Trump announces trade deal with EU following months of negotiations
On Monday, UBS analyst Christine Peng upgraded Shanghai Bairun Investment, listed as 002568:CH, to a Buy rating, elevating it from the previous Neutral stance. Accompanying this upgrade, the price target was also raised to RMB30.36, up from RMB20.60.
Peng’s optimism about the company’s outlook is driven by the potential of Bairun’s whiskey business, which is expected to contribute to the company’s revenue growth. Despite concerns about the ready-to-drink (RTD) wine segment’s performance, UBS anticipates a revenue increase from the introduction of new whiskey products. These are projected to compensate for the anticipated decline in RTD wine sales in fiscal year 2024 and a moderating growth forecast.
The Q1 2025 results have indicated signs of stabilization in the RTD wine business, with an 11% quarter-over-quarter improvement in revenue. UBS is also predicting a positive shift in the Q2 2025 results. The analyst’s expectations are based on the belief that the market has not yet fully recognized the growth prospects of Bairun’s whiskey line.
Shanghai Bairun’s stock is currently trading at a one-year forward price-to-earnings ratio (PER) of 31 times, which represents a 28% discount compared to its historical average of 43 times PE. Furthermore, the stock’s current price-to-earnings growth (PEG) ratio stands at 1.4, which is below the median PEG ratio of 1.5 of its Chinese peers.
In terms of earnings forecasts, UBS’s estimates are 4% and 16% higher than the consensus, suggesting a more bullish outlook on Bairun’s financial performance than the broader market consensus. This revision of the stock’s rating and price target reflects UBS’s confidence in Shanghai Bairun Investment’s potential for growth, particularly in its whiskey business.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.