1. business and industrial

QUARTERLY RESULTS OUTLOOK
Analysis Bancolombia: Colombian Equity/Macro Research
Colombia: Special Report I April 28, 2015
1Q15 Results Expectations
For companies in the Colombian market 1Q15 means the beginning of a new era in
financial reports: the era of international accounting standards known as IFRS
(International Financial Reporting Standards), a set of standards and accounting
financial and accounting policies that are being implemented around the world since
2005 and have arrived in Colombia in 2015 after a long process of legal, institutional
and corporate definitions.
Although some companies have been working on the issue for quite some time and
while some others listed in other markets have already adopted these standards, the
fact is that for most of them this is the first time that the norm is applied. Likewise, it is
the first time that many investors will be faced with understanding the new figures
revealed, which in our opinion is a major challenge.
No strangers to this situation here at Valores Bancolombia we have been conducting
an analysis of the main changes brought by the application of these accounting
standards and while the conclusions will be included in a later and more detailed report
we can anticipate that our main conclusion is that rather than changing the notion of
the value companies can generate in the ordinary course of business the IFRS imply a
change in the language in which results are expressed.
COLCAP’s 1Q15 evolution (base 100)
1800
1T15
1700
1600
1500
1400
1300
1200
Apr-14
Jul-14
Oct-14
Jan-15
Source: Grupo Bancolombia, Bloomberg
So, while we are comfortable with target prices and investment recommendations we
have issued in previous analyzes, we recognize the complexities this issue brings in
terms of interpretation of financial statements.
That is why on this occasion, in the absence of previous IFRS accounting figures and
considering a still partial or minimal disclosure and explanation of the accounting
policies each company has decided to adopt, we have concluded that it wouldn’t be
reliable to approach IFRS results from our current ColGAAP base projection and also
that it makes little sense to present our results expectations in the previous standard.
Consequently, this time we have chosen to provide our expectations not in accounting
and financial terms but from the perspective of the analysis of the performance of key
macroeconomic and operational variables which have an impact on the companies
under coverage as well as some qualitative and informative aspects.
Therefore, we would maintain this way of presenting results expectations until the basis
of quarterly IFRS reports completes an analysis horizon broad enough to structure a
new projection base built on this accounting standard, which according to institutional
decisions would take place in 4Q15, once all 2014 and 2015 quarters are available.
We reiterate our view on the fundamental value of companies which does not change
under the change in international accounting as the cash flow is the same in both
accounting standards. You’re welcomed to read the following analysis.
1
Analysts
Name:
Phone:
E-mail:
Jairo Julián Agudelo Restrepo
(574) 6047048
[email protected]
Name:
Phone:
E-mail:
Juan Camilo Dauder
(574) 604 98 21
[email protected]
Name:
Phone:
E-mail:
Maria Paula Cortés
(571) 353 66 00 ext 37387
[email protected]
Name:
Phone:
E-mail:
Diego Buitrago Aguilar
(571) 746 39 84 ext 37307
[email protected]
Name:
Phone:
E-mail:
Germán Zúñiga Saavedra
(574) 604 70 45
[email protected]
Name:
Phone:
E-mail:
Federico Pérez García
(574) 604 81 72
[email protected]
Apr-15
Quarterly Results Outlook
April 28, 2015
Macroeconomic Balance at the Start of 2015
Figure 1 – National and urban unemployment
February every year (% of EAP)
19.0
Total national
17.6
16.3
15.9
17.2
15.7
14.1
13.9
12.9 12.6 13.6 13.5 13.2 12.5
12.3
12.5 12.6 12.9
12.8
11.9 11.8
12.0
11.2
10.7
10.0
9.9
14.2
Source: Grupo Bancolombia, DANE
Figure 2 – Growth in industrial production ex-coffee
threshing (annual % var.)
