Summary of China Resources Beer (0291.HK) Earnings Review Company Overview - **Company**: China Resources Beer (0291.HK) - **Market Cap**: HK$91.7 billion / $11.7 billion - **Enterprise Value**: HK$90.3 billion / $11.6 billion - **Current Price**: HK$28.28 - **Target Price**: HK$37.00 - **Upside Potential**: 30.8% [1][3] Key Financial Highlights - **1H25 Results**: Better-than-expected core EBIT driven by cost tailwinds and operational efficiency - **Revenue Forecasts**: - 2025E: Rmb39,222.3 million - 2026E: Rmb40,255.4 million - 2027E: Rmb40,940.2 million [3][12] - **EBITDA Growth**: - 2025E: Rmb10,309.9 million - 2026E: Rmb10,599.3 million - 2027E: Rmb11,128.0 million [3][12] - **EPS Growth**: - 2025E: Rmb1.70 - 2026E: Rmb1.90 - 2027E: Rmb2.05 [3][12] Strategic Insights - **Market Conditions**: The macro situation remains fluid with deflation risks, but the company is optimistic about its execution in premiumization and market share gains - **Beer Segment**: Expected mild acceleration in 2H25 with normalizing policy impacts; management emphasizes Heineken as a key driver for premiumization [1][14] - **Spirits Segment**: Potential overhang into 2H25; management plans to expand mid-range products and enhance channel profitability [1][14] Management Strategies 1. **Policy Normalization**: Signs of normalizing anti-extravagance policy observed in August, with improved run-rates for both beer and spirits [1][14] 2. **Premiumization Focus**: Continued prioritization of Heineken and enhancement of brand equity to drive high-quality growth [1][14] 3. **New Channels Growth**: Rapid growth in new channels (instant delivery, Sam's Club) expected to drive volume and mix with minimal margin challenges [1][14] 4. **Cost Control**: Focus on margin improvement and efficiency gains, including streamlining factories and reducing headcount [1][14] Financial Projections and Changes - **Recurring EPS Forecast**: Revised up by 5-6% for 2025-2027E due to improved beer sales estimates and better gross profit margin outlook [1][15] - **Sales Growth**: Expected 3.2% sales growth and 11.9% recurring EBIT growth in 2025E [1][15] - **Free Cash Flow**: Projected at Rmb5.7 billion in 1H25, with a net cash position of Rmb7 billion [1][14] Valuation Metrics - **P/E Ratios**: - 2025E: 15.2x - 2026E: 13.6x - 2027E: 12.6x [3][8] - **Dividend Yield**: Expected to increase from 2.8% in 2024 to 5.1% in 2027 [3][8] Conclusion - **Investment Recommendation**: The company maintains a "Buy" rating with a target price of HK$37.00, reflecting strong execution in premiumization and operational efficiency despite macroeconomic challenges [1][15]