Investment Rating - The investment rating for the company is "Buy" (maintained) with a market price of HKD 23.90 [2][5]. Core Views - The report highlights the ongoing trend of premiumization in the beer industry, although the overall performance is being dragged down by the white liquor segment [2][5]. - The company achieved a revenue of HKD 23.744 billion in H1 2024, a slight decrease of 0.5% year-on-year, while EBIT increased by 2.0% to HKD 6.368 billion, with an EBIT margin improvement of 0.7 percentage points to 26.8% [5]. - The report anticipates a recovery in beer sales in the second half of the year, driven by a lower base and enhanced economies of scale, despite a downward revision in profit forecasts due to slowing premiumization and overall weak demand [5]. Financial Performance Summary - **Revenue and Profit Forecasts**: - Revenue (in million HKD): 2022A: 36,428; 2023A: 40,064; 2024E: 40,754; 2025E: 41,902; 2026E: 43,024 [2]. - Net Profit (in million HKD): 2022A: 4,344; 2023A: 5,153; 2024E: 5,403; 2025E: 6,080; 2026E: 6,646 [2]. - EPS (in HKD): 2022A: 1.34; 2023A: 1.59; 2024E: 1.67; 2025E: 1.87; 2026E: 2.05 [2]. - **Sales Performance**: - Beer revenue for H1 2024 was HKD 22.566 billion, down 1.4% year-on-year, with beer sales volume at 6.348 million kiloliters, a decrease of 3.4% [5]. - The average price of beer increased by 2.0% to HKD 3,555 per kiloliter, with mid-range and above sales accounting for over 50% of total sales for the first time [5]. - **Cost and Margin Analysis**: - Beer gross margin improved by 0.6 percentage points to 45.8%, while overall gross margin increased by 0.9 percentage points to 46.9% [5]. - The report notes an increase in beer production costs by 0.9% to HKD 1,925 per kiloliter, attributed to a decrease in production capacity utilization [5]. - **White Liquor Segment**: - White liquor revenue grew by 20.6% to HKD 1.178 billion, with high-end products seeing significant sales growth [5]. - However, the profitability of the white liquor segment is under pressure due to rising expenses, leading to a decline in EBITDA and EBIT margins [5]. Market Comparison - The report includes comparisons with industry peers and highlights the competitive landscape, indicating that the company is well-positioned to leverage the premiumization trend despite current challenges [4].

Financial Performance - The group's unaudited consolidated revenue for the first half of 2024 was RMB 23,744,000,000, benefiting from the continued development of the premiumization strategy in the beer and liquor businesses[2]. - Shareholders' profit attributable to the company for the first half of 2024 was RMB 4,705,000,000, an increase of 1.2% compared to the same period last year[2]. - The net cash inflow from operating activities increased by 25.6% year-on-year, reflecting the company's strong cash generation capability[2]. - For the six months ended June 30, 2024, the company reported revenue of RMB 23,744 million, a slight decrease of 0.5% compared to RMB 23,871 million for the same period in 2023[17]. - Gross profit increased to RMB 11,139 million, representing a growth of 1.3% from RMB 10,991 million year-on-year[17]. - The company's net profit for the period was RMB 4,733 million, up 0.7% from RMB 4,698 million in the previous year[18]. - Total comprehensive income for the period was RMB 4,744 million, slightly higher than RMB 4,700 million in the prior year[18]. - The company reported a decrease in financial costs to RMB 56 million, down from RMB 135 million in the previous year, indicating improved financial management[17]. - The company's total equity increased to RMB 36,772 million from RMB 34,174 million at the end of 2023, showing a solid financial position[19]. - The company has sufficient resources to meet its liabilities and commitments, ensuring continued operations in the foreseeable future[20]. Beer Business Performance - Beer sales volume reached approximately 6,348,000 kiloliters, a year-on-year decline of 3.4, but the proportion of mid-range and above beer sales exceeded 50% for the first time in the first half of the year[2]. - The average selling price of beer increased by 2.0% year-on-year, with the gross margin for the beer business rising by 0.6 percentage points to 45.8%[2]. - The beer business's EBITDA margin increased significantly, exceeding 10 percentage points to reach 28.3%, marking a historical high[2]. - The unaudited consolidated revenue for the beer business in the first half of 2024 was RMB 22,566,000,000, with high-end beer products continuing to perform well[9]. - Mid-range and above beer sales accounted for over 50% of total sales for the first time in the first half of 2024, with