Report - CREDICORP capital

February 5th 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
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
 December’s economic growth surprises to the upside
 Santander 4Q14 results: Profits in line; slight positive surprise in
revenues was offset by higher expenses
 Concha y Toro – Premium price for a premium winery. Reiterating
BUY - (Full report attached)
 CAP: Recent rally is without clear explanation
COLOMBIA
 Jan-15 inflation will be published by DANE today
 Cemex Latam Holdings 4Q14 results: FX losses hit bottom line figures
PERU
 The national industry will grow more than 4.8% this year
 Graña y Montero issues PEN 629mn in local bonds in foreign markets
Chile
18.8x
16.2x
9.4x
8.7x
1.7x
Colombia
19.2x
22.2x
8.1x
8.4x
1.4x
Peru
15.2x
13.8x
8.0x
7.3x
1.3x
Index
Last
S&P MILA 40
S&P INDEX
Chile
Colombia
Peru
Mex ico
Brazil
Equities Latam
616
2,042
3,917
1,428
13,756
41,711
49,301
2,641
Fx Rates
Last
CLP / US$
UF / CLP
Peru / US$
Colombia / US$
Brazil / US$
CLP / Euro
Euro / US$
627
24,544
3.06
2,393
2.74
711
1.13
Commodities
Last
Copper (US$/lb)
Gold (US$/oz)
Silv er (US$/oz)
Brent (US$/bbl)
Pulp (US$/MT)
WTI (US$/bbl)
259
1,265
17.4
53
916
48
D/D %
YTD%
Local USD
Local USD
-0.2% -0.2%
-3.2% -3.2%
-0.4% -0.4%
-0.8% -0.8%
0.1%
0.1%
1.7% -1.6%
-0.5% -2.0%
-5.6% -6.1%
0.9%
0.6%
-7.0% -9.5%
0.3% -0.6%
-3.3% -4.0%
0.7% -0.7%
-1.4% -5.0%
-0.1% -0.1%
-3.2% -3.2%
D/D %
YTD%
0.2%
0.0%
0.1%
1.5%
1.8%
-0.9%
-1.2%
3.3%
-0.3%
2.6%
0.7%
3.6%
-3.0%
-6.2%
D/D %
Local USD
0.4%
0.3%
0.4%
-4.4%
-1.5%
-8.7%
Local
YTD%
USD
-8.3%
6.7%
11.5%
-4.6%
-1.7%
-9.0%
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.
Chile
Economics and Politics
December’s economic growth surprises to the upside
Today, the Central Bank released the IMACEC (monthly index of economic activity) for the month
of December, showing a 2.9% y/y growth, which was above the market’s estimate of 2.0
(Credicorp Capital expectation of 2.1%. The December figure was driven by the expansion in
services, wholesale trade, and mining activity. With this result, the Chilean economy posted a
preliminary growth of 1.8% during 2014 (the 4Q14 figures will be released on March 18).
Company News
Santander 4Q14 results: Profits in line; slight positive surprise in revenues was offset by
higher expenses
(BSAN: BUY; T.P. CLP 38.0)
Santander
(CLP bn)
4Q14A 4Q13A 4Q14E
Y/Y
A/E
(%)
(%)
Santander
2014A
2015E
12.0x
Rev enues
448
388
426
16%
5%
P/E
10.7x
Prov . Ex p.
-110
-88
-90
25%
22%
P/BV
2.2x
2.1x
Opex
-186
-161
-165
15%
12%
ROAE
22.3%
18.3%
Net income
139
174
141
-20%
-2%
Div . Yield
4.5%
5.6%
ROAA
1.8%
2.6%
1.9%
ROAE
21.8%
30.7%
22.3%
Santander recorded a profit of CLP 139 bn in 4Q14 or CLP 0.74/share, equivalent to a decrease
of 20.3% y/y. The drop in earnings was mostly explained by the extraordinary gain on the selling
of the asset management unit in 4Q13. Excluding this effect, pre-tax profit increased 11% y/y.
Moreover profit came in line with our estimates. ROAE for the quarter reached 21.8%.
The negative surprise came mostly from recalibration on provision models. We remain positive on
the shares supported by strong fundamentals, positive results on the transformation project,
attractive dividend yield, and discounted valuation.
