CGD Securities

Morning Briefing
2 October 2013

OI OI and Portugal Telecom (PT) announce a merger Positive

Ibovespa Daily Performance- Sectors

Oil & Gas Industrials 2.1% 1.8% 1.5% 1.2%

LOCAL NEWS HIGHLIGHTS

4.4%

Health Care
Consumer Services Financials Utilities Consumer Goods

1.1%
1.1% 0.9% 0.8%

Telecommunications
Basic Materials

0.0%

2.0%

4.0%

6.0%

* ELET6 Financial and Investor Relations Director of Eletrobras, Armando Casado, admits the possibility that the state owned company may take over the 51% stake of Alupar in the winning consortium of the Sinop plant project, granted by the government at the new energy-5 auction last August. "We do not rule it out. We have the grant, and do not rule out any possibility," said the executive, who attended the Fundao Coge event on the Brazilian electric sector on Tuesday, October 01. [O Estado de So Paulo Newspaper] * BEEF3 JBS and Marfrig Alimentos announced, through Material Fact to the market, the completion of the sale of Seara Brasil and Zenda to JBS. The transaction of BRL 5.8b was announced on June 10 and, as expected, was completed on Monday. "All conditions required for the signing were fulfilled, including approval of the transaction by antitrust agencies in Brazil and Europe," states the Fact. [Valor Econmico Newspaper] * IGTA3 Iguatemi Empresa de Shopping Centers reported that it bought 55.43% of Anhumas, which holds 50% of the Galleria Shopping Center real estate and adjacent land. The acquisition of BRL 69.3m was done through its subsidiary EDR47. The deal depends on approval of the Administrative Council for Economic Defense (Cade). When finalized, Iguatemi will raise capital through EDR47, whereby its share in the social capital of Anhumas will increase to 60%. Thus, the transaction value will reach a total of BRL 83.6m. [O Estado de So Paulo Newspaper] * Electric Utilities The government of the State of So Paulo plans to compete with the Northeast and Rio Grande do Sul on the billionaire investments poured into wind power generation in Brazil. The Secretary of Energy of So Paulo, Jos Anbal, will meet with the President of the Brazilian Association of Wind Energy (Abeelica), Elbia Melo, to discuss the inclusion of the So Paulo market in the sector. Also invited to the meeting are representatives of equipment manufacturers that have factories in the state. [Valor Econmico Newspaper]

Top 5 (%) OGXP3 UGPA3 TIMP3 FIBR3 USIM5 World Indexes (%) Ibovespa S&P 500 IPC Merval Euro Stoxx 50 TOPIX Shanghai Comp. BSE SENSEX MICEX FTSE/JSE All Share

14.3 4.5 4.1 4.0 3.7 Origin Brazil USA Mexico Argentina Europe Japan China India Russia South Africa

Bottom (%) MMXM3 PDGR3 CRUZ3 JBSS3 OIBR4 Last 53,179 1,695 41,335 4,907 2,918 1,175 2,175 19,517 1,461 43,921 Last (USD) 2.22 13.22 5.80 1.35 97.39 6.12 62.47 32.32 10.13

-3.9 -2.0 -1.7 -1.6 -1.4

Day MTD YTD 1.6 6.3 -10.7 0.8 3.8 17.3 2.9 4.7 0.5 2.6 24.7 99.6 1.4 7.8 17.4 -0.1 7.9 63.0 0.7 3.6 4.2 0.7 4.8 3.7 0.6 7.8 -1.2 -0.2 4.1 21.2 Var. (%) Day MTD 0.0 -7.1 0.5 -1.7 0.1 2.3 0.0 2.3 -0.3 -0.2 0.0 0.0 -0.2 -4.9 -0.5 -3.2 1.0 -1.5

Currency Real Mexican Peso Argentine Peso Euro Yen Yuan Rupee Ruble Rand
Source: Bloomberg, Economtica

