Carlsberg's  FY12  profits  of  RM191.6m  (+15.3%  y-o-y)  were  within  expectations. Despite  a  delay  in  Chinese  New  Year  (CNY)  purchases  this  year,  steady  volume growth and stronger premium beer sales  in the domestic market  drove up its FY12 earnings. The group's 4Q bottomline was seasonally weaker as trade speculation in 3Q  led  to  higher stockpiling  among  retailers.  With  2014  CNY  falling  in  end-January next  year,  FY13  earnings  are  likely  to  benefit  from  two  rounds  of  CNY  sales  this year, namely in January and December. Maintain BUY, with FV of RM14.12.

Within expectations. Carlsberg registered 4QFY12 revenue of RM336.5m (+0.5% y-o-y, -18.1%  q-o-q)  and  earnings  of  RM40.5m  (+8.4% y-o-y,  -33.7%  q-o-q).  4Q  is  a  seasonally weaker  quarter  after  a  strong  3Q  amid  trade  speculation  prior  to  the  annual  Budget announcement. Weak  sales  volume  generally  follows  in 4Q  as  retailers  gradually  deplete their high stockpiles. Moreover, the Chinese New Year's celebrations, which took place in February  this  year  compared  to  January  last  year,  pushed  the  annual  festive  purchases into 1QFY13, leading to a flat y-o-y 4Q revenue growth. Full-year FY12 revenue and profits clocked  in  at  RM1,584.8m  (+6.4%  y-o-y)  and  RM191.6m  (+15.3%  y-o-y)  respectively, driven by  steady volume growth and increased premium beer sales. The improved product mix (as a result of its increasing foothold in the premium beer segment) also led to higher ASPs.  The  year's  earnings  represent  100.1%  and  100.9%  of  our  and  consensus estimates.

Malaysia - the bread and butter. Carlsberg's FY12 profit growth was purely driven by its Malaysian  operations,  with  EBIT  expanding  by  18.9%  y-o-y  to  RM169.0m  following  its aggressive  marketing  initiatives  locally  and  widening  brand  portfolio.  Meanwhile,  its Singaporean  business  endured  a  lukewarm  FY12  performance,  with  EBIT  declining  by 3.0% y-o-y to RM74.7m.

FY13 sees double CNY cheer. With the 2014 Chinese New Year falling on 31 Jan 2014, at  least  some  portion  of  CNY-driven  beer  shipments  to  retailers  is  likely  to  take  place  in December  this  year. Should this be the case, the beer manufacturers' 2013 earnings will potentially  book  in  two  rounds  of  CNY  sales.  The  CNY  celebrations  are  by  far  the  most important annual festival for beer consumption in the country.

Maintain BUY. We are keeping our forecasts unchanged and continue to value Carlsberg at  a  FV  of  RM14.12,  based  on  a  FCFF  valuation  (WACC:  7.6%,  terminal  growth:  2.2%). The  company  is  aggressively  expanding  its  presence  in  the  higher-margin  premium  and super  premium  segment,  spearheaded  by  its  two  locally  brewed  premium  brands,  Asahi and  Kronenbourg.  Carlsberg has,  over the  past few  years, successfully  transformed  itself from a single brand company to one with a formidable brand portfolio. With its wide range of  premium  beer  offerings,  we  think  Carlsberg  will  continue  to  give  Guinness  Anchor Berhad (GAB), the current premium beer market leader, a run for its money.

Source: OSK