[ET Net News Agency, 13 February 2018] Goldman Sachs lifted its target price for China
Resources Beer (CRB)(00291) to HK$37.2 from HK$35, and reiterated its "buy" (on conviction
list) rating.
The research house believes China's beer industry, after years of pricing competition
and consolidation, has reached a new era of profitability focus, rather than the pursuit
of volume share.
CRB is China's largest brewer and owns Snow, the world's best-selling beer brand.
Goldman highlighted CRB's strengths in channel execution and organisational efficiency.
Despite CRB's 30% share price rally since December, it sees 31% upside in next 12 months
as Goldman believes the market has underestimated CRB's margin potential.
It expects CRB will expand net margin from 6.4% to 9.1% by 2019, given: (1) further ASP
hikes and the tapering off of promotion in mainstream segment; (2) premium product
upgrades; and (3) capacity optimization to save labor and D&A costs. (KL)