Equity Research GRUPO COMERCIAL , S.A.B. DE C.V. April 29, 2015

1Q15 Results: FX-driven revaluation of US operations and solid SSS numbers. Hold

Change in Recommendation Change in T.P. Change in Estimates  Quarterly Review Other

Last Price: P$ 46.06 Figures in millions of pesos CHDRAUI High Liquidity Price Target 2015: P$ 52.00 12.9% Return 2013 2014 2015e 2016e

Sales 66,364 71,374 77,241 81,859  Chedraui reported 1Q15 figures in line with our estimates; sales grew 9.5% vs EBITDA 4,436 4,684 5,073 5,404 9.0%, EBITDA 8.3% vs 8.0% and net income 11.1% vs 10.0%. Margin 6.7% 6.6% 6.6% 6.6%  The sales increase was mainly driven by FX-revalued numbers from the US Growth YoY 4.3% 5.6% 8.3% 6.5% operation —a fourth of total revenues—, but also as SSS performance picked Net Profit 1,645 1,709 2,156 2,258 up both in (+3.8%) and the US (+2.5%). Margin 2.5% 2.4% 2.8% 2.8% Growth YoY 9.5% 3.9% 26.2% 4.7%  Sales floor expanded a modest 1.8%, 1.1% coming from Mexico. Chedraui 1.707 1.773 2.237 2.342 reached 265 stores, 216 in Mexico and 49 in the US market. Total Assets 45,567 46,094 50,957 53,452  Gross profit and EBITDA margins were flat YoY, 19.8% and 6.9%; the company Cash 443 793 1,779 1,968 continues to pass on savings to customers as its price-leadership strategy. Total Liabilities 23,917 22,725 23,605 23,197  Operating leverage improved as expenses from of 9 new stores were Debt 5,261 4,721 5,699 5,732 counterbalanced by the reduction of the electricity cost in Mexico as a result of Equity 21,650 23,369 27,352 30,255 the use of the wind energy sources. Majority 21,405 23,129 27,091 29,994

 Net income was slightly affected by the increase in the tax rate from 30.0% to Multiples 32.7%, yet the 2.6% margin was flat YoY. EV/Sales 0.7x 0.7x 0.6x 0.6x  Once again, minimal changes to our estimates lead us to sustain a PT of MP EV/EBITDA 11.2x 10.4x 9.6x 9.0x 52.0 along with a HOLD recommendation P/E 27.0x 26.0x 20.6x 19.7x

Chedraui continues with a positive performance in the industry. The company ROE 8.1% 7.9% 8.5% 7.8% posted an increase in sales of 9.5% boosted by the FX effect in the US division, which ROA 3.9% 3.9% 4.5% 4.4% reported an increase of 24.4% in peso-terms as a result. This was also supported by the Net Debt/ EBITDA 1.1x 0.8x 0.8x 0.7x addition of 4 units. We expect FX will continue to boost sales recorded from the US Dividend Yield 1.1% 0.0% 0.5% 0.7% business as the low comparison base in the FX will play in favor in the remainder of 2015; this effect is not translated in an expansion in margins as the US business has Market Data: lower margins than the Mexican unit. As a result of the positive showing in the US Mkt. Cap (mn) USD 2,921 business we can confirm that the issue with the syndicate —7 stores out 49— did not have a negative effect, the company has performed in the top end of its guidance range Firm Value (mn) USD 3,195 and in line with our expectations. 1yr. High—low MP 38.96—MP 50.16 Float 16% The expansion plan advances slowly, as is seasonally usual for a 1Q. At the end of the 1Q15 the company increased its sales floor 1.8% YoY due to the opening of 9 stores CHDRAUI vs IPC (April 2014 = 100) in the last twelve months—5 Mexico and 4 US. During 1Q15 the company opened only 1 130 store in Mexico but sold one in Tampico, , and as a result the company continues with 216 stores in Mexico—no net openings for the quarter. The company’s 125 2015 guidance includes net sales growing 6.2%-7.2%, yet our expectation is closer to 120 the 1Q’s 9.5% as a result of the FX and a positive SSS results. The expansion plan is 115 limited as a consequence of 2014’s Fiscal Reform, by which the Company was given a 110 five-year term to liquidate some MP 5 billion of deferred taxes. The payments are 105 scheduled to be dividend in average payments of roughly MP 1,200 million, and up to 100 date Chedraui made the first payment during the 2Q14 and we expect the upcoming 95 annual payments during to be done on 2Q for 2015, 2016 and 2017. Apr 14 Jun 14 Aug 14 Oct 14 Dec 14 Feb 15 What´s next for Chedraui? At this moment the company has enough cash and CHEDRAUI IPC leverage room to make a medium-sized acquisition, one that considering the profitability Carlos Hermosillo Bernal spread between Mexico and the US, would most likely be in the Mexican market. There Food, Retail, Beverages are several regional chains that could be an option for the company, and some have  [email protected] presence in different states and margins might be greater than Chedraui. We will keep an eye on this option, as we give it a higher probability following the -Comerci  +52 (55) 1103 6600 x 4134 deal. José Antonio Cebeira González Food, Retail, Beverages INCOME STATEMENT 1Q15 1Q14 Chg. 12M15 12M14 Chg. 1Q15E Real/Est.  [email protected] Sales 18,296 16,701 10% 72,968 67,200 9% 18,193 1%  +52 (55) 1103 6600 x 1394

