FF l1 Inretail

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RESERVA DEL PERU

Latin America Equity Research
13 November 2012
Initiation
Overweight
InRetail
INR.LM, INRETC1 PE
Price: $19.50
Right Place, Right Time; Scarcity Value in Fastest

Economy in Latin America; Initiate at Overweight
Price Target: $24.00
We are initiating coverage of InRetail, a leading food/drug retailer and mall

developer/operator in Peru, with an Overweight rating and a US$24 December
2013 price target, which implies 23% price appreciation. Peru is the fastest
growing country in Latin America and we believe offers the highest potential for
retail expansion in the region, due to low penetration of modern retail (20% of
food sales currently). EPS should expand 29% in the next three years, driven by
solid sales floor expansion and profitability improvement. As such, the 23%
premium to peers is warranted, in our view. We foresee significant upside
potential as management gradually delivers expansion and profitability improves,
and believe it is on track to deliver healthy quarters ahead.
Food retail division, Supermercados Peruanos (SPSA), is dominant in the
fast growing regions outside Lima. SPSA has 45% market share in the regions
outside Lima, where land is cheaper and more spots are available. Logistics,
systems and layout improvements should lead to c100bp improvement in
margin.
InkaFarma offers the most extensive retail network in Peru in an assetlight model. InRetails InkaFarma has 47% share of the modern drugstore
market and 28.3% of the total market, making it the leader. Also, we believe the
limited capex of US$60k/store, healthy 14% store EBITDA margin, and strong
growth opportunities make InkaFarma a source of long term value. Its large
private label portfolio (30% of sales) brings a strong competitive price
advantage and higher margins. Sales per unit of a typical InkaFarma store is 2x
that of other local chains, and 10x larger than mom & pops.
Land bank should limit uncertainty for supermarket and mall expansion in
the rest of 2012 and 2013. InRetail is speeding up openings and building four
additional malls and five mall expansions. It owns much of the real estate on
which it operates; this secures location in the long term and avoids rental hikes.
Parent public since 2007; source of management talent. While InRetail is
new to investors, having gone public last month, its parent, IFS (market cap of
US$3bn), went public in June 07 and posted solid 41% earnings growth in 2011.
Latin American Retail and

Healthcare
AC
Andrea Teixeira, CFA
(1-212) 622-6735
andrea.f.teixeira@jpmorgan.com
J.P. Morgan Securities LLC
Felipe Oliveira, CFA

(55-11) 4950-3892
felipe.r.oliveira@jpmorgan.com
Banco J.P. Morgan S.A.
Price Performance
25
$
23
21
19
Nov-11
Feb-12
May-12
Aug-12
Nov-12
INR.LM share price ($)

IGBVL (rebased)
Abs
Rel
YTD
-3.0%
-10.5%
1m
-3.5%
-1.4%
3m
-3.0%
-9.6%
12m
-3.0%
-13.7%
Price Target Derivation:

We averaged three valuation methods
to derive our PT: (1) peer valuation
of similar retailers in the region, (2)
SOP, and (3) DCF. The blended Dec13 price target is $24, which implies
23% upside.
Stock should retain current premium against peers. InRetail is trading at a

23% premium to peers based on P/E13E of 25.5x, due to the 29% expected
CAGR 12-15E in EPS vs. 21% for peers and we expect this premium to
continue.
Inretail Per Corp (INR.LM;INRETC1 PE)
FYE Dec
2011A
EPS Reported (S)
FY
1.19
EV/EBITDA FY
P/E FY
42.8
EBITDA FY (S mn)
312
Revenues FY (S mn)
4,241
Source: Company data, Bloomberg, J.P. Morgan estimates.
2012E
2013E
2014E
1.57
17.6
32.5
419
4,839
2.00
14.7
25.5
543
5,842
2.63
11.3
19.4
736
7,079
Company Data
Price ($)
Date Of Price
52-week Range ($)
Mkt Cap ($ mn)
Fiscal Year End
Shares O/S (mn)
Price Target ($)
Price Target End Date
19.50
12-Nov-12
21.90 - 19.10
2,004.74
Dec
103
24.00
31 Dec 13
See page 25 for analyst certification and important disclosures, including non-US analyst disclosures.
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that
the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single
factor in making their investment decision.
www.morganmarkets.com
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13 November 2012
Table of Contents
Investment Thesis ....................................................................3
Risks to Rating and Price Target ............................................4
Company Description ..............................................................4
Company Outlook: A Diversified Retailer ..............................5
Food Retail: 80% of Market Up for Grabs...............................6
Drugstores: Sizable Opportunity ..........................................11
Real Estate: KeyCompetitive Advantage..............................16
Financial Outlook ...................................................................19
Valuation .................................................................................20
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13 November 2012
Investment Thesis
InRetail (INRETC1 PE)
Overweight
Scarcity value at the leading retailer in the fastest growing market in LatAm
InRetail is the only publicly traded retailer and a pure-play in the Peruvian market.
The company includes: (1) the second largest supermarket chain (Supermercados
Peruanos, 47% of EBITDA13E) in Peru, (2) the biggest drugstore chain (InkaFarma,
29% of EBITDA13E), and (3) a complementary shopping center business (Real
Plaza, 24% of EBITDA13E).
Only local food retailer, which allows for on-the-ground expertise and faster
decision process on new locations
InRetail is the only pure local retail chain in Peru, competing with Chilean retailers
Falabella and Cencosud in supermarkets. InRetail is a subsidiary of Intercorp, the
second largest consumer bank in Peru, and third largest in Peru overall, which gives
it access to capital markets and also allows for management talent exchange.
Intercorp also has several other consumer businesses that were not part of the IPO,
including department store Oeschle, credit division Financiera Uno, home
improvement chain Promart, and real estate broker Milenia. Its private equity arm,
Nexxus Group, also owns quick service restaurants and movie theaters.
Location, location, location.InRetail/related entities own two-thirds of real
estate on which it operates
InRetail offers a unique position in valuable areas in Lima and the rest of Peru as it
and related companies own two-thirds of the real estate on which the supermarkets
operate, as well as 10 of the 13 malls. All rents that the parent charges are at market
prices of c2-2.5% of sales, and are audited frequently. Also, the planned expansion of
supermarkets for 2013 and part of 2014 is already set. InRetail started as a real estate
developer in 2001 and was later broadened with the acquisition of Supermercados
Peruanos in 2003. Approximately 90% of the proceeds from the IPO will be used to
expand operations of five existing malls, as well opening of four new shopping
centers.
Largest network of pharmacies with highly recognized brand
InkaFarma has the vastest network of stores among all retailers in Peru. The
company has one of the most recognized brands in Peru. The presence of a
pharmacist in each store allows for first aid for many Peruvians who do not have
health insurance and likely would not get healthcare otherwise, increasing loyalty.
Economic backdrop remains solid
Peruvian GDP grew 6.5% in the last five years and our economics and debt strategy
team in the Andeans, led by Benjamin Ramsey, expects GDP in Peru to grow at 6%
in 2013 and 2014, respectively, with inflation within target range and a positive FX
outlook for further appreciation of the Peruvian soles. The main driver of the strong
performance has been domestic consumption. Recent delays of the Conga mining
project has not spilled over into the other foreign direct investments in the country.
Stock should retain current premium against peers, supporting our OW rating
InRetail is trading at a 19% premium to peers based on a P/E13E of 24.7, due to the
29% expected CAGR in EPS over next three years vs 21% for peers. We
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13 November 2012
acknowledge that growth is back-end loaded but its dominant presence and scarcity
value in Peru is worth the risk-reward balance, in our view.
Risks to Rating and Price Target

