Tsingtao Brewery Earnings: Volume Growth Trailed Expectations: Cutting Fair Value by 6% to HKD 73

Narrow-moat Tsingtao Brewery’s second-quarter results trailed our revenue and net profit estimates, primarily due to volume headwinds. On a positive note, gross profit per ton beat our expectations and grew 6% year on year, driven by lower input costs. Hence, net income only missed our estimates by 5% despite the 10% miss in revenue. We left our 2024 net income projection largely unchanged as volume weakness was offset by a better margin. However, we reduce 2025-28 earnings projections by 3%-4% due to lower volume growth assumptions.