August 01, 2025/Cordros Report
INTBREW’s Q2-25 results build on the recovery momentum as highlighted in Q1-25 update. The brewer posted revenue growth of 39.5% y/y, an 888bps expansion in gross margin to 37.0%, and a return to operational profitability, with EBITDA margin of 24.3% — reversing the negative print in Q2-24. Reflecting improved execution, we now forecast 2025E revenue growth of 43.7% (previous: 32.6%), an improved EBITDA margin of 37.4% (previous: 25.6%), and EPS of NGN1.02 (previous: NGN0.57 | 2024FY: loss per share of NGN0.68), driven by favourable product mix, increased local sourcing, and cost savings from CNG-powered operations. Accordingly, reflecting a more robust earnings outlook, we raise our target price to NGN14.09/s (previously: NGN9.17/s) and maintain our “HOLD” rating on the stock. On our numbers, the stock trades at 8.4x P/E and 4.6x EV/EBITDA on 2025E estimates.
Strong topline and cost efficiencies to drive earnings upside: We raise our 2025E revenue growth projection to +43.7% y/y (previously: +32.6% y/y), reflecting prior price adjustments and a favourable shift toward higher-value brands like Trophy and Budweiser. While we now expect relative price stability going forward — given INTBREW’s low price positioning — revenue momentum should be sustained by a modest volume recovery and further mix improvements. Over 2025–2029E period, we model an average annual revenue growth of 19.5%. We now expect gross margin to print 42.9% in 2025E (previously: 34.1%), driven by robust topline, improved cost discipline, and localisation efforts amid easing inflationary pressures. Accordingly, EBITDA margin is forecast to print at 37.4% in 2025E (previously: 25.6%), reflecting improved cost efficiency from the brewer’s shift to CNG-powered operations and logistics, which continues to lower energy and distribution cost intensity. Overall, these revisions lift our earnings per share estimate to NGN1.02 in 2025E (previously: NGN0.57 | vs loss per share of NGN0.68 in 2024FY).
Improved operational efficiency to drive margin expansion: INTBREW’s 5-year historical average EBITDA margin of -1.7% underscores the company’s prolonged struggle with FX losses, elevated input costs, and operational inefficiencies. However, Q2-25 marked a decisive turnaround, with the brewer posting a positive EBITDA margin of 25.7% (vs. 5-year historical average: -1.7% | H1-24: -43.6%) — reflecting improved gross margin performance, tighter cost control, and early gains from localisation and energy efficiency initiatives. Looking ahead, we expect the recovery to persist, with EBITDA margin projected at 37.4% in 2025E and averaging 48.0% over the forecast horizon, supported by further operational optimisation and post-deleveraging gains.
Valuation: Our year-end TP is NGN14.09/s, derived through a 40:60 blend of a DCF valuation and sector-relative valuation estimates (P/E & EV/EBITDA). On P/E, we applied the MEA peer average 2025E multiple of 14.8x, resulting in a fair value (FV) of NGN16.59/s based on our 2025E EPS estimate of NGN1.02/s. Similarly, utilising the MEA peer average EV/EBITDA multiple of 8.5x, we derived a fair value estimate of NGN14.41/s. The combined multiples yielded a multiple-based fair value of NGN15.50/s. Our DCF’s fair value estimate is NGN11.98/s, derived from an equal blend of FCFF (TP: NGN12.37/s) and FCFE (TP: NGN11.59/s) estimates assuming a 19.8% WACC and a 4.0% terminal growth rate.
