy continues to post
encouraging indicators, leading our economists to raise the GDP growth
estimate for 2010 by 50bps to 3.5%. Inflation is not currently an issue, although
we expect interest rates to go up in 2010, most likely after the presidential
election, which will take place in 2H10.

Changes in the portfolio. For the month of October we have made only two
changes compared to the previous month’s portfolio, having included BR Malls
(BRML3) and São Martinho (SMTO3) and removed Açúcar Guarani (ACGU3)
and ALL (ALLL11).

ADTV 3m Price P/E EV/EBITDA

Company Ticker Rating
R$mn Target Upside 2009 2010 2009 2010

Top Picks - October

Banco ABC Brasil ABCB4 Outperform 1.7 R$ 12.50 19.0% 10.4 7.7
BR Malls BRML3 Outperform 12.3 R$ 29.00 38.8% 19.1 24.9 14.3 12.2
MMX MMXM3 Outperform 33.5 R$ 16.80 54.1% n.m n.m nm 74.9
NET NETC4 Outperform 29.4 R$ 25.30 22.8% 16.1 16.2 6.8 6.0
OGX OGXP3 Outperform 95.7 R$ 1,668.70 23.2% 144.3 121.2 nm nm
Oi Oper. TMAR5 Outperform 8.8 R$ 85.70 47.3% 6.9 5.5 3.5 3.2
Pão de Açúcar PCAR5 Outperform 29.9 R$ 72.00 44.0% 20.4 15.4 8.7 7.1
São Martinho SMTO3 Outperform 0.9 R$ 29.50 77.7% 14.9 18.1 7.6 6.0
TIM TCSL4 Outperform 17.7 R$ 6.00 36.1% 87.8 12.8 3.5 3.4
VisaNet VNET3 Outperform 137.3 R$ 22.30 26.8% 16.4 13.9 10.2 8.7

Source: Bloomberg, Bradesco Corretora estimates

Equity Analysts:
Carlos Firetti, CFA
carlosfiretti@bradescobbi.com.br
55 11 2178 5363
Marcos Suzaki
marcos@bradescobbi.com.br
55 11 2178 5317
Chief Economist:
Dalton Gardimam
dalton@bradescobbi.com.br
55 11 2178 4275

Bradesco Corretora – Av. Paulista, 1450 7º andar São Paulo, Brazil – 5511 3556 3001

Bradesco S.A. Corretora de Títulos e Valores Mobiliários (Bradesco Corretora) does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that Bradesco Corretora
and its affiliates 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.

For full disclaimer and definitions, please refer to the end of this report.
Equity Research – Brazil: Thursday, October 1, 2009

The Month Ahead – Mapping Fundamentals and Beyond

ACTIVITY: Clearly the most important figure on the activity front was GDP data for
the second quarter of 2009, with growth of 7.8% (SAAR). Favorable formal
employment numbers have come out (creation of 242k jobs in August) as well.
Remuneration indicators in the labor market are not deteriorating as before (although
some fatigue is still evident). Good economic figures continued with data from the
monthly employment survey, which revealed an 8.1% unemployment rate for the
month of August. However, positive results did not come exactly from occupation: the
number of employed people was flat in both the MoM and YoY comparisons. Retail
sales rose 5.9% YoY in July, with a 0.5% MoM increase, the third in a row, elevating
3-month moving average growth to +0.9% MoM (+0.7% MoM in June). We have not
denied or ignored the improvement in activity indicators. The end of the Brazilian
recession is indeed a reason for celebration, although growth momentum is one part
of the equation; the other one is sustainability. Credit has picked up but credit
demand is still faltering in some sectors. Our strongest concern right now is the
removal of expressive stimuli in the global economy in 2010, which could create
additional fatigue for the economy. All that said, we have revised our forecast for
GDP growth in 2010 to 3.5% from 3%.

INFLATION: Outright deflation in wholesale prices is over, but it is neither fair nor
correct to say that inflation is a concern. The Central Bank’s Quarterly Inflation
Report has not materially changed the inflation outlook. For the Bacen, IPCA inflation
should be 4.2% in 2009 and 4.4% in 2010. The 4.6% inflation penciled out for 1Q11
was probably the trigger for markets becoming more nervous about interest rates.
We have lower forecasts: 3.9% for 2009 and 4% for 2010. However, we have no
disagreement with 2011 forecasts: 4.6%. Before the release of the Inflation Report
we had imagined the Central Bank raising rates in late 2010, and we stick to that
view. We are not yet seeing a hike in 1H10.

