The Ecommerce Handbook

Retail | Thematic Research
The Ecommerce Handbook:

The bittersweet story
Equity Research
BTG Pactual Affiliate Research
Sector Note
December 2021
Luiz Guanais
luiz.guanais@btgpactual.com
+55 11 3383 2755
Gabriel Disselli
gabriel.disselli@btgpactual.com
+55 11 3383 3168
Victor Rogatis
victor.rogatis@btgpactual.com
+55 11 3383 3371
Equity Research
BTG Pactual Affiliate Research
Banco BTG Pactual S.A.
SectorNote
06 December 2021
The Ecommerce Handbook: the bittersweet story
When growth meets a competitive market outlook Luiz Guanais
Brazil – Banco BTG Pactual S.A.
For years, we have argued that ecommerce was the main structural call in Brazilian
luiz.guanais@btgpactual.com
retail, sustained by a still low share of the online channel in total sales plus increasing
+55 11 3383 2755
investments by companies in improving service levels (frictionless experience + lower
delivery times) and growing assortment. The main message in this handbook: Gabriel Disselli
Brazil – Banco BTG Pactual S.A.
ecommerce remains a bullish structural call, but with much more ST noise, paving the
gabriel.disselli@btgpactual.com
way for more volatility. Tech stocks have plummeted in recent months. Besides the
+55 11 3383 3168
(global) debate on the inflationary spiral and the increase in interest rates, with an effect
on the cost of equity, in Brazil three main concerns have weighed on stocks’ Victor Rogatis
performance: (i) deceleration in local ecommerce, particularly for electronics and 1P Brazil – Banco BTG Pactual S.A.
victor.rogatis@btgpactual.com
operators, (ii) competition from national and international players (more discounts,
+55 11 3383 3371
subsidies and rising CAC), and (iii) concerns on sustainable margins for ecommerce
players, given the competitive outlook ahead . In this context, we take the opportunity
to update our estimates for ecommerce players in Brazil .
GMV estimates post-pandemic show legacy from digital shift

Ecommerce companies thrived amid COVID-19 as more people shifted to online
shopping to avoid trips to the store. In 2020, we already sh ook up our TAM estimates
to reflect the main players’ much better figures, but also a legacy that should persist
long after the pandemic ends (with more sellers, traffic, assortment and frequency). In
Brazil, with 45% of total online sales (2020) via cell phones, home appliances and
electronics (all boosted in 2020 by higher demand due to Coronavoucher, and with a
high share of sales from the online channel), it was reasonable to assume much lower
growth prospects in 2021. But despite the deceleration this year (especially since
2Q21), prospects are better than previously expected (GMV-wise). In our estimates,
after growing 66% in 2020, we assume Brazilian ecommerce will grow 26% in 2021
(again mostly driven by the main players, which account for more than 2/3 of the
market) and, on average, 24% annually until 2025, reaching R$505bn (vs. R$429bn in
our previous estimate and R$174bn in 2020), or 20% of total retail sales.
Horizontal marketplaces set to prevail. But there’s room for some niche players
Ecommerce figures are well above pre-pandemic levels, partially driven by an increase
in the share of more formal/bigger sellers in ecommerce sales (Tmall-like market). The
overall share of Brazilian ecommerce is still behind mature markets (19.5% penetration
in 2021), and there are a series of categories in Brazil that lag penetration in
ecommerce vs. more mature markets. The scenario where we see Americanas, MGLU
and MELI (three long -term winners) with ~80% of the market in the LT implies a major
migration from 1P to 3P platforms. But our TAM estimate still leaves R$88bn that should
be in the hands of niche players (or even other smaller horizontal marketplaces). In the
case of niche players, growth should be in categories that still have low penetration in
online sales, such as apparel or pet care. In this sense, only companies focusing on
providing a superior consumer experience (preferably with a footprint in physical retail
with cheaper/more efficient delivery) will have a chance to compete against the trend
ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 40
Banco BTG Pactual S.A. does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that co uld affect the
objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Any U.S. person receiving this report and wishing to effect any transaction in a security
discussed in this report should do so with BTG Pactual US Capital, LLC at 212-293-4600, 601 Lexington Avenue. 57th Floor, New York NY 10022.
06 December 2021 page 2
of consolidation (and horizontal marketplaces) that lies ahead of the sector in the
coming years. Petz, Arezzo , Grupo Soma and Centauro are potential winners in this
scenario.
Bearish ST wave, but still a bullish LT call, with only a few potential winners
While the bearish wave that led to major underperformance in recent months for listed
tech players should continue in the ST (boosted by competition and deceleration in
some ecommerce categories, such as electronics), we remain bullish on ecommerce
as a structural call on the retail sector. Besides the secular growth trend (boosted by
still low penetration vs. more mature markets), the combined GMV for listed players is
64% higher for the coming years vs. our pre-pandemic estimate (a legacy from the
digital shift), and consolidation is already a reality that will likely intensify ahead.
We updated our estimates for five ecommerce players in our coverage universe:
Magazine Luiza, Americanas, Via, Enjoei and Westwing (in the case of MercadoLibre,
we recently published an update report – see “The 2-sided network approach”). While
we still see upside for all of them after the recent sell-off, our TPs have been slashed
due to a higher cost of equity (on average 300bps) and more bearish ST estimates (top
line and margin-wise), given the competitive sector outlook, which we expect to persist
(at least in 2022).
We also downgraded Via to Neutral, on the back of a combination of competitive

outlook, super exposure to electronics/home appliances segment and the uncertainties
regarding the future provisions and monetization of tax credits, which could affect the
company’s capacity to invest in the growth of its operation .
And while ecommerce remains a structural call for us, we prefer LT exposure to the
sector via a basket of leading, proven horizontal players (which also boast much more
liquidity): MercadoLibre, Magazine Luiza and Americanas.
Executive summary – High growth, low profit: the main

ecommerce dilemma
In 2016, we published an in-depth report on the Brazilian e-commerce sector entitled

“It’s time to play the Brazilian internet story”. At that time, Brazil’s internet sector was
developed in a culture of more competitive pricing, sales via interest-free installments,
free freight to attract consumers and hefty investments to cope with the local economy’s
well-documented structural problems. Traditional players were usually large retailers
with capital to subsidize the unprofitable e-commerce channel, seeking to supplement
the offering of their B&M operations. In a nutshell, and in contrast to US e-commerce,
an excessive retail DNA and the lack of an internet DNA ultimately explain ed the
challenges of Brazil’s internet sector in the previous decade.
And during the past five years, the listed players experienced a combination of focus
on service levels (with significant investments in technology/logistics, both by the
ecommerce players and enablers such as Sequoia, Locaweb and Infracommerce),
increasing traffic on platforms and a broader assortment (th e latter with more sellers
and more categories plugged , which was reinforced during the pandemic).
We also learned during this period the power of the ecosystems (please see a series
of reports we published on this matter, detailing the advantage of the Chinese players,
the recent foreign invasion in Brazil, as well as th e cross reading s to the local market)
– we provide in the end of this report the series “Dilemmas of Ecommerce”, with 24
reports published since 2019.
In essence, some of the local players, also boosted by capital raises (in a scenario of
low interest rates in the country), have invested in the ecosystem model, combining a
greater focus on technology, more services (logistics, payments, advertising) and eyes
on attracting the largest number of sellers (focusing on the promise of better economics
with the growth of marketplaces platforms).
In the pursuit of growth, a popular concept in venture capital is the "Valley of Death". A
freshly funded startup enterprise tends to burn cash to invest in product development,
customer acquisition (=subsidies and marketing) and overhead. It continues to burn
cash until it finds product-market fit and until revenues eventually grow large enough
to make the system work and make the company cashflow positive.
We never saw ecommerce in Brazil as a game of “winner takes all” , but instead a
scenario of a few potential winners, all combining traffic, assortment, superior service
levels, as well as higher engagement of users (which translates into higher conversion
rates). And then comes the dilemma of growth vs. profitability in the Brazilian market.
Although it seemed clear that profitability in Brazil in a scenario of 3-4 winners would
not be comparable to some mature international markets ( where a single company
holds more than 50% of the market), the expectation (and multiples of listed players in
the country) relied on a combination of consolidation and better margins (due to further
growth of marketplace share in GMV, operating leverage related to dilutive logistics
costs, more services in ecosystems and eventually a les s aggressive price war).
For most retailers, the path to e-commerce profitability will not resemble a straight line.
Further, these efforts will be ongoing, evolving in tandem with customers’ changing
needs, beliefs and behaviors. As such, e-commerce profitability is a journey that twists
and turns. And looking at the past years (now clearer with the current outlook in Brazil
of higher inflation, more capitalized companies, including niche/smaller players, more
competition in the marketplace business, higher CAC and the still high dependency of
ecommerce on selling cyclical items), growth came at the expense of lower profitability.
But what about the next few years? For most players, it a copy-and-paste trend from
recent years on the profitability front.
In our view, the traditional notion of a universal, linear shopping journey that all
consumers dutifully follow is already disintegrating, and in the next few years the
concept will be completely outdated – the already blurred lines between physical-
heritage retailers and Internet-heritage retailers will have been eradicated. We do not
see margins materially improving in the ST for the leading players , but we do see a few
companies with higher margins in the years to come: these are the true winners in
ecommerce.
It is definitely not an easy task to keep growing like a youthful startup whilst improving
margins in a highly competitive market. But in differentiating companies that grow from
winning players, we believe true LT success in the highly (and always) competitive e-
commerce segment will depend on differentiated value propositions, with the winners
promoting more user engagement (and thus organic traffic growth) via investments in
content, social selling initiatives, broader product (and service) assortments and
continuous improvements in service level, meaning higher monetization of the traffic.
What-to-watch: 5-minute reading
• For years, we have argued that ecommerce was the main structural call in
Brazilian retail, sustained by a still low share of the online channel in total
sales plus increasing investments by companies in improving service levels
(frictionless experience + lower delivery times) and growing assortment. The
main message in this handbook: ecommerce remains a bullish structural call,
but with much more ST noise, paving the way for more volatility;
• In Brazil three main concerns have weighed on stocks’ performance recently:

(i) deceleration in local ecommerce, particularly for electronics and 1P
operators, (ii) competition from national and international players (more
discounts, subsidies and rising CAC), and (iii) concerns on sustainable
margins for ecommerce players, given the competitive outlook ahead;
• In our estimates, after growing 66% in 2020, we assume Brazilian ecommerce

will grow 26% in 2021 (again mostly driven by the main players, which account
for more than 2/3 of the market) and, on average, 24% annually until 2025,
reaching R$505bn (vs. R$429bn in our previous estimate and R$174bn in
2020), or 20% of total retail sales;
• The scenario where we see Americanas, MGLU and MELI (three long -term
winners) with ~80% of the market in the LT implies a major migration fr om 1P
to 3P platforms. But our TAM estimate still leaves R$88bn that should be in
the hands of niche players (or even other smaller horizontal marketplaces);
• Only companies focusing on providing a superior consumer experience

(preferably with a footprint in physical retail with cheaper/more efficient
delivery) will have a chance to compete against the trend of consolidation (and
horizontal marketplaces) that lies ahead of the sector in the coming years.
Petz, Arezzo, Grupo Soma and Centauro are potential wi nners in this
scenario;
• While we still see upside for all of them after the recent sell -off, our TPs have
been slashed due to a higher cost of equity (on average 300bps) and more
bearish ST estimates (top line and margin -wise), given the competitive sector
outlook, which we expect to persist (at least in 2022);
• We also downgraded Via to Neutral, on the back of a combination of

competitive outlook, super exposure to electronics/home appliances segment
and the uncertainties regarding the future provisions and monetization of tax
credits, which could affect the company’s capacity to invest in the growth of
its operation;
• While ecommerce remains a structural call for us, we prefer LT exposure to

the sector via a basket of leading, proven horizontal players (whic h also boast
much more liquidity): MercadoLibre, Magazine Luiza and Americanas.
Our new estimates for the ecommerce sector
Table 1: Comp table: Ecommerce retailers (TPs for YE22)

EV/GMV (1) EV/Sales GMV growth (1) P/E EV/EBITDA Sales growth EBITDA growth EBITDA margin TP
Company 2021E 2022E 2023E 2021E 2022E 2023E CAGR 21-23E 2021E 2022E 2023E 2021E 2022E 2023E CAGR 21-23E CAGR 21-23E 2021E 2022E 2023E Old New
MercadoLibre (2) 1.5x 1.2x 1.0x 7.7x 5.9x 4.8x 22.3% n.m. n.m. n.m. 99.8x 85.7x 61.3x 26.4% 28.5% 7.7% 6.9% 8.0% 2,030 2,030
Magazine Luiza 1.0x 0.8x 0.6x 1.5x 1.2x 1.0x 26.3% 89.8x 183.6x 56.5x 34.0x 27.7x 19.6x 18.4% 29.7% 4.3% 4.3% 5.2% 26 16
Americanas 0.5x 0.4x 0.3x 1.1x 1.0x 0.9x 26.6% 86.9x 37.4x 19.4x 9.7x 6.4x 5.5x 8.3% 28.9% 11.3% 16.0% 16.0% - 45
Via 0.4x 0.4x 0.3x 0.6x 0.6x 0.5x 15.2% 30.6x n.m. 291.5x 15.5x 11.4x 8.3x 11.3% 38.5% 4.0% 5.0% 6.1% 21 8
Westwing 0.2x 0.2x 0.2x 0.3x 0.3x 0.2x 26.2% n.m. n.m. n.m. n.m. 189.2x 7.6x 25.7% n.m -7.9% 0.2% 4.5% 22 7
Enjoei 0.4x 0.3x 0.2x 2.9x 2.0x 1.4x 42.7% n.m. n.m. n.m. n.m. n.m. n.m. 42.7% n.m -96.5% -61.4% -40.4% 18 7
Source: BTG Pactual. Note (1) consolidated GMV (on and offline) (2) MercadoLibre’s TP in USD and EV/GMV multiples not including Mercado Pago.
Table 2: Dashboard Ecommerce Retailers (R$mn)

GMV Net Revenue Adj. EBITDA Adj. Net Income
Companies 2020 2021E 2022E 2023E 2020 2021E 2022E 2023E 2020 2021E 2022E 2023E 2020 2021E 2022E 2023E
MercadoLibre (1) 20,927 29,016 36,255 43,428 3,973 6,990 9,147 11,160 233 540 627 892 -1 82 43 222
Magazine Luiza(2) 43,517 57,522 73,014 91,764 30,218 37,664 44,502 52,771 1,485 1,616 1,921 2,720 392 543 265 862
Americanas 41,608 54,972 70,023 88,110 21,478 26,962 28,114 31,647 3,232 3,055 4,489 5,072 315 310 719 1,387
Via 37,306 44,233 51,797 58,716 28,901 32,016 35,449 39,659 2,917 1,267 1,769 2,431 273 293 -527 31
Westwing 373 435 533 693 245 305 369 482 7 -24 1 22 12 -35 -14 0
Enjoei 495 813 1,232 1,654 80 106 153 216 -23 -102 -94 -87 -31 -102 -92 -110
Source: Companie s and BTG Pactual. Note: (1) USD (2) Considering Kabum
Why is the ecommerce sector still a LT Buy?
2020 erupted into chaos and plunged consumers and businesses into crisis mode. In
2021, we will begin to see contours of the new economic, social, and cultural orders
forged in the crucible of the COVID-19 pandemic. But old (or new) habits die hard. E-
commerce companies have thrived amid COVID-19 as more people shifted to online
shopping to avoid trips to the store.
Table 3: E-commerce share of total global retail sales from 2015 to 2024
21.1% 21.8%
19.5% 20.4%
18.0%
13.6%
12.2%
10.4%
7.4% 8.6%
2015 2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E
Source: Statista, BTG Pactual
But the accelerated adoption of e-commerce worldwide was already set to stall as the
world got back to normal once a COVID-19 vaccine was made widely available in 2021,
which is now reinforced by an inflationary spiral in some economies (and higher interest
rates) and the effect on available income.
Besides the (global) debate on inflation expectations and the increase in interest rates,
with an effect on the cost of equity, in Brazil, there are essentially three main concerns
that have weighed on ecommerce stocks’ performance:
(i) deceleration in Brazilian ecommerce, which is particularly strong for

electronics and 1P operators;
(ii) competition from national and international players (with more discounts,
subsidies and increasing CAC). In this topic, we recently published an
analysis on Shopee in Brazil, highlighting that it is still not a major
competitor versus MGLU, Americanas or MELI, given the poorer service
level and assortment, but which has led to a major increase in the
customer acquisition cost for the whole market (please see “Disturbing a
(not so) calm status quo - analyzing Shopee in LatAm”); and
(iii) concerns on the sustainable margins of ecommerce players, given the

competitive outlook ahead of us.
In 2020, we had already shaken up our TAM estimates to reflect the main players’
much better figures, but also a legacy that should persist long after the pandemic is
over (with more sellers, traffic, assortment and frequency). This time last year, it looked
like the pandemic would cause a dramatic shift in consumer behavior. Ecommerce was
going to be a big winner. And in 1H21, there was still a 7% increase in the # of orders
and 22% increase in the average ticket for the sector, with 6.2mn more consumers
buying online (totaling 42mn consumers in the period).
Table 4: # of orders (mn) – BZ ecommerce Table 5: Average ticket (R$) – BZ ecommerce

