HSBC - Global Brewers by riteshbhansali

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									Consumer Brands & Retail
Global Beverages
                                                                                                           abc
                                                                                                           Global Research



Global Brewers                                                       Brewers delivered strong stock price
                                                                      performance in 2012, supported by
                                                                      volume growth, pricing and mix
Selective approach to 2013; top pick –                                improvements, and M&A activity
A-B InBev
                                                                     Global brewers should benefit from
                                                                      improving consumer trends, cost
                                                                      savings, deal-related synergies, and
HBSC brewers universe
                          HSBC          _____ Target price ______
                                                                      greater investment spend in 2013
Company        Ticker     rating               New       Previous
A-B InBev      ABI        Overweight        EUR74         EUR74      A-B InBev is our top pick among the
               BUD                         USD100         USD94
                                                                      brewers, based on organic growth
Ambev          ABV        Neutral             USD49       USD44
               AMBV4                          BRL97       BRL90       opportunities; TPs EUR74/USD100
Anadolu Efes   AEFES TI   Neutral             TRY30       TRY30
Boston Beer    SAM        Underweight      USD120        USD103     The brewers had reason to toast 2012, particularly as it related
Compañía       CCU        Neutral         CLP7,800     CLP7,500     to their stock price performance. Last year, the 10 beer stocks
Cervecerías    CCU.SN                       USD33        USD30
Unidas                                                              under HSBC coverage experienced an average 23% price
Grupo Modelo   GMODELOC   Neutral          MXN116       MXN122      appreciation, as investors favored defensive industries that
Heineken       HEIA AE    Neutral           EUR56        EUR47
Molson Coors   TAP        Neutral           USD47        USD47      offered organic and acquisition-related growth opportunities.
SABMiller      SAB LN     Neutral        GBP33.50      GBP29.50     Outperformers exhibited their ability to improve global beer
Tsingtao       168 HK     Underweight         HKD35       HKD35
                                                                    volume, offset cost increases with higher pricing, and protect
Source: HSBC
                                                                    margins, while engaging in M&A activity.

                                                                    For 2013, we expect global beer industry trends to improve,
                                                                    with the leading brewers benefiting from volume growth in
                                                                    emerging markets and profit growth in developed markets.
                                                                    Capturing new consumers in markets such as China, Brazil,
                                                                    India, and Russia remains a focus, while realizing pricing
                                                                    opportunities in the US, Canada, and Mexico should notably
                                                                    contribute to increased profitability. Higher pricing and
                                                                    greater cost savings, as well as brand and package mix
11 February 2013                                                    improvements, will be necessary to improve margins this year.
Lauren Torres
Analyst                                                             Industry consolidation remains a hot topic in the beer industry,
HSBC Securities (USA) Inc.                                          as interest transitions from pursuing and announcing sizable
+1 212 525 6972       lauren.torres@us.hsbc.com
                                                                    deals to completing and integrating them, particularly at the
James Watson, CFA                                                   three largest brewers, A-B InBev, SABMiller, and Heineken.
Analyst
HSBC Securities (USA) Inc.                                          In our view, A-B InBev is best exposed to capitalize on growth
+1 212 525 4905       james.c.watson@us.hsbc.com
                                                                    opportunities through its existing businesses, in addition to
View HSBC Global Research at: http://www.research.hsbc.com          brand and territorial acquisitions. Based on its current structure,
                                                                    we believe ABI shares warrant further upside, as they are
Issuer of report: HSBC Securities (USA) Inc                         currently trading at a discount to the peer group. We are
Disclaimer & Disclosures                                            Overweight A-B InBev shares, with target prices of EUR74 on
This report must be read with the                                   the local shares and USD100 on the ADRs. Overall, we are
disclosures and the analyst certifications                          more cautious on the industry, factoring in expensive
in the Disclosure appendix, and with the                            valuations and a volatile economic environment.
Disclaimer, which forms part of it
    Consumer Brands & Retail
    Global Beverages                              abc
    11 February 2013




Contents

Investment summary                            3
A-B InBev, Overweight                        10

Ambev, Neutral                               12

Compañia Cervecerías Unidas (CCU), Neutral   14

Grupo Modelo, Neutral                        15

SABMiller, Neutral                           17

Heineken, Neutral                            19

Anadolu Efes, Neutral                        20

Tsingtao: Underweight                        22

Molson Coors: Neutral                        23

Boston Beer: Underweight                     24

Brewers: Valuations and risks                26

Disclosure appendix                          40
Disclaimer                                   43




2
   Consumer Brands & Retail
   Global Beverages                                                                                             abc
   11 February 2013




Investment summary
 Strong 2012 stock price performance for the brewers reflected better
   volume and pricing growth, as well as cost management
 Outperformers in 2013 should be those brewers that lead industry
   consolidation, benefit from deal-related synergies and improve margins
 Top pick in the beer industry is A-B InBev; with target prices of
   EUR74/USD100, as investments strengthen its global presence



Toasting a strong 2012                                   Continuing the party in 2013
In 2012, the 10 brewers under HSBC coverage              We are optimistic about the beverage industry in
experienced a healthy 23% average stock price            2013, despite unsettling economic conditions.
appreciation vs. increases of 7.3% in the DJIA,          Global beverage companies have benefited from
7.4% in the IBOV, and 17.9% in the IPC. In their         their expansive scale, which has allowed them to
respective local markets, shares appreciated 41%         generate cost savings and increase market share at
for Heineken, 39% for A-B InBev, 27% for                 the expense of their smaller competitors. In
Ambev, and 25% for SABMiller last year.                  addition, the pricing environment has been
                                                         favorable, allowing the industry to price in line
A more diversified brand and regional exposure has       with or above inflation in most markets.
proven to be a successful strategy in the beverage
                                                         In The 2013 HSBC View: Our multi-asset class
industry, which has clearly benefited the global
                                                         summary (7 January 2013), HSBC economists,
brewers. Results in 2012 were marked by a division
                                                         strategists, and analysts noted that the economic
between weak volume performance in developed
                                                         backdrop to 2013 is more favorable than it was a
markets and stronger performance in emerging
                                                         year ago, with concerns about a eurozone breakup
markets, following a trend similar to that in previous
                                                         having receded. However, HSBC’s economics team
years. Top-line growth was especially strong in          believes this will still be a challenging year, as
Latin America, Africa and Asia, while trends in          developed countries continue to battle high debt
Europe and North America were weak.                      levels and austerity. According to HSBC
Most beverage companies have held consumer               economists’ forecasts, global GDP growth will be a
interest by providing affordable products at             sluggish 2.1%, due to the continuing eurozone
                                                         recession and tepid US growth.
attractive price points in efforts to stay relevant
throughout the economic downturn. In addition to         For 2013, HSBC’s economics team expects real
volume growth, price and brand mix improvements          GDP to decrease 0.2% in the eurozone and increase
were achieved by selling higher-margin products.         only 1.7% in the US, on a year-over-year basis. This
                                                         compares to healthier growth-rate forecasts of 3.2%
                                                         for Latin America (+3% in Brazil, +3.2% in Mexico,

                                                                                                                  3
    Consumer Brands & Retail
    Global Beverages                                                                                                              abc
    11 February 2013




Brewers: 2012 stock price performance vs. major indices
Company                               Ticker       Currency      12/30/2011      6/29/2012   12/31/2012       1H12        FY12
A-B InBev                                ABI             EUR             47.31       61.30       65.74       29.6%       39.0%
                                       BUD               USD             60.99       79.65       87.41       30.6%       43.3%
Ambev                                  ABV               USD             36.09       38.33       41.99        6.2%       16.3%
                                     AMBV4               BRL             67.30       77.30       85.58       14.9%       27.2%
Grupo Modelo                       MODELOC               MXN             88.49      117.96      116.02       33.3%       31.1%
Compañia Cervecerías                   CCU               USD             25.24       24.94       31.63       -1.2%       25.3%
Unidas                              CCU.SN               CLP            6799.4      6278.9      7537.8       -7.7%       10.9%
SABMiller                              SAB              GBPp             2,267       2,555       2,825       12.7%       24.6%
Heineken                               HEIA              EUR             35.77       41.15       50.47       15.0%       41.1%
Anadolu Efes                         AEFES               TRY             22.80       23.15       25.70        1.5%       12.7%
Tsingtao                             168 HK              HKD             43.00       44.05       45.75        2.4%        6.4%
Molson Coors                            TAP              USD             43.54       41.61       42.79       -4.4%       -1.7%
Boston Beer                            SAM               USD            108.56      121.00      134.45       11.5%       23.8%
Brewer average                                                                                               11.1%       23.1%
Dow Jones Industrial Average            DJIA                          12217.56    12880.09    13104.14        5.4%        7.3%
Brazil Bovespa Stock Index             IBOV                           56754.08    54354.63    60952.08       -4.2%        7.4%
Mexican Bolsa IPC Index                  IPC                          37077.52   40199.551    43705.83        8.4%       17.9%
Source: HSBC, Thomson ONE




and +4.8% in Chile), 5.7% for India and 8.6% for                           Investment themes for 2013
China. Overall, HSBC economists expect
                                                                           To outpace average industry growth and the
developed-market GDP growth to increase 0.9%,
                                                                           broader markets, we believe that beverage
with emerging markets up a strong 5.4% in 2013.
                                                                           companies will need to further strengthen and
In the beverage industry, volume growth often                              diversify their brands and geographic presence.
tracks closely with GDP growth. Historically,                              For the brewers, the global economic slowdown
most of the larger, more-dominant market-share                             has impacted beer consumption, particularly in
leaders in the soft drink and beer industries have                         developed markets. As a result, the leading
outpaced GDP growth due to their strong brand                              players have focused more on innovation, higher
equity and ability to innovate and leverage an                             pricing, and mix improvements.
expansive distribution system. Similarly, beverage
companies look to raise prices broadly in line with                        Also, the need to expand globally is of greater
inflation. For 2013, HSBC’s economics team                                 significance, either organically through brand
expects global inflation of 2.6%, with an increase                         spend and infrastructure build or through M&A
of 1.7% in developed markets and 5.6% in                                   activity. Emerging markets rank high in priority
emerging markets.                                                          for the brewers, as they have the ability to
                                                                           increase per capita consumption and trade up the
HSBC GDP growth and inflation forecasts                                    consumer to branded premium products.
                  ______GDP % ______        ____ Inflation % ______
                     2013e     2014e            2013e         2014e        Along with increasing their top lines, beverage
World                        2.1      2.8         2.6           2.8        companies need to contain costs and look to
Developed                    0.9      1.7         1.7           1.8
Emerging                     5.4      5.8         5.6           5.7        stabilize or improve margins. This has proven to
Eurozone                    -0.2      1.0         1.8           1.6        be difficult in a rising cost environment. For 2013,
US                           1.7      2.5         1.9           2.2
LatAm                        3.1      3.7         9.0           9.5        we believe, key investment themes are industry
Mexico                       3.2      3.6         3.9           3.6
Brazil                       3.0      3.8         5.5           6.5        consolidation, a focus on emerging markets, and
Chile                        4.8      5.0         3.0           3.0        margin improvement. In our view, brewers that
Argentina                    2.5      3.0        25.0          23.0
China                        8.6      8.4         3.1           2.7        lead the effort in these endeavors should deliver
India                        5.7      7.2         7.6           7.4        above-average industry and market growth.
Philippines                  4.9      5.4         3.9           4.5
Russia                       2.5      2.0         6.7           5.5
Source: HSBC
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   Consumer Brands & Retail
   Global Beverages                                                                                                    abc
   11 February 2013




Industry consolidation                                Estimated contribution to global beer volume growth, 2011-2020

The beverage industry has become intertwined, as      China                                                   42.9%
                                                      Brazil                                                   8.9%
most companies have either merged with the            India                                                    5.3%
                                                      Vietnam                                                  4.6%
larger players or entered into partnerships. This     US                                                       4.6%
has occurred as scale matters from brand,             Mexico                                                   3.7%
                                                      Russia                                                   3.7%
regional, distribution, and cost perspectives.
                                                      Source: Plato

Mergers, acquisitions, and joint ventures have also
become commonplace in the beer industry. In           Focus on emerging markets
2010, FEMSA sold its beer operations in Mexico        The trend among global companies in beer, wine,
and Brazil to Heineken for a total value of           spirits and soft drinks in our universe has been to
USD7.3bn. In June 2012, Grupo Modelo agreed to        direct capital expenditures to emerging markets,
sell the remaining stake of its company to A-B        specifically Latin America, Africa, and Asia. At the
InBev for USD20.1bn. In efforts to compete            same time, beverage companies have used their
effectively in the global beer industry, smaller      strong developed-market positions as cash
companies have either sold to or become more          generators to support emerging-market investments.
aligned with the industry leaders, A-B InBev,         We expect this trend to continue in 2013 with an
SABMiller, and Heineken.                              emphasis on capacity and infrastructure buildout.
                                                      For example, we expect Ambev to continue to invest
In October 2011, SABMiller formed an alliance
                                                      in production and distribution capabilities in the
with Anadolu Efes that strengthened its presence in
                                                      north and northeast of Brazil.
Russia and Ukraine and gave it exposure to new
markets such as Turkey and Central Asia. Just this    At the end of last year, Heineken began to acquire
month, SABMiller, along with its joint venture        the remaining shares of Asia Pacific Breweries
partner China Resources, agreed to buy Kingway        (APB), as it looked to increase its exposure to
Brewery in China for USD864m. Heineken is             emerging markets, particularly in Southeast Asia.
aligned with Compañia Cervecería Unidas (CCU)         In June 2012, Molson Coors acquired StarBev,
in Chile and Argentina, as Heineken holds an          which operates in Central and Eastern Europe for
approximate 33% interest in CCU.                      USD3.5bn, representing Molson Coors’ first
                                                      significant investment in emerging markets.
We expect that consolidation will remain a critical
factor in the beverage industry for the foreseeable   In these growth markets, consumer sentiment has
future. In the beer group, it should be led by A-B    been favorable and the top brewers have increased
InBev, SABMiller, and Heineken. However, in           their exposure from regional and brand
2013, we expect that each of the big three brewers    perspectives. In particular, Latin America has
is likely to be focused on paying down debt from      become an increasingly more significant
acquisitions. Therefore, we believe that large        contributor to earnings, representing just under
acquisitions may be less likely in the near term,     half of A-B InBev’s EBITDA, about 30% of
but that industry leaders will continue to assess     SABMiller’s EBITA, and approximately one-
opportunities that would offer a more-profitable      fourth of Heineken’s (Americas business, US and
developed market presence and a more-diverse          LatAm) EBIT.
emerging market geographic portfolio.




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      Consumer Brands & Retail
      Global Beverages                                                                                                                            abc
      11 February 2013




Beer volume by market (off trade, m liters)
                                                                                                                          2001-2011   2011-2016
                                   2001          2011           2012e        2013e         2014e      2015e      2016e       CAGR        CAGR
Latin America                13,008.0       18,483.1        19,121.8       19,843.4      20,809.8   21,625.9   22,560.4       3.6%        4.1%
        y-o-y % chg             6.0%           4.0%            3.5%           3.8%          4.9%       3.9%       4.3%
 Argentina                    1,084.9        1,610.8         1,632.4        1,655.5       1,681.9    1,712.2    1,741.6       4.0%        1.6%
        y-o-y % chg             1.0%           2.1%            1.3%           1.4%          1.6%       1.8%       1.7%
 Brazil                       2,959.3        4,818.9         5,063.1        5,359.6       5,784.2    6,055.2    6,414.2       5.0%        5.9%
        y-o-y % chg            12.0%           6.7%            5.1%           5.9%          7.9%       4.7%       5.9%
 Chile                          318.9          554.7           571.6          585.5         596.9      606.0      613.7       5.7%        2.0%
        y-o-y % chg             0.6%           3.5%            3.0%           2.4%          1.9%       1.5%       1.3%
US                           17,669.2       17,653.0        17,414.1       17,282.9      17,226.7   17,236.7   17,379.1       0.0%        -0.3%
       y-o-y % chg              -0.1%          -2.1%           -1.4%          -0.8%         -0.3%      0.1%       0.8%
Western Europe               15,384.9       15,928.1        15,902.3       15,840.7      15,826.1   15,828.0   15,859.3       0.3%        -0.1%
       y-o-y % chg               0.6%          -0.6%           -0.2%          -0.4%         -0.1%      0.0%       0.2%
Eastern Europe               13,373.1       19,717.7        19,784.3       19,723.8      19,638.7   19,911.2   20,233.1       4.0%        0.5%
       y-o-y % chg               8.7%          -0.9%            0.3%          -0.3%         -0.4%      1.4%       1.6%
Source: Euromonitor




Margin improvement                                                                    Industry risks and catalysts
In a difficult macroeconomic environment that is                                      We believe that the primary risks for the beverage
pressuring volume growth, beverage companies                                          industry this year relate to further economic
have placed a greater emphasis on pricing and                                         weakness, a more-difficult regulatory
cost savings to stabilize or improve margins. In                                      environment, and higher input costs. Volume
2013, we expect a continued focus on price                                            growth in the beverage industry is correlated with
improvements, with a particular emphasis on a                                         GDP growth across different countries, and
more premium brand and package mix. In terms                                          volume growth would be suppressed by lower-
of cost savings, companies appear likely to focus                                     than-expected GDP growth.
on capturing the benefits of scale through
procurement initiatives and the uses of shared                                        Excise tax increases are a threat that may impact
service centers. More-premium product portfolios                                      companies operating in countries such as France,
and further cost savings are likely sources of                                        Russia, and Brazil. In addition, volume growth
margin growth, we believe.                                                            could be affected by smaller competitors not
                                                                                      following price increases taken by the larger
    2013-2014e EBITDA growth in aggregate for beverage                                beverage companies, which would impact the
    companies under our coverage should exceed revenue growth
                                                                                      potential for market share gains.
 14%

 12%                                                                                  In our view, the most important potential catalyst
 10%
                                                                                      for companies we cover is growth in consumer
                                                                                      disposable income and consumer confidence. We
    8%
                                                                                      believe that upside potential could come from
    6%
                                                                                      increased on-premise consumption and greater
    4%
                                                                                      purchases of premium brands and packages. In
    2%                                                                                addition, a notable decrease in raw material costs
    0%                                                                                could provide a potential boost and help
              2010          2011          2012          2013e      2014e
                      Revenue growth         EBITDA growth                            support better margins, in light of accelerated
                                                                                      top-line growth.
    Source: HSBC, Company data




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  Consumer Brands & Retail
  Global Beverages                                                                                                                                abc
  11 February 2013




Global brewers: Valuation on EV/EBITDA and PE
EV/EVITDA multiples: A-B InBev continues to trade at a discount to the peer group average

 18
                                                                                                                                 Ambev


 15
                                                                                                                                      SABMiller


                                                                                                                                      Average
 12

                                                                                                                                  A-B InBev

  9                                                                                                                                    CCU

                                                                                                                                  Heineken


  6




  3
      Jan-08                      Jan-09              Jan-10                  Jan-11                    Jan-12                  Jan-13




                      A-B InBev            Ambev        Heineken          SABMiller         Average              CCU



Source: Company data, FactSet


PE multiples: A-B InBev continues to trade at a discount to the peer group average

  25
                                                                                                                                Ambev




                                                                                                                                Average
  20
                                                                                                                                SABMiller
                                                                                                                                   CCU
                                                                                                                                 A-B InBev

  15                                                                                                                            Heineken




  10




      5
          Jan-08                  Jan-09              Jan-10                 Jan-11                   Jan-12                 Jan-13




                          A-B InBev           Ambev            Heineken         SABMiller         Average              CCU


Source: Company data, FactSet




                                                                                                                                                    7
8


    Beverage universe valued on PE (USD, except where noted)