e-commerce sales growing approximately 60% year-on-year[10]. - The beer business achieved a profit before interest and tax of RMB 6,365,000,000, an increase of about 2.6% compared to the same period last year, with a profit margin of 28.2%[10]. - Beer sales volume for the first half of 2024 was approximately 6,348 million liters, a decrease of 3.4% year-on-year, although high-end beer products continued to perform well[32]. Liquor Business Performance - The liquor business achieved an unaudited consolidated revenue of RMB 1,178,000,000, a year-on-year increase of approximately 20.6%, with the gross margin rising by 2.1 percentage points to 67.6%[2]. - The white liquor business recorded an unaudited consolidated revenue of RMB 1,178,000,000 in the first half of 2024, representing a year-on-year increase of approximately 20.6%[11]. - The gross margin for the white liquor business rose by 2.1 percentage points to 67.6% in the first half of 2024[11]. - Sales of the national high-end liquor product "Summary" grew by over 50% year-on-year, contributing approximately 70% to the liquor business revenue[2]. - Sales of the national high-end product "Summary" increased by over 50% year-on-year, contributing approximately 70% to the white liquor business revenue[35]. Dividends and Shareholder Returns - The board declared an interim dividend of RMB 0.373 per share, a 30% increase compared to the same period last year[3]. - The company declared an interim dividend of RMB 0.373 per share for the six months ended June 30, 2024, compared to RMB 0.287 per share in the same period of 2023[25]. Strategic Initiatives - The company aims to maintain growth as its primary strategy and is committed to pursuing high-quality development while controlling capital expenditures[3]. - The group plans to implement a dual empowerment business model of "beer + liquor" to enhance competitive advantages and optimize management[12]. - The company is committed to achieving its "3+3+3" development strategy, focusing on transforming from scale to quality and from traditional to modern operations[12]. - The company has optimized its production capacity by ceasing operations at one brewery and starting operations at a new intelligent brewery in Jinan, Shandong[32]. - The company completed the acquisition of a 55.19% stake in Guizhou Jinsha Liquor Industry Co., Ltd., which has been included in the financial consolidation since January 10, 2023[31]. Compliance and Governance - The company has adhered to the corporate governance principles and guidelines since November 2003, with the latest revisions made on June 27, 2024[44]. - The company has confirmed compliance with the standards of the Code of Conduct for Securities Transactions, with no violations reported for the six months ending June 30, 2024[45]. - The interim results for the six months ending June 30, 2024, have been reviewed by the audit committee and independent auditor without any objections[46]. Other Financial Metrics - Current assets totaled RMB 19,004 million, an increase from RMB 17,141 million as of December 31, 2023[19]. - Inventory decreased to RMB 9,015 million from RMB 9,502 million, indicating improved inventory management[19]. - The company's interest income for the six months ended June 30, 2024, was RMB 102 million, down from RMB 208 million in the same period of 2023[22]. - The company recognized government grants amounting to RMB 238 million for the six months ended June 30, 2024, compared to RMB 163 million in the same period of 2023[22]. - The total cost of goods sold for the six months ended June 30, 2024, was RMB 12,605 million, slightly down from RMB 12,880 million in the same period of 2023[25]. - The company’s capital expenditure for the six months ended June 30, 2024, was RMB 747 million, compared to RMB 76 million in the same period of 2023[21]. - The company’s depreciation and amortization expenses for the six months ended June 30, 2024, were RMB 1,140 million, compared to RMB 1,149 million in the same period of 2023[21]. - The company’s total assets as of June 30, 2024, were RMB 19,444 million, an increase from RMB 17,942 million in the same period of 2023[25]. - The company's bank loans as of June 30, 2024, totaled RMB 1,378 million, with an effective annual interest rate ranging from 0.99% to 2.35%[30]. - The group employed approximately 27,000 people, with employee costs totaling around RMB 2,882,000,000 for the year[40]. - The group has no significant acquisitions or disposals during the six months ended June 30, 2024[41]. - A framework agreement for a comprehensive energy project was signed on July 2, 2024, with a term from January 1, 2024, to December 31, 2026[47].

