Result Estimate for 3Q13

Transcription

1 3Q13 Result Estimate for 3Q13 As for our next report on 3Q13 for the companies covered by CorpResearch, at an aggregate level we expect our sample s result (measured in Chilean pesos) to continue to be similar to that observed during the past two quarters. Hence, the EBITDA should increase by 7.3% annually, whereas the margin should go up to 15.1% showing a slight fall of 0.7 pp, as income would expand by 12.1% YoY. At a profit level, we expect they should show a sharp increase of 56.6% YoY, with the net margin improving by 1.9 pp, adding up to 6.7%. In our opinion, income growth will go up to levels above those observed in 2Q13, which could be associated with the increase in commodity prices and a depreciation of the Chilean Peso (which would favor the translation into Chilean Pesos of the income made by companies reporting in US dollars). The increase in the EBITDA would be linked with the aforementioned growth in sales, in spite of the lower operating margin expected. Regarding income by industry, the increase in the EBITDA would be mainly motivated by the forestry sector (+30.2% YoY) and the retail (+10.5% YoY) sector, which should explain 56% and 25% of the increase, respectively. With a lower impact at an aggregate level, the improvement of the soft drink and wine sector (+18.0% YoY) and others (+13.8% YoY) should also be noted. Both the electricity and the utility sector would revert the good performance reported in 2Q13, experiencing a contraction of 5.3% YoY associated to the lower income generated by their overseas affiliates. At an individual level, the companies with the highest increase in their EBITDA would be Copec (increase in paper pulp prices), AntarChile (income of its affiliate Copec), Cencosud (margin improvement) and Endesa (margin improvement). On the other hand, the greatest contractions in gross operating income would be reported by Colbún (margin reduction due to a higher cost structure), Enersis (distribution business of its overseas affiliates) and Entel (similar to 2Q13, due to a change in the accounting method for the cost of mobile equipment). Finally, the banking sector would report a favorable performance for all its entities, with an overall profit increase of 63.3%. Our main assumptions regarding the income of the companies under our coverage are presented below: CorpResearch 2013-October-25 3Q13 Estimates CorpResearch 2013 Octobre - 25

2 Company Date of Report Comments AES Gener Nov 6 The Company s EBITDA would experience a contraction of 20.8% YoY, mainly due to a lower income experienced by the Colombian affiliate Chivor, affected by a drought that has reduced generation levels and energy sales to the spot market. The higher income level expected for the parent company could be explained by a lower tax burden, which could revert a fall in operating figures and non-operating income (due to a lower income derived from exchange differences). Aguas Andinas Nov-27 At an EBITDA level, income during 3Q13 would show a moderate increase of 2.5% YoY. This could be explained by an income increase of 5.9% YoY (motivated by greater traded volumes and the sales of unregulated services) and by a margin reduction of 1.9 pp YoY that would add up to 55%. Earnings would increase by 2.0% YoY, due to a higher operating income and lower tax expenses. Andina Nov 19 Considering the incorporation of Coca-Cola Polar operations, we expect income to increase by 39.6% YoY and the EBITDA to increase by 30.0% YoY, due to a lower basis of comparison. In a pro-forma format (Andina + Polar), income would grow by 3.9%, influenced by a fall in the volumes of sales both in Brazil and in Paraguay. In the case of Chile and Argentina, volumes increased by 3.4% YoY and 14.7% YoY, respectively. Antarchile NA In line with the income reported by its main affiliate, Empresas Copec, we expect AntarChile will show an important improvement at an earnings level. The increase in the average price of long paper pulp (NBSK, +9.2% YoY) and short paper pulp (BHKP, +6.0%) supports this operating recovery. 3Q12 was affected by a tax provision due to an increase of corporate tax rates, from 17.5% to 20.0%, which will not be the case of Banco de Chile Banco Santander Oct-31 Oct-31 The company has shown good operating income. A higher NIM and a higher treasury income have increased income and reduced Other Operating Income compared to the same period in The bank continues to show a good level of provision expenses and non-performing loans. There was an important inflationary increase during this period, which could partially explain the increase of the company s earnings: 3Q13 1.0% vs 3Q12-0.2%. A lower basis of comparison will lead to Banco Santander Chile showing a relevant increase in terms of income. The company reported high income levels both in July and August, mainly explained by a better NIM and a fall of Provision Expenses and Other Operating Expenses. There was an important inflationary increase during this period, which could partially explain the increase of the company s earnings: 3Q13 1.0% vs 3Q12-0.2%. BCI Oct-31 The recent increase of portfolio risk indicators has led to higher provision expenses. In 3Q13, the bank let the coverage ratio go down to a minimum of 1.3, below the minimum of 2.3 shown by the system. This had a positive effect on 3Q13 income but should be reverted during 4Q13, as the bank should face the need to improve its provision levels. There was an important inflationary increase during this period, which could partially explain the increase of the company s profits: 3Q13 1.0% vs 3Q12-0.2%, with an improvement of NIM. Besalco Oct-30 We expect the EBITDA will go down by 24.3% compared to the same period last year, mainly due to a fall in sales reported by its affiliate BS Maquinarias S.A. derived from a delay in the renewal of a contract the company has with Minera Escondida, which in turn has led to a reduction in the production of the latter. On the other hand, both the Hospital Copiapó project and the reposition of the route between Chañaral and Portofino continue to show losses. Likewise, we estimate the income and the profits of the parent company will go down by 3.8% and 2.3%, respectively. CCU Nov-5 We expect income to grow by 12.6% YoY, influenced by the consolidation of the new operations in Uruguay (Nativa and Nix) and Chile (Manantial). We also expect growth in the company s different categories in Chile, since if we leave out Manantial, the organic growth of the company s volumes was 9.9%. In terms of EBITDA, we expect an increase of 12.5% YoY, with a margin upon income of 19.4% due to the good performance of the business segment in Chile.

