Analyst Research Report Snapshot


China Resources Ent. (291 HK, HK$27.0, U): Maintain Underperform




KGI Greater China


15 Nov 2013





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3Q13 beat on beer, retail remains weak 3Q13 and 1Q-3Q13 recurring profit up 36% and 7%, beating our estimates by 36% & 13% on higher beer ASP and lower tax expenses 2013F EPS raised 12%; 2014-15F EPS maintained on worry of financial cost and short-term operating deleveraging from Kingway 12M target price raised to HK$22.8 from HK$20.20 on raised target valuation for beer on market share and ASP pick-up; on potential earnings dilution from Tesco JV over 2014-15F and stretched valuation, we expect CRE shares to remain range-bound; maintain Underperform We raise our 12-month target price to HK$22.8 from HK$20.20. We raise our target EV/EBITDA multiple from 8x to 10x due to price hikes in 3Q13 and CRE’s ability to maintain market share. However, we also model in a net debt of HK$3.7bn in 2014 after including Kingway’s financials. On 30x 2014F PE and 2014-15F profit growth of 28% and 25% YoY, valuation looks stretched. Maintain Underperform.

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