Chile: Merrill increases Chile Brewer CCU target price to $40/ADR
Investment bank Merrill Lynch (MER) Tuesday increased its target price for Chilean Beverage Company and brewer Compania Cervecerias Unidas SA (CU) to $40.00 per American Depository Receipt from its previous target of $35/ADR, according to Dow Jones Newswires, June 19.
CCU, Chile's dominant beer producer, has a commanding domestic market share.
"The Chilean consumer is among the most vibrant in Latin America," with a buoyant economy to shore up CCU's bottom line, Merrill research analysts said in their note. Rising income levels support sales of premium and "super-premium" beer brands, they added.
Corporate restructuring - including "a net headcount reduction of about 6%" - will help improve efficiency, they also said.
Controlled by local investment holding company Quinenco SA (QUINENCO.SN), CCU is one of the few major brewers to remain independent in Latin America, making it a potential takeover candidate.
"CCU provides exposure to potential consolidation. A control premium for CCU would add 30% or more to our price objective," the analysts said.
At 1608 GMT, CCU shares were traded up 1.3% at 3,870.00 pesos ($7.33) in Santiago, widely outperforming the benchmark Ipsa index, which was up 0.1%.
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