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Summary

Multi Bintang (MLBI IJ) is Indonesia’s largest beer producer with a 60% market share. The “Bintang” brand name is incredibly strong and the preferred choice for most of Indonesia’s beer drinkers. The company is also protected by significant barriers to entry, including license restrictions and 150% import tariffs. These factors explain why Multi Bintang has been able to achieve a 100%+ return on equity in the past.
The company was hurt by the large-scale social restrictions that took place during COVID-19. These caused nightlife venues to be shut down and the borders to be closed. But the restrictions have now been taken away. Recent tourism data from Bali is encouraging. The number of arrivals is already back to 80% of pre-COVID levels and is now trending in the right direction.
I think there are plenty of reasons why Multi Bintang could become a growth stock yet again. Indonesia’s beer consumption per capita remains low. While muslims are never going to embrace alcohol, the rest of the population will. Save for extraordinary events in 2015 and 2020, that Indonesian beer market has been growing nicely.
I foresee a 2024e P/E ratio of 14 and an EV/EBIT of 10x for Multi Bintang. Those numbers are far below the peer group and historical averages. It’s also worth noting that Multi Bintang has historically paid out 100% of earnings as dividends. In other words, next year’s dividend yield is likely to be around 7%, which compares to a historical level of about 3%.
The main risks are a potential alcohol ban, competition from craft brewers and higher input costs. But neither of these factors are likely to derail the EPS recovery story, at least not in the short term.