YTD 9.4 2.5 23.4 5.0 25.7 -2.6 19.2 3.6 20.8

Elaborated by:

Distributed by the Members of ESN (see last page of this report)

All ESN research is available on Bloomberg: ESNR <go>

MACROECONOMIC COMMENT Industrial production was flat in August. The news was disappointing because the market expected industrial output to grow 0.2% MoM. The production of capital goods rose 2.6% MoM and the production of intermediary goods and mining output registered small gains. However, this was offset by the 0.6% MoM drop in production of consumption goods. The substantial increase of capital goods production in August partially offset the large drop in July and was led by transport equipment. Meanwhile, the drop in production of consumption goods was led by non-durable goods. On average, the level of industrial production remains within a narrow range. Nevertheless, it is poised to have posted a large drop in 3Q13, compared to 2Q13. Mauro Schneider

RESEARCH OI (OIBR4, Buy, TP BRL 8.00) OI and Portugal Telecom announced a memorandum of understanding for the merger of the companies and Telemar Participaes (OIs shareholding controller), to create CorpCo. In addition, OI will also to do a capital increase that should range between BRL 13.1 b and BRL 14.1 b, with between BRL 7.0 and BRL 8.0 b in cash. The shareholding controller of Telemar Participaes and an investment vehicle managed and run by BTG Pactual will participate in the offering by placing a subscription order of approximately BRL 2.0 billion. Portugal Telecom estimates that the equity value of PT Assets, upon assessment for the purposes of the contribution to Oi, corresponds to a value within a range of values equivalent to BRL 5.8 b and BRL 6.4 b. Another important point will be the improvement of the corporate governance of CorpCo, which will have its shares listed in MF&Bovespa (NOVO MERCADO), NYSE and NYSE Euronext Lisbon. The swap ratios were calculated based on the share prices over the last 30 days: 1 OIBR3 (OI voting share) will swap for 1 voting share of CorpCo; 1.0857 OIBR4 (OI nonvoting share) will swap for 1 voting share of CorpoCo; 1 PT share will swap for a number of share of CorpCo equivalent to EUR 2.2911 (issue with the same price of OIs capital increase). According to the companies, this operation will have a synergy gain of BRL 5.5 b (NPV). The companies also informed that, based on the reported 2012 full year financials of Portugal Telecom and Oi, CorpCo had pro forma revenue of R$37.5 billion, EBITDA of R$12.8 billion and Operating Cash Flow of R$4.2 billion. If OIs capital increase in cash reaches BRL 8.0 billion, then proforma, CorpCos net debt was R$41.2 billion, as of June 30, 2013. Therefore, Net Debt/EBITDA ratio would be 3.2x. Lastly, we highlight that this process should end in 1H14 and Mr. Zeinal Bava will be CEO of CorpCo. Alex Pardellas

CGD Securities
Morning Briefing
2 October 2013

Ibovespa

Points
70,000
65,000 60,000 55,000 50,000 45,000

Volume (BRL b)
30
25 20 15 10 5

40,000
Nov-12

Dec-12

Jun-12

Jun-13

Jul-12

Sep-12

Oct-12

Feb-13

Jul-13

May-12

May-13

Aug-12

Mar-12

Source: Bloomberg

Futures` Market - Ibovespa

Long Position
0.65% 11.54% 41.62%

Mar-13

Short Position
1.78% 9.21% 40.81%

Aug-13

Sep-13

Apr-12

Apr-13

Jan-13

46.18%

48.20%

National Institutional Investor Foreign Investor Banks Other

Source: Bovespa

National Institutional Investor Foreign Investor Banks Other

Open Positions - BTC

Short-Selling Bottom 5 Days to Cover Ticker 23.8 SBSP3 15.2 TIMP3 14.8 BISA3 11.7 AEDU3 10.5 OGXP3

