details - Kallpa SAB

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EQUITY RESEARCH | Initial Coverage
January 15th 2014
Alberto Arispe
Marco Contreras
Retail Industry
Head of Research
(511) 630 7500
aarispe@kallpasab.com
Senior Analyst
(511) 630 7528
mcontreras@kallpasab.com
InRetail Peru Corp.
(BVL: INRETC1)
InRetail Peru Corp.
Fair Value
USD 15.20
HOLD
100% exposure to Peru
1,562.23
Equity's Fair Value (USD MM)
15.20
Share's Fair Value (USD)
Recommendation
Hold
1,644.92
Market Capitalization (USD MM)
Kallpa Securities SAB initiates coverage of InRetail Peru Corp. with a hold
recommendation. Our USD 15.20 fair value per INRETC1 share is 5.0%
below its USD 16.00 market price, as of closing of January 14th 2014.
16.00
Share's Market Price (USD)
102.81
Shares Outstanding (MM)
-5.0%
Upside
590.11
ADTV - LTM (USD 000')
15.90 - 25.00
Range 52 weeks
YTD Change
0.6%
Dividend Yield - LTM
0.0%
BVL
Trading
ADTV: Average daily traded volume
InRetail is compounded of three leading companies in the retail
industry with operations exclusively in Peru (it also belongs to the
Intercorp group). Through its subsidiaries it operates and develops
supermarkets, pharmacies and shopping centers.
We value InRetail using a Discounted Cash Flow to the Firm
methodology with a 10.61% WACC in a 10 year horizon. We also use
a 3.5% perpetual growth rate, which is in line with the potential
growth of the company's earnings.
LTM: Last twelve months
Within its main strengths, the company's leadership in its three
business segments is remarkable: i) second place in supermarkets; ii)
first place in pharmacies; and, iii) first place in shopping centers, with
a market share of 33.5%, 52.0% and 16.3%, respectively.
Currency exchange rate USD/PEN: 2.80
Source: Bloomberg, Kallpa SAB
Financial Ratios
2012
2013e
2014e
P/E
21.10
98.82
22.85
1.59
1.56
1.46
14.57
13.81
10.60
Debt / EBITDA
4.05
4.30
4.04
EBITDA / Financial Exp.
2.64
2.53
3.22
EPS (PEN)
2.62
0.45
1.96
ROE
9.4%
1.6%
6.6%
ROA
4.1%
0.8%
3.0%
P / BV
EV / EBITDA
Source: SMV, InRetail, Kallpa SAB
Chart Nº 1: INRETC1 vs. INCA
USD
Pts.
26.0
INRETC1
120
INCA
115
24.0
110
22.0
It's worth mentioning the low penetration of formal retail in Peru (20%
in 2011), being this the main reason of the potential growth we see in
this industry.
Nevertheless, high competition is a threat to the company, mainly in
the supermarkets industry. More experience and also aggressive
expansion plans of competitors (Falabella and Cencosud) is a risk for
InRetail's operations. Moreover, difficulty to find adequate locations
for formal retail platforms, increases probability of cannibalization.
High execution risk is also present in our financial model. Given that
the company has an ambitious expansion plan, in which it expects to
invest between USD 900 MM and USD 1,100 MM, Free Cash Flow to
the Firm is negative until 2016. Thus, valuation is very sensitive to the
terminal value, which depends on timely new stores openings and
same store sales to reach our long term growth expectations (4.0%,
6.5% y 3.5% for supermarkets, pharmacies and shopping centers,
respectively).
105
20.0
100
95
18.0
90
16.0
85
Source: Bloomberg
Jan-14
Dec-13
Nov-13
Oct-13
Sep-13
Aug-13
Jul-13
Jun-13
May-13
Apr-13
Mar-13
Feb-13
80
Jan-13
14.0
Although he company operates in a low penetration and high
potential industry, we think its main fundamentals are already
internalized in the market price. Therefore we recommend to hold
InRetail.
Retail | InRetail Peru Corp.
Company's financial summary
INCOME STATEMENT (PEN MM)
Net Sales
Cost of Sales
2012
2013e
2014e
BALANCE SHEET (PEN MM)
2012
2013e
2014e
4,784
5,283
6,203
Cash and Cash Equivalents
1,097
306
39
Accounts Receivable
212
252
310
Inventory
602
752
805
-3,437
-3,791
-4,405
Gross Income
1,347
1,492
1,798
Sales Expenses
-868
-1,016
-1,147
Administrative Expenses
-163
-178
-212
51
46
9
367
343
21
22
-156
-172
-176
27
27
27
77
-116
-
Non Current Assets
4,032
4,870
5,739
309
78
288
Total Assets
6,050
6,366
7,089
Taxes
-91
-31
-86
Short Term Debt
Net Income
218
47
202
Accounts Payable
Other Expenses, Net
Operating Income
Financial Income
Financial Expenses
FX Gain (Loss)
Income Before Taxes
Minority Interest
Attributable to InRetail
187
197
2,019
1,497
1,350
Net Fixed Assets
1,764
1,995
2,256
448
Investment Properties
1,104
1,697
2,289
16
Net Intangible Assets
1,137
1,151
1,167
Other Long Term Assets
Other Short Term Liabilities
Gross Margin
187
228
1,320
1,423
-0
0
28
8
8
47
202
Current Liabilities
1,344
1,515
1,660
83
103
103
Long Term Debt
1,584
1,680
2,056
2.62
0.45
1.96
Other Long Term Liabilities
222
224
224
98
106
118
Non Current Liabilities
1,806
1,904
2,281
412
434
566
Net Equity attributable to InRetail
2,901
2,947
3,149
0
0
0
Liabilities + Net Equity
6,050
6,366
7,089
2013e
2014e
Minority Interest
MARGINS AND GROWTH RATES (%)
84
1,232
0
Depreciation and Amortization
EBITDA
108
Current Assets
218
Avg. Shares Outstanding (MM)
Earnings per Share - EPS (PEN)
Other Short Term Assets
2012
2013e
2014e
CASH FLOW (PEN MM)
2012
Net Income
28.2%
28.2%
29.0%
218
47
202
Operating Margin
7.7%
6.5%
7.2%
98
106
118
EBITDA Margin
8.6%
8.2%
9.1%
Changes in Working Capital
63
-200
-18
Other Adjustments
Net Margin
4.6%
0.9%
3.2%
Sales Growth
12.8%
10.4%
17.4%
Operating Cash Flows
Operating Income Growth
39.3%
-6.5%
30.4%
Investment Cash Flows
EBITDA Growth
31.7%
5.5%
30.3%
Financing Cash Flow
Net Income Growth
76.9%
-78.7%
332.6%
2012
2013e
2014e
FINANCIAL RATIOS
Current Assets / Current Liabilities
1.50
0.99
0.81
64.61
65.16
64.48
Debt / Equity
0.57
0.63
0.73
Debt / EBITDA
4.05
4.30
4.04
EBITDA / Financial Expenses
2.64
2.53
3.22
Payout ratio
0.0%
0.0%
0.0%
Average Days of Inventory
Dividends per Share (PEN)
-
-
9.4%
1.6%
6.6%
ROA
4.1%
0.8%
3.0%
ROIC
6.5%
5.1%
6.1%
VALUATION
2012
2013e
2014e
P / Sales
0.96
0.87
0.74
P/E
21.10
98.82
22.85
EV / EBIT
16.34
17.48
13.40
EV / EBITDA
14.57
13.81
10.60
1.59
1.56
1.46
2
-45
301
-
-710
-944
-988
1,057
199
418
751
-790
-268
CHART N° 2: SHAREHOLDERS
22.0%
Intercorp and subsidiaries
NG Pharma Corp.
