Daiwa Research raised its target price for Tsingtao Brewery (00168) to HK$53 from HK$52.6 and maintained its "outperform" rating.
The research house believes Tsingtao will sustain its core brand sales expansion strategy to regain market share in the high-end beer segment in China. On the strong results, Daiwa raised its 2019-21 revenue estimates by 1% and net profit forecasts by 6%-11%, as operating leverage in 1H came in better than its expectation.
It believes Tsingtao is on the right track to deliver gross margin expansion in 2H on continued product mix upgrades and cost-saving measures. As of June 2019, Tsingtao had net cash of CNY17.6bn, versus CNY13.4bn as of December 2018. Daiwa does not rule out overseas
expansion or other M&A opportunities.