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CCU Rallies to Record as Valuation Trails Peers: Santiago Mover

Cia. Cervecerias Unidas SA (CCU), Chile’s largest brewer, rose to a record on speculation that the shares are undervalued relative to peers.

CCU, as the company is also known, advanced 2.9 percent to a record 7,972 pesos at the close in Santiago, its biggest increase in six months and its fourth day of gains.

CCU’s shares trade at 22 times its trailing earnings, which compares with 23 times for Fomento Economico Mexicano SAB, 32 times for Grupo Modelo SA de CV, 25 times for Cia. de Bebidas das Americas (AmBev) and 30 times for Coca-Cola Femsa SAB, according to data compiled by Bloomberg.

“The whole beverages industry has seen a rise in their multiples versus their historic averages,” Isabel Darrigrandi, an analyst at BTG Pactual, said in a telephone interview from Santiago. “CCU was lagging in that area.”

CCU is the dominant brewer in Chile with 80.2 percent market share as of the end of 2011, according to reports on its website. It also controlled 23 percent of the Argentine beer market, according to the same report.

“When you look at its multiples, it’s evidently behind,” Osvaldo Pacheco, an analyst at Banco de Credito & Inversiones, said by phone. “The shares had also been overlooked because of CCU’s exposure to Argentina and the capital controls there.”

The company’s stock rose 11 percent in 2012, underperforming other Chilean bottlers such as Embotelladora Andina SA, which gained 33 percent and Coca-Cola Embonor SA, which jumped 61 percent.

To contact the reporter on this story: Eduardo Thomson in Santiago at ethomson1@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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