KUALA LUMPUR (Aug 21): Heineken Malaysia Bhd shares rose 1.23% this morning after its net profit for the second quarter ended June 30, 2019 (2QFY19) grew 19.7% on year to RM65.7 million from RM54.9 million, while revenue expanded 21.6% to RM512.58 million from RM421.57 million, thanks to higher beer sales.

At 9.05am, Heineken rose 28 sen to RM23 for a market capitalisation of RM6.95 billion.

The brewery declared an interim dividend of 42 sen per share, compared with 40 sen per share in the previous year, payable on Oct 25.

Net profit grew 14.3% to RM118.5 million for the six months ended June 30, 2019 (6MFY19) from RM103.66 million a year ago, as revenue went up 21.32% to RM1.04 billion from RM855.38 million.

Meanwhile, CGS-CIMB Research upgraded Heineken Malaysia Bhd to “Add” at RM22.72 with an unchanged target price (TP) of RM24.80 and said Heineken’s 1H19 net profit of RM118.5 million was at 40% of house and 39% of Bloomberg consensus' FY19 estimates.

In a note Aug 20, the research house said it deemed this in line as 2H is typically stronger.

“The 14.3% y-o-y growth in 1H19 net profit was driven by higher sales volume from more effective marketing campaigns and lower availability of illicit beer.

CGS-CIMB Research said it upgraded the stock to an Add, given its recent share price retracement.

“In our view, the stock is attractive at this juncture, given: i) the resilient demand for beer in Malaysia, ii) the defensive nature of its business, and iii) it is a cheaper proxy for the consumer sector (trading at 35% discount to the current consumer sector’s CY20F weighted average P/E). Potential re-rating catalyst: higher-than-expected sales volume.

“Upgrade to Add, with an unchanged DDM-based TP of RM24.80,” it said.