FISCAL: The possibility of deducting investments corresponding to 0.94% of GDP

from the current primary balance target, which effectively reduces the actual target, is
an important precedent. This move ratifies the ongoing fiscal push, increases
concerns about medium-term issues regarding fiscal finances, and gives room for
interest rate futures to bid up (as we saw in late September). Although we share the
view that the lower target will eventually lead to an increase in the debt-to-GDP ratio
or not allow for a decrease as would be the case otherwise, the present conditions of
public finances are extremely comfortable in terms of debt dynamics. This comes
from the relief of lower rates. The interest burden is going to be approximately 4.8%
of GDP in 2009, while it has averaged 8.5% in the last 10 years. There is plenty of
room for this administration to use this maneuvering room in 2010. Debt is likely to
remain stable or decline slightly in 2010-2011.

BOP: In Jan-Aug 2009 the current account deficit reached US$9.5bn (1.2% of GDP).
This is roughly 47% the size of the current account generated in the same period of
2008. We reiterate our view that there is not a major problem in the currency level
(REER), since the overall structure of foreign exchange transactions is still highly
unconvertible. Our point is that with more flexible, more open and freer FX
transactions we would have better conditions to gauge the most appropriate path for

2
Equity Research – Brazil: Thursday, October 1, 2009

the currency level. Current account deficits that remain very low, as is the case right
now, or that are going to be relatively small, which is going to be the case next year,
are not good arguments for major intervention in the currency or assertions that
Brazil suffers from Dutch disease or some other malfunction in the currency. That
said, it is important to differentiate this overall positive assessment about the BRL
and the present dynamics of abundant flows. The BRL is probably reacting to
extraordinary (as opposed to “normal”) flows. On the domestic front there is a great
deal of equity operations in the pipeline, and a good number of fixed income
instruments (bonds and debentures) to come to market as well, some of which with
sizeable volumes. That combination of supply of domestic assets and still abundant
liquidity motivated us to come up with a trading call for the BRL: while keeping the
US$1.90/R$1 forecast for year-end, we now see the Brazilian currency moving to
US$1.7/R$1 in the short term.

GLOBAL: Housing indicators in the US have begun to stabilize, but new home sales
are 70% off their peak. Leaders of the developed world pleading for everyone to keep
stimuli in place is a perfect indication of the challenges of removing them at this
stage. The global economy is held hostage by the fiscal and monetary stimuli
implemented in 2008 and 2009. Our major concern is faulty credit markets (corporate
credit flat or declining on a YoY basis in the US and Europe is extremely concerning).
CPI inflation is not a problem (we are more worried about deflation and the impacts
of debt spiral in the economy). China is trying harder and harder with ever lower
marginal visible results (industrial production and exports), despite still “good” (and
debatable) GDP numbers. The recovery is well on track, although a genuine recovery
to sustainable growth levels will have to wait a little more.

CONCLUSIONS/ECONOMY AND MARKETS

EQUITY ENVIRONMENT. Valuations are dear, fund managers are talking more and
more about this, and (forced?) migration to stocks with lower liquidity and relatively
better valuations are happening not necessarily with money seeking these stocks
with gusto. The rally is a reflection of loose monetary policies in a world that is
improving. The flow’s momentum simply continues. There are numerous equity
issues in the pipeline as well.

INTEREST/BONDS/COPOM. Interest rates will go up in 2010. We have had, and

maintain, this view. The point is timing of the first rate hike. We do not see this
happening in the first quarter, and view the chances of it happening in 2Q10 are low.
We initially imagined the hike happening in the last quarter of 2010. This is still likely
since an initial move a couple of months before the presidential election in 2010 does
not seem to be the most likely outcome. A benign inflation outlook reinforces this
scenario.

USD/BRL. The combination of inflows and bond/equity issues of good names has led
us to a trading call for the BRL: while keeping the US$1.90/R$1 forecast for year-
end, we now see the Brazilian currency moving to US$1.7/R$1 in the short term.

