Friday, June 5, 2020

Carlsberg VS Heineken

Products


Brands Under Carlsberg



Brands under Heineken


Company Background

Carlsberg Brewery Malaysia Berhad
  1. Owned by CARLSBERG BREWERIES A/S (51%) with top 30 shareholders holding a total of 66.3%. 
  2. Carlsberg Malaysia is holding 25% of Lion Brewery (Ceylon) PLC which is an associate company that manufacture and distribute beers in Sri Lanka. Lion Brewery contributes RM16 millions of net profit to Carlsberg Malaysia in 2019. 
  3. In 2019 Malaysia contributes 70% (RM1581 mil) of its revenue where Singapore contributes 27% (RM 618 mil) of its revenue. Remaining 3% are by other countries. 
  4. Revenue and profit growth over the 10 years. 
    • In 2010 its revenue is RM1368 million, net profit is RM134 million, share price is RM6.34.
    • In 2019 its revenue is RM2256 million, net profit is RM300 million, current share price is RM 25 
    • Its revenue grew 65% while profit grew 123%. Share price grew 294% over the 9 years period. 
  5. Adopting 100% dividend payout policy. 



Heineken Malaysia Berhad
  1. Owned by GAPL Pte Ltd (51%) with top 30 shareholders holding a total of 71.07%. 
  2. Malaysia contributes 99% (RM2297 mil) of its revenue and only 1% are by other countries. 
  3. Revenue and profit growth over the 10 years. 
    • In 2010 its revenue is RM1358 million, net profit is RM152 million, share price is RM9.59.
    • In 2019 its revenue is RM2320 million, net profit is RM313 million, current share price is RM 21.80 
    • Its revenue grew 71% while profit grew 106%. Share price grew 127% over the 9 years period. 
  4. Adopting 100% dividend payout policy. 
  5. Heineken dominates 60% of Malaysia legal beer market. 


Financial Background
  • Heineken have slightly higher sales and profit as compared to Carlsberg, hence, higher EPS
  • Carlsberg paid a special dividend in YA2019, hence, the dividend payout ratio is 134% of its earning (not expecting this kind of dividend payout moving forward).
  • Heineken has higher operating cash flow, which is 134% of its net profit as compared to Carlsberg of 126%. 
  • Heineken has higher shareholder equity in 2019 because Carlsberg payout a higher dividend for YA2019 causes its shareholder equity to drop. 
  • Both Carlsberg and Heineken do not need much cash on hand to do business as:
    • Carlsberg takes 26 days to sell off its inventories, 38 days for them to collect their money from their customers and 105 days for them to pay off their supplier. 
    • Heineken takes 24 days to sell off its inventories, 88 days to collect their money from their customers and 110 days to pay off their supplier. 
    • This explain why Carlsberg and Heineken do not need to keep too much cash on hand for cash flow purpose. And they are both not capex intensive company to do business. 




Facts for Brewery Industry
  • Illicit beer dominates 20% - 25% of Malaysia beer market. 
  • Excise duty for alcohol are 51% of sales. 
  • Malaysia is the 2nd highest country among the world for excise duty, behind Norway and alongside Singapore. 



Covid Impact on Carlsberg & Heineken Financial for Year 2020

  • Calculation is done based on 2019 earnings discounting by 25% to reflect a 3 months lockdown period. 


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