Company Update: Concha y Toro – BUY (Full report attached)
Premium price for a premium winery. Reiterating BUY.
Price: CLP 1,172 ; Target Price: CLP 1,370
We are updating our coverage of Concha y Toro, reiterating our Buy recommendation and
introducing our new 2015YE TP of CLP 1,370. Despite a strong outperformance during 2014
(22.3% vs 4.1% for the IPSA), we continue to see strong tailwinds for further share appreciation in
2015. FX, low wine costs and growth in export volumes will create visibility for results and should
remain as positive drivers for the stock in 2015.
2
CAP: Recent rally is without clear explanation
(CAP: UNDERPERFORM; T.P.: CLP 2,152)
The recent rally in shares (+22% in last 2 days) came without clear fundamentals. We believe that
the oversold shares were likely driven by a shift in price trends in commodities and the Chinese
Government’s announced stimulus efforts. The rumors about a possible sale of the company (or
portion of) cannot be ruled out; however, we believe that such a case is unlikely because cost
advantages for any competitor are not clear (CAP is in the third quartile of cash cost in the
industry). Furthermore, a lack of competitor expertise in the production of iron ore from magnetite
(primary competitor expertise in iron ore from hematite) make any clear suitor unclear. Also, any
interest by Mitsubishi, the company’s minority partner, should also not be ruled out as current
ownership reflects the Japanese firm’s strategic interest to maintain some control over its raw
material supply; however, full control by such partner is unlikely as CAP’s business is not part of
its core operations.
Colombia
Economics and Politics
Jan-15 inflation will be published by DANE today
The market consensus expects a monthly variation of 0.54%, which is below our estimate of
0.65%. In any case, the risks are biased to the downside as the food data has showed moderate
increases in recent days, in addition to the decrease of gasoline prices. Upward pressures will
come from the effect of COP’s depreciation on food and tradable.
Now, downward surprises would not change our expectations for the year-end (3.3%), given the
expected upward pressures during 1H15.
Company News
Cemex Latam Holdings 4Q14 results: FX losses hit bottom line figures
(CLH – HOLD; T.P. COP 20,100)
CLH
(USD mn)
4Q14A 4Q13A 4Q14E
Rev enues
400.4
462.4
446.9
EBIT
110.3
118.8
EBITDA
134.1
158.3
Net Income
64.6
Y/Y
A/E
(%)
(%)
CLH
LTM
2015E
-13.4%
-10.4% P/E
13.0x
13.0x
120.1
-7.1%
-8.1%
FV/EBITDA
8.1x
7.9x
144.7
-15.3%
-7.3%
P/BV
2.5x
1.9x
26.2
66.3
146.8%
-2.6%
Div . Yield
0.0%
0.0%
EBITDA Mg. 33.5%
34.2%
32.4%
Net Mg.
5.7%
14.8%
16.1%
Revenues fell to USD 400.4mn (-13% y/y) due to a hike in the COP/USD exchange rate and
lower revenues in Colombia. EBITDA continued its downward trend, falling more than we
anticipated to USD 134.1mn (-15% y/y); net income soared to USD 64.4mn (+144% y/y) due to
lower interest and other expenses, in line with our expectations. Guidance for 2015 doesn’t look
particularly appealing, with moderate growth expected in Colombia (cement), and some delays in
the investment plan that postponed Capex execution. We maintain our Hold recommendation
on CLH as bottom line figures were in line with our estimates and guidance for 2015 is
relatively in line with our forecasts.
3
Peru
Economics and Politics
The national industry will grow more than 4.8% this year
According to the Peruvian Central bank projections, manufacturing activity likely decreased 2.9%
in 2014; however, according to Piero Ghezzi, the Minister of Production, activity should recover in
2015, growing more than 4.8%; the ministry’s estimates are above those of the BCRP and
National Society of Industries ( 3.7% and 4%, respectively). Mr. Ghezzi also stated that last year
the sector was affected by metal transformation and the fishing sector.
Company News
Graña y Montero issues PEN 629mn in local bonds in foreign markets
(GRAÑA Y MONTERO: BUY; 2015 T.P.: PEN 10.33)
On February 3rd, Graña y Montero announced the issuance of PEN 629mn (~USD 205.4mn) in
REG S Senior Secured VAC-Indexed notes due by November 2039 in the US capital market at a
price of 99.999% (plus accrued interest), which was performed by its subsidiary GYM Ferrovias.
