Goldman Sachs: Lowers target price for CHINA RES BEER (00291) to HKD 30.1, revenue forecast downgraded due to liquor business.

Goldman Sachs released a research report stating that CHINA RES BEER (00291) performed in line with expectations in the first half of the year, with beer sales and average prices demonstrating resilience. However, profitability was hindered by rising packaging costs, which were partially offset by improved indirect cost efficiencies. Among these, the increase in aluminum prices had the most significant impact on the growth of sales costs in the first half of the year. Management anticipates that aluminum cost pressures will ease in the fourth quarter. The firm has lowered its valuation basis, reducing the forecasted price-to-earnings ratio for next year from 17 times to 15 times, with the target price adjusted from HKD 35.15 to HKD 30.1, while maintaining a "Buy" rating. Goldman Sachs noted that after the earnings announcement, CHINA RES BEER's stock price declined by about 5%, which they believe is an overreaction. They observe that the group has still managed to achieve growth in both sales volume and average price amidst industry challenges, outperforming its peers. However, due to the drag from the liquor business and rising packaging cost pressures, Goldman Sachs has lowered its revenue forecasts for 2026 to 2028 by about 2%, cutting the liquor revenue forecast by 17% to 24%, and reducing the recurring net profit forecast by 4% to 6%. Beer sales forecasts were lowered by about 1%, and recurring EBIT estimates for the beer business were trimmed by approximately 5%.