Blue Moon Earnings: Bottom Line Aided by Lower Promotional Expenses, Fair Value Estimate Unchanged

We maintain our fair value estimate for narrow-moat Blue Moon at HKD 2.55 per share following its profit warning alert, which projects an expected net loss of HKD 700 million to HKD 750 million in 2024. This result was slightly better than our expectation due to reduced promotional expenses in the second half. However, we believe that Blue Moon’s near-term results should remain heavily influenced by promotional activities, which could pressure selling prices or increase operating expenses. We slightly cut our 2025-28 revenue and net income estimates by 2%-3% due to a lower 2024 top-line number. With Blue Moon currently trading at 19% above our fair value estimate and 61 times 2025 price/earnings, we think its shares are overvalued.