Basic Materials

December 2020

Commodities Outlook 2021:

Don’t Stop Me Now

Leonardo Correa
+55 11 3383 2166
Leonardo.correa@btgpactual.com

Caio Greiner
+55 11 3383 2944
caio.greiner@btgpactual.com
 Don’t stop me now
Super Cycle looking increasingly probable
Iron ore 62% (US$/t) Copper (US$/lb)
160
3.5
140
120 3.0
100
2.5
80
60 2.0
40
20 1.5

China HRC (US$/t) Brent (US$/t)

700 100

600 80

500 60

400 40

300 20

200 0

2
Source: Bloomberg, Platts, BTG Pactual
 Mining: Estimates for the coming years

Vale 2020 2021 2022

New vs. old: New 20,861 30,588 25,719

EBITDA - BRL Old 20,424 21,626 20,120
Mining New vs. Old 2% 41% 28%

SCC 2020 2021 2022

New 3,800 5,460 5,965

Main changes to our models EBITDA - BRL Old 3,420 3,876 4,295
New vs. Old 10% 29% 28%

(1) Rolling our TPs to YE21

(2) Incorporating 3Q20 results; GMex 2020 2021 2022
(3) Iron ore: US$130/100/85/70 for
2021/22/23/LT, from
New 5,285 6,933 7,524
US$100/85/75/68
(4) Copper: US$3.75/lb for 2021 and 4/lb EBITDA - BRL Old 4,809 5,061 5,643
flat into the LT, from US$3.2/lb and New vs. Old 9% 27% 25%
3.5/lb
(5) FX = BRL5.00/USD (2021 onwards)

3
 Steel: Estimates for the coming years

Gerdau 2020 2021 2022

New vs. old: EBITDA - BRL

New
Old
6,822
6,122
8,429
7,371
8,948
7,910
Steels New vs. Old 11% 14% 13%

Usiminas 2020 2021 2022

Main changes to our models
New 2,556 4,053 3,745
EBITDA - BRL Old 2,477 3,008 2,686
(1) Incorporating 3Q20 results;
(2) Increasing our volumes estimates; New vs. Old 3% 35% 39%
(3) Brazilian steels: carry-over of net
revenue per ton of 7-10% into 2021
(from ~5%) and auto price increase for
Ternium* 2020 2021 2022
2021 at ~35% (from 25-30%).
(4) Updating our iron ore curve; New 1,315 2,027 2,062
(5) FX = BRL5.00/USD (2021 onwards) EBITDA - BRL Old 1,241 1,507 1,857
New vs. Old 6% 35% 11%

*TX’s numbers had already been

published in an earlier report
4
CSN = RESTRICTED.
 Pulp: Estimates for the coming years

New vs. old:

Suzano 2020 2021 2022
Pulp
New 14,783 18,967 17,738
EBITDA - BRL Old 14,010 16,191 16,463
New vs. Old 6% 17% 8%

Main changes to our models Klabin 2020 2021 2022

(1) Incorporating 3Q20 results New 4,754 6,176 6,124

(2) Pulp: Moving to US$575/t in 2021 and EBITDA - BRL Old 4,731 5,894 6,102
flat curve at US$550/t into the LT, from New vs. Old 0% 5% 0%
US$510/t in 2021.
(3) Higher paper sales in the domestic
market
(4) Incorporating IP acquisition to Klabin
(5) Updating Suzano’s 2021 CAPEX
(6) FX = BRL5.00/USD (2021 onwards)

5
Mining

Section 1

6
 • Iron ore prices have risen sharply over the last months due to firm demand prospects, while
supply remains lackluster – reaching US$155/t

• Vale’s lower-than-expected production guidance for 2021 (315-335Mt) has pushed iron ore
prices even higher over the last couple of weeks. Speculation?

• On the demand side, Chinese iron ore consumption continues growing near double digits!
CSP set to grow 5-6% y/y in 2020, likely surpassing 1Bt (huge base)...
Focus themes:
• ... For 2021, we are forecasting “only” a 2% growth of steel production in China... Seems
Mining highly conservative given the consensus growth in GDP above 8%

• Our S/D model points to a ~90Mt deficit in the seaborne market… relevant!

• Early 2021, La Niña could further impact iron ore supply from Brazil and Australia due to
above-average forecasted rainfall from Jan-Apr...

• ... With demand from China likely to continue growing near double digits, we could see a
relevant S/D deficit in the ST, and prices could continue rallying (next stop US$180-200/t?)

• Copper prices have been on a similar trend, and are up nearly 70% from lows... Dr. Copper
has a PHD when it comes to forecasting business cycles!

• We are lifting our iron ore curve (prices on page 9), and now forecast prices at US$130/t in
2021, with medium term prices holding near 90-100/t. Also lifting our LT price to US$70/t.

• We are lifting our copper curve (prices on page 14), and now forecast prices at US$3.75/lb in
2021 and US$4/lb in 2022 onwards.
7
 Mining comps table

Company Ticker Mkt. Cap EV/EBITDA P/E Free Cash Flow Yield Net Debt / EBITDA
US$ mn 2020 2021 2022 2020 2021 2022 2020 2021 2022 2020 2021 2022

Iron ore + Diversified Mining

Rio Tinto PLC RIO LN 125,527 6.2x 5.8x 6.8x 10.9x 10.5x 13.2x 10% 10% 8% 0.1x 0.1x 0.0x
BHP Group PLC BHP LN 150,592 7.6x 6.6x 7.0x 14.5x 11.9x 12.9x 8% 10% 8% 0.5x 0.4x 0.3x
Anglo American PLC AAL LN 41,328 6.3x 4.6x 5.1x 16.3x 10.5x 11.3x 2% 10% 8% 0.8x 0.5x 0.6x
Fortescue Metals Group Ltd FMG AU 51,169 6.2x 4.8x 6.9x 10.8x 7.8x 12.1x 5% 5% 5% 0.1x 0.0x 0.1x
CAP SA CAP CI 1,803 4.5x 4.2x 5.3x 6.9x 5.8x 7.3x 0% 0% 0% 0.7x 0.3x 0.0x
Vale SA* VALE3 BZ 87,125 4.6x 3.0x 3.4x 8.0x 3.9x 5.4x 11% 21% 15% 0.1x 0.0x 0.0x
Weighted average 5.9x 4.8x 5.7x 11.3x 8.4x 10.4x 6% 9% 7% 0.4x 0.2x 0.2x

Copper
Southern Copper* SCCO US 47,575 13.6x 9.3x 8.2x 30.9x 17.8x 16.0x 4% 5% 6% 1.0x 0.6x 0.2x
GMEX* GMEXICOB MM 31,640 7.6x 5.7x 5.1x 20.0x 12.5x 11.2x 7% 6% 11% 1.3x 0.9x 0.6x
Freeport-McMoRan Inc FCX US 34,753 14.0x 7.1x 6.4x 54.6x 13.2x 11.7x 3% 7% 8% 1.9x 0.7x 0.4x
Antofagasta PLC ANTO LN 19,016 9.5x 7.4x 7.4x 38.7x 24.5x 24.7x 2% 3% 5% 0.1x 0.1x -0.1x
KAZ Minerals PLC KAZ LN 4,147 5.7x 5.1x 4.9x 7.8x 6.2x 6.3x 1% 9% 9% 2.3x 2.0x 1.9x
Boliden AB BOL SS 9,127 5.9x 5.4x 5.7x 12.5x 11.0x 11.8x 5% 6% 7% 0.3x 0.1x 0.0x
Buenaventura BVN US 3,484 9.9x 5.4x 5.4x 252.8x 18.7x 19.5x -3% 7% 5% 1.1x 0.4x 0.3x
Cerro Verde CVERDEC1 PE 7,183 7.8x 6.7x 5.9x 20.3x 16.6x 11.4x n.m. n.m. n.m. n.m. n.m. n.m.
Volcan VOLCABC1 PE 1,808 10.9x 10.9x 8.6x n.m. 62.3x 31.2x n.m. n.m. n.m. 2.8x 2.7x 2.3x
Weighted average 9.4x 7.0x 6.4x 54.7x 20.3x 16.0x 3% 6% 7% 1.4x 0.9x 0.7x

8
Source: Bloomberg, BTG Pactual. Note: Prices as of December 16th | *BTG Pactual estimates. Note 2: Vale’s FCF Yield does not consider Brumadinho outflows
 Iron ore prices at US$155/t… US$180/t next target?
160
140 IO Fe 62%

120 IO Fe 65%

100
80
Iron ore prices 60

S/D fundamentals to 40

support higher levels 20

Prices above US$150/t We see S/D fundamentals supporting prices over the coming years
140

• We are lifting our iron ore 130 130

125
curve 120 118
110
• US$130/t in 2021 explained 106
100 100 102 100
by China growth + Vale’s 93
90 93
lower volumes 89 89
83 85
80
• We are lifting our LT prices to
70 70
US$70 (from US$65)
60
50

9
Source: Bloomberg, BTG Pactual
 S/D: We see no escape valve in 2021
Vale’s weak production guidance + strong Chinese CSP should keep markets tight ahead

We see a deficit in the seaborne market Port Inventories in China are

1800 15% lowering once again
180
TOTAL CAPACITY (Mt)
1600 160
TOTAL DEMAND (Mt)
1400 10% 140
% Excess Capacity
120
1200
5% 100
1000 4% 4%
3% 3% 80
2% 3%
800 60
1% 0% 0%
-1% 40
600 -1% -1% -2%
-2% -3%
20
400 -4%
-4% -5%
0
-6% -6%
200
-8%
0 -10%
Others Australian Ore Brazilian Ore

10
Source: World Steel, Steelhome, Companies’ data, BTG Pactual
 Brazilian exports continue facing setbacks… new normal?
40

35

30

25

Main exporters 20

15
Brazil and Australia Brazil monthly iron ore export flows (Mt)
10

Australia is entering its seasonally weak period

Weak seasonality approaching
1200

• Brazil’s volumes should 1000

continue to underperform
(Vale well below potential…) 800
• La Niña: heavy rainfall/cyclones
expected to impact production 600
in 1H21 in Northern Brazil and
400
Western Australia
Weekly Run Rate
200
4 wk mov. avg.