The main downside risks to our recommendation and price target are:
Management has set an aggressive expansion plan, so execution risk is one of the
key uncertainties.
Cannibalization and deterioration in margins with aggressive store rollouts.
Potential deceleration in foreign direct investments on the back of the Conga
project delays may put at risk our GDP growth estimate for Peru and negatively
impact demand.
Construction costs may rise, and we estimate the potential need to raise about 350
million soles and 150m soles in 2014 and 2015, respectively, to fulfill expansion
plans. In this case the company may have to contemplate debt or a follow-on
(there has been no guidance on this).
Worse than expected cash burn as a result of the aggressive expansion plan
leading to more funding requirement than expected.
Stronger competition could result in gross margin pressure, especially in the
supermarket division.
Company Description
InRetail is a multi-format retailer operating exclusively in Peru with nationwide
presence and leading market positions in three business segments: supermarkets
(57% of 2011 EBITDA), drugstores (25% of 2011 EBITDA) and shopping centers
(18% of 2011 EBITDA). We expect an EBITDA CAGR of 29% in the next three
years. In supermarkets, InRetail is the second largest with 33% share, only behind
Cencosuds 44% share, while in drugstores it is the leader with 23% share. We
expect InRetail to have net sales of US$1.8bn in 2012 and EBITDA of US$156m.
InRetail had its initial public offering on October 3rd (solely primary), raising
US$460m for $20 per share. J.P. Morgan acted as global coordinator and joint
bookrunner in the transaction. It trades on the Lima Stock Exchange under the ticker
INRETC1 PE and the price is quoted in US dollars.
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13 November 2012
Company Outlook: A Diversified Retailer

InRetails strategy is to focus on multi-format retailing, capitalizing on the group's
real estate assets. The company started as a real estate developer, to invest the funds
from the insurance business. The group started buying land suitable for commercial
development in the early 2000s, which allowed for fast growth in the mall segment.
The acquisition of Supermercados Peruanos in 2003 added a large customer base that
helps the group cross-sell other businesses, including its private label credit cards.
The drugstore business, InkaFarma, was acquired in January 2011 and completed the
portfolio of formats that are complementary to the mall operation. The segment
breakdown is in the diagram below.
Table 1: InRetail Segment Snapshot Diversified and Complementary Retail Platform
Last 12 months ended
September 30, 2012. In
US$ mn, unless otherwise
noted
Market Position
Sales area GLA m2
# Stores/Properties
Net sales
Adjusted EBITDA*
EBITDA margin (%)
Sales % of total
EBITDA % of total
Supermarkts
Pharmacy
Shopping Centers
Combined
Supermarcados
Peruanos SA
2nd
207,407sqm
78
735.1
38.3
5.2%
62.1%
39.0%
Inkafarma
InRetail
InRetail Peru Corp
1st
N/A
505
413.1
37
9.0%
34.9%
37.7%
1st
274,744 sqm
15
38.8
23.8
61.3%
3.3%
24.2%
1184.6
98.2
8.3%
Source: Company reports. *excludes non-recurring real estate revaluations.
Free-float of 22% is limited as majority shareholders did not participate in

secondary offering
InRetails IPO took place on October 3, 2012, and raised US$460m in gross proceeds
(23mn shares at $20), to be used mostly (90%) in the development of new malls and
expansion of existing ones. The deal was 100% primary, as controlling shareholders
chose not to participate at the $20 IPO price, which is a good signal, in our view. The
resulting free float was limited at 22% but we expect it to improve in the future.
Parent company Intercorp also has some start-up retail businesses. The other retail
businesses that are not part of InRetail include department store Oeschle, credit
division Financiera Uno, home improvement chain Promart, and real estate broker
Milenia. Its private equity arm, Nexxus Group, also owns quick service restaurant
chains and movie theaters.
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13 November 2012
Figure 1: Pre-IPO Shareholder Structure

Intercorp
Financial
Services,
3.1%
Figure 2: Post-IPO Shareholder Structure
Inteligo Bank,
9.8%
Free Float,
22.4%
NG Capital
Partners,
8.1%
NG Capital
Partners, 6.3%
Intercorp,
79.0%
Intercorp and
Subsidiaries,
71.3%
Source: Company reports

Food Retail: 80% of Market Up for Grabs

The supermarket business accounted for 62% of InRetails sales and 39% of
EBITDA, based on the last 12 months ended in September 2012. InRetail has the
second largest supermarket chain in Peru (Supermercados Peruanos) with 33%
market share, only behind Cencosuds 44%. The company operates with four
different formats: Plaza Vea (Hypermarket), Plaza Vea Super (supermarket),
Vivanda (supermarket with more focus on the high end) and EconoMax
(supermarket focused on low end, Bodega style). We believe Supermercados
Peruanoss strong brand and positioning, coupled with InRetails real estate business,
allows for sizable growth opportunity. We believe there is substantial room for
growth in modern retail as the vast majority (80% of sales) of the food retail market
is carried out by mom & pops.
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13 November 2012
Table 2: Supermarkets Snapshot

Introduced
Strategy Highlights
Vivanda
EconoMax
2005
2005
2011
- Target A/B segments

- Innovative supermarket
concept, focused on offering a
select variety of high quality
food and non-food products
- Unique shopping
environment with an innovative
layout
- Target C/D segments

