What I am sharing today is the in-depth research report of the [industry] beer industry: high-end beer: the debate of the middle bureau (attached**).
A link to the full report at the end of this article.
*:Hua Chuang** Full text 20 pages.
Introduction: The high-end of beer is still the first trend, and after the extreme stress test of the past two years, the high-end of beer is still moving forward in the middle of the game. This article focuses on the current market divergence, firstly, to understand the high-end potential of Chinese beer through international comparison and category comparison; the second is the prospect of space, path and pattern in the second half of high-end; The third is to observe marginal changes and grasp the pace of investment in 24 years.
International comparison: Japan cannot simply benchmark, looking at the general experience overseas, China still has room for upgrading. Some investors look at beer in the context of long-term deflation, and use the post-90s Japanese beer industry against China. But in fact, Japan is an extreme scenario of long-term deflation (lack of market depth) and industrial policy (the impact of liquor tax), and Chinese and Japanese beers cannot be simply benchmarked; And although the performance of Japanese beer is relatively weak, the proportion of high-end beer still increases under extreme pressure is a bright spot. From a broader perspective, it is found that mid-to-high-end beer occupies the mainstream of sales in most countries, while China's current low-end beer accounts for a relatively high proportion and there is still a lot of room for upgrading. Compared with other domestic consumer industries, we believe that in the past 20 years, under the wave of inflation, beer has not kept up with the pace of upgrading, and has only accelerated in the past 5-6 years, and there is still a clear "late-mover advantage".
The second half of high-end: the speed of the shift does not change the way forward, 8-10 yuan instead of 6 yuan is a more deterministic logic, more than 10 yuan is difficult but there are fewer players. In 19-23 years, the sales structure of the industry has been upgraded from a "big bottom spire" to a "pyramid shape", and looking forward to the next 5 years, we estimate that the total volume of the beer industry will be basically stable, and the structure will further change to "balanced". In terms of direction, high-end has entered the second stage, and the industry has upgraded and changed its growth rate, but the direction has not changed. On the path: 1) The core is still more than 8 yuan and continues to expand, and 8-10 yuan replaces the 6 yuan price band, which is a high-end logic with high certainty. The successful direct price increase of Qingdao classic 2 million tons of large single products and the continuous increase in the volume of U8 show that the ** belt is vigorous. 2) More than 10 yuan: more emphasis on long-term brand training, we judge that although it is difficult but there are fewer players, China Resources' Heineken is growing rapidly, Budweiser is stable and there is no lack of bright spots, and the performance of other brands is weak.
Pattern interpretation: dislocation competition and cooperation, clear layers, Budweiser cultivates ultra-high-end, China Resources occupies the high-end with Heineken, and Qingdao Beer Yanjing enjoys sub-high-end expansion dividends. It is estimated that the ultra-high-end (more than 15 yuan) is about 900,000 tons, and Budweiser has a deep accumulation, with the current ultra-high-end market share exceeding 50%, and the strategic attention is high. High-grade (10-15 yuan) is about 5.2 million tons, and the current share of Budweiser is about 36%, ranking first, and China Resources has taken advantage of Heineken to occupy a place and drive the growth of pure life, and the current market share has rapidly increased to about 31%, and the strongest potential energy is expected to catch up with Budweiser. The sub-high-end (8-10 yuan) is about 6 million tons, and the price increase of Tsing Beer Classic is supplemented by 1903 to enjoy the expansion dividend, and the market share of 30% at that time is the first; Yanjing City accounted for 17%, and U8 was rapidly expanding nationwide; With a market share of 14%, Super X plans to renew its products and shift from personalization to popularization in the past, and restructure on the basis of Lao Yong's sales of nearly 3 million tons**.
24-year outlook: business is expected to gradually recover, and cost dividends will be released. Benefiting from the sunny weather and the recovery of catering, the feedback and sales in many places during the Spring Festival in 23 slightly exceeded expectations and the structural performance was better. Although Q1 sales may still be under pressure from a high base, it is recommended to continue to pay attention to the post-holiday recovery, and once the demand recovery becomes stronger, it is expected to usher in a high elastic growth catalyst under a low base in the same period of the peak season. On the cost side, the cost of barley is expected to decline by about 10%, and the pressure on packaging materials is expected to be small, and the gross profit margin is expected to increase by about 2pcts represented by Tsing Beer, amplifying the performance growth rate in 24 years. In addition, some investors are worried that the increase in low-grade fee investment will lead to the deterioration of the situation, and the current profit orientation has been the consensus of the industry, and the survey feedback is only a tactical adjustment, so there is no need to worry too much about the increase in low-grade fee investment to bring about the intensification of overall competition.
Investment advice: upgrade to the middle game, profit improvement is clear, continue to reiterate the recommendation. At present, the market's excessive concern about high-end has led to a decline in valuation, but in fact, the high-end side is more than halfway through, which is the core driver of the leader's medium- and long-term earnings improvement. In 24 years, the confidence in profitability driven by cost dividends is high. At present, China Resources and Tsing Beer 24E are about twice as high as PE perspective, and at the same time, the cash flow of beer companies is stable, and the bottom of the valuation reiterates the recommendation. It is the first to recommend China Resources and Tsing Beer (A+H), and recommend Yanjing, which continues to promote reform, and pay attention to heavy beer and Budweiser.
Risk warning: consumption power continues to be weak, high-end sales are less than expected, competition is intensifying, cost reduction is less than expected, and there may be errors in the calculation involving many assumptions.
Due to space limitations, only some of the contents are listed.
*:Hua Chuang** Full text 20 pages.
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