Equity Research Me xico

EQUITY STRATEGY Special Note August 15, 2018

www..com Turkey concerns investors @analisis_fundam

. Strong risk aversion sentiment in stock markets due to continuous Equity Research Team geopolitical and trade tensions, now exacerbated by the imposition of [email protected] new tariffs by Turkey Manuel Jiménez . This week, our portfolio’s performance was negative, and similar to Director Equity Research [email protected] the benchmark (MEXBOL). At the moment, we are not suggesting any changes as we believe cautiousness should prevail Relative performance Weekly* YTD LTM

Relevant profit taking in the stock markets. Throughout the week, the main Portfolio -2.65% -0.89% 0.95% stock indices reflected widespread losses, amid greater commercial and S&P/MEXBOL -2.68% -1.62% -5.08% Spread 0.04% 0.72% 6.03% geopolitical tensions abroad. Investors remain concerned about the situation ** Wednesday to Wednesday between China and the US, while the conflict with Turkey has now been exacerbated. President Erdogan's decision to impose tariffs between 25% and NOTICE: It is important to mention that for the returns computation of the present strategy, 140% on a wide range of US imported products worth US$1bn, that include transaction costs (buy-sell differential, or cars, alcoholic beverages, tobacco, rice and other foods, has increased fears of commissions) are not taken into account and closing prices of the day are used, so it is not further escalating tensions. This has been reflected in a strong risk aversion possible to replicate it at 100% . In spite of the sentiment, with investors’ preference towards safe havens assets, a stronger aforementioned, we consider that it is a good theoretical exercise aimed at patrimonial and dollar, and relevant pressures on commodity and oil prices. private banking clients in order to make more explicit some preferences of the stock market Strategy: Unchanged. This week, the MEXBOL suffered an important profit research team on the weights of the MEXBOL’s issuers that we consider most appropriate in taking, affected by the generalized nervousness among investors, and being accordance with the continuous evaluation similar to the performance of our portfolio (-2.68%). In light of prevailing carried out finished. uncertainty, due to the global conflicts that remain, we suggest keeping a cautious stance. Thus, we prefer to maintain the structure of our model portfolio unchanged.

Weekly Variation in Prices and Portfolio Structure Portfolio – Evolution LTM Portfolio, MEXBOL

Weekly Structure Structure Proposed Proposed Stock 5% Variation* 08-Aug 15-Aug Change Structure AC* -2.78% 3.48% 3.47% 3.47% ALPEKA -2.68% 5.85% 5.85% 5.85% 0% ALSEA* -2.15% 1.79% 1.80% 1.80%

AMXL -3.44% 17.39% 17.25% 17.25% -5% CEMEXCPO -4.86% 9.72% 9.50% 9.50% FEMSAUBD -2.43% 16.23% 16.26% 16.26% GAPB 0.89% 6.33% 6.56% 6.56% -10% GMEXICOB -4.74% 8.80% 8.61% 8.61% HOTEL* 0.37% 1.96% 2.02% 2.02% IENOVA* -3.68% 4.48% 4.43% 4.43% -15% LACOMUBC -0.09% 2.19% 2.24% 2.24% A-17 O-17 D-17 F-18 A-18 J-18 MEGACPO -1.80% 4.81% 4.86% 4.86% MEXCHEM* -3.19% 7.59% 7.54% 7.54% IPC Portfolio WALMEX* -0.42% 9.38% 9.60% 9.60% 100.0% 100.0% 100.0%

Source: Banorte. *Wednesday to Wednesday.

This document is provided for the reader’s convenience only. The translation from the original Spanish version was made by Banorte’s staff. Discrepancies may possibly arise between the original document in Spanish and its English translation. For this reason, the original research paper in Spanish is the only official document. The Spanish version was released before the English translation. The original document entitled “Estrategia Capitales” was released on August 15, 2018. Document for distribution among public

Document for distribution among public

Current Structure Proposed changes - For this week we are not suggesting any changes Weekly Stock Rationale Suggestion

The following charts indicate the portfolio structure, detailing the exposure of each issuer in the portfolio, with respect to its weight in the MEXBOL. Portfolio overweights and underweights Weightings- Portfolio & Benchmark % % 20.0% ALPEKA 5.5% 18.0% MEXCHEM* 5.3% AMXL 4.8% 16.0% GAPB 4.2% 14.0% MEGACPO 4.0% 12.0% FEMSAUBD 3.1% 10.0% CEMEXCPO 2.9% 8.0% IENOVA* 2.9% LACOMUBC 2.2% 6.0% GMEXICOB 2.2% 4.0% HOTEL* 2.0% 2.0% AC* 1.8% 0.0%

