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CASTLE MALTING NEWS in partnership with www.e-malt.com Korean
11 November, 2019

Brewing news Malaysia: Robust growth next year forecast for both Carlsberg and Heineken in Malaysia

Affin Hwang Capital has backed Carlsberg Brewery Malaysia Bhd and Heineken Malaysia Bhd to sustain their robust growth next year, the New Straits Times Online reported on November 11.

The firm said both Carlsberg and Heineken’s medium-term outlooks remain positive, with growth catalysts for the former arising from premiumisation, while the latter stands to benefit from its e-commerce foray and new product launches.

The brewers' business growth in Malaysia and other Asian countries are backed by healthy demographic patterns namely rising population and affluence, urbanisation.

"We expect the brewers to sustain robust earnings growth heading into 2020, underpinned by absence of excise-duty hikes; potential sales boost from Visit Malaysia 2020 and declining presence of contraband beer; and temperate cost environment," it said in a report today.

"We believe the brewers are set to post another record sales in 2020, with volume sales supported by healthy consumption trends under a captive duopoly malt liquor market,” Affin Hwang added.

It said chilled alcoholic beverages such as beer and cider were well-suited to drinkers, especially in Southeast Asia's warm, temperate climate.

The firm kept its “hold' call on Carlsberg due to its recent share-price outperformance, and “buy” call on Heineken.

Affin Hwang said Carlsberg and Heineken had shown commendable earnings in recent quarters, with double-digit top-line growth registered since 4Q18 in spite of three successive rounds of price hikes over April 2018-April 2019.

While this was partially attributable to the clampdown in contraband alcohol (that makes up 20 to 30 per cent of the malt liquor market), the sustainable growth drivers are nonetheless tied to an expanding market size and favourable consumption patterns.

Affin Hwang lifts its target prices for Carlsberg from RM24.60 to RM28.50, and Heineken from RM25 to RM29.

It said its optimism in the brewers' business growth here as Asian countries are backed by healthy demographic patterns – rising population and affluence, urbanisation.


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