Equity Research

April 10th, 2019 Monthly Andean Strategy Update Our strategy continues to pay off in 2019

In March, the Andean region performed closely in line with LatAm (+0.3% vs CREDICORP CAPITAL RESEARCH +0.5%, in USD terms, respectively) with good performances across the board (Colombia: +2.1%; Chile: +1.3%; Peru: +0.9%, in USD terms). However, in local currency terms, Chile dropped 0.5%, while Colombia remained flat and Peru appreciated 0.2%. Daniel Velandia, CFA +(571) 3394400 ext. 1505 We maintain our Underweight position in Chile due to lack of short-term [email protected] catalysts, low trading activity levels and major capital market events coming ahead. Carolina Ratto • The Chilean economy started the year with weak figures, with demand-side +(562) 2446 1768 sectors losing dynamism. [email protected] • Traded volume lost strength in March compared to the first months of 2019. We believe local and foreign investors remain on the sidelines as sentiment Tomás Sanhueza has not changed, and two large capital events (Enel Am’s capital increase +(562) 2446 1751 and Cencosud’s real estate IPO) will keep investors on the sidelines. [email protected] • Our downward bias for earnings and upside estimate for the local market has consistently become more clear: the most relevant sectors of the market Sebastián Gallego, CFA (Retail, Banks and Pulp & Paper) are not showing any signs of recovery. +(571) 3394400 ext. 1594 • Valuations continue to be discounted in terms of 2019E P/E and EV/EBITDA [email protected] (14.4x and 8.0x, respectively); however, our downward bias for earnings leaves us in a more cautious stance. Daniel Córdova • Our Top Picks are ILC, Engie Chile and SK. +(511) 416 3333 Ext. 33052 Upside has narrowed, but we maintain our Overweight position in [email protected] Colombia given solid fundamentals for 2019.

• The local market has been supported by strong inflows to ETFs; Colombia currently ranks sixth among emerging markets. • Our top-down strategy continues to rely upon higher economic activity vs 2018. Our GDP growth forecast stands at 3.3% vs 2.7% in 2018. • External conditions continue to favor our overweight stance in Colombia; any increase in volatility across global markets may be the main threat to our thesis. • We continue to believe that valuations remain attractive; 12-month forward P/E and EV/EBITDA multiples stand at 16.8x and 7.9x, respectively, compared to 20.4x and 8.9x averages, respectively, since 2015. • We maintain Davivienda, Cemargos and Nutresa as our Top Picks. We maintain our Neutral position in Peru, with domestic demand fairly resilient amid short-term risks on metal prices and some political noise. • Private consumption should support overall economic growth, while private investment may be slowly regaining some speed. • Confrontation between the Executive Branch and Congress is at a low point, paving the way for collaboration on pro-growth economic measures. • The Las Bambas' blockade may impact short-term market sentiment. • Companies under coverage continue to trade at a discount against historical averages; however, this discount fades when excluding mining companies. IMPORTANT NOTICE (US FINRA RULE 2242) This document is intended for • We maintain Ferreycorp and InRetail as our Top Picks. Ferreycorp should INSTITUTIONAL INVESTORS and is not subject to all of the independence and disclosure standards applicable to debt research reports prepared for retail benefit from the strong mining investment cycle, while InRetail may keep investors. Credicorp Capital may do or seek to do business with companies covered in its research reports. As a result, investors should be aware that the firm surprising us on synergies from its acquisition of Quicorp and sound growth may have a conflict of interest that could affect the objectivity of this report. in private consumption. Investors should consider this report as only a single factor in making their investment decision. Refer to important disclosures on page 30 to 33, Analyst Certification on Page 30. Additional disclosures on page 33. 1 Actualizar Contents

Monthly Andean Strategy Update

Chile: Still low activity levels in the market with no change in sentiment 5 Top Picks 7 Colombia: Upside has narrowed due to strong performance; however, we maintain our overweight position 9 Top Picks 12 Peru: Domestic demand remains resilient, and should withstand some recent political noise; short term uncertainty in 13 metal prices persists 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 Apr-18 Jun-18 Aug-18 Oct-18 Dec-18 Feb-19 Apr-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% 18.0x 16.8x 25.0% 16.0x 14.4x 14.1x 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% 2.0x -15% -15% -16% -15.0% .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

8.0x 8.0x 7.9x 30.0% 25.0% 7.8x 20.0% 7.6x 15.0% 7.4x 10.0% 5.0% 7.1x 7.2x 0.0% 7.0x -5% -5.0% -12% -10.0% 6.8x -13% -15.0% 6.6x -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: Underweight (+) Solid GDP growth (3.3% 2019E), normalized inflation and compelling outlook for Valuations continue to be discounted. However, we investments still see a lack of catalyst for the market, which in our (+) Safe haven on the regional landscape with steady corporate earnings growth view, is related to the weak earnings growth and (+) Attractive bottom-up stories with discounted valuations potential downward corrections in important sectors. (-) No major recovery in the consumption enviroment In addition, two major capital event (Enel Am capital (-) Negative impact of global risks increase and Cencosud's real estate IPO) will put (-) No clear catalyst with lacking earning growth investors on sidelines for now. We remain cautious (-) Exposure to risks coming from Argentina and Brazil on upcoming months. 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 Sigdo Koppers Colombia Allocation: overweight (+) Attractive valuations The most important issues in the short term are: oil (+) GDP growth acceleration prices, exchange rate performance, corporate (+) Better results within the banking sector governance issues/news, rebalancing process (+) Strong results at Ecopetrol for 2018; dvd yield above 6.5% (COLCAP in April), flows related to the decree 959 of (-) Volatility across foreign markets 2018, ETFs' flow momentum. (-) Twin deficits

Strategy:

We continue to believe that the Colombian market offers an attractive entry point due to i) better macro outlook, where we expect a GDP growth of 3.3%, ii) real gross investment should advance 5.5% in 2019 relative to 3.5% in 2018, and iii) attractive valuations.

Top picks: Davivienda, Nutresa, and Cementos Argos Peru Allocation: Neutral (+) Private consumption remains fairly resilient, while private investment may be Ferreycorp has upside from its extraordinary slowly regaining some speed. dividend announcement, strong fundamentals and (+) Monetary policy will be supportive throughout 2019. lower selling pressures. Engie shows an attractive (+) Confrontation between Executive and Congress is at a low point, paving the way upside, and is supported by strong 2019 revenues for collaboration on economic measures. outlook. Demand for IFS seems reactivated. Cerro (-) Some political noise caused by the Las Bambas' blockade. Verde should catch up with Southern Copper’s (-) Metal prices downside risk on trade war remains a concern. surge and benefit from a favorable outlook for (-) Valuations excluding mining companies at their historical averages. copper. Aceros Arequipa keeps a discount vs. peers. Strategy: Trading ideas: As commodity price short-term risks persist, we favor stocks such as Ferreycorp, Ferreycorp, Engie, IFS, Cerro Verde, Aceros linked to the upcycle of mining investment. At the same time, private consumption Arequipa. maintains a healthy growth, supporting names such as InRetail and Alicorp. We pay attention to positive signals from construction and infrastructure-related sectors.

Top Picks: InRetail and Ferreycorp.

4 Chile Still low activity levels in the market with no change in sentiment

Despite better In March, the Chilean market posted a negative return in both USD (-4.1%) and CLP relative risk position (-0.5%). The Chilean market has been a clear underperformer in the region, behind the in the region, we local markets in Peru and Colombia. Under this regional scenario, our Underweight have not seen a position in Chile seems to have paid off. During March, the local market showed weaker change in sentiment dynamics compared to January and February 2019, with lower average daily traded towards Chile. volumes during the whole month. Local investors were slightly more active as sellers than as buyers, though with significantly low activity. In our view, local investors have remained on the sidelines due to two important capital market events that should take place in the upcoming quarter: (i) the capital increase of Enel Americas for USD 3.5bn (amount not approved yet) and (ii) the IPO of the real estate assets of Cencosud, looking to gather USD 1.0bn. These two capital market events will be a significant investment opportunity for local institutional investors, so we expect them to stay on the sidelines until these operations are more clearly defined and eventually take place. Foreign investors have also been relatively inactive, in line with the previously mentioned dynamic. In terms of valuation, the local market continues to be discounted compared to its three-year average in terms of P/E and EV/EBITDA Fwd, with no major changes. However, corporate earnings for 2019 continue to be weak, and we do not rule out further downward corrections in our estimates, mainly on the most relevant sectors of the index (Banks, Retail and Forestry). Under this scenario, we could see an upward correction in our forward multiples of the local index. Although there has been an increase in local risk of other markets in the region (Brazil with the discussion of the pension reform; Argentina with the election period in a weak macro environment), we have not seen a change in sentiment towards Chile that would allow us to have a more constructive view. Under this scenario, we continue to have a selective strategy, not necessarily favoring valuations but most importantly looking for compelling earnings growth, sound fundamentals and defensive stories in 2019.

