Broker: CGS International
Date of Report: July 8, 2025

DBS Group Holdings and China Resources Beer: Technical Breakouts and Margin Expansion Highlight Regional Investment Opportunities

Market Overview: Trade Tensions Ease as EU and US Near Agreement

The recent breakthrough in trade negotiations between the European Union and the United States is reshaping the global investment landscape. With tariffs on nearly all EU exports to the US set to soar to 50%, the urgency for a deal has never been higher. EU officials are working around the clock to secure an arrangement that would cap tariffs at 10% for most exports, while pushing for further concessions on critical sectors like pharmaceuticals, alcohol, semiconductors, and commercial aircraft. A particularly sensitive aspect of the negotiations revolves around the automotive sector, with the EU seeking quota-based relief from Washington’s 25% tariff on automobiles and a staggering 50% on steel and aluminum. Some automakers are advocating for a system linking tariff relief to increased investments and production within the US. These developments are crucial for global investors monitoring the shifting sands of international trade and their ripple effects across markets.

China Resources Beer (HKG: China Resources Beer): Margin Expansion Amid Mixed Demand

China Resources Beer (CRB) is poised for a period of margin expansion, despite facing headwinds in certain product segments. The company’s beer division is expected to deliver low single-digit year-on-year sales volume growth in the first half of 2025, propelled by a gradual improvement in average selling prices (ASP) thanks to a strategic focus on premiumization.

• Sales Volume: Beer sales volume projected to grow by low single digits YoY in 1H25F.
• ASP Trends: Slight improvement anticipated, driven by premiumization efforts.
• Margin Outlook: Operating profit margin (OPM) expected to expand on the back of declining raw material costs and effective cost-saving measures, both in 1H25F and across FY25F.
• Baijiu Segment: Contrasting the positive outlook in beer, baijiu sales are forecasted to contract by double digits YoY in 1H25F, resulting in a small loss for this segment due to sluggish demand.
• Overall Performance:
  • Overall sales are expected to climb by 2.6% in 1H25F and 1.9% in FY25F.
  • Net profit forecasted to increase by 8.2% in 1H25F and 8.5% in FY25F.
  • DCF-based target price revised lower to HK\$32.5 (WACC: 12.9%, Terminal Growth: 3%).

Recommendation: The outlook remains positive, with an “Add” rating reaffirmed despite a lower target price, reflecting confidence in margin expansion and cost management.

DBS Group Holdings Ltd (SGX: DBS): Technical Buy Signal as Ascending Triangle Forms

DBS Group Holdings, a leading provider of diversified financial services in Asia, is exhibiting strong technical signals that indicate a potential breakout above key resistance levels. The report’s technical analysis highlights several bullish indicators, confirming the bank’s robust uptrend since 2020.
Company Profile: DBS Group Holdings Limited and its subsidiaries deliver a wide array of services, including mortgage financing, lease and hire purchase financing, nominee and trustee services, funds management, corporate advisory, and brokerage. The bank is also the primary dealer in Singapore government securities.

DBS Technical Analysis Overview

• Last Price: S\$45.67
• Entry Price(s): S\$45.67, S\$43.80, S\$41.70
• Support Levels: S\$42.65 (Support 1), S\$40.90 (Support 2)
• Stop Loss: S\$39.90
• Resistance Levels: S\$45.62 (Resistance 1), S\$49.50 (Resistance 2)
• Target Prices:
  • Target 1: S\$47.90
  • Target 2: S\$49.32
  • Target 3: S\$50.70
  • Target 4: S\$54.10

Key Technical Signals for DBS

• An ascending triangle pattern suggests an imminent break above the weakened resistance at S\$45.62.
• The major uptrend since 2020 remains intact, underpinning confidence in further gains.
• Bullish Ichimoku signals have returned, indicating renewed upward momentum.
• Stochastic oscillator has crossed above the 50-midpoint and is trending higher, confirming bullish sentiment.
• The 23-period Rate of Change (ROC) is in positive territory, suggesting acceleration in price movement.
• Volume has risen above the 20-period average, confirming healthy market participation and expansion.
• Directional Movement Index (DMI): The DM+ line is above the 25-level, validating the strength of the bullish trend.

Investment Call: Given the positive technical backdrop and ongoing momentum, the report reiterates a “Buy” recommendation on DBS, with multiple target price levels set for both short- and medium-term investors.

CGS International Stock Rating Framework

Understanding the broker’s rating definitions is crucial for context:

Sector and country rating definitions further guide portfolio positioning relative to benchmarks. As of March 31, 2025, 71% of stocks under coverage were rated “Add,” 21% “Hold,” and 8% “Reduce.”

Conclusion: Strategic Investment Opportunities in Asia’s Evolving Landscape

The current environment, shaped by dynamic global trade negotiations, is presenting investors with both challenges and opportunities. China Resources Beer stands out for its effective margin management and strategic premiumization, while DBS Group Holdings is showcasing compelling technical signals that could lead to significant upside. With robust research and clearly defined rating frameworks, CGS International’s insights provide a solid foundation for informed investment decisions in Asia’s ever-changing markets.