Quote:
"At Berkshire, we particularly favor the rare enterprise that can deploy additional capital at high returns in the future. Owning only one of these companies - and simply sitting tight - can deliver wealth almost beyond measure. Even heirs to such a holding can - ugh! - sometimes live a lifetime of leisure."
3 comments:
10 years financial data from 2014 to 2013
Its revenues grew about 5.4% yearly for the last 5 years and its profits grew 6.5% per year over the last 5 years.
Its average PBTM was 17.6%, latest was 19.4% in 2023.
Its ROE averaged 72.7%, one of the highest in Bursa. ROE was 84.2% in 2023.
Its EPS grew from 65.62 sen per share to 128.06 sen per share in 2023. Its BV per share grew from RM 1.18 in 2014 to RM 1.52 in 2023. Thus, it was able to grow its EPS without requiring to deploy a lot of new capital.
Not surprisingly, its DPO was a high 100.9%. It paid out all its earnings and a bit more, as dividends.
Its average DY was 4.8% and its latest DY in 2023 was 6.18%.
With a high ROE of 84.24%, and it is today priced at 14.7x its book value per share of RM 1.52.
Truly a great business to own for the long term, for those who are not against owning "sin stocks".
Review
Heineken Malaysia Berhad’s (HEIM) FY23 core earnings of RM386.8mn (- 6.3% YoY) met our and consensus expectations at 101% and 100%, respectively.
In 4QFY23, HEIM experienced a 5.3% YoY decline in core net profit to RM99.1mn in tandem with 8.0% YoY drop in revenue to RM728.6m, primarily due to lower sales volume. On QoQ basis, the revenue rose 21.5% driven by higher sales during festive seasons such as Christmas but core earnings increased by only 13.5% QoQ as higher cost was incurred to boost the Chinese New Year sales in 2024.
In FY23, revenue stood at RM2.6bn (-7.6% YoY). Core PBT declined 14.1% YoY due the market corrections following the high base effect in FY22. Despite, core earnings only decreased by 6.3% YoY, mainly driven by the absence of prosperity tax in FY23.
The group declared a final dividend of 88sen/share (4QFY22: 98sen/share) bringing the YTD dividend amounted to 128sen/share (FY22: 138sen/share).
Impact
Maintain our earnings projection and introduce our FY26 core net profit of RM449.1mn.
Outlook
We anticipate that HEIM would maintain a strong revenue in 1QFY24, bolstered by strong demand during the Lunar Chinese New Year. Additionally, Tourism Malaysia aims to attract 27.3 million foreign travellers in 2024, which we believe will drive the growth in beer consumption in the out-of-home channel.
Valuation
Reiterate Buy on Heineken with a target price of RM28.60/share based on DCF valuation (k: 7.7%, g: 3.0%).
Source: TA Research - 28 Feb 2024
RHB Investment Research Reports
Heineken Malaysia - Staying Sober Amidst Challenges; Stay BUY
rhbinvest
Publish date: Wed, 28 Feb 2024, 11:28 AM
Maintain BUY, with new MYR29.60 TP from MYR30, 33% upside and c.6% yield. FY23 results met consensus expectations, but missed our forecast on lower-than-expected sales. We continue to like the brewery sector for the steady demand for beer and continuous operational efficiency gains to mitigate cost inflation. We believe Heineken Malaysia’s current valuation at -1.5SD is unwarranted considering the muted regulatory risks with political stability and largely contained contrabands market. Generous dividend payout ratio will be supported by robust cash flow generation.
FY23 results were below our expectation, but in line with consensus. Net profit of MYR387m (-6% YoY) accounted for 96% and 100% of our and Street estimates. The negative deviation could be attributed to the lower-than- expected sales. Post results, we trim FY24F-25F earnings by 2-3% and introduce FY26F earnings (+4% YoY). Correspondingly, our DDM-derived TP drops to MYR29.60 (inclusive of a 6% ESG premium), which implies 22x FY24F P/E or at a premium over peer Carlsberg (CAB MK, BUY, TP: MYR22.2). This is justified by HEIM’s market leadership in Malaysia and more generous dividend payout.
Results review. YoY, FY23 revenue dipped 8% to MYR2.6bn on the back of soft consumer sentiment whilst FY22 was an exceptional base lifted by economy reopening and special Employee Provident Fund or EPF withdrawal. As a result, FY23 PBT fell 14% to MYR511m. That said, net profit decline was milder at 6% thanks to the normalisation of effective tax rate or ETR post expiry of Cukai Makmur. QoQ, 4Q23 revenue and net profit jumped 22% and 14% on favourable seasonality. FY23 DPS totalled at MYR1.28, which represents a 100% payout ratio. (FY22: MYR1.38, 101%).
Outlook. Management has observed some improvement in consumer sentiment since 4Q23 and this has sustained into FY24F. This is in view of the encouraging Lunar New Year sales momentum. Meanwhile, the premiumisation strategy has continued to gain traction in view of the steady performance of the premium brands. On top of that, rising tourist arrivals should lend further support to consumption growth going forward. On the flipside, management regards the geopolitical tensions as a major risk as further elevation may lead to supply chain disruption and material hikes in input costs.
Risks to our recommendation include weaker-than-expected consumer sentiment and sharp rise in input costs.
Source: RHB Research - 28 Feb 2024
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