0
11
Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20
Source: LBH, Bloomberg, BTG Pactual
 Brazil export flows by port
Production from Carajás could suffer in the coming months due to heavy rainfall

Vale PDM (Carajás) Tubarão

35 25 12

20 10
30
8
25 15
6
20 10
4
15 5 2

10 0 0

CSN Açu (Anglo’s Minas-Rio) Sudeste

4 3.0 3.0
2.5 2.5
3
2.0 2.0

2 1.5 1.5
1.0 1.0
1
0.5 0.5
0.0 0.0
0

12
Source: LBH, BTG Pactual. Note: Numbers are shown in Mt
 Other iron ore data…
Premiums remain healthy, and freight rates are pressured
Premiums holding up above US$10/t… …steel margins on the rise
30 450
400
15 350
300
0 250
200
-15 150
100
-30 50

Discount 58% / 62% Fe Premium 65% / 62% Fe China HRC Metallic Spread US$/t Avg. Spread

Iron ore freight rates (US$/t) Other steelmaking raw materials

35 400
30 350
25 300
20 250
15 200
12
10 150
5 8 100
0 50

Tubarao-Beilun Dampier-Qingdao Met Coal (US$/t) US Scrap midwest (US$/t) 13

Source: Bloomberg, Platts, BTG Pactual
 Copper prices have surpassed US$3.5/lb... Inventories declining
3.5 700
600
3.0 500
400
2.5
300
200
Copper 2.0
100

Lifting our estimates 1.5 0

Copper LME inventories (kt) Copper Spot (US$/lb)

Dr. copper on the rise! We are lifting our curve on positive demand expectations ahead

• Economic rebound in 2021

4.0 4.0 4.0 4.0
should translate into higher 3.8
copper prices 3.5
3.3
• Copper prices usually reflect
3.0 3.0
positive business cycles…
2.8 2.8 2.7 2.8
upcoming! 2.6 2.7
2.5 2.6
• Low inventories are 2.4
supportive in the ST
2.0
14
Source: Bloomberg, LME, BTG Pactual
 Chinese steel production
CSP continues growing in China… strong demand in 2020 driven by government stimuli

Crude steel production growing ~6% YTD… ... And consumption is up by ~8%!
100 25%

Thousands
100 50%
90 20%
90
40% 80
80 15%
70
70 30%
60 10%
60 20% 50 5%
50
10% 40 0%
40
30
30 0% -5%
20
20 -10%
-10% 10
10
0 -15%
0 -20%

China CSP (Mt) y/y % Apparent Steel Consumption (Mt) y/y (%)

15
Source: Bloomberg, NBS, BTG Pactual
 Chinese steel consumption
Consumption has been strong in 2020, and we don’t expect a retraction in 2021

Steel inventories dropping markedly Infra demand is booming!

20 40%
Rebar (Mt)
HRC (Mt) 30%
15
20%
10%
10
0%
5 -10%
-20% Infra FAI - YTD %
-
-30%

Excavator sales (y/y) Air pollution at multi-year lows. Fewer curbs?

200
200%
Beijing 10-year range
150% PM 2.5 (micrograms/m3)
150
100%
Excavator 50%
100
sales up 0%
34% YTD! -50%
2019
50
-100% 2020

0
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 16
Source: Bloomberg, Platts, BTG Pactual
LatAm Steels

Section 2

17
 • Global steel prices have been rising sharply over the last few months, with some indices
already doubling from lows…

• … which is largely explained by a fast recovery in demand (as economies and consumer
industries rebound), before capacity was able to resume.

• Throughout the year, several steelmakers shut down capacity ahead of highly uncertain
times... But BFs (~70% the world’s capacity) can take months to relight.
Focus themes: • China becoming a net importer for months during the year (infra package materially
Steel increasing local consumption) also helped to remove supply from international markets.

• Rising iron ore prices (currently at ~US$155/t) are supportive for steel prices, as cost inflation
tends to reflect on prices.

• In Brazil, producers have announced 50-60% price hikes during the 2H20, having caught up
with international benchmarks (BRL depreciation also helps).

• We calculate import parity equations currently at a discount of -1% for both flats and longs.
We still see room for additional hikes…

• Steel demand in Brazil has fully recovered! The industry should end 2020 on neutral grounds,
with longs (+4% YTD) outperforming flats (-3% YTD).

• We forecast a 12% growth in longs sales in Brazil for 2021, with construction (mostly real
estate) being the most relevant driver

• We forecast a 10% growth in flats sales in Brazil for 2021, with a rebound in manufacturing
(especially auto-markets) being the most relevant driver.
18
 Steel comps table
Mkt. Cap EV/EBITDA P/E Free Cash Flow Yield Net Debt / EBITDA
Company Ticker
US$ mn 2020 2021 2022 2020 2021 2022 2020 2021 2022 2020 2021 2022

Steels LatAm
Gerdau* GGBR4 BZ 7,438 7.4x 5.7x 5.2x 11.5x 11.0x 10.3x 6% 8% 9% 1.5x 1.0x 0.7x
Usiminas* USIM5 BZ 3,399 7.6x 4.6x 4.8x n.m. 10.1x 11.9x 4% 7% 8% 0.8x 0.2x -0.1x
Ternium* TX US 5,941 5.6x 3.5x 3.2x 24.6x 6.8x 6.7x 12% 10% 10% 0.5x 0.1x -0.1x
ICH ICHB MM 1,836 7.0x 6.6x 5.8x 11.3x 13.6x 9.3x -4% 15% 12% -1.3x -2.2x -2.4x
Weighted average 7.0x 5.5x 5.3x 17.4x 10.3x 10.2x 6% 10% 9% 0.9x 0.4x 0.2x

USA
Nucor Corp NUE US 16,979 8.8x 8.2x 8.0x 19.6x 17.0x 17.3x 4% 1% n.m. 1.1x 1.2x 1.0x
United States Steel Corp X US 3,958 n.m. 7.9x 9.7x n.m. n.m. n.m. -23% -6% -8% -19.2x 4.5x 6.2x
Steel Dynamics Inc STLD US 8,036 8.4x 7.9x 7.4x 14.9x 14.1x 13.3x -3% 2% 9% 1.6x 1.5x 1.2x
Commercial Metals Co CMC US 2,483 5.0x 5.8x 6.0x 8.7x 11.4x 12.2x 20% 5% n.m. 1.0x 1.0x 0.7x
Weighted average 7.4x 7.4x 7.8x 14.4x 14.2x 14.3x -1% 0% 1% -3.9x 2.0x 2.3x

Asia
POSCO 005490 KS 21,638 5.7x 4.8x 4.5x 16.7x 10.6x 9.2x 11% 10% 12% 1.5x 1.1x 0.8x
Baoshan Iron & Steel Co Ltd 600019 CH 20,044 5.4x 4.9x 4.7x 12.3x 10.5x 9.6x 8% 16% 15% 0.6x 0.3x 0.1x
Angang Steel Co Ltd 347 HK 4,339 6.0x 5.4x 5.1x 13.7x 12.4x 8.4x 10% 9% 11% 1.7x 1.2x 0.9x
Steel Authority of India Ltd SAIL IB 3,376 15.6x 9.5x 6.9x n.m. n.m. 12.1x 0% 18% 15% -1.0x 7.8x 5.6x
China Steel Corp 2002 TT 13,649 16.4x 10.1x 9.8x n.m. 23.9x 22.3x 2% 6% 5% 5.3x 2.9x 2.9x
Tata Steel Ltd TATA IB 10,051 9.9x 8.4x 6.6x 42.8x 28.5x 9.8x 1% 16% 10% 5.9x 4.8x 3.6x
Maanshan Iron & Steel Co Ltd 323 HK 2,906 6.8x 6.1x 5.8x 9.8x 9.3x 6.7x 15% 16% 15% 1.4x 0.7x 0.6x
Weighted average 9.4x 7.0x 6.2x 19.1x 15.9x 11.1x 7% 13% 12% 2.2x 2.7x 2.1x

Japan
Nippon Steel Corp 5401 JP 12,278 27.7x 15.5x 8.4x n.m. n.m. 11.8x -23% -2% -1% 8.1x 8.5x 4.6x
JFE Holdings Inc 5411 JP 6,251 9.7x 16.5x 8.1x n.m. n.m. 11.0x -13% -16% -4% 6.6x 11.7x 5.9x
Kobe Steel Ltd 5406 JP 1,973 10.5x 12.3x 7.5x n.m. n.m. 21.3x -92% -23% -28% 7.0x 9.2x 6.2x
Weighted average 16.0x 14.7x 8.0x n.m. n.m. 14.7x -43% -14% -11% 7.2x 9.8x 5.5x

Europe
ArcelorMittal SA MT NA 25,356 9.0x 5.4x 4.9x n.m. 13.1x 10.1x 5% 5% 14% 1.9x 1.0x 0.7x
thyssenkrupp AG TKA GF 5,383 n.m. 0.0x 0.0x n.m. n.m. 40.4x -35% -30% -8% 6.3x -5.7x -2.3x
Salzgitter AG SZG GR 1,514 19.2x 4.0x 3.4x n.m. 13.0x 7.5x -20% 0% 6% 6.6x 2.5x 2.1x
voestalpine AG VOE AV 6,336 7.7x 9.8x 6.4x n.m. n.m. 18.5x 5% 4% 6% 3.4x 4.1x 2.5x
SSAB AB SSABA SS 3,350 14.8x 6.4x 5.2x n.m. 16.1x 9.8x 4% 7% 11% 3.6x 1.3x 0.8x
Weighted average 12.7x 5.1x 4.0x n.m. 14.1x 17.2x -8% -3% 6% 4.4x 0.7x 0.8x
19
Source: Bloomberg, BTG Pactual. Note: Prices as of December 16th | *BTG Pactual estimates
 Global steel prices
The steel sector is undergoing an incredible recovery… more to come!

HRC prices have skyrocketed! Longs prices also increasing rapidly

Supply shortages 1000

1000
800
800
600
600

400
400

200
200

US HRC (US$/t) China HRC (US$/t) Turkey Rebar (US$/t) US Rebar (US$/t)
China Export Rebar (US$/t)

20
Source: Platts, Bloomberg, BTG Pactual
 Brazilian steels: Demand levels
The industry should end 2020 on neutral grounds. We expect a 8-12% growth in 2021

50%
Long steel sales are
40%
growing 4% YTD!
30%

20%

10%

0%

-10%

-20%

-30%

-40%

-50%

Flats shipments y/y Longs shipments y/y

21
Source: IABr, BTG Pactual
 Long steels: continued growth ahead
New real estate launches to support a multi-year growth story for long steels. Retail sales supportive in ST
New launches to rebound ahead… Construction retail sales growing ~16%* YTD!
25 120

Thousands
Total launches ('000 units) 38.1% 37.5%
110 32.3% 33.1%
20 LTM
100
22.5%
15 90
10 80 5.8%
70
5
60
Mar Apr May Jun Jul Aug Sep Oct
0 50
-10.4%
-17.6%

Sales of building materials remain strong! We see support for demand ahead
8 40% 1200 40%
Cement Deliveries (Mt) y/y Longs App. Dem. (kt) y/y
30% 30%
1000
6 20% 20%
800
10% 10%
4 600 0%
0%
-10%
-10% 400
2 -20%
-20% 200
-30%
0 -30% 0 -40%

22
Source: Abrainc, SNIC, IABr, ICVA, BTG Pactual | *Note: From March to October
 Distribution chain: flat steels
Distributers have seen double digit growth in sales over the last month… gaining market share

Monthly purchases Monthly shipments

500 60% 500 60%

400 40% 400 40%

20%
300 300 20%
0%
200 200 0%
-20%
100 100 -20%
-40%
0 -60% 0 -40%

Sales (kt) Sales y/y

Purch. (kt) Purch y/y

Flat steel inventories vs. months of consumption: declining…

1400 7x
1200 6x
1000 5x
800 4x
600 3x
400 2x
200 1x
0 0x

Invent. (kt) (LHS) I/S (Months) (RHS) Average From Jan/06

23
Source: INDA, BTG Pactual
 Steel import parity
Evolution of import parity Evolution of import parity
premiums – Flats (HRC) 40% premiums – Longs (Rebar)
35%
30%
25%
20%
15%
5% 10%