华润啤酒(00291.HK) 2024 年 06 月 27 日 投资评级:增持(首次) | 日期 | 2024/6/26 | |-------------------------|---------------| | 当前股价 ( 港元 ) | 28.150 | | 一年最高最低 ( 港元 ) | 52.650/27.050 | | 总市值 ( 亿港元 ) | 913.24 | | 流通市值 ( 亿港元 ) | 913.24 | | 总股本 ( 亿股 ) | 32.44 | | 流通港股 ( 亿股 ) | 32.44 | | 近 3 个月换手率 (%) | 19.89 | | 股价走势图 | | 华润啤酒 恒生指数 -48% -32% -16% 0% 16% 2023-06 2023-10 2024-02 数据来源:聚源 聚击高端,拾级而上 ——港股公司首次覆盖报告 | 张宇光(分析师) | 方勇(分析师) | |--------------------------|--------------------------| | zhangyuguang@kysec.cn | fangyong@kysec.cn ...

Investment Rating - The report assigns a "Buy" rating to China Resources Beer (291.HK) with a target price of HKD 43.2, indicating a potential upside of 47.9% from the current price of HKD 29.2 [9][18]. Core Insights - The stock price of China Resources Beer has declined approximately 25% over the past 40 days due to weak market sentiment, primarily driven by concerns over soft restaurant channels and adverse weather conditions affecting beer sales. However, the company's sales have remained resilient, and management maintains an optimistic outlook for the year [8]. - The report anticipates a significant rebound in the stock price within the next 30 days as market sentiment improves with the onset of the peak season and favorable weather conditions [8]. - Despite a challenging consumption environment, the company is expected to outperform major competitors in terms of sales performance in the first half of 2024 [8]. - The report projects a stable profit growth for the year, with a forecasted 20%-30% sales growth for Heineken products and a slight decrease in unit costs due to locked prices for raw materials [8]. - The impact of industry demand changes on the company's liquor business is expected to be limited, as it is still in the early stages of development with significant growth potential [8]. Financial Projections - Revenue is projected to grow from RMB 35,263 million in 2022 to RMB 45,791 million by 2026, with a compound annual growth rate (CAGR) of approximately 5.9% [13][14]. - Core net profit is expected to increase from RMB 4,520 million in 2022 to RMB 7,692 million by 2026, reflecting a CAGR of 14.2% [13][14]. - The report forecasts a gross margin improvement from 38.5% in 2022 to 45.6% in 2026, driven by cost management and pricing strategies [13][14]. Market Expectations - The report indicates that the market price range for China Resources Beer is between HKD 26.9 and HKD 54.5, with a current market capitalization of HKD 94,568 million [9][10]. - The average daily trading volume over the past three months is reported at HKD 360.7 million [9].

Summary of Conference Call for China Resources Beer Industry Overview - The conference primarily discussed the current market conditions and future strategies of the beer and liquor industry, particularly focusing on promotional activities, cost control, financial status, and sales plans [2][3][4] Key Points Market Conditions and Sales Strategies - The company anticipates a slight decline in sales in the short term but plans to stimulate growth through promotional activities such as sponsoring sports events, expecting a sales peak in the second half of the year [2][3][4] - The company is facing challenges from rising raw material costs and intends to implement effective cost control measures while optimizing operations to maintain competitiveness [2][3][4] - The liquor business has shown rapid growth, prompting the company to adjust its marketing strategies in preparation for the upcoming sales peak [2][3][4] Product and Pricing Strategy - The company has no plans for new product launches or price increases, maintaining a stable strategy focused on existing core products [2][4][16] - The company emphasizes the importance of maintaining channel health to avoid excessive inventory that could negatively impact sales [3][4] - The company is investing in online markets and actively responding to market feedback, showcasing effective strategies for business adjustments during the pandemic [2][4] Competition and Market Dynamics - The discussion highlighted the potential risks facing the beer industry and strategies to cope with economic fluctuations affecting sales [5][6][22] - The company believes that even under economic pressure, it can achieve stable growth through robust market support and economies of scale [5][6][22] - The conversation also touched on the competitive dynamics among companies in the industry and the advantages of non-cash sales channels in resisting economic downturns [5][6][22] Sales Channel Analysis - Different sales channels, such as large supermarkets and small convenience stores, are experiencing varying performance levels, with convenience stores showing good growth potential [6][7][23] - The company plans to adapt to changing market and consumer habits by leveraging existing distributor networks and exploring new sales channels [6][7][23] Future Business Focus - The company is focusing on the development of white and black beers, including healthier options and potential price adjustments to meet high-end market demands [7][8][24] - Continuous product innovation and market adaptability are emphasized as crucial for maintaining a competitive edge in a challenging market [7][8][24] Financial Outlook - The company expects a slight increase in sales expenses due to the impact of the UEFA European Championship, but the overall sales target remains unchanged [4][10][13] - Gross profit margin is projected to improve by approximately 1.25 percentage points due to cost-side improvements [4][10][13] - The liquor business is expected to grow by 30-40% annually, although this may be influenced by overall economic conditions [17][18] Conclusion - The company demonstrates a proactive approach to navigating market challenges and competition, focusing on strategic promotions, cost management, and product innovation to drive future growth [2][3][4][5][6][7][8]

Company and Industry Summary Company Involved - The document involves a company that operates in the consumer beverage sector, specifically focusing on the Chinese market. Core Points and Arguments - The company has recently released its annual performance report, indicating a significant update on its financial status and future development strategies [1]. Other Important but Possibly Overlooked Content - The investor relations head, Kevin, was invited to provide insights and updates, highlighting the company's commitment to transparency and communication with investors [1].

