Tuesday, 17 April 2012

RHB Research maintains Outperform on Carlsberg, ups fair value to RM11.60

KUALA LUMPUR (April 17): RHB Research Institute Sdn Bhd has maintained its Outperform rating on CARLSBERG BREWERY MALAYSIA BHD [] at RM10.82 with a higher far value of RM11.60, and said that the first batch of Asahi draft, which Carlsberg started brewing in Dec 2011, sold out much faster than the company’s initial expectations.

"Asahi’s strong take-up in the market is positive for Carlsberg, although we note that it is still too early to gauge its long-term success."

“Similar to Asahi, Carlsberg will start producing Kronenburg’s draft first followed by bottles later. However, unlike Asahi, we understand the locally-produced Kronenburg will still be priced at a fairly high price point, we believe due to Kronenburg’s premium branding,” the research house said in a note Tuesday.

Carlsberg intends to raise its selling prices by ~3-4% on average, which will take effect in early May 2012. We are positive on this move as we believe it would help cover Carlsberg’s higher raw material costs to a certain extent.

“We have raised our fair value estimate to RM11.60, based on WACC of 8.4% (8.7% previously). Although this implies 20x FY12 PER, we note that Carlsberg has previously traded as high as 24x forward PER. Maintain Outperform,” it said.

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