Recent results have The Feb-19 Imacec confirms a disappointing start of the year for activity. Economic started to increase activity grew just 1.4% y/y in Feb-19 according to the Imacec gauge published by the downside risks to BCCh, well below market expectations (2.0%) and our own forecast (2.2%). The weaker- our 3.3% GDP than-expected result was mainly explained by a strong contraction of mining production (- growth estimate for 7.8% y/y), while the non-mining Imacec expanded 2.4% y/y, favored by the services 2019 (YTD growth sector. The 1.4% y/y headline figure is the lowest since Jun-17, when a long labor strike stands at 1.8%). at the La Escondida mine took place. In seasonally-adjusted terms (s.a.), the Imacec fell 0.2% m/m, with the annual figure standing at 1.9% y/y s.a., also the slowest pace since Jun-17. It is worth noting that Feb-19 had the same number of business days as Feb-18. Overall, these results confirm that the Chilean economy started the year on a low note. Even though there were some one-off effects, such as the adverse weather conditions in the north of the country that affected mining production, demand-side sectors also lost dynamism, except for the segments linked to investment. All-in, the economy does not only face a challenging base of comparison in 1H19 but also started this year with weaker-than-expected dynamics. We continue to expect GDP to grow by less than 3% y/y in 1H19 and recognize the need for higher monthly Imacec increases to achieve our 3.3% GDP growth projection for this year, implying that recent results have started to increase downside risks (YTD growth stands at 1.8%). We will wait for upcoming figures to better assess the most likely scenario as temporary factors in the mining sector should start to fade, thus a rebound should be expected in the upcoming months.

5 During 4Q18 earnings season, ten out of 23 companies in our sample surprised positively in EPS, while seven came in below expectations. EPS posted 6.8% y/y growth, compared to our estimate of 0.3% y/y; this was mostly explained by Retail, in turn explained by Cencosud. The company posted a strong positive surprise (CLP 216bn vs CLP 87bn in our estimates) due to lower taxes that provided a positive effect (all figures compared without hyperinflationary adjustments). On a negative note, we highlight the negative surprise in the Pulp & Paper sector, in both CMPC and Copec. It was a strong 2018 in terms of EPS growth for the companies in the IPSA index, growing by more than ~18% y/y in CLP terms (~16% y/y in USD terms). EPS growth experienced a significant impact from some one-off gains, in particular the gain of more than USD ~300mn for the deal related to the Budweiser license in Argentina. Excluding that one-off, EPS growth for 2018 would have been ~14% y/y, and, in turn, 2019 should post EPS growth of ~8% y/y (vs our current 5% y/y estimate, which includes the one-off).

We see potential What should we expect for 2019? As mentioned above, our EPS growth estimate for downside risks to 2019 remains at 5% y/y; however, we are revising our estimates for the most relevant our earnings sectors in the market (Retail, Banks and Pulp & Paper). On the Retail front, we believe our estimates for the estimates continue to have a somewhat positive bias towards SSS growth, which could be index and the revised downwards due to heavy promotion and an absence of recovery in the potential upside for consumption and labor environment. In addition, Cencosud is still under pressure due to 2019. the lack of information about its real estate IPO. In terms of Banks, our estimates could be adjusted downwards on the back of (i) lower inflation expectations compared to our previous base case, (ii) changes in provision models and (iii) capitalization risk in ItauCorp. Finally, regarding the Pulp & Paper sector, our current estimates are considering too optimistic pulp prices given the levels we see right now. Considering that these three sectors account for almost 50% of the index, we do not rule out even softer earnings growth for 2019. This, coupled with weak activity in terms of flows, leaves us thinking that potential upside for the local index is around ~10% (~5,800 points) as opposed to our current ~17% estimate (~6,150 points).

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

26 12

24 11 22

20 10

18 9 16 8.0x 8 14 14.4x

12 7 Apr-13 Apr-15 Apr-17 Apr-19 Apr-13 Apr-15 Apr-17 Apr-19

Source: Company Reports, Credicorp Capital, & Bloomberg

6 Chile Strategy

Our Top Picks Our Chilean equity sample is trading at 14.4x PE 12m Fwd and 8.0x FV/EBITDA 12m are ILC, Engie Fwd, which continue to be significantly discounted against the market’s three-year Chile and SK. average. However, as mentioned above, we believe these multiples are based on forecasts that may be too optimistic and could be revised downwards. Under this scenario, multiples may be closer to their historical three-year averages than what we are seeing at the moment.

We continue to have a cautious and selective approach for the Chilean market. Under this context, we are removing Enel Chile and replacing it with Engie Chile. 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 see the execution of the call option in the bank and the potential delivery on profitability in Red Salud as short-term triggers for the shares. 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 including 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 1,265). We are maintaining SK in our Top Picks this month 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 (+30% y/y) and improved margins (EBITDA mg. 2018: 13.4%; EBITDA mg. 2019E: 14.3%) 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 with estimated EBITDA growth of 40% y/y. In addition, mining 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 12,026 12,900 7.3% 11.4% 1,810 10.9 9.8 nm nm 1.8 4.1% Conglomerates Engie Chile 1,325.0 1,450.0 9.4% 13.1% 2,100 20.5 10.8 8.1 6.1 1.0 3.7% Utilities SK 1,237.0 1,264.7 2.2% 6.0% 2,001 21.5 17.6 10.4 8.6 1.5 3.7% Industrial Chilean Picks a 6.3% 10.1% 5,911 17.6 12.7 9.3 7.4 1.4 3.8% IPSA 5,255 6,150 17% 20% 156,150 18.6 16.9 9.3 9.0 1.8 2.9% 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 Upside has decreased due to strong performance; however, we maintain our overweight position

In March, the COLCAP index outperformed the MSCI LatAm. In fact, the local index climbed 1.7%, compared to a 2.7% decline of the MSCI LatAm (USD terms). Recall that, on a YTD basis, the COLCAP index has increased 22.1% (USD terms). The relatively strong performance in March was primarily explained by: i) a favorable performance of Brent oil prices (+3.6% m/m), ii) a regulatory change that allowed private pension funds to choose higher risk funds for individuals according to their gender and age, iii) positive trends in 4Q18 corporate results and iv) solid dividend proposals across key companies, such as Ecopetrol and GEB. Despite the recent strong performance of Colombian equities (on both an absolute and a relative basis), we maintain our medium-term strategy of having an overweight position in Colombia relative to other markets in the Andean region. This strategy is supported by: i) compelling valuations, ii) better operating trends and financials in key sectors and iii) a better macro outlook for 2019 (GDP growth of 3.3% in 2019 vs 2.7% in 2018).

ETF flows continued to support the strong performance. Market sentiment in Inflows through ETFs Colombia has shown signs of strength during 2019. This has been supported by positive have been a positive inflows and net buying positions from key market agents. As of April 5th, 2019, Colombia catalyst for the local was among the top six emerging markets in terms of ETF flows towards equities. market. According to Bloomberg, Colombia has received USD 125 mn of inflows on a YTD basis, which is the second highest amount of inflows in LatAm; it is worth noting that Brazil is the only country in the region ahead of Colombia during 2019. Meanwhile, we highlight that Chile and Mexico have been the countries with the largest outflows with USD 92 mn and USD 141 mn, respectively.

