1Q16 results beat both our and consensus’ estimates. Maintain BUY, based on a higher DDM-based TP of MYR17.00 (23% upside), as: 1. Valuations appear attractive as Guinness currently trades close to 15.5x 2016F P/E, -1SD of its historical 5-year mean; 2. It offers an appealing estimated dividend yield of 6.4-7.4%; 3. There is headroom to increase ASPs in tandem with the end of the price adjustment moratorium in June.

Margin-enhancing drive to continue. We expect Guinness Anchor (Guinness)to drive earnings growth through sustained margin-enhancing efforts amidst unenthusiastic sales going forward. Strategic cost management across its value chain would include a more effective allocation of resources and greater commercial focus. Aside from that, we are positive on the lapsing of the price adjustment moratorium in June, which would give Guinness more headroom to increase ASPs, in tandem with a possible recovery in consumer spending. Briefing highlights. Retail prices for alcoholic beverages with more than 8% alcohol by volume (ABV) rose by 3-5%, depending on trade channel, as a cost pass-through measure given the recent switch in the basis of the valuation ofexcise duty. Also, despite the excise duty implementation, contraband levels are believed to have declined – largely due to intensified enforcement. Key risks include the outcome of unresolved bills of demand with the Royal Malaysian Customs, proliferation of contraband alcoholic beverages, and slower-thanexpected sales.