1. Art and Diseño

February 2nd 2015
Credicorp Capital Research
Andean Daily Report
CREDICORP CAPITAL RESEARCH
Chile: +(562) 2450 1600
Colombia: +(571) 339 4400 Ext. 1505
Peru: +(511) 205 9190 Ext. 36070
V a lua tions
REGIONAL
 Andean Economies: Impact from lower copper and oil prices (Full
report attached)
P / E
EV / EBITDA
P / BV
2 0 14 E 2 0 15 E 2 0 14 E 2 0 15 E
LTM
Country
Chile
18.7x
16.1x
9.3x
8.6x
1.7x
Colombia
19.2x
22.0x
8.1x
8.4x
1.4x
CHILE
Peru
15.3x
13.9x
8.0x
7.3x
1.3x
 Colbun 4Q14 Results: strong EBITDA growth, in line with estimates;
EPS impacted by provision for HidroAysen’s write-off
Index
Last
S&P MILA 40
S&P INDEX
Chile
Colombia
Peru
Mex ico
Brazil
Equities Latam
591
1,995
3,837
1,389
13,670
40,951
46,908
2,555
Fx Rates
Last
CLP / US$
UF / CLP
Peru / US$
Colombia / US$
Brazil / US$
CLP / Euro
Euro / US$
633
24,560
3.06
2,440
2.68
714
1.13
PERU
Commodities
Last
 Volcan discloses expectations about its 2015 production and 4Q14
results for the first time
Copper (US$/lb)
Gold (US$/oz)
Silv er (US$/oz)
Brent (US$/bbl)
Pulp (US$/MT)
WTI (US$/bbl)
249
1,279
17.2
51
930
48
 Cencosud – 2015 Capex guidance released; upgrading to Hold after
sharp correction; company evaluating potential spin off of Real Estate
business (Company Alert attached)
 Banmedica raises its participation in Empremedica to 100%
COLOMBIA
 Monetary policy decision and growth projections update by BanRep
came in line with our expectations
 Cement production increased 12.2% y/y in Dec-14
 Davivienda will charge equity tax for 2015-2017 through equity
accounts
 Nutresa to guarantee debt from subsidiaries
 EEB: BoD authorized the participation in two power transmission
projects in Colombia
 Buenaventura evaluates bond issue in order to expand operations
D/D %
YTD%
Local USD
Local USD
-1.1% -1.1%
-7.2% -7.2%
-1.3% -1.3%
-3.1% -3.1%
-0.1% -1.0%
-0.4% -4.6%
-1.3% -2.5%
-8.2% -10.5%
1.5%
0.4%
-7.6% -10.0%
-2.2% -3.0%
-5.1% -6.6%
-1.8% -4.4%
-6.2% -7.5%
-3.6% -3.6%
-6.3% -6.3%
D/D %
YTD%
0.8%
0.0%
1.3%
1.2%
2.9%
0.6%
-0.3%
4.3%
-0.3%
2.8%
2.7%
1.3%
-2.5%
-6.7%
D/D %
Local USD
1.8%
1.9%
2.6%
8.4%
0.0%
8.3%
YTD%
Local USD
-11.7%
8.0%
10.3%
-8.9%
-0.2%
-9.4%
This report is property of IM Trust S.A. and/or Credicorp Capital Colombia S.A Sociedad Comisionista de Bolsa and/or Credicorp Capital S.A.A. and/or its subsidiaries (hereinafter jointly called “Credicorp
Capital”), therefore, no part of this the material or its content, nor any copy of it may altered in any way, transmitted, copied or distributed to any third party without prior and express written consent of
Credicorp Capital. In making this report, Credicorp Capital has relied on information from public sources. Credicorp Capital has not verified the truthfulness, completeness or accuracy of the information
accessed, nor has audit the information in any way. Accordingly, this report does not constitute a statement, assertion or guarantee (express or implied) as to the truth, accuracy or completeness of the
information contained herein or any other written or oral information furnished to any person and/or their advisors.
