Bernstein: Tsingtao Brewery's third-quarter sales volume decline widens as costs and expenses squeeze profits

What happened to sales volume and revenue?

In the third quarter of 2026, sales volume fell 9.1% year on year, a wider decline than the 7% recorded in the second quarter and weaker than the 4% decline previously forecast by Bernstein. Net revenue fell 5.5% year on year to 7.764 billion yuan, broadly in line with the firm's expectations.
The decline in low-end products was the main reason for weaker sales volume. Tsingtao Brewery brand volume also fell 3% year on year, while volume growth for mid- and high-end products slowed to 1%. A lower share of low-end products lifted net revenue per hectolitre by 4% year on year to 395 yuan, but this mainly reflected a change in the sales mix.

Third-quarter cost of sales per hectolitre rose 6.5% year on year to 247 yuan, outpacing net revenue per hectolitre. Bernstein said higher aluminium raw material prices were beginning to feed through, while the channel and geographic mix also weighed on gross margin. Gross margin fell 1.51 percentage points year on year to 37.5%.
Expenses also increased as a share of revenue: the selling expense ratio rose from 14.8% a year earlier to 16.2%, while the administrative expense ratio increased from 3.8% to 5.1%. Operating profit excluding government grants fell 25.5% year on year to 1.254 billion yuan, 6.5% below Bernstein's forecast.
A lower effective tax rate partly offset operating weakness. Third-quarter earnings per share were 0.83 yuan, down 17.1% year on year, matching Bernstein's forecast but below the market consensus of 0.93 yuan shown in the table.

Bernstein expects year-on-year aluminium price increases to reach the mid-to-high double digits over the next six months, with margins remaining under pressure. Its model forecasts full-year sales volume to fall 6.1% year on year in 2026 and a further 0.4% in 2027. Earnings per share are forecast at 3.19 yuan in 2026, below 2025's 3.36 yuan.
The firm's H-share earnings-per-share forecasts for 2026, 2027 and 2028 are approximately 5%, 7% and 9% below Bloomberg market consensus, respectively.
Nevertheless, Bernstein slightly raised its H-share target price from HK$47 to HK$48 and maintained its Outperform rating. It kept its A-share target price at 55 yuan and its rating at Market Perform. The target price adjustment reflects small upward revisions to its earnings-per-share forecasts for 2026 and 2027, while the target price-to-earnings multiple remains at 12.4 times.