November 4, 2026/Cordros Report
We update our views on Guinness Nigeria Plc (GUINNESS), following the release of their 9M-26 unaudited results. The company delivered a solid Q3-26 performance, with revenue growth of 41.0% y/y and an EPS of NGN7.03 (+52.8% y/y). Following our review, we now model 2026E revenue growth of 20.3% y/y (Prev.: +16.0% y/y), EBITDA margin of 17.9% (Prev.: 18.5%) and EPS of NGN25.19 (Prev.: NGN23.70). The revisions primarily reflect a stronger volume outlook, which more than offsets higher energy and distribution costs, while lower net finance costs support the EPS upgrade.
Accordingly, we raise our year-end target price by 7.8% to NGN382.73/share (Prev.: NGN355.03/share), implying an 8.0% downside from the current price of NGN416.00 (as of Nov 3), and maintain our “HOLD” rating on the stock. Our TP adjustment reflects a lower WACC of 17.2% (Prev.: 22.0%), as a higher debt weighting of 45.0% more than offsets a higher CoE of 22.6% (Prev.: 21.8%). We now project 2026E DPS of NGN22.38/share (Prev.: NGN19.00), on a higher payout ratio of 88.9% (Prev.: 80.2%) following the third consecutive interim dividend declaration. Based on our estimates, GUINNESS is trading at 2026E P/E and EV/EBITDA of 16.5x and 9.4x, respectively, vs. MEA peer averages of 18.7x and 8.1x.
Stronger topline and lower finance costs lift earnings: We now expect 2026E revenue to grow by 20.3% y/y (Prev.: +16.0% y/y), driven primarily by stronger volumes, earlier price increases and improved product availability from expanded distribution networks. On costs, we now model COGS growth of 21.3% y/y (Prev.: +15.1% y/y), reflecting higher raw material consumption as production scales up to meet stronger volumes. Similarly, we raise our OPEX growth forecast to 28.2% y/y (Prev.: +24.8% y/y), driven by a 30.1% y/y increase in marketing and distribution expenses (Prev.: +25.4% y/y) on continued investment in route-to-market expansion and elevated energy costs. Consequently, we now expect EBITDA margin to contract by 160bps y/y to 17.9% (Prev.: 18.5%). Additionally, we now model net finance costs to decline by 74.6% y/y to NGN3.49 billion (Prev.: NGN6.08 billion), reflecting lower finance costs of NGN7.31 billion (Prev.: NGN8.53 billion) on the back of a stable debt profile. Accordingly, we now forecast EPS growth of 33.1% y/y to NGN25.19 (Prev.: +25.2% y/y to NGN23.70).
Earnings recovery supports a rising dividend profile: GUINNESS has continued to reward shareholders since its earnings recovery eliminated accumulated losses (2025FY: NGN5.22 billion). The company declared a further interim dividend of NGN7.00/s alongside its 9M-26 results, bringing cumulative 2026 interim dividends to NGN16.00/s. We forecast a final dividend of NGN6.38/s, taking total 2026E DPS to NGN22.38/s (Prev.: NGN19.00/s) and translating to a dividend yield of 5.4%. We expect operating cash flow (OCF) generation (2026E: c.NGN66.33 billion), supported by stronger profitability, to provide sufficient coverage for the dividend.
Valuation: Our target price is NGN382.73/s, derived from a 50/50 blend of DCF and sector relative valuation estimates. Our DCF FV is derived from an equal blend of FCFF (NGN401.19/s) and FCFE (NGN302.80/s) estimates, assuming a 17.2% WACC, 22.6% CoE and 4.0% terminal growth rate. Similarly, our multiple-based FV was derived from an equal blend of EV/EBITDA (NGN356.27/s) and P/E (NGN470.68/s) estimates, utilising MEA peer averages for both factors (8.1x and 18.7x, respectively) as multipliers.