PETALING JAYA: 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 nine-month financial year 2022 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 target price is subsequently raised to RM30.77 (from RM28.88 previously), implying a price-to-earnings valuation of 27.8 times (at its five-year mean) on its financial year 2023 forecast earnings per share of 112.7 sen,” it said, while maintaining a “buy” recommendation.
HLIB Research 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 exchange 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 July 1, 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 cannibalised by the illicit,” said the research firm.
