KUALA LUMPUR (Nov 13): Analysts raised their earnings forecasts for Heineken Malaysia Bhd (KL:HEIM) after the group posted a better-than-expected core net profit performance in its third-quarter results.

In a note on Wednesday, Maybank raised its earnings estimates by 6%-7% for the financial year ending Dec 31, 2024 (FY2024) to FY2026, and increased its 12-month target price for Heineken Malaysia to RM30.20, up from RM28.20.

The research firm said Heineken Malaysia’s outlook remains robust, driven by festive spending expected to boost sales in 4QFY2024.

"The 3QFY2024 results beat our expectations on a lower-than-expected effective tax rate and operating margin expansion. Sales momentum should accelerate, driven by festive spending and expectations for a rise in disposable income in FY2025," it added.

RHB echoed the positive sentiment, raising its FY2024-26 earnings estimates by 6%,4% and 4% respectively, and maintained its 'buy' rating with a target price of RM30.

The firm expects 4QFY2024 sales to benefit from the earlier timing of Lunar New Year in 2025, and a gradual recovery in consumer sentiment.

"In addition, we expect Heineken Malaysia to remain focused on driving operational efficiency and stimulate consumer spending with strategic marketing engagements as well as new product launches," it added.

While RHB acknowledges that broader consumer spending remains cautious amid inflation, it sees Heineken Malaysia's premiumisation strategy, which emphasises premium or exclusive products, and price increases driving earnings growth.

Additionally, Hong Leong Investment Bank (HLIB) also raised its earnings forecasts estimates by 5.7%-7.7% for FY2024 to FY2026. The house kept its 'buy' call with a higher target price of RM34.56, from RM30.71 previously.

HLIB sees strong earnings momentum continuing, supported by improving labour market conditions, higher domestic demand, and the full impact of price hikes.

The research firm also expects Heineken Malaysia to benefit from rising tourist arrivals and a stronger disposable income outlook for FY2025.

"Additionally, the appreciation of the ringgit against the US dollar, amid the US Federal Reserve’s rate cut cycle, should help alleviate Heineken Malaysia's cost pressures," the house added.

In its 3QFY2024 results, Heineken Malaysia posted a core net profit of RM112.3 million, a 23.2% increase quarter-on-quarter and a 28.6% rise year-on-year (y-o-y). For the nine-month period, core earnings reached RM325.9 million, up 13.3% y-o-y.

The results exceeded expectations, driven by higher margins from an average selling price hike and strong cost management.

At the time of writing on Wednesday, Heineken Malaysia’s share price was up seven sen or 3.1% at RM23.62, with a market capitalisation of RM7.14 billion.