- Everyday low price strategy
offering fresh and basic
groceries
- Offers convenience, health
and safety as an alternative to
traditional trade
42
15
3,960
1,290
1,117
1,380
54
13
10
NA
14.3
9.7
8.5
NA
2006
67.2%
8.1%
11.4%
NA
2009
74.5%
13.5%
9.4%
NA
2011
76.7%
12.4%
8.6%
1.2%
2006
5,1%
NA
2.5%
NA
2009
5.6%
8.6%
8.3%
NA
2011
6.0%
10.4%
10.4%
-7.2%
Avg. Store Sales Area

(SQM)
Transactions
Avg. Ticket (US$)
EBITDA Margin
Plaza Vea Super
2001
- Target A/B/C segments

- Maintains Plaza Vea
-One stop shop carries a wide- Hypermarkets brand identity,
range assortment of products
shopping experience, price
(food and non-food) at
and promotional structure
competitive prices
- Smaller size to allow flexibility
in growth plans
- Focused on food items
# of stores (1Q12)
Percentage Sales
Plaza Vea
Source: Company reports.
Mom & pops represent more than 2/3 of market. We foresee sizable opportunity
on the back of a decline in market informality with the reduction of mom & pop
players. This opens a market for the larger players that have good funding,
negotiating power with suppliers and a national footprint. In Peru, the formal market
accounts for 28% of the total market, compared to 46% in Brazil, 43% in Colombia,
41% in Argentina and 50% in Mexico. As we will discuss below, we believe
Supermercados Peruanos is well positioned to gain share from mom & pops and
informal as it decentralizes its logistic network and is better able to supply regions
outside of Lima.
RESERVA DEL PERU
13 November 2012

(1-212) 622-6735
Figure 3: 72% of Market Still Up for Grabs Mom & Pops dominate
70%
46%
41%
43%
Argentina
Colombia
50%
28%
Peru
Brazil
Mexico
Chile
Formal Sector Sales (% of total modern retail sales)

SPSA is the second largest player and a pure Peruvian chain. As discussed
above, Supermercados Peruanos is the second largest food retail chain in Peru, with
33% market share. Also, it is the only pure Peruvian player among the top three.
Cencosud (Chilean retailer) is the leader with 44% market share, while Chilean
retailer Falabella (through Tottus) has 23% share and is the third largest player. It is
also interesting to note that Supermercados Peruanoss market share in Lima is much
lower than outside Lima, and therefore there should be a lot of opportunity to
increase its presence in Lima. We believe it has a competitive advantage on this front
as it is well penetrated in regions outside Lima while competitors are more focused in
Lima. With the decentralization of its logistics network that we will discuss further,
we believe Supermercados Peruanos may even accelerate market share outside Lima,
especially gaining share from mom & pops and informal players.
Figure 4: Market Share

60%
Figure 5: Market Share Lima vs. Outside Lima

47,0%
58%
27%
28%
13%
14%
45%
44%
34%
33%
21%
23%
25,5%
11,0%
Lima
2006
2007
SPSA
2010
Cencosud
2011
Tottus
Market Share
9,2%
Outside Lima
Avg. Store EBITAR Margin
Real estate is key. Owned and group related real estate represents 64% of
Supermercados Peruanoss stores and 70% of selling floor. Owning real estate allows
for faster expansion to capture market opportunities and is an important hedge
against any significant hike in land prices driven by the development of the region or
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13 November 2012
neighborhood. We believe it also gives the company a good competitive position and
can protect it against rental pricing wars as contracts mature.
Figure 6: Owned stores represent a high number of stores

33%
42%
37%
22%
33%
39%
36%
30%
% of sales
# of stores
Square Meters
28%
Third Paties
Group Related
Own
Secured locations for 2013 sales floor growth. InRetail already has secured 92% of
its 25 stores openings in 2013 and already has 13 secured lands for openings beyond
2014. The company appears to be on track to deliver the remaining 2012 planned
openings.
Table 3: 2013 Spots Availability Secured
Secured in 000 Sqm
Secured Land spots
Target Openings
% secured
2012
19.3
10
10
100%
2013
44.3
23
25
92%
2014 Onwards
32.8
13
NA
NA
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13 November 2012
Private label brands should continue supporting healthy gross margin. The
penetration of private label brands at supermarkets have been gradually increasing as
the company extends its private label products portfolio.
Figure 7: Private Label increasing penetration and boosting gross margin
7,5%
5,5%
2006
4,9%
2007
6,4%
6,4%
2009
2010
5,6%
2008
Private Label Penetration

Table 4: Supermercados Peruanos Economics

In US$, unless otherwise noted
Sales Area (m2)
CAPEX
Own
Leased
Payback Period
Owned
Leased
Time to Maturity
Sales/store
EBITDA Margin Curve
1st year
2nd Year
3rd Year
10
Hypermarkets
3,000
Supermarkets
1,200
2,280
1,700
3,280
2,550
8 years
5 years
4 years
270,000
NA
5 years
3 years
130,000
8.9%
5.8%
7.2%
5.3%
6.3%
8.3%
2011
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(1-212) 622-6735
Drugstores: Sizable Opportunity

Solid pharma demand. The pharma sector in Peru has grown at a CAGR of 11%
since 2007,according to IMS, supported by real wage increases and the aging of the
population. Still, Peru has one of the lowest levels of Pharma per capita spending,
with Pharma spending accounting for 4.9% of GDP vs. 6%+ for other major
countries in Latin America. By the same token, the population in the region is aging,
especially in urban cities. As a result, we are confident that the Pharma sector should
continue growth at the low-teens level for the next three years.
Figure 8: Pharma market has grown at an 11% CAGR since 2007

In US$m
1.525
1.465
2008
2009
1.708
1.858
2010
2011
1.225
2007
Pharmaceutical Private Market Sales (US$mn)

Source: IMS
Figure 9: Sizable Opportunity to Boost Pharma per Capita spending

Dollars per capita
887
863
Figure 10: Pharma spending % of GDP per Capita below several

LatAm regions
Private pharma expenditure as % of GDP
855
9.4%
8.2%
581
7.3%
7.2%
6.1%
451
4.9%
256
Brazil
Chile
Argentina
Mexico
Colombia
Healthcare Expenditure per Capita (US$)

