The Company achieved 5.6% YoY net profit growth on 1.0% YoY sales growth in 2025, in line with our expectation. In 4Q25, sales volume was flat while ASP further softened, on a YoY basis, given the deflationary pressures across many consumer subcategories. Its current valuation offers upside room, with decent risk-reward, as well as some positive catalysts during the coming peak season.

Key Factors for Rating

FY25 results review. Tsingtao reported total revenue of RMB32,473m (+1.0% YoY) in 2025, same as BOCIe. Specifically, beer sales volume was up 1.5% YoY to 7.65m KL, whilst ASP was down 0.7% YoY to RMB4,162 per KL. Similar to its peers, Tsingtao saw solid growth in its online and instant retail channels, backed by growing demand in new consumption areas. Its online sales contribution was nearly 9% in 2025, according to management. Meanwhile, GPM improved 1.6ppts YoY to 34.6% due to cost tailwinds, efficiency gain, and sales structural change. Shareholders’ profit rose 5.6% YoY to RMB4,588m, 0.6% below BOCIe. For FY25, announced DPS was RMB2.35, implying a payout ratio of 70% (FY24: 69%).

4Q25 highlights. In 4Q25, Tsingtao’s revenue declined 2.3% YoY, with volume slightly up 0.1% YoY and ASP down 2.4% YoY, as a result of industry-wide pricing softness during 2H25. Accordingly, quarterly GPM was down 1.0ppt YoY to 15.0% in 4Q25.

Outlook. The Company held an offline results conference in HK on 31 Mar. 2026. According to management, Tsingtao Classic series YoY sales growth accelerated to +5.6% in 2025 (2024: +1.5% YoY), and mix upgrade will continue to be the key to the Company’s business. Other pillars include new channel development, product innovation, and on-premise consumption recovery. Overall, management looks for positive YoY growth for FY26, in terms of 1) beer sales volume, 2) total revenue, and 3) shareholders’ profit. Raw and packaging material price inflation pressure should be controllable. Dividend payout ratio is likely to steadily go up, from a long-term perspective.

Key Risks for Rating

Risks: 1) softening ASP, 2) fiercer competition, 3) shift in drinking preferences/ habits, 4) cost inflation, and 5) food safety issue.

Valuation

We slightly revised up our top-line forecasts by 1% for 2026-27 with regard to its encouraging sales structural improvement. We cut our NPM forecasts by 0.3ppt for 2026-27, factoring in 1) more S&D investments and 2) absence of input cost tailwinds.

Our TP for Tsingtao-H (HK$58.80) & Tsingtao-A (RMB71.80) are both unchanged, representing 15x & 21x 26E P/E, respectively. Maintain BUY rating.