Brazil Still Driving Growth for Ambev; Upside Remains but So Do Risks

Ambev continued its business momentum in the third quarter of 2022, with results that in aggregate were in line with our forecasts. The good news was another healthy performance in Brazil, which represented over half of the company's revenue and where both beer and soft drinks revenue exceeded our estimates. The bad news was that the Central America and the Caribbean, or CAC, division remained weak, but at 10% of revenue, this region is much less significant to Ambev's valuation. We have made minor tweaks to our short-term forecasts, mainly for currency movements, and we are reiterating our wide moat rating and BRL 18 fair value estimate.