Daiwa: Downgrades CHINA RES BEER (00291) target price to HK$30, maintains "Buy" rating.

Daiwa released a research report stating that due to CHINA RES BEER (00291)'s investment in mid-to-high-end brands and pressure on raw material costs, the expansion rate of average selling price and profit margin may be lower than expected. Daiwa has lowered the company's core earnings per share forecast for 2026 to 2028 by 2% to 4%, and the target price has been reduced from HKD 33.3 to HKD 30, while maintaining a "Buy" rating. The company's net profit for the first half of the year fell 11% year-on-year to RMB 5.17 billion, 2.3% lower than market consensus. The group's overall revenue increased by 1.2% year-on-year to RMB 24.2 billion, with beer business revenue rising by 2.2% year-on-year to RMB 23.7 billion, while liquor business revenue dropped by 27% year-on-year to RMB 570 million. Daiwa pointed out that beer business sales increased by 1.7% year-on-year to 6.6 million kiloliters, and the average selling price rose by 0.5% year-on-year to RMB 3,586 per kiloliter, outperforming the industry average, primarily benefiting from a strong year-on-year growth of 10% in mid-to-high-end beer sales, which accounted for 26% of total sales. Management emphasized at the earnings conference that they are increasing investment in the promotion of mid-to-high-end brands, and Daiwa believes this may slow the overall average price expansion pace of the group.