Equity Research
January 13th, 2020 Monthly Andean Strategy Update No changes to our Andean allocation. Social unrest is the key factor in our markets
In December, our market posted a strong performance in USD terms (Chile: +10.0%; Colombia: +10.4%; Peru: +4.9%), in line with the CREDICORP CAPITAL RESEARCH performance of LatAm as a whole (+9.8%). On local terms, performance was positive but slightly lower due to a strong appreciation of the local currencies. Daniel Velandia, CFA We remain Overweight for the beginning of the year in Colombia; our +(571) 3394400 ext. 1505 investment thesis is unchanged from prior months related to a better [email protected] topdown approach. ▪ The local index advanced 1.8% in COP (+4.7% in USD terms). This Carolina Ratto contrasts with a 9.8% positive return from the MSCI Latam. Despite this +(562) 2446 1768 performance during Dec-19, we highlight that the COLCAP index was a [email protected] major outperformer during 2019 (24.1% vs 13.7% in USD terms) ▪ Social demonstrations faded in December while the tax bill was Tomás Sanhueza approved; the COP appreciated 6.24%. +(562) 2446 1751 ▪ Our equity strategy continues to be focused on banks; stronger loan [email protected] growth along with major improvements on the asset quality front support our view. In addition to banks, we continue to like the story of Canacol. Sebastián Gallego, CFA ▪ Forward multiples continue to look attractive. P/E and EV/EBITDA +(571) 3394400 ext. 1594 multiples trade close to one standard deviation compared to the [email protected] average of the last three years. ▪ Our top picks continue to be Bancolombia, Davivienda and Canacol. Daniel Córdova We are maintaining our Neutral rating in Chile. Although December +(511) 416 3333 Ext. 33052 was a better month, uncertainty on the political and macro outlook [email protected] remains strong. ▪ Top performers during the month were mostly companies related to the Utilities and Commodities sectors that offer less risk compared to other names indexed to internal activity. ▪ Despite a slightly more positive buying activity, trends remain the same. Local investors having a negative bias, while foreign investors mostly buying through baskets. ▪ The constitutional campaign for the referendum is taking shape and should be the main driving force for upcoming months. ▪ The main question comes from the potential adjustments that earnings could suffer for 2020 and 2021. In our view, the local market is not trading at multiples that offer significant discount and let us be more optimistic. ▪ Our Top Picks are Engie Chile, Concha y Toro and Parque Arauco. We maintain our Underweight recommendation for Peru, in the absence of domestic drivers and latent external risks. • Despite the expected signature of the initial phase US-China trade deal, the second phase is expected to be much more challenging. • Private consumption remained resilient despite the overall moderate economic growth deceleration in 4Q19. • No clear catalysts for Peruvian equities in the short-term; we believe the government pro-growth decrees are in the right direction, although their IMPORTANT NOTICE (US FINRA RULE 2242) This document is intended for INSTITUTIONAL INVESTORS and is not subject to all of the independence and impact will be felt only gradually and mainly into the 2H20. disclosure standards applicable to debt research reports prepared for retail investors. Credicorp Capital may do or seek to do business with companies • We maintain our defensive strategy, preferring utilities and covered in its research reports. As a result, investors should be aware that the firm consumption-related stocks. may have a conflict of interest that could affect the objectivity1of this report. Investors should consider this report as only a single factor in making their • Solid fundamentals at InRetail and Ferreycorp, our Top Picks. investment decision. Refer to important disclosures on page 24 to 27, Analyst Certification on Page 24. Additional disclosures on page 27. Actualizar Contents
Monthly Andean Strategy Update
Chile: No major changes in our strategy. High volatility and uncertainty 5 Top Picks 8 Colombia: We initiate 2020 with an Overweight position; however, we have difficulties to select names beyond banks 9 Top Picks 13 Peru: Moderate optimism on US-China trade deal 14 Top Picks 16
Valuation Summary 17
Economic Forecasts 21
2 Actualizar LTM Andean Equities Performance (in USD)
IPSA COLCAP SP BVL General Index MSCI Latam 130 120 110 100 90 80 70 60 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20
Source: Credicorp Capital, & Bloomberg
Andean Equities Fwd P/E (12 month rolling) vs 5Y historical average
P/E FWD vs Historical 5Y Average
20.0x 30.0% 18.0x 15.8x 15.8x 20.0% 16.0x 14.2x 14.0x 10.0% 12.0x 10.0x 0.0% 8.0x 6.0x -10.0% -16% -17% 4.0x -20% -20.0% 2.0x .0x -30.0% Chile Peru* Colombia
*Peru: vs 2Y historical average Andean Equities Fwd EV/EBITDA (12 month rolling) vs 5Y historical average
EV/EBITDA FWD vs Historical 5Y Average
10.0x 10.0% 9.0x 7.4x 5.0% 8.0x 7.0x 7.0x 7.0x 0.0% 6.0x -5% -5.0% 5.0x 4.0x -10.0% 3.0x -16% -15.0% 2.0x -20.0% 1.0x -21% .0x -25.0% Chile Peru Colombia Source: Credicorp Capital, & Bloomberg
3 Strategy Summary within Andean Context Long view Short view (12-to-18 months) (1-to -3 months) Chile Allocation: Neutral (+) Attractive entry point in some specific names Fundamentals have become less relevant in the (+) Proper fiscal accounts responsibility to take on new social demands current context of social unrest that has been (-) Uncertainty on long term outlook for the economy unfolding in Chile in the last month. We believe the (-) Short to mid term impact in economy is strong, impacting performance of market will continue to be highly volatile, until there companies is a clearer sense of stability in the country. (-) Correlation to the US-China trade war is still latent (-) Weaker position of the government against the opposition
Strategy: We are favoring shares that do not have a clear risk regarding new macro outlook and potential regulatory changes under the current scenario in Chile. Top picks: Engie Chile, Concha y Toro, Parauco Colombia Allocation: Overweight (+) Better operating/financial trends at the banking sector. The most important issues in the short term are: (+) Solid macro data that support our 3.3% GDP growth forecast. global tensions, oil prices, exchange rate (+) Stable rates & inflation performance, corporate governance issues/news, (-) Volatility across foreign markets. expectations on 4Q19 results. (-) Twin deficits. (-) Social demonstrations and labour market.
Strategy:
We remain overweight in Colombia. Our investment thesis continues to mainly rely upon: i) strong economic activity, ii) stable inflation and interest rates, iii) strong earnings momentum across the financial sector, and iv) special operations that may boost current market prices.
Top picks: Bancolombia, Davivienda, and Canacol Peru Allocation: Underweight (+) Private consumption proves resilient, despite a softening in domestic demand IFS and InRetail lead our short term portfolio given growth in 4Q19. their exposure to domestic consumption and strong (+/-) US-China phase one trade deal final details are being negotiated; second fundamentals. Luz del Sur upgraded to third as the phase is expected to be tougher. expected public acquisition offer draws near. Engie (-) Uncertainty remains on the next Congress' composition, as political parties are downgraded mainly to give Luz del Sur more space. having a hard time attracting voters two weeks before the election (polls show ~50% Lastly, we are swapping Nexa Resources for blank/null votes). Buenaventura as the latter lags behind gold and (-) No clear catalysts for Peruvian equities ahead of the congressional elections. base metal mines and should catch up, in part on expectations about its 4Q19 results.
Strategy: Trading ideas: We remain defensive as most external risks have not cleared yet and domestic IFS, InRetail, Luz del Sur, Engie and Buenaventura. catalysts are still not evident. Our portfolio is still exposed to private consumption and utilities.
Top Picks: InRetail and Ferreycorp.
4 Chile No major changes in our strategy. High volatility and Although December uncertainty the market outperformed, the In December, the Chilean market was a strong outperformer in CLP (+2.9%) uncertainty is still recovering after two weak months in October and November (-10.5% in both high. October and November). This month the FX played in favor of the market’s performance in USD (+10.0%). Despite that the environment of unsafety, protests, and political uncertainty maintains, the economy had a break from the negative trend seen I previous months boosted the by the year-end holidays. The capital city had less protests on the streets which helped small and medium enterprises to operate normally. However, despite this break in the turmoil, the uncertainty is still latent, and the risk aversion remains. In terms of the market, some investors took a position in certain names that are not highly correlated with the internal macro scenario in sectors such as commodities and utilities. In terms of flows, the local investors are still on the sidelines and with a negative bias, while foreign investors are passively buying through baskets which has boosted the market in the past few day. Although recently the market has outperformed, we believe this is temporary and the interest for the local market will be low in the upcoming months, awaiting the first stage of the constitutional process that starts in April 26th. We continue to have a selective strategy, focusing on low-beta, low-risk names with limited exposure to the current cycle and higher certainty for 12-months earnings.
Who have been the main winners and losers during the past month? In terms of sectors, the Utilities has been crowned as the top winners during December, driven by the performance of Enel Chile (+16.7%), followed by ECL (+14.5%) and Enel Gx (+13.4%). Entel also had a strong performance (+9.6%) boosted by the sale and leaseback of the towers in Chile and Peru for more than USD 700mn. On the opposite front, we highlight the negative correlation that LATAM Airlines had (-10.7%) after the positive performance it showed since September (+~38%) boosted by the announcement of the sale of 20% of the company to Delta. The outperformance of shares since September is ascribed to the high premium paid by Delta; however, when that transactions passed, shares corrected towards a closer level to its fundamental value.
Update on the social unrest and its aftermaths. During December, there was a clear reduction in the frequency and size of the protests, which we ascribe to the year-end holidays. However, still some isolated protests have emerged, that have ended as violent manifestations keeping the sense of unsafety at high levels. The challenge for the government continues to be public order. It is key to reach peace on the streets in order to undergo a proper constitutional process. On the political front, social reforms are being The constitutional discussed in congress (pensions, health, labor, amongst others), while the environment process starts in is still confrontational. This week four ministers were summoned for questioning by the April 26th, but the congress (Work, Health, Environment, and Finance), initiative pushed by the opposition campaign in left and parties, which reflects the environment of tension and disagreement in the political right-wing parties landscape in turn slowing down the process of all social reforms. which shows the strong has already started. disapproval.
