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Asahi Group Holdings Ltd 2502

Morningstar Rating
JPY 5,697.00 +1.00 (0.02%)
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Company Report

Asahi Earnings: Volume Growth and Price Hikes in Japan and Europe Lift Profits

Narrow-moat Asahi Group Holdings’ double-digit business profit growth in the first quarter was ahead of our expectation and the company’s internal targets thanks to continued price hike benefits, premiumization, positive volume growth in Europe and Japan, and rigorous cost control. Solid domestic profit growth reinforces our thesis that beer tax cuts will prompt consumers to shift to beer, a product in which Asahi holds a commanding lead and enjoys a moat from cheaper beerlike alternatives. Despite nearly double-digit volume contraction in Oceania, volume seems to have returned to growth in April. Given persistent uncertainty surrounding consumer sentiment and input costs in the core markets, we have maintained our full-year forecasts and fair value estimate of JPY 6,600. We continue to view Asahi’s shares, trading at a 16% discount to our intrinsic value, as undervalued. Our profit forecasts for 2024 are 2%-3% above the guidance.

Price vs Fair Value

2502 is trading at a 393% premium.
Price
JPY 5,697.00
Fair Value
JPY 4,336.00
Uncertainty
Medium
1-Star Price
JPY 7,967.00
5-Star Price
JPY 5,772.00
Economic Moat
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Capital Allocation
Tntpxlzms

Bulls Say, Bears Say

Bulls

The premiumization trend is not undermined by inflation in the western markets despite geopolitical uncertainty which may trigger another surge in commodity prices.

Bears

Heightened geopolitical uncertainty might trigger another round of inflation and raise the likelihood of recession, especially in Europe —does not bode well for Asahi’s premiumization strategy and the near-term profit outlook.

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News

Trading Information

Previous Close Price
JPY 5,696.00
Day Range
JPY 5,650.005,774.00
52-Week Range
JPY 5,061.006,001.00
Bid/Ask
JPY 5,696.00 / JPY 5,706.00
Market Cap
JPY 2.89 Tril
Volume/Avg
1.5 Mil / 1.7 Mil

Key Statistics

Price/Earnings (Normalized)
16.57
Price/Sales
1.02
Dividend Yield (Trailing)
2.12%
Dividend Yield (Forward)
2.32%
Total Yield
2.12%

Company Profile

Asahi is a leading brewer in Japan with an estimated 36.5% market share by volume in Japan’s beer and beer-like market, led by its Asahi Super Dry beer brand. It also operates a wide range of acholic and soft beverage products as well as packaged foods, mainly in Japan. It has made inroads into Europe through acquisitions of SABMiller’s brands including Peroni and Pilsner Urquell in Western and Central Europe in 2016 and 2017. The acquisition of Carlton United Breweries has granted Asahi the leading market share in Australia’s beer market with Great Northern the leading brand. East Asia including China and Southeast Asia are the other overseas markets where Asahi is growing. Overseas business represents nearly half of the group sales and 60% of business profits.
Sector
Consumer Defensive
Industry
Beverages - Brewers
Stock Style Box
Large Core
Total Number of Employees
34,728

Competitors

Valuation

Metric
2502
2503
Price/Earnings (Normalized)
16.5710.63
Price/Book Value
1.141.45
Price/Sales
1.020.77
Price/Cash Flow
8.057.59
Price/Earnings
2502
2503

Financial Strength

Metric
2502
2503
Quick Ratio
0.360.81
Current Ratio
0.581.41
Interest Coverage
13.9219.04
Quick Ratio
2502
2503

Profitability

Metric
2502
2503
Return on Assets (Normalized)
3.31%6.03%
Return on Equity (Normalized)
7.29%15.39%
Return on Invested Capital (Normalized)
4.44%8.17%
Return on Assets
2502
2503
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