In brief
Earnings Update
- Non-Core Income Lift Earnings: Kasapreko released its unaudited 9M2026 financial results, reporting a 14.3% y/y increase in net profit to GHS 295.8mn. Earnings came in 13.6% below our forecast and slowed from the 23.3% y/y growth recorded in 1H2026. The increase in net profit reflected an 8.8% y/y rise in revenue to GHS 2.8bn, albeit 15.2% below our forecast, a swing from other operating expenses of GHS 11.9mn to other operating income of GHS 67.6mn, a 262.7% y/y surge in finance income to GHS 3.3mn and a 12.5% y/y fall in finance costs to GHS 101.1mn.
Key Drivers of Our Rating
- We maintain our fair value of GHS2.12, as established in our Initiation of Coverage (IoC) and reaffirmed in our 1H2026 results commentary. The 9.5% decline in the share price from its 1H2026 level to GHS1.80 has increased the potential upside to our unchanged fair value, supporting our current “Accumulate” recommendation, compared with the “Hold” position indicated in our previous commentary. We attribute the recent price weakness partly to profit-taking following the strong post-IPO appreciation. At the current price, the stock offers a more attractive entry point for investors seeking exposure to the company’s growth prospects ahead of the expected contribution from the Adeiso expansion. Nevertheless, a sustained recovery in core margins remains essential to improve earnings quality and underpin our valuation.
Strategic Near-to-Medium-Term Outlook
- Kasapreko’s medium-term growth prospects remain anchored on the Adeiso expansion, which should strengthen production capacity and support volume growth from FY2027, although delayed commissioning limits its FY2026 contribution. The removal of the 20.0% excise duty on locally manufactured fruit juices, effective October 2026, offers some cost relief, but its impact should remain modest given the company’s limited exposure to fruit juices. Meanwhile, improving inventory levels should support festive season demand in 4Q2026. However, rising production and administrative costs continue to weaken underlying profitability, with gross margin contracting and core operating margin declining despite modest improvements in reported margins. Although lower borrowings and financing costs provide an earnings cushion. Overall, we remain cautiously positive on Kasapreko’s growth prospects, but view the recovery in core margins and the successful ramp-up of Adeiso as critical to unlocking sustainable earnings growth and further valuation upside.
Key risks to valuation
- Execution delays at the Adeiso factory construction, Higher-than-expected inflation, foreign exchange volatility, elevated interest rates, utility tariff hikes, rising energy prices, intensified competition, unfavorable tax policy shifts and increase in raw material prices.