China: Tsingtao’s new profit up 1.6% in January-September

Tsingtao Brewery Company, the third-largest beer company in China by volume, reported a 1.6% increase in net profit for the first nine months of 2017 from a year earlier as company's core products recorded higher sales volume.

Net profit for the nine months ended Sep. 30 was 1.87 billion yuan ($281.75 million), as compared with 1.84 billion yuan, the company said in an exchange filing on October 30. Revenue rose 1.5% on-year to 23.38 billion yuan.

The company, which sells products under the Tsingtao, Yinmai, Laoshan, Sanshui, and Hans brands, said accumulative output volume of the company for the reported period was up 1.4% on year, outpacing 0.5% increase in output volume of national beer industry as per National Bureau of Statistics data.

"While we estimate that Tsingtao's market share has been steady at about 18% in volume terms, we believe it has lost market share to AB Inbev (Anheuser-Busch InBev) in terms of value," Anson Chan, an analyst at Daiwa said. "We expect Tsingtao to continue to face strong competition in the premium segment."

Flat revenue on weak pricing power remains a key concern for the company, Anson added.

State-owned Tsingtao Brewery Group Company, has 30.8% in the company.

Japanese brewer Asahi Group Holdings, which holds approximately 19.99% stake, said earlier this month that it has commenced an evaluation of a potential transfer of all or part of its stake in Tsingtao. Although shares had fallen about 6% on the news, it has gradually recovered losses.

Tsingtao was last up 1.9% at HK$32.60 per share in Hong Kong.

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