Daiwa Research lifted its target price for China Resources Beer (CRB)(00291) to HK$34 from HK$24.8, and maintained its "outperform" rating.
The research house now expects CRB to raise its ASP by 5% (from 1%) in 2018, given: (1) its dominant market share in provinces like Sichuan and Liaoning, which afford the company strong pricing power, (2) continued product-mix upgrades, and (3) the inflationary environment in the food and beverage segment.
As consumers switch to high-end beers, Daiwa believes CRB will start competing more directly with international peers with the launch of more high-end products. It raised its 2018-19 EPS forecasts by 9-13%, and revenue forecasts by 3-6% on higher ASPs (up 5-6%; from 1-3%).
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