AB INBEV: AB InBev launches Everie cannabis tea and soft drinks | BUY | EUR100(+39%)
AB INBEV - BUY | EUR100(+39%) AB InBev launches Everie cannabis tea and soft drinks Launch of cannabis 2.0 AB InBev JV with Tilray launched Everie – CBD infused tea CAD0.9bn Canadian cannabis infused beverages market
20 Dec 19
Weak Q3 and reduced FY19 guidance
Weak Q3 numbers and downgraded guidance for FY EBITDA growth. At both the top- and bottom-line, the group disappointed. The slowdown in the main markets, higher cost of sales and yoy phasing of sales and marketing investments all negatively weighed on the results.
25 Oct 19
Brewers | Lasting forever
In this research we analyze in depth the past and future organic revenue growth rates of the brewers. Over the past five years, AB InBev’s 4.9% annual organic revenue growth and Heineken’s 4.5%, look spectacular. However, as both have nearly 40% of their revenues from high-inflation countries, their inflation-corrected organic revenue growth rate has been a disappointing at 0.5% and 0.7%, respectively; well below the 2.1% that Royal Unibrew managed but better than the -1.4% from Carlsberg and the -3% from Molson Coors
ABI RBREW TAP HEIO CARLB
10 Sep 19
The plan B money raiser
The market applauded ABI’s Australian divestment ($11.3bn), and rightly so. AB Inbev reacted quickly after it failed to IPO its Asian unit as a way to contract its immense debt ($106bn). It may well be that this shift (i.e. keeping Asia) means potential investments in emerging markets to offset the lacklustre US.
22 Jul 19
LIBERUM: Anheuser-Busch InBev - Dust off the old playbook of asset sales
Following the pulled IPO, ABI dusted off the old playbook of asset sales to pay down debt. ABI confirmed it will sell CUB to Asahi for $11.3 billion. The group continues to believe an APAC IPO is viable and the multiple the IPO will fetch ex Australia is undoubtedly higher than the previous offer.
19 Jul 19
LIBERUM: Anheuser-Busch InBev - Pre 1Q’19 – Big mark-to-market technically inflates normalised EPS
We are upgrading our normalised FY19 EPS estimates by 20% due to mark-to-market (M2M) adjustments for share-based payments, a lower tax rate and changes in FX. We note that our EBITDA, EBIT and cash flow do not change as much as the M2M is non-cash in nature and reflects a 30% rise in the share price in 1Q’19.
15 Apr 19
LIBERUM: Consumer Staples Weekly - AB InBev’s Asian IPO, debt rejig; Chobani
On 11th January, Bloomberg reported that AB InBev is considering a potential $5bn IPO for its Asian operations to raise funds and cut the group’s $100bn+ debt. The report cites a potential value of $70bn for the Asian unit. Liberum view: AB InBev’s Asia division accounts for 15% of group sales and 12% of EBITDA. A $70bn valuation equates to c.50% of the group’s current $140bn market cap. This valuation implies 8.2x 2019E sales and 22x 2019E EBITDA, similar to Asian brewers United Breweries (India), SABECO (Vietnam) and Chongqing (China). The IPO may remind investors of the true value of the group and act as a positive catalyst for the shares as analyst must revisit the SOTPs. Within its Asian division, ABI owns the vast majority of the Chinese profit pool driven by its portfolio of premium and super premium brands including Budweiser, Corona and Boxing Cat. It is also the market leader in Australia and South Korea, #2 in India and has operations in Vietnam, Japan and other South and Southeast Asian countries. A listing also gives ABI flexibility to sell down its stake to buy the Castel assets, to pay down debt or to buy its minority partners.
