Transferring Coverage of Asahi and Kirin With Narrow Moat Maintained; Prefer Asahi

We transfer coverage of Asahi Group Holdings and Kirin Holdings, keeping their narrow moat ratings. We view the key competitive advantages of the two companies’ brewery businesses as entrenched retailer relationships supported by strong brand portfolios and extensive distribution networks. Our fair value estimates for Asahi and Kirin remain unchanged at JPY 2,200 per share and JPY 2,600 per share, respectively. While we believe both companies’ shares are undervalued, we prefer Asahi over Kirin due to the former’s focus on its core beer business as well as its leading market positions across Japan, Europe, and Australia, which should support margin expansion in the long run.