ALSEA* 0.9%

AC* AMXL

WALMEX* 0.7% GAPB

ALSEA*

HOTEL*

ALPEKA

IENOVA* WALMEX*

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% MEGACPO

GMEXICOB

MEXCHEM*

FEMSAUBD

LACOMUBC CEMEXCPO

IPC Portfolio

Source: Bloomberg, Banorte Source: Bloomberg, Banorte

The next graph shows the sectorial structure of our portfolio, while the table on the right indicates the number of times we are sub or over sectorial exposed and the stocks selected for it. Portfolio structure by sector Weightings by sector- Portfolio & Benchmark % % Energy Services Esp Commerce Sector Portfolio Mexbol Weight Stocks 4.5% 2.0% 1.8% Telecoms 22.2% 19.8% 1.1x Amx, Mega Aeronautical Beverage 19.7% 17.2% 1.1x Ac, Femsa 6.3% Telecoms 22.2% Petrochemical 13.4% 2.5% 5.3x , Mexchem Retail 11.6% 9.4% 1.2x Lacomer, Walmex Mining 8.8% Cement 9.7% 6.3% 1.5x Mining 8.8% 7.3% 1.2x Gmexico Aeronautical 6.3% 6.0% 1.0x Gap Cement Energy 4.5% 1.6% 2.7x Ienova 9.7% Services 2.0% 0.0% N.A. Hotel Esp Commerce 1.8% 4.8% 0.4x Alsea Beverage 19.7% Industrial 4.1% Retail Infrastructure 1.3% 11.6% Financial 14.8% Petrochemical 13.4% Food 3.7% Total 100.0% 100.0%

Source: Bloomberg, Banorte Source: Bloomberg, Banorte

Risk-return ratio. The following graphs show the potential performance of our portfolio and the implicit risk (volatility) vs. the MEXBOL, as well as the estimated return and beta of each issuer in the portfolio.

Model Portfolio – Expected Return vs Volatility (Standard Deviation)

11.5%

11.0% (14.4%, 11.1%) (20.6%, 11.2%)

Volatility 10.5%

10.0% 12% 15% 18% 21% 24% Return Source: Bloomberg, Banorte

Stock in the portfolio- Beta & Expected Return

40% Ienova Cemex 35% Alpek Gmexico 30% Ac 25% Amx Gap 20% Hotel Alsea 15% Walmex Mexchem 10% Mega Femsa 5% Lacomubc 0% -5% 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 -10%

