Heineken up 2.71% as 4Q earnings hit RM100m mark

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KUALA LUMPUR (Feb 21): Heineken Malaysia Bhd shares rose 2.71% in thin trade this morning after its net profit for the fourth quarter ended Dec 31, 2018 (4QFY18) hit RM100 million again — a level not seen since 4QFY16 — and grew 6.79% year-on-year (y-o-y) from RM93.64 million due to higher revenue, and efficient and effective management of commercial spend and overheads.

At 9.05am, Heineken added 62 sen to RM23.48 with 17,000 shares traded.

Quarterly revenue, meanwhile, grew 12.26% to RM662.28 million from RM589.96 million mainly due to increase in sales volume driven by the flagship Tiger brand.

For FY18, Heineken Malaysia’s net profit went up 4.62% to RM282.52 million from RM270.06 million in FY17. Annual revenue increased by 8.29% to RM2.03 billion from RM1.87 billion a year earlier, mainly attributed to increase in sales volume, price adjustment on April 15, 2018 and the implementation of Sales and Services Tax (SST) on Sept 1, 2018.

The group has proposed a higher single-tier final dividend of 54 sen per share compared with 50 sen from the same period last year. This brings the total dividend per share to 94 sen for the financial year ended Dec 31, 2018 (FY18).

Meanwhile, CIMB IB Research maintained its “Hold” rating on Heineken at RM22.86 with a higher target price of RM23.20 (from RM20.50) and said Heineken’s FY18 net profit of RM282.5 million (4.6% y-o-y) was in line with house and Bloomberg consensus’ expectations at 100% and 102% of FY18 estimates, respectively.

In a note yesterday, the research house said in 2019, it expects higher sales volume from lower illicit trade, as well as new product launches to offset rising operating costs and raw material prices.

“Maintain Hold with a higher DDM-based target price of RM23.20 as we roll over our valuation year to 2019, it said.