MercadoLibre Inc.

Early in an accelerated eComm revolution;

raising PO to $1,100
Reiterate Rating: BUY | PO: 1,100.00 USD | Price: 858.86 USD

Raising MELI price objective from $800 to $1,100 09 June 2020 Corrected

We are raising our 12-month price objective on Mercadolibre (MELI) from $800 to R$1,100 Equity
on accelerating growth. We are also raising our projected 5-year CAGRs for gross
merchandise value (GMV) and total payments value (TPV) from 25%/54% to 36%/64%. Our Key Changes
price objective is based on a 2021E EV/GMV multiple of 1.4x (up from 1.0x to reflect
(US$) Previous Current
higher growth expectations) and EV/TPV of 0.3x (unchanged), in line with regional peers
Price Obj. 800.00 1,100.00
but a premium to international benchmarks, due to low Latam penetration rates and faster
2020E Rev (m) 3,173.2 3,288.7
growth. Multiple data sources indicate material regional eCommerce acceleration (see
2021E Rev (m) 4,444.1 4,860.0
Charts 1-3), and we think MELI improvements in pricing, assortments, and service could
2022E Rev (m) 6,527.5 7,627.9
contribute to strength vs prior run rates. We also look for an eventual reacceleration of off-
2020E EPS -1.23 -0.95
platform TPV as MELI optimizes loyalty incentives and consumers gravitate toward
2021E EPS 0.21 0.27
contactless payments. We adjust our estimates and reiterate our Buy rating.

Growth and adoption rates should prove sticky Robert E. Ford Aguilar, CFA
Research Analyst
While some expect a channel reversion to physical retail as malls and stores re-open, we BofAS
+1 646 855 5439
think behaviors are likely to prove sticky. Transmission concern is expected to extend [email protected]
self-isolation, particularly among more affluent consumers, galvanizing habits. We also Melissa Byun, CFA
argue that strong and rapidly improving assortments, pricing and service levels should Research Analyst
BofAS
further fuel an irreversible trend toward eCommerce. MELI is also aggressively extending +1 646 855 3177
[email protected]
logistics and distribution infrastructure, scaling in consumables, sharpening pricing, and
adding thousands of new sellers and cross border offerings. Vinicius Strano, CFA >>
Research Analyst
Merrill Lynch (Brazil)
Latam eCommerce growth likely to exceed other regions +55 11 2188 4541
[email protected]
Latin American eCommerce penetration lags most benchmarks (see Chart 7), enabling it
to grow at higher rates for longer, in our view. Platform improvements are also highly
symbiotic, contributing to relative appeal and adoption. Leading regional retail
Stock Data
incumbents may have also widely under-prioritized eCommerce, and many have
excessive debt, as consumer credit and mall portfolios come under pressure, limiting Price 858.86 USD
ability to defend franchises or more aggressively invest in omni-channel capabilities.
Unauthorized redistribution of this report is prohibited. This report is intended for [email protected] C

Price Objective 1,100.00 USD

Date Established 9-Jun-2020
Estimates (Dec)
Investment Opinion C-1-9
(US$) 2018A 2019A 2020E 2021E 2022E
52-Week Range 422.22 USD - 877.68 USD
EPS (0.82) (3.69) (0.95) 0.27 0.78
EPS Change (YoY) NM -350.0% 74.3% NM 188.9% Mrkt Val (mn) / Shares Out 42,873 USD / 49.9
DPS 0.15 0 0 0 0 (mn)
Average Daily Value (mn) 504.67 USD
Valuation (Dec) BofA Ticker / Exchange MELI / NAS
2018A 2019A 2020E 2021E 2022E Bloomberg / Reuters MELI US / MELI.OQ
P/E NM NM NM 3,181.0x 1,101.1x ROE (2020E) -2.5%
Dividend Yield 0% 0% 0% 0% 0%
Net Dbt to Eqty (Dec-2019A) -107.2%
EV / EBITDA* NM NM NM 470.9x 211.7x
Free Cash Flow Yield* 0.2% 0.3% 0.6% 0.9% 1.3%
* For full definitions of iQ method SM measures, see page 9.

