Surging Beer Sales In Russia And CIS Markets Propel Revenue Growth And Earnings

Key Takeaways

• Strong growth in the Russian beer market and effective strategies are expected to boost international revenue and profitability.
  
• Improved leverage and net cash position enhance financial stability, supporting future net margins and earnings growth.
  
• Geopolitical uncertainties and macroeconomic headwinds have led to volume declines and increased expenses, impacting overall revenue and profitability.

Catalysts

Engages in the production, bottling, distribution, and sale of beer, malt, and non-alcoholic beverages in Turkey and internationally.

• Strong growth momentum in the Russian beer market, with high single-digit volume growth and increased market share, is expected to support revenue and profitability in international operations.
  
• Continuous volume growth in the Beer Group, especially in markets like Russia, Georgia, and Moldova, is a positive indicator for future revenue expansion.
  
• Effective revenue growth strategies, including price adjustments and favorable product mix, are improving gross profitability despite the decline in volumes; this is expected to support future earnings stability.
  
• Improvements in leverage, with a net debt-to-EBITDA ratio of 0.6x and a net cash position in the Beer Group, are strengthening the financial position, which could positively impact future net margins and earnings.
  
• The decision to revise the guidance for the Beer Group’s top-line performance upwards, driven by sustained market strength, particularly in Russia, indicates expectations for continued revenue growth.

Anadolu Efes Biracilik ve Malt Sanayii Anonim Sirketi Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Anadolu Efes Biracilik ve Malt Sanayii Anonim Sirketi's revenue will grow by 40.5% annually over the next 3 years.
• Analysts assume that profit margins will shrink from 7.3% today to 5.1% in 3 years time.
• Analysts expect earnings to reach TRY 22.7 billion (and earnings per share of TRY 63.86) by about January 2028, up from TRY 11.8 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 9.5x on those 2028 earnings, up from 8.2x today. This future PE is lower than the current PE for the TR Beverage industry at 13.3x.
• Analysts expect the number of shares outstanding to decline by 15.67% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 29.96%, as per the Simply Wall St company report.

Anadolu Efes Biracilik ve Malt Sanayii Anonim Sirketi Future Earnings Per Share Growth

Risks

• The challenges in soft drink operations, particularly due to weakened purchasing power and geopolitical uncertainties, have led to a mid-single-digit decline in consolidated volumes, impacting revenue.
  
• Rising operational expenses have resulted in a slight dilution of EBITDA margin despite a strong improvement in gross profitability, affecting net margins.
  
• In Turkey, beer volume performance saw a decline of 1.4%, driven by price increases and weakening consumer purchasing power, potentially affecting future earnings in this market.
  
• The beer operations in Kazakhstan experienced a slower pace of growth due to weak industry dynamics, affecting the overall revenue growth from the CIS region.
  
• Volume declines in international markets such as Pakistan and Uzbekistan due to macroeconomic headwinds and consumer sentiment may lead to reduced revenues and profitability in the soft drink segment.

Valuation

• The analysts have a consensus price target of TRY277.14 for Anadolu Efes Biracilik ve Malt Sanayii Anonim Sirketi based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of TRY376.0, and the most bearish reporting a price target of just TRY185.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be TRY444.6 billion, earnings will come to TRY22.7 billion, and it would be trading on a PE ratio of 9.5x, assuming you use a discount rate of 30.0%.
• Given the current share price of TRY163.0, the analyst's price target of TRY277.14 is 41.2% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.