Forus Leads Ipsa Gains in Chile After BTG Says Buy

Forus SA (FORUS), a Chilean retailer of Columbia clothes and Nine West shoes, surged to a record after Grupo BTG Pactual recommended the stock as a bet on rising demand by South American consumers.

Forus rose 2.1 percent to 3,011 pesos at 1:32 p.m. in Santiago, the highest price on a closing basis since the stock started trading in 2006, according to data compiled by Bloomberg. Forus was the biggest gainer today on Chile’s benchmark Ipsa (IPSA) index, which fell 0.4 percent.

BTG initiated coverage of Santiago-based Forus with a buy recommendation and a 12-month price target of 3,445 pesos, according to an e-mailed report yesterday. The brokerage firm estimated consumer demand will grow 4 percent to 6 percent this year in Peru, Colombia, Chile and Uruguay while Forus will reap gains from 70 stores opened in 2011 and 2012.

“While Chile continues to be Forus’s primary market, over time we expect that Peru, Colombia and Uruguay will represent a bigger piece of the pie,” analysts Isabel Darrigrandi, Alonso Aramburu and Fabio Monteiro wrote in the note. “Forus continues to ramp up its operations in these countries.”

Forus plans to open 35 to 40 stores this year, BTG said. Forus doesn’t operate credit cards, has no associated default risk and leases its stores instead of buying, which results in a “light” balance sheet, BTG said.

The retailer trades at 21 times estimated 2013 earnings, according to data compiled by Bloomberg. Brazil’s Arezzo Industria e Comercio SA, a comparable company according to BTG, trades at 26 times estimated 2013 earnings.

Forus rallied 95 percent last year, the best performance on the Ipsa.

To contact the reporter on this story: Eduardo Thomson in Santiago at

To contact the editor responsible for this story: Brendan Walsh at

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