12
0 50
% 60
0
43% 40
%
40
%
10
0 50
0
30
%
22% 20
%
80
20% 20
% 40
0
7% 8%
10
%
4% 4%
8%
0%
7%
60
4% 30
0
-7%
-2%
0%
534
100.0
93.1 433 438
418
-20%
40 -10% 20
0
403 404
65.2
48.5 50.3 54.4 -20%
-40%
20 10
0
-30%
0 -40% 0 -60%
1H16 1H17 1H18 1H19 1H20 1H21 1H16 1H17 1H18 1H19 1H20 1H21
Orders Growth y/y Average Ticket Growth y/y
Source: eBit and BTG Pactual Source: eBit and BTG Pactual
But in Brazil, with ~45% of total online sales (2020) made via cell phones, home
appliances and electronics (all of them boosted in 2020 by higher demand due to
Coronavoucher, and with a high share of sales coming from the online channel), it was
reasonable to assume much lower growth prospects in 2021.
Table 6: Breakdown by category – Brazilian ecommerce (2020)

Orders (%) Revenue (%)
20.3%
19.9%
15.9%
14.4%
12.8% 12.6%
10.3%
9.6% 9.8%
9.1%
8.2%
5.7% 6.0% 5.7% 5.7%

4.8% 5.0%
3.6% 3.6%
2.8% 2.5% 2.2%
1.8% 1.6% 1.8% 1.8% 1.5%
1.0%
Cell phone Home Eletronic Entertainment Electronics Apparel Furniture CF&T Household items Supply, Sports Toys Automobiles Others Food and Pets
Appliances and Hobbies Beverage
Source: Neotrust and BTG Pactual

Despite the deceleration in sales this year (especially since 2Q21), prospects are better
than previously expected . In our estimates, after growing 66% in 2020, we assume
Brazilian ecommerce will grow 26% in 2021 (again mostly driven by the main players,
which account for more than 2/3 of the market) and, on average, 24% an nually until
2025, reaching R$505bn (vs. R$429bn in our previous estimate and R$174bn in 2020) ,
or 20% of total retail sales.
Table 7: Brazilian e-commerce GMV (R$mn) and % of total retail sales

9.1% 10.7% 11.9% 14.3% 17.1% 20.4%
505
429
403
376
341
321 310 310
269 255 265
255
220 213 211 227
192
174 167 172 160
155 138 132
2020 2021E 2022E 2023E 2024E 2025E
Base case - R$bn Old - December 2020 Old - May 2020 Old - January 2020
Source: NeoTrust and BTG Pactual
These figures are well above pre-pandemic levels (in January 2020, the ecommerce
market was estimated to reach R$310mn in 2025), partially driven by an increase in
the share of more formal/bigger sellers in total ecommerc e sales (Tmall-like market).
Table 8: Brazilian ecommerce market segmentation (R$mn)
504,883
353,418 70%
174,363
113,336 65%
151,465 30%
61,027 35%
2020 2025E
Taobao-like market Tmall-like market
Source: BTG Pactual
The share of Brazilian ecommerce is still behind mature markets, and there are a series
of categories in Brazil that lag penetration in ecommerce vs. more mature markets.
Table 9: Brazilian e-commerce – still easily lagging more developed markets (2020)
Consumer health 2.8% 15.9% 23.8% 34.1% 21.7% 25.0%
Apparel and Footwear 18.6% 37.5% 39.7% 35.0% 37.0% 39.0%
Beauty and Personal

5.3% 21.3% 18.7% 38.0% 9.4% 34.7%
Care
Electronics 31.2% 67.0% 50.7% 43.8% 49.5% 17.9%
Consumer Appliances 42.8% 25.8% 46.5% 45.4% 36.0% 19.9%
Pet Care 6.8% 25.8% 14.3% 48.0% 13.0% 58.7%
Home Care 2.1% 5.5% 12.3% 27.7% 5.8% 17.4%
Source: Euromonitor and BTG Pactual
And while ecommerce is still overly concentrated in the Southeast (51% of sector
growth in 1H21), we expect national expansion in the next few years , with the leading
players attracting smaller sellers and players prev iously restricted to the offline channel.
Table 10: Ecommerce sales breakdown – by region (1H21)
Importance, Contribution and Variation ʹ1H20 vs. 1H21

85% 200 00%
75%
24% 57% 35% 36% 52% 0%
65%
55% -20000 %
45%
-40000 %
35%
63%
25%
51% -60000 %
15%
25%
ƌĂǌŝů͛Ɛ'ƌŽƐƐZĞǀĞŶƵĞ
-80000 %
16%
11% 12%
3% 5%
5%
7% 8%
R$53.4bn
Southeast South Northeast Midwest North
+31%
-5% -10000 0%
Importance Contribution Variation
Source: eBit and BTG Pactual
And besides almost tripling total online GMV in the next five years, there is a clear trend
of consolidation among a few potential winners.
Back in 2016, the three top ecommerce players were 46% of the online market. In
2020, this level already reached 61%, and soared in 2021 to 69%. Given investments
in service levels in recent years (with superior logistics structure and development of
payments platforms, reinforced during the pandemic), plus the increasing traffic and
assortment of leading players, this should be a key competitiv e advantage (and driver
for GMV outperformance). But it is not a game of “winner takes all”.
The scenario where we see MELI, Americanas and MGLU (three long -term winners)
with ~80% of the market implies major migration from 1P to 3P platforms. But our TAM
estimate still leaves R$88bn with niche players (or other horizontal marketplaces).
Table 11: Market share – Brazilian Ecommerce (consolidation has accelerated since the beginning of the pandemic)
22.9% 21.1% 19.4% 17.5%

31.2%
41.8% 39.2%
45.8%
54.3% 54.7% 23.8%
20.8% 21.3% 22.4%
18.6%
8.2% 11.8% 16.4%
21.6% 22.4% 22.9% 23.1%
4.6% 5.9% 19.0%
17.5% 17.9% 16.8%
21.2% 15.9%
31.2% 34.6% 35.1% 35.3% 35.5%

23.5% 28.5% 28.6% 27.6%
19.9%
2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E
MELI AMER MGLU Others
Source: Companie s, Neotrust and BTG Pactual
In the case of niche players, growth should be in categories that still have low
penetration in online sales (as we showed in table 9), such as apparel or pet care. In
this sense, only companies focusing on providing a superior consumer experience
(preferably with a footprint in physical retail with cheap /efficient delivery) will have a
chance to compete against the trend of consolidation (and horizontal marketplaces)
that lies ahead of the sector in the coming years. Petz, Arezzo , Grupo Soma and
Centauro are potential winners in this scenario.
Thus, while the bearish wave that led to a major underperformance in recent months
for listed tech players should continue in the ST (boosted by competition and
deceleration in some ecommerce categories, such as electronics), we are still bullish
on ecommerce as a structural call on the retail sector.
Besides the secular growth trend (boosted by still low penetration vs. more mature
markets), the combined GMV for listed players is 35% higher for the coming years vs.
our pre-pandemic estimates (a legacy from the digital shift), and consolidation is
already a reality that will likely intensify in the coming years. However, we believe the
variables to watch in the coming years will involve more than GMV expansion .
In the pursuit of more users, e-commerce players are accelerating customer acquisition
investments (more marketing) and we expect margin pressure in the coming quarters.
In differentiating companies that grow from winning players, we believe true LT success
in the highly competitive e-commerce segment will depend on differentiated value
propositions, with the winners promoting more user engagement (and thus organic
traffic growth) via investments in content, broader product (and service) assortments
and continuous improvements in service level, meaning higher monetization of GMV
(which has already been an important variable to value stocks).
International competition and the consolidation call
For years, we have argued that Brazilian ecommerce is poised to grow at a secular
pace (set to reach R$505bn in 2025 vs. R$174bn in 2020), while we expect the
consolidation trend from previous years to persist among a few potential winners.
Considering the current stage of market leaders in the country, for newcomers one of
the alternatives was always to invest in prices and aggressive subsidies to attract
customers. In this sense, we recently published two detailed reports debating the
presence of Shopee and Shein in Brazil (in the appendix of this report, we also provide
additional data on both companies, comparing them to Brazilian players).
Disturbing a (not so) calm status quo - analyzing Shopee in LatAm
• Sea Limited was founded in 2009 in Southeast Asia by Forrest Li. It initially
began as a communications tool for gamers (Garena), but slowly became a
massive empire spanning digital media, e-commerce, and financial services;
• Launched in 2015, ecommerce (Shopee) revenues exceeded those of gaming

in 2020, but its gaming business, its only profitable division, continues to be
the cash cow, with proceeds used to fund growth in its other core businesses;
• One key area of innovation for Shopee is its ability to provide a personalized,
social experience. From day one, it integrated shopping and social
experiences. It also adopts a hyper-localized approach in each market to
ensure the best online shopping experience for brands, sellers, and shoppers;
• In its home region, Sea remains locked in a fierce battle with GoTo, Lazada
and Grab Holdings, who are all bolstering their ecommerce and fintech
offerings in one of the fastest-growing Internet markets, which should add
US$110bn in online GMV by 2025;
• Shopee took just two years to become Brazil's most-downloaded shopping

app, alluring users to its low-cost marketplace with its game-changing
approach to ecommerce: in -app mini-games offering coupons;
• When Shopee started in Brazil, it focused its offer on imported products, but
shortly after it began registering local sellers (it currently has an average ticket
of ~R$40, well below leading peers) - it also started in Mexico in February, but
only with a cross-border division, and in Colombia and Chile;
• In Brazil, until February 2021, the company charged no commission from its
sellers (it increased to 5% after that and, since June, to 12%, which could
increase to 18% if the seller chooses the package that includes free shipping);
• While Brazil is still only ~10% of the group’s global traffic, Shopee really grew
the number of visitors in recent quarters, and we expect it to reach ~R$8bn
GMV in 2021 (~5% of ecommerce market), vs. ~R$2bn in 2020;
• Leading players in Brazil have well-established operations, having invested in

building a vast assortment and traffic, and focusing on better service lev els,
which hinders new entrants’ progress in offering a differentiated value
proposition despite a more aggressive approach to attract sellers - indeed,

the service level of Shopee in Brazil is still well below the leading peers ; and
• One of the main competitive edges of Sea, Alibaba and Tencent is their vast
ecosystem, providing valuable databases on consumer habits and help in
credit scoring, not easy to replicate in Brazil, reducing their growth firepower.
Tech outfit: The (not so) low profile apparel titan – Shein
• In May, Shein surpassed Amazon as the most popular app in the shopping
category, ahead of Nike, Zara, H&M and Uniqlo, on iPhone and Android. Last
year, it sold nearly US$10bn worth of apparel, nearly half of Inditex, Zara’s
parent company. Regardless of its mysterious ownership, the Chinese app is
already a global force with over 22 million users shopping daily;
• Shein sells in nearly every major market, i.e. its strength comes from taking
China’s advantages and applying them to the global market;
• More than any other fast-fashion outlet, the company has perfected the art of
trend-setting via trial and error. In 2019, it launched an average of 10,000 new
products a month via a powerful network of 300 suppliers that export from
China to the most important global markets. Shein adds as many new designs
in two months as Zara, the current industry leader, puts out in a whole year.
It is also estimated that its production schedule is as short as 3-7 days,
compared to the average span of 3 weeks disclosed by players like Zara;
• Shein created an in-house algorithm that trawls the web (including its own
massive customer database) to find out what fashion items are trending on
search, and what people are responding to on competitors' websites;
• The company also awards points to customers for everything from opening
the app to watching live streams and entering outfit design contests. An army
of influencers - along with high-profile celebrities - have come to be a core
piece of its ecosystem;
• It has recently also seen momentum in Latin America. In Brazil, we estimate

the company should reach more than R$2bn in sales this year (already bigger
in the online channel than traditional local retailers), and is already a super
relevant destination to buy app arel online in the country;
• The company benefits from a Brazilian law that exempts from import taxes
products below US$50 (which accounts for most of its items), enabling it to
sell fashion products at competitive prices, which offsets the fact that it tak es,
on average, 30 days for the products to be delivered in the country;
• We do see Shein as a growing force in the Brazilian apparel retail sector. But
local players have also increased their efforts towards a more digital (and
omnichannel approach), such as Arezzo, Centauro and Grupo Soma (not to
mention Renner’s strategy to boost its digital ecosystem). All of them, besides
their local flavor, benefit from an extensive store base to reduce delivery time
and costs, as well as to provide a frictionless experience to consumers (a key

advantage in the pursuit of higher conversion rates).
It is too early to say if these foreign companies will be among the winn ers in the
challenging and highly competitive local market, but their moves (like attracting bigger
sellers and increasing assortment, in the case of Shopee, and investing in marketing
via influencers, in the case of Shein ) will make the market even more competitive.
Valuing ecommerce players in current volatile scenario
While the bearish wave that led to a major underperformance in recent months for listed
tech players should continue in the ST (boosted by competition and deceleration in
some ecommerce categories, such as electronics), we are still bullish on ecommerce
as a structural call on the retail sector.
Besides the secular growth trend (boosted by still low penetration vs. more mature
markets), consolidation is already a reality that will likely intensify in the coming years.
We updated our estimates for five ecommerce players in our coverage uni verse:
Magazine Luiza, Americanas, Via, Enjoei and Westwing (in the case of MercadoLibre,
we recently published an update report – please see “The 2-sided network approach”).
While we still see major upside for all of them after the recent sell-off, our TPs were
slashed, mostly due to a higher cost of equity (on average 300bps) and more bearish
ST estimates, given the competitive outlook in the sector, which we expect to persist
in 2022.
Specifically in the case of the higher cost of equity , for every 100bps increase in ke,
there is a 10% decline in the combined market cap (target price) of the companies
analyzed in this report.
We also downgraded Via to Neutral, on the back of a combination of competitive

outlook, super exposure to electronics/home appliances segment and the uncertainties
regarding the future provisions and monetization of tax credits, which could affect the
company’s capacity to invest in the growth of its operation.
And while ecommerce remains a structural call, we prefer LT exposure to the sector
via a basket of leading, proven horizontal players (which also boast much more
liquidity): MercadoLibre, Magazine Luiza and Americanas.
In the case of niche players, although we acknowledge the growth opportunities in still
underpenetrated markets (reinforced by capital raises in the past 12 months), the major
increase in customer acquisition costs, stocks ’ low liquidity and competition from
horizontal players all make these riskier calls.
Table 12: Comp table: Ecommerce retailers (TPs for YE22)

EV/GMV (1) EV/Sales GMV growth (1) P/E EV/EBITDA Sales growth EBITDA growth EBITDA margin TP
Company 2021E 2022E 2023E 2021E 2022E 2023E CAGR 21-23E 2021E 2022E 2023E 2021E 2022E 2023E CAGR 21-23E CAGR 21-23E 2021E 2022E 2023E Old New
MercadoLibre (2) 1.5x 1.2x 1.0x 7.7x 5.9x 4.8x 22.3% n.m. n.m. n.m. 99.8x 85.7x 61.3x 26.4% 28.5% 7.7% 6.9% 8.0% 2,030 2,030
Magazine Luiza 1.0x 0.8x 0.6x 1.5x 1.2x 1.0x 26.3% 89.8x 183.6x 56.5x 34.0x 27.7x 19.6x 18.4% 29.7% 4.3% 4.3% 5.2% 26 16
Americanas 0.5x 0.4x 0.3x 1.1x 1.0x 0.9x 26.6% 86.9x 37.4x 19.4x 9.7x 6.4x 5.5x 8.3% 28.9% 11.3% 16.0% 16.0% - 45
Via 0.4x 0.4x 0.3x 0.6x 0.6x 0.5x 15.2% 30.6x n.m. 291.5x 15.5x 11.4x 8.3x 11.3% 38.5% 4.0% 5.0% 6.1% 21 8
Westwing 0.2x 0.2x 0.2x 0.3x 0.3x 0.2x 26.2% n.m. n.m. n.m. n.m. 189.2x 7.6x 25.7% n.m -7.9% 0.2% 4.5% 22 7
Enjoei 0.4x 0.3x 0.2x 2.9x 2.0x 1.4x 42.7% n.m. n.m. n.m. n.m. n.m. n.m. 42.7% n.m -96.5% -61.4% -40.4% 18 7
Source: BTG Pactual. Note (1) consolidated GMV (on and offline) (2) MercadoLibre’s TP in USD and EV/GMV multiples not including Mercado Pago.
Table 13: Dashboard of Ecommerce Retailers (R$mn)