Business Expansion and Diversification - CR Beer acquired 55.19% equity interest in Guizhou Jinsha Jiaojiu Winery Co., Ltd. in January 2023, marking its entry into the sauce-flavored baijiu market[14] - The Group established two major business units for beer and baijiu businesses, implementing a "Business Departments + Functional Departments/Direct Organizations" model[14] - The company officially entered the baijiu market in 2023, marking a significant milestone in its diversification strategy[55][56] - The Group completed the acquisition of 55.19% equity interest in Guizhou Jinsha, making it an indirect non-wholly owned subsidiary[103][108] - The Group actively expanded its non-beer businesses, proposing a "dual empowerment model for beer and baijiu businesses with mutual growth"[182] Product Innovation and Launches - CR Beer launched "Snow Draft Pure Malt Beer" in February 2023, targeting draft beer enthusiasts seeking higher product value[18] - Launched "Nong Li" product in September, carrying the brand DNA of "Paying Tribute to China's Thousand-Year-Old Brewing Culture"[19] - Introduced the first human + AI co-designed beer, "X Universe Plan", under the "Brave the World SuperX" brand[20] - Launched new baijiu products including "Jingyangchun Vitality Tiger" and "Jingzhi Zhixiang" Zhen series in June[21] - The Group launched the premium non-alcoholic beer "Heineken® 0.0" and promoted a themed marketing campaign leveraging the UEFA Champions League[85] - The Group launched new baijiu products "Zhaiyao Jingzhi" for corporate customers and "Jinsha Xiaojiang" targeting young consumers in 2023[94][95] Strategic Partnerships and Collaborations - The Group reached a strategic cooperation agreement with China Resources Gas Group Limited to support green development[17] - CR Beer signed a comprehensive strategic collaboration with Jiangnan University to strengthen resource integration and promote collaboration between top-tier universities and enterprises[18] - The Group established strategic collaborations with Ele.me, Meituan Instashopping, and China Railway Express[18] - The Group entered into a raw grain supply framework agreement with CR Wufeng Investment, effective from January 1, 2024, to December 31, 2026, for the supply of raw materials and related services for baijiu production[111] - CRWH, a subsidiary, entered into a three-year raw grains supply framework agreement with CRNF Investment, effective from 1 January 2024[114] Financial Performance and Metrics - Revenue for 2023 reached RMB 38,932 million, a 10.4% increase from RMB 35,263 million in 2022[44] - Profit attributable to shareholders of the Company in 2023 was RMB 5,153 million, up 18.6% from RMB 4,344 million in 2022[44] - Basic earnings per share for 2023 were RMB 1.59, compared to RMB 1.34 in 2022[44] - Total equity increased to RMB 34,174 million in 2023 from RMB 27,077 million in 2022[46] - Consolidated net cash decreased to RMB 426 million in 2023 from RMB 9,129 million in 2022[46] - Current ratio declined to 0.70 in 2023 from 0.88 in 2022[46] - Net assets per share (book value) rose to RMB 9.34 in 2023 from RMB 8.33 in 2022[46] - Total consolidated turnover increased by 10.4% year-on-year to RMB 38,932 million in 2023[56][59] - Earnings before interest and taxation rose by 33.2% year-on-year to RMB 6,961 million in 2023[56][59] - Beer sales volume increased by 0.5% year-on-year to 11,151,000 kilolitres in 2023[56][59] - The company proposed a final dividend of RMB 0.349 per share and a special dividend of RMB 0.300 per share, totaling RMB 0.936 per share for 2023[61] - Beer business turnover increased by 4.5% to RMB 36,865,000,000 and earnings before interest and taxation rose by 30.6% to RMB 6,889,000,000 in 2023[62][64] - Sales volume of sub-premium and above beer segment grew by 18.9% to 2,500,000 kilolitres in 2023[65] - Heineken® brand beer sales in China reached 600,000 kilolitres in 2023, achieving the first five-year plan target[66] - Gross profit margin of the beer business increased by 1.7 percentage points to 40.2% in 2023[67] - Baijiu business turnover was RMB 2,067,000,000 and earnings before interest and taxation were RMB 130,000,000 in 2023, with adjusted earnings before interest and taxation of RMB 797,000,000 excluding intangible asset amortization[68][69] - Total dividend for 2023 amounted to RMB 0.936 per share, including a final dividend of RMB 0.349 per share and a special dividend of RMB 0.300 per share[63] - The Group's consolidated turnover in 2023 was RMB 38,932,000,000, a 10.4% increase compared to 2022[81] - The Group's beer sales volume in 2023 increased by 0.5% to approximately 11,151,000 kilolitres[82] - The sales volume of sub-premium and above beer segments increased by 18.9% to approximately 2,500,000 kilolitres in 2023[85] - The Group's beer business turnover and