>> Employed by a non-US affiliate of BofAS and is not registered/qualified as a research analyst under
the FINRA rules.
Refer to "Other Important Disclosures" for information on certain BofA Securities entities that take
responsibility for the information herein in particular jurisdictions.
BofA Securities does and seeks to do business with issuers covered in its research reports. As
a result, investors should be aware that the firm may have a conflict of interest that could
affect the objectivity of this report. Investors should consider this report as only a single
factor in making their investment decision.
Refer to important disclosures on page 10 to 12. Analyst Certification on page 8. Price
Objective Basis/Risk on page 8. 12152005

Timestamp: 09 June 2020 01:51AM EDT

iQprofile MercadoLibre Inc.
SM

iQmethod SM – Bus Performance* Company Sector

(US$ Millions) 2018A 2019A 2020E 2021E 2022E
Return on Capital Employed -1.6% -1.6% 1.2% 2.5% 3.6% Internet/e-Commerce
Return on Equity -11.0% -15.5% -2.5% 0.7% 2.1%
Operating Margin -4.8% -6.7% -2.8% -0.7% 0.5% Company Description
Free Cash Flow 72 138 277 393 562
MercadoLibre is Latin America's largest online
marketplace operator, with a presence in 20
iQmethod SM – Quality of Earnings*
countries, including Brazil, Argentina, Mexico,
(US$ Millions) 2018A 2019A 2020E 2021E 2022E
Colombia, Chile and Venezuela. The company also
Cash Realization Ratio NM NM NM 49.8x 26.2x
Asset Replacement Ratio 2.2x 1.9x 2.1x 2.4x 2.9x operates online classifieds with listings for real
Tax Rate 44.1% NM 15.7% 34.0% 33.0% estate, vehicles, and services, an online payments
Net Debt-to-Equity Ratio -56.7% -107.2% -119.2% -137.0% -161.1% solution, MercadoPago, and shipping solution,
Interest Cover -1.2x -2.3x -0.9x -0.2x 0.2x MercadoEnvios. MELI completed a $333mln IPO on
August 15, 2007. The shares trade exclusively on
Nasdaq.
Income Statement Data (Dec)
(US$ Millions) 2018A 2019A 2020E 2021E 2022E
Sales 1,440 2,296 3,289 4,860 7,628 Investment Rationale
% Change 3.0% 59.5% 43.2% 47.8% 57.0%
Gross Profit 697 1,102 1,547 2,221 3,539 MELI is Latin America's eCommerce leader.
% Change -3.1% 58.1% 40.3% 43.6% 59.3% Regional penetration rates remain low, and we see
EBITDA (24) (80) 2 87 193
considerable opportunity for further market
% Change NM -237.0% NM NM 122.4%
Net Interest & Other Income 4 46 37 52 18 growth. MELI is systematically improving Net
Net Income (Adjusted) (37) (180) (47) 14 39 Promoter Scores by reducing transaction frictions
% Change NM -391.6% 73.7% NM 182.9% and increasing control of payments and fulfillment.
Rollout of marketplace enhancements is driving
faster growth in smaller markets. Inventory
Free Cash Flow Data (Dec)
centralization could also enable MELI to move into
(US$ Millions) 2018A 2019A 2020E 2021E 2022E
more relevant and higher velocity categories. FX
Net Income from Cont Operations (GAAP) (37) (172) (46) 14 39
Depreciation & Amortization 46 73 95 118 154 and headline risk.
Change in Working Capital 208 181 392 495 NA
Deferred Taxation Charge NA NA NA NA NA
Other Adjustments, Net (44) 193 40 54 822
Capital Expenditure (102) (137) (203) (288) (452)
Free Cash Flow 72 138 277 393 562
% Change -36.7% 92.9% 100.1% 41.9% 43.0% Stock Data

Average Daily Volume 587,599

Balance Sheet Data (Dec)

(US$ Millions) 2018A 2019A 2020E 2021E 2022E
Cash & Equivalents 926 3,049 3,629 4,729 6,985
Trade Receivables 491 598 930 1,669 3,152
Other Current Assets 94 143 208 321 523
Property, Plant & Equipment 166 244 316 486 785
Other Non-Current Assets 563 749 837 994 1,208
Total Assets 2,240 4,782 5,920 8,198 12,653
Short-Term Debt 133 186 679 1,386 3,080
Other Current Liabilities 1,033 1,566 2,294 3,719 6,237
Long-Term Debt 602 631 637 665 696
Other Non-Current Liabilities 134 139 201 305 478
Total Liabilities 1,903 2,700 3,980 6,244 10,661
Total Equity 337 2,082 1,940 1,954 1,992
Total Equity & Liabilities 2,240 4,782 5,920 8,198 12,653
* For full definitions of iQ method SM measures, see page 9.

