ARTICLES

Anheuser-Busch

29 July 2019 By PDSNET

Anheuser-Bausch, or AB-Inbev (ANH), is the world's largest brewer of beer, operating in both first world countries and emerging markets. On 10th October 2016, AB-Inbev bought out SABMillar for $107bn. This massive acquisition (a world record) left ANH with over $104bn in debt – a burden which it is only now beginning to eliminate. It expects to bring that debt down in the second half of 2019. AB Inbev trades on the JSE as ANH, the Brussels Stock Exchange as ABI and the New York Stock Exchange (NYSE) as BUD. It announced its intention to list its Asia-Pacific arm on the Hong Kong stock exchange to raise approximately $10bn. The cash will be used to reduce its debt. The company has brands like Budwieser, Stella Artois, Castle, Beck's and Corona. After the acquisition of SA Breweries, AB Inbev is four times the size of the next largest brewer - Heineken - so there is very limited potential for further meaningful acquisitions. Growth from here on must be organic. Because of its American exposure, the company reports quarterly. In its results for the year to 31st December 2018, the company reported turnover up by 4,8%. Sales volumes were up 0,3% with beer volumes up by 0,8% and non-beer volumes down by 3,6%. The company has three global brands - Budweiser, Stella Artois and Corona - and together their sales were up by 9%. Cost of sales increased by 4,7% and earnings before interest, taxation, depreciation and amortisation (EBITDA) by 7,9%. In the first quarter of 2019, the company reported turnover up 5,9% and volumes up 1,3%. EBITDA was up 8,2% in the quarter. From a private investor's perspective, this is a massive international blue chip share which is clearly a good rand-hedge. After listing on the JSE in 2016, the share price fell from above R2000 to below R1000. Since then it has been staging a recovery and is now trading for R1428. At this level it was trading on a P:E of 26,4 and a dividend yield (DY) of around 1,3%. Consider the chart:

Anheuser Bausch (ANH) January 2016 to July 2019 - Chart by ShareFriend Pro

Its latest results for the second quarter of the year (to 30^th June 2019) really impressed the market. It reported the best volume performance in five years with growth of 2,1% and good performances from many major markets, including South Africa. Top-line growth (turnover) was 6,2% and EBITDA was up by 9,4%. Their top three brands globally – Budweiser, Stella Artois and Corona grew by 8% globally and 11,3% outside their home markets. We added ANH to our Shares List on 23^rd July 2019 at R1327.92. It has already climbed 7,5% to R1428.22 in just 3 days. We suggest that this is a solid long-term investment. We also suggest that you pay close attention to our Shares List which is published daily on our web site.  

DISCLAIMER

All information and data contained within the PDSnet Articles is for informational purposes only. PDSnet makes no representations as to the accuracy, completeness, suitability, or validity, of any information, and shall not be liable for any errors, omissions, or any losses, injuries, or damages arising from its display or use. Information in the PDSnet Articles are based on the author’s opinion and experience and should not be considered professional financial investment advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Thoughts and opinions will also change from time to time as more information is accumulated. PDSnet reserves the right to delete any comment or opinion for any reason.

Share this article:

PDSNET ARTICLES

Wall Street and the Rand

As South Africa edges closer to election day, the ANC has been desperately doing everything in its power to pass populist measures to bolster its waning support, especially with the country’s lower income groups. This includes the signing of the highly controversial National Health Insurance (NHI) bill into law by President Ramaphosa.

There

Pan African Resources

In our opinion, the gold price in US dollars should continue to perform well for the rest of 2024 with the potential for rising inflation and increasing political instability in various parts of the world. The upward trend will, of course, be marked by corrections, but the overall direction of the trend is clear. Consider the chart:

Market Overview

This week, the US Federal Reserve Bank’s monetary policy committee (MPC) held interest rates unchanged at their historically high levels and said that they intended to hold rates at these high levels for longer than previously expected. This information was followed by the April 2024 non-farm job creation number which came in at 175 000 – considerably

Correction

The progress of the S&P500 index of the 500 largest companies on Wall Street is important because stock markets around the world, including the JSE, tend to follow it sooner or later.

On 19^th January this year, something momentous happened when the S&P broke above its previous all-time record high

Shoprite

In their article on 10^th April 2024, Checkers sweeps Pick n Pay as it opens 5 new stores in one day., Businesstech drew attention to the fact that Shoprite had taken over five stores from Pick ‘n Pay on the East Rand. Pick

WeBuyCars

In a few days’ time, Transaction Capital (TCP) will unbundle and separately list its second-hand car sales company, WeBuyCars (WBC). The main benefit of this is to release the value of WBC into the hands of its shareholders. When the listing is complete, on 11^th April 2024, WBC will have a total of 417,2m shares in issue which are expected to

Gold and Harmony

In our last Confidential Report, published on 6^th March 2024, we drew your attention to the fact that the US dollar price of gold was about to break up through a critical resistance level at $2060. Gold has now moved up to $2166 so this observation provided an opportunity for private investors to make a significant capital gain, either in actual gold

Reverse Takeover

At the end of October 2023, Mix Telematics (MIX) was a relatively small fleet management company with a market capitalisation of just R2,3bn listed on both the JSE and the American NASDAQ. Its shares on the JSE were wallowing at a low of 380c. This compares with its competitor, Karoo (KRO), also listed on the JSE, but which was at the time, more

Rare Opportunity

You may not have been aware of it, but last week, between Monday and Friday, there was an opportunity to make an 80% profit on your capital. This opportunity occurred because of insider trading on a little known and traded share called Quantum Foods (QFH) in the poultry and animal feeds business.

Generally, the poultry business is

Excessive Bullishness

On Friday last week, the S&P500 index posted yet another new record closing high, but this time just one point higher than the previous day at 5088. This means that the index, which measures the progress of the 500 largest companies on Wall Street, has been climbing without a significant correction for nearly four months. Consider the chart: