Heineken B.V. due diligence report.

Oto Suvari
Dec 10, 2019 · 3 min read

Hatchworks has conducted due diligence on Heineken B.V., an independent Dutch global beer and cider brewery and number one brewer in Europe that has operations in more than 70 countries globally. Headquartered in Amsterdam, Heineken B.V. is listed on the Euronext Amsterdam exchange under the symbol ‘’HEIA’’.

Financials — Heineken B.V.
(Source: Marketscreener.com)

Heineken’s current market cap is €64.5B and stock price is around €95.55.

With a stable predicted net-income growth of 9.6% for 2020E and 2021E, and a net income estimate for 2021E of in excess of €2.6B, this points to a P/E ratio of 20.7x.

The revenue/sales forecast is €24.9B for 2020E, indicating an EV/Sales ratio of 2.71x.

In terms of profitability, an operating margin of 17% is predicted for 2020E. This is notably lower than competitors such as Anheuser-Busch InBev (ABI) that has an operating margin of 33.3% for 2020E.

Heineken B.V. (HEIA) is a yielding equity with a yield of 1.89% for 2020E. In contrast, competitor Molson Coors Brewing (TAP) offers a higher yield of 4.41% for 2020E.

Latest news shows that Heineken B.V. (HEIA) has invested €220M in Brazil to double its production capacity and expects to sustain growth at 3% per annum over the next three years in Brazil. It is worth noting that Heineken B.V. didn’t achieve its forecasts in terms of operating profits; in fact, it barely grew. Also, sales in America declined. However, the beverage industry in general is often thought of as recession-proof, minimising uncertainty in any future recession.

Our internal analysis highlights that Heineken B.V. is expensive from a P/E standpoint with a relatively low yield and a modest debt position. Hatchworks looks for undervalued, defensive, and yielding equities and therefore will not participate for now.

The Hatchscore is 4.4 out of 10. Full details can be found on Hatchnet: www.hatch-net.com/companies


What is Heineken B.V.?

Heineken B.V. is a global Dutch brewer and distributor of beer and cider. The Company offers its beers under the Heineken, Amstel, Desperados, Sol, Tiger, Tecate, Red Stripe, Krušovice, Birra Morett, Affligem, and Lagunitas brands. It offers its ciders under the Strongbow Apple Ciders, Orchard Thieves, Stassen, Bulmers, Old Mout, and Blind Pig brands. Through its distributors, Heineken delivers products to retailers, bars, and restaurants.

Big Investors:

  • Invesco Advisers, Inc.
  • Fidelity Management & Research Co.
  • Morgan Stanley Investment Management Ltd.
  • The Vanguard Group, Inc.

Advisors and Bookrunners:

  • J.P. Morgan Securities.
  • PLC.
  • Morgan Stanley & Co.

What are the risks?

  • A rise in its commodity could affect Heineken B.V’s. sales.
  • Changes in interest rates could have a negative impact for Heineken B.V’s. profits.
  • Liquidity risk, difficulties to meet payment obligations associated with its financial liabilities.

Competitors:

  • Anheuser-Busch InBev (ABI).
  • Molson Coors Brewing (TAP).
  • Carlsberg (CARL B).

Management team:

  • Jean-François van Bosmeer: CEO.
  • Laurence Debroux: CFO.
  • Jan Derck van Karnebeek: CCO.

The Hatchwork Team

The forecast figures are based on the data of Marketscreener.com, and not from hatchworks: https://www.marketscreener.com/HEINEKEN-B-V-6283/financials/


Legal Disclaimer — This report summary has been generated as a result of Hatchworks’ proprietary company vetting and filtering system. The level of due diligence conducted on investible assets conducted ranges from mediocre to significant, the latter being the case where Hatchworks has explicitly taken strategic positions in. By no means is the information in this file to be relied on as investment advice; this includes Hatchworks’ algorithmic composite score known as ‘Hatchscore’. Hatchworks has not received any compensation for this research. For more information you can reach us at info@hatchworksvc.com. This report is not for distribution in the United States of America. It is closed to U.S citizens. If you are a U.S. citizen, you should delete this report or return to sender.

Oto Suvari

Written by

Research & Development at Hatchworks & Neuchatel Ltd. Heading up the group’s R&D activities for Hatchworks, SPECTRE (www.spectre.ai) and linked projects.

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