-5% 0%
-15% -10%
-25% -20%
-35% -30%

(1) FOB Price - Chinese HRC (US$ / ton) 636 (1) FOB Price – Turkish Rebar (US$ / ton) 608
Freight (shipping costs to Brazil) 25 Freight (shipping costs to Brazil) 25
Insurance (0.5% C&F price) 3 Insurance (0.5% C&F price) 3 Premiums
(2) C&F Price - Delivered in Brazil 664 (2) C&F Price - Delivered in Brazil 636 are back to
Import tariff (@ 12% rate) 79 Import tariff (@ 12% rate) 74 negative
Working capital 4 Working capital 4
Port Expenses 20 Port Expenses 20
grounds
Letter of credit 6 Letter of credit 5
AFRMM / Others 6 AFRMM / Others 6
Domestic Freight 20 Domestic Freight 20
(3) Cost of imported steel delivered 799 (3) Cost of imported steel delivered 765
Net domestic HRC price (R$/ton) 4040 Net domestic Rebar price (R$/ton) 3860
FX - BRL/USD 5.08 FX - BRL/USD 5.08
(4) Domestic steel price (US$/ton) 795 (4) Domestic steel price (US$/ton) 760
Premium [(4)/(3)] -1% Premium [(4)/(3)] -1%
24
Source: Bloomberg, Platts, BTG Pactual
 Brazil Macro
Our macroeconomic research team expects a 3.5% GDP expansion in 2021
IBC - Br monthly GDP proxy (sa) Industry Capacity Utilization (%)
150 85

140 80

130 75

120 70

65
110

Industrial Production (y/y) Business confidence index

30%
75
20%
65
10%
55
0%
45
-10%
35
-20%
25
-30%

25
Source: IBGE, Bloomberg, CNI, BTG Pactual
 Other markets: LatAm and US
Relevant drivers for LatAm and US markets on the rise! V-shape…
Mexico – Vehicle Total Production Mexico – Construction Industry Volume
450
'000 units y/y (%)
60% 130 Building Index
400 40% 120
350 20% 110
300
0%
250 100
-20%
200 90
-40%
150
-60% 80
100
50 -80% 70
0 -100% 60

US steel capacity utilization (%) Argentina – Construction Activity YoY (%)

100% 40%
90% 20%
80% 0%
70.9%
70% -20%
60%
-40%
50%
-60%
40%
-80%
30%

26
Source: Bloomberg, BTG Pactual
Pulp & Paper

Section 3

27
 • Tighter S/D fundamentals in the ST have been supporting the implementation of recently
announced price hikes – US$500/t (fully implemented in December)

• Major HW producers have announced US$50/t price hikes in China, while Suzano has
reportedly announced ~US$70/t in Europe and North America… catching up!

• The recovery in paper consumption across the board (and more significantly in China) has
Focus themes: been helping to sustain demand for pulp at healthy levels.

Pulp • In 2021, we expect P&W grades to recover and tissue to grow from a higher base, which
could drive pulp demand to a full recovery.

• On the supply side, MAPA being pushed out to the end of 2021 has created a favorable S/D
environment for next year, with no relevant capacity additions throughout the year

• Reported (ST) supply disruptions from Indonesian/Asian players have been arguably helping
the implementation of recently announced price hikes

• SW markets have been under much tighter conditions than HW, and producers have been
more effective in announcing and implementing price hikes…

• … driving SW-HW spreads to multi-year highs at US$160/t, which we believe could favor
substitution of SW into HW (though at a limited rate)

• Pulp (HW) curve: Lifting estimates for 2021/22 (prices on page 30). We are increasing our
estimates for the next couple of years (US$575/t and US$550/t), and keeping a conservative
approach in the LT (US$550/t, at marginal costs of production), as we remain cautious about
medium-term capacity additions.
28
 Pulp comps table

Mkt. Cap EV/EBITDA P/E Free Cash Flow Yield Net Debt / EBITDA
Company Ticker
US$ mn 2020 2021 2022 2020 2021 2022 2020 2021 2022 2020 2021 2022

Pulp & Paper LatAm

Suzano SA* SUZB3 BZ 14,328 9.2x 6.6x 6.6x n.m. 7.7x 9.2x 4.0% 11.1% 10.9% 4.3x 2.8x 2.5x
Klabin SA* KLBN11 BZ 5,392 10.1x 7.9x 7.9x n.m. 13.1x 16.6x -4.1% -1.1% 7.2% 4.4x 3.5x 3.4x
Duratex SA* DTEX3 BZ 2,600 12.7x 11.2x 9.7x 33.3x 28.4x 22.1x 0.1% 3.5% 3.3% 1.5x 1.1x 0.8x
Empresas CMPC SA CMPC CI 5,978 9.6x 8.1x 7.5x n.m. 27.8x 22.4x 4.8% 6.4% 7.1% 3.3x 2.5x 2.1x
Empresas COPEC SA COPEC CI 12,017 12.4x 9.7x 8.4x n.m. 33.4x 21.4x -4.2% -1.9% 6.1% 5.0x 4.2x 3.4x
Irani Papel e Embalagem SA* RANI3 BZ 261 7.1x 7.1x 6.8x 18.1x 16.7x 18.0x 1.0% -12.0% -8.0% 1.1x 1.6x 1.9x
Weighted average 10.2x 8.4x 7.8x 25.7x 21.2x 18.3x 0% 1% 4% 3.3x 2.6x 2.4x

Pulp & Paper Global

Kimberly-Clark Corp KMB US 46,293 12.2x 12.0x 11.7x 17.8x 17.4x 16.5x 4.7% 5.5% 5.9% 1.8x 1.7x 1.6x
International Paper Co IP US 19,470 8.8x 8.1x 8.0x 17.6x 13.7x 12.6x 10.1% 9.3% 8.1% 2.5x 2.1x 2.0x
UPM-Kymmene Oyj UPM FH 19,799 12.5x 10.8x 10.1x 23.2x 19.6x 18.2x 1.3% -0.9% 0.3% -0.1x 0.3x 0.2x
Stora Enso Oyj STERV FH 14,884 11.8x 9.9x 9.0x 30.7x 19.5x 16.2x 3.8% 4.4% 5.6% 2.3x 1.8x 1.4x
Oji Holdings Corp 3861 JP 5,650 7.0x 8.6x 7.6x 9.4x 13.6x 10.4x 4.8% -0.7% 4.7% 3.0x 3.5x 3.0x
Nine Dragons Paper Holdings Ltd 2689 HK 6,356 7.6x 6.4x 5.9x 10.0x 7.7x 7.2x 2.7% 4.0% 9.7% 2.8x 2.2x 1.8x
Westrock Co WRK US 11,713 7.5x 7.0x 7.0x 16.5x 13.7x 12.6x 10.6% 11.2% 12.0% 3.2x 2.7x 2.3x
Mondi PLC MNDI LN 11,775 9.1x 8.7x 8.1x 16.6x 15.2x 13.3x 6.2% 5.4% 7.0% 1.5x 1.3x 1.0x
Smurfit Kappa Group PLC SKG LN 11,962 8.9x 8.5x 7.8x 16.5x 15.7x 13.8x 5.7% 3.7% 4.1% 1.9x 1.7x 1.5x
Weighted average 9.5x 8.9x 8.3x 17.6x 15.1x 13.4x 6% 5% 6% 2.1x 1.9x 1.6x

29
Source: Bloomberg, BTG Pactual. Note: Prices as of December 16th | *BTG Pactual estimates
 Pulp Curve
We are lifting our curve in 2021/22 on improved ST fundamentals. LT remains unchanged at marginal costs

850
S/D conditions
have improved in the ST,
800 which we expect to drive
750 prices higher
700

650

600 575
550 550
550
550
500 530
510
450 470
400

350

New Curve Old Curve

30
Source: RISI, BTG Pactual | Note: We are modelling net price references
 FOEX prices vs. costs
Prices in China remain below marginal costs of production… both fibers on the rise

Pulp prices in China (USD/t) World BHK cash cost curve

1,000

900

800

700

600

500

400

China BHKP China NBSK

31
Source: FOEX, RISI, BTG Pactual
 Historical SW-HW spreads
Spreads (well above historical average) currently favoring substitution of SW into HW!

China (US$/t) Europe (US$/t)

200 300
160

200 196
100

100

0
0

-100 -100

China SW-HW 5Y Avg Europe SW-HW 5Y Avg

32
Source: FOEX, BTG Pactual
 Searching for that rebound
This crisis is taking longer than usual… so the rise could be faster!

900

800

700

600

500

400 10 months
17 months
9 months

300

China BHKP (US$/t net)

33
Source: FOEX, BTG Pactual
 Global Inventories
Supply-side inventories now under control… HW closer to normalized levels

HW pulp inventory (days of supply) SW pulp inventory (days of supply)

70
45

55 35 36

42
40 25

25 15

Hardwood inv days/supply Average Softwood inv days/supply Average

34
Source: PPPC, BTG Pactual
 Port inventories
Port stockpiles in both regions remain elevated… we see it as a new normal

China (kt) Europe (kt)

2100
2,000 Qingdao
1900
Changshu
1,500 1700

1500
1,000
1300

1100
500
900
0
700

35
Source: RISI, Europulp, BTG Pactual
 Global Pulp Demand Breakdown
Total pulp shipments are growing +4% YTD, driven by HW demand (up +10% YTD)
Total Shipments (kt) – 5-year range October Breakdown by destination
5,000 1%
2019 13% 16% N. America
W. Europe
4,500
2020 E. Europe
LatAm
4,000 22%
Japan
36% China
3,500
3% Other Asia/Africa
3% 7% Oceania
3,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

World (monthly) tissue production - kt World (monthly) P&W production - kt

36
Source: PPPC, BTG Pactual
 Top global consumers
HW shipments (especially to China) have been sustaining pulp consumption

HW Shipments (kt) vs. y/y growth (%) SW Shipments (kt) vs. y/y growth (%)
3,200 50% 25%
2,800 2,200 20%
40%
2,400 15%
30%
10%
2,000 1,800
20% 5%
1,600 0%
10%
1,200 1,400 -5%
800 0% -10%
-10% -15%
400
1,000 -20%
- -20%

Softwood y/y (%)

Hardwood y/y (%)

Shipments to China (kt) vs. y/y growth (%) Shipments to Europe (kt) vs. y/y growth (%)
2000 75% 20%
1,600
50%
1600 10%
25% 1,200
1200 0%
0%
China is 800
800 -10%
growing 7% -25%

YTD 400 -50% 400 -20%

Shipments to China y/y (%) Shipments to Europe y/y (%)

37
Source: PPPC, BTG Pactual
Financials

Section 4

38
 Vale’s Financial Summary 1

VALE
Stock rating / Sector Rating Buy
# shares (million) 5,284
Price (US$) 16.7
Market Cap (US$ million) 88,251
Target 21

