Compañía Cervecerías Unidas S.A. (CCU): A Bull Case Theory

We came across a bullish thesis on Compañía Cervecerías Unidas S.A.  on Cayucos Capital’s Substack. In this article, we will summarize the bulls’ thesis on CCU. Compañía Cervecerías Unidas S.A.’s share was trading at $11.65 as of July 28^th. CCU’s trailing P/E was 12.43 according to Yahoo Finance.

Compania Cervecerias Unidas (CCU), Chile’s dominant brewer with nearly 70% market share and a longstanding partnership between Heineken and the Luksic family, trades near historical trough valuations despite resilient fundamentals. The market’s bearish narrative around global alcohol consumption, especially beer, has driven widespread pessimism, yet Chilean beer demand has held up, benefiting from an economy buoyed by elevated copper prices.

CCU’s Chilean operations, accounting for the majority of sales, remain stable with potential for margin recovery as economic conditions normalize. Argentina, representing roughly a quarter of revenues, has been a persistent drag amid triple‑digit inflation and capital controls, yet offers substantial upside if President Milei’s reforms stabilize the economy; CCU’s exposure here is effectively a free option, as current valuations assign little value to this business. Colombia, where CCU has invested nearly $500 million in a joint venture, is early stage with upside potential.

Balance sheet leverage at 3x EBIT is mitigated by over $500 million of dollar‑denominated cash, providing a war chest for opportunistic expansion. With Heineken and Luksic providing strategic oversight, CCU’s governance is a key strength, underpinned by a seasoned management team. Despite short‑term headwinds from currency depreciation and Argentina’s volatility, CCU’s leading market position, ability to reprice, and operational resilience support durable cash flows.

At current levels, the stock implies little more than the value of the Chilean operations, granting investors free optionality on a recovery in Argentina and Colombia. As market narratives shift, a rerating could unlock significant upside, offering an attractive risk/reward profile for contrarian investors.

Previously, we covered a bullish thesis on Molson Coors Beverage Company (TAP) by Tyler Moody in September 2024, which highlighted its broad beverage portfolio, stable profits, and defensive appeal with modest undervaluation. The company’s stock price has depreciated by approximately 9.79% since our coverage, as the valuation re‑rating did not play out. The thesis still stands as TAP offers steady cash flows. Cayucos Capital shares a similar view but emphasizes CCU’s dominant Chilean market share and optionality in Argentina and Colombia.

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Disclosure: None.