CGSI Research maintained a “positive” outlook on the group’s revenue and net profit in FY25.
PETALING JAYA: Heineken Malaysia Bhd
is expected to deliver stronger sales in 2025 supported by higher disposable income and increased tourist activity in Malaysia, according to analysts.
Hong Leong Investment Bank (HLIB) Research said the brewer’s core net profit in the fourth quarter of 2024 (4Q24) of RM136.3mil is within its expectations.
This brought Heineken’s financial year 2024 (FY24) core earnings to RM447.9mil, representing a 15.8% increase year-on-year (y-o-y). “The result is in line with both our and consensus expectations, achieving 104% of respective full-year forecast.
“The FY24 core profit after tax was arrived at after deducting the estimated reinvestment tax allowance of RM18.8mil,” the research house said in a report yesterday.
On a y-o-y basis, Heineken’s sales rose by 13% due to the impact of the average selling price (ASP) hike in April 2024, along with the stronger sales during the year-end festive season.
“This, along with a lower tax rate and effective commercial execution, helped to catapult core profit after tax’s growth by 37.5%,” HLIB Research said.
The research house said factors including a widespread distribution network coupled with its status as the most affordable alcoholic beverage in the market, had helped to position the brewer to benefit from the minimum wage hike from RM1,500 to RM1,700 effective this month.
“In addition, a steady labour market, supported by low unemployment rate and resilient domestic demand, should drive beer sales. The potential strengthening of the ringgit versus the US dollar could help to ease some of Heineken’s cost pressures,” HLIB Research said.
The research house has a “buy” call on Heineken with a target price of RM34.56 based on 23 times FY25 forecast earnings per share of 150.3 sen.
Meanwhile, CGS International (CGSI) Research maintained a “positive” outlook on the group’s revenue and net profit in FY25 given that consumer sentiment remained buoyant, supported by the robust macroeconomic environment as well as continued tourism activity.
“It is providing Malaysian consumers with greater confidence to increase discretionary spending,” it said.
The research house raised its FY25 and FY26 net profit estimates for Heineken by 6.8% and 6.1%, largely to reflect higher volumes and a lower tax rate in FY25.It said Heineken’s better net profit in 4Q24 had led to an improvement in dividend per share (DPS), with a final DPS of RM1.15, bringing FY24 DPS to RM1.55.
The group’s effective tax rate of 19.1% (down 5.9% points y-o-y) remained low, on the back of reinvestment allowances for its investments in its plant.
“No guidance was provided on the extent of reinvestment allowances for FY25, but we have reduced our FY25 effective tax rate by 0.5% points to 23% to reflect likely reinvestment allowances,” the research house added.
CGSI Research reiterated its “add” call on Heineken with a target price of RM31.90.
TA Research said the expected 25.6% y-o-y increase in international tourist arrivals, to 31.4 million this year, is expected to boost on-trade beer volume, driven by higher beer consumption in night clubs, bistros and pubs.
