Background
Carlsberg Brewery Malaysia Bhd ('Carlsbg') is involved in the manufacturing & distribution of beers, stout & other beverages in Malaysia and it has investments in Sri Lanka, Taiwan & Singapore.
Not-so-recent Development
Carlsbg has generated considerable excitement when it acquired the Singapore outfit from its parent company in late 2009. The contribution of the Singapore outfit was reflected in the results for QE31/12/2009. However we must be careful about the exact operation of Carlsbg. A recent report in the Star newspaper stated that Carlsberg Group could benefit tremendously from Carlsberg China operation. Since the report was carried in our local newspaper, we may wrongly jump to the conclusion that Carlsbg is tapping into the Chinese market. Could this explain why the share price of Carlsbg rallied in the past few weeks?
Recent Financial Results
Carlsbg's net profit increased by 11% q-o-q or 57% y-o-y to RM34.1 million while its turnover increased 36% y-o-y but declined marginally q-o-q to RM329 million.
Table: Carlsbg's last 8 quarterly results
Chart 1: Carlsbg's 20 quarterly results
Valuation
Carlsbg (closed at RM5.85 yesterday) is now trading at a trailing PE of 14.6 times (based on last 4 quarters' EPS of 40 sen). At this multiple, Carlsbg is deemed fairly valued. If it can trade at the same multiple of 16.4 times as Guinness Anchor Bhd- a more established company- then Carlsbg may go as high as RM6.56. At this moment, I do not think Carlsbg can command that kind of valuation. As such, I think its upside is rather limited.
Technical Outlook
Carlsbg is in an uptrend line with support at RM5.10-5.20. The resistance posed by the parallel line (to the uptrend line) would cap its upside at RM6.00-6.10. Horizontal support can be seen at RM5.50 & RM5.30.
Chart 2: Carlsbg's weekly chart as at Nov 12, 2010_10.00am (Source: Quickcharts)
Conclusion
Despite good financial performance, I see very limited upside for Carlsbg for reasons as stated above. However, if the stock were to pullback to RM5.00-5.20, it could be a good long-term investment.
5 comments:
It is for long term investors not punters
Why GAB is considered to be more established than Carlsbg?
Hi Mr.Alex
Hope you Enjoy Your Holiday ...you can reply when you back from Holiday :P
As For YTLE , stock code :0009
how do you think about this share ? will it be related with YTL Communication ?
Thanks
Nian
Hi Marco
Guinness is considered to be more established than Carlsberg because it has a bigger turnover than Carlsberg. It holds the top position for both beer & stout sold locally, via the brand Anchor and Guinness. However, with the acquisition of Carlsberg Singapore operation, Carlsberg may have caught up with Guinness in term of turnover. Its bottom-line is still lagging behind Guinness. Maybe things will change in the near future. Who knows? Only time will tell.
Hi Chee Nian
Thanks for the warm wishes.
I don't like YTLE. Despite its illustrious parentage, its new business (4G) is a sink hole. Look at the broodbath in GPacket! You don't want to get into something like that. If you want to get into a mobile telephony play, try Time.com. Its turnaround looks pretty good. The numbers are quite convincing.
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