PETALING JAYA: The 10% excise duty hike proposed in Budget 2026 is negative to the brewery sector as demand may be dented in the immediate term before eventually normalising, says RHB Research.
The research house said the last excise duty hike in 2016 did not lead to adverse earnings impact to Heineken Malaysia Bhd
and Carlsberg Brewery Malaysia Bhd’s operations, as it recorded earnings growth of 9% and 15% after March 2016.
“That said, beer average selling prices (ASPs) have been raised twice in recent years (April 2024 and August 2025).
“Hence, the upcoming increase to could see a stronger impact on demand after also considering the current subdued consumer sentiment on the back of inflationary pressures.
“Contraband trade, which has been kept largely at bay in recent years (estimated 25% market share), could capitalise on the wider ASP gap.
“We cut our financial year 2026 (FY26) and FY27 forecast earnings by 4% and 3% respectively to reflect more conservative volume assumptions,” the research house noted.
RHB Research anticipated a frontloading this month before the higher excise duty hike kicks in – hence a muted impact to FY25 forecast earnings.
“We foresee the companies intensifying their marketing efforts via consumer engagements and value promotion to stimulate consumption.
“Meanwhile, the government’s commitment to Visit Malaysia Year 2026 could drive higher volumes by accelerating the robust tourist arrival momentum.
“We expect profit margin to remain elevated underpinned by the price increase in August this year, continuous efficiency gain, and favourable input costs and foreign exchange. Hence, the generous dividend payout will continue.
“Risks to our recommendation include weaker-than-expected consumer sentiment and a sharp surge in contraband market share,” the research house added.
Despite the headwinds, RHB Research maintained its “buy” call on Heineken, with a target price of RM26.50 per share from RM30.50 previously.
“Our target price drops to RM26.50 after we tweak our risk assumptions to reflect the risk of rising contraband market share.”
