Equity Research

May 13th, 2019 Monthly Andean Strategy Update Envisioning a better second half in

In April, the Andean region performed below LatAm markets (+0.1% in USD CAPITAL RESEARCH terms), with Colombia, Chile and posting negative performance (-2.3%, - 1.0% and -0.7% in USD terms, respectively). The Andean region performed poorly compared to other EM markets, including Asia, and . Daniel Velandia, CFA We are moving our position in Chile to an Overweight on the back of a +(571) 3394400 ext. 1505 more favorable balance of risks relative to Colombia and Peru, but [email protected] earnings and macro dynamics have not changed. • Although we revised our 2019E GDP growth for Chile from 3.3% to 3.0%, Carolina Ratto we still expect it to grow above potential in 2H19. +(562) 2446 1768 • Market dynamics have not changed, with low activity from local and foreign [email protected] investors. The market has suffered from some overhang due to two large capital market events: Enel Am’s capital raise and ’s real estate Tomás Sanhueza IPO. This will continue until June when both operations take place. +(562) 2446 1751 • Although the short term looks soft, we see a higher downside risk in Peru [email protected] and profit-taking in Colombia, which sets a more enabling context for changing our position in Chile to an Overweight. In particular, we expect a Sebastián Gallego, CFA stronger 2H19 for Chile in earnings and macro figures. +(571) 3394400 ext. 1594 • Valuations are still discounted, even when stressing earnings growth of [email protected] relevant sectors such as Pulp, Retail and Banks. Taking profits in Colombia; shifting to Neutral as we have observed a Daniel Córdova positive absolute/relative performance on a YTD basis. +(511) 416 3333 Ext. 33052 [email protected] • The COLCAP index has climbed 14.3% in USD terms (as of May 7th, 2019), compared to 9.0% and 0.9% from Peru and Chile, respectively. • In addition to a take profit strategy, we see that global volatility has recently picked up again; this has translated into a pressure for the local FX. • We have taken profits in Colombian banks (Bancolombia and Davivienda), which were the core of our equity strategy in the local market. Recall that PFBancolombia and Davivienda have climbed 26.0% and 19.2% in USD terms (as of May 7th, 2019), respectively. • We continue to monitor recent noise coming from a potential new law that seeks to eliminate debit/credit card fees in the banking sector. • We have removed Davivienda from our Top Picks, and we have maintained Cementos Argos and Nutresa as our preferred choices in Colombia. • Despite the neutral stance, we highlight that Colombia continues to rank second in LatAm when analyzing inflows to equity ETFs (only behind Brazil). We are downgrading our recommendation for Peru from Neutral to Underweight due to increased uncertainty about metal prices and liquidity events on one of its large cap stocks. • The US President’s statements about his animus towards a trade deal with China has created uncertainty regarding commodity prices. • FTSE Russell reclassified Credicorp’s stock (BAP) as a USA national; as passive investment funds track this index, selling pressures on the stock could continue. • Private consumption has continued to grow at a moderate pace, public investment contracted less than anticipated in 1Q19 and there are some IMPORTANT NOTICE (US FINRA RULE 2242) This document is intended for INSTITUTIONAL INVESTORS and is not subject to all of the independence and signals of a mild acceleration in private investment. disclosure standards applicable to debt research reports prepared for retail investors. Credicorp Capital may do or seek to do business with companies • Companies under coverage continue to trade at a discount against historical covered in its research reports. As a result, investors should be aware that the firm averages, which disappears when excluding mining companies. may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in1making their • We have maintained Ferreycorp and InRetail as our Top Picks. investment decision. Refer to important disclosures on page 30 to 33, Analyst Certification on Page 30. Additional disclosures on page 33. Actualizar Contents

Monthly Andean Strategy Update

Chile: The market still not ready to take off, but downside seems limited 5 Top Picks 7 Colombia: We have decided to take profits in Colombia, while adopting a more neutral stance within the local market 9 Top Picks 12 Peru: Despite an overall resilient economy, higher volatility in metal prices and specific market events could weigh on 13 sentiment this month Top Picks 15

Valuation Summary 17

Appendix: Monthly Summary 20

Top Winners / Losers of the Month 21 Traded Volume 24 Chile - Pension Funds: Monthly Flows 27 Peru - Pension Funds: Monthly Flows 28 Economic Forecasts 29

2 Actualizar LTM Andean Equities Performance (in USD)

IPSA COLCAP SP BVL General Index MSCI Latam 110 105 100 95 90 85 80 75 70 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19

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% 17.5x 18.0x 25.0% 16.0x 14.0x 13.9x 20.0% 14.0x 15.0% 12.0x 10.0% 10.0x 5.0% 8.0x 0.0% 6.0x -5.0% 4.0x -10.0% -12% -11% 2.0x -15.0% -17% .0x -20.0% Chile Peru Colombia

Andean Equities Fwd EV/EBITDA (12 month rolling) vs 5Y historical average

EV/EBITDA FWD vs Historical 5Y Average

8.7x 9.0x 30.0% 7.6x 8.0x 7.1x 25.0% 7.0x 20.0% 6.0x 15.0% 10.0% 5.0x 5.0% 4.0x -2% 0.0% 3.0x -5.0% 2.0x -10% -10.0% -13% 1.0x -15.0% .0x -20.0% 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: Overweight (+) Still appealing GDP growth close to potential (3.0% 2019E) The Enel Americas capital increase and (+) Safe haven on the regional landscape compared to riskier markets Cencosud's real estate IPO has generated an (+) Discounted valuations when compared to its history overhang that will limit flows in the short-term. Both (-) Upcoming two months will be probably soft due to capital market events events should take place in June. Once that (-) Negative impact of global risks happens, it all comes down to earnings growth that (-) No clear catalyst with lacking earning growth in short term we believe should ramp up in 2H19. The latter (-) Exposure to risks coming from and Brazil coupled with valuations that are still discounted reduces potential downside risk in the market. Strategy: We continue to favor a stock picking strategy of companies with solid fundamentals, earnings momentum and clear catalysts. Top picks: ILC, Engie Chile and Colombia Allocation: Neutral (+) Recovery of the consumption and cement/construction sectors. The most important issues in the short term are: (+) Better operating/financial trends at the banking sector 1Q19 results, oil prices, exchange rate (+) Higher inflows coming from local institutional players performance, corporate governance issues/news, (-) A potential law that seeks to eliminate credit/debit card fees rebalancing process (MSCI at the end of May), flows (-) Volatility across foreign markets related to the decree 959 of 2018, ETFs' flow (-) Twin deficits momentum.

Strategy: We have decided to take profits and turn neutral in Colombia given the rally on a YTD basis. In any case, we maintain our target of 1,720 points for the COLCAP index towards the year end. Given that we have taken profits across the banking sector, we remain confident upon other key sectors/stories such as private consumption and cement & construction. Top picks: Nutresa and Cementos Argos Peru Allocation: Underweight (+) Private consumption kept growing at a moderate pace. We expect InRetail and IFS to post strong results in (+) Public investment fell less than anticipated during 1Q19. 1Q19. Engie shows an attractive discount vs. T.P., (-) Uncertainty regarding the final outcome of trade negotiations between the US and and is supported bya strong 2019 revenues outlook. China has increased. is trading at multiples more (-) FTSE announced change of nationality status for Credicorp. than one standard deviation below its 3-year average (-) Valuations excluding mining companies at their historical averages. and buying flows are timidly re-appearing. Meanwhile, has good long-term fundamentals. Strategy: Trading ideas: As commodity price short-term risks have increased, we favor stocks such as InRetail, Cementos Pacasmayo, Engie, IFS, and Ferreycorp, linked to the upcycle of mining investment. At the same time, private Alicorp. consumption maintains a healthy growth, supporting names such as InRetail.

Top Picks: InRetail and Ferreycorp.

4 Chile The market is still not ready to take off, but downside seems limited

Two relevant capital In April, the Chilean market posted a negative return in both USD (-1.0%) and CLP market events have (-1.4%). The local market continued to post the same dynamics seen in March, almost generated a strong completely erasing the outperformance seen in January 2019. Flows are still way below overhang in the the historical average of the market (-6.8% lower than Apr-18). Local investors continue market. to show low activity levels, which, in our view, can be ascribed to the two relevant capital market events that should take place in June 2019: (i) the USD 3.0bn capital increase of Enel Americas and (ii) the IPO of the real estate division of Cencosud, which is expected to amount to USD 1.0bn. Both events have moved forward in recent weeks. Enel Am’s shareholders approved the amount of USD 3.0bn for the capital increase, and more financial information about Cencosud’s real estate division IPO was disclosed. In our view, further clarity on the transactions should decrease the strong overhang seen in the Chilean market.

Downside risks We have moved our relative position in Chile from UW to OW on the back of a seem more limited more favorable balance of risks when compared to Colombia and Peru. Colombia when compared to has been a strong outperformer during the year (+19% in both USD and COP terms), other Andean which, in our view, makes it difficult to maintain an OW position. Valuations are looking markets. more stretched and upside seems more limited. In the case of Peru, it seems that a relevant event related to the classification of BAP shares in an important index could generate an overhang in the upcoming months due to the relevance of these shares in terms of weight. On the other hand, Chile is still looking discounted compared to its history, even when adjusting earnings for relevant sectors such as Retail, Banks and Forestry. Although short-term momentum seems weak and we do not expect earnings growth to pick up until 2H19, we believe downside risks are much more limited than they are in the other Andean markets and the two relevant capital market events in June should reduce the market overhang seen in recent months. We are taking a step ahead of the market given the context of the Andean markets, so our relative play should take a couple of months to pay off.

