Equity Research

March 12th, 2019 Monthly Andean Strategy Update Maintaining our relative position in the Andes

In February, the Andean region posted a better performance than LatAm CREDICORP CAPITAL RESEARCH (+1.1% vs -4.3% in USD terms), boosted by Colombia (+5.1% in USD terms) and Peru (+4.2% in USD terms), partially offset by Chile (-2.2% in USD terms). FX variations did not have a significant impact this month for Chile, Peru and Colombia, posting a -2.2%, 2.1% and 4.2% return in local terms, respectively. Daniel Velandia, CFA +(571) 3394400 ext. 1505 We continue to maintain a cautious stance in Chile with an Underweight [email protected] position. • We are maintaining our 3.3% GDP growth rate for 2019, with balanced risks Carolina Ratto related to lower consumption and higher investment activity. +(562) 2446 1768 • Traded volumes showed a strong drop, compared to January 2018, of 22%, [email protected] reaching USD 150mn, reflecting weak activity in the market. • Large cap names, mostly in the cyclical sector, posted weak performances Tomás Sanhueza during January. We remain confident about the performance of small cap +(562) 2446 1751 names in Chile. [email protected] • We remain cautious about earnings growth for 2019, with some sectors posting downward risk, which in our view is the missing catalyst for Sebastián Gallego, CFA unlocking value in Chile, at a 15.0x P/E 12-months Fwd. +(571) 3394400 ext. 1594 • We have changed our Top Picks, removing Itaucorp and SQM-B and adding [email protected] SK. Our Top Picks are ILC, Enel Chile and SK. We remain bullish on Colombian equities, and recent performance has Daniel Córdova started to support our view. +(511) 416 3333 Ext. 33052 [email protected] • Given the recent performance of the Colombian market, we have made slight changes to our equity strategy. Specifically, we have decided to take profits in Bancolombia. • We continue to see a gradual recovery of the economy in the upcoming quarters, primarily driven by higher investment. For 2019, we forecast GDP growth of 3.3%, which would be the first time the figure was above 3.0% since 2014. • External conditions continue to favor our overweight stance in Colombia; any increase in volatility in global markets is the main threat to our thesis. • Despite recent performance, we continue to believe that the Colombian market is trading at attractive valuations. • We are maintaining Davivienda and Nutresa among our Top Picks, and we are introducing Cementos Argos to replace Bancolombia. We maintain our Neutral position in Peru. Economic growth seems to have stabilized, and political noise is subdued; however, there are no clear upside drivers. • Moderate deceleration is expected in 1H19 due to a contraction in public investment. • The Central Bank is expected to maintain its expansionary stance throughout the year. • Political noise should remain subdued in 1Q19 as a new dynamic between the Executive Branch and Congress has emerged. • Companies under coverage continue to trade at a discount against historical averages, which almost disappears when excluding mining companies. • After a 35.5% run since our last update, we have put Buenaventura Under IMPORTANT NOTICE (US FINRA RULE 2242) This document is intended for INSTITUTIONAL INVESTORS and is not subject to all of the independence and Review (UR) and are removing it from our Peruvian Top Picks. In its place, disclosure standards applicable to debt research reports prepared for retail we are adding Ferreycorp to benefit from the strong mining investment investors. Credicorp Capital may do or seek to do business with companies covered in its research reports. As a result, investors should be aware1 that the firm may have a conflict of interest that could affect the objectivity of this report. cycle. We are keeping InRetail in our Top Picks to keep benefitting from Investors should consider this report as only a single factor in making their strong momentum in the stock. investment decision. Refer to important disclosures on page 30 to 33, Analyst Certification on Page 30. Additional disclosures on page 33. Actualizar Contents

Monthly Andean Strategy Update

Chile: We are not expecting a shift in sentiment or major catalysts in March 5 Top Picks 7 Colombia: We remain bullish on Colombian equities and recent performance has started to support our view 9

Top Picks 12 Peru: Domestic activity provides some support to local equity market, while short term risks from commodity prices 13 remainTop 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 120

110

100

90

80

70 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-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 15.9x 20.0% 16.0x 14.3x 14.7x 14.0x 10.0% 12.0x 10.0x 0.0% 8.0x 6.0x -11% -10.0% 4.0x -16% -20% -20.0% 2.0x .0x -30.0% Chile Peru Colombia

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

EV/EBITDA FWD vs Historical 5Y Average

8.0x 30.0% 7.9x 7.9x 25.0% 20.0% 7.8x 7.7x 15.0% 7.7x 10.0% 7.6x 5.0% 7.5x 7.5x 0.0% -6% -5.0% 7.4x -9% -10.0% 7.3x -14% -15.0% 7.2x -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 (4.0% 2018E), 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 We remain cautious on upcoming months. (-) Negative impact of global risks (-) No clear catalyst with lacking earning growth (-) Exposure to risks coming from Argentina and Brazil Strategy: We continue to favor a stock picking strategy of companies with solid fundamentals, earnings momentum and clear catalysts. Top picks: ILC, Enel 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, 4Q18 results, rebalancing (+) Strong results at Ecopetrol for 2018; dvd yield above 6.5% process (i.e Hcolsel), shareholders meetings. (-) Volatility across foreign markets (-) Fiscal consolidation

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 and investment would be the main drivers of growth in 2019. Ferreycorp has upside from its upcoming dividend (+) Monetary policy to remain expansionary throughout 2019. announcement, strong fundamentals and recent (+) Political noise may remain subdued in 1H19. price correction. Alicorp has a sizable discount vs. (-) Moderate deceleration expected in 1H19, due to contraction in public investment. target price, amid solid fundamentals; as well as (-) Metal prices downside risk on trade war remains a concern. Engie, which is supported by strong 2019 revenues (-) Valuations excluding mining companies at their historical averages. outlook. Cerro Verde would benefit from a favorable supply-demand global market balance for copper, and Aceros Arequipa should ride on expectations Strategy: over its upcoming dividend announcement. As commodity price short-term risks persist, we favor stocks such as Ferreycorp, linked to the upcycle of mining investment. At the same time, private consumption maintains a healthy growth, supporting names such as InRetail and Alicorp. We remain cautious on construction and infrastructure.

Top Picks: InRetail and Ferreycorp.

