IN-DEPTH REPORT

Andean Region / Equity

20 JANUARY 2023

4Q22 EARNINGS PREVIEW: COMMODITIES PLAYS TO DOMINATE THE

SPOTLIGHT IN EARNINGS SEASON THAT COULD REVEAL THE FIRST SIGNS
OF A DOWNTURN IN THE REGION'S ECONOMIES

KEY DRIVERS

Chile: Commodities companies will remain the center of attention, though they will
share the spotlight with Utilities names. Indeed, persistently high lithium and pulp
prices will continue driving SQM and CMPC, respectively, which should continue
posting operational highs. Enel Chile and Colbun will also perform handsomely
thanks to favorable hydrological conditions and access to cheap Argentine gas.
Colombia: As usual, Ecopetrol will set the tone this earnings season, performing
solidly on the back of the oil price hike. Earnings in the Financials sector will fall
somewhat owing to a higher cost of risk, which should continue normalizing. We
expect Bancolombia to show somewhat greater resilience than Davivienda.
Peru: All eyes will be on the performance of mining companies. We anticipate a poor
quarter from SCCO on account of cost pressures and the correction of copper prices,
partially offset by the rise in molybdenum prices. But BVN’s bottom line will find some
relief thanks to softer comps, considering the Yanacocha asset reclassification. We
expect Financials’ solid earnings momentum to continue despite higher QoQ
provision expenses.

Luis Ramos Cesar Huiman

Head of Equity Strategy Analyst, Strategy
lramos@larrainvial.com chuiman@larrainvial.com
+511 611 4326 +511 611 4335

& LarrainVial Research Team

IN-DEPTH REPORT
Andean Region / Equity

20 JANUARY 2023

4Q22 EARNINGS PREVIEW: COMMODITIES PLAYS TO DOMINATE THE

SPOTLIGHT IN EARNINGS SEASON THAT COULD REVEAL THE FIRST SIGNS
OF A DOWNTURN IN THE REGION'S ECONOMIES

KEY DRIVERS CONTACT US

Chile: Commodities companies will remain the center of attention, Luis Ramos
though they will share the spotlight with Utilities names. Indeed, Head of Equity Strategy
persistently high lithium and pulp prices will continue driving SQM and lramos@larrainvial.com
CMPC, respectively, which should continue posting operational highs. +511 611 4326
Enel Chile and Colbun will also perform handsomely thanks to
favorable hydrological conditions and access to cheap Argentine gas. Cesar Huiman
Colombia: As usual, Ecopetrol will set the tone this earnings season, Analyst, Strategy
performing solidly on the back of the oil price hike. Earnings in the chuiman@larrainvial.com
Financials sector will fall somewhat owing to a higher cost of risk, +511 611 4335
which should continue normalizing. We expect Bancolombia to show
somewhat greater resilience than Davivienda. & Research Team

Peru: All eyes will be on the performance of mining companies. We

anticipate a poor quarter from SCCO on account of cost pressures
and the correction of copper prices, partially offset by the rise in
molybdenum prices. But BVN’s bottom line will find some relief
thanks to softer comps, considering the Yanacocha asset
reclassification. We expect Financials’ solid earnings momentum to
continue despite higher QoQ provision expenses.

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2
LVRS: ANDEAN EQUITY STRATEGY
20 January 2023

I. 4Q22 Earnings Preview: Commodities plays to dominate the spotlight in earnings

season that could reveal the first signs of a downturn in the region’s economies
Luis Ramos lramos@larrainvial.com | Cesar Huiman chuiman@larrainvial.com

Key drivers
Chile: Commodities companies will remain the center of attention, though they will share the spotlight with Utilities
names. Indeed, persistently high lithium and pulp prices will continue driving SQM and CMPC, respectively, which
should continue posting operational highs. Enel Chile and Colbun will also perform handsomely thanks to favorable
hydrological conditions and access to cheap Argentine gas.
Colombia: As usual, Ecopetrol will set the tone this earnings season, performing solidly on the back of the oil price
hike. Earnings in the Financials sector will fall somewhat owing to a higher cost of risk, which should continue
normalizing. We expect Bancolombia to show somewhat greater resilience than Davivienda.
Peru: All eyes will be on the performance of mining companies. We anticipate a poor quarter from SCCO on account
of cost pressures and the correction of copper prices, partially offset by the rise in molybdenum prices. But BVN’s
bottom line will find some relief thanks to softer comps, considering the Yanacocha asset reclassification. We
expect Financials’ solid earnings momentum to continue despite higher QoQ provision expenses.

