Near-term volatility remains for Heineken, but prospects improving
KUALA LUMPUR: Heineken Malaysia Bhd (Heineken) could continue to face headwinds in the near-term future due to effects of the Covid-19 pandemic.
Nevertheless, analysts are now more optimistic on its recovery given the developments on the Covid-19 vaccines.
“Moving forward, the ontrade beer volumes are likely to remain challenged amidst the re-imposition of movement restrictions and the alarmingly high Covid-19 local cases of late.
“Despite near-term weaknesses, we believe the prospect of earnings recovery is looking much brighter given recent vaccine developments, which could eventually result in full re-opening of on-trade channels and the uplift of travel restrictions upon successful local and global vaccination,” said the research team at Kenanga Investment Bank Bhd (Kenanga Research).
It also pointed out that the group has taken various initiatives during the pandemic such as: the implementation of aggressive cost-saving measures (commercial, marketing and overhead spends) that would remain in place even after the pandemic.
If further noted that Heineken is also adapting to change in consumer behaviour by accelerating the growth of its in-house e-commerce platform (Drinkies) and through placing more importance on digital commercial executions to engage with the consumers virtually.
On Heineken’s performance in FY20, Kenanga Research said the company performed better than expected.
It explained that the positive deviation is likely due to betterthan-expected beer volumes in 4Q.
Overall, it maintained its ‘market perform’ rating on the stock.