3 Company Date of Report Comments Cencosud NA We expect income to increase by 11.6% YoY, due to a moderate growth of sales. We also expect the EBITDA to increase by 16.2% YoY due to lower SAG s as many last-year new projects are now in their final stages, reducing this item and therefore improving margins. We believe that profits will go down following the trend reported in the past quarters mainly due to an increase in exchange rates compared to 2012 and higher financial costs. CMPC Nov-7 An increase in the average price of long paper pulp (NBSK, +9.2% YoY) and short paper pulp (BHKP, +6.0%) support an operating recovery. 3Q12 was affected by a tax provision due to an increase in corporate tax rates from 17.5% to 20.0%, which will not be the case in The tissue, forestry and paper product businesses should show a slight improvement at an operating level, whereas the paper business should show a slight downward correction due to the cost situation. Colbun NA The EBITDA will experience a strong contraction of 59.7% YoY in 3Q13, mainly explained by a higher cost structure, associated to an increase in energy sales to the spot market related to lower generation levels of Nehuenco and the contract with Codelco. On the other hand, the bottom line result will be almost zero, as the lower operating performance would be reverted by lower tax expenses. Concha y Toro Nov-15 We expect a growth of 18.4% YoY in income due to higher exchange rates compared to last year and an increase in exported volumes. In terms of EBITDA, we expect an increase of 15.8% YoY, with an EBITDA margin of 12.3% influenced by a strike that affected the company during the past quarter, as all boxes that were not exported will be recorded, allowing a greater dilution of costs. Copec NA An increase in the average price of long paper pulp (NBSK, +9.2% YoY) and short paper pulp (BHKP, +6.0%) supports an operating recovery. 3Q12 was affected by a tax provision due to an increase in corporate tax rates from 17.5% to 20.0%, which will not be the case in We expect a moderate growth of fuel and paper pulp sales volumes, yet income would reach similar levels to those reported in 2Q13 due to price increases. Cruz Blanca NA We expect the income of the insurance business to show an important improvement compared to 2Q13, mainly explained by price adjustments in GES provisions experienced during the entire period. Nevertheless, we expect a lower income to that reported in 2Q12. The outpatient business will report similar levels to those reported in 2012 due to the great amount of centers that have been operating for a short period of time, whereas the hospital business should continue to show an EBITDA in line with the historical results reported in the past 2 years. Embonor Nov-5 We project a growth of 4.9% YoY in income, due to an increase in sales of the Water and Soft Drink sectors. This income increase is mainly influenced by a growth in the volume of sales in Chile and Bolivia, which is in turn amortized by a price reduction expected to occur in the Bolivian market. In terms of EBITDA, we expect an increase of 5.4% YoY, reaching a margin upon income of 16.9% YoY, pushed by selling and administrative expenses. Endesa Oct-29 The company s EBITDA would increase by 8.1% YoY, with a general improvement of its operations. In the case of Chile (explaining about 60% of this increase), this performance could be linked to a higher efficiency of fuel costs, which could compensate the lower income levels expected for the company. On the other hand, the earnings of the parent company would increase only by 2%, in which a better operating income and profits from related companies would be counteracted by higher tax expenses and a greater recognition of minority interest. Enersis Oct-29 Income would decrease by 9.7% YoY, mainly linked to the distribution business (especially the affiliates in Chile, Brazil and Colombia), along with lower sales levels expected for the company. The EBITDA would go down by 5.2% YoY, explained by the lower income reported by the distribution business (Colombia and Argentina) and Endesa Brazil, which would counteract the increase expected for Endesa. The earnings of the parent company would go down by 5.5% YoY, due to the aforementioned operating figures and higher tax expenses, partially counteracted by a lower net interest expense and minority interest results.

