External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

China Resources Beer Holdings / Equity Bottom-Up

<ul><li>CR Beer unveiled its 1H24 results. During the period, revenue and NP missed the market consensus by 7% and 3%, respectively, mainly due to the shrinking sales volume of mainstream beer driven by unfavorable macroeconomic and weather conditions, as well as a high base.</li><li>Management expects a low-singledigit decline in total beer sales volume but positive net profit growth for 2024, supported by gross margin expansion and operational expense control.</li><li>Beer premiumization continues despite overall consumption downgrading trend. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

CR Beer unveiled its 1H24 results. During the period, revenue and NP missed the market consensus by 7% and 3%, respectively, mainly due to the shrinking sales volume of mainstream beer driven by unfavorable macroeconomic and weather conditions, as well as a high base.Management expects a low-singledigit decline in total beer sales volume but positive net profit growth for 2024, supported by gross margin expansion and operational expense control.Beer premiumization continues despite overall consumption downgrading trend. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

CR Beer (291 HK) - 1H24 Rev/NP -0.5%/+1.2%; Earnings Missed with Beer Premiumization Continues

<ul><li>CR beer’s 13.6% 1H revenue growth comprised 9.0% beer revenue growth and RMB977mn baijiu revenue, which was reported and consolidated for the first time.</li><li>While the former seems to be slightly below our estimate of a low-teen growth, beer gross margin of 45.2% was 1.5pp ahead of us, thanks to raw material cost savings, and a better-than-expected sales mix.</li><li>Of note, Heineken recorded 60% YoY shipment growth, and now sub-premium+ (Super-x and above) contributed to 22% of total shipment over the reporting period. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

CR beer’s 13.6% 1H revenue growth comprised 9.0% beer revenue growth and RMB977mn baijiu revenue, which was reported and consolidated for the first time.While the former seems to be slightly below our estimate of a low-teen growth, beer gross margin of 45.2% was 1.5pp ahead of us, thanks to raw material cost savings, and a better-than-expected sales mix.Of note, Heineken recorded 60% YoY shipment growth, and now sub-premium+ (Super-x and above) contributed to 22% of total shipment over the reporting period. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

CR Beer (291 HK) – 1H rev/EBIT +13%/26%; Heineken grew 60%

Thematic (Sector/Industry)

<ul><li>We project Li Auto’s net profit to rise 27% QoQ to RMB 1.2bn in 2Q23E. Profitability in FY24E could also beat expectation on greater economies of scale.</li><li>Apart from its products, we like the Company’s high self-discipline in costs and business expansion even as it is much more resourceful than before.</li><li>We project Li Auto’s 2Q23E revenue to more than triple YoY to RMB 27.9bn, as its sales volume beat guidance.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We project Li Auto’s net profit to rise 27% QoQ to RMB 1.2bn in 2Q23E. Profitability in FY24E could also beat expectation on greater economies of scale.Apart from its products, we like the Company’s high self-discipline in costs and business expansion even as it is much more resourceful than before.We project Li Auto’s 2Q23E revenue to more than triple YoY to RMB 27.9bn, as its sales volume beat guidance.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

CMBI Research Focus List (July Edition) – Our best high conviction stock ideas

<ul><li>2Q preview. 1H23 operational performance came in largely in line with midsingle-digit volume growth, although that of 1Q was slightly stronger than 2Q due to Chinese New Year impact.</li><li>By segment, sub-premium+ delivered 20% growth, with Heineken achieving 30%+.</li><li>Meanwhile, SuperX and others saw teen growth. By channel, restaurant demand has fully recovered to prepandemic levels, while that from night life has been ramping up. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

2Q preview. 1H23 operational performance came in largely in line with midsingle-digit volume growth, although that of 1Q was slightly stronger than 2Q due to Chinese New Year impact.By segment, sub-premium+ delivered 20% growth, with Heineken achieving 30%+.Meanwhile, SuperX and others saw teen growth. By channel, restaurant demand has fully recovered to prepandemic levels, while that from night life has been ramping up. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

CR Beer (291 HK) – Expecting a Solid 1H23

<ul><li>We had diverging takeaways from our distributor chancel check after the Dragon Boat Festival holiday, with beer being the only segment with positive momentum over 2Q.</li><li>Considering the price gap between beer and other alcoholic drinks, and also the growing preference of low alcoholic content, in our view, breweries still offer a multi-year story that looks to be sustainable in the next 4-5 years.</li><li>In the contrary, we continue to see near-term drags in baijiu, dairies and condiments that not only led to a lacklustre 2Q but also a possible slow 2H. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We had diverging takeaways from our distributor chancel check after the Dragon Boat Festival holiday, with beer being the only segment with positive momentum over 2Q.Considering the price gap between beer and other alcoholic drinks, and also the growing preference of low alcoholic content, in our view, breweries still offer a multi-year story that looks to be sustainable in the next 4-5 years.In the contrary, we continue to see near-term drags in baijiu, dairies and condiments that not only led to a lacklustre 2Q but also a possible slow 2H. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Consumer Staples – Divergence continues

Hong Kong

China Resources Beer (Holdings) Company Limited is an alcoholic beverage retailer.

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China Resources Beer Holdings (291 HK)

CR Beer (291 HK) - 1H24 Rev/NP -0.5%/+1.2%; Earnings Missed with Beer Premiumization Continues

Management expects a low-singledigit decline in total beer sales volume but positive net profit growth for 2024, supported by gross margin...

CMB International

CR Beer (291 HK) – 1H rev/EBIT +13%/26%; Heineken grew 60%

CR beer’s 13.6% 1H revenue growth comprised 9.0% beer revenue growth and RMB977mn baijiu revenue, which was reported and consolidated for the first...

CMB International

CMBI Research Focus List (July Edition) – Our best high conviction stock ideas

We project Li Auto’s net profit to rise 27% QoQ to RMB 1.2bn in 2Q23E. Profitability in FY24E could also beat expectation on greater economies of...

CMB International

CR Beer (291 HK) – Expecting a Solid 1H23

1H23 operational performance came in largely in line with midsingle-digit volume growth, although that of 1Q was slightly stronger than 2Q due to...

CMB International

China Consumer Staples – Divergence continues

We had diverging takeaways from our distributor chancel check after the Dragon Boat Festival holiday, with beer being the only segment with...

CMB International

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