Malaysia: Heineken rises on better consumer sentiment

Heineken Malaysia Bhd rose 3.6%, more than 12 times the country’s benchmark index, to hit an all-time high of RM29.50 on February 2, The Star reported.

Analysts attributed the hike in the brewery's share price to better consumer sentiment, which has been boosted by the reopening of China’s border.

Year-to-date, the stock has risen more than 15%.

Meanwhile, Carlsberg Brewery Malaysia Bhd (Carlsberg Malaysia) was the third-highest gainer on the local bourse, rising 66 sen or 2.8% to close at RM24.20.

Year-to-date, Carlsberg Malaysia has risen more than 6%.

In a recent report, CGS-CIMB Research said the return of Chinese tourists will support consumer demand in Malaysia.

The research house noted that the reopening of China’s borders is positive to demand for consumer goods in the longer term.

“China recently announced the relaxation of its Covid-19 rules from January 2023 onwards, including dropping quarantine requirements for international arrivals and resumption of outbound travel for its citizens.

“We expect this to lead to an influx of Chinese tourists globally, including to Malaysia, while China itself will see higher footfall in malls from the relaxation of lockdown measures and arrival of foreign tourists.”

Analysts are upbeat about local breweries’ earnings performance for the final quarter of 2022, which is expected to be driven by the FIFA World Cup tournament in December and earlier timing of Chinese New Year (CNY) in 2023.

It is noteworthy is that pubs and restaurants that sell alcoholic beverages tend to become busy, especially during the World Cup, as football fans like to watch the matches live at social outlets.

The FIFA World Cup was held in Qatar from Nov 20 to Dec 18.

Meanwhile, the earlier timing of CNY in January (as opposed to February) 2023 would generally mean that the bulk of sales for breweries would take place earlier.

“Because CNY fell in January of this year, sales will mostly occur in the final quarter of 2022, rather than the first quarter this year,” an analyst said.

Heineken managed to more than double its year-on-year (y-o-y) net profit for the third quarter ended Sept 30, 2022 to RM108.7mil, from RM51mil in the corresponding quarter of 2021.

Revenue, meanwhile, rose 84.8% y-o-y for the quarter to RM720.5mil.

In its notes on its third quarter performance, Heineken said it continues to be cautious on the macroeconomic outlook.

“The market condition remains challenging, given the continued pressure from global supply chain disruptions, recessionary pressures from leading economies, rising input cost, weakening ringgit and rising inflation that could impact consumer purchasing power.”

Meanwhile, Carlsberg Malaysia posted a net profit of RM76.39mil in the third quarter ended Sept 30, 2022, almost triple the net profit of the previous corresponding quarter, as it rebounded from a low base caused by Covid-19 restrictions.

Revenue rose to RM571.63mil, 63.65% higher from a year ago.

On its prospects, the brewery expects the outlook to remain challenging, given the global inflationary pressures, supply chain disruption and further cost pressures.

This, coupled with the impact from the one-off prosperity tax (Cukai Makmur) on the group’s earnings, will continue to affect earnings for the final quarter of the year.

“The group will continue to intensify its cost-control management while continuing to reinvest in its brands to fuel growth amid the uncertain economic outlook,” it said.

03 February, 2023