[Huachuang Food & Beverage] Tsingtao Beer: Dividends are supported, and sales can be expected

The company released its 2025 annual report, achieving total operating revenue of 32.47 billion yuan, a year-on-year increase of 1.0%; achieving net profit attributable to shareholders of 4.59 billion yuan, a year-on-year increase of 5.6%; and achieving net profit attributable to shareholders excluding non-recurring items of 4.13 billion yuan, a year-on-year increase of 4.5%. In Q4 alone, the company achieved total operating revenue of 3.11 billion yuan, a decrease of 2.3%; achieved a net profit attributable to shareholders of -690 million yuan, compared to -640 million yuan in the same period last year; and achieved net profit attributable to shareholders excluding non-recurring items of -790 million yuan, compared to -740 million yuan in the same period last year. In addition, the company plans to distribute a cash dividend of 2.35 yuan per share (including tax), with a dividend payout ratio of approximately 69.9%.

Sales showed steady growth, while Q4 unit price saw a slight decline. In 2025, the company achieved sales of 7.648 million kiloliters, a year-on-year increase of 1.5%, while the unit price decreased by 0.7% to 4,162 yuan per kiloliter. Considering that the proportion of mid-to-high-end products increased by 1.2 percentage points year-on-year, it is judged that this is due to the company increasing promotions to capture the terminal market in anticipation of recovery in the restaurant sector in the second half of the year. Looking specifically at Q4, beer sales volume and price changed by +0.1%/-2.4% year-on-year, remaining basically flat due to a low base. In terms of specific products, the ultra-high-end and classic series achieved record high sales, the high-end Ao Gu Te is expected to grow by over 20%, white beer continues to grow, ranking first in industry categories, while pure draft beer faced pressure due to damage in the restaurant sector. By region, the main sales area Shandong saw revenue increase by 1.0%, while North China/South China/East China/Southeast regions increased by +0.8%/+1.2%/+3.8%/-0.8% year-on-year, with Hong Kong, Macao, and overseas regions performing well, increasing by 6.8%. By channel, the company continues to strengthen its layout in non-immediate consumption channels, with non-immediate consumption channels accounting for 59.7% in 2025.

Cost advantages drove an increase in gross profit, and expense optimization improved net profit. In 2025, cost advantages continued, with unit costs decreasing by 3.1%. Coupled with the continuous upgrading of the product mix, the gross margin increased by 1.6 percentage points year-on-year to 41.8%. On the expense side, the selling expense ratio decreased by 0.5 percentage points year-on-year to 13.8%, mainly due to the company’s reduced marketing expenditures. The management expense ratio increased by 0.1 percentage points year-on-year to 4.5%, primarily due to investments in digitalization and employee salary growth. In addition, the company’s asset disposal income (from the disposal of land use rights by subsidiaries) increased by 110 million yuan, enhancing company efficiency. In summary, the net profit margin attributable to shareholders in 2025 increased by 0.6 percentage points year-on-year. Looking at Q4 alone, the decrease in unit cost narrowed, decreasing by 0.4%, and the selling expense ratio decreased by 2.3 percentage points year-on-year, further improving expense efficiency, while the management expense ratio remained relatively rigid, increasing by 1.5 percentage points year-on-year. In summary, the net profit margin attributable to shareholders in Q4 decreased by 1.8 percentage points year-on-year.

The company operated steadily in 2025, and growth in the restaurant sector is expected in 2026. Against the backdrop of damaged scenarios in 2025, the company’s steady operations laid the foundation for recovery, and beer business revenue grew against the trend, increasing by 0.8%. Looking ahead, the company continues to promote the layout of high-end products, with Ao Gu Te, white beer, 1903, classic series, etc. expected to maintain growth momentum, while pure draft beer may gradually stabilize under restaurant recovery, combined with seasonal catalysts, beer sales are expected to achieve good growth. At the same time, the company places greater emphasis on channel management, with the main sales area of Shandong promoting distributor stocking through establishing product combination assessment standards, solidifying the regional market foundation. In the capital market, the company plans to distribute a cash dividend of 2.35 yuan per share, with a payout ratio of approximately 69.9%, remaining basically flat compared to 2024, corresponding to dividend yields of 3.8%/5.5% for A/H shares, providing ample safety margin for high-dividend H shares, making them valuable for long-term investors.