6.3%
Others
-
ROE
P / BV
Free Cash Flow
24
404
71.8%
CHART N° 3: EBITDA 2013e BY BUSINESS UNIT
24.5%
Supermarkets
42.4%
Pharmacies
Shopping Centers
MANAGEMENT
Juan Carlos Vallejo
CEO
Augusto Rey
CFO
Gonzalo Rosell
Corporate Finance Manager and IRO
33.0%
Source: InRetail, SMV, Kallpa SAB
www.kallpasab.com
Initial Coverage
2
Index
I.
Investment Thesis: Hold …………………………………………...……………………………………………………………………………..
4
II.
Company's Description …………………………………...…………………………………………………………………………………………
6
III.
i.
History ………………...…………………………………………………………………………………………………………………………
6
ii.
Organization ……..……………………………………………………………………………………………………………………………
7
Business Model and Strategy: Aggressive Expansion in a Low Penetration Market …………….…………………………………. 7
i.
ii.
iii.
IV.
Supermarkets ………………………………………………………………...………………………………………………………………
9
a.
9
Industry: High competition in a 3 - player market …………...…………………………………………………………….
b.
10
Supermercados Peruanos S.A. (SPSA) ……………………………………………………………………………………………
Pharmacies ………………………….……………………………………………………………………………………………………..
11
a.
11
Industry: Market dominated by pharmacies chains…………………………………………………………………………………
b.
12
Eckerd Peru S.A. …………...…………………………………………………………………………………………………………
Shopping Centers ……………..…………………………………………………………………………………………………
13
a.
13
Industry: High potential wit long term objectives ………………...………………………………………………………
b.
13
InRetail Real Estate …………………………..…………………………………………………………………………………….
Valuation ……………..……………………………………………………………………………………………………………………………….
15
i.
15
Discounted Cash Flow ………………………………………………………………………………………………………………………
ii.
17
Sensitivity Analysis ……………………………………………………………………………………………………………………………
iii.
Scenario Analysis ………………………………………………………………………………………………………………………………
17
iv.
Risks ………………………………………………………………………………………………………………………………………..
18
v.
Multiple Analysis ………………………………………………………………………………………………………………………………
19
Annex 1: Financial Statements ………………………………………………………………………………………………………………………
20
www.kallpasab.com
Initial Coverage
3
I.
Investment Thesis: Hold
i.
Exposure to Peruvian consumption: InRetail is one of the few companies in the Lima Stock Exchange with exposure
to consumption industry and that develops 100% of its operations in Peru. This is important as private consumption is
one of the most stable components of the Peruvian economy with a CAGR of 5.6% in the last 10 years. Peru's Central
Bank (BCRP by its acronym in Spanish) expects this dynamism to continue, estimating 5.2%, 5.2% and 5.4% growth
for the years 2013, 2014 and 2015, respectively.
Moreover, the company has an expansion plan that will develop only in Peru and management hasn't disclose to have
interest in entering new markets in the mid term.
ii.
Market leadership: The company has established a notable leadership in its three business segments. As of 2012, it
has the second biggest supermarket chain with 33.5% market share in the industry's sales (Cencosud Peru has the first
place with 41.8% and Hipermercados Tottus ranks third with 24.7%), with 86 stores and 224,985 square meters of
sales area.
In the pharmacies segment, the company has 52.0% market share, ranking first in the pharmacies chains industry. This
is the consequence of the assisted sale business model that has allowed it to have USD 1 MM sales per store,
compared with an average of USD 500,000 sales per store in other chains.
Finally, in the shopping centers segment the company is the first player in the industry with 16.3% market share (Open
Plaza of Falabella Falabella Group ranks second with 15.9%) by sales in 2012 and 20.2% market share by Gross
Leasable Area (GLA) with 338,000 square meters (second place belongs to Mall Aventura Plaza with 14.7% market
share and 235,000 square meters of GLA).
iii.
Low penetration industry: Peru has one of the lowest formal retail penetration in the region, which is the main
indicator of the potential growth of the industry. Supermarkets' sales represent 1.7% of Peru's GDP in 2012, while the
average in Latam is around 4.4% of GDP. Health expenditure in Peru was 4.7% of GDP in 2011, while its main Latam
peers had an average of 6.8% of GDP. Moreover, in Peru there are 1.7 shopping centers per million people, while the
average stands at 3.1 in Latam.
iv.
Integration with other retail platforms: Besides the 3 businesses run by InRetail, Intercorp group is owner of
department stores, home improvement stores, cinemas and restaurant chains. We believe there is a high potential to
build synergies between these retail platforms and the ones of InRetail in order to boost sales.
v.
Margins increase: We expect a sustainable margins increase during the expansion process of the company,
supported by: i) a higher participation of the shopping centers business within InRetail (EBITDA Margin of 52.2% in
2012, compared to 6.5% of supermarkets and 8.5% of pharmacies); ii) increase in sales financed by Tarjeta Oh! (credit
card associated to the supermarkets business since 2012). As the credit card increases its penetration, it will report
higher revenues to the company (unlike Tarjeta Vea, previous credit card, that reported no revenues for the
supermarkets); iii) higher penetration of own brand products in supermarkets and pharmacies; and, iv) higher
operational efficiencies due to lower logistics costs, lower personnel expenses, among others.
vi.
Aggressive expansion plan: InRetail has an aggressive expansion plan, by which it will invest between USD 900 MM
and USD 1,100 MM between 2013 and 2015 to increase its supermarkets and shopping centers. In order to finance this
CAPEX, the company will use the funds collected in the IPO (October 2012) and debt. It's worth mentioning that, given
this strategy, the company will need additional funding in 2015, which we assume will be financed with debt.
vii.
Execution Risk: Due to the aggressive expansion plan, the company is exposed to a high execution risk. Our valuation
is based on the assumption of openings of a certain amount of stores during our forecast period. If these openings were
to be anticipated or delayed, they would have a significant effect on the company's future cash generation and in our
fair value.
Additionally, due to the high investments, the company would report negative free cash flow to the firm until year 2016.
Therefore a significant amount of our valuation relies on the terminal value, making our valuation very sensitive to our
discount rate and our perpetual growth rate.
www.kallpasab.com
Initial Coverage
4
viii.
High competition and cannibalization: The retail industry is highly competitive, mainly in the supermarkets segment.
This segment is concentrated in three players, where InRetail competes with Cencosud and Falabella. Both of them
Chilean companies with more experience in the industry and operations in many countries. They also have aggressive
expansions plans in Peru.
High level of competition could lead to very aggressive discounts campaigns (as it occurred at the beginning of 2013)
that can hurt same store sales growth and financial margins evolution.
Finally, finding locations could be a problem for the company as it's hard to find land with adequate conditions to build
retail platforms and local governments bureaucracy can affect the granting of construction permits. In this way, not only
new stores openings can be delayed, but it's highly probable for a supermarket or a shopping center to be close to
another one, causing cannibalization.
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Initial Coverage
5
II.
Company's description
InRetail is a holding company compounded of three subsidiaries: i) Supermercados Peruanos S.A. that develops and operates
supermarkets under the Plaza Vea and Vivanda brands; ii) Eckerd Peru, company that operates the Inkafarma pharmacies
chain; and, iii) InRetail Real Estate, that develops and operates shopping centers under the Real Plaza brand.