Industrial industrial
production
Producción
sinex-coffee
trilla de café (YoY%)
threshing (YoY%)
15%
2
0%
-1,3%
-5%
-1,6%
-10%
Dic-14
Feb-15
Oct-14
Ago-14
Abr-14
Jun-14
Dic-13
Feb-14
Oct-13
Ago-13
Abr-13
Jun-13
Dic-12
Feb-13
Oct-12
Ago-12
Abr-12
Jun-12
Dic-11
Feb-12
Oct-11
Ago-11
-15%
Source: Grupo Bancolombia, DANE
Figure 3 – Retail sales (annual % var.)
30%
Total Comercio Minorista sin Combustibles
25%
Total Comercio Minorista sin Combustibles ni Vehículos
20%
15%
10%
8.49%
5%
4,77%
0%
-5%
Source: Grupo Bancolombia, DANE
Feb-15
Nov-14
Ago-14
Feb-14
May-14
Nov-13
Ago-13
Feb-13
May-13
Nov-12
Ago-12
May-12
Feb-12
Nov-11
Ago-11
-10%
Feb-11
In terms of international trade, Colombian foreign sales continued their downtrend in
February, although at a slower rate of decline. Indeed, according to the DANE –national
statistics agency– exports totaled USD3,128mn in February, down 26.8% YoY. It is
noteworthy that the loss is seen in both traditional and non-traditional exports. The
former went down from USD3,005mn in February 2014 to USD2,008mn in February
2015 (-33.2%) while non-traditional fell 11.6% YoY affected by variations of -9.7% in
manufacture exports group and -70.3% in the other sectors category. On the other
hand, as of January the exchange balance showed that net inflows of FDI fell from
USD3,639mn in March 2014 to USD3,378mn in March 2015 due to the decline in
investment flows into the oil and mining sector, which went from USD3,000mn in 1Q14
to USD2,695 in 1Q15. This drop was in line with a substantial fall in net portfolio
investment flows which went from USD2,660mn in 1Q14 to USD982mn in 1Q15.
5%
Feb-10
As for confidence, March results reported by Fedesarrollo came unfavorable. On the
one hand, retail confidence stood at 20.3%, dropping 1.1 pps vs. February and 8.5-pp
lower than in March 2014. On the other hand, the consumer confidence index reached
2.3%, falling 11.7 pps vs. February and 16.2 pps vs. March 2014. Thus, now household
confidence is at its lowest since July 2009.
Industry
(YoY%)
Ventas
de lasales
industria
(YoY%)
10%
May-10
Moreover, the most recent figures on the performance of retail and household
purchases suggest a slowdown at the start of 2015. Indeed, in February retail expanded
4.3% YoY; excluding fuel, the YoY variation stood at 4.77%. Sales were driven by
alcohol, cigarettes and tobacco products (17.5%), hardware (17.1%) and other goods
for personal and domestic use (13.3%). In contrast, sales of vehicles and motorcycles
dropped 11.3% YoY and sales of books, stationery and school supplies had a variation
of -7.9%. In the case of the ongoing decline in sales of vehicles the effect of FX
depreciation is evident.
Nov-10
In the foreign trade front, figures of traditional and non-traditional exports continue to
decline, affected by the drop in oil prices and other commodities. In addition, we had
weak dynamics of industrial production, measured by the monthly manufacturing survey
which while reducing the rate of decline lost 1.3% YoY in February. However, industrial
confidence shows signs of recovery YTD. Specifically, at the end of 1Q15 the industrial
confidence index stood at 4.1%, higher than a year ago (2.8%).
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Ago-10
Regarding the labor market, in February unemployment in the 13 largest cities stood at
10%, a 1.2 pps drop vs. February 2014 (11.2%). Nationally, the unemployment rate
rose from 10.7% in February 2014 to 10% in the same month of 2015. The final result
of urban unemployment is explained by a 351,000 increase in employed people (3.5%
YoY) which compares favorably with figures of job creation in February 2014 (257,000).
This shows that job creation remained favorable, in line with results seen in January.
