JP Morgan: Downgrade CHINA RES BEER (00291) performance forecast for the next two years, lowering target price to 38 Hong Kong dollars.

JPMorgan Chase released a research report stating that it has lowered its performance forecast for CHINA RES BEER (00291), with sales expected to decrease by 0.2% and increase by 2.1% last year and this year, respectively. Adjusted EBIT is expected to increase by 4.4% and 13.8% year-on-year. The bank maintains its "overweight" rating on China Resources Beer, with a target price reduced from HK$40.5 to HK$38. The report suggests that the management of CHINA RES BEER disclosed several pieces of information at a forum held by the bank, including that beer consumption demand this year may be similar to last year, with low single-digit sales growth and stable average selling prices. However, due to locked-in costs, aluminum and barley costs are under control. Nevertheless, the sales and loss situation for Baijiu in the second half of last year was worse than in the first half, leading to a possible impairment of goodwill in the fourth quarter of last year, and visibility for this year remains low. The company also disclosed that cost savings and benefits improvement continue to safeguard the company's profit margins, with the goal of increasing the dividend payout ratio from 60% last year to 70% by 2027. The bank believes this implies a dividend yield of over 5% by 2027.