Aggregate EBITDA and Net Income (in local currency, Graph I.1: Quarterly EBITDA by country (Var % YoY)
Var % YoY)
Chile (+34%; +395%): Robust operating performance will 29 34 22 122 76 12 -42 -36 -26
continue to be supported by: (i) commodities companies
(+164% YoY mining; +35% YoY pulp & paper), with SQM and 136
CMPC once again posting operational highs thanks to 100
persistently high lithium and pulp prices, respectively; and (ii) 52 61
34 39
utilities (+64% YoY), with Enel Chile and Colbun reaping the
rewards of favorable hydrology and access to cheap
Argentine gas. We expect outstanding bottom line
performance, not only fueled by operational progress in these -42 -38 -29
sectors but also from more moderate losses at Latam
2Q22 3Q22 4Q22E 2Q22 3Q22 4Q22E 2Q22 3Q22 4Q22E
Airlines, whose results should provide a sneak peak at its
lighter cost and debt structure. Chile Colombia Peru
Colombia (+39%; +30%): Moderation in operational In USD In CLP In COP In PEN
momentum and the bottom line will likely continue. As usual,
overall performance will dance to the beat of Ecopetrol (+85% Graph I.2: Quarterly net income by country (Var % YoY)
YoY; +132% YoY), which continues to benefit from higher oil
prices. On the other side, Financials will see a smaller bottom 82 6 348 122 94 5 -37 -13 17
line (-17% YoY) owing to cost of risk pressures, as these
continue to normalize. We expect Bancolombia to show 395
greater resilience than Davivienda.
Peru (-29%; +13%): Operational underperformance should
moderate, while the bottom line will show progress after two 114 136 121
consecutive quarterly drops. Mining companies (-34% YoY; 27 30 13
+18% YoY) will be the center of attention. SCCO will feel the
brunt of the combined hit of copper price drops and cost -38 -16
pressures, partially offset by a molybdenum price hike. BVN’s 2Q22 3Q22 4Q22E 2Q22 3Q22 4Q22E 2Q22 3Q22 4Q22E
net income will take a breather thanks to softer comps after
the Yanacocha asset reclassification. As for companies Chile Colombia Peru
related to domestic demand, Financials (+18% YoY) will In USD In CLP In COP In PEN
maintain their solid earnings momentum, though this will be Source: LarrainVial Research Department
tempered by higher provisions expenses in QoQ terms.

3
LVRS: ANDEAN EQUITY STRATEGY
20 January 2023

Table I.1: Chile – 4Q22 expectations by sector (in local Graph I.3: Chile – 4Q22 expected net income by company (in
currency, Var YoY) local currency, Var % YoY)

Var YoY

2958
Sector

321
256
183
Revenues EBITDA Net income

105
Consumer 8% -8% -24%

97
65
45
Mining 150% 164% 232%

36
18
17
Pulp & Paper 50% 35% 27%
Real Estate 10% 2% -24%

-4
-5
-6
-9
-14
-21
-27
-36
-39
-44
-45
Retail 8% -32% -59%

-68
Falabella -111
Utilities 48% 64% 1119%

Vapores
CMPC

BCI

Chile
Latam Airlines

Mall Plaza

CCU
CAP
Cencosud

Cencoshopp

Forus

Parauco
Enel Chile
SQM

ENELAM

Aguas
Colbun

Andina
Itaucorp

Santander
ECL
Copec

Ripley
Financials 2% n.a. 9%
Others 26% 1% 169%
LVRS Sample 35% 34% 395%
Ex - commodities 21% 13% 1350%

Table I.2: Colombia – 4Q22 expectations by sector (in local Graph I.4: Colombia – 4Q22 expected net income by
currency, Var YoY) company (in local currency, Var % YoY)
44

Var YoY
Sector
Revenues EBITDA Net income
Financials 27% n.a. -17%
12
Cement & Construction 22% 13% 12%
Oil & Gas 30% 40% 44%
LVRS Sample 29% 39% 30%
Ex - Oil & Gas 26% 13% -15%

-15

-25
Ecopetrol Cemargos Bancolombia Davivienda
Table I.3: Peru – 4Q22 expectations by sector (in local Graph I.5: Peru – 4Q22 expected net income by company (in
currency, Var YoY) local currency, Var % YoY)
108
Var YoY
Sector
Revenues EBITDA Net income
62
Mining -18% -34% 18%
Financials 19% n.a. 18%
Retail 9% 13% 5% 7 5
Cement & Construction 5% -8% -18%
LVRS Sample -2% -29% 13%
-14
Ex - commodities 11% 1% 9% -22 -22 -23
Ferreycorp
IFS

Credicorp

Unacem

Pacasmayo

SCCO
BVN

Inretail

Source: LarrainVial Research Department

4
LVRS: ANDEAN EQUITY STRATEGY
20 January 2023

II. Utilities: Yet another solid hydro generation quarter, bringing relief to earnings
despite high spot prices
Alexander Varschavsky avarschavsky@larrainvial.com | Felipe Flores fflores@larrainvial.com

Highlights
Healthy hydrology throughout the system drove up hydro generation output +46% YoY despite the 35% YoY
hike in spot prices owed to higher fuel prices. The temporary indexation mismatch in regulated PPAs continues
helping GenCos margins as contract prices are indexed to prior high fuel prices.
Indexations mainly due to high inflation keep on boosting Aguas Andinas performance, but the decline in
volumes will probably continue a little more. As for Enel Americas, the definitive deconsolidation of Enel Goias
(USD 194mn) weighed on earnings, which were also affected by BRL and PEN appreciation, though this was
offset by COP depreciation.

Performance: YoY changes in EBITDA Enel Americas: Impact of new tariffs in Peru and of Pacto de
Justicia Tarifaria in Colombia on contract prices.
Aguas-A (+15%): The downward trend in volumes persists (-
2.2%), but the +18% hike in tariffs (owed to indexations) will Table II.1: EBITDA surprises - Actual vs Consensus
more than offset this drop.
2Q21 3Q21 4Q21 1Q22 2Q22 3Q22
Colbun (+24%): Significant increase in hydro generation Colbun Miss Miss Beat Beat Beat Beat
(+77%) and new unregulated contracts are set to boost ECL Beat Miss Miss Beat Miss Miss
revenues. Fenix Peru improvements on the back of higher
ENELAM In line In line Beat Beat In line Miss
spot prices (+187%) and increased generation (+29%).
Enel Chile Miss Miss Miss Beat Miss Beat
ECL (+2.4%): Higher PPA prices owed to fuel indexation Aguas In line In line Beat In line In line In line
offset by higher energy purchases (+47%) after drops in
generation (-15%), and higher fuel costs (+27%) on account * Beat = 5% above consensus estimates. Miss= 5% below consensus
of higher fuel prices. estimates. In line = <-5%;+5%> consensus estimates. Source: Bloomberg and
LarrainVial Research Department
Enel Chile (+385%): Energy sales at higher prices were
boosted by CLP depreciation (-10%). Substantial rise in Graph II.1: Quarterly EBITDA (in reporting currency, Var YoY)
hydro generation (+50%) will boost earnings. The sale of 300 +24%
surplus LNG volumes (USD 520mn) as per Shell contract, +8% 1.7
230
ongoing high gas sales, and the availability of cheap 1.3

USDbn
USDmn

Argentine gas also should drive revenues up. 160 +2%

0.9
Enel Americas (+7.5%): Positive impact on earnings from 90
0.5
BRL and PEN appreciation (+6.1% and +3.3% respectively), 20 0.1
partially offset by COP depreciation (-19.4%). Net earnings -50 -0.4
weighed down by lingering impact of Goias sale (USD -
4Q21
1Q22
2Q22
3Q22

4Q21
1Q22
2Q22
3Q22
4Q22E

4Q22E
4Q21
1Q22
2Q22
3Q22
4Q22E

194mn).
What to watch Colbun ECL ENELAM
Aguas-A: Demand trends after one year of negative growth. +385%
Seasonality effects on demand. Recognition of Alto Maipo 900
revenues. 720
540
CLPbn

Colbun: Additional details of the PPA renegotiation with +15%

360
Codelco and contribution from Argentine gas. 180
0
ECL: Account receivables stemming from the price
4Q21

1Q22

2Q22

3Q22

4Q21

1Q22

2Q22

3Q22
4Q22E

4Q22E

stabilization mechanism and interest on new debt.

Enel Chile: Pace of renewable projects’ commissioning,
commodity hedge and gas sales contribution. Enel Chile Aguas
Source: LarrainVial Research Department

5
LVRS: ANDEAN EQUITY STRATEGY
20 January 2023

III. Commodities: Lithium will drive SQM to new EBITDA highs, Pulp strength to
continue, while Copper, IO and PM prices recovered
Juraj Domic jdomic@larrainvial.com

Highlights
Despite recent corrections, Lithium spot prices remained above USD 75/kg. A smaller price gap and volumes
guidance up to at least 36kMT (4Q22) should take SQM to a new EBITDA record.
Pulp prices remained solid though some signs of weakness emerged at YE22. The rest of commodities prices
rose despite recession fears.
Relative to LQ6 performance, we see names ranking as follows: SQM, CMPC, Copec, SCCO, BVN and CAP.

Performance: YoY and QoQ changes to EBITDA 2023 sales. Look out for updates on cash costs at Mina
Justa and forestry sourcing at Sucuriu.
SQM (+227%, +10%): EBITDA is set for a new record on the
back of Lithium performance, as realized prices continue CMPC’s tissue EBITDA margins losing their two-digits in
closing the gap vs spot prices, with volumes set to overtake 3Q22.
the 36kMT mark. The Iodine price frenzy should continue, SCCO’s cash costs (after by-products). Updates on
but SPN and Potash volumes and prices should trend down. upcoming project schedules and political unrest in Peru.
CAP (-23%, +121%): Increased IO volumes will enjoy BVN reported a pre-emptive stoppage with no impact in
additional price tailwinds but should be partially offset by production (so far). Look for updates on Uchucchacua and
higher production costs. El Brocal mining plans.
COPEC (+11%, -3%): Close to record levels thanks to
continued price strength in pulp (owing to delayed projects Table III.1 : EBITDA surprises - Actual vs Consensus
and logistical issues). The latter to be offset by partial
2Q21 3Q21 4Q21 1Q22 2Q22 3Q22
operation of the Valdivia plant.
CAP Beat Miss In line In line Miss Miss
CMPC (+49%, 0%): Likely to remain flat at record EBITDA CMPC In line Beat In line Beat Beat In line
levels on the back of pulp prices, while secondary
Copec In line Beat In line Beat Beat In line
businesses (which continue enduring higher raw material
costs) will benefit fully from the integration of Brazilian SQM Beat Miss Beat Beat In line Beat
assets and the recovery of the PM20 plant. SCCO Beat In line In line In line Miss Miss

SCCO (-32%, +21%): Stable volumes will benefit from both BVN Miss Miss Beat Beat Miss Miss
copper and molybdenum prices. Cost pressures should * Beat = 5% above consensus estimates. Miss= 5% below consensus
recede somewhat owing to higher by-product credits. estimates. In line = <-5%;+5%> consensus estimates. Source: Bloomberg and
LarrainVial Research Department
BVN (Attributable EBITDA, -35%, +75%): Expect price
tailwinds in precious metals, particularly in attributable Graph III.1: Quarterly EBITDA (in reported currency, Var YoY)
figures via copper. Silver production to remain hampered by 2.3 +227%
Uchucchacua stoppage.
2.3 +227%
-32%
1.8 -32%
1.8
What to watch +11%
1.4
+49% +11%
SQM’s realized lithium prices in 4Q22, particularly the price 1.4
+49%
USDbn
USDbn

gap vs spot, and 2023 guidance. Government to announce 0.9

-23%
0.9 -23%
its National Lithium Policy soon. -35%
-35%
0.5
CAP’s mining cash costs, particularly their distance to the 0.5
USD 47-52/MT target. Realized prices will reflect CAP’s 0.0
capacity to recover its premium over IO index. Watch out for 0.0
4Q21
1Q22
2Q22
3Q22

4Q21
1Q22
2Q22
3Q22

4Q21
1Q22
2Q22
3Q22

4Q21
1Q22
2Q22
3Q22

4Q21
1Q22
2Q22
3Q22

4Q21
1Q22
2Q22
3Q22
4Q22E

4Q22E

4Q22E

4Q22E

4Q22E

4Q22E
4Q21
1Q22
2Q22
3Q22

4Q21
1Q22
2Q22
3Q22

4Q21
1Q22
2Q22
3Q22

4Q21
1Q22
2Q22
3Q22

4Q21
1Q22
2Q22
3Q22

4Q21
1Q22
2Q22
3Q22
4Q22E

4Q22E

4Q22E

4Q22E

4Q22E

4Q22E

changes in Steel costs.

