Huajing Securities·2024-04-14 16:00Investment Rating - The report maintains a "Buy" rating for China Resources Beer (291 HK) with a target price of HK$39.50, down from HK$42.00, reflecting a 6% decrease [5][10][11]. Core Views - The outlook for 2024 remains optimistic, driven by cost reductions and ongoing product upgrade strategies, which are expected to enhance both profit margins and net profits in the beer business [5][6]. - The white liquor segment is anticipated to resume healthy growth, contributing to improved operational leverage [5]. - The beer business showed a solid performance in 2023, with revenue growth of 4.5%, attributed to a 0.5% increase in sales volume and a 4.0% rise in selling prices [5][8]. Financial Summary - Revenue for 2024 is projected at RMB 40,980 million, with an expected increase to RMB 43,463 million in 2025 and RMB 46,090 million in 2026 [7][14]. - Adjusted net profit is forecasted to reach RMB 6,204 million in 2024, increasing to RMB 7,101 million in 2025 and RMB 8,067 million in 2026 [7][14]. - The earnings per share (EPS) for 2024 is estimated at RMB 1.91, with further growth to RMB 2.19 in 2025 and RMB 2.49 in 2026 [7][14]. Business Segment Insights - The beer business is expected to see a gross margin increase to 43.5% in 2024, following a 1.7 percentage point rise in 2023, driven by product upgrades and declining raw material costs [5][6]. - The white liquor business, which had a gross margin of 44% in 2023, is projected to improve its operating profit margin significantly over the next few years, from 6.3% in 2023 to 11.0% in 2024, 18.0% in 2025, and 23.0% in 2026 [6][8]. Valuation - The target price adjustment to HK$39.50 corresponds to an 11.0x EV/EBITDA multiple for 2024, reflecting a mid-range valuation compared to global beer peers and domestic liquor companies [10][11]. - The current stock price offers an attractive entry point, trading at approximately 9.4x EV/EBITDA for 2024 and 16.1x P/E [11].