Income Statement (US$ mn) 2015 2016 2017 2018 2019 2020E 2021E 2022E Operating Metrics 2015 2016 2017 2018 2019 2020E 2021E 2022E
Net Revenues 25,609 29,363 33,967 36,575 37,570 38,162 50,554 46,534 Ferrous
COGS (20,513) (19,537) (21,039) (22,109) (21,187) (18,053) (19,366) (21,178) Volumes (Mt) - Fines 289 293 291 309 269 252 280 310
Gross Profit 5,096 9,826 12,928 14,466 16,383 20,109 31,189 25,356 Volumes (Mt) - Pellets 46 48 52 57 43 31 40 50
EBIT 2,795 8,084 10,930 11,955 1,319 16,290 27,423 22,355 Iron ore spot price (US$/t) - Fines 56 58 71 69 93 106 130 100
Net Financial Result/Mon.Var (10,801) 1,863 (3,019) (4,957) (3,413) (3,616) (202) (190) Realized Prices (US$/t) - Pellets 78 80 109 117 138 135 159 129
Non-oper revenues 97 (1,220) (180) (487) - - - -
Equity Income (885) 312 (708) 213 (681) (741) - - Ferrous Division EBITDA margin 36% 52% 53% 53% 57% 65% 70% 63%
EBT (7,909) 8,727 7,731 6,511 (2,094) 12,674 27,222 22,165
Income tax 5,100 (2,151) (1,495) 172 595 (1,453) (5,444) (6,206) Nickel
Minority Interest 491 6 (21) (36) 497 356 356 356 Volumes (kt) 291 311 294 237 205 191 200 200
Net Income (3,203) 6,894 5,507 6,860 (1,683) 10,835 22,133 16,315 Price ($/lb) 5.3 4.5 4.8 6.2 6.4 6.6 6.9 6.9
EPS (0.61) 1.30 1.04 1.30 (0.32) 2.05 4.19 3.09
EBITDA 7,141 12,083 14,956 15,694 18,133 20,861 30,588 25,719 Copper ($/lb) 2.0 2.0 2.6 2.5 2.5 2.7 3.8 4.0

Balance Sheet (US$ mn) 2015 2016 2017 2018 2019 2020E 2021E 2022E Selective Ratios 2015 2016 2017 2018 2019 2020E 2021E 2022E
Total assets 88,492 99,014 99,184 88,190 91,713 84,108 92,078 95,575 EBITDA Margin (%) 28% 41% 44% 43% 48% 55% 61% 55%
Cash 3,591 4,262 4,328 5,784 8,176 12,437 16,687 17,486 EBIT Margin (%) 11% 28% 32% 33% 4% 43% 54% 48%
Inventory 3,528 3,349 3,926 4,443 4,274 3,956 4,243 4,641 EBT Margin (%) -31% 30% 23% 18% -6% 33% 54% 48%
Receivables 1,476 3,663 2,600 2,648 2,526 3,616 4,213 3,878 Net Margin (%) -13% 23% 16% 19% -4% 28% 44% 35%
Investments 2,940 3,696 3,568 3,225 2,798 2,036 2,036 2,036
Accounts payable 3,365 3,910 4,041 3,512 4,107 3,055 3,443 3,765 Net Debt/EBITDA 4.1x 2.5x 1.6x 0.9x 0.5x 0.1x -0.1x -0.1x
PP&E 59,426 62,290 63,371 56,347 55,075 45,033 47,869 50,505 Net Debt/Equity 87% 78% 54% 32% 22% 7% -4% -5%
Net Debt /Total Capital 47% 44% 35% 24% 18% 6% -4% -5%
Gross Debt 32,938 34,741 27,864 19,815 16,963 15,128 14,799 14,691 Interest Coverage 6.4x 4.4x 4.6x 6.7x 4.8x 7.8x 29.3x 25.1x
Minority Interest 2,115 1,982 1,314 847 (1,074) (1,391) (1,747) (2,103) Capex/Sales 0.3x 0.2x 0.1x 0.1x 0.1x 0.1x 0.1x 0.1x
Book value 33,589 39,042 43,458 43,985 40,067 40,385 51,851 58,591 Capex/Depreciation 2.1x 1.4x 1.0x 1.1x 1.0x 1.3x 1.9x 1.8x
Net debt (including Refis) 29,347 30,479 23,536 14,031 8,787 2,691 (1,888) (2,795) Total Assets/Debt 2.7x 2.9x 3.6x 4.5x 5.4x 5.6x 6.2x 6.5x
39
 Vale’s Financial Summary 2

Simplified Cash Flow (US$ mn) 2015 2016 2017 2018 2019 2020E 2021E 2022E Shareholder Structure TOTAL
EBITDA 7,141 12,083 14,956 15,694 18,133 20,861 30,588 25,719 Litel/Litela 11.6%
Change in working capital 1,287 105 746 (1,094) 886 (2,205) (496) 260 Bradespar 5.7%
Financial Revenues 270 185 481 423 527 380 622 834 BNDESPar 3.7%
Financial expenses / others (1,112) (2,727) (3,276) (2,345) (3,806) (2,688) (1,044) (1,024) Mitsui 5.6%
Income tax / Social contrib. - (2,151) (1,495) (1,368) (1,450) (2,360) (5,444) (6,206) Others 73.4%
Brumadinho - - - - (1,457) (1,419) (2,400) (2,600)
Others - - - - - (1,015) (800) (500) Valuation /Return metrics 2015 2016 2017 2018 2019 2020E 2021E 2022E
Operating cash flow 7,586 7,495 11,412 11,310 12,833 11,555 21,025 16,483 P/E -27.6x 12.8x 16.0x 12.9x -52.4x 8.1x 4.0x 5.4x
EV/EBITDA 16.4x 9.8x 7.3x 6.4x 5.8x 4.7x 2.9x 3.3x
Capex (8,400) (5,482) (3,843) (3,784) (3,704) (4,163) (6,000) (6,000) P/B 2.6x 2.3x 2.0x 2.0x 2.2x 2.2x 1.7x 1.5x
Investments in subsdiaries - - - - - - - - P/OCF 11.6x 11.8x 7.7x 7.8x 6.9x 7.6x 4.2x 5.4x
Others / Acquisitions - - - - - - - -
Investing cash flow (8,400) (5,482) (3,843) (3,784) (3,704) (4,163) (6,000) (6,000) FCF Equity (814) 2,013 7,569 7,526 9,129 7,392 15,025 10,483
FCF yield (ex-others, %) -1% 2% 9% 9% 12% 11% 21% 15%
Increase (decrease) in debt - - - - - (916) (329) (108) FCF yield (%) -1% 2% 9% 9% 10% 8% 17% 12%
Dividends (1,500) (250) (1,456) (3,437) - (3,327) (10,446) (9,576) Dividend yield (%) 2% 0% 2% 4% 0% 4% 12% 11%
Stock issued (Bought back) - - - - - - - - ROE -10% 18% 13% 16% -4% 27% 43% 28%
Others/ Divestments - - - 4,649 (417) - - - ROA -4% 7% 6% 8% -2% 13% 24% 17%
Financing cash flow (1,500) (250) (1,456) 1,212 (417) (4,243) (10,775) (9,684) ROIC 3% 8% 11% 14% 2% 27% 40% 29%
Ke 12% 12% 12% 12% 12% 12% 12% 12%
WACC 10% 10% 10% 10% 10% 10% 10% 10%
Change in cash position (2,314) 1,763 6,113 8,738 8,712 3,149 4,250 799 Spread (ROIC - WACC) -7% -2% 2% 5% -8% 18% 30% 19%

40
 SCC’s Financial Summary 1

SOUTHERN COPPER
Stock Rating / Sector Rating Neutral
# shares outstanding (million) 773
Price (US$) 61
Market Cap (US$ million) 46,882
Target 65

Income Statement (US$mn) 2015 2016 2017 2018 2019 2020E 2021E Operating Metrics 2015 2016 2017 2018 2019 2020E 2021E
Net Revenues 5,046 5,380 6,655 7,097 7,286 7,747 9,413 Copper price (US$/lb) 2.49 2.21 2.80 2.96 2.72 2.80 3.75
COGS 3,487 3,721 3,953 4,113 4,401 4,599 4,411 Molybdenum price (US$/lb) 6.58 6.39 8.12 11.85 11.16 9.02 13.00
Gross Profit 1,559 1,659 2,702 2,984 2,885 3,148 5,002 Zinc price (US$/lb) 0.87 0.95 1.32 1.33 1.16 1.02 1.50
EBIT 1,414 1,564 2,619 2,881 2,753 3,021 4,848 Silver price (US$/oz) 15.65 16.89 17.03 15.61 16.20 19.38 24.00
Net Financial Result -200 -284 -301 -261 -319 -350 -350
Non-oper revenues -25 -8 -16 -31 -7 -36 -44 Copper Shipments (kt) 737 868 889 889 986 1037 950
Equity Income 17 24 23 12 11 4 4 Molybdenum Shipments (kt) 23 22 21 22 27 29 23
EBT 1,206 1,297 2,326 2,602 2,437 2,640 4,458
Income tax -465 -518 -1,594 -1,054 -945 -1,096 -1,772
Minority Interest -5 -2 -4 -5 -6 -3 -13
Net Income 736 777 728 1,543 1,486 1,541 2,673
EPS 0.95 1.00 0.94 2.00 1.92 1.99 3.46
EBITDA 1,925 2,211 3,290 3,555 3,518 3,800 5,460

Balance Sheet (US$mn) 2015 2016 2017 2018 2019 2020E 2021E Selective Ratios 2015 2016 2017 2018 2019 2020E 2021E
Total assets 12,527 13,277 13,771 14,485 16,407 16,593 18,193 EBITDA Margin (%) 38% 41% 49% 50% 48% 49% 58%
Cash 878 597 1,055 1,058 2,006 2,626 3,455 EBIT Margin (%) 28% 29% 39% 41% 38% 39% 52%
Inventory 857 1,010 1,042 1,033 1,069 938 1,140 EBT Margin (%) 24% 24% 35% 37% 33% 34% 47%
Receivables 551 669 976 973 912 1,029 1,203 Net Margin (%) 15% 14% 11% 22% 20% 20% 28%
Investments 0 0 0 0 0 0 0
Accounts payable 647 581 660 673 598 662 659 Net Debt/EBITDA 2.6x 2.4x 1.5x 1.4x 1.4x 1.0x 0.6x
PP&E 8,043 8,767 9,111 9,404 9,371 9,083 9,475 Net Debt/Equity 96% 92% 80% 75% 72% 54% 35%
Net Debt /Total Capital 49% 48% 45% 43% 42% 35% 26%
Gross Debt 5,952 5,954 5,957 5,960 6,941 6,543 6,543 Interest Coverage 9.1x 7.6x 10.8x 12.8x 10.3x 10.3x 14.9x
Minority Interest 36 39 42 45 48 48 61 Capex/Sales 0.2x 0.2x 0.2x 0.2x 0.1x 0.1x 0.1x
Book value 5,263 5,832 6,108 6,568 6,810 7,270 8,861 Capex/Depreciation 2.3x 1.7x 1.5x 1.7x 0.9x 0.6x 1.6x
Net debt 5,074 5,357 4,902 4,902 4,935 3,917 3,088 Total Assets/Debt 2.1x 2.2x 2.3x 2.4x 2.4x 2.5x 2.8x 41
 SCC’s Financial Summary 2