earnings before interest and taxation in 2023 were RMB 36,865,000,000 and RMB 6,889,000,000, respectively, representing increases of 4.5% and 30.6% compared to 2022[82] - The average selling price of beer products increased by 4.0% year-on-year in 2023[82] - The "Heineken®" brand achieved a strong sales growth of nearly 60.0% year-on-year in 2023, reaching a sales volume target of 600,000 kilolitres[85] - The Group's earnings before interest and taxation and profit attributable to shareholders in 2023 increased by 33.2% and 18.6% to RMB 6,961,000,000 and RMB 5,153,000,000, respectively[81] - The Group's beer business gross profit margin increased by 1.7 percentage points to 40.2% in 2023, driven by premiumization and lower packaging material costs[86][87] - Operating expense ratio for the beer business decreased by 1.3 percentage points to 27.1% in 2023, with administrative and other expenses ratio dropping 1.4 percentage points to 7.9%[88] - The Group's consolidated net cash as of December 31, 2023, was RMB426,000,000, with total borrowings of RMB5,112,000,000, of which RMB931,000,000 is repayable within one year and RMB4,181,000,000 repayable after one year but within five years[98][99] - The Group's current liabilities as of December 31, 2023, were RMB24,364,000,000, with a current ratio of 0.70, primarily driven by advance receipts from beer sales and accruals for promotion and marketing expenses[100] - The Group's cash and bank deposit balance as of December 31, 2023, was 99.1% denominated in RMB, 0.4% in HKD, and 0.5% in USD[98][99] - The total dividend for 2023, including a special dividend for the Group's 30th anniversary, reached RMB0.936 per share, representing a 75% year-on-year increase and a dividend payout ratio of 59%[125][128] Operational and Production Developments - The Group initiated the "Research on Quality Improvement and Standardization of Planting Quality Assurance System for Domestic Beer Barley" project, with the first experimental base established in Inner Mongolia[16] - CR Beer set up three institutes of technology for baijiu, responsible for scientific research activities, management, and resource allocation[17] - Officially launched five relocation and new construction projects with annual production capacities ranging from 100,000 to 1 million kilolitres[25] - Put three projects into operation, including an 800,000 kilolitres annual production project at the Bengbu factory[26] - Completed rooftop photovoltaic projects in collaboration with CR Power and CR Gas, involving 22 factories[27] - The Group optimized production capacity by closing 2 breweries and opening 1 new intelligent factory in Bengbu, Anhui, with total annual production capacity of approximately 19,100,000 kilolitres across 62 breweries in China as of end-2023[88] - Baijiu business operated 2 distilleries in Guizhou Province with annual production capacity of approximately 15,000 kilolitres as of end-2023[96] - The Group's annual production capacity as of 31 December 2023 was 19,100,000 kiloliters (KL)[116] - The Group operates breweries in 24 provinces/cities across China, with the highest number of breweries in Sichuan (8) and Liaoning (6)[117] Brand and Market Positioning - CR Snow served as the official beer supplier for the Hangzhou Asian Games, providing products for ceremonies and athletes[19] - The Group sponsored multiple events including marathon events, variety shows, and extreme sports events to enhance brand influence[85] - The Group aims to strengthen Guizhou Jinsha's foundation through organizational restructuring, brand repositioning, and production improvement[93] - The Group will continue to focus on premiumization, brand building, and digital transformation to enhance competitive position in the beer industry[89] - The Group's beer business strategy "Excellence in Development for Winning at Premiumization" entered its final three years in 2023, while the baijiu business strategy "Strategic, Organizational, and Cultural (SOC) Reshaping for Empowered Development" began its first three-year phase[182] - The Group optimized its product mix, built a multi-level brand portfolio, and implemented global flexible procurement to reduce costs and enhance efficiency[182] - The Group strengthened its competitive position through precise marketing campaigns, high-quality channel expansion, and improved product portfolio[184] Risk Management and Corporate Governance - The company emphasizes a robust and prudent operation strategy, aiming for balanced development of efficiency, quality, and scale while managing risks to avoid major financial losses or business interruptions[166] - The company's risk management structure follows the "three lines of defense" model, with business units, risk management functions, and internal audit teams each playing distinct roles in risk