The Zhitong Finance App learned that Huachuang Securities released a research report saying that the beer was upgraded to the central market, profit improvements were clear, and the recommendation continued to be reiterated. Currently, excessive market concerns about high-end have led to a decline in valuations, but in reality, the high-end approach is more than halfway, which is the core driver of the medium- to long-term profit growth of leading companies. Looking at 24 years, profit forecasts are highly reliable, driven by cost dividends. Currently, from a PE perspective, Huarun and Tsing Beer 24E are about 15 and 20 times, respectively. At the same time, the beer company's cash flow is stable, and the bottom of the valuation reaffirms the recommendation. Start with China Resources (00291), etc., recommend Yanjing (000729.SZ), where reforms continue to advance, and focus on heavy beer (600132.SH).
Introduction:
High-end beer is still the number one trend. After experiencing extreme stress tests in the past two years, high-end beer has reached the middle ground and is still making steady progress. This article focuses on current market differences. First, understanding the high-end potential of Chinese beer through international comparison and category comparison; second, looking at the space, path, and pattern outlook for the second half of high-end production; and third, observing marginal changes and grasping the 24-year investment rhythm.
▍ The main views of Huacheng Securities are as follows:
International comparison:
Japan cannot simply compete against the competition. Looking at common overseas experience, China still has room to upgrade. Some investors look at beer on the assumption that long-term deflation is in the background, and target China with the Japanese beer industry after the 90s. However, in reality, Japan is an extreme situation of long-term deflation (market depth is insufficient) and industrial policy (alcohol tax influence) suppression. Chinese and Japanese beer cannot be easily compared; moreover, although the price performance of Japanese beer is weak, the share of the high-end has increased under extreme pressure, which is a highlight.
Looking at overseas from a broader perspective, we found that in most countries, high-end beers account for the mainstream of sales, while China currently accounts for a relatively high proportion of low-grade beer, and there is still plenty of room for upgrading. Compared to other domestic consumer industries, under the big wave of inflation in Chinese consumer goods in the past 20 years, beer has not kept up with the pace of upgrading. It has only accelerated in the past 5-6 years, and it still has a clear “latecomer advantage.”
High-end second half:
There is no change in speed change. 8-10 yuan instead of 6 yuan is a highly deterministic logic. Although 10 yuan or more is more difficult, there are fewer players. The sales structure of the industry has been upgraded from a “big bottom spire” to a “pyramid” in 19-23. Looking ahead to the next 5 years, it is estimated that the total volume of the beer industry will be basically stable, and the structure will further shift to a “balanced” type. In terms of direction, high-end technology has entered the second stage, and the growth rate of industry upgrades has changed gears, but the direction has not changed.
On the path: 1) The core is still continuous expansion of 8 yuan or more, and replacing the 6 yuan price band with 8-10 yuan is a high-end and highly deterministic logic. The successful direct price increase of Qingdao's classic 2 million ton single product and the continued release of U8 indicate that this price is full of vitality. 2) Over 10 yuan: More emphasis is placed on long-term brand cultivation. Although it is more difficult to judge, Heineken under China Resources is growing rapidly, Budweiser is steady and has many highlights, and the rest of the brands are underperforming.
Interpretation of the pattern:
Misplaced competition, clear hierarchy. Budweiser cultivates ultra-high-end, China Resources uses Heineken to occupy the high-end, and Tsing Beer Yanjing enjoys second-tier expansion dividends. According to estimates, there are about 900,000 tons of ultra-high-grade (15 yuan or more). Budweiser has accumulated a deep accumulation. Currently, the ultra-high-grade market share exceeds 50%, and it has a high level of strategic importance.
High-end (10-15 yuan) is about 5.2 million tons. Currently, Budweiser's share is about 36%. China Resources uses Heineken to take the lead and drive pure growth. Currently, its market share has rapidly increased to about 31%, and the strongest potential is expected to catch up with Budweiser. The second-high-end (8-10 yuan) is about 6 million tons. The price increase for classic Tsing Beer was complemented by the expansion dividend in 1903. At the time, Yanjing had the highest market share of 30%; China Resources had a market share of 17%, and China Resources had a market share of 14%. Super X plans to renew products and shift from individualization to popularization in the past, starting with Lao Yong breaking into the market with sales volume of nearly 3 million tons.
24-year outlook:
Operations are expected to pick up gradually, and cost dividends will be released. Benefiting from fine weather and the recovery of restaurants, many places reported that sales slightly exceeded expectations during the Spring Festival in '23 and that the structural performance was good. Although Q1 sales may still be under pressure from a high base, it is recommended to continue to pay attention to the post-holiday recovery. Once the recovery in demand strengthens, the low base during the peak season is expected to be catalyzed by highly elastic growth. On the cost side, barley costs are expected to drop by about 10%, and the pressure on packaging materials is expected to be low. Using Tsing Beer as an example, it is estimated that the gross margin is expected to increase by around 2 pcts, amplifying the 24-year performance increase.
Furthermore, some investors are concerned that the pattern will deteriorate due to the increase in low-tier fee investment by leading companies. The current profit orientation is already an industry consensus, and the research feedback is only a tactical adjustment, so there is no need to worry about the increase in overall competition brought about by the increase in low-tier fee investment.
Risk warning:
Consumption power continues to weaken, high-end sales fall short of expectations, competition intensifies, cost reductions fall short of expectations, and estimates involve many assumptions that may be erroneous, etc.