JP Morgan: Lowers target price for CHINA RES BEER (00291) to HK$28, maintains "Overweight" rating.

J.P. Morgan's research report states that the risk-reward ratio for CHINA RES BEER (00291) appears quite attractive, as its current trading price corresponds to an estimated price-to-earnings ratio of about 10 times for 2027, with a dividend yield of 5.5%. The bank has lowered its target price-to-earnings multiple from 15 times to 14 times (based on the estimated price-to-earnings ratio for 2027), aligning it with global brewing industry standards, and has adjusted the target price from HKD 34 to HKD 28, maintaining an "overweight" rating. J.P. Morgan noted that CHINA RES BEER's revenue for the first half of the year grew by 1.2% year-on-year, which is below the market expectation of a 2.2% increase. Additionally, net profit fell by 11% year-on-year, significantly underperforming market expectations of flat annual performance. The average selling price of beer increased by only 0.5%, below the market expectation of 2%, reflecting the group's priority to maintain market share and a mass-market base rather than raising prices by reducing low-end sales. J.P. Morgan pointed out that the trend towards premiumization continues, with both high-end and mid-high-end beer sales recording double-digit growth, although at a slower pace than market expectations. High-end beer accounted for 27% of sales, which is still insufficient to fully offset the pressure from the mid-to-low end market. New channel collaborations contributed to incremental growth (with less than 1% of sales), also aiding in improving consumer insights.