Introduction

Maybank Investment Bank Berhad provides an incisive analysis of Heineken Malaysia’s financial performance for FY24, offering deep insights into its growth trajectory, profitability, and market position. This detailed report delves into the company’s financial metrics, earnings forecasts, and key drivers that support the analyst’s recommendation to maintain a “BUY” rating for Heineken Malaysia.

Heineken Malaysia: Ending FY24 with a Bang

Heineken Malaysia (HEIM MK) closed FY24 on a high note, surpassing expectations due to robust operating margins. The company’s 4Q24 results were significantly better than anticipated, driven by festive spending and strategic front-loading activities. Analysts foresee FY25 earnings growth propelled by continuous product innovations and aggressive investments in advertising and promotions (A&P) for core mainstream and premium brands.

The discounted cash flow-based target price (DCF-TP) has been raised from MYR30.20 to MYR33.00 (+MYR2.80), reflecting an optimistic view of Heineken Malaysia’s financial trajectory. At its current valuation of 16x price-to-earnings ratio (PER), below the mean of 21x, Heineken Malaysia presents an attractive investment opportunity yielding over 6%.

Key Performance Highlights for FY24

• 4Q24 net profit surged 42% year-on-year (YoY) and 25% quarter-on-quarter (QoQ) to MYR141 million.
• Full-year FY24 net profit rose by 21% YoY to MYR467 million, accounting for 108% of the analyst’s estimates and 109% of consensus estimates.
• The company declared a final dividend per share (DPS) of 115 sen, bringing total FY24 DPS to 155 sen with a 100% dividend payout ratio.

Revenue grew by 13% YoY in 4Q24, driven by higher festive spending and early Chinese New Year (CNY) preparations in January 2025. Additionally, EBIT increased by 32% YoY due to better economies of scale and effective cost management initiatives. A lower effective tax rate of 19% (down 5.8 percentage points YoY) further bolstered profitability.

Projections for FY25 and Beyond

Heineken Malaysia’s FY25E and FY26E earnings estimates were revised upwards by 8%-9%, factoring in improved EBIT margins of 1.9 and 1.7 percentage points, respectively. FY27E estimates were also introduced, reflecting cautious optimism regarding consumer confidence uplift and increased inbound tourism. However, risks such as geopolitical tensions and unfavorable foreign exchange movements remain.

Key Metrics: FY23A–FY27E

• Revenue is projected to grow steadily from MYR2,797 million in FY24A to MYR3,009 million in FY27E.
• EBITDA is expected to rise from MYR652 million in FY24A to MYR747 million in FY27E.
• Core net profit will likely grow from MYR432 million in FY24A to MYR495 million in FY27E.
• Net dividend yield is projected to remain stable, ranging between 6.3% and 6.6% for FY25E–FY27E.
• ROAE is anticipated to maintain high levels, increasing from 86.5% in FY24A to 88.2% in FY27E.

Valuation and Investment Recommendation

Heineken Malaysia is trading at 16x PER, below the historical mean of 21x, making it an attractive investment choice. The target price of MYR33.00 implies a 39% upside from its current price of MYR24.80. The analyst maintains a “BUY” recommendation, citing robust revenue growth, strong dividend yields, and the company’s ability to navigate market challenges effectively.

Risk Factors

While the outlook for Heineken Malaysia is optimistic, investors should remain cognizant of potential risks. Key challenges include an unfavorable regulatory environment (e.g., excise tax hikes), rising raw material costs, geopolitical uncertainties, and adverse foreign exchange movements. These factors could impact earnings growth and valuation.

Conclusion

Heineken Malaysia continues to demonstrate resilience and growth, supported by its strategic initiatives and strong market presence. With an improved financial outlook and an attractive valuation, the company remains a compelling choice for investors seeking exposure to the consumer staples sector in Malaysia. The “BUY” recommendation reflects confidence in Heineken Malaysia’s ability to deliver sustained returns for shareholders.