Core Viewpoint - The Chinese beer industry faces significant challenges in 2024, with a notable decline in sales and a shift in consumer behavior impacting revenue and profit margins [1][4][5]. Revenue and Profit Summary - In 2024, seven listed beer companies achieved a total revenue of approximately 152.13 billion yuan and a net profit of about 17.44 billion yuan [1]. - The revenue distribution among these companies shows three main tiers: over 30 billion yuan, between 10 billion and 30 billion yuan, and below 10 billion yuan [1]. - Budweiser APAC leads with a revenue of 62.46 billion yuan, followed by China Resources Beer and Tsingtao Brewery with revenues of 38.64 billion yuan and 32.14 billion yuan, respectively [1]. Performance Disparity - 57% of the beer companies experienced a decline in sales volume, attributed to a decrease in on-the-go consumption and high-end product sales [1][4]. - Among the seven companies, four reported a decrease in revenue, with Budweiser APAC, China Resources Beer, Tsingtao Brewery, and Chongqing Beer showing declines of 8.9%, 0.76%, 5.3%, and 1.15%, respectively [2][3]. - Conversely, Yanjing Beer, Zhujiang Beer, and Huichuan Beer saw revenue increases of 3.2%, 6.56%, and 5.44%, respectively [2]. Market Challenges - The decline in on-the-go consumption channels, such as restaurants and bars, has significantly impacted beer sales [4][5]. - The average per capita consumption in the restaurant sector dropped to 39.8 yuan, a decrease of 6.6% year-on-year, with the beverage segment experiencing the most significant decline [4]. - High-end product sales are also under pressure, with Budweiser APAC's market share in the high-end segment falling from approximately 50% to 42% [5]. Strategic Shifts - Beer companies are shifting focus from traditional on-premise sales to new consumption scenarios, particularly instant retail, which is gaining traction [6][7]. - Instant retail for beer has seen significant growth, with a reported 83% increase in market size from 2020 to 2022 [6]. - Companies like China Resources Snow Beer and Tsingtao Brewery are exploring customized products and services to meet evolving consumer demands [6]. Future Trends - The competition in the beer industry is transitioning from channel acquisition to the exploration of consumer scenarios, especially in the high-end segment [7]. - The future development of the beer market is expected to focus on technology-driven high-end products and the capture of instant consumption scenarios [7].

Investment Rating - The investment rating for the company is "Buy" [1] Core Views - The company reported a stable start in Q1 2025 with revenue of 4.355 billion yuan, a year-on-year increase of 1.46%, and a net profit attributable to shareholders of 473 million yuan, up 4.59% year-on-year [2][4] - The company's core competitiveness lies in its 6+6 brand matrix, emphasizing product innovation in the beer business, which is expected to enhance brand asset accumulation [4] - The company is actively responding to macro challenges by optimizing its distributor system and investment strategies, maintaining a dividend payout ratio of over 80% [4] Financial Summary - Total revenue for 2023 is projected at 14.815 billion yuan, with a growth rate of 5.5%, while the net profit attributable to shareholders is expected to be 1.337 billion yuan, reflecting a growth rate of 5.8% [3] - The gross profit margin is forecasted to be 49.1% in 2023, with a return on equity (ROE) of 62.5% [3] - Earnings per share (EPS) for 2025 is estimated at 2.61 yuan, with corresponding price-to-earnings (P/E) ratios of 22.07, 21.12, and 19.93 for the years 2025, 2026, and 2027 respectively [3][4]

Investment Rating - The investment rating for the company is "Buy" [1] Core Views - The company reported a stable start in Q1 2025 with revenue of 4.355 billion yuan, a year-on-year increase of 1.46%, and a net profit attributable to shareholders of 473 million yuan, up 4.59% year-on-year [2][4] - The company's core competitiveness lies in its 6+6 brand matrix, emphasizing product innovation in the beer business, which is expected to enhance brand asset accumulation [4] - The company is actively responding to macro challenges by optimizing its distributor system and investment strategies, maintaining a dividend payout ratio of over 80% [4] Financial Summary - Total revenue for 2023 is projected at 14.815 billion yuan, with a growth rate of 5.5%, while the net profit attributable to shareholders is expected to be 1.337 billion yuan, reflecting a year-on-year growth of 5.8% [3] - The gross profit margin is forecasted to be 49.1% in 2023, slightly decreasing to 48.1% by 2025 [3] - Earnings per share (EPS) for 2025 is estimated at 2.61 yuan, with corresponding price-to-earnings (P/E) ratios of 22.07, 21.12, and 19.93 for the years 2025, 2026, and 2027 respectively [3][4]