                                                                                                                                                                                                                                                               11 February 2013
                                                                                                                                                                                                                                                               Global Beverages
                                                                                                                                                                                                                                                               Consumer Brands & Retail
                                                                                                                                                                                                                                  Implied PE
                                                                                   Price                           Target     ________________ EPS _________________           5-yr   ________________ PE _________________   to target price
                                                     Symbol                      2/08/13              Rating        price      2010a 2011a 2012e 2013e 2014e               grth est   2010a 2011a 2012e 2013e 2014e                    2013e    Yield   Div
    Brewers
    A-B InBev                                        ABI-BT                        85.74 Overweight                    100     3.17     4.04      4.68     5.11     5.60        12     27.0    21.2    18.3    16.8    15.3             19.6    2.0%    1.73
    Boston Beer Co.                                   SAM                         139.70 Underweight                   120     3.52     3.73      4.44     4.91     5.46        10     39.7    37.5    31.5    28.5    25.6             24.4    0.0%    0.00
    Heineken^                                       HEIA-AE                        52.53     Neutral                    56     2.58     2.70      2.86     3.18     3.51         9     20.4    19.5    18.4    16.5    15.0             17.6    1.6%    0.83
    Molson Coors                                      TAP                          44.41     Neutral                    47     3.56     3.76      3.87     3.98     4.37         7     12.5    11.8    11.5    11.2    10.2             11.8    2.9%    1.28
    SABMiller*                                      SAB-LN                         50.19     Neutral                    53     1.82     2.06      2.35     2.61     2.84        11     27.6    24.4    21.4    19.3    17.7             20.3    1.8%    0.91
    Anadolu Efes^^^                                AEFES-TR                        26.00     Neutral                    30     0.85     0.58      1.04     1.21     1.39        13     30.6    45.1    25.1    21.4    18.8             24.7    1.6%    0.41
    Tsingtao^^^^                                    168-HK                         46.65 Underweight                    35     1.13     1.29      1.38     1.50     1.73        11     33.3    29.2    27.1    25.0    21.6             23.3    0.8%    0.30
    LatAm Brewers
    Ambev                                          ABV                             46.74           Neutral              49     1.45     1.65      1.66     1.76     1.85        13     32.2    28.3    28.2    26.6    25.3             27.8    2.3%    1.08
    Compania Cervecerias Unidas                    CCU                             31.27           Neutral              33     1.34     1.49      1.48     1.67     1.80         9     23.3    21.0    21.1    18.7    17.4             19.8    2.6%    0.83
    FEMSA                                          FMX                            109.08        Overweight             109     3.05     3.23      3.85     4.52     5.07        10     35.8    33.8    28.3    24.1    21.5             24.1    1.4%    1.51
    Grupo Modelo^^                             GMODELO.C-MX                       111.69           Neutral             116     3.08     3.66      3.81     3.98     4.25         9     36.3    30.5    29.3    28.1    26.3             29.1    3.9%    4.36
      Average                                                                                                                                                                   10     29.0    27.5    23.7    21.4    19.4             22.0    1.9%
    Concentrate Companies
    Coca-Cola Co.                                       KO                          38.77       Overweight               44    1.75     1.92      2.01     2.22     2.42         8     22.2    20.2    19.3    17.5    16.0             19.8    2.6%    1.02
    PepsiCo Inc.                                        PEP                         72.60       Overweight               78    4.13     4.44      4.09     4.45     4.85         8     17.6    16.4    17.8    16.3    15.0             17.5    3.0%    2.15
      Average                                                                                                                                                                    8     19.9    18.3    18.5    16.9    15.5             18.7    2.8%
    Bottlers
    Arca Continental^^                                AC-MX                        94.00           Neutral             101      3.26   2.84**     3.42     4.29     4.91        12     28.8    33.1    27.5    21.9    19.1             23.5    1.6%    1.50
    Coca-Cola Andina                                  AKO'B                        40.94        Overweight              44               1.53     1.45     1.80     2.09        12             26.8    28.2    22.7    19.6             24.4    2.5%    1.04
    Coca-Cola Enterprises Inc.                         CCE                         35.39        Overweight              40      1.78     2.18     2.26     2.53     2.80        11     19.9    16.2    15.7    14.0    12.6             15.8    2.3%    0.80
    Coca-Cola FEMSA                                    KOF                        156.89        Overweight             153      4.22     4.44     5.10     6.12     6.95        14     37.2    35.3    30.8    25.6    22.6             25.0    1.4%    2.25
    Coca-Cola Hellenic                                 CCH                         26.54        Neutral (V)             23      1.62     1.29     1.01     1.36     1.56        10     16.4    20.6    26.3    19.5    17.0             16.9    0.0%    0.00
      Average                                                                                                                                                                   12     25.6    26.4    25.7    20.8    18.2             21.1    1.6%
    Other Alcoholic Bevg Cos
    Brown-Forman Corporation*                           BF'B                        65.08 Underweight                    59     2.16    2.43      2.65     2.95     3.25         8     30.1    26.7    24.6    22.1    20.0             20.0    1.6%    1.02
    Constellation Brands Inc.*                          STZ                         31.85     Neutral                    38     1.86    2.12      2.33     2.65     3.02         7     17.1    15.0    13.7    12.0    10.5             14.3    0.0%    0.00
      Average                                                                                                                                                                    8     23.6    20.9    19.1    17.0    15.3             17.2    0.8%
    S&P 500                                                                 1517.93                                           85.18    96.80    101.97   109.43   118.04               17.8    15.7    14.9    13.9    12.9
    Current prices and target prices for AB InBev, Ambev, CCU, Coca-Cola Andina, and Coca-Cola Hellenic are the ADR prices.
    Current price and target price for SABMiller represent the USD price, using current and forecast FX rates.
    HSBC ratings: V = Volatile
    ^In euros
    ^^In Mexican pesos
    ^^^ in TRY
    ^^^^ in CNY, except target price in HKD




                                                                                                                                                                                                                                                                      abc
    *Calendarized EPS
    **Pro forma EPS
    Source: HSBC
    Beverage universe valued on enterprise value to EBITDA (USDm, ex. share price and where noted)




                                                                                                                                                                                                                                                       11 February 2013
                                                                                                                                                                                                                                                       Global Beverages
                                                                                                                                                                                                                                                       Consumer Brands & Retail
                                                                                                                                                                                                                                             Implied
                                                                             Price # shares Market                                           __________ Calendar EBITDA ___________         ______________ EV/EBITDA______________   EV/EBITDA to TP
                                                    Symbol                   2/8/13 out. (m)  cap. +Debt             - Cash   -JVs      = EV 2010a 2011a 2012e 2013e 2014e                   2010a 2011a 2012e 2013e 2014e                     2013e
    Brewers
    A-B InBev                                       BUD                      85.74          1,599 137,098 39,843      3,673      0 173,268     13,869   15,357   15,573   16,749   18,117     12.5    11.3    11.1    10.3    9.6               11.7
    Boston Beer Co.                                 SAM                     139.70             13   1,877      0         41      0 1,836           99      102      116      124      136     18.6    18.1    15.9    14.8   13.5               12.7
    Heineken^                                      HEIA-AE                   52.53            576 30,257 8,963          722      0 38,498       3,582    3,682    3,891    4,517    4,825     10.7    10.5     9.9     8.5    8.0                9.0
    Molson Coors                                    TAP                      44.41            182   8,065 4,900         516      0 12,449       1,101    1,150    1,266    1,353    1,459     11.3    10.8     9.8     9.2    8.5                9.5
    SABMiller*                                     SAB-LN                    50.19          1,605 80,555 18,621         780      0 98,396       5,145    5,707    6,540    7,606    8,260     19.1    17.2    15.0    12.9   11.9               13.5
    Anadolu Efes^^^                               AEFES-TR                   26.00            592 15,395 2,191          316      0 17,269       1,019      953    1,299    1,495    1,689     16.9    18.1    13.3    11.6   10.2               13.1
    Tsingtao^^^^                                   168-HK                    46.65            675 25,209     493      7,250      0 18,452       2,490    2,799    3,063    3,343    3,811      7.4     6.6     6.0     5.5    4.8                5.1
    LatAm Brewers
    Ambev                                         ABV                        46.74          3,118 145,753 2,063       2,556      0 145,260      6,728    7,854    7,675    8,168    8,518     21.6    18.5    18.9    17.8   17.1               18.6
    Compania Cervecerias Unidas                   CCU                        31.27            159   4,980   552         214      0 5,318          401      451      481      515      541     13.3    11.8    11.1    10.3    9.8               10.9
    FEMSA                                         FMX                       109.08            358 39,031 2,094        2,337      0 38,788       2,427    2,412    2,866    3,272    3,622     16.0    16.1    13.5    11.9   10.7               11.8
    Grupo Modelo^^                            GMODELO.C-MX                  111.69          3,236 361,404     0      29,119      0 332,285     24,934   25,862   28,870   30,841   33,198     13.3    12.8    11.5    10.8   10.0               11.2
      Average                                                                                                                                                                                 14.6    13.8    12.4    11.2   10.4               11.6
    Concentrate Companies
    Coca-Cola Co.                                     KO                     38.77          4,587 177,838 32,730     14,935    700 194,933     12,116   13,703   14,148   15,359   16,609     16.1    14.2    13.8    12.7   11.7               14.3
    PepsiCo Inc.                                      PEP                    72.60          1,575 114,345 27,943      5,711    800 135,777     12,109   13,214   12,403   13,307   14,200     11.2    10.3    10.9    10.2    9.6               10.9
      Average                                                                                                                                                                                 13.7    12.3    12.4    11.4   10.6               12.6
    Bottlers
    Arca Continental^^                              AC-MX                    94.00          1,611 151,458 11,843      4,281       0 159,020     5,436 9,591**    11,227   12,925   14,238     29.3    16.6    14.2    12.3   11.2               13.2
    Coca-Cola Andina                                AKO'B                    40.94            158   6,459    500        105       0 6,854         372     364       433      537      607     18.4    18.8    15.8    12.8   11.3               13.7
    Coca-Cola Enterprises Inc.                       CCE                     35.39            291 10,298 3,466          721       0 13,043      1,163   1,338     1,315    1,379    1,472     11.2     9.7     9.9     9.5    8.9               10.4
    Coca-Cola FEMSA                                  KOF                    156.89            203 31,857 1,562          846       0 32,573      1,619   1,747     2,098    2,433    2,692     20.1    18.6    15.5    13.4   12.1               13.1
    Coca-Cola Hellenic                               CCH                     26.54            363   9,637 2,775         697   (300) 12,015      1,416   1,317     1,147    1,382    1,493      8.5     9.1    10.5     8.7    8.0                7.5
      Average                                                                                                                                                                                 17.5    14.6    13.2    11.3   10.3               11.6
    Other Alcoholic Bevg Cos
    Brown-Forman Corporation*                         BF'B                   65.08            215     13,982   501     369    (150)   14,265     797      860      915     1,000    1,082     17.9    16.6    15.6    14.3   13.2               12.8
    Constellation Brands Inc.*                        STZ                    31.85            190      6,042 3,995     201        0    9,837     889      868      897     1,134    1,238     11.1    11.3    11.0     8.7    7.9                9.7
      Average                                                                                                                                                                                 14.6    14.1    13.7    11.8   10.8               11.3
    Current prices for AB InBev, Ambev, CCU, Coca-Cola Andina, and Coca-Cola Hellenic are the ADR prices.
    Current price for SABMiller represent the USD price, using current FX rates.
    ^In euros
    ^^In Mexican pesos
    ^^^ in TRY
    ^^^^ in CNY, except current price in HKD
    *Calendarized EBITDA
    **Pro forma EBITDA
    Source: HSBC




                                                                                                                                                                                                                                                              abc
9
     Consumer Brands & Retail
     Global Beverages                                                                                         abc
     11 February 2013




Top pick in the beer industry:                         and a 100bp contraction in EBITDA margin to
A-B InBev, Overweight                                  41.8%. In the US, A-B InBev expects growth in
                                                       sales-to-wholesalers (STWs) in the fourth quarter
We believe that A-B InBev remains one of the
                                                       as a result of adjustments to its shipping pattern
best-equipped beverage companies to manage
                                                       and a healthy innovation pipeline.
through current market volatility and emerge as a
stronger competitor. Strengths include its ability     In Latin America North, a high single-digit
to lead the pricing effort, focus on premium           increase in revenue per hectoliter was led by
products, offset higher costs, and improve             pricing strength and continued mix improvements.
margins, while still investing behind its brands       The impact of LAN growth was muted for the
and territories. We expect the company to benefit      overall company due to depreciation of the BRL
from organic growth opportunities, as it continues     against the USD over the course of last year. For
to build upon its leading presence in markets such     the fourth quarter, we expect better volume
as the US and Brazil, and develop its presence in      growth in Brazil, as the brewer engaged in some
less-developed markets such as China. The              promotional activity to offset more-aggressive
proposed acquisition of Grupo Modelo remains           pricing actions taken earlier last year.
under scrutiny by the US Department of Justice,
                                                       For 2012, we estimate an increase in total
but we believe that with or without full ownership
                                                       company volume at A-B InBev of just over 1%
of Modelo, A-B InBev’s Americas business will
                                                       (up 0.4% in 9M12) and a 2% increase in reported
maintain its leading share standing.
                                                       net sales to USD39.9bn, just above consensus at
2012 performance                                       USD39.7bn. We expect operating margin to
For full-year 2012, we expect A-B InBev’s              decline 20bps to 32.1%, leading to a 1.5%
revenue per hectoliter to increase ahead of            increase in operating income to USD12.8bn. Our
inflation, due to improvements in portfolio mix        2012 EPS estimate is USD4.68, ahead of
and revenue management. Cost of sales per              consensus at USD4.65.
hectoliter should increase in the mid-single digits,   Key drivers and concerns
on a constant geography basis, and be broadly
                                                       Potential acquisition of Grupo Modelo
offset by pricing, mix benefits, and cost savings.
                                                       On 31 January, the US Department of Justice filed
We believe that global commodity cost increases
                                                       an antitrust lawsuit challenging A-B InBev’s
will be partly mitigated by procurement savings
                                                       proposed acquisition of the 50% of Grupo Modelo
and efficiency gains. Both distribution and sales &
                                                       that it doesn’t already own. In the lawsuit, the
marketing expenses per hectoliter should increase
                                                       DOJ noted that the transaction would substantially
in the mid- to high single digits this year, as the
                                                       lessen competition in the US beer market and
company is increasing its direct distribution and
                                                       remove a competitor, Modelo, which has
its brand investments.
                                                       historically put pressure on A-B InBev to
In A-B InBev’s two largest markets, North              maintain or lower prices. A-B InBev has said that
America and Latin America North (LAN), results         it believes the lawsuit is “inconsistent with the
were mixed through the first three quarters of         law” and that it will “vigorously” contest the
2012. North America volume was stronger than in        DOJ’s action in federal court.
previous years, up slightly through the first nine
                                                       As a result, the ABI-Modelo transaction is no longer
months of the year. However, the company made
                                                       expected to close in the first quarter of 2013,
significant investments behind innovation, which
                                                       according to the parties involved. A-B InBev could
led to a modest 2.3% improvement in EBITDA

10
     Consumer Brands & Retail
     Global Beverages                                                                                                              abc
     11 February 2013




US beer industry shipments (m bbls)
                          Jan     Feb     Mar     Apr     May     Jun       Jul    Aug     Sep     Oct     Nov     Dec      YTD
2012                     13.34   13.72   15.56   14.95   16.92   16.96    16.43   16.56   14.75   14.30   13.45   13.15   180.09
  yoy% chg               4.9%    7.5%    -5.1%   0.6%    4.9%    -4.3%    7.6%    1.9%    -5.5%   4.7%    1.7%    -1.2%    1.2%
2011                 12.72       12.76   16.41   14.86   16.14   17.72    15.27   16.26   15.60   13.65   13.22   13.32   177.92
 yoy % chg           -3.3%       -3.0%   2.7%    -2.6%   -2.7%   1.5%     -8.7%   -3.7%   4.3%    -1.2%   -0.6%   -4.0%    -1.8%
Source: Beer Institute




maintain that it will not have increased pricing                         domestic beer industry volume improved 1.2% for
influence over the US beer market. A-B InBev                             full-year 2012, off of a 1.8% decline in 2011.
believes that the sale of 100% of Crown Imports to
                                                                         A-B InBev lost 26bps of market share in 2012
Constellation Brands addresses this issue and puts
                                                                         through September, primarily due to declines in
pricing power in the hands of Crown Imports, US
                                                                         the value or below-premium segment, as the
wholesalers, and retailers. In similar previous
                                                                         brewer chose to focus on its premium brand
transactions, brewers have had to make concessions
                                                                         portfolio. In 2013, we expect A-B InBev to regain
to receive regulatory approval, which has entailed
                                                                         some lost volume market share as competitors
the sale of brands or production, or the alteration of
                                                                         follow the industry leader’s pricing actions, while
terms of contracts.
                                                                         continuing to gain value share under improving
In 2013, the potential full integration of Grupo                         consumer conditions.
Modelo into A-B InBev would be a significant
                                                                         2013 outlook
contributor to growth. According to our estimates,
Modelo would contribute approximately USD5bn                             Our 2013 estimates are based on the current
in revenue (c10% of total pro forma 2013e                                structure of A-B InBev and therefore do not reflect
revenue) and USD1.6bn in operating income                                full ownership of Grupo Modelo. We expect 2.3%
(c10% of total pro forma 2013e operating income)                         volume growth in 2013, compared with our 1.4%
to A-B InBev’s results this year.                                        growth estimate for 2012, with better y-o-y
                                                                         performance in the company’s largest markets, the
A-B InBev has guided toward at least USD600m                             US and Brazil. We expect organic growth to be led
in annual deal-related cost synergies over four                          by 7% growth in Asia Pacific and 4% growth in
years. Cost synergies would come from                                    Latin America North, offsetting declines in
procurement, sharing of best practices, and                              Europe. For the total company, we estimate a 6%
efficiencies in overhead and IT systems. An                              increase in revenue to USD42.3bn , benefiting
additional one-time USD500m in cash flow                                 from a 3.5% increase in revenue per hectoliter.
synergies could be captured over two years,
mainly through improving Grupo Modelo’s                                  We expect 2013 operating income to increase 8%
working capital.                                                         to USD13.85bn, which reflects a 70bp increase in
                                                                         operating margin due to higher pricing and
Return to US volume growth                                               ongoing cost savings. We expect the strongest
A-B InBev highlighted on its third-quarter                               organic growth to come from Latin America
conference call that US beer volume returned to                          North and South, each up 12%. Our 2013 EPS
growth after three years of decline. The company                         estimate is USD5.11, up 9% from our 2012 EPS
estimated that industry selling-day adjusted sales-to-                   estimate of USD4.68. We are forecasting 7.5%
retailers (STRs) grew 0.3% in the first nine months                      EBITDA growth for 2013 to USD16.75bn.
of 2012, while its own STRs declined 0.2% in the
same period. According to the Beer Institute,

                                                                                                                                     11
     Consumer Brands & Retail
     Global Beverages                                                                                                                          abc
     11 February 2013




Maintain EUR74 target price, raise                                                         Ambev, Neutral
USD TP to USD100 from USD94                                                                2012 performance
We are maintaining our Overweight rating on A-B
                                                                                           Through the first nine months of 2012, Ambev
InBev shares and our EUR74 target price. We are
                                                                                           volume increased 2.8% on a reported basis and
raising our USD target price to USD100 from
                                                                                           2.1% organically. Total company organic revenue
USD94 to reflect the HSBC FX team’s end-2013
                                                                                           grew 11.7% to BRL22.1bn, supported by an
EUR-USD FX rate forecast of 1.35.
                                                                                           increase of 9.3% in revenue per hectoliter. This
We value A-B InBev local shares primarily on                                               imbalance between pricing and volume was more
EV/EBITDA. On this metric, A-B InBev stock is                                              pronounced in the third quarter, as total organic
trading at 10.3x and 9.6x our 2013 and 2014                                                volume declined 0.5% and revenue per hectoliter
EBITDA estimates, respectively, below the peer                                             increased 15.1%. This was primarily due to
group average (consisting of six global brewers)                                           Ambev’s planned pricing activity at its Beer
of 11-12x. Due to A-B InBev’s market-leading                                               Brazil division, where its revenue per hectoliter
position, exposure to attractive markets, diverse                                          increased 18.3% in the quarter.
product portfolio, and tight cost management, we
                                                                                           Total company gross margin increased 80bps i for
believe that the stock should be valued more in
                                                                                           the nine month period on an organic basis to
line with the peer group average. We expect
                                                                                           67.3%. EBIT grew 12.6% to BRL8.9bn over this
multiple expansion over the next year to 12x,
                                                                                           time period, but the EBIT margin expanded only
implying a local share target price of EUR74.
                                                                                           30bps to 40.3%. This was the result of higher
A-B InBev is scheduled to report fourth-quarter                                            labor costs in Latin America South and greater
and full-year 2012 results on 27 February.                                                 administrative expenses in Brazil.