13 cities
16.0
May-11
The report on economic growth at the end of 2014 showed an annual increase in GDP
of 3.5% in 4Q14 and of 4.6% for FY2014, down from 4.9% in 2013. The components of
domestic demand are shown to be slowing and on the supply front tradable sectors
remained in negative territory, which contrasts with the expansion rate of construction.
At the beginning of 2015 leading indicators suggest that the slowdown has remained.
For example, the Economic Monitoring Indicator (indicador de seguimiento económico,
ISE) grew 3% YoY in January, lower than the figures recorded in December (4.2%) and
a year ago (5.8%). Consequently, we expect GDP to grow about 3% in 1Q15.
Quarterly Results Outlook
April 28, 2015
Finally, regarding inflation in March 2015 consumer prices recorded a monthly variation
of 0.59%, 20-bp higher than in March 2014 and below our expectation (0.83%). With
this result, the annual increase in CPI stood at 4.56%, above the upper limit of the
inflation target range (4%) and the highest since May 2009, when annual inflation
posted 4.77%. It is worth noting that food accumulated an annual variation of 7.36%,
the highest since early 2009.
However, it is worth noting the recent recovery in oil production in 1Q15, which could
contribute to the moderate recovery in the mining and quarrying sector in 1Q15’s GDP.
With the information available, we maintain our view that the economy will grow 3.4%
in 2015, below the expectations of the Central Bank (3.6%) and the Government
(3.5%-4%).
Table 1. Semaphore of activity leading indicators
GDP
Household consumption
Investment
Inflation
Urban unemployment
Job creation
Exports
Traditional
Non traditional
Imports
YoY % change
YoY % change
YoY % change
YoY % change
% of active population
Thousands
YoY % change
YoY % change
YoY % change
YoY % change
Latest reading
A period ago A year ago Vs a period ago Vs a year ago
Date
Value
4Q14
3.5
4.2
6.1
4Q14
5.1
4.1
4.2
4Q14
8.5
10.1
13.8
March
4.6
4.4
2.5
February
10.0
11.8
11.2
February
352
345
257
February
-26.8
-40.2
-8.5
February
-33.2
-48.6
-5.9
February
-11.6
-15.4
-14.1
January
0.8
11.2
-6.6
Consumption
Capital Goods
Retail sales
Vehicle sales
Consumer confidence
Energy demand
Industrial production
Manufacturers confidence
Oil production
Construction licenses
Cement dispatch
Total lending
Commercial lending
Consumption lending
Mortgage lending
Consumption lending
YoY % change
YoY % change
YoY % change
Units
Index
YoY % change
YoY % change
Index
daily thousands of barrel per day
YoY % change
YoY % change
Real YoY % change
Real YoY % change
Real YoY % change
Real YoY % change
Real YoY % change
January
January
February
February
March
February
February
March
March
February
February
January
January
January
January
January
Indicator
Unit
-6.6
21.3
4.8
22,518
2.3
3.0
-1
4.1
1,021
-4.4
13.3
11.4
12.2
9.8
10.3
3.0
9.5
6.1
7.4
21,512
14.0
2.7
-4
7.3
1,027
-0.5
8.3
10.5
10.1
10.0
11.6
4.2
-6.3
-12.6
7.5
24,371
18.5
6.4
4
2.8
977
1.8
10.7
11.4
10
9.9
13
5.8
Pisitive but less than previous period
Much more negative than the previous period
Better than previous period
Source: Grupo Bancolombia, DANE, Econometría, Fedesarrollo, ANH, SFC
3
Quarterly Results Outlook
April 28, 2015
CELSIA (BUY) – Consolidation of Operations in Central
America Will Offset Weakness in Colombia
Expected Date: To Be Confirmed
We expect Celsia’s 1Q15 consolidated results to be favored by the consolidation of
100% of operations assets acquired in late 2014 in Central America. Excluding this
effect to make the analysis comparable with 1Q14, we anticipate some weakness in the
operating results in Colombia mainly due to: i) the decrease in EPSA’s hydroelectric
generation (-20% YoY) given the lower water inflows in the department of Valle during
the quarter (84% of the historical average), and ii) the impact of tax reform in terms of
the wealth and CREE taxes.