4 Chile We are not expecting a shift in sentiment or major catalysts in March

In February, the Chilean market posted a negative return in both USD (-2.2%) and CLP (-2.2%). After a strong month in January (+5.9% in CLP), the market corrected with Market low activity levels compared to previous months. In fact, average traded volume dropped underperformance from USD 196mn to USD 152mn. Foreign investors continued to post weak activity, while was significantly local investors were also on the sidelines. The former were mildly net buyers. In terms of impacted by the individual share performance, a major event that influenced the market downturn was the strong drop in Enel announcement of the USD 3.5bn capital raise of Enel Americas (7.2% of weight in the Americas. index), which resulted in a 13.5% drop since the announcement. In addition to that event, other major large caps also had weak performances, such as Cencosud (-7.8%), Falabella (-3.1%), LATAM (-2.8%) and SQM-B (-2.5%). On the positive side, Entel continued its strong rally in February (+9.2%), while SK posted a strong 9.2% increase in share price. We continue to believe small cap seems to be the segment in the market with the most attractive outlook, mostly considering that the cyclical sector (retail and banks) does not have a promising outlook, at least for 1H19. In terms of valuations, P/E and EV/EBITDA Fwd continue to be discounted compared to their three-year histories by roughly one standard deviation; however, many other EM markets are also discounted and have posted more attractive earnings growth. 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. The BCCh monetary policy normalization will take longer. Activity lost dynamism at the end of last year, which was particularly evident in the non-mining sectors. Although those industries recovered somewhat in Jan-19, one swallow does not make a summer, We are maintaining and we still anticipate that GDP growth will stand below 3% in 1H19. Though risks for our forecast of 3.3% private consumption and net exports are tilted to the downside, we believe that the GDP growth for positive investment momentum will continue this year and next year. Inflation stood at 2019. 1.8% y/y in Jan-19 (down from 2.6% y/y in Dec-18) as a result of the new 2018 CPI basket. We analyzed the inflationary gap and found that only four items explained the bulk of the lower inflation, thus we do not see broad disinflationary pressures. However, inflation will take longer to converge to the 3% target, and the BCCh will adopt an even more gradual approach in its policy normalization. We see The BCCh raising the reference rate by 25 bps in 2H19 and moving the policy rate to its neutral level in 2020 (3.75%). The fundamentals of private consumption have continued to deteriorate. Economic sectors that are highly linked to private consumption showed a sizeable slowdown during the last months of last year. The Commerce Activity Index (CAI) released by the INE grew by 7% y/y in 1H18 and 4% y/y during 2H18. This was mostly explained by the Key drivers for downturn in car sales (from +18% y/y to +8% y/y) but was also because both the consumption on the wholesale and retail channels lost some dynamism. Consumer sentiment (IPEC) has macro front continue remained in pessimistic ground since Aug-18, and has decreased from 51.4 points in to be subdued. Dec-17 to 27.5 points in Jan-19, an extremely pessimistic level. This supports the idea that the initially expected economic recovery was overestimated. On the unemployment front, the downward trend in annual job creation and wage increases has continued, which sets a challenging year for consumption. Recent rate hikes have increased average rates of consumer loans (+140 bps since Oct-18), which has led to a less favorable framework for private consumption. We see a U-shaped trend, with private consumption growing 3.2% in 2019 (down from 4% last year) and a mild recovery in 2020 (to 3.4%), if investment dynamism translates into stronger hiring, thus reducing the downward risk for consumption ahead.

5 Weaker inflation in We believe that the current cycle for Chilean banks is neutral to negative, which is 2019 and the new another reason to be underweight on Chile relative to the region. Recall that the provisions method regulator has defined a new methodology for provision expenses; this year, banks will has left us in a more have to make a one-time adjustment to the commercial group portfolio. This should cautious stance on translate into a negative effect of USD 300mn-USD 400mn for the industry. Furthermore, Banks. we highlight that recent data on the inflation front have surprised to the downside. Under this scenario, we expect an average inflation of 2.2% for 2019E, compared to a previous forecast of 2.8%. It is worth noting that preliminary sensitivity analyses suggest an average decline of 5.0% in net earnings for 2019E relative to our current base case scenario. These two factors have made us even more cautious than we were in our selective stance that was published in Sep-18. In terms of valuation, we believe that top Chilean banks continue to look fair, even when adjusting for profitability. Meanwhile, recent news related to Itau Corpbanca has been negative, which has led us to remove the name from our Top Picks. Finally, we reiterate that we continue to favor Colombian banks (in a regional context) as operating trends are expected to show additional signs of recovery during the 2019-2020 period.

We maintain our cautious view on retail on the back of poor earnings momentum. Even though only a few retailers have already reported earnings (Falabella, Forus, SMU), we estimate 4Q18 will be tough for the whole sector. Companies are showing flat or negative SSS across the board, with margin compression as a result of strong promotional activity, while SG&A expenses are negatively impacted by investments in logistics driven by higher penetration in e-commerce. Recovery will be slow, especially considering that poor sales growth continued in January and February. On the other hand, real estate companies have performed well despite the deceleration in consumption and therefore we believe Parque Arauco, seems a safer bet. We are also maintaining our Buy recommendation in SMU, which reported better than expected results. Deleveraging in 2019 should allow attractive EPS growth despite mild sales increases. Additionally, the company had the opportunity to resume expansions from 2020 onwards as debt level is under control. In the case of Forus our Buy recommendation is related to a more optimistic view on its long term strategy, but it is a medium term bet.

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

26 12

24 11 22

20 10

18 9 16 7.9x 8 14 14.3x

12 7 Mar-13 Mar-15 Mar-17 Mar-19 Mar-13 Mar-15 Mar-17 Mar-19

Source: Company Reports, Credicorp Capital, & Bloomberg

6 Chile Strategy

We are removing Our Chilean equity sample is trading at 15.0x PE 12m Fwd and 7.9x FV/EBITDA 12m SQM-B and Fwd, which continue to be significantly discounted against the market’s three-year Itaucorp from our average. However, we still believe that earnings has become a key driver for unlocking Top Picks and we value in Chile. In fact, we see other markets in the region with more appealing earnings are including SK. growth at similar valuations.

We continue to have a cautious and selective approach for the Chilean market. Under this context, we are removing Itaucorp and SQM from our Top Picks and are including Sigdo Koppers.

We are removing Itau Corpbanca from our top picks. 4Q18 results exhibited a negative surprise relative to our forecast. A one-time adjustment to the bank’s retail portfolio along with a deterioration of some corporate clients primarily explained the surprise (due to higher provision expenses). Furthermore, preliminary monthly results for Jan-19 surprised to the downside, and the top line was particularly weak. Under this scenario, our thesis of a recovery of the bank’s bottom line and earnings momentum has started to look questionable (or at least is currently being challenged). More importantly, we believe that the recent news related to the legal decision in the process with Helm could harm our investment thesis. Specifically, on February 28th, 2019, a three-member Tribunal of the International Court of Arbitration dismissed Helm’s lawsuit and ordered Helm to sell its shares of Itau Corpbanca Colombia at a valuation of USD 299 mn for the 19.44% stake that Helm currently owns. The stated valuation implies a valuation multiple of 1.36x as of Dec-18. Itau Corpbanca and/or Helm could appeal the ruling in the upcoming weeks; however, we believe that the likelihood of an appeal is only about 40%. If there is no appeal, we expect approvals to take six to ten months both in Colombia and in Chile, which could translate into an overhang risk for the vast majority of 2019. We also believe that an implicit valuation of 1.4x for Itau Corpbanca Colombia does not make much sense for a subsidiary that operates at roughly breakeven. We reiterate that top Colombian banks, such as Bancolombia and Davivienda, are currently trading at the same multiple on a forward-looking basis. This supports our view that the implicit valuation for Helm’s stake is not consistent with fundamentals. Finally, a potential deterioration of ~80 bps in CET 1 ratio (under Basel III standards) may add pressure to Itau Corpbanca’s capital position, which is already a challenge.

SQM’s management provided new guidance on sales volumes and prices for 2019, which came in below our forecast and market expectations. On lithium, even though the company has just executed a capacity expansion and management expects demand to grow by over 20% during 2019, total volumes will be only slightly higher than in 2018 as management announced the company will rebuild inventories during 2019. Additionally, new supply coming into the market will make it difficult for the company to capture the price premiums that it did in the past. On potash, management said sales volumes should be lower than 500 Mtons in 2019. Due to these factors, our 2019E EBITDA is over 20% lower than our previous forecast. Although we remain positive on long-term fundamentals, we believe attractive earnings growth is a necessary condition for being positive on the shares considering a 12-month investment frame. Additionally, international noise due to the current trade war could increase volatility in the short term Due to this, we have decided to remove SQM from our Top Picks.

7 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 around ~14x. Based on this, the current valuation suggests that shares are trading at over a 30% 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 were 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. Therefore, we believe regulatory risk has significantly decreased, so we believe downside risk is limited.