BVN CAP CMPC Copec SQM SCCO
COPEC should provide final CAPEX for MAPA BVN CAP CMPC Copec SQM SCCO

(commissioned last December) and provide guidance for Source: LarrainVial Research Department

6
LVRS: ANDEAN EQUITY STRATEGY
20 January 2023

IV. Financials: Cost of risk on the way of normalization as key driver of 4Q22
performance
Florencia Stefani fstefani@larrainvial.com | Magdalena Rosende mrosende@larrainvial.com
Carolina Guerrero cguerrerom@larrainvial.com

Highlights
Chile - Preliminary earnings reveal results remain above historical averages but trending down somewhat in
line with the smaller UF variation this quarter.
Peru and Colombia – Performance to trend down owing to higher provision expenses on account of CoR
normalization.
Loan growth starts to slow in Chile and Peru, largely explained by slower growth in the commercial segment.
We expect this to continue in both countries, and in Colombia, in tune with more challenging conditions.

Performance: YoY changes in net income The speed of inflation easing in 2023 will be a pivotal factor
in Chile, as it will determine changes to UF in the coming
Chile (banks post average +21% YoY growth): Chilean banks
quarters as well as final performance levels in 2023.
released preliminary figures, with earnings falling on average
18% QoQ. Results remain well above historical averages but Graph IV.1: Quarterly net income (in reported currency, Var
are clearly trending down since peaking in 2Q22. This was YoY)
owed to a smaller UF variation (3.50% in 3Q22 vs. 2.47% in +65%
4Q22), something that will likely continue in 2023, while CoR 500 +45% +18%
400 -45%
may have already climbed to pre-pandemic levels.
CLPbn

300
Peru (BAP +7% YoY & IFS +62% YoY): We expect quarterly 200
declines for both BAP and IFS (-15% QoQ and -31% QoQ, 100
respectively) owing to the tougher comparison base after 0
historical earnings highs in 3Q22. However, we expect a
4Q21
1Q22
2Q22
3Q22

4Q21
1Q22
2Q22
3Q22

4Q21
1Q22
2Q22
3Q22

4Q21
1Q22
2Q22
3Q22
4Q22E

4Q22E

4Q22E

4Q22E
downturn trend now mostly because of higher provision
expenses as CoR has started to normalize.
Itaucorp BCI Santander Chile
Colombia (Bancolombia -15% YoY & Davivienda -25% YoY):
We expect Bancolombia and Davivienda to record quarterly +62% +7%
drops (-25% QoQ and -37% QoQ, respectively), mainly owing 1,500
to a higher CoR, as both continue their path to normalization. 1,200
PENmn

900
However, operating income should remain strong thanks to 600
asset repricing and retail loan growth, which should offset 300
higher funding costs, against a backdrop of still high interest 0
4Q21

1Q22

2Q22

3Q22

4Q21

1Q22

2Q22

3Q22
4Q22E

4Q22E
rates.
What to watch
IFS Credicorp
For all the banks we cover: Considering the regional
slowdown and the significant rebound in higher margin -15%
segments over the past 12 months, we view the trends in 2,000
banks’ CoR and loan portfolio quality as the key 1,600 -25%
COPbn

1,200
performance drivers in 2023. 800
400
Until now, performance has been boosted by asset repricing, 0
which has piggybacked on policy rate hikes. However, this
4Q21

1Q22

2Q22

3Q22

4Q21

1Q22

2Q22

3Q22
4Q22E

4Q22E

impact will reverse once central banks start cutting rates.

Thus, the timing of accommodative cycles will play a big
part in shaping 2023 performance. Davivienda Bancolombia
Source: LarrainVial Research Department

7
LVRS: ANDEAN EQUITY STRATEGY
20 January 2023

V. Consumer: Costs and prices set to battle it out in the inflation arena
Magdalena Rosende mrosende@larrainvial.com | Carolina Guerrero cguerrerom@larrainvial.com

Highlights
We expect annual EBITDA to fall in CCU’s case, while Andina’s will likely be flat.
Quarterly performance will likely be driven by higher costs and SG&As, which will continue weighing on the
bottom line. This will likely be partly offset by higher revenues as companies try to hike prices to stay in touch
with higher inflation.

