GAB registered 6MFY12 earnings of RM121.0m (+17.1% y-o-y),
exceeding our expectations. The earlier Chinese New Year festival and more aggressivemarketing efforts boosted 4Q
sales volume, with Tiger remaining as Malaysia’s favourite beer while Guinness
and Heineken continued to perform. 2HFY12 should be weaker than the first half
given the lack of major alcohol-consuming festivitiesin the coming months (remains
to be seen how much the two upcoming global sporting events will boost sales).
Maintain BUY at FV of RM14.20.
Above forecast.
GAB posted 2QFY12 revenue of RM468.3m (+11.1% y-o-y, +5.3% qo-q) and earnings
of RM65.8m (+1.8% y-o-y, +19.2% q-o-q). 6MFY12 earnings, meanwhile, clocked in
at RM121.0m (+17.1% y-o-y) on the back of stronger sales volume. EBIT margins
inched up slightly to 17.7% (+0.2 ppt y-o-y) from favourable brand mix and some
lower costs. All in, GAB’s half year earnings were above estimates, representing
58.9% of our full year forecast and 60.5% of consensus’. When annualized, revenue
beat our estimate by 13.4%.
Yum Seng celebration.
The earlier Chinese New Year timing this time around boosted 2Q volume. Coupled
with numerous marketing initiatives (e.g. Tiger Street Football, Heineken
Thirst), GAB posted its highest monthly sales volume ever in December 2011. Tiger
remains the most popular beer in the country while its premium beer brand Heineken
recorded double-digit growth. With no beer duty hikes in Budget 2012, we believe
domestic MLM volume will continue to enjoy positive growth.
Euro 2012 a kicker?
While GAB’s 1HFY11 earnings, when annualized, was 18% above expectations, the
first half of the financial year has traditionally been the stronger half due
to demand from festivities such as Christmas and Chinese New Year. Over the
past six FYs, only FY10 saw earnings skewed towards the second half (with 54%
of full year profits). For the remaining five FYs, first half contribution has
accounted for 52-57%, even during
the Germany World Cup 2006 (4QFY06 profits at 32% of full year) and Austria/Switzerland Euro 2008 (4QFY08 profits at 16% of full
year). As such, whether the
Ukraine/Poland Euro 2012 will be a major kicker to volumes remains a question.
Maintain BUY. We
are keeping our earnings forecast under review pending sales volume indications
during GAB’s analyst briefing on 28 Feb.
As of now, we estimate sales volume to grow by 5.5% in FY12. We are
keeping our FV unchanged at RM14.20, based on our FCFF valuation with an
unchanged WACC of 8.0% and terminal growth of 2%. We are looking to tweak our
earnings forecast a tad upwards and lower our WACC assumptions following the
adoption of debt on its balance sheet.
Source: OSK188
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