5 The constitutional campaigns begins. The first step of the constitutional process is the opening referendum that will take place in April 26th that will ask for yes/no for a new constitution and what mechanism do people prefer to write the new constitution, if yes The macro context wins. After year-end holidays, we have seen more active opinion from left-wing and right- for Chile has wing parties that diverge between “yes” and “no” voting choice. Even in some right-wing changed, which will parties there is no clear consensus, which increases the sentiment of uncertainty. Initially generate a the idea of a “yes” win was taken as more likely; however, it seems that the extreme challenging scenario violence and protests have been fuel for the “no” option, as people are more tired of for companies in the those events and looking for which use the new constitution as banner. Although the upcoming years. road is just starting, we believe the campaign on both sides is going to be relevant and could end up to be crucial on the final outcome of the opening referendum.
On the macro front, Chile is sailing through rough, uncharted waters. We released new macro estimates for Chile in our Quarterly Andean Macro Report, which implied significant changes in our macro estimates for 2019 and 2020. In terms of economic activity, we downgraded our 2019 GDP growth for 2019 to 1.1% from 1.7% previously, on the back of the strong disruption generated by the protests that started in October 18th and resulting in weak GDP growth (October: -3.4%; November: -3.3%). The weak 4Q19 GDP growth will generate a carry-over effect for 2020, implying negative figures for 2020. In fact, we expect a 1.2% GDP growth for 2020. In terms of inflation, we expect to reach 4% in 1H20 as a result of FX pass-through, converging to 3.3% by 2020 year-end. We expect policy rate to remain unchanged at 1.75% in the upcoming months. However, our base case assumes a 25bps rate cut in 2020, as the Central bank will have room to provide extra stimulus to the economy, considering that inflationary upside pressures are temporary. In our view, the most concerning factors in the long run is fiscal accounts, specially considering the potential further spending needs that are likely to emerge. The MoF projects the fiscal deficit to reach 4.4% of GDP in 2020 after the 1.7% of GDP stimulus package announced. In addition, the MoF sees debt to stand at 38% of GDP by 2024. It is certain that fiscal deficit target (0.2% reduction of GDP annually) will not be achievable under the new context. The good news is that the Chilean economy has a favorable fiscal position to face this extraordinary scenario with net debt currently around at 9% of GDP. Finally, we expect FX to remain with high volatility in the range of 750-800 as the new equilibrium level.
6 Chile Strategy
Our Neutral rating on Chile is based on: i) uncertainty in terms of long-term economic outlook with potential pressure in Chile’s fiscal accounts, ii) potentially higher country risk due to recent events, iii) a still hazy outlook on the implications of the social unrest for the performance of the companies in the short to long term, and iv) potentially interesting opportunities after the significant drop in the equity market. For a potential recovery of the IPSA index to occur, flows from foreign and institutional investors would have to return in order to support certain price levels and stop the strong pressure seen in the market day after day.
Earnings estimates of the market have not been adjusted yet; what is the implicit multiple for the market post adjustment to earnings? We have recently updated our estimates for banks incorporating a tougher macro and political outlook going forward, that sets a challenging context for banks. The latter implied an earnings cut for 2019 and 2020 of ~14% and ~9%, respectively. However, most of the remaining sectors (retail, utilities, food and beverages, amongst others) have not been adjusted yet (our latest update was in August 2019 prior to the social unrest emerged). According to our official estimates, the implicit P/E Fwd for the IPSA index stands at 15.8x; however, prior to the adjustment in banks, the P/E Fwd stood at 14.6x. Therefore, it seems that the upcoming adjustment in earning should significantly correct the valuations of the IPSA index to a fairer level.
We estimate our 2020 earnings growth could go down from a +12% y/y increase prior to the social unrest to a range between -5% y/y and +5% y/y. In that range, the market would be trading between 15.5x and 17x P/E Fwd. Although it is still discounted compared to the average historic multiple of the index (18x-18.5x), the current macro and political scenario is much more uncertain and should imply a de-rating in Chile. Therefore, we do not see that the Chilean market is trading at a significant discount. However it all comes down to what the market does in terms of earnings adjustment for the upcoming years.
P/E Forward (12-month rolling) EV/EBITDA Forward (12-month rolling)
24 12
22 11
20 10
18 9 15.8x 16 8 7.4x
14 7
12 6 Jan-14 Jan-16 Jan-18 Jan-20 Jan-14 Jan-16 Jan-18 Jan-20 Sources: Bloomberg, Company Reports and Credicorp Capital a Simple average, excluding Market Capitalization
7 Top Picks Chile
Our Top Picks are We maintain our selective strategy in the Chilean stock market, with Engie Chile, Engie Chile, Concha Concha y Toro and Parauco as our Top Picks. y Toro and Parauco. Engie Chile (BUY; T.P.: CLP 1,450). Engie Chile is our preferred play in the Latin American Utilities space (excluding Brazil) on the back of the extended duration of its PPA portfolio, its low leverage and its management/parent quality. Regarding the first factor, we believe that Engie Chile shares’ performance will negatively correlate with short-term power prices in Chile as the value of its contracts should rise with lower spot prices. Regarding debt, the substantial room for leverage allows Engie Chile to face the coal phase-out process in Chile comfortably. Finally, we highlight that, as the company completed the construction of its 375MW IEM unit in June, we expect the second half results to surprise the market to the upside and support our forecast of a solid ~10% yield for 2020.
Concha y Toro (HOLD; T.P.: CLP 1,620). We maintain Concha y Toro in our Top Picks as it seems that, under the current context, Concha y Toro is one of the few names that has positive drivers and should outperform in terms of earnings momentum. The lower wine costs due to the positive 2019 harvest should remain at low levels for at least two more quarters, which will benefit margin expansion. In addition, current FX levels in Chile should benefit the top line growth of the company considering its exposure to export markets. Finally, we believe the strategic plan has been showing some delivery in recent quarters with an average price that has improved and volume growth that has gradually recovered.
Parque Arauco (BUY: T.P.: CLP 2,415). We are maintaining Parque Arauco in our top picks. We believe Parque Arauco remains as an attractive vehicle to face the high volatility environment, with high NOI diversification (~ 40% is out of Chile). Execution, continues to be important for growth, but in our view, management has shown to carry out so many brownfield and greenfield projects with great success in the last 5 years. Recent portfolio management has showed that the high level of indebtedness is not an impediment for growth. Legal risks remains and are under discussion, however for now are limited.
Chile - Top Picks
Last Target Total Mkt. P/E FV/EBITDA P/BV Div Yield Price Price Upside Return (USD mn) 2019E 2020E 2019E 2020E LTM 2020E Sectors Engie Chile 1,015 1,450 42.8% 53.8% 1,354 9.1 6.6 4.5 4.2 0.7 10.9% Utilities Concha y Toro 1,429 1,620 13.4% 16.2% 1,351 21.4 18.7 14.0 12.2 1.8 2.8% Food & Beverages Parque Arauco 1,776 2,415 36.0% 40.1% 2,037 15.7 15.4 16.4 15.4 1.6 4.2% Real Estate Chilean Picks a 30.7% 36.7% 4,741 15.4 13.6 11.6 10.6 1.4 6.0% IPSA 4,645 5,740 23.6% 27.9% 124,937 15.0 13.2 8.0 7.4 1.4 4.3%
Sources: Bloomberg, Company Reports and Credicorp Capital a Simple average, excluding Market Capitalization b Prices in local currencies
8 Colombia We initiate 2020 with an Overweight position; however, we have difficulties to select names beyond banks
Market Color
During Dec-19, the COLCAP index had a positive month, but still underperformed the MSCI Latam index. The local index advanced 1.8% and 4.7% in COP and USD terms, respectively. This contrasts with a 9.8% positive return from the MSCI Latam. Despite this performance during Dec-19, we highlight that the COLCAP index was a major outperformer during 2019 (24.1% vs 13.7% in USD terms). Finally, we highlight that social demonstrations in Colombia faded towards mid-December which was positive for market sentiment. The latter along with the approval of the tax bill should be positive signs for the beginning of 2020. In fact, we initiate this year with an overweight position in Colombia relative to peers in the Andean region with a moderately optimistic view for 2020E amid: i) strong economic activity, as we see GDP growth staying above 3.0% during this year, ii) strong earnings momentum at banks (roughly 30% of the COLCAP index), iii) attractive entry point for some relevant names of the COLCAP index (i.e Grupo Sura) amid a highly discounted prices, particularly after the MSCI rebalance at the end of Nov-19, and iv) forward trading multiples still look discounted when compared to historical levels. Despite our moderately optimistic view, we reiterate our target for the COLCAP index at 1,710 points for 2020E as we acknowledge that upside from current levels seems somewhat limited. In fact, we believe that 2019 was probably the best year under the current cycle. Meanwhile, choosing a company and/or a sector beyond banks for our top picks seems to be difficult considering that we do not see an appealing/attractive enough story across the market; we stick with Canacol for now as the third option.
From a bottom up perspective (review of December), Cementos Argos, preferred shares of Grupo Sura and Bancolombia were among the top performers in Dec-19. The strong performance of Cementos Argos and Sura was mainly explained by a technical rebound after the MSCI rebalance; in the case of Grupo Sura, the divestment of the annuity business in Mexico along with new funds in Colombia from the Ley Punto Final was also well received by investors. Regarding Bancolombia, we believe that shares of the bank finished strong in 2019 as the name was one of the top outperformers during the entire year. On the negative side, Banco de Bogota, Nutresa and BVC were among the top underperformers of the month. Here, we highlight that in the particular case of Bogota, investors may have taken some profits after a positive performance throughout 2019.
The local market usually starts very slow, while social demonstrations faded in December. Trading volumes have been relatively low during the initial days of 2020 as the holiday season usually has a negative effect on volumes. We expect the market to gain more traction during upcoming weeks. Beyond this seasonality, we believe that the market attention has somewhat shifted; social demonstrations are no longer taking place, while recent tensions between USA and Iran have capture recent headlines in the press. As of now, we do not expect these tensions to have a material effect towards our view in Colombia, but we acknowledge that the main threats to our thesis come from foreign markets.