Performance: YoY changes in EBITDA Table V.1: EBITDA surprises - Actual vs Consensus

Andina (+1%): EBITDA should remain flat in YoY terms in 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22
4Q22 despite the tough comparison base. Performance Andina Beat In line In line Beat Beat Beat
likely to be shaped by higher costs against a backdrop of
CCU Beat Beat In line Beat Miss In line
high inflation and FX depreciation in the quarter, partly offset
by higher volumes at the consolidated level. The company * Beat = 5% above consensus estimates. Miss= 5% below consensus
has been active in repricing its products in line with inflation estimates. In line = <-5%;+5%> consensus estimates. Source: Bloomberg and
growth in all countries, and this has brought some relief to LarrainVial Research Department
the EBITDA margin, though costs have risen for the same
reason. The company has so far been able to navigate these Graph V.1: Quarterly EBITDA (in reported currency, Var YoY)
challenges on the back of its sound revenue & cost
management.
+1%
CCU (-15%): The company will probably record a lower 150
EBITDA, in part down to tough comps (as it posted
120
historical highs in volumes, revenues and EBITDA in 4Q21).
Higher distribution costs in 4Q22 will continue weighing on 90
CLPbn

the bottom line, owing to the bite from above average oil
60
prices and inflation. However, the company will continue
deploying operational efficiency programs to reduce SG&As. 30
In terms of volumes, these should fall somewhat on a yearly
0
basis, largely on account of lower volumes in the Chilean
4Q21

1Q22

2Q22

3Q22

4Q22E
segment. However, this should be offset by higher prices in
line with the company’s efforts to pass through higher
inflation. Andina
What to watch
200 -15%
Pricing strategies. Both companies will face increasingly
challenging conditions in the coming quarters, with less 160
room to continue hiking prices like they did in 2022. They will
strive to maintain their current volumes sold while 120
CLPbn

contending with customer migration towards lower priced

products against an increasingly testing economic backdrop 80
in 2023. Thus, their ability to keep their costs and SG&As 40
under control will be pivotal to maintain healthy margins and
drive performance as the year progresses. 0
4Q21

1Q22

2Q22

3Q22

4Q22E

CCU
Source: LarrainVial Research Department

8
LVRS: ANDEAN EQUITY STRATEGY
20 January 2023

VI. Retail: Chilean operations continue weighing on consolidated performance

Joel Lederman jlederman@larrainvial.com

Highlights
Chile: EBITDA correction on the cards this quarter after solid performance in 4Q21.
Peru: Despite protests, InRetail should deliver resilient EBITDA growth in 4Q22.

Performance: YoY changes in EBITDA Table V.1: EBITDA surprises - Actual vs Consensus
Cencosud (+0.4%): Solid top-line growth driven by the 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22
consolidation of GIGA and TFM. However, we expect a Cencosud Beat Beat Beat Beat In line Beat
contraction in EBITDA margins owing to greater promotional
Falabella Beat Beat In line Miss Miss Miss
activity.
Forus Beat In line Beat Beat Beat Beat
Falabella (-56%): Demand-side pressure in Chile will put Ripley Beat Beat In line Miss In line Miss
stress on non-banking performance, as promotional activity
is set to grow. Loan growth in the banking segment should Inretail In line Beat In line In line In line Beat
drive revenues higher, but CoR will rise in tandem and push * Beat = 5% above consensus estimates. Miss= 5% below consensus
down the bottom line. estimates. In line = <-5%;+5%> consensus estimates. Source: Bloomberg and
LarrainVial Research Department
Ripley (-55%): Soft quarterly performance owed to
department store weakness in Chile and Peru. We expect Graph V.1: Quarterly EBITDA (in reported currency, Var YoY)
healthy loan growth in the banking segment, with higher
funding and provision expenses. Aventura is performing well, +0.4%
but the tough comparison based owed to the 4Q21 one-off -56%
suggest a margin contraction is on the cards. 500

Forus (-33%): EBITDA to feel the hit of the Chilean downturn 380
(~80% of total EBITDA LTM). However, we acknowledge the 260 -33%
CLPbn

-55%
company faced a tough comparison base after a solid 4Q21.
140
InRetail (+13%): Performance to remain on upward growth
path thanks to the resilience of essential goods and the 20
operational recovery of the Pharma and Malls divisions.
4Q21
1Q22
2Q22
3Q22

4Q21
1Q22
2Q22
3Q22

4Q21
1Q22
2Q22
3Q22

4Q21
1Q22
2Q22
3Q22
4Q22E

4Q22E

4Q22E

4Q22E
-100
What to watch
Cencosud Falabella Forus Ripley
Stacked inventories. Inventories should normalize in 4Q22.
However, we believe the process could stretch out over
another couple of quarters, which will continue putting +13%
pressure on margins in the short term. 750

Portfolio quality still deteriorating in 4Q22. Essential to 600

continue monitoring asset quality going forward, especially
PENmn

450
in a year of heightened economic uncertainty. 300
Should we be shocked? Our base case is that 1H23 will be 150
difficult for retailers, though this should not come as a
0
surprise at this point. However, 2H23 could bring positive
4Q21

1Q22

2Q22

3Q22

4Q22E

news if the economy stabilizes sooner than expected.

Peru 1Q23: Although 4Q22 performance did not feel the
pinch of political turmoil, the persistence of social unrest in Inretail
January increases our caution for Peruvian operations in Source: LarrainVial Research Department
1Q23.
9
LVRS: ANDEAN EQUITY STRATEGY
20 January 2023

VII. Real Estate: 3Q22 narrative should continue in 4Q22

Joel Lederman jlederman@larrainvial.com

Highlights
We anticipate similar trends across the Real Estate space, with mid to low single-digit EBITDA growth in the
face of tough comps. Companies’ ability to pass through inflation to tenants should provide the silver lining this
quarter.
Passthrough will become a concern in 2023. Tenant rents are mostly linked to CPI, and still high inflation plus
an expected slowdown in consumption in 1H23 will test landlords’ ability to fully transfer inflation.