14 Jan 19
LIBERUM: Consumer Staples Weekly - Kerry, UK sugar tax, Nespresso, RB, beer
Kerry Co-op plans partial spin of €2.2bn stake | UK sugar tax raises £154m since April introduction | Nespresso to invest CHF43m in Romont, Switzerland site | Reckitt partners with SCI for D2C infant nutrition sales | Proposed change to VAT on beer in Colombia
ABI KYGA RB/ NESN
26 Nov 18
LIBERUM: Anheuser-Busch InBev - Resetting numbers & US strategy upside
Adverse FX and input cost developments should continue to be more than compensated by structural premiumisation trends. The group’s strong brand portfolio, distribution prowess and low-cost advantage are sources of durable competitive advantages. We lower our estimates due to rising input costs and softer than expected results but see significant upside from here. TP to €93 from €99, BUY.
09 Nov 18
LIBERUM: Consumer Staples Weekly - Beer price-fixing probe; Plastics ban; Altria
On 25th October, Reuters reported that the on-going anti-trust investigations in India into price-fixing by brewers United Breweries, ABI and Carlsberg was initiated after ABI approached the regulator with information about the cartel. ABI discovered the collusion after taking over SABMiller's Indian operations. Executives of the three companies used to discuss and set ex-brewery prices, the base on which state governments apply taxes. The companies could be liable to a potential fine of up to $272m in total, according to the report, although ABI’s share could be waived. Liberum view: The Indian alcohol market is highly taxed and regulated but remains an attractive growth market for global brewers. The uncovering of these allegations could give further reason for the government to keep regulations tighter for longer, hurting the long-term prospects of alcoholic beverages industry in the country.
AB INBEV British American Tobacco
29 Oct 18
LIBERUM: Anheuser-Busch InBev - 3Q’18 big miss, dividend cut and muddled consensus
Group 3Q’18 organic sales grew 4.5%, below consensus seeking 6.2% driven primarily by revenue/hl. Organic normalized EBITDA grew 7.5%, also missing consensus, which expected 9.9%. The results were offset by commodity price inflation. Normalised EPS of $0.82 missed consensus seeking $1.02. If you adjust for the mark-to-market losses and the Argentina hyperinflation accounting, EPS came in at $1.19. Reported profits attributable to equity holders missed expectations by 43%. The difficult quarter and adverse emerging market volatility led to a 50% dividend cut.
25 Oct 18
LIBERUM: Mountain or Molehill in H2 – Pan-Europe
In a bid to leave full-year estimates unchanged, management will often cite a higher H2 weighting after a miss at the interims. Conversely, we often see prudence after a strong H1, with analysts reluctant to upgrade numbers. The ‘anchoring’ around the full-year estimates can lead to companies facing either mountains or molehills in H2. Last year, Rotork and Rightmove were identified prior to warning and beating, respectively, (PDF). In this screen we search for further possible ‘warners’ – both positive and negative – focussing on 2018E H2 EPS weightings vs. their five-year median. AB InBev and Spirent Communications face tougher H2s than usual but are rated Buy by Liberum. Conversely, IAG, Publicis and Travis Perkins look well-placed to exceed full-year expectations.
ABI AZN ASML GIVN SPT VIV CARLB DOM GSK IAG PAGE PSON PUB SCHP SHP TPK ULVR
02 Oct 18
LIBERUM: Anheuser-Busch InBev - 2Q'18 adj. EBITDA in-line but a 2.3% adj. EPS miss
2Q’18 organic sales grew 4.7%, behind consensus expectations of 5.4% driven by slower than expected growth in North America and EMEA. Normalized EBITDA beat by 1.1% but organic normalized EBITDA growth of 7% was a touch below expectations of 7.2%. As we go down the P&L, we see slight misses which compound on the way down. Normalized EBIT organic growth came in at 6.7% compared to consensus of 7.7%, though the margin of 32.2% was in line. Normalized EPS came in at $1.1 compared to consensus expectations of $1.13, which is a 2.3% miss. No change to guidance.
26 Jul 18
LIBERUM: Anheuser-Busch InBev - Cutting EPS by 9%, target price to €99 due to FX
We reduce our estimates for AB InBev due to the translation effect from the recent softness in the Brazilian real and the Argentinean peso. We are cutting our EPS estimates by 9% for FY18E and FY19E due to this adverse situation. Our CROCE/WACC and DCF valuations are impacted by FX translation. We still like AB InBev's low-cost advantage and unparalleled portfolio of brands with 7 of the 10 most valuable beer brands according to BrandZ. Maintain BUY with a reduced TP of €99 (from €105).
