Tsingtao Reports Profit That Trails Analysts’ Estimates

Tsingtao Brewery Co. posted first-half profit that missed analysts’ estimates as slowing economic growth damped demand for beer produced by China’s second-largest brewer. The stock dropped.

Net income rose to 1 billion yuan ($157 million) in the six months ended June 30 from 990 million yuan a year earlier, according to a statement to the Hong Kong Stock Exchange late yesterday. That compares with the 1.13 billion yuan average of four analyst estimates compiled by Bloomberg.

Tsingtao is increasing production as competitors including SABMiller Plc and China Resources Enterprise Ltd. expand in the world’s most-populous country. The brewer in March said challenges this year will include a weakening global economy and slower growth in domestic consumption.

“The disappointing first half 2012 results evidence our view that Tsingtao is entering a slower earnings growth phase,” Morgan Stanley analysts Lillian Lou, Angela Moh and Mark Yuan wrote in a note distributed today. They rate the stock “underweight.”

Tsingtao shares fell 4.4 percent to HK$43.20 at the 4 p.m. close in Hong Kong. The benchmark Hang Seng Index dropped 0.45 percent.

Sales rose 11 percent to 13.4 billion yuan from 12 billion yuan a year earlier, according to the company’s statement. Tsingtao also said it is confident of meeting its annual production target of 10 billion liters beer.

Market Share

China Resources Enterprise, which makes Snow beer through its joint venture with SABMiller, had a 22 percent share of the China beer market in 2011, according to data from Euromonitor International. Tsingtao was second with a 14 percent share.

Chairman Jin Zhiguo resigned, Tsingtao reported in June, less than two weeks after an investor sold a block of shares 7 percent below market price. The beermaker said at the time Jin resigned for health reasons and that the company had no contact with the investor before the share sale.

Tsingtao plunged 7.8 percent, the most in two years, on June 19 as billionaire investor Chen Fashu offered 32 million shares at HK$47 apiece, 7 percent less than the previous closing price of HK$50.55.

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