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Research houses keep optimistic view on local brewers

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Maybank Investment Bank, TA Securities maintain ‘buy’ calls on Carlsberg, Heineken.

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Carlsberg and Heineken received favourable recommendations from analysts following their latest quarterly results.

PETALING JAYA:
Maybank Investment Bank (Maybank IB) has maintained its ‘buy’ call on Carlsberg at RM20.68 with an unchanged target price (TP) of RM24.70 today.

The research house noted that the brewer’s results for the second quarter of 2023 (Q2 2023) were in line with expectations.

In a note today, Maybank IB said it anticipates relatively subdued sales momentum across Carlberg’s sales channels in Q3 2023.

However, it noted that the group’s performance should improve in the subsequent quarter due to the seasonally stronger festive spending during that period.

In addition, it emphasised the absence of the Prosperity Tax will further contribute to the group’s earnings growth for this year.

“We maintain our earnings projections, ‘buy’ recommendation, and discounted cash flow (DCF) TP of RM24.70 that is calculated with a weighted average cost of capital of 8% and long-term growth of 2.5%,” it said today.

In response to diminishing consumer consumption, the research house expects Carlsberg will continue to ramp up its advertising and promotion expenditure to stimulate sales across its on-trade and off-trade channels in the mainstream category.

Reporting on its premium portfolio, the research house reported that Carlsberg had discontinued its distribution agreement with Asahi for Malaysia and Singapore.

The company is now in the process of introducing other premium offerings such as Kronenbourg 1664, Connor’s Stout, Porter, and Somersby. However, no brand name has been confirmed at this juncture.

TA Securities raises TP for Heineken

Meanwhile, TA Securities has maintained its “buy” call on Heineken Malaysia Bhd at RM25.82, with a higher TP of RM31.90, from RM31.40 previously based on unchanged DCF variables.

TA Securities has revised down the group’s earnings projections by 5.9% for financial year 2023 (FY2023), 2.3% (FY2024) and 0.2% (FY2025) in response to market adjustments.

The research firm noted that Heineken has maintained a cautious stance on its immediate outlook, given challenging macroeconomic factors that could suppress consumer sentiment.

Moving forward, it said that Heineken aims to enhance operational efficiency to optimise its profitability.

“We anticipate an improvement in economic conditions for the second half of FY2023, following the resolution of post-2023 state elections political uncertainties.

“There are expectations that the government will introduce supplementary stimulus measures to provide more substantial support to the nation’s economy and propel it towards a more robust trajectory” it said.

As at 12.28pm, Carlsberg’s share price was up by 4 sen or 0.19% at RM20.72, giving it a market capitalisation of RM6.34 billion.

Meanwhile, Heineken shares were up by 52 sen or 2.01% at RM26.34, valuing the company at RM7.96 billion.

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