CARLSBG: Earnings Exceed Expectations on Cost Efficiencies, Target Price Raised
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
Core profit for the first nine months of fiscal year 2025 (9M25) landed within expectations, primarily driven by robust third-quarter performance. The company’s 9M25 core profit of RM278.1 million accounted for 78% of both the investment bank’s and consensus full-year forecasts. Despite a 3.0% year-on-year (YoY) decline in revenue to RM1.7 billion, core earnings for the period increased by 9.0% YoY, signaling strong operational management.
Performance Review
The improved performance was largely attributed to stronger third-quarter results across both Malaysia and Singapore operations, alongside higher contributions from its Sri Lankan associates. In Malaysia, third-quarter 2025 (3Q25) Earnings Before Interest and Tax (EBIT) saw a 7.8% YoY rise to RM97.4 million, supported by a 4.3% YoY revenue growth to RM431.4 million. This strong showing was primarily due to early trade purchases made ahead of a price adjustment effective September 2025. Cumulatively, 9M25 EBIT for Malaysia increased by 4.4% YoY to RM284.4 million on stable revenue.
Singapore’s operations, while facing headwinds from weaker sales, softer consumer sentiment, and a stronger Ringgit against the Singapore Dollar, saw a significant 79.2% YoY surge in 3Q25 EBIT to RM27.4 million. This was mainly due to one-off trade offer adjustments related to prior year’s operations. For 9M25, Singapore’s EBIT remained stable at RM52.4 million despite a 6.3% YoY decline in turnover.
Contributions from Sri Lanka associates also bolstered performance, growing 23.1% YoY in 3Q25, benefiting from better pricing strategies and lower operational expenses. The company also declared a higher third interim dividend of 25.0 sen per share for 3Q25, up from 23.0 sen per share in 3Q24.
Future Outlook
Looking ahead, the company implemented a single-digit price increase in September 2025. This strategic move aims to preserve margins amidst rising costs and sluggish sales volumes, and is expected to alleviate the impact of an excise duty hike in November. For the full fiscal year 2025, the group’s turnover is projected to remain stable at approximately RM2.5 billion. This stability is anticipated despite flat sales volumes, primarily supported by higher average selling prices. The investment bank has maintained its FY25-27F earnings projections, affirming its confidence in the company’s trajectory.
Investment Recommendation
TA Securities maintains a “Buy” recommendation.