Mar-13

May-13

Top 5 Ticker BBDC3 ELPL4 LAME4 NATU3 CPLE6

Points 70,000
Days to Cover 2.2 2.2 1.6 1.5 1.1 60,000 50,000 40,000

BRL b 60 50 40 30

Jan-13

Apr-13

Feb-13

Jun-13

Jul-13

Aug-13

Open Positions - BTC

Source: CBLC, Bloomberg, Economtica

Ibovespa

Elaborated by:

Distributed by the Members of ESN (see last page of this report)

All ESN research is available on Bloomberg: ESNR <go>

Sep-13

Disclaimer This report was prepared by Caixa Banco de Investimento, S.A. (CaixaBI) and / or CGD Investimentos, S.A. Corretora de Valores e Cmbio (CGD Securities). The information upon which this report was based has been obtained from sources that we believe to be reliable, but CaixaBI and / or CGD Securities do not guarantee that it is accurate or complete. The analyst (s) responsible for this report did not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views by CaixaBI or CGD Securities. At any time Caixa Geral de Depsitos Group, CaixaBI's parent company, CGD Securities, or any affiliated companies (or employees) may have a position subject to change in these securities. There are no pre-established policies regarding frequency, change or update in recommendations issued by CaixaBI and CGD Securities and the same applies to our coverage policy. Opinions in this report are subject to change without notice. This document is for your private information, and is not to be constructed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. Any opinion or recommendation contained herein and in the investments to which they refer may not be appropriate for investors due to their specific financial position or investment targets. Investors should consider this report as only a single factor in making their investment decision. Investors should also note that income from the securities mentioned in this report, if any, may fluctuate and that each security's price or value may rise or fall. Thus, investors may receive back less than initially invested. Past performance is not a guarantee for future performance. CaixaBI, CGD Securities or other companies in the Caixa Geral de Depsitos Group (CGD Group) accepts no liability of any type for any indirect or direct loss arising from the use of this report. CaixaBI, Banco Caixa Geral Brasil (BCG Brasil) or other affiliated companies of Caixa Geral de Depsitos Group, does and seeks to provide investment banking or other services to the companies referred 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 research. This report is confidential and is intended solely for the designated addressee. Therefore any disclosure, replication, distribution or any action taken in reliance on it, is prohibited and unlawful. Receipt and/or review of this research report constitutes your agreement not to redistribute, retransmit, or disclose to others the contents, opinions, conclusion, or information contained in this report (including any investment recommendations, estimates or price targets without first obtaining express permission from an authorized officer of CaixaBI and / or CGD Securities. The share price mentioned in the report is the close price of the indicated day. The activity of CaixaBI is supervised by Banco de Portugal (BoP) and Comisso de Mercado de Valores Mobilirios (CMVM). The activity of CGD Securities is supervised by Banco Central do Brasil (BACEN) and Comisso de Valores Mobilirios (CVM). BCG-Brasils activities are supervised by BACEN. Regarding Portuguese companies, please see http://www.caixabi.pt for disclosures on Conflicts of Interest and Ownership by CaixaBI and CGD Group. Furthermore, BCG Brasil as subsidiary of Caixa Geral de Depsitos or other affiliated companies of Caixa Geral de Depsitos do and seek to provide investment banking or other services to JSL and EDP. CaixaBI and ESN team up in a business agreement on the Brazilian market through CGD Securities, a CGD Group owned subsidiary (50% by CaixaBI and 50% by BCG Brasil). With this agreement, CGD Securities will use the ESN brand in the Brazilian market, sharing ESNs recommendations sy stem. Although, the preparation of this report by CGD Securities and its distribution (CGD Securities Activity) are not bind to or by the obligations and duties stated in the agreement in force between ESN Members and ESN (ESN Agreement) and, related to the CGD Securities Activity, the ESN Members and ESN have no rights against CaixaBI or CGD Securities under the ESN Agreement.