Foreign investors and pension funds have also supported the market. Both players have been net buyers on a YTD basis, which has also supported market sentiment. In fact, local pension funds reported a net buying position of USD 34.8 mn, while foreign investors reached USD 46.1 mn (both as of Feb-19), making them the largest YTD buyers in the local market. Feedback from investors suggests that flows, given regulatory changes, could be larger than initially expected. According to Resolution No. 959 from 2018, private pension funds are now allowed to choose higher risk funds for individuals in Colombia according to their gender and age. For instance, individuals that are younger than 47 for men and younger than 42 for women who choose not to select their risk preference could see their contributions automatically going to higher risk funds. The resolution went into effect on March 5th, 2019 and may result in new monthly inflows into the local equity market of ~USD 50 mn. According to local institutional clients, these inflows could be even larger.

The financial sector is leading the way on a YTD basis; Corficolombiana has been the top winner in the local market on a YTD basis with a +62.5% return (excluding dividends). We believe Corficolombiana’s positive performance is explained by: i) the payment to the banks related to RDS2, ii) less noise in the media and iii) 688% net earnings growth in 2018 (partially explained by the implementation of IFRS 15). Bancolombia, Aval, Ecopetrol and Davivienda follow Corficolombiana with +30.0% returns. The strong performance of the financial sector has been right in line with our equity strategy as we believe there should be better operating/financial trends across the banking industry during 2019 and 2020. In fact, we continue to expect loan growth of 8%-10% this year, compared to a figure close to 6.0% in 2018. More importantly, we have seen positive signs on the asset quality front, and we continue to forecast a decrease from 2018 figures of 20-30 bps in

9 cost of credit. Under this scenario, ROAEs across the banking sector should climb at least 100 bps vs 2018 (among banks under coverage in Colombia).

Ecopetrol is also a top winner on a YTD basis with a 27.0% increase in price; the recent flow of news has been positive for the company. Management announced that the dividend proposal of COP 225/share was approved by shareholders. Given the closing price at the end of April 5th, 2019, the dividend yield of Ecopetrol should be placed at 6.7%, which is among the highest within the local market. Meanwhile, total oil production in Colombia was 892.5 kbped in Feb-19, equivalent to an 8.4% y/y increase, and the oil production figure of 899 kbped in Jan-19 was the highest figure reported in Colombia since May-16. Furthermore, recent comments made by the company’s CEO indicate that the company plans to drill 17 or more exploratory wells, possibly surpassing the figure from 2018 (17 exploratory wells). Finally, we highlight that the recent performance of Brent oil prices, which have climbed above the USD 70/barrel level, is positive news for the state-owned company.

Our top-down strategy continues to rely upon higher economic activity in 2019. The Central Bank decided to stay on hold in the most recent meeting as rates remained at 4.25%. Meanwhile, the Central Bank’s statement signaled that economic growth positively surprised the institution at the end of last year, and it has continued to improve in early 2019. We reiterate that our forecast for GDP growth stands at 3.3% for 2019, while the Central Bank’s forecast is currently above the market consensus at 3.5%.

Valuations remain Despite recent performance, we continue to believe that the Colombian market is attractive. trading at attractive valuations. The Colombian equity market currently trades at 12- month-forward multiples of 16.8x P/E and 7.9x EV/EBITDA, compared to averages of 20.4x and 8.9x, respectively, since 2015. We believe that the current cycle is favorable for local equities due to: i) higher profitability at key companies, such as banks, ii) stable interest rates and inflation, iii) higher economic activity with no signs of overheating and iv) strong dividend yields (average above ~3.0% for our Colombian sample). Colombia Strategy

Our equity strategy is unchanged from last month, when we made a slight change given the strong rally of Bancolombia. The strong performance of Bancolombia has continued; we reiterate that, even though we were optimistic on the name, performance has exceeded our expectations. Given this scenario, Bancolombia is no longer in our Top Picks; we have replaced it with Cementos Argos, which joins Davivienda and Nutresa in our selection. We maintain our favorable view on local banks, and we maintain Davivienda (BUY, T.P.: COP 41,500/share) in our Top Picks. Our positive view is supported by: i) a pickup in loan growth with an annual estimate of 10.2% y/y for 2019, compared to 7.3% y/y and 8.3% y/y for 2017 and 2018, respectively, ii) a 24-bps y/y decline in cost of credit for 2019E, explained by the full coverage of Electricaribe and lower provisions coming from the RDS2 case, considering the recent payment of the ANI to the financial system (~USD 200.3 mn), iii) the fact that relative valuation looks attractive when compared to that of local and Andean peers and iv) higher profitability, measured in terms of ROAE, in 2019E relative to Bancolombia (14.7% vs 11.9%). It is worth noting that shares are currently trading at 10.2x 2019E P/E, compared to a median of 13.9x from Andean peers.

We are more positive on construction, maintaining our view of a slow recovery in terms of volumes during 2019 but also foreseeing some price increases. This year should be an inflection point after negative performances in both 2016 and 2017 and a flattish 2018. Our recovery thesis is supported by: i) a decrease in housing inventories

10 (housing inventory levels have decreased at a 0.7% monthly compounded rate since Nov- 17), reaching 131,594 as of Jan-19, a level similar to that of Jun-16, ii) constant positive figures from the civil works sector (4G projects now have a 23% progress rate, and there are several ongoing district projects) and iii) a favorable base in 2018. Furthermore, we believe that current market conditions support price increases, with local players preparing themselves for the entrance of a new competitor.

Although we expect slightly better momentum for Exito in the short term, our top pick in the consumption sector continues to be Nutresa. After the strong correction that Nutresa experienced at the start of the year, we believe that that there is potential upside from positive surprises in quarterly results that could reflect a more positive scenario for consumption. Our view is that downside risks to consumption have been fading, and we believe Nutresa has room to continue to improve its pricing and the efficiency of its distribution. However, we expect these improvements to take some time and to be reflected in share price gradually over the course of the year. On the other hand, Exito seems to have better short-term momentum right now, after valuation dropped significantly and has gradually corrected. Although the short-term prospects look more attractive for Exito, we continue to prefer Nutresa.

We reiterate that Davivienda, 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 20 9 18 16.8x 7.9x 8 16 14 7 12

10 6 Apr-16 Apr-17 Apr-18 Apr-19 Apr-16 Apr-17 Apr-18 Apr-19 Source: Company Reports, Credicorp Capital, & Bloomberg

11 Top Picks Colombia

Davivienda (BUY; T.P. COP 41,500). We continue to favor Davivienda among Colombian banks (medium-term perspective). Despite a strong performance over the LTM (+13.7% vs -3.0% for the COLCAP index, in USD terms), we still see upside for the stock. Our positive view is supported by: i) a pickup in loan growth with an annual estimate of 10.2% y/y for 2019, compared to 7.3% y/y and 8.3% y/y for 2017 and 2018, respectively, ii) a 24- bps y/y decline in cost of credit for 2019E, explained by the full coverage of Electricaribe and lower provisions coming from the RDS2 case, considering the recent payment of the ANI to the financial system (~USD 200.3 mn), iii) the fact that relative valuation looks attractive when compared to that of local and Andean peers and iv) higher profitability, measured in terms of ROAE, in 2019E relative to Bancolombia (14.7% vs 11.9%). It is worth noting that shares are currently trading at 10.2x 2019E P/E, compared to a median of 13.9x from Andean peers.

Nutresa (BUY; T.P. COP 31,900). We still expect strong momentum for shares in 2019, which should be supported by results. 4Q18 results surprised positively in EBITDA and earnings, which came in way above our forecasts. Our thesis on Nutresa is based on: (i) a volume-growth trend given that the company has already experienced a recovery, leveraging its leading position in its core categories under a more favorable scenario for consumption in Colombia, (ii) improvements in prices through innovation, better sales mix and specific price increases, (iii) a favorable scenario for commodities and (iv) the turnaround stories of segments that underperformed in recent years (TMLUC and El Corral).