9 Macro / political developments
The tax reform was finally approved in Congress, which was definitely a huge victory for President Duque. The Chamber of Representatives approved the tax bill of 2018 that had to be submitted again to Congress after the Constitutional Court revoked it some months ago due to procedural flaws during its legislative process last year. The Chamber voted the same text that had already been approved by the Senate, meaning that the bill did not have to go through a conciliation process. Under this scenario, the bill became a law of the country on January 1st , 2020. Considering the approval of the tax reform, we believe that the status quo should remain, which should continue to be positive, particularly for investment. Recall that the main goal of the reform was to improve competitiveness through corporate tax cuts. Finally, the approval was definitely a good signal in terms of governability and economic/political stability, especially when considering the social demonstrations that took place in 4Q19.
Inflation closed 2019 at 3.8%, accelerating from 3.18% in 2018. The CPI rose 0.26% m/m in Dec 19, slightly above our estimate and the market consensus forecast (0.23% and 0.25%, respectively). Given this scenario, inflation reached 3.8% in 2019 amid supply side pressures related to climate shocks that pressured foodstuff prices and the pass through from the COP depreciation. Core measures have increased recently (and continued to do so in Dec-19) amid a stronger domestic demand and the incidence of a weaker COP, though most gauges continue to sit below 3.5% close to the 3% target of the BanRep. On its part, foodstuff prices retreated again (-0.25% m/m), signaling that the climate shock has continued to revert (the annual figure decelerated from 6.90% y/y to 5.80% y/y currently). Here, it is worth noting that despite pressures, we expect inflation to converge towards levels closer to the Central Bank’s target of 3.0%. As of now, we anticipate year-end 2020E inflation to stand at 3.4%.
No major changes in the Central Bank’s language as the repo rate remains stable at 4.25%. The Central Bank vote unanimously again to hold the repo rate at 4.25% during December’s meeting. This was broadly in line with our expectations and those for the whole market; recall that the repo rate has stayed stable for nearly twenty consecutive months. Overall, the BanRep seems comfortable with its current stance as the Board continues to consider that the rise of inflation throughout this year was mainly explained by transitory shocks, and that those impacts should fade soon. Also, governor Echavarria did not express major concerns around the FX pass through nor the negotiations of the minimum wage. In terms of growth, the tone continues to be moderately optimistic on the recent and expected dynamics for next year, amid an economy that is growing near its potential according to BanRep’s estimates. Importantly, Echavarria affirmed that the impact on the economy from the national strike and recent demonstrations has been rather low. Under this scenario, we continue to expect that the repo rate will remain at 4 25 throughout next year given current conditions.
Equity strategy
We are initiating 2020E with slight changes in our equity strategy, but the core remains unchanged for now. We reiterate that our target for the COLCAP index in 2020E remains unchanged at 1,710 points as we are moderately optimistic for this year. The top-down picture continues to be the main positive theme, in our view. Economic activity remains healthy as we see another year with GDP growth above 3.0%. The latter is particularly positive when considering the scenario in other Andean countries. Beyond economic conditions, we reiterate that the Colombian market should continue to benefit from a strong earnings momentum at banks (roughly ~30% weight of the COLCAP index). Despite the positive view on prior themes, we acknowledge that our thesis of a COP appreciation from the 3,400-3,500 has mostly materialized, reason to remove that part of
10 our prior thesis. Finally, we continue to monitor any potential special operations in the local market as we are aware that most investors are always eager for those transactions.
Regarding trading multiples, we reiterate that the Colombian market continues to look attractive from a valuation standpoint. Our sample of the COLCAP index currently trades at 15.8x P/E forward and 7.0x EV/EBITDA forward, compared to a 3-year average of 19.3x and 8.1x, respectively. In fact, we highlight that the Colombian market currently trades near one standard deviation on a forward multiple basis. Despite the discount, we acknowledge that continue to expect a stronger delivery in key names of the local market.
Banks remain the core of our strategy with Bancolombia and Davivienda as our top picks. That said, we believe that the best was already observed in 2019. Our thesis on Colombian banks remains relatively unchanged as we expect further normalization on cost of risk, while banks have started to guide for even higher loan growth compared to our estimates. Here, it is worth emphasizing that most banks have already recorded full provisions for Electricaribe and Ruta del Sol 2. In addition, NPL figures point towards a brighter outlook across the entire loan book; as of Oct-19, the industry’s NPL ratio stands at 3.25% when compared to a figure of 3.6% during the same period of 2018. Finally, we believe that investors have priced in most of the upside for local banks during 2019 and further upside may come but at a more moderate pace. In terms of valuation, banks in Colombia trade at an average of 11.2x P/E 2020E relative to a median of 11.9x of Andean peers under our coverage. That said, banks look somewhat fair when adjusting for profitability; at this point, we argue that Colombian banks may deserved a bit more upside when compared to Andean peers given a challenging macro/political scenario in other countries.
Also on the financial sector, we believe that the recent rally on Grupo Sura(HOLD; 35,300) is well justified by the fundamentals of the name, which we see discounted despite its low ROEs (it is currently trading at 0.8x P/BV). Additionally, the play on Grupo Sura could be seen as a top down play on Colombia in a context were the other financial companies in the COLCAP have rallied. We are closely monitoring this name as we believe that there is a strong appetite by some investors at current prices.
In the cement front, we are expecting a mild deceleration in cement consumption this year, as our forecast stands at 2% - 4%, vs our 3% - 5% projection for 2019. We believe that this should be explained by a more challenging base for the infrastructure segment, given advances in 4G and district infrastructure projects during 2019, with the latter not continuing in 2020 (regional elections took place in 2019). On the other hand, we believe that housing should still be slow this year, as inventories remain high and their decreasing rate slowed down since May – 19. Furthermore, there is a new competitor within the cement market that expects to have won a ~10% market share by year-end. Then, we would rather stay on the sidelines with Cemargos (HOLD; 7,700) and CLH (HOLD; 5,000) with a stronger concern in the case of Cemargos, considering our expectation of weak 4Q19 results and a possible +100% dividend payout ratio for 2020E.
11 From the side of utilities, the 2019 seem to have ended with an energy demand increasing near 4% according to XM reports. For this year, this trend should remain positive, driven by higher consumption and positive momentum in the economic activity. After the start of the “heat” season in Dec-19, the scenario for reservoirs in Colombia looks warmer considering a current 70-30 energy mix between renewables (including hydro) and fossil fuels burned (mostly gas and coal). A potential increase of thermal activity ahead could signal a scenario of tight profits for the utilities names in 1H20, where reservoirs levels are lower and thermo plants tend to increase OPEX for the companies. In any case, the Ministry of Mines and Energy (MME), with the Planning Unit Energy Mining (UPME), foresee to sustain a 70-30 mix of renewables and non-renewables sources for the upcoming years, respectively. Meanwhile, with non-conventional sources, like eolic and solar farms, adding to the new capacity for the mega-hydro plant coming from EPM, we don’t see any upside or good fit in the Colombian generator’s arena for the year. That said, we remain with our lower expectations regarding PPA prices in the long run for Celsia (UPERF | T.P.: COP 4,100/share). Finally, other name which could be harm in lower circumstances is GEB’s (HOLD | T.P.: COP 2,450) generation arm with Emgesa (31% of GEB’S Own Adj. 2020 EBITDA), but the growth from their vehicles in Perú and Brazil could offset this impact.
Meanwhile, for the energy sector, National Hydrocarbon Agency ended last year with 26 contracts for E&P development including a more claimed gas fuel and offshore projects in the Caribbean. Ecopetrol (HOLD | T.P.: COP 3,000/share – USD 19.7/ADR) updated their investment plan, willing to deploy nearly 80% of their capex range USD 4.5bn – 5.5bn in Colombia, mainly in their biggest revenue arm: Upstream, accounting for 52% of Adj. 2020 EBITDA. After US-Iran tensions, Brent oil seems to be near the levels we observed during the average 2019. By the time of this report the mentioned commodity trades near USD 66/barrel and our expectations assume there is no reason to hold prices above USD 70/barrel like the ones we perceived initiating the second week of January.
Besides the E&P state-controlled company, Canacol (BUY | T.P.: COP 15,900/share – USD 5.0/share), an independent gas-player, also informed their new 12 drilling targets and total capex for this year of USD 114mn, expecting to sum even more inventory to their reserves in order to respond to the new gas pipeline expansion of 100 MMscfd managed by Promigas. Our bet on this name remains unchanged despite the challenge to close Medellín sales, while announcing details related to the development of the new gas pipeline.
Given all the above, we reiterate that our top picks are Davivienda, Bancolombia, and Canacol.
P/E Forward (12-month rolling) EV/EBITDA Forward (12-month rolling)
28 11 26 24 10 22 9 20 18 8 16
14 15.8x 7 12 7.0x 10 6 Jan-17 Jan-18 Jan-19 Jan-20 Jan-17 Jan-18 Jan-19 Jan-20 Sources: Bloomberg, Company Reports and Credicorp Capital a Simple average, excluding Market Capitalization
12 Top Picks Colombia
Davivienda (BUY; T.P.: COP 47,500). We are maintaining Davivienda as one of our Top Picks as we continue to like the bank’s medium-term story. Our view is mainly explained by i) expected higher loan growth in Colombia compared to the industry average for both 2019E and 2020E (at least 150 bps higher and ~11.0% y/y in 2020E), ii) an estimated 15- bps decline in cost of risk next year (recall that both Electricaribe and RDS 2 should be off the table in 2020E), iii) a robust digital transformation plan (as of 3Q19, Davivienda’s product sales through digital channels accounted for 48% of total sales, compared to only 4.0% in 2Q18, iv) 23.1% y/y EPS growth in 2020E, v) a 100-bps ROAE expansion in 2020E compared to 2019E and vi) a still attractive valuation of roughly 1.4x P/BV 2020E. Finally, we highlight that Davivienda has not faced any corporate governance issues, which we believe has been a key driver for the stock, in contrast to other companies in our Colombian sample.
Bancolombia (BUY; T.P.: COP 48,800). In addition to similar trends in provision expenses as Davivienda, we believe that Bancolombia should also benefit from i) strong annual growth in the consumer segment in Colombia (over 20% y/y in 2019E and double- digit growth in 2020E), ii) digital penetration through key apps/platforms, such as Nequi and Ahorro a la Mano, and iii) improvement in efficiency ratios as we expect a cost to income ratio of 48.7% in 2020E, compared to 50.1% in 2018. Finally, we reiterate that we expect an 80-bps ROAE expansion to 13.2% next year (compared to year-end 2019E) Under this scenario, considering the improving macro picture in Colombia, we believe that Bancolombia continues to be an ideal vehicle to invest in the local market.
Canacol (BUY; T.P.: COP 15,900). After Canacol revealed its new investment plan (see report), we believe the company has a high probability in terms of upside due to their track record in order to deliver growth and its position among the full-gas E&P companies with right expertise to drill the already committed 12 wells this year. Another move this year will be the deployment of capital regarding exploration studies in their new blocks obtained in the Lower and Middle Valley of Magdalena: VIM 33, 45 and 49; adding nearly 316 thousand new acres to their E&P conceded areas. The company also has a success rate of over 80% in F&D activity, booking almost 98,000 boe of gas at the end of 2018 and oir expectations aim them to develop up to 95,000 boe in the Bolivar department. Regarding financials, with their quarterly dividend and debt reduction, balance sheet could end much stronger this year. Stability in their cash flows with an average lifetime of inflation-indexed contracts of approximately seven years are competitive advantages for the company. In addition, Canacol has signed agreements to deliver gas from Jobo to Medellín (50 MMcfd) and to supply the El Tesorito thermo plant. The first agreegment mentined requires a gas pipeline with 100 MMcfd of capacity, which should cost USD 300mn-400mn; the latter has already obtained the “Cargo por Confiabilidad” agreement, which is a guaranty of demand for a 20-year term, and should start by year-end 2023.
Colombia - Top Picks
Last Target Total Mkt. P/E FV/EBITDA P/BV Div Yield Price Price Upside Return (USD mn) 2019E 2020E 2019E 2020E LTM 2020E Sector Davivienda 45,480 47,500 4.4% 6.6% 6,327 14.0 11.4 nm nm 1.7 2.1% Banks Bancolombia 45,600 48,800 7.0% 9.6% 13,172 13.7 11.8 nm nm 1.7 2.6% Banks Canacol 11,300 15,900 40.7% 45.2% 624 19.3 5.9 5.7 3.8 2.8 4.5% Oil&gas Colombian Picks a 5.7% 8.1% 19,499 13.8 11.6 nm nm 1.7 2.4% COLCAP 1,657 1,710 3.2% 8.3% 95,924 12.1 15.6 8.4 8.1 1.6 5.1%
Sources: Bloomberg, Company Reports and Credicorp Capital a Simple average, excluding Market Capitalization
13 Peru Moderate optimism on US-China trade deal
Economic activity maintained a subdued performance on October; we do not expect meaningful changes in November. Economic activity expanded 2.1% y/y in Oct19, very similar to its September performance (+2.2% y/y) and again below market expectations (+2.5%, according to Reuters). On a sector by sector basis, activity was Economic activity spurred by most of primary sectors (agriculture, primary manufacturing and hydrocarbons) remained subdued in and commerce and total services, both of which kept the healthy pace they exhibited October; November throughout last year (expanding +3.5% and 2.9% y/y). However, besides another weak early indicators show print in mining production (+0.1% y/y) -with which it accumulates a contraction of -1.6% a continuation of YTD-, we are mostly concerned about the sluggish growth in both the construction sector such trend. and non-primary manufacturing (+1.2% and -3.6% y/y, respectively), as their underperformance is driving a soft deceleration in non-primary sectors in 4Q19. Even though private consumption has remained supportive in the last quarter of 2019, there is still the risk that the moderate deceleration in domestic demand-oriented industries could continue into 1Q20 (in part also due to remaining concerns on the external front and the political noise in January stemming from the Jan. 26th congressional elections).
Recent government measures to spur economic growth would have an impact only The fiscal stimulus later into 2020. This past week has been the last one of urgency decrees issued by the from recent urgency Vizcarra administration (in the absence of the dissolved Congress), as the Prime Minister decrees will develop has stated that from now on the government will focus on producing the regulatory only gradually, but framework for the series of urgency decrees already enacted. Many of the decrees have could be offset later been focused on streamlining procedures that public entities and sub-national in the year by the governments must follow in order to accelerate the execution of public infrastructure usual noise of the projects. Given that most of these measures will only be implemented progressively during next election cycle. the coming months, we believe that the full effect of said decrees will be materialized in 2H20. Therefore, any fiscal stimulus from these measures will be gradual, and it could be offset in the final months of the year by an increase in investor cautiousness due to the beginning of the next election cycle (April 2021 presidential and congressional elections). A “first stage” US- The announcement of a “first stage” US-China trade deal is positive news for the China trade deal is local economy and equities, but the external front continues to pose risks. Local good news, but investors and companies seem to be taking a more cautious approach to the upside risk optimism could be of said trade deal, considering that a return to the situation prevailing before the first tariff moderated by hikes will most likely take a long time as the more complex issues of the US-China subsequent phases economic relationships get tackled in subsequent phases. Moreover, the persistent and risks to global concern on an eventual global economic slowdown could still local business expectations. growth. On the political front, the brief period of intense political campaign before the Jan. Two weeks away 26th elections has started. According to the latest Datum poll, Acción Popular (center of from the Jan. 26th political spectrum) would get 24% of valid votes, while Fuerza Popular would come in congressional second with 21%. We expect the majority of the electorate to continue supporting mostly elections. centrist, moderate right-wing or moderate left-wing candidates.
The Constitutional Court will debate the legal claim against the dissolution of Congress on Jan. 14th. The Court could issue a verdict that day or take more time to do so. Key members of the Court have previously stated that it will uphold the Jan. 26th elections, and that any verdict would only have future effects (not retroactive). Thus, we do not expect that its decision will upend the ongoing electoral process.
14 Peru Strategy
In December, the Lima Stock Exchange returned 4.91% in USD and 2.23% in PEN, underperforming the MSCI Latam Index, which was boosted by Chile and Mexico. The announcement by the US and China of the successful negotiation of the first phase of the trade deal supported base metal prices, which boosted miners, whose weight on the local index represents more than 36%.
We maintain our underweight recommendation for Peruvian equities. There is still much uncertainty regarding the congressional elections that will take place on January 26th, 2020. Recent polls show that ~50% of voters surveyed would either cast a blank or null vote. However, most of the voting intentions are currently held by centrist political We maintain our parties (both left and right-leaning). Moreover, at the local level, there are no clear Underweight catalysts for economic activity. At the international level, even if trade war-related risks are recommendation for receding, they are far from being over. Negotiations for the second phase of the US-China Peru, as no clear trade deal are expected to be much tougher as the main talking points should center catalyst suggests a around intellectual property and other sensitive issues. stronger recovery. December returns compensated for the lost ground in November. There were no relevant laggards during the month. Base metal mining companies drove the index forward, particularly led by heavyweight Southern Copper but also Volcan, Nexa Resources, Cerro Verde and Trevali. Credicorp remained relatively flat throughout the month, constraining the index’s return. Moreover, we still like issuers with strong fundamentals exposed to domestic demand (IFS, InRetail). Luz del Sur appreciated in value during the month as the expected announcement of the public acquisition offer draws near; we expect the announcement to take place in 1Q20. Construction companies still lack short-term catalysts, as the fiscal stimulus from the series of urgency decrees enacted by the Executive will only have an impact in 2H20.
Local stocks in our sample appreciated, led by mining companies. At 14.2x 12M forward P/E, companies under our coverage are trading at a ~23% discount against its two-year historical average (corrected for the significant losses in Buenaventura). Likewise, at 7.0x, the 12M forward EV/EBITDA is at a ~6% discount vs the five-year historical average.
On an ex-mining companies basis, the EV/EBITDA is trading at a ~13% premium and the P/E multiple at a ~9% premium vs. historical averages. Mining stocks On an ex-mining maintained their discount to their 2-year multiple averages, despite the stock price surge companies basis, in December (particularly for base metal miners). local market is trading at a premium against its recent P/E Forward (12-month rolling) * FV/EBITDA Forward (12-month rolling) * history. 12 24 11 22 10 20 9 18 8
16 7
14 14.2x 6 7.0x 12 5 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Source: Company Reports, Credicorp Capital, & Bloomberg *Mean in the chart considers the last 2 years.
15 Top Picks Peru
InRetail (BUY; T.P.: USD 46.70). We maintain our confidence on InRetail despite a We continue to see softening in domestic demand growth in the short term. Food Retail still has growth upside potential in opportunities from new formats Economax (cash & carry) and Mass (hard discounter), InRetail in the short which as a whole represents ~10% of Food Retail revenues. Also, drugstores should and medium terms as continue gaining market share, while InRetail could continue achieving EBITDA margin synergies from expansion through potential synergies from vertical integration and stores maturation. All vertical integration in, the strong positioning in the Peruvian market that InRetail has is essential to continue are yet to be fully expanding its market share and margins in the long term. realized. Ferreycorp (BUY; T.P.: PEN 2.85). We maintain Ferreycorp as a Top Pick as it is positioned to be one of the top performers in this mining investment upcycle. In 2019 and 2019 Jan-Nov mining 2020, it will provide CAT machinery to Mina Justa for USD 100mn. Additionally, it will also investment has deliver a fleet of CAT trucks of 320 MT and other types of equipment for the Quellaveco registered a 26.6% mining project, in addition to providing specialized support to the project. The total value of y/y increase, led by the contract is USD 500mn, and the biggest cash inflow will take place in 2021 as major outlays on greenfield machinery deliveries are scheduled to take place. In addition, we expect the Spare Parts projects such as & Services to continue to grow, albeit at a more moderate rate, providing more stability to Mina Justa, the company’s overall revenues. It is worth noting that the big mining machinery deliveries Quellaveco and to come should foster future SP&S growth. These positive factors should keep driving Quecher Main. results forward for the next couple of years, and we believe this impact has not been priced in yet, given the current price levels of the company’s stock. .
