Carlsberg has been a well-established brewing company for a long time. Being able to penetrate into different markets, the green label Carlsberg has become a popular branding among consumers. However, faceoff from its powerful competitor such as Guinness Anchor Berhad, it is difficult for it to fight for beer market share in such an intense market. However, one thing good about brewery industry is that they need not much research and development expenditure to survive in the market. On the other hand, acquisitions of subsidiaries may exhaust much of the company's cash reserve. With clubbing and pub industry on the grow in Malaysia, demand of alcoholic beverage is on the rise as well which in turn guarantee the future earnings of brewing manufacturer.
As alcoholic substance may be abused and misused, government monitors the distribution closely and imposes heavy duties at the same time to curb the demand of alcoholic beverage. This makes the industry having hard time in expanding their business in Malaysia. Also, recent import of cheap brewing products from Thailand and Indonesia has further slashed the market share of local established brewing company.
Based on the ten years cash flow from operating activities, although there are fluctuations in between, we can see that Carlsberg find its way up in slow but steady pace. Both ratios are up to satisfactory as not much capital expenditure is required to support the business manufacturing line. Judging from its cash flow statement, Carlsberg maintains a high cash level for several years which indicates a good cash management. However, price earning at 19 is considered high which means the company is overbought. The company potential has been realized.
Stock: CARLSBRG Code:2836
Stock: CARLSBRG Code:2836
