Southwest Securities released a research report saying that for the first time$China Resources Beer (00291.HK) $According to the "Buy" rating, 2022-24 return net profit is expected to maintain a compound growth rate of 12.4%. In addition, considering the completion of the company's high-end product matrix and the continuous progress of channel reform, it is given a valuation of 35 times in 2022, corresponding to the target price of HK $57.18.

The main points of Southwest Securities are as follows:

Recommendation logic：

1. The industry has begun its high-end transformation since 2017, and has now entered a dividend period for structural upgrading after the introduction of upfront fees. It is estimated that high-end beer sales in the industry will account for more than 20% in the next three years.

2. The company's leading position in domestic beer is unyielding, with a market share of about 33%, which has been the first in China for a long time. It has a leading national layout and has three core market groups in Northeast, Southwest and East China.

3. The high-end transformation strategy will continue to land: the first three-year plan will close the customs smoothly, work with Heineken to create a 44th product matrix + channel model reform and focus on key customers + capacity optimization has been successfully completed, and the second three-year plan has been opened. it is expected that by 2025, sales of high-end and above will exceed 4 million tons, and the dividend of high-end upgrading will be released at an accelerated pace.

Quantity and price stability has become an industry trend, and the oligopoly pattern is solidified.

At present, the steady price increase trend of beer industry volume is clear, and high-end has become the main logic of the industry:1) quantityUnder the trend of aging and capacity loss, overall sales are expected to decline steadily, mainly due to the decline in the share of low-end beer, while the proportion of high-end beer sales continues to rise, from 5% in 2013 to 12% in 2020.

2) PriceThe demand side benefits from the increase in per capita income and the upgrading of consumption under the acceleration of urbanization, the supply side benefits from the initiative of alcohol enterprises to embrace high-end, and the optimization of the industry product structure is obvious. In 2020, the income contribution of middle and high-end beer has exceeded 65%. In the past five years, the industry ton price has risen rapidly, and the CAGR has been maintained at more than 4%.

Competition pattern, industry competition tends to be rational, the focus of the development of wine enterprises has changed from sales-oriented to profit-oriented.

Join hands with Heineken to create a product matrix, sub-high-end sales to achieve the outbreak. On the one hand, the company reached a long-term strategic cooperation with Heineken in 2018 to obtain the right to use the Heineken brand in China, on the other hand, the company made great efforts to cultivate domestic brands such as SuperX and Marsgreen, and the international + domestic "44th" product matrix finally took shape, making up for the company's past reliance on a single brand and weak brand strength.

At present, the company has the main product layout for the five major price bands from mid-range to ultra-high, and with the continuous release of multi-category strategic momentum of high-end beer, the company's sub-high-end sales are expected to exceed 2 million tons in 2021. According to the category, the two major products of Chunsheng and SuperX will exceed 1 million tons within 3 years, and Heineken is expected to achieve sales of 1 million tons in 3-5 years. Under the blessing of the three major brands, the company's sub-high-end sales are expected to reach 4 million tons in 2025.

Fully occupy the high-end commanding heights, channel reform focus on major customers.

At the market level, the company is divided into two provinces, five cities and eight highlands, concentrating resources to attack the areas with a high degree of high-end beer; at the terminal level, the company makes all-round efforts at night, high-end catering and other high-end terminals to achieve rapid volume of high-end beer. In addition, the company maintains a high trend in terms of expenses, and uses a large number of buying stores and other ways to attack the opponent's core channels in the red area market. In terms of channels, we started the second reform of the national channels, comprehensively transferred from deep distribution to large customers; carried out sword casting action to attract high-quality businessmen in the fast consumer industry to break through the high-end channels, and set up a three-level major customer platform to achieve accurate empowerment for dealers. Occupy the commanding heights and channel thrust, the company's nationalization and high-end potential can be unstoppable.

Stock price catalyst:Hot weather in summer; industry price increases; higher-end sales than expected; better-than-expected progress in channel reform

Risk Tips:The price of raw materials has gone up; competition for high-end beer has intensified.