PP 7767/09/2010(025354)

Malaysia Corporate Highlights RHB Research

Institute Sdn Bhd
A member of the
RHB Banking Group
R e su l ts N o t e Company No: 233327 -M

19 August 2010
MARKET DATELINE

Carlsberg Brewery Share Price

Fair Value
:
:
RM5.20
RM6.03
No surprises Recom : Outperform
(Maintained)

Table 1 : Investment Statistics (CARLSBG; Code: 2836) Bloomberg: CAB MK

Net Net
FYE Turnover profit EPS Growth PER C.EPS* P/NTA Gearing ROE NDY
Dec (RMm) (RMm) (sen) (%) (x) (sen) (x) (%) (%) (%)
2009a 1045.5 76.1 25.0 1.3 20.8 - 9.7 net cash 15.4 3.3
2010f 1462.7 125.5 40.7 62.8 12.8 37.0 13.0 net cash 23.2 4.7
2011f 1491.8 132.0 42.8 5.2 12.1 39.0 13.1 net cash 22.3 4.9
2012f 1505.7 146.3 47.5 10.8 10.9 45.0 13.8 net cash 22.6 5.5
Main Market Listing /Trustee Stock /Non-Syariah Approved Stock By The SC * Consensus Based On IBES Estimates

♦ In line with our expectation. Carlsberg reported 1HFY12/10 net profit of RHBRI Vs. Consensus
RM68.7m, which were within our but above consensus expectations, Above
accounting for 55% and 60% of our and consensus full year forecasts, In Line
respectively. Below

♦ Dividends. Carlsberg declared an interim dividend of 5 sen per share (less Issued Capital (m shares) 308.1
25% tax) and 2.5 sen per share (less 25% tax) special dividend, totaling Market Cap (RMm) 1602.01
7.5 sen which we believe is in line with our full year dividend projection of Daily Trading Vol (m shs) 0.2
32.5 sen (24.4 sen net), giving a net yield of 4.7%. 52wk Price Range (RM) 4.07-5.28
Major Shareholders: (%)
♦ Yoy, net profit grew by 139% in 2Q FY12/10 on the back of: 1) higher Carlsberg Breweries A/S 51
sales volume (+56.8% yoy) arising from the acquisition of Carlsberg
Singapore together with strong demand during the World Cup season; 2) FYE Dec FY10 FY11 FY12
higher EBIT margin (+4.8%-pts) arising from synergies and contribution EPS chg (%) - - -
from Singapore, lower raw materials costs and more favourable US$ vs. Var to Cons (%) 10.1 9.9 5.5
MYR exchange rate.
PE Band Chart
♦ Russia wheat ban might affect margins. We believe its operating PER = 18x
margins for the 2H FY10 may be affected by the rise in wheat prices PER = 16x
PER = 14x
caused by Russia’s ban on wheat exports due to a severe drought in the
country. Russia is the third largest wheat exporter in the world, accounting
for an estimated 8% of global wheat production. The export ban is
currently due to expire by year-end, but may be extended if the drought
continues. We estimate that wheat comprises 15-30% of total raw material
costs. Although we believe that Carlsberg has already sourced some of its
raw material requirements for the year, we are cautious as the period of
the export ban is uncertain. However, we are leaving any assumptions Relative Performance To FBM KLCI
unchanged for now pending clarification by management at the analysts
Carlsberg
briefing today.

♦ Other catalysts. An increase in the excise duty in 2H10 will also bring FBM KLCI
about a negative impact for Carlsberg’s topline and profitability.
Furthermore, as there are no forseeable events such as Chinese New Year
and the World Cup season in the 2H, we are expecting a slower topline
growth.

♦ Risks. 1) Sharp drop in TIV; 2) continued decline in Carlsberg’s market

share; and 3) possibility of excise duty hike in the 2011 Budget.

♦ Forecast. No change to our earnings forecasts for the time being.

Hoe Lee Leng
♦ Investment case. We maintain our DCF-based fair value of RM6.03, (603) 92802641
using an unchanged WACC of 9.2%. We maintain our Outperform hoe.lee.leng@rhb.com.my
recommendation on the stock.

Page 1 of 3
Please read important disclosures at the end of this report.

A comprehensive range of market research reports by award-winning economists and analysts are exclusively
available for download from www.rhbinvest.com
 19 August 2010

Table 2: Earnings Reviews (YoY Cumulative)

FYE Dec (RMm) 2Q09 1Q10 2Q10 QoQ (%) YoY (%) 1H09 1H10 YoY (%) Comments
Turnover 213.1 378.5 334.2 (11.7) 56.8 503.0 712.6 41.7 Yoy: higher turnover due to
World Cup season and
better performance in
hypermarkets and
supermarkets in both
Malaysia and Singapore
EBIT 15.6 48.1 40.6 (15.6) 160.4 43.4 88.8 104.5 Refer to EBIT margin
Interest Income 1.1 (0.7) (1.1) 50.9 (205.0) 2.5 (1.9) (175.8)
Associates 0.4 1.8 1.1 (39.9) 148.4 0.7 2.9 342.4 Higher contribution from
associates
Pretax Profit 17.1 49.2 40.6 (17.5) 137.4 46.5 89.8 93.1 Filtered down from EBIT
Taxation (4.0) (11.1) (9.5) (14.3) 137.7 (11.8) (20.6) 74.5 Refer to Effective Tax Rate
MI (0.2) (0.3) (0.3) (4.8) 16.6 (0.4) (0.5) 25.1
Net Profit 12.9 37.8 30.8 (18.6) 139.3 34.3 68.7 100.4 Filtered down from PBT and
lower effective tax rate
EPS (sen) 4.2 12.3 10.0 (18.6) 139.3 11.2 22.5 100.4 7.5 sen (less 25% tax)
interim dividend declared
during the quarter
GDPS (sen) 5.0 0.0 7.5 - 50.0 5.0 7.5 50.0