Nevertheless, we expect a better operating performance vs. 4Q14 supported by the
greater participation of thermal power plants and the favorable spot prices which
increased 13% compared to 1Q14 and 3% QoQ. Thus, we highlight the benefits of
Celsia’s balanced portfolio of assets which would allow the company to have a basically
stable behavior in power generation (-1% YoY), without affecting the business strategy.
For this, it is foreseeable that the company complements power production with
additional purchases in the market.
Finally, regarding the consolidation of operations in Central America, we expect it to
positively impact Celsia’s revenues and profit, once non-recurring events that affected
4Q14 results are overcome.
ISAGEN (HOLD) – Sogamoso’s Positive Impact
Expected Date: May 4
For 1Q15, we expect Isagen to report good operating and financial performance vs.
1Q14 thanks to the increased power production provided by Sogamoso. It is important
to note that the Sogamoso hydroelectric megaproject started commercial operation on
December 20th, 2014, and within days its contribution in power generation added
positively to 4Q14 results and therefore for 2015 we expect the full operation of this
plant to positively and significantly impact Isagen’s results.
We highlight the expected 23% YoY growth in power generation in 1Q15, although it is
important to note that without the base effect of the contribution of Sogamoso,
generation from other plants would decrease 11% vs. 1Q14 due to lower water inflows
during the quarter. In this vein, we expect Isagen to continue the aggressive marketing
strategy with a YoY increase of 13% in contract sales while maintaining their active
participation in the spot market (11% YoY). Furthermore, higher generation would imply
a significant reduction in energy purchases which would positively impact operating
margins.
However, non-operating results could moderate the outstanding operational
performance mainly due to: i) higher interest expense by the accrual of interest
associated with debt to finance Sogamoso, and ii) the impact of the tax reform in terms
of the wealth and CREE taxes.
4
Table 2 – Celsia’s consolidated 1Q15 results
expectation (*)
Power generation (GWh)
Energy sales (GWh)
Contracts (GWh)
% of contracts
Spot market
% of spot market
Energy purchases (GWh)
Purchases / Generation (% )
Contract sales / Generation (% )
1Q15E
1,717
1Q14
1,740
Var.%
-1.3%
2,337
1,168
50%
1,168
50%
619
36%
68%
2,196
1,079
49%
1,117
51%
457
26%
62%
6.4%
8.2%
4.6%
35.4%
(*) Operations in Colombia
Source: Grupo Bancolombia, Celsia
Table 3 – EPSA’s 1Q15 results expectation
1Q15E
830
1Q14
1,039
Var.%
-20.1%
Energy sales (GWh)
Contracts (GWh)
1,107
816
1,198
692
-7.6%
17.9%
% of contracts
Spot market
% of spot market
Energy purchases (GWh)
74%
291
26%
277
58%
506
42%
160
Purchases / Generation (% )
Contract sales / Generation (% )
33%
98%
15%
67%
Power generation (GWh)
-42.5%
73.1%
Source: Grupo Bancolombia, Celsia
Table 4 –ISAGEN’s 1Q15 results expectation (COPmn)
1Q15E
Power generation (GWh)
Energy sales (GWh)
Contracts (GWh)
% of contracts
Spot market
% of spot market
Exports (GWh)
Energy purchases (GWh)
Purchases / Generation (% )
Contract sales / Generation (% )
Source: Grupo Bancolombia, Isagen
3,701
3,845
2,912
76%
933
24%
0
145
4%
79%
1Q14
2,999
3,434
2,585
75%
840
25%
9
435
14%
86%
Var.%
23.4%
12.0%
12.6%
11.1%
-96.4%
-66.6%
Quarterly Results Outlook
April 28, 2015
EEB (HOLD) – Emgesa: Increased Generation Would Favor
Quarterly Results
Expected Date: To Be Confirmed
We believe that Emgesa’s 1Q15 results should show a good performance vs. 1Q14,
due to the positive behavior in power generation (7% YoY) thanks to improved relative
conditions in terms of water inflows in the central region and the Salaco project
repowering. This, added to the favorable outlook for energy prices, should boost
Emgesa’s revenues. Furthermore, higher generation would imply a moderate reduction
in energy purchases, which would positively impact operating margins.