The company belongs to the Intercorp group, one of the largest economic groups in Peru, with businesses in the financial,
insurance, real estate, retail industries, among others. Besides InRetail, the financial arm of the group, Intercorp Financial
Services Inc. (BVL: IFS), is listed in the Lima Stock Exchange. This company consolidates Interbank (4th bank in Peru by
loans and deposits) and Interseguro (insurance company that ranks 1st in annuities).
i.
History
Table N° 1: InRetail's history
1993
1997
1998
2002
2003
2004
2005
2011
2012
2012
• Chilean company Supermercados Santa Isabel S.A. enters the Peruvian market with the acquisition of the
supermarkets that belonged to Scala. The company kept growing with the acquisition of Mass and Top market, and the
leasing of San Jorge supermarkets.
• Uruguayan company Velox Retail Holdings acquired 37% of Santa Isabel.
• Dutch company Royal Ahold, during that time the third biggest retailer worldwide, purchased 50% of Velox and started a
Joint Venture with the latter.
• Ahold increased its stake up to taking total control of Santa Isabel in May 2002.
• Due to a restructuration process, Ahold sold its operations in Asia and South America, which included Santa Isabel's
Peruvian operations (they were loosing money during that time: 2003's ROE -39.8%). Intercorp group acquired these
operations for USD 56 MM.
• First year of operations of Intercorp group's supermarket business. Its name changed from Supermercados Santa Isabel
S.A. to Supermercados Peruanos S.A.
• Intercorp group enters in the shopping center's business with the construction of the first Real Plaza in Chiclayo.
• Intercorp group acquired Grupo Eckerd, the owner of Inkafarma pharmacies chain for USD 375 MM.
• Intercorp group's retail businesses are reorganized with the foundation of InRetail Peru Corp, a holding that consolidates
the group's most mature retail businesses.
• In October 2012, InRetail Peru Corp carried out its Initial Public Offering and its shares are listed in BVL. The company
collected USD 460 MM which were used in the holding's business expansion.
Source: InRetail, Kallpa SAB
www.kallpasab.com
Initial Coverage
6
ii.
Organization
As it was previously mentioned, in 2012 Intercorp group carried out the reorganization of its retail business. Thus, it
founded InRetail which grouped the more mature retail businesses: supermarkets, pharmacies and shopping centers.
After this reorganization, and due to the new company’s ambitious expansion plan, Management opted for a capital
contribution through an international public offering. Through this placement, InRetail collected USD 460 MM, which
represented a 22.0% stake in the company. Intercorp group along with Nexus Group control the remaining 78% stake.
Chart N° 4: Intercorp group's organization chart
Intercorp Peru
Ltd.
Intercorp Financial
Services Inc. (BVL:
IFS)
Intercorp Retail
Inc.
InRetail Peru
Corp. (BVL:
INRETC1)
99.98%
Supermercados
Peruanos S.A.
99.99%
Eckerd Peru
100.00%
InRetail Real
Estate Corp.
99.29%
Interbank
99.99%
Interseguro
Other
companies
Source: InRetail, Intercorp
III.
Business model and strategy: Aggressive expansion in a low penetration market
The company’s main target is focused on taking advantage of the country’s potential with regard to growth perspectives in
consumption levels and in the economy in general terms, for which it has established an aggressive expansion plan that will
be detailed subsequently.
This good perspectives are supported by a sustainable increase in the GDP per capita which will motivate an rise in the
Peruvian middle class. This new middle class will have a high demand for consumption goods and will seek to satisfy this
demand increasingly through formal retail channels.
Chart Nº 5: GDP per capita (USD)
Chart Nº 6: GDP, Retail's GDP and Private
Consumption Growth
7,000
14%
GDP
6,000
12%
Retail GDP
5,000
10%
Private consumption
8%
4,000
6%
3,000
4%
2,000
2%
1,000
0%
-2%
2003
2004
Source: World Bank
www.kallpasab.com
2005
2006
2007
2008
2009
2010
2011
2012
2006
2007
2008
2009
2010
2011
2012
2013e
2014e
2015e
Source: BCRP
Initial Coverage
7
How do we know that there is growth potential? As of 2011, the formal retail penetration was only 20% in Peru (the
remaining 80% were attended by traditional or informal retail channels). This is the lowest penetration among the region’s
main countries.
Additionally, in 2013 Peru had the 12th place within the 30 best countries with investment potential in the retail industry. This
classification is carried out through the Global Retail Development Index, elaborated by AT Kearney. Among the variables that
are evaluated in this index we have the attractiveness and market saturation, and the country risk.
Chart Nº 7: Formal retail penetration in Latam
Table N° 2: Ranking by Global Retail Development Index - 2013
Ranking
Country
Region
Score
100%
1
Brazil
Latam
69.5
90%
2
Chile
Latam
67.1
3
Uruguay
Latam
66.5
Formal
Informal
37%
80%
48%
58%
70%
60%
47%
58%
80%
50%
4
China
Asia
66.1
5
United Arab Emirates
Middle East
63.5
…
…
…
…
12
Peru
Latam
56.5
13
Malaysia
Asia
55.3
40%
63%
30%
52%
42%
20%
10%
53%
42%
20%
0%
Peru
Argentina
Brazil
Mexico
Source: ILACAD, InRetail
Colombia
Chile
…
…
…
…
18
Colombia
Latam
52.1
19
Indonesia
Asia
51.9
Source: AT Kearney
How will InRetail take advantage of this potential? The company’s current strategy is focused on growing through its three
business units, but with emphasis in the shopping center business. As of 2012, this segment represented 3.3% of the
holding’s revenues and 20.0% of the EBITDA. However, we estimate that this stake will increase, representing 5.9% of the
company’s sales and 29.2% of the EBITDA in 2016.
The other segments will also register important growth rates, but they will reduce their stake in the holding, mainly the
supermarket segment (although it will still be the most important segment).
Chart N° 8: Evolution of the stake by business unit - InRetail's sales 2012 - 2016.
3.3%
5.9%
Supermarkets
33.2%
Sales 2012
PEN 4,784 MM
35.9%
Sales 2016
PEN 8,117 MM
Pharmacies
58.2%
Shopping Centers
63.5%
Chart N° 9: Evolution of the stake by business unit - InRetail's EBITDA 2012 - 2016.
20.0%
29.2%
Supermarkets
39.9%
EBITDA 2012
PEN 412 MM
47.4%
EBITDA 2016
PEN 835 MM
Pharmacies
Shopping Centers
32.6%
30.9%
www.kallpasab.com
Initial Coverage
8
How will InRetail reach our sales and EBITDA estimations? The company has an ambitious expansion plan that
contemplates a total investment between USD 900 MM and 1,100 MM, which will be executed between 2013 and 2015. This
investment will be used in the development of new supermarkets and shopping malls.
The plan is being financed with funds collected from the IPO that the company carried out in October 2012 (USD 460 MM)
and with higher indebtedness levels, which will significantly increase in 2015 before strong cash requirements that we
estimate during that year.
It is worth mentioning that the pharmacies chain’s expansion is not the financing’s main target. This due to the low CAPEX
necessary to open a new pharmacy (approximately USD 60,000 per each store), since they operate in rented areas.
Supermarkets and shopping malls require land purchases and infrastructure construction, so they demand a higher CAPEX.
i.
Supermarkets
a.