EBIT Margin (%) 7.3 12.7 12.2 (0.6) 4.8 8.6 12.5 3.8 Higher margin mainly due
to synergies from
Singapore
Pretax Margin 8.0 13.0 12.1 (0.9) 4.1 9.2 12.6 3.4
(%)
Net Margin (%) 6.0 10.0 9.2 (0.8) 3.2 6.8 9.6 2.8
Effective Tax 23.4 22.6 23.4 0.9 0.0 25.4 23.0 (2.4)
Rate (%)
Source: Company, RHBRI

Table 3. Earnings Forecasts Table 4. Forecast Assumptions

FYE Dec (RMm) FY09a FY10F FY11F FY12F FYE Dec FY10F FY11F FY12F

Turnover 1045.5 1462.7 1491.8 1505.7 TIV (mil HL) 1.45 1.45 1.45
Turnover growth (%) 8.9 39.9 2.0 0.9 Market share (%) 42.9% 42.9% 42.9%

Cost of Sales (739.3) (998.5) (1014.3) (1024.0)

Gross Profit 306.2 464.2 477.6 481.7

EBITDA 117.6 188.2 202.1 207.4

EBITDA margin (%) 11.2 12.9 13.5 13.8

Depr&Amor (20.4) (20.8) (26.5) (27.7)

Net Interest 3.1 (12.0) (12.0) 1.7
Associates 2.2 2.2 2.2 2.2

Pretax Profit 102.6 157.6 165.7 183.6

Tax (25.8) (31.5) (33.1) (36.7)
Net Profit 76.1 125.5 132.0 146.3
Source: Company data, RHBRI estimates

Page 2 of 3

A comprehensive range of market research reports by award-winning economists and analysts are exclusively
available for download from www.rhbinvest.com
IMPORTANT DISCLOSURES

This report has been prepared by RHB Research Institute Sdn Bhd (RHBRI) and is for private circulation only to clients of RHBRI and RHB Investment Bank
(previously known as RHB Sakura Merchant Bankers). It is for distribution only under such circumstances as may be permitted by applicable law. The opinions
and information contained herein are based on generally available data believed to be reliable and are subject to change without notice, and may differ or be
contrary to opinions expressed by other business units within the RHB Group as a result of using different assumptions and criteria. This report is not to be
construed as an offer, invitation or solicitation to buy or sell the securities covered herein. RHBRI does not warrant the accuracy of anything stated herein in any
manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against RHBRI. RHBRI and/or its associated persons
may from time to time have an interest in the securities mentioned by this report.

This report does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives
of persons who receive it. The securities discussed in this report may not be suitable for all investors. RHBRI recommends that investors independently evaluate
particular investments and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of a particular investment or
strategy will depend on an investor’s individual circumstances and objectives. Neither RHBRI, RHB Group nor any of its affiliates, employees or agents accepts
any liability for any loss or damage arising out of the use of all or any part of this report.

RHBRI and the Connected Persons (the “RHB Group”) are engaged in securities trading, securities brokerage, banking and financing activities as well as providing
investment banking and financial advisory services. In the ordinary course of its trading, brokerage, banking and financing activities, any member of the RHB
Group may at any time hold positions, and may trade or otherwise effect transactions, for its own account or the accounts of customers, in debt or equity
securities or loans of any company that may be involved in this transaction.

“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective directors,
officers, employees and agents of each of them. Investors should assume that the “Connected Persons” are seeking or will seek investment banking or other
services from the companies in which the securities have been discussed/covered by RHBRI in this report or in RHBRI’s previous reports.

This report has been prepared by the research personnel of RHBRI. Facts and views presented in this report have not been reviewed by, and may not reflect
information known to, professionals in other business areas of the “Connected Persons,” including investment banking personnel.

The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based
upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.

The recommendation framework for stocks and sectors are as follows : -

Stock Ratings

Outperform = The stock return is expected to exceed the FBM KLCI benchmark by greater than five percentage points over the next 6-12 months.

Trading Buy = Short-term positive development on the stock that could lead to a re-rating in the share price and translate into an absolute return of 15% or more
over a period of three months, but fundamentals are not strong enough to warrant an Outperform call. It is generally for investors who are willing to take on
higher risks.

Market Perform = The stock return is expected to be in line with the FBM KLCI benchmark (+/- five percentage points) over the next 6-12 months.

Underperform = The stock return is expected to underperform the FBM KLCI benchmark by more than five percentage points over the next 6-12 months.

Industry/Sector Ratings

Overweight = Industry expected to outperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Neutral = Industry expected to perform in line with the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Underweight = Industry expected to underperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

RHBRI is a participant of the CMDF-Bursa Research Scheme and will receive compensation for the participation. Additional information on recommended
securities, subject to the duties of confidentiality, will be made available upon request.

This report may not be reproduced or redistributed, in whole or in part, without the written permission of RHBRI and RHBRI accepts no liability whatsoever for the
actions of third parties in this respect.

Page 3 of 3

A comprehensive range of market research reports by award-winning economists and analysts are exclusively
available for download from www.rhbinvest.com