CARLSBG–Fundamental Analysis (23 Feb 2014)

CARLSBG Analysis:-

Excel – https://lcchong.files.wordpress.com/2014/02/carlsbg-q4-2013.xlsx

PDF – https://lcchong.files.wordpress.com/2014/02/carlsbg-q4-2013.pdf

My View:-

– Fair values:
  – 10-Y DCF: 9.11 – 11.17 (MOS: -39% -> 14%)
  – EY%: 12.10 – 12.87 (MOS: -4.99% -> 1.34%)
  – Absolute PE: 12.06 – 12.83 (MOS: -5.30% -> 1.05%)
– I think the fair value probably range from 11.9 – 12.3. At the current price (12.62 as of 21 Feb 2014), CARLSBG is already fully valued or over valued. Besides, MOS derived from all models are not up to my benchmark (10.59%).
– The dividend return spread between GAB and CARLSBG vs the 10-year MGS yield has narrowed to only 30-40bpts vs the  historical  10-year average of 280-290bpts. (Source: RHB)
– Going forward, I remain conservative and skeptical above volume growth in the brewery sector as some reports show that the industry is saturated, coupled with several other external factors such as rising fuel costs, inflation as well as potential exposure to excise duty hike in the near future. However, earnings should be sustainable at current levels.
– 2014 will be a challenging year for brewers due to competition from contrabrand beers and as consumer spending dwindles. Fortunately, this will be partially alleviated by the Visit Malaysia Year 2014 event.
– In my opinion, there is still some downside risk even though the share prices of both stocks have fallen sharply from last year’s peaks (down 30-45%). 10.24 – 11.50 is a good support zone, from technical aspect. Chances of CARLSBG dropping below this zone is low.
– I may accumulate CARLSBG if its price got big discount.

Latest Financial – Q4 2013 Financial Report (21 Feb 2014) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1544685

At the time of writing, I owned shares of CARLSBG.

CARLSBG-Q4-2013_Page_2

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