Cemargos (BUY; T.P. COP 9,900). On March 1st, 2019, we updated our valuation model and view on Cementos Argos, giving the stock a BUY rating. Our view on the company factors in the deceleration of the US market and our new forecasts that consider the impact of the entry of new capacity into the Colombian market. Meanwhile, our BUY rating is based on: i) Cemargos’ current 10.2x 2019E EV/EBITDA, which implies a ~30.7% discount vs its historical multiple, 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.

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 Davivienda 39,040 41,500 6% 9% 5,642 12.8 10.2 nm nm 1.7 2.3% Banks Nutresa 26,180 31,900 22% 24% 3,854 18.9 17.1 9.3 8.3 1.4 2.2% Food & Beverages Cemargos 8,000 9,900 24% 27% 3,396 61.0 46.5 13.0 10.3 1.4 3.1% Cement & Construction Colombian Picks a 6% 9% 5,642 12.8 10.2 11.1 9.3 1.7 2.3% COLCAP 1,600 1,720 8% 12% 110,053 18.4 16.1 7.9 7.5 1.1 4.3%

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

12 Peru Domestic demand remains resilient and should withstand some recent political noise; short-term uncertainty on metal prices persists

Private consumption- Despite overall economic deceleration at the beginning of the year, domestic related sectors demand-driven sectors remain resilient. In January, the monthly economic activity remain resilient, and indicator rose 1.6% y/y, below the market consensus (Bloomberg: 2.4%). However, this there are signs of was mainly the result of primary sectors falling 5.2% y/y (due to the 31.3% y/y and 1.4% hope for y/y contractions in fishing and mining activity, respectively). However, non-primary sectors construction activity. maintained the fairly dynamic behavior exhibited since the start of last year, expanding 3.5% y/y, buoyed by private consumption, commerce and services activities. This scenario continues to provide fundamental support for names such as InRetail, Alicorp and IFS, among others.

While we remain cautious on construction-related activity, some recent indicators provide some hope. In January, the construction sector barely grew (+0.9% y/y), maintaining the trend of previous months. However, domestic cement consumption increased 4.8% y/y in February (+1.8% y/y in January and -1.2% y/y in December); in addition, public investment expanded 15.5% y/y in March, in a marked contrast with the contraction observed in the first two months of the year. Even though consistent positive performance still remains to be seen, construction and infrastructure activity could receive a boost if the measures laid out by Prime Minister Del Solar are carried out successfully.

Political noise has In the short term, social unrest in the Apurimac region over the Las Bambas’ increased in recent blockade is triggering some political noise. Some communities in the vicinity of MMG’s weeks due to the Las Bambas mine complex (who basically claim unfulfilled obligations and pending land blockade of the Las payments from the government) are still blocking the road that connects Las Bambas to Bambas mine by the Matarani port (crucial for delivering copper shipments) in southern Peru. Negotiations local communities. have stalled because these communities still demand that their top two legal advisors be released from pre-trial detention (they were detained on charges of extortion against MMG). The company has said in recent days that it will start gradually suspending activities in this mine if the road blockage continues. The Las Bambas mine produced 15.8% of the copper in the country in 2018, ranking third behind Cerro Verde (20.3%) and Antamina (18.9%). According to the Central Bank, its annual production represents roughly 1% of Peru’s GDP.

While this issue may affect consumer and business confidence, its impact should The Las Bambas be limited and temporary. In the past, situations similar to the Las Bambas blockade situation impacted have had a temporary effect on consumer expectations and a limited economic impact the vote of beyond the production of the specific mine involved. Events like this mostly have a political confidence for the cost for the incumbent administration. In the case of Las Bambas, some of this cost was new cabinet of seen last week as Prime Minister Del Solar got a vote of confidence from Congress with ministers. the lowest number of congressmen voting in favor (46 out of 130) in the last 18 years. This result puts additional pressure on the new cabinet of ministers to deliver quickly on its goals, mainly on those related to accelerating economic activity.

Monetary policy is still expected to remain expansionary for the rest of the year. Annual headline inflation accelerated in March to 2.3%, up from 2.0% in February, and we believe it could rise even further in April and May. However, this would happen mainly due to a statistical effect, and, therefore, we believe the Central Bank will hold its policy rate at 2.75% in its April meeting.

13 Peru Strategy

The Lima Stock Exchange (BVL) posted a positive performance again in March, though below the gains of January and February, increasing 1.2% in USD terms (1.8% in PEN). Utilities shares continued their good performance based on momentum from the previous month due to the capital increase announced by Enel Americas, parent company of Enel Gx and Enel Dx. InRetail shares rose on the back of the solid fundamentals of consumer spending and the expectation of accretive value generated by vertical integration with Quicorp. In addition, the construction sector recovered from the performance exhibited in February as public investment contracted less than expected in Jan-19 and Feb-19 and positive momentum was driven by Graña’s capital increase.

We maintain our Base metal prices exhibited a more uneven performance in March as uncertainty Neutral over the U.S.-China trade talks returned. While zinc prices increased (+5.5%), copper recommendation on and tin prices fell (-0.4% and -1.5%, respectively), which explained the flat performances Peru as some of Cerro Verde and Minsur shares. Volcan shares dropped again last month (-8.8%) in the political noise and wake of its removal from FTSE indexes in mid-March. short-term uncertainty on metal We maintain our Neutral recommendation on Peru as upside and downside risks prices may weigh are fairly balanced and there is a lack of clear catalysts for significant market gains. against local names. Despite aggregate economic activity’s deceleration in January, domestic demand has maintained a relatively dynamic pace, which should continue in the upcoming months. However, the Las Bambas’ blockade could affect market sentiment in April, construction- related industries are still showing mixed signals and Prime Minister Del Solar’s presentation before Congress did not deliver positive surprises in terms of actions aimed at reinvigorating economic growth.

Still trading at a discount against historical averages. At 14.1x 12M forward P/E, companies under our coverage are trading at a ~12.7% discount against the two-year historical average (corrected for the significant losses in Buenaventura). Likewise, 12M forward FV/EBITDA of 7.1x represents a ~13.1% discount against its five-year historical Although we average. maintain a more Excluding mining companies leads to a 12M forward P/E discount of 2.2% and a favorable view on 12M forward FV/EBITDA premium of 0.9%. However, uncertainty over the degree of stocks linked to China’s economic deceleration in 2019 and the fate of the U.S.-China trade negotiations is private consumption, still a hurdle the sector must overcome to unlock medium-term value. Thus, we maintain a we are also keeping more favorable view on names linked to private consumption, but we are keeping an eye an eye on stocks out for positive signals from the construction sector and base metals markets. related to construction and P/E Forward (12 month rolling) * FV/EBITDA Forward (12 month rolling) * mining. 22 11

20 10

18 9

16 8 7.1x 14.1x 14 7

12 6 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-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 32.50). We maintain InRetail in our Top Picks due to its strong positioning in Pharma, possible synergies after the acquisition of Quicorp and its leadership in the food industry. InRetail has been able to outperform its peers with the new commercial strategy “Everyday low prices”, while exploring the discount format through the Mass brand and now the cash & carry format too. Even though Mass is not significant in terms of sales and EBITDA, it prevents the company from being kept out of that segment if it starts to pick up. The acquisition of Quicorp has definitely changed the We see an scenario for InRetail. It was made at a fair multiple (EV/EBITDA 12x vs pharma global opportunity in peers’ figure of 13x) considering the opportunities arising from the deal: (i) higher InRetail as synergies negotiating power with global suppliers, possibly allowing the company to reduce the price with Quicorp could gap with traditional drugstores and thereby penetrate the informal channel, (ii) possible unlock more value synergies coming from reducing headcounts, closing 160 stores and consolidating than meets the eye. logistics and distribution, (iii) vertical integration as Quimica Suiza owns two national laboratories that distribute ~40% of the medicines in the country and (iv) international expansion into Ecuador, Bolivia and Colombia. So far, the company has positively surprised us in terms of synergies.

