October 31, 2025/Cordros Report
INTBREW recorded a modest revenue growth of 9.4% y/y in the quarter (9M-25: +37.6% y/y) and sustained margin improvements – gross (+308bps y/y to 29.9%) and EBITDA (+16.29 ppts y/y to 21.7%), reflecting stable pricing and improved cost efficiency, aided by moderating inflation and FX stability. However, volume growth remained weak, constrained by persistent consumer price sensitivity and subdued demand across mainstream beer segments. In view of the slower-than-expected demand recovery, we have revised our 2025E revenue forecast downward to NGN717.42 billion (Previous: NGN742.80 billion) to reflect softer sales execution and muted consumer momentum. While localisation initiatives and improved procurement efficiency should continue to support profitability, elevated operating costs and a fragile consumer environment are likely to constrain near-term earnings upside. Accordingly, we cut our 2025E EPS forecast to NGN0.92 (Previous: NGN1.02 | loss per share of NGN0.68 in 2024FY). Consequent on these revisions, our target price is adjusted slightly lower by 1.1% to NGN13.93/s (Previous: NGN14.09/s), and we maintain a “HOLD” rating on the stock. On our estimates, INTBREW trades at EV/EBITDA and P/E multiples of 15.2x and 9.3x, respective.
Strong topline and cost efficiencies to drive earnings upside: Reflecting weaker sales execution and a slower-than-expected recovery in mainstream segments, we revise our 2025E revenue growth projection downward to +37.3% y/y (Previous: +43.7% y/y). The revision mainly reflects a more tempered outlook for volume recovery. Over the 2025–2029E period, we model an average annual revenue growth of 20.2%. We maintain our 2025E gross margin estimate at 42.9% (2024FY: 26.9%), supported by improved procurement efficiency and higher local sourcing. However, we lower our EBITDA margin forecast to 34.2% (Previous: 37.4% | 2024FY: -10.2%) to reflect sustained marketing expenses to defend market share. Overall, we project 2025E EPS at NGN0.92 (Previous: NGN1.02 | loss per share of NGN0.68 in 2024FY), capturing the impact of softer topline momentum and a slower pace of margin recovery.
ROE set to rebound sharply following multi-year losses: INTBREW’s return on equity (ROE) has been negative for the past five years, averaging -25.7% (2020–2024A), reflecting persistent losses driven by high finance costs, FX-related pressures, and weak operating margins. However, with profitability expected to normalise in 2025E, we project ROE to rebound to turn positive at 25.7%, marking the first positive return in over five years. This improvement is underpinned by stronger earnings, improved cost efficiency, and reduced leverage. Over the 2025–2029E period, we forecast an average ROE of 27.3%, suggesting a sustained turnaround in shareholder returns as earnings stabilise and balance sheet efficiency improves.
Valuation:Our year-end TP is NGN13.93/s, derived through a 40:60 blend of a DCF valuation and sector-relative valuation estimates (P/E & EV/EBITDA). Our DCF’s fair value estimate is NGN13.97/s, derived from an equal blend of FCFF (TP: NGN14.37/s) and FCFE (TP: NGN13.57/s) estimates assuming a 19.8% WACC and a 4.0% terminal growth rate. On P/E, we applied the MEA peer average 2025E multiple of 16.2x, resulting in a fair value (FV) of NGN15.00/s based on our 2025E EPS estimate of NGN0.92/s. Similarly, utilising the MEA peer average EV/EBITDA multiple of 8.5x, we derived a fair value estimate of NGN12.82/s. The combined multiples yielded a multiple-based fair value of NGN13.91/s.
