Nomura lifted its target price for China Resources Beer (CRB)(00291) to HK$37 from HK$26.9, and maintained its "buy" rating.
The research house believes the recent January 2018 price hike may not be a one-off event given CRB's leading market position and strong profit at its distributors and retailers.
Nomura analysed the competitive landscape in 19 operating regions, and concluded that CRB has the potential to increase its ex-factory prices in nine regions. It thus raised its FY2018/19 ASP forecasts by 4.8%/7.8%, after factoring in 5.9%/3.5% like-for-like ASP increases.
Nomura believes cost pressure should be manageable and that the increase in ASP could more than offset the increase in costs. The biggest cost pressure comes from packaging materials, the cost of which has shown signs of stabilisation.
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