12 Jul 18
LIBERUM: Anheuser-Busch InBev - 1Q’18 better than expected; positive outlook reiterated
Group 1Q’18 organic sales grew 4.7%, well ahead of consensus on 3.6% driven by better than expected volumes in Mexico, Colombia and Argentina. Organic normalized EBITDA growth of 6.6% beat consensus by 190bps, led by strong synergy capture, a stronger top line and overall better than expected results. Normalised EPS of $0.73 missed consensus on $0.79 primarily due to a mark-to-market loss on derivatives related to Modelo and SAB. There is no change to the 2018 outlook. Reiterate BUY with €105.
09 May 18
LIBERUM: Consumer Staples Weekly - Reckitt-Pfizer; AB InBev; Danone; L’Oréal
Reckitt and GSK withdraw from Pfizer consumer health auction | ABI finalizes Russia and Ukraine business combination with Efes | Danone issues €300m social bond with a 1.0% coupon | L’Oréal renews license deal with Armani till 2050
ABI RB/ GSK BN OR
26 Mar 18
LIBERUM: Consumer Staples - Rising freight and pack costs set to pressure 1H margins
Headwinds are building for consumer staples companies’ margins in 2018. General Mills and Henkel have warned that higher U.S. freight costs will hurt sales and margins in 2018 whilst many others are calling out the risks from still rising freight rates. Packaging costs are also spiking with cardboard and plastic packaging prices rising double-digits in the past couple of quarters. We expect these pressures combined with still sluggish sales growth will hurt margins in 1Q/1H and will lead to a volatile reporting season and scope for negative earnings surprises. We expect more pressure on valuations - the consumer staples sector still trades on a cal'18E PE of 20x vs the 10-yr avg. of 17x.
ABI TATE NESN DGE BN
23 Mar 18
LIBERUM: Consumer Staples Weekly - Tate & Lyle; Heineken; Essity; L’Oréal
Tate appoints HORN as U.S. distributor for the Nutrition Industry | Heineken opens brewery in Mexico; optimistic on NAFTA | Essity to restructure production facility in Santiago, Chile | L’Oréal appoints China CEO to Executive Committee
ABI ABF CPR BEI TATE HEIA OR
05 Mar 18
Strong year ending, sees better performance in FY18
Strong Q4 on the back of a rebound in Brazil as well as better performances in China and Colombia. The US remains soft, although improved vs. Q3. As positives, we note a better than expected margin progression. The improvment from quarter to quarter and positive FY18 outlook should be reassuring for shareholders.
01 Mar 18
LIBERUM: Anheuser-Busch InBev - The King of Beers reigns: optimism going into 2018
Organic sales grew 8.2% in 4Q’17, beating consensus on 5.8% due to continued premiumisation trends, revenue management, and evidence of pricing power. Group 4Q’17 organic volumes grew 1.6%, better than consensus on 1.3% driven by LatAm North and LatAm South. Normalized EBITDA came in at $6,186m vs. $5,985m, a 3.4% beat. Normalised EPS of $1.04 beat consensus on $1.02 by 1.7%. The 2018 outlook statement is bright and suggests ABI is on stronger footing. BUY with a TP of €105.
01 Mar 18
LIBERUM: Consumer Staples - 4Q preview: Improving outlook for 2018 likely balanced by full sector valuation
On balance, we expect a solid, if unspectacular, set of results. Growth remains constrained - we forecast 3.7% LfL sales growth for Consumer Staples with headwinds from soft consumer demand, geopolitical turmoil and disinflation. Input prices remain benign but intense price competition, retailer pressures and online deflation impede margin growth, putting the onus on cost savings and M&A to drive EPS. Sector valuation remains elevated at 20.8x cal’18E, a 36% premium to STOXX600. We expect valuations to remain capped, particularly if bond yields continue to rise.
