East African Breweries Ltd (NSE: EABL) 2019 Company Update
Ahead of EABL’s FY19 earnings release on 26th July and given the developments in the company since our last company update, we have reviewed our forecasts and subsequently our valuation of the stock. We estimate that FY19 EPS will grow 39.4% y/y driven by 11.2% y/y growth in net revenue, on the back of resumption of production of Senator Keg and performance of Tanzania market with an estimated net sales growth of c.26% y/y. Additionally, FY18 was a low base as EPS dropped 26.0% y/y to KES 7.91 due to a one-off tax provision of KES 2.0Bn. Normalized for the tax provision, EPS is expected to grow 19.1% y/y. Overall, we continue to see significant potential with 20.9% upside based on a target price of KES 241.75. We therefore maintain our BUY recommendation on EABL.
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