2 MercadoLibre Inc. | 09 June 2020

Tracking services suggest sharp eCommerce acceleration
eCommerce tracking services are indicating sharp acceleration in growth across Latin
American markets. Growth rates also appear to be well above other regions, and follow
significant improvements in order tracking, shipping speeds and overall service levels
across platforms. Online assortments have also grown by orders of magnitude as
marketplaces add new sellers and SKUs. And, while relatively small in terms of
incremental items, we estimate that the addition of shelf-stable consumables categories
to MELI’s assortments more than doubles its total addressable market.

Chart 1: eCommerce in Brazil may have doubled in May… Chart 2: … Argentina also appears to be accelerating

126.9% 111%

84%
81.6%

26.7%
18.4%

1Q19 1Q20 April May * April April 20th-30th

Note: May figures through May 24th. Figures exclude MELI Source: Cámara Argentina de Comercio Electrónico, Kantar
Source: Compre & Confie

Chart 3: Adyen processed transaction volumes in Mexican eCommerce were up over 4x in late May
Weekly Processed Volume Growth

400%

300%

200%

100%

0%
1-Jan 15-Jan 29-Jan 12-Feb 26-Feb 11-Mar 25-Mar 8-Apr 22-Apr 6-May 20-May
Source: Adyen

MELI’s relative underperformance may be changing

In 2019, MELI’s Brazilian GMV rose 23.0% in BRL vs. organic rates of 25.1% and an
estimated 52.1% at B2W and Magazine Luiza, respectively. We attribute differences in
growth rates to the earlier maturation of rival marketplaces and greater consumables
exposure, while MELI addressed logistics and shipping performance gaps. MELI sellers
also appear to have lost leadership in key categories in 2019, introducing incremental
challenge, as competitors pressed for market share. In 2019, MELI’s GMV was still an
estimated 2.4x that of Magazine Luiza and about 60% greater than industry #2, B2W.
Relative growth rates, however, are triggering debate over the merits of an omni-
channel retail model vs. MELI’s greater use of third-party assets. We think MELI is likely

MercadoLibre Inc. | 09 June 2020 3

addressing multiple assortment, delivery and pricing issues within its platform and look
for performance gaps to materially narrow over the coming months, as MELI deploys
remedies and builds out distribution infrastructure. MELI’s slower 1Q growth is also, in
part, attributable to its historical outperformance in apparel, auto parts and other more
elastic categories, which initially contracted in the wake of the COVID-19 pandemic, as
well as a much later entry into consumables, in our view.

Chart 4: MELI’s eCommerce growth Chart 5: Magazine Luiza’s eCommerce growth

eCommerce GMV, BRL bln eCommerce GMV*, BRL bln

CAGR ('16-19): 39.3% 29.9 CAGR ('16-19): 65.5%

24.3

17.4
+15.0% y/y 12.4
11.1 +72.6% y/y
6.6 7.6 7.0
4.4 4.1
2.7 2.4

2016 2017 2018 2019 1Q19 1Q20 2016 2017 2018 2019 1Q19 1Q20
Source: Company financials, BofA Global Research *Includes marketplace commissions; Netshoes consolidated in June 2019
Source: Company financials, BofA Global Research

Chart 6: B2W’s eCommerce growth

eCommerce GMV, BRL bln

CAGR ('16-19): 14.7%

18.8
15.0
12.5 12.8
+27.3% y/y

3.6 4.6

2016 2017 2018 2019 1Q19 1Q20

Source: Company financials, BofA Global Research

4 MercadoLibre Inc. | 09 June 2020

Chart 7: We think MELI’s recent growth has been particularly impressive in Chile, Colombia & Mexico
MercadoLibre's # of orders, % Chg y/y (from April 24th until May 3rd)

125%
119%
112%

52%
47%
39%

Brazil Uruguay Argentina Mexico Colombia Chile

Source: MercadoLibre

Five factors suggest an eventual reacceleration of Brazil

In addition to an industry-wide acceleration in Brazilian eCommerce growth, we believe a
greater normalization of core categories as well as multiple price, assortment and
service level efforts are capable of driving intermediate- to long-term MELI growth rates
in excess of industry averages.

