The Zhitong Finance App learned that Guotai Junan released a research report saying that previously, the market was concerned about the year-on-year decline in sales in the beer industry in the third quarter at a high base, the slowdown in product structure upgrades, and the short-term impact of the Tsing Beer incident. The bank believes that the current pessimistic expectations have been fully responded to. The logic of structural upgrades and downward cost will continue to be verified, bringing about strong certainty in profit growth, and prominent allocation value. Proposed increase in holdings: Tsingtao Brewery (600600.SH), Yanjing Brewery (000729.SZ), Chongqing Beer (600132.SH); Hong Kong stocks: China Resources Brewery (00291), Tsingtao Brewery Co., Ltd. (00168).
Guotai Junan's main views are as follows:
The pessimistic expectations have been more fully responded to.
Previously, the market was concerned about the beer industry's year-on-year decline in sales in the third quarter at a high base, the slowdown in product structure upgrades, and the short-term impact of the Tsing Beer incident. The bank believes that the current pessimistic expectations have been fully reflected. The sector's valuation has also been fully digested, falling back to a historical low in 2013. According to the bank's profit forecast, the current stock price of the leading stocks corresponding to 2024 has shown strong allocation values: Tsingtao Brewery 21X, Yanjing Beer 31X (corresponding to 2025 23X), China Resources Beer 20X, and Chongqing Beer 23 times.
Structural upgrades are compounded by declining costs, and profit growth is more certain.
1) On the structural side, the long-term logic of upgrading will continue. China's beer industry has a low tonnage price base, strong momentum for structural upgrading and tonnage price increases after supply-side pattern optimization. The room and acceptance for rising tonnage prices are relatively high, and anti-cyclical properties are strong. Comparing the 10-15 year tonnage price increase cycle between the US and Japan, the bank believes that the resilience of China's beer structural upgrading is expected to be fully demonstrated. 2) On the cost side, raw material costs are in a downward cycle. The end of Australia and wheat is expected to bring about a marked decline in barley costs in 2024. Prices of aluminum cans and cartons are low, and the trend of improving ton costs continues. 3) Looking ahead to 2024, the bank expects industry leaders to maintain high single-digit year-on-year revenue growth and 15-20% year-on-year profit growth. Among them, sales are expected to maintain low single-digit growth, low to medium single-digit growth in tonnage prices, declining raw material costs are expected to drive profit growth in 2024 to 10-15%, and profit growth in 2024 is highly certain.
Catalyst: 1) Yanjing Brewery's 2023 three-quarter report performance exceeded expectations, forming an important catalyst. Yanbeer's 23Q3 revenue was +8.53% year-on-year, net profit to mother was +37.37%, internal reforms improved efficiency and profit flexibility continued to be realized. U8 continued to maintain a high growth rate to drive volume and price increases. Sales volume in single Q3 was +4.2% year-on-year, significantly faster than the industry, with revenue per ton of +4.1%, reflecting the resilience of structural upgrades and the strengthening of the company's sales assessment incentives. 2) The impact of the Tsingtao Brewery one-time incident was limited, accelerating market sentiment to bottoming out.
Risk warning: raw material costs are rising; market competition is intensifying; weather factors affect sales, etc.