Source: Bloomberg, Banorte

Main Fundamentals of the Portfolio Members Sector Stock Fundamentals  is the second largest beverage bottler of the Coca Cola brand in Latin America. In it AC * participates in the markets of , Ecuador and Peru (Lindley).  It has a stake in the snack segment, where it maintains a strong growth rate with the Bokados, Wise and Inalecs Not Covered brands. Beverages  One of the most profitable companies in the beverage market in with a constant dividend payment policy. Consensus PT:  It signed a definitive agreement with The Coca-Cola Co (TCCC) to be the bottler in the Southwest of the USA. AC will contribute with its operations in Mexico, Argentina, Peru and Ecuador. TCCC will provide 9 plants in Texas, $149.18 Oklahoma, Arkansas and New Mexico. Annual sales in the territories contributed by TCCC are worth USD$2.350 bn.  However, the impact on profitability will have to be monitored due to higher prices of some inputs, as well as the sugar concentrate. In 2018, an improvement in terms of margins is expected derived from obtaining synergies.  Femsa has an attractive and diversified business portfolio, defensive in the midst of an environment like the current one. Femsa UBD  Despite the uncertainty that exists regarding the impact that a renegotiation of NAFTA could have on consumption, especially in the northeast of the country, where Femsa has a strong exposure through OXXO, we believe that this Not Covered format will continue to be a growth booster, through new openings.  The gas station business should experience a good growth trend at the sales level as a result of the increase in Consensus PT: energy prices, although the stricter regulation could mean higher maintenance costs for the stations. Eventually, we think that the liberalization of fuels prices could open windows of opportunity for inorganic growth in this segment, this $198.96 by acquiring small groups of stations that are less efficient.  We expect Kof to contribute to the revenue increase, although with a lower profitability, stemmed from the integration of Vonpar and CCBPI (which has lower margins), in addition to the increase of some inputs such as sugar, PET and the sugar concentrate.  It announced a plan called "A stronger CEMEX" in order to accelerate the obtaining of its investment grade and improve the total return of its shareholders. Cemex CPO  Aimed to improve operational performance and create value with a focus on prices, discipline in costs and Cement outsourcing of support activities. PT2018: $17.50  Better global perspectives for the next decade should support the performance of its regions.  Initiatives (reduction) in cash flow items aimed at recovering their investment grade.  2018 forecasts (USD): +5.1% Sales, +3.2% EBITDA and an EBITDA margin of 18.5%.  La Comer is a self-service store operator focused on serving the medium, medium-high and high income segments of the population; mainly in the Metropolitan Area of and the center of the country.  The company is establishing an aggressive growth plan aimed to double its number of stores and move from 54 units in 2016 to 117 in 2022. Lacomer UBC  We believe that this could be achieved without the margins being affected by the pre-operational expenses of the new Retail stores, while maintaining its solid financial structure, as it will grow from the operation flow itself. PT2018: $23.00  We expect profitability to climb derived from the development towards the high income segment and a consequent change in the sales mix towards a more favorable one, to which we should add a higher operating leverage and better commercial conditions, as a result of the new dimension of the company.  In this way, in 2018, we expect a most aggressive domestic growth and expansion in terms of profitability in the retail sector: SSS+ 8%, SS + 15.4%, EBITDA + 6.9%. With a reduction in the FV/EBITDA multiple of 12.7x LTM to 12.3x 2018E, below WALMEX.  The company has implemented a focused growth strategy, seeking to meet specific characteristics and needs of each Walmex * of the different segments of the population pyramid in Mexico.  At the same time, significant investments in digitalization and logistics should increase the company’s efficiency, and allow a greater deployment of its omnichannel offer. We believe that this would not only allow it to maintain its PT2018: $59.00 leadership position in the sector -even in a challenging environment for consumption- but also lay the foundations to guarantee the sustainability of the business in the face of the future growth of electronic commerce.  As for our PT, Walmex would trade at a EV/EBITDA multiple of 16.5x, very similar to the current multiple of 16.1x.  Alsea is a operator with 3,353 units and operations in 7 countries. In Latin America, it operates establishments of the brands , Domino's, Chili's, PF Chang's Italianni's, Pei Wei. , CPK, Vips Alsea and . Specialized Commerce  In , along with Grupo Zena, it added brands such as "Domino's Pizza", "Burger King", "Foster's Hollywood", PT2018: $77.00 "Cañas y Tapas", "La Vaca Argentina", and "il Tempietto", the last four own brands in .  In 2018, we expect revenue growth of 11.6% and 14.2% in terms of EBITDA, equivalent to a 30bp expansion in the margin, due to economies of scale and the first benefits of the new Alsea Operations Center and the transformation of Vips.  Company dedicated to the development, construction and operation of energy infrastructure in Mexico. It includes several business lines involving transportation and storage of gas, liquefied natural gas, natural gas distribution and power generation. Ienova *  One of its strengths is not only its leadership and experience in large infrastructure projects, but also a diversified portfolio, with stable, predictable and growing long-term flows thanks to the structure of contracts with a solid base, Energy with attractive returns (a return on projects of 9%-11% in USD terms, unlevered and after taxes). PT2018: $118.00  The company intends to continue capitalizing on the opportunities of a potential joint business that could be worth up to USD$45 bn by 2025 through different infrastructure projects in natural gas (USD$10 bn), energy (USD$25 bn) and fluids (USD$10 bn).  For 2018, we anticipate solid revenue increases of USD$1.34 bn and an EBITDA of USD$853 million, those are increases of 15.1% and 12.4%, respectively.