However, non-operating results could affect net results primarily due to the impact of
the tax reform in terms of the wealth and CREE taxes.
ECOPETROL (SELL) – Stronger Impact of Oil Prices vs. 4Q14
Table 5 – Emgesa’s 1Q15 results expectation
(COPmn)
Power generation (GWh)
1Q15E
3,202
1Q14
2,991
Var.%
7.1%
3,707
2,545
69%
1,162
31%
552
17%
79%
3,677
2,533
69%
1,144
31%
686
23%
85%
0.8%
0.5%
Energy sales (GWh)
Contracts (GWh)
% of contracts
Spot market
% of spot market
Energy purchases (GWh)
Purchases / Generation (% )
Contract sales / Generation (% )
1.6%
-19.5%
Source: Grupo Bancolombia, Emgesa
Expected Date: To Be Confirmed
For 1Q15 we expect Ecopetrol to increase production to 778 kboed from 765 kboed in
4Q14, explained by the higher production shown in their main fields and especially
Chichimene, where we expect production to reach around 80 kboed vs. 67 kboed in
4Q14.
Although the mentioned increase in production is a factor to highlight in the operation of
the company we believe it’s important to note that this won’t mean increased revenues
given the significant quarterly 33.6% drop from USD73.2/bbl to USD48.6/bbl in WTI
prices.
Due to this fall we expect the company’s basket of crude and products to stand at
USD45.8/bbl and USD61.3/bbl falling 27.2% and 24.1%, respectively.
Importantly, we are waiting for the company to publish their 2030 strategic plan which
will include new production targets and plans of investment in exploration and refining
for the next 15 years. As mentioned by the new CEO Juan Carlos Echeverry, the
company won’t introduce changes to corporate structure but redefine its focus.
Table 6 – Ecopetrol’s 1Q15 operating figures
1Q15E
1Q14
Var.%
Oil production (kboed)
Gas production (kboed)
645
133
629
136
Total production (kboed)
2.5%
-2.2%
778
765
1.7%
WTI spot price (USD/bbl)
Oil basket
49
46
73
63
-33.6%
-27.2%
Gas basket
20
23
-12.1%
Products basket
61
81
-24.1%
Source: Grupo Bancolombia, Ecopetrol
CANACOL ENERGY (SPECULATIVE BUY) – Impact of Oil
Prices Reflected in Financial Results
Expected Date: To Be Confirmed
For calendar Q1 (fiscal Q3) we expect Canacol Energy to experience a slight 2.8%
decrease in production, to 11.82 kboed, mainly due to declines in the Rancho Hermoso
and Ecuador fields. For the LLA-23 and Esperanza fields we expect a basically stable
production.
As with Ecopetrol, we expect the company to reflect lower revenues given the sharp
drop in the WTI seen in the quarter (33.6%) which would lead the company’s average
sales price to stand at USD33. 8/bbl, 25.8% lower than 4Q14’s when the price was
USD45.6/bbl.
Finally, we are waiting for Canacol to publish their 2015 investment plan which,
according to the company, hasn’t been published since they expect to include the
recent exploration discovery in the Clarinet well, a cornerstone for the development of
the natural gas strategy.
