Better prospects for Heineken Malaysia

KUALA LUMPUR: There are happier times ahead for Heineken Malaysia Bhd as the government has given the green light for entertainment outlets to resume operations from May 15, 2022, which should help the brewer's revenue recovery in on-trade channels.

Kenanga Research said in a note it was raising its forecasts on the group given that the transition to endemicity has allowed the hospitality and F&B industries to resume normal operating hours.

"With the reopening of tourism and leisure activities, we are optimistic of the group’s outlook and thus, bump up FY22E and FY23E earnings by 16% each.

"With that, we upgrade our call to 'outperform' and TP higher to RM27.40," it said.

In a recent earnings announcement, Heineken recorded a profit after tax and minority interests (Patami) of RM113.4mil for 1QFY22, which was above Kenanga's and consensus expectations at 40% and 41% of their full-year estimates respectively.

According to Kenanga, the group's revenue was up 27% to RM698.3mil due to the easing of Covid-19 restrictions and successful commercial executions during Chinese New Year, which drove sales.

It added that revenue was also aided by a prike hike in 4QFY21 for certain products as well as promotions.

While operating expenses increased in tandem with the higher revenue, Heineken's earnings before interest, tax, depreciation and amortisation (Ebitda) improved four percentage points due to cost management initiatives and optimisation of marketing spend.

Moving forward, Kenanga said the inelasticity of beer demand should help to shield it from any hike in product prices owing to higher raw and packaging materials prices.

"With unchanged excise duties on beers and reopening of the economy and tourism sector, we are optimistic of the group’s outlook," it added.

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Kenanga , Heineken Malaysia , brewer , beer , F&B , entertainment


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