ABI ULVR CARLB OR TATE RI HEIA NESN BN RB/ KYGA CPR ABF BEI
31 Jan 18
LIBERUM: Consumer Staples: Our Best Ideas - Valuation capped in 2018: buy value, FCF yield and self-help – Reckitt, Danone, Heineken
In 2018, we expect interest rates and inflation will continue to rise on the back of reflationary policies and stronger global GDP growth. Emerging Market growth is picking up bolstering resilient Developed Markets and leading to a more synchronous, broader global economic picture. The risk to global trade remains elevated due to rising protectionism and the potential for trade wars. We expect continued market volatility as nationalistic politics heighten the risk of unintended geopolitical events.
ABI NESN BN ABF KYGA TATE ULVR ULVR OR RB/ BEI ONTEX MCB HEIA CARLB DGE RI CPR RCO
19 Jan 18
LIBERUM: Consumer Staples Weekly - Reckitt; Chinese beer & IMF; Nestlé candy
Reckitt agrees license with Orbis Biosciences | New Chinese infant formula laws remove 1,400 products | Local Chinese beer companies raise prices | Hershey & Ferrero submit final bids for Nestlé’s U.S. candy
ABI TATE RB/ CARLB RCO RI NESN
08 Jan 18
Q2 better than expected
Q2 update: revenue grew +5% organically (cons. +3.8%), volumes were up 1% (cons. +0.1%) whereas revenue per hl stood at +3.2%. The EBITDA margin was up 238 bp on an organic basis and -110bp on reported figures. Organic revenue growth by region: North America 0% (cons. -0.9%), LatAm West +8.5% (cons. +6.4%), LatAm North -1.8% (cons. +0.7%), LatAm South 35.4% (cons. +27%), EMEA +10% (cons. +6.3%) and Asia Pacific +5.9% (cons. +5%). By the most important markets, the US saw a better quarter with revenues down only 0.2% but the company has been losing market share. In Brazil, revenue declined 3.8% in Q2, with beer volumes down 1.3% (an improvement vs Q1) against market volumes of -2.7%. The margin stood at 39.2% (better than in Q1). Mexico continues to perform ok with revenue up low double-digit. South Africa delivered very good +8.8% sales growth in Q2 with a strong margin progression. Colombia had a better quarter vs. Q1 with revenues up +3.4% and volumes down 1.4%. China had quite a good quarter with revenue up +7.2% with +1% growth in volumes and an EBITDA margin expansion to 35.7%. The group expects to accelerate revenue growth in FY17.
27 Jul 17
Q1 better than expected, provides some relief
Q1 update: revenue grew by +3.7% organically (cons. +2.8%), volumes were down -0.5% (cons. -0.6%), and revenue per hl stood at +4.3%. On the reported figures, revenue was up by 7%. The EBITDA margin was up by 76bps on an organic basis and flat on the reported figures. Organic revenue growth by region: NorAm -2.1% (cons. -0.1%), LatAm West +3% (cons. +4.5%), LatAm North +2% (cons. +0.4%), LatAm South +27.4% (cons. +16%), EMEA + 4.9% (cons. +4%) and Asia Pacific +8% (cons. +3.5%). By the most important markets, Brazil remains weak (although volumes were up by 3.4%, the EBITDA margin contracted to 38.8%). US volumes were disappointing (down 4.7%) impacted by BudLight, and the EBITDA margin slightly improved. Mexico seemed to be solid (revenue up high-single-digit) with margin expansion. China had a good start to the quarter with positive volumes (+5%) and better revenue per hl (+6%). South Africa seems to running well with stronger pricing and margin expansion on the back of the implementation of Global Brands. In Colombia, volumes were down by almost 8% and the margin contacted due to a VAT increase. The group expects to accelerate revenue growth in FY17 despite the volatile market environment.
