Summary of Tsingtao Brewery Co Ltd Conference Call Company Overview - **Company**: Tsingtao Brewery Co Ltd - **Industry**: Consumer (Beer) - **Market Cap**: Rmb87,933.7 million - **Stock Rating**: Equal-weight - **Price Target**: HK$50.00 - **Current Price**: HK$55.00 - **52-Week Range**: HK$67.00 - HK$40.00 - **Average Daily Trading Value**: HK$238 million [5][10] Key Financial Results - **2024 Core Sales**: Rmb31.6 billion, down 5% year-over-year (yoy) [8] - **Net Profit**: Rmb4.3 billion, up 2% yoy [8] - **Sales Volume**: 7.5 million KL, down 6% yoy, compared to industry decline of 1% [8] - **Gross Margin**: Expanded by 1.4 percentage points to 32.7% [4] - **Operating Margin**: Increased by 1 percentage point to 14.2% [8] - **Dividend Payout**: Rmb2.2 per share, with a payout ratio of 69% [8] Volume and Market Performance - **Main Brand Volume**: Dropped 4.8% yoy to 4.34 million KL in 2024; medium- to high-end volume down 3% to 3.15 million KL [3] - **4Q24 Volume Recovery**: Tsingtao brand volume up 7.4% yoy, other brands up 2.1% yoy; industry production volume up 9.8% yoy [3] - **Average Selling Price (ASP)**: Flattish yoy in 2024, with volume growth of 5.6% and ASP growth of 1.7% in 4Q24 [8] Cost and Expense Management - **SG&A Ratio**: Increased by 0.4 percentage points in 2024; S&D expense ratio up 0.5 percentage points [4] - **Net Cash Position**: Rmb20.0 billion at the end of 2024, down from Rmb21.2 billion in 2023 [4] Competitive Landscape - **Market Share**: Tsingtao holds a 21.4% market share, with a slight decline of 1.1% yoy [10] - **Comparison with Competitors**: Tsingtao's sales and volume performance compared to CRB and Budweiser APAC, with Tsingtao's sales down 5.5% yoy [10] Risks and Opportunities - **Upside Risks**: Successful premiumization strategy, favorable weather conditions, and better-than-expected cost control efficiencies [13] - **Downside Risks**: Increased competition leading to market share loss, slow capacity closure plans, and rising raw material prices [13] Conclusion - Tsingtao Brewery Co Ltd has shown resilience with a slight increase in net profit and recovery in volume towards the end of 2024. However, challenges remain in maintaining market share and managing costs effectively in a competitive landscape. The company's strategic focus on premiumization and cost efficiencies will be crucial for future growth.