(1) The current environment is driving new buyers, new sellers and greater
frequency to MELI’s platform. And, an extended outlook for social spacing and
self-isolation is likely to galvanize eCommerce habits, as MELI continues to
improve value propositions, relevance and experiences.

(2) About one-third of MELI’s GMV is estimated to come from auto parts and
apparel, which contracted in March, and are now gradually recovering from
trough levels. As behavior increasingly normalizes, we look for auto parts and
apparel to behave in line with aggregated BAC credit and debit card data
(Exhibit 2), and ultimately converge with wider averages.

(3) MELI pricing had lost competitiveness in several key categories, and we expect
sharper 1P offerings, category-specific take rates, and the introduction of a
buy-box or MELI choice label to improve overall pricing, while enriching
assortment.

(4) MELI’s hybrid move into high-velocity, shelf-stable consumables more than
doubles its total addressable market, while ensuring competitive pricing, in our
view. The move had been planned for 2H20, but was pulled forward as the
impact of COVID-19 became apparent. While early, we look for offerings to
further improve in terms of breadth and overall value. We also look for
consumables to help further improve delivery densities and lower last mile
costs.

(5) In 1Q20, an estimated 25% of MELI shipments were made via its private
logistics and shipping stack with delivery times of 2 days or less. We look for
the addition of new distribution centers, cross docking facilities and smaller
shipping nodes to expand 1-2 day fulfillment to about 70% of GMV within 2-3
years, driving further material improvements in service levels and conversion.

MercadoLibre Inc. | 09 June 2020 5

Chart 8: eCommerce coming from a very low base in Latin America Table 1: Latin America eCommerce penetration by country
eCommerce gross sales as a % of total retail sales, 2019 % of gross sales, 2019
Country Online Penetration
27.1% 27.0% Brazil 5.8%
Chile 5.7%
Argentina 5.3%
Mexico 4.9%
Uruguay 2.3%
18.2% Colombia 2.2%
Peru 2.1%
15.2%14.7%
Other Latam 2.9%
12.8% Latin America 4.7%
11.6%
10.5% Source: IBGE, eBit, Euromonitor, BofA Global Research
9.6% 9.0%
7.0%
6.1%
4.7% 4.6%

1.6%

Source: IBGE, eBit, Euromonitor, BofA Global Research

Exhibit 1: We think US eCommerce card data reflects Latam consumption patterns, and could explain some of MELI’s relative weakness given its strength in
apparel and auto parts
Best Performers Worst Performers

Restaurant / Sports Home Sporting eCommerce Clothing, Department Clothing, ex- Health & Autoparts &
Grocery Electronics
Food Delivery Apparel Furnishings Goods Overall Total Stores Sports Personal Care Services

