Key takeaway

CBC reported stable volume and price in 1Q26, increased investment in 1L pack products and beverages, and continued to expand off-premise channels. Product mix improved steadily, and a significant decline in cost per ton led to a notable increase in gross margin. Tax rate fluctuations will have no base effect after 2Q. We expect volume and price to remain stable for the full year of 2026. Cost trends still require observation. The 2025 dividend implies a current dividend yield of about 4.67%, offering good value. The peak beer consumption season has recently arrived, and the World Cup is about to begin. Watch for potential catalysts from the upcoming tournament.

Event

The peak beer consumption season has recently arrived, and the World Cup is about to begin. The beer sector may see catalysts. The company previously released its 2025 annual report and 1Q26 report.

In 2025, the company recorded operating revenue of RMB14.722bn (YoY +0.53%), net profit attributable to shareholders of the parent company of RMB1.231bn (YoY +10.43%), and net profit attributable to shareholders of the parent company after excluding non-recurring items of RMB1.188bn (YoY -2.78%). Revenue and profit were in line with the previously released earnings guidance. In 1Q26, the company recorded revenue of RMB4.350bn, YoY -0.12%; net profit attributable to shareholders of the parent company was RMB0.438bn, YoY -7.40%; net profit attributable to shareholders of the parent company after excluding non-recurring items was RMB0.434bn, YoY -7.07%. Revenue and performance meet expectations.

Quick Take

1Q26 volume and price stable, product mix improved steadily In 2025, revenue reached RMB14.722bn, YoY +0.53%. Among this, beer revenue was RMB14.298bn, YoY +0.90%, with sales volume of 2.9952mn kiloliters (YoY +0.68%). Revenue per ton wasRMB4,915/ton, YoY -0.15% (beer price per ton was RMB4,774, YoY +0.22%). In 1Q26, the company’s beer business recorded operating revenue of RMB4.253bn (+0.19%), sales volume of 886.5k tons (+0.34%), and price per ton of RMB4,797 (-0.15%).

By product mix, in 2025 the share of premium beer sales volume continued to increase. Premium segment revenue grew by 2.19% (volume +3.23%, price per ton -1.01%); mainstream segment revenue declined by 1.03% (volume -1.95%, price per ton +0.94%); economy segment revenue declined by 1.80% (volume +0.53%, price -2.31%).

In 1Q26, premium beer revenue was RMB2.666bn (+2.42%), with share increasing by 1.36pct to 62.69%; mainstream beer revenue was RMB1.492bn (-3.75%), with share decreasing by 1.44pct to 35.09%; economy beer revenue was RMB0.095bn (+3.62%), with share increasing by 0.07pct to 2.23%.

recorded revenue of RMB5.884bn, YoY -1.43%; the southern region recorded revenue of RMB4.388bn, YoY +1.67%. Among them, the northwest region’s share increased by 0.75pct to 28.16%. 1Q26 northwest and south regions performed better, and the channel structure remained stable. 1Q26 the northwest/central/south regions recorded operating revenue of RMB1.226bn, RMB1.778bn, and RMB1.248bn, YoY +4.05%/-3.08%/+1.37%, with revenue contribution changing by +1.07pct/-1.41pct/+0.34pct to 28.83%/41.82%/29.35%, respectively. In 1Q26, operating revenue from the wholesale agency channel reached RMB4.24bn, up 0.05% YoY. In 1Q26, the number of dealers increased by 91 to 3,280.

1Q26 cost improvement drove gross margin expansion, while tax rate fluctuation affected net margin 1) In 2025 the company’s gross margin/net margin changed by +2.30/+1.47pct YoY to 50 .88%/16.83%, and in 4Q25 the company’s gross margin/net margin change d by +13.05/+26.10 pct YoY to 56.43%/-0.28%. In 1Q26, the company’s gross profit margin/net profit margin change d by +1.24/-1.55pcts YoY to 49.66%/20.06%, respectively. The improvement in gross profit margin was mainly attributable to product mix upgrade and cost optimization. 2) In 2025 the selling (including R&D)/administrative expense ratios changed by +0.88/+0.49pct YoY to 18.03%/4.17%, and in 4Q25 the selling (including R&D)/administrative expense ratios changed by +2.76/+1.81pct YoY to 37.16%/9.34%. In 1Q26 the selling expense ratio/administrative expense ratio changed by +0.61/+0.06pct YoY to 13.34%/3.47%, and the increase in the selling expense ratio was mainly due to increased inves tment in new products.

