Carlsberg growth intact | The Star

PETALING JAYA: Carlsberg Brewery Malaysia Bhd is on an upward trajectory as the worst is likely over for breweries in the country.

CGS International (CGSI) Research in a report said cumulatively, the industry volumes have turned positive, as the first half of 2024 registered an industry revenue growth of 5.1% year-on-year above the 5% price increase that went into effect in April this year.

The research house noted some of the key factors that contributed to the industry’s promising outlook included the EPF Account 3 withdrawals, as well as tourist arrivals that have mitigated the impact on inflation, which was the main reason for a drag in revenue in 2023.

“For Carlsberg, the introduction of Sapporo as its premium Japanese product in Malaysia appears to have got off to a good start, with indications of volumes surpassing those of its previous offering in recent months,” CGSI Research said.

For Singapore, the swap out of Asahi for Sapporo is expected to take a longer time to deliver similar results, given the larger and more competitive Japanese beer market there.

Additionally, CGSI Research said it estimates the beer industry will grow by 5%, 5.7% and 5.1% for financial year 2024 (FY24), FY25 and FY26, respectively.

“This is set to be driven by higher tourist arrivals, civil servant salary increases in December 2024, and generous cash handouts to lower income households as the government scales back RON95 petrol subsidies,” added the research house.

Against this backdrop, CGSI Research said it will raise its core net profit estimates for FY24, FY25 and FY26 by 0.6%, 2.2% and 1.7%, respectively.

“Our target price was raised from RM22.70 to RM22.87.

“We also reiterate our ‘add’ call on Carlsberg Malaysia as we see the return of revenue growth for its Malaysian operations, serving as a rerating catalyst for its shares,” it said.

CGSI Research said the risks will include geopolitical risks weighing on tourism flows into Malaysia, and an acceleration in consumer preferences away from beer.

“There is a risk of higher excise duties on alcohol overall, but unlikely in our view,” it added.