KUALA LUMPUR: Affin Hwang Capital Research believes Heineken Malaysia Bhd
will continue to maintain its dominant position in the domestic malt liquor market because of its strong brand portfolio and solid brand name.
Following its CY2016 earnings which came in above expectations, the research house on Thursday maintained its Buy call on the stock with a target price of RM17.92.
Heineken Malaysia’s CY2016 earnings grew by 15.1% to RM 273.3mil compared to RM237.4mil in CY2015, mainly due to 6.6% sales growth, more effective cost controls and lower tax rate in the December quarter, it said.
As the company had recently announced the change of its financial year end from June 30 to Dec 31, its latest reporting period was for a period of 3 months and 18 months, from October 1, 2016 to December 31, 2016 and from July 1, 2015 to December 31, 2016 respectively.
“Higher revenue growth was attributable to continued volume growth for the premium brands such as Heineken and Guinness and robust growth in the Off-Trade segment that was mostly driven by earlier timing of Chinese New Year,” the research house said.
While profit before tax grew by 3.7% on-year, net profit grew by 15.2% on-year mainly due to lower tax rate of 14.5% compared to 23% in the same period last year, it noted.
“Heineken Malaysian plans to continue to concentrate on the growing premium segment which is a higher margin segment and also extend its current portfolio where relevant, for example, variations of Tiger White and Anchor, as well as in the near beer categories such as Strongbow cider, to target new consumers,” it said.
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