Please refer to pages 26-27 for our detailed                                               For full-year 2012, we expect total company
valuation and risks table.                                                                 volume to increase 3%, helped by better fourth-
                                                                                           quarter volume growth in Brazil due to increased
                                                                                           promotional activity and the acquisition of
                                                                                           Cervecería Nacional Dominicana (CND) in the
                                                                                           Caribbean. According to our estimates, revenue
A-B InBev: 4Q12, FY12 and FY13 estimates (USDm)                                            should increase 16% to BRL31.5bn, helping boost
                                                  Consensus                    HSBC        gross margin by 30bps to 67.8%. We are
4Q12                               4Q11a              4Q12e                    4Q12e       forecasting 15.5% operating income growth to
Sales                               9,873                10,198                10,478      BRL13.5bn and 19% EPS growth to BRL3.30.
EBIT                                3,546                 3,695                 3,722
EBITDA                              4,237                 4,427                 4,450      For the ADRs, our revised EPS estimate is
Net profit                          1,959                 1,956                 1,985
EPS (USD)                            1.23                  1.26                  1.24      USD1.66, down slightly from our previous
Full-year 2012                     FY11a                 FY12e                 FY12e       estimate of USD1.68 due to depreciation of the
Sales                              39,046               39,732                 39,948      BRL against the USD.
EBIT                               12,607               12,757                 12,813
EBITDA                             15,357               15,479                 15,573
Net profit
EPS (USD)
                                    6,449
                                     4.04
                                                         7,439
                                                          4.65
                                                                                7,477
                                                                                 4.68
                                                                                           Key drivers and concerns
Full-year 2013                                          FY13e*                 FY13e       Impact of CND
Sales                                                    45,292                42,292
EBIT                                                     14,653                13,851
                                                                                           Ambev closed of the acquisition of Cervecería
EBITDA                                                   17,789                16,749      Nacional Dominicana (CND) in the second
Net profit                                                8,097                 8,178
EPS (USD)                                                  5.01                  5.11      quarter of 2012 for the purchase price of USD1bn,
*FY13 consensus factors in certain estimates that include 100% ownership of Grupo Modelo   representing a 13x EV/EBITDA multiple. The
Source: HSBC, Bloomberg estimates

12
   Consumer Brands & Retail
   Global Beverages                                                                                                               abc
   11 February 2013




newly acquired CND increased Ambev’s beer             benefit from a more-favorable, higher-margin
volume in the Caribbean from 900,000hl and            product and package mix, as well as further
added 3.7m hl.                                        development of its strong innovation pipeline.

According to Ambev, the integration plan is on        Our 2013 volume estimate is for 4% growth,
track, and it plans to beat its initial guidance to   ahead of HSBC Economics’ GDP growth
deliver a combined EBITDA of USD190m for the          forecasts of 3% for Brazil and 3.1% for Latin
first 12 months of operations. We believe that the    America. We expect sales to increase 9.5% to
transaction will be EPS-accretive in the first year   BRL34.5bn, led by strong pricing, especially in
of operations and that it represents the potential    Brazil and the HILA division. Operating income
for other relatively small deals in the region that   should rise 12% to BRL15.1bn, reflecting a 90bp
could expand Ambev’s presence.                        margin expansion to 43.7%. These estimates are
                                                      slightly ahead of our previous forecasts, as we
Effect of tax increases in Brazil
                                                      expect Ambev to deliver strong volume and
At the end of September, Brazil’s tax agency
                                                      pricing growth on a year-over-year basis, but
announced that it would delay a tax increase on
                                                      margins may come under more pressure than
beer until April 2013 in an effort to boost local
                                                      expected due to negative currency or commodity
investments. The brewers were anticipating a
                                                      cost effects.
20%-plus tax increase on beer beginning October
1, but this increase was postponed and spread over    Based on our positive outlook for Ambev in the
the next six years. This occurred as a result of      beer and soft drink industries, our 2013 EPS
agreements made by the brewers to continue to         estimate is BRL3.63, up from BRL3.58. We are
increase investment spend, which include opening      also raising our USD estimate to USD1.76 from
plants (therefore, creating jobs) and not to pass     USD1.71 previously, reflecting adjustments to our
through additional price increases on beer, which     HSBC currency-related forecasts. Our ADR
ultimately hurt the consumer.                         estimate represents a 5.5% increase. HSBC’s
                                                      economics team maintains its bearish BRL view,
If the anticipated tax increase had occurred,
                                                      but recently noted that it sees less room for BRL
Ambev was planning an incremental price
                                                      depreciation in 1H13 and it lowered its year-end
increase of about 4%, but now it expects to take
                                                      USD-BRL forecast to 2.15 from 2.30.
additional pricing of just 0.5-1% twice a year for
the next six years. Although better than initially
expected, we believe that increased taxes and thus     Ambev: Relative stock price performance
higher prices to consumers could still negatively
                                                       300
affect beer volume in Brazil over the near term.       250
                                                       200
2013 outlook                                           150
Although the company has not provided guidance         100

for 2013, Ambev noted that it expects a negative         50
                                                          0
currency effect this year, which should be partly
                                                              Jan-08



                                                                         Jan-09



                                                                                  Jan-10



                                                                                                     Jan-11



                                                                                                                Jan-12



                                                                                                                         Jan-13




offset by lower commodity costs. In addition, the
company hopes to return to more-balanced
                                                                         AmBev             S&P 500            Bovespa
volume and pricing growth in Brazil in 2013, as
its smaller competitors should follow Ambev’s          Source: FactSet

pricing actions. We expect Ambev to continue to

                                                                                                                                    13
     Consumer Brands & Retail
     Global Beverages                                                                                                 abc
     11 February 2013




Raise TPs to BRL97 from BRL90,                                region. In Beer Chile, 2.5% sales growth was driven
and to USD49 from USD44                                       fairly equally by volume and pricing.
We are reiterating our Neutral rating on Ambev                Full-year gross profit increased 11.7% to
shares, based primarily on valuation, and raising our         CLP583bn, marking a 40bp improvement in gross
target prices to USD49 from USD44 for ABV and to              margin to 54.2%. Normalized EBIT increased
BRL97 from BRL90 for AMBV4 shares (applying                   only 0.7% to CLP181bn, as a result of a 16%
the current BRL/USD FX rate) to reflect our                   increase in MSD&A expenses. The expense
increased estimates. Among the brewers, we                    increase was primarily due to inflationary pressure
continue to believe, Ambev stock should trade at a            in Argentina, as well as higher distribution,
premium to the peer group average due to the                  marketing, and salary expenses in Chile.
company’s dominant market share in a high-growth              Normalized EBITDA increased 3.6% to
market, where we expect to see industry growth                CLP236bn, and EBITDA margin declined by
accelerate. Yet Ambev’s premium to its peer group             160bps to 21.9%.
has widened significantly over the past 12 months,
                                                              CCU delivered full-year EPS of CLP359.3, down
making it difficult to justify even further upside.
                                                              3.8% on a comparable basis from the previous year.
Ambev: 4Q12, FY12 and FY13 estimates (BRLm)
                                         Consensus   HSBC
                                                              Key drivers and concerns
4Q12                            4Q11a        4Q12e   4Q12e
                                                              Increasing competition
Sales                            8,378       9,692    9,446   We are most concerned about near-term
EBIT                             4,109       4,700    4,587
EBITDA                           4,506       5,260    5,040   performance at CCU’s Beer Chile and Argentina
Net profit                       3,046       3,524    3,486
EPS (BRL)                         0.98        1.12     1.11
                                                              divisions, which in 2012 represented two-thirds of
Full-year 2012                  FY11a       FY12e    FY12e    the company’s total EBITDA.
Sales                           27,127      31,463   31,543
EBIT                            11,686      13,401   13,486   In Chile, normalized EBITDA margin at CCU’s
EBITDA                          13,141      15,226   15,207
Net profit                       8,618      10,171   10,310   Beer Chile division declined from its more historical
EPS (BRL)                         2.77        3.33     3.30
Full-year 2013                              FY13e    FY13e
                                                              35-36% levels to 32.5% in 2012. We expect margins
Sales                                       34,164   34,526   to remain under pressure in Chile, although the
EBIT                                        14,843   15,073
EBITDA                                      16,800   16,875   company has noted plans to restore margins, as
Net profit                                  11,194   11,372   private consumption demand remains strong.
EPS (BRL)                                     3.65     3.63
Source: HSBC, Bloomberg estimates                             We believe that CCU will continue to be impacted
                                                              by a competitive pricing environment and higher
Ambev is scheduled to report fourth-quarter and
                                                              distribution costs over the near term. In Chile,
full-year 2012 results on 27 February.
                                                              CCU competitor Ambev has been discounting its
Compañia Cervecerías                                          prices on cans in supermarkets. CCU has taken
Unidas (CCU), Neutral                                         steps to counter Ambev’s lower prices, but we
                                                              believe the high level of competition could
2012 performance                                              continue to negatively impact CCU.
In 2012, CCU delivered a 10.9% sales increase to
CLP1,076bn, with growth of 6.4% in volume and                 CCU recently put through price increases of 5-6%
4.4% in higher average prices. Volume grew at a               on one-way packages and more than 3% overall,
double-digit rate at the company’s non-alcoholic and          and it believes that Ambev is likely to follow this
spirits divisions, while volume declined at CCU               price increase. CCU also recently rolled out two
Argentina due to a double-digit price increase in the         innovations, a returnable 1.2L package and Cristal
                                                              Light, to bolster is competitive position.

14
    Consumer Brands & Retail
    Global Beverages                                                                                                                          abc
    11 February 2013




CCU: Fourth-quarter and full-year 2012 results by division (CLPbn) before exceptional items
                                    Beer           Beer            Non-                                                  Other        Total
                                    Chile      Argentina       alcoholic            Wines                 Spirits        elims        CCU
Fourth-quarter 2012
% of total company sales            30.0%          27.4%          25.9%              11.4%                 5.4%          -0.1%      100.0%
Volume (m hl)                       -6.3%           0.5%          17.9%               1.6%                10.3%               -       8.6%
Revenue                             -3.3%           6.5%          14.6%               3.6%                 9.9%               -       5.2%
EBIT                               -11.9%          11.9%          22.3%             -33.8%                48.9%               -      -3.6%
EBITDA                              -8.1%          12.6%          22.2%             -24.8%                40.0%               -      -0.4%
Full-year 2012
% of total company sales            29.8%          23.3%          27.2%             13.9%                  5.9%          -0.1%      100.0%
Volume (m hl)                        1.1%          -1.6%          16.5%              5.3%                 15.7%               -       7.9%
Revenue                              2.5%          13.6%          17.6%              8.1%                 24.8%               -      10.9%
EBIT                                -9.5%          -3.5%          22.1%              6.1%                 21.8%               -       0.7%
EBITDA                              -5.3%           0.1%          20.5%              4.6%                 19.1%               -       3.6%
Source: Company data




CCU has also experienced recent weakness in                           Raise TPs to USD33 from USD30,
Argentina, as the normalized EBITDA margin                            and to CLP7,800 from CLP7,500
declined to 14% in 2012 from 15.7% a year earlier.                    We are maintaining our Neutral rating on CCU
CCU noted that the beer market in Argentina could                     shares and raising our target prices to reflect our
become more complex with the introduction of                          increased estimates. Our revised target price on
proprietary bottles, though recent regulations                        the ADRs is USD33, up from USD30, and for the
should mitigate much of the impact on CCU. We                         local shares, we are raising our target price to
believe this is a potential issue for CCU in 2013,                    CLP7,800 from CLP7,500 {current exchange rate:
due to its secondary position in the market behind                    472 CLP*USD 2013e TP} /2{each ADR is 2
the leader, Ambev.                                                    local shares}).
2013 outlook                                                          On EV/EBITDA, CCU is trading at 10.3x our 2013
In 2013, we expect total company volume to                            EBITDA estimate, respectively, in line with its
improve 8% and pricing to improve 3.5% to result                      historical multiple and just below the peer group
in sales growth of 11.5% to CLP1,201bn. Sales                         average (consisting of global brewers) of 11-12x.
growth should be led by CCU’s Argentina and                           We expect multiple expansion over the next year, to
non-alcoholic divisions, with each up in the mid-                     11x, factoring in our 2013 EBITDA growth
teens. Despite strong growth in sales and gross                       estimate, which implies a target price of USD33.
profit, we expect some margin pressure due to
                                                                      Grupo Modelo, Neutral
currency movements and high MSD&A expenses,
although the cost increases should be less on a                       In June 2012, A-B InBev announced its plans to
year-over-year basis. We expect total company                         acquire the remainder of Grupo Modelo shares
EBIT to increase 5.5% to CLP189bn for the full                        that it didn’t already own for USD20.1bn. In late
year, and margin to contract 90bps to 15.8%.                          January 2013, the US Department of Justice filed

We expect 2013 EBITDA of CLP249bn (up from                            CCU: FY13 estimates (CLPm)
our previous CLP247bn estimate), which represents                                                                   Consensus        HSBC
                                                                      Full-year 2013                  FY12a             FY13e        FY13e
a 6% year-over-year increase and an EBITDA
margin decline of 110bps to 20.7%. Our 2013 EPS                       Sales                       1,075,690          1,144,000    1,200,840
                                                                      EBIT                          181,188            194,667      189,329
estimate is CLP403, a 12%y-o-y increase.                              EBITDA                        235,948            250,175      248,682
                                                                      Net profit                    114,433            131,051      128,365
                                                                      EPS (CLP)                       359.3              419.7        403.0
                                                                      Source: HSBC, Bloomberg estimates

                                                                                                                                                15
     Consumer Brands & Retail
     Global Beverages                                                                                          abc
     11 February 2013




an antitrust lawsuit against A-B InBev’s proposed         A-B InBev has agreed to purchase Grupo Modelo
acquisition of Modelo. Since the announcement of          for USD9.15 per share, meaning the currency risk
the deal and the DOJ’s filing, trading in Modelo          remains with Modelo shareholders. We believe
shares has primarily reflected the expected closure       another driver to Modelo’s current share price is
of the deal (anticipated purchase price) and not          the USD-MXN exchange rate. At the time of the
company fundamentals, in our view.                        deal announcement, the exchange rate was 13.35,
                                                          but the MXN USD has since appreciated, and is
2012 performance
                                                          now trading at 12.73.
For full-year 2012, Grupo Modelo increased net
sales 9.1% to MXN99.3bn and operating 14% to              2013 outlook
MXN25.1bn. Sales growth was driven by strong              For 2013, we expect total company volume to
domestic pricing, up 6.8%, and currency                   increase 3.5%, driven by growth of 4.5% in
depreciation (weaker MXN vs. USD) at its export           exports and 3% in Mexico. Total sales should
business. Total company volume increased only             increase 5% to MXN104.3bn, led by a 7.5%
1.2%, with domestic volume down 0.3% due to poor          increase in domestic revenue. In the export
weather and a tough y-o-y comparison, and export          division, we forecast a 1% increase in revenue, as
volume up 4.7%. In 2012, gross margin improved            pricing should be negatively impacted by the
50bps to 52.8% and operating margin improved              strengthening of the MXN against the USD.
110bps to 25.3%. Full-year EPS of MXN3.81
                                                          We expect total company EBIT to increase 7% in
represented a 4% year-over-year increase.
                                                          2013 to MXN26.8bn, representing a 40bp
In the US, Crown Imports outperformed the beer            expansion in operating margin to 25.7%.
industry and the imported beer category, with             Operating margin expansion should benefit from a
strength behind the Corona Extra, Modelo Especial,        stronger MXN with respect to USD-denominated
and Corona Light brands. Grupo Modelo performed           costs, although this benefit on the cost line will
well in its second-largest export market, Australia, as   likely not be enough to offset the negative
well as in Chile, China, and Japan, where it delivered    currency effects on export division revenue.
double-digit volume growth.
                                                          Our 2013 EPS estimate is MXN3.98, a 4.5%
Key drivers and concerns                                  increase from 2012, and our EBITDA estimate is
Regulatory and currency risk                              MXN30.8bn, a 7% increase.
In November 2012, Mexico’s antitrust authority            Lower TP to MXN116 from MXN122
granted approval to A-B InBev to acquire the
                                                          We are maintaining our Neutral rating on Modelo
remaining 50% of Grupo Modelo. On 31 January
                                                          shares and lowering our target price to MXN116
2013, the US DOJ rejected the ABI-Modelo
                                                          from MXN122, to reflect the current MXN-USD
transaction based on anticompetitive practices, as
                                                          exchange rate. Our MXN116 target price reflects
the elimination of Modelo in the US beer market
                                                          the tender price and represents an F/PE multiple,
would give A-B InBev more pricing power. A-B
                                                          relative to an aggregate Mexican market index
InBev disagrees with the DOJ’s contentions in the
                                                          compiled by FactSet of 2.1x, a 29x 2013e PE
lawsuit, and it has said it would formally address
                                                          multiple, and 11x 2013e EV/EBITDA.
these and that it intends to refute the claim.
Ultimately, A-B InBev may need to make some
concessions in order to receive US regulatory
approval but should be able to clear the regulatory
hurdles, in our view.
16
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    Global Beverages                                                                                                                abc
    11 February 2013




SABMiller: Volume performance by region, on organic basis
                             1Q Jun-11       1H12 Sep-11    3Q Dec-11      FY12 Mar-12    1Q Jun-12   1H13 Sep-12    3Q Dec-12
Lager volume
Organic                               5%             3%            3%              3%           5%            4%              2%
Latin America                         6%             8%            8%              8%           6%            4%              6%
Colombia                              6%             7%            6%              7%           4%            3%              7%
Peru                                 11%            11%            9%             10%           8%            6%              6%
Ecuador                              -1%             5%           15%              7%           8%            4%              1%
Europe                                5%             flat         -2%             -1%           7%            9%              1%
Poland                                4%            -2%           -6%             -4%          11%           10%             -2%
Romania                              -3%            -8%           -6%             -8%          15%           25%             23%
Russia                               11%             3%           -6%              2%
Czech Republic                        4%            -1%            2%              flat         1%            2%            -11%
US - MillerCoors
STWs                                -3.1%          -3.9%        -1.6%            -2.7%         0.3%         -1.2%           -1.4%
STRs                                -2.7%          -2.3%        -3.3%            -2.4%        -1.4%         -1.9%           -1.1%
Asia                                 11%             4%            7%              4%           7%            5%             -1%
 China                               14%             5%            5%              4%           5%            4%             -3%
 India                              -13%            -7%           21%              3%          24%           23%             18%
Africa                               15%            15%           11%             13%           9%            6%              4%
South Africa
 Lager                                flat           flat             2%           2%           1%            1%              3%
 Soft Drinks                         -3%            -3%               1%           2%           9%            8%             -3%
Source: Company data




Grupo Modelo: FY13 estimates (MXNn)                                        For the total company, we expect total volume to
                                             Consensus       HSBC          increase 5.5% on a reported basis, following 8.7%
Full-year 2013                  FY12a            FY13e       FY13e
                                                                           growth in the first half of the year (4% on an
Sales                           99,297         104,754      104,269
EBIT                            25,106          25,305       26,817        organic basis). Full-year sales should increase
EBITDA                          28,869          30,840       30,841        11% to USD35bn (core revenue estimate of
Net profit                      12,344          12,653       12,891
EPS (MXN)                         3.81            4.02         3.98        USD24.1bn), and operating profit should increase
Source: HSBC, Bloomberg estimates                                          17% to USD6.3bn (core operating profit estimate
                                                                           of USD4.6bn), reflecting a 70bp margin increase
SABMiller, Neutral                                                         to 17.8%.
Fiscal 2013 performance                                                    Our fiscal year 2013 EPS estimate is USD2.43,
The outlook for fiscal 2013 (ending in March) is                           which represent represents 14% y-o-y growth.
mixed, as the company expects continued growth
                                                                           Key drivers and concerns
in most of its developing markets, modest
improvements in some mature markets, and                                   Increasing emerging market exposure

uncertainty in Europe. We expect Latin America                             As with many of the global brewers in our
and Africa to continue to be the main source of                            universe, we expect the main growth driver for
organic EBITA growth in fiscal 2013.                                       SABMiller in its coming fiscal year to be its
                                                                           emerging market territories.
Specifically, we estimate 13% EBITA growth in
Latin America for 2013, led by strength in Peru,                           In terms of pursuing emerging market growth,
along with distribution efficiencies, and 11.5%                            SABMiller is investing in greenfield breweries in
growth in Africa, despite capacity constraints. We                         Africa, where it is facing capacity constraints.
agree with SABMiller's assertion that the                                  Africa has a large informal alcohol segment that
“fundamental potential of our emerging markets                             SABMiller plans to draw consumers from, using its
remains strong.”                                                           traditional beers, which are sold at a lower price
                                                                           point and brewed with local ingredients.

