Analyst Miao Zhang from CMB International Securities maintained a Buy rating on China Resources Beverage (Holdings) Company Limited and decreased the price target to HK$12.85 from HK$18.61.
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Miao Zhang has given his Buy rating due to a combination of factors that suggest long-term growth potential for China Resources Beverage (Holdings) Company Limited. Despite short-term earnings pressure, largely due to a decline in the water business and a moderated beverage growth, the company is expected to benefit from its ongoing capacity expansion and channel reform initiatives. The company is on track with its capacity expansion plan, which includes the commencement of new production lines and the aim to achieve 60% self-owned capacity by 2025. This expansion is anticipated to improve gross profit margins over time as consumption sentiment recovers.
Additionally, the company’s channel reform efforts, which include restructuring distribution channels and adding specialized distributors, are expected to yield significant benefits post-2026. These strategic initiatives are designed to enhance operational efficiency and market reach, aligning with the company’s integration into the Five-Year Plan as a central state-owned enterprise. Although the target price has been adjusted to reflect current earnings pressure, the long-term outlook remains positive, justifying the Buy rating.