[ET Net News Agency, 18 January 2018] Daiwa Research lifted its target price for
Tsingtao Brewery (00168) to HK$45.9 from HK$33.9, and maintained its "hold" rating.
The research house views Asahi Group's recent sale of its stake in Tsingtao as slightly
negative due to the low transaction price (HK$7.22/share) and Tsingtao's failure to meet
expectations to rapidly upgrade its product mix by cooperating with an international
partner.
Compared with China Resources Beer (CRB)(00291), Daiwa said Tsingtao is more vulnerable
to the expansion of imported beer brands in China, due to its greater revenue exposure to
high-end markets (20% market share) and coastal regions (eg, Shandong and Shanghai), where
imported brands have wider distribution than domestic brands and are more aggressive in
marketing due to their higher ASPs.
Daiwa revised up its 2018-19 EPS by 4-11% on higher ASP assumptions, but it believes
that Tsingtao still lags its peers in terms of pace of ASP growth. Moreover, it forecast
Tsingtao's sales volume to expand by 1% in 2018, versus 2% for CRB. (KL)