NB NL | A fading Star
Nigerian Breweries (NB) revenue fell by 1% for the six-month period ending June 2019 (Avior: +1% y/y). The Group's revenue declined for the third consecutive six-month period. We believe muted volume growth, together with a 17% excise increase resulted in the revenue decline. IntBrew's aggressive pricing strategy, done to gain market share (c.25% share of the market), forced NB to maintain prices. As a result, NB had to absorb input cost inflation and an excise increase, impacting operating margins (-4pp y/y). AB InBev's large balance sheet supports our view that IntBrew will continue its quest for market share gain (citing a target of 40% market share by 2021). Therefore, we do not forecast ease in the current competitive environment over the short-term. We forecast earnings to grow at a CAGR of 13.2% over the next three years.
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