GMV Net Revenue Adj. EBITDA Adj. Net Income
Companies 2020 2021E 2022E 2023E 2020 2021E 2022E 2023E 2020 2021E 2022E 2023E 2020 2021E 2022E 2023E
MercadoLibre (1) 20,927 29,016 36,255 43,428 3,973 6,990 9,147 11,160 233 540 627 892 -1 82 43 222
Magazine Luiza(2) 43,517 57,522 73,014 91,764 30,218 37,664 44,502 52,771 1,485 1,616 1,921 2,720 392 543 265 862
Americanas 41,608 54,972 70,023 88,110 21,478 26,962 28,114 31,647 3,232 3,055 4,489 5,072 315 310 719 1,387
Via 37,306 44,233 51,797 58,716 28,901 32,016 35,449 39,659 2,917 1,267 1,769 2,431 273 293 -527 31
Westwing 373 435 533 693 245 305 369 482 7 -24 1 22 12 -35 -14 0
Enjoei 495 813 1,232 1,654 80 106 153 216 -23 -102 -94 -87 -31 -102 -92 -110
Source: Companie s, BTG Pactual. Note: (1) USD (2) Considerin g Kabum
Investment cases
Magazine Luiza – New TP of R$16 for YE22 vs. R$26 before (Buy rating)
Despite a competitive ST scenario in local e-commerce (with more than 60% of GMV
coming from the sale of electronics and home appliances) and the overhanging tough
comps from last year’s huge growth (reflecting consumers’ digital shift), we note the
following: all the top players (MGLU included) invested a lot in service levels to reduce
delivery times (and costs) in recent years – potentially affecting newcomers’ efforts to
offer a differentiated value proposition despite more aggressive approaches to attr act
sellers.
Table 14: Consolidated GMV breakdown by category (2Q21) Table 15: GMV breakdown by channel (2021E)
2%
7%
2% 2%
29% 27%
9%
49%
13%
22% 24%
15%
Mobile and Telephones Appliances

Computers Home and Furniture
Electronics, Audio and Video Food and Beverage
E-commerce (1P) Marketplace (3P) B&M
Vehicle Accessories Health and Beauty
Source: Yipit and BTG Pactual. Note: Ecommerce sales (1P+3P) ex-Netshoes Source: Company and BTG Pactual
With an omnichannel proposition, MGLU stores boost brand awareness (store as a

customer acquisition cost) and attract sellers (some using online channels for the first
time, via Parceiro Magalu).
We use a blended model to value MGLU, applying a 3-phase DCF approach given the
still high penetration of the B&M business and the potential for consolidation in e-
commerce over the coming years (which means MGLU should outgrow the market).
In our DCF analysis, we assumed that, from 2026 (our last year of projection) until
2031, MGLU will grow its FCF by 15%, with it growing 10% from 2032 to 2036 (in USD
and above the e-commerce market, in line with our consolidation call). We assume
4.0% growth (in USD) in perpetuity.
Table 16: Three-phase DCF model – US$mn

Cash Flows (modeling until 2026E)
Year Year Year Year Year

0 1 2 3 4
Future val. enterprise FCF 8 119 241 336 481
Present value FCF 8 106 192 239 306
First stage (years 5 through 10) growth:
Year Year Year Year Year Average

5 6 7 8 9 Growth
Future val. enterprise FCF 554 637 732 842 968 15.0%
Second stage (years 10 through 15) growth:

10 11 12 13 14 Growth
Future val. enterprise FCF 1,065 1,172 1,289 1,418 1,559 10.0%
Third stage (perpetuity growth)
Enterprise FCF year 20 1,622

Present value of perpetuity 4,148
Source: BTG Pactual
We also factor in an EV/GMV exit multiple analysis (assuming 1.0x EV/GMV 2026),
also taking into account its growing e-commerce operation. And finally, we incorporated
R$1/share from Kabum (acquired in July and to be fully incorporated in 2022).
We thus reach a TP of R$16/share (vs. R$26 previously). At current valuation, MGLU

trades at 0.8x EV/GMV 2022, implying 119% upside to our TP. The higher cost of equity
vs. previously (+340bps) accounts for 75% of our TP revision for MGLU.
Assuming MGLU will be one of the winners in Brazilian e-commerce, increasing the
lifetime value of its customers (and thus the assertiveness of investments) should more
than offset margin pressures in the long term.
Table 17: New vs. Old – Magazine Luiza (R$mn)*

New (pro forma consolidated) Old (pro forma consolidated) Changes
2021 2022 2023 2024 2025 2021 2022 2023 2024 2025 2021 2022 2023 2024 2025
Gross Revenues - B&M+B2C 44,492 52,035 60,189 69,167 78,780 46,060 55,535 65,973 77,580 90,410 -3.4% -6.3% -8.8% -10.8% -12.9%
Gross Revenues - B2C 27,671 31,822 36,595 42,084 48,397 28,125 33,750 40,500 48,600 58,321 -1.6% -5.7% -9.6% -13.4% -17.0%
Gross Revenues - B&M 16,821 20,213 23,594 27,083 30,384 17,934 21,785 25,472 28,979 32,090 -6.2% -7.2% -7.4% -6.5% -5.3%
GMV marketplace 13,322 21,315 31,972 47,958 71,937 12,810 20,562 29,815 43,232 62,686 4.0% 3.7% 7.2% 10.9% 14.8%
Net Revenues 37,894 44,772 53,090 63,507 77,106 38,909 46,970 55,922 65,961 77,182 -2.6% -4.7% -5.1% -3.7% -0.1%
Gross Margin 25.9% 27.1% 27.7% 28.7% 30.5% 27.3% 26.6% 26.4% 26.3% 26.3% -145b ps 45b ps 124b ps 238b ps 426b ps
EBITDA 1,629 1,944 2,748 3,632 4,902 1,958 2,088 2,875 3,645 4,512 -16.8% -6.9% -4.4% -0.4% 8.6%
EBITDA Margin 4.3% 4.3% 5.2% 5.7% 6.4% 5.0% 4.4% 5.1% 5.5% 5.8% -73b ps -10b ps 4b ps 19b ps 51b ps
Net Income 550 278 879 1,570 2,313 620 720 1,248 1,810 2,415 -11.2% -61.4% -29.6% -13.3% -4.2%
Source: Company, BTG Pactual. Note: (*) Not considering Kabum

Table 18: P&L Summary – Magazine Luiza (R$mn)*

Income Statement (R$mn) 2018 2019 2020 2021E 2022E 2023E Balance Sheet (R$mn) 2018 2019 2020 2021E 2022E 2023E
Net operating revenue 16,393.1 21,003.0 30,218.4 37,664.1 44,502.3 52,770.6 Current Assets 6,412.4 12,841.2 16,798.8 19,905.8 21,747.7 24,333.5
Cost of products sold (11,164.2) (14,485.4) (21,745.4) (27,918.3) (32,452.0) (38,156.9) Cash + short term investment 1,008.2 4,753.9 2,903.2 4,350.8 4,396.6 4,827.9
Gross Incom e 5,228.9 6,517.6 8,473.0 9,745.8 12,050.3 14,613.7 Net receivables 2,051.6 2,915.0 4,761.9 5,016.9 5,966.3 7,072.3
Administrative and general expenses (626.6) (754.0) (944.0) (1,056.2) (1,120.8) (1,164.3) Inventories 2,810.2 3,801.8 5,927.2 6,323.8 7,170.4 8,218.9
Selling expenses (2,991.1) (3,758.2) (5,589.1) (6,786.2) (8,208.3) (9,839.1) Other 542.4 1,370.5 3,206.5 4,214.4 4,214.4 4,214.4
Results from doubtful liquidations (421.2) (694.7) (484.3) (699.7) (691.2) (758.0) Long-term Assets 1,031.3 2,053.8 2,237.7 3,182.6 3,182.6 3,182.6
Depreciation and amortization expenses (166.4) (488.2) (702.1) (824.6) (1,025.4) (1,064.1) Perm anent Assets 1,353.1 4,896.1 5,610.7 7,667.6 7,788.2 8,001.6
Other revenues and expenses 23.8 372.3 29.3 412.4 (108.7) (132.7) Total Assets 8,797 19,791 24,647 30,756 32,719 35,518
EBIT 1,047.4 1,194.7 782.8 791.5 896.0 1,655.5
Depreciation and amortization expenses 166.4 488.2 702.1 824.6 1,025.4 1,064.1 Current + Long Term Liabilities 6,493.9 12,226.1 17,321.9 19,839.9 21,536.9 23,689.2
EBITDA 1,213.8 1,683.0 1,484.9 1,616.1 1,921.3 2,719.6 Suppliers 4,105.2 5,934.9 8,501.4 9,340.4 11,037.4 13,189.7
Non-recurring / other adjustments 0.0 0.0 0.0 0.0 0.0 0.0 Taxes 141.0 352.7 401.3 144.3 144.3 144.3
Adjusted EBITDA 1,213.8 1,683.0 1,484.9 1,616.1 1,921.3 2,719.6 Total debt ST + LT 456.0 848.9 1,686.8 2,352.0 2,352.0 2,352.0
Financial Results (201.5) 45.2 (279.7) (352.2) (417.1) (325.4) Deferred Revenue 39.2 43.0 43.0 50.3 50.3 50.3
Earnings before taxes 845.9 1,239.9 503.1 439.3 478.9 1,330.1 Other 1,752.5 5,046.6 6,689.4 7,952.9 7,952.9 7,952.9
Income tax and social contribution tax (245.8) (326.2) (110.6) 103.3 (213.5) (468.4) Minority Interest 0.0 0.0 0.0 0.0 0.0 0.0
Net incom e 600.0 913.7 392.4 542.6 265.4 861.7 Shareholders' Equity 2,302.9 7,564.9 7,325.3 10,916.2 11,181.6 11,828.4
Deferred Revenue (53.3) (412.9) (73.4) (498.4) 0.0 0.0 Total Liabilities + Equity 8,797 19,791 24,647 30,756 32,719 35,518
Adjusted Net incom e 546.7 500.8 319.1 44.2 265.4 861.7
Growth (y/y) 2018 2019 2020 2021E 2022E 2023E Cash flow (R$mn) 2018 2019 2020 2021E 2022E 2023E
Net Sales 29.3% 28.1% 43.9% 24.6% 18.2% 18.6% Cash Flow from Operations 615.4 1,450.2 (529.0) 812.3 1,422.9 2,134.3
SSS 28.4% 24.6% 68.1% 22.6% 12.2% 11.7% Capex (417.0) (1,767.5) (1,236.7) (2,329.6) (1,146.0) (1,277.4)
Conventional Stores SSS 18.6% 7.8% -7.4% 4.7% 7.7% 6.4% Free Cash Flow to Firm 198.5 (317.3) (1,765.7) (1,517.3) 277.0 856.9
E-commerce Sales 60.1% 76.0% 130.7% 43.7% 29.6% 29.0% Cash Flow from Financing (558.5) 426.2 619.7 230.2 (231.1) (210.8)
EBITDA 20.3% 38.7% -11.8% 8.8% 18.9% 41.5% Free Cash Flow to Equity (360.0) 109.0 (1,146.0) (1,287.1) 45.8 646.1
Net income 54.7% -8.4% -36.3% -86.1% 500.1% 224.7%
Operating M argins 2018 2019 2020 2021E 2022E 2023E

Gross Margin 31.9% 31.0% 28.0% 25.9% 27.1% 27.7%
EBIT Margin 6.4% 5.7% 2.6% 2.1% 2.0% 3.1%
Adjusted EBITDA Margin 7.4% 8.0% 4.9% 4.3% 4.3% 5.2%
EBITDA Margin 7.4% 8.0% 4.9% 4.3% 4.3% 5.2%
Adjusted Net Margin 3.3% 2.4% 1.1% 0.1% 0.6% 1.6%
Source: Company, BTG Pactual. Note: (*) Not considering Kabum
Americanas – New TP of R$45 (Buy rating)
Following the combination of B2W and Lojas Americanas, we updated our estimates
for the combined company. We also included in our numbers the estimates for Hortifruti
Natural da Terra (acquired in August).
On the governance front, following the announcement in mid -October that it was
considering a corporate restructuring, combining the respective shareholder bases of
LAME3, LAME4 and AMER3 in Novo Mercado, Americanas SA announced at the end
of October that it signed the terms of the incorporation.
The controlling shareholders of Lojas Americanas will hold 29.2% of the NewCo (giving
up control without charging a premium): meaning LAME3 and LAME4 will be combined
at a 1:1 swap ratio, the same ratio as the combination of Americanas SA and Lojas
Americanas.
In order to enable the corporate combination of Lojas Americanas an d Americanas SA

(AMER3), with the shareholders’ meeting scheduled for December 10, the following is
proposed to the shareholders of both companies: the merger of Lojas Americanas into
Americanas at its book value on June 30, 2021.
The shares issued by Americanas and held by Lojas Americanas on the date of the
merger will be canceled, and each shareholder of Lojas Americanas, holder of 1
common share or 1 preferred share issued by Lojas Americanas, receives, as a result
of the merger, and in replacement for the canceled Lojas Americanas shares, 0.185982
common share issued by Americanas. The combination terms also establish a poison
pill – meaning that any shareholder that acquires more than 15% of the shares of
Americanas SA must launch a tender offer for the rest of the company.
Table 19: Current shareholders’ structure Table 20: Post-deal shareholders’ structure
Free float
Reference shareholder*
LAME3/4
ON 60.8% ON 39.2%
PN 26.1% PN 73.9% Free float
TOTAL 38.2% TOTAL 61.8% Reference shareholder*
AMER3
ON 29.2% ON 70.8%
Investment vehicle
LEVEL 1 –B3 ON 38.8%

Free float
ON 46.8% AMER3
NOVO MERCADO –B3
ON 14.4%
NOVO MERCADO –B3
Source: Company and BTG Pactual. Note: Long term sharehold ers that hold 53.2% of Source: Company and BTG Pactual. Note: Long term shareholders
Americanas SA
The combination of the operating assets unlocks value, as the company should capture
synergies – in August, it already announced that the combination of LAME and B2W
should generate synergies of R$2.3bn by 2024 (ex -merger costs), or R$1.6bn NPV,
related to optimization of shipping, marketing and technology investments, as well as
in the financial structure of the resulting company.
Using a DCF analysis, we thus reach a TP of R$45/share. At current valuation,

Americanas trades at 0.4x EV/GMV 2022, implying 51% upside to our TP. We also
incorporated Hortifruti Natural da Terra (HNT) into our numbers (accounting for 6% of
our TP).
In August, Lojas Americanas announced the acquisition of HNT for R$2.1bn. The deal
implied HNT valued at 9x EV/EBITDA 2021, considering initial synergies (or ~12x
EV/EBITDA without synergies) and 27x P/E 2021 (our estimate here).
HNT is the largest food retail chain in Brazil, specialized in the sale of fresh produce
(fruits and vegetables), with a productivity index (sales/sqm) ~2x higher than leading
(traditional) food retailers like GPA and Carrefour. It has 77 stores in 4 states (RJ, SP,
MG and ES) via two formats: (i) Traditional, with 700sqm of sales area and (ii) Light,
with 180sqm. HNT also operates with two brands: Hortifruti and Natural da Terra.
Yes, part of the migration from offline to online is set to lose steam, while the sector
remains competitive (meaning margin pressure), but there is also a positive structural
trend for horizontal platforms with great assortment, strong traffic and focus o n service
level that should secure faster e-commerce consolidation among a few potential
winners, with AMER among them, hence our Buy rating on the name
Table 21: P&L Summary – Americanas (without considering HNT, which is incorporated separately) – R$mn
Income Statement 2020 2021E 2022E 2023E 2024E 2025E Balance Sheet 2020 2021E 2022E 2023E 2024E 2025E
Net Revenues 21,478 26,962 28,114 31,647 35,630 39,944 Current + long term assets 36,119 31,943 32,789 34,520 36,842 39,770
COGS (14,437) (18,670) (18,969) (21,397) (24,036) (26,901) Cash + short term investment 21,631 10,795 11,674 12,239 13,335 14,888
Gross Profit 7,041 8,293 9,144 10,250 11,594 13,043 Net receivables 3,365 4,235 4,338 4,795 5,300 5,942
Sales expenses (3,371) (4,735) (4,093) (4,607) (5,009) (5,416) Inventories 4,123 7,988 7,852 8,560 9,282 10,015
Administrative expenses (439) (502) (562) (570) (570) (559) Other 2,449 2,690 2,690 2,690 2,690 2,690
D&A (1,557) (1,847) (2,046) (2,128) (2,214) (2,303) Long-term assets 4,551 6,236 6,236 6,236 6,236 6,236
Other expenses 0 0 0 0 0 0 Permanent assets 11,591 12,551 12,602 13,126 13,671 14,238
EBIT 1,675 1,208 2,443 2,944 3,800 4,766 Total assets 47,710 44,495 45,392 47,646 50,513 54,008
EBITDA 3,232 3,055 4,489 5,072 6,014 7,068
Financial Results (1,040) (1,218) (2,191) (1,551) (1,284) (1,318) Current + long term liabilities 31,839 28,588 28,945 30,159 31,479 32,911
Financial Revenues 0 268 1,138 956 797 840 Suppliers 7,094 9,129 9,486 10,700 12,020 13,452
Equity Income 0 0 0 0 0 0 Taxes 242 236 236 236 236 236
Non-Operating (327) (184) (362) (366) (367) (360) ST Debt 2,351 3,630 3,630 3,630 3,630 3,630
EBT 308 73 1,028 1,982 2,947 3,927 LT Debt 19,233 9,738 9,738 9,738 9,738 9,738
Income Tax 7 237 (308) (595) (884) (1,178) Other 2,920 5,855 5,855 5,855 5,855 5,855
Profit Sharing 0 0 0 0 0 0 Minority interest 3,559 0 0 0 0 0
Minority Interest 0 0 0 0 0 0 Shareholders' equity 12,311 15,907 16,447 17,487 19,034 21,096
Net Earnings 315 310 719 1,387 2,063 2,749 Total liabilities + Equity 47,710 44,495 45,392 47,646 50,513 54,008
Operating Margins 2020 2021E 2022E 2023E 2024E 2025E Growth 2020 2021E 2022E 2023E 2024E 2025E
Gross Margin 32.8% 30.8% 32.5% 32.4% 32.5% 32.7% Net Sales 13.3% 25.5% 4.3% 12.6% 12.6% 12.1%
Sales expenses / Net Revenues -15.7% -17.6% -14.6% -14.6% -14.1% -13.6% SSS -7.2% 0.0% 10.0% 7.4% 7.2% 5.8%
Administrative Expenses / Net Revenues -2.0% -1.9% -2.0% -1.8% -1.6% -1.4% EBITDA -42.4% -5.5% 46.9% 13.0% 18.6% 17.5%
EBIT Margin 7.8% 4.5% 8.7% 9.3% 10.7% 11.9% Net income -93.5% -1.6% 132.0% 92.9% 48.7% 33.3%
EBITDA Margin 15.0% 11.3% 16.0% 16.0% 16.9% 17.7%
Income tax rate 2.4% 324.9% -30.0% -30.0% -30.0% -30.0%
Net margin 1.5% 1.2% 2.6% 4.4% 5.8% 6.9%
Source: Company, BTG Pactual
Via – New TP of R$8 vs. R$21 before (Downgrading to neutral rating)
In 2020, Via evolved from a pure B&M player to a more digital and omnichannel
platform, leveraging on its strong features such as its large client base (28mn active
clients), logistics structure and long-standing credit relationships with clients.
Although Via has followed the top players and invested in service levels to reduce
delivery time and cost, which could help the company in terms of competitiveness to
attract both consumers and sellers to its platform, we still see a challenging scenario
in the ST, with tough comps vs. last year, a more competitive scenario for ecommerce
and Via’s recently announced provisions expected for the next few years.
In November, Via announced big changes in its labor provisions, impacting its balance
sheet and P&L. They saw a 32% increase in the average amount of contingencies in
3Q21 vs. other periods and an 82% increase in contingencies in 1H21. Both factors
combined led the company to revisit its provisioning policy, resulting in an increase of
R$1.2bn in labor provisions, amo unting to R$2.5bn in total. The company expects the
total impact on its results to follow the table (23) below, with a still high number of new
lawsuits in 2022, but a decreasing trend of net additions, reaching a more normalized
and sector-aligned 0.7% of net revenues in labor provisions in 2024.
Meanwhile, Via has R$9.5bn in tax credits on its balance sheet that it expects to
monetize to offset the increase in labor provisions (R$422mn expected to be monetized
in 2021, R$1.8bn in 2022, R$1.9bn in 2023 an d R$1.6bn in 2024). See Tables 22 and
23 for more details.
Table 22: Tax Credits (R$mn) Table 23: Labor Provisions impact (R$mn)
Tax monetization schedule (+) 2022 2023 2024 2025 2026 2027
Balance Sheet Income Statement
ICMS 482 639 810 846 649 104 1,500-2,000
PIS and COFINS 729 896 361 17
IRPJ and CSLL 41 41 40 107 900-1,000
600-700
500-600
Others 107 34 15 459 300-400 300-400 300-400 300-400
Deferred Income Tax 472 313 343 355 1,249

