Ping An Securities·2025-06-27 02:37Investment Rating - The report initiates coverage with a "Buy" rating for Qingdao Beer [1][6]. Core Views - Qingdao Beer, established in 1903, is a leading domestic beer producer with a strong brand value of 264.675 billion yuan in 2024, maintaining its position as the top beer brand in China for 21 consecutive years [5][9]. - The company is focusing on high-end product development and has seen a stable beer demand, with a projected revenue growth driven by cost advantages from raw material price declines [5][21]. - The report forecasts steady revenue growth and profit release, with expected net profits of 4.8 billion, 5.1 billion, and 5.4 billion yuan for 2025, 2026, and 2027 respectively, reflecting year-on-year growth rates of 11%, 6%, and 6% [5][47]. Summary by Sections Section 1: Brand and Management - Qingdao Beer has a stable management structure and has undergone leadership changes that are expected to drive growth [9][13]. - The company has 57 wholly-owned and controlled breweries and exports to 120 countries, focusing on brand optimization and market expansion [5][9]. Section 2: Market Trends and Cost Advantages - The beer market in China is stabilizing, with production levels expected to remain between 35-36 million kiloliters from 2021 to 2024 [5][21]. - The average price of beer in the industry has increased by 13.3% from 2019 to 2024, indicating a trend towards premiumization [21][23]. - Raw material costs have generally declined since 2022, providing a cost advantage for beer companies [25][27]. Section 3: Product Structure and Efficiency - Qingdao Beer is implementing a "1+1" brand strategy, focusing on its main brand and a secondary brand to enhance market presence [29]. - The company has seen a significant increase in the sales of mid-to-high-end products, which accounted for 41.8% of total sales in 2024, up 6.6 percentage points from 2021 [30]. - Operational efficiency has improved, with a 76.2% capacity utilization rate in 2024, up 4.7 percentage points from 2017 [39][40]. Section 4: Financial Forecast and Valuation - The report projects revenues of 33.6 billion, 34.7 billion, and 35.6 billion yuan for 2025, 2026, and 2027, with corresponding growth rates of 4%, 3%, and 3% [47]. - The expected gross margins are forecasted to be 41.2%, 41.5%, and 41.7% for the same years, reflecting improvements due to product mix optimization [47].