3) In 2025 net operating cash flow was RMB2.624bn (+3.23%). In 1Q26 the company’s operating cash flow increased by 22.25% YoY to RMB1.650bn.

4) Calculated based on operating cost, cost per ton in 2025 was RMB2415 (-4.63%), and cost per ton in 4Q25 was RMB2216 (-21.36%). 1Q26 cost per ton was RMB2470, down 2.86% YoY, mainly because raw material procurement costs remained relatively low in Q1. The company adopts various measures to reduce the volatility of commodities, such as continuously conducting hedging for aluminum materials, and it also launchescost-saving projects every year, enabling it to withstand external risks on the cost side.

5) The income tax rate increased by 0.59pct in 2025 to 23.56%. In 1Q26 the income tax rate was 24 .06%, up 6.17pct YoY, and it is expected that the tax rate may stabilize at around 25% going forward.

The company increases focus on one liter products and off premise channels, and we watch beer peak season sales momentum driven by the World Cup catalyst In terms of channels, on premise dining remains under pressure, and the shift of consumers toward off premise channels has continued for the past two to three years; with the development of instant retail, consumers are increasingly accustomed to instant purchases and at home consumption. Chongqing Brewery will also continue to increase investment in off-premise channels. At present, Chongqing Brewery’s off-premise channel strategy has three parts. First, drive the growth of major brands (such as Carlsberg, Tuborg, and Wusu). Second, consolidate existing market share. Third, establish new pillars for future growth. Meanwhile, Chongqing Brewery is continuously promoting the creation of consumption scenarios. So far, more than 200 stores have signed cooperation agreements for the “Big Wusu, Small BBQ” program, with over 100 already opened, and the program continues to roll out in multiple core cities.

product matrix is expanding rapidly. One-liter products represent not only larger packaging but also product upgrades. 1) New products: From January to March this year, several Chongqing Brewery brands launched new one-liter craft products, including “Carlsberg” Western-style Pilsner craft beer, “Tuborg” wheat craft beer, “Chongqing” Guobin double-hopped craft beer, the “Wusu” Xinjiang specialty fruit-infused craft white beer series, “Feng Hua Xue Yue” four-season special brews, “Xixia” goji berry craft beer, “Dali” Aheige, and “Jing-A” Hop Cloud · Light Hazy IPA. 2) Flavor: One-liter craft products are not merely a change in packaging size. The beer itself has been redesigned with new innovative selling points. According to different brand positioning, flavors with regional characteristics such as goji berry, tea, buckwheat, coffee, and fruit have been incorporated to create a more differentiated product experience. 3) Production lines: In March this year, flexible one-liter can production lines at Chongqing Brewery’s Dazhulin brewery and Xinjiang Urumqi brewery were put into operation successively. Together with the production line launched last year, the company has now deployed three large-capacity canned product production lines, and the capacity utilization rate of these three lines has exceeded 60%.

The FIFA World Cup in the US, Canada, and Mexico will kick off on June 12 this year. Considering the strong correlation between beer and football, past World Cups have been important opportunities for brand pr omotion for beer companies. However, as most matches of this World Cup will be held in the early morning or morning Beijing time, we expect the direct boost to beer sales may be limited. Attention should be paid to the potential sentiment boost to the beer sector after the World Cup begins. Earnings forecast and investment recommendation: The company is expected to achieve revenue of RMB14.733bn, RMB14.904bn, and RMB15.105bn in 2026–2028, representing YoY changes of +0.07%, +1.16%, and +1.35%; net profit attributable to shareholders of the parent company is expected to reach RMB1.185bn, RMB1.227bn, and RMB1.287bn, representing YoY changes of -3.70%, +3.52%, and +4.90%; corresponding EPS isRMB2.45, RMB2.54, and RMB2.66; corresponding dynamic PE for 2026–2028 is 21.85X, 21.10X, and 20.12X.

Risks: 1. Risk that the promotion of premium products falls short of expectations: The industry has entered an era of premiumization, and companies are improving profitability by promoting sales of premium products. Competition in the premium beer market is currently intense, and if the company’s premium product promotion encounters obstacles, profitability may fall short of expectations. 2. Raw material price fluctuation: Raw materials such as beer ingredients and packaging materials account for a significant portion of production costs. A rise in raw material prices could substantially erode profitability. Barley costs have currently retreated from previous highs, but if raw material prices fluctuate in the future, unexpected price increases may cause the company’s profitability to fall short of expectations. 3. Market demand recovery falls short of expectations: Since 2024, beer consumption scenarios such as catering have gradually recovered, and if the pace of recovery falls short of expectations, it will affect the company’s product sales.