GDP growth in Chile We have cut our 2019 GDP growth estimate to 3% after a softer-than-expected is expected to be 1Q19. The BCCh announced that the Mar-19 Imacec grew by 1.9% y/y, similar to market above its potential in expectations and our forecast. Thus, in 1Q19, GDP advanced by less than the 2% 2H19. threshold for the first time in almost two years. As in the previous Imacec figures, the mining industry contributed negatively, and non-mining sectors remained relatively subdued. This figure confirms a softer-than-expected starting point for economic activity this year and leads us to decrease our long-held 2019 GDP growth forecast to 3.0%, down from 3.3% previously. Overall, this is explained by: i) a lower-than-expected mining output in 1Q19, ii) a less favorable external scenario, iii) subdued dynamism in non- mining industries, particularly in commerce and , iv) the sharp fall in consumer confidence and v) the slow pace of progress of the Government’s flagship reforms in Congress. That said, we expect the economy to grow above its potential in 2H19. Given this lower economic growth, we think that the likelihood of the BCCh holding the reference rate unchanged at 3.00% during the remainder of the year has increased, despite higher short-term inflation expectations (higher electricity prices), as the view on the pace of the convergence of core CPI to the 3% target has not changed.

5 Our 1Q19 earnings estimates show a slow start to 2019; things should start to pick up in 2H19. We estimate top line increased by 7.6% y/y in CLP terms; however, CLP depreciated 12.6% y/y, leading to a -4.4% y/y revenue drop in USD terms. In fact, in reporting currencies, companies posted mild 1.8% and 2.6% y/y revenue increases in CLP and USD terms, respectively. We estimate EBITDA grew 4.7% y/y, and we believe EPS went in the opposite direction, dropping 2.8% y/y. In terms of sectors, we highlight that the Retail sector posted 26% y/y earnings growth driven by Cencosud, which includes a USD 96mn after-tax gain due to the sale of 49% of the bank in Peru. However, trends have not changed. When excluding Cencosud’s one-off, EPS for Retail dropped 12%. We expect Forestry to post a strong drop in EPS, despite sound top line growth. We expect CMPC to post higher cash cost y/y, similar to 4Q18, and Copec had significant plant maintenance costs, which damaged margins. All things considered, the Chilean companies continue to show weakness in terms of growth, reflecting the lack of significant activity and consumption reactivation. We expect strong losses in CAP due to lower -ore dispatches and considerable cost overruns related to the accident at its main port Guacolda II. In addition, the start of 2019 sets a challenging scenario for margins due to low growth, local currency depreciation and higher SG&A expenses. However, we remain confident that 2H19 results will start to recover due to a weak comp base and a recovery in the underperforming sectors.

Valuations in Chile Although we could see some further downward revisions in earnings for 2019, are still discounted valuations continue to be discounted against the historical average. Our earnings even when adjusting growth estimate for the IPSA index in 2019 stands at 8.4% y/y in CLP terms (5.6% in USD 2019 EPS growth. terms), which implicitly reflects a 14.0x P/E Fwd for the Chilean market (~17% discount to 3-year average). In our view, some relevant sectors such as Retail, Banks and Forestry could have some downward revisions in earnings for 2019; however, if we cut our earnings growth estimates by ~50% for those sectors, earnings growth for 2019 would be close to ~5% y/y. When adjusting our P/E Fwd, the Chilean market would still be trading close to one standard deviation below the historical average. Therefore, it seems that downside risk to the market is limited, and catalysts should come further on the road ahead with a recovery in earnings growth and the reduction of the overhang related to capital market events.

P/E Forward (12-month rolling) FV/EBITDA Forward (12-month rolling)

26 12

24 11 22

20 10

18 9 16 8 14 14.0x 7.6x 12 7 May-13 May-15 May-17 May-19 May-13 May-15 May-17 May-19

Source: Company Reports, Credicorp Capital, & Bloomberg

6 Chile Strategy

Our Top Picks Our Chilean equity sample is trading at 14.0x P/E 12m Fwd and 8.0x FV/EBITDA 12m continue to be Fwd, which continue to be significantly discounted against the market’s three-year ILC, Engie Chile average. As mentioned above, when adjusting earnings estimates, there is still a and SK. significant discount that softens the potential downside for the local market.

We have not seen any change in trend regarding the dynamics of the local market, which should continue as is until there are some signs of recovery in earnings and the market overhang ends. We continue to have a cautious and selective approach for the Chilean market. This month we are maintaining our Top Picks. Top Picks Chile

ILC (BUY; T.P.: CLP 12,900). Considering the multiples of peers with ILC's business mix, we estimate that the company should trade at a P/E multiple of ~14x. Based on this, the current valuation suggests that shares are trading at a high discount. We continue to be positive on fundamentals as we are expecting double-digit growth in earnings in addition to a dividend yield that should continue to be one of the highest in the Chilean market (over 4.0%). Finally, a pension reform bill was recently sent to Congress. The proposals are in line with our expectations, and we believe they will not be disruptive for the industry; therefore, we do not see them as a game changer for the pension fund industry. Thus, we believe regulatory risk has significantly decreased, so we believe downside risk is limited.

Engie Chile (BUY; T.P.: CLP 1,450). We are maintaining Engie Chile in our Top Picks. Engie Chile is one the largest power producers in Chile and is undergoing a strategic conversion from thermal to renewables (1GW solar + wind portfolio). The company’s long- duration portfolio and highly contracted status provide cash flow visibility and protection against further drops in local power prices. The company is currently trading at close to ~5x 2020 EV/EBITDA, well below peers. We also like the company’s low leverage and cautious stance regarding renewables deployment.

7 Sigdo Koppers (BUY; T.P. CLP 1,373). We are maintaining SK in our top picks due to its positive earnings momentum and the high possibility of its capturing the increase in mining construction/production activity through its subsidiaries. For 2019, we foresee a significant bottom line increase (+39.2% y/y) and improved margins (EBITDA mg. 2018: 13.4%; EBITDA mg. 2019E: 15.2%) driven by i) the recovery of the company’s engineering & construction subsidiary (ICSK) due to the end of an overbudget project in Peru and higher backlog execution, ii) operational improvements in Magotteaux (EBITDA mg. 2018: 8.7%; EBITDA mg. 2019E: 10%), such as increased synergies with its consortiums in China, the implementation of new technologies in its factories, the selling of higher quality products and the transfer of production from Belgium to Thailand and iii) the fact that the positive trend in its machinery subsidiary SKC should continue during upcoming years. In addition, mining estimated investment remains high, reaching USD 18,661mn for the 2018-2022 period, leading to a significant upside risk to our estimates in the event of new project announcements.

Chile - Top Picks

Chilean Picks Last Target Total Mkt. P/E FV/EBITDA P/BV Div Yield Price Price Upside Return (USD mn) 2018E 2019E 2018E 2019E LTM 2018E Sectors ILC 11,740 12,900 9.9% 14.1% 1,716 10.6 9.6 nm nm 1.8 4.2% Conglomerates Engie Chile 1,269.8 1,450.0 14.2% 18.1% 1,956 19.1 10.0 7.4 5.6 0.9 3.9% Utilities SK 1,279.9 1,372.6 7.2% 10.6% 2,012 23.3 16.8 10.4 8.6 1.5 3.4% Industrial Chilean Picks a 10.4% 14.3% 5,684 17.7 12.1 8.9 7.1 1.4 3.8% IPSA 5,079 6,150 21% 25% 157,802 15.4 14.7 8.9 8.5 1.7 3.9% a Simple average, excluding Market Capitalization

Sources: Bloomberg, Company Reports and Credicorp Capital a Simple average, excluding Market Capitalization b Prices in local currencies

8 Colombia We have decided to take profits in Colombia and are adopting a more neutral stance in the local market

In April, the COLCAP index underperformed the MSCI Latam. In fact, the local index declined 2.3% compared to a relatively flat performance from the MSCI Latam. We believe that the lower return in Colombia was primarily explained by: i) a take-profit strategy at top Colombian banks due to the positive performance on a YTD basis, ii) the approval by the Lower House of a potential law that seeks to eliminate the banking fees related to credit/debit cards, iii) negative behavior in Ecopetrol due to a possible overreaction to the dividend payment and the anticipation of weak 1Q19 results and iv) global volatility (1.5% depreciation of the local FX). Our positive view on the Colombian market has materialized, leading us to take some profits, particularly in the banking sector, which has been the core of our Colombian equity strategy. Under this scenario, we are shifting to a neutral position from our prior overweight. That said, we maintain our target of 1,720 points for the COLCAP index for 2019E year-end.

