SPDB International·2025-08-20 04:29Investment Rating - The report maintains a "Buy" rating for China Resources Beer (291.HK) with a target price of HKD 34.3, indicating a potential upside of 21.3% from the current price of HKD 28.3 [1][3]. Core Insights - China Resources Beer reported a 23% year-on-year increase in net profit attributable to shareholders for 1H25, reaching RMB 5.79 billion. The core operating profit, adjusted for one-time items, grew by 11.3% to RMB 7.1 billion, surpassing market expectations due to a significant reduction in unit costs and improved gross margins [1][5]. - The company is one of the few in the beer industry that achieved positive growth in average selling prices during a weak consumption environment, with a 0.4% increase in 1H25 [1][5]. - The new management's clear business development plans and positive outlook are expected to enhance market confidence in the company's future performance, potentially leading to better stock performance compared to peers [1][5]. Financial Performance Summary - Sales Volume and Pricing: In 1H25, beer sales volume increased by 2.2%, outperforming major competitors like Budweiser APAC, which saw an 8.2% decline. The average selling price rose by 0.4% due to a shift towards higher-end products, with premium and above products seeing over 10% growth [5][10]. - Cost Management: The unit cost decreased by 4.1% year-on-year, contributing to a 2.5 percentage point expansion in gross margin. The company's "Three Precision" strategy led to an 11% reduction in overall sales expenses [5][10]. - White Spirit Business: Despite a 34% drop in revenue from the white spirit segment due to regulatory challenges, the impact on overall performance is limited as this segment contributes a small portion to total revenue [5][10]. Financial Projections - Revenue and Profit Forecasts: The projected revenue for 2025 is RMB 39.13 billion, with a year-on-year growth of 1.3%. The net profit attributable to shareholders is expected to reach RMB 6.09 billion, reflecting a 28.5% increase [7][10]. - Valuation Metrics: The report provides a price-to-earnings (P/E) ratio forecast of 14.0 for 2025, with a return on equity (ROE) projected at 19.1% [7][10]. Market Positioning - The company is positioned to capture market share from competitors in the high-end segment, with significant growth opportunities in regions where its premium products are currently underrepresented [5][10].