Excel – http://1drv.ms/1AThtM4

My View:-

- Fair values/Market Timing:
  – 5-Y DCF:
    – Good Scenario – 12.67 (Fair Value Uncertainty: HIGH)
    – Base Scenario – 11.06 (Fair Value Uncertainty: VERY HIGH)
    – Bad Scenario – 9.63 (Fair Value Uncertainty: EXTREME)
  – Absolute EY%:
    – Trailing:   
      – FY13 (EPS: 0.602) – Fair value 12.49 (Fair Value Uncertainty: HIGH)
      – R4Q (EPS: 0.637) – Fair value 13.24 (Fair Value Uncertainty: MEDIUM)
    – Forward:   
      – FY14 (EPS: 0.624) – Fair value 12.97 (Fair Value Uncertainty: HIGH)
      – FY15 (EPS: 0.656) – Fair value 13.63 (Fair Value Uncertainty: MEDIUM)
    – EPS applied to reach the current stock price (12.44): 0.599   
- 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.
- CARLSBG is determined to move away from a single star beer product company to become a star beer portfolio company. Over the past 10 years, CARLSBG has been trying to launch a couple of new products into the market. To date, however, its Carlsberg Green Label is still viewed as the group’s only crown jewel. As such, a reshuffle has been undertaken in its top management team over the last 2 to 3 years with the aim of bringing good changes to the group. Besides, it has also appointed a few brand managers to oversee the brand building efforts across a few main products, whereby premium brands are expected to form a larger proportion of its new product portfolio. While efforts are being made to build market share for its premium products, the Carlsberg Green Label will remain as the bread and butter of the group. Whether or not CARLSBG will be able to return to its former glory, it is still too early to tell, but the good efforts warrant CARLSBG a buy/hold call for the long term. There are downside risks if things do not turn out as expected.
- At the current price (12.44), valuation of CARLSBG is not attractive. However, recently I accumulated a bit of CARLSBG shares because its DY% maintains at 5%.

Latest Financial – Q2 2014 Financial Report (26 Aug 2014) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1720665

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