Tsingtao Brewery(SH:600600) Huachuang Securities·2024-10-29 17:08Investment Rating - The report maintains a "Strong Buy" rating for Qingdao Beer (600600) with a target price of 90 CNY, compared to the current price of 68.51 CNY [1][2]. Core Views - The report highlights that despite a challenging market environment with weak demand, Qingdao Beer is managing to reduce channel inventory and maintain operational stability. The company is expected to benefit from a recovery in the restaurant sector and improved cost management in the coming year [2][4]. Financial Performance Summary - For the first three quarters of 2024, Qingdao Beer reported total revenue of 28.959 billion CNY, a decrease of 6.5% year-on-year. The net profit attributable to shareholders was 4.990 billion CNY, an increase of 1.96%, while the net profit for the third quarter was 1.348 billion CNY, down 7.94% year-on-year [2][4]. - The company’s operating income for Q3 was 8.891 billion CNY, reflecting a decline of 9.03% year-on-year. The gross profit margin improved slightly to 14% [2][4]. - The report notes that the sales volume in Q3 decreased by 5.1% year-on-year, which is slightly weaker than the industry average, but inventory levels are being effectively managed [2][4]. Cost and Expense Management - The report indicates that while the cost of goods sold has decreased by 2.2% to 2,388 CNY per ton, the overall expense ratio has increased, primarily due to higher marketing expenditures aimed at boosting sales [2][4]. - The increase in sales expenses by 14.1% is attributed to both offline promotional activities and increased advertising during the Olympic season [2][4]. Future Outlook - The report anticipates that Qingdao Beer will enter a phase of recovery with a focus on cost management and inventory reduction. The company is expected to benefit from favorable barley pricing and a potential recovery in consumer demand linked to the restaurant sector [2][4]. - The earnings per share (EPS) forecast for 2024 is projected at 3.22 CNY, with expectations of gradual growth in subsequent years [2][4].