CR Beer Earnings: Lower Price Growth Expectations for Beer in 2023; Lowering Valuation

Narrow-moat China Resources Beer delivered first-half results that slightly outpaced our estimates and largely met Refinitiv's consensus. Although the firm delivered 20% EBIT growth, the share price still reacted negatively likely due to the slight miss in price growth for beer. We reduce our 2023 price growth and net profit estimate to account for weaker third-quarter sales and an unfavorable mix for the beer segment in the second half. We currently assume price growth would rebound in 2024 as broader consumption improves, but we retain our longer-term view that CR Beer’s premium segment volume growth would slow from 2025 onward.