Review

• Carlsberg Brewery Malaysia Berhad’s (Carlsberg) 9MFY24 core net profit of RM255.1mn came in within ours and consensus expectations at 76% of the full-year forecast.

• For 3QFY24, core net profit soared by 19.8% YoY to RM91.0mn, alongside revenue growth of 8.3% YoY to RM555.9mn. This commendable quarterly performance was driven by improved results from its Malaysia operations, which offset the decline in its Singapore operations.

• Cumulatively, 9MFY24 revenue rose by 6.5% YoY to RM1.8bn, while core earnings improved by 2.4% YoY. The better results were underpinned by higher turnover in its Malaysia operations and stronger performance from its associate in Sri Lanka (+30.8% YoY to RM24.8mn), which helped offset weaker results from its Singapore operations.

• Malaysia. In 3QFY24, EBIT surged by 22.5% YoY to RM90.4mn, driven by higher revenue of RM413.6mn (+14.2% YoY). The increase in revenue was due to a price adjustment in April 2024 and an improved product mix. Cumulatively, 9MFY24 turnover rose by 9.6% YoY to RM1.3bn, while EBIT grew by 11.0% YoY to RM272.3mn, supported by the April 2024 price increase and a longer Chinese New Year sales period for its Malaysia operations compared to the previous year. As a result, the 9MFY24 EBIT margin increased slightly by 0.3%-pts YoY to 20.6%.

• Singapore. 9MFY24 EBIT slid 17.7% YoY to RM51.9mn, while revenue dropped marginally by 1.5% YoY to RM470.4mn, as lower sales were offset by higher CNY sales. Sequentially, 3QFY24 EBIT declined by 6.1% YoY to RM15.3mn, as sales declined by 6.0% YoY to RM142.4mn. The disappointing results were mainly due to lower premium sales resulting from the transition of the Asahi brand to the Sapporo brand.

• In this quarter, Carlsberg declared a third interim dividend of 23.0sen/share (3QFY23: 19.0sen/share), which is higher than the 62.0sen/share declared in 9MFY23 (9MFY24: 65.0sen/share).

Impact

• FY24-26F earnings projections remain unchanged.

Outlook

• In the upcoming quarter, we expect the on-trade channel to remain resilient, especially with Christmas and year-end activities, which could boost out-of-home consumption.

• Looking ahead, we reckon that Singapore’s demand will gradually recover, driven by higher tourist arrivals and increased brand awareness of Sapporo.

Valuation

• Based on a DCF valuation (k: 8.1%, g: 3.0%) and a 3% ESG premium, we have maintained our TP for Carlsberg at RM24.10/share, Reiterate Buy.

Source: TA Research - 11 Nov 2024