KUALA LUMPUR (Nov 1): Affin Hwang Capital Research has upgraded Heineken Malaysia Bhd to “Buy” at RM18 with a target price of RM21.15 and said Heineken’s 9M18 results were in line with house expectations but fell below consensus estimates.

In a note today, the research house said Heineken’s revenue grew by 6.5% year-on-year (y-o-y) to RM1.37 billion in 9M18 while bottom-line growth was weaker at 3.5% y-o-y (9M18: RM182.5 million) on the back of higher commercial spend recorded for 1H18’s festivities.

“The Sales & Service Tax-driven price hike will likely temper Heineken’s earnings momentum, but nevertheless demand for malt liquor is rather inelastic and the resulting impact will be manageable, in our view.

“The stock is looking attractive at current levels after its price fell by 21% over the last 3 months.

“As such we upgrade Heineken to a Buy (from Hold with a CY19E target price of RM21.15.