Bci Stock Market Recommendation Retail Sector
2018 Stock Market Recommendation Retail Sector
Sector View
Outlook 2018
- Estimated recovery of consumption in Chile and the region will translate into general improvements across the board. Additionally, a much more moderate FX depreciation against the dollar in Argentina would allow for margin improvements in Cencosud and Falabella, albeit not providing sufficient impulse for top line growth.
- Gross margin for department stores will be benefit from the appreciation of the CLP against the USD, further favoring companies where this business has a relevant market share, such as Forus, Ripley and Tricot.
- Efficiency plans implemented by the companies will continue to yield results. Meanwhile, investment plans remain below those developed in previous years, although we do not rule out new announcements post presidential elections, in the event that a pro-market candidate is elected.
Risks
- Consumption deceleration in Latin American countries higher/lower than expected.
- FX deprecation of Latin American currencies higher/lower than expected.
- Increase/decrease in investments announced by companies.
- Sales decline to Argentine tourists, in parallel with lower price competitiveness.
- Appearance of international competitors in the e-commerce business.
Peers
| P/E | P/B | EV/EBITDA | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Company | Country | T.P. 2018E | Last Price | Upside | Div. Yield 2018E | Market Cap (MMUS$) | YtD Return | 2017E | 2018E | 2017E | 2018E | 2017E | 2018E |
| Cencosud | Chile | 2,290 | 1,923 | 19.1% | 1.5% | 8,735 | 2.3% | 20.0 | 17.3 | 1.3 | 1,2 | 12,2 | 10,1 |
| Falabella | Chile | 6,800 | 6,274 | 8.4% | 1.1% | 24,245 | 18.8% | 27 | 24.2 | 3.9 | 3.6 | 16.1 | 14.5 |
| Forus | Chile | 2,940 | 1,136 | 6.2% | 1.6% | 1,136 | 22.8% | 25.1 | 21.3 | 3.4 | 3.2 | 14.5 | 12.5 |
| Parauco | Chile | 1,920 | 1,776 | 8.1% | 1.8% | 2,520 | 17.3% | 22.1 | 20.4 | 2.0 | 1.8 | 18.8 | 17.8 |
| Ripley | Chile | 650 | 625 | 4.0% | 1.7% | 1,920 | 56.5% | 17.4 | 14.8 | 1.7 | 1.6 | - | - |
| Tricot | Chile | 930 | 865 | 7.5% | 2.1% | 508 | - | 19.3 | 17.5 | 1.8 | 1.6 | 10.4 | 9.3 |
| Peers | |||||||||||||
| Hites | Chile | 654 | 0.7% | 391 | 32.3% | 15.2 | - | 1.7 | 10.4 | ||||
| Lojas Americanas | Brasil | 20 | - | 9,382 | 16.0% | 111.3 | 36.5 | 16.0 | 9.6 | ||||
| Liverpool | México | 150 | 0.5% | 10,784 | -9.6% | 21.1 | 16.9 | 2.5 | 2.4 | 13.4 | 10.7 | ||
| Soriana | México | 42 | 4,109 | -5.8% | 17.3 | 14.7 | 1.4 | 1.4 | 8.4 | 7.7 | |||
| Éxito | Colombia | 15,780 | 0.3% | 2,391 | 5.9% | 47.1 | 0.9 | 15.0 | 12.6 | ||||
| WallMart | US | 81 | 2.5% | 240,559 | 16.5% | 18.5 | 17.4 | 3.2 | 3.4 | 8.5 | 8.3 | ||
| Carrefour | Francia | 17 | 4.1% | 11,239 | -25.3% | 18.1 | 13.4 | 1.3 | 7.5 | 5.8 | |||
| Casino | Francia | 50 | 6.2% | 4,707 | 9.7% | 7.2 | 14.3 | 0.9 | - | 15.0 | 9.4 | ||
| WalMex | México | 43 | 1.5% | 40,467 | 20.2% | 25.2 | 22.1 | 5.6 | 5.8 | 14.0 | 12.6 | ||
Recommendations Sector Retail
Companies under coverage at Sector Retail: