Core Viewpoint - The Chinese liquor industry is entering a deep adjustment period in 2024, with intensified market competition and frequent personnel changes, prompting companies to view "reform" as a key driver for exploring new growth points to meet challenges and seize opportunities [2]. Company Overview - Huaren Beer Chairman Hou Xiaohai has reduced his shareholding in the company twice in May, cashing out over 26 million HKD, which has sparked market speculation [4][6]. - Hou Xiaohai has been with Huaren Beer for 24 years and previously led the company to become the top-selling beer brand in China with the "Brave the World" strategy [4][7]. - The company has invested over 10 billion CNY in acquiring several liquor companies, including Jingzhi Liquor, Jinzongzi Liquor, and Jinsha Liquor, positioning Hou as a key player in the liquor sector [4][10]. Strategic Developments - In the final year of the "3+3+3" strategy, Hou Xiaohai aims for liquor revenue to exceed 10 billion CNY and profits to reach 2 billion CNY, indicating a need for substantial breakthroughs in the "beer and liquor dual empowerment" strategy [5][14]. - The "3+3+3" strategy has led to significant improvements in Huaren Beer’s financials, with gross profit margin rising from 33.71% to 42.36% and revenue increasing from 28.694 billion CNY to 38.635 billion CNY from 2016 to 2024 [8]. Liquor Business Performance - The liquor business currently has a scale of over 4 billion CNY, with a target to exceed 10 billion CNY in the future [17]. - In 2024, the liquor business generated revenue of 2.149 billion CNY, with a slight increase in EBITDA to 807 million CNY [12]. - The other two acquired companies, Jinzongzi and Jingzhi, have faced challenges, with Jinzongzi's revenue declining by 37.04% to 925 million CNY and continuing losses [13]. Future Outlook - The company aims to leverage its capital advantages and nationwide channel capabilities to enhance brand structure and expand nationally, focusing on market promotion and product pricing control [19]. - Experts believe that achieving the 10 billion CNY revenue target will require optimizing product structures and increasing the proportion of mid-to-high-end products [20].

Core Viewpoint - In 2024, China Resources Beer (00291.HK) experienced a decline in both revenue and net profit, with total revenue at 38.635 billion yuan, a slight decrease of 0.76% year-on-year, and net profit attributable to shareholders at 4.739 billion yuan, down 8.03% year-on-year [1] Group 1: Beer Business Performance - The beer business revenue was 36.486 billion yuan, a year-on-year decrease of 1%, with sales volume at approximately 10.874 million kiloliters, down 2.5% year-on-year [1] - Despite the decline in revenue and sales volume, the gross profit margin for the beer business increased by 0.9 percentage points to 41.1% due to the high-end strategy and a decrease in some packaging costs [2][3] - High-end beer sales grew by over 9% year-on-year, with brands like "Heineken" seeing nearly 20% growth, while "Snow" and "Red Duke" sales nearly doubled [2] Group 2: Cash Flow and Financial Health - The net cash inflow from operating activities increased by 67% to 6.928 billion yuan, marking a five-year high [1][6] - The average selling price of beer rose by 1.5% year-on-year, contributing to the improved gross profit margin [2] Group 3: White Wine Business Performance - The white wine business revenue grew by 4% to 2.149 billion yuan, although it fell short of the previously estimated growth target of over 30% [4][6] - The gross profit margin for the white wine business increased by 5.6 percentage points to 68.5% [6] - The brand "Abstract" under the white wine segment saw a 35% increase in sales, contributing over 70% to the white wine business revenue [6][7] Group 4: Strategic Focus and Future Outlook - The company plans to continue focusing on high-end products like "Heineken," "Snow Pure," and "superX" to drive growth in 2025 [3] - The company is expected to seek breakthroughs amid the dual pressures of declining beer sales and slowing white wine growth [7]

Core Viewpoint - The performance of China Resources Beer in 2024 was mixed, with record-high gross margins but declining revenue and net profit, particularly in its white liquor business, which faced significant challenges [1][2][9]. Financial Performance - In 2024, China Resources Beer reported a total revenue of 38.635 billion yuan, a slight decrease of 0.76% year-on-year, and a net profit attributable to shareholders of 4.739 billion yuan, down 8.03% [2]. - This marked the first revenue decline in five years, with net profit falling below 5 billion yuan [2]. Gross Margin and Profitability - Despite the revenue and profit decline, the company's overall gross margin increased by 1.2 percentage points to 42.6%, the highest in five years [3]. - The gross margin for the beer segment reached 41.1%, up 0.9 percentage points, while the white liquor segment saw a significant increase of 5.6 percentage points to 68.5% [3]. Strategic Developments - The high-end strategy has shown positive results, with sales of premium products in the beer segment growing over 9%, and the sales of the "Li" brand increasing by 35% [3][5]. - The company has also seen a notable increase in online sales channels, with GMV growing over 30% [5]. Challenges in White Liquor Business - The white liquor segment faced challenges, including high inventory levels and price discrepancies, particularly with core assets like Jinsha Liquor [4][6]. - Despite a 4% revenue growth in the white liquor segment to 2.149 billion yuan, the overall performance was hindered by these issues [4]. Management and Strategic Execution - Frequent changes in management, particularly at Jinsha Liquor, have raised concerns about stability and strategic execution [7][8]. - The aggressive growth targets set for the white liquor business have not been met, leading to increased pressure on management [7]. Industry Context - The report reflects the broader challenges faced by traditional giants in transitioning through cross-industry acquisitions, highlighting the difficulties in adapting to new market dynamics [9].

Investment Rating - The report assigns a rating of "Buy" for the company, expecting a relative increase of 5% to 15% compared to the CSI 300 index over the next six months [19][18]. Core Views - The company's beer business is steadily progressing towards high-end products, while the white liquor segment is experiencing counter-cyclical growth [1][10]. - The company achieved total revenue of 38.635 billion yuan in 2024, a year-on-year decrease of 0.8%, and a net profit of 4.739 billion yuan, down 8% year-on-year [3][9]. - The high-end beer sales grew by over 9% year-on-year, with Heineken seeing close to 20% growth, and the overall product structure is upgrading with mid-range and above beer sales exceeding 50% for the first time [4][5]. Summary by Sections Financial Performance - In 2024, the company reported total revenue of 38.635 billion yuan and a net profit of 4.739 billion yuan, with EBIT at 4.567 billion yuan, reflecting a slight increase of 0.2% year-on-year [3][9]. - The overall gross margin improved to 42.6%, up 1.3 percentage points year-on-year, with the beer segment's gross margin at 41.1% [6][9]. Sales and Growth - The beer sales volume in 2024 was 10.874 million tons, with a price of 3,355 yuan per ton, showing a decrease of 2.5% in volume but an increase of 1.5% in price year-on-year [4][5]. - The white liquor business generated revenue of 2.149 billion yuan, up 4% year-on-year, with a gross margin increase of 5.6 percentage points to 68.5% [5][6]. Future Projections - Revenue growth is projected at 6% for 2025, 5% for 2026, and 4% for 2027, with net profit growth expected at 9% for 2025 and 8% for the following years [9][12]. - The estimated earnings per share (EPS) are projected to be 1.59 yuan for 2025, 1.72 yuan for 2026, and 1.86 yuan for 2027 [9][12].

Investment Rating - The report maintains a "Buy" rating for China Resources Beer (0291.HK) with a target price raised to HKD 41.8, indicating a potential upside of 38% from the current stock price of HKD 30.05 [1][5][4]. Core Insights - The overall consumption environment is under pressure, leading to a 2.5% decline in total sales volume, while high-end product sales grew by 9%. The average selling price increased by 1.5%, and gross profit per thousand liters rose by 4.9% [2][4]. - The company is implementing a "Three Precision" strategy focusing on streamlined management, lean cost control, and meticulous operations to drive growth in a stagnant market [2][4]. - The white liquor segment showed steady growth, with revenue reaching RMB 2.15 billion, a 4% increase year-on-year, and an EBITDA of RMB 850 million, reflecting a profit margin of 39.6% [3][4]. Financial Summary - In 2024, total revenue is projected at RMB 39.65 billion, with a slight growth of 2.62% expected in 2025 and 1.12% in 2026. Net profit estimates for 2025, 2026, and 2027 are RMB 5.22 billion, RMB 5.44 billion, and RMB 5.68 billion respectively, with corresponding EPS of HKD 1.73, HKD 1.80, and HKD 1.88 [9][11][4]. - The gross margin is expected to improve to 42.34% in 2025, with a net profit margin of 13.16% [11][17]. - The company plans to continue increasing its dividend payout ratio, with a total dividend of RMB 0.76 per share for the year, representing a payout ratio of 52% [3][4]. Valuation Analysis - The report employs both comparable company analysis and DCF methods for valuation, concluding a target price of HKD 41.8 based on a 25x PE ratio and a DCF valuation suggesting a fair market value of HKD 42.6 [12][4]. - The average PE ratio of comparable companies is noted at 21.4x, while the report assigns a higher multiple to China Resources Beer due to its market position and growth prospects [12][14].