Enel Chile (BUY; T.P.: CLP 77). We are including Enel Chile in our Top Picks. Enel Chile is the largest energy generator and distribution company in Chile and is the most important player in renewable energy in the country, which is an industry that has been evolving and will reach a penetration of 70% by 2050. Enel Chile only has 8% of capacity in coal generation, mitigating the risks due to the decarbonization program, and has a significant pipeline of projects in renewable energy, in which the company will invest USD 1.4bn over the next three years (principally in solar and wind). The company’s capacity matrix gives it a competitive advantage that will help it to continue to maintain its long-term contract level. Enel Chile has a significant pool of PPA contracts and has been one of the few players to win new contracts in the last two auctions, bringing stability to cash generation for the upcoming years. The company is currently trading at 6.4x 2019 EV/EBITDA, far below the sector average for the last three years (8.9x), and pays a ~5% dividend yield with a low net debt to EBITDA ratio of ~2x. Moreover, with the EGP consolidation in 2Q18 and good hydro generation in 4Q18, results for the next quarter should come with good momentum. Finally, we acknowledge that we continue to monitor the evolution of the new Dx segment law in Congress, which could be a negative trigger in the medium term, but we do not expect big changes in the first half of 2019 since conversations are in the early stages.

8 Sigdo Koppers (BUY; T.P. CLP 1,265). We are including SK in our Top Picks this month due to its positive earnings momentum coupled with the high possibility of its capturing the increase in mining construction/production activity throughout its subsidiaries. For 2019, we foresee a significant bottom line increase (+20% 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 an 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 11.789 12.900 9,4% 13,6% 1.758 10,7 9,6 nm nm 1,8 4,2% Conglomerates Enel Chile 69,3 77,0 11,1% 15,4% 7.248 14,1 17,2 7,2 6,4 1,5 4,3% Utilities SK 1.245,8 1.264,7 1,5% 5,2% 1.997 21,4 17,6 10,4 8,5 1,5 3,7% Industrial Chilean Picks a 7,4% 11,4% 11.003 15,4 14,8 8,8 7,5 1,6 4,1% IPSA 5.275 6.150 17% 20% 175.633 19,0 17,0 8,8 8,4 1,8 3,1% a Simple average, excluding Market Capitalization

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

9 Colombia We remain bullish on Colombian equities and recent performance has started to support our view

In February, the COLCAP index outperformed the MSCI Latam. In fact, the local index climbed 5.1%, compared to a 4.3% decline in the MSCI Latam (USD terms). Recall that, on a YTD basis, the COLCAP index has increased 20.0%. The strong performance in February was primarily explained by i) a 6.7% appreciation of Brent oil prices, ii) solid 4Q18 results from key companies such as Bancolombia and iii) a better macro outlook for 2019. Despite the recent strong performance of Colombian equities (on both an absolute basis and a relative basis), we maintain our medium-term strategy of having an Overweight position in Colombia, relative to the Andean region, supported by: i) compelling valuations, ii) better operating trends and financials in key sectors and iii) a better macro outlook in 2019 vs 2018 (GDP growth at 3.3% vs 2.7% in 2018). Market sentiment has remained Market sentiment has remained positive, while key names in the COLCAP index positive. have shown major signs of recovery. Our equity strategy has continued to rely primarily on Colombian banks, which have been performing quite well. In fact, we highlight that Davivienda and Bancolombia have climbed 33.7% and 27.1%, respectively, on a YTD basis (USD terms). It is worth noting that Bancolombia’s 4Q18 results exhibited some positive signs of recovery ahead of 2019 and 2020; specifically, loan growth climbed 8.0% y/y after a few somewhat weak quarters. More importantly, asset quality finally showed major signs of recovery. The 30-day PDL ratio declined 76 bps compared to 4Q17, while the 90-day NPL ratio decreased 47 bps. We expect to observe similar trends in upcoming 4Q18 results from Davivienda and Grupo Aval; these financial institutions are expected to report financials on March 13th and March 14th, respectively. In addition, we also highlight the recent performance of Ecopetrol. Shares have climbed 26.5% on a YTD basis, and recent news has been positive. First, the company announced a DPS of COP 225/share, equivalent to a ~6.9% dividend yield, which we believe should act as a positive short-term catalyst; we believe that a debt to EBITDA ratio below 1.5x and a cash position above COP 14.5 tn support our positive view. Meanwhile, recent comments made by the Minister of Finance suggest that the government’s potential divestment of Ecopetrol may be off the table for 2019. Finally, other key names of the COLCAP index have had a positive year in USD terms; Corficol, Grupo Aval and CLH have climbed 59.6%, 26.8% and 35.6%, respectively.

Our top-down strategy continues to rely upon a positive macro picture in Colombia; we have updated our macro forecast, suggesting a positive trend. Last week, the DANE published 4Q18 GDP figures; growth was 2.8% y/y, which was slightly below our estimate (3.2% y/y). In any case, economic growth showed a consistent pace of 2.8% y/y from 2Q18 through 4Q18 and a non-negligible improvement in comparison to previous periods (2017: 1.4% y/y; 1Q18: 2.1% y/y). More importantly, we are reiterating our long- held view of GDP growth of 3.3% y/y for 2019, which would be the first time since 2014 that the Colombian economy advanced by over 3.0% y/y. It is worth noting that growth should be primarily driven by: i) further recovery of investment and ii) healthy fundamentals for private consumption. These should be the main engines of growth in our view. Recall that regional and local elections will be held on October 27th, 2019, so new authorities will assume office in Jan-20. This will play a major role in economic growth in the upcoming quarters as the last year of government terms is usually characterized by strong execution, especially in investment. On the private side, we also

10 expect a significant acceleration of investment this year amid: i) higher sentiment led by an improving political landscape and domestic demand recovery, ii) a significant reduction in corporate taxes (the combination of a lower income tax rate and new tax credits/discounts means that firms will see a reduction of paid taxes of ~1% of GDP by Valuations remain 2020), iii) higher oil investment under current crude prices (Ecopetrol’s capex is set to rise attractive. ~15% this year) and iv) a gradual recovery of the buildings sector after two years of contraction.

Despite recent performance, we continue to believe that the Colombian market is trading at an attractive valuation. The Colombian equity market currently trades at a 12- month forward of 15.9x P/E and 7.7x EV/EBITDA, compared to an average of 20.0x and 9.0x, respectively, since 2015. Accordingly, the local market continues to trade beyond one standard deviation away from historical averages. Furthermore, 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 of ~3.4% for our Colombian sample).

We also see positive momentum in terms of flows. According to Decree 959 of 2018, private pension funds will be 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 42 for women who choose not to select their risk preference could see their contributions automatically going to higher risk funds. The law went into effect on March 5th, 2019 and could result in inflows to the local equity market of ~USD 50 mn. Colombia Strategy

Given the recent performance of the Colombian market, we have made slight changes to our equity strategy. Specifically, we have decided to take profits in Bancolombia after the recent strong performance resulted in a share price above our T.P. of COP 36,900/share. 4Q18 results exhibited some positive signs of recovery ahead of 2019 and 2020; specifically, loan growth climbed 8.0% y/y after a few somewhat weak quarters. More importantly, asset quality finally showed major signs of recovery. The 30- day PDL ratio declined 76 bps compared to 4Q17, while the 90-day NPL ratio decreased 47 bps. Going forward, we continue to expect positive trends in the local banking system. Under this scenario, we are maintaining Davivienda (BUY, T.P.: COP 41,500/share) as our favorite stock. It is worth noting that Davivienda expects a better year in the consumer segment as the economy ended 2018 with signs of improvement. Specifically, the bank expects loan growth in this segment to reach a figure of 12%-13%, compared to an advance of 8%-9% in 2018E. This along with a potential increase in ROAE (14.7% in 2019E vs 12.6% in 2018E) should be attractive for investors at a valuation close to 1.4x P/BV 2019E.

We are maintaining Nutresa in our Top Picks, and we are adding Cementos Argos to replace Bancolombia. Regarding Nutresa (BUY, T.P.: COP 31,900/share), even though shares have experienced a strong upward correction (~10% since January 22nd?), which we believe can be ascribed to an unjustified discount, we still see strong momentum for shares, which will now come from the results side. In 4Q18, the company surprised positively in EBITDA and earnings, which were way above our estimates. Our thesis for Nutresa is based on: (i) volume growth, which has already shown a recovery, leveraging on the company’s leading position in its core categories under a more favorable scenario for consumption in Colombia, (ii) an increase in prices due to innovation, sales mix and specific price increases, (iii) a favorable scenario for commodities and (iv) the turnaround stories in the underperforming segments of recent years (TMLUC and El Corral).

