Carlsberg’s 9MFY12 earnings of RM151.2m (+17.4% y-o-y) beat estimates on the back of an improved product mix, better cost efficiencies and a lower effective tax rate. Its Malaysian operations (73.7% of total EBIT) expanded 16.0% y-o-y. The firm’s strong push of Asahi and Kronenbourg brands in the local market boosted its ASPs, while giving it greater ability to secure more retail outlets through diversified product offerings. We are adjusting our FV higher to RM14.12, following an upward revision in our earnings forecasts. Maintain BUY.
Topping expectations. Carlsberg recorded 3QFY12 revenue of RM410.8m (+2.3% y-o-y, +7.2% q-o-q) and earnings of RM61.1m (+25.0% y-o-y, +61.8% q-o-q). Strong performance from its premium brands (Asahi and Kronenbourg) led to an improved product mix, while cost efficiencies and a lower effective tax rate further boosted its profitability. Operating expenses dipped 1.0% y-o-y despite a 2.3% revenue increase, while taxes dropped 11.4% whereas PBT climbed 15.3%. The group’s 9MFY12 revenue of RM1,248.3m (+8.1% y-o-y) and RM151.2m profit (+17.4% y-o-y) topped forecasts given: i) wider margins arising from a better product mix, and ii) lower taxes. The 9M earnings represented 84.8% and 82.8% of our and consensus estimates.
Going premium. Although the Carlsberg Green Label still accounts for more than 80% of the company’s sales, the company has, in our opinion, successfully transitioned itself from being viewed as a one-brand company to a corporation with diversified product offerings. Its subsidiary Luen Heng has brought in a slew of imported beers to expand the firm’s brand portfolio. Sales of most of these imported brands are still low while costs are high as a result of the RM5/litre import duty. Nevertheless, Carlsberg has built a commendable range of locally-brewed beers with the likes of Carlsberg Green Label, Asahi and Kronenbourg.
Malaysia-driven growth. The group’s 9MFY12 operating profit from its Malaysian operations surged 16.0% y-o-y on a 10.7% revenue increase. Its Singapore operations, meanwhile, saw an EBIT and revenue rise of 7.3% and 3.9% respectively. The 61.8% q-o-q jump in the company’s 3Q earnings reflected a marketing-heavy 2Q, mainly attributed to advertising and promotional expenses in the Euro 2012 campaign.
Maintain BUY. We are raising our FY12 and FY13 forecasts by 7.7% and 4.1% respectively on expectations of: i) better ASPs arising from a better product mix, and ii) lower operating expenses. Hence, we are lifting our FV to RM14.12, based on our FCFF model (WACC: 7.6%, terminal growth: 2.2%).
FYE Dec (RMm)
|
FY09
|
FY10
|
FY11
|
FY12f
|
FY13f
|
Revenue
|
1,045.5
|
1,368.2
|
1,489.4
|
1,662.9
|
1,768.3
|
Net Profit
|
76.1
|
133.2
|
166.2
|
192.0
|
206.3
|
% chg y-o-y
|
0.0
|
75.0
|
24.7
|
15.5
|
7.5
|
Consensus
|
182.7
|
202.2
| |||
EPS
|
24.9
|
43.6
|
54.3
|
62.8
|
67.5
|
DPS
|
17.3
|
58.5
|
72.5
|
59.7
|
64.1
|
Dividend yield (%)
|
1.3
|
4.5
|
5.5
|
4.6
|
4.9
|
ROE (%)
|
15.4
|
24.3
|
27.4
|
30.4
|
32.5
|
ROA (%)
|
9.7
|
14.2
|
17.6
|
19.9
|
21.1
|
PER (x)
|
52.6
|
30.1
|
24.1
|
20.9
|
19.4
|
BV/share
|
1.69
|
1.90
|
2.06
|
2.06
|
2.10
|
P/BV (x)
|
7.3
|
6.5
|
6.0
|
6.0
|
5.9
|
EV/EBITDA (x)
|
31.9
|
19.4
|
15.9
|
14.1
|
13.2
|
Results Table (RMm)
FYE Dec
|
3Q12
|
2Q12
|
Q-o-Q chg
|
YTD FY12
|
YTD FY11
|
Y-o-Y chg
|
Comments
|
Revenue
|
410.8
|
383.4
|
7.2%
|
1,248.3
|
1,154.4
|
8.1%
| |
EBIT
|
79.7
|
48.1
|
65.7%
|
193.9
|
170.5
|
13.7%
| |
Net interest expense
|
(2.0)
|
(0.4)
|
358.5%
|
(3.2)
|
(2.3)
|
41.0%
| |
Associates
|
1.8
|
1.6
|
11.7%
|
5.8
|
6.0
|
-2.7%
| |
PBT
|
79.5
|
49.3
|
61.3%
|
196.5
|
174.2
|
12.8%
| |
Tax
|
(17.7)
|
(11.1)
|
58.8%
|
(43.5)
|
(44.5)
|
-2.4%
| |
MI
|
(0.7)
|
(0.4)
|
87.8%
|
(1.8)
|
(0.8)
|
129.1%
| |
Net profit
|
61.1
|
37.7
|
61.8%
|
151.2
|
128.8
|
17.4%
| |
EPS
|
20.0
|
12.3
|
49.4
|
42.1
| |||
DPS
|
-
|
5.0
|
5.0
|
5.0
| |||
EBIT margin
|
19.4%
|
12.6%
|
15.5%
|
14.8%
| |||
NTA/Share
|
0.87
|
0.67
|
0.87
|
0.64
|
EARNINGS FORECAST
FYE Dec (RMm)
|
FY09
|
FY10
|
FY11
|
FY12f
|
FY13f
|
Turnover
|
1,045.5
|
1,368.2
|
1,489.4
|
1,662.9
|
1,768.3
|
EBITDA
|
117.6
|
193.4
|
236.1
|
267.0
|
284.9
|
PBT
|
102.6
|
176.5
|
220.4
|
255.0
|
273.9
|
Net Profit
|
76.1
|
133.2
|
166.2
|
192.0
|
206.3
|
EPS
|
24.9
|
43.6
|
54.3
|
62.8
|
67.5
|
DPS
|
17.3
|
58.5
|
72.5
|
59.7
|
64.1
|
Margin
| |||||
EBITDA (%)
|
11.3
|
14.1
|
15.9
|
16.1
|
16.1
|
PBT (%)
|
9.8
|
12.9
|
14.8
|
15.3
|
15.5
|
Net Profit (%)
|
7.3
|
9.7
|
11.2
|
11.5
|
11.7
|
ROE (%)
|
15.4
|
24.3
|
27.4
|
30.4
|
32.5
|
ROA (%)
|
9.7
|
14.2
|
17.6
|
19.9
|
21.1
|
Balance Sheet
| |||||
Fixed Assets
|
545.9
|
569.0
|
591.4
|
592.2
|
592.5
|
Current Assets
|
399.2
|
362.0
|
369.5
|
375.1
|
392.1
|
Total Assets
|
945.1
|
931.0
|
960.9
|
967.2
|
984.6
|
Current Liabilities
|
356.2
|
276.1
|
253.8
|
263.5
|
270.5
|
Net Current Assets
|
43.1
|
85.9
|
115.7
|
111.6
|
121.6
|
LT Liabilities
|
72.3
|
72.8
|
76.0
|
73.2
|
73.2
|
Shareholders Funds
|
516.6
|
582.1
|
631.0
|
630.6
|
640.9
|
Net Gearing (%)
|
Net cash
|
Net cash
|
Net cash
|
Net cash
|
Net cash
|
Source: OSK
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