February 25, 2021
Despite forecasts for sales and profit growth in 2021, concerns about AB InBev’s ebitda margin have gained the upper hand. The title yielded 5% in the morning.
Decidedly, since the mega-buyout of SAB Miller in 2016, the share price ofAB InBev
was only a long series of disappointments for shareholders, apart from the year 2019. In question: the enormous indebtedness resulting from this deal, then the weakness of american market and today the pandemic. In September 2016, the title was close to peaks of 118.8 euros that is to say twice more than the current price of 51 euros.
“This forecast includes a clear warning on the ebitda margin but it should be partially taken into account by the market, especially after Heineken’s results;”
Fernand de Boer
Analyst at Degroof Petercam
New cold shower this Thursday morning (-5%) after the publication of the brewing group’s annual results. In the fourth quarter, yet it exceeded market expectations in terms of volumes (+ 1.6%) and turnover (+ 4.5%). What is unfortunately not the case for ebitda (excluding tax credit in Brazil).
“The biggest negative surprise in ebitda compared to consensus is in North America and Europe, which is largely due to the 4e quarter “, notes Reginald Watson, d’ING (“keep”; 54.92 euros).
Forecasts from the world’s number one beer company financial analysts are also upset. True, he predicts a significant improvement in its products and profits in 2021, compared to 2020. But he also warns that the negative impact of currencies and commodity prices, among others, will weigh on its ebitda margin in 2021.
After canceling its interim dividend, AB InBev will finally distribute a coupon of 0.50 euro.
“This forecast includes a clear warning on the ebitda margin but it should be partially taken into account by the market, especially after Heineken’s results”, underlines Fernand de Boer in Degroof Petercam. The analyst, who wonders what kind of action AB InBev could take to offset this pressure, believes the negative impact of currencies between 500 and 600 million dollars. In this context, he will re-examine his recommendation (“buy”) and his target price (70 euros).
The dividend in question
Reginald Watson is also surprised by the announcement of the distribution of a coupon of 0.50 euro after the cancellation of the interim dividend earlier in the year. And this, while the net debt to ebitda ratio stands at 4.8, with a reiterated ambition to reach a level of 2.
In KBC Securities (“buy”; 80 euros), analysts always appreciate the value due to its dominant position in the market, high intrinsic profitability and long-term growth prospects in emerging markets. They believe that valuation remains attractive with an estimated price / earnings ratio of 2022 at 17.5.
I hope you are in health and well.
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