PETALING JAYA: Carlsberg Brewery Malaysia Bhd was the top gainer on Bursa Malaysia in early trading today after its net profit rose by 5.1% year-on-year (y-o-y) to RM333.2 million in FY2023.
Its decent financial performance also prompted several research houses to reiterate their “buy” calls on the brewer.
The stock climbed as much as 42 sen or 2.2% to RM19.86 shortly after the opening bell. It pared its gains by the mid-day break, up 28 sen or 1.44% at RM19.72, valuing the group at RM6.03 billion.
Research houses anticipate an uptick in sales for Carlsberg, fuelled by an increasing number of foreign tourists to Malaysia and Singapore.
TA Securities, which maintained its “buy” call with an unchanged target price of RM22.90 per share, expects Carlsberg’s Q1 FY2024 revenue to remain strong on the back of Chinese New Year (CNY) sales.
“Thereafter, management expects an increase in sales and service tax (SST) to drive up costs, especially logistics costs. Note that food and beverages are exempted from the proposed SST hike to 8% from 6% currently,” it said.
The research house noted that the FY2023 net profit rose despite a weaker revenue of RM2.3 billion (-6.3% y-o-y). “We attribute the better performance to the absence of prosperity tax of RM21.6 million and deferred tax income of RM11.3 million.
“The drop in sales was due to lower revenue in both Malaysia (-7.1% y-o-y) and Singapore (-4.3% y-o-y) as consumers pulled back on discretionary spending and a shorter CNY sales period in 2023,” it said.
It noted the Q4 FY2023 net profit rose 10.6% to RM84 million, in tandem with a higher revenue of 13.1% to RM580.5 million, thanks to the year-end festive period and lower tax rate.
Moving forward, TA believes that its profit before tax margin will decline in FY2024 due to higher spending on advertisement and promotions for the 2024 Summer Olympics in Paris and Euro 2024 in Germany.
Meanwhile, RHB Research said the brewer’s FY2023 results missed expectations on a weaker-than-expected profit margin.
“That said, we continue to like the brewery sector for the steady demand for beer and continuous operational efficiency gains to mitigate cost inflation. Its generous dividend payout ratio will be supported by robust cash flow generation,” it said.
Carlsberg declared a final dividend of 31 sen (vs 25 sen in Q4 FY2022), bringing total dividend for FY2023 to 93 sen (vs 88 sen in FY2022), translating to an 85.3% payout ratio.
RHB said while the implementation of subsidy rationalisation and higher consumption taxes should impact consumption, it expects Carlsberg’s topline growth to be sustained by the “relatively inelastic demand for beer” and healthy legal total industry volume.
RHB maintained its “buy” call but reduced its TP to RM22.20 from RM22.70.