20230821-招银国际-华润啤酒-00291.HK-1H_rev_EBIT_+13_26__Heineken_grew_60__5页_1mb

CR Beer's first-half revenue growth of 13.6% includes a 9.0% increase in beer sales and an additional RMB977 million from baijiu, which is now included in consolidated reports. Although beer revenue growth appeared slightly below the analyst's estimate, gross margin reached 45.2%, 1.5 percentage points ahead of expectations, driven by raw material cost savings and better sales mix. Heineken showed robust 60% year-on-year shipment growth, while the sub-premium+ segment contributed 22% to total shipment. This translated into a 26.6% recurring EBIT margin, 1.5 points better than forecast.

Management maintains a positive outlook on beer premiumization for the next few years, with potential catalysts including innovations in bottle size, flavors, and alcohol content. They express satisfaction with Heineken's (+60%) and Snow (+26%) performance in China, but note lukewarm reception for SuperX due to limited price hikes. A 20%+ growth is expected for sub-premium+ in 2023. For baijiu, price management is key amid industry headwinds, with a target revenue of RMB10 billion over three years and net profit of RMB2-3 billion. The price range for baijiu is set at RMB100-300 as core, and RMB500-1000+ for premium focus.

The target price for the stock is HK$73.10, down from a previous HK$76.90, reflecting updated financial estimates. Recurring EBIT estimate for 2023E increased by 11% after refining gross margins by 1.8 percentage points. Valuation is based on a 23x forward EV/EBITDA for mid-2024, remaining stable compared to long-term averages. Financial summaries include projected revenue growth from CNY5.6% to CNY6.9%, gross profit margins from CNY39.2% to CNY45.5% by 2025E, and net profit margins improving from CNY13.2% to CNY16.8%. Key metrics show improving ROE and reduced net gearing, supporting debt-to-equity and liquidity ratios.

Earnings revisions indicate stronger forecasts in gross and operating margins, while the company aims for continued growth through premiumization and market strategies.