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2015 All-Latin America Research Team: Food & Beverages, No. 1: Thiago Duarte, Rafael Shin & team

< The 2015 Latin America Research Team
Thiago Duarte, Rafael Shin & teamBTG PactualFirst-Place Appearances: 2

Total Appearances: 6

Team Debut: 2007

Repeating in first place is the BTG Pactual squad under the direction of Thiago Duarte in São Paulo and New York–based Rafael Shin. As they did last year, 31-year-old Duarte also heads the top troupe on the Agribusiness roster; and Shin, 34, co-captains (with Fábio Monteiro) a crew that captures a runner-up position on the Retailing lineup. Their four-strong Latin America food and beverages group wins investor plaudits for being ahead of the pack in underscoring the long-term risks in Brazil, for its expert understanding of both the broad industry and details that move specific stocks, and for providing access to leading companies in the region. It “goes far beyond the usual in reports and service,” attests one fan. The team covers 16 stocks in this sector, with plans to add at least one more this year, and is broadly negative on the drinks subsector. “Among beverage stocks, whose revenues usually are tightly linked to domestic activity, we expect earnings growth to keep decelerating as a result of weaker macro,” explains Duarte. Accordingly, the analysts favor only one name in the space: Chile-based Embotelladora Andina, a bottler and distributor of Coca-Cola Co. products. Despite the unfavorable economic scenario, they contend, Andina’s management will improve profitability by cutting costs and improving the company’s product mix. The shares were trading at 2,066 pesos in mid-July, and they project a rise to 2,300 pesos. Regarding the Brazilian foods industry, “we see momentum as generally strong, underpinned by a weaker currency in Brazil and strong protein demand globally,” Duarte says. Although in Mexico, he adds, “we find it difficult to find upside due to the high valuations in the overall sector. However, we do expect a further divergence in valuations among [food and beverages] names based on their geographic exposures and currency risks.” For example, BTG’s researchers are touting Mexican multinational bakery Grupo Bimbo as well as Gruma, a globally dominant corn miller and tortilla maker, because of their high exposures to U.S. markets and natural hedge against weak emerging-markets currencies.


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