Chongqing Brewery Earnings: Muted Price Growth Dragged Results; Fair Value Down Slightly to CNY 75

Chongqing Brewery reported full-year 2023 earnings with revenue and net profit in line with its preliminary results. We lowered our revenue growth expectations but raised our aftertax profit margin forecasts slightly through the explicit forecast period, resulting in a 3.8% cut in the company’s fair value estimate to CNY 75 per share. This implies 24 times 2024 P/E, 16 times adjusted EV/EBITDA, and 3.7% dividend yield. While investors could be concerned about the company’s weaker-than-expected near-term growth outlook, especially for its premium segment, we believe Chongqing Brewery remains a quality name, given the company’s distribution strength in its core regions in China. We think the shares are fairly valued currently.