The Zhitong Finance App learned that Anxin International released a research report stating that it maintained China Resources Beer (00291)'s “buy” rating and lowered the 24/25/26 net profit to 57.4/63.8/6.81 billion yuan due to conservative principles, and the corresponding EPS was HK$1.91/2.23. Taking into account the current sentiment in the Hong Kong stock market, the target price was lowered to HK$48. The bank believes that the beer and liquor business is a high-quality track with long slopes and snow, and has the ability to raise prices in the long run. Under the leadership of excellent management, combined with the company's existing nationally renowned brand matrix, the bank continues to be optimistic about the development prospects of China Resources Beer for a long time. However, considering the current economic environment under pressure and the increase in the company's profit scale, the bank expects the future growth rate to be lower than the previous three years.

Anxin International's main views are as follows:

Heineken Plus is driving second-highest growth.

The sales volume of the second-highest product in '23 was 2.5 million tons, up 18.9% year on year. The sales volume of second-highest products reached 22%. Heineken grew by more than 60%, and sales exceeded 600,000 tons. The performance was very strong. Chunsheng achieved double-digit growth and ushered in a period of explosion. The company re-packaged and upgraded its products in response to a super-brave breakthrough under pressure on growth. Judging from its performance over the past 24 years, beer's performance is relatively steady against the backdrop of macroeconomic pressure. The high-end of the industry is the general trend. In the future, China Resources will continue to focus on single products worth more than 10 yuan, strive for the next high-end, and compete for first place in the high-end market.

Liquor integration is going well, and the product portfolio needs to be strengthened.

In '23, the company completed the acquisition of 55.2% of Jinsha Liquor's shares and officially entered the liquor sector. The liquor business achieved revenue of 2.06 billion in '23, and the EBIT after amortization was 797 million, with a profit margin of 38.6%. In 23 years, the company has reshaped products and channels, reorganized brands, and launched new products at different prices and channel special products with Digest and Sands as the core to meet the different needs of consumers. At the same time, vigorously remove inventory, guarantee prices, and ensure dealer profits. The company believes that the penetration rate of soy wine will continue to increase in the future, and Jinsha has more room for development as a well-known soy wine company. The company will focus on Shandong, Henan, Guangdong, Guizhou, Jiangsu, and Zhejiang, which have a high penetration rate of soy wine, and then penetrate into the surrounding area after improving the regional market.

A special dividend will be paid, and liquor production capacity will continue to be invested.

The company will pay a special dividend of 0.3 yuan per share this year, combined with regular mid-term and year-end dividends. This year's dividend will reach 0.936 yuan per share, with a dividend ratio of 59%. In the future, in addition to the normal capital expenses of the beer business, the company expects to invest 1.8 billion yuan in liquor storage capacity over the next 2-3 years to increase the stock of old liquor. Therefore, the dividend payout ratio will not remain at 59% in the short term, but there is room for improvement in the long run.

Risk warning: Competition in the industry is intensifying, spending intentions are lower than expected, and raw material prices are rising.