TSINGTAO BREWERY(600600)：3Q RESULTS SLIGHTLY MISSED SALES VOLUME RECOVERY STILL ON TRACK

　　The Company reported 5.7% YoY net profit growth on 1.4% YoYrevenue growth in 9M25, both slightly below expectations. In 3Q25,sales volume YoY growth was slightly slower vs. 2Q25, while ASP sawYoY decrease, given deflationary pressures across many consumersubcategories in general. The Company’s current P/E valuation is notexcessive, still with decent risk-reward. In the meantime, investorsentiment is likely to turn positive to some degree. Reiterate BUYrating for both Tsingtao-H and Tsingtao-A.
　　Key Factors for Rating
　　9M25 results review. Tsingtao reported total revenue of RMB29.4bn (up 1.4%YoY) in 9M25, slightly below our expectation. Specifically, beer sales volume wasup 1.6% YoY to 6.89m KL, while ASP slightly fell 0.2% YoY to RMB4,260 per KL.
　　By brand, sales volume of Tsingtao and secondary brands (e.g. Laoshan) camein at 3.99m KL (+4.0% YoY) and 2.90m KL (-1.6% YoY), respectively, in 9M25.
　　Sub-premium segment and above accounted for 42.6% of total sales volume, up1.6ppts YoY, implying a steady trend of mix upgrade. Similar to its peers, Tsingtaosaw solid growth in its online & instant retail channels, backed by rising demandin off-trade new consumption areas. In 9M25, GPM rose 1.9ppts YoY to 36.7%,on cost tailwinds and production efficiency gain. Shareholders’ profit grew 5.7%YoY to RMB5.274bn (up 5.7% YoY), slightly below our expectation.
　　3Q25 highlights. In 3Q25, Tsingtao’s revenue slightly fell 0.2% YoY, with salesvolume up 0.3% YoY and ASP down 0.5% YoY, as we can see that ex-factory &retail pricing pressures were visible across most consumer staples subcategories.
　　It is still encouraging that sales volume growth of its sub-premium segment andabove accelerated from 2Q’s 4.8% to 3Q’s 6.8%, on a YoY basis. Quarterly NPMexpanded 0.2ppt YoY to 15.4%.
　　Key Risks for Rating
　　Risks: 1) softening ASP, 2) fiercer industry competition, esp. among the mid-tohigh-end class, 3) shift in drinking habits and preferences, 4) input cost inflation.
　　Valuation
　　We fine-tuned our revenue & net profit forecasts for 2025-27. Our TP for Tsingtao-H of HK$58.80 is unchanged, representing 15.9x/15.3x 25-26E P/E. Assuming ashare price premium of 25% (previous: 33%), we derive the TP for Tsingtao-Aat RMB71.80 (previous: RMB81.60). Currently, its valuation can offer decent riskreward,in our view. Tsingtao’s ASP looks soft, but its sales volume recovery, aswell as mix upgrade, is on track. Maintain BUY. Valuation remains undemandingat this point, and sentiment may turn marginally stronger on potentialacceleration in fundamentals from 4Q25 to 1Q26.
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