Period     1QFY13 / 3MFY13 

Actual vs. Expectations     CARLSBG’s 3MFY13 net profit of RM50.5m came in within expectations, making up 24% of ours and the street’s FY12 full year estimates of RM210.2m and RM207.5m respectively. 

Dividends    No dividend was declared, as expected.

Key Results Highlights   QoQ, earnings grew 25% from RM40.5m to RM50.5m despite underpinned by a strong growth in revenue. Its revenue saw an increase by 40% from RM336.5m to RM470.8m. The higher revenue was due to the peak of Chinese New Year festive period.

YoY, although its revenue grew 4% from RM454.0m due to the positive growth in its premium beer segment and better Chinese New Year sales, its earnings dipped 3% from RM52.4m to RM50.5m. The dip in earnings was due to a lower contribution from its associate company in Sri Lanka (-55%) and the one-off costs write back in 2012 for Singapore segment coupled with a higher effective tax rate of 23.3% (+1.6ppt).

Outlook    Given CARLSBG’s strong presence in the premium beer market and participation in English Premier League sponsor for the next 3 years, we believe that CARLSBG will continue to maintain its growth momentum.

Change to Forecasts    No changes to our earnings forecast.

Rating    Downgrade to UNDERPERFORM.

We are downgrading CARLSBG to UNDERPERFORM from OUTPERFORM given its rich valuation, which implies a 23.6x PER to its FY13 earnings.

Valuation     Our DCF-base target price of RM15.53 raised by 9% from RM14.22 as we rolled forward our valuation to FY14.

Risks    A higher than expected excise duty hike, input cost and decline in its market share.

Source: Kenanga