In brief
Rating Summary:
We assign an ACCUMULATE rating on Guinness Ghana Breweries Plc, underpinned by a constructive medium-term outlook for revenue growth to be powered by a strategic blend of Castel group’s mass-market penetration and Diageo’s legacy premium brand leadership. The company’s balanced portfolio across alcoholic and non-alcoholic beverages positions it strongly to capture growth opportunities in both volume and value segments. We project revenue to grow at a robust, albeit moderated 26.7% CAGR (FY2025/26 – FY2029/30), driven by continued product innovation and category diversification.
However, profitability will likely remain constrained by high input costs despite increased local sourcing (69% in FY2024/25). Input costs grew at a CAGR of 32.3% (2020 – 2025) and we forecast a slightly moderated pace of 30.5% (2025 – 2030), keeping margins below historical levels (gross: 16.2%, operating: 4.1%). Nonetheless, we expect sustainability initiatives to improve efficiency, although ongoing quarterly utility tariff hikes remain a risk.
Our blended valuation (DCF: 40%, P/E: 30%, DDM: 30%) yields a fair value based on a 16.0% risk-free rate, 17.8% WACC, and 5.0% terminal growth. Overall, we view Guinness Ghana as a medium-term accumulation play, with its strong brand portfolio and strategic localisation, leveraging Ghana’s economic recovery, amid structural cost challenges.
Earnings Update
- Guinness Ghana Breweries Plc (GGB Plc) delivered an exceptional FY2024/25 performance, with earnings surging nearly 863.0% y/y to GHS 334.6mn, driven by a 51.7% y/y jump in revenue to GHS 3.6bn and lower finance costs following a 71.2% decline in debt. Gross and operating margins improved to 26.6% and 15.4%, respectively, reflecting pricing strength, and operational efficiency. The result marked GGB Plc’s highest-ever revenue and reinforced its market leadership. Despite rising input costs and operational expenses, reduced finance charges supported earnings performance.
Key Investment Thesis
- Portfolio Breadth Strengthens Revenue Growth Outlook: We assign an ACCUMULATE rating on GGB Plc, supported by its diversified portfolio across alcoholic, non-alcoholic, and spirits categories. We forecast a 26.7% CAGR in revenue over FY2025/26 – FY2029/30, underpinned by product innovation, brand equity, and accessible premium offerings. The company’s strategic mix has evolved, with non-alcoholic beverages now contributing an average of 48.7% of revenue (2021 – 2025), which we expect to drive volume-led growth, and beer supporting growth through flagship brands like Guinness FES and Star Beer.
- Ownership Transition Spurs Strategic Upside: We believe the Castel Group’s acquisition of Diageo’s 80.4% stake in July 2025 introduces a major strategic catalyst. Castel’s scale and deep regional experience should enhance operational efficiency, route-to-market execution, and mass-market penetration. We expect this transition to enhance GGB Plc’s capacity to balance volume growth with premium brand expansion, creating a structural advantage against both multinational and local competitors. Overall, we expect these dynamics to underpin sustained topline momentum, validating our five-year revenue growth forecast of a 26.7% CAGR.
- 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 and underperformance of marketing and product innovation initiatives to generate sufficient sales uplift.