identification, mitigation, and monitoring[168] - The Group's risk management framework is based on a "Three Lines of Defense" model, with clear division of responsibilities and management duties across business units, risk management functions, and internal audit functions[169] - The Board of Directors continuously monitors risk management and internal control systems, reviewing their effectiveness semi-annually through the Audit Committee[171][173] - The Group conducts annual risk assessments through a top-down and bottom-up process, identifying risks across strategic, marketing, operational, and human resource dimensions[172][174] - Identified risks are analyzed for likelihood and potential impact, with higher-priority risks receiving immediate attention and mitigation measures[175][177] - Risk monitoring indicators are established based on quantifiable and practicable principles, with regular reporting and independent reviews by the internal audit function[176][178] - The Group implemented measures to mitigate public sentiment and reputation risks, including monitoring and prohibiting activities that could damage its reputation[187][188] - The Group prioritized health, safety, and environmental protection, conducting staff training, emergency drills, and increasing environmental investments[189][190] - The Group addressed market supply risks by closely monitoring raw material dynamics, developing procurement strategies, and expanding supplier networks[193][195] - The Group enhanced information security by strengthening system management, implementing disaster recovery systems, and ensuring project quality[192][194] Leadership and Organizational Changes - Mr. Zhao Chunwu was appointed as Executive Director and President of the Company effective from 18 August 2023, with nearly 20 years of experience in sales and marketing[135][136] - Mr. Zhao Wei was appointed as Chief Financial Officer on 2 June 2023 and as Executive Director on 18 August 2023, with over 20 years of experience in financial management[137][138] - Mr. Daniel Robinson was appointed as Non-executive Director since December 2023 and serves as the managing director of Heineken Management (Shanghai) Co. Ltd., which supports the Group in premium brand building and marketing[139][140] - Mr. Tang Liqing was appointed as Non-executive Director in November 2021, with over 25 years of experience in finance, accounting, and human resources, particularly in the fast-moving consumer goods sector[141][142] - Ms. Guo Wei was appointed as a Non-executive Director of the Company in September 2023[143][144] - Ms. Guo Wei has extensive experience in auditing and financial management, holding a bachelor's degree in economics and a master's degree in law[143][144] - Mr. Houang Tai Ninh has been a Director of the Company since 1988 and holds a Bachelor of Business Studies degree[145] - Dr. Li Ka Cheung has been a Director since March 2003 and is Honorary Chairman of SHINEWING (HK) CPA Limited[145][146] - Mr. Lai Hin Wing was appointed as a Director in August 2022 and has over 40 years of legal practice experience[147][148] - Mr. Lai Hin Wing holds a Bachelor of Laws degree and is a Notary Public and China Appointed Attesting Officer[147][148] - Mr. Bernard Charnwut Chan has been a Director of the Company since November 2006 and holds multiple high-ranking positions in various companies, including Chairman & President of Asia Financial Holdings Limited and Chairman of Asia Insurance Company Limited[149][150] - Mr. Siu Kwing Chue, Gordon has been a Director of the Company since November 2006 and has extensive experience in government roles, including Secretary for Economic Services and Secretary for Transport in Hong Kong[151][152] - Mr. Xu Lin was appointed as Vice-President of the Company in January 2024, bringing experience from his previous role as a senior colonel in the Security Bureau of the Joint Staff Department of the Central Military Commission of the Communist Party of China[153] - Mr. Liu Youtai, appointed as Vice-President in December 2021, has extensive experience in marketing and financial management, having served in various high-ranking positions within the Company's subsidiaries since joining in 2002[154][155] - Mr. Zeng Shenping, appointed as Vice-President in December 2021, has extensive experience in marketing and investment & acquisition, having served in various high-ranking positions within the Company's subsidiaries since joining in 2000[156] - Mr. Wei Qiang was appointed as Vice-President in June 2023 and has over 20 years of experience in the beer and fast-moving consumer goods industry, including roles as CFO and Executive Director of the Company[157] - Mr. Wei has been appointed as Vice-President of the company since June 2023, bringing over 20 years of experience in beer and FMCG business