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<Research>BofAS Sets CHINA RES BEER's TP at HKD35.6; Goodwill Impairment Clears Uncertainty
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During the current downcycle of the baijiu market, concerns over potential goodwill impairment have been a major uncertainty over the past six months, BofA Securities said in its research report. The broker views the profit warning from CHINA RES BEER (00291.HK) as an event that clears these doubts. This impairment accounts for around 40% of the RMB7 billion goodwill related to Jinsha, which is larger than expected. Whether CHINA RES BEER will make further impairment provisions in 2026 depends on the fundamentals of baijiu. At least for now, BofA Securities believes the amount has been included in prudent assumptions. BofA Securities has kept a Buy rating on CHINA RES BEER with a target price of HKD35.6 based on three key reasons: 1) CHINA RES BEER's market share continues to expand thanks to its proactive response to channel fragmentation and diversified demand; 2) the stock has been a notable laggard in the Chinese consumer sector over the past six months, and the stock price is expected to catch up as short-term uncertainties are cleared; and 3) three catalysts could drive potential revaluation in 2Q26, including possible recovery in the catering channel, 2Q being a peak season, and the World Cup in June. AAStocks Financial News |
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