11 On March 1st, 2019, we released an update on Cementos Argos (BUY, T.P.: COP 9,900/share) (see report). We believe that Cemargos is one of the best current plays in the COLCAP index, from both a tactical and a fundamental perspective. From a tactical perspective, the decline in share price observed in 2018 has opened up an opportunity. In fact, shares are currently trading at ~10x 2019E EV/EBITDA, compared to a historical figure of ~15x. From a fundamental perspective, we believe that two key factors support our constructive view: i) Cemargos is the market leader in Colombia, and we believe that the local cement sector will recover in 2019, leading to EBITDA margin expansions for the company. ii) The company has a 50% revenue exposure to the USA, where, despite deceleration, we do not expect significant downside risks in terms of pricing nor demand because of the strict regulations for import and capacity additions.

We maintain our neutral position on Ecopetrol; however, recent news has been positive. The recently announced dividend proposal of COP 225/share creates a new catalyst for the stock; recall that, at current prices, this represents a yield of ~6.9%, which is one of the highest in the local market. In addition, we believe that the likelihood of a potential divestment by the government of its stake seems rather low. Under this scenario, we do not see any potential overhang risks for the company. Finally, the company was able to deliver strong results in 2018, particularly in terms of addition of 1P reserves; recall that the reserve replacement ratio excluding the effect of oil prices reached 109%.

Given all the aforementioned, 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 9 20 18 15.9x 8 7.7x 16

14 7 12 10 6 Mar-16 Mar-17 Mar-18 Mar-19 Mar-16 Mar-17 Mar-18 Mar-19 Source: Company Reports, Credicorp Capital, & Bloomberg

12 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 (24.7% vs -1.8% from the COLCAP index, in USD terms), we still see upside for the stock. Recall that our positive view is supported by: i) an uptick 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 10.3x 2019E P/E relative to a median of 12.3x from Andean peers.

Nutresa (BUY; T.P. COP 31,900). Even though shares have experienced a strong upward correction (~10% since January 22nd?), which we believe can be ascribed to an unjustified discount, we still see strong momentum for shares, which will now come from the results side. In 4Q18, the company surprised positively in EBITDA and earnings, which were way above our estimates. Our thesis for Nutresa is based on: (i) volume growth, which has already shown a recovery, leveraging on the company’s leading position in its core categories under a more favorable scenario for consumption in Colombia, (ii) an increase in prices due to innovation, sales mix and specific price increases, (iii) a favorable scenario for commodities and (iv) the turnaround stories in the underperforming segments of recent years (TMLUC and El Corral).

Cemargos (BUY; T.P. COP 9,900). Recall that, on March 1st, 2019, we updated our valuation model and view on Cementos Argos, giving shares a BUY rating. Our view on the company factors in the deceleration of the US market and our new estimates that consider the impact of the entry of new capacity into the Colombian market. Our BUY rating is based on: i) Cemargos’ current 10.2x 2019E EV/EBITDA, which implies a ~30.7% discount vs its historical multiple, ii) an expected uptick 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 37.200 41.500 12% 14% 5.293 12,2 9,7 nm nm 1,6 2,5% Banks Nutresa 25.860 31.900 23% 26% 3.748 19,0 17,1 9,3 8,3 1,4 2,2% Food & Beverages Cemargos 7.730 10.300 33% 36% 3.229 63,8 57,4 11,6 10,8 1,4 3,1% Cement & Construction Colombian Picks a 12% 14% 5.293 12,2 9,7 10,4 9,6 1,6 2,5% COLCAP 1.503 1.720 14% 19% 102.008 17,7 15,9 7,7 7,3 1,0 4,7%

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

13 Peru Domestic activity provides some support to the local equity market, but short-term risks from commodity prices remain Although economic activity may Moderate deceleration is expected in 1H19 due to a contraction in public decelerate in 1H19, investment. In 4Q18, GDP expanded 4.8% y/y, mainly driven by an acceleration in we do not see private consumption (+3.8% y/y) and the modest growth of private investment (+2.1% y/y). meaningful downside With 4Q18 results, full-year GDP managed to expand 4%, while domestic demand risk to local advanced 4.3%, its highest pace in the last five years. However, early indicators of activity valuations. have recently shown that economic growth has decelerated somewhat at the beginning of 2019. While some retail and banking credit activity figures show this, the deceleration has been mostly visible in construction-related indicators (local cement dispatches grew 0.3% y/y in January after growing 1.2% y/y in Dec-18 and 4.9% y/y in Nov-18). Additionally, public investment fell 20% y/y in the first two months of 2019, while sub-national public investment contracted 30% y/y. We expect that public investment will continue to fall in coming months due to the anticipated effect of the change in local and regional authorities in January of this year. As a result, we expect GDP to expand at a 3.5%-4.0% y/y pace in 1Q19. Although this implies a deceleration from 4Q18, the trend should be reversed in 2H19, thus we do not see it as a significant downside risk to local stock valuations.

In this context, the Central Bank (BCR) has signaled that it will maintain its The BCR will remain expansionary stance throughout the year. In February, inflation stood at 2% y/y (core supportive of inflation at 2.4% y/y), and, since we believe inflation expectations will remain anchored economic activity in well within the target inflation range of the BCR (with mild demand-side pressures) 2019, given the throughout the year, the BCR will have few incentives to change its current monetary absence of inflation policy stance (unless economic growth becomes stronger). The BCR has signaled that it pressures. will maintain its policy interest rate at 2.75% throughout 1H19, and we now expect two 25bps hikes in the remainder of 2019. Considering such rate increases, the monetary policy rate would reach 3.25% by year-end, which would still imply an expansionary stance.

In 2019, private consumption and investment will be the main drivers of growth. The labor market is currently showing favorable dynamics as formal employment grew 4.3% in 2018. However, we have observed some signs of deceleration in January, for instance: i) the number of people with payroll payments through banks has decreased and ii) social security contributions have shown more modest growth rates compared to December. Therefore, unless private investment (particularly in infrastructure) accelerates, there is a risk that labor market dynamics will lose steam and that private consumption will decelerate. We forecast that private investment will grow 5.3% in 2019, mainly boosted by mining investment, which should grow around 23% this year. However, construction of infrastructure projects is still progressing at a slow pace, and we do not see a relevant driver arising from this sector, at least not in 1H19. A Congress that is less confrontational Political noise has remained subdued in 1Q19, as a new dynamic between the with the Executive Executive Branch and Congress has emerged. Fuerza Popular (the main opposition Branch should allow party in Congress) has signaled that it will drop its confrontational stance and instead political noise to focus on legislative proposals to address the country’s challenges. This should benefit remain subdued this President Vizcarra, whose approval ratings fell in March for the second consecutive year. month, though, with a 56% approval rating, he still has room to push a more aggressive growth agenda (the main complaint of the electorate). On the other hand, the flow of sensitive information coming from former Odebrecht executives should resume in April as top Peruvian prosecutors have postponed the on-going interrogations until then.

14 Peru Strategy

The Lima Stock Exchange (BVL) posted a positive performance in February, increasing 3.0% in USD terms (2.1% in PEN). Utilities improved across the board on strong 4Q18 results. Furthermore, as the parent company of Enel Gx and Enel Dx announced a capital increase (to be approved), investors speculated about a possible purchase of the minority stakes of Luz del Sur, which is being sold by Sempra. Consumer names were driven forward by Alicorp’s acquisition of Intradevco and InRetail’s strong momentum. In contrast, financials were affected by lower-than-expected results for 4Q18, and the construction sector was weighed down by Graña y Montero (-6.5%) and Cementos Pacasmayo (-3.3%), two of the most significant losers in February.