EBITDA 1,240 1,145 8% 4,778 4,465 7% 1,239 0% Actinver EBITDA Margin 6.8% 6.9% 6.5% 6.6% 6.8% Corporate Headquarters Net Profit 460 418 10% 1,750 1,662 5% 452 2% Guillermo González Camarena 1200 11th Floor, Centro Ciudad Santa Fe EPS $ 0.48 $ 0.43 10% $ 1.82 $ 1.72 5% $ 0.47 2% México, D.F. 01210 1

CHEDRAUI — Revenue Evolution, Quarterly (MP mn) CHEDRAUI — Quarterly Financials 167

20,000 157

165 1Q14 YoY 4Q14 YoY 1Q15 YoY

161

168

157

4,646 159

158 Income Statement 3,651

15,000 4,613 Revenues 16,701 5.3% 20,305 10.2% 18,296 9.5%

3,864

3,958

3,708 3,757 3,678 Cost of Sales 13,389 5.1% 16,390 10.9% 14,679 9.6% Operating Expenses 2,484 4.7% 2,978 5.4% 2,682 8.0% 10,000 Other Income (Expense) 2 -94.6% (8) -70.4% (7) -459.6%

Operating Profit 830 5.4% 929 16.6% 927 11.7%

15,492

14,625

13,518

13,175

13,041 12,836

12,257 Margin 5.0% 4.6% 5.1%

5,000 12,057 EBITDA 1,145 2.6% 1,235 9.7% 1,240 8.3% Margin 6.9% 6.1% 6.8% 0 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 Net Financial Expenses (221) -13.8% (265) 22.3% (223) 1.1% Mexico US Real Estate Financial Income 18 96.1% 8 -71.7% 7 -59.3% Interest Gain 16 68.5% 8 -68.7% 3 -81.1% CHEDRAUI — EBITDA Evolution, Quarterly (MP mn) Financial Expenses 239 -9.9% 274 10.9% 231 -3.5% 8%

1,200 Interest Paid 137 -19.3% 140 7.3% 108 -20.7%

112

134

107

116

107 127

1,000 181

107 Results form JVs 0 n.a. 0 n.a. 0 n.a.

173

141

175 179

168 6% Profit Before Taxes 609 14.6% 664 14.5% 704 15.6% 171 800 Taxes 183 56.3% 212 66.4% 230 26.1% Profit from Continuing Operations 426 2.8% 451 -0.2% 474 11.1% 600 Minority Participation 8 -40.2% 16 -4.4% 14 74.6%

942 4% Net Profit 418 4.3% 435 0.0% 460 9.8%

878

865 857

400 843 827 794 Margin 2.5% 2.1% 2.5%

200 Balance Sheet 0 2% Total Assets 44,837 1.5% 46,094 1.2% 45,689 1.9% Mexico US Real Estate Current Assets 10,041 -16.6% 10,552 -0.9% 10,272 2.3% Margin Mexico Margin US Margin Chedraui Cash & Equivalents 383 -75.8% 793 79.2% 428 11.8% Receivables 252 -54.3% 624 8.0% 345 37.3% CHEDRAUI — Same Store Sales Other Receivables 1,595 -34.9% 1,458 -28.3% 1,894 18.8% 6% Inventories 6,607 1.5% 7,025 4.2% 6,664 0.9% 5% Long Term Assets 34,796 8.3% 35,542 1.8% 35,417 1.8% 4% Investment in Associated Companies 23 -5.3% 20 -12.5% 20 -12.5% 3% Property, Plant & Equipment 26,002 3.5% 26,822 3.2% 26,848 3.3%

2% Total Liabilities 22,751 -2.5% 22,725 -5.0% 21,791 -4.2%

1% Current Liabilities 13,754 -4.8% 15,854 8.6% 15,566 13.2% Bank Loans (ST) 867 -69.4% 1,265 97.7% 2,475 185.5% 0% 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 Debt Securities (ST) 400 n.a. 0 n.a. 500 25.0% -1% Suppliers 9,552 3.2% 11,704 8.6% 9,588 0.4% -2% Long Term Liabilities 8,997 1.4% 6,871 -26.3% 6,225 -30.8% -3% Bank Loans (LT) 3,774 -14.1% 2,900 -27.0% 2,286 -39.4% -4% Debt Securities (LT) 0 n.a. 0 n.a. 0 n.a.

