Broker: UOB Kay Hian
Date of Report: 20 August 2025
China Resources Beer Surges Ahead: Strong 1H25 Results, Heineken & Sub-Premium Drive Next Growth Phase
Overview: China Resources Beer Delivers Robust 1H25 Performance
China Resources Beer (CR Beer, HKEX: 291 HK), China’s largest beer company by sales volume, delivered a strong set of results for the first half of 2025, exceeding market expectations. Despite challenges in its baijiu business, the company’s relentless focus on premiumization and operational efficiency has positioned it for sustainable growth. UOB Kay Hian maintains its BUY rating on the stock, with a slightly reduced target price of HK\$33.80, reflecting minor adjustments for baijiu weakness.
Key Investment Highlights
- 1H25 results beat expectations: Strong performance in the sub-premium and above beer segments, with mid- to high-single-digit volume growth driving ASP expansion.
- Heineken at the Core: Heineken remains the flagship for premiumization, while the sub-premium segment, anchored by Super X and revitalized local brands, is targeted for the next growth phase.
- Baijiu business stabilizing: Revenue and EBITDA declined in 1H25, but management expects no further deterioration in 2H25 as portfolio adjustments take hold.
- Operational excellence: Improved gross margins, disciplined expense management, and a healthy dividend payout underscore the company’s financial strength.
Stock Profile and Market Performance
| Ticker |
Share Price (HK\$) |
Target Price (HK\$) |
Upside (%) |
Market Cap (HK\$m) |
52-Week Range (HK\$) |
| 291 HK |
28.28 |
33.80 |
+19.5 |
91,745.3 |
21.60 – 36.00 |
Detailed Financial Summary: 1H25 Results
| Metric |
1H25 |
1H24 |
YoY Change (%) |
| Total Revenue (Rmbm) |
23,942 |
23,744 |
0.8 |
| Beer Revenue (Rmbm) |
23,161 |
22,566 |
2.6 |
| Baijiu Revenue (Rmbm) |
781 |
1,178 |
(33.7) |
| Gross Profit (Rmbm) |
11,704 |
11,139 |
5.1 |
| Gross Profit Margin (%) |
48.9 |
46.9 |
+2.0ppt |
| Adj. EBITDA (Rmbm) |
8,336 |
7,532 |
10.7 |
| Adj. EBITDA Margin (%) |
34.8 |
31.7 |
+3.1ppt |
| Attributable Net Profit (Rmbm) |
5,789 |
4,705 |
23.0 |
| Adjusted Net Profit (Rmbm) |
5,354 |
4,719 |
13.4 |
| Beer Sales Volume (mL) |
6,487 |
6,348 |
2.2 |
| ASP of Beer (Rmb/kl) |
3,570 |
3,554 |
0.4 |
| COGS of Beer (Rmb/kl) |
1,847 |
1,925 |
(4.1) |
Operational Review: Premiumization and Channel Expansion
Beer Segment:
- Revenue grew 3% year-on-year to Rmb23,161m in 1H25, driven by a 2% increase in sales volume and a 0.4% rise in ASP.
- Gross margin expanded by 2.5ppt to 48.3%, thanks to lower raw material costs.
- Adjusted EBITDA for beer rose 14% year-on-year, with margin improving by 3.4ppt to 35.1%.
- Sub-premium and above segments recorded mid- to high-single-digit volume growth; affordable premium and above segments grew over 10% year-on-year.
- Heineken, Lao Xue, and Amstel volumes surged by over 20%, 70%, and 100%, respectively.
Channel Performance:
- Off-trade channel contributed more than 60% of sales volume in 1H25.
- Online and instant retail businesses posted GMV growth of nearly 40% and 50% year-on-year, respectively.
Baijiu Segment:
- Revenue fell 34% year-on-year to Rmb781m in 1H25.
- EBITDA dropped 47% to Rmb218m, with margin shrinking by 7.2ppt to 27.9%.
- Management expects the baijiu business to stabilize in 2H25, supported by pricing initiatives and new product launches targeting the mass market.
- Zhaiyao brand accounted for nearly 80% of baijiu revenue in 1H25.
Strategic Outlook: 15th Five-Year Plan and Growth Drivers
- Heineken remains the centerpiece of CR Beer’s premiumization strategy, while the sub-premium segment, led by Super X and revitalized local brands such as Xihu, will be critical for incremental growth.
- New product launches in the Rmb100-300 price range are expected to capture mass-market demand.
- Streamlined operations and a “lean, precise” approach continue to drive expense efficiency.
Financial Forecasts and Valuation
| Metric |
2024 |
2025F |
2026F |
2027F |
| Net Turnover (Rmbm) |
38,635 |
39,392 |
40,758 |
42,245 |
| EBITDA (Rmbm) |
8,694 |
9,913 |
10,772 |
11,571 |
| Net Profit (Adj., Rmbm) |
4,524 |
5,898 |
6,170 |
6,824 |
| EPS (Fen) |
139.4 |
181.8 |
190.2 |
210.4 |
| PE (x) |
18.7 |
14.3 |
13.7 |
12.4 |
| Dividend Yield (%) |
2.9 |
3.9 |
4.4 |
5.3 |
| ROE (%) |
15.3 |
17.7 |
17.1 |
17.5 |
| Net Margin (%) |
11.7 |
15.0 |
15.1 |
16.2 |
Dividend and Returns
- Interim dividend of Rmb0.464 per share declared for 1H25, maintaining a payout ratio of 26%.
- Dividend yield estimated to rise from 2.9% in 2024 to 5.3% by 2027.
Cash Flow and Balance Sheet Strength
- Operating cash flow expected to increase from Rmb6,928m in 2024 to Rmb10,239m by 2027.
- Significant increase in ending cash and cash equivalents, from Rmb3,816m in 2024 to Rmb17,775m in 2027.
- Net debt to equity projected to further improve to -38.2% by 2027, indicating net cash position strength.
Earnings Revisions and Risks
- 2025 earnings forecast raised by 7%, reflecting one-off gains and solid beer segment performance.
- 2026 forecast slightly lowered by 0.4% due to ongoing baijiu business adjustments.
- Risks include intensified competition in premium beer and slower-than-expected baijiu recovery.
Valuation and Recommendation
- Target price set at HK\$33.80, implying 10.0x 2025F EV/EBITDA and 9.2x 2026F EV/EBITDA.
- Stock currently trades at attractive valuations: 8.3x 2025F EV/EBITDA and 7.7x 2026F EV/EBITDA.
- BUY rating maintained due to strong fundamentals, premiumization progress, and robust cash generation.
Conclusion: China Resources Beer Remains a Standout in China’s Beverage Sector
CR Beer’s 1H25 performance underscores its leadership in China’s beer market and its resilience in the face of market challenges. Its strategic focus on Heineken, sub-premium innovation, and operational excellence continues to deliver results. While the baijiu segment remains under adjustment, the company’s robust cash flows, healthy margins, and commitment to shareholder returns make it a compelling investment for those seeking exposure to China’s evolving consumer landscape.
Broker: UOB Kay Hian | Date: 20 August 2025
