In brief
- Robust Cost Containment Supports Strong Bottom-Line Improvement: Guinness Ghana posted strong earnings rebound in 1Q2025/26, recording a net profit of GHS 24.7mn, compared to a loss of GHS 3.0mn in the prior-year period. The turnaround was driven primarily by aggressive cost containment, including a 24.3% y/y decline in cost of sales to GHS 443.4mn, a 20.4% y/y reduction in operating expenses to GHS 61.9mn, and a 34.8% y/y fall in finance charges to GHS 8.5mn following the repayment of borrowings and easing interest rates. Although revenue declined by 18.6% y/y to GHS 549.1mn on weaker volumes, the sharp contraction in input and operating costs expanded margins significantly. Gross margin improved by 601bps to 19.3%, operating margin strengthened by 626bps to 8.0%, and net margin increased by 494bps to 4.5%
- Superior Route-to-Market Scale and Structural Reach to Anchor Revenue Growth: Guinness Ghana operates one of the largest and most integrated distribution systems in the beverage sector, supported by dual breweries and a broad network of key distributors, wholesalers, sub-wholesalers and trade outlets. This scale materially exceeds the reach of competitors such as Kasapreko whose stringent distributor requirements limit expansion and Accra Brewery, whose mid-scale, depot-led model offers narrower national coverage. We believe this depth in both modern trade and high-frequency retail channels enhances visibility, accelerates SKU roll-outs, and positions Guinness Ghana for sustained volume recovery. This supports our five-year revenue CAGR forecast of 26.7% (2025–2029).
- Castel Group Integration to Strengthen Distribution and Drive Volume Upside: Castel Group’s acquisition of an 80.4% stake introduces a major distribution-focused shareholder with extensive African last-mile capabilities. We expect Castel’s strong wholesaler relationships, broad retail access, and proven route-to-market infrastructure to enhance Guinness Ghana’s reach, especially in under-served regions. The integration should unlock volume-led gains across both mass-market beer and premium RTD/spirit portfolios, reinforcing our five-year revenue growth outlook of 26.7%.
- VAT Reduction to Reignite Consumer Purchasing Power and Support Volume Growth: We expect that the reduced VAT rate (especially with the removal of the 1.0% COVID levy) will contribute to better demand conditions, as consumers respond positively to stable prices. Our analysis revealed that in FY2024/25, Guinness Ghana collected GHS 844.3mn in VAT for the Ghanaian government, translating into a four-year CAGR of 40.4% and consistently depleting consumers’ purchasing power. In view of this, we believe that the removal of the 1.0% COVID levy and resultant decline in the effective VAT rate by 190bps to 20.0% in 2026 will reboot consumers’ purchasing power with potential for topline gain. This environment will enhance Guinness Ghana’s ability to protect its market share and maintain volume growth. We forecast revenue to grow by 21.8% y/y to GHS 4.4bn in FY2025/26
- Key risks to valuation: Higher-than-expected inflation, foreign exchange volatility, elevated interest rates, utility tariff hikes, rising energy prices, price surge in key raw materials, intensified competition, unfavorable tax policy shifts (especially excise duty on sweetened and alcoholic beverages) and underperformance of marketing and product innovation initiatives to generate sufficient sales uplift
Rating Summary: We maintain our ACCUMULATE rating on Guinness Ghana Breweries Plc (GGB Plc) and lift our fair value estimate by 19.1% to GHS 7.56 per share, implying 14.6% upside from current levels. Guinness Ghana continues to wield one of the industry’s most formidable route-to-market systems, an integrated, nationwide distribution engine underpinned by dual breweries in Achimota (Accra) and Kaase (Kumasi). This network strengthens availability, accelerates new SKU adoption and drives deep penetration across high-frequency retail channels, positioning the company to sustain volume-led revenue expansion over the medium term.
Castel Group’s acquisition of 80.4% of Diageo’s stake adds a powerful strategic catalyst. By tapping Castel’s extensive West and Central African distribution infrastructure and last-mile capabilities, GGB Plc stands to reinforce the 15.4% y/y volume growth recorded in FY2024/25 and broaden both mass-market and premium segment reach. We therefore project revenue to grow at a 26.7% five-year CAGR (FY2025/26–FY2029/30), albeit representing a normalisation from the exceptional recent growth but remaining structurally strong.
Market valuation remains highly supportive of a re-rating. Guinness Ghana trades at a P/E of 5.6x, a steep discount to the 18.1x peer average, a gap we believe materially understates the company’s improving fundamentals and earnings trajectory. With revenue momentum firming and the operational platform set for scale, we see clear scope for valuation convergence toward peer multiples. Our GHS 7.56 fair value derives from a blended methodology, comprising DCF (40%), P/E multiple (40%) and DDM (20%) and anchored on a 15.69% risk-free rate, 17.5% WACC, and 5.0% terminal growth rate.