The bullet bond has a tenor of 24.8 years, an interest rate of 4.075% (without inflation
adjustment).
4
Trading Information
Traded Volume
Country
Vol. (USDmn)
Best sector
Worst Sector
Chile
71.0
Banks & Fin. / +1.1%
Consumption / -1.31%
Colombia
57.4
-
-
Peru
9.0
Mining / +2.72%
Agribusiness / -0.67%
Volume Leaders
Chile
USD Th.
Colombia
Clp. %
USD Th.
Peru
Cop. %
USD Th.
Pen %
CAP
$ 5,606.7
21.64%
Ecopetrol
$ 17,255.7
-4.99%
Volcan-B
$ 1,317
10.91%
Enersis
$ 5,426.1
0.24%
Bancolombia
$ 9,395.9
-0.99%
Atacocha-B
$ 1,138
-5.56%
Latam
$ 5,205.9
0.08%
Grupo Av al
$ 4,170.7
0.00%
Graña y Montero
$ 966
-0.15%
COP
Cop.%
Top Winners
Top Winners & Losers
Chile
Top Winners
CLP
Colombia
Clp.%
Top Winners
Peru
PEN / USD
%
CAP
$ 2,306
21.64%
ISA
$ 7,970
2.71%
Minera IRL
$ 0.07
16.67%
Ripley
$ 292
3.38%
Celsia
$ 5,460
1.68%
Volcan-B
$ 0.61
10.91%
$ 28,307
2.97%
Av ianca
$ 3,760
1.62%
Siderperu
$ 0.21
10.53%
COP
Cop.%
Top Losers
BCI
Top Losers
Salfacorp
CLP
Clp.%
Top Losers
PEN / USD
%
$ 429.0
-4.45%
Pacific Rubiales
$ 7,700
-9.41%
Relapasa
$ 0.17
-10.53%
CCU
$ 5,730.4
-2.57%
Canacol
$ 7,200
-6.13%
Atacocha-B
$ 0.17
-5.56%
ILC
$ 7,351.8
-2.49%
Ecopetrol
$ 2,190
-4.99%
Aceros Arequipa
$ 0.40
-4.76%
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
hlessau@credicorpcapital.com
Director of Sales & Trading
hhorta@credicorpcapital.com
EQUITY RESEARCH
EQUITY SALES & TRADING
CHILE
COLOMBIA
PERU
Hernán Arellano
Francisca Manuschevich
César Cuervo
Héctor Collantes
Head of Equities
harellano@credicorpcapital.com
Head of Equity Research
fmanuschevich@credicorpcapital.com
# (562) 2446 1798
Head of North Andean Equity Research
ccuervo@credicorpcapital.com
# (571) 339 4400 Ext 1012
Head of Equity Research
hcollantes@credicorpcapital.com
# (511) 205 9190 Ext 33052
Javier Günther
Marilyn Macdonald
Cristián Castillo
Christopher DiSalvatore
Jaime Pedroza
Fernando Pereda
Associate: Retail & Financials
cdisalvatore@credicorpcapital.com
# (562) 2446 1724
Senior Analyst: Utilities
jpedroza@credicorpcapital.com
# (571) 339 4400 Ext 1025
Senior Analyst: Cement & Utilities
fpereda@credicorpcapital.com
# (511) 205 9190 Ext 37856
International Equity Sales
jgunther@credicorpcapital.com
# (562) 2450 1695
International Equity Sales
mar_macdonald@btconnect.com
# (4477) 7151 5855
International Sales Trader
ccastillo@credicorpcapital.com
# (786) 999 1633
CHILE
PERU
COLOMBIA
Arturo Prado
Juan C. Domínguez
Iván Bogarín
René Ossa
Rodrigo Zavala
Juan A. Jiménez
Senior Analyst: Natural Resources
aprado@credicorpcapital.com
# (562) 2450 1688
Senior Analyst: Banks
jcdominguez@credicorpcapital.com
# (571) 339 4400 Ext 1026
Senior Analyst: Retail & Others
ibogarin@credicorpcapital.com
# (511) 416 3333 Ext 33055
International Equity Sales
reneossa@credicorpcapital.com
# (562) 2651 9324
Head of Equity - Peru
rzavala@credicorpcapital.com
# (511) 313 2918 Ext 36044
Head of International Equity Sales
jjimenez@credicorpcapital.com
# (571) 339 4400 Ext 1701
Andrés Ossa
Sebastián Gallego
Tamara Vasquez
Christian Munchmeyer
Ursula Mitterhofer
Santiago Castro
Analyst: Utilities, Telecom & I.T.