Ferreycorp (BUY; T.P. PEN 3.00). Investors should find the stock attractive at current prices, and demand for the stock is reappearing. Moreover, the company announced relatively strong annual dividends (5.1% dividend yield, excluding an extraordinary dividend that was also announced); this news has been well received by investors. Also, the company still has a 2% stake (PEN 10mn book value) in La Positiva Vida Seguros y We expect mining Reaseguros, which it holds as assets for sale. Moreover, Ferreycorp has attractive investment to post medium-term fundamentals. It will provide a fleet of CAT trucks of 320 MT and other types an expansion of 23% of equipment for the Quellaveco mining project. Furthermore, for a five-year period, it will in 2019 and 18% in provide specialized support. In total, the contract is for USD 500mn, above our 2020. expectations. This comes in addition to the USD 100mn contract with the Mina Justa project of Minsur 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 35.60 43.80 23% 24.0% 3,660 57.1 25.6 13.9 11.5 2.9 0.9% Retail Ferreycorp 2.52 3.00 19% 24.9% 745 8.6 8.3 7.4 7.1 1.2 5.8% Materials Peruvian Picks a 23% 24.4% 4,405 32.9 17.0 10.7 9.3 2.0 3.4% S&P/BVL 21,368 23,400 10% 12% 35,457 18.2 13.5 8.8 7.8 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

April 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 188 190 HOLD 2,376 2.5 8.3 8.6 6.5 6.8 0.9 12.1% 11.7% 11.1% 3.8% 3.6% Aguas-A Utilities 381 390 UPERF 3,401 2.5 16.9 17.1 10.4 9.8 3.7 6.0% 21.3% 22.4% 7.4% 7.5% Andina-B Food & Beverages 2,448 2,880 HOLD 3,275 4.6 0.5 19.4 17.9 8.6 8.3 2.8 4.1% 14.8% 15.4% 5.6% 6.0% AntarChile Conglomerates 9,269 13,900 BUY 6,365 1.2 9.6 10.0 5.9 5.8 0.9 4.2% 9.7% 8.8% 2.8% 2.5% Banco de Chile Banks 99 98 UPERF 15,093 6.6 2.4 16.5 15.6 nm nm 3.1 3.4% 18.8% 18.7% 1.8% 1.7% Banco Santander Banks 51 56 HOLD 14,575 8.2 10.4 15.8 14.5 nm nm 3.2 4.1% 19.5% 20.0% 1.6% 1.6% Besalco Construction 643 745 BUY 557 0.4 37.0 23.0 12.2 9.0 2.0 2.4% 5.3% 8.2% 1.5% 2.2% CCU Food & Beverages 9,455 9,530 HOLD 5,257 3.9 5.4 11.5 21.1 6.4 10.0 3.3 5.2% 25.0% 12.6% 14.2% 7.2% CMPC Pulp & Paper 2,320 3,100 BUY 8,728 6.0 13.9 13.3 6.3 6.3 1.1 3.6% 7.5% 7.5% 4.1% 4.1% Colbun Utilities 153 165 HOLD 4,024 2.1 17.5 13.7 7.7 7.4 1.1 9.4% 6.2% 8.1% 3.4% 4.5% Concha y Toro Food & Beverages 1,426 1,520 HOLD 1,602 1.4 21.6 16.4 15.0 11.7 1.9 2.3% 8.8% 11.0% 4.6% 5.9% Copec Pulp & Paper 8,750 11,200 HOLD 17,115 8.4 13.9 14.2 7.9 7.8 1.6 2.9% 11.4% 10.4% 5.3% 4.8% Embonor-B Food & Beverages 1,608 1,980 BUY 1,145 0.7 16.9 15.9 7.8 7.8 2.5 4.6% 13.4% 13.6% 6.7% 6.8% Enel Chile Utilities 70 74 HOLD 7,435 5.9 2.2 0.3 0.2 7.5 7.1 1.5 4.9% 11.5% 12.2% 5.6% 5.6% Engie Chile Utilities 1,325 1,450 BUY 2,100 2.0 20.5 10.8 8.1 6.1 1.0 3.7% 5.1% 9.2% 3.0% 5.6% Entel Telecom & IT 7,001 6,550 HOLD 3,182 2.9 nm 41.1 8.0 7.5 1.7 0.0% 0.0% 4.1% 0.0% 1.4% Falabella Retail 5,050 5,400 HOLD 19,067 16.8 25.8 22.8 13.9 13.0 2.8 1.2% 10.3% 10.3% 3.4% 3.6% Forus Retail 1,820 2,310 BUY 708 0.6 17.8 17.9 9.7 9.3 2.1 2.2% 12.6% 11.8% 11.0% 10.5% Habitat Financials 950 1,260 BUY 1,430 0.1 11.1 9.7 7.5 6.5 2.6 7.2% 23.8% 25.8% 18.7% 20.4% ILC Conglomerates 12,026 12,900 BUY 1,810 1.3 10.9 9.8 nm nm 1.8 4.1% nm nm nm nm Itau Corpbanca Banks 6 8 BUY 4,500 3.5 0.3 15.0 12.5 nm nm 0.9 2.3% 6.1% 7.0% 0.7% 0.8% Masisa Materials 42 43 HOLD 501 0.2 22.6 50.1 9.9 11.5 0.5 2.2% 2.2% 1.0% 1.5% 0.8% Parque Arauco Real Estate 1,800 1,970 HOLD 2,432 2.0 14.1 16.5 18.3 17.6 4.6 3.3% 13.6% 10.8% 5.3% 4.2% Quiñenco Conglomerates 1,834 2,135 HOLD 4,588 0.9 18.2 17.6 nm nm 1.0 5.4% nm nm nm nm Ripley Retail 574 663 HOLD 1,674 1.9 15.8 15.2 18.9 17.3 1.2 3.8% 7.4% 7.6% 2.5% 2.5% Security Conglomerates 273 330 HOLD 1,515 0.9 11.3 9.4 nm nm 1.4 5.1% 12.2% 13.7% 0.9% 0.9% SK Industrial 1,237 1,265 BUY 2,001 0.3 21.5 17.6 10.4 8.6 1.5 3.7% 6.9% 8.2% 2.5% 3.0% SM-ChileB Conglomerates 332 332 HOLD 5,996 1.6 42.2 38.6 nm nm 2.8 0.9% 6.9% 7.0% 1.3% 1.3% SMU Retail 176 247 BUY 1,525 1.0 26.5 20.3 10.0 9.2 2.1 0.0% 5.9% 6.8% 2.1% 2.8% Sonda Telecom & IT 1,075 1,060 BUY 1,409 1.4 52.5 27.3 12.4 10.9 1.9 1.1% 3.8% 7.2% 2.1% 3.9% SQM-B Materials 25,715 34,600 HOLD 10,054 24.2 39.9 23.2 27.7 12.0 12.9 4.8 4.2% 20.6% 17.9% 10.3% 8.6% Chile Sample 5,255 6,150 156,150 132.9 18.6 16.9 9.3 9.0 1.8 2.9% 10.6% 10.7% 2.1% 2.0%