Industry: High competition in a 3 - player market
The supermarket industry is one of the industries with the highest growth potential in the Peruvian economy. The
low penetration has led to the development of great expansion plans in Lima and in provinces, through which
supermarkets seek to steal market share from traditional retail channels such as mom & pop's stores and local
markets.
Chart Nº 10: Supermarket sales as a % of 2012's
GDP
5.8%
6.0%
5.0%
Chart Nº 11: Supermarket selling area (Square
meters per 1,000 inhabitants)
134
140
5.5%
120
4.81%
106
Average: 4.4%
112
100
4.0%
Average: 84 m2
4.3%
4.2%
80
71
62
3.0%
60
2.0%
1.7%
40
20
1.0%
20
-
0.0%
Peru
Colombia
Mexico
Argentina
Brazil
Peru
Chile
Source: BCRP, Apoyo, INE, DANE, INDEC, INEGI, ABRAS
Colombia
Argentina
Brazil
Mexico
Chile
Source: World Bank, INE, DANE, ANTAD, INDEC, ABRAS, Equilibrium
This segment is also one of the most competitive segments within the retail industry. It is concentrated in 3 main
players, of which 2 are Chilean major retail holdings (Cencosud and Falabella) with a vast experience and
regional presence. InRetail’s challenge is to face this high competitiveness level without neglecting its expansion
and efficiency improvement plans.
Chart Nº 12: Evolution of supermarkets' market shares
100%
90%
14.3%
17.7%
19.0%
20.7%
23.2%
24.7%
32.9%
34.2%
33.3%
33.5%
80%
70%
28.1%
30.3%
60%
Tottus (Falabella)
50%
SPSA
40%
Cencosud
30%
57.6%
52.0%
20%
48.1%
45.1%
43.5%
41.8%
2009
2010
2011
2012
10%
0%
2007
2008
Source: Equilibrium
www.kallpasab.com
Initial Coverage
9
b.
Supermercados Peruanos S.A. (SPSA)
SPSA is the company which develops and operates 86 supermarkets from InRetail (as of closing of 2012). It
operates under the following formats:
Table N° 3: SPSA's store formats
• Vivanda is SPSA's most exclusive format. It is focused in offering fresh and innovative
products. It emphasizes the quality of its products and services. As of closing of 2012,
SPSA owned 8 stores, all located in Lima.
• Plaza Vea is SPSA's massive and fastest growing format. It is focused in offering its
customers low prices and an extensive range of products. It is the first chain that opened
stores outside Lima. As of 2012, SPSA owned 67 stores, of which 49 are hypermarkets
(the remaining 18 stores operate under a Plaza Vea Super format, given their lower size).
• Discount stores focused in offering low prices and a quick service. They compete directly
with mom & pop's and local markets. As of 2012, SPSA owned 11 stores.
For the next years, we expect that the company will keep on growing in terms of same store sales (SSS) as well
as by new store openings (under Plaza Vea format).
In terms of same store sales, we expect that they will reach a 4.0% growth in the long term. We consider 2013
as an unusual year (a -1% SSS’s estimated growth), given the combination of political and economic
conjunctures locally and abroad, which provoked very aggressive promotion campaigns. This resulted in stock
outs in several supermarkets from InRetail and its competitors. We do not see that this situation will be repeated
in the future due to the damage generated in the companies’ growths and margins, before aggressive promotion
campaigns like those of 2103.
In terms of new store openings, we expect that SPSA will open a significant amount of new stores in the next
years. The company has a land bank with 30 ensured locations for new supermarkets. We believe that SPSA
should open 13 new supermarkets in 2014 and 12 in 2015.
On the other hand, we believe that the supermarket business has space for a significant margin improvement.
This, due to the following reasons:
-
Tarjeta Oh!’s higher penetration
After Intercorp group acquired Santa Isabel in 2003, it was decided the creation of a credit card for the
supermarket segment, since it generates customer loyalty through exclusive benefits and promotions for
the cardholders. In this way, Tarjeta Vea was created, a credit card administrated by Interbank (bank that
belongs to Intercorp group). It is worth mentioning that this credit card registered no revenues for SPSA.
The contract with Interbank expired in 2012. Some negotiations were carried out in order to renew the
contract with Interbank but they didn’t come to an agreement. Financiera Uno (a financial entity
specialized in consumption which also belongs to Intercorp group) enters in this scenario, with which an
agreement was reached to administrate a new credit card: Tarjeta Oh!. This agreement, unlike the
previous agreement with Interbank, will generate revenues for SPSA for 1.25% of the sales carried out
through the credit card.
Thus, sales’ growth and the card’s higher penetration (currently 18% of SPSA’s sales are carried out
through the card) will generate a higher income and margins for the company.
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10
-
Higher penetration of own brand products
Having own brand products (product whose brand belongs to the company, but its manufacturing is
carried out by third parties) is essential for a supermarket, as they generate the highest margins.
Currently, SPSA has some own brands (such as Bell’s and La Florencia, among others), and their
penetration within total sales is around 10%. In other markets the penetration exceeds 20%, so we believe
that there is space for a potential growth in this regard.
-
Efficiency improvements
SPSA is executing several plans in order to increase the company’s efficiency. The company opened new
distribution centers in Arequipa and Trujillo in late 2012 and in mid 2013, respectively. These centers must
improve the product supply towards stores located in provinces, and must reduce logistic costs.
Additionally, the company is training multi task employees, which are not specialized in a single function.
Having a more skilled and productive staff will allow the company to reduce the number of employees per
store.
Chart Nº 13: Selling area and stores
Chart Nº 14: EBITDA and EBITDA Margin
Stores
000' m2
400
Area (000 m2)
140
# stores
350
350
123
111
Margin (%)
PEN MM
EBITDA
6.7%
120
300
6.3%
6.7%
6.5%
6.1%
5.7%
98
300
86
250
100
250
80
200
60
150
6%
4%
58
51
3%
150
100
50
2008
2009
2010
2011
2012
2013e
2014e
40
100
20
50
-
-
2015e
Source: SPSA, Kallpa SAB
ii.
7%
5%
75
67
200
8%
EBITDA Margin
2%
1%
0%
2010
2011
2012
2013e
2014e
2015e
Source: SPSA, Kallpa SAB
Pharmacies
a.
Industry: Market dominated by pharmacies chains
Pharmacies, unlike supermarkets, belong to an industry where the formal retail has a higher penetration. As of
2011, 60% of pharmacies sales were represented by pharmacies chains. However, 40% is an attractive market
target which is still possible to attack. Why in this case the formal retail penetration is this high? The main reason
has to do with the concern given by the final consumer with regard to healthcare and to the quality and
guaranties that are offered when purchasing pharmaceutical products in a formal store.
Additionally, if we compare Peru with other countries from the region, we note that it has the lowest healthcare
expenses per capita (USD 285.00), and lowest healthcare expenses as a percentage of GDP (4.7%).
Chart Nº 15: Healthcare expenses per capita
(USD)
Chart Nº 16: Healthcare expenses as a % of
2011's GDP
1,200
1,075
1,121
8.9%
9%
1,000
830
800
10%
8%
Average : USD 727
7%
620
600
7.6%
6.0%
6.1%
Colombia
Mexico
Chile
Argentina
6%
432
400
7.5%
Average: 6.8%
5%
4.7%
285
4%
200
3%
-
2%
Peru
Source: World Bank
www.kallpasab.com
Colombia
Mexico
Argentina
Chile
Brazil
Peru
Brazil
Source: World Bank
Initial Coverage
11
b.
