Yanjing Brewery(000729) 东方证券·2025-02-10 10:00Investment Rating - The report maintains a "Buy" rating for Yanjing Beer, with a target price of 16.59 CNY, based on a valuation of 468 billion CNY [3][4]. Core Views - Yanjing Beer is expected to see a steady improvement in profitability, driven by the strong growth of its U8 product line and structural upgrades in its product matrix, leading to a slight increase in market share [2][13]. - The overall beer market in China is projected to experience a controlled decline, with Yanjing Beer expected to maintain a stable market share due to its strong brand positioning and product offerings [7][16]. Summary by Sections Financial Forecast and Investment Recommendations - The earnings per share (EPS) for Yanjing Beer is forecasted to be 0.37, 0.53, and 0.64 CNY for the years 2024, 2025, and 2026 respectively, reflecting an upward revision from previous estimates [3]. - Revenue projections for 2024 to 2026 are adjusted to 14,957 million CNY, 15,884 million CNY, and 16,657 million CNY, with corresponding growth rates of 5.2%, 6.2%, and 4.9% [3]. Market Position and Product Development - Yanjing Beer has successfully developed the U8 product as a national mid-to-high-end growth item, contributing to a projected compound annual growth rate (CAGR) of 0.5% in total sales from 2023 to 2027 [21]. - The U8 product is expected to account for approximately 32% of total sales by 2028, driven by its competitive pricing and strong market acceptance [34][35]. Competitive Landscape and Industry Trends - The report highlights that Yanjing Beer has increased its market share from 10.1% in 2021 to 10.8% in 2023, outperforming competitors like Chongqing Beer and Zhujiang Beer during the same period [13][20]. - The overall beer market in China is anticipated to decline at a compound rate of -1.7% from 2023 to 2035, with Yanjing Beer expected to navigate this decline effectively due to its strategic positioning and product offerings [16][19]. Profitability Improvement Measures - Key reforms initiated by Yanjing Beer include focusing on the U8 product, optimizing production lines, and reducing costs, which are expected to enhance the company's profitability compared to its peers [38][39]. - The company's gross margin is projected to improve significantly, benefiting from the increased share of U8 and cost reductions in raw materials [7][38].