Declaration of the CGD Securities analyst(s) pursuant to ICVM 483 Article 17 The investment or securities analyst(s), involved in the preparation of this report (Invest Analyst), declares (declare) that the recommendations contained reflect exclusively their personal opinions on the company and its securities and were prepared in an independent and autonomous manner, including in relation to CGD Securities. The compensation received by the investment analyst(s) is conditional on the fulfilment of qualitative and quantitative assumptions established by the CGD Securities, among which the revenue from the business and the financial operations executed by the institutions mentioned in this report. This document was prepared by CGD Securities and will be supplied to its addressee exclusively for the purpose of providing information on the company (companies) and the securities discussed herein. The information used in the preparation of the report was obtained from primary and secondary public sources, or directly from the company (companies) together with the estimates and calculations made by CGD Securities. The classification of recommendation follows the ESN Recommendation System.

Recommendation System: Since 4 August 2008, the Members of ESN (European Securities Network) are using an Absolute Recommendation System to rate any single stock under coverage, with a time horizon of 12 months and a rating scale as follows. CaixaBI is a Member of ESN, therefore uses the same Recommendations System of ESN. The ESN Recommendation System is Absolute. It means that each stock is rated on the basis of a total return, measured by the upside potential (including dividends) over a 12 months time horizon. The ESN spectrum of recommendations (or ratings) for each stock comprises 5 categories: Buy, Accumulate (or Add), Hold, Reduce and Sell (in short: B, A, H, R, S). Meaning of each rating or recommendation: Buy: the stock is expected to generate a total return of over 20% during the next 12-month time horizon; Accumulate: the stock is expected to generate a total return of 10% to 20% during the next 12-month time horizon; Hold: the stock is expected to generate a total return of 0% to 10% during the next 12-month time horizon; Reduce: the stock is expected to generate a total return of 0 to -10% during the next 12-month time horizon; Sell: the stock is expected to generate a total return below -10% during the next 12-month time horizon; Rating Suspended: the rating is suspended due to a capital operation (take-over bid, SPO, ) where the issuer or a related party of the issuer is or could be involved or to a change of analyst covering the stock; Not Rated: there is no rating for a company being floated (IPO) by the issuer or a related party of the issuer.

Equity Research Team

Joo Miguel Loureno BRASIL (CGD Securities) Equity Research Vicente Koki, CNPI Alex Pardellas, CNPI Leonardo Pinto, CNPI Jlia Monteiro, CNPI Elaine Rabelo, CNPI Thomaz Moraes Strategy Mauro Schneider Technical Analysis Eduardo Collor, CNPI Trading Desk Bovespa So Paulo Ricardo de Paula - Head SP Rio de Janeiro Edmilson Lana - Head RJ Trading Desk BM&F So Paulo Sergio Campanille - Head Rio de Janeiro Research Sales Raffi Dokuzian - Head PORTUGAL (CaixaBI) Equity Research Andr Rodrigues Carlos Jesus Guido Varatojo dos Santos Helena Barbosa Jos Mota Freitas, CFA Equity Sales Valentim Martins General Manager Trading Ins Ribeiro Head Sales Sofia Cordeiro Head Investment Centre Lisbon Paulo Asseiceiro Syndication and Sales Team Leonor Canedo General Manager Rui Correia Joana Gouveia Jorge Bento Sebastio Coutinho andre.rodrigues@caixabi.pt carlos.jesus@caixabi.pt guido.santos@caixabi.pt helena.barbosa@caixabi.pt mota.freitas@caixabi.pt +351 21 389 68 39 +351 21 389 68 12 +351 21 389 68 22 +351 21 389 68 31 +351 22 607 09 31 +351 21 313 73 00 +351 21 389 68 16 vkoki@cgdsecurities.com.br apardellas@cgdsecurities.com.br lpinto@cgdsecurities.com.br jmonteiro@cgdsecurities.com.br erabelo@cgdsecurities.com.br tmoraes@cgdsecurities.com.br +55 11 3074 4522 +55 21 3138 3154 +55 11 3074 4517 +55 21 3138 3128 +55 11 3074 8027 +55 11 3074 4514