Dalton Gardimam – 5511 2178 4275 – dalton@bradescobbi.com.br

Denis Blum – 5511 2178 4224 – denis@bradescobbi.com.br

3
Equity Research – Brazil: Thursday, October 1, 2009

Sector View
Figure 1: Sector Allocation for Ibovespa
Our Weight Our Weight
Ibovespa View Ibovespa Stocks Ticker Ibovespa
Banks 14.0% Under 12.5% Banco do Brasil BBAS3 4.0%
Bradesco BBDC4 5.0%
Itaú Unibanco ITUB4 3.5%
Other Fin. Sector 6.3% Over 8.1% BM&FBovespa BVMF3 2.5%
Redecard RDCD3 2.5%
VisaNet VNET3 3.1%
Consumer Goods 4.5% Neutral 4.9% Ambev AMBV4 2.5%
Minerva BEEF3 1.0%
Perdigão PRGA3 1.4%
Retail 3.7% Over 4.0% Pão de Açúcar PCAR5 4.0%
Oil 18.8% Neutral 19.0% OGX OGXP3 4.0%
Petrobras PETR4 15.0%
Steel 11.4% Neutral 11.0% CSN CSNA3 5.5%
Usiminas USIM3 5.5%
Mining 18.0% Under 17.0% MMX MMXM3 2.5%
Vale VALE5 14.5%
Pulp and Paper 2.4% Under 0.0%
Real Estate 3.4% Over 4.0% BR Malls BRML3 4.0%
Aerospace 0.7% Under 0.0%
Airlines 1.3% Under 0.0%
Telecom - Fixed 3.3% Over 6.0% NET NETC4 4.0%
Oi Part. TMAR5 2.0%
Telecom - Wireless 1.7% Neutral 2.0% TIM Part. TCSL4 2.0%
Utilities 6.7% Neutral 6.5% AES Tietê GETI4 2.5%
Tractebel TBLE3 2.5%
Transmissão Pta. TRPL4 1.5%
Transports and Logistics 1.3% Over 2.0% ALL ALLL11 2.0%
Sugar and Ethanol 0.5% Over 3.0% Cosan CSAN3 3.0%
Petrochemicals 0.9% Under 0.0%
Others 1.0% Under 0.0%
Total 100.0% 100.0% 100.0%
Source: BM&F Bovespa and Bradesco Corretora

Figure 2: Sector Allocation for Ibx-50

Our Weight Our Weight
Ibx-50 View Ibx-50 Stocks Ticker Ibx-50
Banks 21.9% Under 18.0% Banco do Brasil BBAS3 6.0%
Bradesco BBDC4 7.0%
Itaú Unibanco ITUB4 5.0%
Other Fin. Sector 4.8% Over 6.0% BM&FBovespa BVMF3 2.0%
Redecard RDCD3 2.0%
VisaNet VNET3 2.0%
Consumer Goods 6.1% Neutral 6.5% Ambev AMBV4 3.5%
Minerva BEEF3 1.0%
Perdigão PRGA3 2.0%
Retail 2.6% Over 3.0% Pão de Açúcar PCAR5 3.0%
Oil 26.3% Over 28.0% OGX OGXP3 6.0%
Petrobras PETR4 22.0%
Steel 7.6% Neutral 8.0% CSN CSNA3 4.0%
Usiminas USIM3 4.0%
Mining 17.5% Under 16.0% MMX MMXM3 2.0%
Vale VALE5 14.0%
Pulp and Paper 0.7% Under 0.0%
Real Estate 1.3% Neutral 1.5% BR Malls BRML3 1.5%
Aerospace 1.0% Under 0.0%
Airlines 0.4% Under 0.0%
Telecom - Fixed 1.8% Over 2.5% NET NETC4 1.5%
Oi Part. TMAR5 1.0%
Telecom - Wireless 1.2% Neutral 1.0% TIM Part. TCSL4 1.0%
Utilities 4.6% Neutral 5.0% AES Tietê GETI4 2.0%
Tractebel TBLE3 2.0%
Transmissão Pta. TRPL4 1.0%
Transports and Logistics 0.6% Over 2.0% ALL ALLL11 2.0%
Sugar and Ethanol 0.3% Over 2.5% Cosan CSAN3 2.5%
Petrochemicals 0.8% Under 0.0%
Others 0.4% Under 0.0%
Total 100.0% 100.0% 100.0%
Source: BM&F Bovespa and Bradesco Corretora

4
Equity Research – Brazil: Thursday, October 1, 2009

Top Picks

Banco ABC Brasil (ABCB4) – ABC Brasil is currently our best bet to play the
banking sector. We favor small banks with a strong presence in the corporate
segment, in which opportunities for niche players like ABC Brasil have risen since the
recent mergers of Itaú with Unibanco and Santander with ABN. Furthermore, the
bank is already prepared and waiting for better timing to expand its operations in the
SME segment, where there are major growth opportunities and higher return levels.

BR Malls (BRML3) – We expect BR Malls shares to present good performance in

the coming weeks as it has fallen short of the sector’s average, especially in the last
month. We also believe the company will use ~R$600mn of its current ~R$1bn in
cash to continue growing through acquisitions in the short term, increasing expected
EBITDA and reducing its “premium” 10.9x EV/EBITDA10 multiple against the sector
average of 9.8x. Moreover, we believe that the company’s results will continue to
confirm our good perception of the sector, and is likely to maintain strong sales
growth. In addition, the company has more liquidity compared to its peers. We have
an Outperform rating for BRML3, with a R$29.00/share target price.