Investment Rating - The report maintains an "Accumulate" rating for the beer industry, indicating a positive outlook for investment opportunities in this sector [1]. Core Insights - The beer industry experienced a recovery in Q1 2025 after a challenging 2024, with revenue and profit showing signs of growth. Specifically, the beer sector's revenue for 2024 was CNY 68.038 billion, down 1.67% year-on-year, while net profit increased by 6.05% to CNY 7.290 billion. In Q1 2025, revenue reached CNY 20.043 billion, up 3.68% year-on-year, and net profit rose by 10.62% to CNY 2.519 billion [11][22][24]. Summary by Sections 1. Q1 Performance and Cost Elasticity - The beer sector faced pressure in 2024, but Q1 2025 showed recovery with revenue and profit growth. The revenue for 2024 was CNY 68.038 billion, with a net profit of CNY 7.290 billion. In Q1 2025, revenue was CNY 20.043 billion, and net profit was CNY 2.519 billion, indicating a recovery trend [11][22]. - Cost elasticity has been a key factor in maintaining profit margins, with a steady increase in gross profit margins throughout 2024 and into Q1 2025 [19][20][55]. 2. Future Growth Potential - The report anticipates a positive trend in volume and price in the upcoming quarters, particularly as the industry enters a low base period in Q2 and Q3 2025. The recovery in the restaurant sector is expected to support beer sales [48][50]. - The focus on mid-to-high-end beer products continues to drive growth, with brands like Qingdao Beer and Yanjing Beer expected to perform well due to their strong market positions and product upgrades [53][54]. 3. Investment Recommendations - The report suggests increasing exposure to quality leaders such as Qingdao Beer and Yanjing Beer, which are positioned well for growth in the upcoming consumption peak season. The recommendation is based on their strong cash flow and dividend yield potential [6][24]. - The report highlights the importance of monitoring the recovery of the restaurant sector and the impact of consumption stimulus policies on beer sales [50][52].

Investment Rating - The investment rating for the company is "Buy" [1] Core Views - The company has returned to positive growth in Q1 2025 after facing challenges in FY 2024, with a focus on high dividend value [8] - The company plans to distribute a total dividend of 2.40 CNY per share for FY 2024, resulting in a dividend payout ratio of 104% [2] - The company is entering a stable development phase, emphasizing shareholder returns through high dividend payouts [8] Financial Performance Summary - In FY 2024, the company achieved revenue of 14.645 billion CNY, a year-on-year decrease of 1.15%, and a net profit of 1.115 billion CNY, down 16.61% [2] - In Q1 2025, the company reported revenue of 4.355 billion CNY, a year-on-year increase of 1.46%, and a net profit of 473 million CNY, up 4.59% [2] - The company’s gross margin for FY 2024 was 48.57%, which improved to 48.42% in Q1 2025 [5] - The company’s sales volume in FY 2024 was 2.9749 million tons, a decrease of 0.75%, but increased to 883,500 tons in Q1 2025, reflecting a growth of 1.93% [3] Product and Regional Performance - In FY 2024, the company’s revenue from high-end, mainstream, and economy products was 8.592 billion CNY, 5.243 billion CNY, and 335 million CNY respectively, with the economy segment showing a growth of 15.56% [3] - In Q1 2025, revenue from high-end, mainstream, and economy products was 2.603 billion CNY, 1.550 billion CNY, and 910 million CNY respectively, with all segments returning to growth [3] - Revenue from the Northwest, Central, and Southern regions in FY 2024 was 3.884 billion CNY, 5.969 billion CNY, and 4.316 billion CNY respectively, with all regions showing growth in Q1 2025 [4] Future Projections - Revenue forecasts for 2025 and 2026 have been adjusted to 15.065 billion CNY and 15.449 billion CNY respectively, with an additional forecast for 2027 at 15.785 billion CNY [9] - EPS forecasts for 2025 and 2026 have been revised to 2.58 CNY and 2.72 CNY respectively, with a new forecast for 2027 at 2.79 CNY [9]