Peru - Top Picks
Last Target Total Mkt. P/E FV/EBITDA P/BV Div Yield Price Price Upside Return (USD mn) 2019E 2020E 2019E 2020E LTM 2020E Sectors InRetail 39.00 46.72 19.8% 20.3% 4,009 25.4 19.9 10.3 9.1 3.1 0.5% Retail Ferreycorp 2.12 2.85 34.4% 41.0% 623 7.6 8.0 5.9 6.0 1.0 6.6% Materials Peruvian Picks a 27.1% 30.6% 4,633 16.5 13.9 8.1 7.6 2.0 3.5% S&P/BVL 20,382 22,910 12.4% 15.2% 38,140 22.6 15.6 8.0 6.9 nm 2.8% Sources: Bloomberg, Company Reports and Credicorp Capital a Simple average, excluding Market Capitalization
16 Valuation Summary
January 2020
17 Chile
ADTV P/E FV/EBITDA P/BV Div Yield. ROAE ROAA Company Sector Px Last Px Target Rating Mkt. Cap Local ADR 2019E 2020E 2019E 2020E LTM 2020E 2019E 2020E 2019E 2020E AESGener Utilities 163 175 HOLD 1,808 1.6 2.2 7.5 5.8 5.9 0.7 11.0% 10.1% 7.5% 3.5% 2.7% Aguas-A Utilities 342 390 UPERF 2,682 3.5 15.8 16.1 9.9 9.7 3.3 6.4% 20.5% 20.6% 6.7% 6.6% Andina-B Food & Beverages 2,210 2,760 BUY 2,565 4.1 0.2 17.1 16.9 8.2 7.9 2.5 4.9% 14.1% 13.8% 5.5% 5.4% Antarchile Conglomerates 7,800 9,400 HOLD 4,694 0.5 13.9 14.3 7.8 7.3 0.7 3.6% 5.0% 4.7% 1.4% 1.3% Banco de Chile Banks 86 90 HOLD 11,390 12.7 2.4 15.4 15.0 nm nm 2.5 3.3% 16.5% 16.0% 1.5% 1.4% Banco Santander Banks 46.2 49.0 HOLD 11,481 8.0 9.0 16.2 15.5 nm nm 2.6 3.7% 16.1% 15.8% 1.2% 1.2% BCI Banks 37,300 39,700 HOLD 6,966 3.9 13.6 14.2 nm nm 1.4 2.5% 10.6% 9.8% 0.9% 0.8% Besalco Cement & Construction 450 650 BUY 342 0.3 18.4 14.7 9.6 7.7 1.4 3.7% 7.5% 9.0% 2.0% 2.4% CAP Mining 5,638 7,500 HOLD 1,111 3.7 9.1 6.4 6.0 4.9 0.5 5.5% 6.0% 8.5% 2.3% 3.1% CCU Food & Beverages 7,370 8,840 UPERF 3,591 3.4 6.5 18.9 17.3 8.8 8.6 2.6 3.2% 11.4% 12.4% 6.0% 6.4% Cencosud Retail 1,021 1,400 BUY 3,855 7.0 8.2 10.2 8.4 9.4 nm 4.8% 8.9% 7.6% 3.4% 2.7% CMPC Pulp & Paper 1,960 2,100 BUY 6,462 6.4 141.7 99.3 9.2 9.0 0.8 0.6% 0.6% 0.8% 0.3% 0.4% Colbun Utilities 126 160 BUY 2,921 2.5 10.1 10.5 5.7 6.0 0.8 9.7% 8.0% 7.8% 4.3% 4.1% Concha y Toro Food & Beverages 1,460 1,620 HOLD 1,438 1.3 21.9 19.1 14.2 12.4 1.9 2.7% 8.6% 9.4% 4.3% 4.7% Copec Pulp & Paper 7,460 8,000 BUY 12,788 6.4 23.2 23.0 9.6 9.0 1.2 2.1% 5.1% 5.0% 2.3% 2.3% Embonor-B Food & Beverages 1,330 1,810 BUY 906 0.5 14.6 13.9 8.0 7.5 2.0 5.2% 12.2% 12.4% 5.8% 5.7% Enel Chile Utilities 75 74 HOLD 6,857 6.0 1.7 18.2 13.1 6.3 6.2 1.4 5.9% 9.6% 10.5% 4.3% 4.7% Enel Generacion Chile Utilities 385 400 UPERF 4,164 0.5 12.6 8.6 5.8 5.7 7.1 8.9% 11.5% 16.5% 6.1% 8.8% Engie Chile Utilities 1,190 1,450 BUY 1,653 1.8 9.2 8.2 5.0 4.9 0.8 10.8% 8.5% 9.2% 5.1% 5.6% Entel Telecom & IT 5,563 7,450 BUY 2,216 2.2 41.8 27.3 7.1 6.5 1.3 1.0% 2.9% 4.3% 1.0% 1.5% Falabella Retail 3,456 4,780 HOLD 11,434 13.8 22.5 19.7 11.8 10.9 1.9 1.8% 7.6% 8.3% 2.4% 2.6% Hites Retail 202 UR UR 100 0.1 nm nmnm nm nm nm nm nm nm nm nm ILC Conglomerates 8,150.0 14,600.0 BUY 1,075 1.2 7.6 6.9 nm nm 1.2 6.1% nm nm nm nm Itau Corpbanca Banks 4 5 UPERF 2,991 2.2 0.1 17.7 15.8 nm nm 0.7 1.7% 3.8% 4.1% 0.4% 0.4% Latam Airlines Transport 7,645.3 7,110.0 HOLD 6,114 6.5 208.7 36.0 7.3 6.4 2.0 0.3% 0.9% 5.3% 0.1% 0.8% Masisa Materials 32 38 UPERF 331 0.2 31.6 14.8 12.2 12.3 0.4 2.8% 1.3% 2.8% 0.8% 1.9% Parque Arauco Real Estate 1,978.0 2,415.0 BUY 2,363 2.4 17.5 17.1 17.6 16.5 1.8 3.7% 10.4% 9.9% 4.1% 3.9% Quiñenco Conglomerates 1,575 2,170 HOLD 3,454 1.0 9.3 9.1 nm nm 0.8 5.4% nm nm nm nm Ripley Retail 418.4 613.0 BUY 1,068 0.9 8.0 15.4 10.0 9.7 0.9 4.4% 9.8% 5.0% 3.1% 1.5% Salfacorp Cement & Construction 501 UR UR 297 0.6 nm nmnm nm nm nm nm nm nm nm nm SK Industrial 990.6 1,400.0 HOLD 1,404 0.9 11.5 10.4 7.7 7.1 1.1 6.4% 8.6% 8.8% 3.1% 3.2% SM SAAM Transport 59 70 HOLD 760 0.4 14.2 12.5 5.8 5.3 1.0 4.3% 6.8% 7.5% 3.6% 3.8% SMU Retail 144.4 213.3 HOLD 1,099 0.7 25.2 20.8 8.9 8.6 1.2 1.2% 4.6% 5.4% 1.7% 2.0% Sonda Telecom & IT 670 1,080 HOLD 770 1.1 21.6 16.2 7.8 6.5 1.2 2.5% 5.3% 6.8% 2.8% 3.5% SQM-B Materials 21,379.0 22,200.0 BUY 7,151 11.6 24.5 24.2 17.6 11.5 9.3 3.4 4.1% 15.0% 20.6% 7.2% 9.7% Chile Sample 4,910 5,740 136,955 135.4 16.8 15.3 8.5 8.0 1.5 3.8% 8.7% 9.2% 1.8% 1.9%
Source: Company Reports, Credicorp Capital, & Bloomberg
18 Colombia
ADTV P/E FV/EBITDA P/BV Div Yield. ROAE ROAA Company Sector Px Last Px Target Rating Mkt. Cap Local ADR 2019E 2020E 2019E 2020E LTM 2020E 2019E 2020E 2019E 2020E Avianca Transport 1,760 1,000 UPERF 540 0.3 0.6 -1.2 262.4 8.6 8.3 0.8 0.0% -46.5% 0.3% -6.3% 0.0% Bancolombia Banks 45,600 48,800 BUY 13,172 6.4 14.9 13.7 11.8 nm nm 1.7 2.6% 12.4% 13.2% 1.4% 1.5% BVC Financial 11,600 14,000 BUY 216 0.1 16.2 14.7 8.4 7.6 1.5 5.8% 9.0% 9.6% 7.0% 7.3% Canacol Oil&gas 11,300 15,900 BUY 624 0.4 19.3 5.9 5.7 3.8 2.8 4.5% 15.1% 40.9% 4.4% 13.2% Celsia Utilities 4,475 4,100 UPERF 1,475 0.4 21.3 21.6 8.0 7.6 1.1 3.3% 5.1% 5.0% 2.0% 1.8% Cemargos Cement & Construction 6,880 7,700 HOLD 2,795 2.9 55.6 78.3 9.9 9.4 1.2 3.7% 2.1% 1.6% 0.9% 0.7% CLH Cement & Construction 4,430 5,000 HOLD 789 0.3 17.8 10.5 7.5 6.6 0.5 0.0% 2.8% 4.5% 1.4% 2.3% Corficolombiana Conglomerates 31,500 28,800 HOLD 2,877 0.7 6.8 6.8 nm nm 1.2 1.8% 17.6% 15.4% 4.1% 3.7% Davivienda Banks 45,480 47,500 BUY 6,327 1.4 14.0 11.4 nm nm 1.7 2.1% 12.3% 13.7% 1.3% 1.4% Ecopetrol Oil&Gas 3,325 3,000 HOLD 42,106 7.4 12.7 10.7 13.1 5.3 5.7 2.5 7.3% 21.5% 17.0% 9.6% 7.5% GEB Utilities 2,260 2,450 HOLD 6,391 1.3 10.7 10.6 7.9 7.7 31.2 7.0% 15.0% 14.5% 7.4% 7.0% Grupo Argos Conglomerates 18,660 17,000 HOLD 4,581 1.7 24.2 18.1 9.8 9.2 0.9 2.0% 4.0% 5.2% 1.4% 1.8% Grupo Aval Banks 1,445 1,430 HOLD 9,823 1.7 1.0 11.3 10.3 nm nm 1.8 4.2% 15.6% 15.9% 1.1% 1.1% Grupo Sura Conglomerates 33,400 35,300 HOLD 5,830 2.9 11.5 10.0 nm nm 0.8 1.8% 6.7% 7.3% 2.4% 2.8% Nutresa Food & Beverages 25,020 30,500 BUY 3,546 1.2 14.4 13.8 8.3 7.8 1.4 3.0% 6.6% 6.6% 3.9% 3.8% Colombia Sample 1,657 1,710 95,924 29.9 12.1 15.6 8.4 8.1 1.6 5.1% 11.6% 12.0% 2.3% 2.4%
Source: Company Reports, Credicorp Capital, & Bloomberg
19 Peru
ADTV P/E FV/EBITDA P/BV Div Yield. ROAE ROAA Company Sector Px Last Px Target Rating Mkt. Cap Local ADR 2019E 2020E 2019E 2020E LTM 2020E 2019E 2020E 2019E 2020E Aceros Arequipa Cement & Construction 0.89 0.90 BUY 366 0.0 7.7 7.1 4.2 3.5 0.6 7.4% 7.8% 8.1% 3.9% 4.0% Alicorp Food & Beverages 9.08 12.10 BUY 2,333 0.7 16.9 13.0 10.0 8.5 2.5 3.0% 13.6% 16.3% 4.6% 5.4% Buenaventura Mining 14.15 17.80 HOLD 3,737 18.1 38.8 19.9 15.7 9.8 1.3 0.2% 3.4% 6.3% 2.3% 4.2% Cementos Pacasmayo Cement & Construction 6.05 7.20 HOLD 778 0.2 0.0 19.4 17.1 9.3 8.6 1.6 6.2% 9.1% 10.4% 4.6% 5.2% Cerro Verde Mining 19.50 24.00 BUY 6,826 0.1 15.0 12.6 5.1 4.7 1.3 3.2% 8.7% 9.8% 6.0% 7.0% Enel Distribucion Peru Utilities 7.15 7.20 HOLD 1,376 0.2 10.6 11.5 7.7 7.2 nm 3.8% 18.7% 15.2% 9.2% 7.8% Enel Generacion Peru Utilities 2.30 2.88 HOLD 1,968 0.0 9.5 9.5 5.5 5.6 nm 5.1% 20.9% 18.2% 14.2% 12.9% Engie Peru Utilities 7.90 8.10 HOLD 1,432 0.2 13.0 13.5 7.4 7.6 1.3 5.4% 10.0% 9.6% 5.0% 4.9% Ferreycorp Materials 2.12 2.85 BUY 623 0.5 7.6 8.0 5.9 6.0 1.0 6.6% 12.5% 11.4% 4.8% 4.2% Graña y Montero Cement & Construction 1.70 2.30 HOLD 447 0.2 0.3 14.3 14.4 5.0 5.0 0.7 0.0% 4.6% 4.1% 1.4% 1.4% IFS Banks 41.52 50.53 BUY 4,793 2.1 11.6 11.0 nm nm 2.1 4.3% 18.2% 17.1% 2.0% 1.9% InRetail Retail 39.00 46.72 BUY 4,009 2.0 25.4 19.9 10.3 9.1 3.1 0.5% 11.9% 13.6% 3.6% 4.2% Luz del Sur Utilities 26.00 17.52 BUY 3,816 0.6 20.9 21.0 14.6 14.0 nm 3.8% 20.8% 18.8% 9.8% 9.2% Minsur Mining 1.55 2.00 BUY 1,347 0.2 17.3 16.1 8.3 7.4 1.0 0.0% 6.0% 6.2% 2.5% 2.4% Nexa Resources Mining 8.23 12.32 BUY 1,097 1.3 1.3 27.2 7.8 4.8 3.8 0.5 2.9% 1.6% 5.6% 0.7% 2.5% Unacem Cement & Construction 2.00 3.10 BUY 1,096 0.5 9.7 9.0 6.3 5.8 0.9 2.6% 8.7% 8.7% 3.6% 3.8% Volcan Mining 0.51 0.60 HOLD 2,094 0.3 15.2 11.6 9.9 9.6 3.2 1.1% 5.3% 6.9% 1.6% 2.1% Peru Sample 20,382 22,910 38,140 25.9 22.6 15.6 8.0 6.9 nm 2.8% 11.5% 11.7% 3.9% 5.2%