Eckerd Peru S.A.
Eckerd Peru is the company that operates InRetail holding’s pharmacies chain, through its Inkafarma brand. It
opened its first pharmacy in mid 90s and it was acquired by Intercorp group in 2011. As of closing of 2012, it had
580 pharmacies and it was the market’s leader with a 52% market share, according to IMS Health.
Besides Inkafarma, there are other important pharmacies chains, most notable: i) Quimica Suiza S.A. which
operates Fasa, Mifarma and BTL chains; and, ii) Albis S.A., which operates Arcangel chain. As of 2011, these
companies had 22% and 14% market shares, respectively (while Inkafarma had a 47% market share during that
year).
It is worth mentioning the market share gap that exist between Inkafarma and the second place. This due to the
fact that annual sales per Inkafarma pharmacy reach USD 1MM, while an average drugstore from other chains
reaches annual sales for USD 500,000.
This gap occurs principally due to the company's competitive advantage of offering a higher sales scale. Due to
Eckerd Peru’s greater sales volume, it has more power when negotiating with its suppliers, which allows the
company to have an every day low prices strategy. Consequently, this generates customer loyalty, since most
customers seek quality and low medicine prices.
On the other hand, the pharmacies segment also constitutes one of InRetail’s growth foundations in the future.
This growth, as well as that from the supermarket segment, will be supported by the same store sales' growth
and by new pharmacies openings.
The same store sales also decreased considerably in 2013, due to strong discount campaigns from the
competition as a way of increasing their market shares and as a response to fears regarding the domestic
economy’s slowdown. However we believe that same store sales should recover until reaching a 6.5% growth in
the long – term. This due to the higher demand of cosmetic and personal care products, and lower level of
competition (compared to the supermarkets industry).
Additionally, we believe that this segment will have a quick expansion through new stores as a consequence of
the low CAPEX that is necessary to open a new pharmacy (approximately USD 60,000), which is supported by
the following points:
-
A reduced store size, given that pharmacies use an assisted sales over the counter format, so they do not
require significant selling spaces.
-
All pharmacies operate in rented premises, so it is not necessary to invest in land, which requires less
paperwork and permits.
Finally, we estimate a margin improvement in this segment, since we believe that sales of products from own
brands will increase, and that the company will achieve logistic efficiencies with the new distribution center
(actually it is migrating to the new distribution center but also using the old one).
Chart Nº 17: Pharmacies stores
1,000
915
900
PEN MM
EBITDA Margin
Margin (%)
10%
820
800
8.5%
8.4%
8.8%
9%
7.9%
720
200
700
8%
7.1%
7%
580
600
150
500
400
EBITDA
250
6%
432
5%
384
100
303
4%
300
3%
200
50
2%
100
1%
-
2009
2010
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2011
2012
2013e
2014e
2015e
0%
2011
2012
2013e
2014e
2015e
Initial Coverage
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iii.
Shopping centers
a.
Industry: High potential with long term objectives
The shopping center segment has been one of segments with the highest growth within the formal retail industry.
The number of shopping centers increases every year as well as the gross leasable area (GLA), which has
increased at a CAGR of 26.7% between 2009 and 2012.
Despite this fact, Peru is far away from other countries of the region in regard with the development of shopping
centers. In our country, there are 1.7 shopping centers per 1 million inhabitants as of 2012, while the region’s
average is 3.1.
Chart Nº 19: Shopping centers' growth in Peru
000' m2
S.C
GLA (000' m2)
2,500
# Shopping Centers
63
52
2,000
45
1,500
70
6.0
60
5.0
5.2
50
36
Chart Nº 20: Shopping centers per 1 million
inhabitants in Latin America
4.0
Average: 3.1
40
32
3.0
20
500
10
-
2009
2010
2011
2012
Colombia
Chile
2.6
1.7
2.0
1.0
-
2013e
Peru
Source: ACCEP
3.5
2.3
30
1,000
3.4
Brazil
Argentina
Mexico
Source: ACCEP
Asociacion de Centros Comerciales y de Entretenimiento del Peru – ACCEP (Peruvian Association of
Entertainment and Shopping Centers) has observed potential in this industry estimating that there will be 137
shopping centers nationwide in 2021. In this way, there will be 4 shopping centers per 1 million inhabitants, and
this sector would contribute with 6.0% of the GDP.
Currently, there are more than 10 shopping center operators in Peru, which belong to major local and
international business groups. However, within this group it is worth mentioning Real Plaza, which belong to
InRetail, and Open Plaza, which belong to Chilean Falabella. Both operators concentrate more than 30% of the
industry’s sales and gross leasable area.
Table N° 4: Shopping centers - Market share by sales
Table N° 5: Shopping centers - Market share by gross
leasable area (GLA)
Company
Company
GLA (m2)
Sh. (%)
Real Plaza (InRetail)
933
16.3%
Real Plaza (InRetail)
338,000
20.2%
Open Plaza (Falabella)
910
15.9%
Mall Aventura Plaza (Mall Plaza)
235,000
14.0%
Jockey Plaza (Altas Cumbres)
774
13.5%
Open Plaza (Falabella)
230,000
13.7%
Mall Aventura Plaza (Mall Plaza)
588
10.3%
Inversiones Castelar
160,000
9.5%
Administradora Panamericana
552
9.6%
Jockey Plaza (Altas Cumbres)
136,834
8.2%
Plaza San Miguel
530
9.3%
Administradora Panamericana
125,662
7.5%
Plaza Norte
428
7.5%
MZ Gestion Inmobiliaria
118,707
7.1%
Others
1,012
17.7%
Others
331,906
19.8%
TOTAL
5,727
100%
TOTAL
1,676,109
100%
Source: ACCEP
b.
Sales (USD MM) Share (%)
Source: ACCEP
InRetail Real Estate Corp.
It is a company whose core business is operating InRetail’s shopping centers under the Real Plaza brand.
Strictly speaking, it is not a retail business since the company obtains revenues from renting spaces in its
shopping centers. The company leads the market, in terms of sales and gross leasable area, as it is shown in
previous tables. It is a very attractive segment due to high margins, which we believe it is justified by the high
investment amounts that the infrastructure construction demands.
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Initial Coverage
13
We expect that this segment will grow by expansions, by new shopping centers openings (115,000 and 100,000
additional square meters of gross leasable area in 2014 and 2015, respectively), as well as by a sustainable and
stable increase in rentals, which we estimate in 3.5% annually.
The shopping centers segment’s margins are the highest within InRetail, in line with many infrastructure
businesses. Although we do not see major margin increases in the future, we believe that the EBITDA margin
should recover, reaching the levels achieved in 2012, as long as the company obtains economies of scale with
new shopping centers openings.
Chart Nº 21: Gross leasable area (GLA) and
number of shopping centers
000' m2
GLA (000 m2)
S.C.
# Shopping Centers
700
20
EBITDA
52.2%
200
50.4%
51.1%
51.5%
48.3%
16
500
60%
EBITDA Margin
55.9%
20
18
14
400
250
25
600
Margin (%)
PEN MM
15
12
55%
50%
150
45%
300
10
100
40%
200
5
50
-
-
35%
100
2011
2012
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2013e
2014e
2015e
30%
2010
2011
2012
2013e
2014e
2015e
Initial Coverage
14
VII.
Valuation
We value the company through a Discounted Cash Flow to the Firm methodology. Additionally, we calculate an approximation
through a multiples analysis with a sample of Latin-American companies that are comparable to InRetail.
i.