Peru
Brazil
Chile
Argentina
Mexico
Colombia
Peru
% of GDP per Capita

11
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(1-212) 622-6735
Figure 11: Peru Urban population > 50 year old increasing...
Figure 12: and should represent 22% of total by 2015
2.8
2.2
16%
1.8
20%
18%
22%
1.3
2000
2005
2010
2015
2000
Peru Urban Population with 50y or more (millions)
2005
2010
2015
% of Total Urban PopulationAbove 50 years old
Source: INEI
Source: INEI
Mom & pops account for 60% of the market. The drugstore market in Peru is
highly fragmented, with mom & pops accounting for 60% of sales and 83% of total
stores. As larger chains have higher sales per store and better purchasing, we believe
it should continue gaining share over mom & pops and expect the market to
gradually consolidate.
Figure 13:Modern chains account for 40% of total market sales but less on a store base
60%
7.749
40%
1.543
Stores
Sales Share
Modern Chains
Mom&pops
Source: Company estimates / IMS
InkaFarma is the leading player and looks well positioned to continue gaining
share. InkaFarma has 47% share of the modern drugstore market and 28.3% of total
market, making it the leader. The second largest player is FASA, which has 23%
market share followed by Arcangel with 14% share. InkaFarma represented 35% of
sales and 38% of InRetails EBITDA in the last 12 months ended September 30,
2012.
12
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Figure 14: Sizable Growth Opportunity for InkaFarma Stores
Figure 15: InkaFarma is the leading player
Figure 16: InkaFarma has higher sales per store

1.100
Pharmace
utical
Market
Mom&pops,
40%
Modern Retail,
60%
600
Modern
Retail
InkaFarma,
47.1%
Others, 52.9%
100
Others
23%
Fasa, BTL, Mif arma
Source:IMS
14%
Arcangel
8%
Boticas&Salud
Felicidad
5% 3%
Others
Mom&pops
Other chains
InkaFarma
Annual Sales per Stores (US$ thousands)

Source: Company reports, IMS
InkaFarmas valuation at acquisition in 2011 denotes market potential

InRetail won a competitive process to acquire InkaFarma in January 2011. The
amount paid was US$386m, and we estimate a valuation of c14x forward
EV/EBITDA.
Private labels support high margins and have opportunity to increase
penetration. Private label (PL) brands have gross margin of ~70% while non-private
label products gross margin stands at high single digits. As a result, the increased
penetration of private label on InkaFarma sales mix should allow for further
improvements. Currently, private label represents 29.6% of InkaFarma sales and we
believe there is room for at least a 200bp expansion as the company extends its PL
portfolio (for example diapers, which should be launched in 2013).
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13 November 2012
Figure 17: Private Label accounts for 76% of gross profit and 29% of
sales
Figure 18: Private Label Penetration Increasing

Private label brands as a % of total sales
24%
25.5%
26.9%
27.0%
2010
2011
29.6%
22.4%
71%
18.9%
76%
29%
Sales
Private Labels
Gross Profit
2007
Non-Private Label
2008
2009
Jun 12
Private Label Penetration
Asset light model allows for high ROE

InkaFarma stores typically reach EBITDA breakeven in just three months and a 4wall margin (marginal contribution) of 14% in three years, as depicted in Figure 19
below. This is one of the reasons we believe EBITDA margins can reach 8.2% in
2012 from 6.8% in 2011. The store maturity typically is reached in 36 months and
the payback in just 12 months.
Figure 19: Fast Maturity of InkaFarma Stores
% EBITDA at Store Level by Maturity
14%
0%
2%
4%
5%
5M
6M
8%
10%
-4%
-14%
1M
2M
3M
4M
12M
24M
36M
EBITDA margin
Low CAPEX per store of only $60,000

The economics of an InkaFarma store is very attractive. It typically requires limited
capex of only $60,000 to open, for three key reasons: (1) locations are 100% leased,
and (2) stores are small (about 120 square meters and 40 square meters of sales area).
(3) All products are behind the counter, so there is no need for a fancy layout.
Seventy percent of InkaFarmas sales is drugs, and there is sizable opportunity
to grow personal care share
The sales person can persuade customers to buy private labels, which are cheaper for
the client and carry higher margin for InkaFarma (30% of sales). Keeping products
behind the counter may limit impulse buying of non-pharma (30% of sales
14
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13 November 2012
currently), which is a negative. However, it reduces the expenses for security and
inventory shrinkage. Management does not plan to change the layout of the stores.
Below we detail a mature InkaFarma store profit & loss statement. While InkaFarma
sells one-fourth of a Brazilian drugstores average sales, the cost of setting up is just
about 15% of the CAPEX to open a drugstore in Brazil.
Table 5: InkaFarma Store Economics
US$ '000, unless otherwise noted
Mature Store P&L
Sales
Gross Profit
Payroll
Rent
Other store expenses
EBITDA
CAPEX
Maintenance CAPEX
US$ '000
1,235
333
(101)
(31)
(28)
174
60
3.7
% of sales
100.0%
27.0%
-8.2%
-2.5%
-2.3%
14.1%
4.9%
0.3%
15
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Real Estate: Key Competitive Advantage

Sizable market opportunities. Mall penetration in total retail sales is relatively low,
at 13% of total sales in Peru, compared to 21% in Chile and 18% in Brazil. Also, the
number of malls per million people (1.5 against 3.2 in Colombia) also shows that
Peru has one of the lowest, as outlined below. As such, we believe the real estate
market in Peru allows for a sizable growth opportunity, especially as InRetails Real
Plaza is the leading operator with a substantial land bank.
Figure 20: Malls in Peru
Figure 21: Malls in Peru
# of Malls
GLA ('000 sqm)
27
23
17
19
2008
2009
2010
Provinces
18
2011
964
450
463
2010
2011
764
644
15
912
229
229
2008
2009
Lima
Provinces
Lima
Source: Colliers, ACCEP
Source: Colliers, ACCEP
Figure 22: Malls represent 13% of total retail sales in Peru
Figure 23: and present sizable room to increase penetration
# of total retail sales
# of Malls per million people
18%
20%
2,2
13%
Peru
2,9
21%
2,4
1,5
Brazil
Colombia
Chile
Peru
Brazil
Argentina
Chile
Colombia
# of Malls per million people
Shopping Mall Penetration (% of retail sales)
Source: ACCEP
3,2
Source: ACCEP
InRetail looks well positioned to continue growing its real estate business.
Operating through its Real Plaza brand, InRetail is the leading shopping center
operator in Peru. Currently, InRetail operates nine owned shopping centers, related
parties own four shopping centers and it has two owned stand-alone stores. The real
estate division represented 3% of sales and 24% of adjusted EBITDA in the last 12
months ended September 30, 2012.
16
RESERVA DEL PERU
13 November 2012

(1-212) 622-6735
Figure 24: InRetail GLA has grown by more than 5x
Figure 25: InRetail Market Share
# InRetail Malls GLA (000sqm)
Market Share breakdown