Source: Company Reports, Credicorp Capital, & Bloomberg
20 Economic Forecasts
January 2020
21 Economic Forecasts
CHILE National Accounts (YoY) 2015 2016 2017 2018 2019F 2020F Current GDP (USDmm) 244,417 250,266 277,184 299,148 283,565 274,205 GDP (%) 2.3 1.3 1.5 4.0 1.1 1.2 Domestic Demand (% v ar.) 2.5 1.3 3.1 4.7 0.8 -0.3 Total Consumption (% v ar.) 2.6 2.9 2.7 3.7 1.6 1.2 CPI 4.4 2.7 2.3 2.6 3.0 3.3 Reference rate (end of y ear) 3.50 3.50 2.50 2.75 1.75 1.50 Ex change rate (end of y ear) 709 667 615 696 752 750 Ex change rate (av g.) 655 677 649 640 703 760 Fiscal Balance (% GDP) -2.2 -2.7 -2.8 -1.7 -2.7 -4.5 Foreign Reserves (USDmm) 38,643 40,494 38,983 39,861 36,025 36,000
Source: INE, BCCh, Dipres & Credicorp Capital Estimates
PERU National Accounts (YoY) 2015 2016 2017 2018 2019F 2020F Current GDP (USDmm) 191,517 194,745 214,332 225,259 227,767 239,708 GDP (%) 3.3 4.0 2.5 4.0 2.3 3.0 Domestic Demand (% v ar.) 2.9 1.1 1.4 4.3 2.6 3.0 Total Consumption (% v ar.) 4.9 2.8 2.2 3.6 3.0 3.0 CPI 4.4 3.2 1.4 2.2 1.9 2.2 Ov ernight interest rate (end of y ear) 3.75 4.25 3.25 2.75 2.25 2.00 Ex change rate (end of y ear) 3.41 3.36 3.24 3.37 3.32 3.35-3.40 Ex change rate (av g.) 3.19 3.38 3.26 3.29 3.34 3.35-3.40 Fiscal Balance (% GDP) -2.1 -2.6 -3.1 -2.5 -1.6 -1.9 Foreign Reserves (USDmm) 61,485 61,686 63,621 60,121 68,800 69,000
Source: INEI, BCR & Credicorp Capital Estimates
COLOMBIA National Accounts (YoY) 2015 2016 2017 2018 2019F 2020F Current GDP (USDmm) 293,321 283,148 314,458 330,083 319,871 339,262 GDP (%) 3.0 2.1 1.4 2.7 3.3 3.2 Domestic Demand (% v ar.) 2.4 1.2 1.2 3.8 4.8 3.1 Total Consumption (% v ar.) 3.4 1.6 2.4 3.9 4.4 3.1 CPI 6.8 5.8 4.1 3.2 3.8 3.4 Ov ernight interest rate (end of y ear) 5.75 7.50 4.75 4.25 4.25 4.25 Ex change rate (end of y ear) 3,175 3,002 2,984 3,249 3,297 3,150 Ex change rate (av g.) 2,760 3,051 2,951 2,957 3,283 3,300 Fiscal Balance (% GDP) -3.0 -4.0 -3.6 -3.1 -2.5 -2.4 Foreign Reserves (USDmm) 46,741 46,683 47,637 48,402 53,100 54,000
Source: DANE, BanRep, Bloomberg & Credicorp Capital Estimates
22 Important Disclosures
This research report was prepared by Credicorp Capital Peru S.A and/or Credicorp Capital Colombia Sociedad Comisionista de Bolsa and/or Credicorp Capital S.A. Corredores de Bolsa, companies authorized to engage in securities activities in Peru, Colombia and Chile, respectively and indirect subsidiaries of Credicorp Capital Ltd. (jointly referred to as “Credicorp Capital”). None of the companies jointly referred to as Credicorp Capital are registered as broker-dealers in the United States and, therefore, they are not subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. This research report is provided for distribution only to “major U.S. institutional investors” in reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any U.S. recipient of this research report wishing to effect any transaction to buy or sell securities or related financial instruments based on the information provided in this research report can do so only through Credicorp Capital Securities Inc., a registered broker-dealer in the United States. Under no circumstances may a U.S. recipient of this research report effect any transaction to buy or sell securities or related financial instruments directly through Credicorp Capital. CCSI or any of its representatives are not involved in any way in the preparation, development, or supervision of the research report and does not have any influence whatsoever over the research content. Any analyst whose name appears on this research report is not registered or qualified as a research analyst with the Financial Industry Regulatory Authority (“FINRA”) and is not a registered representative of Credicorp Capital Securities Inc. and, therefore, is not subject to applicable restrictions under FINRA Rules on communications with a subject company, public appearances and trading securities held by a research analyst account.
A. Analyst Disclosures The functional job title of the person(s) responsible for the recommendations contained in this report is Equity Research Analyst unless otherwise stated on the cover.
Regulation AC - Analyst Certification: Each Equity Research Analyst listed on the front-page of this report is principally responsible for the preparation and content of all or any identified portion of this research report and hereby certifies that with respect to each issuer or security or any identified portion of the report with respect to an issuer or security that the Equity Research Analyst covers in this research report, all of the views expressed in this research report accurately reflect their personal views about those issuer(s) or securities. Each Equity Research Analyst also certifies that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation(s) or view(s) expressed by that Equity Research Analyst in this research report. Each Equity Research Analyst certifies that he or she is acting independently and impartially from the referenced company/shareholders, directors and is not affected by any current or potential conflict of interest that may arise from any of the companies’ activities. Analyst Compensation: The research analyst(s) primarily responsible for the preparation of the content of this research report attest(s) that no part of his or her compensation was, is or will be, directly or indirectly, related to the specific recommendations that he or she expressed in the research report. The equity research analysts responsible for the preparation of this report receive compensation based upon various factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues. Registration of non-US Analysts: Unless otherwise noted, the non-US analysts listed on the front of this report are employees of one of the companies jointly referred as Credicorp Capital, which are non-US affiliates of Credicorp Capital Securities Inc., a SEC registered and FINRA member broker-dealer. Equity Research Analysts employed by the companies jointly referred as Credicorp Capital, are not registered/ qualified as research analysts under FINRA/NYSE rules, are not registered representatives of Credicorp Capital Securities Inc. and may not be subject to NASD Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, public appearances, and trading securities held by a research analyst account. Please refer to www.credicorpcapital.com for further information relating to research and conflict of interest management.
