Credit Suisse raised its target price for Tsingtao Brewery (00168) to HK$65 from HK$63 and maintained its "outperform" rating.
The research house said Tsingtao's 2Q results were a strong beat. The positive surprises mainly came from (1) volume up 0.9% versus industry down 1.5%, (2) ASP growth accelerating to 7%, (3) 1.5pp improvement in gross margin, and (4) efficient cost management.
Credit Suisse believes Tsingtao's execution capability is well-proven, which should remove market concerns and potentially trigger a valuation re-rating. It lifted its FY2019-21 EPS forecasts by 3% to reflect the stronger-than-expected results.
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