Leading analyst Anthony Geard has reiterated his Hold recommendation for SABMiller, the global brewer, following its full-year results this week, saying the “overall feel” of its results is “very solid” despite falling marginally short of his estimates.
Geard, of Investec, increased his Target Price to “reflect some FX moves and a slight peer group rerating since we last wrote”. “Our ZAR target price rises to 54,000cps from 51,000cps and we reiterate our Hold recommendation”.
He said: “SAB’s FY13 results fell marginally (1%) short of our and consensus estimates, but the overall feel of the results is very solid. The same applies to the outlook and we see no reason to revise our positive assessment of the investment case. SAB’s growth-oriented portfolio of high-quality, well-diversified assets should sustain top-line and earnings growth comfortably ahead of its peers.
“Speculative activity regarding possible acquisitive interest from ABI in SAB on a 2-3 year view may cause the rating to overshoot.
“EPS of 236cps (adjusted, diluted) represents an 11% increase over the prior year and compound growth of 16% during the past ten years. Organic top-line CAGR (6.9% in FY13A) ranks top of our list of leading consumer staples groups over both five and ten years and informs our sense that SAB should trade at a mid-teen premium to the peer group.
“We’ve trimmed our numbers slightly (roughly 2%) to reflect USD strength relative to key EM currencies, notably ZAR and COP. We still target EPS CAGR of 11% off the FY13A base and expect near-term news flow to be supportive.”