MMX (MMXM3) – MMX’s expansion project is so promising that the company has
considerable upside potential even taking into account the macroeconomic risks that
still exist in China. We have a TP of R$14.1/share for the company, implying upside
potential of 64%, even though we are assuming iron ore prices dropping 42% over
the next three years. Moreover, there is the possibility of positive triggers in the short
to medium term as the company closes a strategic agreement with Wisco, China’s
second-largest steel mill, and as the construction of the Sudeste Port begins.
However, fluctuations in the Chinese stock market could add some volatility to
commodities stocks.

NET (NETC4) – NET should gain good momentum with its 3Q09 results being
published on October 21. In our view, the company should continue to improve its
performance and grow as pay TV penetration increases in the country, with NET
gaining the most on the back of its highly-competitive triple play bundles (TV +
telephone + broadband). In addition, we believe the company will expand its cross-
selling efforts, increasing penetration of broadband customers in its own pay TV
subscriber base. It is important to note that NETC4 has underperformed the market
(+3.7% in September vs. +8.9% for Ibovespa)

OGX (OGXP3) – OGX started its drilling campaign on August 16 in the BM-S-29
block (more specifically, the Abacate-1 prospect) and on September 17 began the
Vesuvio BM-C-43 project. The company’s schedule for 2009 involves drilling six
wells, with the announcement of results for four of them, in a process that will convert
potential resources into proven reserves. In light of OGX’s team, the accredited
certification company that revised the potential reserve studies and the general
development of the company, we are optimistic about the success rate to be
achieved and the enormous upside potential to be created with the discoveries.

5
Equity Research – Brazil: Thursday, October 1, 2009

Oi (TMAR5) – We maintain our bet on Oi as a value play trading at low multiples

(3.8x EV/EBITDA10E, vs. international peers trading at 5.1x), implying large upside,
while also being a defensive bet in a more cautious scenario. In our view, the
negative pressure on the company’s results due to the merger has already subsided,
and the market should start looking forward to 2010 with synergies amounting to
roughly R$1.0bn, besides a positive outcome from the startup of wireless operations
in São Paulo state, which will permit the company to generate strong FCF (above
20%) that should be used to reduce debt (currently at 2.2x EBITDA 2010).

Pão de Açúcar (PCAR5) – We have an Outperform rating for PCAR5 and a R$66.4
target price for YE09 on the back of: (i) potential value addition of R$750mn, or
R$3.00 per share, due to synergies generated from combined operations with Ponto
Frio; (ii) potential value addition from the group’s e-commerce business, which has
already risen to second place in the Brazilian market and should reach R$904mn in
sales in 2009 (we are evaluating it at R$1.115bn, or R$4.40 per share); and (iii) our
valuation of the company’s real estate assets at R$2.603bn, which, discounting the
present value of the additional lease expenses it would incur in case it sells its
assets, is estimated at R$1.781bn, or R$7.00 per share. In addition, we see other
hidden values, such as the group’s drugstores and gas stations, which we are not
taking into account in our target price but nevertheless evaluate at R$88mn and
between R$103mn and R$145mn, respectively.

São Martinho (SMTO3) – Among the listed sugar & ethanol companies, São
Martinho has the highest exposure to ethanol, whose prices were quite compressed
recently. However, due to rainfalls and the normal cycle, ethanol prices have started
to recover and we expect this trend to continue through April 2010. Under this
scenario we expect the entire sector to benefit, although more so for São Martinho,
which has greater exposure to the fuel and is leveraged by its own sugarcane
production.

TIM (TCSL4) – We believe TIM should continue to outperform Vivo considering that it
is still trading at a discount that should become narrower, as we believe the company
has a greater potential to improve margins and consequently profitability compared to
Vivo. The company is in a turnaround phase, investing in its network and improving
its customer base, focusing on the postpaid segment. Furthermore, synergies with
Intelig, to be tapped only in 2010, should drive EBITDA margins upwards as the
company significantly reduces its interconnection and leased-line expenses. TCSL4
is trading at 3.5x EV/EBITDA10E, lower than Vivo’s 4.0x.

VisaNet (VNET3) – We believe the current valuations for VisaNet have already
priced in most of the negative impact we expect from new regulations and the new
competitive environment. The company has a strong long-term growth case in terms
of volumes and strong competitive positioning that certainly makes it one of the
dominant players in the sector. According to our numbers, VisaNet currently trades at
16.4x P/E 2009 and 13.9x P/E 2010.

