[ET Net News Agency, 15 May 2018] Nomura raised its target price for China Resources
Beer (CRB)(00291) to HK$42 from HK$40.4, and maintained its "buy" rating.
The research house said its recent channel checks confirm CRB's strong execution and
strategy shift toward quality growth. In the five regions (Sichuan, Zhejiang, Henan,
Shanghai, and Guangdong) that Nomura surveyed, CRB has successfully implemented price
hikes without additional rebates in all regions except Guangdong. Moreover, the promotion
budget has been revised to focus on consumers instead of distribution channels.
CRB is in talks with Heineken to acquire its China business. Nomura believes the
cooperation could remove CRB's bottleneck of premium beer penetration. As Heineken is a
famous premium brand in China, this acquisition could help CRB to accelerate its premium
beer sales.
Nomura estimated that a 5% shift from mass market volume to premium volume could enhance
CRB's FY2018 ASP/net profit by 4%/28%, due to the premium segment's much higher
profitability. (KL)