Suntory Beverage & Food Limited (STBFY)
OTC PINK OTC PINK Primary 
Suntory Beverage's Potential For Margin Expansion Offers Opportunity
Suntory Food & Beverage offers a stable, diversified portfolio of strong regional brands and operates with no material debt, reducing financial risk. The company trades at a relatively inexpensive valuation compared to U.S. peers, providing a margin of safety for investors. Upcoming price increases in Japan and potential improving shareholder focus could boost margins and support future growth, despite recent volume softness.
Suntory: A Buy On Higher Prices And Lower Costs
Suntory is projected to achieve a +13% EBIT growth in 2025, driven by higher product prices and cost optimization measures. Suntory's strong market position in Japan allows it to implement price hikes without significantly impacting sales volume. Suntory can manage raw material costs by altering packaging and product line-ups, which would enhance profitability.
Suntory Beverage & Food: Eyes On Profitability Improvement, Capital Allocation
Suntory's operating profit surged 17.6% YoY in 1H 2024, driven by successful cost management and product mix optimization in Japan. Suntory plans to raise its dividend payout ratio to 40% and invest JPY 300-600 billion in capital investments for the FY 2024-2026 period. My rating for Suntory Beverage is a Buy, taking into account the profitability improvement for its Japanese operations and the company's balanced capital allocation approach.