Discounted Cash Flow
We value InRetail using a Discounted Cash Flow to the Firm methodology at a 10.61% discount rate (WACC) in a 10
year horizon (2014 – 2023). We use a 3.5% perpetual growth rate, which is in line with the estimated potential growth
of the company’s cash flows within our model.
Table N° 6: InRetail's valuation under DCF
Cash Flow (PEN MM)
+ EBIT
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
343
448
564
694
827
961
1,092
1,215
1,336
1,460
1,589
106
118
131
142
151
160
170
179
187
196
205
- CAPEX
-944
-988
-884
-714
-631
-596
-539
-507
-519
-512
-525
- ∆ Working capital
-200
-18
17
17
23
24
25
25
25
25
24
+ Depreciation & Amortization
- Taxes
Free Cash Flow to the Firm
-31
-86
-98
-126
-169
-211
-256
-298
-342
-389
-435
-726
-526
-271
12
201
339
490
613
687
779
858
Valuation
10.61%
WACC
3.50%
Perpetual Growth
5,769.36
Enterprise Value (PEN MM)
-1,701.84
- Debt (PEN MM)
306.89
+ Cash (PEN MM)
-0.18
- Minority Interest (PEN MM)
4,374.23
Equity's Fair Value (PEN MM)
102.81
2.80
Currency exchange rate (PEN/USD)
15.20
Below are our main assumptions:
Sales: Point III indicated that we expect a significant sales’ growth in the next years, boosted by new store openings in
all the business segments, as well as by same store sales growth. Sales’ greater dynamism is supported by the middle
class’ growth in Peru as well as by the domestic economy’s growth. For these reasons, we believe that sales,
particularly in the supermarket segment, will go in line with the GDP’s growth.
Chart Nº 23: SPSA Sales' growth vs. GDP's growth
Sales
20%
SPSA Sales Growth
GDP Growth
17.8%
18%
16.4%
13.6%
8.8%
12%
10%
2,500
6.9%
8%
Margin (%)
Gross Income
2,000
26.8%
8%
7%
10%
Gross Margin
27.2%
28.2%
28.2%
29.0%
35%
29.2%
30%
1,500
25%
1,000
20%
500
15%
8.5%
6.3%
7.2%
6.5%
6%
6.0%
6%
5%
5.1%
4%
4%
2%
0%
3%
2010
2011
Source: InRetail, BCRP, Kallpa SAB
www.kallpasab.com
PEN MM
9%
14.9%
16%
14%
Chart Nº 24: Gross Income vs. Gross Margin
GDP
2012
2013e
2014e
2015e
-
10%
2010
2011
2012
2013e
2014e
2015e
Initial Coverage
15
Cost of sales: In our analysis period we consider an improvement in the company’s gross margin, supported by a
higher penetration of own brand products (in supermarkets as well as in pharmacies), and by a higher stake from the
shopping center segment, given its high margin in regard with the other segments.
CAPEX: As it was previously mentioned, the company has an ambitious expansion plan, estimated between USD 900
MM and 1,100 MM for 2013 – 2015. We assume a CAPEX around the range’s middle point. In the same way, we
assume a maintenance CAPEX equivalent to approximately 1% of the company’s sales.
Chart Nº 25: CAPEX
Chart Nº 26: Indebtedness ratios
PEN MM
Debt/
EBITDA
1,800
Maintenance CAPEX
45%
1,600
Expansion CAPEX
40%
1,400
CAPEX / Sales
35%
40.0%
5.5
5.0
1,200
30%
1,000
800
25%
17.0%
17.9%
20%
15.9%
14.9%
12.3%
600
8.8%
400
200
2010
2011
2012
2013e
2014e
2015e
EBITDA/Financial Exp.
5.0
4.8x
4.5
4.8x
4.3x
4.5
4.0x
4.0x
3.8x
4.0
4.0
3.5
3.5
2.9x
15%
3.0
10%
2.5
5%
2.0
0%
1.5
3.0
3.2x
3.1x
2.9x
2.6x
3.0x
2.5
2.5x
2.0
1.5
2010
2016e
There is no differentiation data between expansion and maintenance CAPEX in 2010 2012. InRetail acquired Eckerd Peru in 2011.
Debt/EBITDA
5.0x
EBITDA/
Fin. Exp.
2011
2012
2013e
2014e
2015e
2016e
Indebtedness: The supermarket and drugstore businesses demand high inventory amounts, which are financed
through suppliers. However, expansions in the supermarket and shopping centers segments require huge capital
inflows, due to the infrastructure construction’s high costs.
For this reason, the company faces high indebtedness levels which will be maintained in the short and mid – term.
However, indebtedness levels should improve as long as the company makes the delivery of higher sales scale and
higher financial margins.
Discount rate: We estimate a 10.61% discount rate (WACC), which results from assuming a 4.50% risk free rate
(which includes a 3.00% free risk rate for mature markets and a 1.50% country risk). We estimated a 1.09 levered beta.
We assume an 8.5% average indebtedness rate and a 1.0% appreciation rate for PEN.
Chart N° 27: WACC's breakdown
WACC
10.61%
Appreciation
PEN/USD
1.00%
COKe
12.89%
Rf
3.00%
Beta
1.09
E/(D+E)
62.97%
Risk premium
6.50%
COKd
8.50%
D/(D+E)
37.03%
(1-T)
70.00%
Country risk
1.50%
Source: Kallpa SAB
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Initial Coverage
16
ii.
Sensitivity Analysis
Our fair value is calculated over the base of assumptions that are assumed by the analyst. Nevertheless, investors may
evaluate variations in this fair value before changes in our main assumptions, such as the discount rate and the
perpetual growth rate.
Table N° 7: FV's sensitivity to WACC and to perpetual growth rate (g)
WACC \ g
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
9.61%
15.88
16.99
18.26
19.74
21.48
23.56
26.10
10.11%
14.09
15.02
16.07
17.29
18.70
20.37
22.36
10.61%
12.53
13.31
14.19
15.20
16.36
17.71
19.31
11.11%
11.15
11.82
12.56
13.41
14.37
15.48
16.77
11.61%
9.93
10.50
11.14
11.85
12.66
13.58
14.64
Source: Kallpa SAB
iii.
Scenario analysis
We sensitize the valuation’s main variables in order to carry out the following scenario analysis.
a.
Baseline scenario – FV: USD 15.20: Under this scenario, we assume a 4.0%, 6.5% and 3.5% same store
sales’ growths in the long term for supermarkets, pharmacies and shopping centers, respectively. This, given a
5% domestic economy’s growth in the long term. Additionally, we assume a 10.61% discount rate. Our long
perpetual growth is 3.5%.
b.
Optimistic scenario – FV: USD 25.95: Under this scenario, we assume a 100 basis points increase in the same
store sales’ growth (5.0%, 7.5% and 4.5% for supermarkets, pharmacies and shopping centers, respectively),
before significant improvements in the country’s growth perspectives and market’s lower competitiveness.
Additionally, we assure a lower risk perception which results in a 100 basis points decrease in our discount rate
with regard to the baseline scenario. Our perpetual growth is 4.5%.
c.
Pessimistic scenario – FV: USD 9.36: Under this scenario, we assume a 100 basis points decrease in the
same store sales’ growth (3.0%, 5.5% and 2.5% for supermarkets, pharmacies and shopping centers,
respectively), before a more pronounced domestic economy’s slowdown and the industry’s higher
competitiveness. Additionally, we assume a higher risk perception which results in a 100 basis points increase in
the discount rate with regard to the baseline scenario. Our perpetual growth is 2.5%.
