KUALA LUMPUR (May 17): CIMB IB Research has maintained its “Add” rating on Carlsberg Brewery (M) Bhd at RM24.24 with a higher target price of RM25.70 (from RM24.30) and said Carlsberg’s 1Q19 core net profit of RM87.6m was above expectations, at 30% of house and Bloomberg consensus’ FY19 estimates.

In a note May 16, the research house said demand for beers in Malaysia and Singapore remains healthy, with Carlsberg focusing on growing its higher-margin premium beer segment.

CIMB Research said on a q-o-q basis, Carlsberg’s 1Q19 revenue grew 25.5% owing to higher sales volume from CNY festivities.

“Malaysia operations recorded a 32.7% q-o-q growth in 1Q19 revenue, while Carlsberg’s Singapore operations’ 1Q19 revenue grew 7.2% qoq. In terms of 1Q19 segmental operating profit, Malaysia recorded higher growth of 61.1% y-o-y to RM90.3 million, attributed to a more profitable sales mix and higher economies of scale.

“In comparison, Singapore operations posted a 1Q19 lower operating profit of RM20.7 million (-28.6% q-o-q). In our view, this is due to seasonality as 4Q is typically a stronger period for Carlsberg in Singapore. A dividend of 21.5 sen/share was declared in 1Q19, within expectations.

“Maintain Add with higher DDM-based target price of RM25.70,” it said.