mschneider@cgdsecurities.com.br ecollor@cgdsecurities.com.br

+55 11 3074 4534 +55 21 3138 3153

rpaula@cgdsecurities.com.br elana@cgdsecurities.com.br

+55 11 3073 6120 +55 21 3138 3107 +55 11 3074 4560

scampanille@cgdsecurities.com.br

+55 11 3074 8047 +55 21 3138 3107 +55 11 3074 8003 +55 11 3074 4540

sales@cgdsecurities.com.br raffi.dokuzian@cgdsecurities.com.br

valentim.martins@caixabi.pt

ines.ribeiro@caixabi.pt

+351 21 389 68 74 +351 21 389 68 89 +351 21 389 68 96

sofia.cordeiro@caixabi.pt

paulo.asseiceiro@caixabi.pt

+351 21 389 68 76

leonor.canedo@caixabi.pt msv@caixabi.pt rui.correia@caixabi.pt joana.gouveia@caixabi.pt jorge.bento@caixabi.pt sebastiao.coutinho@caixabi.pt

+351 21 389 68 85 +351 21 389 68 86 +351 21 389 68 87 +351 21 389 68 88 +351 21 389 68 19

Brasil - So Paulo CGD Investimentos CVC S.A. Av. Juscelino Kubitschek, 1700 - 10 So Paulo, SP 04543-000 Tel: + 55 11 3074 8004

Brasil - Rio de Janeiro CGD Investimentos CVC S.A. Praia de Botafogo 228 - 7 Andar Rio de Janeiro, RJ 22359-900 Tel: + 55 21 3138 3100

Portugal - Lisboa Caixa - Banco de Investimento, S.A. Rua Barata Salgueiro, 33. Lisboa, Portugal 1269-057 Tel: + 351 21 313 73 00

