Kasapreko PLC: Expansion and Lower Finance Costs to Drive Higher-Quality Earnings

Kasapreko PLC (KASA) enters a funded capacity expansion phase following its GHS700 million IPO, with lower finance costs, growing exposure to non-alcoholic beverages and the Adeiso expansion expected to support earnings growth.

We initiate coverage on Kasapreko PLC (“KASA” or “the Company”) with a “BUY” recommendation and a 12-month target price of GHS2.29 per share, implying 25% upside potential from the current market price of GHS1.84. Our view is supported by the funded Adeiso expansion, growth in non-alcoholic beverages and lower finance costs, which we expect to strengthen earnings.

Kasapreko Investment Case

Kasapreko has evolved from a largely spirits-focused manufacturer into a diversified total beverage platform, with established alcoholic brands and growing exposure to water, energy drinks and carbonated soft drinks.

The Company’s revenue increased from GHS945.0 million in FY2021 to GHS3.50 billion in FY2025, representing a CAGR of approximately 39%. Non-alcoholic beverages accounted for 55.5% of FY2025 revenue and recorded a 33.9% gross margin, compared with 44.5% of revenue and a 29.6% gross margin for alcoholic beverages.

Our investment case is anchored on four pillars:

• Strong brand equity and a diversified beverage portfolio, supported by established alcoholic brands and growing exposure to water, energy drinks and carbonated soft drinks.
• Funded capacity growth through the Adeiso expansion, with IPO proceeds supporting new water and carbonated soft drink capacity.
• Deleveraging and stronger liquidity, supporting earnings conversion through lower finance costs.
• Strong earnings momentum, while cost control remains important.

Kasapreko’s Adeiso Expansion

The completion of the GHS700 million IPO has materially reduced funding uncertainty around the Adeiso project, with GHS672.5 million of gross IPO proceeds allocated to the facility.

The expansion comprises two water lines and one carbonated soft drink line. Water capacity is expected to increase from 96,000 bottles per hour to 177,000 in 2026 and 258,000 in 2027, while carbonated soft drink capacity is expected to increase from 120,000 bottles per hour to 192,000 by the end of 2026.

With funding secured, the investment case now depends on timely commissioning, capacity utilisation and effective distribution.

Kasapreko 1HY-2026 Financial Performance

Kasapreko’s revenue increased 6.2% year-on-year to GHS1.79 billion in 1HY-2026, with growth accelerating in the second quarter. Q2-2026 revenue increased 8.6% year-on-year to GHS935.6 million, compared with 3.8% growth in Q1-2026.

Cost of sales increased 6.2% year-on-year to GHS1.26 billion, broadly in line with revenue growth, while gross profit increased 6.4% to GHS528.8 million.

Gross margin was broadly stable at 29.6%, compared with 29.5% in 1HY-2025. Q2-2026 gross margin, however, increased by 60 basis points year-on-year to 32.9%, offsetting the 69-basis-point contraction recorded in Q1-2026.

Lower Finance Costs Support Earnings Growth

Operating profit increased 27.4% year-on-year to GHS309.0 million, lifting the operating margin to 17.3% from 14.4%.

However, selling, general and administrative expenses increased 20.2% year-on-year, ahead of revenue growth. Other operating income also moved from an expense of GHS35.4 million to income of GHS42.5 million.

Finance costs declined 24.9% to GHS72.8 million, reducing finance-cost intensity to 4.1% of revenue from 5.8%. Reported interest coverage improved to 4.2x from 2.5x.

Profit before tax increased 26.0% to GHS240.1 million, while net profit increased 23.3% to GHS185.8 million. Net margin consequently improved to 10.4% from 9.0%.

After excluding other operating items and unrealised exchange gains, adjusted profit before tax increased 7.7%, with the adjusted margin remaining broadly stable at 10.9% compared with 10.8%.

Kasapreko Cash Flow and Balance Sheet

Operating cash flow increased 157.1% to GHS185.5 million in 1HY-2026, equivalent to 99.8% of net profit compared with 47.9% in 1HY-2025. Cash generated from operations increased 68.9% year-on-year to GHS317.6 million, while interest paid declined 26.8% to GHS71.0 million.

However, the cash flow improvement was concentrated in Q2-2026, with implied Q2 operating cash flow of GHS182.3 million, compared with GHS3.3 million in Q1. This improvement therefore remains subject to consistency.

Capital expenditure increased to GHS340.4 million, equivalent to 19.0% of revenue compared with 3.7% in 1HY-2025. Free cash flow consequently moved to a GHS154.9 million deficit, from a GHS9.2 million surplus in 1HY-2025, reflecting the current expansion programme.

Following the IPO, net IPO proceeds of GHS677.7 million increased cash to GHS633.6 million, while expansion spending increased property, plant and equipment by 35.8% to GHS1.08 billion.

Debt declined 20.8% to GHS479.9 million, moving Kasapreko from net debt of GHS363.2 million at December 2025 to net cash of GHS153.8 million at June 2026.

However, GHS151.2 million of corporate bonds was classified as current ahead of its 29 January 2027 maturity, making execution of the August–December 2026 sinking-fund plan the key near-term liquidity checkpoint.

Ghana Beverage Industry Outlook

Ghana’s beverage industry spans alcoholic and non-alcoholic categories, including spirits, beer, bottled water, energy drinks, carbonated soft drinks and juices. In 2025, FMCG volume sales increased 13.7% year-on-year, while value sales increased 41.8%.

The industry outlook remains constructive, supported by lower inflation and improved financing conditions. However, renewed cedi weakness continues to expose producers to imported input costs.

Future industry growth is expected to depend more on volumes, product innovation and market penetration than price increases, while affordable pack sizes, distribution and cost control remain important as competition intensifies.

Key Risks to the Kasapreko Investment Case

The key risks to our view and target price include:

• Adeiso execution and utilisation risk: Delays, cost overruns or weak distribution could reduce returns on the GHS672.5 million allocated to the project.
• Core earnings and margin risk: Other operating income contributed significantly to reported operating profit growth, while SG&A expenses increased faster than revenue.
• Input cost and currency risk: Imported sugar, barley, PET resin and packaging materials expose Kasapreko to exchange rates, commodity prices and freight costs.
• Cash flow and refinancing risk: Expansion spending resulted in a GHS154.9 million free cash flow deficit in 1HY-2026, while GHS151.2 million of corporate bonds mature on 29 January 2027.
• Competition and regulatory risk: Competition across spirits, water, energy drinks and carbonated soft drinks could affect pricing power and capacity utilisation, while changes in excise duties, food safety requirements or plastics regulation could affect costs and demand.
• Limited free float and trading liquidity risk: The IPO placed approximately 14.1% of post-IPO shares with public investors, which could limit market liquidity and amplify share price movements.

Kasapreko Target Price and BUY Rating

We value Kasapreko at GHS2.29 per share, representing 25% upside from the GHS1.84 current market price.

Our valuation uses a 60:40 blend of discounted cash flow and relative valuation. The DCF valuation combines FCFF and FCFE estimates and assumes a 16.8% WACC, 18.3% cost of equity and 11.5% terminal growth rate. The relative valuation applies forward P/E and EV/EBITDA multiples from seven listed peers.

We therefore initiate coverage on Kasapreko PLC with a BUY recommendation and a 12-month target price of GHS2.29 per share.

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