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Carlsberg Brewery Malaysia Bhd Finance Essay
This report is written and designed with a main purpose for every potential investor
reference and guideline related to consumer products market. It is mainly for a better
and clear understanding about the conditions and trends of the market. In addition, it
might also used for finding out the latest update news which may impact the
investment strategy. This investment analysis report have been established to provide
some suggestion on a right choice for a future investment, helping in carry out a good
financial decisions and may contribute a good achievement with an overall success as
an investor.
In this investment analysis report, I chose two companies from consumer products
industry which involving Carlsberg Brewery Malaysia BHD and Guinness Anchor BHD
as an investment target. There are some reasons of why it is a good decision and why
it has being a necessity to invest in this industry. Over the periods, investing in
consumer products market can be a good strategy since this industry always stable
over the time. This sector has a steady and constant growth even during the both bull
and bear market. Bull and bear market is used to determine the upward and
downward market trends where bull market is generally connected to capital gains
with an increasing in future prices while bear market is a price decline in the stock
market.
Based on the market movement and the market affordability, it can be shown that the
market demand from the consumer goods industry will always exist all over the
periods of the time, no matter in the time of expanding economy in particular industrial
revolution or even during the time of recession where the economy is contracting. In
this rising competitive market, it has been expected to be increase in the future and
have a continuously growth. Therefore it is a profitable business to invest in which will
give every investor a better prospect of higher return and also far greater chance for
success.
Company Profile
2.1 Carlsberg Brewery Malaysia BHD
Carlsberg Brewery Malaysia Berhad is one of the 50 breweries of Carlsberg all around
the world. It is a Malaysia-based company which principally engaged in the
manufacturing of beer, stout, shandy and non-alcoholic beverages for the

establishment of marketing and distribution in the home market and for export
purposes. Carlsberg Malaysia Brewery BHD was incorporated in December 1969 as a
public company and was listed on the Main Board of the Bursa Malaysia Securities
Berhad on January 1972 under consumer products sector along with the locally
brewing of Carlsberg Green Label beer. It becomes No. 1 beer brand with more than
50% share of the Malaysian Beer Market.
During 2001 to 2005, Carlsberg Brewery Malaysia Berhad has created a rapid
progress by generate an increasing significant profit as a proof. Carlsberg Malaysia
provides various types of beer for every drinker which designed with different taste
and lifestyles for every occasion. It has different target market since there are different
types of customer therefore each product unit is different from one another. Presently,
the production has been expanded to several SBUs (Strategic Business Units) which
includes Carlsberg Green Label, Carlsberg Gold, Carlsberg Special Brew,
Kronenbourg 1664 and 1664 Blanc, Asahi Super Dry, Somersby Apple Cider, SKOL
Beer and Super Beer, Danish Royal Stout, Corona Extra, Jolly Shandy Lemon and
Nutrimalt as non-alcoholic beverages.
Furthermore, Carlsberg Brewery Malaysia Berhad through its subsidiaries including
Carlsberg Marketing Sdn Bhd and Luen Heng F & B Sdn Bhd which located in
Malaysia, Carlsberg Singapore Pte Ltd and Lion Brewery (Ceylon) Plc in Sri Lanka,
has take part in the wide range expansion of imported international beer brands in
particular Hoegardeen, Stella Artois, Budweiser, Grimbergen and Beck's. This
company has a great achievement of being 7 of 9 world's top international beer
brands and it has strengthened their power in beer industry. In addition, Carlsberg
Malaysia has being at the forefront of product quality and innovation which always led
the market with a dynamic product launches, massive consumer campaigns and be a
recognizable popular beer. The company has been championing many Corporate
Social Responsibility initiatives focusing on environment, community, workplace and
marketplace.
2.2 Guinness Anchor BHD
Guinness Anchor Berhad was incorporated in 1964 with the name of &quot;Guiness
Malaysia Limited&quot;, and then it was changed the name to &quot;Guinness
Malaysia Berhad&quot; in 1966. GAB was legally formed in 1989 by the merger of
Guinness Malaysia Berhad and Malayan Breweries (Malaya) Sdn Bhd whose parent
companies were Guinness Overseas Ltd (GOL) and Malayan Breweries Ltd (the
present Asia Pacific Breweries Ltd). GOL is owned by Diageo Plc which is nominated
as the world's leading premium drinks group with an outstanding collection of brands
across spirits, wine and beers. GAB manufactured and marketed various types of

brands such as Tiger Beer, Guinness Beer, Heineken, Anchor Smooth, Anchor
Strong, Kilkenny, Anglia Shandy, Malta, Paulaner, Strongbow and Sol. It is the largest
market shareholder of Malaysian Beer and stout industry with 57% of the market
share and GAB had revenue of more than RM 1.2 billion in the financial year ending
2009.
Today, GAB has becomes the major producer and market leader of Malaysian beer
and stout industry in Malaysia and following the merger, GAB has been listed on the
Main Board of Bursa Malaysia during the same year. GAB operates the Sungei Way
Brewery across Peninsular Malaysia, as well as Sabah and Sarawak which started the
operations in 1965 and it was located in Selangor by occupying the land area of 23.72
acres (96,000 m2). GAB has workforce of more than 560 employees. GAB is the first
and only Brewery in Malaysia to receive the Hazard Analysis Critical Control Point
Certification from the Ministry of Health and received the ISO 9001:2008 certification,
having fulfilled the additional requirements of ISO 9001:2000.
GAB has delivered 10 consecutive years by revenue, profit and market share
expansion. It has strong brand equity which may drives to market growth and caters
consumer palates. GAB also has approximately 30,000 sales and distribution points
throughout Malaysia which prove that GAB has wide distribution network and also
strong relationships with its business and trade partners. During last few years, GAB
has received number of awards involving StarBiz - ICR Malaysia Corporate
Responsibility Awards 2009 for Workplace and 2010 for Community Investment; the
Enterprise Asia's Asia Responsible Entrepreneurship Awards 2011 for Investment in
People; Malaysia HR Awards (Silver recognition in the Employer of Choice category)
and most recently, the Malaysian Dutch Business Council Malaysian Sustainability
Awards for Workplace Best Practices and Community Investment.
Financial Performance
Financial Ratios Analysis
Financial ratio analysis is important as the basic tool for every business which may
help in illustrate the business planning process involving SWOT (Strength, Weakness,
Opportunities and Threats). It plays a vital role in business strategy planning which is
usually used for analyzing the company performance since it was derived from the
company's financial statements information. Financial ratio analysis has several
strengths including it will be very useful in identifying any areas of significant changes
or notice any unusual fluctuations in the business organization process. In addition, it
can record how the business performance was over time by highlighting the areas of
good and bad performance which may directly attract the user's focus of attention. By
doing the examination in financial ratio analysis, every entrepreneurs and business

owners can easily track progress by setting of specific goals.

There are hundreds of financial ratios available that can used by any company but
some of the ratios are only applicable to industry-specific and not to all businesses.
Deciding which financial ratios are appropriate and may apply to the business is
important and becomes a necessity since users can make inferences about the
financial performance and condition of its operations, as well as the company's
attractiveness for investment target from the level and historical trends of these ratios.
In addition, different users of financial ratio analysis such as investor, bankers,
creditors and management may exercise the analysis for decision making purposes. It
shows the company efficiency in operating and management of the business and it
indicates how well the company has done in earning the profit and asset utilization.
In this report, there are some financial ratios has been provided as a guideline for
every potential investor to make a comparison of financial performance between
Carlsberg Brewery Malaysia and Guinness Anchor Berhad in order to meet a final
conclusion on which company should be invest in. The ratios will be shown as below
including profitability ratio, investment ratio, liquidity ratio, financial leverage ratio and
performance ratio, as well as the evaluation and analysis of the ratios. The ratios is
calculated based on the company's three years published accounts which including
2009, 2010 and 2011.
Table 3.1.1
Carlsberg Brewery Malaysia BHD
2011
2010
2009
Profitability Ratio
Return on Equity
26.495
22.995
14.791
Return on Total Assets
17.293
14.311
8.056
Return on Revenue
11.156
9.739
7.283

