Chinese beer industry’s premiumization to accelerate from this year, investors underestimate upside in earnings – UBS
COMPANY NEWS STOCKS VIEWS & ANALYSIS
Chinese beer industry’s premiumization to accelerate from this year, investors underestimate upside in earnings – UBS
COMPANY NEWS STOCKS VIEWS & ANALYSIS

Chinese beer industry’s premiumization to accelerate from this year, investors underestimate upside in earnings – UBS

 

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The premiumization of Chinese beer to accelerate from this year onwards, mainly due to the higher price-performance ratio of beer compared to other types of alcoholic beverages and the more diversified brand portfolios of leading breweries, UBS said in a research note. 

Given that Chinese beer brands have underperformed the market by 12% so far this year, UBS believed investors may be underestimating the upside in earnings from the upgraded beer portfolios and tighter costs. 

Portfolio execution would be a key differentiator for beer companies as consumers seek new experiences and differentiated products, it said.

The broker’s top picks are Tsingtao Brew, Bud APAC and China Resources Beer. The broker lowered its long-term profit growth forecast for China Resources Beer’s baijiu business, and cut its target price from HK$73 to HK$66.05, maintaining its Buy rating.

Shares of China Resources Beer gained 0.3% to close at HK$50.15.