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 1,630 2,160 UPERF 520 0.3 0.6 nm nm 5.2 4.8 0.4 0.0% -5.2% -2.3% -1.0% -0.4% Bancolombia Banks 42,400 36,900 BUY 12,800 6.7 17.1 16.3 13.7 nm nm 1.8 2.6% 10.6% 11.9% 1.2% 1.3% BVC Financials 12,000 13,300 BUY 232 0.2 14.0 13.3 8.5 7.7 1.5 6.1% 11.0% 11.5% 8.4% 8.9% Canacol Oil & Gas 10,300 10,680 HOLD 585 0.1 1.1 nm 5.7 5.5 3.1 2.5 0.0% -3.2% 35.2% -1.1% 12.1% Cemargos Cement & Construction 8,000 9,900 BUY 3,396 2.3 61.0 46.5 13.0 10.3 1.4 3.1% 2.2% 2.9% 0.9% 1.3% CLH Cement & Construction 4,600 5,700 HOLD 819 0.5 13.1 13.6 7.1 7.5 0.5 0.0% 4.1% 3.9% 2.0% 2.0% Davivienda Banks 39,040 41,500 BUY 5,642 1.5 12.8 10.2 nm nm 1.7 2.3% 12.6% 14.7% 1.3% 1.5% Ecopetrol Oil & Gas 3,360 3,580 HOLD 44,203 12.1 24.8 9.9 9.8 5.2 4.9 2.7 6.6% 26.9% 23.9% 11.2% 10.8% Éxito Retail 14,440 17,290 HOLD 2,068 1.6 21.7 15.8 7.6 7.5 1.0 2.3% 4.1% 5.9% 0.5% 0.7% Grupo Argos Conglomerates 17,840 21,500 HOLD 4,697 2.0 27.5 26.7 9.3 9.3 1.0 2.0% 3.5% 3.6% 1.2% 1.2% Grupo Aval Banks 1,235 1,400 HOLD 8,707 2.1 1.7 11.2 9.9 nm nm 1.7 4.3% 17.1% 15.4% 1.7% 1.9% Grupo Sura Conglomerates 36,200 39,100 HOLD 6,602 4.7 16.7 13.1 nm nm 0.9 1.5% 5.2% 6.3% 1.8% 2.2% Nutresa Food & Beverages 26,180 31,900 BUY 3,854 1.1 18.9 17.1 9.3 8.3 1.4 2.2% 4.9% 5.3% 3.0% 3.1% Colombia Sample 1,600 1,720 110,053 39.7 18.4 16.1 7.9 7.5 1.1 4.3% 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 0.79 0.85 BUY 298 0.1 5.0 5.1 4.0 3.7 0.5 7.2% 10.2% 9.4% 5.8% 4.9% Alicorp Food & Beverages 11.15 13.00 HOLD 2,883 1.0 18.0 16.9 11.5 10.2 3.3 2.5% 17.3% 16.7% 6.5% 6.0% Buenaventura Mining 17.18 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 6.70 8.10 HOLD 866 0.4 0.1 24.2 19.5 10.5 9.4 1.8 4.5% 7.7% 9.4% 4.2% 5.1% Cerro Verde Mining 24.24 28.30 BUY 8,485 0.1 14.5 13.2 6.1 5.5 1.6 2.1% 10.9% 11.0% 7.5% 7.8% Enel Generacion Peru Utilities 2.27 2.60 BUY 1,954 0.0 10.9 11.7 6.7 6.8 2.1 5.5% 20.2% 17.9% 13.9% 12.7% Enel Distribucion Peru Utilities 5.50 6.85 HOLD 1,065 0.1 9.6 9.2 6.5 6.3 1.8 4.4% 18.1% 17.1% 8.2% 8.1% Engie Peru Utilities 6.29 7.80 HOLD 1,147 0.1 11.4 10.5 7.0 6.8 1.1 5.3% 9.4% 9.6% 4.5% 5.0% Ferreycorp Materials 2.52 3.00 BUY 745 0.5 8.6 8.3 7.4 7.1 1.2 5.8% 13.2% 12.8% 5.7% 5.6% Graña y Montero Cement & Construction 2.38 2.50 HOLD 476 0.1 0.4 27.3 15.6 4.8 5.7 0.7 0.0% 2.7% 4.5% 0.7% 1.2% IFS Conglomerates 45.75 49.00 BUY 5,175 0.7 14.3 11.9 nm nm 2.6 3.9% 18.4% 18.9% 1.9% 2.1% InRetail Retail 35.60 43.80 BUY 3,660 1.0 57.1 25.6 13.9 11.5 2.9 0.9% 5.4% 10.9% 1.9% 3.4% Luz del Sur Utilities 12.20 13.75 HOLD 1,801 0.1 14.0 13.9 10.2 9.9 2.2 5.0% 16.2% 15.6% 7.5% 7.1% Minsur Mining 1.79 1.95 BUY 1,565 0.2 39.3 30.9 7.7 8.1 1.3 0.0% 3.2% 3.9% 1.7% 2.0% Volcan Mining 0.62 1.00 HOLD 766 0.4 9.2 9.0 4.6 4.7 1.2 5.0% 13.0% 12.0% 3.7% 3.7% Peru Sample 21,368 23,400 35,457 24.2 18.2 13.5 8.8 7.8 1.9 2.6% 11.4% 12.2% 3.9% 5.5%

Source: Company Reports, Credicorp Capital, & Bloomberg

19 Appendix: Monthly Summary

April 2019

20 Chile - Top Winners / Losers Of The Month

WINNERS:

CAP: Global supply of iron ore continues to be under pressure due to the accident at Vale.

Vapores: Positive news from its subsidiary Hapag Lloyd should boost upcoming results.

Enel Americas: Rebound following the drop triggered by the USD 3.5 bn equity raise announcement. Minorities and Enel are getting closer to an agreement on the effective size of the deal, which brings certainty to the process and supports valuations.

CCU: Positive performance is explained by better prospects for 2019 results.

SM SAAM: Strong earnings momentum.

Top Winners Return Top Winners YTD Return Top Winners LTM Return

CAP 11.8% CAP 32.9% CAP 17.9% Vapores 6.9% Entel 31.7% SM SAAM 9.9% Enel Americas 6.1% SK 19.2% CCU 9.6% CCU 5.0% Parauco 17.8% Concha y Toro 8.6% SM SAAM 4.6% Vapores 16.0% AESGener 6.9%

Top Losers Return Top Losers YTD Return Top Losers LTM Return

Salfacorp -8.3% Forus -8.5% Cencosud -36.3% Embonor-B -7.5% Corpbanca -7.4% Forus -26.9% AESGener -6.7% Salfacorp -6.6% Latam Airlines -22.9% Sonda -6.5% Cencosud -6.2% Masisa -20.3% Forus -6.4% Sonda -5.7% Salfacorp -19.3%

LOSERS:

Salfacorp: Weaker earnings momentum than the industry.

Embonor-B: Noise regarding political and FX risks have weighed on shares.

AESGener: Negatively impacted by the pressure of its high leverage in the context of renegotiations with miners. The market seems to be scrutinizing the AES Gener balance sheet in order to gauge the eventual needs for new equity to fund its renewables push.

Sonda: Risks related to Brazil’s pension reform discussion has negatively impacted shares.

Forus: Bad earnings momentum expected to persist in 1Q19.

21 Colombia - Top Winners / Losers Of The Month

WINNERS:

Conconcreto: No coverage.

ETB: Better results in 4Q18.

ISA: Overhang risk has faded; speculation over the selling process.

BVC: Positive reaction to 4Q18 results.

Bancolombia: Strong momentum due to strong inflows into Colombia.

Top Winners Return Top Winners YTD Return Top Winners LTM Return

Conconcreto 53.1% Corficolombiana 61.6% Bcolombia 38.0% ETB 32.4% Av al 31.9% Ecopetrol 30.6% ISA 14.2% Bcolombia 30.3% Dav iv ienda 24.2% BVC 11.7% CLH 29.7% ISA 19.8% Bcolombia 10.1% Ecopetrol 29.1%

Top Losers Return Top Losers YTD Return Top Losers LTM Return

Av ianca -9.9% CLH -46.1% CLH -4.0% Av ianca -44.0% Cemargos -3.1% ETB -28.5% Nutresa -1.2% Cemargos -22.3% Éx ito -11.9%

TOP LOSERS:

Avianca: The dividend policy was a negative signal.

CLH: Volatility continues amid expectations of news on Maceo.

Cemargos: Large sell-off on the name.

Nutresa: More cautious view on the recovery of consumption in Colombia.

22 Peru - Top Winners / Losers Of The Month

WINNERS:

Siderperu: An extraordinary dividend was announced.

Graña y Montero: Significant new contract with Quellaveco; capital increase completed.

Backus: 4Q18 results showed continued strong earnings.

Relapsa: Solid 4Q18 results.

Southern: Strong 4Q18 results, and copper prices recovered in 1Q19.