Last month, we Improved sentiment regarding the US-China trade talks and a more dovish Fed moved Peru from stance pushed industrial metal prices up, and base metal mining companies Underweight to followed. Copper (+5.9%), zinc (+2.7%) and tin (+3.9%) prices increased. Thus, the most Neutral as domestic important base metal mining companies rallied. In fact, Minsur (+21.6%) and Cerro Verde demand continued to (+15.9%) were the top winners of the month. One major exception was Volcan (-9.3%), accelerate. which will be removed from the FTSE index during March.

After moving our recommendation from Underweight to Neutral last month, we continue to see a balanced outlook for Peru. Domestic demand continued to show signs of healthy growth. However, catalysts for external demand are not clear as uncertainty persists due to the US-China trade negotiations and the possibility of a more pronounced global economic deceleration.

Still trading at a discount against its historical averages. At 14.7x 12M forward P/E, companies under our coverage are trading at a ~10% discount against the two-year historical average (corrected for the significant losses in Buenaventura). Likewise, the 12M forward FV/EBITDA of 7.5x represents a ~9% discount against the five-year historical average.

Mining companies still offer the largest upsides, but there is uncertainty about metal prices. The discount of our sample almost disappears when controlling for mining companies. These companies make up 35% of our sample; Buenaventura alone accounts for ~20%. Despite the price increases in February, the mining companies in our sample, such as Cerro Verde, remain discounted from historical averages by approximately one The discount in 12M standard deviation. Thus, greater value remains concentrated in the risky mining sector. forward multiples almost disappears in our ex-mining P/E Forward (12 month rolling) * FV/EBITDA Forward (12 month rolling) * sample. 22 11

20 10

18 9

16 8 7.5x 14.7x 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.

15 Top Picks Peru After a 35.5% run since our last update, we put Buenaventura Under Review (UR) on February 22nd, and now we are removing it from our Peruvian Top Picks. In its place, we are adding Ferreycorp to benefit from the strong mining investment cycle. We are keeping InRetail in our Top Picks to keep benefitting from strong momentum in the stock.

InRetail (BUY; T.P.: USD 32.50). We maintain InRetail as a Top Pick 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 We see an commercial strategy “Everyday low price”, while also exploring the discount format opportunity in through the Mass brand and now the cash & carry format too. Even though Mass is not InRetail as synergies significant in terms of sales and EBITDA, it prevents the company from being kept out of with Quicorp could that segment if it starts to pick up. The acquisition of Quicorp has definitely changed the unlock more value scenario for InRetail. It was made at a fair multiple (EV/EBITDA 12x vs pharma global than meets the eye. peers’ figure of 13x) considering the opportunities arising from the deal: (i) higher negotiating power with global suppliers, possibly allowing the company to reduce the price gap with traditional drugstores and thereby penetrate the informal channel, (ii) possible synergies coming from reducing headcounts, closing 160 stores and consolidating 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. We are reviewing our figures on the back on new guidance and we will shortly update our target price.

Ferreycorp (BUY; T.P. PEN 3.00). After being hit last month, investors are once again finding the stock attractive at current prices, and demand for the stock is reappearing. We expect mining Furthermore, the company will announce its annual dividend towards the end of the investment to post month. At current prices, we expect the dividend yield to stand at ~5.0%. Also, the an expansion of 23% company still has a 2% stake (PEN 10mn book value) in La Positiva Vida Seguros y in 2019 and 18% in Reaseguros, which it holds as assets for sale. Moreover, Ferreycorp has attractive 2020. medium-term fundamentals. It will provide a fleet of CAT trucks of 320 MT and other types of equipment for the Quellaveco mining project. Furthermore, for a five-year period, the company will provide specialized support. In total, the contract amounts to USD 500mn, above our expectations. In addition, the company has a 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 35,00 32,50 -7% -6,7% 3.598 44,9 24,7 13,9 12,7 2,9 0,5% Retail Ferreycorp 2,44 3,00 23% 29,0% 718 8,3 8,1 7,3 7,0 1,1 6,0% Materials Peruvian Picks a -7% 11,1% 4.316 26,6 16,4 10,6 9,8 2,0 3,2% S&P/BVL 20.503 23.400 14% 17% 36.125 17,8 14,2 8,8 8,0 2,0 2,5% a Simple average, excluding Market Capitalization, IFS share price in USD Source: Company Reports, Bloomberg and Credicorp Capital

