Malaysia: Analysts maintains 'buy' on Carlsberg amid manufacturing shutdown

Carlsberg Brewery Malaysia Bhd will mitigate the negative impact on its sales with off-trade and e-ecommerce channels as its manufacturing operations shutter during the first phase of the ongoing movement control order, The Star Online reported on June 4.

"Given similar operational disruptions during MCO 1.0, measures have already been put in place to minimise business impact, especially in terms of inventory stock movement and distribution to off-trade channels," said Maybank Investment Bank Research.

The research house opines that with about four weeks of inventory at present, the brewer will comfortably pull through the two-week lockdown period.

Carlsberg does not have plans to undergo further restructuring in FY21 and has reached an optimal operational ratio to position for robust growth in sales volume in a post-pandemic environment.

However, Maybank IB noted that if movement restrictions are extended, advertising and promotion expenses may decline upon cancellations of on-the-ground marketing engagements.

"To abide by social distancing measures, CAB will move its promotional campaigns back to digital platforms while new product launches will also centre around off-trade channels (eg. Connor’s stout in a can) until its on-trade channels are allowed to re-open," it said.

Maybank IB maintained its "buy" call on Carlsberg with a discounted cashflow target price of RM24.10.