Investment house Chapel Hill Denham Limited has upgraded Guinness Nigeria Plc to Buy from Hold and raised its 12 months target price (TP) to N545.28 from N343.13.
Analysts at Chapel Hill Denham said the upgrade is underpinned by better-than-expected margin resilience following excise duty implementation and higher energy costs, stronger balance sheet, lower finance costs, and stronger dividend expectations.
Guinness Nigeria has delivered a year to date (YTD) return of 18.9 percent, outperforming the NGX consumer goods index return of -0.4 percent, although lags the NGX ASI’s return of 60.5 percent YTD.
Despite subdued consumer demand, Guinness Nigeria grew revenue by 20.37 percent to N403.33 billion September 2026 from N335.07 billion as at September 2025.
The consumer goods firm’s new owner Tolaram has magnified the company’s earnings through an excellent distribution channel as well as customer centric strategy.
“We believe this reflects the combined impact of price increases and volume growth as Tolaram continues to widen Guinness distribution network following its new distribution center in Kaduna,” said analysts at Chapel Hill Denham.
“Accordingly, we believe further distribution expansion will support revenue growth into FY-27E. In addition, Q4 has historically been the company’s strongest quarter, contributing an average of 31 percent of calendar-year revenue over the past five years,” said analysts at Chapel Hill Denham.
Despite excise duty implementation, Guinness Nigeria’s gross margin remained flat at 37.5 percent year on year (yoy) in the first nine months of 2026.
“This performance suggests that the company has managed the additional tax burden and other production cost pressures better-than-expected,” said Chapel Hill Denham Limited.
The company posted profit after tax (PAT) of N40.69 billion in the first nine months of 2026, which is higher than 2025’s 53.06 percent to N26.58 billion.
Net profit margin rose to 10.08 percent in the period under review from 7.93 percent as at September 2025.
Guinness Nigeria has overcome the foreign currency devaluation headwinds or losses and benefitted from an excellent deleveraging exercise.
Finance expenses declined by 61.9 percent year on year (yoy) to N5.83 billion in September 2026, as borrowings declined by 13.0 percent year to date (YTD) to N38.21 billion.
“In our view, the reduction in debt and the shift towards local-currency borrowing should reduce the company’s exposure to exchange-rate movements and provide greater earnings growth,” summed analysts at Chapel Hill Denham.
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