Despite the recent correction, the financial sector is leading (for the most part) the COLCAP index on a YTD basis. This also supports our strategy of taking some Financials have profits in the financial system. Corficol is currently the best performing stock on a YTD been among the basis (+56.1% as of May 7th, 2019). More importantly, we highlight that banks/financial top performers in entities (Aval, Bancolombia, Davivienda and Banco de Bogota) are currently in the top the COLCAP eight of the COLCAP index and that all of these shares are currently performing better index. than the market. This is consistent with our previous equity strategy in Colombia of favoring banks amid better expectations on: i) higher loan growth driven by an improvement in economic activity, ii) lower provision expenses and iii) higher profitability in 2019E and 2020E than in prior years. That said, price performance has matched out TPs and even surpassed it as recently observed in the case of Bancolombia. This has translated into fairer valuations compared to the end of 2018. Furthermore, the recent noise created by a new potential law that seeks to eliminate debit/credit card fees in Colombia may act as a negative catalyst in the short term. We reiterate that this law was approved by the Lower House, and there are two additional debates to take place in the Senate before the law is approved by President Duque (if Mr. Duque refuses, it will need to go back to Congress).

Beyond our decision to have a neutral stance, we highlight that ETF flows towards the local equity market have remained resilient. According to Bloomberg, inflows towards equity ETFs in Colombia were USD 180 mn; this is the seventh highest figure across emerging markets on a YTD basis (as of May 3rd). More importantly, the Colombian market ranks second across LatAm markets, only behind Brazil, which ranks second for the entire sample of emerging markets. A better economic outlook during 2019E compared to previous years, an attractive relative valuation and potential for better corporate results during this year have supported this performance of flows.

Local pension funds have become the only relevant, in our view, net buyers of the local market. In Apr-19, local institutional clients had a net buying position of USD 85.3 mn, taking the top spot on a YTD basis with USD 223 mn. On the other hand, foreign investors became net sellers on a YTD basis due to a massive net selling position of USD 71.9 mn in Apr-19. As we have previously discussed, local institutional clients have supported the recent rally in the local market. That said, we highlight that these agents have accumulated positions in key names that are above the legal requirement, which provides less room to maneuver for boosting the local market.

9 This fact also supports our decision to shift to a more neutral stance.

The recent approval of the National Development Plan (PND in Spanish) by Congress has also created some noise for a key company, Ecopetrol. According to an article in the PND, Ecopetrol might incur additional costs of ~COP 100 bn (every two months) due to the reduction of VAT on gasoline prices from 19% to 5%. This will become effective on June 1st, 2019. Although we maintain a neutral to positive view on the company, particularly at current prices, we believe that this may create some noise.

We reiterate that our top-down equity strategy in Colombia continues to rely upon higher economic activity in 2019. Even though we have shifted our relative allocation within the Andean region, we maintain the core ideas of our investment thesis for Colombian equities. We reiterate our current GDP growth forecast of 3.3% for 2019E; recall that this would be the first time since 2014 that the Colombian economy grew above 3.0%. Meanwhile, we continue to believe that Central Bank rates and inflation should remain under control; in fact, we expect rates to remain at 4.25% for most of the year, while inflation should stay within the tolerance range of the Central Bank of 2.0% to 4.0% (our forecast is 3.3% for 2019E).

From a bottom-up perspective and considering forward trading multiples, the local The local market market has re-rated in recent months. The Colombian equity market currently trades at has gained +15% a 12-month forward of 17.5x P/E and 8.7x EV/EBITDA, compared to an average of 20.1x on a YTD basis. and 8.9x since 2015. The recent rally, observed on a YTD basis, has positively adjusted the Colombian trading multiples. In fact, our sample no longer trades below one standard deviation as was previously the case. Colombia Strategy

In addition to our shift from Overweight to Neutral, we are also making adjustments to our equity strategy in the local market. We reiterate that our main play has been local banks, particularly top banks such as Bancolombia and Davivienda. At this point, we maintain our positive mid-term view on both banks, particularly for 2019E and 2020E, mainly driven by: i) an acceleration of loan growth given a better economic outlook compared to prior years, ii) a potential decline of 20-25 bps on an annual basis in cost of credit as provision expenses coming from key corporate cases may fade, iii) higher profitability, measured in terms of ROAE, and iv) the absence of concerns ahead of the implementation of Basel III standards. That said, we believe that the recent rally in both names may be a good opportunity to take at least partial profits. Recall that Bancolombia surpassed our TP of COP 36,900/share and Davivienda reached our TP of COP 41,500/share on April 9th, 2019. Finally, we highlight that Bancolombia is currently at fair valuation when adjusting the bank’s P/BV for 2019 expected ROAE.

Given our decision on local banks, we are shifting our focus towards the private consumption and cement & construction sectors. At this point, we are betting on early signs of improvement in both sectors given the recovery of economic activity. However, it is important to note that neither of these stories is as impressive as the one we previously identified within banks. That said, we are confident that key companies across these sectors, such as Nutresa and Cementos Argos, should outperform the local market in the upcoming quarters.

10 Regarding the construction sector, we continue to see positive signs. We maintain our view of a slow recovery in the Colombian construction sector during 2019 after negative performances in both 2016 and 2017 and a flattish 2018. Cement dispatches have posted a 2.3% increase YTD (the largest expansion since 2016), and we continue to expect 3%-5% growth this year. We expect this slight growth to be supported by the boost in the infrastructure sector and a very gradual recovery of the housing sector towards year end.

We have seen a significant boost in the infrastructure sector due to 4G and district projects. In the case of 4G projects, two have a +90% progress rate, and district projects are being boosted by district elections that will take place in Oct-19. This has resulted in a 27.8% LTM increase in concrete production for civil works. In addition, housing continues to show positive signs with inventories decreasing to 2016 levels and the willingness to buy a house index currently standing in positive ground. In fact, we highlight that the decrease in non-social housing inventories has accelerated in recent months, which we believe is positive since this segment affects construction activity the most. Finally, we acknowledge that licenses continue to be discouraging.

Finally, we expect a favorable pricing environment with price increases in 1H19 supported by the recovery in demand. We highlight that CLH (HOLD; TP: 5,700) reported a 3% q/q increase in prices in 1Q19 and stated that its strategy is to support pricing rather than market share, which makes us feel confident about our view. These price increases should have a positive effect not only on companies’ top lines but also, more importantly, on EBITDA margins due to the high operational leverage of the cement business. We believe that the best company to make a play on in construction is Cemargos (BUY; TP: 9,900).

As for private consumption, overall dynamics have been positive so far this year as retail sales rose 4.4% y/y in Jan/Feb-19, while the sample excluding vehicles grew 5.1% y/y, above the 4.8% observed in full year 2018. In addition, consumer confidence reached positive ground in Mar-19 (1.2%) for the first time in seven months, continuing the recovery observed since the stark deterioration caused by the tax reform debate (due to the initial inclusion of the VAT to foodstuffs). We expect this overall behavior to continue in the coming months as fundamentals remain supportive: i) inflation should stand slightly above the 3% target throughout the year, ii) disposable income should be high in the short term due to the strong increase in the minimum wage (+6%) and iii) consumption loan rates have fallen, on average, by 77 bps after a rare increase in Jan-19.

Thus, we reiterate that Nutresa and Cementos Argos are our Top Picks.

P/E Forward (12-month rolling) FV/EBITDA Forward (12-month rolling)

28 11 26 24 10 22 9 20 17.5x 8.7x 18 8 16 14 7 12 10 6 May-16 May-17 May-18 May-19 May-16 May-17 May-18 May-19 Source: Company Reports, Credicorp Capital, & Bloomberg

11 Top Picks Colombia

Cemargos (BUY; TP: COP 9,900). Recall that, on March 1st, 2019, we updated our valuation model and view on Cementos Argos, changing our rating to BUY. At this point, our view on the company factors in the deceleration of the US market and our new estimates that consider the impact of the entry of new capacity into the Colombian market. Our BUY rating is based on: i) Cemargos’ current 10.3x 2019E EV/EBITDA, which implies a ~31.3% discount vs the historical average, ii) an expected pick-up in the cement sector in Colombia, where Cemargos is the leader (we expect price increases during 1H19 and after 2021), and iii) stability in the US market with EBITDA margin expansions.

Nutresa (BUY; TP: COP 31,900). We are including Nutresa in our portfolio this month. Shares have remained relatively flat during the last three months after the correction seen at the end of Jan-19. However, we continue to expect a good performance from the company in the medium term. The 1Q19 results made us more optimistic about growth, which, in our view, is going to be the main driver for shares. Our thesis on Nutresa is based on: (i) volume growth, which has already shown a recovery leveraging on its leading position in its core categories under a more favorable scenario for consumption in Colombia, (ii) increases in prices due to innovation, sales mix and specific price increases, (iii) a favorable scenario for commodities and (iv) the turnaround stories in the underperforming segments of recent years (TMLUC and El Corral).

Colombia - Top Picks

Colombian Picks Last Target Total Mkt. P/E FV/EBITDA P/BV Div Yield Price Price Upside Return (USD mn) 2018E 2019E 2018E 2019E LTM 2018E Sector Nutresa 26,100 31,900 22% 24% 3,644 19.0 17.1 9.5 8.5 1.4 2.2% Food & Beverages Cemargos 7,910 9,900 25% 28% 3,177 60.3 46.0 12.9 10.3 1.4 3.1% Cement & Construction Colombian Picks a 24% 26.4% 6,821 39.6 31.6 11.2 9.4 1.4 2.7% COLCAP 1,535 1,720 12% 17% 97,518 17.4 15.3 127.6 127.3 1.0 4.9% a Simple average, excluding Market Capitalization Source: Company Reports, Bloomberg and Credicorp Capital

Sources: Bloomberg, Company Reports and Credicorp Capital a Simple average, excluding Market Capitalization

12 Peru Despite a resilient economy overall, higher volatility in metal prices and specific market events could weigh on sentiment this month

Economic activity Fundamentals linked to domestic demand remain resilient, despite a deceleration at continues to grow the start of the year. In 1Q19, private consumption continued to grow at a moderate below potential, pace, and public investment contracted less than anticipated. Given the signals of a mild while inflation is acceleration in private investment (e.g. domestic cement consumption grew 4.8% y/y and contained. 4.9% y/y in March and February, respectively, compared to 0.8% y/y in both January and December), there is evidence that domestic demand-related stocks remain well supported by economic fundamentals. Specifically, private consumption dynamics should continue to underpin names such as InRetail and IFS. On the other hand, it remains to be seen whether public investment surprises us positively again in 2Q19. Finally, progress in the execution of large infrastructure projects and the reconstruction of damaged public infrastructure in the northern regions of the country (from the El Niño of 2017) remains slow.

However, uncertainty about the final outcome of trade negotiations between the US and China has increased. Apparently, the positions of the countries have moved further apart, though negotiators continue to work to reach a deal. Nonetheless, copper and zinc prices have suffered already, falling ~2.1% and ~6.2%, respectively, since May 3rd. We believe this uncertainty will continue to be a drag on local mining stocks in the short term, but the medium term outlook for copper and zinc prices is still positive given global supply and demand trends.

We believe the The recent acceleration of inflation was expected and should be reversed in coming monetary stimulus months. CPI rose 0.20% m/m in April, in line with market estimates but way above Apr-18 will remain for a (-0.14%). Thus, inflation accelerated to 2.6% y/y and could accelerate further in May for prolonged period of the same reason. However, it should fall in June and July due to a high statistical base in time. 2018. Since inflation expectations remain anchored within the target range, we are maintaining our year-end inflation estimate of 2.3%. The Central Bank held its policy rate at 2.75% on May 9th. We believe monetary stimulus will remain in place well into 2020, providing a favorable context for reinforcing domestic demand fundamentals.

Nonetheless, our GDP growth forecast for 2019 faces some downside risk. We estimate the economy will expand ~2.5% y/y in 1Q19. If economic activity grows at a 2.5% y/y pace in 1H19, an expansion of 5.0% y/y must be seen in 2H19 in order to reach our 3.7% GDP growth forecast for 2019. This could turn out to be challenging if the global growth outlook deteriorates further.

On the political front, the relatively calm environment since January remains. Even The political though the government is putting pressure on Congress to move faster with the political environment remains and judicial reforms, the pressure is restrained, and some other political forces within relatively calm, Congress are joining the government in this effort. Some extra noise may arise around though some limited July 1st, when congressmen will elect a new Executive Board (“Mesa Directiva”), which noise may arise in makes decisions on the agenda of Parliament, among other responsibilites. However, we the very short term. believe the noise will be limited as the most likely outcome is a multi-party Executive Board (in contrast to previous Boards that were fully controlled by opposition parties).

13 Peru Strategy

After three consecutive months of m/m growth, in April, the (BVL) fell (-0.73% m/m in USD and -0.96% m/m in PEN). The drop was mainly concentrated in the mining and construction sectors. In mining, Buenaventura, Southern Copper and reported results below expectations, and metal prices decreased slightly: zinc (-1.2% m/m), copper (-0.9% m/m) and gold (-0.7% m/m). Meanwhile, the construction sector was weighed down by Graña y Montero, which was affected by media reports saying that the company participated in bribes to government officials. On the other hand, the consumer sector was the top performer in April as InRetail soared. Utilities and financials also outperformed the market.

We are downgrading We are downgrading our recommendation on Peru from Neutral to Underweight due our recommendation to two factors: First, uncertainty over the trade negotiations between the US and for Peru from Neutral China. In early May, US President, Donald Trump, tweeted that tariffs on USD 200bn of to Underweight. Chinese imports would increase from 10% to 25% and four days later signaled a trade deal with China was still possible. The announcements created strong swings in commodity prices, affecting mining companies and the BVL more broadly. In this context, we recommend stocks linked to domestic demand to hedge commodity risk. Second, FTSE Russell’s decision to change the nationality status of Credicorp (BAP). FTSE Russell announced it will reclassify Credicorp’s stock (BAP) as USA nationality, in accordance with its internal rules, effective after the close of business on June 21st. As a result, Peru’s weight in the FTSE Russell Emerging Markets Index, (currently at 0.4%) will be negatively impacted by this reclassification (only Buenaventura will remain in the index). As passive investment funds track this index, selling pressures on the stock could continue in the coming days. Given that Credicorp is the most important constituent of the S&P/BVL General Index, the BVL performance could be affected.

Still trading at discounts against historical averages. At 13.9x 12M forward P/E, We seek refuge in companies under our coverage trade at a 12.2% discount against the two-year historical domestic demand- average (corrected for the significant losses in Buenaventura). Likewise, the 12M forward related stocks amid FV/EBITDA of 7.1x trades at a 13.4% discount against the five-year historical average. commodity price For both multiples, the discounts are approximately one standard deviation from the uncertainty. historical averages.

Excluding mining companies, discounts disappear. Uncertainty over the fate of US- China trade negotiations is affecting the sector, while stocks linked to domestic demand are trading at their historical averages.

P/E Forward (12 month rolling) * FV/EBITDA Forward (12 month rolling) * 22 11

20 10

18 9

16 8 7.1x 13.9x 14 7

12 6 May-14 May-15 May-16 May-17 May-18 May-19 May-14 May-15 May-16 May-17 May-18 May-19 Source: Company Reports, Credicorp Capital, & Bloomberg *Mean in the chart considers the last 2 years.

14 Top Picks Peru

InRetail (BUY; T.P.: USD 43.80). We maintain our strong conviction on the name based We continue to see on the guidance of ~30% growth in EBITDA for Pharma and ~15% growth in EBITDA for an opportunity in Food. Growth opportunities in Food are coming from the new formats Economax (cash & InRetail as synergies carry) and Mass (hard discounter), which reached ~7% and ~3%, respectively, of total with Quicorp could food sales in 1Q19. Also, we believe Inkafarma Express should allow InRetail to continue unlock more value to gain market share in the traditional channel and there is also room to improve margins than meets the eye. due to synergies from vertical integration and store maturations. All-in, we believe that InRetail has a strong positioning in the Peruvian market and should be able to continue to expand it.

Ferreycorp (BUY; T.P. PEN 3.00). As we anticipated, Ferreycorp revenues increased significantly in 1Q19 on the back of a growing spare parts & services (SP&S) business line, deliveries of equipment for mining units on contracts signed in 2018 and sales to the construction sector. Gross margin increased more than expected due to the higher participation of the SP&S segment in the sales mix, which reached record levels. The gross margin improvement, coupled with higher-than-expected depreciation and We expect mining amortization, led to a 2.9 pp increase in EBITDA margin. Net income was further boosted investment to post by non-cash exchange rate (FX) gains as the PEN and CLP appreciated against the USD. expansions of 23% in 2019 and 18% in In addition, Ferreycorp has attractive medium-term fundamentals. It will provide a fleet of 2020. CAT trucks of 320 MT and other types of equipment for the Quellaveco mining project. Furthermore, for a five-year period, it will provide specialized support. In total, the contract was signed for USD 500mn, above our expectations. This contract is in addition to the USD 100mn contract with the Mina Justa project of to deliver CAT machines during 2019 and 2020. As such, Ferreycorp has locked in strong growth rates in sales of new machinery until at least 2021. Meanwhile, the sales of spare parts and services should continue to grow, albeit at a more moderate rate. All in all, Ferreycorp is positioned to be one of the top performers in this mining investment upcycle. .

Peru - Top Picks

Last Target Total Mkt. P/E FV/EBITDA P/BV Div Yield Price Price Upside Return (USD mn) 2018E 2019E 2018E 2019E LTM 2018E Sectors InRetail 37.50 43.80 17% 17.7% 3,855 60.5 27.1 14.0 11.6 3.1 0.9% Retail Ferreycorp 2.46 3.00 22% 27.9% 725 8.4 8.1 7.4 7.0 1.2 6.0% Materials Peruvian Picks a 19% 22.8% 4,580 34.5 17.6 10.7 9.3 2.1 3.4% S&P/BVL 20,688 23,400 13% 16% 34,738 18.1 13.3 8.8 7.7 1.9 2.6% a Simple average, excluding Market Capitalization, IFS share price in USD Source: Company Reports, Bloomberg and Credicorp Capital

