Jingu Finance | Haitong International released a research report stating that China Resources Beer (00291) achieved revenue/net income attributable to mother of 23.74/4.7 billion yuan in 24H1, a year-on-year change of -0.5%/+1.2%. Due to the negative impact of high base numbers and weather, the beer business achieved revenue of 22.57 billion yuan, a year-on-year change of -1.4%, with sales volume/ton price change of -3.4%/+2.0% year-on-year, both volume and price performance were better than the industry average. Benefiting from the improvement of product structure and the decrease in some packaging material costs, the gross margin of the beer business increased by 0.6 percentage points to 45.8%. For baijiu, after refreshing the summary and measures such as stabilizing prices by reducing inventory, reshaping the organization, etc., the baijiu business achieved revenue of 1.18 billion yuan in the first half of the year, a year-on-year increase of +20.6%, driving the gross margin up by 2.1 percentage points to 67.6%. The net cash flow from operating activities increased by 25.6% year-on-year during the reporting period. The company distributed a mid-term dividend of 0.373 yuan per share, a 30% year-on-year increase, raising the interim dividend rate from 20.1% to 25.7%.
The bank stated that since the Political Bureau meeting on September 26, a series of macro policy measures have been launched. With subsequent efforts in promoting consumption and expanding domestic demand, domestic consumption may see an accelerated recovery. According to the bank's statistics, as of the end of October, the historical percentile rank of PEs for H-shares in the essential consumer sector is at 1% since 2011 (15.1x), with the alcoholic beverages PE historical percentile rank at 2% since 2011 (16.6x). The bank believes that the improving domestic economic outlook and the liquidity improvement brought by the USD interest rate cuts will further enhance the valuation of H-shares. China Resources Beer, as a leading company in the beer industry and the only dual-driven target of 'beer + baijiu', is expected to be the first to benefit from the sector's valuation recovery.
The bank continued to point out that the company's beer sales volume, revenue, and profits have ranked first domestically in 2023. Despite continuous pressure on industry demand in the second and third quarters of this year, the company's volume-price resilience and high-end pace are better than the industry average, reflecting a solid brand foundation and strong operational capabilities. With lower base numbers in the fourth quarter, the data on dining during the National Day holiday indicates a stable trend in the consumption channel, and cost reduction brings certainty to performance. As for baijiu, the company has completed the first phase of 'exploration' and entered the second phase of 'development', expecting rapid growth in the next two years. From various angles such as performance, valuation, and dividends, the company's stock price has a higher safety margin. The bank expects the company's EPS for 24-26 to be 1.64/1.83/1.96 yuan (previously 1.87/2.14/2.42 yuan), giving a 24-year 27x PE (unchanged), lowering the target price from 56 to 48 Hong Kong dollars, maintaining an 'outperform the market' rating.