Gross Profit Margin (%)

37.598
35.195
30.028
Operating Profit Margin (%)
15.343
13.316
10.058
Return on Capital Employed (%)
22.94
18.962
10.852
Investment Ratio
P/E Ratio
14.502
18.233
Dividend Yield
9.177
3.965
Dividend Payout
1.331
0.723
Liquidity Ratio
Current Ratio
1.456
1.311
1.121
Quick Ratio
1.209
1.134
0.956
Financial Leverage Ratio
Interest Coverage Ratio (times)
-38.003
111.113
Total Debt Equity Ratio
0.0355

0.091
0.017
Leverage Ratio
0.526
0.602
0.832
Performance Ratio
Gross EPS (Sen)
54.35
43.58
24.90
Dividend (Sen)
58.00
18.00
Table 3.1.2
Guinness Anchor BHD
2011
2010
2009
Profitability Ratio
Return on Equity (%)
35.109
32.423
32.102
Return on Total Assets (%)
26.473
23.046
21.974
Return on Revenue (%)
12.183
11.239
11.046
Gross Profit Margin (%)
32.75
29.5
28.469
Operating Profit Margin (%)

17.018
15.692
15.465
Return on Capital Employed (%)
35.45
30.939
29.587
Investment Ratio
P/E Ratio
16.9
15.248
12.979
Dividend Yield
5.325
5.325
6.721
Dividend Payout
0.9
0.812
0.872
Liquidity Ratio
Current Ratio
3.281
2.647
2.373
Quick Ratio
2.8
2.173
1.971
Financial Leverage Ratio
Interest Coverage Ratio (times)
560.834
576.136
249.559
Total Debt Equity Ratio
0.0
0.0

0.0
Leverage Ratio
0.326
0.407
0.461
Performance Ratio
Gross EPS (Sen)
60.00
50.50
47.00
Dividend (Sen)
54.00
41.00
41.00
Analysis and Evaluation
Profitability Ratios
Profitability ratio is the ratios that most frequently used in financial ratio analysis and
also becomes one of the ratios that every firm must be concerned with. Profitability
ratios are commonly used to indicate and determine the overall company's
performance and efficiency on how well a company is performing in terms of its
business ability to generate profits as compared to expenses which incurred over a
specific time period. It also may used in established the company's bottom line and its
return to the company's investors. Generally in most of the ratios, a company can be
indicate is doing well in their performance by having a higher value compared to the
competitor's ratio or the same ratio from previous period.
There are two categories of profitability ratios involving margins and returns. Ratios
that show margins reflect the company's capability to interpret the sales dollars into
profits at various stages of measurement. Meanwhile, ratios that show returns indicate
the company's power to measure the overall efficiency in generating returns to its
shareholders. There are some examples of profitability ratios such as return on equity,
return on total asset, return on revenue, gross profit margin, operating profit margin
and return on capital employed.
Return on Equity
This ratio is probably the most essential ratios to investors in the company for making
a decision on the investment because it measures profitability related to ownership
which means that it will show the return on the money that the investors have put in
the company. Generally, higher percentage values have favorable meaning which

