PETALING JAYA: Brewer Heineken Malaysia Bhd has been downgraded to a “hold” after reporting a weaker first quarter ended March 31, stemming from soft consumer sentiment.
Analysts who downgraded the stock cited the recent share price run as also another factor for the downgrade.
In a report yesterday, AmInvestment Bank Bhd said it recommended the downgrade from a “buy” with an unchanged discounted cash flow (DCF)-derived fair value of RM19.80 per share on the stock.
“While we like Heineken for its defensive earnings properties, valuations have caught up with our fair value.”
Other research houses also reached the same conclusion on the stock’s valuation following the price gains.
Maybank Investment Bank Research, which has also downgraded the stock to a “hold” from a “buy”, said the shares had gained 12% year-to-date.
“We believe the stock is now fairly valued, with its near-term earnings potential largely factored into the price,” it said.
Affin Hwang Capital also downgraded the stock to a “hold” with a slightly higher target price of RM18.15.
“We finetuned our forecasts after the release of Heineken’s final 2016 accounts and tweaked earnings by 1.4% and 1.5% for 2017 to 2019.
“The share price has reached our old target price and we believe that it is now fairly valued.
“Thus, we downgrade it to a ‘hold’ with a slightly higher 12-month DCF-derived target price of RM18.15 from RM17.92.”
The company reported a marginally lower net profit of RM48.97mil for the first quarter compared to RM50mil during the previous year’s corresponding quarter.