China: China Resources Beer shares jump on record-high net profit in H1

Shares of China Resources Beer jumped as investors drank in the brewer's record-high net profit for the first half of the year, Market Screener reported on August 19.

The stock rose as much as 7.7% to HK$28.66 in Hong Kong after China's largest brewer by volume announced earnings on August 19. It pared gains to close up 6.2% at HK$28.28 - its highest closing price and largest one-day percentage gain since April.

The drinks company, which distributes Heineken and Tiger brands in China, is reaping the payoff of its push into the premium products segment. That helped profit climb 23% to about $805.9 million in the first six months of the year, on revenue that rose 0.8%, it said on August 19.

Beer was the highlight of the half, generating the bulk of the brewer's sales as averaging selling prices gained.

The beer segment added 17% to the company's profit, beating Citi analysts' expectations. Key margins in the division also topped forecasts, Xiaopo Wei and Vincent Young said in a note.

Sales of baijiu - a Chinese liquor - declined but the business was still "relatively resilient" with a stable gross profit margin, the analysts said.

Citi maintains a buy rating and HK$35.60 target on China Resources Beer, which remains its top sector pick.

By comparison, Budweiser APAC, which sits second in Citi's pecking order, posted beer sales declines over the first half. Still, Citi kept a buy call on the Budweiser distributor, and has another on Tsingtao, China's second-biggest brewer by volume.