y/y Growth
January 19% 40% 14% -4% 29% 5% 13.3% 7% 16% 8% 6% 8%
February 25% 43% 18% -3% 35% 9% 17.4% 10% 15% 11% 9% 11%
March 56% 38% 35% -18% 32% 39% 24.4% -6% 8% 2% 18% -4%
April 184% 108% 98% 33% 86% 100% 73.0% 40% 54% 41% 64% 17%
May 167% 140% 126% 124% 99% 90% 82.5% 65% 61% 61% 56% 28%
Week ending:
3/24/2020 60% 39% 52% -33% 27% 79% 25.1% -19% 6% -12% 27% -14%
3/31/2020 87% 60% 53% -28% 35% 70% 32.2% -10% 12% -2% 25% -15%
4/7/2020 140% 77% 60% -28% 40% 56% 44.4% 3% 14% 6% 27% -8%
4/14/2020 156% 89% 45% 0% 44% 55% 45.0% 8% 15% 9% 36% -9%
4/16 & 4/15 191% 123% 155% 21% 88% 112% 81.5% 49% 68% 52% 70% 30%
4/23/2020 185% 133% 138% 67% 100% 124% 84.2% 51% 74% 50% 89% 23%
4/30/2020 182% 125% 126% 70% 90% 114% 79.0% 51% 58% 49% 46% 19%
5/7/2020 171% 128% 115% 122% 92% 100% 81.4% 63% 68% 58% 30% 24%
5/16/2020 155% 142% 124% 136% 88% 88% 79.4% 64% 63% 60% 60% 26%
5/23/2020 170% 136% 135% 127% 113% 88% 84.6% 70% 57% 66% 80% 30%
5/29/2020 163% 146% 129% 108% 107% 81% 84.7% 65% 49% 61% 75% 33%
Chg. In Growth
Wk of 5/16 vs. 5/7 -7% 10% -5% -19% -6% -7% 0.1% -6% -7% -5% -6% 3%
May vs. April -17% 32% 28% 91% 13% -10% 9.6% 25% 7% 20% -7% 11%
Source: BAC Internal Data

6 MercadoLibre Inc. | 09 June 2020

MercadoPago app downloads are accelerating
Chart 9: Brazil Chart 10: Argentina Chart 11: Mexico
7-day moving average of daily downloads 7-day moving average of daily downloads 7-day moving average of daily downloads

90,000 45,000 25,000

80,000 40,000
20,000
70,000 35,000
60,000 30,000
15,000
50,000 25,000
40,000 20,000
10,000
30,000 15,000
20,000 10,000 5,000
10,000 5,000
0 0 0
6-Feb
18-Feb

6-Feb
18-Feb
2-Mar

1-May
13-May
25-May
6-Jun

2-Mar

1-May
14-Mar
26-Mar
7-Apr

13-May
25-May
6-Jun
1-Jan
13-Jan
25-Jan

19-Apr

1-Jan

14-Mar
26-Mar
7-Apr
13-Jan
25-Jan

19-Apr

13-Jan
25-Jan

18-Feb

19-Apr

13-May
25-May
6-Jun
1-Jan

6-Feb

14-Mar
26-Mar
7-Apr
2-Mar

1-May
2019 2020 2019 2020 2019 2020
Source: SensorTower Source: SensorTower Source: SensorTower

Table 2: Marketplace valuation comparables

Prices as of June 08th

Company BofA BofA Price Market Cap EV/GMV

Price
Name Ticker rating Crncy (USD mln) 2019A 2020E 2021E
B2W BCGVY C-1-9 93.0 BRL 9,843 2.37x 1.94x 1.48x
Magazine Luiza MGZZF C-1-8 62.4 BRL 20,449 3.42x 2.89x 1.99x
MercadoLibre MELI C-1-9 858.9 USD 42,694 2.90x 2.37x 1.73x
Amazon AMZN B-1-9 2,524.1 USD 1,256,982 3.02x 2.58x 2.21x
eBay EBAY B-2-9 48.7 USD 38,781 0.54x 0.49x 0.45x
Alibaba BABA B-1-9 219.0 USD 587,516 0.61x 0.54x 0.46x
Pinduoduo PDD C-2-9 68.3 USD 79,411 0.56x 0.39x 0.27x
Average 1.92x 1.60x 1.23x
Source: Bloomberg, BofA Global Research

Table 3: Payments valuation comparables

Prices as of June 08th
Company BofA BofA Price Market Cap EV/TPV
Price
Name Ticker rating Crncy (USD mln) 2019A 2020E 2021E
MercadoLibre MELI C-1-9 858.9 USD 42,694 1.42x 0.94x 0.56x
Stone STNE C-2-9 39.3 USD 10,891 0.45x 0.46x 0.39x
PagSeguro PAGS C-1-9 36.8 USD 12,102 0.53x 0.51x 0.43x
Square SQ C-3-9 89.6 USD 38,787 0.36x 0.35x 0.25x
Paypal PYPL B-1-9 156.1 USD 183,094 0.25x 0.21x 0.16x
Cielo CIOXF C-2-8 4.6 BRL 2,550 0.02x 0.03x 0.03x
Average 0.51x 0.42x 0.30x
Source: Bloomberg, BofA Global Research