Sector Stock Fundamentals  First private airport group in terms of passenger traffic in Mexico. It operates 12 airports mainly in the Pacific region of the country. Gap B  Positive perspective of the airport sector. Airports  Cash generator this allows it to pay attractive dividends. PT2018: $220.00  The integration of the Jamaica airport "MBJ, represents a significant geographical diversification.  2018 Estimations: +9.5% in terms of total passenger traffic, +14.5% in operating revenues and +13.9% in EBITDA with an EBITDA margin (without considering the revenues from improvements to concession assets) of 69.6%.  The environment continues to be favorable for GMexico, as its Mining operations will continue to reflect higher profitability, with an average copper price estimated at USD$3.00 per pound in 2018. Gmexico B  In the GMXT transportation division, the acquisition of the Florida East Coast Railway (FEC) will support sustained growth, with a more balanced mix of MXN and USD revenue, also providing greater stability to the group's income. Mining PT2018: $70.80  GMexico maintains a financial strength that is very important in an environment like the current one, with a Net Debt/EBITDA ratio of 1.9x and that we expect to decrease to 1.7x in 2018.  Our 2018 estimations assume an annual growth of 12.4% and 16.5% in revenues and EBITDA, respectively. The expectation of higher flows will continue to support the distribution of attractive dividends, with an estimated return of 2.8% based on current prices.  We are still waiting for the sale of the electric co-generation plants expected by the end of this year to be completed, which would be a catalyst for the share price.  Regarding the situation with M&G, M&G Mexico maintained a standard level of PET production with the support of Alpek, through guaranteed financing, while preparing a definitive restructuring plan. Alpek's priorities in this process Alpek A are to maximize the recovery of outstanding debts and maintain the supply of PTA to the restructured entity. At M&G Chemicals USA, the restructuring process is underway, and it is expected to obtain the required approvals to complete the PT2018: $39.50 transaction in association with Indorama and Far Eastern, although there is no clear date, waiting to be completed before the end of the year.  Our 2018 estimates include revenues of MXN$133.36 bn (USD$6.785 bn) and an EBITDA of MXN$14.691 bn (USD$769 million), i.e., increases of 34.7% and 96.3% YoY, respectively. The above is supported by the favorable environment in Polyester, with higher sales volumes (+15.0% YoY), thanks to the incorporation of Suape/Citepe and higher prices of raw materials, in line with the trend of recovery in the price of oil.  Mexchem’s solid fundamentals coupled with better vertical integration of operations, strategic acquisitions such as Netafim (global leader in the development, manufacture and distribution of advanced drip solutions and micro Mexchem * irrigation solutions based in Tel Aviv, Israel) with lower needs for relevant investments, and a healthy balance, support good prospects for the company by 2018. With a growth guidance that includes annual growth now between 25% and

30% in EBITDA, aligned with our estimates, we reiterate our vision optimist being Mexchem one of our favorite 2018 TP: $72.50 issuers for this year.  For 2018, we anticipate revenues of USD$7.376 bn and an EBITDA of USD$1.445 bn, which would represent increases of 26.5% and 30.6% YoY, mainly driven by the integration of Netafim and the operation of the ethylene cracker in Texas.  HOTEL is one of the leading companies in the hotel industry in Mexico. The company has the ability to identify conversion, acquisition and development opportunities that generate value. In addition, it focuses on making profitable Hotel * and improving the results of hotel assets that are not well managed. Fragmentation in the industry gives an attractive Services opportunity for growth and the tourism sector has positive prospects. PT2018: $12.50  The company's flexible operating model allows it to adapt its hotels and react to market trends and conditions with an efficient cost structure, which has led to an increasing profitability.  The integration of rooms that are in maturity and development will boost the growth in their results for 2018. We expect an increase in revenues of 43% and in EBITDA of 45%, with a margin of 33.9%.  AMX is the largest telecommunications operator in Latin America, and by the end of 2Q18, it had a base of 362.4 million Income-Generating Units (UGI by its Spanish acronym). At the end of the quarter, the post-payment base represents 26.2% of the UGI base. In 2018, we estimate an increase of 4.4% in the post-payment base.  ARPU's good performance due to the demand for mobile and fixed internet services that offset a drop in voice revenues and pressures on Pay TV revenues. Amx L Telecomms  The migration of users from pre-payment to post-payment plans continues to advance due to the offer of value-added services combined with a reduction in rates and a greater volume of data in the tariff plans. PT2018: $19.50  We believe that the increase in profitability in 2Q18 could give confidence to investors in regards to the firm’s performance for the second half of the year. Thus, for 2018 we foresee an expansion in the EBITDA margin of 2.7pp, derived from efficiencies and higher revenue of the data service.  We expect a greater generation of cash flow by reducing capital investments and shares repurchase. Management intends to reduce the ND/EBITDA ratio to 1.5x in 2019 and distribute a greater amount of cash to its shareholders once it reaches this goal.  Megacable is an attractive investment opportunity due to its profitability, healthy financial structure and growth potential. At the end of 2Q18, the company had a base of Income-Generating Units (UGI by its Spanish acronym) of 7.6 million. For 2018, we anticipate an increase of 14.7% in the UGI base to 8.2 million. Mega CPO  Megacable's commercial strategy has allowed it to increase the number of internet and telephone subscribers at a faster rate than the competition. In addition, the company is very competitive in its services offer for the business

