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A. Stotz Investment Research

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CAB (CAB MK): Premium Brand Strategy Drives Growth

CEO, A. Stotz Investment Research

Dr. Andrew Stotz, CFA

Equity Bottom-Up

Carlsberg Brewery Malaysia / Equity Bottom-Up

<ul>
<li>Earnings on an upcycle trend, good core profit return, and strong cash levels relative to its sector</li>
<li>Strategy to focus on its premium brands should continue to drive growth, premium grew faster than overall sales, up by 26% YoY in 1Q18</li>
<li>Equity income from Lion Brewery should rise as it has recovered from flood damages; the associate enjoys strong demand in Sri Lanka and should benefit from the local gov’t battling illicit alcohol</li>
<li>Trades in line with ASEAN Consumer Staples at 18CE* 23.5x PE but offers better EPS growth, a good 4% dividend yield and is net cash</li>
<li>Risks: Introduction of EFTA in Singapore could lead to competition from cheaper European imports</li>
</ul><p><em>* Consensus Estimates</em></p>


Earnings on an upcycle trend, good core profit return, and strong cash levels relative to its sector
Strategy to focus on its premium brands should continue to drive growth, premium grew faster than overall sales, up by 26% YoY in 1Q18
Equity income from Lion Brewery should rise as it has recovered from flood damages; the associate enjoys strong demand in Sri Lanka and should benefit from the local gov’t battling illicit alcohol
Trades in line with ASEAN Consumer Staples at 18CE* 23.5x PE but offers better EPS growth, a good 4% dividend yield and is net cash
Risks: Introduction of EFTA in Singapore could lead to competition from cheaper European imports
* Consensus Estimates

CAB (CAB MK): Focus on Premium Beer and Cider Brands