Rating Summary:
We revise our rating on Guinness Ghana Breweries Plc (GGB Plc) from “ACCUMULATE” to “BUY”, following a 47.6% upgrade to our previous provisional fair value of GHS 7.56, implying a 20.92% upside from the current price of GHS 9.23. Our rating reflects the company’s ongoing premiumisation drive, targeted efficiency-enhancing CAPEX and a supportive tax environment, alongside compelling valuation metrics. Although revenue declined 15.9% y/y to GHS 1.3bn in 1H2025/26 as management deprioritised lower-priced, high-volume products, we expect earnings quality to strengthen as premium spirits and alcoholic RTDs gain share within the portfolio. We forecast revenue growth of 21.8% y/y to GHS 4.4bn in FY2025/26, moderating from the 51.7% y/y expansion recorded in FY2024/25, supported by improved product mix, bottling efficiency upgrades and the reduction in VAT from 21.9% to 20.0% alongside the removal of the 1.0% COVID levy. Cost of sales declined 17.4% y/y to GHS 1.1bn in 1H2025/26, aided by a 40.7% appreciation of the cedi, while the renewed ability to claim input tax credits on the embedded 5.0% levies should provide an additional cost buffer despite residual FX exposure. At 7.6x P/E versus a 27.9x peer average, the stock trades at a material discount, which we believe does not reflect its improving earnings trajectory and supports scope for multiple re-rating. Our fair value derives from a blended approach comprising DCF (40%), P/E (40%) and DDM (20%), anchored on a 15.01% risk-free rate, WACC of 16.6% and a 5.0% terminal growth rate.