-5% Consolidated Equity 22,086 6.0% 23,369 7.9% 23,898 8.2% Mexico US (dolar based) Controlling Interest 21,834 5.7% 23,129 8.1% 23,637 8.3% Minority Equity 252 32.1% 240 -2.0% 261 3.5% CHEDRAUI — Units in Operation Cash Flow Statement

250

49 49

47 Profit Before Taxes 609 14.6% 664 14.5% 704 15.6%

46

45

45 45 45 Pre-Tax Cash Flow 1,040 5.8% 1,164 20.1% 1,094 5.1% 200 Working Capital Changes (696) -33.6% 1,947 -23.0% (2,078) 198.7% Cash Flow from Operations 345 -633.3% 3,111 -11.1% (985) -385.8% 150 Cash Flow from Investment (625) 65.6% (779) 88.4% (352) -43.7%

Cash Flow from Financing 224 -83.7% (2,036) -31.0% 931 316.5%

216 216

214

212 212

100 211 203 200 Net Incr. (Decr.) in Cash and T.I. (57) -106.1% 296 119.9% (406) 614.9% FX Gain (Loss) in Cash and T.I. (3) -92.2% 99 -2025.6% 41 -1586.1% 50 Outstanding Shares 964 0.0% 964 0.0% 964 0.0% 0 Total Debt 5,643 -29.5% 4,721 -10.3% 5,840 3.5% 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15

Mexico US Source: Company, Actinver Estimates. 2

Equity, Economic, Quantitative and Fixed Income Research Departments

Equity Research

Gustavo Terán Durazo, Head of Equity Research (52) 55 1103-6600 x1193 [email protected] CFA Senior Analysts Telecommunications, Media and Martín Lara (52) 55 1103-6600 x1840 [email protected] Financials

Carlos Hermosillo Bernal Consumption (52) 55 1103-6600 x4134 [email protected]

Pablo Duarte de León FIBRAs (REITs) (52) 55 1103-6600 x4334 [email protected]

Mining, Metals, Paper and Pablo Abraham Peregrina (52) 55 1103-6600 x1395 [email protected] Conglomerates

Ramón Ortiz Reyes Cement, Construction and Concessions (52) 55 1103-6600 x1835 [email protected]

Federico Robinson Bours Energy, Chemicals and Industrial (52) 55 1103-6600 x4127 [email protected] Carrillo Junior Analysts Telecommunications, Media and Juan Enrique Ponce Luiña (52) 55 1103-6600 x1693 jponce@actinver,com.mx Financials

Enrique Octavio Camargo Energy, Chemicals and Industrial (52) 55 1103-6600 x1836 [email protected] Delgado

José Antonio Cebeira Consumption (52) 55 1103-6600 x1394 [email protected] González

Mining, Metals, Paper Conglomerates, Mauricio Arellano Sampson (52) 55 1103-6600 x1835 [email protected] Cement, Construction and Concessions

Laura Elena Bosch Ramírez FIBRAs (REITs) (52) 55 1103-6600 x4136 [email protected]

Economic and Quantitative Research

Head of Economic and Quantitative Ismael Capistrán Bolio [email protected] Research (52) 55 1103-6600 x6636

Jaime Ascencio Aguirre Economy and Markets (52) 55 1103-6600 x1100 [email protected]

Santiago Hernández Morales Quantitative Research (52) 55 1103-6600 x4133 [email protected]

Roberto Galvan González Technical Research (52) 55 1103-6600 x5039 [email protected]

Fixed Income Research

Araceli Espinosa Elguea Head of Fixed Income Research (52) 55 1103-6600 x6641 [email protected]

Roberto Ramírez Ramírez Fixed Income Research (52) 55 1103-6600 x1672 [email protected]

Jesús Viveros Hernández Fixed Income Research (52) 55 1103-6600 x6649 [email protected]

Raúl Márquez Pardinas Fixed Income Research (52) 55 1103 6600 x1110 [email protected]

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 Buy. The stock’s total return is expected to exceed the total return of the IPC index in the current year.  Neutral. The stock’s total return is expected to be in line with the total return of the IPC index in the current year.  Sell. The stock’s total return is expected to be below the total return of the IPC index in the current year.

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“The analysts in charge of producing the Analysis Reports: Jaime Ascencio Aguirre; Mauricio Arellano Sampson; Laura Elena Bosch Ramírez; Enrique Octavio Camargo Delgado; Ismael Capistrán Bolio; José Antonio Cebeira González, Pablo Enrique Duarte de León; Araceli Espinosa Elguea; Roberto Galván González; Carlos Hermosillo Bernal; Santiago Hernández Morales; Martín Roberto Lara Poo; Raúl Márquez Pardinas; Ramón Ortiz Reyes; Pablo Abraham Peregrina; Juan Enrique Ponce Luiña; Federico Robinson Bours Carrillo; Gustavo Adolfo Terán Durazo; Jesús Viveros Hernández, declare”:

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