Should i buy china resources beer holdings stocks？

华人网 2024-10-10 00:16

In 2023, many industries began to experience a phenomenon of consumer segmentation, including sectors like marinated goods, pickled vegetables, snacks, projectors, and automobiles. However, the beer industry seems to have remained unaffected. The average price per ton for major beer brands was 4,182 yuan, marking a 4% year-on-year increase. This growth is primarily attributed to the rising sales of mid-to-high-end beers, such as CR Beer’s Heineken and Yanjing’s U8. In the first half of this year, Yanjing Beer saw an 8% increase in price per ton, while Zhujiang Beer rose by 6%. The price increases for CR Beer, Budweiser APAC, and Chongqing Beer were relatively limited.

While the overall price increase in the beer industry has slowed, it is still on the rise without any price cuts. Two main factors contribute to this situation. First, the beer market has reached a monopolistic structure, eliminating the incentive for manufacturers to engage in price wars. In 2023, CR Beer held a market share of 31.4%, Qingdao Beer 22.5%, Budweiser 18.3%, Yanjing 11.1%, and Chongqing Beer 8.4%. Each brewery has established its own stronghold, moving past the stage where they compete for market share through aggressive pricing.

Second, the base price of beer is relatively low. For example, a mainstream 350ml can costs around 4 yuan, and a 630ml bottle is about 5 yuan, significantly lower than the average prices in major overseas markets. While the overall consumer environment appears not to have impacted the beer industry, a deeper analysis reveals that it has hindered the shift towards premiumization and affected sales. In the first half of this year, Budweiser China, Qingdao Beer, and CR Beer experienced year-on-year sales declines of 8.5%, 7.8%, and 3.4%, respectively. Budweiser holds the highest market share in China’s premium beer segment and has seen the largest drop in both sales and revenue. In contrast, Chongqing Beer’s sales increased by 3.3% year-on-year, with a modest rise of 1.5% in the second quarter.

Secondly, the high-end upgrade of beer has slowed down dramatically. For example, Chongqing Beer is the fastest-rising leader in terms of tonnage price through structured upgrading in the past few years. In the second quarter of this year, the lowest-end economy products had the best revenue performance, up 10.7% year-on-year, while mainstream products grew 5.1% year-on-year, and premium products declined 1.9% year-on-year.

And Chongqing Brewery also reclassified its wine in 2023, with more than 8 yuan as high-grade, 4-8 yuan as mid-range, and less than 4 yuan as low-grade, compared with 10 yuan, 6-10 yuan, and less than 6 yuan, respectively, previously. From the Chongqing Beer business data and division initiatives, beer also has the meaning of consumer downgrading, breaking the momentum of the past few years of sustained consumer upgrading, and most of the other beers have similar business performance.

The business scale is small Yanjing beer realized the plight of the reversal, however, the beer industry's largest leader China Resources fell into the stall quagmire.In the first half of this year, China Resources revenue was 24.4 billion yuan, a year-on-year decline of 0.06%, and net profit was 4.7 billion yuan, up 1.2%.Revenue is the first half-year negative growth in more than 20 years, except for 2020. The previous 2019-2023, revenue, profit compound growth rate of 4.4%, 40.8%, respectively, visible performance in this year there is a significant stalling situation.The sales structure, in the first half of this year, the sales of mid-range and above beer accounted for more than 50% for the first time.

Ton price of 3,555 yuan, up 2% year-on-year, lower than the same period of Tsingtao Beer's 4,283 yuan, Chongqing Beer's 4,834 yuan, but slightly higher than Yanjing's 3,205 yuan. However, CR Breweries profitability hit another record high. The latest gross profit margin was 46.9%, up 5.55% from the end of 2023, and the net profit margin was 19.4%, up 6.4% from the end of 2023, a considerable improvement. This is not pulled by a sharp rise in tonnage prices, but rather a rapid decline in the cost end of the package. For example, the main glass futures contract slipped from 1,900 yuan at the beginning of the year to 1,000 yuan today, a decline of nearly 50%, falling back to the beginning of 2016.

In addition, the price of imported barley slumped sharply from $410 per ton at the beginning of 2023 to $258.6 per ton in August, also down 37%. From a fundamental point of view, China Resources Beer valuation decline has its inevitability. However, the valuation of the industry's lowest, there is also the logic of the capital side. China Resources Beer listed in Hong Kong stocks, and Hong Kong stock liquidity is particularly poor, the valuation given to the A-share listed beer leaders than some low.

For example, Tsingtao Beer, A-share market valuation of 17.5 times, H-share valuation of 11.76 times, and even lower than the CR Beer. Visible Hong Kong stocks due to the overall liquidity is too poor, the valuation discount is more obvious. In addition, the market shorting China Resources Beer is also relatively strong. As of Wind, as of September 20, the number of shares of open short sales of 95.62 million shares, once again a new record high, more than 47 million shares in early July increased significantly.

However, China Resources Beer PE has hit a new low since 2011, the valuation continues to plummet the space should also be more limited.

In summary, China Resources Beer Holdings faces challenges such as declining sales and intensified market competition. Although the price per ton has increased, the overall market environment and the phenomenon of consumer segmentation may affect its long-term growth. Therefore, I do not recommend purchasing shares of China Resources Beer Holdings.