2022 2023 2024 2025 2026 2027
Total 1,831 1,923 1,569 1,784 1,898 104
Source: Company and BTG Pactual Source: Company and BTG Pactual
In this report, we use a 3-phase DCF approach to value Via. In our DCF analysis, we
assumed that, from 2026 (our last year of projection) until 2031, VVAR will grow its
FCF by 8%, with it growing 5% from 2032 to 2036 (in USD). We assume 3.0% growth
(in USD) into perpetuity.


- 1 2 3 4
Future val. enterprise FCF (231) (104) 19 101 137
Present value FCF -231 -92 15 69 82

5 6 7 8 9 Growth

10 11 12 13 14 Growth
Enterprise FCF year 20 264

Present value of perpetuity 418
Source: BTG Pactual
We also consider the NPV of the tax credits, using the same cost of equity of Via’s
DCF. In our calculations, considering the company can fully monetize its credits, it
should add a $7.6bn in equity value, or R$5/share. But we could see downside risks
for the monetization given its dependency on taxes generated by the company (and
operating growth), as well as regulatory and fiscal decisions, outside of Via’s control.
Thus, our downgrade to Neutral is based on a combination of a competitive outlook,

super exposure to electronics/home appliances segment and the uncertainties
regarding the future provisions and monetization of tax credits in its balance sheet,
which could affect the company’s capacity to invest in the growth of its operation.
We thus reach a new TP of R$8/share (vs. R$21 previously). The higher cost of equity
vs. previously (+320bps) accounts for 1/3 of our TP revision for Via.
Table 25: Fiscal Credits NPV

Tax credit 2022 2023 2024 2025 2026 2027
Tax benefit (R$mn) 1,831 1,923 1,569 1,784 1,898 104
Tax benefit (US$mn) 324 353 299 346 369 20
# of years - 1.0 2.0 3.0 4.0 5.0
NPV (US$mn) 324 311 232 236 221 11
Total NPV (US$mn) 1,335
Total NPV (BRLmn) 7,540
Total NPV (BRL/share) 5.00
Source: BTG Pactual
Table 26: New vs. Old – Via

New Old Changes
2021E 2022E 2023E 2024E 2025E 2021E 2022E 2023E 2024E 2025E 2021E 2022E 2023E 2024E 2025E
Total GMV 44,233 51,797 58,716 65,285 72,465 38,511 42,566 46,277 50,229 54,543 14.9% 21.7% 26.9% 30.0% 32.9%
Online GMV 22,543 28,272 33,069 37,629 42,825 14,486 16,225 18,172 20,352 22,794 55.6% 74.3% 82.0% 84.9% 87.9%
Net Revenues 32,016 35,449 39,659 44,064 48,794 31,157 34,800 37,856 40,976 44,101 2.8% 1.9% 4.8% 7.5% 10.6%
Gross Margin 30.5% 30.6% 30.6% 30.7% 30.8% 29.2% 29.3% 29.4% 29.4% 29.5% 131bps 124bps 127bps 130bps 132bps
Adj. EBITDA (with IFRS16) 1,267 1,769 2,431 3,197 3,837 2,593 3,103 3,397 3,697 3,996 -51.1% -43.0% -28.4% -13.5% -4.0%
Adj. EBITDA Margin (with IFRS16) 4.0% 5.0% 6.1% 7.3% 7.9% 8.3% 8.9% 9.0% 9.0% 9.1% -436bps -393bps -284bps -177bps -120bps
Net Financial Results (1,174) (1,748) (1,598) (1,377) (1,449) (827) (995) (1,314) (1,565) (1,666) 42.0% 75.7% 21.6% -12.0% -13.1%
Net Income 293 (527) 31 763 1,253 629 923 901 944 1,107 -53.5% -157.0% -96.6% -19.1% 13.2%

Table 27: P&L Summary – Via

Income statement 2019 2020 2021E 2022E 2023E Balance Sheet 2019 2020 2021E 2022E 2023E
Gross Revenues 29,847 34,457 37,775 41,678 46,573 Current assets 12,452 19,248 14,811 15,445 16,893
(-) deductions (4,205) (5,556) (5,759) (6,229) (6,914) Cash 1,364 2,984 1,625 1,223 1,326
Net Revenues 25,642 28,901 32,016 35,449 39,659 Receivables 5,112 7,907 4,807 5,322 5,955
COGS (18,252) (19,435) (22,236) (24,613) (27,505) Inventories 4,565 6,176 6,124 6,645 7,358
Gross Profit 7,390 9,466 9,780 10,836 12,155 Other 1,411 2,181 2,255 2,255 2,255
Sales expenses (5,162) (5,892) (7,562) (8,153) (8,725) Non-current assets 5,573 7,457 9,306 9,306 9,306
G&A expenses (755) (891) (1,184) (1,167) (1,249) Permanent assets 6,399 6,351 7,053 6,868 6,647
Equity income 47 54 44 50 56 Total assets 24,424 33,056 31,170 31,619 32,846
Other (expenses) / revenues (521) (386) (757) (922) (595) Current liabilities 15,733 18,497 15,779 16,755 17,952
Depreciation / Amortization (697) (731) (772) (827) (795) Loans and financing 1,655 2,684 2,971 2,971 2,971
EBIT 302 1,620 (452) (183) 846 Consumer financing 3,289 4,003 2,481 2,648 2,853
EBITDA 1,149 2,531 510 847 1,837 Suppliers 7,925 8,283 7,349 8,137 9,103
Interest revenues 196 422 287 356 380 Other 2,864 3,527 2,979 2,999 3,025
Interest expenses (1,178) (1,118) (1,461) (2,105) (1,979) Non-current liabilities 8,113 8,580 9,854 9,854 9,854
EBT (680) 924 (1,626) (1,931) (752) Loans and financing 500 1,765 2,175 2,175 2,175
Income taxes 171 81 1,161 483 188 Other 7,613 6,815 7,679 7,679 7,679
Net income before minorities (509) 1,004 (464) (1,448) (564) Shareholders' equity 578 5,979 5,537 5,010 5,041
Minorities 33 (731) 757 922 595 Total liabilities + Equity 24,424 33,056 31,170 31,619 32,846
Net income (476) 273 293 (527) 31
Cash flow 2019 2020 2021E 2022E 2023E
Adjusted EBITDA 1,670 2,917 1,267 1,769 2,431 Changes in working capital (2,726) (5,503) (1,039) (60) (149)
Capex (439) (432) (955) (845) (769)
Free cash flow to equity (3,165) (5,935) (1,993) (905) (918)
Operating margins 2019 2020 2021E 2022E 2023E Growth 2019 2020 2021E 2022E 2023E
Gross Margin 28.8% 32.8% 30.5% 30.6% 30.6% SSS -1.3% -3.3% 0.1% 6.5% 6.0%
Sales expenses / Net Revenues -20.1% -20.4% -23.6% -23.0% -22.0% Average Floor Space 1.1% 3.0% 3.4% 10.4% 17.8%
Administrative Expenses / Net Revenues -2.9% -3.1% -3.7% -3.3% -3.1% Gross Sales -2.4% 15.4% 9.6% 10.3% 11.7%
EBIT margin 1.2% 5.6% -1.4% -0.5% 2.1% Net Sales -4.8% 12.7% 10.8% 10.7% 11.9%
EBITDA margin 4.5% 8.8% 1.6% 2.4% 4.6% EBITDA 67.5% 120.3% -79.8% 66.0% 116.9%
Adj. EBTIDA margin 6.5% 10.1% 4.0% 5.0% 6.1% Adjusted EBITDA 35.0% 74.7% -56.6% 39.6% 37.5%
Income tax rate -25.1% 8.7% -71.4% -25.0% -25.0% Net income 78.3% -157.4% 7.1% -280.0% -105.8%
Net margin -1.9% 0.9% 0.9% -1.5% 0.1%
Westwing – New TP of R$7 vs. R$22 before (Buy rating)
Westwing Brasil was founded in 2011 as a subsidiary of a German multinational group

of the same name that, besides Brazil, also operated in Europe and Asia. After a period
of rapid expansion in 2012-16 (GMV CAGR of 34%), a drop in investments, mainly in
IT and marketing, slowed down the company’s growth until 2018, when there was a
management buyout led by Axxon Group.
The company has four business models: (i) Westwing Club (shopping catalog), (ii)
Gallery (one store in São Paulo) that should gain scale, ( iii) marketplace (where
Westwing operates as a seller on the main platforms), and (iv) Westwing Now.
Table 28: Revenue breakdown (2020 vs. 2026)
1%
7%
17%
10%
1%
43%
2020 2026E
38%
83%
Club Now Marketplace Gallery Club Now Marketplace Gallery
Source: BTG Pactual
In its core business (Westwing Club, 83% of sales last year), the company operates
via a model of flash campaigns (lasting, on average, 4-5 days), totaling ~60 campaigns
per week (a shopping catalog). One of the advantages of this model is that for 80% of
what is available in the campaign, Westwing has a consignment agreement with the
supplier and only buys the product after the campaign is over (using cross-docking and
drop shipping models in the delivery process for consumers).
Table 29: Westwing vs. traditional ecommerce players
Traditional
E Commerce
Search box No search box
Focus on inspiration
Focus on products & prices
Next campaigns
Browsing per category Magazine
This has been a profitable operation, and last year it launched a complementary model,
Westwing Now (similar to a more traditional 1P platform), where consumers can find
products for immediate delivery (in the Club model, lead times are longer as Westwing
only orders the product after the campaign is over). In almost two years, Now is already
~25% of sales (YE21E), leveraging on the cross-sell with Club users (90% of Now
clients came from Club), resulting in lower CAC.
Beyond the business model, the main strength of Westwing is based on user
engagement on the platform, its vast assortment, and the relationship with the brands.
With more competition in the online sector, growth is now a function of investments in
assortment and customer acquisition, which in turn involves UX. In this debate, user
engagement (one of Westwing’s main advantages) becomes a key variable, enabling
higher frequency on its platform and providing a higher LTV with a lower CAC.
On the risk side, vertical marketplaces have a smaller addressable market, competition
from horizontal marketplaces (and some vertical players) will likely intensify, and (in
Westwing’s case) developing Westwing Now (a more WC-intensive business model
demanding a more express logistics structure) carries its own risks.
But we see the company well positioned as a niche player, exploring its social selling
platform, vast product catalog and consumer engagement (the latter is an important
competitive advantage over the horizontal marketplaces).
As for other ecommerce peers we cover, in order to best capture the value of Westwing
we use a 3-phase DCF approach, showing it should outgrow the market for years.
In the DCF analysis, we assume that, in 2026-31, FCF grows 15%, while in 2032-36 it
expands 10% (in USD and outperforming the ecommerce market, in line with our
consolidation call for some horizontal marketplaces and niche players). In perpetuity,
we assume 4.5% growth (in USD).

0 1 2 3 4
Future val. enterprise FCF (5) (6) (2) 5 9
Present value FCF -5 -5 -2 3 6

5 6 7 8 9 Growth

10 11 12 13 14 Growth

Source: BTG Pactual
Our TP of R$7 means a major revision vs. our previous TP, reflecting a higher customer
acquisition cost and a competitive outlook (our GMV estimates are 45% lower, on
average, for the next few years vs. the previous model) , as well as a higher cost of
equity (which accounted for 33% of our TP revision), while implying EV/Sales 2022 of
1.5x (vs. 0.3x currently) and 30% sales CAGR in 2021-26, meaning valuation still offers
major upside, especially after the recent sell -off.
Table 31: New vs. Old – Westwing

New Old Changes
2021E 2022E 2023E 2024E 2025E 2021E 2022E 2023E 2024E 2025E 2021E 2022E 2023E 2024E 2025E
GMV 435 533 693 924 1,222 565 879 1,368 2,078 3,076 -23% -39% -49% -56% -60%
Net revenue 305 369 482 645 856 392 611 954 1,451 2,147 -22% -40% -49% -56% -60%
Contribution margin 135 172 228 309 415 190 302 477 733 1,093 -29% -43% -52% -58% -62%
Gross Profit 49 79 111 159 223 97 164 269 423 641 -50% -52% -59% -62% -65%
Gross margin 16.0% 21.3% 23.0% 24.6% 26.1% 24.8% 26.8% 28.1% 29.2% 29.9% -879bps -549bps -517bps -454bps -381bps
EBIT -48 -16 -2 27 66 -9 12 55 136 261 -233% -103% -80% -75%
EBITDA (with IFRS16) -37 1 22 57 103 2 34 89 181 318 -98% -76% -69% -68%
EBITDA margin -12.2% 0.2% 4.5% 8.8% 12.0% 0.6% 5.5% 9.3% 12.5% 14.8% -535bps -481bps -367bps -284bps
Net income -35 -14 0 21 51 -14 8 38 89 166 -276% -101% -76% -69%
Net margin -11.5% -3.8% -0.1% 3.3% 6.0% -3.6% 1.3% 4.0% 6.1% 7.7% -509bps -413bps -283bps -176bps
Table 32: P&L Summary – Westwing