04 May 17
Stock attractiveness falls flat
FY and Q4 update: In Q4, revenue grew +0.2% organically (cons. +3.1%), volumes were down 3.3% (cons. -0.8%), and revenue per hl stood at +3.9%. The EBITDA margin was down 152bp on an organic basis and -300bp on reported figures (FX headwinds) to 37%. By the most important markets, Brazil remained weak (EBITDA in Q4 was down c.33%), although pricing improved. US volumes were down in line with Q3, however, margins improved. Mexico seems to be solid. China had a weaker quarter on strong comparables but the overall performance seems to be good (market share gains with stronger pricing). Volumes in South Africa declined by 5% in Q4 and the EBITDA contracted. In Colombia, volumes were also down with a margin contraction. For the FY revenue grew +2.4% organically, and volumes were down 2%. Revenue per hl was up +4.5%. On reported figures, sales contracted by 3%. The EBITA margin contracted by 92bp organically on the back of a weak Brazil (EBITDA declined by c.20% in FY16) and was down 190bp on reported figures to 36.8%. The net profit for period is down 42% on the back of FX headwinds as well as higher net finance costs (linked to the acquisition of SABM). The proposed total dividend is €3.6 (in line with last year’s). FY17 outlook: the group expects top-line growth to accelerate. The company also updated its synergies guidance: ABI expects a total $2.8bn in synergies at constant FX from the SABM acquisition ($2.45bn previously),of which $800m was captured in 2016 and another $2.0bn will be delivered in the next 3-4 years.
02 Mar 17
Q3: ABI lowers guidance on the back of weak Brazil
ABI Q3 update: On an organic basis, revenue grew +2.8% (cons. +3.4%). Volumes were down 0.9% (cons. -1.5%). Revenue per hl stood at 3.8%. On the reported figures, revenue is down 2.3%. The EBITDA margin contracted by 240bp on a reported basis and by 178bp on organic basis (due to Brazil). Organic sales by region: North America -0.3% (cons. +0.7%), Mexico +12% (cons. +8.1%), LatAm North -5% (cons. +3.1%), LatAm South 22.2% (cons. 12.2%), Europe +3.1% (cons. +3%) and Asia 5% (cons. 4.9%). Volumes by region: North America -2.4% (cons. -0.8%), Mexico +9.6% (cons. +5%), LatAm North -4.5% (cons. -4%), LatAm South -1.7% (cons. -7%), Europe -3.2% (cons. +0.3%) and Asia 1.2% (cons. +0%). By most important market, the US performance in Q3 was weak (both STRs and STWs were down by respectively –2.6% and -2.5%, ABI continued also to lose some market share to STRs). Brazil was very weak (volumes down 5.1%, pricing was negative, and there was a huge EBITDA margin deterioration from 50.2% to 37.8%). Mexico seems robust. China delivered good results (volumes +1.6% and 417bp EBITDA margin progression). The group cut its FY guidance for pricing to now be in line with inflation (vs. ahead of inflation) due to a weak Brazil. ABI had expected Brazil to be flat in revenue for the FY, which is no longer the case. The company expects that unfavourable hedges linked to the devaluation of the Brazilian real will impact COGS before easing by mid-FY17.
28 Oct 16
Weak Q2 but who cares when China gives clearance & the SABM Board recommends the offer
Q2 update. On an organic basis, revenue grew +4% (cons +5.8%). Volumes were down -1.7% (cons +1%). Revenue per hl stood at 5.9%. On the reported figures, revenue is down -2.2%. The EBITDA margin contracted by 50 bps (due to LatAm). Organic sales by region: North America +2.2% (cons. +1%), Mexico +9.5% (cons. +11%), LatAm North +1.7% (cons. +9.2%), LatAm South 4.1% (cons. +15%), Europe +4.6% (cons. +4%) and Asia 4.1% (cons. +5%). Volumes by region: North America +0.4% (cons. -0.7%), Mexico +7.2% (cons. +8%), LatAm North -4.6% (cons. +1.3%), LatAm South -14.8% (cons. -5%), Europe -0.8% (cons. +1.2%) and Asia –1.7% (cons. +1.2%). Taking the most important markets, the US delivered good results which were an improvement on the Q1 (volumes were practically flat -0.3% with flat STRs and STWs down -0.9%, whereas the EBITDA margin was up +92bp). Mexico recorded another quarter of strong growth (volumes +9.9%, the margin was negatively impacted by the timing of sales and marketing investments). Brazil’s performance was weak and reflects the challenging macro environment (volumes -4.7%, organic EBITDA margin was down 217bp). China’s performance was good given the weak industrial environment (volumes -1.8% vs. market -8%, organic EBITDA margin was up +553bp on the back of premium portfolio). The company amended its FY guidance and now expects Brazilian net revenue to be flat for the FY (mid to high-single-digit previously).