Andean Picks

16 Valuation Summary

March 2019

17 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 198 180 HOLD 2,486 2.5 4.4 9.0 6.8 7.0 0.9 7.6% 21.4% 10.4% 7.0% 3.6% Aguas-A Utilities 383 385 HOLD 3,387 2.5 16.9 17.1 10.3 10.2 3.4 6.1% 20.9% 20.0% 7.6% 7.3% Andina-B Food & Beverages 2,385 2,880 HOLD 3,225 4.6 0.5 18.9 17.4 8.6 8.3 2.7 4.1% 14.8% 15.4% 5.6% 6.0% AntarChile Conglomerates 9,425 13,900 BUY 6,414 1.2 9.7 10.1 5.8 5.7 0.9 4.1% 9.7% 8.8% 2.8% 2.5% Banco de Chile Banks 104.0 98.0 UPERF 15,666 6.3 2.7 17.3 16.4 nm nm 3.3 3.2% 18.8% 18.7% 1.8% 1.7% Banco Santander Banks 51.6 56.0 HOLD 14,486 8.3 10.4 15.9 14.6 nm nm 3.2 4.1% 19.5% 20.0% 1.6% 1.6% Besalco Construction 672 745 BUY 577 0.5 38.7 24.0 12.6 9.2 2.1 2.3% 5.3% 8.2% 1.5% 2.2% CCU Food & Beverages 9,560 9,530 HOLD 5,268 3.9 5.2 11.7 21.3 6.4 10.1 3.3 5.1% 25.0% 12.6% 14.2% 7.2% Cencosud Retail 1,255 1,900 HOLD 5,358 8.0 15.5 13.5 9.4 9.4 0.9 1.9% 5.7% 6.4% 2.3% 2.6% CMPC Pulp & Paper 2,400 3,100 BUY 8,947 6.0 14.3 13.6 6.4 6.4 1.1 3.5% 7.5% 7.5% 4.1% 4.1% Colbun Utilities 152 153 HOLD 3,975 2.0 16.6 18.1 7.6 7.9 1.1 4.8% 6.4% 5.8% 3.5% 3.2% Concha y Toro Food & Beverages 1,416 1,520 HOLD 1,577 1.4 21.5 16.2 14.8 11.6 1.9 2.3% 8.8% 11.0% 4.6% 5.9% Copec Pulp & Paper 8,965.0 11,200.0 HOLD 17,377 8.4 14.1 14.4 8.0 7.9 1.6 2.8% 11.4% 10.4% 5.3% 4.8% Embonor-B Food & Beverages 1,631 1,980 BUY 1,144 0.8 17.1 16.2 7.9 7.8 2.5 4.6% 13.4% 13.6% 6.7% 6.8% Enel Americas Utilities 119 140 BUY 10,212 12.4 11.1 17.9 13.8 5.3 4.7 1.7 1.7% 9.3% 11.9% 2.4% 2.8% Enel Chile Utilities 69.5 77.0 BUY 7,273 6.2 2.3 14.1 17.3 7.2 6.5 1.5 4.2% 10.7% 8.3% 5.3% 3.8% Engie Chile Utilities 1,279 1,480 BUY 2,009 2.0 18.7 7.6 8.0 5.3 1.0 1.6% 5.3% 11.9% 3.1% 7.2% Entel Telecom & IT 7,150 6,550 HOLD 3,220 2.8 nm 42.0 8.1 7.6 1.7 0.0% 0.0% 4.1% 0.0% 1.4% Falabella Retail 5,150 5,400 HOLD 19,269 17.7 26.3 23.2 14.1 13.2 2.8 1.1% 10.3% 10.3% 3.4% 3.6% Forus Retail 1,805 2,310 BUY 696 0.6 17.7 17.7 9.6 9.2 2.1 2.3% 12.6% 11.8% 11.0% 10.5% Habitat Financials 917.6 1,260.0 BUY 1,368 0.1 10.8 9.4 7.2 6.3 2.5 7.4% 23.8% 25.8% 18.7% 20.4% ILC Conglomerates 11,725 12,900 BUY 1,748 1.4 10.6 9.6 nm nm 1.7 4.2% nm nm nm nm Itau Corpbanca Banks 6.1 7.7 BUY 4,695 3.5 0.3 15.8 13.1 nm nm 1.0 2.2% 6.1% 7.0% 0.7% 0.8% Latam Airlines Transport 7,670.0 7,330.0 HOLD 6,936 7.0 5.6 51.0 23.9 7.6 7.1 1.6 0.7% 3.2% 6.6% 0.7% 1.5% Masisa Materials 43 43 HOLD 501 0.3 22.6 50.1 10.0 11.6 0.5 2.2% 2.2% 1.0% 1.5% 0.8% Parque Arauco Real Estate 1,811 1,970 HOLD 2,425 2.1 14.2 16.6 18.3 17.7 4.6 3.3% 13.6% 10.8% 5.3% 4.2% Quiñenco Conglomerates 1,915 2,135 HOLD 4,749 1.2 19.0 18.4 nm nm 1.1 5.2% nm nm nm nm Ripley Retail 573 663 HOLD 1,654 2.0 15.8 15.1 19.0 17.4 1.2 3.8% 7.4% 7.6% 2.5% 2.5% Security Conglomerates 284 330 HOLD 1,565 1.1 11.8 9.8 nm nm 1.5 4.9% 12.2% 13.7% 0.9% 0.9% SK Industrial 1,250 1,265 BUY 2,004 0.2 21.5 17.6 10.4 8.6 1.5 3.7% 6.9% 8.2% 2.5% 3.0% SM-ChileB Conglomerates 343 332 HOLD 6,141 1.5 43.7 40.0 nm nm 2.9 0.9% 6.9% 7.0% 1.3% 1.3% SMU Retail 170.7 247.5 BUY 1,469 1.1 25.8 19.7 8.3 7.7 2.0 0.0% 5.9% 6.8% 2.1% 2.8% SM SAAM Transport 65 UR UR 944 0.4 17.2 15.3 8.2 7.6 1.2 3.8% 5.7% 6.4% 3.0% 3.5% Sonda Telecom & IT 1,074.5 1,060.0 BUY 1,396 1.5 52.5 27.3 12.4 10.9 1.9 1.1% 3.8% 7.2% 2.1% 3.9% SQM-B Materials 25,575 34,600 HOLD 9,915 24.9 42.1 22.8 27.2 11.8 12.7 4.8 4.2% 20.6% 17.9% 10.3% 8.6% Chile Sample 5,299 6,150 176,263 148.9 19.2 17.7 8.8 8.5 1.8 3.1% 10.7% 10.6% 2.3% 2.2%

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

18 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 1,795 2,160 UPERF 563 0.2 0.6 nm nm 5.2 4.9 0.5 0.0% -5.2% -2.3% -1.0% -0.4% Bancolombia Banks 38,400 36,900 BUY 11,368 6.7 16.8 14.8 12.4 nm nm 1.6 2.9% 10.6% 11.9% 1.2% 1.3% BVC Financials 11,720 13,300 BUY 223 0.2 13.6 12.9 8.3 7.5 1.5 6.3% 11.0% 11.5% 8.4% 8.9% Canacol Oil & Gas 10,820 10,680 HOLD 604 0.1 0.9 nm 5.9 5.3 2.9 2.6 0.0% -3.2% 35.2% -1.1% 12.1% Celsia Utilities 4,375 5,000 HOLD 1,472 0.5 18.7 25.2 6.9 7.5 1.2 4.0% 7.0% 4.6% 2.5% 1.8% Cemargos Cement & Construction 7,880 9,900 BUY 3,279 1.9 60.1 45.9 12.9 10.2 1.4 3.2% 2.2% 2.9% 0.9% 1.3% CLH Cement & Construction 4,580 5,700 HOLD 802 0.6 12.8 13.3 7.0 7.4 0.5 0.0% 4.1% 3.9% 2.0% 2.0% Corficolombiana Conglomerates 24,960 UR UR 2,174 0.8 16.8 11.9 nm nm 1.7 1.8% 10.3% 11.8% 1.9% 2.4% Davivienda Banks 38,200 41,500 BUY 5,427 1.5 12.5 10.0 nm nm 1.7 2.4% 12.6% 14.7% 1.3% 1.5% Ecopetrol Oil & Gas 3,205 3,580 HOLD 41,447 12.5 25.3 9.4 9.4 5.0 4.7 2.6 6.9% 26.9% 23.9% 11.2% 10.8% GEB Conglomerates 2,055 2,200 HOLD 5,934 1.1 17.3 16.5 nm nm 1.7 4.6% 9.7% 9.9% 4.7% 4.7% ETB Telecom & IT 202 310 UPERF 226 0.1 nm nm 2.0 2.2 0.4 0.0% -8.0% -23.6% -3.6% -9.7% Éxito Retail 14,520 17,290 HOLD 2,044 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 17,700 21,500 HOLD 4,579 2.0 27.3 26.5 9.5 9.4 1.0 2.0% 3.5% 3.6% 1.2% 1.2% Grupo Aval Banks 1,205 UR UR 8,468 2.1 1.7 10.9 9.7 nm nm 1.7 4.3% 15.0% 16.0% 1.7% 1.9% Grupo Sura Conglomerates 34,860 39,100 HOLD 6,240 4.5 16.1 12.6 nm nm 0.8 1.6% 5.2% 6.3% 1.8% 2.2% ISA Utilities 14,340 14,700 HOLD 4,996 1.8 13.7 12.1 9.0 8.7 1.5 4.1% 10.8% 12.2% 2.7% 3.1% Nutresa Food & Beverages 25,980 31,900 BUY 3,760 1.0 18.9 17.1 9.3 8.3 1.4 2.2% 4.9% 5.3% 3.0% 3.1% Colombia Sample 1,528 1,720 103,605 39.2 17.8 15.5 7.9 7.3 1.0 4.6% 12.4% 12.5% 2.5% 2.6%