275
Real Plaza; 19%
222
193
143
75
Others; 47%
88
Open Plaza;
20%
44
2006
2007
2008
2009
2010
2011
2012
GLA ('000 sqm)
Mall Plaza; 14%
Profitable portfolio of malls. InRetail has highly profitable locations in its portfolio,
with highly successful assets as was the case with Chiclayo. We expect InRetail to
close 2012 with 275k square meters of gross leasable areas.
Table 6: Assets Portfolio Breakdown
Property Type
GLA ('000)
Yield
M
M
PC
PC
M
M
M
M
PC
SA
SA
29
13
18
13
33
3
25
28
7
11
14
20.9%
13.1%
12.2%
12.0%
11.6%
11.4%
11.0%
8.9%
4.2%
10.5%
8.8%
SA
M
PC
PC
2
29
10
15
222
27.3%
16.7%
8.9%
7.1%
Commercial Properties
Chiclayo
Juliaca
Pro
Santa Clara
Primavera N/C/S
Trujillo
Arequipa
Huancayo
Nuevo Chimbote
San Juan
Jr Union
Related Party Malls
E. Central
Centro Civico
Piura
Chorrillos
Total GLA 2011
Source: Company reports. M=Mall, PC=Power Center; SA=Stand Alone retail store.
Figure 26: Shopping Mall Yields Curve

18.2%
15.8%
20.9%
15.4%
12.2%
8.9%
8.4%
9.3%
8.3%
8.0%
Year 1
Year 2
11.4%
10.3%
Year 3
Chiclayo
Year 4
Pro
Year 5
Trujillo
Source: Company reports. *Yield = EBITDA 2011/Capex Investment

17
RESERVA DEL PERU
13 November 2012

(1-212) 622-6735
Figure 27: InRetail to have 275k sqm of GLA by 2012

000's Sqm
275
222
193
143
88
75
44
2006
2007
2008
2009
2010
2011
2012
GLA ('000 sqm)

Margins have been under pressure in real estate due to strong launches and preoperating expenses. Real estate business EBITDA margin (including real estate
revaluation) has declined from 91% to 81.6% in 2011, mostly explained by the
aggressive addition of GLA over past years that is not fully matured and also by the
pre-operating expenses related to malls under development that should be diluted as
opened malls mature. As 60-85% of GLA is leased to anchors, the maturation
process is faster than in other regions, such as Brazil, where anchor stores account for
40-60%. We believe that when the market develops further with smaller satellite
brands coming to Peru and anchor stores percentage of total GLA decreases, we
should see an improvement in margins as satellite stores typically carry higher
margins for the mall developer.
Figure 28: Net Sales
Figure 29: EBITDA Margin (including assets revaluation)
In US$m
%
28,3
89.6%
20,9
15,7
11,4
2008
88.8%
2009
2010
2011
2010
Revenues (US$mn)
18
2011
EBITDA Margin
RESERVA DEL PERU
(1-212) 622-6735

13 November 2012
Financial Outlook
We expect InRetails sales to grow at a 21% CAGR, EBITDA to increase at a 29%
CAGR and EPS at 29%, over the FY12E-15E period. Our key assumptions are:
Floor space: We expect floor space to expand by 23% and 21% in 2013 for
SPSA and InkaFarma, respectively. This should come from a more aggressive
store opening plan.
Same store sales: We expect low to mid-single digits SSS for supermarkets in
2012-2013 and low to mid-teens SSS for drugstores.
EBITDA margin: on the consolidated level, we expect a 70bps improvement in
the EBITDA margin in 2013, followed by 130bps in 2014. Management has
engaged in several initiatives that should lead to around 100bp improvement in
the EBITDA margin for the supermarket division by 2015, as detailed below:
(1) Elimination of a non-recurring negative impact from the San Borja
store closing in 2012. This store was closed for remodeling and had
negatively impacted the EBITDA margin by 30bp as it was one of
the top selling locations.
(2) Private label credit card agreement with parent Interbank allows
for 1% cash rebate on sales on the private label card within
Supermercados Peruanos stores. The private label card accounts
for 30% of sales, so there should be a 0.3% positive impact on
margins.
(3) Logistics supply chain efficiencies should lead to a 10bp
improvement in EBITDA margin in 2013. The company is
improving distribution to 90% direct from 75% of merchandise
previously at the supermarkets distribution and handling.
(4) Opening stores have a positive impact on margin, as preoperational expenses surpass the maturation curve impact.
Other initiatives to improve store level efficiencies include:
(1) Multi-functional employees at the store level consultant Mr. Eric
Skog, who helped N-rated Almacenes Exito previously. We
believe this initiative should lead to a 20bp improvement in
EBITDA margin by 2013.
(2) Centralized food processing facility that is scheduled to be full
scale next year will lead to a redefined layout of stores and
increased selling area and productivity from 800 to 200 bakers,
for instance. The main impact of centralization of the food
processing facility are twofold: (1) free up space at stores for
additional selling; and (2) reduce the number of store employees.
SAP implementation at the front end is done for both SPSA and InkaFarma,
so the initial negative impact of stockouts in same stores sales is behind the
company. InRetail is currently working on the financial and accounting modules
implementation.
EPS: We expect an EPS CAGR of 29% for 2015E-2012.
19
RESERVA DEL PERU
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13 November 2012
Valuation
We are initiating on InRetail with an Overweight rating and a US$24 endDecember 2013 price target. Our price target implies 23% upside and is based on a
blended valuation of: (1) comparable peer multiples, (2) sum of the parts (SOP) of
supermarkets, drugstores and mall businesses, and (3) discounted cash flow analysis.
The valuation based on similar companies indicates a fair P/E 12-month forward of
21.4x, which is based on the median that LatAm retailers are trading at, as shown
below. This method implies a $20 fair price for InRetail shares.
Table 7: Valuation Based on Peer Multiples
Fair P/E 12-M FWD
2014 EPS
Fair Value (PEN$)
2013 PEN$
Dec-13 Fair Price
21.4
2.63
56.3
2.78
20.0
Total Upside
2.6%
Source: JPM estimates
Table 8: LatAm P/E12-month fwd