Chart Nº 28: Scenario analysis
FV (USD)
30
+ 3.11
25.95
LT growth 4.5%
Optimistic
scenario
25
+ 4.08
20
+ 1.67
15
10
- 1.50
15.20
SSS
- 100 bpts
Baseline
scenario
- 3.09
9.36
- 1.24
5
Pessimistic
scenario
LT growth 2.5%
WACC
+ 100 bpts
SSS
+ 100 bpts
WACC
- 100 bpts
Source: Kallpa SAB
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Initial Coverage
17
iv.
Risks
a.
Peru risk: 100% of the company’s operations are concentrated in Peru, so it is exposed to the country’s
economic performance. Any significant event regarding politic or economic affairs, among others, may have an
impact in InRetail’s results.
b.
Execution risk: The company has an aggressive expansion strategy that will cause negative cash flows to the
firm in the short term. Hence, most of the fair value relies on its terminal value. Changes in the investment plan’s
execution or in the long term same store sales, will have a significant impact in our fair value.
c.
Cannibalization risk: High competitiveness levels and limited locations with proper conditions for formal retail’s
development may provoke many platforms to be located very close to other ones, causing sales cannibalization.
d.
Currency risk: As of 2012, approximately 80% of the company’s debt was denominated in USD, while most of
the company’s revenues were originated in local currency (PEN). This constitutes a risk since it generates
exposure to the exchange rate’s volatility. We expect that this risk will gradually decrease as long as the
company assumes new debt in local currency.
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Initial Coverage
18
v.
Multiple Analysis
Table N° 8: Peer companies of InRetail
Company
Market Cap.
(USD MM)
Country
InRetail Peru Corp.
P/E
12M
P/E
2014
EV/EBITDA
12M
EV/EBITDA
2014
P/BV
ROE
ROA
Peru
1,645
41.83
22.85
13.55
10.60
1.59
3.8%
1.8%
Walmart Mexico
Mexico
44,739
24.92
21.55
14.03
12.35
4.31
17.7%
11.1%
SACI Falabella
Chile
20,149
25.39
18.99
19.85
14.17
3.46
14.1%
4.8%
Cia Brasileira de Distribuicao
Brazil
11,068
25.83
17.56
8.78
6.75
2.87
11.6%
2.9%
Cencosud SA
Chile
9,084
24.08
15.35
9.47
8.30
1.17
5.0%
2.1%
Colombia
6,708
27.29
27.08
n.d.
11.11
1.71
6.4%
4.9%
Mexico
5,886
21.15
18.43
10.98
9.90
1.80
9.0%
4.9%
Chile
5,583
24.91
n.d.
12.98
n.d.
n.d.
15.9%
5.5%
Grupo Comercial Chedraui
Mexico
3,083
25.18
22.36
10.91
9.84
1.90
7.7%
3.7%
Corp Favorita
Ecuador
1,541
14.98
n.d.
10.68
n.d.
2.28
16.1%
11.4%
10,949
25.56
20.52
12.36
10.38
2.34
10.7%
5.3%
Almacenes Éxito
Organizacion Soriana
Walmart Chile
Average
Chart Nº 29: P/E 2014 vs. EV/EBITDA 2014
Chart Nº 30: ROE vs. ROA
EV/EBITDA
2014
Market Cap.
18
Walmart
Mexico
14
8%
Exito
InRetail
Exito
6%
Soriana
Chedraui
8
Walmart
Mexico
10%
12
10
Market Cap.
14%
12%
Falabella
16
ROA
4%
Chedraui
Cencosud
2%
6
InRetail
CBD
P/E
16
18
CBD
Cencosud
4
14
Falabella
Soriana
20
22
24
26
28 2014
0%
0%
4%
8%
12%
16%
20% ROE
We observe that InRetail trades at a 22.9x P/E 2014 multiple, while its peer companies trade at an average of 20.5x.
Additionally, it trades at 10.6x EV/EBITDA 2014, while it peers trade at a 10.4x multiple.
If we take these multiples as a basis in order to value the company, we would find a USD 15.56 fair value per InRetail
share through EV/EBITDA 2014 and a USD 14.37 fair value per share through P/E 2014. If we take the average from
both values we obtain a USD 14.96 fair value per share, which is 6.5% below the market price.
Table N° 9: Valuation by EV/EBITDA 2014
EBITDA estimated for 2014 (PEN MM)
Multiple
Fair EV (PEN MM)
Net Debt (PEN MM)
Minority Interest (PEN MM)
Shares Outstanding
Table N° 10: Valuation by P/E 2014
565.90
10.38
5,873.21
-1,394.95
-0.12
Net income estimated for 2013 (PEN MM)
201.60
20.52
Multiple
4,136.99
102.81
Shares Outstanding
14.37
Share's Fair Value by multiples (USD)
14.96
4,478.15
102.81
15.56
Source: Kallpa SAB
It is worth mentioning that this analysis is referential since it does not take into account the potential growth of the
company’s profits after 2014.
www.kallpasab.com
Initial Coverage
19
Annex 1: Financial Statements
INCOME STATEMENT (PEN MM)
2010
2011
2012
2013e
2014e
2015e
2,489.6
4,242.2
4,783.9
5,282.9
6,203.2
7,162.9
-1,821.6
-3,087.4
-3,436.9
-3,791.4
-4,405.3
-5,069.1
Gross Income
668.0
1,154.8
1,347.0
1,491.5
1,797.9
2,093.8
Sales Expenses
-464.5
-778.9
-868.0
-1,016.2
-1,147.5
-1,300.1
-69.1
-151.9
-163.2
-177.8
-212.0
-241.0
Net Sales
Cost of Sales
Administrative Expenses
40.4
39.6
51.4
45.8
9.4
11.2
Operating Income
174.8
263.6
367.2
343.3
447.8
564.0
Net Interest Income
-42.1
-98.1
-134.8
-149.2
-159.9
-236.1
8.3
20.8
76.8
-116.4
-
-
141.1
186.3
309.2
77.7
288.0
327.8
Other Expenses, Net
FX Gain (Loss)
Income Before Taxes
Taxes
-35.6
-62.8
-90.9
-31.1
-86.4
-98.4
Net Income
105.5
123.6
218.3
46.6
201.6
229.5
0.2
0.1
0.0
-0.0
0.0
0.0
105.4
123.4
218.3
46.6
201.6
229.5
46.2
69.4
83.3
102.8
102.8
102.8
2.280
1.778
2.620
0.453
1.961
2.232
75.1
100.6
98.3
105.9
118.1
130.7
209.3
312.7
411.8
434.5
565.9
694.6
2010
2011
2012
2013e
2014e
2015e
Cash & Cash Equivalents
118.8
345.7
1,096.9
306.4
38.7
611.3
Accounts Receivable
134.2
89.6
212.2
251.9
309.8
373.7
Inventory
266.9
614.8
602.0
751.8
804.7
987.2
35.2
139.5
107.7
186.8
197.1
208.8
555.2
1,189.7
2,018.8
1,496.8
1,350.2
2,181.0
Minority Interest
Attributable to InRetail
Earnings per Share - EPS (PEN)
EBITDA
BALANCE SHEET (PEN MM)
Other Short Term Assets
Current Assets
1,166.7
1,515.2
1,763.5
1,994.8
2,255.7
2,494.9
Investment Properties
604.9
761.1
1,104.3
1,697.0
2,289.0
2,788.8
Net Intangible Assets
45.3
1,116.6
1,136.7
1,150.7
1,167.2
1,181.8
8.9
13.7
27.0
27.0
27.0
27.0
Non Current Assets
1,825.7
3,406.6
4,031.6
4,869.5
5,739.0
6,492.6
TOTAL ASSETS
2,381.0
4,596.2
6,050.4
6,366.4
7,089.3
8,673.5
Short Term Debt
141.0
79.7
83.7
186.6
228.5
336.4
Accounts Payable
703.8
1,103.6
1,231.8
1,320.3
1,423.2
1,698.4
17.6
15.0
28.1
8.1
8.1
8.1
Current Liabilities
862.4
1,198.3
1,343.6
1,515.1
