Goldman Sachs Tsingtao Brewery (0168.HK): 1Q26 First Take: Sales In-Line, NP Beat on GPM Expansion and Lower Selling Costs; Buy-H
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Tsingtao Brewery reported solid first-quarter 2026 results on April 27, with sales reaching RMB 10.3 billion, down 1.5 percent year-over-year and aligning with Goldman Sachs expectations. Net profit climbed 5.2 percent to RMB 1.8 billion, beating the Goldman estimate of RMB 1.72 billion. Recurring net profit stood at RMB 1.7 billion, representing a 6.4 percent increase. The earnings outperformance was primarily driven by gross margin expansion and a 10 percent reduction in selling expenses.
A key positive surprise was the 1.1 percent year-over-year increase in average selling price to RMB 4,671 per kiloliter, supported by a favorable comparison base and ongoing product mix premiumization. Core operating profit grew 7 percent, with the operating margin expanding 1.7 percentage points. Notably, the selling expense ratio dropped by 1 percentage point to 11.5 percent, coming in 1.1 percentage points below expectations. Operating cash flow surged 67 percent to RMB 3 billion, underscoring solid earnings quality.
Goldman Sachs maintains its Buy-H rating with a 12-month H-share target price of HK$61, offering 21.2 percent upside from the current price of HK$50.35. The A-share rating remains Neutral with a target of RMB 67.50. Key areas of focus for the upcoming April 28 earnings call include premiumization strategies, brand momentum, and raw material cost trajectories, particularly for aluminum and barley.