RHB Research has maintained its “Buy” call on Carlsberg Brewery Malaysia Bhd (Carlsberg Malaysia), although it lowered its target price (TP) to RM18.80 from RM20.80, citing softer sales momentum and a potentially more challenging consumption environment in the second half of 2026.
The revised target price implies around 30% upside and an estimated 8% FY27 dividend yield, according to the research house.
RHB said Carlsberg Malaysia’s first-half 2026 (1H26) results came in slightly below expectations, with earnings of RM182 million, up 3% year-on-year (YoY), accounting for 47% to 48% of its and consensus’ full-year forecasts.
Following the results, RHB trimmed its FY2026 to FY2028 earnings forecasts by 4% each as it expects consumer spending conditions to become more challenging.
It subsequently lowered its discounted dividend model-derived TP to RM18.80, incorporating a 6% environmental, social and governance (ESG) premium. The valuation implies a FY27 price-to-earnings ratio of 15 times.
Despite the earnings downgrade, RHB said Carlsberg Malaysia’s current valuation appears attractive, trading close to two standard deviations below its five-year mean following the recent share price sell-off.
The research house believes the decline has been excessive given the brewer’s resilient performance and attractive dividend yield.
For 1H26, Carlsberg Malaysia’s revenue increased 6% YoY to RM1.2 billion, with stronger sales in Malaysia more than offsetting weaker performance in Singapore.
Sales in Malaysia rose 9%, while Singapore revenue declined 4%.
Profit before tax (PBT) increased 4% to RM236 million, although margins narrowed by 0.4 percentage points.
RHB attributed the margin pressure partly to the adverse impact of Malaysia’s excise duty increase implemented in November 2025, alongside weaker performance in Singapore.
On a quarter-on-quarter basis, revenue and net profit in the second quarter declined 27% and 16%, respectively, reflecting unfavourable seasonality after the first quarter benefited from Lunar New Year festive demand.
RHB also believes consumer demand in 2Q26 was affected by weaker sentiment amid heightened geopolitical tensions in the Middle East.
Carlsberg Malaysia declared a total interim dividend of 45 sen per share for 1H26, up from 43 sen in 1H25, representing a payout ratio of 76%, compared with 75% previously.
Looking ahead, management has observed an increase in contraband activity, with cautious consumer spending potentially creating a more favourable environment for illicit products to gain market share.
RHB said the issue has also been exacerbated by wider price gaps following the excise duty increase at the end of 2025.
Management is working with the relevant authorities to strengthen enforcement efforts and clamp down on illicit trade.
Meanwhile, Carlsberg Malaysia expects the impact of ongoing Middle East conflicts on its supply chain and production costs to remain manageable, supported by diversified sources of supply.
Management’s focus will remain on cost optimisation and prudent resource allocation to mitigate a challenging operating environment in the months ahead.
RHB said key risks to its positive recommendation include weaker-than-expected consumer sentiment and unfavourable regulatory changes.