Regional
Andean Economies: Impact from lower copper and oil prices (Full report attached)
The sharp reduction in commodity prices during the last months have impacted the terms of trade
of the Andean economies and therefore, their national income. Particularly, the fall in copper
prices entails risks on the expected recovery of Chile and Peru’s economic activity, while lower
crude prices will negatively affect Colombian growth.
This report analyzes the expected impact of the recent strong reduction in both copper and oil
prices on Chile, Colombia and Peru’s economies.
Chile
Company News
Colbun 4Q14 Results: strong EBITDA growth, in line with estimates; EPS impacted by
provision for HidroAysen’s write-off
(COLBUN: BUY; T.P.: CLP 196)
Colbun
(USDm)
4Q14A 4Q13A 4Q14E
Y/Y
A/E
(%)
(%)
Colbun
2014
2015E
Rev enues
330.1
349.6
320.6
-5.6%
3.0%
P/E
79.8x
18.0x
EBIT
111.1
64.1
115.5
73.2%
-3.8%
FV/EBITDA
13.7x
9.8x
EBITDA
159.0
106.8
161.0
48.9%
-1.2%
P/BV
1.5x
1.2x
Net Income
-61.8
6.9
74.9
nm
nm
Div . Yield
0.4%
1.3%
EBITDA Mg. 48.2%
30.5%
50.2%
Net Mg.
2.0%
23.4%
-18.7%
Colbun posted a strong quarter, with EBITDA growth of 49%, in line with our forecast. Hydro
generation increased 46% when compared to 4Q13, driven by a better snow melting season and
by the entry of Angostura during the year. The latter drove a strong reduction in costs, which
largely explains the positive results. Spot market purchases decreased from USD 59 mn in 4Q13
to USD 29 mn in 4Q14, while fuel costs declined 58% y/y, to USD 41 mn during the period. EPS
came in below our estimates, largely due to an impairment provision of USD 102mn associated
with the HidroAysen project. We highlight that this impartment does not change our positive view
towards Colbun, as HidroAysen was not included in our projections. We remain bullish on the
name and reiterate our BUY rating on Colbun.
2
Company Alert: Cencosud – Hold (Upgraded from Underperform) (Company Alert attached)
2015 Capex guidance released; upgrading to Hold after sharp correction; company
evaluating potential spin off of Real Estate business
Price: CLP 1,500; Target Price: CLP 1,765
Cencosud released it annual Capex guidance for 2015, implying sales growth of 11% - 20% and a
range of EBITDA growth of 16% - 33%. Overall, operational expectations are slightly better than
what we are expecting while capex comes in line with our current assumptions. The company
also mentioned that it was evaluating a potential spin off and IPO of its Real Estate business, a
move which could unlock value for shareholders. After an 18% USD decline in shares since our
last model update (October 2014), we are upgrading our recommendation to Hold.
Banmedica raises its participation in Empremedica to 100%
(BANMEDICA: BUY; T.P.: CLP 1,170)
Through a public release to the local regulatory, Banmedica announced the acquisition of the
remaining shares of Empremedica S.A in Peru, raising its participation from 75% to 100%. The
acquisition implied an investment of USD 19.3mn. Empremedica S.A is the controlling society of
Clinic San Felipe and ROE Laboratory through which Banmedica participates in the health
provision services in Peru. This acquisition looks to complete the participation of Banmedica in
the 50-50 joint venture formed with Pacifico to participate in health provision, health insurance
and medical assistance insurances services in Peru. In the last material fact, Banmedica
announced a total investment in this joint venture of USD 57mn, approximately.
Colombia
Economics and Politics
Monetary policy decision and growth projections update by BanRep came in line with our
expectations
The BanRep decided to keep the repo rate unchanged at 4.50% for a fifth month in a row, in line
with both market consensus and our expectations. The language of the statement remained
balanced between: i) risks on activity from low oil prices and a low dynamism of the main trading
partners, and ii) an inflation and inflation expectations that stand close to the ceiling of the
BanRep’s target range, amid a domestic demand that continues growing at a healthy pace.
