PETALING JAYA: The country’s brewers are heading into a period of transition, as investors weigh the impact of the 10% excise duty hike in November.
However, analysts remain largely positive on the sector’s resilience and margin strength.
Hong Leong Investment Bank (HLIB) Research and RHB Research believe that short-term demand volatility will be offset by frontloaded sales, efficiency gains and tourism-led consumption next year, maintaining their “buy” calls on Heineken Malaysia Bhd
.
HLIB Research reported that Heineken’s nine-month ended Sept 30, 2025 (9M25) core net profit rose 2.9% year-on-year (y-o-y) to RM320.6mil, coming in within expectations.
The brewery’s strong third quarter (3Q25)saw a sharp 38% quarter-on-quarter (q-o-q) earnings jump, fuelled by frontloading activities ahead of the August and September price hikes and effective revenue management.
Sales rose 21.6% q-o-q as both on-trade and off-trade channels performed robustly, aided by improved distribution and operational efficiency. The research house expects this momentum to spill over into 4Q25 as consumers stock up before the higher excise duty takes effect.
This, combined with year-end festivities, should underpin another strong quarter.
HLIB Research projects that brewers will raise beer prices by about 6% to offset the excise-duty hike. “Nevertheless, we believe any volume decline would be temporary and could be cushioned, if not fully offset, by Visit Malaysia 2026 and the Fifa World Cup effects,” it said.
Operationally, Heineken’s ongoing digital transformation, through its “Digital Backbone” and “Eazle” platforms, has improved order management and efficiency, reflected in a two percentage point expansion in operating margin.
HLIB Research has maintained its “buy” rating with an unchanged target price of RM27.14, based on 18 times mid-financial year 2026 (FY26) price-to-earnings ratio, citing Heineken’s brand leadership, strong pricing power and consistent dividend track record.
RHB Research shared a similarly upbeat stance, maintaining a “buy” call with a target price of RM26.50, implying 23% upside and a forecast FY26 yield of around 7%.
The research house expects frontloading in October 2025 before the new excise duty kicks in, followed by a temporary slowdown in volumes. However, it foresees breweries ramping up marketing and consumer engagement to sustain consumption.
“We expect profit margins to remain elevated, underpinned by the price increase in August, continuous efficiency gain and favourable input costs and foreign exchange. Together with the effective clampdown efforts to contain contraband trades, we expect the generous dividend payout to continue,” it said.
Heineken’s 9M25 results were “broadly within expectations,” with net profit at RM318mil, down 2% y-o-y due to tax normalisation, though pre-tax profit climbed 2% to RM419mil on margin gains.
The brewer’s 3Q25 was notably strong as revenue surged 22% q-o-q to RM656mil and pre-tax profit margin hit a record 22.7%, lifting net profit by 36% sequentially.
RHB Research expects earnings to improve further in 4Q25, in line with historical seasonal trends, and sees no need to revise its forecasts. Importantly, the firm believes the negative impact of the excise duty hike is already factored into current valuations.
