Industry News       English French Dutch Spanish German Russian Italian Portuguese Portuguese Danish Greek Romanian Ukrainean Chinese Polish Korean
Logo Slogan_Ukrainean


CASTLE MALTING NEWS in partnership with www.e-malt.com Ukrainean
01 October, 2020



Brewing news Malaysia: Carlsberg Brewery Malaysia and Heineken (M) Bhd expected to post stronger sales volume

Brewers Carlsberg Brewery Malaysia Bhd and Heineken (M) Bhd are expected to post stronger sales volume as alcohol consumption rises on the relaxed Movement Control Order (MCO), observed Hong Leong Investment Bank Bhd (HLIB Research).

HLIB Research analyst Gan Huan Wen noted this by comparing the recovery of beer sales in Thailand.

“We reckon the chances of an excise duty hike during Budget 2021 to be low. However, should this happen, brewers can mitigate the earnings impact by ‘watering down’ their beer.

“Still, there are some concerns from the recent apparent tougher stance by the government on alcohol-related matters,” he said in a note yesterday.

Gan noted that beer sales volume in Thailand grew 27% year-on-year (YoY) in July after the easing of lockdown restrictions in spite of the lack of tourists.

“Using Thailand as a benchmark, we expect beer sales volumes in the third quarter of the year (3Q20) to be stronger YoY as we understand a larger portion of beer consumption in Malaysia (50%) is consumed out-of-home (versus Thailand’s 27%), which translates to stronger recovery as consumers are permitted to return to drinking outlets post-MCO,” the report noted.

HLIB Research expects Heineken to return to profitability in 3Q20 (versus 2Q20 net loss of RM18 million), “as we understand May and June were already profitable months after losses peaked in March (RM43 million net loss)”, the analyst said.

Gan does not expect the government to hike alcohol excise duty as Malaysia’s alcohol excise duty is already the second-highest in the world.

“The government will not risk increasing alcohol excise duty which could, in turn, fuel illicit market activity and result in lower tax collection.

“Note that in the tobacco industry, after tobacco excise duties were increased in 2015, legal volumes shrank drastically at the expense of illicit options as consumers began seeking cheaper alternatives.

“This resulted in the government collecting less tobacco excise duty revenue despite raising the excise duty structure,” he said.

Heineken recently estimated illicit trade to account for about 28% of the total market. Malaysia’s alcohol excise duty is based on alcohol content (RM175 per litre of pure alcohol).

“Should the alcohol excise duty be increased, we reckon brewers will be able to ‘water down’ their products in order to mitigate the increased excise duty cost, and therefore, keep selling prices unchanged.

“We also reckon both brewers are more than able to do this as many of their locally brewed brands currently have higher alcohol by volume versus their European and Japanese counterparts,” Gan added.

Despite the sales recovery going into the second half of the year, Gan noted that there has been a number of worrying structural issues recently.

He pointed out that while other food and beverage companies were permitted to operate throughout the MCO period, both Carlsberg and Heineken were forced to close their breweries for six weeks.

Recently, the government approved harsher penalties for drunk driving (RM100,000 fine and up to 15 years’ imprisonment for first-time offenders) and drinking outlets continue to operate with shortened hours, while certain other entertainment venues and nightclubs remain closed altogether.

“These operations remain one of the last few sectors of the economy that have not been permitted from operating. Overall, these seem to point towards a tougher stance by the current administration on alcohol-related matters,” he said.

HLIB Research upgraded both Carlsberg and Heineken to ‘Hold’ from ‘Sell’ with unchanged target prices of RM19.70 and RM18.70 respectively based on a discounted cashflow valuation methodology with a weighted average cost of capital of 8.5% and TG of 2.5%.





Назад



E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .














We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.     Ok     Ні      Privacy Policy   





(libra 0.7188 sec.)