00291 Overview

Earnings Forecast Adjustment: Morgan Stanley has reduced its EPS forecast for CHINA RES BEER for 2025-27 by 2-4% due to demand challenges, restructuring needs, and rising aluminum prices impacting profit margins.

Sales and Profit Growth Outlook: Despite the EPS reduction, Morgan Stanley maintains its sales and operating profit growth forecasts for CHINA RES BEER's beer business, expecting efficiency improvements and a higher share of Heineken beer to mitigate raw material cost increases.

Liquor Business Performance: The liquor segment of CHINA RES BEER is projected to incur a loss in 2025, with expectations of narrowing losses in 2026, while overall recurring net profit is anticipated to grow by 11% in both years.

Target Price Update: Morgan Stanley has raised its target price for CHINA RES BEER from HKD35 to HKD36, reflecting RMB appreciation, while maintaining an Overweight rating despite the earnings forecast reduction.

Stock Performance Overview: Various Hong Kong stocks showed mixed performance, with notable gains for ANTA SPORTS (+2.365%) and HAIDILAO (+5.822%), while LI NING (-1.875%) and SANDS CHINA LTD (-1.271%) experienced declines.

Short Selling Data: Short selling activity varied across stocks, with LI NING having the highest ratio at 23.224%, while TSINGTAO BREW reported the lowest at 1.075%.

Investment Ratings: Most stocks listed received a "Buy" rating, except for LI NING, which is rated as "Hold," indicating a generally positive outlook for the majority of the stocks.

Market Insights: Citi's estimate for Macau's February gross gaming revenue (GGR) is projected at MOP20 billion, reflecting a 1% year-over-year increase, suggesting a stable gaming market.

Improvement in Consumption: This year's Chinese New Year holiday data indicates a recovery in the domestic consumption market, particularly in tourism, culture, and catering sectors, compared to last year.

Broker Optimism: UOB Kay Hian expresses optimism about structural consumption growth in China, highlighting potential policy support and overseas growth opportunities, especially in catering and experiential consumption.

Top Stock Picks: UOB Kay Hian's top stock recommendations include ANTA SPORTS, CHINA RES BEER, HAIDILAO, and YUM CHINA, all rated as Buy, with an Overweight rating for the domestic consumption sector.

Target Price Adjustments: The broker has adjusted target prices for several stocks based on CNY holiday consumption and travel data, increasing targets for HAIDILAO, LI NING, KWEICHOW MOUTAI, and WULIANGYE.

Lunar New Year Consumption Performance: The Lunar New Year holiday showed strong demand in catering and tourism, prompting Daiwa to recommend stocks like GUMING and YUM CHINA that benefit from this trend.

Economic Reflation Signs: The report highlighted initial signs of reflation in the Chinese economy driven by service consumption, with rising prices and reduced promotions in various sectors.

Catering Sector Outlook: Daiwa remains optimistic about GUMING and YUM CHINA, suggesting that a broader recovery in catering could enhance alcohol consumption at venues, while also favoring NONGFU SPRING and TINGYI due to domestic tourism.

Caution on MIXUE GROUP: Despite the positive outlook for many stocks, Daiwa expressed caution regarding MIXUE GROUP due to uncertain profit growth visibility, maintaining a Neutral rating.

Hong Kong Stock Performance: On February 16, Hong Kong stocks saw a positive half-day session, with the HSI closing up 138 points (0.5%) at 26,705, marking a strong overall performance in the Year of the Snake with a 32% gain.

HSI Quarterly Review Changes: The quarterly review of the HSI included the addition of CATL, CMOC, and LAOPU GOLD, which saw significant gains, while ZHONGSHENG HLDG was removed from the index.

Individual Stock Movements: Notable stock movements included SANDS CHINA LTD rising 2.7% despite a slight decline in property EBITDA, while ANTA SPORTS experienced a minor drop after shareholder approval for a significant acquisition.

US Department of War Update: The US Department of War's withdrawal of the "List of Chinese Military Companies" impacted stock prices, with BABA-W declining 0.5% and BIDU-SW increasing by 1.3%.

US Inflation and Stock Market Update: US inflation was below expectations while core inflation met them; the DJIA rose by 0.1% last Friday.

Hong Kong Stock Market Performance: The Hong Kong bourse opened lower, with the HSI down 0.2% and other indices also showing declines.

HSI Quarterly Review Changes: CATL, CMOC, and LAOPU GOLD were added to the HSI, while ZHONGSHENG HLDG was removed; CATL and CMOC saw slight increases in their stock prices.

Notable Stock Movements: Stocks like BABA-W and BIDU-SW dropped significantly after being listed as Chinese military companies, while ANTA SPORTS received approval for a stake acquisition in PUMA.