4 Company Date of Report Comments Entel Nov-4 We expect the company should report good income for the third quarter due to the acquisition and new operations of Nextel Peru, and a new agreement with Falabella, which provides network infrastructure services to VMNO. In terms of income, we expect an increase of 15% compared to the same quarter last year. In terms of EBITDA, it would not be consistent to make any comparisons due to the new accounting treatment for mobile equipment, therefore the effect of Nextel and the agreement with Falabella will not be reflected in it. Falabella NA We estimate income will increase by about 12% YoY due to the positive results shown by the Company in previous quarters. Nevertheless, such income could be affected by a strong pressure on SAG s due to higher salary and logistic costs. Peru continues to show positive yet decelerated growth rates, whereas Colombia continues to show weak results. This is why we expect the EBITDA to increase by about 4% YoY. Finally, we expect earnings will grow by 40% YoY due to a greater contribution of its banking business. Forus NA We expect an income increase higher than 13% YoY and even better results in terms of EBITDA and earnings, expecting a growth of 43% and 86% compared to the same quarter last year, hence maintaining the good results shown by the Company since it was listed in the Stock Exchange. Hites NA We expect an income increase higher than 18% YoY due to greater in-store sales and the opening of new stores. We expect the EBITDA will go up to record levels this year, projecting an increase close to 50% YoY. Finally, we expect the earnings of the Company to go up by 86.4% due to a better performance reported by all its business lines and an emphasis on increasing cost efficiency. IAM Nov-27 At an operating level, both the EBITDA and income of the company would show an annual increase of 3.0% and 5.9%, respectively, in 3Q13; explained by the consolidation of the income of its affiliate Aguas Andinas (recording an increase in traded physical volumes and a slight margin fall of 1.9 pp YoY). Meanwhile, the earnings of the parent company would increase by 4.6% YoY due to a better operating income and lower tax expenses, partially counteracted by higher net interest expenses. Parauco NA We expect income to remain plain when compared to the same period last year. At the same time, we expect the EBITDA and earnings to go down by 2.4% and 11.0% respect to the same period last year due to a greater inflation in the countries the company operates in and higher financial costs. Ripley NA We expect sales to go up only by 4.1% YoY and the EBITDA to remain plain respect to that reported for the same period last year. Likewise, we observe an improvement in the Company s gross margin along with a lower non-operating income. Nevertheless, we expect the company will have positive results in terms of earnings due to the robust results reported by its banking business. SK Nov-11 We expect the EBITDA will go up by 1.4% due to a greater service activity for ENAEX and Magoteaux, an effect derived from the lower quality of the material, which requires greater volumes of material for grinding. Nevertheless, the standstill of Pascua Lama operations could have a negative effect on SKIC sales. In addition, we expect income to decrease when compared to the same quarter last year, affected mainly by exchange differences and the mothballing of Pascua Lama. SM-SAAM NA The third quarter is a period of high activity in terms of logistic operations, only surpassed by the fourth quarter that reports greater shipping activity due to Christmas season sales. We expect SM-SAAM will maintain the same stable results reported during the first half this year.

