The Zhitong Finance App learned that Bank of America Securities released a research report stating that it maintains the “buy” rating of Tsingtao Brewery Co., Ltd. (00168), with a target price of HK$75. The company's revenue for the first quarter fell 5.2% year on year, slightly lower than market expectations, but profit after tax and core profit after tax rose 10.1% and 12% year over year, both exceeding market expectations for medium to high unit growth. The bank believes that strong profits are benefiting from lower raw material costs and quarterly fluctuations in sales expenses.
The bank pointed out that Tsing Beer's sales growth in the first quarter lagged behind local peers, but the situation narrowed in April, partly benefiting from a low base. However, the bank was wary of the short-term impact of the slight increase in the base figure in May and June last year on the sales growth trend, and the average sales price was under pressure in the short term. The bank maintains its estimate for Tsing Beer and its forecast for low to medium unit growth in this year's average sales price. Under the weak average sales price, favorable cost and geographical integration can still provide a good profit margin buffer and support its double-digit earnings per share growth.