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Kirin Holdings Co Ltd 2503

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Stock XTKS Rating as of
JPY 2,213.00 −22.00 (0.98%)
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Company Report

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Kirin Earnings: Upfront Investment and Kyowa Hakko’s Widened Losses Curbed Profit Growth

Jeanie Chen

Narrow-moat Kirin posted mixed first-quarter results with solid growth in the domestic brewery, US soft beverage, and pharmaceutical businesses but deteriorating profitability of Kyowa Hakko Bio (health science). The downside risk posed by Kyowa Hakko may offset the strength of the other businesses given the lack of a solution to restore profits over the short term. We have maintained our forecasts and fair value estimate of JPY 2,600. We continue to view shares as undervalued, indicating 12% upside to our intrinsic value. Our profit forecasts are a touch above the guidance of flat business profits year on year.

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Price vs Fair Value

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2503 is trading at a 693% premium.
Price
JPY 2,237.50
Fair Value
JPY 7,346.00
Uncertainty
Medium
1-Star Price
JPY 9,962.00
5-Star Price
JPY 4,637.00
Economic Moat
Xvrkhy
Capital Allocation
Lldnmfjgy

Bulls Say, Bears Say

Bulls

Kirin’s health science profits will improve after the downsizing of commoditized amino acids business ends while new nutritional ingredients and Blackmores start making contribution.

Bears

The strategic shift to the health and wellness field raises concerns over Kirin’s long-term outlook, given a lack of track record in areas outside brewing business and unclear competitive advantages

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Trading Information

Previous Close Price
JPY 2,235.00
Day Range
JPY 2,212.00–2,246.00
52-Week Range
JPY 1,983.00–2,305.00
Bid/Ask
JPY 2,212.50 / JPY 2,213.50
Market Cap
JPY 1.79 Tril
Volume/Avg
1.3 Mil / 3.0 Mil

Key Statistics

Price/Earnings (Normalized)
11.40
Price/Sales
0.83
Dividend Yield (Trailing)
3.18%
Dividend Yield (Forward)
3.18%
Total Yield
3.58%

Company Profile

Kirin is the second largest brewer by value in Japan, with an estimated 35.7% volume share in beer and beer-like category as of 2022. It holds a top share in happoshu (low-malt beer) and new genre (no-malt beer) categories. Apart from beer, it also operates a wide range of acholic and soft beverage products in Japan. It made several acquisitions including Lion Nathan and National Foods in Oceania, the Brazilian brewer Schincariol, and Myanmar Brewery, but has divested most of the acquired businesses except Lion. It has shifted focus back to the domestic brewery after a painful exit from Brazil in 2017 and identified craft beer and wellness as new growth drivers. Overseas business represents about 40% of group’s sales. It also owns a 48.6% stake in the largest Filipino brewer San Miguel.
Sector
Consumer Defensive
Industry
Beverages - Brewers
Stock Style Box
Large Core
Total Number of Employees
33,739
Website
http://www.kirinholdings.co.jp

Competitors

Valuation

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Metric
2503
2502
Price/Earnings (Normalized)
 11.4017.29
Price/Book Value
 1.561.19
Price/Sales
 0.831.06
Price/Cash Flow
 8.158.40
Price/Earnings
2503
2502

Financial Strength

Metric
2503
2502
Quick Ratio
 0.810.36
Current Ratio
 1.410.58
Interest Coverage
 19.0413.92
Quick Ratio
2503
2502

Profitability

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