CHINA RES BEER(00291) 海通国际·2024-11-10 07:28Investment Rating - The report maintains an "Outperform" rating for China Resources Beer Holdings (291 HK) with a target price of HK56.00 [5][14]. Core Insights - The company is demonstrating resilience amid industry fluctuations and is steadily advancing its "beer and liquor dual empowerment" strategy. In the first half of 2024, the company achieved revenue of RMB 23.74 billion and net profit attributable to the parent of RMB 4.70 billion, reflecting a year-on-year change of -0.5% and +1.2% respectively [11][12]. - The beer business generated revenue of RMB 22.57 billion, a decrease of 1.4% year-on-year, with sales volume and average selling price changing by -3.4% and +2.0% respectively, outperforming the industry average [11][12]. - The gross profit margin for the beer business improved by 0.6 percentage points to 45.8%, aided by an enhanced product mix and reduced packaging costs [11][12]. - The baijiu segment saw revenue growth of 20.6% year-on-year, reaching RMB 1.18 billion, with gross profit margin rising by 2.1 percentage points to 67.6% [11][12]. - The company reported a 25.6% year-on-year increase in net cash inflow from operating activities and raised its interim dividend by 30% to RMB 0.373 per share, increasing the half-year dividend payout ratio from 20.1% to 25.7% [11][12]. Financial Summary - Revenue projections for the next three years are as follows: RMB 39.51 billion in 2024, RMB 40.39 billion in 2025, and RMB 41.12 billion in 2026, reflecting growth rates of 1%, 2%, and 2% respectively [4][10]. - Net profit estimates are projected to be RMB 5.32 billion in 2024, RMB 5.95 billion in 2025, and RMB 6.35 billion in 2026, with growth rates of 3%, 12%, and 7% respectively [4][10]. - The diluted EPS is expected to increase from RMB 1.64 in 2024 to RMB 1.96 in 2026, with a P/E ratio decreasing from 18 in 2024 to 15 in 2026 [4][10]. Market Context - The report highlights that macroeconomic policies are likely to boost domestic demand, with the valuation of the consumer staples sector showing signs of recovery from historical lows [6][13]. - The H-share consumer staples industry is currently at a historical PE percentile of 1% since 2011, indicating potential for valuation improvement [6][13]. - As a leading player in the beer industry and the only company combining beer and baijiu, China Resources Beer is positioned to benefit from sector valuation recovery [6][13].