Tsingtao's Margins Could Rise Despite Expected Fall in Revenue

Dow Jones11:03

0303 GMT - Tsingtao Brewery's margins could rise despite a likely decline in revenue, as its sales mix and cost efficiency are set to improve, says Morningstar's Chokwai Lee in a note. The brewer faced higher input costs in 1H, but its gross margin expanded thanks to cost discipline and a stronger sales mix, with higher-margin mid-to-high-end beers contributing a larger revenue share, the director says. He expects Tsingtao's revenue to benefit from consumers' shift toward premium brands through its higher-end portfolio. Morningstar retains its fair-value estimate for Tsingtao's Hong Kong-listed shares at 71.00 Hong Kong dollars and for its Shanghai-listed shares at 63.50 yuan, noting they remain undervalued. H-shares drop 0.25% to HK$40.60 while A-shares rise 0.6% to 51.02 yuan.

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