MercadoLibre Inc. | 09 June 2020 7

Price objective basis & risk
Mercadolibre (MELI)
Our price objective of $1,100 is based on a sum-of-the-parts valuation. We value
marketplace contributions at 1.4x forward-year (2021E) GMV, within the range of
valuations for physical store and first-party online retailers globally (0.2x-4x). We value
fintech revenue streams at 0.3x forward-year (2021E) TPV.This multiple at the higher-
end of global and local marketplace and payments platform peers (0.03x-0.5x), based on
our more elevated growth expectations.

Risks to our price objective are slower economic growth, an erosion in investor
sentiment, macroeconomic sluggishness, currency weakness or devaluation, political
turmoil, competition or new market entrants, execution challenges, greater-than-
anticipated margin investment, higher delinquencies, rising working capital needs,
technological problems, cost increases, regulatory difficulties, and tax changes.

Analyst Certification
We, Robert E. Ford Aguilar, CFA and Vinicius Strano, CFA, hereby certify that the views
each of us has expressed in this research report accurately reflect each of our respective
personal views about the subject securities and issuers. We also certify that no part of
our respective compensation was, is, or will be, directly or indirectly, related to the
specific recommendations or view expressed in this research report.

8 MercadoLibre Inc. | 09 June 2020

Latin America - Consumer Coverage Cluster
Investment rating Company BofA Ticker Bloomberg symbol Analyst
BUY
Arcos Dorados ARCO ARCO US Robert E. Ford Aguilar, CFA
Arezzo & Co XARZF ARZZ3 BZ Robert E. Ford Aguilar, CFA
B2W BCGVY BTOW3 BZ Robert E. Ford Aguilar, CFA
CBD CBD CBD US Robert E. Ford Aguilar, CFA
CBD GPSAF PCAR3 BZ Robert E. Ford Aguilar, CFA
Chedraui GCHEF CHDRAUIB MM Robert E. Ford Aguilar, CFA
Grupo Carrefour Brasil XLDPF CRFB3 BZ Robert E. Ford Aguilar, CFA
Hypera Pharma XHPYF HYPE3 BZ Robert E. Ford Aguilar, CFA
Lojas Americanas LOJPF LAME4 BZ Robert E. Ford Aguilar, CFA
Magazine Luiza MGZZF MGLU3 BZ Robert E. Ford Aguilar, CFA
Marisa Lojas SA XZSMF AMAR3 BZ Robert E. Ford Aguilar, CFA
Mercadolibre MELI MELI US Robert E. Ford Aguilar, CFA
Natura &Co Holding SA XZVAF NTCO3 BZ Robert E. Ford Aguilar, CFA
Vivara XUVZF VIVA3 BZ Robert E. Ford Aguilar, CFA
NEUTRAL
BK Brasil XUATF BKBR3 BZ Robert E. Ford Aguilar, CFA
Cia. Hering HRTSF HGTX3 BZ Melissa Byun, CFA
KimberlyClark Mx KCDMF KIMBERA MM Robert E. Ford Aguilar, CFA
Lojas Renner SA LORPF LREN3 BZ Robert E. Ford Aguilar, CFA
UNDERPERFORM
Alsea ALSSF ALSEA* MM Robert E. Ford Aguilar, CFA
Cencosud XCSCF CENCOSUD CI Robert E. Ford Aguilar, CFA
CVC CVCBF CVCB3 BZ Robert E. Ford Aguilar, CFA
El Puerto de Liverpool ELPQF LIVEPOLC MM Robert E. Ford Aguilar, CFA
FEMSA FMX FMX US Robert E. Ford Aguilar, CFA
FEMSA FMXUF FEMSAUBD MM Robert E. Ford Aguilar, CFA
Soriana ONZBF SORIANAB MM Robert E. Ford Aguilar, CFA
Walmex WMMVF WALMEX* MM Robert E. Ford Aguilar, CFA
Walmex WMMVY WMMVY US Robert E. Ford Aguilar, CFA
RSTR
Via Varejo S.A. GBXPF VVAR3 BZ Robert E. Ford Aguilar, CFA
RVW
Falabella XDIYF FALAB CI Robert E. Ford Aguilar, CFA

