On Monday, JPMorgan initiated coverage on Asahi Group Holdings Ltd. (2502:JP) (OTC: ASBRY), a leading beverage company, with an Overweight rating and a price target of ¥2,100. The coverage looks ahead to December 2025, with a focus on the company's potential for growth and increased shareholder returns.
Asahi, known for its diverse portfolio of alcoholic and non-alcoholic beverages, has been working on improving its financial structure following a series of acquisitions that significantly increased its interest-bearing debt. JPMorgan analysts project an annual increase of 6% in Asahi's business profit from the fiscal year 2024 to 2027. This optimistic forecast is based on expected benefits from price increases and liquor tax revisions in Japan, combined with solid consumption rates in the European market.
Despite the current challenges faced by Asahi's Oceania business, the analysts at JPMorgan believe that the company's strong performance in its Japan and Europe segments will drive overall profit growth. Asahi has been focused on repaying its debt, but the analysts anticipate that starting in the fiscal year 2025, the company will begin to enhance shareholder returns more vigorously.
The financial institution expects Asahi's return on equity (ROE) to climb gradually from 7.7% in the fiscal year 2024 to 8.9% by the fiscal year 2027. This increase is anticipated to stem from the company's profit growth and a strategic shift towards aggressive shareholder returns. The new price target reflects JPMorgan's confidence in Asahi's future performance and its ability to deliver value to its shareholders over the next few years.
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