management, along with extensive expertise in financial management, investment, and M&A[158] - Mr. Fan Shikai, aged 56, was appointed as Vice-President in June 2023 and holds key positions in subsidiaries, including Deputy General Manager of China Resources Wine Holdings and General Manager of Guizhou Jinsha Jiaojiu Winery, with over 20 years of sales and marketing experience[159][160] Awards and Recognitions - Ranked 76th in the 2023 Brand Value List of Chinese Listed Companies — Top 100 List[32] - Ranked 362nd in the Fortune China 500 list[32] - Ranked 1482nd in the Forbes Global 2000 list[33] - The 2022 annual report received multiple awards, including GOLD for Financial Data: Manufacturing & Distributing[36] - The company was ranked 37th in the Worldwide Top 100 Annual Report Ranking and 9th in the Asia Pacific Region Top 80 Ranking[38] - The Group received multiple awards in 2023, including the "Directors Of The Year Awards 2023" and eight awards from the "All-Asia Executive Team"[123] Market and Investor Relations - The Group held approximately 360 meetings with over 5,000 fund managers and analysts in 2023[122] - The Hang Seng Index declined by 15.38% in 2023, reflecting cautious investor sentiment amidst geopolitical challenges[121] - The Group changed the board lot size for trading on the Hong Kong Stock Exchange from 2,000 shares to 500 shares, effective from 11 April 2024[115] - The Group organized an offline seminar for stock commentators in Hong Kong to discuss product strategies and business developments[122] - The Group's stock price closed at HK$34.20 on the HKD counter and RMB28.05 on the RMB counter as of December 2023, with a total market capitalization of approximately HK$110.95 billion[124][126] - The Group joined the "HKD-RMB Dual Counter Model" in June 2023 to enhance share liquidity and support RMB internationalization[124][126] - CR Beer was included in several newly launched indices by Hang Seng Indexes Company, including the Hang Seng SCHK Consumption Index, Hang Seng SCHK Central SOEs Value Index, and Hang Seng SCHK SOEs Select Index[124][126] - The Group's dividend policy ensures that the annual dividend distributed to shareholders is no less than 20% of the profit attributable to shareholders under normal circumstances[125][127] Employee and Workforce Management - The Group's employee count increased to approximately 27,000 as of December 31, 2023, up from 24,000 in the previous year, with employee costs totaling RMB5,867,000,000 for the year[110] - The Group's staff size increased to 27,000 as of 31 December 2023, up from 24,000 in 2022, with over 99% employed in Mainland China[113] - Staff costs for the year ended 31 December 2023 amounted to approximately RMB5.867 billion[113] Environmental and Social Responsibility - The Group prioritized health, safety, and environmental protection, conducting staff training, emergency drills, and

Investment Rating - The report maintains a "Buy" rating for China Resources Beer (291 HK) with a target price of HK$39.50, down from HK$42.00, reflecting a 6% decrease [5][10][11]. Core Views - The outlook for 2024 remains optimistic, driven by cost reductions and ongoing product upgrade strategies, which are expected to enhance both profit margins and net profits in the beer business [5][6]. - The white liquor segment is anticipated to resume healthy growth, contributing to improved operational leverage [5]. - The beer business showed a solid performance in 2023, with revenue growth of 4.5%, attributed to a 0.5% increase in sales volume and a 4.0% rise in selling prices [5][8]. Financial Summary - Revenue for 2024 is projected at RMB 40,980 million, with an expected increase to RMB 43,463 million in 2025 and RMB 46,090 million in 2026 [7][14]. - Adjusted net profit is forecasted to reach RMB 6,204 million in 2024, increasing to RMB 7,101 million in 2025 and RMB 8,067 million in 2026 [7][14]. - The earnings per share (EPS) for 2024 is estimated at RMB 1.91, with further growth to RMB 2.19 in 2025 and RMB 2.49 in 2026 [7][14]. Business Segment Insights - The beer business is expected to see a gross margin increase to 43.5% in 2024, following a 1.7 percentage point rise in 2023, driven by product upgrades and declining raw material costs [5][6]. - The white liquor business, which had a gross margin of 44% in 2023, is projected to improve its operating profit margin significantly over the next few years, from 6.3% in 2023 to 11.0% in 2024, 18.0% in 2025, and 23.0% in 2026 [6][8]. Valuation - The target price adjustment to HK$39.50 corresponds to an 11.0x EV/EBITDA multiple for 2024, reflecting a mid-range valuation compared to global beer peers and domestic liquor companies [10][11]. - The current stock price offers an attractive entry point, trading at approximately 9.4x EV/EBITDA for 2024 and 16.1x P/E [11].

