CHINA RES BEER(00291)2024-04-24 09:10Business 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 HK110.95 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