20220127-招银国际-华润啤酒-00291.HK-Profit_alert_in_line_with_us__still_our_sector_top_buy_4页_1009kb

CR Beer (291 HK) Summary

Core Content

CR Beer (291 HK) is a leading company in the China Consumer Staples sector, currently rated as a BUY by CMB International Securities. The company has announced its 2021E net profit range of RMB4.4–4.7bn, representing an 110%–124% YoY increase, which aligns with the research firm's forecast. The company's profit alert is attributed to several factors, including a RMB1.3bn non-recurring gain from a land transfer, expanding gross margin (GPM) due to price hikes and premiumization, lower administrative expenses from reduced impairment losses and one-off costs, and higher selling expenses due to increased market spending.

Despite the profit guidance being in line with expectations, the target price (TP) was lowered to HK$80.0, reflecting a 3ppt higher operating expense ratio. However, the company remains the top pick in the sector due to its strong potential for margin expansion, driven by a combination of product premiumization and capacity optimization.

Key Financial Highlights

Earnings Summary

• 2021E Net Profit: RMB4.406bn (up 21.4% YoY)
• 2022E Net Profit: RMB4.337bn (down 33.9% YoY)
• 2023E Net Profit: RMB5.235bn (up 20.7% YoY)
• EPS (2021E): RMB1.0
• EPS (2022E): RMB1.3
• EPS (2023E): RMB1.6
• Consensus EPS (2021E): RMB0.9
• Consensus EPS (2022E): RMB1.3
• Consensus EPS (2023E): RMB1.7

Key Ratios

• Gross Margin: 36.8% (FY19A) → 39.7% (FY21E) → 41.3% (FY22E) → 42.9% (FY23E)
• Operating Margin: 6.5% (FY19A) → 9.8% (FY20A) → 14.5% (FY21E) → 17.3% (FY22E) → 19.5% (FY23E)
• ROE: 10.4% (FY19A) → 13.0% (FY20A) → 14.0% (FY21E) → 16.6% (FY22E) → 17.9% (FY23E)
• Dividend Yield: 0.3% (FY19A) → 0.5% (FY20A) → 0.8% (FY21E) → 1.1% (FY22E) → 1.3% (FY23E)

Financial Metrics

• Target Price (TP): HK$80.0 (up/downside: +47.2% from current price of HK$59.8)
• P/E (2021E): 47.2
• P/B (2021E): 6.2
• EV/EBITDA (2021E): 29.0x (based on 3-year average)

Main Points

• Profit Alert: CR Beer's 2021E net profit is expected to be RMB4.4–4.7bn, with 2H21E net profit at RMB0.1–0.4bn, matching the research firm's low-end forecast.
• Reasons for Profit Growth:
  • Non-recurring gain: RMB1.3bn from land transfer.
  • Premiumization and price hikes: Driving GPM expansion.
  • Cost reduction: Lower administrative expenses due to reduced impairment and one-off costs.
  • Market expenses: Increased selling expenses to support growth.
• Target Price: Set at HK$80.0, based on 29.0x EV/EBITDA.
• Margin Expansion: The company is positioned to deliver higher margin expansion than peers, thanks to product premiumization and capacity optimization.
• Outlook for 2022E: Another strong year with sub-premium+ volume growth of ~20% and stronger price hikes than 2021E.

Key Takeaways from NDR

• Premium/Sub-premium Volume Growth: Maintains at early 30% in 2021E.
• Contribution to Revenue: Premium/sub-premium contribution rises to 17.3% from 13.2% in 2020.
• GPM Expansion: Solidified despite raw material inflation in 2H21.
• 2022E Outlook:
  • Shipment Growth: Expected to be LSD (likely strong).
  • Price Hikes: Even stronger than in 2021E, including like-for-like increases on mass market and sub-premium+ SKUs.

Stock Performance

• Market Cap: HK$183,048 million
• Avg 3Mths Turnover: HK$465.3 million
• 52W High/Low: HK$76.0 / HK$53.4
• Total Issued Shares: 3,244 million

Shareholding Structure

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

Analyst Rating

• CMBIS Rating: BUY
• Potential Return: Over 15% over next 12 months

Risk and Disclaimer

• Risks Involved: Transacting in securities involves risks, and past performance does not guarantee future results.
• Disclaimer: The report is not investment advice and should be used with caution. CMBIS is not a registered broker-dealer in the U.S. or Singapore, and the report is subject to legal restrictions in these jurisdictions.

Conclusion

CR Beer is viewed as a BUY by CMBIS due to its strong margin expansion potential, premiumization strategy, and capacity optimization. The company's profit growth is supported by non-recurring gains, cost management, and price hikes. The target price is set at HK$80.0, and the company is expected to outperform its peers in the sector.