Disclaimer:
These reports have been prepared and issued by the Members of European Securities Network LLP (ESN). ESN, its Members and their affiliates (and any director, officer or employee thereof), are neither liable for the proper and complete transmission of these reports nor for any delay in their receipt. Any unauthorised use, disclosure, copying, distribution, or taking of any action in reliance on these reports is strictly prohibited. The views and expressions in the reports are expressions of opinion and are given in good faith, but are subject to change without notice. These reports may not be reproduced in whole or in part or passed to third parties without permission. The information herein was obtained from various sources. ESN, its Members and their affiliates (and any director, officer or employee thereof) do not guarantee their accuracy or completeness, and neither ESN, nor its Members, nor its Memb ers affiliates (nor any director, officer or employee thereof) shall be liable in respect of any errors or omissions or for any losses or consequential losses arising from such errors or omissions. Neither the information contained in these reports nor any opinion expressed constitutes an offer, or an invitation to make an offer, to buy or sell any securities or any options, futures or other derivatives related to such securities (related investments). These reports are prepared for the clients of the Me mbers of ESN only. They do not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive any of these reports. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in these reports and should understand that statements regarding future prospects may not be realised. Investors should note that income from such securities, if any, may fluctuate and that each securitys price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. Foreign currency rates of exchange may adversely affect the value, price or income of any security or related investment mentioned in these reports. In addition, investors in securities such as ADRs, whose value are influenced by the currency of the underlying security, effectively assume currency risk. ESN, its Members and their affiliates may submit a pre-publication draft (without mentioning neither the recommendation nor the target price/fair value) of its reports for review to the Investor Relations Department of the issuer forming the subject of the report, solely for the purpose of correcting any inadvertent material inaccuracies. Like all members employees, analysts receive compensation that is impacted by overall firm profitability For further details about the specific risks of the company and about the valuation methods used to determine the price targets included in this report/note, please refer to the latest relevant published research on single stock or contact the analyst named on the front of the report/note. Research is available through your sales representative. ESN will provide periodic updates on companies or sectors based on company-specific developments or announcements, market conditions or any other publicly available information. Unless agreed in writing with an ESN Member, this research is intended solely for internal use by the recipient. Neither this document nor any copy of it may be taken or transmitted into Australia, Canada or Japan or distributed, directly or indirectly, in Australia, Canada or Japan or to any resident thereof. This document is for distribution in the U.K. Only to persons who have professional experience in matters relating to investments and fall within article 19(5) of the financial services and markets act 2000 (financial promotion) order 2005 (the order) or (ii) are persons falling within article 49(2)(a) to (d) of the order, namely high net worth companies, unincorporated associations etc (all such persons together being referred to as relevant persons). This document must not be acted on or relied upon by persons who are not relevant persons. Any investment or investment activity to which this document relates is available only to relevant persons and will be engaged in only with relevant persons. The distribution of this document in other jurisdictions or to residents of other jurisdictions may also be restricted by law, and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. By accepting this report you agree to be bound by the foregoing instructions. You shall indemnify ESN, its Members and their affiliates (and any director, officer or employee thereof) against any damages, claims, losses, and detriments resulting from or in connection with the unauthorized use of this document. For disclosure upon conflicts of interest on the companies under coverage by all the ESN Members and on each company recommendation history, please visit the ESN website (www.esnpartnership.eu) For additional information and individual disclaimer please refer to www.esnpartnership.eu and to each ESN Member websites:
www.bancaakros.it regulated by the CONSOB - Commissione Nazionale per le Societ e la Borsa www.bankiabolsa.es regulated by CNMV - Comisin Nacional del Mercado de Valores www.caixabi.pt regulated by the CMVM - Comisso do Mercado de Valores Mobilirios www.cgdsecurities.com.br regulated by the CVM Comisso de Valores Mobilirios www.cmcics.com regulated by the AMF - Autorit des marchs financiers www.degroof.be regulated by the FSMA - Financial Services and Markets Authority www.equinet-ag.de regulated by the BaFin - Bundesanstalt fr Finanzdienstleistungsaufsicht www.ibg.gr regulated by the HCMC - Hellenic Capital Market Commission www.pohjola.com regulated by the Financial Supervision Authority www.snssecurities.nl regulated by the AFM - Autoriteit Financile Markten

Members of ESN (European Securities Network LLP)

Banca Akros S.p.A. Viale Eginardo, 29 20149 MILANO Italy Phone: +39 02 43 444 389 Fax: +39 02 43 444 302

Equinet Bank AG Grfstrae 97 60487 Frankfurt am Main Germany Phone:+49 69 58997 410 Fax:+49 69 58997 299

Bank Degroof Rue de IIndustrie 44 1040 Brussels Belgium Phone: +32 2 287 91 16 Fax: +32 2 231 09 04

Investment Bank of Greece 24B, Kifisias Avenue 151 25 Marousi Greece Phone: +30 210 81 73 000 Fax: +30 210 68 96 325

Bankia Bolsa Serrano, 39 28001 Madrid Spain Phone: +34 91 436 7813 Fax: +34 91 577 3770

Pohjola Bank plc P.O.Box 308 FI- 00013 Pohjola Finland Phone: +358 10 252 011 Fax: +358 10 252 2703

Caixa-Banco de Investimento Rua Barata Salgueiro, 33 1269-050 Lisboa Portugal Phone: +351 21 389 68 00 Fax: +351 21 389 68 98

SNS Securities N.V. Nieuwezijds Voorburgwal 162 P.O.Box 235 1000 AE Amsterdam The Netherlands Phone: +31 20 550 8500 Fax: +31 20 626 8064

CM - CIC Securities 6, avenue de Provence 75441 Paris Cedex 09 France Phone: +33 1 4596 7940 Fax: +33 1 4596 7748