6
Equity Research – Brazil: Thursday, October 1, 2009
Figure 3: Top Picks for October
Avg. 3m Vol.
Company R$ million
Banco ABC Brasil ABCB4 1.7
BR Malls BRML3 12.3
MMX MMXM3 33.5
NET NETC4 29.4
OGX OGXP3 95.7
Oi Oper. TMAR5 8.8
Pão de Açúcar PCAR5 29.9
São Martinho SMTO3 0.9
TIM TCSL4 17.7
VisaNet VNET3 137.3
Source: Economática and Bradesco Corretora

Figure 4: Main Recommendations for October – Minimum Average Daily Volume of R$10mn
Avg. 3m Vol.
Company R$ million
AmBev AMBV4 41.2
BR Malls BRML3 12.3
MMX MMXM3 33.5
NET NETC4 33.5
OGX OGXP3 29.4
Pão de Açúcar PCAR5 95.7
TIM TCSL4 17.7
VisaNet VNET3 137.3
Source: Economática and Bradesco Corretora

7
Equity Research – Brazil: Thursday, October 1, 2009

Performance of Top Picks

Our Performance in September

Figure 5: Top Picks’ Performance in September

Avg. 3m Vol.
Company R$ million Change%
Açúcar Guarani ACGU3 6.1 -0.5%
ALL ALLL11 49.9 0.3%
Banco ABC Brasil ABCB4 1.7 11.5%
MMX MMXM3 33.5 29.8%
NET NETC4 29.4 3.9%
OGX OGXP3 95.7 32.2%
Oi Oper. TMAR5 8.8 12.6%
Pão de Açúcar PCAR5 29.9 8.4%
TIM TCSL4 17.7 11.4%
VisaNet VNET3 137.3 6.9%
Portfolio 11.6%
Ibovespa IBOV 8.9%
Source: Economática and Bradesco Corretora

Figure 6: Main Recommendations for September – Minimum Average Daily Volume of R$10mn
Avg. 3m Vol.
Company R$ million Change%
ALL ALLL11 49.9 0.3%
AmBev AMBV4 41.2 5.0%
MMX MMXM3 33.5 29.8%
NET NETC4 29.4 3.9%
OGX OGXP3 95.7 32.2%
Oi Oper. TMAR5 8.8 12.6%
Pão de Açúcar PCAR5 29.9 8.4%
TIM TCSL4 17.7 11.4%
VisaNet VNET3 137.3 6.9%
Portfolio 13.8%
Ibovespa IBOV 8.9%
Source: Economática and Bradesco Corretora

8
Equity Research – Brazil: Thursday, October 1, 2009

Analyst Certification
Each analyst responsible for the preparation and content of this report hereby certifies, pursuant to SEC Regulation AC and applicable laws and regulations of
other jurisdictions, that:
(i) the views expressed herein accurately and exclusively reflect his or her personal views and opinions about the subject company(ies) and its or their
securities;
(ii) that no part of their compensation was, is, or will be paid directly or indirectly, related to the specific recommendation or views expressed by that analyst
in this report; and
pursuant to Brazilian securities exchange commission (Comissão de Valores Mobiliários – CVM) Instruction 388/03:
(i) the recommendations indicated in this report solely and exclusively reflect his or her personal opinions and were prepared independently and
autonomously, including in relation to Bradesco Corretora;
(ii) he or she has no relation with the persons acting within the company(ies) analyzed in this report;
(iii) Bradesco Corretora, for which he or she works, may be involved in the acquisition, sale or dealing of securities of the company(ies) analyzed in this
report;
(iv) he or she does not receive compensation for services provided and does not have commercial relations with the company(ies) analyzed in this report,
or with individuals, legal entities, funds, trusts or estates that act representing the same interest as the company(ies). However, Bradesco Corretora
may receive compensation for services provided or have commercial relations with the company(ies) analyzed in this report, or with individuals, legal
entities, funds, trusts or estates that act representing the same interest as the company(ies); and

(v) his or her compensation is not linked to the pricing of any securities issued by the company(ies) analyzed in this report, or the proceeds of trades or
financial operations conducted by Bradesco Corretora.

Important Disclosures
Company-specific regulatory disclosures
Bradesco Corretora and/or its affiliates beneficially own one percent or more of any class of common equity securities of the subject
x 1
company(ies). This position reflects information available as of the business day prior to the date of this report;
Bradesco Corretora and/or its affiliates have managed or co-managed a public or Rule 144A offering of the subject company’s(ies’)
x 2
securities in the twelve months preceding the date of this report;
Bradesco Corretora and/or its affiliates have received compensation for investment banking services from the subject company(ies) in the
x 3 twelve months preceding the date of publication of the research report and/or expects to receive or intends to seek compensation for
investment banking services from the subject company(ies) in the three months following the date of this report;

4 Bradesco Corretora and/or its affiliates were making a market in the subject company’s(ies’) equity securities at the date of this report;

5 Any other actual material conflict of interest of Bradesco Corretora and/or its affiliates known at the date of this report.