means that the company is efficient in generating income on new investment. As the
table 3.1.1 and 3.1.2 shown above, the ROE in Carlsberg Brewery Malaysia is lower
than ROE in Guinness Anchor Berhad. During the 3 years time, even though CBM
shows a significant increase in the ROE value but yet the ROE of GAB is higher.
Hence, GAB performs better than CBM.
Return on Total Asset
ROA ratios can be called as return on investment. It is usually used as an indicator
and gives ideas to the investors in terms of measuring the business management
efficiency in term of using its investment in assets to generate net income. ROA
indicates the number of cents earned on each dollar of assets. Therefore, the higher
the values are, the more profitable the company is. Based on the results of the
calculation, the Return on Total Asset in GAB is higher compared to the ROA in CBM
which means that GAB is perform better at converting its investment into profit
compared to CBM.
Return on Revenue
Return on Revenue is a financial tool that used to measure of the company's
profitability that compares net income to its revenue from year to year. This ratio may
help the management in controlling the expenses. Intrinsically, the difference between
net income and revenue is expenses, thus an increasing ROR means that the
company is generating higher net income with lesser expenses which managed
efficiently. The table of 3.1.1 and 3.1.2 indicates that GAB has a higher percentage of
ROR every year compared to CBM. Hence, GAB does better in controlling the
expenses to get a higher net income than CBM.
Gross Profit Margin
Gross profit margin is the ratio of gross profit to sales revenue. This ratio indicates
how well a company controls the inventory cost and the cost of product manufacturing
and afterwards passes on the costs to its customer. It reveals the financial
performance by showing the proportion of money left over from revenues after
calculating the cost of goods sold. Higher profit margin means that the company is
doing efficiently in the business operation. Based on the table above, it shows that
CBM has a higher gross profit margin during the three years' time compared to the
gross profit margin of GAB. It implies that CBM is perform better and doing more
efficiently in term of the balance of money proportion.
Operating Profit Margin
This ratio is also known as net profit margin. It is a measurement of the company's
pricing strategy and operating efficiency. Operating profit margin analysis gives idea
on how much the proportion of company's revenue left over after deducting from the

payment of variable cost such as salaries and raw materials and also how much the
company can generate on each dollar of sales. As the table of 3.1.1 and 3.1.2 shown,
it shows that GAB has a higher operating profit margin than CBM. It means that GAB
is more effective in converting sales into profit, in other hand, CBM are not generating
enough sales and operating expenses of the company are not kept effectively.
Return on Capital Employed
ROCE is a ratio that used to measure the return of a business that can be achieved
form the capital employed or from the company's assets. It indicates the company's
capital investment in terms of efficiency and profitability. ROCE can be used to reveals
how much the company is gaining from the assets and how much it is losing from its
liabilities. Generally, the rate of ROCE should be higher than the rate of the company's
borrowing or else shareholders' earning will be reduced as borrowing is increase. The
calculation shows that GAB has a higher ROCE than CBM, therefore GAB is more
profitable.
Liquidity Ratio
Liquidity ratios are ratios that generally used to measure the company capability to
fulfill its short term debt obligations by paying off all the liabilities when they fall due.
Generally, if the value of liquidity ratios is greater than 1, it indicates that the
company's financial performance is in a good condition because the short term
obligations are fully covered and it is less likely fall into financial difficulties. The higher
the liquidity ratios are, the higher the margin of safety will be for the company to satisfy
its current liabilities. Short term creditors will prefer a high current ratio while
shareholder will prefer a low current ratio so that there are more assets workings for
the business growth. The most frequent used liquidity ratios in the company's
performance analysis are current ratio and quick ratio.
Current Ratio
It is also called as working capital ratio which measures the solvency or liquidity of the
business. It indicates the company's ability to meet short term liabilities and to see
whether the firm has enough resources to pay its debts. High current ratio means that
there is too much money is tied up in current assets that could be used to generate
incomes. In other hand, low current ratio means that the company is unable to meet
the debts as they fall due. As the table shows that GAB has higher current ratio than
CBM which means that GAB can be categorized as healthy business and a desirable
target of investment.
Quick Ratio
Quick ratio or acid test is an indicator of the business liquidity which measures the
level of all assets that can be quickly convertible into cash and used to meet its short

term liabilities. Current ratios are less stringent test which means that quick ratio
provides more conservative measures because quick ratio excludes inventory. The
higher the ratio, the healthier the company's position since the level of liquidity is
higher. Based on the calculation, CBM's quick ratio is lower than GAB which means
that CBM's current liabilities will be hardly met from the current asset without selling
the inventory.

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