PETALING JAYA: Analysts say Heineken NV’s restructuring to relocate large-scale production to established regional breweries in Malaysia and Vietnam, is positive for Heineken Malaysia Bhd
.
This decision will help open a new revenue avenue for Heineken Malaysia through exports to Singapore and broader Asia-Pacific markets.
Heineken NV on Tuesday announced that its subsidiary Asia-Pacific Breweries Singapore (APBS), will progressively phase down large-scale production at its Tuas brewery, the home of its Tiger beer brand, with output reallocated to existing facilities in Malaysia and Vietnam.
In a note to clients, Hong Leong Investment Bank (HLIB) Research said the potential contribution from the new revenue would likely be meaningful for Heineken Malaysia, given that export sales currently account for less than 1% of its revenue.
“We expect Heineken Malaysia’s role to be largely business-to-business supply-driven, with branding, marketing and business -to-consumer execution handled by APBS in Singapore.
“The shift should support higher utilisation at Heineken Malaysia’s plant and improve operating leverage, which in turn could drive margin expansion,” it pointed out.
“Coupled with Malaysia’s geographic proximity, we see Heineken Malaysia likely to be the main supply base for the Singapore market rather than Heineken Vietnam,” added the research house.
An analyst with a bank-backed brokerage said: “We believe growing export exposure could provide earnings diversification and support better valuations for Heineken Malaysia.”
Expanding export sales would help reduce Heineken Malaysia’s regulatory concentration risk as earnings are fully exposed to Malaysia’s policy landscape.
“A more diversified revenue mix could therefore help narrow the valuation gap over time,” he added.
Among brewers, Heineken Malaysia stands out as a key beneficiary of a stronger ringgit given its predominantly domestic sales mix.
For these reasons, HLIB Research has reiterated a “buy” call on the stock with an unchanged target price of RM28.07 per share.
In a report, TA Research said the recent development is expected to provide an incremental earnings support for Heineken Malaysia over the medium term.
Since the operational transition in Singapore would be implemented progressively through the end of 2027, the research house expected the financial contribution to materialise gradually.
While production reallocation could be fulfilled by breweries in both Malaysia and Vietnam, TA Research said Malaysia is better positioned to capture a larger share of exports to Singapore.
Therefore, based on TA Research’s internal assumptions that 60% of Singapore-bound exports are fulfilled by Heineken Malaysia, this could translate into an estimated revenue uplift of RM344.7mil in FY27 and RM360.4mil in FY28 respectively.
“Based on our preliminary estimates, we project Heineken Malaysia’s net profit to increase by approximately 1.5% in FY27 and 6.2% in FY28 after incorporating these assumptions,” it added.
At this stage, TA Research said it has maintained FY26-FY28 earnings forecasts, pending further clarity from management on export allocation to the Malaysia operations and the associated earnings contribution.
It has kept a “buy” call on the stock at a target price of RM25.80 per share.
