Champion Breweries’ Strong Cash Flow from Operations Validates Earnings Quality and Buy Rating

Champion Breweries Plc is efficiently running its operations as the brewer methodically turns revenue to cash flow, validating a strong liquidity position and buy rating.

The company’s operating cash margin increased to 41.29 percent in the first nine months of 2025, from 19.25 percent as at September 2024, according to MoneyCentral calculations.

This indicates that Champion Breweries has healthy liquidity, and operations are running well.

Operating cash flow margin is a cash flow ratio that measures cash from operating activities as a percentage of total sales revenue in a given period. It is a good indicator of earnings quality because it only includes transactions that involve the actual transfer of money. A higher ratio indicates strong liquidity.

Champion Breweries operating cash flow from operations surged by 227.10 percent to N8.85 billion as at September 2025, which indicates the brewer will be able to increase its dividend, buy back some of its stock, reduce debt, or acquire another company.

It is important to note that the Champion Breweries has also maintained consistently positive operating cash flows over the past five years as it continues to intensify its business combinations strategy.

A strong cash flow and healthy balance sheet gives Champion Breweries the leeway to enter into an agreement to acquire the brand assets and intellectual property of the Bullet range of ready-to-drink (RTD) alcoholic and energy beverages from Sun Mark International Limited.

This strategic plan (business combination) is expected to broaden and diversify the brewer’s product portfolio, and further increase its share of the brewery market.

Buoyed by stronger brand promotion and acceptance by consumers as well as a hike in the price of key products, sales spiked by 252.82 percent to N21.43 billion in the first nine months of 2025.

Meristem BUY Rating

Analysts at Meristem Securities in a note to clients expect Champion Breweries’ revenue momentum to remain strong, bolstered by the recent acquisition of the ready-to-drink (RTD) alcoholic and energy brand Bullet, which has an established presence in 14 African countries.

“This move should expand Champion Breweries consumer reach and deepen its portfolio, positioning the company to strengthen its regional footprint and support future revenue growth,” said analysts at Meristem Securities.

They project 2025 full-year (Full Year) revenue of N30.50 billion up 43.86 percent year on year (YoY) from N20.89 billion in 2024FY, driven by ongoing product diversification and strategic initiatives to capture additional market share.

Despite the challenging operating environment and imported inflation, Champion Breweries’ operating profit margin increased 20.01 percent in the period under review from 8.13 percent the previous year.

Operating profit surged by 276.31 percent to N4.29 billion in the period under review from N1.14 billion the previous year.

Profit after tax (PAT) spiked by 9,417 percent to N2.04 billion in September 2025 from N21.49 million the previous year.

The fact that Cash from Operations of N5.85$ Billion substantially exceeds the Net Income (N2.04 Billion) for the nine-month period indicates that: the reported profits are completely backed by cash, and the company is converting its sales into cash very efficiently and not relying on credit sales (Accounts Receivable) to generate reported profits.

There is going to be a future margin expansion on the back of relative stability in the foreign exchange market that helped shrink foreign exchange revaluation losses and continued revenue growth.

Based on assessment of Champion Breweries’ growth potential, margin recovery prospects, and long-term cash-flow outlook, analysts at Meristem Securities have placed a Buy rating on the company’s stock.

Based on the analysts’ estimation, the brewer has a fair value of N19.45, and a present share price of N12.35 as of November 27, 2025, which translates to discount to fair value of 58.26 percent.

“While near-term dividend visibility remains limited as the company consolidates its recovery, rising profitability and improving cash-flow prospects should support shareholder returns over the medium term,” summed analysts at Meristem Securities.

Champion Breweries Opens N15.9 Billion Rights Issue

Champion Breweries has opened its N15.91bn rights issue to qualified shareholders.

In a statement filed with the Nigerian Exchange Limited on Tuesday, signed by its Company Secretary, Tosan Aiboni, it was indicated that the offer includes 994,221,766 ordinary shares of N0.50 each at N16 per unit.

The company’s capital-raising programme received shareholder approval at its Extraordinary General Meeting held on 24 July 2025.

Announcing the opening of the offer, Champion Breweries Plc said it has obtained the Securities and Exchange Commission’s approval. Existing shareholders can participate in the offer on the basis of one new share for every nine existing shares held as of 4 September 2025, the qualifying date.

“Completed Participation Forms, together with payment/evidence of payment for the full amount payable, should be submitted no later than Monday, 5 January 2026, to any of the Issuing Houses or any of the Receiving Agents listed in the Rights Circular,” read part of the statement.

“This Rights Issue represents the first phase of a two-step capital raise, with a Public Offer to follow shortly. The proceeds will be utilised to fund the strategic acquisition of the Bullet brand, an important step in Champion Breweries’ domestic and international growth agenda.”

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