UPDATE 1-RESEARCH ALERT-San Miguel Brewery a buy says Citigroup

(Adds details, updates share price)

MANILA, June 20 (Reuters) - Citigroup issued a buy recommendation on San Miguel Brewery (SMB.PS), the Philippines' biggest drinks group, as it started coverage of the stock, with a target price of 10.3 pesos (23 US cents).

The stock was unchanged at 8.40 pesos in late trade on Friday.

Citigroup said in a research note it sees profitability upside in San Miguel Brewery, the crown jewel in the empire of Southeast Asia's biggest food and drinks conglomerate San Miguel and the biggest local IPO so far this year, despite a mature domestic market.

Citigroup was the lead underwriter for San Miguel Brewery's $147-million IPO in May. The drinks group is valued at around $2.9 billion and is among the Philippines 10 biggest listed firms.

A better product mix and reduced costs pressures, partly due to its alliance with Japanese brewer Kirin (2503.T), will drive profits in the company, Citigroup said.

Citigroup said its target P/E multiple for San Miguel Brewery of 15.3 times is at a 15 percent discount to global peers. ($1 = 44.36 pesos) (Reporting by Rosemarie Francisco; Editing by Lincoln Feast)