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

Tsingtao Brewery Co Ltd H / Equity Bottom-Up

<ul><li>Tsingtao announced 3Q results after market close last Friday (27 Oct).</li><li>3Q revenue and net profits came in at RMB9.4bn/RMB1.5bn, down/up -4.6%/+4.7% YoY.</li><li>The results were consistent to our expectation, and was slightly better than what market previously expected of an approximately 10% sales decline. </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.

Tsingtao announced 3Q results after market close last Friday (27 Oct).3Q revenue and net profits came in at RMB9.4bn/RMB1.5bn, down/up -4.6%/+4.7% YoY.The results were consistent to our expectation, and was slightly better than what market previously expected of an approximately 10% sales decline. 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.

Tsingtao Brewery (168 HK) – 3Q Rev/Np -4.6%/+4.7%; Above Market Expectation

<ul><li>Tsingtao reported 14% growth in 2Q net profits to RMB2.0bn. Driven by 3% volume growth and 5% ASP uptick, revenue stood at RMB11bn, up 8% YoY.</li><li>This compared to HSD growth of CR Beer and 20% of Budweiser.</li><li>Gross/EBIT margins was up approximately 2pp to 33%/21%, respectively, and we expect recurring strengths in both premiumization and cost efficiency to fuel margins expansion into 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.

Tsingtao reported 14% growth in 2Q net profits to RMB2.0bn. Driven by 3% volume growth and 5% ASP uptick, revenue stood at RMB11bn, up 8% YoY.This compared to HSD growth of CR Beer and 20% of Budweiser.Gross/EBIT margins was up approximately 2pp to 33%/21%, respectively, and we expect recurring strengths in both premiumization and cost efficiency to fuel margins expansion into 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.

Tsingtao Brewery (168 HK) – 2Q Rev/Np +8%/14% on Recurring Strengths

Budweiser Brewing  APAC  / Equity Bottom-Up

<ul><li>Bud APAC’s core net profit of US$279mn was slightly below us, owing to 1) a weak S.Korea performance which consisted of a 7% revenue decline and a 30% slip in normalised EBITDA, 2) a normalising effective tax base subsequent to a provision reversal in India, and 3) currency erosion driven by a weak RMB and KRW to USD.</li><li>Excluding the latter, Bud APAC reported an organic 14.9% sales growth for the quarter (vs 7.9% as on reported basis), with the help of the continuous strength in China that consisted of an 11.0% volume growth and a 7.8% ASP uptick.</li><li>While we assert that there is no quick fix to the operational landscape in S.Korea (though transient, per management), we think market might have overlooked the robust China momentum that looks to be parallel to our sector picks such as CR Beer (291HK, Buy) and Tsingtao (168HK, Buy). </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.

Bud APAC’s core net profit of US$279mn was slightly below us, owing to 1) a weak S.Korea performance which consisted of a 7% revenue decline and a 30% slip in normalised EBITDA, 2) a normalising effective tax base subsequent to a provision reversal in India, and 3) currency erosion driven by a weak RMB and KRW to USD.Excluding the latter, Bud APAC reported an organic 14.9% sales growth for the quarter (vs 7.9% as on reported basis), with the help of the continuous strength in China that consisted of an 11.0% volume growth and a 7.8% ASP uptick.While we assert that there is no quick fix to the operational landscape in S.Korea (though transient, per management), we think market might have overlooked the robust China momentum that looks to be parallel to our sector picks such as CR Beer (291HK, Buy) and Tsingtao (168HK, Buy). 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.

Budweiser APAC (1876 HK) – 2Q Organic Sales +15%

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>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

China

Tsingtao Brewery Company Limited produces and distributes beer products.  The Company markets its products throughout China and around the world under the Tsingtao Beer brand name.

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Tsingtao Brewery Co Ltd H (168 HK)

Tsingtao Brewery (168 HK) – 3Q Rev/Np -4.6%/+4.7%; Above Market Expectation

he results were consistent to our expectation, and was slightly better than what market previously expected of an approximately 10% sales decline.

CMB International

Tsingtao Brewery (168 HK) – 2Q Rev/Np +8%/14% on Recurring Strengths

Tsingtao reported 14% growth in 2Q net profits to RMB2.0bn. Driven by 3% volume growth and 5% ASP uptick, revenue stood at RMB11bn, up 8% YoY.

CMB International

Budweiser APAC (1876 HK) – 2Q Organic Sales +15%

Bud APAC’s core net profit of US$279mn was slightly below us, owing to 1) a weak S.Korea performance which consisted of a 7% revenue decline and a...

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

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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