segment. PT2018: $92.00  The company continues to gain position in the business segment through an attractive commercial offer and solutions tailored to customers.  With the 2Q18 figures incorporated, we estimate an increase of 13.8% in sales and 21.7% in terms of EBITDA for the 2018, with a slight advance in profitability. The financial structure is solid and we estimate a Net Debt/EBITDA ratio of 0x. Source: Banorte

Stocks’ indicators The following table shows a summary of recommendations, price targets, expected returns, weighting and main multiples of the companies under our coverage, as well as some other companies listed on the .

General Information of Companies in BMV

Ticker Recommendation Source Actual Price Var Portfolio IPC EV/EBITDA P/E P/B Price Target % Weight Weight Actual S/5Y Av Actual S/5Y Av Actual S/5Y Av Var YTD

AC* C 121.48 149.18 22.8% 3.5% 1.6% 9.24 -14% 16.10 -25% 1.94 -37% -10.6% ALFAA Buy B 24.36 30.00 23.2% 2.9% 8.35 1% 192.59 1.79 -28% 12.7% ALPEKA Buy B 30.19 39.50 30.8% 5.9% 0.4% 33.01 2.23 22% 28.7% ALSEA* Buy B 65.00 77.00 18.5% 1.8% 0.9% 10.33 -8% 40.40 -16% 5.84 8% 1.0% AMXL Buy B 15.71 19.50 24.1% 17.3% 12.4% 6.76 0% 6.24 30% -7.3% ASURB Hold B 346.32 375.00 8.3% 2.4% 14.17 -12% 17.60 -24% 3.86 8% -3.3% AXTELCPO Buy B 3.86 5.30 37.3% 5.62 -48% 28.69 260% 2.1% AZTECACP Sell B 2.42 2.50 3.3% 7.57 9% 2.36 42% -30.9% BIMBOA C 38.63 47.22 22.2% 1.6% 10.64 -1% 50.83 15% 2.28 -35% -11.2% BOLSAA C 36.28 41.67 14.8% 10.25 2% 16.42 -25% 3.64 24% 7.2% BSMXB C 30.18 32.60 8.0% 1.8% 10.52 -27% 1.68 -17% 5.0% CEMEXCPO Buy B 13.12 17.50 33.4% 9.5% 6.5% 10.27 6% 17.81 1.05 -14% -10.7% CHDRAUIB C 43.01 48.88 13.6% 8.20 14% 19.37 -13% 1.43 -13% 19.2% CREAL* Buy B 23.76 39.00 64.1% 5.41 -36% 0.66 -62% -3.3% CUERVO* C 25.68 32.32 25.9% 0.5% 14.68 -7% 18.74 1.97 -18.5% CULTIBAB C 15.38 30.25 38% 35.65 0.59 -57% -1.3% ELEKTRA* C 796.47 1.7% 18.38 23% 28.84 2.56 27% 13.7% FEMSAUBD C 181.97 198.96 9.3% 16.3% 13.2% 13.14 4% 15.11 -43% 2.69 -5% -1.6% FIBRAMQ C 20.01 25.31 26.5% 11.46 3.48 -52% 0.58 -29% 2.1% FIHO12 Buy B 11.97 15.70 31.2% 11.16 -7% 15.89 -49% 0.75 -17% 7.5% FINN13 C 11.78 12.56 6.6% 0.64 -22% 13.5% FUNO11 C 24.79 34.96 41.0% 12.75 -18% 10.18 -33% 0.66 -36% -14.4% GAPB Buy B 178.72 220.00 23.1% 6.6% 2.4% 13.05 -11% 20.47 -13% 