ZHONGTAI SECURITIES·2024-08-20 02:44Investment 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].