RHB Investment Bank has upgraded from Neutral to “Buy” recommendation for Carlsberg Brewery Malaysia Bhd with a higher TP of MYR24.60 from MYR23.10, 14% upside and c.4% FY22F yield.
The investment house said that Carlsberg Brewery’s 9M21 results met expectations despite a soft topline, thanks to the trim in marketing and fixed costs.
“Earnings growth should recover strongly in 4Q21F, supported by pent-up demand and year-end seasonality. Its subdued YTD share price performance has rendered Carlsberg a sector laggard.
RHB says that Its current valuation is attractive for investors seeking exposure in the brewery sector, which enjoys pricing power on the back of inelastic demand.
It said that in view of the nationwide economy reopening in Malaysia in 4Q21, RHB expects earnings to recover strongly QoQ on pent-up demand, further aided by year-end seasonal factors.
RHB said that as it is trading at 24x P/E FY22F or close to the 5-year mean, and believes the valuation is undemanding, and see Carlsberg as an attractive laggard play.
It said that it has a relatively more diversified earnings profile, which offers better earnings resiliency amidst the pandemic environment.