P/E 12-month fwd
Exito (JPMe)
Falabella (JPMe)
Walmex (JPMe)
CBD (JPMe)
Cencosud (BBG Consensus)
Soriana (JPMe)
Median
28.9
21.3
25.6
21.5
16.7
18.3
21.4
Source: JPM estimates for companies except Cencosud, which are from BBG consensus
We also assessed a sum-of-the parts valuation using EV/EBITDA 13E at the median
of comparable companies in each segment (supermarkets, drugstores, and malls) and
applying a conglomerate discount of 15%, as investors can't buy each business
separately, and do not have visibility of separate balance sheets, we derive a fair
price of $25 per share, as detailed below:
Table 1: Sum of the parts - Median Multiples
EV/EBITDA 13E
Supermarkets
PCAR4
WALMEXV MM
EXITO CB
CENCOSUD CI*
FALAB CI
Median
10.8
13.8
13.7
9.9
13.1
13.1
Drugs
HYPE3 BZ
RADL3 BZ*
BPHA3 BZ*
CFR CI*
Median
10.7
15.6
13.7
9.8
12.2
Malls
BRML3 BZ*
MULT3 BZ*
IGTA3 BZ*
SSBR3 BZ*
Median
Source: JPMorgan estimates and Bloomberg consensus for companies noted with *
20
14.6
16.0
14.6
11.7
14.6
RESERVA DEL PERU
(1-212) 622-6735

13 November 2012
Table 2: SOP Valuation for Supermarkets, Drugstores and Malls Divisions

Peruvian Soles millions unless otherwise noted
(A) SUPERMERCADOS PERUANOS
EBITDA 2014E (PEN mn)
Supermarkets EV/EBITDA 2013E
Enterprise Value (PEN mn)
325
13.1
4,250
(B) INKAFARMA
Drugstores EV/EBITDA 2013E
186
12.1
2,278
(C) MALLS
Malls EV/EBITDA 2013E
224
14.6
3,273
CONTROLLING COMPANY (A + B + C)
(-) Net Debt 2014E (PEN mn)
(=) Equity Value (PEN mn)
(-) Conglomerate Discount
(=) Fair Equity Value (PEN mn)
Fair Equity Value (USD mn)
Price per Share in US$
9,801
1,872
7,928
15%
6739
2577
25
Source: JPM Estimates, Bloomberg
DCF shows additional value that may be unlocked after high growth phase
As normally happens in high growth companies, valuation of InRetail based on
discounted cash flows shows the highest potential upside among the three methods
used. However, we do acknowledge the high execution risk and lack of visibility to
predict real estate prices and construction costs of the malls. Also, we highlight that
the company will remain free cash flow negative until 2015, and may need further
funding.
Table 3: DCF Derivation Implies Fair Price of $27
Peruvian Soles in Millions, unless otherwise noted
Equity Value (PEN mn)
Total Number of Shares (Million)
Fair Price (PEN) per share
Fair Price (US$) per share
7,628
103
74
27
Source: JPMorgan estimates
We averaged the three valuation methods described above to derive the PT,
including: (1) peer valuation of similar retailers in the region, (2) SOP, and (3) DCF.
The blended Dec-13 price target is $24, implying 23% upside.
Table 4: Blended Price Target of $24, assumes equal weight to DCF, Multiples and SOP
Price per Share
Blended PT
DCF Weight
P/E Weight
SOP Weight
Dec-13 PT (rounded)
Potential Upside
33%
33%
33%
26.7
20.2
25.1
24.0
23%
21
RESERVA DEL PERU
13 November 2012

(1-212) 622-6735
Table 5: Discounted cash flow valuation for InRetail

Peruvian Soles Millions
Cash Flow
(+) Net Sales
(-) COGS
(=) Gross Profit
(-) OPEX
(=) EBIT
(+/-) Financial Results
(-) Taxes
(=) After Tax Op. Earnings
(+) D&A
(=) After Tax Op. Earnings
(+/-) Working Capital
(-) Capex
(+/-) Debt Variation
(=) FCFE
Perpetuity Growth / Value
Discount Factor
Present Value of FCFE
2012E
4,839
(3,510)
1,329
(1,022)
307
(56)
(89)
161
112
273
167
(1,158)
(718)
6.0%
(165)
2013E
5,842
(4,222)
1,619
(1,220)
400
(90)
(104)
205
144
349
158
(1,125)
(618)
2014E
7,079
(5,070)
2,008
(1,446)
562
(228)
(108)
226
173
399
136
(940)
350
(55)
2015E
8,547
(6,123)
2,425
(1,730)
694
(238)
(146)
311
210
520
169
(913)
150
(74)
2016E
9,685
(6,949)
2,737
(1,950)
787
(191)
(188)
408
236
643
84
(708)
20
2017E
10,847
(7,796)
3,052
(2,155)
896
(171)
(227)
498
245
744
102
(590)
256
2018E
12,043
(8,659)
3,384
(2,400)
984
(139)
(259)
586
264
850
111
(586)
(100)
275
2019E
12,840
(9,234)
3,606
(2,544)
1,062
(123)
(287)
651
265
917
85
(291)
(100)
610
2020E
13,674
(9,836)
3,838
(2,692)
1,145
(102)
(319)
724
264
989
89
(303)
(100)
675
2021E
14,549
(10,468)
4,081
(2,849)
1,232
(81)
(352)
799
264
1,063
93
(315)
(50)
791
2022E
15,466
(11,131)
4,336
(3,013)
1,322
(78)
(381)
863
265
1,128
98
(328)
898
(618)
1.0
(49)
2.0
(59)
3.0
14
4.0
165
5.0
159
6.0
316
7.0
313
8.0
329
9.0
335
2023E
16,429
(11,826)
4,603
(3,186)
1,417
(74)
(411)
932
266
1,198
47
(333)
912
17,336
10.0
6,103
High EPS CAGR of 29% and scarcity value justify the 19% premium to peers
InRetail is trading at 25.5x P/E13E, a premium of 23% to peers that we believe is
explained by higher expected growth of 29% against 21% for peers. ROE is low at
6.8% vs. peers 9.8% but we believe is explained by ownership of a land bank that is
yet to generate returns. On a growth adjusted basis we think InRetail looks attractive,
trading at 1x vs. 1.1 for peers.
Table 9: Trading at to peers premium on 2013 multiples
MKT CAP
VOLUME
P/E
InRetail
InRetail @ PT
US$ mn
2,005
2,467
3M US$mn
NA
NA
12E
32.6
40.1
13E
25.5
31.4
LatAm Peers
Exito
Falabella
Walmex
CBD
Cencosud
Soriana
Median
8,378
24,052
51,735
11,600
12,363
5,913
12,363
3.2
6.8
46.9
21.4
17.0
2.6
17.0
32.3
26.6
28.8
26.8
21.1
19.7
26.8
28.4
20.5
25.2
20.8
16.0
18.1
20.8
EV/EBITDA
Adj.
EV/EBITDA
EBITDA
CAGR
12-15E
29.0%
29.0%
13E
12.4
14.7
14E
9.7
11.3
13E
8.1
9.4
14E
7.2
8.4
12-15E
29.2%
29.2%
9.5%
21.2%
14.7%
22.9%
30.7%
8.9%
21.2%
13.7
13.1
13.8
10.8
9.9
9.1
13.1
12.2
11.2
12.2
9.4
8.6
8.3
11.2
9.6
9.1
9.7
7.6
6.9
6.3
9.1
8.5
7.8
8.5
6.6
6.0
5.8
7.8
15.6%
17.6%
13.7%
15.7%
15.8%
7.7%
15.7%
PEG
ROE
EPS CAGR
14E
19.4
23.9
13E
0.8
1.0
12E
6.9%
6.9%
26.6
17.2
21.9
17.4
13.3
16.5
17.4
4.3
1.0
1.7
1.1
0.8
1.9
1.1
6.4%
15.1%
17.7%
9.8%
9.6%
9.9%
9.8%
Source: JPM estimates, except Cencosud, which are from BBG. Adj./ EBITDA adjusts for different corporate tax rate across regions.
22
Analyst
Andrea Teixeira
Andrea Teixeira
Andrea Teixeira
Andrea Teixeira
Andrea Teixeira
Andrea Teixeira
BBG Estimates
Andrea Teixeira
RESERVA DEL PERU
(1-212) 622-6735

