Huachuang Securities·2026-03-11 10:30Investment Rating - The report maintains a "Strong Buy" rating for China Resources Beer, with a target price of HKD 40 [2][7]. Core Views - The company is expected to achieve a net profit of HKD 29.2 to 33.5 billion for 2025, reflecting a decline of 29.6% to 38.6%. However, after adjusting for goodwill impairment related to the acquisition of 55.19% of Jinsha Liquor, the net profit is projected to be HKD 57.1 to 63.2 billion, representing a growth of 20.0% to 32.8% [2][7]. - The report highlights that the beer segment remains robust, with Heineken's sales expected to grow by approximately 20%. Key growth contributions are anticipated from Guangdong, Zhejiang, and Northeast regions, while the overall beer sales are expected to show low single-digit growth [7][8]. - The goodwill impairment of HKD 27.9 to 29.7 billion related to Jinsha Liquor is seen as a necessary step to relieve the financial burden on the company's balance sheet, allowing for a more focused operational strategy moving forward [7][8]. Financial Summary - Total revenue for 2024 is projected at HKD 38.635 billion, with a slight increase to HKD 39.640 billion in 2025, reflecting a year-on-year growth rate of 2.6% [3][13]. - The net profit for 2024 is estimated at HKD 4.739 billion, with a significant drop to HKD 3.332 billion in 2025, before rebounding to HKD 6.388 billion in 2026 [3][13]. - The earnings per share (EPS) is expected to decrease from HKD 1.46 in 2024 to HKD 1.03 in 2025, before increasing to HKD 1.97 in 2026 [3][13]. Market Position and Strategy - The report emphasizes that China Resources Beer is well-positioned in the market, with a focus on high-end product offerings and operational efficiency improvements through the "Three Precision" strategy [7][8]. - The company is expected to benefit from the recovery in the dining sector, which will support its core business and sales growth in the coming years [7][8]. - The report suggests that the valuation of China Resources Beer is currently attractive compared to its peers, indicating a potential for valuation recovery post-goodwill impairment [7][8].