Maybank IB notes that Heineken’s 3Q23 results were marred by soft sales volume on the back of subdued consumer sentiment and ongoing cost pressures on consumers. 4Q earnings are expected to be stronger on festive spending but sales
momentum could still be capped by lower domestic spending power.
The FY23E-FY25E earnings estimates by the house is now being reduced by 8%-9%, however, the house does maintain its Buy call on the stock albeit at a lower TP of MYR28.20.
The group’s 3Q23 net profit of MYR87m brings 9M23 net profit to MYR288m, reflecting 67%/69% of Maybank’s/consensus FY23E estimates. The house notes that lower-than-expected sales volume attributed to the earnings shortfall and that no dividend was declared as it is historically announced in 2Q and 4Q. Heineken’s revenue fell 17% YoY largely due to a high base in 3Q22 from pent-up demand, weak consumer sentiment, and lower consumer disposable income amid cost inflationary pressures. Beer volume corrected c.20% YoY in 3Q23.
Pre-tax profit eased by a wider 27% YoY led by higher operating expenses as a % of sales at 80% (vs. 78% in 3Q22) from
higher A&P expenses, we suspect. QoQ, despite 5% higher revenue, higher repair and maintenance costs led to weaker pre-tax profit by 3% QoQ.
Maybank is reducing its FY23E-FY25E earnings estimates by 9% p.a, however, it expects an improvement in 4Q23 earnings as consumer spending picks up towards the YE but sales momentum may be relatively moderate.
