HLIB Research said the earnings impact resulting from the delisting of Asahi will begin to manifest in the upcoming quarters.
PETALING JAYA: The earlier timing of Chinese New Year (CNY) this year is set to spur Carlsberg Brewery Malaysia Bhd
’s (Carlsberg Malaysia) earnings for its first quarter ending March 31, 2024 (1Q24).
UOB Kay Hian (UOBKH) Research noted that the early CNY in 2023 also resulted in more pre-sales being captured that year.
“Buying ahead of CNY should result in a seasonally strong 1Q24 for Carlsberg Malaysia.
“However, organic growth in 2024 may be more muted, given the persistent headwinds clouding consumer sentiment. As such, we continue to expect a relatively flat volume growth (0.5% year-on-year) in 2024,” UOBKH Research said in a report.
With the upcoming implementation of subsidy rationalisation and higher consumption taxes anticipated to impact consumption, RHB Investment Bank Bhd said Carlsberg Malaysia’s top line growth is expected to be sustained by the relatively inelastic demand for beer and healthy legal total industry volume.
“In addition, the group’s premiumisation strategy will continue to drive favourable average selling prices and target the higher income groups that are more insulated from inflationary pressures.”
Additionally, the research house said the company also announced plans to further upgrade its production facilities to drive operational efficiency.
“This will be effective in mitigating any input cost inflation arising from unfavourable foreign-exchange rates and hike in the service tax, with management expecting commodity prices to stay stable.”
Hong Leong Investment Bank (HLIB) Research, meanwhile, said the earnings impact resulting from the delisting of Asahi will begin to manifest in the upcoming quarters, with the group estimating a net profit reduction of about RM30mil in its current financial year (FY24).
“However, we anticipate that this impact will be cushioned by the introduction of its Sapporo premium beer, which is brewed locally and is now available in the market.
“Despite the absence of sales volume from the Asahi brand, we expect lower sales to be cushioned by the continued influx of foreign tourists to Malaysia and Singapore; as well as the anticipation of gradual improvement in labour market conditions and income prospects in Malaysia,” it said.
This, the research house said, will support the demand for existing brands.
Additionally, HLIB Research said lower raw material costs and the expected strengthening of the ringgit against the dollar are poised to further support the group’s earnings performance for FY24.
For 4Q23, Carlsberg Malaysia saw its revenue decreasing by 5.3% year-on-year to RM580.5mil, while net profit increased by 39.7% to RM84mil.
In FY23, Carlsberg Malaysia witnessed an 8% decline in mainstream beer sales, while premium beers experienced a 15% drop compared to FY22.
UOBKH Research said the company’s 4Q23 results were within expectations.
“While revenue was seasonally strong, core earnings saw a sequential decline as increased marketing spend offset the improved volume.
“Full-year earnings are relatively flat as the absence of the prosperity tax cushioned the impact of declining sales.”
