China Resources Beer Holdings: Stock Worth Buying?

China Resources Beer (Holdings) Co. Ltd. is an investment holding company that manufactures, distributes, and sells beer products in Mainland China. The company offers its products under the Heineken, Li, Löwen Fruit Beer, Snow Xiao Pi Qi, Amstel, Nong Li, Snow, and Jinsha brand names. As of March 24, 2022, it operated 65 breweries in 24 provinces, municipalities, and autonomous regions in Mainland China. China Resources Beer's stock is traded on the Hong Kong Stock Exchange (HKEX) under the symbol 0291.HK. In this article, we will discuss the company's recent financial performance, dividend history, and provide an analysis of its stock price to help investors decide if they should buy China Resources Beer Holdings stocks.

China Resources Beer Holdings' stock price history

China Resources Beer Holdings Co. Ltd. (CRHKY) is traded on the Hong Kong Stock Exchange (HKEX) under the symbol 0291.HK. The company operates as an investment holding company that manufactures, distributes, and sells beer products.

As of March 15, 2024, the stock price of China Resources Beer Holdings closed at HK$36.30. The 52-week high was HK$65.60, and the 52-week low was HK$27.20. On September 16, 2024, the stock hit a 52-week low of HK$21.60.

On Friday, March 15, 2024, the stock price fell by -0.548%, fluctuating between HK$35.45 and HK$36.50 during the trading day. Despite the recent drop, the stock is still up by 8.68% over the past 2 weeks.

Looking at the short-term trend, the stock is expected to rise 7.33% over the next 3 months, with a predicted price range of HK$31.58 to HK$39.22.

On July 15, 2024, China Resources Beer Holdings announced a dividend of $0.08 per share, payable on July 15, 2024, with an ex-dividend date of May 22, 2024.

In summary, despite the recent dip, China Resources Beer Holdings stock has shown positive momentum, and several short-term signals indicate a potential buying opportunity for those considering investing in the company.

Dividend payments

CR Beer recently announced a dividend of $0.08 per share, payable on July 15, 2024, with an ex-dividend date of May 22, 2024. This has shone a spotlight on the company's dividend history, yield, and growth rates. CR Beer has maintained consistent dividend payments since 2017, with dividends distributed on a bi-annual basis. As of November 2024, the company has a 12-month trailing dividend yield of 1.71% and a 12-month forward dividend yield of 1.82%, indicating an expected increase in dividend payments over the next 12 months.

CR Beer's dividend growth rates have been impressive. Over the past three years, their annual dividend growth rate was 47.50%, and over a five-year period, this rate was 37.10%. This results in a 5-year yield on cost of approximately 8.28%. The company's dividend payout ratio, an important indicator of sustainability, was 0.40 as of December 31, 2023. This suggests that the company retains a significant portion of its earnings, ensuring funds for future growth and downturns.

CR Beer's profitability rank, as assessed by GuruFocus, was 6 out of 10 as of December 31, 2023, indicating fair profitability. The company has reported net profits in 8 out of the past 10 years. While their growth rank is also 6 out of 10, indicating a fair growth outlook, their revenue growth rate of 4.50% per year underperforms most of its global competitors. Similarly, their 3-year EPS growth rate of 28.80% per year is lower than approximately 31.79% of global competitors.

In summary, China Resources Beer Holdings has a solid track record of dividend payments, a promising dividend growth rate, and a sustainable payout ratio. While their profitability and growth metrics are not industry-leading, they still provide a stable foundation for future dividend sustainability. Investors seeking high-dividend yield opportunities may consider CR Beer a viable option, especially given their position as China's largest brewer with a strong brand portfolio.

Revenue and earnings growth

China Resources Beer Holdings Co. Ltd. is a state-owned major beverage maker and a core subsidiary of China Resources (Holdings), a conglomerate that operates electricity, food, and other businesses. The company was founded in 1992 and is headquartered in Hong Kong. It manufactures, distributes, and sells beer products under brand names such as Heineken, Li, and Snow.

