UBS Global Research lifted its target price for China Resources Beer (CRB)(00291) to HK$44.5 from HK$42.86 but downgraded its rating to "neutral" from "buy" given full valuation.
The research house said CRB's share price has almost doubled over the past two years,
driven by asset optimisation and mix upgrade. UBS believes its estimated 24% EBITDA growth for 2020 has factored in potential earnings contributions from both the Heineken alliance and cost-saving initiatives.
UBS raised its 2019 EBITDA by 4% given CRB's 1H earnings beat, which implies 2H EBITDA growth of 40% given a low base. However, UBS believes the 1H earnings beat was largely due to value-added tax benefits, which are likely to fade in 2020 once distributors and retailers enter into new annual contracts with brands at the beginning of the year.
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