13 November 2012
Financial Outlook
Table 10: Income Statement
Total revenue
Net Sales - SPSA
Net Sales - InkaFarma
Net Sales - Real Estate
Intercompany Revenues Adjustments
(-) Total COGS
Gross Profit
Gross Margin
Cash SG&A Expenses
Depreciation & Amortization
Other Operating Expenses (Income)
InRetail Real Estate Mark-to-Market Holdco Elimination
Combined Mark-to-Market Adjustment
Operating profit (EBIT)
EBIT Margin
Net Financial Result
Income Taxes at Subs
InRetail Holdco Taxes on Dividends from Subs
Net Income
EBITDA (Nominal PEN$mm) - Accounting
EBITDA Margin
Adj. EBITDA
Adj. EBITDA Margin
2011
4,241
2,820
1,333
114
(27)
(3,086)
1,155
27.2%
(812)
(101)
(21)
(10)
51
262
6.2%
(77)
(63)
122
363
8.6%
312
7.3%
2012E
4,839
3,081
1,635
152
(29)
(3,510)
1,329
27.5%
(895)
(112)
(16)
307
6.3%
(56)
(89)
161
419
8.7%
419
8.7%
2013E
5,842
3,746
1,908
228
(40)
(4,222)
1,619
27.7%
(1,066)
(144)
(10)
400
6.8%
(90)
(104)
205
543
9.3%
543
9.3%
2014E
7,079
4,590
2,158
382
(52)
(5,070)
2,008
28.4%
(1,261)
(173)
(12)
562
7.9%
(162)
(130)
270
736
10.4%
736
10.4%
2015E
8,547
5,701
2,423
490
(67)
(6,123)
2,425
28.4%
(1,508)
(210)
(13)
694
8.1%
(187)
(162)
346
904
10.6%
904
10.6%
Source: J.P. Morgan estimates, Company data.
Table 11: Balance Sheet

2011
2012E
2013E
2014E
2015E
Cash and cash equivalents

Receivables from clients
Inventories
Other current assets
Current assets
PP&E
Other Long-Term Assets
Long Term Assets
Total Assets
47
615
105
1,190
1,515
1,891
3,407
4,596
44
532
119
1,504
2,561
2,078
4,640
6,143
53
587
144
975
3,543
2,078
5,621
6,596
64
705
175
1,124
4,309
2,078
6,388
7,512
77
851
211
1,281
5,013
2,078
7,091
8,373
Payables to Suppliers
Other Current Liabilities
Current liabilities
Total Debt
Deferred Taxes
Other Long-Term Liabilities
Stockholders' Equity
Total Liabilities
153
1,119
1,561
167
18
1,732
4,596
175
1,215
1,703
174
28
3,024
6,143
211
1,462
1,703
174
28
3,229
6,596
256
1,758
2,053
174
28
3,499
7,512
309
2,123
2,203
174
28
3,845
8,373
Net Debt
1,138
895
1,512
1,872
2,061
Source: Company reports and JPM estimates
23
RESERVA DEL PERU
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13 November 2012
InRetail: Summary of Financials

Income Statement - Annual
Revenues
COGS
Gross profit
SG&A
Operating income
EBITDA
Interest, net
Other Income
Pretax income
FY11A
4,241
(3,086)
1,155
(812)
262
312
(77)
(21)
185
FY12E
4,839
(3,510)
1,329
(895)
307
419
(56)
(16)
250
FY13E
5,842
(4,222)
1,619
(1,066)
400
543
(90)
(10)
310
FY14E
7,079
(5,070)
2,008
(1,261)
562
736
(162)
(12)
400
Income taxes
Tax rate
(63)
(33.9%)
(89)
(35.7%)
(104)
(33.7%)
(130)
(32.4%)
122
103
1.19
FY11A
101
161
103
1.57
FY12E
112
205
103
2.00
FY13E
144
270
103
2.63
FY14E
173
Change in working capital

Cash flow from operations
67
296
167
270
158
507
136
580
Capex
Free cash flow
Free cash flow / share
367
-
1,158
-
1,125
-
940
-
Net income - reported (GAAP)

Diluted shares outstanding
EPS - operating
EPS - reported (GAAP)
Cash Flow Data
D&A
Dividends
Balance Sheet
Cash and cash equivalents
Accounts receivable
Current assets
PP&E
Goodwill
Total assets
Short-term Debt
Current liabilities
FY11A
424
47
1,190
1,515
4,596
1,119
FY12E
808
44
1,504
2,561
6,143
1,215
FY13E
191
53
975
3,543
6,596
1,462
FY14E
181
64
1,124
4,309
7,512
1,758
Long-term Debt
Total liabilities
4,596
6,143
6,596
7,512
Shareholders' equity
1,732
3,024
3,229
3,499
FY11A
15.4%
5.2%
7.5%
7.5%
(30.0%)
FY12E
14.1%
7.0%
34.4%
17.0%
31.6%
FY13E
20.7%
6.6%
29.8%
30.2%
27.5%
FY14E
21.2%
5.6%
35.4%
40.7%
31.6%
27.2%
6.2%
7.3%
27.5%
6.3%
8.7%
27.7%
6.8%
9.3%
28.4%
7.9%
10.4%
5.0
1.5
42.8
4.1
1.3
17.6
32.5
3.1
1.1
14.7
25.5
2.8
1.0
11.3
19.4
Ratio Analysis
Sales growth
Same store sales growth
EBITDA growth
EBIT growth
EPS growth - operating
Gross margin
EBIT margin
EBITDA margin
Inventory growth
Debt / EBITDA
Enterprise value / Revenues
Enterprise value / EBITDA
P/E
Source: Company reports and J.P. Morgan estimates.

