Asahi (TSE:2502) Valuation Check as Cyberattack Fallout Drives 20% November Alcohol Sales Decline

Asahi Group Holdings (TSE:2502) is still working through the hangover from its September cyberattack, with November alcohol sales down at least 20% year on year and logistics only gradually getting back on track.

See our latest analysis for Asahi Group Holdings.

Even with the cyberattack still weighing on operations, the market seems relatively calm so far. Asahi’s year to date share price return of 9.38% and three year total shareholder return of 32.98% suggest steady, rather than explosive, momentum around the current ¥1,760.5 level.

If you are weighing Asahi against other consumer names, it could also be worth scanning for resilience in other defensive areas of the market through fast growing stocks with high insider ownership.

With earnings still feeling the impact of the cyberattack, but the shares trading at a sizeable discount to analyst and intrinsic value estimates, is Asahi a mispriced defensive play, or is the market already banking on a smooth recovery?

Price-to-Earnings of 15x: Is it justified?

On a price-to-earnings multiple of 15x at a last close of ¥1,760.5, Asahi screens as notably undervalued versus both peers and its own implied fair earnings multiple.

The price-to-earnings ratio compares what investors pay today for each unit of current earnings, making it a core yardstick for mature, cash generative beverage groups like Asahi. With earnings forecast to grow around the mid single digit to high single digit range and a long run track record of profit expansion, a materially depressed multiple suggests the market is not fully pricing in Asahi’s ability to keep compounding profits.

Against this backdrop, Asahi’s 15x P/E sits well below the Asian Beverage industry’s 19.3x average and far under the estimated fair P/E of 24.3x that our models suggest the market could gravitate toward over time. It is also inexpensive compared to a 34.1x average for a selected peer group, underscoring how conservative the current valuation looks if the company simply delivers on steady earnings growth rather than any step change in performance.

Explore the SWS fair ratio for Asahi Group Holdings

Result: Price-to-Earnings of 15x (UNDERVALUED)

However, lingering cyberattack disruptions and any slowdown in Asahi’s steady mid to high single digit earnings growth could quickly challenge the undervaluation story.

Find out about the key risks to this Asahi Group Holdings narrative.

Another View: DCF Points To Even Deeper Value

Our DCF model paints an even starker picture, with fair value estimated around ¥4,616.9 per share versus the current ¥1,760.5, implying Asahi trades at roughly a 62% discount. If the cash flows materialise as expected, is the market overlooking a slow burning compounding story?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Asahi Group Holdings for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 904 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Asahi Group Holdings Narrative

If you see the numbers differently or want to stress test your own assumptions, you can build a personalised Asahi thesis in under three minutes: Do it your way.

A great starting point for your Asahi Group Holdings research is our analysis highlighting 5 key rewards and 1 important warning sign that could impact your investment decision.

Looking for more investment ideas?

Before you move on, lock in your next watchlist candidates by scanning focused stock sets built from the ground up around value, growth, and structural themes.

• Capitalize on potential mispricings by targeting companies screened as compelling on cash-flow metrics through these 904 undervalued stocks based on cash flows.
• Harness powerful secular trends by concentrating on innovation leaders shaping the future of intelligent automation with these 25 AI penny stocks.
• Strengthen the income side of your portfolio by focusing on businesses offering reliable payouts via these 12 dividend stocks with yields > 3%.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com