Top Winners Return Top Winners YTD Return Top Winners LTM Return

Siderperu 24.3% Siderperu 58.2% Siderperu 70.6% Graña y Montero 10.2% Relapasa 30.2% In Retail 60.9% Backus 9.7% Minsur 26.8% BVN 16.6% Relapasa 7.2% Southern 26.7% Enel Generacion 14.9% Southern 6.7% In Retail 26.5% IFS 13.6%

Top Losers Return Top Losers YTD Return Top Losers LTM Return

Milpo -9.0% Milpo -15.5% Trev ali -69.5% Volcan B -5.9% Panoro Minerals -11.4% Atacocha B -49.3% Alicorp -3.6% Volcan B -9.9% Volcan B -46.7% Atacocha B -3.5% Atacocha B -5.6% Relapasa -42.5% Minsur -2.8% Trev ali -3.0% Panoro Minerals -36.7%

LOSERS:

Nexa Peru: Stock started to trade ex-dividend.

Volcan B: Exclusion from MSCI Indexes.

Alicorp: Investors waiting for more details on Intradevco acquisition.

Atacocha B: Price volatility due to wide spreads between bid and ask prices.

Minsur: Profit taking correction.

23 Chile - Traded Volume

In March, total traded volume was USD 3,065mn, 17.0% lower than it was in March 2018, considering the same number of trading days. Daily average traded volume was USD 146mn, USD 29.3mn lower than the USD 176mn figure seen during same month last year and 4.1% lower than the USD 152mn figure seen in February 2019. As for significant non-recurring flows, we highlight the FTSE rebalancing and block trades in Falabella (USD 15.36mn, 17.70mn and 19.29mn), Mall Plaza (USD 12.03mn and 10.41mn), Security (USD 19.22mn), Colbun (USD 15.75mn) and Las Condes (USD 41.81mn). For 2019, total accumulated traded volume reached USD 10,415mn, 12.5% lower than the USD 11,906mn figure seen in same period in 2018 and 27.1% 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

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

Source: Bolsa de Comercio de Santiago & 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% -6%

+45%

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

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

Source: Bolsa de Comercio de Santiago & Credicorp Capital

24 Colombia - Traded Volume

In March, ADTV was COP 186,747 mn, or USD 59.75 mn, equivalent to increases of 10.8% y/y and 1.1% y/y, respectively. This also represented increases of 35.9% m/m in terms of COP and 35.4% m/m in terms of USD. Total traded volume was COP 3,734,931 mn, increasing by 16.7% y/y and 35.7% m/m. In dollars, these figures are equivalent to USD 1,195.05 mn, increasing by 6.5% y/y and 35.3% 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 - - Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-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 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19

Source: BVC & Credicorp Capital

25 Peru - Traded Volume

Total traded volume in March was USD 231.7mn (+8.3% y/y) with specific trades at the beginning of the month. The average daily traded volume (ADTV) increased to USD 11.0mn, a 3.1% rise from the USD 10.7mn figure registered in March 2018, due to fewer large specific trades. ADTV decreased 6.7% on a m/m basis (USD 12.6mn in February 2019). YTD, the total accumulated traded volume was 15.6% lower than the five-year average. Through March 31st, pension funds and other local institutional investors were net buyers, with USD 20.4mn and USD 18.5mn, respectively. Local retail investors were net buyers with USD 20.4mn??. Foreign retail investors were net sellers with USD 0.7mn, while foreign institutional investors were net sellers with USD 60.0mn. Local retail and institutional investors and pension funds were involved in 66.9.0% of total trading.

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

- - Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-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% 5%

Moving AverageAverageAverageAverageAverageAverageAverage MovingMovingMovingMovingMovingMovingMovingLTM LTM LTM LTM LTM LTM LTM Moving Average MovingLTM 15 40% . 10

5

- Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19

Source: BVL & Credicorp Capital

26 Chile - Pension Funds: February Flows

In February, pension funds were net buyers of local equities (USD 82.4mn). The net investment was highly influenced by Andina-B (USD 121.1mn) due to the sale of a 7.32% stake (USD 264mn) of the company owned by The Coca-Cola Company, which was seeking to increase liquidity for upcoming investments. Exposure to the asset class reached 10.98%, decreasing 12 bps m/m. Exposure through direct investments (8.85%) and investment through investment funds (1.79%) decreased 8 bps m/m and 5 bps m/m, respectively. Additionally, we highlight that the major investment of pension funds during the LTM was Falabella (USD 708mn) due to the capital increase (USD 581mn) in Oct-18; excluding this effect, the major investment was SQM-B (USD 645mn). On the other hand, the major divestment was EnelGx (USD 919mn) due to the tender offer through which Enel Chile increased its stake in the company.

February marks the sixteenth consecutive month of investment in Embonor-B, the twelfth in Falabella, SM-Chile B and Copec and the eighth in SMU. On the other hand, it was the sixth consecutive month of divestment in Sonda, Cencosud and EnelAm.

As for sector allocation, pension funds were overweight in Consumer Discretionary (Falabella and Ripley) and were significantly underweight in Materials (SQM-B and CMPC).

Local Stock Movements

900 845

700 461 500 282 273 291 268 300 157 67 82

100 29 USD USD mn -100 -25 -71 -300

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

Top Net Investments Top Net Investments Total Total February LTM ANDINA-B 121.1 FALABELLA 708 FALABELLA 40.9 SQM-B 645 MALLPLAZA 22.4 ENELCHILE 480 BSANTANDER 13.6 MALLPLAZA 333 COPEC 8.4 COPEC 210 Top Net Divestments Top Net Divestments Total Total February LTM CENCOSUD -37.7 ENELGXCH -919 ENELAM -30.8 ENELAM -179 CHILE -29.4 CHILE -66 ENELCHILE -17.5 ECL -60 PARAUCO -10.3 CENCOSUD -47

Net Investments February 82.4 Net Investments LTM 2,303

Source: SAFP & Credicorp Capital

27 Peru - Pension Funds: October Flows

Peruvian Pension Funds’ (AFPs) exposure to local equities decreased to 10.6% in October 2018, when the S&P/BVL General Index fell -3.38% in PEN terms (-5.06% in USD terms).

In October, the net gap between the upper limit on equity investments vs actual funds invested was USD 939.9mn, USD 312.9mn greater than in September 2018. At an aggregate level, exposure to both local and international equities decreased.

We observed net divestments in local equities of USD 1.0mn. The main investments during October 2018 included Alicorp (USD 11.7mn), Engie (USD 5.9mn) and IFS (USD 5.3mn). On the other hand, the main divestments for the month were Buenaventura (USD 29.7mn), Enel Gx (USD 3.8mn) and Volcan (USD 0.5mn).

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 -27 -32

-301 -170

Jul-16 Jul-18 Jul-17

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

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

Feb-16 Feb-17 Mar-17 Feb-18 Mar-18 Mar-16

Aug-16 Sep-16 Nov-16 Dec-16 Nov-17 Dec-17 Aug-18 Sep-18 Aug-17 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 ALICORC1 1.1 4.8 5.8 11.7 ENGIEC1 1.5 0.0 4.4 5.9 IFS 0.1 -0.4 5.6 5.3 BAP -0.2 6.0 -0.6 5.2 NEXA 0.0 2.2 0.0 2.3

Top Net Fund 1 Fund 2 Fund 3 Total Divestments BVN ADR 0.0 -17.3 -12.3 -29.7 ENGEPEC1 -0.2 -2.2 -1.4 -3.8 VOLCABC1 -0.1 0.1 -0.6 -0.5 LUSURC1 0.0 0.2 -0.4 -0.2 ENDISPC1 -0.1 0.3 -0.2 0.0

Net Investment 1.9 -7.7 4.8 -1.0 August

Source: SBS, Credicorp Capital.

