Mayo 2019. On May 14th, EISA reported its 1Q19 results, posting CL$ 6,794 million EBITDA (+34% YoY) which came highly above our expectations (CL$ 4,785 million). Results were higher-than-expected exclusively related to the strong +133% YoY EBITDA increase in the Real Estate Development segment (CL$ 3,812 million vs. CL$ 1,636 million of 1Q18 vs. CL$ 1,500 mil-lion expected). The company was benefited by the +14% YoY sales increase on the writing process of two new projects (Providencia and Lima). On the other hand, the E&C segment results came in line with expectations, but we were positively surprised by the strong 29% QoQ increase in total backlog (CL$392 billion), highly superior to our expectations (CL$ 330 billion 19YE) and reaching EISA’s highest historical level since its IPO in 2012. Given that results came above expectations we expect a positive reaction in the stock related to it in the short-term.

Real Estate segment driving 1Q19 positive results due to a solid writing cycle. According to our estimates, the +121% EBIT YoY increase was ~ 58% explained by the Real Estate seg-ment with +52% YoY sales increase and 230bps EBIT margin improvement. According to the company, during the 1Q19 started the writing of Deja vu project in Providencia and Fly project in Lima, while continued the rest of prohjects normally. The total promises for 2019 are expected to reach UF 2.3.

Engineering & Construction reaching the historical maximum backlog after been awarded with Quebrada Blanca II and other projects. Engineering & Construction segment posted +430% YoY EBIT increase (as expected) , mainly driven a low comparable basis in the “Building segment” that reached –CL$ 1,857 million EBIT loss in the 1Q18 (-CL$ 527 million loss in the 1Q19). We also highlight the –9% EBIT decrease in Industrial Construction and Services (as expected) . The company expect to see a re-acceleration during the 2H19 driv-en by Civil Works and the recently awarded Vespucio Oriente and Metro Linea 3 projects. Regarding Quebrada Blanca II, we were expecting the company to be awarded with this project, but with a lower amount of backlog.

Our take: 1Q19 operating results and backlog came above our expectations, while confirm-ing the turnaround we were expecting in some particular segments. We highlight the posi-tive net margin improvement YoY in all segments, and the attractive backlog, that should continue supporting a positive earnings momentum for the rest of the year. We maintain our T.P. and recommendation unchanged by the moment.

Target Price: CL$ 321
Current Price: CL$ 281
EQUITY RESEARCH – CHILE
COMPANY NOTE – CONSTRUCTION – EISA
May 15th, 2019
CONTACT
Aldo Morales E.
aldo.morales@bice.cl
+(562) 2692 3481
1Q19 RESULTS – EISA
Source: BICE Inversiones estimates