GMV 181 193 373 435 533 693 Current + long term assets 21 22 63 363 352 344
Gross revenues 162 173 333 401 481 629 Cash + short term investment 4 4 32 291 262 231
Net revenues 122 132 245 305 369 482 Net receivables 7 8 9 34 41 54
Cost of goods/services sold (65) (70) (135) (170) (197) (255) Inventories 9 9 20 25 36 46
Gross profit 29 33 48 49 79 111 Other 0 0 2 13 13 13
SG&A (20) (29) (4) (10) (95) (113) Permanent + long term assets 5 9 35 131 150 174
EBIT 9 4 0 (48) (16) (2) Total assets 25 31 98 494 502 518
EBITDA (with IFRS16) 12 7 4 (37) 1 22
Adj . EBITDA (with IFRS16) 15 8 7 (24) 1 22 Current + long term liabilities 31 36 94 107 129 145
Financial income/expense (3) (3) (6) 3 2 1 Suppliers 11 7 40 24 39 51
Pretax income 6 1 (6) (44) (14) (0) Customer Pre Payment 13 12 24 22 28 33
Income tax (2) 1 18 9 0 0 Total debt ST + LT 0 7 11 4 4 4
Net income 5 2 12 (35) (14) (0) Other 7 10 19 57 57 57
Shareholders' equity (6) (5) 4 387 373 372
Total liabilities 25 31 98 494 502 518
Operating Margins 2018 2019 2020 2021E 2022E 2023E Cash flow (R$mn) 2018 2019 2020 2021E 2022E 2023E
Gross Margin 24.1% 24.9% 19.8% 16.0% 21.3% 23.0% Cash Flow from Operations 7 1 35 (87) (5) 3
SG&A expenses / Net Revenues -16.4% -21.7% -1.6% -3.3% -25.7% -23.3% (-) Capex 0 (2) (8) (31) (27) (35)
EBIT Margin 7.7% 3.2% 0.0% -15.6% -4.4% -0.3% Free Cash Flow to Firm 7 (0) 27 (118) (32) (32)
EBITDA Margin 10.2% 5.3% 1.6% -12.2% 0.2% 4.5% Cash Flow from Financing 0 4 (3) (3) 2 1
Adj. EBITDA Margin 12.3% 6.2% 3.0% -7.9% 0.2% 4.5% Free Cash Flow to Equity 7 4 24 (121) (29) (31)
Net margin 3.8% 1.3% 4.7% -11.5% -3.8% -0.1%
Growth (y/y) 2018 2019 2020 2021E 2022E 2023E

Net Sales 8.9% 85.2% 24.4% 21.0% 30.7%
Adj. EBITDA -45.5% -9.5% -425.7% -102.9% 2975.3%
Net income -62.8% 571.3% -402.8% -60.1% -96.6%
Enjoei – New TP of R$7 vs. R$18 before (Buy rating)
Enjoei is a marketplace primarily focused on P2P resale of apparel and lifestyle items
in Brazil, a combination of an ecommerce and social selling platform. Launched in 2009
as a blog to sell secondhand clothing, it started its exclusive website in 2012, and since
then the platform has evolved into a broader ecosystem.
In the next few years, Enjoei should invest on five main fronts to benefit from the
increasing penetration of apparel in ecommerce sales (and the growth of the
secondhand market): (i) trade-in program and better search algorithm and predictive
model, (ii) expansion of enjuPro nationally (in which Enjoei is r esponsible for 100% of
the operation, including curatorship and logistics), (iii) growth in the B2C segment (with
the brands selling directly in the platform, instead of only its core P2P model) , as the
company already added new categories such as pets, co smetics and furniture to its
Marketplace, (iv) growth of its digital wallet (Enju-Wallet) and (v) partnerships with third-
party carriers (reducing dependency o n the Brazilian Post Office).
All these initiatives target greater assortment and better service levels (boosting loyalty
and frequency). Coupled with that, as Enjoei accelerates marketing investments to
grow brand awareness, it aims to combine new users on the platform with its current
(frequent) consumers who have shown better cohorts (and retention rates).
On the structural front, our positive view on Enjoei (and our Buy rating) reflects three
pillars: (i) leading (niche) player in the sale of secondhand fashion items (primarily),
exposed to e-commerce’s secular growth in Brazil and to the circular economy with an
ESG approach; (ii) broad assortment and high frequency/engagement; and (iii)
combination of millions of buyers and millions of sellers on the same platform, creating
a network effect.
To calculate our target price, we used a 3-phase DCF approach.In the DCF analysis,
we assume that, from 2026 (our last forecasted year) until 2031, Enjoei will grow its
FCF by 10%, while from 2032 to 2036 it will grow 6% (in USD and above the e-
commerce market’s performance, in line with our consolidation call). In perpetuity, we
assume 3.5% growth (in USD).
Table 33: Three-phase DCF model – Enjoei (US$mn)


0 1 2 3 4
Future val. enterprise FCF (13) (6) (33) (4) 31
Present value FCF (13) (5) (25) (3) 19

5 6 7 8 9 Growth

10 11 12 13 14 Growth

Source: BTG Pactual
As the case of Enjoei, or TP of R$7 implies a major revision vs. the previous target of
R$18, also reflecting the higher CAC and the competitive outlook (while Enjoei is more
dependent than WEST of paid traffic), as well as a higher cost of equity (which
accounted for 82% of our TP revision), implying EV/Sales 2022 of 7.4x and 39% sales
CAGR in 2021-26.
Table 34: New vs. Old – Enjoei

New Old Changes
R$mn 2021E 2022E 2023E 2024E 2025E 2021E 2022E 2023E 2024E 2025E 2021E 2022E 2023E 2024E 2025E
GMV 813 1,232 1,654 2,215 2,852 864 1,555 2,644 4,099 6,148 -6% -21% -37% -46% -54%
Tak e rate 23.1% 22.2% 22.5% 23.1% 23.7% 26.3% 26.7% 27.1% 27.8% 28.3% -321bps -455bps -465bps -475bps -465bps
Net revenues 106 153 216 308 422 144 264 461 747 1,155 -26% -42% -53% -59% -63%
Gross profit 28 43 68 106 157 54 109 208 352 545 -49% -60% -67% -70% -71%
Gross margin 26.2% 28.4% 31.3% 34.2% 37.1% 37.6% 41.5% 45.1% 47.1% 47.1% -1147bps -1309bps -1375bps -1292bps -1002bps
EBITDA (102) (94) (87) (99) (111) (39) (51) (8) 55 139 165% 85% -987% -280% -180%
EBITDA margin -96.5% -61.4% -40.4% -32.1% -26.3% -26.9% -19.3% -1.7% 7.3% 12.0% -6965bps -4207bps -3867bps -3942bps -3828bps
Net income (102) (92) (110) (140) (174) (43) (48) (8) 32 98 138% 92% -1292% -533% -278%
Table 35: P&L Summary – Enjoei

GMV 231 270 495 813 1,232 1,654 Current + long term assets 39 17 507 421 361 412
Gross billings 58 77 128 188 273 371 Cash + short term investment 36 13 503 393 278 209
Net revenues 39 54 80 106 153 216 Net receivables 0 1 0 1 1 1
Cost of goods/services sold (31) (37) (51) (78) (110) (149) Inventories 0 1 3 4 5 6
Gross profit 9 17 29 28 43 68 Other 3 4 0 23 77 196
Operating Expenses (18) (16) (31) (81) (70) (89) Permanent + long term assets 13 20 22 52 54 51
Pre-Marketing Operating Profit (9) 1 (1) (53) (26) (21) Total assets 52 38 529 473 416 464
Marketing Expenses (7) (17) (22) (50) (68) (66)
D&A (3) (5) (7) (11) (21) (21) Current + long term liabilities 15 19 31 33 68 226
EBIT (19) (21) (30) (114) (115) (108) Suppliers 4 5 12 8 11 15
EBITDA (16) (15) (23) (102) (94) (87) Tax 5 5 9 8 11 15
Financial income/expense 0 (0) (1) 12 23 (2) Total debt ST + LT 1 1 1 11 39 189
Operating income (19) (21) (31) (102) (92) (110) Other 4 9 9 7 7 7
Income tax (1) 0 0 0 0 0 Leasing 0 3 1 6 6 6
Net income (20) (21) (31) (102) (92) (110) Shareholders' equity 37 16 497 434 342 232
Total liabilities 52 38 529 473 416 464
Growth (y/y) 2018 2019 2020 2021E 2022E 2023E Cash flow (R$mn) 2018 2019 2020 2021E 2022E 2023E
GMV 14.5% 16.9% 83.3% 64.1% 51.7% 34.2% Cash Flow from Operations (5) (8) (0) (96) (103) (164)
Gross billings 19.5% 33.2% 66.8% 46.5% 45.5% 36.0% (-) Capex 0 0 (9) (34) (23) (18)
Net Sales 17.4% 36.0% 48.3% 33.4% 44.2% 41.3% Free Cash Flow to Firm (5) (8) (9) (131) (126) (181)
EBITDA -29.9% 5.5% -51.4% -337.0% 8.3% 7.0% Cash Flow from Financing 0 (2) 470 22 51 148
Net income -54.6% -4.9% -49.9% -227.8% 10.0% -19.8% Free Cash Flow to Equity (5) (10) 461 (109) (75) (33)
Operating Margins 2018 2019 2020 2021E 2022E 2023E

Gross Margin 14.8% 21.9% 22.7% 14.8% 15.9% 18.2%
Operating expenses / Net Revenues -30.7% -20.3% -23.9% -42.9% -25.5% -23.9%
EBIT Margin -33.0% -26.8% -23.6% -60.5% -42.1% -29.1%
EBITDA Margin -28.4% -20.2% -18.3% -54.6% -34.4% -23.5%
Income tax rate 4.7% -0.1% 0.0% 0.0% 0.0% 0.0%
Net margin -34.3% -27.0% -24.3% -54.4% -33.6% -29.6%

Appendix 1 - The ecommerce snapshot
Table 36: Total monthly visits – Brazilian ecommerce (mn)

Total monthly visits (mn) Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21
Mercado Livre 314.0 359.5 346.0 312.5 268.5 292.5 274.5 255.5 256.6 268.1 264.7 247.2 252.4
Americanas.com 144.0 190.0 174.0 153.5 124.5 140.5 130.5 117.5 109.6 109.5 117.9 102.4 114.7
Submarino.com 26.9 42.1 32.2 31.5 24.5 26.7 24.2 23.0 19.8 19.8 18.3 21.7 18.4
Shoptime 25.2 38.2 29.3 24.9 19.1 20.9 22.8 18.1 15.5 16.5 15.7 14.9 18.0
Supermercado Now 0.4 0.4 0.5 0.5 0.6 0.7 0.7 0.5 0.5 0.4 0.4 0.3 0.3
Magazine Luiza 84.1 123.3 98.0 96.1 74.0 86.1 80.9 82.0 84.1 88.6 90.6 100.2 103.7
Netshoes 31.9 47.9 38.9 31.6 26.3 26.4 27.2 27.0 28.5 34.0 38.6 30.8 30.9
Zattini 11.6 18.5 14.5 11.5 8.5 8.5 9.4 9.5 10.4 11.4 10.2 9.2 9.5
Estante Virtual 6.7 6.8 6.3 6.1 5.7 6.4 5.9 5.6 5.3 4.7 5.3 5.2 5.3
CanalTech 21.0 23.4 23.9 23.4 20.4 23.9 21.9 20.9 20.1 20.2 21.8 21.2 21.9
Steal the Look 0.6 0.5 0.5 0.6 0.7 0.9 0.9 0.7 0.8 0.8 0.8 0.8 0.7
Aiqfome 0.9 0.9 0.8 0.7 0.7 0.9 0.9 0.9 0.9 0.9 0.8 0.7 0.9
Kabum 13.9 14.5 14.2 12.8 13.2
Epoca Cosmeticos 6.0 9.7 7.0 6.4 5.9 6.0 6.2 5.8 6.4 6.2 6.3 6.0 5.6
Casas Bahia 79.2 121.3 82.9 85.8 72.6 90.1 84.2 75.7 78.7 80.7 76.1 80.6 70.5
Ponto Frio 23.7 36.9 22.9 22.0 18.4 25.1 23.9 21.8 22.9 23.8 22.4 20.3 18.4
Extra.com.br 26.1 35.1 24.2 26.3 21.6 28.0 24.8 20.7 20.6 24.4 25.5 23.9 21.8
Shopee 16.8 30.3 33.8 34.9 32.3 40.7 41.1 42.4 43.2 48.1 53.8 56.3 59.0
Elo7 33.3 35.5 34.7 32.0 28.2 29.8 27.2 25.0 23.4 24.2 25.0 23.8 23.7
Aliexpress 30.5 41.6 37.8 37.9 31.1 39.6 37.4 35.8 36.8 40.3 48.1 46.7 46.9
Amazon 107.5 128.6 115.3 98.6 84.8 99.6 93.7 88.6 101.3 94.2 102.0 93.8 95.0
Total 990.3 1,290.6 1,123.5 1,036.8 868.3 993.3 938.1 876.9 899.1 931.3 958.3 918.8 930.8
Source: SimilarWeb, BTG Pactual
Table 37: Logistics as a service – Brazilian ecommerce

Comments
AMER expects 3 openings by YE21 | Shopee expects do open 1

DCs (#) 26 25 7 28 12 0 DC in Barueri-SP in the ST | VIA expects to reach 31 DCs by
1Q22
MELI expects to open 1 cross docking and 26 hubs by 4Q21
Hubs/Cross docking (#) 211 219 97 n.a n.a. n.a.
reaching 18 cross docking centers and 106 hubs
Available stores as hubs (#) 1413 2,248 n.a 1029 n.a n.a AMER considers 438 Uni.co's stores and 77 HNT's stores
MGLU includes the area of stores that are intended for storage |
Total storage area (sqm) 1,200,000 1,200,000 1,200,000 1,220,000 557,000 n.a
VIA expects 1,340mn sqm by 1Q22
% of shipments by Correios 10%* 10% <15% 2% n.a ~90% *1P only
% of shipments in up to 24h 57%* 52% >50% >40% n.a n.a *1P only
Sellers (000) 120 114 12,000 108 n.a 1,000 MELI's total sellers, not only in Brazil
SKUs (mn) 50 127 335 (live listings) 34 n.a n.a
Source: Companie s, BTG Pactual. Data as of October 2021

Table 38: Brazilian ecommerce snapshot

Website Avg Visit Duration Bounce rate (%) Direct Traffic (%) Searches (%) Paid search (%) Pages per Visit Audience interest
Mercado Livre 00:10:08 26.7% 47.5% 28.7% 40.4% 10.1 Computer Eletronics, Technology, Games
Americanas.com 00:05:22 35.3% 27.1% 23.2% 61.0% 6.0 Shopping, Eletronics

Submarino.com 00:04:03 38.1% 29.5% 18.9% 61.9% 4.7 Shopping, Eletronics
Shoptime 00:03:52 40.9% 25.0% 28.8% 45.2% 4.9 Shopping, Eletronics
Supermercado Now 00:13:14 25.1% 60.3% 22.2% 29.5% 18.6 Groceries
Magazine Luiza 00:05:03 48.2% 26.4% 28.0% 55.5% 4.4 Shopping, Eletronics, Technology
Netshoes 00:07:30 30.4% 52.7% 21.7% 35.0% 9.7 Computer Eletronics, Technology, Fashion, Apparel
Zattini 00:06:59 37.9% 44.7% 20.4% 40.9% 8.3 Fashion, Apparel, Shopping, Media
Estante Virtual 00:06:00 38.2% 32.7% 42.3% 32.1% 6.9 Science, Education, Media, E-commerce, Shopping
CanalTech 00:01:22 75.4% 17.1% 78.1% 0.1% 1.8 Computer Eletronics, Technology, Games, Programming
Steal the Look 00:01:38 72.1% 23.6% 54.8% 9.7% 1.8 Media, Shopping, Fashion, Apparel
Aiqfome 00:10:02 32.6% 83.6% 13.4% 1.4% 3.8 Shopping, Computer Eletronics, Technology
Kabum 00:06:06 37.0% 48.6% 20.5% 48.7% 6.6 Games, Computer Eletronics, Technology, Programming
Epoca Cosmeticos 00:06:43 40.8% 31.3% 23.7% 61.2% 6.9 Beauty, Cosmetics, Media, Shopping
Casas Bahia 00:04:29 53.2% 24.3% 23.4% 63.3% 3.6 Shopping, Eletronics
Ponto Frio 00:03:15 61.5% 21.6% 23.2% 61.3% 2.8 Computer Eletronics, Technology, Shopping
Extra.com.br 00:03:14 61.5% 21.7% 28.1% 57.5% 2.8 Computer Eletronics, Technology, Shopping
Shopee 00:11:30 22.2% 60.8% 23.3% 30.8% 12.5 Computer Eletronics, Technology, Shopping
Elo7 00:05:51 47.4% 27.4% 50.8% 23.8% 6.2 Computer Eletronics, Technology, Shopping
Aliexpress 00:08:41 32.9% 59.9% 18.3% 19.9% 8.3 Computer Eletronics, Technology, Games, Programming
Amazon 00:06:43 31.5% 50.0% 19.4% 47.3% 7.5 Computer Eletronics, Technology, Education, Programming
Average 00:06:16 42.32% 38.8% 29.1% 39.3% 6.6
Source: Similarweb, BTG Pactual. Note: As of October 2021
Table 39: Service level in Brazilian ecommerce – by company (last 6 months)

Website # of complaints Would do business again (%) Solution index (%) Consumer's grade
Mercado Livre 57,453 70.5% 75.3% 6.01
Americanas.com 21,220 85.5% 93.5% 8.51

Submarino.com 5,425 72.4% 82.2% 6.92
Shoptime 10,993 70.4% 86.7% 7.09

Supermercado Now 1,924 77.3% 86.4% 7.64
Magazine Luiza 58,796 79.4% 91.7% 7.63
Netshoes 17,895 78.9% 93.2% 7.97
Zattini 5,014 78.1% 95.2% 8.07
Estante Virtual 738 74.7% 91.9% 7.25
Aiqfome 144 85.9% 94.4% 8.07

