Carlsberg to see sales recovery in 2H

JAYA: Carlsberg Brewery Malaysia Bhd will likely experience a short-term dip in sales volume in the second quarter (2Q) of this year before recovery sets in by the final six months (2H) of 2024.

According to analysts, the anticipated weakness in the brewery’s sales volume for the three months to June 2024 stems from higher product prices and the lack of festivities.

This, however, has not changed analysts’ bullish take on Carlsberg’s shares.

Most of them continue to advocate “buy” on the counter. Among them are Maybank Investment Bank Research (Maybank IB Research) and Hong Leong Investment Bank Research (HLIB Research) .

In its report yesterday, Maybank IB Research said Carlsberg should see a stronger 2H24, despite a likely weakness in 2Q24.

“We expect sales volume to slow in 2Q24 with higher product prices and the absence of festivities deterring consumer consumption of beer temporarily,” the research house said.

That said, it added, higher disposable income arising from financial support measures, such as the recently introduced withdrawals the Employees Provident Fund Account 3, could help buffer the negative effects from a potential subsidy rollback in 2H24, while a boost in inbound tourism could also support product demand.

Maybank IB Research maintained its target price for Carlsberg’s shares at RM21.

Carlsberg’s 1Q24 net profit rose 3% year-on-year (y-o-y) to Rm87.9mil, while revenue was up 10% y-o-y to Rm725.8mil.

The improved performance, which was largely in line with brokerages’ expectations, was supported by a longer selling period prior to the Chinese New Year and additional trade purchases in March ahead of the price increases.

Citing news reports, HLIB Research said Carlsberg’s upcoming earnings would reflect the impact of the 5% retail price increase for Carlsberg beers.

“Considering the high base effect in 1Q24 due to Chinese New Year sales and pre-hike sales boost, 2Q24 sales are expected to normalise downwards,” it said.

“Looking at the full year, we anticipate 5% growth in group top-line, driven by the ongoing recovery of foreign tourism to Malaysia and Singapore, alongside gradual improvements in labour conditions and income prospects within Malaysia,” it added.

HLIB Research kept its target price for Carlsberg at RM30.12 based on 27.3 times its estimated price-earnings ratio for 2024.