KUALA LUMPUR: Analysts are keeping a "buy" call on Carlsberg Brewery Malaysia Bhd
as a focus on premium brands and a pick up in sales of Sapporo lift the brewer's outlook for the year.
Hong Leong Investment Bank (HLIB) Research expects FY24 to be a "transitional year" for Carlsberg amid expectations of positive sales for Sapporo.
While HLIB forecasts flat earnings in FY24, it highlighted that more sales traction for Sappro, in addition to the appreciation of the ringgit, could lead to positive earnings surprises by the year-end.
Sales in Sapporo are projected to fill the gap left behind by the Asahi brand, which Carlsberg ceased to distribute in Malaysia at the end of 2023.
"We expect the group’s beer sales in FY24 to be driven by the continued influx of foreign tourists to Malaysia and Singapore; and gradual improvements in labour conditions and income prospects within Malaysia," it added in results review.
HLIB remained positive on Carlsberg's shares with a target price of RM22.20.
RHB Research said in its own note that there will be new product launches to bolster sales following the rollout of Sapporo, 1664 Brut, and Somersby Pineapple & Lime in the first half of 2024.
It said the brewer's key growth driver has been the premiumisation of its product mix, which should continue in view of its focus on premium brands, further supported by the price increases in April.
RHB said the easing output costs will have little bearing on Carlsberg's FY24 margin given the hedging in place.
"Similarly, the stronger ringgit could only result in minor cost savings considering the low percentage of input cost/revenue and Singapore exposure.
"That said, management did observe a pick-up in consumer sentiment following the strong rebound in the ringgit," it said.
RHB kept its "buy" call on Carlsberg and target price of RM30.12.
Meanwhile, TA Securities Research struck a more cautious tone on Carlsberg's near-term outlook due to the impact of inflation on consumer spending power.
"We anticipate that sales volume will be under pressure, even though revenue growth is expected to be driven by a price revision effective in April 2024," it said in its update.
However, the research firm said on-trade sales are expected to improve gradually in the future, driven by increased outbound tourism and government initiatives to boost tourism in Malaysia, such as a 30-day visa-free period for foreign visitors.
TA maintained its "buy" recommendation on Carlsberg with a higher target price of RM24.10.