Investment Rating - The investment rating for the Chinese consumer staples sector is generally positive, with multiple companies rated as "Outperform" [1]. Core Insights - In April 2025, five out of eight tracked industries maintained positive growth, two experienced negative growth, and one remained flat. The sectors with single-digit growth include dairy, food and beverage, soft drinks, condiments, and frozen foods. The declining sectors are mass and below liquor and sub-high-end and above liquor, while the beer industry remained flat. Compared to the previous month, six industries showed improved growth rates, while two saw a deterioration. Overall demand has not significantly increased or decreased [10][34]. Summary by Category Liquor Industry - **Sub-high-end and above liquor**: In April, revenue was 26.4 billion yuan, down 1.5% year-on-year. Cumulative revenue for January to April was 167 billion yuan, up 0.3% year-on-year. Inventory levels increased as demand entered a low season [4][14]. - **Mass and below liquor**: Revenue in April was 15 billion yuan, down 10.7% year-on-year, marking 15 consecutive months of negative growth. Cumulative revenue for January to April was 75.2 billion yuan, down 13.9% year-on-year [16]. Beer Industry - Revenue in April was 14 billion yuan, flat compared to the same period last year. Cumulative revenue for January to April was 60.6 billion yuan, down 0.2% year-on-year. The industry is preparing for the upcoming sales season with low inventory levels [5][19]. Condiments - Revenue in April was 36.3 billion yuan, up 2.3% year-on-year, with cumulative revenue for January to April at 155.4 billion yuan, growing 1.3% year-on-year. The industry is experiencing weak sales due to external consumption pressures [21]. Dairy Products - Revenue in April was 33.6 billion yuan, up 3.4% year-on-year, while cumulative revenue for January to April was 156 billion yuan, down 0.6% year-on-year. The industry showed positive growth due to a low base effect from the previous year [23]. Frozen Foods - Revenue in April was 6.7 billion yuan, up 1.5% year-on-year, with cumulative revenue for January to April at 43.1 billion yuan, up 1.3% year-on-year. The industry faces challenges due to lower consumer spending and increased competition [25]. Soft Drinks - Revenue in April was 50 billion yuan, up 2.7% year-on-year, with cumulative revenue for January to April at 235.6 billion yuan, up 2.3% year-on-year. The industry is entering its peak season with intensified competition [27]. Restaurant Sector - Revenue for listed restaurant companies in April was 13.4 billion yuan, up 3.1% year-on-year, with cumulative revenue for January to April at 57.1 billion yuan, up 2.6% year-on-year. The sector is seeing recovery, particularly in tea and Western fast food segments [29].

Core Insights - The beer market is experiencing intensified competition as it enters a phase of stock competition, with contrasting performance driven by events like the European Cup and the Paris Olympics, alongside adverse weather and weak recovery in dining demand [1][3] - The overall beer industry remains highly fragmented, with major players like Budweiser APAC, China Resources Beer, Tsingtao Brewery, and Yanjing Beer generating over 150 billion yuan in total revenue, while smaller companies struggle with revenues below 1.3 billion yuan [1][3] Industry Performance - In 2024, the beer industry in China saw a 0.6% decline in production among large-scale enterprises, with industry revenue decreasing by 5.7%, marking it as the only category in the food and beverage sector to experience a revenue drop [3][8] - Major companies such as Budweiser APAC, Tsingtao Brewery, and China Resources Beer reported revenue declines of 8.8%, 5.3%, and 2.45% respectively, while Yanjing Beer and Zhujiang Beer managed to achieve revenue growth [3][10] Financial Results - Among the six major beer companies, Budweiser APAC, China Resources Beer, and Chongqing Beer all faced declines in both revenue and net profit, while Tsingtao Brewery saw a slight increase in net profit despite a revenue drop [5][6] - Yanjing Beer and Zhujiang Beer reported significant growth in both revenue and net profit, with Yanjing's net profit increasing by 63% [5][6] Q1 2025 Performance - In Q1 2025, major beer companies showed resilience with revenue and net profit growth, particularly Yanjing Beer, which achieved a net profit increase of over 60% [13][14] - Qingdao Beer led in revenue with approximately 10.446 billion yuan, while Zhujiang Beer had the highest revenue growth rate at 10.69% [14][16] Market Trends - The beer market is shifting towards high-end products, with companies focusing on premium offerings to attract consumers [15][17] - Yanjing Beer has launched new beverage products, indicating a strategic move towards diversification and tapping into the beverage market [17][18] - Qingdao Beer is also exploring beverage integration through its strategic merger with Qingdao Beverage Group, enhancing its product offerings and market reach [19]

Investment Rating - The investment rating for the company is "Buy" and is maintained [8] Core Views - The company's total revenue for Q1 2025 is 4.355 billion yuan, representing a year-on-year increase of 1.46%. The net profit attributable to shareholders is 473 million yuan, up 4.59% year-on-year, while the net profit excluding non-recurring items is 467 million yuan, an increase of 4.74% year-on-year [2][6] - Sales volume is gradually stabilizing, with Q1 2025 sales volume at 883.5 thousand kiloliters, a year-on-year increase of 1.93%. However, the average price per ton has decreased by 0.46% year-on-year. Revenue from high-end, mainstream, and economy products has increased by 1.21%, 1.99%, and 6.09% respectively [12] - The company benefits from a decrease in raw material prices, leading to a 1.45% reduction in cost per ton and an increase in gross margin by 0.52 percentage points to 48.42%. The net profit margin attributable to shareholders has increased by 0.32 percentage points to 10.85% [12] - The company is actively seeking transformation and investing in non-consumption channels to compensate for losses in on-premise consumption channels. The expected EPS for 2025, 2026, and 2027 is 2.65, 2.76, and 2.85 yuan respectively, with corresponding PE ratios of 21X for 2025 and 2026, and 20X for 2027 [12] Financial Summary - For 2025, the projected total revenue is 14.923 billion yuan, with a net profit of 2.618 billion yuan. The EPS is expected to be 2.65 yuan [19] - The company's total assets are projected to grow from 10.968 billion yuan in 2024 to 16.595 billion yuan in 2027, while the total liabilities are expected to increase from 8.515 billion yuan to 9.721 billion yuan over the same period [19]

