Period 3Q12 / 9M12
Actual vs. Expectations The 9M12 net profit of RM151.2m came in above expectations, making up 85% and 83% of ours and the street's FY12 full year estimates of RM177.4m and RM182.7m respectively.
Dividends No dividend was declared as expected.
Key Results Highlights YoY, it recorded improved sales of RM1,248.3m, which were up by 8.1% due to its successful marketing and campaign for two major events namely CNY 2012 and EURO 2012. A positive growth was also seen in its premium beer segment, which saw its net profit rising by 17.4% to RM151.2m.
QoQ, the company's 3Q12 net profit of RM61.1m improved by 68% on the back of a 7.2% increase in revenue. The strong earnings growth was attributable to the improvement of its operating margin from 12.6% to 19.4%. Geographically, its Malaysia and Singapore's businesses expanded by 6.1ppt and 7ppt to 17.5% and 23.6% respectively. This was largely due to the better pricing and lower production cost at its premium beer segment.
Carlsberg has also started to locally brew two of its premium brands, i.e. Asahi and Kronenbourg starting from this year given the positive demands for the two beers.
Outlook Moving forward, with CARLSBG's strong presence in the premium beer market, we believe that CARLSBG will be able to deliver another strong set of earnings in its coming quarters, supported by the upcoming festive seasons, i.e. Christmas and CNY.
Change to Forecasts We have tweaked our FY12E and FY13E earnings forecasts higher by 7.8% and 5.6%, respectively, as we had lowered our import duty assumptions.
Rating Maintain OUTPERFORM.
Valuation We have revised our Target Price higher to RM14.22 from RM14.10, which is in-line with our earnings upgrade. Our TP is derived from a DCF valuation model with a WACC of 8.6% and terminal growth of 1.5%, which also implies PER of 22.9x-20.8x on its FY12E-FY13E earnings.
Risks A higher than expected excise duty hike, input cost and decline in its market share.