E-Malt.com News article: World: Nomura International cuts rating for SABMiller

Nomura International has cut its rating for brewer SABMiller to ‘reduce’ from ‘neutral’ as it sees short-term downside risks due to continuing pressure on margins, ProactiveInvestors.co.uk reported on August, 23.

London-based analyst Ian Shackleton said although the long-term growth story for SABMiller is still attractive given exposure to fast-growth markets, the short-term downside risk from margin pressure cannot be ignored.

“With the shares now trading on a 9 percent premium to the beer average, we downgrade our rating from Neutral to Reduce,” he said.

His target price is 2,600 pence. SABMiller was last trading at 2,762.5 pence.

Shackleton believes his cautious view is supported by the interim figures from Dutch rival Heineken reported on August, 22, with higher input costs, exacerbated by foreign exchange movements, especially in Central & Eastern Europe and Africa.

Pressure in Central & Eastern Europe is also exacerbated by a growth in discount channels.

In addition, the analyst said the outlook for Australia is not improving, with Asia and Pacific-focused bottler Coca Cola Amatil revealing yesterday that it plans to re-enter the beer industry at the end of 2013, which could lead to increased competition.

Also, the recent acquisition of Grupo Modelo by AB InBev argues against a bid by AB InBev for SABMiller in the short to medium term, Shackleton said.


24 August, 2012