Andean Picks

15 Valuation Summary

May 2019

16 Chile

ADTV P/E FV/EBITDA P/BV Div. Yd. ROAE ROAA Company Sector Px Last Px Target Rating Mkt. Cap Local ADR 2018E 2019E 2018E 2019E LTM 2019E 2018E 2019E 2018E 2019E AESGener Utilities 181 190 HOLD 2,226 2.5 7.7 8.1 6.2 6.5 0.8 12.9% 11.7% 11.1% 3.8% 3.6% Aguas-A Utilities 400 390 UPERF 3,463 2.6 17.7 18.0 10.7 10.1 3.8 5.7% 21.3% 22.4% 7.4% 7.5% Andina-B Food & Beverages 2,420 2,880 HOLD 3,110 4.5 0.5 19.1 17.7 8.5 8.2 2.8 4.2% 13.1% 15.4% 5.0% 6.0% AntarChile Conglomerates 9,000 13,900 BUY 6,005 1.1 9.0 9.4 6.0 5.6 0.9 4.4% 9.8% 8.8% 2.8% 2.5% Banks 98.8 98.0 UPERF 14,598 6.8 2.4 16.4 15.6 nm nm 3.1 3.4% 18.5% 18.7% 1.7% 1.7% Banco Santander Banks 48.8 56.0 HOLD 13,446 8.5 10.5 15.0 13.8 nm nm 3.1 4.3% 18.8% 20.0% 1.6% 1.6% BCI Banks 44,360 49,100 HOLD 8,814 3.9 14.2 13.6 nm nm 1.7 2.3% 14.7% 12.3% 1.2% 1.0% Besalco Construction 620 745 BUY 522 0.4 35.7 22.2 10.8 9.0 1.9 2.5% 7.6% 8.2% 2.1% 2.2% CCU Food & Beverages 9,200 9,530 HOLD 4,970 3.9 5.6 11.2 20.5 6.2 9.7 3.2 5.3% 25.2% 12.6% 14.3% 7.2% CMPC Pulp & Paper 2,099 3,100 BUY 7,672 5.9 12.2 11.7 5.8 5.7 0.9 4.1% 6.0% 7.5% 3.3% 4.1% Colbun Utilities 137.9 160.0 BUY 3,536 2.2 15.3 12.8 6.6 6.5 1.0 11.9% 6.2% 7.7% 3.4% 4.2% Food & Beverages 1,372 1,520 HOLD 1,498 1.4 20.8 15.7 14.9 11.4 1.8 2.4% 8.8% 11.0% 4.6% 5.9% Copec Pulp & Paper 8,050.1 11,200.0 HOLD 15,299 8.1 12.4 12.7 7.7 7.2 1.4 3.2% 9.9% 10.4% 4.6% 4.8% Embonor-B Food & Beverages 1,580 1,980 BUY 1,098 0.6 16.6 15.7 8.4 7.7 2.4 4.7% 12.2% 13.6% 6.1% 6.8% Enel Americas Utilities 116.0 120.0 HOLD 9,744 13.6 11.1 0.2 0.2 4.9 4.5 2.4 6.2% 18.2% 13.2% 5.1% 4.0% Enel Chile Utilities 66 74 HOLD 6,629 5.8 2.0 0.2 0.2 6.9 6.5 1.3 5.5% 11.5% 12.2% 5.6% 5.6% Engie Chile Utilities 1,269.8 1,450.0 BUY 1,956 2.0 19.1 10.0 7.4 5.6 0.9 3.9% 5.1% 9.2% 3.0% 5.6% Telecom & IT 6,950 6,550 HOLD 3,069 2.8 nm 40.8 9.0 7.5 1.6 0.0% -1.9% 4.1% -0.7% 1.4% Falabella Retail 4,730.0 5,400.0 HOLD 17,350 17.2 24.2 21.4 12.8 12.4 2.6 1.2% 10.0% 10.3% 3.3% 3.6% Forus Retail 1,721 2,310 BUY 650 0.5 16.8 16.9 9.6 8.7 2.0 2.4% 12.2% 11.8% 10.7% 10.5% Habitat Financials 925.3 1,260.0 BUY 1,353 0.1 10.9 9.5 6.9 6.3 2.5 7.4% 25.4% 25.8% 19.9% 20.4% ILC Conglomerates 11,740 12,900 BUY 1,716 1.3 10.6 9.6 nm nm 1.8 4.2% nm nm nm nm Itau Corpbanca Banks 5.8 7.7 BUY 4,347 3.4 0.2 14.9 12.4 nm nm 0.9 2.3% 5.3% 7.0% 0.6% 0.8% Materials 47 43 HOLD 540 0.2 24.3 53.9 9.7 11.8 0.5 2.1% -22.2% 1.0% -14.9% 0.8% Parque Arauco Real Estate 1,879.9 1,970.0 HOLD 2,468 2.0 14.7 17.2 18.1 17.7 4.8 3.2% 14.1% 10.8% 5.5% 4.2% Quiñenco Conglomerates 1,782 2,135 HOLD 4,331 0.9 17.6 17.1 nm nm 1.0 5.6% nm nm nm nm Ripley Retail 565.0 663.4 HOLD 1,599 1.7 15.6 14.9 14.6 17.2 1.2 3.8% 7.4% 7.6% 2.5% 2.5% Security Conglomerates 267 330 HOLD 1,445 0.9 11.1 9.3 nm nm 1.4 5.2% 11.1% 13.7% 0.8% 0.9% SK Industrial 1,279.9 1,372.6 BUY 2,012 0.3 23.3 16.8 10.4 8.6 1.5 3.4% 6.5% 9.0% 2.4% 3.3% SM-ChileB Conglomerates 331 332 HOLD 5,815 1.7 42.2 38.6 nm nm 2.8 0.9% 6.9% 7.0% 1.3% 1.3% SMU Retail 173.6 247.5 BUY 1,465 1.0 26.2 20.0 10.0 9.2 2.1 0.0% 5.1% 6.8% 1.8% 2.8% Sonda Telecom & IT 990 1,060 HOLD 1,261 1.3 48.3 25.1 11.2 10.4 1.7 1.2% 2.2% 7.2% 1.2% 3.9% SQM-B Materials 24,095 34,600 HOLD 9,148 23.2 38.4 21.1 25.2 10.9 11.8 4.4 4.6% 20.6% 17.9% 10.3% 8.6% Chile Sample 5,079 6,150 157,802 145.8 15.4 14.7 8.9 8.5 1.7 3.9% 10.4% 10.8% 2.2% 2.2%

Source: Company Reports, Credicorp Capital, & Bloomberg. For LATAM, EV/EBITDAR

17 Colombia

ADTV P/E FV/EBITDA P/BV Div. Yd. ROAE ROAA Company Sector Px Last Px Target Rating Mkt. Cap Local ADR 2018E 2019E 2018E 2019E LTM 2019E 2018E 2019E 2018E 2019E Avianca Transport 1,530 2,160 UPERF 463 0.2 0.5 nm nm 5.1 4.8 0.4 0.0% -5.2% -2.3% -1.0% -0.4% Bancolombia Banks 39,400 36,900 BUY 11,321 6.6 16.8 15.2 12.7 nm nm 1.7 2.8% 10.6% 11.9% 1.2% 1.3% BVC Financials 12,440 13,300 BUY 228 0.2 14.5 13.7 8.5 7.7 1.6 5.9% 11.0% 11.5% 8.4% 8.9% Canacol Oil & Gas 10,080 10,680 HOLD 543 0.1 1.2 nm 5.3 5.3 3.0 2.4 0.0% -3.2% 35.2% -1.1% 12.1% Cemargos Cement & Construction 7,910 9,900 BUY 3,177 2.1 60.3 46.0 12.9 10.3 1.4 3.1% 2.2% 2.9% 0.9% 1.3% CLH Cement & Construction 4,630 5,700 HOLD 782 0.5 12.5 13.0 6.9 7.3 0.5 0.0% 4.1% 3.9% 2.0% 2.0% Davivienda Banks 37,340 41,500 BUY 5,118 1.4 12.2 9.7 nm nm 1.6 2.5% 12.6% 14.7% 1.3% 1.5% Ecopetrol Oil & Gas 2,885 3,580 HOLD 35,997 11.1 23.5 8.5 8.4 4.5 4.2 2.4 7.7% 26.9% 23.9% 11.2% 10.8% Éxito Retail 13,900 17,290 HOLD 1,888 1.5 6.2 6.2 2,019.0 2,020.0 0.9 2.4% 4.1% 5.9% 0.5% 0.7% Grupo Argos Conglomerates 17,920 21,500 HOLD 4,474 1.9 27.6 26.8 9.7 9.7 1.0 1.9% 3.5% 3.6% 1.2% 1.2% Grupo Aval Banks 1,275 1,400 HOLD 8,529 2.0 1.7 11.5 10.3 nm nm 1.8 4.3% 17.1% 15.4% 1.7% 1.9% Grupo Sura Conglomerates 35,480 39,100 HOLD 6,120 4.2 16.4 12.9 nm nm 0.8 1.5% 5.2% 6.3% 1.8% 2.2% Nutresa Food & Beverages 26,100 31,900 BUY 3,644 1.1 19.0 17.1 9.5 8.5 1.4 2.2% 4.9% 5.3% 3.0% 3.1% Colombia Sample 1,535 1,720 97,518 37.5 17.4 15.3 127.6 127.3 1.0 4.9% 13.0% 12.4% 2.7% 2.6%

Source: Company Reports, Credicorp Capital, & Bloomberg

18 Peru

ADTV P/E FV/EBITDA P/BV Div. Yd. ROAE ROAA Company Sector Px Last Px Target Rating Mkt. Cap Local ADR 2018E 2019E 2018E 2019E LTM 2019E 2018E 2019E 2018E 2019E Aceros Arequipa Materials 0.77 0.85 BUY 298 0.0 5.0 5.1 4.0 3.7 0.5 7.2% 10.2% 9.4% 5.8% 4.9% Alicorp Food & Beverages 10.71 13.00 HOLD 2,757 1.0 17.3 16.2 11.2 10.0 3.2 2.6% 17.3% 16.7% 6.5% 6.0% Buenaventura Mining 15.93 17.30 BUY 3,222 19.1 14.8 11.2 8.9 7.8 1.0 0.2% 7.4% 8.9% 5.0% 6.2% Cementos Pacasmayo Cement & Construction 6.05 8.10 HOLD 780 0.3 0.1 21.9 17.7 9.7 8.7 1.7 4.9% 7.7% 9.4% 4.2% 5.1% Mining 23.25 28.30 BUY 8,139 0.1 13.9 12.7 5.8 5.2 1.5 2.2% 10.9% 11.0% 7.5% 7.8% Enel Generacion Peru Utilities 2.28 2.60 BUY 1,954 0.0 11.0 11.8 6.6 6.7 2.1 5.5% 20.2% 17.9% 13.9% 12.7% Enel Distribucion Peru Utilities 5.35 6.85 HOLD 1,031 0.1 9.4 9.0 6.5 6.3 1.8 4.5% 18.1% 17.1% 8.2% 8.1% Engie Peru Utilities 6.45 7.80 HOLD 1,171 0.2 11.6 10.7 7.0 6.7 1.1 5.2% 9.4% 9.6% 4.5% 5.0% Ferreycorp Materials 2.46 3.00 BUY 725 0.5 8.4 8.1 7.4 7.0 1.2 6.0% 13.2% 12.8% 5.7% 5.6% Graña y Montero Cement & Construction 2.28 2.50 HOLD 502 0.1 0.4 28.9 16.6 4.5 5.4 0.8 0.0% 2.7% 4.5% 0.7% 1.2% IFS Conglomerates 44.15 49.00 BUY 4,994 0.7 13.8 11.6 nm nm 2.6 4.0% 18.4% 18.9% 1.9% 2.1% InRetail Retail 37.50 43.80 BUY 3,855 0.9 60.5 27.1 14.0 11.6 3.1 0.9% 5.4% 10.9% 1.9% 3.4% Utilities 12.10 13.75 HOLD 1,779 0.1 13.9 13.8 10.1 9.9 2.2 5.0% 16.2% 15.6% 7.5% 7.1% Minsur Mining 1.64 1.95 BUY 1,427 0.2 35.9 28.2 6.2 6.5 1.1 0.0% 3.2% 3.9% 1.7% 2.0% Volcan Mining 0.55 1.00 HOLD 677 0.4 8.1 8.0 4.6 4.7 1.0 5.6% 13.0% 12.0% 3.7% 3.7% Peru Sample 20,688 23,400 34,738 24.0 18.1 13.3 8.8 7.7 1.9 2.6% 11.4% 12.2% 3.9% 5.5%

Source: Company Reports, Credicorp Capital, & Bloomberg

19 Appendix: Monthly Summary

May 2019

20 Chile - Top Winners / Losers Of The Month

WINNERS:

Masisa: Shares rallied after management announced the decision to divest forestry assets in Chile and Argentina.

Cencosud: Performance can be explained by better 4Q18 results (especially in Brazil) and better EPS outlooks for 2019; after the IPO, Cencosud should be able to reduce financial expenses by ~ USD50mn.

Ripley: No relevant news. 1Q19 results are expected be weak but fair on a relative basis vs peers.

BCI: Better-than-expected results at recently acquired companies; at the consolidated level, 1Q19 results were above our expectations.

Sonda: Correction after weak performance during the first three months of the year.

Top Winners Return Top Winners YTD Return Top Winners LTM Return

Masisa 15.0% Entel 31.8% CCU 10.3% Cencosud 9.1% Masisa 31.4% SK 9.4% Ripley 5.1% CAP 27.3% CAP 8.5% BCI 3.7% SK 22.6% AESGener 7.3% Sonda 3.1% Parauco 21.0% Concha y Toro 5.4%

Top Losers Return Top Losers YTD Return Top Losers LTM Return

SQM-B -7.6% SQM-B -11.6% Cencosud -29.5% Latam Airlines -7.2% Salfacorp -10.7% Latam Airlines -28.6% Santander -7.0% Santander -7.9% SQM-B -28.1% Vapores -5.5% Forus -7.4% Salfacorp -24.4% CMPC -5.0% Andina-B -6.8% Forus -23.5%

LOSERS:

SQM-B: Shares have been pressured after management released guidance for 2019.

Latam Airlines: Weaker outlook due to higher fuel prices and tough competition in international routes.

Santander: Weak 1Q19 due to a low UF-inflation print during the quarter; ROAE guidance was downwardly adjusted by 100 bps to 18%.

Vapores: Noise related to the tariff dispute between the US and China.

CMPC: Weak performance due to headwinds in the global Pulp market.

21 Colombia - Top Winners / Losers Of The Month

WINNERS:

GEB: possible entrance to MSCI.

Davivienda: Positive momentum for the banking industry.

Banco de Bogota: Positive momentum for the banking industry.

Grupos Argos: no particular reason.

Nutresa: Better outlook after positive 1Q19 results boosted shares during the month.

Top Winners Return Top Winners YTD Return Top Winners LTM Return

GEB 7.5% Corficolombiana 64.5% Bcolombia 21.4% Dav iv ienda 7.0% Av al 34.1% Dav iv ienda 20.2% Bogota 4.4% Conconcreto 31.8% Corficolombiana 13.4% Grupo Argos 4.1% CLH 31.6% BVC 11.1% Nutresa 4.0% Bcolombia 30.3%

Top Losers Return Top Losers YTD Return Top Losers LTM Return

Ecopetrol -12.6% Av ianca -11.4% Conconcreto -49.7% Av ianca -12.2% Canacol -1.2% Av ianca -49.7% Canacol -11.9% CLH -45.0% ETB -11.2% ETB -38.8% ISA -0.9% Cemargos -20.0%

TOP LOSERS:

Ecopetrol: Volatility in oil prices.

Avianca: Corporate governance risks have impacted shares.

Canacol: Uncertainty related to the Promigas Pipeline.

ETB: Candidate for mayor states the District should maintain its participation.

ISA: Profit-taking after a positive rally.

22 Peru - Top Winners / Losers Of The Month

WINNERS:

InRetail: Strong delivery after Quicorp acquisition and good outlook for 2019 due to strong growth in the Food division and margin expansions in Pharma.

Siderperu: No particular reason.

Enel Gx Peru: Increased with very small volume.

Top Winners Return Top Winners YTD Return Top Winners LTM Return

In Retail 9.2% Siderperu 61.8% In Retail 63.2% Siderperu 1.1% In Retail 37.8% Siderperu 39.1% Enel Generacion 0.9% Southern 25.5% Enel Generacion 29.9% Relapasa 22.2% Backus 8.9% Minsur 20.3% IFS 3.1%

Top Losers Return Top Losers YTD Return Top Losers LTM Return

Atacocha B -13.7% Volcan B -22.5% Trev ali -71.1% Trev ali -13.4% Atacocha B -15.8% Volcan B -53.0% Volcan B -11.3% Panoro Minerals -14.9% Atacocha B -52.5% Casagrande -8.5% Milpo -14.0% Relapasa -49.5% U. Andina Cem. -8.4% Trev ali -11.0% Panoro Minerals -44.8%

LOSERS:

Atacocha B: Revenues decreased 25%, and EBIT and net profits were negative in 1Q19.

Trevali: A drop in zinc prices dragged the stock down.

Volcan B: Double-digit contraction in the P&L in 1Q19.

Casagrande: Hit by EPU (Peruvian ETF) basket destructions.

Unacem: 4.0% y/y drop in average cement prices in Unacem stand-alone in 1Q19.

23 Chile - Traded Volume

In April, total traded volume was USD 3,223mn, 6.8% lower than it was in April 2018, considering the same number of trading days. Daily average traded volume was USD 153mn, USD 11.2mn lower than the USD 165mn figure seen during same month last year and 5.2% higher than the USD 146mn figure seen in March 2019. As for significant non-recurring flows, we highlight the the public offering of the Banco Internacional shares by ILC for USD 47.4mn, the auction on EnelAM (USD 298.4mn) and block trades in SQM-B (USD 40.30mn), Watts (USD 30.73mn), Mall Plaza (USD 21.63 and USD 19.17mn) Falabella (USD 12.69mn and 10.88mn) and Aguas-A (USD 10.90mn). For 2019, total accumulated traded volume reached USD 13,638mn, 11.2% lower than the USD 15,364mn figure seen in same period in 2018 and 27.3% above the five-year average for the period.

Avg. Traded Volume & IGPA Evolution

300 Avg. Traded Volume IGPA 35,000

250 30,000

25,000 200

USDm 20,000 150 15,000 100 10,000

50 5,000

- - Apr/14 Apr/15 Apr/16 Apr/17 Apr/18 Apr/19

Source: Bolsa de Comercio de & Credicorp Capital

Moving Avg LTM & Yearly Avg

250 Mvng Avg LTM 2014 Avg. 2015 Avg. 2016 Avg. 2017 Avg. 2018 Avg. 2019 Avg.

200 +19% -8%

+45%

150 -37% Moving Average Average LTM Moving +16% 100

50 Apr/14 Apr/15 Apr/16 Apr/17 Apr/18 Apr/19

Source: Bolsa de Comercio de Santiago & Credicorp Capital

24 Colombia - Traded Volume

During April, ADTV reached COP 128,618 mn and USD 40.76 mn equivalent to decreases of -30.6% and -39.2% y/y respectively. This also represented decreases of -31.1% m/m in terms of COP and - 31.8% m/m in terms of USD. Total traded volume reached COP 2,572,351 mn decreasing by -34.0% y/y and -31.1% m/m. In dollars, these figures are equivalent to USD 815.27 mn, decreasing -42.1% y/y and -31.8% m/m.

Average Traded Volume Avg. Traded Volume COLCAP 180 2,000 160 1,800 140 1,600 1,400 120 1,200 USDmn 100 1,000 80 800 60 600 40 400 20 200 - - Apr-14 Apr-15 Apr-16 Apr-17 Apr-18 Apr-19

Source: BVC & Credicorp Capital

Moving Average LTM

110

Mvng. Avg. LTM 2014 Avg. 2015 Avg. -8% 90 2016 Avg. 2017 Avg. 2018 Avg.

2019 Avg. -40% 70

5% -5% -1% -4%

50

Moving Average Average Average LTM LTM MovingMoving

30 Apr-14 Apr-15 Apr-16 Apr-17 Apr-18 Apr-19

Source: BVC & Credicorp Capital

25 Peru - Traded Volume

Traded volume in April was USD 132.6mn (-45.6% y/y). Unlike March, there were no large blocks traded during April. The average daily traded volume (ADTV) decreased to USD 6.0mn, a 50.6% decrease from the USD 12.2mn registered in April 2018. Likewise, ADTV decreased 45.4% on a m/m basis (USD 11.0mn in March 2019). YTD, the accumulated traded volume was 21.0% lower than the five-year average. Until April 26th, pension funds and other local institutional investors were net buyers with USD 2.9mn and USD 16.5mn, respectively. On the other hand, local and foreign retail investors, as well as foreign institutional investors were net buyers with USD 16.7mn, USD 0.5mn, and USD 2.2mn net outflows, respectively. Local retail, pension funds and institutional investors were involved in 74.2% of total trading this month.

Avg. Traded Volume & SP/BVL Evolution

120 Avg. Traded Volume SP/BVL General Index 25,000

100 20,000

80

15,000 USDmn 60 10,000 40

5,000 20

- - Apr-14 Apr-15 Apr-16 Apr-17 Apr-18 Apr-19

Source: BVL & Credicorp Capital

Moving Avg LTM & Yearly Avg

Mvng Avg LTM 2013 Avg. 2014 Avg. 2015 Avg.

35 2016 Avg. 2017 Avg. 2018 Avg. 2019 Avg.

30 -35% 25 127% -46% 20

-6% -50%

Moving Average Average Average Average Average Average Average Average LTM LTM LTM LTM LTM LTM LTM MovingMovingMovingMovingMovingMovingMoving Moving Average Average LTM Moving 15 5% 40% 10 5 - Apr-13 Apr-14 Apr-15 Apr-16 Apr-17 Apr-18 Apr-19

Source: BVL & Credicorp Capital

26 Chile - Pension Funds: April Flows

In April, pension funds were net buyers of local equities (USD 134mn) for the third consecutive month. The net investment was driven by Chile, which, through SM-Chile, paid the last installment to the Central Bank on April 30th; this payment was related to the existing debt coming from the financial crisis in Chile during the 1980s. The exposure to the asset class reached 9.98%, decreasing 6 bps m/m. This was mainly explained by a decrease in investment through alternative assets (-23 bps m/m) that was partially offset by an increase in the exposure through direct investments (+16 bps m/m) and investment through investment funds (+1 bp m/m). Additionally, we believe the upcoming capital events of Enel Americas (capital increase) and Cencosud (IPO of its real estate segment) will continue to affect the investment decisions of pension fund managers in the short term. The major investments during the month included: Chile (USD 50.8mn), Cencosud (USD 43.4mn), Santander (USD 30.4mn), Quiñenco (USD 16.2mn) and SQM-B (USD 15.4mn). The major divestments were: EnelAM (USD 15.5mn), SM-Chile (USD 10.9mn), AES Gener (USD 9.1mn), Mall Plaza (USD 7.3mn) and SMU (USD 6.5mn). April marks the fourteenth consecutive month of investment in Copec, the seventh in Santander, the sixth in Ripley and the fifth in SalfaCorp. On the other hand, it was the eighth consecutive month of divestment of Sonda and EnelAm and the fifth of CAP and Enel Chile. We highlight that it was the first month of divestment of SMU, after nine consecutive months of investment. Local Stock Movements

900 845

700 461 500 273 291 268 300 157 134 67 82

100 29 10 USD USD mn -100 -25 -300

-500 -441 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 Monthly Top Investments / Divestments

Top Net Investments Top Net Investments Total Total April LTM CHILE 50.8 SQM-B 541 CENCOSUD 43.4 FALABELLA 530 BSANTANDER 30.4 MALLPLAZA 351 QUINENCO 16.2 BSANTANDER 171 SQM-B 15.4 ANDINA-B 170 Top Net Divestments Top Net Divestments Total Total April LTM ENELAM -15.5 ENELAM -236 SM-CHILE B -10.9 ECL -61 AESGENER -9.1 SONDA -23 MALLPLAZA -7.3 MASISA -21 SMU -6.5 PARAUCO -17

Net Investments April 134.0 Net Investments LTM 2,280 Source: SAFP & Credicorp Capital

27 Peru - Pension Funds: November Flows

Peruvian Pension Funds’ (AFPs) exposure to local equities increased to 10.8% in November 2018, when the S&P/BVL General Index surged 0.08% in PEN (-0.78% in USD).

In November, the net gap between the upper limit on equity investments vs actual funds invested was USD 920.1mn, USD 19.8mn lower than in October. At an aggregate level, exposure to local equities increased, while that of international equities decreased.

We observed net divestments in local equities of USD -16.3mn. The main investments during November 2018 included InRetail (USD 9.2mn), Alicorp (USD 8.5mn) and Nexa (USD 2.2mn). On the other hand, the main divestments for the month were Buenaventura ADR (USD 21.6mn), Credicorp (USD 16.3mn) and Volcan (USD 0.8mn).

Local Stock Movements

361

224

132 113 88 98 82 72 64 58 55 58 63 39 47 28

USDm 23 19 12 12 6 1

0 -1 -1 -20 -14 -15 -17 -22 -16 -27 -32

-301 -170

Jul-17 Jul-18 Jul-16

Apr-16 Oct-16 Oct-17 Oct-18 Apr-17 Apr-18

Jan-16 Jun-16 Jan-17 Jun-17 Jan-18 Jun-18

Mar-16 Mar-17 Mar-18

Feb-16 Feb-18 Feb-17

Nov-16 Dec-17 Dec-16 Nov-17 Nov-18

Aug-16 Aug-17 Aug-18 Sep-18 Sep-16 Sep-17

May-17 May-18 May-16 Source: SBS, Credicorp Capital. Monthly Top Investments / Divestments

Top Net Fund 1 Fund 2 Fund 3 Total Investments INRETC1 0.3 6.2 2.6 9.2 ALICORC1 0.0 4.8 3.7 8.5 NEXA 0.0 0.6 1.6 2.2 CPACASC1 0.0 -0.2 1.4 1.2 NEXAPEC1 0.2 0.4 0.0 0.6

Top Net Fund 1 Fund 2 Fund 3 Total Divestments BVN ADR 0.0 -17.9 -3.6 -21.6 BAP -0.4 -12.4 -3.5 -16.3 VOLCABC1 0.0 -0.6 -0.2 -0.8 LUSURC1 0.0 0.0 0.0 0.0 ENGEPEC1 0.0 0.0 0.0 0.0

Net Investment -0.4 -18.3 2.4 -16.3 November

Source: SBS, Credicorp Capital.

28 Economic Forecasts

CHILE National Accounts (YoY) 2015 2016 2017 2018 2019F 2020F Current GDP (USDmm) 244,417 250,266 277,184 299,148 307,689 331,486 GDP (%) 2.3 1.3 1.5 4.0 3.0 3.3 Domestic Demand (% v ar.) 2.5 1.3 3.1 4.7 3.6 3.7 Total Consumption (% v ar.) 2.6 2.9 2.7 3.7 3.2 3.3 Inv estment / GDP 23.8 22.9 21.6 21.7 22.2 22.6 CPI 4.4 2.7 2.3 2.6 2.6 3.0 Reference rate (end of y ear) 3.50 3.50 2.50 2.75 3.00 3.75 Ex change rate (end of y ear) 709 667 615 696 650 640 Ex change rate (av g.) 655 677 649 640 655 645 Fiscal Balance (% GDP) -2.2 -2.7 -2.8 -1.7 -1.7 -1.4 Foreign Reserves (USDmm) 38,643 40,494 38,983 39,861 40,000 41,000 Source: INE, BCCh, Dipres & Credicorp Capital Estimates