Importantly, the BanRep revised its 2015 GDP growth forecast from 4.3% to 3.6% as the most
likely figure, similar to our estimate of 3.7%.
The high level of uncertainty currently, jointly with the recent upward trend in inflation, which is
expected to continue in the upcoming months, continue to support our expectation of a stable
repo rate at 4.50% for several months. In any case, we expect the BanRep´s next move to be on
the downside, which might happen in 4Q15 as risks on the economic activity will be higher in
2016, a year in which the government will be required to carry out a significant fiscal adjustment
as a result of current oil prices. Thus, we expect a repo rate at 4.0% by Dec-15.
Cement production increased 12.2% y/y in Dec-14
According to DANE, cement production advanced 12.2% in Dec-14 (Nov-14:4.8%). At the same
time, cement deliveries grew by 10.0% y/y after climbing 6.3% y/y in Nov-14. In addition, we
highlight that cement production increased 10.2% during 2014, while deliveries did it by 10.3%.
These results suggest that the construction dynamics should remain solid, as the sector continues
to stand out in the local economy.
3
Company News
Nutresa to guarantee debt from subsidiaries
(NUTRESA: BUY; T.P.: COP 32,000)
The BoD authorized Grupo Nutresa to guarantee debt from subsidiaries Noel, Doria, Means and
Colcafe up to COP 690 bn. This debt will be used to fund the acquisition of Grupo El Corral.
Davivienda will charge equity tax for 2015-2017 through equity accounts
(PFDAVIVIENDA: BUY; T.P.: COP 35,300)
The shareholders decided to charge the equity tax for 2015-2017 through equity accounts,
according to Article 10 of Law 1739 of 2014 (the tax bill). This procedure, which does not comply
with IFRS, will pressure ROAE to the upside, but will contract capital adequacy ratios a few basis
points. Recall that Grupo Aval reached the same decision in previous weeks.
EEB: BoD authorized the participation in two power transmission projects in Colombia
(EEB: BUY, T.P.: COP 1,930)
The BoD authorized the management of EEB to participate in the following transmission projects
that will be awarded by UPME: 500 kV Refuerzo Costa Caribe and Refuerzo 500 kV
Suroccidental.
Peru
Company News
Volcan discloses expectations about its 2015 production and 4Q14 results for the first time
(VOLCAN: BUY; T.P.: PEN1.10)
Volcan, the mining company, expects an increase in the production of zinc (5%) and lead (8%),
which will reach 295,000 MT and 62,000 MT, respectively. The firm is also looking for a 9%
increase in silver output. For its part, Ignacio Rosado, said in the company report, that the cost
reduction and operating efficiency policies will continue. In a related note, Volcan disclosed its
4Q14 production results for the first time. The results were higher than our estimates for the main
metals that Volcan produces, including production numbers of 73,100 MT Zn (+7% A/E) and
6.1mn oz Ag (+5% A/E).
Buenaventura evaluates bond issue in order to expand operations
(BUENAVENTURA: HOLD; T.P.: USD 12.90)
Roque Benavides, CEO of Buenaventura, commented during the Bloomberg’s 2015 Summit
event, that the firm could issue bonds this year (considered previously). However, this issuance
will not likely happen in the short term due to challenged market conditions. It was also informed
that Buenaventura’s capex of USD 220mn will be financed mainly by the company’s cash
generation and the future cash flow of the Cerro Verde’s expansion, which is expected to be
completed by year-end.
4
Trading Information
Traded Volume
Country
Vol. (USDmn)
Best sector
Worst Sector
Chile
86.2
Retail / +3.73%
Consumption / -1.30%
Colombia
170.6
-
-
6.8
Mining / +2.92%
Agribusiness / -2.38%
Peru
Volume Leaders
Chile
USD Th.
