KUALA LUMPUR, Jan 28 (Bernama) -- Bursa Malaysia snapped its five-day winning streak to close lower on Wednesday, as investors took profit following a cumulative gain of 4.25 per cent over the past five sessions, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) fell 14.76 points or 0.83 per cent to 1,756.49 from Tuesday’s close of 1,771.25. The market bellwether opened 1.46 points lower at 1,769.79, marking the day’s high, and hit a low of 1,750.05 during the mid-afternoon session. Market breadth was negative with losers trouncing gainers 876 to 384, while 525 counters were unchanged, 964 untraded and 94 suspended. Turnover improved to 3.65 billion units worth RM4.41 billion from Tuesday's 3.58 billion units worth RM4.46 billion.
Upgrade from sell to HOLD with target price (TP) of RM15.52
Review
- Carlsberg reported its 9MFY16 net profit of RM157.9mn (+11.7% YoY). The results came within ours (71%) but below streets estimates (66%). No dividend was declared, similar to last corresponding period.
- YoY, the group revenue grew marginally by 0.6% to RM1.2bn. This was driven by positive contribution from Singapore segment. The segment recorded a double-digit growth of 10.6% to RM424.6mn supported by 1) stronger sales volume as well as 2) higher contribution from subsidiary company Maybev. Meanwhile, Malaysia segment logged a slight contraction of 3.9% to RM820.3mn underpinned by loss of contribution from Luen Heng business. Note that, Luen Heng is a distributor and supplier of wines and spirit and the disinvestment was completed last August 2015.
- For 9MFY16, the group’s operating profit expanded by 15.5% YoY to RM204.5mn owing to strong contribution from both segments. This was attributable to 1) effective costs control and positive products mix, 2) increased contribution from Maybev, and 3) strengthening of Singapore Dollar against MYR. Thus, the group’s EBIT margin lifted by 2.1p.p.
Impact
- No changes to our earnings forecasts at this juncture.
Outlook
- With the acquisition of Maybev in April 2014, the group has been witnessing increased contributions from its Singapore operations. We take comfort that such geographical diversification has allowed the group to offset the slow performance seen in its Malaysian operations and positively benefitted from weak Ringgit.
Valuation
- We maintain our target price at RM15.52 based on DCF methodology (COE: 7.6%, g: 2.5%). However, we upgrade the stock from Sell to Hold since the sharp drop in its share price recently
Source: TA Research - 29 November 2016
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