Cemex Latam Holdigs Will Launch Takeover Bid for CLH’s Float Speculative Overweight, TP COP5,900 Cement Economic, Industry and Market Research September 2020 Analysts

CEMEX Will Launch Takeover Juliana Aguilar Vargas, CFA Cement and Infrastructure Analyst Bid for CLH’s Float juaguila@.com.co Silvia Natalia Andrade Rodriguez Speculative Overweight, TP COP5,900 Equity Strategist [email protected] Today we learned that CEMEX, CLH’s parent company, will launch a takeover bid to acquire CLH’s float (26.84% of total outstanding shares), at a price of COP3,250/share. Cemex Latam Holdings Although the price at which the bid will be made offers an upside of 16% Target price (COP) 5,900 Closing price (COP) compared to the current market price, we believe that it is well below the fair September 7, 2020 2,805 value of the company, which for us is COP5,900/share, and which does not Upside potential 110% incorporate the Maceo plant. 52-week range (COP) 1,360-4,650 The bid price implies an EV/EBITDA multiple of 8.1x for 2020E and 6.2x for Market cap (COPmn) 1,561,882 Outstanding shares (mn) 556,8 2021E, and an EV/ton of USD127/ton, excluding Maceo. Float (mn) 149.6 Average daily trading volumen 898.5 Despite the fact that we see a greater fundamental potential, we recommend 12 months (COPmn) participating in the takeover bid since we consider that the possible Dividend yield 0% decrease in the liquidity of the share given the execution of the bid could Total return 110% limit the materialization of its fundamental potential.

According to the statement from the Financial Superintendency, CLH’s share will be suspended until the day after the takeover bid notice is published. CEMEX estimates that the review of the bid by the Super will take 2 to 4 weeks.

It is important to bear in mind that according to FTSE Russell, CLH should exit the Small Cap index in the next rebalancing on September 18 becoming part of the Micro-Cap group. Given the recent news and the scenario of having CLH’s share suspended for this date, we believe this exit could not be carried out, which, according to international analysts, could represent sales for up to 15 trading days. Economic, Industry and Market Research Juan Pablo Espinosa Arango Chief Economist and Head of Economic, Industry and Market Research [email protected]

Economic research Industry Research Equity Research Arturo Yesid González Peña Jhon Fredy Escobar Posada Jairo Julián Agudelo Restrepo Quantitative Analyst Head of Agroindustry Research Head of Equity Research [email protected] [email protected] [email protected]

Santiago Espitia Pinzón Nicolás Pineda Bernal Diego Alexander Buitrago Aguilar Macroeconomic Analyst Head of Commerce Research Energy Analyst [email protected] [email protected] [email protected]

Bryan Hurtado Campuzano Juan Sebastián Neira Orozco Andrea Atuesta Meza International and Regional Analyst Commerce Industry Analyst Financial Sector Analyst [email protected] [email protected] [email protected]

Paolo Betancur Montoya Juan Manuel Pacheco Perez Agroindustry Analyst Juliana Aguilar Vargas, CFA International and Markets Analyst [email protected] Cement & Infrastructure Analyst [email protected] [email protected] Javier David Villegas Juan Camilo Meneses Cortes Real Estate and Hotels Analyst Ricardo Andrés Sandoval Carrera Central Banking and Financial System [email protected] Oil & Gas & Airlines Analyst Analyst [email protected] [email protected] Valentina Gómez Garzón Commerce Sector Analyst [email protected] Valentina Martínez Jaramillo Laura Natalia Capacho Camacho Consumer & Industry Analyst Interrn Juan Esteban Echeverri Agudelo [email protected] [email protected] Administrative Assistant [email protected] Andrés Uribe Rendón Junior Analyst [email protected] Research Assistant Alejandro Quiceno Rendón Jairo Andrés Burgos Guerra Research Editor Intern [email protected] [email protected] Terms of use This report has been prepared by Analysis Bancolombia a research and analysis department at Grupo Bancolombia. It shall not to be distributed, copied, sold, or altered in any way without the express permission of Grupo Bancolombia, nor be used for any purpose other than to serve as background material which does not constitute an offer, advice, recommendation, or suggestion by Grupo Bancolombia for making investment decisions or conducting any transactions or business. The use of the information provided is solely the responsibility of the recipient.

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Rating System The investment recommendation on the issuers under coverage by Analysis Bancolombia is governed by the rating system presented below, subject to the following criteria:

The upside potential is the percentage difference between the target price of securities issued by a particular issuer and their market price. The target price is not a forecast of the price of a stock, but a fundamental independent valuation made by Analysis Bancolombia, which seeks to reflect the fair price the market should pay for the shares on a given date.

Based on an analysis of the relative upside potential amongst the securities of companies under coverage and the COLCAP index, the ratings of the assets are determined as follows:

Overweight: when the upside potential of a stock exceeds by 5% or more the return potential of the COLCAP index. Market Weight: when the upside potential of a stock does not differ by more than 5% from the return potential of the COLCAP index. Underweight: when the upside potential of a stock is 5% or more below the return potential of the COLCAP index. Under Review: the company’s coverage is under review and therefore there’s no rating or target price.

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The fundamental potential of the index is determined based on the methodology established by the BVC for the calculation of the COLCAP index, considering the target prices published by Analysis Bancolombia. This will be made with the Colcap basket on the dates of calculation May and November of every year. For the companies part of the index but not covered, the consensus of market analysts will be used.

Currently, Analysis Bancolombia has 19 companies under coverage, distributed as follows:

Overweight Market Weight Underweight Under Review Number of issuers with ratings of: 9 1 7 1 Percentage of issuers with ratings of: 50% 6% 38% 6%