EABL | Moving up the ladder
East African Breweries grew revenue by 13% for the half-year ending December 2018 (versus -0.3% y/y in H1'18). Strong volume growth (+13% y/y) contributed to the increase. Robust performances in mainstream spirits, bottled beer and Senator Keg influenced volume growth. A positive mix led to operating margins expanding 230bp to 27% for the half-year. The renewed growth in Senator Keg, with Kenya sales growing by 35% y/y, is encouraging. We believe the segment will continue to act as a catalyst for future growth. The global EM market sell-off during 2018 de-rated EABL from an historical five-year average of 20.4x to 14.7x fwd PE. We maintain our view that EABL is positioned for growth. Moreover, we forecast 35% CAGR earnings growth to FY'21. We believe the counter is undervalued at these levels.
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