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<Research>HSBC Global Research Cuts TPs on Beer Stocks; CR BEER, TSINGTAO BREW Preferred
Recommend 17 Positive 34 Negative 21 |
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HSBC Global Research reported that year-to-date, beer stocks have retreated 7% due to recent weak sales volumes, compared to a 3% rise in the CSI 300 Index over the same period. Given the slowdown in demand, the broker expected their 2Q24 sales to be similar to those in 2H23 and 1Q24, with an average YoY decline of 2.8%. However, average product prices should continue to expand, with growth slowing to 0.4% YoY. Of the beer brewers covered by HSBC, low-teens earnings growth is expected this year, with low single-digit revenue growth, mainly due to a rebound in sales volume from a low base in 2H24, as well as support from sports events such as the Paris Olympics. All in all, the broker expected beer stocks to grow steadily but unevenly this year, where brewers with more mass-market exposure are poised to outperform. The broker considered the industry to be attractively valued and expected a revaluation if performance improved in 3Q24. HSBC preferred CHINA RES BEER (00291.HK) and TSINGTAO BREW (00168.HK), both of which are rated Buy, as they would benefit from a rebound in sales volume from a low base in 3Q24, as well as a sustained increase in mass-market sales due to an upgraded product mix. HSBC's ratings and target prices for beer stocks are listed below: Stock | Rating | Target Price (HKD) CHINA RES BEER (00291.HK) | Buy | $45.5 -> $37.8 TSINGTAO BREW (00168.HK) | Buy | $70.5 -> $64.1 BUD APAC (01876.HK) | Hold | $11.4 -> $10.5 AAStocks Financial News |
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