Stock Name: CARLSBG
Company Name: CARLSBERG BREWERY MALAYSIA BHD
Research House: MAYBANK
Carlsberg Brewery Malaysia Bhd
(May 31, RM4.84)
Upgrade to buy from hold at RM4.73 with revised target price of RM5.50 (from RM4.60): Carlsberg's 1Q10 performance raises confidence that it will be able to realise the full measure of potential sales and synergies at Carlsberg Singapore Private Ltd (CSPL) of at least RM25 million net profit in 2010. We raise 2010-12 forecasts by 20%-22% and our discounted cash flow-based (DCF) target price to RM5.50 (from RM4.60) as a result.
1Q10 net profit of RM37.8 million was up 76.9% year-on-year (y-o-y) and 90.6% quarter-on-quarter (q-o-q). This was due to revenue growth of 30.6% y-o-y and 26% q-o-q coming from CSPL, which contributed, to 22.6% of this quarter's y-o-y sales growth. The slightly later Chinese New Year (CNY) in February 2010 (versus early January 2009) also allowed Carlsberg to capture a fuller part of the festive period's sales from the trade's stocking-up activities.
1Q10 net profit alone formed approximately 33% of our and consensus' full-year forecasts. Other than top-line growth, this was also boosted by improvements in earnings before interest, tax, depreciation and amortisation (Ebitda) margin, which stood at 14% in 1Q10 as compared to 11.4% in the corresponding quarter of 2009. Lower effective rate of 22.6% (-4 percentage points y-o-y, -2.5% percentage points q-o-q) due to lower tax rate in Singapore also contributed to the commendable bottom-line growth.
Carlsberg's 12-month moving average (MA) revenue totalled RM1.13 billion, or RM173.5 million more than its corresponding 12-month MA revenue of RM960.6 million. Allowing for new sales of RM131.9 million at CSPL, this implies that Carlsberg's 12-month MA revenue rose by RM41.6 million or 4.3%. This was less than its rival's RM66.7 million or 5.3% increase in 12-month MA revenue to RM1.33 billion. Thus, Carlsberg's revenue market share fell by 0.3 percentage point in 1Q10 to 43% as its rival Guinness' revenue market share grew more quickly.
With the World Cup football coming up next and the strong start from Singapore's two new integrated resorts, we see no reason for any tapering of near-term sales growth. We are placing our dividends forecasts under review for a potential upgrade. ' Maybank IB, May 31
This article appeared in The Edge Financial Daily, June 1, 2010.
Company Name: CARLSBERG BREWERY MALAYSIA BHD
Research House: MAYBANK
Carlsberg Brewery Malaysia Bhd
(May 31, RM4.84)
Upgrade to buy from hold at RM4.73 with revised target price of RM5.50 (from RM4.60): Carlsberg's 1Q10 performance raises confidence that it will be able to realise the full measure of potential sales and synergies at Carlsberg Singapore Private Ltd (CSPL) of at least RM25 million net profit in 2010. We raise 2010-12 forecasts by 20%-22% and our discounted cash flow-based (DCF) target price to RM5.50 (from RM4.60) as a result.
1Q10 net profit of RM37.8 million was up 76.9% year-on-year (y-o-y) and 90.6% quarter-on-quarter (q-o-q). This was due to revenue growth of 30.6% y-o-y and 26% q-o-q coming from CSPL, which contributed, to 22.6% of this quarter's y-o-y sales growth. The slightly later Chinese New Year (CNY) in February 2010 (versus early January 2009) also allowed Carlsberg to capture a fuller part of the festive period's sales from the trade's stocking-up activities.
1Q10 net profit alone formed approximately 33% of our and consensus' full-year forecasts. Other than top-line growth, this was also boosted by improvements in earnings before interest, tax, depreciation and amortisation (Ebitda) margin, which stood at 14% in 1Q10 as compared to 11.4% in the corresponding quarter of 2009. Lower effective rate of 22.6% (-4 percentage points y-o-y, -2.5% percentage points q-o-q) due to lower tax rate in Singapore also contributed to the commendable bottom-line growth.
Carlsberg's 12-month moving average (MA) revenue totalled RM1.13 billion, or RM173.5 million more than its corresponding 12-month MA revenue of RM960.6 million. Allowing for new sales of RM131.9 million at CSPL, this implies that Carlsberg's 12-month MA revenue rose by RM41.6 million or 4.3%. This was less than its rival's RM66.7 million or 5.3% increase in 12-month MA revenue to RM1.33 billion. Thus, Carlsberg's revenue market share fell by 0.3 percentage point in 1Q10 to 43% as its rival Guinness' revenue market share grew more quickly.
With the World Cup football coming up next and the strong start from Singapore's two new integrated resorts, we see no reason for any tapering of near-term sales growth. We are placing our dividends forecasts under review for a potential upgrade. ' Maybank IB, May 31
This article appeared in The Edge Financial Daily, June 1, 2010.
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