BoA Securities: Reiterates "Buy" rating on CHINA RES BEER (00291) with target price lowered to HKD 30.6.

Bank of America Securities issued a research report stating that it reiterated a "buy" rating for CHINA RES BEER (00291) because it is expected that the company will surpass the top three beer companies in China in the difficult market. It is projected that its sales decline in 2024 will be the lowest at 3.1% (compared to single-digit declines for TSINGTAO BREW (00168) and over 10% for BUD APAC (01876)), thanks to its proactive self-rescue measures. The target price was lowered by 7% to 30.6 Hong Kong dollars. Bank of America Securities expects that CHINA RES BEER's revenue declined by 1.4% last year (beer down 1.6%; liquor up 3%) with a 7.5% decrease in net profit. Excluding non-core government subsidies and disposal income, core profit before tax may increase by 4%. Due to China's fiscal pressure, it is cautiously forecasted that these items will trend below in the future. Therefore, earnings per share forecast for 2024/25 has been reduced by 5%/4%. The report mentioned that although it may not be as easy for CHINA RES BEER to increase sales in 2025 compared to its peers, the bank believes there is significant cost-saving potential due to the company's high sales and distribution investments since 2018. The bank also predicts that the dividend payout ratio for the next three years will increase from 59% in 2023 to over 70%.