iQmethod SM Measures Definitions

Business Performance Numerator Denominator
Return On Capital Employed NOPAT = (EBIT + Interest Income) * (1 - Tax Rate) + Goodwill Amortization Total Assets – Current Liabilities + ST Debt + Accumulated Goodwill
Amortization
Return On Equity Net Income Shareholders’ Equity
Operating Margin Operating Profit Sales
Earnings Growth Expected 5-Year CAGR From Latest Actual N/A
Free Cash Flow Cash Flow From Operations – Total Capex N/A
Quality of Earnings
Cash Realization Ratio Cash Flow From Operations Net Income
Asset Replacement Ratio Capex Depreciation
Tax Rate Tax Charge Pre-Tax Income
Net Debt-To-Equity Ratio Net Debt = Total Debt, Less Cash & Equivalents Total Equity
Interest Cover EBIT Interest Expense
Valuation Toolkit
Price / Earnings Ratio Current Share Price Diluted Earnings Per Share (Basis As Specified)
Price / Book Value Current Share Price Shareholders’ Equity / Current Basic Shares
Dividend Yield Annualised Declared Cash Dividend Current Share Price
Free Cash Flow Yield Cash Flow From Operations – Total Capex Market Cap. = Current Share Price * Current Basic Shares
Enterprise Value / Sales EV = Current Share Price * Current Shares + Minority Equity + Net Debt + Sales
Other LT Liabilities
EV / EBITDA Enterprise Value Basic EBIT + Depreciation + Amortization
iQ method SMis the set of BofA Global Research standard measures that serve to maintain global consistency under three broad headings: Business Performance, Quality of Earnings, and validations. The key features of
iQmethod are: A consistently structured, detailed, and transparent methodology. Guidelines to maximize the effectiveness of the comparative valuation process, and to identify some common pitfalls.
iQ database ® is our real-time global research database that is sourced directly from our equity analysts’ earnings models and includes forecasted as well as historical data for income statements, balance sheets, and cash
flow statements for companies covered by BofA Global Research.
iQ profile SM, iQ method SM are service marks of Bank of America Corporation.iQ database ®is a registered service mark of Bank of America Corporation.

MercadoLibre Inc. | 09 June 2020 9

Disclosures
Important Disclosures
Mercadolibre (MELI) Price Chart

The Investment Opinion System is contained at the end of the report under the heading "Fundamental Equity Opinion Key". Dark grey shading indicates the security is restricted with the opinion suspended. Medium grey
shading indicates the security is under review with the opinion withdrawn. Light grey shading indicates the security is not covered. Chart is current as of a date no more than one trading day prior to the date of the report.

Equity Investment Rating Distribution: Technology Group (as of 31 Mar 2020)

Coverage Universe Count Percent Inv. Banking Relationships* Count Percent
Buy 162 60.45% Buy 98 60.49%
Hold 47 17.54% Hold 33 70.21%
Sell 59 22.01% Sell 28 47.46%
Equity Investment Rating Distribution: Global Group (as of 31 Mar 2020)
Coverage Universe Count Percent Inv. Banking Relationships* Count Percent
Buy 1602 52.15% Buy 1005 62.73%
Hold 713 23.21% Hold 463 64.94%
Sell 757 24.64% Sell 382 50.46%
* Issuers that were investment banking clients of BofA Securities or one of its affiliates within the past 12 months. For purposes of this Investment Rating Distribution, the coverage universe includes only stocks. A stock
rated Neutral is included as a Hold, and a stock rated Underperform is included as a Sell.