                                                                                                                                      17
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     11 February 2013




SABMiller has also strengthened its presence in      Fiscal 2014 outlook
Russia and Ukraine through its alliance with         We expect 4% volume growth in 2014, led by
Anadolu Efes (closed in late 2011), while gaining    growth of 9% in Africa, 6% in Asia, and 5% in
exposure to new markets such as Turkey and           Latin America. We expect volume growth in
Central Asia. This deal should generate USD50m       Europe to still be constrained with only 0.5%
in synergies in fiscal 2014 and 2015.                growth led by Eastern Europe. Our fiscal 2014
On 5 February, SABMiller announced, along with       estimate of total company sales is USD37.8bn
its joint venture partner China Resources, that it   (core revenue estimate of USD25.8bn), which
had entered into an agreement to acquire Kingway     represents a 7% year-over-year increase.
Brewery for RMB5.38bn (USD864m) in cash.             We expect SABMiller’s operating profit to increase
The brewery business comprises seven breweries,      9% to USD6.85bn (core operating profit estimate of
with total annual production capacity of 14.5m       USD5.1bn), reflecting 30bps of margin expansion
hectoliters. In 2011, Kingway sold 9.3m              from its cost savings program and its focus on its
hectoliters of beer. According to SABMiller, “the    premium brand portfolio. On a divisional level, we
acquisition is highly complementary with CR          expect 13% operating income growth from Africa
Snow’s existing footprint and will reinforce its     and 12% growth in Latin America.
production base, sales infrastructure, and market
position in the fast-growing Guangdong region, as    Our fiscal 2014 EPS estimate is USD2.67,
well as provide additional scale and market          representing a 10% year-over-year increase,
presence in Sichuan, Shaanxi, and Tianjin.” The      and up from our previous estimate of USD2.64.
transaction is subject to regulatory and Kingway     For EBITDA, we are forecasting 8.5% growth
shareholder approvals.                               to USD7.4bn.

Focus on premium brands                              Raise TP to 3,350p from 2,950p
In addition, we expect SABMiller to continue         We are maintaining our Neutral rating on
pursue growth in the premium beer segment            SABMiller shares, considering a full valuation, in
around the world. In the US, MillerCoors             our view. We are raising our 12-month target
delivered strong growth in the third calendar        price to 3,350p from 2,950p, factoring in our
quarter (underlying net income up 13.5%),            increased estimates and now applying a market
benefiting from strong double-digit growth from      multiple of 13.5x to our 2013 EBITDA estimate.
its premium brand portfolio. The Tenth and Black     This multiple is based on our positive view of
Beer Company continues to grow volume ahead          SABMiller’s strong position in the global beer
of the overall US craft beer segment.                industry and its recent transactions in China,
                                                     Russia, and Europe. We believe that SABMiller is
                                                     operating well under challenging economic
                                                     conditions, but that it should continue to face
                                                     sluggish consumer trends in its more-developed
                                                     markets, particularly in Western Europe.




18
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    Global Beverages                                                                                                  abc
    11 February 2013




SABMiller: 2H13, FY13 and FY14 estimates (USDm)               Heineken has guided to an 8% increase in input
                                         Consensus   HSBC     costs per hectoliter for full-year 2012, led by input
4Q12                            2H12a        2H13e   2H13e
                                                              cost inflation and a shift toward higher-priced
Core revenue                    11,221      14,410   12,698
Core op profit                   2,203       2,619    2,623   one-way packaging. We believe that cost pressure
EBITDA                           3,083       3,737    3,669   should lead to a 90bp decline in gross margin for
Net profit                       1,767       2,024    2,035
EPS (USD)                         1.10        1.24     1.26   the year, as Heineken cannot take sufficient
Full-year 2012                  FY12a       FY13e    FY13e    pricing to cover its cost increases. We believe that
Core revenue                    21,760      25,483   24,068
Core op profit                   3,987       4,909    4,612   better near-term profit growth may also come
EBITDA                           5,875       6,530    6,833
Net profit                       3,400       3,911    3,910   from more-moderate marketing and selling
EPS (USD)                         2.13        2.40     2.42   expenses. For the full year, Heineken expects
Full-year 2013                              FY14e    FY14e
Core revenue                                27,104   25,765   marketing and selling (beia) expense as a
Core op profit                               5,572    5,100
                                                              percentage of revenue to be approximately 12.5%
EBITDA                                       7,095    7,420
Net profit                                   4,400    4,325   versus 12.8% in 2011. This lower spend on
EPS (USD)                                     2.70     2.67
                                                              marketing should help Heineken deliver a flat
Source: HSBC, Bloomberg estimates
                                                              EBIT (beia) margin at 15.8%.
SABMiller is scheduled to report its fourth-                  We are raising our full-year 2012 EPS to
quarter trading statement on 18 April and its fiscal          EUR2.86 from EUR2.82, which represents 6%
2013 results on 23 May.                                       year-over-year growth. This reflects a better-than-
Heineken, Neutral                                             expected performance in the third quarter, as
                                                              organic revenue increased 4% (up 7.1% on a
2012 performance                                              reported basis), with volume up 1.5% and revenue
Following a 4% organic net profit (beia) decline              per hectoliter up 2.5%. Our revised estimate also
in the first half of 2012, Heineken expects a                 now incorporates Heineken’s increased ownership
stronger profit performance in the second half of             in Asia Pacific Breweries.
the year and full-year net profit to be broadly in
                                                              Key drivers and concerns
line with that of a year earlier on an organic basis.
We are expecting a 12% increase in reported                   Acquisition of APB

EBIT (beia) for the second half of the year, and              In mid-November 2012, Heineken closed its
7% full-year growth to EUR2.88bn. We expect                   acquisition of Fraser & Neave’s shares of Asia
better second-half performance to be driven by a              Pacific Breweries (APB). APB had previously been
higher rate of pricing growth and strong results in           a joint venture between Heineken and Fraser &
emerging markets such as Mexico, Brazil, and                  Neave, of which Heineken held a 42% economic
Russia, as well as an easier comparison with the              interest. As of the deal close, Heineken owned over
second half of 2011.                                          95% of APB shares and made a mandatory general
                                                              offer for all of the remaining shares.

                                                              In 2011, APB generated 11.9m hl in volume, sales of
APB's market share in Southeast Asia
                                                              EUR1.24bn, and EBIT (beia) of EUR428m. We
Thailand                                                5%
Cambodia                                               66%    believe that Asia offers an attractive long-term
Malaysia                                               55%
Singapore                                              73%
                                                              growth opportunity for Heineken, and that full
Laos                                                    5%    ownership of APB will increase Heineken’s ability
Vietnam                                                17%
Indonesia                                              66%    to invest in this market, especially in the premium
Papua New Guinea                                       90%
                                                              beer segment.
Source: Company data



                                                                                                                        19
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     11 February 2013




Heineken: 2H12, FY12 and FY13 estimates (EURm)                 AME division, up 7%, offsetting a 1% decline at
                                         Consensus    HSBC     its Western Europe division.
4Q12                            2H11a        2H12e    2H12e
Sales                            8,765        9,455    9,423   In terms of sales, we estimate a 14% increase to
EBIT (beia)                      1,437        1,539    1,610   EUR20.8bn. This should be driven by recent
EBITDA (beia)                    1,999        2,227    2,126
Net profit (beia)                  884          934      940   acquisitions, along with Heineken’s focus on
EPS (EUR)                         1.53         1.61     1.64
Full-year 2012                  FY11a        FY12e    FY12e    segmentation, premiumization, and innovation
Sales                           17,123      18,261    18,209   across its markets. We believe that trading
EBIT (beia)                      2,697       2,620     2,875
EBITDA (beia)                    3,682       3,817     3,891
                                                               consumers up to more premium beverages will
Net profit (beia)                1,584       1,627     1,645   contribute to our 2013 forecast for a 4% increase in
EPS (EUR)                         2.70        2.82      2.86
Full-year 2013                              FY13e     FY13e    revenue per hectoliter.
Sales                                       20,477    20,767
EBIT (beia)                                  3,147     3,425   We expect EBIT (beia) to increase 19%
EBITDA (beia)                                4,484     4,517
                                                               (reflecting a 70bp increase in operating margin) to
Net profit (beia)                            1,876     1,809
EPS (EUR)                                     3.26      3.18   EUR3.4bn, led by 13% growth in AME and 8%
Source: HSBC, Bloomberg estimates                              growth in the Americas. This increase is driven by
                                                               acquisitions and strong pricing, combined with
Investments in emerging markets
                                                               Heineken’s TCM2 cost-savings program and
For 2012, Heineken stated that the focus of its                synergies from the FEMSA acquisition. We are
EUR1.2bn in capital expenditures would be on its               increasing our 2013 EBITDA estimate to
growth markets of Africa, Latin America, and Asia.             EUR4.5bn from EUR4.2bn. Our revised 2013
In Mexico, Heineken is beginning to regain share               EPS estimate is EUR3.18, up from EUR3.16
while maintaining strong pricing in the market and             previously, which represents an 11% year-over-
benefiting from changes made to its overall                    year growth rate.
portfolio following the FEMSA acquisition.
                                                               Raise TP to EUR56 from EUR47
Last year, Heineken hosted an investor conference
                                                               We maintain our Neutral rating on HEIA shares, but
focused on the potential for beer growth in Africa
                                                               we are increasing our target price to EUR56 from
and the Middle East (AME). Currently, AME
                                                               EUR47 to reflect our increased estimates, which
accounts for 12% of volume and revenue for
                                                               factor in Heineken’s acquisition of APB. We are
Heineken, and 19% of EBIT (beia). More
                                                               applying a market multiple of 9x to our 2013
important, the division is growing strongly, as
                                                               EBITDA estimate. On EV/EBITDA, this multiple is
revenue increased at a 15% CAGR and EBIT at a
                                                               still below the peer group average of 11.5x but above
19% CAGR over the last four years. From 2007 to
                                                               its historical average of 8.5x, considering Heineken’s
2011, AME generated 42% of Heineken’s total
                                                               recent expansionary and cost reduction efforts.
company organic EBIT growth.
                                                               Heineken is scheduled to report fiscal 2012 results
2013 outlook
                                                               on 13 February.
Our revised 2013 estimates reflect Heineken’s full
ownership of Asia Pacific Breweries, which                     Anadolu Efes, Neutral
should be accretive in its first year. We expect               Anadolu Efes is covered by HSBC analyst Bulent
10% total company volume growth in 2013,                       Yurdagul in Istanbul.
which includes the APB acquisition, or
approximately 4% organic volume growth. On an                  2012 performance
organic basis, we expect growth to be led by the               Anadolu Efes reported 18% growth in total sales
                                                               volumes for 2012. However, on a pro forma basis,

20
   Consumer Brands & Retail
   Global Beverages                                                                                                abc
   11 February 2013




volume growth was a mere 3% and was mainly on           believe that beer volume will remain weak in both
the back of 11.5% growth in the soft drink              countries over the medium term, considering the
segment. Even though reported beer volume               slow growth of the past two years, but we estimate
increased 23.5%, this was due to the deal with          2013 will reflect better performance on the back
SABMiller to combine their Russia and Ukraine           of the following factors:
units under Anadolu Efes’s control, with
                                                         In Turkey, going forward, tax increases will be
SABMiller taking a 24% stake in Efes. This deal
                                                          every six months and will be based on inflation,
was completed in March 2012.
                                                          which in our opinion should lessen concerns
Beer volume in Turkey increased 2% in 2012,               about slow volume growth in the country.
while international beer volume decreased 6% on a
                                                         In Russia, Anadolu Efes had seen a consistent
pro forma basis. The weak performance in
                                                          increase in its market share before the
international division was mainly due to the slow
                                                          acquisition of SABMiller operations.
growth in Russian beer volume, as well as market
                                                          However, following the acquisition, the
share losses in Russia due to SABMiller
                                                          market share of the combined entity in Russia
integration issues. International markets apart from
                                                          has declined, which we believe is mainly due
Russia reported much stronger volume growth in
                                                          to integration issues. We believe that in 2013,
the range of mid-single digits to low teens.
                                                          Anadolu Efes will see better volume in Russia
We estimate full-year 2012 revenue will increase          following resolution of these issues.
34% to TRY6.37bn and operating profit will
                                                        For 2013, we are estimating revenue will increase
increase 37% to TRY830m, most of which is
                                                        14% to TRY7.26bn and operating profit will
driven by the successful soft drink segment and
                                                        increase 14.6% to TRY950m, representing
addition of SABMiller’s business in Russia.
                                                        slight margin expansion. Our 2013 EPS estimate
Key drivers and concerns                                is TRY1.21, representing a 17% year-over-
Performance in Russia                                   year increase.
We believe that the key issue for Anadolu Efes is
its recent poor performance in Russia. The laggard      Russia: Beer market share by volume

performance was mainly due to SABMiller                                     3Q11     4Q11     1Q12   2Q12   3Q12

integration issues (all other international countries   Carlsberg            37.8     37.2    37.6   37.9   38.9
                                                        Efes /SABMiller      16.8     17.0    16.5   15.8   14.7
improved volume at least mid-single digits in           A-B InBev            16.5     15.5    14.7   14.6   14.7
2012), in addition to tougher regulations and           Heineken             12.1     12.8    13.1   13.1   12.7
                                                        Others               16.8     17.5    18.1   18.6   19.0
higher taxes on alcohol in the country. We believe
                                                        Source: Carlsberg
the worst is over in terms of the company’s
Russian operations, and we estimate a better            Maintain TRY30 target price
performance in 2013, following the resolution of        We are maintaining our Neutral rating and TRY
integration issues with SABMiller’s operations.         target price on Efes’s shares. Anadolu Efes is
                                                        currently trading at par with brewery peers in
2013 outlook                                            terms of one-year forward EV/EBITDA on HSBC
Although beer consumption in Turkey and Russia          estimates. We believe that this is justified, as we
is lower than the developed-market average,             estimate that the strong growth potential of the
volume growth in both countries has been under          soft drinks division represented by CCI will
pressure over the last few quarters, mainly due to      compensate for the laggard beer volumes.
the tax increases imposed by the governments. We

                                                                                                                     21
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     11 February 2013




Anadolu Efes: FY12 and FY13 estimates (TRYm)                      Tsingtao is planning to increase capacity by 6% this
                                            Consensus    HSBC     year and might incur higher operating expenses. The
Full-year 2012                  FY11a           FY12e    FY12e
                                                                  increase will likely be attributed to staff retentions
Sales                               4,761        6,405    6,371
EBIT                                  604          829      830
                                                                  and factory reconstruction when it expands capacity
EBITDA                                953        1,305    1,299   through acquisitions. Barley represented 13% of
Net profit                            341          663      613
EPS (TRY)                            0.58         1.13     1.04   total COGS in 2011, and we estimate the average
Full-year 2013                                  FY13e    FY13e    cost of barley will increase by 10% in 2013, as the
Sales                                           7,138    7,265
EBIT                                            1,006      950    Australian Bureau of Agricultural and Resource
EBITDA                                          1,545    1,495    Economics and Sciences (ABARES) recently
Net profit                                        770      718
EPS (TRY)                                        1.31     1.21    warned that dry weather has delayed planting and
Source: HSBC, Bloomberg estimates                                 could decrease barley production by 18% in fiscal
                                                                  year 2013 (March).
Tsingtao: Underweight
                                                                  2013 outlook
Tsingtao is covered by HSBC analyst Christopher
                                                                  For 2013, we estimate a 20.5% sales increase to
Leung in Hong Kong.
                                                                  RMB31.6bn, mainly boosted by market share
2012 performance                                                  gains in mass-market regions such as Hebei,
Overall, beer production volume in China was                      Shanxi, and Shaanxi provinces. We do not believe
exceptionally weak in fourth-quarter 2012, down                   that top-line growth will be driven by large
5% year-over-year, compared to up 1% between                      acquisitions, as there is a limited number of
January through September 2012, due to a high                     regional brewery companies, and valuations
comparison base and unfavorable weather. For                      remain expensive.
Tsingtao, sales volume in the fourth quarter may                  We project Tsingtao’s gross margin will decline
also have been weak; however, the impact on                       70bps this year to 30.5%, mainly due to the
earnings for 2012 should be minimal, as the                       change in revenue mix and higher raw-material
contribution from the quarter is less than 5% of                  costs. We also expect Tsingtao to incur higher
total earnings. We believe that Tsingtao will                     A&P expenses, which should reduce its EBIT
reduce A&P to offset the loss on the top line, as it              margin by 80bps to 7.8%. Our EPS estimate for
is a non-peak season for promotional activities.                  2013 is RMB1.50, an increase of 8.7% from the
For full-year 2012, we expect sales to increase                   prior year.
13.4% to RMB26.3bn. EBIT should increase 8% y-                    Maintain HKD35 target price
o-y to RMB2.27bn, marking a 50bp decline in EBIT
                                                                  We maintain our Underweight rating and HKD35
margin. Our EPS estimate for the year is RMB1.38.
                                                                  target price on Tsingtao shares. Our target price is
Key drivers and concerns                                          based on a 12-month forward PE of 19x, which is
Margin pressure                                                   taken from a multiple that is one standard
We believe Tsingtao will continue to face margin                  deviation below the group’s historical average PE
pressure over the next two years, given its strategy              of 26x since 2008, in line with the peer group
to promote lower-margin products for market                       average. We apply a discount to the historical
share and intense competition in the mass beer                    valuation, given a much lower growth profile over
market. In addition, there is pressure from higher                the next few years.
staff costs and barley prices.



22
    Consumer Brands & Retail
    Global Beverages                                                                                                   abc
    11 February 2013




Tsingtao: FY12 and FY13 estimates (RMBm)                      Our revised 2012 EPS estimate is USD3.87, up
                                         Consensus   HSBC     from our previous estimate of USD3.84 due to
Full-year 2012                  FY11a        FY12e   FY12e
                                                              better-than-expected third-quarter performance in
Sales                           23,158      26,203   26,261
EBIT                             2,101       2,339    2,270   the US.
EBITDA                           2,799       3,111    3,063
Net profit                       1,738       1,798    1,869   Key drivers and concerns
EPS (RMB)                         1.29        1.32     1.38
Full-year 2013                              FY13e    FY13e    Weak consumer and economic conditions
Sales                                       29,695   31,635   Molson Coors acquired StarBev, which operates in
EBIT                                         2,727    2,460
EBITDA                                       3,619    3,343   Central and Eastern Europe, for USD3.5bn in June
Net profit                                   2,072    2,031
EPS (RMBD)                                    1.55     1.50
                                                              2012. This was Molson Coors’ first large
Source: HSBC, Bloomberg estimates
                                                              investment in emerging markets. When justifying its
                                                              acquisition of StarBev to investors, Molson Coors
Molson Coors: Neutral                                         relied on the higher-than-average expected GDP
                                                              and beer industry growth rates of its acquired
2012 performance
                                                              territories, along with its ability to manage brewing
Through the first three quarters of 2012, Molson
                                                              operations better in those countries. In addition, the
had a story of better-than-expected performance in
                                                              company expects to generate USD50m in synergies
the US market, offsetting very difficult economic
                                                              (about 5% of net sales). However, we question the
and beer operating environments in the UK and
                                                              growth potential of the StarBev markets due to low
Canada. In addition, the third quarter marked the
                                                              consumer confidence and economic weakness over
addition of the StarBev territories and led to
                                                              the near term.
greater reported profit growth.
                                                              On its third-quarter conference call, Molson Coors
Through the first nine months of 2012 in the US,
                                                              noted that consumer demand in StarBev’s
operating income increased 12%, driven by strong
                                                              territories had “a real slowdown” during the
volume growth, better pricing, cost management
                                                              quarter, especially in September versus July and
initiatives, and easy comparisons. Strong volume
                                                              August. The company also noted that in virtually
growth was led by the Tenth and Blake (premium-
                                                              all of the StarBev’s markets, it saw GDP decline
focused) beer division, which has had double-digit
                                                              in 2012, compared with 2011. HSBC economists
growth in volume and contributed to mix benefits
                                                              expect GDP across these markets to decline in
for the overall company.
                                                              2012, with only a modest increase in 2013.
UK operating income for the nine months
                                                              2013 outlook
decreased slightly more than 50%, hurt by
                                                              We expect 10.5% volume growth on a reported basis
increased pension expenses and higher input
                                                              in 2013 and a 1% decline on an organic basis. Slight
costs, and a 4% decline in volume. In Canada,
                                                              growth in the US, Canada, and Europe should be
operating income decreased 7% over the same
                                                              offset by continued declines in the UK. We forecast
period, hurt by high levels of competition, volume
                                                              a 13% in increase in net revenue to USD4.5bn and a
declines, and increases in marketing expenses.
                                                              7.5% increase in operating income to USD1.1bn.
For full-year 2012, we expect total company                   We expect better performance in the US, as
volume to increase 14% (due to the acquisition of             rebounding industry volume and premium brands
StarBev), with 0.5% organic growth. Sales should              should drive growth for Molson Coors, along with
grow 13.5% to USD3.99bn and operating income                  the acquisition of StarBev.
should improve 7% to USD1bn, reflecting a
150bp contraction in operating margin to 25%.
                                                                                                                         23
     Consumer Brands & Retail
     Global Beverages                                                                                                    abc
     11 February 2013




For 2013, we are lowering our EPS estimate to                     Volume growth in 2012 was driven by strong
USD3.98 from USD4.03. This slight decrease                        volume from Angry Orchard and Twisted Tea
reflects lower volume estimates for StarBev                       brands, as well as Samuel Adams Seasonals, which
territories, as well as the continuation of difficult             are offsetting weaker performance in other Samuel
industry conditions in Canada and the UK.                         Adams styles. Boston Beer is focusing on its Tea
                                                                  and Angry Orchard brands in reaction to a greater
Maintain USD47 target price                                       emphasis on above-premium adjacent categories by
We are maintaining our Neutral rating on TAP                      bigger brewers in the US. Both of these brands are
shares and our target price of USD47, with limited                benefiting from significant gains in distribution in
changes to our estimates for 2012 and 2013. We                    2012, especially Angry Orchard, which was
continue to apply an 11.5x PE multiple to our new                 introduced only in the second half of 2011.
2013 EPS estimate to reach our target price,
                                                                  For full-year 2012, we are expecting volume
which represents what we regard as a warranted
                                                                  growth of 11%, cycling 9.5% growth last year.
discount to the peer group based on Molson
                                                                  We expect 14% revenue growth to USD587m,
Coors’ lack of organic growth opportunities.                      helped by a 3% increase in revenue per barrel.
Molson Coors: 4Q12, FY12 and FY13 estimates (USDm)                Gross margin should decline 20bps for the year to
                                            Consensus    HSBC     55.3%, due to higher input costs and additional
4Q12                            4Q11a           4Q12e    4Q12e    complexity within the business. Operating income
Sales                              937           1,074    1,105   should increase 15% to USD95.5m, reflecting
EBIT                               215             146      191
EBITDA                             271             231      266   10bp operating margin expansion to 16.3% due to
Net profit                         177             117      119   greater leverage from higher volume.
EPS (USD)                         0.97            0.64     0.66
Full-year 2012                  FY11a           FY12e    FY12e
                                                                  Our revised 2012 EPS estimate is USD4.44, up
Sales                               3,517        3,967    3,991
EBIT                                  933          865      999   from USD4.16. Our increased estimates reflect a
EBITDA                              1,150        1,179    1,266   stronger-than-expected third quarter and increased
Net profit                            698          669      704
EPS (USD)                            3.76         3.85     3.87   guidance for the year. Our full-year EBITDA
Full-year 2013                                  FY13e    FY13e
                                                                  estimate is USD116m, a 13.5% increase from a
Sales                                           4,468    4,504
EBIT                                              957    1,073    year earlier.
EBITDA                                          1,293    1,353
Net profit                                        718      723    Key drivers and concerns
EPS (USD)                                        3.99     3.98
Source: HSBC, Bloomberg estimates
                                                                  Increasing competition in craft beer
                                                                  The US craft beer industry has been growing
Molson Coors is scheduled to report fourth-                       faster than the overall US beer industry, which has
quarter and full-year 2012 results on 14 February.                driven a rush of investment into the category.
                                                                  Leading US brewers Anheuser-Busch InBev and
Boston Beer: Underweight                                          MillerCoors are primarily focusing on investing
2012 performance                                                  behind a leading craft brand, with many smaller
                                                                  supporting brands. On the micro-brewery end of
In mid-December, Boston Beer issued positive
                                                                  the spectrum, Boston Beer CEO Jim Koch has
guidance updates for both 2012 and 2013. It
                                                                  estimated that there are “probably 100 new
raised its 2012 EPS guidance range to USD4.30-
                                                                  breweries being introduced every year.” We
4.60 from USD3.80-4.20. This increase was
                                                                  therefore expect Boston Beer to face more
primarily due to increased shipment volume and
                                                                  significant competition in 2013, both in terms of
the timing of certain selling, general, and
                                                                  pricing and securing shelf space.
administrative expenses. The company projects
full-year 2012 depletions growth of 11-13%.

24
    Consumer Brands & Retail
    Global Beverages                                                                                                       abc
    11 February 2013




Growth in the cider market                                       2013 outlook
In addition to pursuing growth in the craft beer                 In December, Boston Beer increased its 2013
category, both Boston Beer and the leading                       depletions growth guidance to 10-15% from its
domestic brewers are looking for growth in                       previously communicated guidance for high
adjacent categories. This is a smaller category for              single-digit growth. We believe this forecast
the large brewers but can be higher-margin and                   includes a significant contribution from Twisted
higher-growth. We view Boston Beer’s push into                   Tea and Angry Orchard. Boston Beer does not
adjacent categories as an opportunity for the                    break down the volume of its individual brands,
company to establish itself earlier in a growing                 but we expect its beer volume growth to lag
market. We also note the risks to Boston Beer, as                slightly behind the overall craft industry due to the
making significant investments in emerging                       proliferation of new craft brands.
categories might not provide the same return on
investment as further investment in craft beer.                  We expect 2013 volume growth of 12% and sales
                                                                 growth of 14% to USD668m. Operating income
Increasing complexity                                            should grow 8% to USD103m, reflecting an 80bp
Boston Beer has guided to capital investments of                 margin contraction to 15.5% due to higher
USD55-75m for 2012 and USD55-65m for 2013,                       investment and complexity in Boston Beer’s
before returning to a lower long-term run-rate                   operations. Our revised EPS estimate is USD4.91,
(2011 capex was USD20m). This increased                          up from our previous USD4.61estimate, now
investment is in response to competitive pressures               representing10.5% growth.
with the craft beer industry. The company is
investing in its production lines to handle greater              Raise TP to USD120 from USD103
complexity behind the greater importance of its                  We reiterate our Underweight rating on Boston
long-tail brands. We expect this additional                      Beer and continue to believe that SAM shares are
investment and complexity to negatively affect                   expensive relative to peers, even accounting for its
earnings in 2013.                                                strong volume growth potential.

Boston Beer: 4Q12, FY12, and FY13 estimates (USDm)
                                                                 We are raising our price target to USD120 from
                                                                 USD103, as Boston Beer has continued to exceed
                                           Consensus    HSBC
4Q12                            4Q11a          4Q12e    4Q12e    our volume growth expectations, mainly led by
Sales                              142            153      160   the emergence of Twisted Tea and Angry Orchard
EBIT                                26             27       27
EBITDA                              31             33       32   as important drivers of current growth. However,
Net profit                          16             16       17   we see increasing levels of competition in the
EPS (USD)                         1.17           1.23     1.27
Full-year 2012                  FY11a          FY12e    FY12e    craft beer space as a significant risk to Boston
Sales                                513          574      587   Beer over the next several years, and we do
EBIT                                  83           93       96
EBITDA                               102          114      116   believe that this is not fully reflected in the shares.
Net profit                            52           59       59
EPS (USD)                           3.73         4.40     4.44   Boston Beer is scheduled to report fourth-quarter
Full-year 2013                                 FY13e    FY13e
                                                                 and full-year 2012 results on 20 February.
Sales                                             637      668
EBIT                                              105      104
EBITDA                                            128      124
Net profit                                         66       64
EPS (USD)                                        4.95     4.91
Source: HSBC, Bloomberg estimates




                                                                                                                             25
     Consumer Brands & Retail
     Global Beverages                                                                                                                                                                      abc
     11 February 2013




Brewers: Valuations and risks
 Name/ticker           Rating Valuation                                                                                                                    Risks

                            We value A-B InBev local shares primarily on EV/EBITDA. On this metric, A-B InBev                                             Downside risks, we believe, include further deterioration in
                            stock is trading at 10.3x our 2013 EBITDA estimates, respectively, below the peer                                             market and industry conditions, higher commodity costs,
                            group average (consisting of six global brewers) of 11-12x. We expect multiple                                                currency risk resulting in higher local procurement costs and a
                            expansion over the next year closer to 12x, implying a local share target price of                                            greater translation hit to earnings, increased competitive and
  A-B InBev
                         OW EUR74.                                                                                                                        pricing pressure, as well as regulatory issues associated with
 (ABI, BUD)                 Under our research model, for stocks without a volatility indicator, the Neutral band is                                      the closing of the Grupo Modelo acquisition.
                            5pptS above and below our hurdle rate for European stocks of 9%. Our EUR74 target
                            price represents a potential return, including a 2% dividend yield, of 17.4%, which is
                            above the Neutral band; thus, we reiterate our Overweight rating on the shares.

                                 For Ambev ADRs, our new12-month target prices of USD49 from USD44 (BRL97 from                                            Downside risks, we believe, include weakening consumer
                                 BRL90 for the local shares) represent a relative (to an aggregate Brazilian market                                       sentiment, increased competition and loss of share in the
                                 index, compiled by FactSet) F/PE multiple of 2.5x, 28x 2013e PE multiple, and 18.5x                                      Brazilian beer market, price discounting in Canada, a
                                 2013e EV/EBITDA multiple. On EV/EBITDA, Ambev shares are trading at 17.8x our                                            worse-than-expected impact from higher taxes in Brazil,
   Ambev                         increased 2013 EBITDA estimate, above the peer group average of 11x. Under our                                           and increasing raw material costs.
                           N
(ABV, AMBV4)                     research model, for stocks without a volatility indicator, the Neutral band is 5ppts above                               Upside risks that we see include stronger-than-expected
                                 and below our hurdle rate for Brazilian stocks of 11%. Our target price suggests a                                       consumer conditions in Brazil, greater pricing power, and
                                 potential return, including a 2.3% dividend yield, of 7.1%, which is within the Neutral                                  lower input costs.
                                 band; thus, we are reiterating our Neutral rating on Ambev shares.

                                 For CCU shares, we have revised 12-month target prices of USD33 for the ADRs and                                         Downside risks to CCU, in our view, include a competitive
                                 CLP7,800 for the local shares. Our local share target price is derived by USD33*472                                      pricing environment in its core markets, inflationary risk
                                 (exchange rate) divided by 2 (each ADR is 2 local shares). On EV/EBITDA, CCU is                                          (particularly in Argentina), and exchange rate risk.
                                 trading at 10.3x our 2013 EBITDA estimate, in line with its historical multiple and just                                 Upside risks, we believe, include stronger consumption
       CCU                       below the peer group average (consisting of global brewers). We expect multiple                                          trends in its markets, geographic and product portfolio
      (CCU,                N     expansion over the next year, to 11x, more in line with the peer average, which                                          expansion, and a lessening of raw material cost pressures.
     CCU.SN)                     implies a target price of USD33. Under our research model, for stocks without a
                                 volatility indicator, the Neutral band is 5ppts above and below our hurdle rate for
                                 Chilean stocks of 8.5%. Our USD33 local share target price suggests an 8.2%
                                 potential return (including a 2.6% dividend yield), which is within the Neutral band;
                                 thus, we reiterate our Neutral rating on the stock.

                                 Our revised MXN116 target price, down from MXN122, reflects the tender price of the                                      The primary risk to the downside is termination of the deal
                                 ABI-Modelo deal and represents an F/PE multiple, relative to an aggregate Mexican                                        with A-B InBev, in our view, and the primary risk to the
                                 market index compiled by FactSet of 2x, a 29x 2013e PE multiple, and 11x 2013e                                           upside is depreciation of the MXN relative to the USD.
Grupo Modelo                     EV/EBITDA. Under our research model, for stocks without a volatility indicator, the
                           N
(GMODELOC)                       Neutral band is 5ppts around our hurdle rate for Mexican stocks of 9%. Our new target
                                 price of MXN116 represents a potential return, including a 3.9% dividend yield, of
                                 7.8%, which is within the Neutral band; thus, we reiterate our Neutral rating.

                                 Our revised target price of 3,350p, up from 2,950p, represents a relative – to an                                        We believe that upside risks include a notable improvement
                                 aggregate UK market index, compiled by FactSet – F/PE multiple of 1.9x, a 20x                                            in macroeconomic conditions, an easing of cost pressures,
                                 calendar 2013e PE multiple, and a 13.5x calendar 2013e EV/EBITDA multiple. Based                                         and SABMiller’s ability to out-execute its competitors during
                                 on EV/EBITDA, SABMiller stock is trading at 12.9x our calendar 2013 EBITDA                                               economic volatility. Downside risks, in our view, include
     SABMiller                   estimate, above the peer group at 11-12x. Under our research model, for stocks                                           further deterioration in market and industry conditions,
                           N
     (SAB.LN)                    without a volatility indicator, the Neutral band is 5ppts above and below our hurdle                                     acquisition and currency risk, and increasing competitive,
                                 rate for UK stocks of 7.5%. Our 3,350p target price suggests a potential return,                                         cost, and pricing pressures.
                                 including a 1.8% dividend yield, of 7.2%, which is within the Neutral band; thus, we
                                 reiterate our Neutral rating on the stock.

                                 Our new local share target price of EUR56, up from EUR47, represents a relative (to                                      Downside risks, in our view, include further deterioration in
                                 an aggregate market index) F/PE multiple of 1.7x, 2013e PE multiple of 17.5x, and                                        market and industry conditions, rising costs, and increasing
                                 2013e EV/EBITDA multiple of 9x. Heineken shares are trading at 8.5x our 2013                                             competitive and pricing pressure. Upside risks, we believe,
                                 EBITDA estimate, below the peer group average of 11-12x. Under our research                                              include a notable improvement in macroeconomic
     Heineken                    model, for stocks without a volatility indicator, the Neutral band is 5ppts above and                                    conditions, easing cost pressures, and greater than-
                           N
     (HEIA AE)                   below our hurdle rat for European stocks of 9%. Our revised 12-month, local share                                        expected cost savings.
                                 target price of EUR56 suggests a potential return, including a 1.6% dividend yield, of
                                 8.2%, which is within the Neutral band; thus, we are reiterating our Neutral rating on
                                 the shares.
 HSBC ratings: OW = Overweight, N = Neutral, UW = Underweight; V = Volatile.
 Potential return equals the percentage difference between the current share price and the target price, including the forecast dividend yield when indicated.
 Source: HSBC




26
     Consumer Brands & Retail
     Global Beverages                                                                                                                                                                      abc
     11 February 2013




                                   We value the company using a sum-of-the-parts analysis. We value the domestic and                                        The main upside risk, we believe, is better-than-expected
                                   international beer business on a brewery peer multiple comparison. For our peer                                          growth of the international operation following the alliance
                                   group comparison, we used EV/EBITDA multiples of 12x for 2013e. For the soft drink                                       with SABMiller, and higher-than-expected margin expansion
                                   operations, we use our target price for Coca-Cola Icecek (CCOLA TI, N, TP                                                at the Turkish operations.
                                   TRY47.3). For Alternatifbank (not rated), we use its current market capitalization of                                    The major downside risk that we see is a continuation of
 Anadolu Efes                      TRY1,016m (up from TRY475m). Our target price for Anadolu Efes is TRY30.0,                                               weak beer volumes in the company’s major markets, Turkey
                            N
   (AEFES)                         mainly owing to a higher valuation of Coca-Cola Icecek. Under our research model,                                        and Russia, as well as higher-than-expected raw material
                                   for stocks without a volatility indicator, the Neutral band is 5ppts above and below the                                 prices leading to lower margins.
                                   hurdle rate for Turkish stocks of 12.5%. Our target price of TRY30.0 implies a
                                   potential return of c15%, which is within the Neutral band; therefore, we reiterate our
                                   Neutral rating on Anadolu Efes shares.

                              Our target price of HKD35 is based on a 19x 12-month forward PE, which is taken                                               Upside risks, in our view, include better-than-expected
                              from a multiple that is one standard deviation below the group’s historical average PE                                        gross margins due to a higher-than-expected price
                              of 26x since 2008, in line with the peer group average. We apply a discount to the                                            increase or lower-than-expected input cost inflation, any
     Tsingtao                 historical valuation, given a much lower growth profile over the next few years. Under                                        earnings-accretive M&A transactions or government
                           UW
     (168 HK)                 our research model, the Neutral rating band for non-volatile China equities is 5ppts                                          subsidies, a lower-than-expected effective tax rate, and
                              above and below our hurdle rate for Chinese stocks of 9.5%. Our target price of                                               much faster-than-expected top-line growth due to market
                              HKD35 implies a negative potential return of c25% (including 0.8% forecast dividend                                           share gains.
                              yield), which is below the Neutral band; we therefore reiterate our Underweight rating.

                                   Molson Coors stock is trading at a 43% discount to its peers based on PE, below its                                      Risks to the downside, in our view, include increased price
                                   historical discount (over three years) of 30%. We are applying an 12x PE multiple on                                     competition, increases in excise taxes or other regulatory
                                   our new 2013 EPS estimate of USD3.98 to reach our 12-month target price of USD47                                         issues, and execution and integration risk in Central
                                   price, which represents a relative to the S&P 500 F/PE multiple of 0.9x, and a 38%                                       Europe. Potential risks to the upside, we believe, include
Molson Coors                       discount to its peer group. On an EV/EBITDA basis, Molson Coors stock is trading at                                      greater-than expected industry growth across the
                            N
    (TAP)                          9.2x our 2013 EBITDA estimate of USD1.35bn, below its peer group. Under our                                              company’s markets, an increase in the scope or speed of
                                   research model, for stocks without a volatility indicator, the Neutral band is five                                      cost saving programs, and market share gains due to
                                   percentage points above and below our hurdle rate for US stocks of 7%. Our new                                           better execution in the US.
                                   target price implies a potential return, including a 2.9% dividend yield, of 8.7%, which is
                                   within the Neutral band; thus, we reiterate our Neutral rating.

                              Boston Beer stock is trading at 31.5x our new 2012 EPS estimate of USD4.44 and                                                Upside risks, in our view, include the company’s ability to
                              28.5x our new 2013 EPS estimate of USD4.91. This 2013 multiple represents a 57%                                               take and hold significant price increases in the market,
                              premium to the peer group, above its historical premium of 42%. Compared to the                                               greater benefits from the Freshest Beer program, better-
                              S&P Mid Cap Index, Boston Beer stock is trading at a 81% premium versus 50%                                                   than-expected volume growth, and increased efficiency at
                              historically. Given the specific risks that the company faces in 2012 and 2013, we do                                         its Pennsylvania brewery.
  Boston Beer                 not believe the stock will see a significant expansion from current levels. The stock is
                           UW
    (SAM)                     trading at 14.8x our 2013 EBITDA estimate of USD124m, above its peer group
                              average of 11.5x. We expect a multiple contraction to 12.5x, which implies a target
                              price of USD120. Under our research model, for stocks without a volatility indicator,
                              the Neutral band is 5ppts above and below our hurdle rate for US stocks of 7%. Our
                              USD120 target price suggests a potential return of minus-14.1%, which is below the
                              Neutral band; thus, we reiterate our Underweight rating on SAM shares.

HSBC ratings: OW = Overweight, N = Neutral, UW = Underweight; V = Volatile.
Potential return equals the percentage difference between the current share price and the target price, including the forecast dividend yield when indicated.
Source: HSBC




                                                                                                                                                                                                                     27
     Consumer Brands & Retail
     Global Beverages                                                                                                                            abc
     11 February 2013




Financials & valuation: A-B InBev                                                                                                                    Overweight
Financial statements                                                      Valuation data
Year to                       12/2011a   12/2012e   12/2013e   12/2014e   Year to                          12/2011a            12/2012e          12/2013e        12/2014e
Profit & loss summary (USDm)                                              EV/sales                                4.2               4.0               3.7             3.3
                                                                          EV/EBITDA                              11.3              11.1              10.3             9.6
Revenue                         39,045     39,948     42,292     45,195   EV/IC                                   2.0               1.9               1.8             1.7
EBITDA                          15,357     15,573     16,749     18,117   PE*                                    21.2              18.3              16.8            15.3
Depreciation & amortisation     -2,747     -2,760     -2,898     -3,030   P/Book value                            3.6               3.1               2.7             2.4
Operating profit                12,610     12,813     13,851     15,087   FCF yield (%)                           6.1               6.0               6.4             7.0
Net interest                    -2,597     -1,858     -1,691     -1,640   Dividend yield (%)                      1.3               2.0               2.2             2.4
PBT                             10,636     11,614     12,910     14,247
Taxation                        -2,083     -1,973     -2,582     -3,134   Note: * = Based on HSBC EPS (fully diluted)
Net profit                       6,449      7,477      8,178      8,962
Cash flow summary (USDm)
                                                                          Issuer information
Cash flow from operations       11,946     12,477     13,227     13,682                                                                                                  1




                                                                          Share price (EUR)          64.13                      Target price (EUR)      74.00
                                                                                                                                                                         5.
                                                                                                                                                                         4




Capex                           -3,376     -3,200     -3,264     -3,362
Cash flow from investment       -2,728     -4,505     -3,554     -3,542   Reuters (Equity)                      ABI.BR          Bloomberg (Equity)            ABI BB
Dividends                       -3,243     -3,407     -3,577     -3,756   Market cap (USDm)                    137,098          Market cap (EURm)            102,604
Change in net debt              -5,532     -4,567     -5,894     -6,396   Free float (%)                             95         Enterprise value (USDm)      173,268
FCF equity                       8,000      7,852      8,429      9,116   Country                              Belgium          Sector                    Beverages
                                                                          Analyst                         Lauren Torres         Contact              +1 212 525 6972
Balance sheet summary (USDm)
Intangible fixed assets         75,120     76,109     77,113     78,656
Tangible fixed assets           18,044     18,577     19,249     19,905     Price relative
Current assets                  12,323     13,826     17,420     21,431         79                                                                                 79
Cash & others                    5,320      6,391      9,357     12,839
Total assets                   112,427    115,525    120,888    127,166         69                                                                                 69
Operating liabilities           19,073     18,804     19,812     20,990
Gross debt                      40,157     36,661     33,732     30,819         59                                                                                 59
Net debt                        34,837     30,270     24,376     17,980
Shareholders funds              37,492     43,908     50,729     58,264         49                                                                                 49
Invested capital                81,094     83,317     84,614     86,163
                                                                                39                                                                                 39

                                                                                29                                                                                  29
Ratio, growth and per share analysis                                              2011                          2012                    2013                    2014
                                                                                                                    AB InBev     Rel to BEL-20
Year to                       12/2011a   12/2012e   12/2013e   12/2014e
                                                                            Source: HSBC
Y-o-y % change
Revenue                            7.6        2.3        5.9        6.9   Note: price at close of 08 Feb 2013
EBITDA                            10.7        1.4        7.5        8.2
Operating profit                  12.9        1.6        8.1        8.9
PBT                               19.8        9.2       11.2       10.4
HSBC EPS                          27.8       15.6        9.3        9.6
Ratios (%)
Revenue/IC (x)                     0.5        0.5        0.5        0.5
ROIC                              12.3       12.9       13.2       13.8
ROE                               17.7       18.4       17.3       16.4
ROA                                9.4        9.8        9.9       10.0
EBITDA margin                     39.3       39.0       39.6       40.1
Operating profit margin           32.3       32.1       32.8       33.4
EBITDA/net interest (x)            5.9        8.4        9.9       11.0
Net debt/equity                   84.9       63.5       44.6       28.8
Net debt/EBITDA (x)                2.3        1.9        1.5        1.0
Per share data (USD)
EPS (fully diluted)               4.05       4.68       5.11       5.60




28
    Consumer Brands & Retail
    Global Beverages                                                                                                                         abc
    11 February 2013




Financials & valuation: Ambev                                                                                                                             Neutral
Financial statements                                                      Valuation data
Year to                       12/2011a   12/2012e   12/2013e   12/2014e   Year to                          12/2011a         12/2012e          12/2013e         12/2014e
Profit & loss summary (BRLm)                                              EV/sales                               10.4              9.0              8.1             7.4
                                                                          EV/EBITDA                              18.5             18.9             17.8            17.1
Revenue                         27,127     31,543     34,526     37,680   EV/IC                                  14.7             11.4             10.9            10.3
EBITDA                          13,141     15,207     16,875     18,739   PE*                                    28.3             28.2             26.6            25.3
Depreciation & amortisation     -1,455     -1,721     -1,802     -1,858   P/Book value                           11.2             10.2              8.8             7.6
Operating profit                11,686     13,486     15,073     16,881   FCF yield (%)                           2.7              3.6              3.6             3.9
Net interest                      -468       -693       -623       -592   Dividend yield (%)                      1.9              2.3              2.4             2.6
PBT                             11,218     12,794     14,450     16,289
Taxation                        -2,522     -2,384     -2,974     -3,421   Note: * = Based on HSBC EPS (fully diluted)
Net profit                       8,618     10,310     11,372     12,754
Cash flow summary (BRLm)
                                                                          Issuer information
Cash flow from operations       12,607     13,973     13,978     15,332                                                                                                 4.




                                                                          Share price (USD)          46.74                    Target price (USD)      49.00
                                                                                                                                                                        8




Capex                           -3,173     -2,500     -2,500     -3,000
Cash flow from investment       -2,203     -4,925     -2,425     -2,925   Reuters (Equity)                       ABV.N        Bloomberg (Equity)           ABV US
Dividends                       -5,476     -7,500     -7,000     -7,500   Market cap (USDm)                    145,753        Market cap (BRLm)            288,163
Change in net debt              -4,785      2,991     -3,454     -3,800   Free float (%)                             10       Enterprise value (USDm)      145,260
FCF equity                       7,574     10,334     10,293     11,156   Country                                 Brazil      Sector                    Beverages
                                                                          Analyst                         Lauren Torres       Contact              +1 212 525 6972
Balance sheet summary (BRLm)
Intangible fixed assets         19,481     23,000     23,690     24,401
Tangible fixed assets            9,265     10,044     10,743     11,885     Price relative
Current assets                  14,680     12,815     16,838     21,276         61                                                                               61
Cash & others                    8,076      4,899      8,176     11,806         56                                                                               56
Total assets                    46,139     48,687     54,218     60,639
                                                                                51                                                                               51
Operating liabilities           16,208     16,067     17,424     18,787
Gross debt                       4,102      3,916      3,738      3,569         46                                                                               46
Net debt                        -3,974       -983     -4,437     -8,237         41                                                                               41
Shareholders funds              25,611     28,390     32,730     37,953         36                                                                               36
Invested capital                19,141     24,894     25,670     26,968         31                                                                               31
                                                                                26                                                                               26
                                                                                21                                                                                21
Ratio, growth and per share analysis                                              2011                          2012                  2013                    2014
                                                                                                                Ambev      Rel to BOVESPA INDEX
Year to                       12/2011a   12/2012e   12/2013e   12/2014e
                                                                            Source: HSBC
Y-o-y % change
Revenue                            7.5       16.3        9.5        9.1   Note: price at close of 08 Feb 2013
EBITDA                            12.3       15.7       11.0       11.0
Operating profit                  14.9       15.4       11.8       12.0
PBT                               13.8       14.0       12.9       12.7
HSBC EPS                          11.0       19.2       10.0       12.0
Ratios (%)
Revenue/IC (x)                     1.3        1.4        1.4        1.4
ROIC                              43.9       49.8       47.4       50.7
ROE                               34.5       38.2       37.2       36.1
ROA                               20.4       23.1       23.3       23.2
EBITDA margin                     48.4       48.2       48.9       49.7
Operating profit margin           43.1       42.8       43.7       44.8
EBITDA/net interest (x)           28.1       22.0       27.1       31.6
Net debt/equity                  -15.4       -3.4      -13.4      -21.5
Net debt/EBITDA (x)               -0.3       -0.1       -0.3       -0.4
Per share data (BRL)
EPS (BRL)                         2.77       3.30       3.63       4.06
EPS (USD)                         1.65       1.66       1.76       1.85




                                                                                                                                                                       29
     Consumer Brands & Retail
     Global Beverages                                                                                                                                abc
     11 February 2013




Financials & valuation: CCU                                                                                                                                        Neutral
Financial statements                                                          Valuation data
Year to                       12/2011a    12/2012a    12/2013e    12/2014e    Year to                          12/2011a             12/2012a         12/2013e            12/2014e
Profit & loss summary (CLPm)                                                  EV/sales                                2.4                  2.1              2.1               1.9
                                                                              EV/EBITDA                              11.8                 11.1             10.3               9.8
Revenue                        969,547    1,075,689   1,200,840   1,327,194   EV/IC                                   3.1                  3.1              2.5               2.4
EBITDA                         226,166      234,103     248,682     270,590   PE*                                    21.0                 21.1             18.7              17.4
Depreciation & amortisation    -47,782      -54,773     -59,352     -64,418   P/Book value                            8.3                  7.7              7.1               6.5
Operating profit               178,384      179,330     189,329     206,172   FCF yield (%)                           4.6                  4.8              4.7               5.1
Net interest                    -7,331       -9,366      -9,903     -10,398   Dividend yield (%)                      2.5                  2.6              2.8               3.0
PBT                            166,830      160,814     174,456     194,373
Taxation                       -35,809      -36,839     -34,891     -38,875   Note: * = Based on HSBC EPS (fully diluted)
Net profit                     118,971      114,431     128,365     143,498
Cash flow summary (CLPm)
                                                                              Issuer information
Cash flow from operations      167,370      93,912     182,096      196,966                                                                                                      5.




                                                                              Share price (USD)          31.27                        Target price (USD)        33.00
                                                                                                                                                                                 5




Capex                          -77,847     -85,632     -94,195     -103,614
Cash flow from investment      -76,240     -89,578     -87,695      -97,114   Reuters (Equity)                      CCU.N             Bloomberg (Equity)           CCU US
Dividends                      -62,793     -69,261     -74,802      -80,786   Market cap (USDm)                       4,980           Market cap (CLPbn)             2,353
Change in net debt             -11,957      92,264     -11,199      -10,665   Free float (%)                           33.9           Enterprise value (USDm)        5,318
FCF equity                     105,179     102,266     109,692      117,702   Country                                 Chile           Sector                    Beverages
                                                                              Analyst                         Lauren Torres           Contact              +1 212 525 6972
Balance sheet summary (CLPm)
Intangible fixed assets         110,614     115,827     130,000     132,600
Tangible fixed assets           575,756     612,329     672,171     712,617     Price relative
Current assets                  542,545     495,888     517,788     576,360         35                                                                                      35
Cash & others                   177,664     102,337     123,536     144,202         33                                                                                      33
Total assets                  1,298,491   1,326,448   1,355,985   1,461,393         31                                                                                      31
Operating liabilities           290,189     259,656     216,151     238,895         29                                                                                      29
Gross debt                      247,060     263,997     273,997     283,997         27                                                                                      27
Net debt                         69,396     161,660     150,461     139,795         25                                                                                      25
Shareholders funds              568,976     613,220     666,783     729,495         23                                                                                      23
Invested capital                761,062     746,224     980,272   1,038,481
                                                                                    21                                                                                      21
                                                                                    19                                                                                      19
                                                                                    17                                                                                      17
Ratio, growth and per share analysis                                                  2011                          2012                      2013                      2014
                                                                                                            CCU             Rel to CHILEAN IGPA GENERAL INDEX
Year to                       12/2011a    12/2012e    12/2013e    12/2014e
                                                                                Source: HSBC
Y-o-y % change
Revenue                            15.7        10.9        11.6        10.5   Note: price at close of 08 Feb 2013
EBITDA                             12.8         3.5         6.2         8.8
Operating profit                   14.9         0.5         5.6         8.9
PBT                                18.5        -3.6         8.5        11.4
HSBC EPS                           11.8        -3.8        12.2        11.8
Ratios (%)
Revenue/IC (x)                      1.3         1.4         1.4         1.3
ROIC                               19.4        18.3        17.5        16.3
ROE                                22.1        19.4        20.1        20.6
ROA                                11.2        10.0        11.0        11.6
EBITDA margin                      23.3        21.8        20.7        20.4
Operating profit margin            18.4        16.7        15.8        15.5
EBITDA/net interest (x)            30.9        25.0        25.1        26.0
Net debt/equity                    10.1        22.8        19.6        16.7
Net debt/EBITDA (x)                 0.3         0.7         0.6         0.5
Per share data (CLP)
EPS (CLP)                       373.53      359.28      403.03      450.54
EPS (USD)                         1.49        1.48        1.67        1.80




30
    Consumer Brands & Retail
    Global Beverages                                                                                                                      abc
    11 February 2013




Financials & valuation: Grupo Modelo                                                                                                                        Neutral
Financial statements                                                      Valuation data
Year to                       12/2011a   12/2012a   12/2013e   12/2014e   Year to                          12/2011a      12/2012a           12/2013e            12/2014e
Profit & loss summary (MXNm)                                              EV/sales                                2.3          2.2                    2.0              1.8
                                                                          EV/EBITDA                              12.8         11.5                   10.8             10.0
Revenue                         91,006     99,297    104,269    111,665   EV/IC                                   2.5          2.5                    2.4              2.3
EBITDA                          25,862     28,869     30,841     33,198   PE*                                    30.5         29.3                   28.1             26.3
Depreciation & amortisation     -4,748     -4,789     -5,124     -5,329   P/Book value                            4.4          4.6                    4.6              4.2
Operating profit/EBIT           22,004     25,107     26,817     29,024   FCF yield (%)                           5.6          4.1                    6.0              6.9
Net interest                     1,752        397        350        400   Dividend yield (%)                      3.1          3.9                    4.2              4.4
PBT                             23,756     25,504     27,167     29,424
Taxation                        -5,472     -6,588     -7,335     -7,945   Note: * = Based on HSBC EPS (fully diluted)
Net profit                      11,825     12,344     12,891     13,747
Cash flow summary (MXNm)
                                                                          Issuer information
Cash flow from operations       24,697     21,543     26,992     29,760                                                                                                  3.




                                                                          Share price (MXN) 111.69                        Target price (MXN)           116.00
                                                                                                                                                                         6




Capex                           -3,853     -4,966     -4,953     -5,025
Cash flow from investment       -4,064     -5,241     -5,226     -5,273   Reuters (Equity)  GMODELOC.MX                   Bloomberg (Equity) GMODELOC MM
Dividends                      -12,045    -19,100    -16,000    -16,000   Market cap (USDm)         28,200                Market cap (MXNm)            361,404
Change in net debt              -8,457      2,798     -5,767     -8,486   Free float (%)                 20               Enterprise value (MXNm)      332,285
FCF equity                      13,667      9,963     14,704     16,835   Country                   Mexico                Sector                  BEVERAGES
                                                                          Analyst             Lauren Torres               Contact              +1 212 525 6972
Balance sheet summary (MXNm)
Intangible fixed assets          8,583      8,841      9,106      9,379
Tangible fixed assets           68,929     69,043     69,235     69,229     Price relative
Current assets                  51,788     47,858     56,047     65,906         126                                                                              126
Cash & others                   32,271     29,119     35,239     43,726
                                                                                116                                                                              116
Total assets                   127,809    124,696    134,388    144,514
Operating liabilities           11,531     11,749     12,228     12,930         106                                                                              106
Gross debt                           0          0          0          0          96                                                                              96
Net debt                       -32,271    -29,473    -35,239    -43,726
                                                                                 86                                                                              86
Shareholders funds              81,563     79,382     79,212     85,809
Invested capital                85,498     84,520     86,921     87,858          76                                                                              76
                                                                                 66                                                                              66
                                                                                 56                                                                             56
Ratio, growth and per share analysis                                               2011                         2012               2013                     2014
                                                                                                          Grupo Modelo   Rel to MEXICAN I.P.C. IDX
Year to                       12/2011a   12/2012e   12/2013e   12/2014e
                                                                            Source: HSBC
Y-o-y % change
Revenue                            7.0        9.1        5.0        7.1   Note: price at close of 08 Feb 2013
EBITDA                             3.7       11.6        6.8        7.6
Operating profit                   1.4       14.1        6.8        8.2
PBT                               15.4        7.4        6.5        8.3
HSBC EPS                          18.9        4.3        4.4        6.6
Ratios (%)
Revenue/IC (x)                     1.1        1.2        1.2        1.3
ROIC                              19.5       21.0       21.9       23.3
ROE                               14.9       15.3       16.3       16.7
ROA                               14.2       14.2       14.6       14.8
EBITDA margin                     28.4       29.1       29.6       29.7
Operating profit margin           24.2       25.3       25.7       26.0
Net debt/equity                  -29.9      -28.1      -31.1      -35.7
Net debt/EBITDA (x)               -1.2       -1.0       -1.1       -1.3
Per share data (MXN)
EPS (fully diluted)               3.66       3.81       3.98       4.25




                                                                                                                                                                        31
     Consumer Brands & Retail
     Global Beverages                                                                                                                       abc
     11 February 2013




Financials & valuation: SABMiller                                                                                                                          Neutral
Financial statements                                                      Valuation data
Year to                       03/2012a   03/2013e   03/2014e   03/2015e   Year to                          03/2012a         03/2013e          03/2014e         03/2015e
Profit & loss summary (USDm)                                              EV/sales                                  2.8            2.5               2.2            2.0
                                                                          EV/EBITDA                                17.3           15.1              13.0           12.0
Revenue                         31,388     35,306     37,824     40,510   EV/IC                                     2.4            2.3               2.2            2.2
EBITDA                           5,875      6,833      7,420      7,914   PE*                                      24.4           21.4              19.3           17.7
Depreciation & amortisation     -1,173       -904       -960       -960   P/Book value                              3.2            3.0               2.7            2.5
Operating profit                 5,370      6,288      6,848      7,437   FCF yield (%)                             3.9            4.6               5.2            5.7
Net interest                      -572       -823       -765       -750   Dividend yield (%)                        1.6            1.8               2.4            2.8
PBT                              5,062      5,851      6,468      7,039
Taxation                        -1,385     -1,626     -1,811     -1,971   Note: * = Based on HSBC EPS (fully diluted)
Net profit                       3,400      3,910      4,325      4,719
Cash flow summary (USDm)
                                                                          Issuer information
Cash flow from operations        3,937      3,775      4,165      4,578                                                                                               5.




                                                                          Share price (GBPp) 3,176                            Target price (GBPp)      3,350
                                                                                                                                                                      5




Capex                           -1,473     -1,510     -1,606     -1,708
Cash flow from investment      -11,600       -544       -564       -584   Reuters (Equity)           SAB.L                    Bloomberg (Equity)           SAB LN
Dividends                       -1,324     -1,687     -1,952     -2,249   Market cap (USDm)          80,555                   Market cap (GBPm)             51,442
Change in net debt              11,088     -1,349     -1,526     -1,619   Free float (%)                 55                   Enterprise value (USDm)       98,396
FCF equity                       2,703      3,217      3,605      3,894   Country           United Kingdom                    Sector                    Beverages
                                                                          Analyst            Lauren Torres                    Contact              +1 212 525 6972
Balance sheet summary (USDm)
Intangible fixed assets         30,029     29,699     29,282     28,848
Tangible fixed assets            9,299      9,917     10,553     11,206     Price relative
Current assets                   4,663      5,160      6,068      7,183         3228                                                                           3228
Cash & others                      745      1,032      1,558      2,178
                                                                                3028                                                                           3028
Total assets                    55,651     56,155     57,905     59,877
Operating liabilities            5,909      6,364      6,538      6,823         2828                                                                           2828
Gross debt                      19,226     18,164     17,164     16,164         2628                                                                           2628
Net debt                        18,481     17,132     15,606     13,986
                                                                                2428                                                                           2428
Shareholders funds              25,073     27,439     29,966     32,602
Invested capital                37,337     37,380     37,806     38,236         2228                                                                           2228
                                                                                2028                                                                           2028
                                                                                1828                                                                           1828
Ratio, growth and per share analysis                                                2011                          2012               2013                  2014
                                                                                                                SABMiller   Rel to FTSE ALL-SHARE
Year to                       03/2012a   03/2013e   03/2014e   03/2015e
                                                                            Source: HSBC
Y-o-y % change
Revenue                           10.9       12.5        7.1        7.1   Note: price at close of 08 Feb 2013
EBITDA                            10.3       16.3        8.6        6.7
Operating profit                  11.1       17.1        8.9        8.6
PBT                               12.7       15.6       10.6        8.8
HSBC EPS                          11.7       14.1       10.0        8.9
Ratios (%)
Revenue/IC (x)                     1.0        0.9        1.0        1.1
ROIC                              13.3       12.5       13.5       14.3
ROE                               14.5       14.9       15.1       15.1
ROA                                9.3        9.5        9.9       10.3
EBITDA margin                     18.7       19.4       19.6       19.5
Operating profit margin           17.1       17.8       18.1       18.4
EBITDA/net interest (x)           10.3        8.3        9.7       10.6
Net debt/equity                   71.0       60.3       50.3       41.5
Net debt/EBITDA (x)                3.1        2.5        2.1        1.8
Per share data (USD)
EPS(fiscal)                       2.13       2.43       2.67       2.90
EPS (calendar)                    2.35       2.60       2.84       3.10




32
    Consumer Brands & Retail
    Global Beverages                                                                                                                               abc
    11 February 2013




Financials & valuation: Heineken                                                                                                                                Neutral
Financial statements                                                      Valuation data
Year to                       12/2011a   12/2012e   12/2013e   12/2014e   Year to                          12/2011a                12/2012e        12/2013e          12/2014e
Profit & loss summary (EURm)                                              EV/sales                                2.0                   2.1               1.8             1.6
                                                                          EV/EBITDA                              10.5                   9.9               8.5             8.0
Revenue                         17,187     18,209     20,767     22,110   EV/IC                                   2.1                   1.8               1.8             1.7
EBITDA                           3,682      3,891      4,517      4,825   PE*                                    19.5                  18.4              16.5            15.0
Depreciation & amortisation     -1,227     -1,209     -1,275     -1,301   P/Book value                            3.2                   2.9               2.6             2.3
Operating profit                 2,457      2,612      3,145      3,421   FCF yield (%)                           7.8                   7.8               9.1             8.5
Net interest                      -444       -441       -601       -631   Dividend yield (%)                      1.5                   1.6               1.7             1.9
PBT                              2,253      2,434      2,824      3,085
Taxation                          -539       -645       -791       -864   Note: * = Based on HSBC EPS (fully diluted)
Net profit                       1,584      1,645      1,809      1,977
Cash flow summary (EURm)
                                                                          Issuer information
Cash flow from operations        2,911      3,285      3,712      3,618                                                                                                       6.




                                                                          Share price (EUR)          52.53                          Target price (EUR)      56.00
                                                                                                                                                                              6




Capex                             -800     -1,200     -1,100     -1,100
Cash flow from investment       -1,755     -6,326     -1,150     -1,125   Reuters (Equity)                     HEIN.AS              Bloomberg (Equity)          HEIA NA
Dividends                         -580       -576       -633       -692   Market cap (USDm)                     40,429              Market cap (EURm)             30,257
Change in net debt                  37      4,077     -1,344     -1,586   Free float (%)                             55             Enterprise value (EURm)       38,498
FCF equity                       2,074      1,984      2,319      2,159   Country                           Netherlands             Sector                    Beverages
                                                                          Analyst                         Lauren Torres             Contact              +1 212 525 6972
Balance sheet summary (EURm)
Intangible fixed assets         10,835     15,377     15,531     15,686
Tangible fixed assets            7,860      8,402      8,778      8,890     Price relative
Current assets                   4,708      5,169      6,067      6,366         59                                                                                     59
Cash & others                      813        955      1,684      1,935
Total assets                    27,127     33,703     35,162     35,781         54                                                                                     54
Operating liabilities            6,352      6,982      7,839      8,369         49                                                                                     49
Gross debt                       9,180     13,399     12,784     11,449
Net debt                         8,367     12,444     11,100      9,514         44                                                                                     44
Shareholders funds               9,774     10,543     11,619     12,804         39                                                                                     39
Invested capital                16,238     21,011     20,853     20,637
                                                                                34                                                                                     34

                                                                                29                                                                                      29
Ratio, growth and per share analysis                                              2011                          2012                       2013                     2014
                                                                                                                        Heineken      Rel to AEX
Year to                       12/2011a   12/2012e   12/2013e   12/2014e
                                                                            Source: HSBC
Y-o-y % change
Revenue                            5.0        5.9       14.0        6.5   Note: price at close of 08 Feb 2013
EBITDA                             2.8        5.7       16.1        6.8
Operating profit                  -1.4        9.2       20.9        8.7
PBT                                7.1        8.0       16.0        9.3
HSBC EPS                           4.7        5.9       11.1       10.4
Ratios (%)
Revenue/IC (x)                     1.0        1.0        1.0        1.1
ROIC                              11.6       10.6       11.2       12.2
ROE                               15.8       16.2       16.3       16.2
ROA                                7.6        6.9        7.2        7.5
EBITDA margin                     21.5       21.4       21.8       21.8
Operating profit margin           14.3       14.4       15.1       15.5
EBITDA/net interest (x)            8.3        8.8        7.5        7.6
Net debt/equity                   82.9      115.5       93.5       72.7
Net debt/EBITDA (x)                2.3        3.2        2.5        2.0
Per share data (EUR)
EPS (fully diluted)               2.70       2.86       3.18       3.51




                                                                                                                                                                             33
     Consumer Brands & Retail
     Global Beverages                                                                                                                       abc
     11 February 2013




Financials & valuation: Anadolu Efes                                                                                                                          Neutral
Financial statements                                                      Valuation data
Year to                       12/2011a   12/2012e   12/2013e   12/2014e   Year to                          12/2011a        12/2012e           12/2013e            12/2014e
Profit & loss summary (TRYm)                                              EV/sales                                3.5            2.7                 2.4                  2.2
                                                                          EV/EBITDA                              18.1           13.3                11.6                 10.2
Revenue                          4,761      6,371      7,265      8,139   EV/IC                                   3.7            3.1                 2.8                  2.6
EBITDA                             953      1,299      1,495      1,689   PE*                                    45.1           25.1                21.4                 18.8
Depreciation & amortisation       -349       -470       -545       -599   P/Book value                            4.9            4.3                 3.7                  3.4
Operating profit                   604        830        950      1,090   FCF yield (%)                           3.1            5.4                 4.0                  2.7
Net interest                        -6        -49        -52        -48   Dividend yield (%)                      1.6            1.6                 1.6                  2.9
PBT                                465        858        945      1,081
Taxation                          -106       -212       -194       -223   Note: * = Based on HSBC EPS (fully diluted)
Net profit                         341        613        718        821
Cash flow summary (TRYm)
                                                                          Issuer information
Cash flow from operations        1,092      1,803      1,671      1,528                                                                                                       1




                                                                          Share price (TRY)          26.00                  Target price (TRY)           30.00
                                                                                                                                                                              5.
                                                                                                                                                                              4




Capex                             -553       -901       -976     -1,030
Cash flow from investment         -553       -901       -976     -1,030   Reuters (Equity)       AEFES.IS                   Bloomberg (Equity)          AEFES TI
Dividends                         -247       -136       -245       -441   Market cap (USDm)           8,703                 Market cap (TRYm)              15,395
Change in net debt                 389        715        274         37   Free float (%)                 33                 Enterprise value (TRYm)        17,269
FCF equity                         473        841        627        416   Country                    Turkey                 Sector                     Beverages
                                                                          Analyst           Bulent Yurdagul                 Contact              +90 212 3764612
Balance sheet summary (TRYm)
Intangible fixed assets          1,360      1,360      1,360      1,360
Tangible fixed assets            2,693      3,096      3,535      3,975     Price relative
Current assets                   2,343      2,633      3,203      4,262         34                                                                                   34
Cash & others                      940        316        573      1,548         32                                                                                   32
Total assets                     6,421      7,117      8,128      9,630         30                                                                                   30
Operating liabilities              999      1,210      1,168      1,224         28                                                                                   28
Gross debt                       2,099      2,191      2,722      3,734         26                                                                                   26
Net debt                         1,159      1,875      2,149      2,186         24                                                                                   24
Shareholders funds               3,144      3,621      4,110      4,506         22                                                                                   22
Invested capital                 4,457      5,564      6,356      6,824
                                                                                20                                                                                   20
                                                                                18                                                                                   18
                                                                                16                                                                                   16
Ratio, growth and per share analysis                                              2011                          2012                 2013                        2014
                                                                                                            Anadolu Efes   Rel to ISTANBUL COMP
Year to                       12/2011a   12/2012e   12/2013e   12/2014e
                                                                            Source: HSBC
Y-o-y % change
Revenue                           14.2       33.8       14.0       12.0   Note: price at close of 08 Feb 2013               Stated accounts as of 31 Dec 2005 are IFRS compliant
EBITDA                            -6.4       36.3       15.1       13.0
Operating profit                 -14.1       37.3       14.6       14.7
PBT                              -29.4       84.6       10.0       14.4
HSBC EPS                         -32.3       79.8       17.1       14.3
Ratios (%)
Revenue/IC (x)                     1.2        1.3        1.2        1.2
ROIC                              11.5       12.5       12.7       13.1
ROE                               11.5       18.1       18.6       19.1
ROA                                6.8       10.2       10.6       10.4
EBITDA margin                     20.0       20.4       20.6       20.8
Operating profit margin           12.7       13.0       13.1       13.4
EBITDA/net interest (x)          168.8       26.4       28.6       35.2
Net debt/equity                   36.1       50.4       50.7       46.8
Net debt/EBITDA (x)                1.2        1.4        1.4        1.3
Per share data (TRY)
EPS (fully diluted)               0.58       1.04       1.21       1.39




34
    Consumer Brands & Retail
    Global Beverages                                                                                                                        abc
    11 February 2013




Financials & valuation: Tsingtao                                                                                                               Underweight
Financial statements                                                      Valuation data
Year to                       12/2011a   12/2012e   12/2013e   12/2014e   Year to                          12/2011a         12/2012e        12/2013e             12/2014e
Profit & loss summary (CNYm)                                              EV/sales                                0.8             0.7                 0.5             0.5
                                                                          EV/EBITDA                               6.8             5.8                 5.1             4.5
Revenue                         23,158     26,261     31,635     36,901   EV/IC                                   3.3             2.9                 2.4             1.8
EBITDA                           2,799      3,063      3,343      3,811   PE*                                    29.2            27.1                25.0            21.6
Depreciation & amortisation       -698       -793       -883       -972   P/Book value                            4.6             4.0                 3.5             3.1
Operating profit                 2,101      2,270      2,460      2,838   FCF yield (%)                          -4.3             6.3                 5.2             7.5
Net interest                        36        147        183        239   Dividend yield (%)                      0.7             0.7                 0.8             0.9
PBT                              2,455      2,612      2,838      3,272
Taxation                          -657       -679       -738       -851   Note: * = Based on HSBC EPS (fully diluted)
Net profit                       1,738      1,869      2,031      2,342
Cash flow summary (CNYm)
                                                                          Issuer information
Cash flow from operations        1,872      4,676      4,512      5,034                                                                                                    -




                                                                          Share price (HKD)          46.65                   Target price (HKD)         35.00
                                                                                                                                                                          2
                                                                                                                                                                          5.
                                                                                                                                                                          0




Capex                           -2,442     -2,500     -2,500     -2,500
Cash flow from investment       -3,937     -3,238     -3,320     -3,279   Reuters (Equity)            0168.HK                Bloomberg (Equity)           168 HK
Dividends                         -336       -351       -374       -406   Market cap (USDm)               3,941              Market cap (CNYm)             25,209
Change in net debt               1,900     -1,281     -1,022          5   Free float (%)                     50              Enterprise value (CNYm)       18,452
FCF equity                      -1,046      1,551      1,284      1,858   Country                        China               Sector                    Beverages
                                                                          Analyst          Christopher K Leung               Contact               +852 29966531
Balance sheet summary (CNYm)
Intangible fixed assets          3,861      3,815      3,765      3,710
Tangible fixed assets            8,038     10,100     12,054     13,936     Price relative
Current assets                   9,583     10,282     11,783     12,223         64                                                                                 64
Cash & others                    6,108      7,389      8,411      8,406
                                                                                59                                                                                 59
Total assets                    21,634     24,349     27,754     30,020
Operating liabilities            9,530     10,550     12,108     12,212         54                                                                                 54
Gross debt                         617        617        617        617         49                                                                                 49
Net debt                        -5,491     -6,772     -7,795     -7,790
                                                                                44                                                                                 44
Shareholders funds              11,110     12,741     14,520     16,602
Invested capital                 5,845      6,257      7,083      9,249         39                                                                                 39
                                                                                34                                                                                 34
                                                                                29                                                                                  29
Ratio, growth and per share analysis                                              2011                          2012                 2013                       2014
                                                                                                           Tsingtao     Rel to SSE COMPOSITE INDEX
Year to                       12/2011a   12/2012e   12/2013e   12/2014e
                                                                            Source: HSBC
Y-o-y % change
Revenue                           16.4       13.4       20.5       16.6   Note: price at close of 08 Feb 2013
EBITDA                            12.4        9.4        9.1       14.0
Operating profit                   8.8        8.0        8.4       15.4
PBT                               15.6        6.4        8.7       15.3
HSBC EPS                          14.3        7.6        8.7       15.3
Ratios (%)
Revenue/IC (x)                     5.7        4.3        4.7        4.5
ROIC                              38.2       27.8       27.3       25.7
ROE                               16.8       15.7       14.9       15.0
ROA                                9.0        7.9        7.5        7.8
EBITDA margin                     12.1       11.7       10.6       10.3
Operating profit margin            9.1        8.6        7.8        7.7
Net debt/equity                  -48.7      -52.2      -52.6      -45.9
Net debt/EBITDA (x)               -2.0       -2.2       -2.3       -2.0
Per share data (CNY)
EPS (fully diluted)               1.29       1.38       1.50       1.73




                                                                                                                                                                         35
     Consumer Brands & Retail
     Global Beverages                                                                                                                          abc
     11 February 2013




Financials & valuation: Molson Coors                                                                                                                           Neutral
Financial statements                                                      Valuation data
Year to                       12/2011a   12/2012e   12/2013e   12/2014e   Year to                          12/2011a             12/2012e            12/2013e        12/2014e
Profit & loss summary (USDm)                                              EV/sales                                1.5                2.1                 1.7             1.6
                                                                          EV/EBITDA                              10.8                9.8                 9.2             8.5
Revenue                          3,517      3,991      4,504      4,669   EV/IC                                   0.9                0.9                 0.8             0.8
EBITDA                           1,150      1,266      1,353      1,459   PE*                                    11.8               11.5                11.2            10.2
Depreciation & amortisation       -217       -267       -280       -290   P/Book value                            1.1                1.0                 0.9             0.9
Operating profit                   933        999      1,073      1,169   FCF yield (%)                          14.9               16.9                18.8            20.9
Net interest                      -108       -152       -178       -173   Dividend yield (%)                      2.8                2.9                 3.5             3.9
PBT                                821        853        895        996
Taxation                          -119       -147       -170       -199   Note: * = Based on HSBC EPS (fully diluted)
Net profit                         701        704        723        795
Cash flow summary (USDm)
                                                                          Issuer information
Cash flow from operations          868        930        986      1,062                                                                                                     5.




                                                                          Share price (USD)          44.41                       Target price (USD)        47.00
                                                                                                                                                                            8




Capex                             -235       -185       -175       -175
Cash flow from investment         -338     -2,465       -225       -225   Reuters (Equity)                       TAP.N           Bloomberg (Equity)           TAP US
Dividends                         -228       -249       -279       -313   Market cap (USDm)                       8,065          Market cap (USDm)              8,065
Change in net debt                 140      3,015       -352       -445   Free float (%)                             95          Enterprise value (USDm)       12,449
FCF equity                         662        742        813        889   Country                         United States          Sector                    Beverages
                                                                          Analyst                        James Watson            Contact              +1 212 525 4905
Balance sheet summary (USDm)
Intangible fixed assets          6,039      9,059      9,104      9,150
Tangible fixed assets            1,779      2,203      2,098      1,993     Price relative
Current assets                   2,118      1,869      2,384      2,852         52                                                                                     52
Cash & others                    1,079        717      1,069      1,464         50                                                                                     50
Total assets                    12,424     15,689     16,215     16,692         48                                                                                     48
Operating liabilities            2,772      2,927      3,007      3,050         46                                                                                     46
Gross debt                       1,962      4,615      4,615      4,565         44                                                                                     44
Net debt                           883      3,898      3,546      3,101         42                                                                                     42
Shareholders funds               7,648      8,102      8,546      9,029         40                                                                                     40
Invested capital                 6,085      9,487      9,511      9,480
                                                                                38                                                                                     38
                                                                                36                                                                                     36
                                                                                34                                                                                     34
Ratio, growth and per share analysis                                              2011                          2012                    2013                       2014
                                                                                                                 Molson Coors      Rel to S&P 500
Year to                       12/2011a   12/2012e   12/2013e   12/2014e
                                                                            Source: HSBC
Y-o-y % change
Revenue                            8.1       13.5       12.9        3.6   Note: price at close of 08 Feb 2013
EBITDA                             4.5       10.1        6.8        7.8
Operating profit                   3.9        7.1        7.4        9.0
PBT                                3.3        3.9        4.9       11.3
HSBC EPS                           5.9        2.8        2.8       10.0
Ratios (%)
Revenue/IC (x)                     0.6        0.5        0.5        0.5
ROIC                              13.2       10.6        9.2        9.9
ROE                                9.1        8.9        8.7        9.0
ROA                                6.3        5.9        5.4        5.7
EBITDA margin                     32.7       31.7       30.0       31.3
Operating profit margin           26.5       25.0       23.8       25.0
EBITDA/net interest (x)           10.7        8.3        7.6        8.4
Net debt/equity                   11.5       47.8       41.3       34.2
Net debt/EBITDA (x)                0.8        3.1        2.6        2.1
Per share data (USD)
HSBC EPS (fully diluted)          3.76       3.87       3.98       4.37




36
    Consumer Brands & Retail
    Global Beverages                                                                                                                        abc
    11 February 2013




Financials & valuation: Boston Beer Company                                                                                                      Underweight
Financial statements                                                      Valuation data
Year to                       12/2011a   12/2012e   12/2013e   12/2014e   Year to                          12/2011a         12/2012e         12/2013e           12/2014e
Profit & loss summary (USDm)                                              EV/sales                                2.3              2.0                1.8            1.6
                                                                          EV/EBITDA                              18.1             15.9               14.8           13.5
Revenue                           513        587        668        729    EV/IC                                   8.0              6.3                5.1            4.9
EBITDA                            102        116        124        136    PE*                                    37.5             31.5               28.5           25.6
Depreciation & amortisation       -19        -20        -20        -22    P/Book value                           10.3              8.4                6.8            5.7
Operating profit                   83         96        103        114    FCF yield (%)                           3.0              0.8                1.6            5.7
PBT                                83         96        104        115    Dividend yield (%)                      0.0              0.0                0.0            0.0
Taxation                          -32        -36        -39        -44
Net profit                         51         59         64         71    Note: * = Based on HSBC EPS (fully diluted)

Cash flow summary (USDm)
Cash flow from operations           73         76         81         91   Issuer information
Capex                              -20        -65        -60        -20                                                                                                 -




                                                                          Share price (USD) 139.70                            Target price (USD)       120.00
                                                                                                                                                                       1
                                                                                                                                                                       4.
                                                                                                                                                                       1




Cash flow from investment          -20        -65        -60        -20
Dividends                            0          0          0          0   Reuters (Equity)                      SAM.N         Bloomberg (Equity)           SAM US
Change in net debt                   0          9          0        -51   Market cap (USDm)                       1,877       Market cap (USDm)              1,877
FCF equity                          37         10         20         70   Free float (%)                             95       Enterprise value (USDm)        1,836
                                                                          Country                         United States       Sector                    Beverages
Balance sheet summary (USDm)
                                                                          Analyst                        James Watson         Contact              +1 212 525 4905
Intangible fixed assets             3          4          4          4
Tangible fixed assets             144        189        229        227
Current assets                    126        114        121        176      Price relative
Cash & others                      49         40         41         91          152                                                                             152
Total assets                      273        306        353        407          142                                                                             142
Operating liabilities              70         77         80         83          132                                                                             132
Gross debt                          0          0          0          0          122                                                                             122
Net debt                          -49        -40        -41        -91          112                                                                             112
Shareholders funds                185        224        268        319          102                                                                             102
Invested capital                  148        188        232        232           92                                                                             92
                                                                                 82                                                                             82
                                                                                 72                                                                             72
Ratio, growth and per share analysis                                             62                                                                             62
                                                                                   2011                         2012                 2013                   2014
Year to                       12/2011a   12/2012e   12/2013e   12/2014e                                     Boston Beer Company     Rel to S&P 500
Y-o-y % change                                                              Source: HSBC

Revenue                           10.6       14.5       13.8        9.1
EBITDA                             3.3       13.5        7.1       10.0   Note: price at close of 08 Feb 2013
Operating profit                   2.4       14.8        8.2       10.5
PBT                                2.3       15.2        8.5       10.4
HSBC EPS                           6.0       18.8       10.6       11.4
Ratios (%)
Revenue/IC (x)                     3.7        3.5        3.2        3.1
ROIC                              36.7       35.2       30.6       30.7
ROE                               29.2       29.0       26.2       24.2
ROA                               19.2       20.5       19.5       18.7
EBITDA margin                     19.8       19.7       18.5       18.7
Operating profit margin           16.2       16.3       15.5       15.7
Net debt/equity                  -26.8      -17.9      -15.1      -28.7
Net debt/EBITDA (x)               -0.5       -0.3       -0.3       -0.7
Per share data (USD)
EPS (fully diluted)               3.73       4.44       4.91       5.46




                                                                                                                                                                      37
     Consumer Brands & Retail
     Global Beverages           abc
     11 February 2013




Notes




38
Consumer Brands & Retail
Global Beverages           abc
11 February 2013




Notes




                             39
     Consumer Brands & Retail
     Global Beverages                                                                                          abc
     11 February 2013




Disclosure appendix
Analyst Certification
The following analyst(s), economist(s), and/or strategist(s) who is(are) primarily responsible for this report, certifies(y) that the
opinion(s) on the subject security(ies) or issuer(s) and/or any other views or forecasts expressed herein accurately reflect their
personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific
recommendation(s) or views contained in this research report: Lauren Torres and James Watson

Each analyst whose name appears as author of an individual section or individual sections of this report certifies that the views
about the subject security(ies) or issuer(s) or any other views or forecasts expressed in the section(s) of which (s)he is author
accurately reflect his/her personal views and that no part of his/her compensation was, is or will be directly or indirectly related
to the specific recommendation(s) or view(s) contained therein: Bulent Yurgadul and Christopher Leung
Brazilian Securities Exchange Commission (CVM) Regulation No. 483
Pursuant to CVM Ruling No. 483 (July 2010), HSBC has obtained from the analyst(s) listed above under "Analyst
Certification" and disclosed (where applicable), the statements set forth in Article 17 and have rendered (where applicable) the
statements set forth in Article 18, under the sections titled "Analyst Certification" and "HSBC & Analyst Disclosures". The
analyst(s) furthermore certifies(y) that the recommendations contained in this report have been prepared independently, even in
relation to HSBC.

Additionally, for purposes of Article 16, the principal analyst responsible for compliance of the mentioned regulation is the
first name in the list under "Analyst Certification" that has local certification, where applicable.

Important disclosures
Equities: Stock ratings and basis for financial analysis
HSBC believes that investors utilise various disciplines and investment horizons when making investment decisions, which
depend largely on individual circumstances such as the investor's existing holdings, risk tolerance and other considerations.
Given these differences, HSBC has two principal aims in its equity research: 1) to identify long-term investment opportunities
based on particular themes or ideas that may affect the future earnings or cash flows of companies on a 12 month time horizon;
and 2) from time to time to identify short-term investment opportunities that are derived from fundamental, quantitative,
technical or event-driven techniques on a 0-3 month time horizon and which may differ from our long-term investment rating.
HSBC has assigned ratings for its long-term investment opportunities as described below.

This report addresses only the long-term investment opportunities of the companies referred to in the report. As and when
HSBC publishes a short-term trading idea the stocks to which these relate are identified on the website at
www.hsbcnet.com/research. Details of these short-term investment opportunities can be found under the Reports section of this
website.

HSBC believes an investor's decision to buy or sell a stock should depend on individual circumstances such as the investor's
existing holdings and other considerations. Different securities firms use a variety of ratings terms as well as different rating
systems to describe their recommendations. Investors should carefully read the definitions of the ratings used in each research
report. In addition, because research reports contain more complete information concerning the analysts' views, investors
should carefully read the entire research report and should not infer its contents from the rating. In any case, ratings should not
be used or relied on in isolation as investment advice.




40
   Consumer Brands & Retail
   Global Beverages                                                                                           abc
   11 February 2013




Rating definitions for long-term investment opportunities
Stock ratings
HSBC assigns ratings to its stocks in this sector on the following basis:

For each stock we set a required rate of return calculated from the cost of equity for that stock’s domestic or, as appropriate,
regional market established by our strategy team. The price target for a stock represents the value the analyst expects the stock
to reach over our performance horizon. The performance horizon is 12 months. For a stock to be classified as Overweight, the
potential return, which equals the percentage difference between the current share price and the target price, including the
forecast dividend yield when indicated, must exceed the required return by at least 5 percentage points over the next 12 months
(or 10 percentage points for a stock classified as Volatile*). For a stock to be classified as Underweight, the stock must be
expected to underperform its required return by at least 5 percentage points over the next 12 months (or 10 percentage points
for a stock classified as Volatile*). Stocks between these bands are classified as Neutral.

Our ratings are re-calibrated against these bands at the time of any 'material change' (initiation of coverage, change of volatility
status or change in price target). Notwithstanding this, and although ratings are subject to ongoing management review,
expected returns will be permitted to move outside the bands as a result of normal share price fluctuations without necessarily
triggering a rating change.

*A stock will be classified as volatile if its historical volatility has exceeded 40%, if the stock has been listed for less than 12
months (unless it is in an industry or sector where volatility is low) or if the analyst expects significant volatility. However,
stocks which we do not consider volatile may in fact also behave in such a way. Historical volatility is defined as the past
month's average of the daily 365-day moving average volatilities. In order to avoid misleadingly frequent changes in rating,
however, volatility has to move 2.5 percentage points past the 40% benchmark in either direction for a stock's status to change.

Rating distribution for long-term investment opportunities
As of 11 February 2013, the distribution of all ratings published is as follows:
Overweight (Buy)                44%      (29% of these provided with Investment Banking Services)
Neutral (Hold)                     37%      (27% of these provided with Investment Banking Services)
Underweight (Sell)                 19%      (23% of these provided with Investment Banking Services)


Information regarding company share price performance and history of HSBC ratings and price targets in respect of its long-
term investment opportunities for the companies the subject of this report,is available from www.hsbcnet.com/research.




                                                                                                                                 41
     Consumer Brands & Retail
     Global Beverages                                                                                     abc
     11 February 2013




HSBC & Analyst disclosures
Disclosure checklist
Company                                           Ticker            Recent price         Price Date                    Disclosure
AB INBEV                                        ABI.BR                    64.13         08-Feb-2013                             7, 11
ANADOLU EFES                                  AEFES.IS                    26.00         08-Feb-2013                              1, 5
BOSTON BEER COMPANY                             SAM.N                    139.70         08-Feb-2013                                 6
GRUPO MODELO                              GMODELOC.MX                    111.93         08-Feb-2013                                 7
HEINEKEN                                       HEIN.AS                    52.53         08-Feb-2013                 1, 2, 5, 6, 7, 11
MOLSON COORS                                     TAP.N                    44.41         08-Feb-2013                             7, 11
SABMILLER                                        SAB.L                    31.76         08-Feb-2013                          6, 7, 11
TSINGTAO                                       0168.HK                    46.65         08-Feb-2013                                 7
Source: HSBC



1      HSBC* has managed or co-managed a public offering of securities for this company within the past 12 months.
2      HSBC expects to receive or intends to seek compensation for investment banking services from this company in the next
       3 months.
3      At the time of publication of this report, HSBC Securities (USA) Inc. is a Market Maker in securities issued by this
       company.
4      As of 31 January 2013 HSBC beneficially owned 1% or more of a class of common equity securities of this company.
5      As of 31 December 2012, this company was a client of HSBC or had during the preceding 12 month period been a client
       of and/or paid compensation to HSBC in respect of investment banking services.
6      As of 31 December 2012, this company was a client of HSBC or had during the preceding 12 month period been a client
       of and/or paid compensation to HSBC in respect of non-investment banking securities-related services.
7      As of 31 December 2012, this company was a client of HSBC or had during the preceding 12 month period been a client
       of and/or paid compensation to HSBC in respect of non-securities services.
8      A covering analyst/s has received compensation from this company in the past 12 months.
9      A covering analyst/s or a member of his/her household has a financial interest in the securities of this company, as
       detailed below.
10     A covering analyst/s or a member of his/her household is an officer, director or supervisory board member of this
       company, as detailed below.
11     At the time of publication of this report, HSBC is a non-US Market Maker in securities issued by this company and/or in
       securities in respect of this company

Analysts, economists, and strategists are paid in part by reference to the profitability of HSBC which includes investment
banking revenues.

For disclosures in respect of any company mentioned in this report, please see the most recently published report on that
company available at www.hsbcnet.com/research.

* HSBC Legal Entities are listed in the Disclaimer below.

Additional disclosures
1     This report is dated as at 11 February 2013.
2     All market data included in this report are dated as at close 08 February 2013, unless otherwise indicated in the report.
3     HSBC has procedures in place to identify and manage any potential conflicts of interest that arise in connection with its
      Research business. HSBC's analysts and its other staff who are involved in the preparation and dissemination of Research
      operate and have a management reporting line independent of HSBC's Investment Banking business. Information Barrier
      procedures are in place between the Investment Banking and Research businesses to ensure that any confidential and/or
      price sensitive information is handled in an appropriate manner.
4     As of 31 December 2012, Kingway Brewery Holding Ltd was a client of HSBC or had during the preceding 12 month
      period been a client of and/or paid compensation to HSBC in respect of investment banking services. HSBC acted as sell-
      side advisors to Kingway Brewery Holding Ltd regarding the acquisition by China Resources Enterprise, Limited.




42
   Consumer Brands & Retail
   Global Beverages                                                                                                                      abc
   11 February 2013




Disclaimer
* Legal entities as at 8 August 2012                                                                                   Issuer of report
‘UAE’ HSBC Bank Middle East Limited, Dubai; ‘HK’ The Hongkong and Shanghai Banking Corporation
                                                                                                                       HSBC Securities (USA) Inc
Limited, Hong Kong; ‘TW’ HSBC Securities (Taiwan) Corporation Limited; 'CA' HSBC Bank Canada,
Toronto; HSBC Bank, Paris Branch; HSBC France; ‘DE’ HSBC Trinkaus & Burkhardt AG, Düsseldorf;                          452 Fifth Avenue, 9th floor
000 HSBC Bank (RR), Moscow; ‘IN’ HSBC Securities and Capital Markets (India) Private Limited,                          HSBC Tower
Mumbai; ‘JP’ HSBC Securities (Japan) Limited, Tokyo; ‘EG’ HSBC Securities Egypt SAE, Cairo; ‘CN’                       New York, NY 10018, USA
HSBC Investment Bank Asia Limited, Beijing Representative Office; The Hongkong and Shanghai Banking                    Telephone: +1 212 525 5000
Corporation Limited, Singapore Branch; The Hongkong and Shanghai Banking Corporation Limited, Seoul
                                                                                                                       Fax: +1 212 525 0354
Securities Branch; The Hongkong and Shanghai Banking Corporation Limited, Seoul Branch; HSBC
Securities (South Africa) (Pty) Ltd, Johannesburg; HSBC Bank plc, London, Madrid, Milan, Stockholm, Tel                Website: www.research.hsbc.com
Aviv; ‘US’ HSBC Securities (USA) Inc, New York; HSBC Yatirim Menkul Degerler AS, Istanbul; HSBC
México, SA, Institución de Banca Múltiple, Grupo Financiero HSBC; HSBC Bank Brasil SA – Banco
Múltiplo; HSBC Bank Australia Limited; HSBC Bank Argentina SA; HSBC Saudi Arabia Limited; The
Hongkong and Shanghai Banking Corporation Limited, New Zealand Branch incorporated in Hong Kong
SAR
This material was prepared and is being distributed by HSBC Securities (USA) Inc., ("HSI") a member of the HSBC Group, the NYSE and FINRA. This
material is for the information of clients of HSI and is not for publication to other persons, whether through the press or by other means. It is based on
information from sources, which HSI believes to be reliable but it is not guaranteed as to the accuracy or completeness. This material is not, and should not be
construed as, an offer or the solicitation of an offer to buy or sell any securities. The opinions contained within the report are based upon publicly available
information at the time of publication and are subject to change without notice. HSI and/or its affiliated companies will buy or sell from customers on a
principal basis the securities of the issuer(s) whose securities are recommended in this report. Employees of HSI and its affiliates not involved in the
preparation of this report may have positions in the securities mentioned in this report and may from time to time add or dispose of any such securities in a
manner different than discussed in this report. Past performance is not necessarily a guide to future performance. The value of any investment or income may
go down as well as up and you may not get back the full amount invested. Where an investment is denominated in a currency other than the local currency of
the recipient of the research report, changes in the exchange rates may have an adverse effect on the value, price or income of that investment. In case of
investments for which there is no recognised market it may be difficult for investors to sell their investments or to obtain reliable information about its value or
the extent of the risk to which it is exposed. In the UK this report may only be distributed to persons of a kind described in Article 19(5) of the Financial
Services and Markets Act 2000 (Financial Promotion) Order 2001. The protections afforded by the UK regulatory regime are available only to those dealing
with a representative of HSBC Bank plc in the UK. In Singapore, this publication is distributed by The Hongkong and Shanghai Banking Corporation Limited,
Singapore Branch for the general information of institutional investors or other persons specified in Sections 274 and 304 of the Securities and Futures Act
(Chapter 289) (“SFA”) and accredited investors and other persons in accordance with the conditions specified in Sections 275 and 305 of the SFA. This
publication is not a prospectus as defined in the SFA. It may not be further distributed in whole or in part for any purpose. The Hongkong and Shanghai
Banking Corporation Limited Singapore Branch is regulated by the Monetary Authority of Singapore. Recipients in Singapore should contact a "Hongkong
and Shanghai Banking Corporation Limited, Singapore Branch" representative in respect of any matters arising from, or in connection with this report. In
Hong Kong, this document has been distributed by The Hongkong and Shanghai Banking Corporation Limited in the conduct of its Hong Kong regulated
business for the information of its institutional and professional customers; it is not intended for and should not be distributed to retail customers in Hong
Kong. The Hongkong and Shanghai Banking Corporation Limited makes no representations that the products or services mentioned in this document are
available to persons in Hong Kong or are necessarily suitable for any particular person or appropriate in accordance with local law. All inquiries by such
recipients must be directed to The Hongkong and Shanghai Banking Corporation Limited. In Korea, this publication is distributed by either The Hongkong and
Shanghai Banking Corporation Limited, Seoul Securities Branch ("HBAP SLS") or The Hongkong and Shanghai Banking Corporation Limited, Seoul Branch
("HBAP SEL") for the general information of professional investors specified in Article 9 of the Financial Investment Services and Capital Markets Act
(“FSCMA”). This publication is not a prospectus as defined in the FSCMA. It may not be further distributed in whole or in part for any purpose. Both HBAP
SLS and HBAP SEL are regulated by the Financial Services Commission and the Financial Supervisory Service of Korea. In Australia, this publication has
been distributed by The Hongkong and Shanghai Banking Corporation Limited (ABN 65 117 925 970, AFSL 301737) for the general information of its
“wholesale” customers (as defined in the Corporations Act 2001). Where distributed to retail customers, this research is distributed by HSBC Bank Australia
Limited (AFSL No. 232595). These respective entities make no representations that the products or services mentioned in this document are available to
persons in Australia or are necessarily suitable for any particular person or appropriate in accordance with local law. No consideration has been given to the
particular investment objectives, financial situation or particular needs of any recipient. This publication is distributed in New Zealand by The Hongkong and
Shanghai Banking Corporation Limited, New Zealand Branch incorporated in Hong Kong SAR. In Canada, this document has been distributed by HSBC Bank
Canada and/or its affiliates. Where this document contains market updates/overviews, or similar materials (collectively deemed “Commentary” in Canada
although other affiliate jurisdictions may term “Commentary” as either “macro-research” or “research”), the Commentary is not an offer to sell, or a
solicitation of an offer to sell or subscribe for, any financial product or instrument (including, without limitation, any currencies, securities, commodities or
other financial instruments).
© Copyright 2013, HSBC Securities (USA) Inc, ALL RIGHTS RESERVED. No part of this publication may be reproduced, stored in a retrieval system, or
transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC
Securities (USA) Inc. MICA (P) 038/04/2012, MICA (P) 063/04/2012 and MICA (P) 110/01/2013




                                                                                                                                                                 43
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Americas Research Team
Americas Research Management                            Rates Strategy
Head of Research, Americas                              Latin America
Ben Laidler                            1 212 525 3460   Gordian Kemen                   1 212 525 2593
                                                        Victor Fu                       1 212 525 4219
Research Marketing, Americas
                                                        Alejandro Martinez-Cruz        52 55 5271 2380
Shora Haydari                          1 212 525 3335
Guillermo Berger                       1 212 525 7653   US
Global Management                                       Larry Dyer                      1 212 525 0924
                                                        Jae Yang                        1 212 525 0861
CEO, Global Research
Stuart Parkinson                      44 20 7991 6705   Equity Strategy
Equities                                                LatAm
Chris Georgs                          44 20 7991 6781   Ben Laidler                     1 212 525 3460
Equity Product Management                               Francisco J Schumacher          1 212 525 4430
Patrick Boucher                        1 212 525 7632   Brazil
Economics                                               Alexandre Gartner              55 11 3371 8181
Stephen King                          44 20 7991 6700   Francisco Machado, CFA         55 11 3371 8191
Fixed Income                                            Mexico
Steven Major                          44 20 7991 5980   Juan Carlos Mateos, CFA        52 55 5721 3607
                                                        Jaime Aguilera                 52 55 5721 2379
Currency Strategy
David Bloom                           44 20 7991 5969   Equity
Climate Change Centre of Excellence
Nick Robins                           44 20 7991 6778   Beverages
                                                        Lauren Torres                   1 212 525 6972
Emerging Markets Cross Asset Strategy                   James Watson, CFA               1 212 525 4905
Pablo Goldberg                         1 212 525 8729   Cement & Construction
Bertrand J. Delgado                    1 212 525 0745   Francisco Suarez               52 55 5721 2173
                                                        Berenice Munoz                 52 55 5721 5623
Economics
                                                        Food and Agribusiness
US                                                      Pedro Herrera                   1 212 525 5126
Kevin Logan                            1 212 525 3195   Diego T Maia                   55 11 3371 8192
Ryan Wang                              1 212 525 3181   Ravi Jain                       1 212 525 3442
Latin America                                           Financials – Banks
Andre Loes                            55 11 3371 8184   Victor Galliano                 1 212 525 5253
                                                        Mariel Santiago                 1 212 525 5418
Mexico & Central America                                Gold
Sergio Martin                         52 55 5721 2164   Patrick Chidley, CFA            1 212 525 4915
Lorena Dominguez                      52 55 5721 2172   Botir Sharipov                  1 212 525 5150
Claudia Navarrete                     52 55 5721 2422
                                                        Healthcare & Education
Brazil                                                  Luciano T Campos               55 11 3371 8192
Constantin Jancso                     55 11 3371 8183   Caio S Moscardini              55 11 3371 5635
Sabrina Andrade                       55 11 3847 5190   Industrials – Mexico
South America (ex-Brazil)                               Juan Carlos Mateos, CFA        52 55 5721 3607
Javier Finkman                        54 11 4344 8144   Ivan Enriquez                  52 55 5721 2397
Ramiro Blazquez                       54 11 4348 2616
                                                        Metals & Mining
Jorge Morgenstern                     54 11 4130 9229
                                                        Jonathan Brandt, CFA            1 212 525 4499
                                                        Miguel Falcao                  55 11 3847 9348
Foreign Exchange                                        Oil & Gas
                                                        Anisa Redman                    1 212 525 4917
G-10
Robert Lynch                           1 212 525 3159   Real Estate
                                                        Felipe Rodrigues (Brazil)      55 11 3847 9029
Emerging Markets                                        Francisco Suarez (Mexico)      52 55 5721 2173
Clyde Wardle                           1 212 525 3345
                                                        Retailing
Latin America                                           Francisco J Chevez, CFA         1 212 525 5350
Marjorie Hernandez                     1 212 525 4109   Manisha A Chaudhry              1 212 525 3035
                                                        Stewart H Ragar, CFA           55 11 3847 9342
Precious Metals - Global
James Steel                            1 212 525 3117   Telecoms, Media & Technology
Howard Wen                             1 212 525 3726   Richard Dineen                  1 212 525 6707
                                                        Sean Glickenhaus                1 212 525 4131
Fixed Income                                            Utilities
                                                        Eduardo J Gomide               55 11 3371 9502
Credit                                                  Sandra Boente                   1 212 525 4441
US Credit Strategy
Van Hesser                             1 212 525 3114
Arjun Bowry                            1 212 525 3119
Mary Ellen Olson                       1 212 525 0191
Latam Corporate Credit
Robert J Schmieder                     1 212 525 4829
Sarah Leshner                          1 212 525 3132

US High Yield
Mary Ellen Olson                       1 212 525 0191

								
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