Citi says beer consumption rebound to boost United Malt, begins with 'buy'

United Malt

26/10/2021 04:58

** Citi begins coverage on United Malt Group  UMG.AX  with a
'buy' rating and a price target of A$5.00, calls the commercial
maltster a high-quality reopening play
    ** Says demand analysis in UMG's key geographies points to a
recovery emerging in H2 and into FY22 with beer production
surging in the U.S.
    ** Australian malt exports are under pressure, but demand
could recover rapidly as Asian economies reopen as well
    ** Expects UMG's capacity utilisation to recover to ~95% by
the end of FY23
    ** Says co is cheaply priced at ~9 times its EV/EBITDA, it
would make a good acquisition target by another large commercial
malster given UMG's complementary assets and exposure to growth
markets
    ** FY21 will be the trough in earnings, with Scottish
facility expansion adding ~A$14 mln ($10.45 mln) in EBITDA over
the next year
    ** Shares up 0.3% to A$3.950; are down ~4% this year, as of
last close
    **  6/8 analysts rate the stock "buy" or higher, 2 "hold";
their median PT is A$4.77 – Refinitiv data


($1 = 1.3398 Australian dollars)

 (Reporting by Anushka Trivedi in Bengaluru)
 ((Anushka.Trivedi@thomsonreuters.com; +918061823241;))