Kabum 11,332 74.4% 88.4% 7.16
Epoca Cosmeticos 1,581 83.5% 91.4% 8.10
Casas Bahia 27,035 61.7% 83.4% 6.12
Ponto Frio 6,932 66.1% 87.2% 6.68
Extra.com.br 5,012 63.9% 86.4% 6.31
Shopee 29,345 62.2% 71.4% 5.43

Elo7 1,434 62.3% 83.3% 6.47
Aliexpress 16,212 49.4% 54.8% 4.38
Amazon 35,538 80.8% 85.0% 7.81
Average 16,528 72.49% 85.4% 7.03
Source: ReclameAqui and BTG Pactual. Note: As of November 2021

Appendix 2 - The main ecommerce dilemmas (a recap of

our notes)
2019
Organic acquisition costs
Vertical vs. Horizontal marketplaces
The monopoly of the client
Brazilian consumer commerce
It’s omni and UX-focused
2020
Total addressable market
The online channel in times of pandemic
Global stock-out levels amid COVID-19
Facebook effect
The online push and the regional approach
Ecommerce TAM post-2020
2021
Understanding the shopping journey: the line between shopping and buying
Old products, old habits, but a new sales channel: analyzing Poshmark’s IPO
Brand versus platforms
The advertising arbitrage flywheel
Ecommerce glocalization
Fast track
The emerging secondhand market and the role of vertical platforms
The Commerce e-volution
Stats roundup
The battle for engagement Subscription -based model
AliExpress to start local marketplace in Brazil; implications for local players
Owning an audience versus renting it
Black Friday in the middle of Covid era

MercadoLibre 06 December 2021 page 34
MercadoLibre
Income Statement (US$mn) 12/2016 12/2017 12/2018 12/2019 12/2020 12/2021E 12/2022E 12/2023E
Revenue - 1,217 1,440 2,296 3,973 6,990 9,147 11,160
Operating expenses (ex depn) - (866) (1,271) (2,079) (3,283) (5,670) (7,488) (8,978)
EBITDA (BTG Pactual) - 183 (24) (80) 233 540 627 892
Depreciation - (41) (46) (73) (105) (199) (272) (363)
Operating income (EBIT, BTG Pactual) - 142 (70) (153) 128 341 355 529
Other income & associates - 0 0 0 0 0 0 0
Net Interest - (2) 4 46 (46) (173) (176) (165)
Abnormal items (pre-tax) - 0 0 0 0 0 0 0
Profit before tax - 140 (65) (107) 81 169 179 364
Tax - (40) 29 (65) (82) (87) (135) (142)
Profit after tax - 100 (37) (172) (1) 82 43 222
Abnormal items (post-tax) - 0 0 0 0 0 0 0
Minorities / pref dividends - 0 0 0 0 0 0 0
Net Income (local GAAP) - 100 (37) (172) (1) 82 43 222
Adjusted Net Income - 100 (37) (172) (1) 82 43 222
Tax rate (%) 0 29 0 0 101 52 76 39
Per Share 12/2016 12/2017 12/2018 12/2019 12/2020 12/2021E 12/2022E 12/2023E
EPS (local GAAP) - 2.01 (0.74) (3.48) (0.01) 1.65 0.88 4.49
EPS (BTG Pactual) - 2.01 (0.74) (3.48) (0.01) 1.65 0.88 4.49
Net DPS - 0.54 0.13 0.00 0.08 0.04 0.00 0.00
BVPS - 6.59 6.81 40.10 33.39 (0.37) 0.51 5.00
Cash Flow (US$mn) 12/2016 12/2017 12/2018 12/2019 12/2020 12/2021E 12/2022E 12/2023E
Net Income - 100 (37) (172) (1) 82 43 222
Depreciation - 41 46 73 105 199 272 363
Net change in working capital - 39 226 378 664 1,069 448 (926)
Other (operating) - 0 0 0 0 0 0 0
Net cash from operations - 180 235 279 768 1,350 763 (341)
Cash from investing activities - (75) (98) (141) (247) (606) (558) (625)
Cash from financing activities - (395) (373) (259) (663) (1,392) 0 0
Bal sheet chge in cash & equivalents - - 329 2,122 701 345 205 (966)
Balance Sheet (US$mn) 12/2016 12/2017 12/2018 12/2019 12/2020 12/2021E 12/2022E 12/2023E
Cash and equivale nts - 598 926 3,049 3,750 4,094 4,300 3,334
Other current assets - 689 585 740 1,597 2,342 2,840 3,534
Total current assets - 1,287 1,511 3,789 5,347 6,436 7,139 6,868
Net tangible fixed assets - 138 184 460 709 1,208 1,494 1,756
Net intangible fixed assets - 0 0 0 0 0 0 0
Investments / other assets - 248 544 533 470 394 394 394
Total assets - 1,673 2,240 4,782 6,526 8,038 9,028 9,017
Trade payables & other ST liabilities - 912 1,033 1,566 3,087 4,901 5,847 5,614
Short term debt - 56 133 186 548 765 765 765
Total current liabilities - 968 1,166 1,752 3,636 5,666 6,612 6,380
Long term debt - 312 602 808 1,104 2,278 2,278 2,278
Other long term liabilities - 67 134 238 134 113 113 113
Total liabilities - 1,347 1,903 2,799 4,875 8,056 9,002 8,770
Equity & minority interests - 326 337 1,983 1,652 (18) 25 247
Total liabilities & equities - 1,673 2,240 4,782 6,526 8,038 9,028 9,017
Financial ratios 12/2019 12/2020 12/2021E 12/2022E 12/2023E

Company Profile: EBITDA margin -3.5% 5.9% 7.7% 6.9% 8.0%
Operating margin -6.7% 3.2% 4.9% 3.9% 4.7%
MercadoLibre hosts the largest e-commerce and payments
ecosystem of Latin America, focused on enabling e-commerce Net margin -7.5% -0.0% 1.2% 0.5% 2.0%
and digital and mobile payments on behalf of its customers and RoE -14.8% -0.0% 10.0% 1284.0% 163.1%
sellers. The company is present in 18 countries and is based in RoIC 65.8% -27.0% -39.7% -29.9% -78.2%
Argentina. EBITDA / net interest 1.7x 5.0x 3.1x 3.6x 5.4x
Net debt / EBITDA 25.7x -9.0x -1.9x -2.0x -0.3x
Total debt / EBITDA -12.5x 7.1x 5.6x 4.9x 3.4x
Net debt / (net debt + equity) 2878.2% 471.1% 98.3% 102.0% 662.9%
Source: Company reports and BTG Pactual estimates. Valuations: based on the last share price of that year(E)
based on share price as of 03 December 2021
Magazine Luiza 06 December 2021 page 35
MagazineLuiza
Income Statement (R$mn) 12/2016 12/2017 12/2018 12/2019 12/2020 12/2021E 12/2022E 12/2023E
Revenue 9,465 11,931 15,531 19,799 28,945 36,255 42,082 48,669
Operating expenses (ex depn) (8,820) (10,995) (14,353) (18,074) (27,546) (34,660) (40,254) (46,205)
EBITDA (BTG Pactual) 714 1,030 1,243 1,763 1,517 1,786 2,089 2,842
Depreciation (133) (143) (163) (486) (697) (835) (1,031) (1,061)
Operating income (EBIT, BTG Pactual) 582 887 1,080 1,277 820 952 1,057 1,781
Other income & associates 0 0 0 0 0 0 0 0
Net Interest (507) (414) (297) (72) (410) (669) (793) (762)
Abnormal items (pre-tax) 0 0 0 0 0 0 0 0
Profit before tax 74 473 783 1,204 410 283 264 1,019
Tax 12 (84) (185) (291) (18) 258 (1) (160)
Profit after tax 87 389 598 913 392 542 263 859
Abnormal items (post-tax) 0 0 0 0 0 0 0 0
Minorities / pref dividends 0 0 0 0 0 0 0 0
Net Income (local GAAP) 87 389 598 913 392 542 263 859
Adjusted Net Income 87 389 598 913 392 542 263 859
Tax rate (%) 0 18 24 24 4 0 0 16
Per Share 12/2016 12/2017 12/2018 12/2019 12/2020 12/2021E 12/2022E 12/2023E
EPS (local GAAP) 0.01 0.06 0.09 0.14 0.06 0.08 0.04 0.13
EPS (BTG Pactual) 0.01 0.06 0.09 0.14 0.06 0.08 0.04 0.13
Net DPS 0.00 0.00 0.02 0.03 0.04 0.04 0.00 0.03
BVPS 0.11 0.31 0.35 1.13 1.10 1.64 1.68 1.77
Cash Flow (R$mn) 12/2016 12/2017 12/2018 12/2019 12/2020 12/2021E 12/2022E 12/2023E
Net Income 87 389 598 913 392 542 263 859
Depreciation 133 143 163 486 697 835 1,031 1,061
Net change in working capital 271 (240) (255) 376 (1,796) (405) (99) (2)
Other (operating) 0 0 0 0 0 0 0 0
Net cash from operations 491 292 506 1,775 (707) 971 1,196 1,918
Cash from investing activities (129) (176) (417) (1,767) (1,237) (2,330) (1,146) (1,277)
Cash from financing activities 1,849 (1,010) (530) 211 538 366 0 (215)
Bal sheet chge in cash & equivalents 256 254 (664) 3,746 (1,851) 1,448 46 431
Balance Sheet (R$mn) 12/2016 12/2017 12/2018 12/2019 12/2020 12/2021E 12/2022E 12/2023E
Cash and equivale nts 1,418 1,672 1,008 4,754 2,903 4,351 4,397 4,828
Other current assets 2,502 3,585 5,404 8,087 13,896 15,555 17,351 19,506
Total current assets 3,920 5,258 6,412 12,841 16,799 19,906 21,748 24,334
Net tangible fixed assets 561 569 754 1,077 1,258 1,922 2,042 2,255
Net intangible fixed assets 513 532 599 3,819 4,353 5,746 5,746 5,746
Investments / other assets 1,194 1,061 1,031 2,054 2,238 3,183 3,183 3,183
Total assets 6,187 7,420 8,797 19,791 24,647 30,756 32,719 35,518
Trade payables & other ST liabilities 2,834 3,702 5,258 7,993 11,749 13,495 15,192 17,345
Short term debt 838 434 131 10 1,667 12 12 12
Total current liabilities 3,672 4,136 5,389 8,003 13,416 13,508 15,205 17,357
Long term debt 1,011 437 325 839 20 2,340 2,340 2,340
Other long term liabilities 796 772 780 3,385 3,886 3,993 3,993 3,993
Total liabilities 5,479 5,346 6,494 12,226 17,322 19,840 21,537 23,689
Equity & minority interests 708 2,074 2,303 7,565 7,325 10,916 11,182 11,828
Total liabilities & equities 6,187 7,420 8,797 19,791 24,647 30,756 32,719 35,518

Company Profile: EBITDA margin 8.9% 5.2% 4.9% 5.0% 5.8%
Operating margin 6.4% 2.8% 2.6% 2.5% 3.7%
Magazine Luiza retails a wide range of goods through a chain of
stores and its e-commerce platform (73% of total GMV), including Net margin 4.6% 1.4% 1.5% 0.6% 1.8%
electronics, housewares, toys, apparel, books and food. RoE 18.5% 5.3% 5.9% 2.4% 7.5%
Magazine Luiza operates more than 1,400 department stores RoIC 47.2% 16.8% 12.7% 11.7% 19.3%
throughout Brazil and currently has 26 distribution centers. EBITDA / net interest 24.4x 3.7x 2.7x 2.6x 3.7x
Net debt / EBITDA -2.2x -0.8x -1.1x -1.0x -0.9x
Total debt / EBITDA 0.5x 1.1x 1.3x 1.1x 0.8x
Net debt / (net debt + equity) -106.7% -19.9% -22.4% -22.4% -26.5%
Via 06 December 2021 page 36
Via
Revenue 22,167 25,689 26,928 25,642 28,901 32,016 35,449 39,659
Operating expenses (ex depn) (21,404) (24,150) (25,691) (23,972) (25,984) (30,749) (33,680) (37,228)
EBITDA (BTG Pactual) 401 1,321 686 1,149 2,531 510 847 1,837
Depreciation (251) (319) (333) (847) (911) (962) (1,030) (990)
Operating income (EBIT, BTG Pactual) 149 1,002 353 302 1,620 (452) (183) 846
Other income & associates 0 0 0 33 (731) 757 922 595
Net Interest (937) (765) (741) (982) (696) (1,174) (1,748) (1,598)
Profit before tax (787) 237 (388) (647) 193 (869) (1,010) (157)
Tax (34) (80) 121 171 81 1,161 483 188
Profit after tax (822) 157 (267) (476) 273 293 (527) 31
Net Income (local GAAP) (822) 157 (267) (476) 273 293 (527) 31
Adjusted Net Income (822) 157 (267) (476) 273 293 (527) 31
Tax rate (%) 0 34 0 0 0 0 0 0
Per Share 12/2016 12/2017 12/2018 12/2019 12/2020 12/2021E 12/2022E 12/2023E
EPS (local GAAP) (0.51) 0.10 (0.17) (0.30) 0.17 0.18 (0.33) 0.02
EPS (BTG Pactual) (0.51) 0.10 (0.17) (0.30) 0.17 0.18 (0.33) 0.02
Net DPS 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
BVPS 1.76 1.85 1.58 0.36 3.74 3.47 3.14 3.15
Cash Flow (R$mn) 12/2016 12/2017 12/2018 12/2019 12/2020 12/2021E 12/2022E 12/2023E
Net Income (822) 157 (267) (476) 273 293 (527) 31
Depreciation 251 319 333 847 911 962 1,030 990
Net change in working capital (2,011) (512) 561 (2,726) (5,503) (1,039) (60) (149)
Net cash from operations (2,581) (36) 627 (2,355) (4,318) 216 443 872
Cash from investing activities (151) (303) (663) (439) (432) (955) (845) (769)
Cash from financing activities 3,939 260 200 6,085 2,575 (808) 168 204
Bal sheet chge in cash & equivalents (2,647) (471) 152 (2,347) 1,620 (1,359) (402) 103
Cash and equivale nts 4,030 3,559 3,711 1,364 2,984 1,625 1,223 1,326
Other current assets 6,678 8,884 9,833 11,088 16,264 13,186 14,222 15,568
Total current assets 10,708 12,443 13,544 12,452 19,248 14,811 15,445 16,893
Net tangible fixed assets 1,438 1,423 1,449 5,009 4,492 4,811 4,626 4,405
Net intangible fixed assets 1,257 1,233 1,427 1,245 1,653 2,010 2,010 2,010
Investments / other assets 4,124 4,832 4,636 5,718 7,663 9,538 9,538 9,538
Total assets 17,527 19,931 21,056 24,424 33,056 31,170 31,619 32,846
Trade payables & other ST liabilities 8,525 10,476 11,502 10,180 11,145 9,542 10,351 11,343
Short term debt 3,532 3,802 3,378 5,553 7,352 6,237 6,404 6,609
Total current liabilities 12,057 14,278 14,880 15,733 18,497 15,779 16,755 17,952
Long term debt 407 397 1,021 4,931 5,707 6,014 6,014 6,014
Other long term liabilities 2,255 2,297 2,632 3,182 2,873 3,840 3,840 3,840
Total liabilities 14,719 16,972 18,533 23,846 27,077 25,633 26,609 27,806
Equity & minority interests 2,808 2,959 2,523 578 5,979 5,537 5,010 5,041
Total liabilities & equities 17,527 19,931 21,056 24,424 33,056 31,170 31,619 32,846

Operating margin 1.2% 5.6% -1.4% -0.5% 2.1%
With more than 60 years of history and tradition in the electronics,
home appliances and furniture market, Via Varejo controls Casah Net margin -1.9% 0.9% 0.9% -1.5% 0.1%
Bahia/Ponto Frio brands, has over 1000 stores, employing more RoE -30.7% 8.3% 5.1% -10.0% 0.6%
than 47,000 people. The company also operated an 1P e- RoIC 4.8% 12.8% -2.8% -1.1% 5.3%
commerce and marketplace platform. EBITDA / net interest 1.2x 3.6x 0.4x 0.5x 1.1x
Net debt / EBITDA 7.9x 4.0x 20.8x 13.2x 6.2x
Net debt / (net debt + equity) 94.0% 62.8% 65.7% 69.1% 69.1%
Americanas 06 December 2021 page 37
Americanas
Revenue - 16,346 17,690 18,956 21,478 26,962 28,114 31,647
Operating expenses (ex depn) - (13,765) (14,898) (15,294) (18,247) (23,907) (23,625) (26,574)
EBITDA (BTG Pactual) - 2,580 2,792 3,663 3,232 3,055 4,489 5,072
Depreciation - (767) (933) (1,370) (1,557) (1,847) (2,046) (2,128)
Operating income (EBIT, BTG Pactual) - 1,814 1,859 2,293 1,675 1,208 2,443 2,944
Other income & associates - (138) (117) (146) (327) (184) (362) (366)
Net Interest - (1,640) (1,413) (1,376) (1,040) (951) (1,053) (596)
Abnormal items (pre-tax) - 0 0 0 0 0 0 0
Profit before tax - 36 329 772 308 73 1,028 1,982
Tax - 45 (78) (148) 7 237 (308) (595)
Profit after tax - 81 250 623 315 310 719 1,387
Abnormal items (post-tax) - 0 0 0 0 0 0 0
Minorities / pref dividends - 157 130 81 0 0 0 0
Net Income (local GAAP) - 238 381 704 315 310 719 1,387
Adjusted Net Income - 238 381 704 315 310 719 1,387
Tax rate (%) - 0 24 19 0 0 30 30
Per Share 12/2016 12/2017 12/2018 12/2019 12/2020 12/2021E 12/2022E 12/2023E
EPS (local GAAP) - 0.26 0.42 0.78 0.35 0.34 0.80 1.54
EPS (BTG Pactual) - 0.26 0.42 0.78 0.35 0.34 0.80 1.54
Net DPS - 0.11 0.11 0.11 0.41 0.09 0.20 0.38
BVPS - 5.12 5.45 5.72 13.63 17.61 18.21 19.36
Cash Flow (R$mn) 12/2016 12/2017 12/2018 12/2019 12/2020 12/2021E 12/2022E 12/2023E
Net Income - 238 381 704 315 310 719 1,387
Depreciation - 767 933 1,370 1,557 1,847 2,046 2,128
Net change in working capital - (405) 718 994 98 (2,970) 390 49
Other (operating) - 0 0 0 0 0 0 0
Net cash from operations - 600 2,031 3,068 1,971 (813) 3,156 3,565
Cash from investing activities - (1,290) (1,326) (2,290) (1,770) (2,355) (2,550) (2,652)
Cash from financing activities - 15,523 (46) 1,844 3,584 (8,297) (180) (347)
Bal sheet chge in cash & equivalents - - 25 497 11,025 (10,836) 879 566
Cash and equivale nts - 10,085 10,110 10,607 21,631 10,795 11,674 12,239
Other current assets - 7,520 7,404 8,302 9,937 14,912 14,880 16,045
Total current assets - 17,605 17,514 18,909 31,568 25,707 26,554 28,284
Net tangible fixed assets - 7,032 7,411 10,288 11,591 12,551 12,602 13,126
Net intangible fixed assets - 0 0 0 0 0 0 0
Investments / other assets - 2,899 3,380 4,072 4,551 6,236 6,236 6,236
Total assets - 27,536 28,305 33,269 47,710 44,495 45,392 47,646
Trade payables & other ST liabilities - 5,510 6,112 8,004 9,737 11,743 12,100 13,314
Short term debt - 4,145 2,291 2,554 2,351 3,630 3,630 3,630
Total current liabilities - 9,655 8,403 10,558 12,088 15,373 15,731 16,945
Long term debt - 11,479 13,390 15,075 19,233 9,738 9,738 9,738
Other long term liabilities - 296 226 256 518 3,477 3,477 3,477
Total liabilities - 21,430 22,019 25,889 31,839 28,588 28,945 30,159
Equity & minority interests - 6,106 6,286 7,380 15,871 15,907 16,447 17,487
Total liabilities & equities - 27,536 28,305 33,269 47,710 44,495 45,392 47,646

Operating margin 12.1% 7.8% 4.5% 8.7% 9.3%
Americanas offers through its web site and B&M operations
products including books, CDs, DVDs, IT equipment, electronic Net margin 3.7% 1.5% 1.2% 2.6% 4.4%
equipment, perfumes, clothing and others RoE 14.0% 3.6% 2.2% 4.4% 8.2%
RoIC 17.5% 11.1% 7.0% 13.3% 16.0%
EBITDA / net interest 2.7x 3.1x 3.2x 4.3x 8.5x
Net debt / EBITDA 1.9x -0.0x 0.8x 0.4x 0.2x
Net debt / (net debt + equity) 48.8% -0.3% 13.9% 9.3% 6.1%
Westwing 06 December 2021 page 38
Westwing
Revenue - - 122 132 245 305 369 482
Operating expenses (ex depn) - - (109) (125) (241) (351) (369) (461)
EBITDA (BTG Pactual) - - 12 7 4 (37) 1 22
Depreciation - - (3) (3) (4) (10) (17) (23)
Operating income (EBIT, BTG Pactual) - - 9 4 0 (48) (16) (2)
Other income & associates - - 0 0 0 0 0 0
Net Interest - - (3) (3) (6) 3 2 1
Abnormal items (pre-tax) 0 - 0 0 0 0 0 0
Profit before tax - - 6 1 (6) (44) (14) (0)
Tax - - (2) 1 18 9 0 0
Profit after tax - - 5 2 12 (35) (14) (0)
Abnormal items (post-tax) 0 - 0 0 0 0 0 0
Minorities / pref dividends 0 - 0 0 0 0 0 0
Net Income (local GAAP) - - 5 2 12 (35) (14) (0)
Adjusted Net Income - - 5 2 12 (35) (14) (0)
Tax rate (%) 0 0 27 0 0 0 0 0
Per Share 12/2016 12/2017 12/2018 12/2019 12/2020 12/2021E 12/2022E 12/2023E
EPS (local GAAP) - - 0.04 0.02 0.11 (0.32) (0.13) (0.00)
EPS (BTG Pactual) - - 0.04 0.02 0.11 (0.32) (0.13) (0.00)
Net DPS - - 0.00 0.00 0.00 0.00 0.00 0.00
BVPS - - (0.05) (0.05) 0.04 3.51 3.39 3.38
Cash Flow (R$mn) 12/2016 12/2017 12/2018 12/2019 12/2020 12/2021E 12/2022E 12/2023E
Net Income - - 5 2 12 (35) (14) (0)
Depreciation - - 3 3 4 10 17 23
Net change in working capital - - - (6) 31 (59) 4 (7)
Other (operating) 0 - 0 0 0 0 0 0
Net cash from operations - - - (1) 47 (84) 7 16
Cash from investing activities - - 0 (2) (8) (31) (27) (35)
Cash from financing activities - - 0 7 3 (7) 0 0
Bal sheet chge in cash & equivalents - - - 0 27 259 (29) (31)
Cash and equivale nts - - 4 4 32 291 262 231
Other current assets - - 16 17 31 72 90 113
Total current assets - - 21 22 63 363 352 344
Net tangible fixed assets - - 3 7 13 67 86 109
Net intangible fixed assets 0 - 0 0 0 0 0 0
Investments / other assets - - 1 2 22 64 64 64
Total assets - - 25 31 98 494 502 518
Trade payables & other ST liabilities - - 29 26 75 62 84 100
Short term debt - - 0 7 7 4 4 4
Total current liabilities - - 29 33 82 66 88 105
Long term debt - - 0 0 4 0 0 0
Other long term liabilities - - 2 3 8 41 41 41
Total liabilities - - 31 36 94 107 129 145
Equity & minority interests - - (6) (5) 4 387 373 372
Total liabilities & equities - - 25 31 98 494 502 518

Company Profile: EBITDA margin 5.3% 1.6% -12.2% 0.2% 4.5%
Operating margin 3.2% 0.0% -15.6% -4.4% -0.3%
Westwing is a platform based on shopping with social media like
browsing. Offers online shoppers furniture and home accessories Net margin 1.3% 4.7% -11.5% -3.8% -0.1%
at deep discounts in daily flash sales. RoE -32.1% -2742.7% -17.9% -3.7% -0.1%
RoIC -71.4% -0.7% -113.7% -15.1% -1.3%
EBITDA / net interest 2.2x 0.6x 11.9x -0.3x -18.0x
Net debt / EBITDA 0.4x -5.2x 7.7x -363.9x -10.4x
Total debt / EBITDA 1.0x 2.7x -0.1x 6.1x 0.2x
Net debt / (net debt + equity) -139.8% 126.1% -285.7% -222.2% -155.5%
Enjoei 06 December 2021 page 39
Enjoei
Revenue 0 34 39 54 80 106 153 216
Operating expenses (ex depn) 0 (46) (56) (69) (103) (209) (247) (304)
EBITDA (BTG Pactual) 0 (13) (16) (15) (23) (102) (94) (87)
Depreciation 0 (2) (3) (5) (7) (11) (21) (21)
Operating income (EBIT, BTG Pactual) 0 (14) (19) (21) (30) (114) (115) (108)
Other income & associates 0 0 0 0 0 0 0 0
Net Interest 0 2 0 (0) (1) 12 23 (2)
Profit before tax 0 (12) (19) (21) (31) (102) (92) (110)
Tax 0 (1) (1) 0 0 0 0 0
Profit after tax 0 (13) (20) (21) (31) (102) (92) (110)
Net Income (local GAAP) 0 (13) (20) (21) (31) (102) (92) (110)
Adjusted Net Income 0 (13) (20) (21) (31) (102) (92) (110)
Tax rate (%) 0 0 0 0 0 0 0 0
Per Share 12/2016 12/2017 12/2018 12/2019 12/2020 12/2021E 12/2022E 12/2023E
EPS (local GAAP) 0.00 (0.06) (0.10) (0.10) (0.16) (0.52) (0.47) (0.56)
EPS (BTG Pactual) 0.00 (0.06) (0.10) (0.10) (0.16) (0.52) (0.47) (0.56)
Net DPS 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
BVPS 0.00 0.06 0.19 0.08 2.51 2.19 1.73 1.17
Cash Flow (R$mn) 12/2016 12/2017 12/2018 12/2019 12/2020 12/2021E 12/2022E 12/2023E
Net Income 0 (13) (20) (21) (31) (102) (92) (110)
Depreciation 0 2 3 5 7 11 21 21
Net change in working capital 0 6 5 0 13 (33) (48) (113)
Net cash from operations 0 (5) (13) (16) (12) (123) (119) (202)
Cash from investing activities 0 0 0 0 (9) (34) (23) (18)
Cash from financing activities 39 0 1 (1) 0 10 28 150
Bal sheet chge in cash & equivalents - 11 25 (23) 490 (110) (115) (70)
Cash and equivale nts 0 11 36 13 503 393 278 208
Other current assets 0 1 1 1 4 28 82 203
Total current assets 0 12 36 14 507 420 360 412
Net tangible fixed assets 0 8 13 20 22 52 54 51
Net intangible fixed assets 0 0 0 0 0 0 0 0
Investments / other assets 0 0 3 3 0 0 0 0
Total assets 0 19 52 38 529 473 415 463
Trade payables & other ST liabilities 0 7 12 13 28 19 26 34
Short term debt 0 0 1 1 1 2 2 2
Total current liabilities 0 7 12 13 28 22 28 36
Long term debt 0 0 1 0 0 9 36 186
Other long term liabilities 0 1 2 8 4 9 9 9
Total liabilities 0 8 15 21 32 39 73 231
Equity & minority interests 0 11 37 16 497 434 342 232
Total liabilities & equities 0 19 52 38 529 473 415 463

Company Profile: EBITDA margin -28.9% -29.5% -96.5% -61.4% -40.4%
Operating margin -38.4% -38.0% -107.0% -75.0% -50.0%
Enjoei is a marketplace for selling clothes, accessories, furniture,
appliances and other objects. On its website, users can sell Net margin -38.7% -39.1% -96.1% -60.2% -50.9%
pieces that have long been forgotten in the wardrobe and buy RoE -77.2% -12.1% -21.9% -23.8% -38.4%
others (new or used), from various brands and people who also RoIC -409.1% -1986.9% -419.1% -138.1% -66.3%
want more free space in the closet. EBITDA / net interest -81.1x -25.9x 8.9x 4.1x -45.1x
Net debt / EBITDA 0.8x 21.4x 3.7x 2.5x 0.2x
Total debt / EBITDA -0.0x -0.0x -0.1x -0.4x -2.2x
Net debt / (net debt + equity) -278.4% 9755.1% -728.1% -233.4% -9.2%
Required Disclosures
This report has been prepared by Banco BTG Pactual S.A.

The figures contained in performance charts refer to the past; past performance is not a reliable indicator of future results.
BTG Pactual Definition Coverage *1 IB Services *2