Simplified Cash Flow (US$mn) 2015 2016 2017 2018 2019 2020E 2021E Shareholder Structure TOTAL
EBITDA 1,925 2,211 3,290 3,555 3,518 3,800 5,460 Americas Mining Corporation (AMC) 80%
Change in working capital 76 -336 -261 27 -50 78 -379 Free Float 20%
Financial Revenues 11 7 6 16 21 18 18 Total 100%
Financial expenses -211 -291 -306 -277 -341 -367 -367
Income tax / Social contrib. -339 -389 -701 -888 -791 -931 -1,516
Others -25 -8 -16 -31 -7 -36 -44
Operating cash flow 1,437 1,196 2,012 2,402 2,350 2,561 3,171 Valuation /Return metrics 2015 2016 2017 2018 2019 2020E 2021E
P/E 63.7x 60.4x 64.4x 30.4x 31.5x 30.4x 17.5x
Capex -1,151 -1,118 -1,023 -1,134 -708 -482 -1,004 EV/EBITDA 27.0X 23.7X 15.8X 14.6X 14.8X 13.4X 9.2X
Investments in subsdiaries 0 0 0 0 0 0 0 P/B 8.9x 8.0x 7.7x 7.1x 6.9x 6.4x 5.3x
Others 0 0 0 0 0 0 0 P/OCF 32.6x 39.2x 23.3x 19.5x 20.0x 18.3x 14.8x
Investing cash flow -1,151 -1,118 -1,023 -1,134 -708 -482 -1,004
FCF Equity - US$mn 282 75 985 1,263 1,636 2,076 2,154
Increase (decrease) in debt 0 0 0 0 0 0 0 FCF yield (%) 1% 0% 2% 3% 3% 4% 5%
Div. rec from invest (net) 0 0 1 1 1 1 1 Dividend yield (%) 1% 0% 1% 2% 3% 2% 2%
Dividends -271 -139 -456 -912 -1,237 -1,082 -1,082 ROE 14% 13% 12% 23% 22% 21% 30%
Stock issued 0 0 0 0 0 0 0 ROA 6% 6% 5% 11% 9% 9% 15%
Others 0 0 1 1 1 1 1 ROIC 9% 9% 16% 17% 16% 18% 27%
Financing cash flow -271 -139 -454 -910 -1,235 -1,080 -1,080 Ke 11.6% 11.6% 11.6% 11.6% 11.6% 11.6% 11.6%
WACC 9.7% 9.7% 9.7% 9.7% 9.7% 9.7% 9.7%
Change in cash position 16 -62 535 358 407 999 1,087 Spread (ROIC - WACC) -1% 0% 6% 7% 6% 8% 17%

42
 GMex’s Financial Summary 1
GRUPO MEXICO
Stock Rating / Sector Rating Neutral
# shares outstanding (million) 7,785
Price (MXN/shr) 80
Market Cap (US$ million) 35,386
Target (MXN/shr) 89

Income Statement (US$mn) 2015 2016 2017 2018 2019 2020E 2021E Operating Metrics 2015 2016 2017 2018 2019 2020E 2021E
Net Revenues 8,181 8,173 9,786 10,495 10,683 10,549 12,730 Copper price (US$/lb) 2.49 2.21 2.80 2.96 2.72 2.80 3.75
COGS 5,751 5,656 6,109 6,621 6,899 6,466 6,804
Gross Profit 2,430 2,518 3,677 3,874 3,784 4,083 5,927
EBIT 2,188 2,299 3,435 3,601 3,491 3,810 5,624
Net Financial Result 16 -1 76 -1,081 -80 -697 -470 SCC's Copper Shipments (kt) 737 868 889 889 986 1037 950
Non-oper revenues -101 -62 -112 -29 40 -31 -44 Asarco's Copper Shipments (kt) -300 186 120 131 116 74 130
Equity Income 22 28 27 9 1 3 4 SCC's EBITDA Margin (%) 38% 41% 49% 50% 48% 49% 58%
EBT 2,125 2,263 3,426 2,501 3,453 3,084 5,114 Asarco's EBITDA Margin (%) 11% 9% 19% 1% 7% 31% 27%
Income tax -757 -776 -1,730 -991 -1,233 -1,174 -1,976
Minority Interest -269 -265 -299 -373 -410 -330 -599
Net Income 1,100 1,223 1,397 1,137 1,810 1,580 2,539 ITM (US$mn)
EPS 0.14 0.16 0.18 0.15 0.23 0.20 0.33 Net Revenues 1,897 1,767 2,049 2,360 2,473 2,206 2,251
EBITDA 3,101 3,311 4,655 5,002 4,998 5,285 6,933 EBITDA 695 725 876 1,013 1,096 959 908

Balance Sheet (US$mn) 2015 2016 2017 2018 2019 2020E 2021E Selective Ratios 2015 2016 2017 2018 2019 2020E 2021E
Total assets 21,563 22,119 25,436 25,679 27,461 29,565 32,115 EBITDA Margin (%) 38% 41% 48% 48% 47% 50% 54%
Cash 1,848 1,293 1,714 1,674 2,608 1,681 2,545 EBIT Margin (%) 27% 28% 35% 34% 33% 36% 44%
Inventory 980 1,034 1,078 1,478 1,546 1,570 2,392 EBT Margin (%) 26% 28% 35% 24% 32% 29% 40%
Receivables 766 850 1,297 1,251 1,220 1,513 1,901 Net Margin (%) 13% 15% 14% 11% 17% 15% 20%
Investments 0 0 0 0 0 0 0
Accounts payable 1,232 1,347 1,654 1,723 1,623 2,000 2,789 Net Debt/EBITDA 1.8x 1.8x 1.5x 1.3x 1.4x 1.3x 0.9x
PP&E 13,279 13,800 15,983 17,144 16,956 16,271 16,719 Net Debt/Equity 58% 58% 60% 58% 56% 57% 46%
Net Debt /Total Capital 37% 37% 37% 37% 36% 36% 31%
Gross Debt 7,560 7,332 8,550 8,384 9,377 8,761 8,761 Interest Coverage 14.7x 13.9x 26.8x 3.7x 14.1x 5.4x 9.0x
Minority Interest 1,528 1,562 1,981 2,097 2,224 4,220 4,688 Capex/Sales 0.0x 0.2x 0.4x 0.2x 0.1x 0.1x 0.1x
Book value 9,851 10,360 11,463 11,512 12,076 12,365 13,658 Capex/Depreciation 0.4x 1.6x 2.8x 1.2x 0.8x 0.6x 1.1x
Net debt 5,713 6,040 6,836 6,710 6,769 7,080 6,216 Total Assets/Debt 2.9x 3.0x 3.0x 3.1x 2.9x 3.4x 3.7x 43
 GMex’s Financial Summary 2

Simplified Cash Flow (US$mn) 2015 2016 2017 2018 2019 2020E 2021E Shareholder Structure TOTAL
EBITDA 3,101 3,311 4,655 5,002 4,998 5,285 6,933 Controlling Group 60%
Change in working capital 462 -144 -297 -286 -137 61 -422 Free Float 40%
Financial Revenues 226 238 249 262 275 289 303 Total 100%
Financial expenses -210 -239 -174 -1,343 -355 -986 -773
Income tax / Social contrib. -757 -776 -1,201 -991 -1,233 -1,174 -1,976
Others -4 -2 -4 -16 -25 -1 5
Operating cash flow 2,819 2,389 3,228 2,629 3,523 3,473 4,068 Valuation /Return metrics 2015 2016 2017 2018 2019 2020E 2021E
P/E 32.2x 28.9x 25.3x 31.1x 19.5x 22.4x 13.9x
EV/EBITDA 13.6X 12.9X 9.4X 8.7X 8.8X 8.3X 6.2X
Capex -397 -1,615 -3,469 -1,685 -1,208 -835 -1,484 P/B 3.6x 3.4x 3.1x 3.1x 2.9x 2.9x 2.6x
Investments in subsdiaries 0 0 0 0 0 0 0 P/OCF 12.6x 14.8x 11.0x 13.5x 10.0x 10.2x 8.7x
Others 0 0 0 0 0 0 0
Investing cash flow -397 -1,615 -3,469 -1,685 -1,208 -835 -1,484 FCF Equity - US$mn 2,153 509 -540 570 1,905 2,309 1,986
FCF yield (%) 6% 1% -2% 2% 5% 7% 6%
Dividend yield (%) 1.5% 0.8% 1.8% 3.7% 4.5% 3.5% 3.5%
Increase (decrease) in debt 0 0 0 0 0 0 0 ROE 11% 12% 12% 10% 15% 13% 19%
Div. rec from invest (net) 0 0 0 0 0 0 0 ROA 5% 6% 5% 4% 7% 5% 8%
Dividends -548 -292 -654 -1,313 -1,590 -1,246 -1,246 ROIC 9% 9% 11% 12% 11% 11% 15%
Stock issued 0 0 0 0 0 0 0 Ke* 11.5% 11.5% 11.5% 11.5% 11.5% 11.5% 11.5%
Others 0 0 0 0 0 0 0 Spread (ROE - Ke) 0% 0% 1% -2% 3% 1% 7%
Financing cash flow -548 -292 -654 -1,313 -1,590 -1,246 -1,246 * - Weighted average of SCC, ITM and Asarco.

