20220110-招银国际-华润啤酒-00291.HK-4Q_likely_in_line_with_on_track_premiumization_progress__our_sector_top_pick_4页_1mb

CR Beer (291 HK) Summary

Core Content

CR Beer (291 HK) is highlighted as a sector top pick with a BUY rating. The company is expected to maintain solid performance in 2021 and 2022, driven by premiumization progress and price hikes. Analysts believe that the company's guidance for 2021 aligns with their expectations, and the current valuation is considered reasonable.

Key Highlights

• 2021 Guidance:

  • Shipment is expected to remain flat to a slight decline (LSD), with a ~5% increase in Average Selling Price (ASP).
  • Premium and sub-premium volume growth is projected to maintain at an early 30%, with the premium/sub-premium volume contribution rising to 17.3% from 13.2% in 2020.
  • EBIT growth is expected to be around 20%, which is more conservative than the previously assumed ~25%+.

• 2022E Outlook:

  • Shipment is expected to grow by LSD, with a stronger price hike than 2021.
  • Sub-premium+ volume growth is anticipated to be ~20%, supporting the overall growth.
  • Gross margin expansion is expected despite rising raw material costs, reinforcing the company's profitability.

• Earnings Risk:

  • Earnings risk is considered well-contained unless the recent pandemic persists into 2Q22 and disrupts shipment targets.
  • Any correction in the stock is viewed as a potential entry point.

• Valuation:

  • Target Price (TP) is set at HK$88.0, maintaining the previous TP.
  • The TP is based on a 3-year average 29.0x EV/EBITDA multiple, reflecting a mean-reversion expectation once investors overlook the current volume challenges.

• Stock Performance:

  • Current Price: HK$59.8
  • 12-month price performance is shown in an attached chart (not included here).
  • The stock has shown mixed performance over the past 1, 3, and 6 months, with a -12.2% 1-month return and a +6.1% 3-month return relative to the market.

Financial Summary

Revenue (RMB mn)

• FY19A: 33,190
• FY20A: 31,448
• FY21E: 33,393
• FY22E: 35,852
• FY23E: 38,454

YoY Revenue Growth (%)

• FY19A: 4.2
• FY20A: (5.2)
• FY21E: 6.2
• FY22E: 7.4
• FY23E: 7.3

Net Income (RMB mn)

• FY19A: 1,312
• FY20A: 2,094
• FY21E: 4,431
• FY22E: 4,588
• FY23E: 5,402

EPS (RMB)

• FY19A: 0.6
• FY20A: 0.8
• FY21E: 1.0
• FY22E: 1.4
• FY23E: 1.7

YoY EPS Growth (%)

• FY19A: (2.1)
• FY20A: 32.6
• FY21E: 20.3
• FY22E: 43.0
• FY23E: 17.7

P/E (x)

• FY19A: N/A
• FY20A: N/A
• FY21E: 54.3
• FY22E: 38.0
• FY23E: 32.3

P/B (x)

• FY19A: N/A
• FY20A: N/A
• FY21E: 7.0
• FY22E: 6.3
• FY23E: 5.6

Yield (%)

• FY19A: N/A
• FY20A: N/A
• FY21E: 0.7
• FY22E: 1.1
• FY23E: 1.2

ROE (%)

• FY19A: 10.4
• FY20A: 13.0
• FY21E: 13.9
• FY22E: 17.5
• FY23E: 18.3

Net Margin (%)

• FY19A: 4.0
• FY20A: 6.7
• FY21E: 13.3
• FY22E: 12.8
• FY23E: 14.0

Shareholding Structure

• CRH Beer: 51.7%
• Morgan Stanley: 4.7%
• HHLR Advisor: 4.1%

Key Ratios

• Premium & Super Premium Sales Mix (%):

  • FY19A: 20.4
  • FY20A: 23.2
  • FY21E: 29.3
  • FY22E: 35.2
  • FY23E: 41.6

• Sub-premium Sales Mix (%):

  • FY19A: 79.6
  • FY20A: 76.8
  • FY21E: 70.7
  • FY22E: 64.8
  • FY23E: 58.4

• Gross Margin (%):

  • FY19A: 36.8
  • FY20A: 38.4
  • FY21E: 39.7
  • FY22E: 41.1
  • FY23E: 42.3

• Operating Margin (%):

  • FY19A: 6.5
  • FY20A: 9.8
  • FY21E: 13.6
  • FY22E: 18.1
  • FY23E: 19.7

• Pre-tax Margin (%):

  • FY19A: 6.6
  • FY20A: 9.6
  • FY21E: 19.1
  • FY22E: 18.4
  • FY23E: 20.2

• Net Margin (%):

  • FY19A: 4.0
  • FY20A: 6.7
  • FY21E: 13.3
  • FY22E: 12.8
  • FY23E: 14.0

• Effective Tax Rate (%):

  • FY19A: (40.5)
  • FY20A: (30.4)
  • FY21E: (30.4)
  • FY22E: (30.4)
  • FY23E: (30.4)

• Current Ratio (x):

  • FY19A: 0.2
  • FY20A: 0.3
  • FY21E: 0.4
  • FY22E: 0.4
  • FY23E: 0.3

• Net Payable Days:

  • FY19A: 331.9
  • FY20A: 364.1
  • FY21E: 364.1
  • FY22E: 300.0
  • FY23E: 250.0

• Inventory Turnover Days:

  • FY19A: 107.9
  • FY20A: 95.0
  • FY21E: 104.8
  • FY22E: 113.3
  • FY23E: 130.0

• Dividend Yield (%):

  • FY19A: 0.4
  • FY20A: 0.6
  • FY21E: 0.8
  • FY22E: 1.2
  • FY23E: 1.4

• BVPS (RMB):

  • FY19A: 6.1
  • FY20A: 6.5
  • FY21E: 7.6
  • FY22E: 8.5
  • FY23E: 9.6

Analyst Rating and Recommendations

• CMBIS Rating: BUY
• Target Price: HK$88.0
• Up/Downside: +47.2% from current price of HK$59.8
• CMBIS Ratings Explanation:
  • BUY: Potential return of over 15% over next 12 months
  • HOLD: Potential return of +15% to -10% over next 12 months
  • SELL: Potential loss of over 10% over next 12 months
  • NOT RATED: Not rated by CMBIS

Important Disclosures

• The report is for informational purposes only and should not be used as investment advice.
• CMBIS does not provide individually tailored investment advice.
• There may be conflicts of interest due to CMBIS's market-making activities.
• The report is not an offer or solicitation to buy or sell any securities.
• Recipients should contact CMBIS for further details.

Legal and Regulatory Information

• The report is subject to various legal restrictions depending on the jurisdiction (UK, US, Singapore).
• In the US, the report is only for "major US institutional investors".
• In the UK, it is only for persons falling under Article 19(5) or Article 49(2) of the relevant regulations.
• In Singapore, it is distributed by CMBI (Singapore) Pte. Limited and is subject to Singapore's Financial Advisers Act.