5 3Q13 Estimates COMPANIES Revenues EBITDA Net Income (Controllers) CLP mn 3Q13E 3Q12 % YoY 3Q13E 3Q12 % YoY 3Q13E 3Q12 % YoY BCI 0 0 NA 0 0 NA 83,353 49, % BSANTANDER 0 0 NA 0 0 NA 106,204 50, % CHILE 0 0 NA 0 0 NA 137,386 99, % Banking 0 0 NA 0 0 NA 326, , % ANDINA 341, , % 51,881 39, % 13,295 12, % CCU 274, , % 53,203 47, % 24,159 17, % CONCHA Y TORO 136, , % 16,892 14, % 9,682 7, % EMBONOR 94,516 90, % 16,009 15, % 7,484 6, % Wines & Beverages 847, , % 137, , % 54,620 44, % AGUAS ANDINAS 85,225 80, % 46,916 45, % 18,098 17, % AES GENER 255, , % 73,595 88, % 24,084 18, % COLBUN 245, , % 23,670 55, % 177 1, % ENDESA 599, , % 282, , % 66,422 64, % ENERSIS 1,445,161 1,600, % 499, , % 96, , % Utilities 2,631,291 2,732, % 925, , % 205, , % CMPC 642, , % 121, , % 38,256 1, % COPEC 3,169,742 2,624, % 270, , % 124,988 3, % Forestry 3,811,808 3,207, % 391, , % 163,244 5, % CENCOSUD 2,456,726 2,201, % 205, , % 55,823 66, % FALABELLA 1,462,142 1,300, % 172, , % 83,018 59, % FORUS 45,793 40, % 11,438 7, % 9,276 4, % HITES 69,450 58, % 6,617 4, % 2,366 1, % PARAUCO 27,636 27, % 20,009 20, % 9,570 10, % RIPLEY 278, , % 15,954 16, % 4,210 3, % Retail 4,340,618 3,896, % 432, , % 164, , % ANTARCHILE 3,174,816 2,625, % 267, , % 76, NA BESALCO 88,640 92, % 11,562 15, % 3,963 4, % CRUZ BLANCA 134, , % 7,267 8, % 1,986 2, % ENTEL 402, , % 118, , % 40,251 48, % IAM 85,225 80, % 46,649 45, % 9,060 8, % SK 331, , % 43,837 41, % 20,388 15, % SM-SAAM 61,104 53, % 12,376 10, % 6,202 4, % Others 4,278,876 3,656, % 507, , % 157,869 83, % TOTAL SAMPLE (CLP mn) 15,910,036 14,188, % 2,395,701 2,233, % 1,072, , % Note: The figures stated by the companies in USD have been translated into Chilean pesos for comparative purposes. The exchange rate used is: 3Q12=CLP and 3Q13=CLP , corresponding to the average exchange rate for each quarter. Source: Chile's Central Bank, SVS, Company Reports, CorpResearch. COMPANIES Revenues EBITDA Net Income (Controllers) USD mn 3Q13E 3Q12 % YoY 3Q13E 3Q12 % YoY 3Q13E 3Q12 % YoY AES GENER % % % ANTARCHILE 6, , % % NA CMPC 1, , % % % COLBUN % % % COPEC 6, , % % % SK % % % SM-SAAM % % % REPORTS (in USD mn) 15, , % 1, , % %

6 Glossary Term Definition / Translation Calculation EBITDA EBITDAR Earnings Before Interests, Taxes, Depreciation and Amortization Earnings Before Interests, Taxes, Depreciation, Amortization and Rents Operational Income plus Depreciation and Amortization Operational Income plus Depreciation and Amortization plus rent of fixed assets. It is used the at transport industries to reverse the rent of airplanes or ships. EV Enterprise Value Market capitalization plus Net Financial Debt plus Minority Interest EV/EBITDA EVA Valuation multiple. While greater it is, more expensive it is the stock Economic Value Added EV divided by Ebitda FCF Free Cash Flow Operational Income plus Depreciation and Amortization minus tax minus capital expenditures plus (minus) working capital variation. Free-float Margin Operational Ebitda Net Percentage of stocks that can be freely traded in the market Percentage of sales Percentage of stock that does not belong to controller s shareholders. Operational Income / Revenue Ebitda / Revenue Net Income / Revenue P/E Price / Earnings Market Price divided by EPS P/B Price to Book value ratio Market price divided by the accounting value of the stock. Dividend Yield The return in terms of dividends of investing in equities Dividends distributed in a year divided by the market price. FCF yield Free Cash Flow Return. FCF / Market Price ROA Return on Assets Net Income / Total Assets ROE Return on Equity Net Income / Accounting capitalization EPS Earnings Per Share Net Income / Shares outstanding YTD Year to Date Percentage variation year to date Stocks recommendations are established according to the stock yield relative to the IPSA Index. We recommend Hold when we expect the share to have a yield in line with the IPSA; Buy, when the yield expected for the share is above to that expected for the IPSA; and Sell, when the yield expected for the share is below to that expected for the IPSA. We define a yield to be In line with the IPSA when it is within a range whose scope is equivalent to a third of the variation expected for the index, with a 5% minimum.

7 CorpResearch Álvaro Donoso Director CorpResearch Economic Research Sebastian Cerda Executive Director CorpResearch & Economic Studies Nicolas Birkner Chief of Economic and Financial Analysis Karla Flores Economics Analyst Equity Research Vicente Meschi Deputy Equity Research Director Sergio Zapata Senior Analyst. Sector: Energy and Utilities M Josefina Güell Analyst. Sector: Retail Martin Antunez Analyst. Sectors: Construction Isabel Bendeck Analyst. Sectors: Retail Patricio Acuña Analyst. Sector: Food & Beverages Rosario Norte 660 Piso 17, Las Condes, Santiago. Phone (562)

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