Lyon: CHINA RES BEER (00291) reported that its revenue in the first half of the year met expectations, while the liquor business dragged down gross margin, which fell short of expectations.

Lyon published a research report stating that CHINA RES BEER (00291) had a revenue of 24.24 billion RMB in the first half of the year, an annual increase of 1.2%, slightly lower than the bank and market expectations by about 1%. The profit attributable to shareholders was 5.169 billion RMB, a year-on-year decrease of 10.7%, which is 5% and 11% lower than the bank's and market's expectations, respectively. The report indicated that the revenue and gross profit margin trends in the beer business roughly met expectations after excluding one-off items, with beer business revenue of 23.67 billion RMB, an annual increase of 2.2%, in line with the bank's expectations; beer sales rose 1.7% year-on-year, with sales of mid-range and above beers growing over 10% year-on-year, and "Heineken" sales increasing by 20% year-on-year. The average selling price of beer rose by 0.4% year-on-year. The liquor segment was the main drag, with revenue of 570 million RMB, a year-on-year decrease of 27%; EBIT loss was 281 million RMB. Overall gross profit margin fell by 1.2 percentage points year-on-year to 47.7%, while the ratio of sales and administrative expenses decreased by 0.9 percentage points year-on-year to 22.3%. Core net profit fell by 4.5% year-on-year to 5.109 billion RMB.