June 19, 2025/Cordros Report
We update our views on Guinness Nigeria Plc (GUINNESS) for 2025E. The brewer’s 9M-25 results confirm a sharp turnaround in earnings, driven by aggressive pricing, improved product mix, and cost containment efforts. After a NGN61.65 billion loss in 9M-24, the company returned to profitability with a NGN6.72 billion profit-after-tax (PAT), highlighting the effectiveness of their transformation strategy. Looking ahead, we expect GUINNESS to sustain topline momentum through a focused push on margin-accretive products. Our investment case is anchored on the company’s strengthened operational execution, with strategic priorities centered on cost efficiency, volume recovery, distribution expansion, and innovation. These efforts should enhance long-term competitiveness and support continued earnings recovery. Accordingly, we project a year-end target price of NGN87.59/s (from NGN69.58/s) and maintain our “HOLD” rating. On our estimates, GUINNESS is currently trading at a 2025E P/E and EV/EBITDA multiples of 8.3x and 1.6x, respectively.
Strong topline growth to support earnings: We project 180.8% y/y revenue growth in 2025E, largely reflecting the extended 18-month reporting period following GUINNESS’ change in financial year-end. On an adjusted 12-month basis (January – December), we estimate revenue growth of 87.2% y/y, underpinned by volume recovery and pricing gains. Notably, GUINNESS has sustained higher pricing across their product portfolio, even amid heightened market competition, reinforcing brand equity and pricing power. Furthermore, ongoing enhancements to their route-to-market strategy — including expanding the number and geographic spread of sales outlets, as well as introducing sub-distributors (retail outlets) to improve last-mile delivery and deepen retail penetration — are expected to sustain sales momentum. Accordingly, we estimate gross margin will rise to 34.0% in 2025E (2024FY: 30.5%), while EBITDA margin is projected to improve to 14.2% (2024FY: 11.8%), supported by better cost management, improved operational efficiency and a stronger focus on higher-margin segments like RTDs, Spirits, and the “Guinness” brand. Overall, we expect a return to profitability, with EPS projected at NGN6.45 in 2025E, (vs a loss per share of NGN25.00 in 2024FY).
Stronger balance sheet as leverage moderates: In 2025E, GUINNESS’ financial position is expected to improve significantly, supported by a return to profitability and lower financial leverage. A key milestone was the repayment of the NGN39.32 billion related-party loan, which reduced FX exposure and eased funding pressure. Consequently, total equity is projected to rise to NGN16.29 billion in 2025E (2024FY: NGN2.16 billion), while the debt-to-equity ratio is expected to improve markedly to 4.9x from 18.6x in 2024FY. Debt servicing capacity, while still sub-optimal, is also set to strengthen, with interest coverage improving to 1.1x (2024FY: 0.2x).
Valuation: Our target price is NGN87.59/s, derived from an 80/20 blend of DCF and sector-relative valuation estimates. Our DCF FV (NGN94.34/s) is derived from an equal blend of FCFF (NGN107.87/s) and FCFE (NGN82.09/s) estimates, assuming a 30.5% WACC, 34.9% CoE and 4.0% terminal growth rate. Our relative valuation fair value estimate of NGN58.03/s was derived using a P/E approach, applying a Nigerian peer average multiple of 9.0x (sourced from Bloomberg) to our 2025E EPS forecast of NGN6.45.
