Quick take: Carlsberg shares up after profits beat expectations, record dividend

KUALA LUMPUR: Carlsberg Brewery Malaysia Bhd’s shares soared Friday after its  latest financial results topped expectations coupled with record RM1 dividend.

The brewer, the second top gainer, jumped 50 sen, or 2.32% to RM22.08 with 117,500 shares traded.

Carlsberg’s fourth quarter net profit rose 34.9% to RM67.4mil from RM50mil.

Its revenue for the quarter ended Dec 31, 2018 (4QFY18) rose 22.3% year-on-year to RM525.65mil from RM429.94mil.

Carlsberg declared a fourth quarter interim dividend of 16.6 sen per share, a final dividend of 22.4 sen per share and a special dividend of 9.3 sen per share, amounting to a total of 48.3 sen per share.

This brings its total dividend payout for FY18 to a record high RM1 per share, translating to a payout ratio of 110.3% of the group’s net profit for FY18, its highest ever payout.

CGS-CIMB Research said Carlsberg’s FY18 core net profit of RM272.5mil came in above expectations, at 107% of the house and 103% of Bloomberg consensus’ estimate.

The research house said Carlsberg also declared a final 4Q18 DPS of 22.4 sen and a special DPS of 9.3 sen, bringing FY18 DPS to 100 sen (vs. FY16: 87 sen).

“The 110% net profit payout was above expectations,” it said.

“Heading into 2019, we see two growth drivers for CAB. We expect Singapore operations to improve with better inventory management and restructuring of its operations since 2H18.

“Also, we expect Carlsberg to continue to record stronger sales volume, especially in the premium segment (Asahi, 1664 Blanc, etc) which offers better margins vs.mainstream beers (Carlsberg, etc). This is inline with Carlsberg’s ongoing strategy of premiumisation,” CGS-CIMB said.

The research house has raised its FY19-20F EPS estimates by 8.8-10.6% to factor in higher premium segment sales following Carlsberg’s FY18 results beating expectations.

Our DDM-based target price is raised to RM24.30 while we also roll forward our valuation base year to 2019.

“Our rating is upgraded to Add from Hold given optimism on strong sales volume, growing profitability via premiumisation,and cheaper proxy to consumer sector (trading at 34% discount to current consumer sector CY20 weighted average P/E),” CGS-CIMB said.

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