Asahi's Profits to Leap After Cost Inflation Easing in 2024; No Disruption in Premiumization

The 2022 results and outlook presented by narrow-moat Asahi give us confidence that profits will leap in 2024. Despite marginal profit growth guidance for 2023, there were several positives in management’s presentation, including share gains in many core markets and continued premiumization amid a challenging operating environment. While the market fears that recession and inflation, particularly in Europe, could derail its premiumization strategies, the fourth-quarter results indicate limited impacts. We believe that the food and energy cost inflation will have greater impacts on lower-income earners and thus more noticeable volume decline in the value segment. We have raised our fair value estimate to JPY 6,400 from JPY 6,000 after raising our profit forecasts marginally from 2025 and rolling the forecasts to 2023. Our new intrinsic value indicates a handsome 40%-plus upside.