5
Table 7 – Canacol’s 1Q15 operating figures
1Q15E
1Q14
Var.%
Oil production (kboed)
8.25
8.59
Gas production (kboed)
3.24
3.24
0.0%
Total production (kboed)
11.49
11.83
-2.9%
WTI spot price (USD/bbl)
48.6
73.2
-33.6%
Average selling price (USD/boe)
33.8
45.6
-25.8%
Source: Grupo Bancolombia, Canacol
-4.0%
Quarterly Results Outlook
April 28, 2015
CEMENTOS ARGOS (BUY) – Affected by Price Pressure on
Northern Coast and IFRS Adjustments
Expected Date: Last Week of May
Cementos Argo’s financial results could see revenues favored thanks to two main
reasons: i) the good performance in construction in the US, where housing starts went
up 4.7% in 1Q15, reaching 2.9mn units, as well as the recovery in prices and the
consolidation of the operation to a more depreciated exchange rate, and ii) the good
behavior of domestic demand in Colombia where cement production grew by 11%,
while cement dispatches grew by 10% YoY.
However, the potential impact on profit margins is difficult to estimate as during 2H14
there was strong competition on the northern coast of the country that generated
contraction in the company’s operating margin and EBITDA. Despite this, we believe
that the devaluation of the exchange rate may have resulted in decreased imported
cement and clinker, taking into account the loss of competitiveness, which could favor
the financial statements of the cement company.
Table 8 – Evolution of production and shipments of
cement in January – February (tons)
Cement production (tons)
Cement dispatches (tons)
1Q15E
8.25
3.24
1Q14
8.59
3.24
Var.%
-4.0%
0.0%
11.49
11.83
-2.9%
USA home starts (mn units)
Source: Grupo Bancolombia, DANE, Bloomberg
It is also important to note that the company decided to reflect the wealth tax through
the balance sheet, so a significant impact on net profits coming from this particular tax
is not expected.
NUTRESA (HOLD) – Lower Margins but Stable Results
Expected Date: May 29
Table 9 – Commodity Index in USD
Grupo Nutresa maintains a net exposure to the FX rate close to USD250mn, of which
the company hedges about 20%-30%, so the devaluation trend seen in 1Q15 could
have a negative impact on profit margins.
Moreover, our calculation of Nutresa’s commodity index suggests that during 1Q15 this
decreased 13.4% in USD, while growing 6.6% in Pesos, taking into account the FX
devaluation which will have a negative impact on profit margins.
150
140
130
126
120
108
110
97
107
100
89
90
80
Despite these differences, it is important to highlight that even though experiencing a
slight slowdown domestic consumption maintains good indicators with retail excluding
fuel and vehicles growing 9.33% YTD as of February, while food and non-alcoholic
beverages expanded 8.77%, which should keep the company’s good momentum in
sales.
Source: Grupo Bancolombia, Nutresa
Table 10 – Commodity Index in COP
270
250
230
210
GRUPO EXITO (BUY) – Affected by Fierce Competition and
Non-Recurring Expenses
Expected Date: Last Week of May
190
170
6
Source: Grupo Bancolombia, Nutresa.
abr-15
ene-15
jul-14
oct-14
abr-14
ene-14
oct-13
jul-13
abr-13
ene-13
oct-12
jul-12
abr-12
ene-12
oct-11
jul-11
abr-11
As with retail, supermarkets’ sales in Colombia have also shown a good momentum
since according to the DANE –national statistics agency– revenues grew 13.1% in the
first two months of year, from net sales of COP5.76bn in Jan-Feb 2014 to COP6.51bn
in Jan-Feb 2015, respectively. It is also important to note that the growth in staff in
supermarkets also grew 6.3% in Jan-Feb, in line with the good trend in revenues.
ene-11
150
abr-15
ene-15
jul-14
oct-14
abr-14
ene-14
jul-13
oct-13
abr-13
ene-13
jul-12
oct-12
abr-12
ene-12
jul-11
oct-11
abr-11
70
ene-11
However, it is important to note that since March this year the company began
consolidating their recent purchase of Grupo El Corral, whose profit margins are higher
than Nutresa’s consolidated results, which is why we expect this consolidation to help to
partially offset the contraction in the margin coming from the two aspect initially
addressed.
