Bralirwa, TBL, EABL beer wars leave East African investors spoilt for choice

TBL, EABL, Bralirwa share price comparison 

By JOINT REPORT The EastAfrican

Posted  Saturday, October 5  2013 at  14:44

In Summary

• A look at the latest data for the three listed brewers in the region — East African Breweries Ltd (EABL) in Kenya, Tanzania Breweries Ltd (TBL) and Rwanda’s Bralirwa — shows powerful performances in key indicators such as profitability, stock valuations, dividend payouts and earnings per share.
• Researchers at UBS, Switzerland’s largest bank, have singled out Uganda and Tanzania as being among the fastest growing alcohol markets globally.
• See related graphics here

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East Africa is once again in the wars. The fight for market share in the beer industry over the past few years has produced a set of peculiar financial data that could define decisions for investors.

A look at the latest data for the three listed brewers in the region — East African Breweries Ltd (EABL) in Kenya, Tanzania Breweries Ltd (TBL) and Rwanda’s Bralirwa — shows powerful performances in key indicators such as profitability, stock valuations, dividend payouts and earnings per share.

As such, beer stocks have emerged a top target for investors looking for big stockmarket gains in a battle pitting the world’s biggest brewers — Heineken, Diageo and SABMiller. The thirst for beer is surging in the EAC market, where consumption is estimated to be growing by at least 10 per cent annually.

READ: Brewers bring beer fight to East Africa

So among the beer stocks, which should an investor go for?

Financial data for SABMiller’s Nile Breweries Ltd — with market share standing at about 52 per cent in Uganda — was not available as the firm is not listed. Among those listed, annual reports showed that for the first time in over eight years, TBL dethroned EABL as the region’s most profitable brewer in the past year.

TBL, which is majority owned by SABMiller, saw its net earnings rise by six per cent to Tsh177.12 billion ($111.36 million) for the full year ended March 2013, from Tsh166.41 billion ($105 million) posted in the same period last year.

READ: Tanzania Breweries increases dividend payout by 50pc

EABL, which is owned by Diageo, saw its net profits drop by 37.92 per cent to Ksh6.9 billion ($80.7 million) for the year ending June 2013, from Ksh11.18 billion ($132.7 million) last year.

READ: Sobering dip in profits for giant brewer EABL

Bralirwa, which is controlled by Dutch brewer Heineken, posted a 29.81 per cent growth in profit after tax to Rwf19.02 billion ($30.18 million) for the period ended December 2012, from Rwf14.65 billion ($24.2 million) posted for the period ended December 2011.

READ: Bralirwa set to pay out higher dividends

Bralirwa emerged as the best performing beer counter between January and September, even as analysts expressed a preference for TBL, citing the relatively cheaper valuation on the counter.

The Rwandan beer maker’s shares rose 34 per cent in the first nine months of this year, pipping both TBL and EABL, which gained 26 and 24.15 per cent respectively.

Analysts say that although TBL shares lagged behind Bralirwa, its stock was relatively cheaper and had posted stronger performances while EABL’s, which gave investors the lowest return, is the most expensive.