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Important disclosures/certifications are in the “Important Disclosures” section of this report. U.S. investors’ inquiries should be directed to Santander Investment Securities Inc. at (212) 583-4629/ (212) 350-3918. Latin American Equity Research Flashnote New York, February 25, 2009 Mexico – Beverages Alexander Robarts Sergio MatsumotoNew York: Santander Investment Securities Inc. New York: Santander Investment Securities Inc.(212) 350-0723 (212) 350-3981 URRENT US$1.57/M$23.33 ARGET RICEUS$2.25/M$27.00 News On February 25, Arca reported its 4Q08 results, in line with our estimates and previously released guidance, with consolidated EBITDA up 5.8% YoY in nominal peso terms. Bloomberg ARCA* 52-Week Range (US$) 3.99-1.58 2007E P/E Rel to IPC (x) 0.6 2007E P/E Rel to Soft Drinks (x) 0.5 IPC (US$) 1,234 3-Yr CAGR (07-10E) 6.8% Market Capitalization (US$ Mn) 1,265 Float (%) 46 3-Mth Avg Daily Vol (US$Mn) 0.54 Shares Outst Mn 806 Net Debt/Equity (x) 0.14 Book Value per Share (US$) 1.30 Estimates and Valuation Ratios 2007 2008E 2009E 2010E (M$) 2,484 2,937 2,689 3,037 Current EPS 3.08 3.64 3.34 3.77 228 267 228 249 Current EPS 0.28 0.33 0.28 0.31 P/E (x) 5.6 4.7 5.6 5.1 P/Sales (x) 0.7 0.7 0.6 0.6 P/CE (x) 4.0 3.7 4.0 3.7 FV/Sales (x) 0.7 0.7 0.6 0.6 FCF Yield (%) 10.3 -6.2 12.8 16.0 Div per Share (US$) 0.19 0.09 0.15 0.19 Div Yield (%) 11.9 5.5 9.8 12.0 Sources: Bloomberg, Company reports, and Santander estimates. News/Analysis: On February 25, Arca reported its 4Q08 results, in line with our estimates and previously released guidance, with consolidated EBITDA up 5.8% YoY in nominal peso terms. Arca’s Arca: Flashnote U.S. investors’ inquiries should be directed to Santander Investment Securities Inc. at (212) 583-4629/ (212) 350-3918. As such, the consumption outlook in these territories appears challenging due to lower income expectations resulting from agricultural commodity prices having declined 40% from their peak, as well as the effect of a severe drought in the area, which is the worst since the 1930’s. With Bokados (approximately 4% of total sath continued at 20% YoY. This mainly reflected POS expansion throughout Mexico including the greater Mexico City area. The results highlight flattish 4Q08 EBITDA growth in Mexico due to a continuing decline in organic Mexican soft drink sales volume and higher dollar-linked input costs (as expressed in pesos). At the consolidated level, this is being mostly offset by incremental, albeit lower margin growth in Argentina. Bokados is posting ongoing robust growth, but has yet to make a material impact on consolidated EBITDA. Regarding the M$2.5 billion combined debt incurred in late 2008 (at 350 bps higher cost than the prior year), management stated during the results call that it intends to restructure the debt “well before” the maturity of the M$1.3 billion bridge loan tranche in April 2009, and this could introduce re-financing risk, in our view. Valuation and Risks: Our target price is based on a DCF analysis. Risks include more-than-expected price competition from B-brands and Pepsi, higher-than-expected raw material costs, delays in realizing synergies with Bokados, and a slower-than-expected turnaround in Argentina’s operations. Arca – Fourth-Quarter 2008 Results U.S. Dollars in Millions Mexican Pesos in Millionsa S. Est % vs. S. Est %Ch Y/Y 4Q08 S. Est % vs. S. Est %Ch Y/Y Sales 413 407 1.6% 4130.0%Sales 5,1405,059 1.6% 4,51113.9% Op Profit 63 61 3.0% 68 (7.2%)Op Profit 787764 3.0% 7445.7% EBITDA 82 80 2.0% 88 (7.1%)EBITDA 1,015995 2.0% 9605.8% EBITDA Margin 19.7% 19.7% 8 bps 21.3% (152 bps)EBITDA Mgn 19.7%19.7% 8 bps 21.3% (152 bps) Net Inc 58 56 2.7% 4528.0%Net Inc 721702 2.7% 49445.8% EPS 0.07 0.07 2.7% 0.0628.0%EPS 0.890.87 2.7% 0.6145.8% Except per share amounts. Sources: Company reports and Santander estimates. Important disclosures/certifications are in the “Important Disclosures” section of this report. U.S. investors’ inquiries should be directed to Santander Investment Securities Inc. at (212) 583-4629/ (212) 350-3918. Arca – 12-Month Relative Performance (U.S. Dollars) ArcaIPCF-08A-08J-08A-08O-08D-08F-09Sources: Bloomberg and Santander. Arca – Three-Year Stock Performance (U.S. Dollars) Source: Santander. Analyst Recommendations and Price Objectives SB: Strong Buy B: Buy UP: Underperform UR: Under Review D-05M-06J-06S-06D-06M-07J-07S-07D-07M-08J-08S-08D-08 Embotelladoras Arca (L Axis) IPC (R Axis) B $3.3011/3/06 H $2.15 H $2.70 H $3.93 H $2.2512/1/08 2009 ISCLOSURES ONTINUED Key to Investment Codes Rating Definition f Companies Covered with This Rating% of Companies Provided Investment Banking Services in the Past 12 MonthsBuy Expected to outperform the local market benchmark by more than 10%. 58.60%65.63% Hold Expected to perform within a range of 0% to 10% above the local market 31.18%21.88% Underperform/Sell Expected to underperform the local market benchmark. 9.14%12.50% Under review 1.08%– The numbers above reflect our Latin American universe as of Friday, February 6, 2009. For a discussion, if applicable, of the valuation methods used to determine the price targets included in this report and the risks to achieving these targets, please refer to the latest published research on these stocks. Research is available through your sales representative and other electronic systems. Target prices are 2009 year-end unless otherwise specified. Recommendations are based on a total return basis (expected share price appreciation + prospective dividend yield) unless otherwise specified. Stock price charts and rating histories for companies discussed in this report are also available by written request to Santander Investment Securities Inc., 45 East 53 Street, 17 Floor (Attn: Research Disclosures), New York, NY 10022 USA. Ratings are established when the firm sets a target price and/or when maintaining or reiterating the rating. Ratings may not coincide with the above methodology due to price volatility. Management reserves the right to maintain or to modify ratings on any specific stock and will disclose this in the report when it occurs. Valuation methodologies vary from stock to stock, analyst to analyst, and country to country. Any investment in Latin American equities is, by its nature, risky. A full discussion of valuation methodology and risks related to achieving the target price of the subject security is included in the body of this report. The benchmark used for local market performance is the country risk of each country plus the 1-year U.S. Treasury yield plus 6.5% of equity risk premium, unless otherwise specified. The benchmark plus the 10.0% differential used to determine the rating is time adjusted to make it comparable with the total return of the stock over the same period. For additional information about our rating methodology, please call (212) 350 3974. This research report (“report”) has been prepared by Santander Investment Securities Inc. 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The following analysts hereby certify that their views about the companies and their securities discussed in this report are accurately expressed, that their recommendations reflect solely and exclusively their personal opinions, and that such opinions were prepared in an independent and autonomous manner, including as regards the institution to which they are linked, and that they have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report, since e compensation system applying to Grupo Santander and any of its affiliates is not pegged to the pricing of any of the securities issued by the companies evaluated in the report, or to the income arising from the businesses and financial transactions carried out by Grupo Santander and any of its affiliates: Alexander Robarts, Sergio Matsumoto. Grupo Santander receives non-investment banking revenue from the subject company. 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