CARLSBG: Operational Efficiencies Drive Robust Performance, Target Price Raised
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
Financial results for the first nine months of the year have met analyst expectations, primarily driven by robust operational performance and strategic cost management. The company reported a core net profit of MYR280m, marking a 4% year-on-year increase and accounting for 76-79% of full-year forecasts.
Performance Review
The third quarter of the year saw a significant uplift, with core net profit surging by 26% quarter-on-quarter to MYR103m. This strong quarterly performance was attributed to a substantial 19% quarter-on-quarter increase in revenue to MYR583m, partly due to frontloading of sales ahead of a price hike implemented in September. Margin expansion of one percentage point was a key factor, stemming from tight cost control measures and the aforementioned price adjustments. The Singapore segment also contributed positively, with sales and profit before tax (PBT) boosted by trade offer adjustments related to prior years’ operations. Dividend payout for the nine-month period increased to 68 sen, up from 65 sen in the previous corresponding period.
Despite the strong nine-month core earnings, overall nine-month revenue saw a 3% year-on-year decline to MYR1.7bn. This dip was largely influenced by the earlier timing of the Lunar New Year in 2025 and prevailing cautious consumer sentiment.
Future Outlook and Challenges
Looking ahead, profit margins are anticipated to remain elevated, supported by the 3Q25 price increase, ongoing efficiency gains, and favorable input costs and foreign exchange conditions. Enhanced efforts to combat contraband trade are also expected to contribute positively to profitability. The company is committed to maintaining its generous dividend payout policy.
However, the sector faces a challenge from the higher excise duty, which took effect in November. This is expected to lead to a temporary slowdown in volume. In response, breweries are likely to intensify marketing efforts, including consumer engagements and value promotions, to stimulate consumption amidst higher selling prices. The government’s “Visit Malaysia Year 2026” initiative is also expected to boost tourist arrivals, potentially driving higher sales volumes for the company.
Investment Recommendation
TA SECURITIES has maintained a positive stance on the company, reiterating a BUY recommendation with a target price of RM0.25, representing a 25% upside from the last traded price of RM0.20. The target price implies an attractive yield of approximately 7% for FY26.