Bradesco Corretora research ratings distribution

Rating Definition Coverage¹ BR²

Outperform Expected to outperform the Ibovespa by more than 10%. 59% 74%
Market Perform Expected to perform in the range of 10% above or below the Ibovespa. 22% 88%
Underperform Expected to underperform the Ibovespa more than 10%. 10% 86%
Under Review This indicates that both the target price and the rating are currently being revised. 5% 100%
Restricted The analyst cannot express his/her views on the company. 4% 100%
(1) Percentage of companies under coverage globally within this rating category. As of 10/1/09 Bradesco Corretora had 73 companies
under coverage globally.
(2) Percentage of companies within this rating category for which [investment banking] services were provided within the past 12 months.

Bradesco Corretora ratings

Bradesco Corretora ratings are constantly revised and any temporary inconsistencies between the upside potential that gave rise to any such rating and the
upside potential in connection with the target price are at all times deliberate. The official rating shall prevail.

Any differences between the rating and the target price may occur especially due to the analyst’s expectations to the effect that any short/medium term factors
that cannot be priced-in yet might lead to inconsistencies between Bradeco Corretora valuation and the stock behavior. The factors Bradeco Corretora
considered include, but are not limited to: Any expectations in connection with quarterly results, market conditions, ownership issues and any expectations
involving mergers and acquisitions.

The ratings reflect only the analyst’s expectation on the future performance of the relevant stock. A “Outperform” rating does not necessarily represent that the
analyst approves of the company and its management whilst a “Underperform” rating does not necessarily means that the analyst has a negative view on the
company. Within Bradeco Corretora coverage universe there are sound companies, with good fundamentals as per the market consensus, and fair priced stock,
and would not be Bradeco Corretora investment pick.

Price target and rating history

Price target, rating history chart(s), valuation/method used to determine price target, and our policy for managing conflicts of interest in connection with investment
research are available upon request. You may obtain this information by contacting your representative or by sending an email to
bradescocorretora@infobradesco.com.br.

9
Equity Research – Brazil: Thursday, October 1, 2009

Ad d ition al Disclosu res

A lthough CVM Ins truction 388/03 perm its that each analys t responsible for the preparation and content of this report may hold securities of the com pany(ies )
analyzed in this report, provided that s uc h s ec urities not exc eed 5% of the personal as sets of each and such analys t, Br adesco C o rretora’s internal policy
prohibi ts its analysts , profess ionals reporting to analysts and m em bers of their hous eholds from owning sec urities in any c ompany in the analysts ’ area of
covera ge Analy sts are paid i n part based on the profitability of Br ad esco C orreto ra and its affil iates, whic h includes inv estm ent bank ing revenues. Bradesco
C or retora policy prohibits its analy sts, persons reporting to its analysts or m em bers of thei r hous eholds from serv ing as an officer or director, advis ory board
m em ber or em ployee of any c ompany in the analysts’ area of coverage.

T he following disclosures are required under or based on the laws of the jurisdi ction indic ated, ex cept to the extent already made above w ith respec t to United
S tates laws and regulatio ns. Brazil: T his report is distributed in Brazil by Br ad esco Co rretora . Any inv estor in Braz il who receiv es this report and w ishes to
conduc t transac tions w ith stoc ks anal yzed herein should contac t and request exe cution of orders through Bradesco C o rr etora at (55 11) 3556-3001.

U nited K in gd om an d Eu ro pean Eco no mic Area: In the United Kingdom and els ewhere in the European Econom ic Area, this report m ay be m ade or
com muni cated by Bradesco S ecurities UK Limited (" Bradesc o U K"). Bradesco U K is authorized and regulated by the F inancial Services Authority and its
regis tered offic e is at: 20-22 Bedford R ow, London, W C 1R 4JS. T his report is for distribution only to pers ons who:

(i) are persons that are eligible counterparties and professional clients of Brades co U K;
(ii) have profess ional experience in m atters relating to inv estm ents falling within Article 19(5) of the F inancial Serv ices and Mark ets Ac t 2000 (F inanc ial
Prom otion) Order 2005 (as amended, the "Financial Promotion Order");
(iii )
are persons falling within A rticle 49 (2) (a) to (d) ("high n et worth compani es, unincorporated as sociati ons etc ") of the F inancial Prom otion Order;

(iv ) are outs ide the United K ingdom, or

(v) are persons to w hom an inv itation or inducem ent to engage in inves tm ent activity (wi thin the m eaning of s ec tion 21 of the Fi nancial Services and
M arkets Ac t 2000) in c onnection with the is sue or sale of an y securitie s to w hich this report relates m ay otherwise lawfully be com m unicated or caus ed
to be comm unicated (all such pers ons together being referred to as "relev ant persons").