44
 GGBR’s Financial Summary 1
GERDAU
Stock Rating / Sector Rating Buy
# shares outstanding (million) 1,702
Price (BRL) 24
Market Cap (BRL million) 40,508
Target 30

Income Statement (R$ mn) 2015 2016 2017 2018 2019 2020E 2021E Operating Metrics 2015 2016 2017 2018 2019 2020E 2021E
Net Revenues 43,581 37,652 36,918 46,160 39,644 42,862 49,201 Capacity Utilization (%) 70% 62% 63% 64% 62% 56% 60%
COGS -39,046 -34,188 -33,313 -40,010 -35,441 -37,740 -41,999
Gross Profit 4,536 3,464 3,605 6,150 4,203 5,122 7,202 Vol - Brazil (kt) 6,457 6,069 5,607 5,535 5,609 5,222 5,916
EBIT -2,946 -1,624 1,135 4,037 3,201 3,980 5,439 Vol - US (kt) 6,037 5,966 6,313 6,084 4,275 4,256 4,384
Net Financial Result -2,878 -945 -1,143 -1,890 -1,509 32 -715 Vol - LatAm (kt) 2,401 2,088 1,722 1,307 1,059 930 1,023
Non-oper revenues 0 0 0 0 0 0 0 Vol - Specialty (kt) 2,621 2,103 1,976 2,111 1,586 1,249 1,498
Equity Income -25 -13 -35 10 -17 152 174
EBT -5,849 -2,582 -43 2,158 1,674 4,164 4,899 EBITDA margin - Brazil 13% 13% 15% 19% 16% 22% 23%
Income tax 1,498 -304 -295 169 -458 -673 -1,225 EBITDA margin - US 9% 8% 5% 9% 11% 10% 10%
Minority Interest -22 0 0 0 0 0 0 EBITDA margin - LatAm 10% 14% 14% 18% 21% 25% 19%
Net Income -4,372 -2,886 -338 2,326 1,216 3,491 3,674 EBITDA margin - Specialty 10% 13% 18% 16% 12% 10% 14%
EPS -2.57 -1.70 -0.20 1.37 0.71 2.05 2.16
EBITDA 4,306 4,046 4,319 6,658 5,714 6,822 8,429 EBITDA margin - Consolidated 10% 11% 12% 15% 14% 16% 17%

Balance Sheet (R$ mn) 2015 2016 2017 2018 2019 2020E 2021E Selective Ratios 2015 2016 2017 2018 2019 2020E 2021E
Total assets 70,093 54,635 50,302 51,281 54,003 64,326 67,430 EBITDA Margin (%) 10% 11% 12% 14% 14% 16% 17%
Cash 6,919 6,088 3,377 3,350 6,295 7,950 9,935 EBIT Margin (%) -7% -4% 3% 9% 8% 9% 11%
Inventory 8,781 6,333 6,701 9,168 7,660 9,132 9,916 EBT Margin (%) -13% -7% 0% 5% 4% 10% 10%
Receivables 4,587 3,577 2,798 3,202 2,672 4,313 4,510 Net Margin (%) -10% -8% -1% 5% 3% 8% 7%
Investments 1,393 799 1,280 1,368 1,812 2,310 2,310
Accounts payable 3,630 2,744 3,180 4,119 3,763 4,678 5,206 Net Debt/EBITDA 4.5x 3.6x 3.0x 1.7x 1.7x 1.5x 1.0x
PP&E 23,256 19,352 16,444 15,546 15,901 17,447 17,585 Net Debt/Equity 62% 60% 56% 45% 36% 31% 23%
Net Debt /Total Capital 38% 38% 36% 31% 27% 24% 19%
Gross Debt 26,461 20,583 16,509 14,907 16,050 18,355 18,130 Interest Coverage 2.4x 2.0x 2.5x 4.2x 3.9x 4.9x 7.2x
Minority Interest 285 247 249 208 217 223 223 Capex/Sales 0.1x 0.0x 0.0x 0.0x 0.0x 0.0x 0.1x
Book value 31,686 24,028 23,646 25,731 26,956 33,231 36,032 Capex/Depreciation 0.3x 0.3x 0.3x 0.5x 0.7x 0.5x 0.9x
Net debt 19,542 14,495 13,132 11,557 9,755 10,405 8,195 Total Assets/Debt 2.6x 2.7x 3.0x 3.4x 3.4x 3.5x 3.7x
45
 GGBR’s Financial Summary 2

Simplified Cash Flow (R$ mn) 2015 2016 2017 2018 2019 2020E 2021E Shareholder Structure TOTAL
EBITDA 4,306 4,046 4,319 6,658 5,714 6,822 8,429 Metalurgica Gerdau 37%
Change in working capital 330 2,573 -238 -1,930 1,681 -907 -453 Gerdau BG 0%
Financial Revenues 378 252 227 204 223 182 239 Gerdau Family 1%
Financial expenses -1,780 -2,010 -1,726 -1,580 -1,470 -1,401 -1,178 Management / Treasury 1%
Income tax / Social contrib. -600 -304 -295 0 -458 -673 -1,225 Free Float 61%
Others 0 0 0 0 0 0 0 TOTAL 100%
Operating cash flow 2,634 4,557 2,286 3,352 5,690 4,022 5,810 Valuation /Return metrics 2015 2016 2017 2018 2019 2020E 2021E
P/E -9.3x -14.0x -119.7x 17.4x 33.3x 11.6x 11.0x
Capex -2,324 -1,483 -873 -1,195 -1,747 -1,503 -2,600 EV/EBITDA 13.9x 13.6x 12.4x 7.8x 8.8x 7.5x 5.8x
Investments in subsdiaries 0 0 0 0 0 0 0 P/B 1.3x 1.7x 1.7x 1.6x 1.5x 1.2x 1.1x
Others 0 0 0 0 0 0 0 P/OCF 15.4x 8.9x 17.7x 12.1x 7.1x 10.1x 7.0x
Investing cash flow -2,324 -1,483 -873 -1,195 -1,747 -1,503 -2,600
FCF Equity - BRLmn 288 3,074 1,413 2,157 3,943 2,519 3,210
Increase (decrease) in debt 0 0 0 0 0 0 0 FCF yield (%) 1% 8% 3% 5% 10% 6% 8%
Div. rec from invest (net) 0 0 0 0 0 0 0 Dividend yield (%) 1% 0% 0% 1% 1% 1% 2%
Dividends -384 0 -86 -599 -484 -269 -873 ROE -14% -12% -1% 9% 5% 11% 10%
Stock issued 0 0 0 0 0 0 0 ROA -6% -5% -1% 5% 2% 5% 5%
Others 0 0 0 0 0 0 0 ROIC -7% -5% 4% 13% 11% 11% 15%
Financing cash flow -384 0 -86 -599 -484 -269 -873 Ke 13.1% 13.1% 13.1% 13.1% 13.1% 13.1% 13.1%
WACC 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0%
Change in cash position -73 3,074 1,327 1,558 3,459 2,250 2,338 Spread (ROIC - WACC) -18% -16% -7% 2% 0% 0% 4%

46
 USIM’s Financial Summary 1
USIMINAS
Stock Rating / Sector Rating Buy
# shares outstanding (million) 1,229
Price (R$) 13.6
Market Cap (R$mn) 16,718
Target 17.0

Income Statement (R$ mn) 2015 2016 2017 2018 2019 2020E 2021E Operating Metrics 2015 2016 2017 2018 2019 2020E 2021E
Net Revenues 10,186 8,454 10,734 13,737 14,949 15,270 18,801 Capacity Utilization (%) 61% 46% 61% 63% 62% 54% 58%
COGS -10,013 -7,967 -9,098 -11,522 -13,074 -12,470 -14,503 Volumes - Domestic (Mt) 3,592 3,176 3,441 3,650 3,682 3,022 3,324
Gross Profit 173 488 1,636 2,215 1,875 2,800 4,298 Volumes - Export (Mt) 1,326 478 584 548 424 533 544
EBIT -3,725 -364 729 883 772 1,392 2,859 Total steel volumes 4,918 3,654 4,025 4,198 4,106 3,555 3,867
Net Financial Result -1,246 -30 -463 93 -510 -1,266 -292 Iron ore production (Mt) 3.8 3.2 3.5 6.4 8.6 8.8 9.5
Non-oper revenues 0 0 0 0 0 0 0
Equity Income 96 143 155 260 181 143 172 Price HRC (Dom) R$/ton 1,701 1,745 2,197 2,629 2,762 2,966 3,233
EBT -4,875 -251 421 1,236 443 269 2,739 Price HRC (Ex) US$/ton 476 515 780 826 858 656 656
Income tax 1,190 -325 -106 -407 -66 -323 -411
Minority Interest -116 -93 -82 -102 -163 -433 -672 Steel
Net Income -3,801 -670 233 727 213 -487 1,656 Cash Cost/ton - R$/ton 1,591 1,424 1,693 2,067 2,269 2,448 2,644
EPS -3.09 -0.54 0.19 0.59 0.17 -0.40 1.35 EBITDA/ton - R$/ton 57 168 448 523 302 186 275
EBITDA 293 1,015 2,186 2,693 1,856 2,556 4,053 EBITDA/ton - US$/ton 17 48 141 143 77 36 54

Balance Sheet (R$ mn) 2015 2016 2017 2018 2019 2020E 2021E Selective Ratios 2015 2016 2017 2018 2019 2020E 2021E
Total assets 27,758 26,255 25,984 26,524 26,337 28,315 30,516 EBITDA Margin (%) 3% 12% 20% 20% 12% 17% 22%
Cash 2,024 2,257 2,314 1,693 1,921 4,190 5,358 EBIT Margin (%) -37% -4% 7% 6% 5% 9% 15%
Inventory 2,748 2,604 2,763 3,881 3,796 3,376 3,934 EBT Margin (%) -48% -3% 4% 9% 3% 2% 15%
Receivables 1,428 1,179 1,555 1,894 1,938 2,572 2,872 Net Margin (%) -37% -8% 2% 5% 1% -3% 9%
Investments 1,084 1,126 1,054 1,088 1,053 1,176 1,348
Accounts payable 1,606 846 977 1,134 1,518 1,733 2,103 Net Debt/EBITDA 20.0x 4.6x 2.0x 1.5x 1.7x 0.8x 0.2x
PP&E 14,744 13,749 12,883 11,715 11,515 11,327 11,331 Net Debt/Equity 44% 35% 32% 29% 23% 14% 5%
Net Debt /Total Capital 30% 26% 24% 23% 19% 12% 5%
Gross Debt 7,886 6,942 6,656 5,854 5,111 6,164 6,164 Interest Coverage 0.5x 1.8x 2.7x 3.7x 2.2x 4.6x 8.1x
Minority Interest 1,585 1,656 1,409 1,431 1,522 1,955 2,628 Capex/Sales 0.1x 0.0x 0.0x 0.0x 0.0x 0.1x 0.1x
Book value 13,409 13,536 13,775 14,266 14,043 13,909 15,067 Capex/Depreciation 0.2x 0.2x 0.1x 0.3x 0.6x 0.7x 0.8x
Adjusted Net debt 5,862 4,684 4,342 4,161 3,189 1,974 806 Total Assets/Debt 3.5x 3.8x 3.9x 4.5x 5.2x 4.6x 5.0x
47
 USIM’s Financial Summary 2