5.46 51% -10.4% GCARSOA1 C 69.47 70.50 1.5% 0.9% 11.61 9% 14.63 -29% 1.68 -33% 7.0% GENTERA* Hold B 19.73 21.50 9.0% 0.7% 13.05 -23% 1.89 -47% 20.4% GFINBURO C 30.46 31.37 3.0% 1.7% 3.85 -28% 10.11 -32% 1.46 -34% -5.2% GFNORTEO C 128.20 144.93 13.0% 10.6% 7.95 -4% 13.34 -11% 2.40 18% 18.9% GICSAB Buy B 9.08 14.00 54.2% 23.46 0.72 -1.4% GMEXICOB Buy B 54.09 70.80 30.9% 8.6% 6.4% 6.03 -15% 14.53 -9% 1.77 -18% -16.7% GMXT* C 31.55 36.10 14.4% 0.7% 9.89 21.68 2.72 4.3% GSANBOB1 C 19.10 23.50 23.0% 7.17 3% 11.65 -27% 1.35 -31% -2.6% GRUMAB C 234.63 275.17 17.3% 1.7% 10.29 -2% 16.64 -6% 3.91 -13% -5.9% HERDEZ* C 42.29 49.53 17.1% 9.94 -2% 16.16 -44% 2.23 -17% -7.4% HOTEL* Buy 10.86 12.50 15.1% 2.0% 14.67 24.69 1.24 5.6% ICHB C 88.15 88.60 0.5% 6.49 8% 1.06 -14% 4.9% IENOVA* Hold B 87.44 118.00 34.9% 4.4% 1.6% 14.59 -3% 6.55 -74% 1.47 -24% -9.3% KIMBERA C 33.03 36.84 11.5% 1.6% 13.44 -6% 23.93 -10% 31.62 97% -2.4% KOFL C 114.14 141.97 24.4% 2.0% 43.96 37% 2.07 -17% -16.7% LABB Hold B 16.00 22.00 37.5% 8.16 -20% 12.40 2.18 -28% -22.0% LACOMUBC Buy C 21.18 23.00 8.6% 2.2% 29.42 4.6% LALAB C 19.50 24.53 25.8% 0.3% 9.09 -14% 21.19 -6% 1.88 -40% -29.4% LIVEPOLC Hold B 134.74 140.00 3.9% 0.9% 10.86 -6% 17.03 -28% 1.97 -35% 8.4% MEGACPO Buy B 84.36 92.00 9.1% 4.9% 0.9% 8.44 -4% 21.79 17% 2.83 3% 5.4% MEXCHEM* Hold B 64.04 72.50 13.2% 7.5% 2.2% 8.73 12% 13.06 -55% 2.58 30% 31.7% NEMAKA Buy B 15.58 16.00 2.7% 0.3% 5.54 4% 17.44 1.29 9.4% OHLMEX* C 28.61 29.82 4.2% 5.24 7% 5.61 -5% 0.63 -18% -12.3% OMAB Buy B 118.43 125.00 5.5% 1.3% 12.43 6% 18.50 -12% 6.87 44% 16.5% PE&OLES* C 308.09 417.64 35.6% 0.9% 4.88 -16% 10.66 1.57 -29% -24.8% PINFRA* Buy B 198.13 230.00 16.1% 1.5% 10.03 -6% 17.11 -24% 2.28 -40% 1.8% RA C 114.03 127.67 12.0% 0.4% 3.10 13.56 2.43 6.2% RASSINIA Buy B 37.46 45.00 20.1% 4.29 0% 8.49 2.00 10% 6.1% SIMECB C 59.00 75.07 27.2% 0.82 -19% -3.8% SITESL C SORIANAB Hold B 33.73 35.50 5.2% 6.83 -12% 14.13 -30% 1.01 -34% -15.4% SPORTS Hold B 18.20 21.50 18.1% 6.48 -26% 27.58 -42% 1.56 -17% -0.3% TLEVICPO Buy B 70.04 81.00 15.6% 5.9% 7.89 -16% 30.59 -22% 2.29 -16% -4.8% VOLARA Sell B 13.23 12.50 -5.5% 0.4% 66.15 1.44 -56% -15.9% WALMEX* Hold B 52.41 59.00 12.6% 9.6% 8.9% 15.48 9% 26.07 0% 6.14 39% 9.2% S&P/BMV IPC 48,556.69 Source: BM V, Banorte, Bloomberg.