Investment Rating - The report assigns a "Buy" rating with a target price of HKD 41.3, representing a potential upside of 21.8% from the current price of HKD 33.9 [2][3]. Core Insights - The company has shown steady performance in FY23 with a revenue of RMB 38.93 billion, a year-on-year increase of 10%. The EBIT recorded was RMB 6.96 billion, reflecting a significant year-on-year growth of 33% due to a low base effect [1][3]. - The beer business is focused on premiumization, with a revenue of RMB 36.87 billion in FY23, up 5% year-on-year. The average selling price increased by 4% to RMB 3,306 per thousand liters, driven by product mix upgrades [1][3]. - The white liquor business has successfully undergone a transformation, achieving a revenue of RMB 2.07 billion in FY23, with an EBIT of RMB 130 million. The company has effectively reduced inventory levels and improved pricing strategies [1][2]. Summary by Sections Beer Business - The beer segment's revenue reached RMB 36.87 billion, with a stable volume of 11.15 million kiloliters sold. The sales of premium and above products grew by 18.9%, accounting for 22.4% of total sales [1][2]. - The gross margin for the beer business improved to 40.2%, up 1.7 percentage points year-on-year, with EBIT and net profit contributions of RMB 7.03 billion and RMB 5.25 billion, respectively [1][3]. White Liquor Business - The white liquor segment generated RMB 2.07 billion in revenue, with an EBIT of RMB 130 million. After adjusting for intangible asset amortization from the acquisition of Guizhou Jinsha, the EBIT would be RMB 797 million, reflecting a robust EBIT margin of 38.6% [2][3]. - The company has successfully reduced inventory by approximately RMB 800 million, achieving a significant improvement in pricing for key products [1][2]. Financial Projections - The report forecasts net profits of RMB 60.7 billion, RMB 70.2 billion, and RMB 80.3 billion for the years 2024 to 2026, respectively, with a target price based on a 20x PE ratio for FY24 earnings [3][4].

Core Viewpoint - China Resources Beer reported a 10.4% year-on-year increase in total revenue for 2023, reaching 38.932 billion yuan, while net profit attributable to shareholders rose by 18.6% to 5.153 billion yuan, despite facing challenges in overall beer sales growth and issues with its subsidiary, Jinsha Liquor [1][2][4]. Group 1: Beer Business Performance - The beer sales volume for China Resources Beer in 2023 reached 11.151 million kiloliters, showing a modest growth of 0.5%, primarily driven by product premiumization and a decrease in packaging costs [2][4]. - The high-end Heineken brand saw a nearly 60% increase in sales volume, making China the second-largest market for Heineken globally [4]. - The gross profit margin for the beer business improved by 1.7 percentage points to 40.2%, benefiting from increased sales and reduced costs [4]. Group 2: Market Challenges - Despite positive indicators, the overall beer sales growth of 0.5% was deemed unsatisfactory by the chairman, who noted a decline in sales volume in the second half of 2023, with a 4.6% year-on-year drop to 4.58 million tons [2][4]. - The chairman acknowledged a trend of strong performance in the first quarter, followed by pressure in the second quarter, and a decline in the third and fourth quarters, indicating a challenging consumption environment [2][4]. Group 3: High-End Market Dynamics - The high-end beer market remains competitive, with China Resources Beer aiming to expand its high-end product offerings without engaging in price wars [5][7]. - The company anticipates that the high-end beer market in China will continue to grow, with expectations for significant increases in high-end beer sales over the next decade [5][7]. - Competitors like Budweiser APAC are also experiencing growth in high-end and super high-end products, indicating a robust market for premium beers [7]. Group 4: Jinsha Liquor Performance - Jinsha Liquor's performance has been less favorable, with revenue and net profit not returning to pre-acquisition levels, generating only 1.3 million yuan in profit for 2023 [9][12]. - The company is implementing a three-year plan to improve Jinsha Liquor's brand, channel, and market management, with a focus on product quality and sales growth [12]. - Despite challenges, Jinsha Liquor has shown signs of recovery, with sales in the second half of 2023 increasing by nearly 70% compared to the previous year [12].