Rating
Buy Expected total return 10% above the company’s sector 68% 52%
average.
Neutral Expected total return between +10% and -10% the 31% 31%
company’s sector average.
Sell Expected total return 10% below the company’s sector 1% 25%
average.
1: Percentage of companies under coverage globally within the 12-month rating category.
2: Percentage of companies within the 12-month rating category for which investment banking (IB) services were provided within the past 12 months.
Absolute return requirements
Besides the abovementioned relative return requirements, the listed absolute return requirements must be followed:
a) a Buy rated stock must have an expected total return above 15%
b) a Neutral rated stock can not have an expected total return below -5%
c) a stock with expected total return above 50% must be rated Buy
Analyst Certification
Each research analyst primarily responsible for the content of this investment research report, in whole or in part, certifies that:
(i) all of the views expressed accurately reflect his or her personal views about those securities or issuers, and such recommendations were elaborated independently, including in relation to Banco
BTG Pactual S.A. and/or its affiliates, as the case may be;
(ii) no part of his or her compensation was, is, or will be, directly or indirectly, related to any specific recommendations or views contained herein or linked to the price of any of the securities discussed
herein.
Research analysts contributing to this report who are employed by a non-US Broker dealer are not registered/qualified as research analysts with FINRA and therefore are not subject to the restrictions
contained in the FINRA rules on communications with a subject company, public appearances, and trading securities held by a r esearch analyst account.
Part of the analyst compensation comes from the profits of Banco BTG Pactual S.A. as a whole and/or its affiliates and, consequently, revenues arisen from transactions held by Banco BTG Pactual
S.A. and/or its affiliates.
Where applicable, the analyst responsible for this report and certified pursuant to Brazilian regul ations will be identified in bold on the first page of this report and will be the first name on the signature
list.
Statement of Risk
MercadoLibre INC [ARMELI] - MercadoLivre is subject to macroeconomic conditions, mainly inflation, FX-rate, GDP growth, consumer spending and credit availability. Company specific risks include
growth dynamics of the ecommerce sector in LatAm, competition and deterioration of working capital terms
Magazine Luiza S.A. [BRMGLU] - We believe the main risks are 1) macro conditions changes, 2) competition, and 3) execution.
Americanas SA [BRAMER] - Americanas is subject to local macroeconomic conditions, mainly inflation and GDP.
Via Varejo S/A [BRVIIA] - We believe the main risks are 1) the deterioration of the macro scenario, 2) increased competition in traditional retail and e-commerce, and 3) execution.
Westwing Comercio Varejista S.A [BRWEST] - Westwing is subject to local macroeconomic conditions, mainly inflation, FX-rate, GDP growth, consumer spending and credit availability. Company
specific risks include growth dynamics of the ecommerce sector and competition.
ENJOEI.COM.BR ATIVIDADES DE INTERNET LTDA [BRENJU] - Enjoei is subject to local macroeconomic conditions, mainly GDP and inflation
Valuation Methodology
MercadoLibre INC [ARMELI] - Our 12-month forward target price is based on a blended valuation: 40% DCF based (3-phase DCF with a cost of equity of 9.1% and g of 6.0%, in nominal USD) and a
60% exit multiple of 1.1x EV/GMV and 0.2x Market cap/TPV
Magazine Luiza S.A. [BRMGLU] - Our 12-month forward target price is based on a blended valuation: 60% DCF based (3-phase DCF with a cost of equity of 12.0% and g of 4.0%, in nominal USD)
and a 40% exit multiple of 1.0x EV/GMV.
Americanas SA [BRAMER] - Our 12-month forward target price is based on a DFC valuation. Cost of equity of 11.0% and g of 5.0%, in nominal USD
Via Varejo S/A [BRVIIA] - Our 12-month forward target price is DCF based (3-phase DCF wth a cost of equity of 13.6% and g of 3.0%, in nominal USD).
Westwing Comercio Varejista S.A [BRWEST] - Our 12-month forward target price is DCF based (3-phase DCF with a cost of equity of 12.2% and g of 4.5%, in nominal USD).
ENJOEI.COM.BR ATIVIDADES DE INTERNET LTDA [BRENJU] - Our 12-month forward target price is DCF based (3-phase DCF with a cost of equity of 13.3% and g of 3.5%, in nominal USD)
Company Disclosures
Company Name Reuters 12-mo rating Price Price date
Americanas 1, 2, 4, 6, 9, 18, 20 AMER3.SA Buy R$29.83 6-12-2021
Enjoei 1, 2, 4, 6, 18, 19, 20 ENJU3.SA Buy R$3.51 6-12-2021
Magazine Luiza 1, 2, 4, 6, 9, 18, 20 MGLU3.SA Buy R$7.30 6-12-2021
MercadoLibre 1, 2, 4, 6, 12, 18, 19, 20 MELI.OQ Buy US$1,052.95 3-12-2021
Via 1, 2, 4, 6, 9, 18, 20, 22 VIIA3.SA Neutral R$5.61 6-12-2021
Westwing 1, 2, 4, 6, 9, 18, 20 WEST3.SA Buy R$3.55 6-12-2021
1. Within the past 12 months, Banco BTG Pactual S.A., its affiliates or subsidiaries has received compensation for investment banking services from this company/entity.
2. Banco BTG Pactual S.A, its affiliates or subsidiaries expect to receive or intend to seek compensation for investment banking services and/or products and services other than investment services
from this company/entity within the next three months.
4. This company/entity is, or within the past 12 months has been, a client of Banco BTG Pactual S.A., and investment banking services are bei ng, or have been, provided.
6. Banco BTG Pactual S.A. and/or its affiliates receive compensation for any services rendered or presents any commercial relationships with this company, entity or person, entities or funds which
represents the same interest of this company/entity.
9. Banco BTG Pactual S.A. has acted as manager/co-manager in the underwriting or placement of securities of this company/entity or one of its affiliates or subsidiaries within the past 12 months.
12. Directors or employees of Banco BTG Pactual S.A., its affiliates or subsidiaries take part on the board of directors of this company.
18. As of the end of the month immediately preceding the date of publication of this report, neither Banco BTG Pactual S.A. nor its affiliates or subsidiari es beneficially own 1% or more of any class of
common equity securities
19. Neither Banco BTG Pactual S.A. nor its affiliates or subsidiaries have managed or co-managed a public offering of securities for the company within the past 12 months.
20. Neither Banco BTG Pactual S.A. nor its affiliates or subsidiaries engaged in market making activities in the subject company's securities at the time this research report was published.
22. Banco BTG Pactual S.A. or its affiliates or subsidiaries do not expect to receive or intends to seek compensation for investment banking services from the companies within the next 3 months.
For a complete set of disclosure statements associated with the companies discussed in this report, including information on valuation and risk, please access the BTG
Pactual research website at www.btgpactual.com/research/Disclaimers/Overview.aspx
Global Disclaimer
This report has been prepared by Banco BTG Pactual S.A. (“BTG Pactual S.A.”), a Brazilian regulated bank. BTG Pactual S.A. is the responsible for the distribution of this report in Brazil. BTG Pactual
US Capital LLC (“BTG Pactual US”), a broker-dealer registered with the U.S. Securities and Exchange Commission and a member of the Financial Industry Regulatory Authority and the Securities
Investor Protection Corporation is distributing this report in the United States. BTG Pactual US is an affiliate of BTG Pactual S.A. BTG Pactual US assumes responsibility for this research for purposes
of U.S. law. Any U.S. person receiving this report and wishing to effect any transaction in a security discussed in this report should do so with BTG Pactual US at 212-293-4600, 601 Lexington Ave.
57th Floor, New York, NY 10022.
This report is being distributed in the United Kingdom and elsewhere in the European Economic Area (“EEA”) by BTG Pactual (UK) Limited (“BTG Pactual UK”), which is authorized and regulated by
the Financial Conduct Authority of the United Kingdom. BTG Pactual UK has not: (i) produced this report, (ii) substantially altered its contents, (iii) changed the direction of the recommendation, or (iv)
disseminated this report prior to its issue by BTG Pactual US. BTG Pactual UK does not distribute summaries of research produced by BTG Pactual US.
BTG Pactual Chile S.A. Corredores de Bolsa (“BTG Pactual Chile”), formerly known as Celfin Capital S.A. Corredores de Bolsa, is a Chilean broker dealer registered with Comisión para el Mercado
Financiero (CMF) in Chile and responsible for the distribution of this report in Chile and BTG Pactual Perú S.A. Sociedad Agente de Bolsa (“BTG Pactual Peru”), formerly known as Celfin Capital S.A.
Sociedad Agente e Bolsa, registered with Superintendencia de Mercado de Valores (SMV) de Peru is responsible for the distribution of this report in Peru. BTG Pactual Chile and BTG Pactual Peru
acquisition by BTG Pactual S.A. was approved by the Brazilian Central Bank on November 14th, 2012.
BTG Pactual S.A. Comisionista de Bolsa (“BTG Pactual Colombia”) formerly known as Bolsa y Renta S.A. Comisionista de Bolsa, is a Colombian broker dealer register with the Superintendencia
Financeira de Colombia and is responsible for the distribution of this report in Colombia. BTG Pactual Colombia acquisition by BTG Pactual S.A. was approved by Brazilian Central Bank on December
21st, 2012.
BTG Pactual Argentina is a broker dealer (Agente de Liquidación y Compensación y Agente de Negociación Integral ) organized and regulated by Argentinean law, registered with the Exchange
Commission of Argentina (Comisión Nacional de Valores) under license Nro. 720 and responsible for the distribution of this report in Argentina. Additionally, the Brazilian Central Bank approved the
indirect controlling participation of Banco BTG Pactual S.A. in BTG Pactual Argentina on September 1st, 2017.
References herein to BTG Pactual include BTG Pactual S.A., BTG Pactual US Capital LLC, BTG Pactual UK, BTG Pactual Chile and BTG Pactual Peru and BTG Pactual Colombia and BTG Pactual
Argentina as applicable. This report is for distribution only under such circumstances as may be permitted by applicable law. This report is not directed at you if BTG Pactual i s prohibited or restricted
by any legislation or regulation in any jurisdiction from making it available to you. You should satisfy yourself before reading it that BTG Pactual is permitted to provide research material concerning
investments to you under relevant legislation and regulations. Nothing in this report constitutes a representation that any i nvestment strategy or recommendation contained herein is suitable or
appropriate to a recipient’s individual circumstances or otherwise constitutes a personal recommendation. It is published sol ely for information purposes, it does not constitute an advertisement and is
not to be construed as a solicitation, offer, invitation or inducement to buy or sell any securities or related financial instruments in any jurisdiction. Prices in this report are believed to be reliable as of
the date on which this report was issued and are derived from one or more of the following: (i) sources as expressly specified alongside the relevant data; (ii) the quoted price on the mai n regulated
market for the security in question; (iii) other public sources believed to be reliable; or (iv) BTG Pactual's proprietary data or data available to BTG Pactual. All other information herein is believed to
be reliable as of the date on which this report was issued and has been obtained from public sources believed to be reliable. No representation or warranty, either express or implied, is provided in
relation to the accuracy, completeness or reliability of the information contained herein, except with respect to information concerning Banco BTG Pactual S.A., its subsidiaries and affiliates, nor is it
intended to be a complete statement or summary of the securities, markets or developments referred to in the report. In all cases, investors should conduct their own investigation and analysis of such
information before taking or omitting to take any action in relation to securities or markets that are analyzed in this report. BTG Pactual does not undertake that investors will obtain profits, nor will it
share with investors any investment profits nor accept any liability for any investment losses. Investments involve risks and investors should exercise prudence in making their investment decisions.
BTG Pactual accepts no fiduciary duties to recipients of this report and in communicating this report is not acting in a fiduciary capacity. The report should not be regarded by recipients as a substitute
for the exercise of their own judgment. Opinions, estimates, and projections expressed herein constitute the current judgment of the analyst responsible for the substance of this report as of the date
on which the report was issued and are therefore subject to change without notice and may differ or be contrary to opinions expressed by other business areas or groups of BTG Pactual as a result
of using different assumptions and criteria. Because the personal views of analysts may differ from one another, Banco BTG Pactual S.A., its subsidiaries and affiliates may have issued or may issue
reports that are inconsistent with, and/or reach different conclusions from, the information presented herein. Any such opini ons, estimates, and projections must not be construed as a representation
that the matters referred to therein will occur. Prices and availability of financial instruments are indicative only and subject to change without notice. Research will initiate, update and cease coverage
solely at the discretion of BTG Pactual Investment Bank Research Management. The analysis contained herein is based on numerous assumptions. Different assumptions could result in materially
different results. The analyst(s) responsible for the preparation of this report may interact with trading desk personnel, sales personnel and other constituencies for the purpose of gathering, synthesizing
and interpreting market information. BTG Pactual is under no obligation to update or keep current the information contained herein, except when terminating coverage of the companies discussed in
the report. BTG Pactual relies on information barriers to control the flow of information contained in one or more areas within BTG Pactual, into other areas, units, groups or affiliates of BTG Pactual.
The compensation of the analyst who prepared this report is determined by research management and senior management (not incl uding investment banking). Analyst compensation is not based on
investment banking revenues, however, compensation may relate to the revenues of BTG Pactual Investment Bank as a whole, of which investment banking, sales and trading are a part. The securities
described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. Options, derivative products and futures are not suitable for all investors, and trading in these
instruments is considered risky. Mortgage and asset-backed securities may involve a high degree of risk and may be highly volatile in response to fluctuations in interest rates and other market
conditions. Past performance is not necessarily indicative of future results. If a financial instrument is denominated in a currency other than an investor’s currency, a change in rates of exchange may
adversely affect the value or price of or the income derived from any security or related instrument mentioned in this report, and the reader of this report assumes any currency risk. This report does
not take into account the investment objectives, financial situation or particular needs of any particular investor. Investors should obtain independent financial advice based on their own particular
circumstances before making an investment decision on the basis of the information contained herein. For investment advice, trade execution or other enquiries, clients should contact their local sales
representative. Neither BTG Pactual nor any of its affiliates, nor any of their respective directors, employees or agents, accepts any liability for any loss or damage arising out of the use of all or any
part of this report. Notwithstanding any other statement in this report, BTG Pactual UK does not seek to exclude or restrict any duty or liability that it may have to a client under the “regulatory system”
in the UK (as such term is defined in the rules of the Financial Conduct Authority). Any prices stated in this report are for information purposes only and do not represent valuations for individual
securities or other instruments. There is no representation that any transaction can or could have been effected at those prices and any prices do not necessarily reflect BTG Pactual internal books
and records or theoretical model-based valuations and may be based on certain assumptions. Different assumptions, by BTG Pactual S.A., BTG Pactual US, BTG Pactual UK, BTG Pactual Chile and
BTG Pactual Peru and BTG Pactual Colombia and BTG Pactual Argentina or any other source, may yield substantially different results. This report may not be reproduced or redistributed to any other
person, in whole or in part, for any purpose, without the prior written consent of BTG Pactual and BTG Pactual accepts no liability whatsoever for the actions of third parties in this respect. Additional
information relating to the financial instruments discussed in this report is available upon request. BTG Pactual and its affiliates have in place arrangements to manage conflicts of interest that may
arise between them and their respective clients and among their different clients. BTG Pactual and its affiliates are involved in a full range of financial and related services including banking, investment
banking and the provision of investment services. As such, any of BTG Pactual or its affiliates may have a material interest or a conflict of interest in any services provided to clients by BTG Pactual
or such affiliate. Business areas within BTG Pactual and among its affiliates operate independently of each other and restrict access by the particular individual(s) responsible for handling client affairs
to certain areas of information where this is necessary in order to manage conflicts of interest or material interests. Any of BTG Pactual and its affiliates may: (a) have disclosed this report to companies
that are analyzed herein and subsequently amended this report prior to publication; (b) give investment advice or provide other services to another person about or concerning any securities that are
discussed in this report, which advice may not necessarily be consistent with or similar to the information in this report; (c) trade (or have traded) for its own account (or for or on behalf of clients), have
either a long or short position in the securities that are discussed in this report (and may buy or sell such securities), with the securities that are discussed in this report; and/or (d) buy and sell unitsin
a collective investment scheme where it is the trustee or operator (or an adviser) to the scheme, which units may reference securities that are discussed in this report.
United Kingdom and EEA: Where this report is disseminated in the United Kingdom or elsewhere in the EEA by BTG Pactual UK, this report is issued by BTG Pactual UK only to, and is directed by
BTG Pactual UK at, those who are the intended recipients of this report. This report has been classified as investment research and should not be considered a form of advertisement or financial
promotion under the provisions of FSMA 2000 (Sect. 21(8)).This communication may constitute an investment recommendation under the Market Abuse Regulation 2016 (“MAR”) and, as required by
MAR, the investment recommendations of BTG Pactual personnel over the past 12 months can be found by clicking on https://www.btgpactual.com/research/. Please also consult our website for all
relevant disclosures of conflicts of interests relating to instruments covered by this report. While all reasonable effort has been made to ensure that the information contained is not untrue or misleading
at the time of publication, no representation is made as to its accuracy or completeness and it should not be relied upon as such. Past performances offer no guarantee as to future performances. All
opinions expressed in the present document reflect the current context and which is subject to change without notice.
Dubai: This research report does not constitute or form part of any offer to issue or sell, or any solicitation of any offer to subscribe for or purchase, any securities or investment products in the UAE
(including the Dubai International Financial Centre) and accordingly should not be construed as such. Furthermore, this information is being made available on the basis that the recipient acknowledges
and understands that the entities and securities to which it may relate have not been approved, licensed by or registered with the UAE Central Bank, Emirates Securities and Commodities Authority
or the Dubai Financial Services Authority or any other relevant licensing authority or governmental agency in the UAE. The content of this report has not been approved by or filed with the UAE Central
Bank or Dubai Financial Services Authority.
United Arab Emirates Residents: This research report, and the information contained herein, does not constitute, and is not intended to constitute, a public offer of securities in the United Arab
Emirates and accordingly should not be construed as such. The securities are only being offered to a limited number of sophisticated investors in the UAE who (a) are willing and able to conduct an
independent investigation of the risks involved in an investment in such securities, and (b) upon their specific request. The securities have not been approved by or licensed or registered with the UAE
Central Bank or any other relevant licensing authorities or governmental agencies in the UAE. This research report is for the use of the named addressee only and should not be given or shown to
any other person (other than employees, agents or consultants in connection with the addressee's consideration thereof). No transaction will be concluded in the UAE and any enquiries regarding the
securities should be made with BTG Pactual CTVM S.A. at +55 11 3383-2638, Avenida Brigadeiro Faria Lima, 3477, 14th floor, São Paulo, SP, Brazil, 04538-133.

The Ecommerce Handbook

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

The Ecommerce Handbook

Uploaded by

Copyright:

Available Formats

Retail | Thematic Research

The Ecommerce Handbook:

GMV estimates post-pandemic show legacy from digital shift

We also downgraded Via to Neutral, on the back of a combination of competitive

Executive summary – High growth, low profit: the main

In 2016, we published an in-depth report on the Brazilian e-commerce sector entitled

What-to-watch: 5-minute reading

• In Brazil three main concerns have weighed on stocks’ performance recently:

• In our estimates, after growing 66% in 2020, we assume Brazilian ecommerce

• Only companies focusing on providing a superior consumer experience

• We also downgraded Via to Neutral, on the back of a combination of

• While ecommerce remains a structural call for us, we prefer LT exposure to

Our new estimates for the ecommerce sector

Table 1: Comp table: Ecommerce retailers (TPs for YE22)

Table 2: Dashboard Ecommerce Retailers (R$mn)

Why is the ecommerce sector still a LT Buy?

Source: Statista, BTG Pactual

(i) deceleration in Brazilian ecommerce, which is particularly strong for

(iii) concerns on the sustainable margins of ecommerce players, given the

Table 4: # of orders (mn) – BZ ecommerce Table 5: Average ticket (R$) – BZ ecommerce

Orders Growth y/y Average Ticket Growth y/y

Table 6: Breakdown by category – Brazilian ecommerce (2020)

5.7% 6.0% 5.7% 5.7%

Source: Neotrust and BTG Pactual

Table 7: Brazilian e-commerce GMV (R$mn) and % of total retail sales

2020 2021E 2022E 2023E 2024E 2025E

Source: NeoTrust and BTG Pactual

Table 8: Brazilian ecommerce market segmentation (R$mn)

Taobao-like market Tmall-like market

Source: BTG Pactual

Consumer health 2.8% 15.9% 23.8% 34.1% 21.7% 25.0%

Apparel and Footwear 18.6% 37.5% 39.7% 35.0% 37.0% 39.0%

Beauty and Personal

Electronics 31.2% 67.0% 50.7% 43.8% 49.5% 17.9%

Consumer Appliances 42.8% 25.8% 46.5% 45.4% 36.0% 19.9%

Pet Care 6.8% 25.8% 14.3% 48.0% 13.0% 58.7%

Home Care 2.1% 5.5% 12.3% 27.7% 5.8% 17.4%

Source: Euromonitor and BTG Pactual

Table 10: Ecommerce sales breakdown – by region (1H21)

Importance, Contribution and Variation ʹ1H20 vs. 1H21

24% 57% 35% 36% 52% 0%

Importance Contribution Variation

Source: eBit and BTG Pactual

22.9% 21.1% 19.4% 17.5%

31.2% 34.6% 35.1% 35.3% 35.5%

Source: Companie s, Neotrust and BTG Pactual

International competition and the consolidation call

Disturbing a (not so) calm status quo - analyzing Shopee in LatAm

• Launched in 2015, ecommerce (Shopee) revenues exceeded those of gaming

• Shopee took just two years to become Brazil's most-downloaded shopping

• Leading players in Brazil have well-established operations, having invested in

proposition despite a more aggressive approach to attract sellers - indeed,

• It has recently also seen momentum in Latin America. In Brazil, we estimate

and costs, as well as to provide a frictionless experience to consumers (a key

Valuing ecommerce players in current volatile scenario

We also downgraded Via to Neutral, on the back of a combination of competitive

Table 12: Comp table: Ecommerce retailers (TPs for YE22)

Table 13: Dashboard of Ecommerce Retailers (R$mn)

Mobile and Telephones Appliances

With an omnichannel proposition, MGLU stores boost brand awareness (store as a

Table 16: Three-phase DCF model – US$mn

Year Year Year Year Year