Note: S in millions (except per-share data).Fiscal year ends Dec
24
RESERVA DEL PERU
13 November 2012

(1-212) 622-6735
Analyst Certification: The research analyst(s) denoted by an AC on the cover of this report certifies (or, where multiple research
analysts are primarily responsible for this report, the research analyst denoted by an AC on the cover or within the document
individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views
expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of
any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views
expressed by the research analyst(s) in this report.
Important Disclosures
Lead or Co-manager: J.P. Morgan acted as lead or co-manager in a public offering of equity and/or debt securities for InRetail within
the past 12 months.
Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: InRetail.
Client/Investment Banking: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as investment
banking clients: InRetail.
Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following
company(ies) as clients, and the services provided were non-investment-banking, securities-related: InRetail.
Client/Non-Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients,
and the services provided were non-securities-related: InRetail.
Investment Banking (past 12 months): J.P. Morgan received in the past 12 months compensation for investment banking InRetail.
Investment Banking (next 3 months): J.P. Morgan expects to receive, or intends to seek, compensation for investment banking
services in the next three months from InRetail.
Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or services
other than investment banking from InRetail.
Company-Specific Disclosures: Important disclosures, including price charts, are available for compendium reports and all J.P. Morgan
covered companies by visiting https://mm.jpmorgan.com/disclosures/company, calling 1-800-477-0406, or emailing
research.disclosure.inquiries@jpmorgan.com with your request.
InRetail (INR.LM, INRETC1 PE) Price Chart
36
30
24
Price($) 18
12
0
Oct
12
Oct
12
Oct
12
Nov
12
Nov
12
Nov
12
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire
period.
J.P. Morgan ratings or designations: OW = Overweight, N= Neutral, UW = Underweight, NR = Not Rated
Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe:
J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the
average total return of the stocks in the analysts (or the analysts teams) coverage universe.] Neutral [Over the next six to twelve
25
RESERVA DEL PERU
(1-212) 622-6735

13 November 2012
months, we expect this stock will perform in line with the average total return of the stocks in the analysts (or the analysts teams)
coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of
the stocks in the analysts (or the analysts teams) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if
applicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy
reasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not a
recommendation or a rating. In our Asia (ex-Australia) and U.K. small- and mid-cap equity research, each stocks expected total return is
compared to the expected total return of a benchmark country market index, not to those analysts coverage universe. If it does not appear
in the Important Disclosures section of this report, the certifying analysts coverage universe can be found on J.P. Morgans research
website, www.morganmarkets.com.
Coverage Universe: Teixeira, Andrea: Almacenes Exito (IMI.CN), AmilPar (AMIL3.SA), B2W Compania Global do Varejo
(BTOW3.SA), CBD (PCAR4.SA), CBD ADR (CBD), CFR Pharmaceuticals (CFR.SN), Cencosud (CEN.SN), Comerci
(COMEUBC.MX), DASA (DASA3.SA), Falabella (FAL.SN), Fleury (FLRY3.SA), Guararapes Confeccoes (GUAR3.SA), Hering
(HGTX3.SA), Lojas Americanas (Non-Voting) (LAME4.SA), Lojas Americanas (Voting) (LAME3.SA), Lojas Renner (LREN3.SA),
OdontoPrev (ODPV3.SA), Organizacion Soriana (SORIANAB.MX), Restoque (LLIS3.SA), Wal-Mart de Mexico (WALMEXV.MX)
J.P. Morgan Equity Research Ratings Distribution, as of September 28, 2012
J.P. Morgan Global Equity Research Coverage
IB clients*
JPMS Equity Research Coverage
IB clients*
Overweight
(buy)
44%
52%
42%
69%
Neutral
(hold)
44%
46%
48%
61%
Underweight
(sell)
12%
34%
10%
53%
*Percentage of investment banking clients in each rating category.

For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold
rating category; and our Underweight rating falls into a sell rating category. Please note that stocks with an NR designation are not included in the table
above.
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"Other Disclosures" last revised September 29, 2012.
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RESERVA DEL PERU

Right Place, Right Time; Scarcity Value in Fastest

Price Target: $24.00

We are initiating coverage of InRetail, a leading food/drug retailer and mall

Latin American Retail and

Andrea Teixeira, CFA

Felipe Oliveira, CFA

INR.LM share price ($)

Price Target Derivation:

Stock should retain current premium against peers. InRetail is trading at a

Latin America Equity Research

Latin America Equity Research

Latin America Equity Research

Risks to Rating and Price Target

Latin America Equity Research

Company Outlook: A Diversified Retailer

InRetail Peru Corp

Source: Company reports. *excludes non-recurring real estate revaluations.

Free-float of 22% is limited as majority shareholders did not participate in

Latin America Equity Research

Figure 1: Pre-IPO Shareholder Structure

Figure 2: Post-IPO Shareholder Structure

Source: Company reports

Food Retail: 80% of Market Up for Grabs

Latin America Equity Research

Table 2: Supermarkets Snapshot

- Target A/B segments

- Target C/D segments

Avg. Store Sales Area

Plaza Vea Super

- Target A/B/C segments

Source: Company reports.

Andrea Teixeira, CFA

Formal Sector Sales (% of total modern retail sales)

Figure 4: Market Share

Figure 5: Market Share Lima vs. Outside Lima

Source: Company reports.

Source: Company reports.

Latin America Equity Research

Figure 6: Owned stores represent a high number of stores

Source: Company reports

Source: Company reports

Latin America Equity Research

Private Label Penetration

Table 4: Supermercados Peruanos Economics

Andrea Teixeira, CFA

Drugstores: Sizable Opportunity

Figure 8: Pharma market has grown at an 11% CAGR since 2007

Pharmaceutical Private Market Sales (US$mn)

Figure 9: Sizable Opportunity to Boost Pharma per Capita spending

Figure 10: Pharma spending % of GDP per Capita below several

Healthcare Expenditure per Capita (US$)

% of GDP per Capita

Andrea Teixeira, CFA

Figure 11: Peru Urban population > 50 year old increasing...

Figure 12: and should represent 22% of total by 2015

Peru Urban Population with 50y or more (millions)

% of Total Urban PopulationAbove 50 years old

Source: Company estimates / IMS

Andrea Teixeira, CFA

Figure 14: Sizable Growth Opportunity for InkaFarma Stores

Source: Company reports