09 June 2009

Chile's Parque Arauco Rises to 1-Year High on Profit Outlook

By Nathan Gill
     June 9 (Bloomberg) -- Parque Arauco SA, a Chilean shopping-center developer and operator, climbed to its highest in a year in Santiago trading on speculation that its expansion plans will boost earnings growth.
     Parque Arauco rose 3.2 percent to 514 pesos, the highest closing price since May 28, 2008. The company has said it plans to double its locations for lease with the construction of 11 new malls in Chile, Peru and Colombia.
     “We see good prospects for the company in terms of earnings in the next three years because of the strong expansion plan,” Diego Celedon, an analyst with Banchile Inversiones, said today in a telephone interview. “Also, the real estate company’s defensive characteristics in the current uncertain economic environment have caught our attention.”
     Chile’s economic activity shrank by the most in a decade in April and the annual inflation rate fell to a two-year low, boosting expectations that the central bank will cut interest rates for a record sixth straight month.
     Parque Arauco has rallied 11 percent in the past three days since Banchile initiated coverage of the stock with a “buy” rating and a 600 peso share-price estimate. Profit probably will more than double this year as the company expands in Chile, Peru and Colombia, Banchile said.
     “It’s a company that doesn’t have much coverage,” Celedon said. “The initiation of coverage might be making shares react positively because it gave information to investors who may not have had much.”