Tsingtao Brewery
The latest investment analysis on Tsingtao Brewery
Group Research - Equities31 Oct 2025
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Company Overview
Tsingtao Brewery Company Limited is a beer producer and distributor in China with over 120 years' history. It is the second largest brewer (in terms of sales volume) in China with around 18% of market share in the country in 2024. Sales volume was 7.5mn KL in 2024. By the end of 2024, the company's production capacity was 14.19mn KL, with 57 breweries across 20 provinces/municipalities of China. Major brands of the company include "Tsingtao" and "Laoshan". Products from Tsingtao Brewery has been sold in 120 countries and regions around the world.
Investment Overview
Product mix enhancement. Product upgrade remained on track, with main brand "Tsingtao" and mid- to high-end beer volumes up 6.8%/4.2% y/y in 3Q25 (up 4.6%/4.0% in 9M25), well ahead of total sales volume growth (+0.3%/1.6% in 3Q25/9M25). However, price discounts partly offset premiumisation gains as consumers stayed value-driven. The company continues to broaden its premium lineup (e.g., Light Dry, Sakura White Beer, Hazy IPA, wheat series) to capture wider demand. We expect ongoing premiumisation to largely offset pricing pressure, with improving sentiment supporting ASP recovery in 2026.
More in-home consumption. Leveraging the ongoing shift to in-home channels, Tsingtao continues to post strong momentum in emerging channels, such as e-commerce, instant delivery, and warehouse clubs. With nearly 60% of volume from in-home consumption, the company is well positioned to benefit from this structural trend, supporting low-single-digit volume growth in 2026.
Margin expansion. Favourable input costs helped production cost per tonne fall 3%/3.4% y/y in 3Q25/9M25, lifting gross margin by 1.3ppts/1.9ppts, respectively. Barley prices should stay benign with potential global output increase next year. Combined with disciplined expense control, we expect c.8% earnings growth in both FY25/26F.
Maintain BUY with TPs of HKD75.00/RMB92.00. We trim FY25/26F earnings by 1% on weaker-than-expected ASP performance. Our A-share TP (RMB92.00) is based on 14x 12-month forward EV/EBITDA, in line with historical average, and our H-share TP (HKD75.00) implies a ~30% discount on five-year average EV/EBITDA vs A-share. The H-share remains more attractive, also offering a >5% dividend yield.
Key risks:
Lower-than-expected ASP growth, significant sales volume decline due to weather or market share changes, higher-than-expected raw material costs, food safety issues, etc.
Tsingtao Brewery Company Limited is a beer producer and distributor in China with over 120 years' history. It is the second largest brewer (in terms of sales volume) in China with around 18% of market share in the country in 2024. Sales volume was 7.5mn KL in 2024. By the end of 2024, the company's production capacity was 14.19mn KL, with 57 breweries across 20 provinces/municipalities of China. Major brands of the company include "Tsingtao" and "Laoshan". Products from Tsingtao Brewery has been sold in 120 countries and regions around the world.
Investment Overview
Product mix enhancement. Product upgrade remained on track, with main brand "Tsingtao" and mid- to high-end beer volumes up 6.8%/4.2% y/y in 3Q25 (up 4.6%/4.0% in 9M25), well ahead of total sales volume growth (+0.3%/1.6% in 3Q25/9M25). However, price discounts partly offset premiumisation gains as consumers stayed value-driven. The company continues to broaden its premium lineup (e.g., Light Dry, Sakura White Beer, Hazy IPA, wheat series) to capture wider demand. We expect ongoing premiumisation to largely offset pricing pressure, with improving sentiment supporting ASP recovery in 2026.
More in-home consumption. Leveraging the ongoing shift to in-home channels, Tsingtao continues to post strong momentum in emerging channels, such as e-commerce, instant delivery, and warehouse clubs. With nearly 60% of volume from in-home consumption, the company is well positioned to benefit from this structural trend, supporting low-single-digit volume growth in 2026.
Margin expansion. Favourable input costs helped production cost per tonne fall 3%/3.4% y/y in 3Q25/9M25, lifting gross margin by 1.3ppts/1.9ppts, respectively. Barley prices should stay benign with potential global output increase next year. Combined with disciplined expense control, we expect c.8% earnings growth in both FY25/26F.
Maintain BUY with TPs of HKD75.00/RMB92.00. We trim FY25/26F earnings by 1% on weaker-than-expected ASP performance. Our A-share TP (RMB92.00) is based on 14x 12-month forward EV/EBITDA, in line with historical average, and our H-share TP (HKD75.00) implies a ~30% discount on five-year average EV/EBITDA vs A-share. The H-share remains more attractive, also offering a >5% dividend yield.
Key risks:
Lower-than-expected ASP growth, significant sales volume decline due to weather or market share changes, higher-than-expected raw material costs, food safety issues, etc.