China Merchants released a research report stating that China Resources Beer (00291) is expected to have a mediocre performance in the first half of the year, but profit margins have still increased due to efficiency. They believe that the potential good replenishment momentum during the peak season proves the rationale for a 'shareholding' rating, and that the stock price has already digested the first half-year performance. Signs of demand recovery appeared in early July; the trend remains to be confirmed. The target price has been adjusted from HKD 45.4 to HKD 37, and earnings estimates have been lowered by 11%.
China Merchants Securities stated that they have lowered their full-year revenue growth expectation for China Res Beer from 12.6% to 4.9% to reflect the flat performance in the first half of the year, but they expect to achieve 10% growth in the second half of the year. They increased the full-year gross margin forecast by 0.8 percentage points to reflect the positive impact of product portfolio upgrades and cost savings, even with the deleveraging of production in the first half of the year. They lowered the full-year operating expense ratio by 0.5 percentage points to reflect the cost measures implemented by management.