23 B. Ownership and Material Conflicts of Interest
Other significant financial interests
Credicorp Capital Securities Inc. or its affiliates ´beneficially own´ securities issued by the companies referenced in this report according to the following table:
Equal or less than USD Type of instruments Equal or less than USD 50,000 Equal or less than USD 500,000 More than USD 1,000,000 1,000,000 Other equity securities Aceros Arequipa Minsur - Banco de Chile, BCI,CMPC,Colbun,Corpbanca, Falabella,Ripley,SQM-B, Cencosud, ECL, Entel, Santander, Bancolombia,Ecopetrol,GrupoAval, Debt securities Cemargos LATAM, ETB Davivienda,IFS Promigas,Alicorp,Cementos, Endispc1,Engepec1,Engiec1,Inretail, Luz del Sur, Milpo, Minsur, Unacem, Volcan Banco de Bogota, Bancolombia, Canacol, Celsia, Cemargos, Cemex Deriv ativ es on equity /debt Latam Holding, Corficolombiana, - - - securities Ecopetrol, EEB, Grupo Argos,Grupo Aval, Grupo Sura, ISA, Nutresa The research analyst(s) primarily responsible for the preparation of the content of this research report or their household members ´beneficially own´ securities issued by the companies referenced in this report according to the following table:
Type of instruments Equal or less than USD 10,000 Equal or less than USD 50,000 Equal or less than USD 500,000 Equal or less than USD 1,000,000 Entel, Falabella, Celsia, ISA, Canacol, Equity securities CMPC, Santander, Luz del sur, Copec, ECL, Luz del Sur S.A.A. Enel Gx Cemargos, SQM, Enel Chile, Ecopetrol Debt securities - - - - Derivatives on equity/debt - - - - securities C. Compensation and Investment Banking Activities Credicorp Capital Securities Inc. or its affiliates have managed or co-managed a public offering of securities, in the past 12 months, for the following company(ies):BCI, COPEC, EISA, ILC, LAN, Securiy, SK, SMU, Hites, Corficolombiana, Davivienda, Grupo Aval, ISA, Alicorp, Engiec1, Luz del Sur. Credicorp Capital Securities Inc. or its affiliates currently have or had, within the past 12 months, the following company(ies) as investment banking client(s): BCI, COPEC, ECL, EISA, ILC, Invercap, LAN, Santander,Security, SK, SMU, Enjoy, HITES,Corficolombiana, Davivienda, EEB, Grupo Aval, ISA, Aceros Arequipa, AIH, Alicorp, Buenaventura, Cementos Pacasmayo, Engiec1, Ferreycorp, Graña y Montero, IFS, Inretail, Luz del Sur, Milpo, Volcan. Credicorp Capital Securities Inc. or its affiliates also have received compensation, within the past 12 months, for investment banking services from the following company(ies):BCI, COPEC, ECL, EISA, ILC, Invercap, LAN, Santander,Security, SK, SMU, Enjoy, HITES,Corficolombiana, Davivienda, EEB, Grupo Aval, ISA, Aceros Arequipa, AIH, Alicorp, Buenaventura, Cementos Pacasmayo, Engiec1, Ferreycorp, Graña y Montero, IFS, Inretail, Luz del Sur, Milpo, Volcan. Credicorp Capital Securities Inc. or its affiliates also expect to receive or intend to seek compensation, in the next 3 months, for investment banking services from the following company (ies):BCI, COPEC, ECL, EISA, ILC, Invercap, LAN, Santander,Security, SK, SMU, Enjoy, HITES,Corficolombiana, Davivienda, EEB, Grupo Aval, ISA, Aceros Arequipa, AIH, Alicorp, Buenaventura, Cementos Pacasmayo, Engiec1, Ferreycorp, Graña y Montero, IFS, Inretail, Luz del Sur, Milpo, Volcan.
D. Other Compensation and Non-Investment Banking Activities
Credicorp Capital Securities Inc. or its affiliates currently provide or have provided, within the past 12 months, non-investment-banking securities-related services to the following company(ies):Banco de Chile, BCI, COPEC, Corpbanca, EISA, Habitat, ILC, LAN, Santander, SMU, Hites, Avianca, Banco de Bogota, Bancolombia, BVC, Cemargos, Davivienda, Ecopetrol, EEB, ETB, Grupo Argos, Grupo Sura, ISA, Nutresa, Promigas. Credicorp Capital Securities Inc. or its affiliates also have received compensation, within the past 12 months, for non-investment-banking securities-related services from the following company(ies): Banco de Chile, BCI, COPEC, Corpbanca, EISA, Habitat, ILC, LAN, Santander, SMU, Hites, Avianca, Banco de Bogota, Bancolombia, BVC, Cemargos, Davivienda, Ecopetrol, EEB, ETB, Grupo Argos, Grupo Sura, ISA, Nutresa, Promigas. 24 Credicorp Capital Securities Inc. or its affiliates currently provides or have provided, within the past 12 months, non-securities-related services to the following company(ies): Banco de Chile, BCI, Corpbanca, Forus, Habitat, Lan, Santander, Security, SK, Banco de Bogota, Bancolombia, Davivienda, Aceros Arequipa, AIH, Alicorp, Cementos Pacasmayo, Cerro Verde, Endispc1, Engepec1, Engiec1, Ferreycorp, Graña y Montero, Luz del Sur, Milpo, UNACEM, Nexa. Credicorp Capital Securities Inc. or its affiliates also have received compensation, within the past 12 months, for non-securities services from the following company(ies): Banco de Chile, BCI, Corpbanca, Forus, Habitat, Lan, Santander, Security, SK, Banco de Bogota, Bancolombia, Davivienda, Aceros Arequipa, AIH, Alicorp, Cementos Pacasmayo, Cerro Verde, Endispc1, Engepec1, Engiec1, Ferreycorp, Graña y Montero, Luz del Sur, Milpo, UNACEM, Nexa.
E. Market Making Cedicorp Capital Securities Inc. or its affiliates act as market maker in the following company(ies): Almendral, Besalco, Invercap, Masisa, Quiñenco, Ripley, Security, SMSAAM, Enjoy, BVC, EEB, ETB, Alicorp, Cementos Pacasmayo, Engiec1, Ferreycorp, BVL. F. Rating System Stock ratings are based on the analyst’s expectation of the stock’s total return during the twelve to eighteen months following assignment of the rating. This view is based on the target price, set as described below, and on the analyst’s opinion, general market conditions and economic developments. Buy: Expected returns of 5 percentage points or more in excess over the expected return of the local index, over the next 12-18 months. Hold: Expected returns of +/- 5% in excess/below the expected return of the local index over the next 12-18 months. Underperform: Expected to underperform the local index by 5 percentage points or more over the next 12-18 months. Under Review: Company coverage is under review. The IPSA, COLCAP and IGBVL indexes are the selective equity indexes calculated by the Bolsa de Comercio de Santiago, the Bolsa de Valores de Colombia, and the Bolsa de Valores de Lima, respectively. In making a recommendation, the analyst compares the target price with the actual share price, and compares the resulting expected return for the IPSA, the COLCAP, and/or the SPBVL indexes, as estimated by Credicorp Capital S.A. Corredores de Bolsa, Credicorp Capital Colombia Sociedad Comisionista de Bolsa, and/or CredicorpCapital Peru S.A, and then makes a recommendation derived from the difference in upside potential between the shares and the respective index. G. Distribution of Ratings
Buy Hold Underperform Restricted / UR
Companies covered with this rating 41% 49% 8% 3%
Compensation for investment banking 40% 17% 33% 0% services in the past 12 months*
*Percentage of investment banking clients in each rating category.
H. Price Target Unless otherwise stated in the text of this report, target prices in this report are based on either a discounted cash flow valuation or comparison of valuation ratios with companies seen by the analyst as comparable or a combination of the two methods. The result of this fundamental valuation is adjusted to reflect the analyst’s views on the likely course of investor sentiment. Whichever valuation method is used there is a significant risk that the target price will not be achieved within the expected timeframe. Risk factors include unforeseen changes in competitive pressures or in the level of demand for the company’s products. Such demand variations may result from changes in technology, in the overall level of economic activity or, in some cases, in fashion. Valuations may also be affected by changes in taxation, in exchange rates and, in certain industries, in regulations. Investment in overseas markets and instruments such as ADRs can result in increased risk from factors such as exchange rates, exchange controls, taxation, and political and social conditions. This discussion of valuation methods and risk factors is not comprehensive – further information is available upon request.
25 II.ADDITIONAL DISCLOSURES
This product is not for retail clients or private individuals.
The information contained in this publication was obtained from various publicly available sources believed to be reliable, but has not been independently verified by the companies jointly referred as Credicorp Capital, therefore they do not warrant the completeness or accuracy of such information and does not accept any liability with respect to the accuracy or completeness of such information, except to the extent required by applicable law. This publication is a brief summary and does not purport to contain all available information on the subjects covered. Further information may be available on request. This report may not be reproduced for further publication unless the source is quoted. This publication is for information purposes only and shall not be construed as an offer or solicitation for the subscription or purchase or sale of any securities, or as an invitation, inducement or intermediation for the sale, subscription or purchase of any securities, or for engaging in any other transaction. This publication is not for private individuals.
