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Latam Airlines Gains in Chile on 10-Year Low Valuations

Aug. 16 (Bloomberg) -- Latam Airlines SA, Latin America’s largest carrier by revenue, rallied as the stock’s lowest valuation in at least a decade lured buyers.

Latam, formed by the takeover of Brazil’s TAM SA by Chile’s Lan Airlines SA, rose 5.2 percent to 6,407.8 pesos at the close in Santiago, the biggest jump in 14 months. The stock was the best performer today on the IPSA benchmark index, which fell 0.8 percent.

“Latam’s valuation multiples are showing an attractive point of entry if you are an investor with a mid to long-term horizon,” Oswaldo Pacheco, an analyst at Banco de Credito e Inversiones, said in a telephone interview today from Santiago.

The airline’s shares have fallen 43 percent in 2013 as it works to reach saving targets from its takeover of Brazil’s TAM SA and after receiving approval in June to sell $1 billion in new shares to fund expansions and reduce debt.

Latam’s price-to-book ratio reached 1.04 times on Aug. 13, the lowest since April 2003, compared to 3.5 times for Panama’s Copa Holdings SA and 2.4 times for Bogota-based Avianca Holdings SA, its two closest regional peers, according to data compiled by Bloomberg. Avianca has fallen 8.8 percent in 2013 while Copa has increased 37 percent.

Copa surpassed Latam on Aug. 5 as the largest carrier by market value headquartered in Latin America. Copa’s total market cap is $6.05 billion, while Latam is at $6.04 billion.

Latam is scheduled to report second-quarter results Aug. 20. Analysts forecast a loss of $95.7 million, according to the average of six estimates.

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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