T his report is direc ted only at relev ant persons and m ust not be acted on or relied on by pers ons who are not relevant persons. Any inv estm ent o r inves tm ent
ac tivity to which this report relates is available only to relevant pers ons and will be engaged i n only with relev ant persons . No public offer of any s ec urities to
w hich this report relates is being made by Brades co UK or B radesco C orretora in the United Ki ngdom or els ewhere in the European Econom ic Area.

U nited States: This report is dis tributed in the U nited States by Brades co Securities Inc. Bradesco Sec urities Inc ., a U .S. regis tered brok er-dealer and a wholly -
ow ned subsidiary of Banco Bradesco S.A., is a m ember of FINR A/SIPC . All U.S. rec ipients of this report wis hing to effec t trans ac tions in sec urities dis cuss ed
should contact and plac e orders through Bradesco Securities Inc. at (212) 888-9141.
Oth er C ou n tries: T his report, and the securities discussed herein, m ay not be eligible for dis tribution or sale in al l c ountries or to certain categories of investors.
In general, this report may be distributed only to profes sional and institutional investors.

G en eral Disclosu res

1) T his report has been prepared solely by B rad esco C orreto ra and is being provided exclusively for inform ational purposes. The information, opini ons,
es tim ates and projections c onstitute the judgment of the author as of the current date and are subject to m odifications without prior notice. Bradesco
C orreto ra has no obligation to update, m odify or am end this report and inform the reader acc ordingly, except w hen term inating cov erage of the i ss uer
of the sec urities disc ussed in this report.
2) T his report, including the es ti mates and calc ulations of B rad esco Co rr eto ra , is based on publ icly av ailable inform ation that it consider reliable, but it do
not repres ent it is accurate or c om plete, and should not be relied upon as s uc h.
3) T his report is not an offer or a solicitati on for the purc hase or sale of any financ ial instrum ent. It is not intended to provide personal inves tm ent advice

and it does not take into acc ount the s pecific investm ent obj ectives, financial situation and the partic ular needs of any sp ecific pers on who may receive

this report. Investors s hould s eek financial advi ce regarding the appropriateness of investing in any s ecurities, other investm ent or inves tm ent s trategies

discu ss ed or recom m ended i n this report and should understand that statem ents regarding future prospects m ay not be realiz ed.
4) Investors should no te that inc ome from securities or other inv estm ents, if any, referred to in this report may fluctuate and that price or value of such
s ecurities and investm ents m ay rise or fall. Acc ordingly, inv estors m ay rec eive back less than originally i nves ted. P ast perform ance is not neces sari ly a
guide to future perform ance. Brad esco C orreto ra and its affiliates do not accept responsibili ty for any direc t or indirect loss arising due to us e of this
report. Inv estors s hould c onsider w hether any advic e or recom m endation in this res earch is s uitable for their particular circums tanc es and, if
appropriate, s eek profes sional advice, including tax advice. Exc hange rate mov ements could hav e adverse effects on the v alue or price of, or incom e
deriv ed from , certain investm ents.
5) B rad esco Co rretor a’s and its affiliates’ s alespeople, traders and other profess ionals may provide oral or written mark et comm entary or trading
s trategies to their clients and their proprietary trading desk s that reflec t opinions that are contrary to the opinion exp res sed in this report. Suc h m arket
c om mentary or trading strategies reflect the different tim e fram es, assum pti ons, view s and analytical m ethods of the persons who prepared them, and
B rad esco C orreto ra and its affiliates are under no obligation to ens ure that suc h m arket c omm entary or trading strategies are brought to the attention
of any rec ipient of this report.
6) F rom tim e to tim e, B rad esco C orreto ra or its affiliates and offic ers, directors and em ployees, not including its analy sts m ay, to the ex tent permitted by
law , hold long or short pos itions, or otherw ise be interes ted in trans actions in ass ets directly or indirectly related to this report.
7) N on-US research analy sts w ho have prepared this report are not registered or qualified as res earch analysts w ith F IN RA but instead have satis fied the
regis tration and qualifica tion requirements or other research-related standards of a non-U S ju ri sdiction.

Any additional inform ation m ay be obtained by contacting y our representativ e or by se nding an email to bradescocorretora@infobrades co.c om .br

No p ortio n o f th is do cum ent may be (i) co pied, ph oto cop ied o r d up licated in any fo rm, or b y an y mean s, or (ii) redistribu ted witho ut prio r co nsen t from
Bradesco Co rretora.