1,659.8
2,043.0
Long Term Debt
460.9
1,481.4
1,583.8
1,679.8
2,056.4
3,027.9
58.7
184.8
222.3
224.3
224.3
224.3
Net Fixed Assets
Other Long Term Assets
Other Short Term Liabilities
Other Long Term Liabilities
Non Current Liabilities
Total Liabilities
Net Equity attributable to InRetail
Minority Interest
Net Equity
TOTAL LIABILITIES + EQUITY
CASH FLOW (PEN MM)
519.7
1,666.1
1,806.2
1,904.1
2,280.7
3,252.2
1,382.1
2,864.4
3,149.8
3,419.2
3,940.5
5,295.2
997.2
1,730.1
2,900.5
2,947.1
3,148.7
3,378.2
1.6
1.8
0.1
0.1
0.1
0.1
998.9
1,731.8
2,900.6
2,947.2
3,148.8
3,378.3
2,381.0
4,596.2
6,050.4
6,366.4
7,089.3
8,673.5
2010
2011
2012
2013e
2014e
2015e
105.4
123.4
218.3
46.6
201.6
229.5
75.1
100.6
98.3
105.9
118.1
130.7
Changes in Working Capital
-0.5
-10.3
63.3
-200.0
-18.2
17.1
5.3
121.1
24.3
2.0
Operating Cash Flows
185.3
334.8
404.2
Investment Cash Flows
Net Income
Other Adjustments
-
-
-45.5
301.4
377.3
-420.9
-1,676.6
-710.0
-943.9
-987.6
-884.2
Financing Cash Flow
217.1
1,568.6
1,057.0
198.9
418.5
1,079.5
Free Cash Flow
-18.5
226.9
751.2
-790.5
-267.7
572.6
Source: Kallpa SAB
www.kallpasab.com
Initial Coverage
20
Appendix – Disclaimer
Analyst certification
The analyst that prepared this report hereby certifies that: i) the opinions and views expressed in this valuation report, in regard with
the issuer and with the company’s overview, reflected his/her personal opinion and ii) No part of his/her salary compensation was, is
or will be related directly or indirectly to the recommendations expressed in this report.
The economic compensation of the analyst that prepared this report is based in several factors, including but not limited to Kallpa
Securities SAB’s profitability and the profits generated by its different areas, including investment banking. In addition, the analyst
does not receive any kind of economic compensation from the companies he/she covers.
This valuation report was prepared by Kallpa Securities SAB’s employees that maintain the position of Analyst. Persons involved in
the elaboration of this report are authorized to maintain shares.
Share prices in this report are based on market prices as of closing of the day prior to the publication of this report, unless it is strictly
stated.
General statement
This document is for informative purposes only. Under no circumstances it should be used / be considered as an offer of sale or an
application of purchase of shares or any other securities mentioned in this document. The information herein has been obtained from
sources which are believed to be reliable, but Kallpa Securities SAB does not guarantee the trustfulness or accuracy of the content
of this report, or the future market values of shares or other securities mentioned in this document. The views and opinions
expressed in this document constitute our opinion at the time of this report and are subject to change without any notice. Kallpa
Securities SAB does not guarantee analysis updates before any change in the circumstances of the market. The products referred in
this document may not be available for purchase in some countries.
Kallpa Securities SAB has reasonably designed policies to prevent or to control the exchange of non-public information used by
areas such Research and Investment, Capital Markets, among others.
Definition of qualification ranges
Kallpa Securities SAB has 5 qualification ranges: Buy +, Buy, Hold, Sell and Sell - . The analyst will assign the coverage one of these
ranges.
Sell Sell Hold
< - 30%
-30% to -15%
-15% to 0%
> + 30%
+15% to +30%
0% to +15%
Buy +
Buy
Hold
The range assigned to each company covered by the analyst in these reports is based on the analysis/monitoring Kallpa Securities
SAB has been developing for the company. In some cases, the analyst can express his/her short-term points of view to traders,
vendors and some Kallpa Securities SAB’s clients but this point of view may differ in time by market volatility and other factors.
The fair value calculated by Kallpa SAB is based in one or more valuation methodologies commonly used by financial analysts,
including but not limited to discounted cash flows, In Situ valuations or any other applicable methodology. It should be noted that the
publication of a fair value does not imply any guarantee that the value will be achieved.
www.kallpasab.com
Initial Coverage
21
KALLPA SECURITIES SOCIEDAD AGENTE DE BOLSA
MANAGEMENT
Alberto Arispe
CEO
(511) 630 7500
aarispe@kallpasab.com
COMMERCIAL
CAPITAL MARKETS
CORPORATE FINANCE
Enrique Hernández
Manager
(51 1) 630 7515
ehernandez@kallpasab.com
Ricardo Carrión
Manager
(51 1) 630 7500
rcarrion@kallpasab.com
Andrés Robles
Manager
(51 1) 630 7500
arobles@kallpasab.com
Edder Castro
Analyst
(51 1) 630 7529
ecastro@kallpasab.com
Humberto León
Analyst
(51 1) 630 7527
hleon@kallpasab.com
Javier Frisancho
Trader
(51 1) 630 7517
jfrisancho@kallpasab.com
Jorge Rodríguez
Trader
(51 1) 630 7518
jrodriguez@kallpasab.com
EQUITY RESEARCH
Marco Contreras
Senior Analyst
(51 1) 630 7528
mcontreras@kallpasab.com
Fiorella Torres
Assistant
(51 1) 630 7500
ftorres@kallpasab.com
TRADING
Eduardo Fernandini
Head Trader
(51 1) 630 7516
efernandini@kallpasab.com
CHACARILLA OFFICE
Hernando Pastor
Representative
(51 1) 626 8700
hpastor@kallpasab.com
MIRAFLORES OFFICE
Daniel Berger
Representative
(51 1) 652 6453
dberger@kallpasab.com
Walter León
Representative
(51 1) 243 8024
wleon@kallpasab.com
AREQUIPA OFFICE
Jesús Molina
Representative
(51 54) 272 937
jmolina@kallpasab.com
Ricky García
Representative
(51 54) 272 937
rgarcia@kallpasab.com
OPERATIONS - IT
Mariano Bazán
Analyst - Treasury
(51 1) 630 7522
mbazan@kallpasab.com
Ramiro Misari
Head of IT
(51 1) 630 7500
rmisari@kallpasab.com
INTERNAL CONTROL
Elizabeth Cueva
Controller
(51 1) 630 7521
ecueva@kallpasab.com
www.kallpasab.com
Initial Coverage
22

details - Kallpa SAB

Transcription

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