KUALA LUMPUR: Off the back of a strong third-quarter performance, Carlsberg Brewery Malaysia Bhd
is expected to put in a commendable fourth quarter result amid strong foreign tourist arrivals, and sporting events such as the 2022 Fifa World Cup and Singapore Grand Prix.
Hong Leong Investment Bank (HLIB) Research, which said the recent 8M22 core net profit announcement exceeded both its and consensus expectations, said it is pencilling in a higher sales volume assumption and average selling price for the brewer.
"Post-earnings adjustment, Our TP is subsequently raised to RM30.77 (from RM28.88 previously), implying a PE valuation of 27.8x (at its 5-year mean) on its FY23f EPS of 112.7 sen," it said, while maintaining a "buy" recommendation.
HLIB said it is also bullish on Carlsberg as the depreciating ringgit is expected to continue lifting its export sales, which represents about 30% of total group sales.
Additionally, the rate of exhchange is also expected to hedge the group's higher raw material costs.
"We are also not overly concerned about the potential demand erosion following Carlsberg raising its beer prices on 1 July, considering that beer remains the cheapest alcoholic drink in the market, thus relatively inelastic demand.
"Separately, we applaud the government initiatives on
curbing alcohol smuggling in Budget 2023, which is a boon to brewers whose sales have been cannibalized by the illicit," said the research firm.
