Dec 15 (Lagos) - International Breweries Plc (
INTBREW ) listed 5.3 billion shares yesterday the Scheme of Merger involving International Breweries Plc, Intafact Beverages Limited and Pabod Breweries Limited
With this listing of 5,301,612,656 ordinary shares, the total issued and fully paid up shares of International Breweries Plc has now increased from 3,294,249,280 to 8,595,861,936 ordinary shares.
This change in shares outstanding has big implication for public shareholders of the Company.
The trailing
P/E ratio is now above 455 while the EPS is now 12 Kobo. In comparison the P/E ratio of much bigger brewers like
NB and
GUINNESS is 37 and 75 respectively.
This stock has been the best stock of the year but we should expect it to come back to more acceptable levels now that the deal is done.
That P/E ratio is not sustainable unless the Company grows its Profit after tax by massive proportions, which is not likely to happen in the short term.
One year ago, this stock was in the region of N 16 per unit and today it is trading at N 54.84 per unit.
In our opinion, this is the right time to offload the stock and book your profits because it will surely come back to reality now that the deal is done and analysts want to see growth in sales and profit before tax.
The book value of the stock is now 1.61 per unit which means that the Price to book ratio is now 35, compare that with P/B ratio of
NB &
GUINNESS of 6 & 1.75 respectively. These are our basis to forming our opinion as to why we would offload the stock from our portfolio if we had been lucky enough to have it over the past year.
reporting for easykobo.com on Friday, Dec 15 2017 from Lagos, Nigeria