aossa@credicorpcapital.com
# (562) 2651 9332
Analyst: Oil & Gas
sgallego@credicorpcapital.com
# (571) 339 4400 Ext 1594
Research Assistant
tamaravasqueza@credicorpcapital.com
# (511) 416 3333 Ext 37946
International Sales & Trading
cmunchmeyer@credicorpcapital.com
# (562) 2450 1613
Sales & Trading
umitterhofer@credicorpcapital.com
# (511) 313 2918 Ext 32922
International Sales & Trading
scastro@credicorpcapital.com
# (571) 339 4400 Ext 1344
Tomás Sanhueza
Carlos E. Rodriguez
Analyst: Food & Beverages, Healthcare
tsanhueza@credicorpcapital.com
# (562) 2446 1751
Analyst: GEA & infrastructure
cerodriguez@credicorpcapital.com
# (571) 339 4400 Ext 1365
Pilar González
FIXED INCOME SALES & TRADING
Analyst: Transport
mpgonzalez@credicorpcapital.com
# (562) 2446 1768
Felipe García
Lourdes Alamos
Head of Fixed Income
fgarcia@credicorpcapital.com
Research Coordinator & Holdings Analyst
lalamos@credicorpcapital.com
# (562) 2450 1609
FIXED INCOME & ECONOMICS RESEARCH
CHILE
COLOMBIA
PERU
Gonzalo Covarrubias
Carlos Sanchez
Alfredo Bejar
Head of Capital Markets
gcovarrubias@credicorpcapital.com
Head of Fixed Income
csanchez@credicorpcapital.com
Head of Fixed Income / FX Trading
alfredobejarg@credicorpcapital.com
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
pyazigi@credicorpcapital.com
# (562) 2450 1637
Head of Research & Chief Economist
dvelandia@credicorpcapital.com
# (571) 339 4400 Ext 1505
Senior Fixed Income Analyst
ileon@credicorpcapital.com
# (511) 416 3333 Ext 37854
Head of Sales
griquelme@credicorpcapital.com
# (562) 2446 1712
RM Fixed Income Offshore
cjarrin@credicorpcapital.com
# (571) 340 2591
Local FI Senior Trader
vyong@credicorpcapital.com
# (511) 313 2902 - # (511) 313 2908
Felipe Lubiano
Sergio Ferro
Alberto Zapata
Belén Larraín
Andrés Valderrama
Evangeline Arapoglou
Senior Fixed Income Analyst
flubiano@credicorpcapital.com
# (562) 2651 9308
Fixed Income Analyst
sferro@credicorpcapita.com
# (571) 339 4400 Ext 1609
Fixed Income Analyst
azapatag@credicorpcapital.com
# (511) 205 9190 Ext 36018
Head of International FI Sales
blarrain@credicorpcapital.com
# (562) 2446 1720
Fixed Income Trader
jvalderramma@credicorpcapital.com
# (571) 323 9163
Senior International FI Trader
earapoglou@credicorpcapital.com
# (511) 313 2902 - # (511) 313 2908
Paulina Valdivieso
Camilo A. Durán
Paz Stepke
José Andrés Riveros
Lizeth Espíritu
Fixed Income Analyst
pvaldivieso@credicorpcapital.com
# (562) 2651 9337
Macro Analyst
caduran@credicorpcapital.com
# (5511) 339 4400 Ext. 1383
International Fixed Income Sales
pstepke@credicorpcapital.com
# (562) 2651 9336
Fixed Income Trader
jriveros@credicorpcapital.com
# (571) 339 4400 Ext 1180
Fixed Income Trader
lespiritu@credicorpcapital.com
# (511) 313 2902 - # (511) 313 2908
Andrés Osorio
Benjamín Diaz
Economist
aosorio@credicorpcapital.com
# (562) 2446 1760
Local Fixed Income Sales
bdiaz@credicorpcapital.com
# (562) 2446 1738