Enersis
$ 9,107.2
Falabella
Latam
Colombia
Clp. %
USD Th.
0.71%
Bancolombia
$ 43,487.5
$ 6,172.2
0.51%
Grupo Av al
$ 6,025.8
-1.68%
Ecopetrol
Peru
Cop. %
USD Th.
Pen %
1.62%
Credicorp
$ 862
-0.82%
$ 21,581.9
2.39%
In Retail
$ 807
0.61%
$ 20,124.2
-0.51%
Volcan-B
$ 735
6.67%
Top Winners & Losers
Chile
Top Winners
Cencosud
CLP
Colombia
Clp.%
Top Winners
Peru
COP
Cop.%
Top Winners
PEN / USD
%
Rio Alto Mining
$ 2.87
8.30%
$ 1,551
10.70%
Canacol
$ 6,900
10.40%
Ripley
$ 261
2.81%
Grupo Av al
$ 1,285
2.39%
Volcan-B
$ 0.48
6.67%
Embonor-B
$ 844
1.69%
Bancolombia
$ 28,880
1.62%
BVN
$ 11.47
5.23%
Top Losers
CLP
Top Losers
COP
Cop.%
Top Losers
PEN / USD
Clp.%
%
Forus
$ 2,249.5
-3.33%
PFCemargos
$ 8,600
-5.49%
Atacocha-B
$ 0.19
-5.00%
CAP
$ 1,552.4
-2.86%
Éx ito
$ 25,000
-4.94%
Casa Grande
$ 6.45
-3.01%
CCU
$ 5,798.2
-2.54%
BVC
$ 19
-4.15%
Bco. Continental
$ 4.11
-2.14%
Sources: Bloomberg & Credicorp Capital
5
Economic Calendar
Chile
Date
30-Jan
5-Feb
5-Feb
6-Feb
6-Feb
Time
9:00
8:30
8:30
8:00
8:00
Indicator / Event
Unemployment Rate
Economic Activity Index YoY
Economic Activity Index MoM
CPI YoY
CPI MoM
Period
Dec-14
Dec-14
Dec-14
Jan-15
Jan-15
Consensus
6.0%
1.9%
4.3%
-0.3%
Credicorp
Capital
-
-
Actual
Previous
6.0%
-
6.1%
1.3%
0.2%
4.6%
-0.4%
Actual
Previous
4.50%
-
4.50%
3.66%
0.27%
Actual
Previous
0.17%
3.07%
-0.31%
0.23%
3.22%
-0.31%
Colombia
Date
30-Jan
5-Feb
5-Feb
Time
21:00
21:00
Indicator / Event
Reference Rate
CPI YoY
CPI MoM
Period
Jan-15
Jan-15
Jan-15
Consensus
4.50%
3.79%
0.58%
Credicorp
Capital
-
Peru
Date
1-Feb
1-Feb
1-Feb
Time
2:00
2:00
2:00
Indicator / Event
CPI MoM
CPI YoY
Wholesale Price Index MoM
Period
Jan-15
Jan-15
Jan-15
Consensus
0.12%
3.05%
-
Credicorp
Capital
-
Sources: Bloomberg & Credicorp Capital
6
Important Disclosures
This report is property of IM Trust S.A. and/or Credicorp Capital Colombia S.A. Sociedad Comisionista de Bolsa and/or Credicorp
Capital Perú S.A.A. and/or its subsidiaries (hereinafter jointly referred to as “Credicorp Capital”), therefore, no part of this the material
or its content, nor any copy of it, may be altered in any way, transmitted, copied or distributed to any third party without prior and
express written consent of Credicorp Capital.
In making this report, Credicorp Capital has relied on public information. Credicorp Capital has not verified the truthfulness,
completeness or accuracy of the information accessed, nor has audited the information in any way. Accordingly, this report does not
constitute a statement, assertion or guarantee (express or implied) as to the truth, accuracy or completeness of the information
contained herein or any other written or oral information furnished to any person and/or their advisors.
Unless otherwise stated, the information used in this report is not confidential, nor constitutes privileged information that may mean
the violation of the rules of the stock market, or that could mean failure to comply with copyright legislation.
This report is not intended and shall not be understood in any way as to: a) predict the future or guarantee a specific financial result;
b) ensure the fulfillment of the scenarios described in it; c) be an investment advice or opinion that could be considered as Credicorp
Capital recommendations.
The information contained in this report is only for referential purposes. While reading it, you should consider that the information
contained in this report may be oriented to a specific segment of clients or investors, with a certain risk profile that may not be yours.
Unless otherwise stated, this report does not contain investment recommendations or other suggestions that may be understood to
be given under the stock market intermediaries’ special duty to clients classified as investors. When recommendations are made, the
report will clearly specify the investors risk profile to which the recommendation is intended. Credicorp Capital can seek and/or
conduct business with companies that are mentioned in the report, and they can also execute buying and selling transactions of
shares that are mentioned.
It is important to state that the fluctuation in exchange rates can have adverse effects on investments values.
It is client responsibility to determine how to use the information contained in this report. Hence, the client is the sole responsible for
investment decisions or any other operation he/she might perform in the stock market based on this report. In other words, the
investment or operation result made by the client using the information contained in this report is of her/his sole responsibility.
Credicorp Capital does not assume any responsibility, obligation or duty for any action or omission derived from the use of this
document.
Credicorp Capital recommends to their clients to ask for professional advice from financial, legal, accounting, tax experts before
adopting an investment decision. Under no circumstances the information contained in this report may be considered as a financial,
legal, accounting or taxation opinion, neither as a recommendation or investment advice.
Rating System
N° of Companies
Companies covered
covered with this rating with this rating (% )
Rating
Definition
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.
35
43%
Hold
Expected returns of +/- 5% in excess/below the expected return
of the local index over the next 12-18 months.
36
44%
Underperform
Expected to underperform the local index by 5 percentage points or
more over the next 12-18 months.
9
11%
Under Review /
Restricted
Company coverage is under review or restricted.
2
3%
82
100%
Total
CONTACT LIST
ANDEAN RESEARCH TEAM
SALES & TRADING
Heinrich Lessau
Hugo Horta
Director of Research
[email protected]
Director of Sales & Trading
[email protected]
EQUITY RESEARCH
EQUITY SALES & TRADING
CHILE
COLOMBIA
PERU
Hernán Arellano
Francisca Manuschevich
César Cuervo
Héctor Collantes
Head of Equities
[email protected]
Head of Equity Research
[email protected]
# (562) 2446 1798
Head of North Andean Equity Research
[email protected]
# (571) 339 4400 Ext 1012
Head of Equity Research
[email protected]
# (511) 205 9190 Ext 33052
Javier Günther
Marilyn Macdonald
Cristián Castillo
Christopher DiSalvatore
Jaime Pedroza
Fernando Pereda
Associate: Retail & Financials
[email protected]
# (562) 2446 1724
Senior Analyst: Utilities
[email protected]
# (571) 339 4400 Ext 1025
Senior Analyst: Cement & Utilities
[email protected]
# (511) 205 9190 Ext 37856
International Equity Sales
[email protected]
# (562) 2450 1695
International Equity Sales
[email protected]
# (4477) 7151 5855
International Sales Trader
[email protected]
# (786) 999 1633
CHILE
PERU
COLOMBIA
Arturo Prado
Juan C. Domínguez
Iván Bogarín
René Ossa
Rodrigo Zavala
Juan A. Jiménez
Senior Analyst: Natural Resources
[email protected]
# (562) 2450 1688
Senior Analyst: Banks
[email protected]
# (571) 339 4400 Ext 1026
Senior Analyst: Retail & Others
[email protected]
# (511) 416 3333 Ext 33055
International Equity Sales
[email protected]
# (562) 2651 9324
Head of Equity - Peru
[email protected]
# (511) 313 2918 Ext 36044
Head of International Equity Sales
[email protected]
# (571) 339 4400 Ext 1701
Andrés Ossa
Sebastián Gallego
Tamara Vasquez
Christian Munchmeyer
Ursula Mitterhofer
Santiago Castro
Analyst: Utilities, Telecom & I.T.