Investment Recommendation

Investment Recommendation: 2025 demonstrates resilience, and 2026 sales are worth looking forward to, maintaining a “Strong Buy” rating. In 2025, despite damaged scenarios, the company continues to solidify its operational foundation, achieving steady sales growth while the product mix continues to upgrade, with the proportion of mid-to-high-end products steadily increasing. Looking ahead to 2026, as restaurant scenes continue to recover, the company strengthens channel management to layout terminals, and seasonal beer sales are expected to achieve good growth. Based on the 2025 annual report, we adjust our earnings forecasts for 2026-2028 to //** billion yuan, considering the high dividend characteristics of H shares, we maintain target prices for A/H shares at ** yuan and ** HKD, corresponding to PE ratios of **X and **X for 2026, maintaining a “Strong Buy” rating.

Specific Profit Forecast and Investment Recommendation

Please feel free to contact the Huachuang Food & Beverage Team.

Risk Warning

Sales of high-end products may not meet expectations, industry competition may intensify, and adverse weather factors may occur.

Team Introduction

Assistant Director of the Research Institute, Head of the Consumer Research Center, Chief Analyst for Food and Beverage: Ouyang Yu

Bachelor’s degree from Zhejiang University, research master’s degree from Erasmus University in the Netherlands, with 9 years of experience in food and beverage research. Previously worked at China Merchants Securities, joined Huachuang Securities in 2020. Ranked first in the New Fortune Best Analyst Awards for four consecutive years from 2021 to 2024, and has won numerous first-place awards in best analyst rankings from Sina Jin Qilin, Crystal Ball, Shanghai Securities News, and 21st Century Gold Medal Analyst. In 2025, ranked second in the New Fortune Best Analyst Awards.

— Liquor Research Group (Baijiu, Red Wine, Yellow Wine, Liquor Distribution Industry)

Senior Analyst: Tian Chenxi

Master’s degree from the University of Birmingham, joined Huachuang Securities Research Institute in 2020, with 5 years of experience in the consumer industry research.

Senior Analyst: Liu Xude

Master’s degree from Peking University, joined Huachuang Securities Research Institute in 2021, with 4 years of experience in food and beverage research.

Assistant Researcher: Wang Peipei

Master’s degree in Finance from Nankai University, joined Huachuang Securities Research Institute in 2024.

— Consumer Goods Research Group (Soft Drinks, Dairy and Meat Products, Seasonings, Restaurant Chains, Baked Snacks, Functional Foods, Food Ingredients, etc.)

Head of Consumer Goods Research Group, Senior Analyst: Fan Zipan

Master’s degree from Renmin University of China, with 7 years of experience in the consumer industry research, previously worked at Changjiang Securities, joined Huachuang Securities Research Institute in 2020.

Researcher: Yan Wenyang

Master’s degree in Economics from Nanjing University, joined Huachuang Securities Research Institute in 2023.

Assistant Researcher: Cun Tebin

Master’s degree in Finance from Shanghai Jiao Tong University, joined Huachuang Securities Research Institute in 2025.

Committee Member, Vice President, Director of Huachuang Securities Research Institute, New Fortune Platinum Analyst: Dong Guangyang

Master’s degree in Economics from Shanghai University of Finance and Economics, with 17 years of experience in the food and beverage research. Previously worked at China Merchants Securities and UBS Securities. From 2013 to 2025, he has won first place in the New Fortune Best Analyst Awards eight times, second place three times, and third place once, and has won first place in the Golden Bull Awards for Best Analyst for three consecutive years, and has been recognized as the most valuable analyst in the whole market for three consecutive years, won first place in the Crystal Ball Best Analyst Awards four times, first place in the Sina Jin Qilin Best Analyst Awards for six consecutive years, and first place in the Shanghai Securities News Best Analyst Awards five times.

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