In terms of revenue and earnings growth, China Resources Beer Holdings has shown mixed results. On the one hand, the company has consistently increased its market share in the Chinese beer market, becoming the top player for nine consecutive years since 2014. This indicates strong revenue growth. On the other hand, there have been fluctuations in the stock price and earnings over time, with some quarters showing declines. For example, in 2013, China Resources Enterprise Ltd.'s first-quarter net profit fell 35% due to heavy discounting and promotional activities.

The company's revenue and earnings growth can be influenced by various factors, including the performance of its parent company, China Resources (Holdings), and its ability to maintain its market share in a competitive industry. Additionally, economic conditions in China, such as slowdowns or other negative factors, can impact the company's performance.

Looking at recent financial reports, the company's annual reports from 2020 to 2023 are available. These reports would provide valuable insights into the company's financial health, revenue, and earnings growth over the past few years. It is worth noting that the 2023 annual report was released in April 2024, suggesting a delay in reporting the most recent financial information.

In summary, while China Resources Beer Holdings has demonstrated strong market share and brand recognition in the Chinese beer market, there have been fluctuations in its stock price and earnings. Investors should carefully consider the company's financial reports, market conditions, and potential risks before making investment decisions regarding the stock.

Risk analysis

China Resources Beer Holdings Co. Ltd. (CR Beer) is a major player in the Chinese beer industry, with a volume share of about 26% as of 2023. The company has a diverse portfolio of brands, including Heineken, Li, Löwen Fruit Beer, Snow Xiao Pi Qi, Amstel, and Edelweiss. With 65 breweries across Mainland China, CR Beer has a strong presence in the market.

However, there are several risks to consider before investing in the company:

• Market Competition: While CR Beer is the market leader, it faces competition from well-known brands such as Tsingtao and Budweiser APAC. These competitors have significant market share and can impact CR Beer's performance.
• Industry Dynamics: The Chinese beer market is subject to premiumization, with consumers demanding higher-quality, premium beers. This shift could impact CR Beer's sales if they fail to adapt their product offerings.
• Financial Performance: On March 15, 2024, CR Beer's stock price fell by 0.548%, and the price has fallen in 6 of the last 10 days. While the stock is still up by 8.68% over the past 2 weeks, this recent volatility may be a cause for concern.
• Support and Resistance Levels: The stock is currently closer to the resistance level of HK$36.45 than the support level of HK$33.40. This may indicate that the trading risk/reward is less attractive in the short term, and investors might want to wait for a better entry point.
• Sell Signals: A sell signal was issued on March 14, 2024, and the stock has fallen since then. There is also a sell signal from the 3-month Moving Average Convergence Divergence (MACD). These signals suggest that the stock may continue to fall in the near term.
• Dividend History: While CR Beer recently announced a dividend of $0.08 per share, payable on July 15, 2024, investors should analyse the company's dividend history, yield, and growth rates to assess the sustainability of dividend payments.
• ESG Risk: CR Beer's ESG (Environmental, Social, and Governance) Risk Rating indicates that the company has medium exposure to ESG issues and is managing these issues at an average level. Investors should consider their own ESG criteria when evaluating the risk associated with investing in CR Beer.

In conclusion, while CR Beer is a leading player in the Chinese beer market, there are several risks to consider, including market competition, industry dynamics, financial volatility, and ESG concerns. Investors should carefully evaluate these risks before making any investment decisions.

Stock price forecasts

On the one hand, there are some positive signals for the stock, with buy signals from both short and long-term Moving Averages, and the stock is expected to rise in the short term. On the other hand, there are also some sell signals, with a sell signal issued from a pivot top point on March 14, 2024, and a sell signal from the 3-month Moving Average Convergence Divergence (MACD).

The stock is currently in the upper part of a weak rising trend, which may pose a selling opportunity for short-term traders. The stock is closer to the resistance from accumulated volume, which may indicate that the trading risk/reward is not attractive at the moment.

Analysts' 12-month price targets for the stock vary, with targets of $71.40, $76, $64, $67, and $90.50.

Frequently asked questions