Quarterly Results Outlook
April 28, 2015
Moreover, we believe that the sharp devaluation would have a positive impact on Grupo
Exito’s sales performance as their exposure to imported product is much lower than
amongst some competitors like PriceSmart or Cencosud.
It is also important to note that the company began consolidating the acquisition of
Super Inter in 4Q14 which, added to special sales event Aniversario Exito held between
February 27th and March 18th 2015, while it was held from March 28th to April 16th 2014,
generates positive expectations in sales but lower performance in profit margins
considering that SuperInter, a discount format, has lower margins compared to other
formats of Grupo Exito.
In addition, Grupo Exito decided to reflect the wealth tax on their P&L, something that
would put downward pressure on bottom line during 1Q15.
AVIANCA (BUY) – Stable Results
Expected Date: To Be Confirmed
Given the sharp decline in jet fuel prices during 1Q15 which stood at USD162.1/gallon,
dropping 45% from the USD293.1/gal in 1Q14, or 40% vs. the average price in 2014 of
USD269.3/gallon, we expect the company’s profit margins to display a substantial
recovery.
Furthermore, operational statistics for the first two months of the year are quite positive
with the load factor averaging 80% (74.9% local and 81.5% international), while it stood
at 79.4% in the same period last year (77.4% local and 79.9% international), which
should have a positive impact on the profitability of flights and therefore in consolidated
financial statements.
It is also important to note that the company is carrying out significant investments in
training and logistics centers in Bogota and Rionegro (near Medellin) to improve
operations looking forward, which could bring non-recurring costs in their financial
statements.
It is also important to note that Avianca Holdings report their financial statements in
USD, thus consolidating operations in Colombia, which can represent 15%-20% of total
revenues, would not have a significant impact on the consolidation of financial
statements.
7
Table 12 – Avianca Holdings’ operating figures
Passengers
International
Domestic
ASK
International
Domestic
RPK
International
Domestic
Load Factor
International
Domestic
1Q15
6,680
2,672
4,008
10,549
8,174
2,375
8,332
6,568
1,764
79.0%
80.4%
74.3%
Source: Grupo Bancolombia, Avianca Holdings
1Q14
6,189
2,569
3,620
9,861
7,798
2,063
7,734
6,140
1,594
78.4%
78.7%
77.3%
Var.%
7.9%
4.0%
10.7%
7.0%
4.8%
15.1%
7.7%
7.0%
10.7%
55.4
161.4
-299.2
Quarterly Results Outlook
April 28, 2015
Results Expectations – Infrastructure Sector 1Q15
During the first quarter the infrastructure sector showed dynamism in pursuing 4G
projects. On the one hand, several contracts of the first wave were signed which
include: i) Mulalo-Loboguerrero (highway), ii) Conexion Autopista Norte (highway),
among others; on the other hand, in PPPs of private initiative, the Segunda Calzada
Ibague-Cajamarca project (highway) was awarded to the consortium Promisa de
Sociedad Futura GICA S.A., which already signed the commencement act.
Regard the second wave projects, the ANI –national infrastructure agency– published
the final specifications, starting the bidding process, in compliance with the schedule
initially established.
Additionally, progress was made in road infrastructure projects such as i) start digging
tunnel 2 in the El Tablon- Puente Tellez sector, ii) opening the Variante Oriental de
Sincelejo (highway) and the Circunvalar de Monteria (ring road), continuity in the Via al
Mar project (highway), among others .
