Tech Sector PitchOctober 20, 2020

Georges MahamaPortfolio Strategist

Burke MishoeUS Markets Analyst

Andre LimonLATAM Analyst

Apple x MicrosoftTech Sector Overview

Current Tech Holdings

Tech Sector Performance

AppleInvestment Thesis

The brand for the rest of us.

Taking a byte into services.

Hardware just works. Those who outsource, and those who don't.

AppleCompany Strategy

Company Strategy

Focus on Design and Functionality of Products

● First mover advantage ● Committed to bringing the best user experience to its

customers

Strengthening Apple Ecosystem

● Apple’s vertical integration● Opportunities to leverage relationships

Decreasing Dependence on the Sale of iPhones

● Prioritizing its services business and other divisions● Machine learning, AI, Siri

1

1

1

LeadersEcosystem

Services

AppleFinancial Highlights

Price History Q3 Financial Highlights ● 2 trillion dollar market cap

● EPS: $2.58 vs. $2.04 est.

● Revenue: $59.69 billion vs. $52.25 billion est.

● 4-to-1 Stock Split

Product Revenue Increase● iPhone:$26.42 billion vs. $22.37 billion est.

● iPad: $6.58 billion vs. $4.88 billion est.

● Mac:$7.08 billion vs. $6.06 billion est.

● Other Product Revenue: $6.45 billion vs. $6 billion est.

AppleRevenue Breakdown

Growth Estimates (2021)● Total Revenue: +14.20%● iPhone Sales: +12.34%● Operating Expenses: -1.03%● Services Margin: 63.7%

AppleCompetitors and Comps Model

AppleValuation

AppleValuation

AppleTechnical Analysis

AppleAnalyst Recommendations

Monte Carlo Simulation Annualized VolatilityCorrelation Matrix

Low correlation risk with our current holdings

Mean: $ 205.17Median: $ 172.44

Strong risk adjusted returns. Medium volatility

AppleRisk/Return Analysis

MicrosoftInvestment Thesis

Trusted Reputation

Unique Portfolio of Products

Software Company with a Cloud Component

MicrosoftCompany Strategy

Experiences spanning a variety of devicesMobile

1st

Company Strategy

Services and InfrastructureCloud

1st

Mobile 1st, Cloud 1st

● Creating an unique experiences through all devices

● Expansion of Data Centers across the globe

● SaaS, PaaS, IaaS

Reinvent Productivity and Business Process

● Development of Microsoft 365

● Acquisitions of LinkedIn and Affirmed NetworkContinuous M&A Activity Strategic Alliances

Microsoft

Price History Q3 Financial Highlights

Product Revenue Increase

● Revenue was $35.0 billion and increased 15%

● Operating income was $13.0 billion and increased

25%

● Net income was $10.8 billion and increased 22%

● Office 365 Commercial revenue growth of 25%

● LinkedIn revenue increased 21%

● Dynamics products and cloud services revenue increased 17%

Financial Highlights

Microsoft

Revenue Growth Revenue by Product

Revenue Breakdown

Microsoft

MSFT stands out in key metrics such as ROE and sales growth.

Comps Analysis

MicrosoftValuation and Sensitivity

MicrosoftValuation and Sensitivity

Microsoft

UpsideBase Case

Exit multiple 23.6x

Consensus Estimates

Historical averages in BS and IS assumptions

Downside

$ 222.18 $ 235.98 $ 256.00

Exit multiple 22x

Consensus Estimates

Historical averages in BS and IS assumptions

Exit multiple 24x

Consensus Estimates

Minor adjustments to BS and IS

Scenario Comparison

MicrosoftTechnical Analysis

MicrosoftAnalyst Recommendation

Microsoft

Monte Carlo Simulation Annualized VolatilityCorrelation Matrix

Low correlation risk with our current holdings

Mean: $ 335.86Median: $ 284.68

Strong risk adjusted returns, medium volatility

Risk Return Analysis

Buy 45 Shares of MSFTCurrent Price - $ 216.44

RecommendationApple x Microsoft

Buy 80 Shares of AAPLCurrent Price - $ 122.72

AppleAppendix

MicrosoftAppendix

Global Network Locations Azure Cloud Services

MicrosoftAppendix

MicrosoftAppendix

AAPL

1. Sector overview 2. Investment Thesis(Georges)3. Company strategy (Burke)4. Revenue Breakdown (Georges)5. Financial Highlights, price performance (Burke)6. Competitors and comps model (Andre)7. DCF and sensitivity (Georges)8. Price target breakdown of scenarios (Burke)9. Technical analysis (Georges)

10. Risk return discussion(Andre)11. Key conclusion (Burke)

Optional

Supply chain analysis, geographic breakdown, swot analysis.

MSFT

1. Sector overview2. Investment Thesis (Georges)3. Company strategy( Burke)4. Revenue Breakdown (Andre)5. Financial Highlights, price performance (Burke)6. Competitors and comps model (Andre)7. DCF and sensitivity (Andre)8. Price target breakdown of scenarios (Andre)9. Technical analysis (Burke)

10. Risk return discussion (Andre)11. Key conclusion (Andre)

Optional

Supply chain analysis, geographic breakdown, swot analysis.