1. Screening Methodology

This idea generation report applies a systematic four-stage screening process to the Latin American retail universe, narrowing from an initial long list of ~18 names to a final coverage recommendation. The screening is conducted in the context of initiating coverage on a LatAm retail name for the AgenticFinance equity research platform.

1.1 Screening Criteria

2. Long List — 18 LatAm Retail Names

The initial universe captures all LatAm-listed retail companies meeting the basic market cap and sector criteria. Companies are grouped by primary format.

* Carrefour Brasil (CRFB3) undergoing delisting process as of early 2026. Included for completeness but flagged as non-investable going forward.

3. Financial Quality Filters

The long list is filtered through four financial quality metrics to identify fundamentally sound businesses with attractive operating characteristics.

3.1 Filter Results

4. Short List — Top 10 Names

After applying financial quality filters and excluding non-core formats (QSR, pharmacy, CPG), delisting situations, and weak fundamentals, the short list narrows to 10 core LatAm retail names ranked by composite attractiveness.

5. Eliminated Names

6. Short List — Comparative Valuation

* Cencosud's elevated P/E (42.9x) reflects the impact of IAS 29 hyperinflation accounting on Argentine operations. Adjusting for this, the underlying P/E is estimated at ~18-22x, well below Falabella and WALMEX. The P/S of 0.50x is the most compelling signal — pricing Cencosud at half its annual revenue despite dominant market positions.

7. Final Recommendation: Cencosud S.A.

7.1 Why Cencosud?

Cencosud emerges as the most compelling coverage initiation candidate from this screening based on five key factors:

Factor 1: Dominant Multi-Format Platform

• ~30% supermarket market share in Chile — #1 position with pricing power
• Six-country footprint (CL, AR, BR, PE, CO) provides geographic diversification
• 1,397 stores across supermarkets, home improvement, department stores, and shopping centers
• 3.5M+ sqm of sales area — among the largest retail footprints in LatAm

Factor 2: Earnings Inflection

• Net income grew 70.4% in FY2025 to CLP 398 billion (USD 419M)
• Q4 2025 EBITDA margin expanded to 10.0% (+28 bps YoY)
• Revenue growth in 5 of 6 operating countries — only Argentina (IAS 29) dragged
• Colombia showing strongest trajectory with significant EBITDA acceleration

Factor 3: Valuation Disconnect

• P/S of 0.50x vs. Falabella's 1.4x and WALMEX's 1.0x — cheapest in peer group
• Headline P/E of 42.9x is distorted by IAS 29; adjusted P/E estimated at 18-22x
• Analyst consensus: BUY rating with CLP 3,186 target (4 Buy / 1 Sell)
• Catalysts for re-rating: Argentina normalization, Colombia ramp, Cencosud Shopping value crystallization

Factor 4: Structural Tailwinds

• Private label expansion at +14% LatAm growth rate — directly benefits scale operators
• Chilean VAT equalization removes cross-border e-commerce disadvantage
• E-commerce penetration growth (LatAm +12.2%) accelerates omnichannel retailers
• USD 610M capex plan for 2025 (+16% YoY) signals management confidence

Factor 5: Under-Coverage & Information Asymmetry

• Only 5 analysts cover the stock — thin coverage for a USD 8.8Bn company
• Complex multi-country, multi-format structure creates analytical complexity
• IAS 29 distortions in Argentina mask underlying operational improvements
• Opportunity to provide differentiated research with non-consensus insights

7.2 Key Risks

• Argentina macro: continued hyperinflation, FX controls, and policy uncertainty
• Brazil tax reform transition (CBS/IBS 2027-2033) — compliance costs
• Home improvement cyclicality linked to LatAm construction and interest rate cycles
• E-commerce disruption from MercadoLibre and quick-commerce platforms
• FX translation risk across five currencies (CLP, ARS, BRL, PEN, COP)

7.3 Coverage Roadmap

Following this screening, the coverage initiation process will proceed with:

• Step 3: Initiating Coverage — Full company research, financial modeling, DCF/comps valuation, charts, and 30-50 page initiation report
• Step 4: Thesis Tracker — Define investment thesis pillars, KPIs, and monitoring framework
• Step 5: Catalyst Calendar — Map upcoming earnings, events, and regulatory milestones
• Ongoing: Earnings updates, morning notes, and model refreshes

This screening confirms Cencosud S.A. as the optimal candidate for initiating coverage — combining dominant market positions, an earnings inflection, attractive relative valuation, and structural tailwinds in Latin America's largest consumer sector.