[email protected]
# (562) 2651 9332
Analyst: Oil & Gas
[email protected]
# (571) 339 4400 Ext 1594
Research Assistant
[email protected]
# (511) 416 3333 Ext 37946
International Sales & Trading
[email protected]
# (562) 2450 1613
Sales & Trading
[email protected]
# (511) 313 2918 Ext 32922
International Sales & Trading
[email protected]
# (571) 339 4400 Ext 1344
Tomás Sanhueza
Carlos E. Rodriguez
Analyst: Food & Beverages, Healthcare
[email protected]
# (562) 2446 1751
Analyst: GEA & infrastructure
[email protected]
# (571) 339 4400 Ext 1365
Pilar González
FIXED INCOME SALES & TRADING
Analyst: Transport
[email protected]
# (562) 2446 1768
Felipe García
Lourdes Alamos
Head of Fixed Income
[email protected]
Research Coordinator & Holdings Analyst
[email protected]
# (562) 2450 1609
FIXED INCOME & ECONOMICS RESEARCH
CHILE
COLOMBIA
PERU
Gonzalo Covarrubias
Carlos Sanchez
Alfredo Bejar
Head of Capital Markets
[email protected]
Head of Fixed Income
[email protected]
Head of Fixed Income / FX Trading
[email protected]
CHILE
COLOMBIA
PERU
# (562) 2450 1635
# (571) 323 9154
# (511) 205 9190 Ext 36148
Paulina Yazigi
Daniel Velandia
Irvin León
Guido Riquelme
Christian Jarrin
Vallerie Yong
Head of Research & Chief Economist
[email protected]
# (562) 2450 1637
Head of Research & Chief Economist
[email protected]
# (571) 339 4400 Ext 1505
Senior Fixed Income Analyst
[email protected]
# (511) 416 3333 Ext 37854
Head of Sales
[email protected]
# (562) 2446 1712
RM Fixed Income Offshore
[email protected]
# (571) 340 2591
Local FI Senior Trader
[email protected]
# (511) 313 2902 - # (511) 313 2908
Felipe Lubiano
Sergio Ferro
Alberto Zapata
Belén Larraín
Andrés Valderrama
Evangeline Arapoglou
Senior Fixed Income Analyst
[email protected]
# (562) 2651 9308
Fixed Income Analyst
[email protected]
# (571) 339 4400 Ext 1609
Fixed Income Analyst
[email protected]
# (511) 205 9190 Ext 36018
Head of International FI Sales
[email protected]
# (562) 2446 1720
Fixed Income Trader
[email protected]
# (571) 323 9163
Senior International FI Trader
[email protected]
# (511) 313 2902 - # (511) 313 2908
Paulina Valdivieso
Camilo A. Durán
Paz Stepke
José Andrés Riveros
Lizeth Espíritu
Fixed Income Analyst
[email protected]
# (562) 2651 9337
Macro Analyst
[email protected]
# (5511) 339 4400 Ext. 1383
International Fixed Income Sales
[email protected]
# (562) 2651 9336
Fixed Income Trader
[email protected]
# (571) 339 4400 Ext 1180
Fixed Income Trader
[email protected]
# (511) 313 2902 - # (511) 313 2908
Andrés Osorio
Benjamín Diaz
Economist
[email protected]
# (562) 2446 1760
Local Fixed Income Sales
[email protected]
# (562) 2446 1738