B= Banorte C= Bloomberg Consensus

Certification of Analysts. We, Gabriel Casillas Olvera, Delia Maria Paredes Mier, Alejandro Padilla Santana, Manuel Jiménez Zaldívar, Tania Abdul Massih Jacobo, Katia Celina Goya Ostos, Juan Carlos Alderete Macal, Víctor Hugo Cortes Castro, Marissa Garza Ostos, Miguel Alejandro Calvo Domínguez, Hugo Armando Gómez Solís, Gerardo Daniel Valle Trujillo, José Itzamna Espitia Hernández, Valentín III Mendoza Balderas, Santiago Leal Singer and Francisco José Flores Serrano certify that the points of view expressed in this document are a faithful reflection of our personal opinion on the company (s) or firm (s) within this report, along with its affiliates and/or securities issued. Moreover, we also state that we have not received, nor receive, or will receive compensation other than that of Grupo Financiero Banorte S.A.B. of C.V for the provision of our services.

Relevant statements. In accordance with current laws and internal procedures manuals, analysts are allowed to hold long or short positions in shares or securities issued by companies that are listed on the Mexican Stock Exchange and may be the subject of this report; nonetheless, equity analysts have to adhere to certain rules that regulate their participation in the market in order to prevent, among other things, the use of private information for their benefit and to avoid conflicts of interest. Analysts shall refrain from investing and holding transactions with securities or derivative instruments directly or through an intermediary person, with Securities subject to research reports, from 30 calendar days prior to the issuance date of the report in question, and up to 10 calendar days after its distribution date.

Compensation of Analysts.

Analysts’ compensation is based on activities and services that are aimed at benefiting the investment clients of Casa de Bolsa Banorte Ixe and its subsidiaries. Such compensation is determined based on the general profitability of the Brokerage House and the Financial Group and on the individual performance of each analyst. However, investors should note that analysts do not receive direct payment or compensation for any specific transaction in investment banking or in other business areas. Last-twelve-month activities of the business areas. Grupo Financiero Banorte S.A.B. de C.V., through its business areas, provides services that include, among others, those corresponding to investment banking and corporate banking, to a large number of companies in Mexico and abroad. It may have provided, is providing or, in the future, will provide a service such as those mentioned to the companies or firms that are the subject of this report. Casa de Bolsa Banorte or its affiliates receive compensation from such corporations in consideration of the aforementioned services.

Over the course of the last twelve months, Grupo Financiero Banorte S.A.B. C.V., has not obtained compensation for services rendered by the investment bank or by any of its other business areas of the following companies or their subsidiaries, some of which could be analyzed within this report.

Activities of the business areas during the next three months.

Casa de Bolsa Banorte, Grupo Financiero Banorte or its subsidiaries expect to receive or intend to obtain revenue from the services provided by investment banking or any other of its business areas, by issuers or their subsidiaries, some of which could be analyzed in this report.

Securities holdings and other disclosures.

As of the end of last quarter, Grupo Financiero Banorte S.A.B. of C.V. has not held investments, directly or indirectly, in securities or derivative financial instruments, whose underlying securities are the subject of recommendations, representing 1% or more of its investment portfolio of outstanding securities or 1 % of the issuance or underlying of the securities issued.

None of the members of the Board of Grupo Financiero Banorte and Casa de Bolsa Banorte, along general managers and executives of an immediately below level, have any charges in the issuers that may be analyzed in this document.

The Analysts of Grupo Financiero Banorte S.A.B. of C.V. do not maintain direct investments or through an intermediary person, in the securities or derivative instruments object of this analysis report. Guide for investment recommendations.

Reference

BUY When the share expected performance is greater than the MEXBOL estimated performance. HOLD When the share expected performance is similar to the MEXBOL estimated performance. SELL When the share expected performance is lower than the MEXBOL estimated performance. Even though this document offers a general criterion of investment, we urge readers to seek advice from their own Consultants or Financial Advisors, in order to consider whether any of the values mentioned in this report are in line with their investment goals, risk and financial position.

