In "The Big Banks," Citigroup: Last year's liquor impairment loss for China Resources Beer exceeded expectations, and adjusted net profit slightly surpassed expectations

Citi published a research report stating that China Resources Beer (00291.HK) issued a profit warning, expecting its reported profit to decline by 29.6% year-on-year to HKD 38.6 million, mainly due to impairment losses on liquor exceeding expectations. It is estimated that the impairment loss will account for 16.6% to 17.7% of its current goodwill balance, reflecting weak demand in the liquor market following the acquisition of Sands.

After accounting for the impairment loss, its adjusted profit is expected to increase by 20% to 33% year-on-year, slightly exceeding the bank's and market expectations by 1% and 3%, respectively. The bank believes that the higher-than-expected liquor impairment is beneficial for the company's long-term development, as it reduces the chances of further impairments in the future. Additionally, the bank expects stable sales performance in the first two months of this year.

The bank maintains its target price at HKD 33.2, with a rating of "Outperform."