Goldman Sachs: Raises TSINGTAO BREW's (00168) target price to 60 Hong Kong dollars, maintains buy rating.

Goldman Sachs released a report stating that it has raised TSINGTAO BREW's profit forecast for 2026-2027 by 5%. For the first quarter of 2025, the bank expects sales to increase by 3% year-on-year, mainly driven by sales volume growth, while average prices remain stable. The bank has slightly raised the 12-month target price for H-shares and A-shares to HK$60 (previously HK$59) / RMB 68 (previously RMB 69), still based on a 2026 P/E ratio of 19.0 times / 15.2 times, discounted at 9.6% / 9.9% cost of equity to the end of 2025, maintaining a buy rating. In Tsingtao Brewery's 2024 fiscal year performance, sales / recurring net profit met expectations, and the bank updated its model based on this. Considering: 1) The bank expects Tsingtao Brewery's sales volume trend to improve in the first quarter of 2025-2027, with sales volume expected to increase by 1%-2% year-on-year, so sales expectations are raised by 2%-4%; 2) The bank expects the recovery of the high-end market in 2025 to be higher than the mass market, which will drive the bank's model update, continuing the outstanding performance of the high-end market in the fourth quarter and the whole of 2024 (2024 sales volume decreased by 2.7%, while overall sales volume decreased by 5.8%), leading to an increase in average prices. The high-end market in 2024 was mainly driven by white beer, while fresh beer was affected by softness in the catering channel. 3) Although the magnitude has decreased, the favorable cost advantage of barley will continue to benefit the cost side in 2025. 4) Despite the intense competition (partly due to increased investment in sports marketing), commercial investment increased in 2024, and the expense ratio will remain at a higher level, but it is expected to gradually return to normal levels in the future.