Goldman Sachs: Target price of HK$33.50 for the “buy” rating for China Resources Breweries (00291)

The Zhitong Finance App learned that Goldman Sachs released a research report stating that the “buy” rating for China Resources Brewery (00291) is discounted until the end of 2025, based on an expected price-earnings ratio of 19 times in 2026, with a 12-month target price of HK$33.50, with room for 34% increase from the current stock price. The report mentioned that the bank held a China Resources Beer Investor Exchange Meeting on June 30.

The highlights of the meeting are as follows:

1) Recent performance in the second quarter of 2025

Management has observed that beer sales have achieved positive year-on-year growth since the second quarter, and that anti-extravagance and waste policies have had little impact, driving beer sales to achieve low single-digit year-on-year growth since 2025, even though the industry continues to weaken. The average selling price increased slightly due to a mild product portfolio upgrade (in an unfavorable price increase environment). High-end/sub-high-end products achieved mid-single digit year-on-year growth in the first five months of 2025. Management expects that by continuing to promote the high-end strategy, the growth rate will increase to high single digits to double digits throughout 2025. Regarding the liquor business, management indicated that the company will try to avoid net losses in the first half of 2025 against the backdrop of the entire industry being challenged by anti-extravagance and waste policies, despite the expected decline in revenue.

2) Profit margin

The management reiterated its commitment to achieve double-digit profit growth in 2025, based on gross margin expansion of more than 1 percentage point during the year (mainly benefiting from a single-digit decline in unit sales costs, due to favorable raw material costs), as well as a reduction in sales and management expenses due to continuous cost reduction measures.

3) Brand performance tracking

Heineken continued the strong momentum of the previous 5 months in June, with sales up 20% + year over year. Chunsheng recorded a mid-single-digit decline in sales during the year, partly due to the weakness of the Sichuan market (the region faces a high base, especially during the Spring Festival), and the company is undergoing channel reforms.

4) Channel Strategy

In terms of the beer business, management emphasized cooperation with three new channels (Sam's Club, Hema Instant Delivery, and Fat Donglai) to increase sales and utilize their customer insights. New channel partnerships currently account for a high single-digit percentage of sales (lower single-digit percentage last year), and profit margins are the same as non-ready-to-drink channels (lower gross margin but lower costs).

5) Regional performance

Management added that Heineken continued to perform steadily in the Guangdong market during the year, and the sales growth rate was higher than the national average.

6) Shareholder returns

Management reaffirmed the target dividend payout ratio of 60% by 2025 and plans to increase it to 70% within two years.