Investment Rating - The investment rating for the company is "Buy" (maintained) [6] Core Views - The company achieved revenue of 4.355 billion yuan in Q1 2025, a year-on-year increase of 1.46%, and a net profit attributable to shareholders of 473 million yuan, up 4.59% year-on-year, slightly exceeding expectations [1] - The company's beer business saw a recovery in sales volume, with a total of 883,500 tons sold in Q1 2025, representing a year-on-year increase of 1.93% [2] - Cost improvements have driven profitability enhancements, with gross margin and net margin increasing by 0.52 and 0.67 percentage points year-on-year to 48.42% and 21.61%, respectively [4] - The company is expected to focus on non-current drinking channels and strengthen core market penetration, with stable product structure and controlled expense ratios [5] Summary by Sections Financial Performance - In Q1 2025, the company reported a revenue of 4.355 billion yuan, with a net profit of 473 million yuan, and a non-recurring net profit of 467 million yuan, all showing positive year-on-year growth [1] - The sales volume for the beer business was 883,500 tons, with an average price per ton of 4,804 yuan, reflecting a slight decrease of 0.34% year-on-year [2] Product and Regional Performance - High-end beer revenue reached 2.603 billion yuan, up 1.21% year-on-year, while mainstream beer revenue was 1.550 billion yuan, up 1.99% year-on-year [2] - The company’s revenue from different regions showed balanced performance, with the Northwest, Central, and Southern regions generating revenues of 1.178 billion, 1.835 billion, and 1.231 billion yuan, respectively [3] Cost and Profitability - The company’s operating cash flow increased by 24.88% year-on-year to 1.350 billion yuan, indicating strong cash flow performance [4] - The cost per ton decreased by 1.45% year-on-year to 2,543 yuan, attributed to lower raw material and packaging costs [4] Future Outlook - Revenue growth is projected at 2.0%, 2.6%, and 2.6% for 2025-2027, with net profit growth expected at 14.4%, 4.4%, and 4.3% for the same period [5] - The estimated earnings per share (EPS) for 2025, 2026, and 2027 are 2.6, 2.8, and 2.9 yuan per share, respectively, with a price-to-earnings (P/E) ratio of 21.9, 21.0, and 20.1 [5]

Industry Overview - The beer industry in 2024 is experiencing a significant divergence, with some companies thriving while others struggle, reflecting a structural adjustment within the market [2][3] - The National Bureau of Statistics reported a 0.6% year-on-year decline in beer production and a 5.7% decrease in industry revenue, making beer the only category in the food and beverage sector to see a revenue drop [2] Market Dynamics - The Chinese beer market is characterized by oligopolistic competition, with the top six companies (CR6) holding a market share of 92.6% [3] - Beer production has been declining since its peak in 2013, leading to a contraction in the overall consumption market, which directly impacts the performance of leading companies [3] Financial Performance - Major companies like Budweiser APAC, China Resources Beer, and Tsingtao Brewery reported revenue declines of 8.89%, 0.76%, and 5.3% respectively in 2024 [4][5] - Net profits for Budweiser APAC, China Resources Beer, and Chongqing Beer also fell by 14.8%, 8.03%, and 17.05% respectively, attributed to weak consumer demand and challenges in traditional sales channels [4][5] Growth Segmentation - Yanjing Beer and Zhujiang Beer are exceptions, showing positive growth in both revenue and profit, with Yanjing's revenue increasing by 3.20% and net profit by 54.87% [5] - Yanjing U8 has successfully penetrated the mid-to-high-end market, achieving a 31.40% increase in sales volume [6] Strategic Shifts - Companies are shifting focus towards operational efficiency and market segmentation to find sustainable profit growth in a saturated market [8][9] - Budweiser APAC is reallocating resources from super-premium products to the core price segment of 8-10 yuan, which is performing better in the current consumption environment [7][8] Cost Management - Several companies, including Budweiser APAC and China Resources Beer, have reduced their sales costs by 8.93% and 2.93% respectively, due to lower barley prices and improved cost control measures [9][10] - Qingdao Beer managed to achieve a slight net profit increase despite revenue decline by reducing various operational costs [10][12] Marketing Innovations - Companies are adopting innovative marketing strategies to engage younger consumers, such as emotional and scenario-based marketing [13][14] - Budweiser APAC is focusing on expanding non-drinking channels and targeting new consumption scenarios, while China Resources Beer has seen over 30% growth in online business [15][16]