29 Jul 16
Q1 disappoints on Brazilian weakness
ABI reported its Q1. Volumes were down 1.7% (cons. -0.3%). Organic revenue was up 3.1% (cons. 6.1%). Revenue per hl stood at 4.9%. On reported figures, revenues were down 10% whereas the normalised EBITDA margin contracted by 120bp. Organic volumes by region: Northe America -1.1% (cons. 0.1%), Mexico +13% (cons. +8%), LatAm North -7.3% (cons. -3.5%), LatAm South -5.3% (cons. -2%), Europe +1.8% (cons. +0.5%) and Asia -0.5% (cons. 0%). Taking the most important markets, the US delivered good results (volumes down 1.2% with STRs -0.3% and STWs down -1.2%, whereas the EBITDA margin was up +82bp). Mexico delivered another quarter of solid growth (volumes +13%, however the margin was negatively impacted by the timing of sales and marketing investments). Brazil’s performance reflects the challenging macro environment (volumes -8.5%, organic EBITDA margin was down 96bp). China’s performance was neutral (volumes -1.1% vs. market -4%, organic EBITDA margin up +76bp). The group expects the challenging environment to continue but initiatives which have been put in place should mitigate the impact. Consequently, ABI remains cautiously optimistic about the rest of the year and maintains its guidance.
04 May 16
Q4 leaves a taste of disappointment
ABI released its Q4 and FY results. In Q4, total volumes declined 0.7% (cons 0%) whereas revenue grew organically +7% (cons +6.5%). The normalised EBITDA grew +6.6% (cons 6.5%). Revenue per hl grew 7.7%. On reported figures, sales stood at $10.7bn (cons $11.1bn) and normalised EBITDA was at $4.3bn (cons $4.58bn). Q4 organic volumes by region: NorAm -2.9% (cons. -1%), Mexico +11.3% (cons. +5%), LatAm North -2.6% (cons. +1.1%), LatAm South -3.7% (cons. +0.9%), Europe + 2.9% (cons. -3%) and Asia Pacific -0.2 (cons -1%). Q4 organic revenue by region: NorAm -0.6% (cons. 0.2%), Mexico +13.9% (cons. +8%), LatAm North +7.1% (cons +9%), LatAm South -+24.1% (cons. +28.5%), Europe + 8.9% (cons. +3%) and Asia Pacific 11% (cons +4.8%). Taking the most important markets, in Q4, the *US* volumes were down 3.3% (STWs were down 3.3% STRs were down 1.1%) whereas the organic EBITDA margin contracted 246bp (poor quarter). *Mexico* recorded another strong quarter with volumes up +11.3% and a 352bp organic EBITDA margin improvement. In *Brazil*, volumes stood at -3.5% whereas the EBITDA margin was up 34bp (a good performance in a difficult economic context). *China* remained fragile with volumes practically flat (-0.2% vs. -6% for the whole industry, good performance overall). On a FY basis, total volumes were down 0.6%, organic revenue was up +6.3% (-7% on reported figures). The normalised EBITDA margin was up 55bp organically and down 80bp on a reported basis. Proposed interim dividend is €2.00 (€3.60 for the FY vs. €3.00 last year).
25 Feb 16
Solid Q3, China disappoints
ABI released its Q3 update. Revenue grew +7.9% organically (consensus +6.7%) whereas organic volumes were up +1.5% (cons. +0.9%). Revenue per hl grew 6.3%. On reported figures revenue was down by 7.1% due to an adverse FX effect. Total normalised EBITDA margin progressed by 58bp organically and was 10bp down on a reported basis.
30 Oct 15