CARLSBG (2836) - Carlsberg Brewery (M) - Bracing for 2015
Target RM13.22 (Stock Rating: HOLD)
Carlsberg highlighted during its analysts’ briefing today that it is pleased with the FY14 results but the business environment in FY15 will be tougher due to the slower consumer spending in Malaysia and competitive environment in Singapore. The company plans to continue to spend wisely on A&P despite the tougher road ahead. We maintain our FY15-17 net profit forecasts and DCF-based target price. The stock remains a Hold. Although FY15 earnings growth could be weak, its share price should be well supported by its high dividend yield of ~6%. We prefer Thai Beverage.
What Happened
We attended Carlsberg’s FY14 briefing today that was hosted by its Managing Director, Mr. Henrik Juel Andersen. Approximately 30 fund managers and analysts attended the briefing. The key takeaways were: (i) Singapore’s strong growth was driven by the recovery from the stock rationalisation programme last year. Management thinks that the market is still very competitive; (ii) Malaysia sales volume was flat yoy but it managed to improve profitability from higher operating efficiency, better pricing and product mix; (iii) premium brands continued to grow strongly but sales contribution remained small; and (iv) management expects sales volume to be flat in FY15 due to the slower consumer spending.
What We Think
There were no surprises from the briefing. In line with the management’s expectations, we expect the operating environment in FY15 to be tougher as Malaysia will implement the GST while Singapore growth will come from normalised growth after the recovery from the stock rationalisation programme in 2013 and the completion of Maybev acquisition in Apr 2014. While 1Q performance is likely to be stronger yoy, driven by the stronger Chinese New Year sales, 2Q results could be weak due to the implementation of the GST. Our sales volume growth assumption of 2% in FY15 is broadly in line with the management’s expectation of flat volume growth. The strong growth from premium brands and its Sri Lanka associate could help to buffer some impact of the slower consumer spending.
What You Should Do
We do not recommend investors to add position. However, we believe its share price should be well supported by its high dividend yield of ~6% despite the expected challenging environment in 2015.
Source: CIMB Daybreak - 03 March 2015
Target RM13.22 (Stock Rating: HOLD)
Carlsberg highlighted during its analysts’ briefing today that it is pleased with the FY14 results but the business environment in FY15 will be tougher due to the slower consumer spending in Malaysia and competitive environment in Singapore. The company plans to continue to spend wisely on A&P despite the tougher road ahead. We maintain our FY15-17 net profit forecasts and DCF-based target price. The stock remains a Hold. Although FY15 earnings growth could be weak, its share price should be well supported by its high dividend yield of ~6%. We prefer Thai Beverage.
What Happened
We attended Carlsberg’s FY14 briefing today that was hosted by its Managing Director, Mr. Henrik Juel Andersen. Approximately 30 fund managers and analysts attended the briefing. The key takeaways were: (i) Singapore’s strong growth was driven by the recovery from the stock rationalisation programme last year. Management thinks that the market is still very competitive; (ii) Malaysia sales volume was flat yoy but it managed to improve profitability from higher operating efficiency, better pricing and product mix; (iii) premium brands continued to grow strongly but sales contribution remained small; and (iv) management expects sales volume to be flat in FY15 due to the slower consumer spending.
What We Think
There were no surprises from the briefing. In line with the management’s expectations, we expect the operating environment in FY15 to be tougher as Malaysia will implement the GST while Singapore growth will come from normalised growth after the recovery from the stock rationalisation programme in 2013 and the completion of Maybev acquisition in Apr 2014. While 1Q performance is likely to be stronger yoy, driven by the stronger Chinese New Year sales, 2Q results could be weak due to the implementation of the GST. Our sales volume growth assumption of 2% in FY15 is broadly in line with the management’s expectation of flat volume growth. The strong growth from premium brands and its Sri Lanka associate could help to buffer some impact of the slower consumer spending.
What You Should Do
We do not recommend investors to add position. However, we believe its share price should be well supported by its high dividend yield of ~6% despite the expected challenging environment in 2015.
Source: CIMB Daybreak - 03 March 2015