FUNDAMENTAL EQUITY OPINION KEY: Opinions include a Volatility Risk Rating, an Investment Rating and an Income Rating. VOLATILITY RISK RATINGS, indicators of potential
price fluctuation, are: A - Low, B - Medium and C - High. INVESTMENT RATINGS reflect the analyst’s assessment of a stock’s: (i) absolute total return potential and (ii)
attractiveness for investment relative to other stocks within its Coverage Cluster (defined below). There are three investment ratings: 1 - Buy stocks are expected to have a total
return of at least 10% and are the most attractive stocks in the coverage cluster; 2 - Neutral stocks are expected to remain flat or increase in value and are less attractive than
Buy rated stocks and 3 - Underperform stocks are the least attractive stocks in a coverage cluster. Analysts assign investment ratings considering, among other things, the 0-12
month total return expectation for a stock and the firm’s guidelines for ratings dispersions (shown in the table below). The current price objective for a stock should be
referenced to better understand the total return expectation at any given time. The price objective reflects the analyst’s view of the potential price appreciation (depreciation).
Investment rating Total return expectation (within 12-month period of date of initial rating) Ratings dispersion guidelines for coverage cluster*
Buy ≥ 10% ≤ 70%
Neutral ≥ 0% ≤ 30%
Underperform N/A ≥ 20%
* Ratings dispersions may vary from time to time where BofA Global Research believes it better reflects the investment prospects of stocks in a Coverage Cluster.
INCOME RATINGS, indicators of potential cash dividends, are: 7 - same/higher (dividend considered to be secure), 8 - same/lower (dividend not considered to be secure) and 9 - pays
no cash dividend. Coverage Cluster is comprised of stocks covered by a single analyst or two or more analysts sharing a common industry, sector, region or other classification(s). A stock’s
coverage cluster is included in the most recent BofA Global Research report referencing the stock.

Price charts for the securities referenced in this research report are available at https://pricecharts.baml.com, or call 1-800-MERRILL to have them mailed.
BofAS or one of its affiliates acts as a market maker for the equity securities recommended in the report: Mercadolibre.
BofAS or an affiliate has received compensation from the issuer for non-investment banking services or products within the past 12 months: Mercadolibre.
The issuer is or was, within the last 12 months, a non-securities business client of BofAS and/or one or more of its affiliates: Mercadolibre.
BofAS or one of its affiliates is willing to sell to, or buy from, clients the common equity of the issuer on a principal basis: Mercadolibre.
The issuer is or was, within the last 12 months, a securities business client (non-investment banking) of BofAS and/or one or more of its affiliates: Mercadolibre.
BofA Global Research personnel (including the analyst(s) responsible for this report) receive compensation based upon, among other factors, the overall profitability of Bank of America
Corporation, including profits derived from investment banking. The analyst(s) responsible for this report may also receive compensation based upon, among other factors, the overall
profitability of the Bank’s sales and trading businesses relating to the class of securities or financial instruments for which such analyst is responsible.

Other Important Disclosures

From time to time research analysts conduct site visits of covered issuers. BofA Global Research policies prohibit research analysts from accepting payment or reimbursement for travel
expenses from the issuer for such visits.
Prices are indicative and for information purposes only. Except as otherwise stated in the report, for the purpose of any recommendation in relation to: (i) an equity security, the price

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referenced is the publicly traded price of the security as of close of business on the day prior to the date of the report or, if the report is published during intraday trading, the price referenced is
indicative of the traded price as of the date and time of the report; or (ii) a debt security (including equity preferred and CDS), prices are indicative as of the date and time of the report and are
from various sources including BofA Securities trading desks.
The date and time of completion of the production of any recommendation in this report shall be the date and time of dissemination of this report as recorded in the report timestamp.

Recipients who are not institutional investors or market professionals should seek the advice of their independent financial advisor before considering information in this report in connection
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This information: has been approved for publication and is distributed in the United Kingdom (UK) to professional clients and eligible counterparties (as each is defined in the rules of the FCA
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General Investment Related Disclosures:
Taiwan Readers: Neither the information nor any opinion expressed herein constitutes an offer or a solicitation of an offer to transact in any securities or other financial instrument. No part of
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This report may contain a short-term trading idea or recommendation, which highlights a specific near-term catalyst or event impacting the issuer or the market that is anticipated to have a
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Foreign currency rates of exchange may adversely affect the value, price or income of any security or financial instrument mentioned herein. Investors in such securities and instruments,
including ADRs, effectively assume currency risk.

MercadoLibre Inc. | 09 June 2020 11

UK Readers: The protections provided by the U.K. regulatory regime, including the Financial Services Scheme, do not apply in general to business coordinated by BofA Securities entities located
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