Simplified Cash Flow (R$ mn) 2015 2016 2017 2018 2019 2020E 2021E Shareholder Structure ON PN
EBITDA 293 1,015 2,186 2,693 1,856 2,556 4,053 Nippon Usiminas 31% 1%
Change in working capital 243 -366 -405 -1,299 425 1 -488 Ternium / Techint 40% 1%
Financial Revenues 231 562 377 985 509 240 210 CSN 14% 21%
Financial expenses -645 -577 -818 -732 -832 -556 -501 Others/Free Float 15% 77%
Income tax / Social contrib. 0 -325 -106 -407 -66 -323 -411 Total 100% 100%
Others 0 0 0 0 0 0 0
Operating cash flow 122 309 1,234 1,241 1,892 1,918 2,863 Valuation /Return metrics 2015 2016 2017 2018 2019 2020E 2021E
P/E -4.4x -25.0x 71.6x 23.0x 78.4x -34x 10.1x
Capex -784 -225 -216 -463 -690 -804 -1,000 EV/EBITDA 78.8x 21.6x 9.8x 7.9x 11.0x 7.6x 4.6x
Investments in subsdiaries 0 0 0 0 0 0 0 P/B 1.2x 1.2x 1.2x 1.2x 1.2x 1.2x 1.1x
Others 0 0 0 0 0 0 0 P/OCF 136.6x 54.1x 13.5x 13.5x 8.8x 8.7x 5.8x
Investing cash flow -784 -225 -216 -463 -690 -804 -1,000
FCF Equity - R$mn -777 -9 936 676 1,039 680 1,190
Increase (decrease) in debt 0 0 0 -802 -743 1,153 0 FCF yield (%) -5% 0% 6% 4% 6% 4% 7%
Div. rec from invest (net) 0 0 0 0 221 0 0 Dividend yield (%) 0% 0% 0% 1% 2% 1% 3%
Dividends -39 0 0 -125 -255 -179 -497 ROE -28% -5% 2% 5% 2% -4% 11%
Stock issued 0 0 0 0 0 0 0 ROA -14% -3% 1% 3% 1% -2% 5%
Others 0 0 0 0 0 0 0 ROIC -13% -1% 3% 3% 3% 6% 11%
Financing cash flow -39 0 0 -928 -778 974 -497 Ke - USD 12.9% 12.9% 12.9% 12.9% 12.9% 12.9% 12.9%
WACC - USD 11.1% 11.1% 11.1% 11.1% 11.1% 11.1% 11.1%
Change in cash position -701 84 1,018 -150 424 2,088 1,366 Spread (ROIC - WACC) -24% -12% -8% -8% -8% -5% 0%

48
 TX’s Financial Summary 1

TERNIUM
Stock Ra ting / Sector Ra ting Buy
# s ha res outs tandi ng (mi l l i on) 200
Pri ce (USD) 30
Ma rket Ca p (USD mi l l i on) 6,012
Ta rget 38

Income Statement (US$ mn) 2015 2016 2017 2018 2019 2020E 2021E Opera ting Metri cs 2015 2016 2017 2018 2019 2020E 2021E
Net Revenues 7,878 7,224 9,665 11,635 10,220 8,542 10,220 Ca pa ci ty Util i za tion - Steel s (%) 92% 94% 96% 84% 81% 73% 76%
COGS -6,478 -5,389 -7,312 -8,509 -8,521 -7,087 -7,950
Gros s Profi t 1,400 1,835 2,353 3,126 1,700 1,455 2,270
EBIT 639 1,142 1,512 2,246 815 685 1,398 Vol umes - Mexi co (Mt) 5,933 6,405 6,623 6,550 6,304 5,815 6,606
Net Fi na nci a l Res ul t -99 -38 -165 -281 -95 75 4 Vol umes - Southern regi on (Mt) 2,552 2,221 2,456 2,301 1,938 1,817 1,908
Non-oper revenues 0 0 0 0 0 0 0 Vol umes - Others (Mt) 1,115 1,138 2,518 4,105 4,268 3,648 3,858
Equi ty Income -396 15 68 82 24 -55 178 TOTAL s teel vol umes 9,600 9,764 11,597 12,956 12,511 11,281 12,372
EBT 143 1,118 1,415 2,047 744 705 1,580
Income tax -202 -412 -337 -349 -197 -393 -537 Pri ce per ton - Steel s (US$) 815 738 810 870 793 736 809
Mi nori ty Interes t -46 -111 -137 -186 -18 -65 -158
Net Income -104 596 941 1,512 529 247 885
EPS -0.52 2.97 4.70 7.54 2.64 1.23 4.41 Ca s h Cos t/Ton - US$/ton 627 511 595 614 636 578 601
EBITDA 1,073 1,549 1,986 2,835 1,481 1,315 2,027 EBITDA /Ton - US$/ton 81 118 130 171 92 88 126

Ba l a nce Sheet (US$ mn) 2015 2016 2017 2018 2019 2020E 2021E Sel ective Ra tios 2015 2016 2017 2018 2019 2020E 2021E
Total a s s ets 8,063 8,323 12,123 12,548 12,936 12,476 13,178 EBITDA Ma rgi n (%) 14% 21% 21% 24% 14% 15% 20%
Ca s h 389 328 471 295 732 1,240 1,568 EBIT Ma rgi n (%) 8% 16% 16% 19% 8% 8% 14%
Inventory 1,579 1,648 2,551 2,690 2,158 1,805 1,877 EBT Ma rgi n (%) 2% 15% 15% 18% 7% 8% 15%
Recei va bl es 637 847 2,051 2,093 1,878 1,407 1,561 Net Ma rgi n (%) -1% 8% 10% 13% 5% 3% 9%
Inves tments 250 418 478 495 514 439 616
Accounts pa ya bl e 582 612 900 905 878 894 994 Net Debt/EBITDA 1.1x 0.6x 1.4x 0.6x 1.0x 0.5x 0.1x
PP&E 4,208 4,136 5,350 5,818 6,540 6,543 6,514 Net Debt/Equi ty 28% 20% 55% 27% 22% 9% 4%
Net Debt /Total Ca pi tal 22% 17% 35% 21% 18% 8% 4%
Gros s Debt 1,521 1,219 3,222 2,037 2,189 1,866 1,866 Interes t Covera ge 10.0x 29.8x 10.8x 9.4x 12.0x -46.6x 27.2x
Mi nori ty Interes t 770 775 842 1,091 1,103 1,135 1,293 Ca pex/Sa l es 0.1x 0.1x 0.2x 0.0x 0.1x 0.1x 0.1x
Book va l ue 4,033 4,391 5,010 6,393 6,612 6,856 7,300 Ca pex/Depreci a tion 1.1x 1.1x 4.3x 0.9x 1.6x 1.0x 1.0x
Net debt 1,132 890 2,751 1,742 1,456 626 298 Total As s ets /Debt 5.3x 6.8x 3.8x 6.2x 5.9x 6.7x 7.1x

49
 TX’s Financial Summary 2

Si mpl i fi ed Ca s h Fl ow (US$ mn) 2015 2016 2017 2018 2019 2020E 2021E Sha rehol der Structure TOTAL
EBITDA 1,073 1,549 1,986 2,835 1,481 1,315 2,027 Techi nt Group 62%
Cha nge i n worki ng ca pi tal 803 -249 -1,819 -175 719 413 -126 Tena ri s 11%
Fi na nci a l Revenues 8 14 20 21 29 47 79 Free Fl oa t 26%
Fi na nci a l expens es -107 -52 -184 -302 -124 28 -75
Income tax / Soci a l contri b. -202 -412 -337 -349 -197 -393 -537
Other opera ting i ncome 0 0 0 1 1 1 1 Total 100%
Opera ting ca s h fl ow 1,574 851 -334 2,031 1,909 1,410 1,369 Va l ua tion /Return metri cs 2015 2016 2017 2018 2019 2020E 2021E
P/E -58.8x 10.3x 6.5x 4.1x 11.6x 24.8x 6.9x
Ca pex -467 -436 -2,022 -519 -1,050 -610 -600 EV/EBITDA 6.8X 4.6X 4.7X 3.0X 5.5X 5.7X 3.5X
Non Opera ting Item 0 0 0 0 0 0 0 P/B 1.5x 1.4x 1.2x 1.0x 0.9x 0.9x 0.8x
Others 0 0 0 1 1 1 1 P/OCF 3.9x 7.2x -18.4x 3.0x 3.2x 4.4x 4.5x
Inves ting ca s h fl ow -467 -436 -2,022 -518 -1,049 -609 -599
FCF Equi ty - US$mn 1,062 304 -2,493 1,327 842 737 612
Increa s e (decrea s e) i n debt 0 0 0 0 0 0 0 FCF yi el d (%) 17% 5% -41% 22% 14% 12% 10%
Di v. rec from i nves t (net) 0 0 0 0 0 0 0 Di vi dend yi el d (%) 3.4% 3.7% 3.7% 4.0% 4.3% 0.0% 7.2%
Di vi dends -209 -228 -227 -245 -265 0 -441 ROE -3% 14% 19% 24% 8% 4% 12%
Stock i s s ued 0 0 0 0 0 0 0 ROA -1% 7% 8% 12% 4% 2% 7%
Others 0 0 0 0 0 0 0 ROIC 7% 13% 12% 16% 6% 5% 11%
Fi na nci ng ca s h fl ow -209 -228 -227 -245 -265 0 -441 Ke 12.9% 12.9% 12.9% 12.9% 12.9% 12.9% 12.9%
WACC 11.5% 11.5% 11.5% 11.5% 11.5% 11.5% 11.5%
Cha nge i n ca s h pos i tion 899 188 -2,583 1,268 594 802 330 Sprea d (ROIC - WACC) -4% 1% 0% 5% -6% -6% -1%

50
 SUZB’s Financial Summary 1
Suzano
Stock Rating / Sector Rating Buy
# shares outstanding (million) 1,346
Price (R$) 54
Market Cap (R$mn) 72,684
Target 66

Income Statement (R$ mn) 2015 2016 2017 2018 2019 2020E 2021E Operating Metrics 2015 2016 2017 2018 2019 2020E 2021E
Net Revenues 10,224 9,882 10,521 13,437 26,013 30,233 34,686 Sales total (kt) 4,521 4,726 4,795 4,480 10,668 11,806 11,274
COGS -6,184 -6,572 -6,449 -6,918 -20,743 -18,834 -17,300 Market pulp (kt) 3,291 3,530 3,615 3,226 9,412 10,613 10,028
Gross Profit 4,040 3,311 4,071 6,519 5,269 11,399 17,386 Paper (kt) 1,230 1,196 1,180 1,254 1,256 1,193 1,246
EBIT 3,070 1,324 3,252 4,998 2,597 8,189 13,465
Net Financial Result -4,429 1,101 -1,019 -4,843 -6,726 -28,895 -2,364 BEKP (US$/ton, China) 628 507 635 760 568 461 575
Non-oper revenues 0 0 0 0 0 0 0 Avg. paper price (R$/ton) 2,807 2,900 2,805 3,301 3,536 3,505 3,816
Equity Income 0 -7 6 8 32 7 0
EBT -1,359 2,418 2,239 163 -4,097 -20,699 11,101 Pulp Cash Cost (R$/ton) 668 623 600 647 707 633 637
Income tax 433 -726 -432 155 1,282 9,103 -1,665 Paper Est. Cash Cost (R$/ton) 2,102 1,754 1,821 1,986 2,222 2,287 2,332
Net Income -925 1,692 1,807 318 -2,815 -11,596 9,436
EPS -0.84 1.53 1.63 0.29 -2.54 -10.47 8.52
EBITDA 4,489 3,883 4,655 6,561 10,722 14,783 18,967