Any opinions, projections, forecasts or estimates in this report are those of the author only, who has acted with a high degree of expertise. They reflect only the current views of the author at the date of this report and are subject to change without notice. The companies jointly referred to as Credicorp Capital have no obligation to update, modify or amend this publication or to otherwise notify a reader or recipient of this publication in the event that any matter, opinion, projection, forecast or estimate contained herein, changes or subsequently becomes inaccurate, or if research on the subject company is withdrawn. The analysis, opinions, projections, forecasts and estimates expressed in this report were in no way affected or influenced by the issuer. The author of this publication benefits financially from the overall success of Credicorp Capital. The investments referred to in this publication may not be suitable for all recipients. Recipients are urged to base their investment decisions upon their own appropriate investigations that they deem necessary. Any loss or other consequence arising from the use of the material contained in this publication shall be the sole and exclusive responsibility of the investor and Credicorp Capital accepts no liability for any such loss or consequence. In the event of any doubt about any investment, recipients should contact their own investment, legal and/or tax advisers to seek advice regarding the appropriateness of investing. Some of the investments mentioned in this publication may not be readily liquid investments. Consequently it may be difficult to sell or realize such investments. The past is not necessarily a guide to future performance of an investment. The value of investments and the income derived from them may fall as well as rise and investors may not get back the amount invested. Some investments discussed in this publication may have a high level of volatility. High volatility investments may experience sudden and large falls in their value which may cause losses. International investing includes risks related to political and economic uncertainties of foreign countries, as well as currency risk.
To the extent permitted by applicable law, no liability whatsoever is accepted for any direct or consequential loss, damages, costs or prejudices whatsoever arising from the use of this publication or its contents.
This report may not be independent of Credicorp Capital’s proprietary interests. Credicorp Capital trades the securities covered in this report for its own account and on a discretionary basis on behalf of certain clients. Such trading interests may be contrary to the recommendation(s) offered in this report
Credicorp Capital (and its affiliates) has implemented written procedures designed to identify and manage potential conflicts of interest that arise in connection with its research business, which are available upon request. The Credicorp Capital research analysts and other staff involved in issuing and disseminating research reports operate independently of Credicorp Capital’s Investment Banking business. Information barriers and procedures are in place between the research analysts and staff involved in securities trading for the account of Credicorp Capital or clients to ensure that price sensitive information is handled according to applicable laws and regulations.
26 Credicorp Capital Securities Inc., is a wholly owned subsidiary of Credicorp Capital Ltd.
Nothing herein excludes or restricts any duty or liability to a customer that Credicorp Capital Securities Inc. have under applicable law. Investment products provided by or through Credicorp Capital Securities Inc. are not insured by the Federal Deposit Insurance Corporation and are not deposits or other obligations of any insured depository institution, may lose value and are not guaranteed by the entity that published the research as disclosed on the front page and are not guaranteed by Credicorp Capital Securities Inc.
Investing in non-U.S. Securities may entail certain risks. The securities referred to in this report and non-U.S. issuers may not be registered under the U.S. Securities Act of 1933, as amended, and the issuer of such securities may not be subject to U.S. reporting and/or other requirements. Rule 144A securities may be offered or sold only to persons in the U.S. who are Qualified Institutional Buyers within the meaning of Rule 144A under the Securities Act. The information available about non-U.S. companies may be limited, and non-U.S. companies are generally not subject to the same uniform auditing and reporting standards as U.S. companies. Securities of some non-U.S. companies may not be as liquid as securities of comparable U.S. companies. Securities discussed herein may be rated below investment grade and should therefore only be considered for inclusion in accounts qualified for speculative investment.
Analysts employed by one of the companies jointly referred to as Credicorp Capital, all of which are non-U.S. broker-dealers, are not required to take the FINRA analyst exam. The information contained in this report is intended solely for certain "major U.S. institutional investors" and may not be used or relied upon by any other person for any purpose. Such information is provided for informational purposes only and does not constitute a solicitation to buy or an offer to sell any securities under the Securities Act of 1933, as amended, or under any other U.S. federal or state securities laws, rules or regulations. The investment opportunities discussed in this report may be unsuitable for certain investors depending on their specific investment objectives, risk tolerance and financial position.
In jurisdictions where Credicorp Capital Securities Inc. is not registered or licensed to trade in securities, or other financial products, transactions may be executed only in accordance with applicable law and legislation, which may vary from jurisdiction to jurisdiction and which may require that a transaction be made in accordance with applicable exemptions from registration or licensing requirements.
The information in this publication is based on sources believed to be reliable, but Credicorp Capital Securities Inc. does not make any representation with respect to its completeness or accuracy. All opinions expressed herein reflect the author's judgment at the original time of publication, without regard to the date on which you may receive such information, and are subject to change without notice.
Credicorp Capital Securities Inc. or its affiliates may have issued other reports that are inconsistent with, and reach different conclusions from, the information presented in this report. These publications reflect the different assumptions, views and analytical methods of the analysts who prepared them. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is provided in relation to future performance.
Credicorp Capital Securities Inc. and any company affiliated with it may, with respect to any securities discussed herein: (a) take a long or short position and buy or sell such securities; (b) act as investment and/or commercial bankers for issuers of such securities; (c) act as market makers for such securities; (d) serve on the board of any issuer of such securities; and (e) act as paid consultant or advisor to any issuer. The information contained herein may include forward-looking statements within the meaning of U.S. federal securities laws that are subject to risks and uncertainties. Factors that could cause a company's actual results and financial condition to differ from expectations include, without limitation: political uncertainty, changes in general economic conditions that adversely affect the level of demand for the company's products or services, changes in foreign exchange markets, changes in international and domestic financial markets and in the competitive environment, and other factors relating to the foregoing. All forward-looking statements contained in this report are qualified in their entirety by this cautionary statement.
Other countries: Laws and regulations of other countries may also restrict the distribution of this report. Persons in possession of this document should inform themselves about possible legal restrictions and observe them accordingly.
27 CONTACT LIST
ANDEAN RESEARCH TEAM SALES & TRADING
Daniel Velandia, CFA Felipe García Head of Research & Chief Economist Head of Sales & Trading [email protected] [email protected] # (571) 339 4400 Ext 1505 # (571) 339 4400 Ext. 1132
EQUITY RESEARCH EQUITY SALES & TRADING
Carolina Ratto Mallie Andre Suaid Head of Equity Research - Retail Head of Equities [email protected] [email protected] # (562) 2446 1768 # (562) 2446 1710
CHILE PERU COLOMBIA CHILE PERU COLOMBIA
Tomás Sanhueza Daniel Córdova Sebastián Gallego, CFA German Barousse Rodrigo Zavala Juan A. Jiménez Head of Equity Research - Consumer & Head of Equity Research Peru Head of Equity Research - Banks Vice President Equity Sales Head of Capital Markets - Peru Head of International Equity Sales Transport. [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] # (562) 2446 1751 # (511) 416 3333 Ext 33052 # (571) 339 4400 Ext 1594 # (562) 2450 1637 # (511) 313 2918 Ext 36044 # (571) 339 4400 Ext 1701
Andrés Cereceda Juan Pablo Brosset Steffania Mosquera Ursula Mitterhofer Renzo Castillo Santiago Castro Associate: Pulp & Paper, Materials, Analyst: Cement & Construction Senior Analyst: Cement & Construction, Senior Associate Sales & Trading Equities Sales International Sales & Trading Healthcare, Pension Funds [email protected] Non Bank financials [email protected] [email protected] [email protected] [email protected] # (511) 416 3333 Ext 36018 [email protected] # (562) 2450 1613 # (511) 416 3333 Ext 36167 # (571) 339 4400 Ext 1344 # (562) 2446 1798 # (571) 339 4400 Ext 1025 Ana María Bauzá Maria Fernanda Luna Credicorp Capital Securities INC Joel Lederman Daniel Mora Corporate Access Equities Sales Associate - Retail Analyst- Banks [email protected] [email protected] [email protected] [email protected] # (562) 2450 1609 # (511) 416 3333 Ext 36182 Rafael Solis # (562) 2651 9332 # (571) 339 4400 Ext 1609 Institutional Equity Sales Credicorp Capital UK Ltd. [email protected] Felipe Navarro Nicolas Erazo # (786) 999 1619 Senior Analyst: Construction, Industrial & Ports Analyst - Utilities Marilyn Macdonald [email protected] [email protected] International Equity Sales # (562) 2450 1688 # (571) 339 4400 Ext 1365 [email protected] # (4477) 7151 5855 Macarena Ossa Analyst - Utilities [email protected] # (562) 2450 1694
Agustina Maira Research Coordinator [email protected] # (562)2434 6433
FIXED INCOME & ECONOMICS RESEARCH FIXED INCOME SALES & TRADING
CHILE PERU COLOMBIA Andrés Nariño Alfredo Bejar Director Sales Offshore Head of International FI Josefina Valdivia Cynthia Huaccha Camilo A. Durán [email protected] [email protected] Head of Fixed Income Fixed Income Associate Macro Analyst # (571) 339-4400 Ext. 1459 # (511) 205 9190 Ext 36148 [email protected] [email protected] [email protected] # (562) 2651 9308 # (511) 416 3333 Ext 37946 # (5511) 339 4400 Ext. 1383 CHILE PERU COLOMBIA
Alejandro Toth Guido Riquelme Evangeline Arapoglou Carlos Sanchez Analyst Fixed Income Head of Capital Markets Chile Head of international FI Sales Head of Fixed Income [email protected] [email protected] [email protected] [email protected] # (562) 2651 9368 # (562) 2446 1712 # (511) 416 3333 Ext 36099 # (571) 323 9154
Juan Francisco Mas Andrés Valderrama Gustavo Trujillo Fixed Income Sales Fixed Income Sales Head of Sales [email protected] [email protected] [email protected] # (562) 2446 1720 # (511) 416 3333 Ext 40352 # (571) 323 9252
Rafael Gaete Natalia Jurado Andrés Agudelo Local Fixed Income Sales Fixed Income Sales Fixed Income Sales [email protected] [email protected] [email protected] # (562) 2651 9336 # (511) 416 3333 Ext 36027 # (571) 339 4400 Ext 1180
Diego Hidalgo Pamela Horna Emilio Luna Local Fixed Income Sales Fixed Income Sales Fixed Income Sales [email protected] [email protected] [email protected] # (562) 2450 1693 # (511) 313 2902 Ext. 42942 # (571) 339 4400
Lizeth Espiritu Carla Tejada Credicorp Capital Securities INC Fixed Income Sales Fixed Income Analyst [email protected] [email protected] # (562) 2450 1619 # (511) 416 3333 Ext. 36143 Jhonathan Rico Fixed Income Trader Ana Lucía Rondón Medina [email protected] Sales Renta Fija # 1 (786) 9991614 [email protected] # (511) 416 3333 Ext. 40339 Michael Tafur Fixed Income [email protected] # 1 (786) 9991607
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