10
Bradesco Corretora Research Team
Sectors Analysts Associates
Economics Dalton Gardimam 55 11 2178 4275
(Chief Economist) dalton@bradescobbi.com.br

Denis Blum 55 11 2178 4224

denis@bradescobbi.com.br

Strategy, Banking, Insurance Carlos Firetti, CFA 55 11 2178 5363 Marcos Suzaki 55 11 2178 5317
and Financial Services (Head of Research) carlosfiretti@bradescobbi.com.br marcos@bradescobbi.com.br
Rafael Frade 55 11 2178 4056
rafaelf@bradescobbi.com.br
Oil & Gas, Petrochemicals Auro Rozenbaum 55 11 2178 5315 Bruno Varella 55 11 2178 5310
and Sugar & Ethanol auro@bradescobbi.com.br bvarella@bradescobbi.com.br
Alessandro Mady 55 11 2178 5329
alessandrotm@bradescobbi.com.br
Transportation, Logistics, Malls and Edigimar Maximiliano 55 11 2178 5327 Luiz Peçanha 55 11 2178 5324
Small Caps maximiliano@bradescobbi.com.br pecanha@bradescobbi.com.br

Consumer Goods and Retail Fabio Monteiro 55 11 2178 5318 Ricardo Boiati 55 11 2178 5326
fabio@bradescobbi.com.br rboiati@bradescobbi.com.br
Rodrigo Santoro 55 11 2178 4276
rodrigo@bradescobbi.com.br
Telecom, Media and Technology Luis Azevedo 55 11 2178 5321 Vitor Pini 55 11 2178 4274
luisazevedo@bradescobbi.com.br vpini@bradescobbi.com.br
Rodrigo Santoro 55 11 2178 4276
rodrigo@bradescobbi.com.br
Education Vitor Pini 55 11 2178 4274 Luis Azevedo 55 11 2178 5321
vpini@bradescobbi.com.br luisazevedo@bradescobbi.com.br
Electric Utilities, Water & Sewage Vladimir Pinto 55 11 2178 5323 Marcelo Sá 55 11 2178 4273
vladimir.pinto@bradescobbi.com.br marcelo.sa@bradescobbi.com.br
Steel, Mining, Pulp & Paper Raphael Biderman 55 11 2178 5313 Gina Montone 55 11 2178 4272
rbiderman@bradescobbi.com.br gina@bradescobbi.com.br
Alessandro Mady 55 11 2178 5329
alessandrotm@bradescobbi.com.br
Real State André Rocha 55 11 2178 4223
andre.rocha@bradescobbi.com.br
Fixed Income Altair Pereira 55 11 2178 4279 Nathalie Aron 55 11 2178 4225
altair@bradescobbi.com.br nathalie@bradescobbi.com.br
Individual Investors Jose Francisco Cataldo 55 11 2178 5319 Nathalie Aron 55 11 2178 4225
cataldo@bradescobbi.com.br nathalie@bradescobbi.com.br

Institutional Sales Team

Bradesco Corretora CTVM S.A. – São Paulo Bradesco Securities, Inc. – New York
Sales – 55 11 3556 3001 FINRA/SIPC Member
João Saldanha, CFA saldanha@bradescobbi.com.br Sales – 01 212 888 9141
José Arvelos arvelos@bradescobbi.com.br Marcelo Cabral mcabral@bradescosecurities.com
Juvenal Neves juvenal@bradescobbi.com.br Alison Kulach akulach@bradescosecurities.com
Vikram Kapur vic@bradescosecurities.com
Jason Myers jason@bradescosecurities.com

Sales - Fixed Income – 01 212 888 9141

Sales Trading – 55 11 3556 3001 Shinichiro Fukui shin@bradescosecurities.com
Adilson dos Santos 5900.adilson@bradesco.com.br
Sales Trading – 01 212 888 9141
Sales - Fixed Income - 55 11 2178 6959 Alec Cunningham alec@bradescosecurities.com
Ana Carolina Quadros carolina.quadros@bradescobbi.com.br Robert Vespa robert@bradescosecurities.com
Fernanda Weber Bratz fernanda@bradescobbi.com.br
Bradesco Securities UK, Ltd
Sales - Local Fixed Income - 55 11 2178 4419 Sales – 44 (0)203 178 4170
Dauro Zaltman dauro@bradescobbi.com.br Jeffrey Noble jnoble@bradescosecurities.com
Denise Chicuta denise.chicuta@bradescobbi.com.br Victor Cortes victor@bradescosecurities.com
Keite Bianconi keite@bradescobbi.com.br Robert Hulme rhulme@bradescosecurities.com

Av. Paulista, 1450 7º andar

CEP: 01310-917 São Paulo – SP
Brazil