20 July, 2005

China: Tsingtao Brewery upgraded to 'equal-weight' by Morgan Stanley

Morgan Stanley announced on July 19 it has upgraded its rating on China's Tsingtao Brewery Co Ltd to "equal-weight" after the company scored strongly in a consumer survey conducted by the brokerage, according to Xinhua Financial Network News. Morgan Stanley also upgraded its target price on the stock to 8.7 hkd. Tsingtao's shares were unchanged at 8.2 hkd this morning in Hong Kong.

In a survey of 2,100 Chinese consumers, including 500 beer drinkers, Tsingtao came out well ahead of other national brands in terms of awareness, penetration, perception of quality, and taste, Morgan Stanley said.

"Tsingtao's strong scorecard from our China Consumer Survey gives us greater confidence in the company's growth potential through its brand leverage," the brokerage said in a research note.

"We believe Tsingtao needs to spend little incremental capex to capture additional volume growth in the next two years."

Morgan Stanley added that challenging industry fundamentals have kept it from being more positive on Tsingtao. The brokerage said that it has an "in-line" view for China's food and beverage industry.

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