Valuation Method and Risk Statement

Research evidence excerpt

Valuation Method and Risk Statement

In addition to industry- and company-specific risk, we point out to investors the potential

risks inherent in investing in companies with significant assets and business operations in

emerging markets. Potential EM-related risks include the volatile nature of the currency,

regulatory and sociopolitical risk, and abrupt potential changes in the cost of capital and

economic growth outlook. Valuations can also be impacted by 'contagion' from

developments in other emerging markets. Each of the above has the potential to

significantly impact company/industry performance. Our valuations are based on various

methodology including earnings multiples, DCF or SOTP.

AMX: Our PT is based on 2027E EV/EBITDA multiple and in line with LatAm peers. Key

downside risks to our valuation are exposure to over 20 countries, being in 17 in LatAm;

FX; AMX is deemed being "preponderant" in telecommunications in Mexico; and higher

than expected 5G-related capex. Key upside risks are higher mobile and fixed growth,

and lower-than-expected capex.

VIVT: Our PT is based on a 2027E EV/EBITDA, and supported by a 2027E FCF yield in line

with BZ peers. The main risks to our valuation are mobile segment stalled growth, a price

war on the fixed segment, above-expected 5G capex, governance with its parent

Telefonica Group, change in tax regulation (especially on interest on equity or telecom-

specific taxes such as Fistel or Fust).

TIM: Our PT is based on a 2027E EV/EBITDA, and supported by a 2027E FCF yield in line

with BZ peers. The main risks to our valuation are mobile segment, 5G, TI debt, IoE.

Nu Holdings: Our price target is based on a PBV target backed by a dividend discount

model. The main risks that could materially change our investment thesis are: 1)