Source: Company Reports, Credicorp Capital, & Bloomberg

19 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 0.78 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 11.20 13.00 HOLD 2,887 1.0 18.1 17.0 11.5 10.3 3.3 2.5% 17.3% 16.7% 6.5% 6.0% Buenaventura Mining 16.50 17.30 BUY 3,222 19.3 14.8 11.2 8.9 7.8 1.0 0.2% 7.4% 8.9% 5.0% 6.2% Cementos Pacasmayo Cement & Construction 6.49 8.10 HOLD 840 0.4 0.1 23.6 19.0 10.3 9.2 1.8 4.6% 7.7% 9.4% 4.2% 5.1% Cerro Verde Mining 23.79 28.30 BUY 8,328 0.1 14.2 13.0 5.8 5.2 1.6 2.1% 10.9% 11.0% 7.5% 7.8% Enel Generacion Peru Utilities 2.13 2.60 BUY 1,828 0.0 10.3 11.0 6.2 6.3 2.0 5.8% 20.2% 17.9% 13.9% 12.7% Enel Distribucion Peru Utilities 5.50 6.85 HOLD 1,062 0.1 9.7 9.2 6.5 6.2 1.8 4.3% 18.1% 17.1% 8.2% 8.1% Engie Peru Utilities 5.86 7.80 HOLD 1,065 0.1 10.5 9.8 6.8 6.6 1.0 5.7% 9.4% 9.6% 4.5% 5.0% Ferreycorp Materials 2.45 3.00 BUY 723 0.5 8.4 8.1 7.3 7.0 1.2 6.0% 13.2% 12.8% 5.7% 5.6% Graña y Montero Cement & Construction 2.05 2.50 HOLD 409 0.1 0.3 23.5 13.5 5.2 6.2 0.6 0.0% 2.7% 4.5% 0.7% 1.2% IFS Conglomerates 45.00 49.00 BUY 5,090 0.7 14.1 11.8 nm nm 2.6 3.9% 18.4% 18.9% 1.9% 2.1% InRetail Retail 35.50 32.50 BUY 3,650 1.0 45.6 25.1 14.0 12.8 3.0 0.5% 6.7% 10.6% 2.3% 3.3% Luz del Sur Utilities 12.35 13.75 HOLD 1,818 0.1 14.2 14.1 9.3 9.1 2.3 4.9% 16.2% 15.6% 7.5% 7.1% Minsur Mining 1.70 1.95 BUY 1,481 0.2 37.2 29.2 7.3 7.8 1.2 0.0% 3.2% 3.9% 1.7% 2.0% Unacem Cement & Construction 2.80 UR UR 1,393 0.1 nm nm nm nm 1.1 0.0% 0.0% nm 0.0% nm Volcan Mining 0.63 1.00 HOLD 2,193 0.4 26.2 25.8 9.1 9.2 3.3 1.7% 13.0% 12.0% 3.7% 3.7% Peru Sample 20,627 23,400 36,286 24.4 17.9 14.3 8.8 8.0 2.0 2.5% 11.4% 12.2% 3.9% 5.5%

Source: Company Reports, Credicorp Capital, & Bloomberg

20 Appendix: Monthly Summary

March 2019

21 Chile - Top Winners / Losers Of The Month

WINNERS:

Vapores: Strong 4Q results in its affiliate company Hapag Lloyd.

Entel: Positive surprise in earnings and a better outlook for 2019 results boosted shares.

SK: Positive earnings momentum, coupled with high probability to award new mining construction contracts.

CCU:Outperformance is explained by positive results with strong growth across segments.

CMPC: Slight correction after recent underperformance of shares. We foresee some volatility going forward.

Top Winners Return Top Winners YTD Return Top Winners LTM Return

Vapores 9.2% Entel 28.2% CCU 4.8% Entel 9.2% SK 19.7% Concha y Toro 4.6% SK 9.2% CAP 18.9% SM-Chile B 3.8% CCU 4.0% Parauco 16.5% Chile 3.1% CMPC 3.8% Masisa 16.0% CMPC 3.0%

Top Losers Return Top Losers YTD Return Top Losers LTM Return

Enel Americas -14.9% Enel Americas -6.9% Cencosud -35.2% Cencosud -7.8% Andina-B -5.4% Forus -32.4% Forus -5.9% Ripley -4.4% Vapores -31.9% Corpbanca -5.8% Corpbanca -4.2% San Pedro -25.7% Ripley -5.6% Cencosud -2.8% Enel Generacion -24.1%

LOSERS:

Enel Americas: USD 3.5 mn capital increase

Cencosud: Concerns regarding the possibility of loosing investment grade

Forus: Weak 4Q18 results explained its bad performance Corpbanca: Weak results for 4Q18 and preliminary monthly results.for Jan-19.

Ripley: Bad momentum for retail in general

22 Colombia - Top Winners / Losers Of The Month

WINNERS:

Corficolombiana: positive reaction to dividend announcement.

CLH: Positive reaction to possible Maceo news.

Pf Aval:

Avianca: Recovery from the contraction in Jan-18. Operating results, such as transported passengers ASK (capacity) and RPK (traffic) posted annual increases and were very closed 2018’s target.

Pf Bancolombia: positive performance of loan growth and meaningful signs of recovery on the asset quality front.

Top Winners Return Top Winners YTD Return Top Winners LTM Return

Corficolombiana 28.9% Corficolombiana 49.4% Dav iv ienda 27.1% CLH 14.7% CLH 35.1% Ecopetrol 24.3% PfAv al 9.8% Av al 25.4% PfBColombia 23.0% Av ianca 8.1% Dav iv ienda 22.1% Bcolombia 19.3% PfBColombia 8.0% Bcolombia 18.4%

Top Losers Return Top Losers YTD Return Top Losers LTM Return

Conconcreto -15.9% Conconcreto -16.6% Conconcreto -68.9% ETB -12.9% ETB -13.9% ETB -49.9% BVC -7.2% BVC -9.8% CLH -47.0% PfGrupo Argos -4.3% Av ianca -43.9% PfCemargos -23.4%

TOP LOSERS:

Conconcreto: the company proposes not to pay dividends to shareholders in 2019

ETB: Absence of a catalyst due to the failure of the Bogotá administration to sell its stake

BVC: announced the dividend distribution (COP 550/share) below our expectations (COP 625.3/share)

Pf Grupo Argos:

23 Peru - Top Winners / Losers Of The Month

WINNERS:

Minsur: Unexpected dividend (~5.2% yield before rally) boosted the stock

Cerro Verde: Stock catching up with copper price increase

Relapasa: Recovery on strong 4Q18 results

Sider Peru: No information on stock’s rally

Luz del Sur: Speculation amid potential sale of Sempra’s (parent company) participation in the company

Top Winners Return Top Winners YTD Return Top Winners LTM Return

Minsur 21.6% Minsur 30.4% In Retail 58.1% Cerro Verde 15.9% Siderperu 27.3% Siderperu 43.1% Relapasa 15.0% In Retail 22.9% Enel Generacion 16.0% Siderperu 12.9% Relapasa 21.4% IFS 10.7% Luz del Sur 12.7% Southern 18.7% Backus 9.7%

Top Losers Return Top Losers YTD Return Top Losers LTM Return

Panoro Minerals -11.4% Panoro Minerals -11.4% Trev ali -78.3% Volcan B -9.3% Milpo -7.1% Relapasa -56.4% Graña y Montero -6.5% Graña y Montero -6.0% Atacocha B -55.0% Pacasmay o -3.3% Trev ali -5.7% Volcan B -50.4% IFS -3.0% Volcan B -4.2% Panoro Minerals -46.7%

LOSERS:

Panoro Minerals: Low liquidity has it delayed against the copper price cycle

Volcan B: It was announced the stock will be taken out of the FTSE index

Graña y Montero : The company missed its own deadline for announcements about the capital increase

Pacasmayo: Lower-than-expected 4Q18 results on higher production costs and two non-cash effects

IFS: Lower-than-expected 4Q18 results mainly driven by higher provision expenses at Interbank

24 Chile - Traded Volume

In February, traded volume was USD 3,043mn, 12.1% lower than in February 2018, considering the same number of trading days. Daily average traded volume was USD 152mn, USD 20.9mn lower than the USD 173mn seen during same month last year and 22.3% lower than the USD 196mn seen in January 2019. As for significant non-recurring flows, we highlight the auction of the 7.3% stake in Andina-B shares owned by Coca-Cola Chile (USD 265mn) and block trades in Falabella (USD 17.5mn), EnelAM (USD 13.5mn), Andina-B (USD 12.1mn), Aguas-A (USD 12.0mn), Parque Arauco (USD 12.0mn) and Mall Plaza (USD 10mn). For 2019, accumulated traded volume reached USD 7,350mn, 10.5% lower than the USD 8,215mn seen in same period of 2018 and 39.0% above the accumulated 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

- - Feb/14 Feb/15 Feb/16 Feb/17 Feb/18 Feb/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% -1%