Balance Sheet (R$ mn) 2015 2016 2017 2018 2019 2020E 2021E Selective Ratios 2015 2016 2017 2018 2019 2020E 2021E
Total assets 28,260 29,399 28,523 53,933 97,908 101,658 108,806 EBITDA Margin (%) 44% 39% 44% 49% 41% 49% 55%
Cash 2,448 3,695 2,708 25,486 9,579 6,024 13,675 EBIT Margin (%) 30% 13% 31% 37% 10% 27% 39%
Inventory 1,316 1,313 1,208 1,853 4,686 4,509 4,142 EBT Margin (%) -13% 24% 21% 1% -16% -68% 32%
Receivables 1,886 1,622 2,304 2,537 3,036 3,165 3,631 Net Margin (%) -9% 17% 17% 2% -11% -38% 27%
Investments 330 220 188 340 322 337 337
Accounts payable 581 583 610 633 2,376 2,291 2,104 Net Debt/EBITDA 2.7x 2.7x 2.0x 1.6x 5.0x 4.3x 2.8x
PP&E 16,346 16,235 16,211 17,020 41,121 39,297 38,695 Net Debt/Equity 133% 102% 82% 85% 301% 998% 340%
Net Debt /Total Capital 57% 50% 45% 46% 75% 91% 77%
Gross Debt 14,711 14,013 12,192 35,738 63,685 69,542 67,441 Interest Coverage 3.6x 3.4x 3.8x 4.4x 2.6x 1.6x 4.3x
Minority Interest 0 0 0 0 0 0 0 Capex/Sales 0.2x 0.3x 0.2x 0.2x 0.2x 0.1x 0.1x
Book value 9,192 10,143 11,622 12,012 17,973 6,368 15,803 Capex/Depreciation 1.2x 1.0x 1.3x 1.8x 0.7x 0.6x 0.9x
Net debt 12,263 10,317 9,484 10,251 54,106 63,518 53,766 Total Assets/Debt 1.9x 2.1x 2.3x 1.5x 1.5x 1.5x 1.6x
51
 SUZB’s Financial Summary 2

Simplified Cash Flow (R$ mn) 2015 2016 2017 2018 2019 2020E 2021E Shareholder Structure ON
EBITDA 4,489 3,883 4,655 6,561 10,722 14,783 18,967 Suzano Controlling Shareholders 46%
Change in working capital -1,023 268 -549 -856 212 1,293 -285 Bndespar 0%
Financial Revenues 285 361 306 460 493 307 301 Votorantim 6%
Financial expenses -1,255 -1,156 -1,218 -1,500 -4,179 -9,197 -4,368 Others 49%
Income tax / Social contrib. 433 114 -432 0 0 0 -1,665 TOTAL 100%
Others 0 0 0 0 0 0 0
Operating cash flow 2,930 3,470 2,762 4,664 7,248 7,186 12,949 Valuation /Return metrics 2015 2016 2017 2018 2019 2020E 2021E
P/E -78.5x 43.0x 40.2x 228.2x -25.8x -6.3x 7.7x
Capex -1,742 -2,637 -1,755 -2,796 -5,778 -4,265 -4,900 EV/EBITDA 18.8x 21.3x 17.6x 12.6x 11.8x 9.2x 6.6x
Investments in subsdiaries 0 0 0 0 0 0 0 P/B 7.9x 7.2x 6.3x 6.1x 4.0x 11.4x 4.6x
Others 0 0 0 0 0 0 0 P/OCF 24.8x 20.9x 26.3x 15.6x 10.0x 10.1x 5.6x
Investing cash flow -1,742 -2,637 -1,755 -2,796 -5,778 -4,265 -4,900
FCF Equity - R$mn 1,188 834 1,006 1,869 1,470 2,921 8,049
Increase (decrease) in debt 0 0 0 0 0 0 0 FCF yield (%) 2% 1% 1% 3% 2% 4% 11%
Div. rec from invest (net) 0 0 0 0 0 0 0 Dividend yield (%) 0% 0% 1% 0% 1% 0% 0%
Dividends -195 -300 -571 -210 -602 0 0 ROE -10% 17% 16% 3% -16% -182% 60%
Stock issued 0 0 0 0 0 0 0 ROA 9% -1% 7% 8% 0% 11% 8%
Others 0 0 0 0 0 0 0 ROIC 11% 5% 12% 17% 3% 9% 15%
Financing cash flow -195 -300 -571 -210 -602 0 0 Ke 12.0% 12.0% 12.0% 12.0% 12.0% 12.0% 12.0%
WACC 9.4% 9.4% 9.4% 9.4% 9.4% 9.4% 9.4%
Change in cash position 993 534 436 1,658 869 2,921 8,049 Spread (ROIC - WACC) 1% -5% 2% 7% -7% -1% 5%

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 KLBN’s Financial Summary 1
Klabin
Stock Rating / Sector Rating Buy
# shares outstanding (million) 1,082
Price (R$) 25
Market Cap (R$mn) 26,509
Target 29

Income Statement (R$ mn) 2015 2016 2017 2018 2019 2020E 2021E Operating Metrics 2015 2016 2017 2018 2019 2020E 2021E
Net Revenues 5,688 7,091 8,373 10,016 10,272 11,626 13,892 Hardwood - 591 997 1,043 1,084 1,065 1,200
COGS -3,982 -5,227 -6,427 -6,342 -7,241 -7,576 -8,360 Softwood (fluff) - 206 360 360 402 420 400
Gross Profit 1,706 1,864 1,946 3,674 3,031 4,050 5,531 Total Pulp - 797 1,357 1,402 1,486 1,485 1,600
EBIT 1,462 1,349 1,538 2,978 2,519 2,677 3,528 Kraftliner 418 399 351 366 389 413 450
Net Financial Result -3,441 1,817 -714 -1,054 -1,662 -6,116 -894 Card Board 685 693 698 613 687 728 705
Non-oper revenues 0 0 0 0 0 0 0 Corrugated Box 550 558 606 609 614 682 922
Equity Income 31 49 14 6 7 28 28 Industrial Bags 140 150 159 159 152 143 154
EBT -1,948 3,215 838 1,930 864 -3,411 2,661 Other 40 53 55 42 21 - -
Income tax 695 -733 -306 255 -150 1,483 -641 Total paper 1,833 1,852 1,868 1,788 1,863 1,966 2,232
Minority interests 0 0 0 0 0 0 0
Net Income -1,253 2,482 531 2,185 714 -1,929 2,021 BEKP (US$/ton, China) - 507 635 760 568 460 575
EPS -1.16 2.29 0.49 2.02 0.66 -1.78 1.87
EBITDA 1,967 2,279 2,698 4,023 3,702 4,754 6,176 Cash COGS/Ton (R$/ton) 1,627 1,436 1,391 1,463 1,507 1,501 1,495
Pulp Cash Cost (R$/ton) - 801 688 711 779 767 720

Balance Sheet (R$ mn) 2015 2016 2017 2018 2019 2020E 2021E Selective Ratios 2015 2016 2017 2018 2019 2020E 2021E
Total assets 26,268 29,314 30,550 29,634 34,703 35,108 35,827 EBITDA Margin (%) 35% 32% 32% 40% 36% 41% 44%
Cash 5,611 6,464 8,272 7,047 9,731 5,904 4,578 EBIT Margin (%) 26% 19% 18% 30% 25% 23% 25%
Inventory 701 877 933 1,206 1,332 1,520 1,680 EBT Margin (%) -34% 45% 10% 19% 8% -29% 19%
Receivables 1,501 1,625 1,754 2,041 1,860 2,144 2,562 Net Margin (%) -22% 35% 6% 22% 7% -17% 15%
Investments 0 0 0 0 0 0 0
Accounts payable 702 635 714 904 1,024 1,504 1,662 Net Debt/EBITDA 6.3x 5.3x 4.2x 3.1x 3.9x 4.4x 3.5x
PP&E 12,009 12,995 12,619 12,262 13,241 16,459 17,926 Net Debt/Equity 232% 169% 156% 197% 237% 503% 425%
Net Debt /Total Capital 70% 63% 61% 66% 70% 83% 81%
Gross Debt 18,022 18,469 19,549 19,446 24,085 26,675 26,264 Interest Coverage 2.3x 1.8x 2.1x 2.6x 1.6x 3.2x 3.9x
Minority Interest 0 0 0 241 454 580 580 Capex/Sales 0.8x 0.4x 0.1x 0.1x 0.3x 0.4x 0.3x
Book value 5,352 7,100 7,234 6,292 6,047 4,128 5,099 Capex/Depreciation 9.2x 2.8x 0.8x 0.9x 2.2x 2.3x 1.5x
Net debt 12,411 12,005 11,278 12,398 14,354 20,771 21,686 Total Assets/Debt 1.5x 1.6x 1.6x 1.5x 1.4x 1.3x 1.4x
53
 KLBN’s Financial Summary 2

Simplified Cash Flow (R$ mn) 2015 2016 2017 2018 2019 2020E 2021E Shareholder Structure TOTAL
EBITDA 1,967 2,279 2,698 4,023 3,702 4,754 6,176 Klabin Irmaos 20%
Change in working capital -227 -367 -106 -370 176 7 -420 BNDES 5%
Financial Revenues 582 932 749 495 1,023 353 295 Monteiro Aranha 7%
Financial expenses -848 -1,284 -1,289 -1,549 -2,275 -1,496 -1,600 Niblak 3%
Income tax / Social contrib. 0 -733 -306 0 -150 0 -641 Others 65%
Others 0 0 0 0 0 0 0 TOTAL 100%
Operating cash flow 1,474 827 1,745 2,599 2,477 3,617 3,811 Valuation /Return metrics 2015 2016 2017 2018 2019 2020E 2021E
P/E -21.2x 10.7x 49.9x 12.1x 37.1x -13.7x 13.1x
Capex -4,628 -2,565 -879 -957 -2,575 -4,702 -4,100 EV/EBITDA 19.8x 16.9x 14.0x 9.7x 11.2x 10.1x 7.9x
Investments in subsdiaries 0 0 0 0 0 0 0 P/B 5.0x 3.7x 3.7x 4.2x 4.4x 6.4x 5.2x
Others 0 0 0 0 0 0 0 P/OCF 18.0x 32.1x 15.2x 10.2x 10.7x 7.3x 7.0x
Investing cash flow -4,628 -2,565 -879 -957 -2,575 -4,702 -4,100
FCF Equity - R$mn -3,154 -1,738 866 1,642 -98 -1,085 -289
Increase (decrease) in debt 7,036 447 1,080 -104 4,639 2,590 -411 FCF yield (%) -12% -7% 3% 6% 0% -4% -1%
Div. rec from invest (net) 0 0 0 0 0 0 0 Dividend yield (%) 1.4% 1.7% 1% 3% 4% 2% 4%
Dividends -378 -458 -377 -840 -957 -470 -951 Accounting ROE -23% 35% 7% 35% 12% -47% 40%
Stock issued 0 0 0 0 0 0 0 ROA -5% 8% 2% 7% 2% -5% 6%
Others 0 0 0 0 0 0 0 ROIC 5.9% 5.1% 6.0% 11% 9% 8% 9%
Financing cash flow 6,658 -11 703 -944 3,682 2,120 -1,362 Ke 10.5% 10.5% 10.5% 10.5% 10.5% 10.5% 10.5%
WACC 8.3% 8.3% 8.3% 8.3% 8.3% 8.3% 8.3%
Change in cash position 3,504 -1,749 1,570 698 3,584 1,035 -1,651 Spread (ROIC - WACC) -2% -3% -2% 3% 0% -1% 1%

54
 Disclaimer
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