[ET Net News Agency, 13 December 2018] HSBC lowered its target price for China
Resources Beer (CRB) (00291) to HK$30.74 from HK$43.5 and downgraded its rating to "hold"
from "buy".
The research house thinks CRB has inherited from its parent company a more open and
market-oriented management style and incentives, which allows it to act quickly to
mitigate costs and maximise revenue. However, they think the margin improvement in 1H19
will be limited. They expect its GPM to improve by 1.8ppt in 2018e and to be flat in
2019e.
HSBC thinks China's consumer landscape undergoes a shift towards higher-grade products.
Therefore, CRB needs to move up in a shrinking and competitive market. They are waiting
for a real synergy from the agreement with Heineken to see if CRB and Heineken can
cooperate in building a more diversified product portfolio to penetrate the high-end
market. (RC)