Performance: YoY changes in EBITDA Graph V.1: Quarterly EBITDA (in reported currency, Var YoY)

Cencoshopp (+2%): Revenues to accelerate on the back of

inflation passthrough. However, the EBITDA margin will likely +2%
90
fall in the quarter.
72
Parque Arauco (+4%): Solid top-line growth across the
board, with a downward trend in YoY margins, like in 3Q22. 54
CLPbn

Our net income estimates do not consider asset

revaluations, as these can show some volatility. 36

Mallplaza (+2%): Higher top-line levels, despite pressure on 18

margins due to higher-than-expected marketing expenses.
0
What to watch 4Q21 1Q22 2Q22 3Q22 4Q22E
How much inflation can tenants tolerate? The slowdown in Cencoshopp
consumption in 1H23 will test the ability of landlords to
transfer inflation.
+4%
Up-side risk? A sooner-than-expected improvement in the +2%
90
economy could bring enhancements to the provisioning
models of Real Estate players, which could positively impact 72
NOI in 2023. However, this is not our base case.
54
CLPbn

Table V.1: EBITDA surprises - Actual vs Consensus 36

18
2Q21 3Q21 4Q21 1Q22 2Q22 3Q22
Mall Plaza In line Beat In line Beat In line Beat 0
4Q21

1Q22

2Q22

3Q22

4Q21

1Q22

2Q22

3Q22
4Q22E

4Q22E
Parauco Beat Beat Beat In line In line Beat
Cencoshopp In line Beat Beat Beat In line In line
Mall Plaza Parauco
* Beat = 5% above consensus estimates. Miss= 5% below consensus
estimates. In line = <-5%;+5%> consensus estimates. Source: Bloomberg and
LarrainVial Research Department Source: LarrainVial Research Department

10
LVRS: ANDEAN EQUITY STRATEGY
20 January 2023

VIII. Industrials: Cyclical correction just around the corner

Luis Ramos lramos@larrainvial.com | Cesar Huiman chuiman@larrainvial.com

Highlights
Cement companies across the board will find it hard to escape from the downturn in volumes and higher
energy prices.
Performance discrepancies among companies will be down to price hikes, volume resilience and the ability to
navigate FX headwinds.
Cementos Argos should be the EBITDA outperformer this quarter.

Performance: YoY changes in EBITDA Table VI.1: EBITDA surprises - Actual vs Consensus
Cementos Argos (+13%): Top line will continue to post 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22
double-digit growth thanks to sound pricing strategies Pacasmayo Miss Beat Miss Beat In line Beat
across the company's footprint. In geographic terms, US Ferreycorp Beat Beat In line In line Beat Beat
operations will continue as the center of attention this
Unacem Beat Beat Beat In line Miss Beat
quarter. Efforts to optimize costs and logistic efficiencies
will be key to offset contraction in margins. Cemargos Beat Miss In line Miss Miss In line

Unacem (-6%): Unlike in recent quarters, weakness in * Beat = 5% above consensus estimates. Miss= 5% below consensus
estimates. In line = <-5%;+5%> consensus estimates. Source: Bloomberg and
volumes will also be felt in the central zone, offsetting the
LarrainVial Research Department
rise in prices and top line improvements. Energy costs and
raw materials pressures will continue taking a toll on Graph VI.1: Quarterly EBITDA (in reporting currency, Var YoY)
margins.
+13%
Ferreycorp (-10%): Revenues have been resilient thanks to 750
the growing weight of the spare parts & services business. 600
Although the change in mix will be positive for margins, it
will not be enough to offset the negative effects of lower FX 450
COPbn

depreciation on earnings as well as relatively higher SG&A

300
expenses.
150
Pacasmayo (-13%): Revenues under pressure again owing
to weak volumes, offset by higher prices. Pressure on 0
margins will come more from higher energy costs and SG&A
4Q21

1Q22

2Q22

3Q22

4Q22E
expenses than from the need to import clinker given the
change in demand.
Cemargos
What to watch -6%
500
Volume growth in Peru. Volumes slowed in 4Q22, -10%
confirming our view. In 2023, the well-known resilience of 400
self-construction activity will be put to the test, as the pace
300 -13%
PENmn

of economic growth is set to slow this year.

200
Energy prices. Energy prices took hurt cement companies
throughout 2022. Price behavior will be key in 2023, 100
particularly against the backdrop of subdued global growth.
0
Ferreycorp. The key question is the extent to which demand
4Q21
1Q22
2Q22
3Q22

4Q21
1Q22
2Q22
3Q22

4Q21
1Q22
2Q22
3Q22
4Q22E

4Q22E

4Q22E

for machinery will be resilient amid the deteriorating mining

investment outlook. Also, the harvest of spare parts &
services will determine the fate of top-line resilience and Pacasmayo Ferreycorp Unacem
could provide some sustainability to operating margins.
Source: LarrainVial Research Department

11
LVRS: ANDEAN EQUITY STRATEGY
20 January 2023

IX. Others: Vapores, Ecopetrol and Latam

Cristian Campos ccampos@larrainvial.com

Highlights
Vapores (Hapag Lloyd) to post lower EBITDA margins as lower freight rates feed through.
Oil uptrend to continue driving Ecopetrol’s E&P results (+40% YoY), but at a slower pace than in previous
quarters.
Latam’s lighter cost and debt structure plus expected tailwinds could boost the company’s margins in 2023

Performance: YoY changes in EBITDA Table VII.1: EBITDA surprises - Actual vs Consensus

Vapores, (Hapag Lloyd -14%, Vapores’s single underlying 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22
asset): Freight rates (index) dropped -71% YoY in 4Q22, but
Vapores Beat Beat Beat Beat Beat Beat
the company’s average rate should fall -14%, bringing down
the EBITDA margin from 55.4% in 4Q21 to 50% in 4Q22, and Ecopetrol In line In line Beat In line Beat Beat
EBITDA from EUR 4.0bn in 4Q21 to EUR 3.5mn (-17%). Latam Miss Beat Beat Miss Beat Beat