+45%

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

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

Source: Bolsa de Comercio de Santiago & Credicorp Capital

25 Colombia - Traded Volume

In February, ADTV reached COP 137,617 mn and USD 44.18 mn, equivalent to decreases of -19.0% y/y and -25.7% y/y, respectively. This also represented increases of 0.1% m/m in terms of COP and 1.6% m/m in terms of USD. Total traded volume reached COP 2,752,331 mn, decreasing by -19.0% y/y and -4.7% m/m. In dollars, these figures are equivalent to USD 883.53 mn, decreasing -25.7% y/y and -3.2% 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 - - Feb-14 Feb-15 Feb-16 Feb-17 Feb-18 Feb-19

Source: BVC & Credicorp Capital

Moving Average LTM

110

Mvng. Avg. LTM 2013 Avg. 2014 Avg. -14% 90 2015 Avg. 2016 Avg. 2017 Avg. -8%

2018 Avg. 2019 Avg.

70

-40% -1%

50 -5%

Moving Average Average Average LTM LTM MovingMoving

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

Source: BVC & Credicorp Capital

26 Peru - Traded Volume

Traded volume in February was USD 236.4mn (+8.6% y/y) with specific trades at the beginning of the month. The average daily traded volume (ADTV) increased to USD 11.8mn, an 8.6% increase from the USD 10.9mn registered in January 2018. ADTV decreased 6.0% on a m/m basis (USD 12.6mn in January 2019). YTD, the accumulated traded volume was 17.4% lower than the five-year average. Through February 28th, pension funds and other local institutional investors were net buyers with USD 27.3mn and USD 32.6mn, respectively. On the other hand, local retail investors were net sellers with USD 24.8mn. Foreign retail and institutional investors were net sellers with USD 0.5mn and USD 34.7mn, respectively. Local retail investors, pension funds and institutional investors were involved in 71.0% 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

- - Feb-14 Feb-15 Feb-16 Feb-17 Feb-18 Feb-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 17%

-6% -50%

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

5

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

Source: BVL & Credicorp Capital

27 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 7.32% stake (USD 264mn) of the company owned by The Coca-Cola Company, which was seeking increase the liquidity for upcoming investments. The 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 side, the major divestment was EnelGx (USD 919mn), due to the tender offer in 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 are overweight in Consumer Discretionary (Falabella and Ripley) and are significantly underweight in Materials (SQM-B and CMPC).

Local Stocks 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

28 Peru - Pension Funds: August’s Flows

Peruvian Pension Funds’ (AFPs) exposure to local equities decreased to 10.8% in August 2018, when the S&P/BVL General Index fell 4.73% in PEN (-5.62% in USD).

In August, the net gap between the upper limit on equity investments vs actual funds invested was USD 700.4mn, USD 175.5mn lower than in July. At an aggregate level, exposure to local equities decreased, while that of international equities increased.

We observed net investments in local equities of USD 112.5mn. The main investments during August 2018 included Credicorp (USD 80.5mn), Alicorp (USD 13.7mn) and Buenaventura (USD 8.0mn). On the other hand, the main divestments for the month were InRetail (USD 1.2mn) and Volcan (USD 0.1mn).

Local Stock Movements

361

224

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

USDm 23 19 12 12 6 1

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

-301 -170

Jul-16

Jul-17

Jul-18

Apr-16

Oct-16

Apr-17

Oct-17

Apr-18

Jan-16

Jun-16

Jan-17

Jun-17

Jan-18

Jun-18

Feb-16

Mar-16

Feb-17

Mar-17

Feb-18

Mar-18

Aug-16

Sep-16

Nov-16

Dec-16

Aug-17

Sep-17

Nov-17

Dec-17

Aug-18

May-16

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

Top Net Fund 1 Fund 2 Fund 3 Total Investments BAP 1.0 43.4 36.1 80.5 ALICORC1 0.3 8.2 5.2 13.7 BVN ADR 0.0 -0.2 8.3 8.0 NEXA 0.3 -1.3 5.5 4.5 SCOTIAC1 0.0 1.6 0.6 2.2

Top Net Fund 1 Fund 2 Fund 3 Total Divestments INRETC1 0.0 -1.2 0.1 -1.2 VOLCABC1 0.0 -0.6 0.4 -0.1 LUSURC1 0.0 0.0 0.0 0.0 ATACOAC1 0.0 0.0 0.0 0.0 GRAM ADR 0.0 0.0 0.0 0.0

Net Investment 1.5 50.0 61.0 112.5 August

Source: SBS, Credicorp Capital.

29 Economic Forecasts

CHILE National Accounts (YoY) 2015 2016 2017 2018F 2019F Current GDP (USDmm) 244,417 250,266 277,184 299,440 311,003 GDP (%) 2.3 1.3 1.5 4.0 3.3 Domestic Demand (% v ar.) 2.5 1.3 3.1 4.6 3.7 Total Consumption (% v ar.) 2.6 2.9 2.7 3.8 3.4 Inv estment / GDP 23.8 22.9 21.6 22.0 22.4 CPI 4.4 2.7 2.3 2.6 3.0 Reference rate (end of y ear) 3.50 3.50 2.50 2.75 3.50 Ex change rate (end of y ear) 709 667 615 696 650 Ex change rate (av g.) 655 677 649 640 655 Fiscal Balance (% GDP) -2.2 -2.7 -2.8 -1.8 -1.7 Foreign Reserves (USDmm) 38,643 40,494 39,500 39,000 40,000 Source: INE, BCCh, Dipres & Credicorp Capital Estimates

PERU National Accounts (YoY) 2015 2016 2017 2018F 2019F Current GDP (USDmm) 191,600 194,817 214,452 226,649 229,677 GDP (%) 3.3 4.0 2.5 3.8 3.7 Domestic Demand (% v ar.) 2.9 1.1 1.4 4.2 3.8 Total Consumption (% v ar.) 4.9 2.7 2.2 3.2 3.5 Inv estment / GDP 24.5 22.8 21.7 22.3 22.2 CPI 4.4 3.2 1.4 2.2 2.5 Ov ernight interest rate (end of y ear) 3.75 4.25 3.25 2.75 3.50 Ex change rate (end of y ear) 3.41 3.36 3.24 3.37 3.35-3.40 Ex change rate (av g.) 3.19 3.38 3.26 3.29 3.35-3.40 Fiscal Balance (% GDP) -2.1 -2.6 -3.1 -2.5 -2.3 Foreign Reserves (USDmm) 61,485 61,686 63,621 61,100 61,900 Source: INEI, BCR & Credicorp Capital Estimates

COLOMBIA National Accounts (YoY) 2015 2016 2017 2018F 2019F Current GDP (USDmm) 192,710 283,133 314,477 333,432 344,803 GDP (%) 3.0 2.0 1.8 2.7 3.3 Domestic Demand (% v ar.) 2.4 1.2 1.9 3.0 3.6 Total Consumption (% v ar.) 3.4 1.4 2.2 3.3 3.4 Inv estment / GDP 23.8 23.4 23.1 22.9 23.2 CPI 6.8 5.8 4.1 3.2 3.6 Ov ernight interest rate (end of y ear) 5.75 7.50 4.75 4.25 5.00 Ex change rate (end of y ear) 3,175 3,002 2,984 3,200 3,000 Ex change rate (av g.) 2,760 3,051 2,951 2,940 3,050 Fiscal Balance (% GDP) -3.0 -4.0 -3.6 -3.1 -2.6 Foreign Reserves (USDmm) 46,741 46,683 47,637 48,319 48,343

Source: DANE, BanRep, Bloomberg & Credicorp Capital Estimates

30 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.

31 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.

32 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.

33 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.

34 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.

35 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 Analyst: Construction, Industrial & Ports [email protected] Andrés Nariño Alfredo Bejar # (562) 2450 1688 Director Sales Offshore Head of International FI [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

36