According to Zhitong Finance APP, GTJA released a Research Report stating that the commercial model advantages and profitability resilience of the beer sector will be highlighted in the 2024 fiscal year. Looking ahead, it is expected that national brands will maintain relatively robust high profit levels, and regional brands' net margins will further improve, with leading companies continuously increasing dividend rates. In the medium to long term, the economic situation is expected to see marginal recovery, and long-term structural upgrades and category expansions will continue. Leading breweries may expand their categories, with contributions from beverages, spirits, and other business lines gradually increasing. The competition in the future will be mild, costs will moderately decline, and gross margins may reach new highs. From 2025 to 2026, the beer industry will fully enter a high-dividend era, which may present strong certainty investment opportunities under low base, low expectation, and low valuation.

GTJA's main opinions include:

The industry will enter a high-dividend era, expected to show strong profit resilience.

Since the peak sales of the beer industry in 2014, it has experienced stages of supply-side capacity reduction, increased market share for leading brands, price increases through structural upgrades, and improved profit margins. Profitability and valuation have risen across the board. However, since the second half of 2023, due to the decline in inflation levels, the logic of price increases has been challenged, leading to a drop in valuations to historical lows of around 20 times. Nevertheless, the profitability level of the sector continues to reach new highs, with the net margin in the third quarter of 2024 increasing by 0.16 percentage points to 13.1%, highlighting the advantages of the business model and profitability resilience.

The next industrial stage of beer will feature nationwide brands maintaining relatively robust high profit levels alongside regional brands' net margins further improving, while leading companies continuously increase dividend rates. It is expected that by 2025-26, TSINGTAO BREW and CHINA RES BEER's dividend rates may gradually rise to 60-70% from 64% and 58% respectively, Yanjing Brewery is expected to gradually improve, and Chongqing Brewery may maintain 100% dividends, while Budweiser may maintain above 82%.

The economic situation is expected to see marginal recovery, with long-term structural upgrades and category expansions continuing.

Due to relatively weak consumption scenarios like Dining, the bank estimates that the Industry sales volume in 2024 may decline by around 3% year-on-year, with ton prices increasing by 1-2% year-on-year. With more proactive policies and the issuance of dining consumption vouchers in many regions, the bank expects that the recovery of dining and other scenarios in 2025 may lead to a rebound in volume and price trends, coupled with a low base effect. The bank expects that the sales growth rate from Q4 2024 to Q3 2025 is likely to improve sequentially, with ton price increases likely to exceed the rise in CPI, and the long-term structural upgrade trend remaining unchanged.

The bank expects that in 2025-2026, Budweiser may focus on ultra-high-end upgrades, and does not rule out slight product price increases; CHINA RES BEER will adhere to the dual-drive strategy of "White + Beer" and high-end diversification strategy; TSINGTAO BREW may focus on developing pure draft and flavor innovation based on its classic 8 yuan product; Chongqing Brewery’s "Set Sail 27" may lead or initiate a beverage track layout plan; Beijing Yanjing Brewery U8 may maintain rapid growth driven by product line refinement and regional penetration; Guangzhou Zhujiang Brewery’s pure draft is benefiting from sustained growth due to regional market advantages. In the medium to long term, leading breweries may expand their categories, and the contribution of Other business lines such as beverages and Spirits will gradually increase.

The competitive situation is mild, with costs steadily declining, and gross margin may hit new highs.

In 2025, the overall competitive situation is not expected to intensify significantly. Leading companies Budweiser, CHINA RES BEER, and Chongqing Brewery may still focus on profit assessment and avoid malicious competition; among regional leaders, Guangzhou Zhujiang Brewery focuses on Guangdong, while Beijing Yanjing Brewery leads with high-end single products for regional penetration. The 6-8 yuan price range has formed a brand monopoly advantage, and prices above 10 yuan are driven by product innovation rather than low-price competition.

Beijing Yanjing Brewery and Guangzhou Zhujiang Brewery contributed 70% of the Industry profit increase from January to September 2024, mainly benefiting from their industrial stage, regional channel advantages, and internal cost reduction and efficiency enhancements, which are expected to continue. The trend of regional differentiation may continue, while the recovery of national leaders under improved Industry prosperity is promising. TSINGTAO BREW may achieve market share recovery driven by organizational innovation in 2025.

From the cost side, the bank predicts that the cost of barley in 2025 may decline by mid to high single digits year-on-year, while the prices of glass bottles and cartons remain stable; the leading companies' gross margin in 2025 may still see a slight increase.

Investment suggestion: The beer Industry will fully enter the high dividend era in 2025-2026, with strong certainty of investment opportunities under low base, low expectations, and low valuations; driven by policies, improving prosperity, and product innovation as catalysts.

Suggested Shareholding: TSINGTAO BREW (600600.SH), Beijing Yanjing Brewery (000729.SZ), Guangzhou Zhujiang Brewery (002461.SZ), Chongqing Brewery (600132.SH), Hong Kong stocks: TSINGTAO BREW (00168), CHINA RES BEER (00291).

Risk warning: fluctuations in costs, impact of extreme weather, changes in consumer habits.