Ecopetrol (+40%): Performance to be driven by 11% hike in * Beat = 5% above consensus estimates. Miss= 5% below consensus
estimates. In line = <-5%;+5%> consensus estimates. Source: Bloomberg and
oil prices (Brent), with gross production up 4% to 720k LarrainVial Research Department
boepd. E&P EBITDA growth of 62% YoY to COP 12.5tn will
drive the company’s overall performance, as usual. Graph VII.1: Quarterly EBITDA (in reporting currency, Var
Latam Airlines (+3%). The company’s performance still YoY) -14%
reflects Covid impact, but things are increasingly 2.0
1.6
approaching normality. This is especially true for some
EURbn

1.2
operational figures that have bettered 4Q19 results, such as 0.8
Load Factor in some segments and costs (CASK). Higher oil 0.4
0.0
prices YoY (+11%) will weigh on the company’s margins.
4Q21

1Q22

2Q22

3Q22

4Q22E
What to watch
Vapores. The current SCFI spot rate is USD 1,064/TEU, Vapores
below 2020 levels but still above 2019 levels. Year-on-year +40%
underperformance has already become evident and has 25
been reflected in share prices. The question is at what level 20
15
will freight rates bottom. 10
COPtn

5
Ecopetrol. The company’s operational performance will 0
remain solid, mostly on the back of high oil prices, but oil
4Q21

1Q22

2Q22

3Q22

4Q22E

prices have already started to fall in QoQ terms, which

should lead to a lower EBITDA margin than in 2022. The
Ecopetrol
company will remain under the spotlight given the current
political situation in Colombia, although most of the new +3%
government’s measures affecting the company have already 500
400
been implemented.
USD mn

300
200
Latam Airlines. Figures up to 4Q22 continued to reflect the 100
influence of the Chapter 11 process, so a clear financial 0
picture will only emerge after 1Q23. We expect an extremely
4Q21

1Q22

2Q22

3Q22

4Q22E

challenging 2023, with some tailwinds such as the expected

drop in oil prices relative to 2022 levels and the global
depreciation of the US dollar, which could boost the Latam Airlines
company’s margins as it starts anew. Source: LarrainVial Research Department

12
LVRS: ANDEAN EQUITY STRATEGY
20 January 2023

Table 1: 4Q22 Estimates

Revenues EBITDA Net Income 4Q22 Earnings
4Q21 4Q22e YoY (%) 4Q21 4Q22e YoY (%) 4Q21 4Q22e YoY (%) Release

Utilities
Chile USD mn 6,408 7,489 17% 1,704 2,523 48% 142 1,570 1,004%
Colbun USD mn 375 483 29% 164 203 24% -55 78 241% 01 Feb
ECL USD mn 392 489 25% 71 73 2% 9 9 6% 01 Feb
ENELAM USD mn 4,514 4,502 0% 1,179 1,267 7% 119 221 86% 27 Feb
Enel Chile CLP bn 795 1,679 111% 168 814 385% 37 1,125 2958% 28 Feb
Aguas CLP bn 137 162 19% 71 82 15% 21 28 36% 23 Mar
Beverages
Chile USD mn 1,825 1,781 -2% 350 291 -17% 176 120 -31%
Andina CLP bn 687 775 13% 134 135 1% 72 65 -9% 30 Jan
CCU CLP bn 822 852 4% 155 131 -15% 74 45 -39% 28 Feb
Retail
Chile USD mn 9,214 8,996 -2% 1,237 763 -38% 549 206 -63%
Cencosud CLP bn 3,401 4,126 21% 430 432 0% 195 185 -5% 02 Mar
Falabella CLP bn 3,444 3,423 -1% 483 210 -56% 196 -22 -111% 28 Feb
Forus CLP bn 97 85 -12% 26 17 -33% 14 9 -36% 02 Mar
Ripley CLP bn 678 586 -14% 84 38 -55% 49 16 -68% 03 Mar
Peru USD mn 1,200 1,357 13% 154 180 17% 67 73 9%
Inretail PEN mn 4,829 5,285 9% 620 702 13% 269 283 5% 28 Feb
Real Estate
Chile USD mn 278 276 -1% 233 215 -7% 103 71 -31%
Mall Plaza CLP bn 92 98 7% 72 73 2% 14 11 -21% 28 Feb
Parauco* CLP bn 60 71 17% 47 49 4% 25 14 -44% 26 Jan
Cencoshopp CLP bn 78 83 7% 73 74 2% 46 39 -14% 01 Mar
Commodities
Chile USD mn 10,647 13,698 29% 2,142 3,629 69% 988 1,931 96%
CAP USD mn 907 804 -11% 304 233 -23% 110 72 -34% 31 Jan
CMPC USD mn 1,677 2,130 27% 407 604 49% 91 233 156% 26 Jan
Copec USD mn 6,979 7,676 10% 872 963 11% 467 405 -13% 03 Mar
SQM USD mn 1,084 3,088 185% 560 1,829 227% 320 1,220 281% 01 Mar
Peru USD mn 3,077 2,622 -15% 1,947 1,322 -32% 482 587 22%
SCCO USD mn 2,824 2,414 -14% 1,737 1,185 -32% 707 569 -20% 30 Jan*
BVN USD mn 253 207 -18% 210 137 -35% -225 18 108% 28 Feb
Banks
Chile USD mn 2,786 2,577 -8% 862 849 -1%
Chile CLP bn 704 793 13% 284 336 18% 30 Jan
Santander CLP bn 634 477 -25% 232 128 -45% 03 Feb
BCI CLP bn 601 778 30% 131 215 65% 31 Jan
Itaucorp CLP bn 364 306 -16% 66 96 45% 28 Feb
Colombia USD mn 1,859 1,901 2% 457 307 -33%
Bancolombia COP bn 4,753 6,439 35% 1,445 1,228 -15% 23 Feb
Davivienda COP bn 2,474 2,715 10% 333 250 -25% 24 Feb*
Peru USD mn 1,195 1,468 23% 328 399 21%
Credicorp PEN mn 3,789 4,221 11% 1,061 1,132 7% 09 Feb
IFS PEN mn 1,021 1,497 47% 261 422 62% 10 Feb*
Cement & Construction
Peru USD mn 923 998 8% 206 195 -5% 96 81 -16%
Pacasmayo PEN mn 525 538 2% 142 124 -13% 52 40 -22% 14 Feb
Ferreycorp PEN mn 1,758 1,846 5% 270 244 -10% 151 117 -23% 15 Feb*
Unacem PEN mn 1,431 1,503 5% 417 391 -6% 183 158 -14% 01 Mar
Colombia USD mn 652 644 -1% 139 128 -8% 29 26 -10%
Cemargos COP bn 2,537 3,100 22% 542 615 13% 112 125 12% 21 Feb*
Oil & Gas
Colombia USD mn 8,168 8,608 5% 3,595 4,061 13% 1,563 1,812 16%
Ecopetrol COP bn 31,761 41,443 30% 13,981 19,551 40% 6,077 8,725 44% 28 Feb*
Others
Latam Airlines USD mn 1,996 2,690 35% 386 398 3% -2,751 -66 98% 27 Feb*
Vapores** EUR mn 2,183 2,080 -5% 1,209 1,040 -14% 1,056 874 -17% 23 Feb
* Our estimates do not consider asset revaluations in 4Q22
*Approximate date, not disclosed yet.
**Vapores considers 30% of Hapag-Lloyd’s
Source: LarrainVial Research Department