PERU National Accounts (YoY) 2015 2016 2017 2018 2019F 2020F Current GDP (USDmm) 191,517 194,745 214,332 225,259 229,800 235,500 GDP (%) 3.3 4.0 2.5 4.0 3.7 3.7 Domestic Demand (% v ar.) 2.9 1.1 1.4 4.3 3.8 3.7 Total Consumption (% v ar.) 4.9 2.8 2.2 3.6 3.6 3.6 Inv estment / GDP 23.8 22.2 20.9 21.8 22.1 22.4 CPI 4.4 3.2 1.4 2.2 2.3 2.5 Ov ernight interest rate (end of y ear) 3.75 4.25 3.25 2.75 2.75 2.75 Ex change rate (end of y ear) 3.41 3.36 3.24 3.37 3.35-3.40 3.35-3.40 Ex change rate (av g.) 3.19 3.38 3.26 3.29 3.30-3.35 3.35-3.40 Fiscal Balance (% GDP) -2.1 -2.6 -3.1 -2.5 -2.1 -2.2 Foreign Reserves (USDmm) 61,485 61,686 63,621 60,121 64,500 67,300 Source: INEI, BCR & Credicorp Capital Estimates

COLOMBIA National Accounts (YoY) 2015 2016 2017 2018 2019F 2020F Current GDP (USDmm) 293,321 283,148 314,458 330,083 342,149 370,470 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 4.2 3.6 Total Consumption (% v ar.) 3.4 1.6 2.4 3.9 3.9 3.4 Inv estment / GDP 23.8 23.2 22.2 22.4 22.9 23.1 CPI 6.8 5.8 4.1 3.2 3.3 3.2 Ov ernight interest rate (end of y ear) 5.75 7.50 4.75 4.25 4.50 5.00 Ex change rate (end of y ear) 3,175 3,002 2,984 3,249 3,000 2,900 Ex change rate (av g.) 2,760 3,051 2,951 2,957 3,050 2,950 Fiscal Balance (% GDP) -3.0 -4.0 -3.6 -3.1 -2.6 -2.4 Foreign Reserves (USDmm) 46,741 46,683 47,637 48,402 50,402 51,507 Source: DANE, BanRep, Bloomberg & Credicorp Capital Estimates

29 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.

30 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:

Type of instruments Equal or less than USD 50,000 Equal or less than USD 500,000 More than USD 1,000,000 Other equity securities Minsur - - AESGener, Aguas-A, Banco de Chile, BCI, Cencosud, CMPC, Colbun, Itaucorp, ECL, Enel Chile, Entel, Falabella, LATAM, Parauco, Quiñenco, Ripley, Santander Chile, Debt securities InRetail Grupo Sura SQM, Bancolombia, Davivienda, Ecopetrol, ETB, Grupo Aval, Alicorp, Cementos Pacasmayo, Enel Dx Peru, Enel Gx Peru, Ferreycorp, IFS, Luz del Sur, Milpo, Minsur, Unacem, Volcan. Derivatives on equity/debt Avianca, Bancolombia, Celsia, Cemargos, Ecopetrol, Éxito, Grupo securities GEB, ISA Argos, Grupo Aval, 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 Equity securities BCI, Ferreycorp, and InRetail 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): Davivienda, ISA, Alicorp, Engie Peru and 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): Davivienda, GEB, ISA, Aceros Arequipa, AIH, Alicorp, Buenaventura, Cementos Pacasmayo, Engie Peru, Ferreycorp, Graña y Montero, IFS, InRetail, Luz del Sur, Milpo and 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): Davivienda, GEB, ISA, Aceros Arequipa, AIH, Alicorp, Buenaventura, Cementos Pacasmayo, Engie Peru, Ferreycorp, Graña y Montero, IFS, InRetail, Luz del Sur, Milpo and 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): Davivienda, GEB, ISA, Aceros Arequipa, AIH, Alicorp, Buenaventura, Cementos Pacasmayo, Engie Peru, Ferreycorp, Graña y Montero, IFS, InRetail, Luz del Sur, Milpo and 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, ItauCorpbanca, EISA, Falabella, Habitat, Salfacorp, Santander, Security, SMU, Hites, Avianca, Banco de Bogota, Bancolombia, BVC, Cemargos, Davivienda, Ecopetrol, GEB, ETB, Exito, Grupo Argos, Grupo Sura, ISA, Nutresa, and Promigas.

31 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, ItauCorpbanca, EISA, Falabella, Habitat, Salfacorp, Santander, Security, SMU, Hits, Avianca, Banco de Bogota, Bancolombia, BVC, Cemargos, Davivienda, Ecopetrol, GEB, ETB, Exito, Grupo Argos, Grupo Sura, ISA, Nutresa, and Promigas. 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, ItauCorpbanca, Forus, Habitat, LATAM, Santander, SK, Banco de Bogota, Bancolombia, Davivienda, Aceros Arequipa, AIH, Alicorp, Cementos Pacasmayo, Cerro Verde, Enel Dx Peru, Enel Gx Peru, Engie Peru, Ferreycorp, Graña y Montero, Luz del Sur, Milpo, and Unacem. 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, ItauCorpbanca, Forus, Habitat, LATAM, Santander, SK, Banco de Bogota, Bancolombia, Davivienda, Aceros Arequipa, AIH, Alicorp, Cementos Pacasmayo, Cerro Verde, Enel Dx Peru, Enel Gx Peru, Engie Peru, Ferreycorp, Graña y Montero, Luz del Sur, Milpo, and Unacem. E. Market Making Cedicorp Capital Securities Inc. or its affiliates act as market maker in the following company(ies): Almendral, Besalco, Invercap, Masisa, Quiñenco, Grupo Security, SM SAAM, Enjoy, BVC, GEB, ETB, Alicorp, Cementos Pacasmayo, Engie Energia Peru and Ferreycorp. 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 38% 51% 4% 7%

Compensation for investment banking 35% 34% 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.

32 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.

33 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.

34 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 Equities Regional [email protected] [email protected] # (562) 2446 1768

CHILE PERU COLOMBIA CHILE PERU COLOMBIA

Tomás Sanhueza Daniel Córdova Sebastián Gallego, CFA René Ossa Rodrigo Zavala Juan A. Jiménez Head of Equity Research - Consumer & Head of Equity Research Peru Head of Equity Research - Banks Head of Equity Head of Equity - Peru Head of International Equity Sales Transport. [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] # (511) 416 3333 Ext 33052 # (571) 339 4400 Ext 1594 # (562) 2651 9324 # (511) 313 2918 Ext 36044 # (571) 339 4400 Ext 1701 # (562) 2446 1751 Steffania Mosquera German Barousse Renzo Castillo Santiago Castro Ezequiel Fernández Luis Vicente Senior Analyst: Cement & Construction, Vice President Equity Sales Equities Sales International Sales & Trading VP Utilities Senior Analyst: Mining & Utilities Non Bank financials [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] # (562) 2450 1637 # (511) 416 3333 Ext 36167 # (571) 339 4400 Ext 1344 # (562) 2651 9344 # (511) 416 3333 Ext 37854 # (571) 339 4400 Ext 1025 Ursula Mitterhofer Maria Fernanda Luna Credicorp Capital Securities INC Andrés Cereceda Raúl F. Jacob Daniel Mora Senior Associate Sales & Trading Equities Sales Associate: Pulp & Paper, Materials, Analyst: Cement & Construction Analyst [email protected] [email protected] Healthcare, Pension Funds [email protected] [email protected] # (562) 2450 1613 # (511) 416 3333 Ext 36182 Rafael Solis [email protected] # (511) 416 3333 Ext 36065 # (571) 339 4400 Ext 1609 Institutional Equity Sales # (562) 2446 1798 Cristóbal Grez Credicorp Capital UK Ltd. [email protected] Associate Equity Sales # (786) 999 1619 Joel Lederman [email protected] Marilyn Macdonald Associate - Retail # (562) 2450 1629 International Equity Sales David Crummy [email protected] [email protected] Equity Sales Trader # (562) 2651 9332 Ana María Bauzá # (4477) 7151 5855 [email protected] Corporate Access # (786) 999 1618 Felipe Navarro [email protected] Senior Analyst: Construction, Industrial & Ports # (562) 2450 1609 [email protected] # (562) 2450 1688

Macarena Ossa Analyst [email protected] # (562) 2450 1694

FIXED INCOME & ECONOMICS RESEARCH FIXED INCOME SALES & TRADING

CHILE PERU COLOMBIA Andrés Nariño Alfredo Bejar Director Sales Offshore Head of International FI Josefina Valdivia Juan Pablo Brosset Camilo A. Durán [email protected] [email protected] Head of Fixed Income Fixed Income Analyst 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 36018 # (5511) 339 4400 Ext. 1383 CHILE PERU COLOMBIA

Ignacio Sabelle Guido Riquelme Evangeline Arapoglou Carlos Sanchez Fixed Income Analyst Head of Sales 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

Felipe Guzmán Juan Francisco Mas Andrés Valderrama Gustavo Trujillo Senior Economist Fixed Income Sales Fixed Income Sales Head of Sales [email protected] [email protected] [email protected] [email protected] # (562) 2651 9385 # (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 Guillermo Arana 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. 36144 # (571) 339 4400

Lizeth Espiritu Patricio Luza Fixed Income Sales Fixed Income Sales [email protected] [email protected] Credicorp Capital Securities INC # (562) 2450 1619 # (511) 416 3333 Ext. 36168

Carla Tejada Jhonathan Rico Fixed Income Analyst Fixed Income Trader [email protected] [email protected] # (511) 416 3333 Ext. 36143 # 1 (786) 9991614

Ana Lucía Rondón Medina Sales Renta Fija Michael Tafur [email protected] Fixed Income # (511) 416 3333 Ext. 40339 [email protected] # 1 (786) 9991607

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