CR Beer: Cutting Revenue and Profit Forecasts on Volume Headwinds; Fair Value Estimate Cut by 10%

After reviewing our 2024 forecasts for narrow-moat China Resources Beer, we reduce our full-year revenue and net income projections by 4% and 2% respectively, to factor in weak consumer demand. We also lower our 2025-28 outlook for the beer and baijiu segments, resulting in 7%-9% cuts in our net profit forecasts. As such, we reduce our fair value estimate to HKD 40.50 per share from HKD 45.00, implying 21 times 2025 price/earnings, 11 times enterprise value/EBITDA, and 2.5% dividend yield. Although CR Beer’s shares are undervalued, our sector top pick is Budweiser APAC, which we think carves out stronger prospects for premiumization in the long term.