13
LVRS: ANDEAN EQUITY STRATEGY
20 January 2023

Table 2: 4Q22 Earnings reports calendar

Monday Tuesday Wednesday Thursday Friday

23 Jan 24 Jan 25 Jan 26 Jan 27 Jan

Parque Arauco

CMPC

30 Jan 31 Jan 01 Feb 2 Feb 3 Feb

Banco de Chile BCI Colbun Santander

SCCO* CAP ECL

Andina CAP

6 Feb 7 Feb 8 Feb 9 Feb 10 Feb

Credicorp IFS*

13 Feb 14 Feb 15 Feb 16 Feb 17 Feb

Pacasmayo Ferreycorp*

20 Feb 21 Feb 22 Feb 23 Feb 24 Feb

Cemargos* Bancolombia Davivienda*

Vapores

27 Feb 28 Feb 01 Mar 02 Mar 3 Mar

Latam Airlines* Falabella Cencoshopp Cencosud Ripley

ENELAM Inretail SQM Forus COPEC

Mall Plaza Unacem

Enel Chile

Itaucorp

BVN

CCU

Ecopetrol*

20 Mar 21 Mar 22 Mar 23 Mar 24 Mar

Aguas

* Approximate date, not disclosed yet.

Source: LarrainVial Research Department

14
R E S E A R C H D E PA R T M E N T

Director of Research Co-Head of Research Co-Head of Research

Leonardo Suarez Financials Utilities
Managing Director Florencia Stefani Alexander Varschavsky
(562) 2339 8668 Executive Director Executive Director
lsuarez@larrainvial.com Senior Analyst Senior Analyst
(562) 2339 8597 (562) 2339 8610
fstefani@larrainvial.com avarschavsky@larrainvial.com

Head of Equity Strategy Chief Economist Corporate Credit Strategy

Luis Ramos Javier Salinas Cristian Campos
Executive Director Senior Vice President Senior Vice President
(511) 611 4326 (562) 2339 8531 Senior Analyst
lramos@larrainvial.com jsalinas@larrainvial.com (562) 2339 8425
crcampos@larrainvial.com

Consumer Senior Economist Basic Materials Financials

Joel Lederman Francisco de la Cerda Juraj Domic Magdalena Rosende
Vice President Senior Associate Senior Associate Senior Associate
Senior Analyst (562) 2339 8289 Senior Analyst Senior Analyst
(562) 2339 8047 fdelacerda@larrainvial.com (562) 2519 8029 (562) 2616 5264
jlederman@larrainvial.com jdomic@larrainvial.com mrosende@larrainvial.com

Corporate Credit Utilities Equity Strategy Financials

Lucas Howard Felipe Flores Cesar Huiman Carolina Guerrero
Senior Associate Associate Associate Associate
Senior Analyst Analyst Analyst Analyst
(562) 2339 8698 (562) 2519 8041 (511) 611 4335 (562) 2339 8516
lhoward@larrainvial.com fflores@larrainvial.com chuiman@larrainvial.com cguerrerom@larrainvial.com

PUBLISHING & CORPORATE ACCESS

Head of Institutional Client Editing Design Research Support

Relationships David Arenas Bernardita Ebensperger Paulina Ordenes
Consuelo Solis (562) 2616 5649 (562) 2616 5659 (562) 2339 8591
(562) 2339 8639 darenas@larrainvial.com bebensperger@larrainvial.com pordenes@larrainvial.com
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