GAB registered 6MFY12 earnings of RM121.0m (+17.1% y-o-y),exceeding our expectations. The earlier Chinese New Year festival and  more aggressivemarketing efforts boosted 4Qsales volume, with Tiger remaining as Malaysia's favourite beer while Guinnessand Heineken continued to perform. 2HFY12 should be weaker than the first halfgiven the lack of major alcohol-consuming festivitiesin the coming months (remainsto be seen how much the two upcoming global sporting events will boost sales).Maintain BUY at FV of RM14.20.

Above forecast.GAB posted 2QFY12 revenue of RM468.3m (+11.1% y-o-y, +5.3% qo-q) and earningsof RM65.8m (+1.8% y-o-y, +19.2% q-o-q). 6MFY12 earnings, meanwhile, clocked inat RM121.0m (+17.1% y-o-y) on the back of stronger sales volume. EBIT marginsinched up slightly to 17.7% (+0.2 ppt y-o-y) from favourable brand mix and somelower costs. All in, GAB's half year earnings were above estimates, representing58.9% of our full year forecast and 60.5% of consensus'. When annualized, revenuebeat our estimate by 13.4%.

Yum Seng celebration.The earlier Chinese New Year timing this time around boosted 2Q volume. Coupledwith numerous marketing initiatives (e.g. Tiger Street Football, HeinekenThirst), GAB posted its highest monthly sales volume ever in December 2011. Tigerremains the most popular beer in the country while its premium beer brand Heinekenrecorded double-digit growth. With no beer duty hikes in Budget 2012, we believedomestic MLM volume will continue to enjoy positive growth.

Euro 2012 a kicker?While GAB's 1HFY11 earnings, when annualized, was 18% above expectations, thefirst half of the financial year has traditionally been the stronger half dueto demand from festivities such as Christmas and Chinese New Year. Over thepast six FYs, only FY10 saw earnings skewed towards the second half (with 54%of full year profits). For the remaining five FYs, first half contribution hasaccounted for 52-57%, even during the  Germany World Cup 2006  (4QFY06 profits at 32% of full year)  and Austria/Switzerland  Euro 2008 (4QFY08 profits at 16% of fullyear).  As such, whether theUkraine/Poland Euro 2012 will be a major kicker to volumes remains a question.

Maintain BUY. Weare keeping our earnings forecast under review pending sales volume indicationsduring GAB's analyst briefing on 28 Feb. As of now, we estimate sales volume to grow by 5.5% in FY12. We arekeeping our FV unchanged at RM14.20, based on our FCFF valuation with anunchanged WACC of 8.0% and terminal growth of 2%. We are looking to tweak ourearnings forecast a tad upwards and lower our WACC assumptions following theadoption of debt on its balance sheet.

Source: OSK188