Determination of Target Prices

For the calculation of estimated target prices for securities, analysts use a combination of methodologies generally accepted among financial analysts, including, but not limited to, multiples analysis, discounted cash flows, sum-of-the-parts or any other method that could be applicable in each specific case according to the current regulation. No guarantee can be given that the target prices calculated for the securities will be achieved by the analysts of Grupo Financiero Banorte S.A.B. C.V, since this depends on a large number of various endogenous and exogenous factors that affect the performance of the issuing company, the environment in which it performs, along with the influence of trends of the stock market, in which it is listed. Moreover, the investor must consider that the price of the securities or instruments can fluctuate against their interest and cause the partial and even total loss of the invested capital.

The information contained hereby has been obtained from sources that we consider to be reliable, but we make no representation as to its accuracy or completeness. The information, estimations and recommendations included in this document are valid as of the issue date, but are subject to modifications and changes without prior notice; Grupo Financiero Banorte S.A.B. of C.V. does not commit to communicate the changes and also to keep the content of this document updated. Grupo Financiero Banorte S.A.B. of C.V. takes no responsibility for any loss arising from the use of this report or its content. This document may not be photocopied, quoted, disclosed, used, or reproduced in whole or in part without prior written authorization from Grupo Financiero Banorte S.A.B. of C.V.

GRUPO FINANCIERO BANORTE S.A.B. de C.V

Research and Strategy

Gabriel Casillas Olvera Chief Economist and Head of Research [email protected] (55) 4433 - 4695

Raquel Vázquez Godinez Assistant [email protected] (55) 1670 - 2967

Economic Analysis

Delia María Paredes Mier Executive Director of Economic Analysis [email protected] (55) 5268 - 1694 Katia Celina Goya Ostos Senior, Global Economist [email protected] (55) 1670 - 1821 Miguel Alejandro Calvo Economist, Regional [email protected] (55) 1670 - 2220 Domínguez Francisco José Flores Serrano Economist, Mexico [email protected] (55) 1670 - 2957 Lourdes Calvo Fernández Analyst (Edition) [email protected] (55) 1103 - 4000 x 2611

Fixed income and FX Strategy

Alejandro Padilla Santana Head Strategist – Fixed income and FX [email protected] (55) 1103 - 4043 Juan Carlos Alderete Macal, CFA FX Senior Strategist [email protected] (55) 1103 - 4046 Santiago Leal Singer Strategist Fixed income and FX [email protected] (55) 1670 - 2144

Equity Strategy

Director Equity Research — Manuel Jiménez Zaldivar [email protected] (55) 5268 - 1671 Telecommunications / Media Victor Hugo Cortes Castro Technical Analysis [email protected] (55) 1670 - 1800 Equity Research – Conglomerates / Financials/ Marissa Garza Ostos [email protected] (55) 1670 - 1719 Mining / Petrochemicals Equity Research – Airlines / Airports / Cement José Itzamna Espitia Hernández [email protected] (55) 1670 - 2249 / Infrastructure / REITs Equity Research – Auto Parts/ Consumer Valentín III Mendoza Balderas [email protected] (55) 1670 - 2250 Discretionary / Real Estate / Retail Itzel Martínez Rojas Analyst [email protected] (55) 1670 - 2251

Corporate Debt

Tania Abdul Massih Jacobo Director Corporate Debt [email protected] (55) 5268 - 1672 Hugo Armando Gómez Solís Senior, Corporate Debt [email protected] (55) 1670 - 2247 Gerardo Daniel Valle Trujillo Analyst, Corporate Debt [email protected] (55) 1670 - 2248

Wholesale Banking

Armando Rodal Espinosa Head of Wholesale Banking [email protected] (55) 1670 - 1889 Alejandro Eric Faesi Puente Head of Global Markets and Institutional Sales [email protected] (55) 5268 - 1640 Alejandro Aguilar Ceballos Head of Asset Management [email protected] (55) 5268 - 9996 Head of Investment Banking and Structured Arturo Monroy Ballesteros [email protected] (55) 5004 - 1002 Finance Head of Transactional Banking, Leasing and Gerardo Zamora Nanez [email protected] (81) 8318 - 5071 Factoring Jorge de la Vega Grajales Head of Government Banking [email protected] (55) 5004 - 5121 Luis Pietrini Sheridan Head of Private Banking [email protected] (55) 5004 - 1453 René Gerardo Pimentel Ibarrola Head of Asset Management [email protected] (55) 5268 - 9004 Ricardo Velázquez Rodríguez Head of International Banking [email protected] (55) 5004 - 5279 Víctor Antonio Roldan Ferrer Head of Corporate Banking [email protected] (55) 5004 - 1454