Advances in airport infrastructure:
 Expansion of the El Dorado airport - Structuring of El Dorado 2

Additional works at Simon Bolivar airport, Santa Marta

Publication of final specifications for the airports in Armenia, Popayan and
Neiva

Modernization of airports in Antioquia, Cordoba and Sucre

Signing the contract to modernize the airport of Barranquilla
Progress in railway infrastructure:

Opening of the Red Ferrea del Pacifico (railway network), Valle del Cauca
So far in the second quarter the tender process for several projects have been
completed with consortia submitting proposals of interest. Unlike the first wave, there
have been many more interested parties (between 4 and 7 proponents with significant
international participation) and in our opinion there’s been commitment and compliance
of the Government. In addition, other two PPPs of private initiative were awarded (Malla
Vial del Meta and Segunda Calzada Chirajara-Villavicencio, both highways) which is
why we keep recommending the companies participating in this sector.
CONCONCRETO (BUY) –
Expected Date: May 27th
During the first quarter Conconcreto displayed dynamism in their portfolio of projects
and the execution of new contracts where we highlight: i) the development and
construction of the sixth Gran Plaza shopping center in Soacha, ii) signing the contract
to execute the final works in the La Linea tunnel for COP105,000mn, iii) the initial stage
of the construction of Avianca’s operating experience center in Bogota, iv) delivery of
an industrial plant for production of clinker to Panam cements in the Dominican
Republic (70 tons/hour ), v) Hidrocucuana (55MW of installed capacity) is in its final
stage to be delivered to Empresa de Energia del Pacifico where they built a 5km
tunnel, vi) the Rafael Uribe Uribe viaduct in Sabaneta whose construction has
advanced 35% and will be delivered in December this year, among other national and
international projects.
The company hasn’t been very active in 4G projects but one of the most important
drivers now is the real estate partnership signed with Grupo Argos, where Conconcreto
will contribute with about COP818,000mn in real estate assets. In the coming days the
companies will provide information regarding the financial vehicle for the operation.
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Quarterly Results Outlook
April 28, 2015
EL CONDOR (HOLD) – An active player in the 4G concession
program
Expected Date: May 29th
We expect solid operational results. As relevant facts in the first quarter the company
signed the contract for road repairs in Medellin for COP10,000mn which is incorporated
into the backlog; additionally, the company was given until June 2017 for the
construction of the Vias de las Americas concession granting. Finally, the company
signed two contracts with Airplan for paving the runways in Carepa (COP12,000mn)
and Monteria (COP9,800mn), figures incorporated into their backlog.
Regarding 4G projects, the company received approval of feasibility (and publication in
the SECOP [Electronic Systems for Public Procurement]) for the PPPs of private
initiative Cesar-Guajira (100%) and Malla Vial del Meta (11%), the latter awarded on
April 6th to the consortium where El Condor has a stake.
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Quarterly Results Outlook
April 28, 2015
Equity Sales
Equity Research
Rupert Stebbings
Jairo Agudelo
Equity Markets Vice President
Head of equity research
[email protected]
[email protected]
+574 6045138
+574 6047048
Natalia Agudelo Parra
Juan Camilo Dauder Sánchez
Equity Sales
Head Energy Analyst
[email protected]
[email protected]
+574 6045144
+574 6049821
Maria Paula Cortés Durán
Fixed Income
Pablo Caicedo
Head Financial & Small Cap
[email protected]
+571 353 6600 ext 37387
VP International Business
[email protected]
Diego Buitrago Aguilar
+571 488 6000
Energy Analyst
[email protected]
Economic Research
+571 7463984 ext 37307
Juan Pablo Espinosa
German Zúñiga Saavedra
Head of Economic Research
Infrastructure and Industry Analyst
[email protected]
[email protected]
+571 7463991 ext. 37313
+574 6047045
Alexander Riveros
Senior Economist
[email protected]
+571 7463980 ext 37303
Federico Perez Garcia
Oil & Gas Junior Analyst
[email protected]
+574 6048172
Research Assistant
Claudia Restrepo
Research Editor
[email protected]
+574 404 3809
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Quarterly Results Outlook
April 28, 2015
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