Stock Name: CARLSBG
Company Name: CARLSBERG BREWERY MALAYSIA BHD
Research House: OSK

Carlsberg Brewery Malaysia Bhd
July 22, RM5.04
Maintain buy at RM5 with target price of RM5.30: Through 70%-owned subsidiary Luen Heng F&B Sdn Bhd, Carlsberg now holds the right to distribute and market all Asahi beer brands and'' products in Malaysia beginning this month. Carlsberg expects to drive sales of Asahi beer via its distribution network. Distribution will be centred on on-trade (hotel, restaurant, caf'') and off-trade (supermarkets) channels.

Although Asahi beer commands a small market share of less than 1% in Malaysia, Carlsberg intends to expand the brand's presence by leveraging the group's distribution network. The move will benefit both Carlsberg and its Japanese partner Asahi Breweries. Carlsberg will'' expand its brand coverage to compete with market leader Guinness Anchor while Asahi gets to grow its presence in Malaysia.

Available at premium pricing at both on-trade and off-trade channels, Asahi will be priced on par with other premium beers such as Hoegaarden'' and Kilkenny.

Pricing may well be some 20% to 38.5% (as per its price at Cold Storage) higher than standard lagers such as Tiger and Carlsberg's Green Label at off-trade channels while those at on-trade channels will be priced at the respective outlets' discretion, although still at a premium.

The newly-acquired rights came with the introduction of three new stock-keeping units. Apart from the typical 330ml cans, 330ml bottles and larger 640ml bottles, the collaboration will also see the introduction of a new 135ml can, enlarged one-litre can and also a two-litre giant-sized can.

Excluding the larger one and two-litre cans, which are currently only available at duty-free outlets, the other variants are available at all distribution channels.

In view of the smallish market share of Asahi beer brands in Malaysia, there should be no major earnings impact on Carlsberg. Nonetheless, the inclusion of Asahi into Carlsberg's brand portfolio will certainly be a boost since the Asahi brand can now leverage on Carlsberg's distribution network. Furthermore, Asahi is a brand familiar to the Malaysian market, being widely known in Japanese restaurants and AEON's Jusco supermarkets. ' OSK Research, July 22


This article appeared in The Edge Financial Daily, July 23, 2010.