28 Economic Forecasts

CHILE National Accounts (YoY) 2015 2016 2017 2018 2019F 2020F Current GDP (USDmm) 244,417 250,266 277,184 299,148 308,585 332,451 GDP (%) 2.3 1.3 1.5 4.0 3.3 3.3 Domestic Demand (% v ar.) 2.5 1.3 3.1 4.6 3.7 3.7 Total Consumption (% v ar.) 2.6 2.9 2.7 3.8 3.3 3.3 Inv estment / GDP 23.8 22.9 21.6 22.0 22.4 22.8 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 3.25 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 3.00 3.25 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 61,100 63,700 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

Type of instruments Equal or less than USD 50,000 Equal or less than USD 100,000 Equal or less than USD 500,000 Equal or less than USD 1,000,000 More than USD 1,000,000 Other equity securities Minsur

AesGener, Banco de Chile, Cencosud, CMPC, Colbun, Corpbanca, ECL, Falabella, Latam, Cementos Pacasmayo, Enel Dx Ripley, Grupo Sura, InRetail and Debt securities Alicopr and Luz del Sur Entel Santander, SQM, Enjoy, Security, Peru and Engie Energía Perú. Minsur Bancolombia, Banco de Bogotá, Ecopetrol, Grupo Aval, Ferreycorp, IFS, Milpo and Unacem

Avianca, Bancolombia, Celsia, Derivatives on equity/debt Cemargos, CLH, Éxito, Grupo securities Argos, Grupo Aval and Isa.

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 10,000 Equity securities 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 Energia 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, EEB, ISA, Aceros Arequipa, AIH, Alicorp, Buenaventura, Cementos Pacasmayo, Engie Energia 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, EEB, ISA, Aceros Arequipa, AIH, Alicorp, Buenaventura, Cementos Pacasmayo, Engie Energia 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, EEB, ISA, Aceros Arequipa, AIH, Alicorp, Buenaventura, Cementos Pacasmayo, Engie Energia 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, Hatitat, Ripley, Salfacaforp, Santander, Security, SMU, Avianca, Banco de Bogotá, Bancolombia, BVC, Canacol, Cemargos, Davivienda, GEB, ETB, Exito, Grupo Argos, Grupo Sura, ISA, Nutresa and Promigas. Credicorp Capital Securities Inc. or its affiliates also have received compensation, within the past 12 months, for non-investment-banking securities-related services from the following company(ies): Banco de Chile, BCI, Copec, ItauCorpbanca, EISA, Falabella, Hatitat, Ripley, Salfacaforp, Santander, Security, SMU, Avianca, Banco de Bogotá, Bancolombia, BVC, Canacol, Cemargos, Davivienda, GEB, ETB, Exito, Grupo Argos, Grupo Sura, ISA, Nutresa and Promigas.

31 Credicorp Capital Securities Inc. or its affiliates currently provides or have provided, within the past 12 months, non-securities-related services to the following company(ies): Banco de Chile, BCI, Corpbanca, Forus, Habitat, Lan, Banco de Bogota, Bancolombia, Davivienda, Arequpia, AIH, Alicorp, Cementos Pacasmayo, Cerro Verde, Enel Dx Peru, Enel Gx Peru, Engie Energia Peru, Ferryecorp, 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, Corpbanca, Forus, Habitat, Lan, Banco de Bogota, Bancolombia, Davivienda, Arequpia, AIH, Alicorp, Cementos Pacasmayo, Cerro Verde, Enel Dx Peru, Enel Gx Peru, Engie Energia Peru, Ferryecorp, Graña y Montero, Luz del Sur, Milpo and Unacem.

E. Market Making

Credicorp Capital Securities Inc. or its affiliates act as market maker in the following company(ies): Almendral, Besalco, Invercap, Masisa, Quiñenco, Grupo Security, DK, SMSAAM, Enjoy, BVC, GEB, ETB, Alicorp, Cementos Pacasmayo, Enegie Energia Peru and Ferrycorp.

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 39% 46% 7% 7%

Compensation for investment banking 36% 33% 40% 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 CHILE PERU COLOMBIA Head of Equity Research - Retail [email protected] René Ossa Rodrigo Zavala Juan A. Jiménez # (562) 2446 1768 Head of Equity Head of Equity - Peru Head of International Equity Sales [email protected] [email protected] [email protected] CHILE PERU COLOMBIA # (562) 2651 9324 # (511) 313 2918 Ext 36044 # (571) 339 4400 Ext 1701

Tomás Sanhueza Daniel Córdova Sebastián Gallego, CFA German Barousse Renzo Castillo Santiago Castro Head of Equity Research - Consumer & Head of Equity Research Peru Head of Equity Research - Banks Vice President Equity Sales Equities Sales International Sales & Trading Transport. [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] # (511) 416 3333 Ext 33052 # (571) 339 4400 Ext 1594 # (562) 2450 1637 # (511) 416 3333 Ext 36167 # (571) 339 4400 Ext 1344 # (562) 2446 1751 Steffania Mosquera Cristóbal Grez Maria Fernanda Luna Credicorp Capital Ezequiel Fernández Luis Vicente Senior Analyst: Cement & Construction, Associate Equity Sales Equities Sales Securities INC VP Utilities Senior Analyst: Mining & Utilities Non Bank financials [email protected] [email protected] Rafael Solis [email protected] [email protected] [email protected] # (562) 2450 1629 # (511) 416 3333 Ext 36182 Institutional Equity Sales # (562) 2651 9344 # (511) 416 3333 Ext 37854 # (571) 339 4400 Ext 1025 [email protected] Ursula Mitterhofer Pablo Aguilar # (786) 999 1619 Associte Sales & Trading Equities Sales Andrés Cereceda Raúl F. Jacob Daniel Mora [email protected] [email protected] David Crummy Associate: Pulp & Paper, Materials, Analyst: Cement & Construction Analyst # (562) 2450 1613 # (511) 416 3333 Ext 36153 Equity Sales Trader Healthcare, Pension Funds [email protected] [email protected] [email protected] [email protected] # (511) 416 3333 Ext 36065 # (571) 339 4400 Ext 1609 Ana María Bauzá Credicorp Capital UK Ltd. # (786) 999 1618 # (562) 2446 1798 Sales Coordinator [email protected] Marilyn Macdonald Joel Lederman # (562) 2450 1609 International Equity Sales Associate - Retail [email protected] [email protected] # (4477) 7151 5855 # (562) 2651 9332

Felipe Navarro FIXED INCOME SALES & TRADING Senior Analyst: Construction, Industrial & Ports Andrés Nariño Alfredo Bejar [email protected] Director Sales Offshore Head of International FI # (562) 2450 1688 [email protected] [email protected] # (571) 339-4400 Ext. 1459 # (511) 205 9190 Ext 36148

CHILE PERU COLOMBIA

FIXED INCOME & ECONOMICS RESEARCH Guido Riquelme Evangeline Arapoglou Carlos Sanchez Head of Sales Head of international FI Sales Head of Fixed Income CHILE PERU COLOMBIA [email protected] [email protected] [email protected] # (562) 2446 1712 # (511) 416 3333 Ext 36099 # (571) 323 9154 Josefina Valdivia Juan Pablo Brosset Camilo A. Durán Head of Fixed Income Fixed Income Analyst Macro Analyst Juan Francisco Mas Andrés Valderrama Gustavo Trujillo [email protected] [email protected] [email protected] Fixed Income Sales Fixed Income Sales Head of Sales # (562) 2651 9308 # (511) 416 3333 Ext 36018 # (5511) 339 4400 Ext. 1383 [email protected] [email protected] [email protected] # (562) 2446 1720 # (511) 416 3333 Ext 40352 # (571) 323 9252 Ignacio Sabelle Fixed Income Analyst Rafael Gaete Natalia Jurado Andrés Agudelo [email protected] Local Fixed Income Sales Fixed Income Sales Fixed Income Sales # (562) 2651 9368 [email protected] [email protected] [email protected] # (562) 2651 9336 # (511) 416 3333 Ext 36027 # (571) 339 4400 Ext 1180 Felipe Guzmán Senior Economist Diego Hidalgo Guillermo Arana Emilio Luna [email protected] Local Fixed Income Sales Fixed Income Sales Fixed Income Sales # (562) 2651 9385 [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] # (562) 2450 1619 # (511) 416 3333 Ext. 36168

Carla Tejada Fixed Income Analyst [email protected] # (511) 416 3333 Ext. 36143

Ana Lucía Rondón Medina Sales Renta Fija [email protected] # (511) 416 3333 Ext. 40339

Credicorp Capital Securities INC

Jhonathan Rico Michael Tafur Fixed Income Trader Fixed Income [email protected] [email protected] # 1 (786) 9991614 # 1 (786) 9991607

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