CMSC: Maintains "Buy" rating on CHINA RES BEER (00291) with a target price of HKD 26.

CMSC released a research report stating that it maintains a "Buy" investment rating for CHINA RES BEER (00291), with a target price of HKD 26. The company increased its dividend payout ratio by 2 percentage points to 28% in the first half of the year and raised the dividend payout ratio for this year to over 55%, aiming for a sustainable and steady increase that hopes to reach levels of 60% or even 70% in the medium to long term. The management team has committed not to reduce the dividend payout ratio due to fluctuations in profits. CMSC indicated that CHINA RES BEER's performance in the first half of the year met expectations (excluding non-recurring items), with revenue rising by 1.2% year-on-year to RMB 24.24 billion, a gross profit of RMB 11.551 billion, and a gross profit margin that decreased by 1.2 percentage points to 47.7% compared to the same period last year, mainly impacted by rising raw material and packaging costs. Revenue for the same period in 2025 included approximately RMB 619 million from joint venture contributions and RMB 731 million in land disposal gains related to the relocation of the Shenzhen headquarters. Excluding these one-time items, the EBITDA for the first half of 2026 was RMB 7.997 billion, a year-on-year decrease of 1%. The liquor business continued to decline, while the beer business grew by 0.7% year-on-year, in line with expectations. The net cash flow from operating activities increased by 5.6% year-on-year to RMB 6.729 billion. The report noted that while the overall beer industry faced softness in the first half of the year, CMSC observed that CHINA RES BEER achieved growth rates above the market by continuously optimizing its product structure. The steadily increasing dividend payout ratio reflects management's confidence in long-term growth, with expected dividend yields of 6.4% and 7.7% for 2026 and 2027, respectively.