External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

<ul><li>Tsingtao reported 14% growth in 2Q net profits to RMB2.0bn. Driven by 3% volume growth and 5% ASP uptick, revenue stood at RMB11bn, up 8% YoY.</li><li>This compared to HSD growth of CR Beer and 20% of Budweiser.</li><li>Gross/EBIT margins was up approximately 2pp to 33%/21%, respectively, and we expect recurring strengths in both premiumization and cost efficiency to fuel margins expansion into 2H. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Tsingtao reported 14% growth in 2Q net profits to RMB2.0bn. Driven by 3% volume growth and 5% ASP uptick, revenue stood at RMB11bn, up 8% YoY.This compared to HSD growth of CR Beer and 20% of Budweiser.Gross/EBIT margins was up approximately 2pp to 33%/21%, respectively, and we expect recurring strengths in both premiumization and cost efficiency to fuel margins expansion into 2H. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Tsingtao Brewery (168 HK) – 2Q Rev/Np +8%/14% on Recurring Strengths

Budweiser Brewing Company APAC / Equity Bottom-Up

<ul><li>Bud APAC’s core net profit of US$279mn was slightly below us, owing to 1) a weak S.Korea performance which consisted of a 7% revenue decline and a 30% slip in normalised EBITDA, 2) a normalising effective tax base subsequent to a provision reversal in India, and 3) currency erosion driven by a weak RMB and KRW to USD.</li><li>Excluding the latter, Bud APAC reported an organic 14.9% sales growth for the quarter (vs 7.9% as on reported basis), with the help of the continuous strength in China that consisted of an 11.0% volume growth and a 7.8% ASP uptick.</li><li>While we assert that there is no quick fix to the operational landscape in S.Korea (though transient, per management), we think market might have overlooked the robust China momentum that looks to be parallel to our sector picks such as CR Beer (291HK, Buy) and Tsingtao (168HK, Buy). </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Bud APAC’s core net profit of US$279mn was slightly below us, owing to 1) a weak S.Korea performance which consisted of a 7% revenue decline and a 30% slip in normalised EBITDA, 2) a normalising effective tax base subsequent to a provision reversal in India, and 3) currency erosion driven by a weak RMB and KRW to USD.Excluding the latter, Bud APAC reported an organic 14.9% sales growth for the quarter (vs 7.9% as on reported basis), with the help of the continuous strength in China that consisted of an 11.0% volume growth and a 7.8% ASP uptick.While we assert that there is no quick fix to the operational landscape in S.Korea (though transient, per management), we think market might have overlooked the robust China momentum that looks to be parallel to our sector picks such as CR Beer (291HK, Buy) and Tsingtao (168HK, Buy). Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Budweiser APAC (1876 HK) – 2Q Organic Sales +15%

<ul><li>Tsingtao’s solid 1Q and takeaway from briefing again convinced us that the Company is dedicated to its premiumization effort along with a more costeffective operation.</li><li>Despite market talks about soft beer sales in April, Tsingtao’s low-teen sales growth of the month was encouraging, considering also the middouble-digit volume growth in Classic &amp; above.</li><li>Looking ahead, 2Q is an important quarter for beer consumption, as the quarter’s restocking momentum typically provides a good gauge to peak season demand, and therefore any earnings upside for Tsingtao. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Tsingtao’s solid 1Q and takeaway from briefing again convinced us that the Company is dedicated to its premiumization effort along with a more costeffective operation.Despite market talks about soft beer sales in April, Tsingtao’s low-teen sales growth of the month was encouraging, considering also the middouble-digit volume growth in Classic &amp; above.Looking ahead, 2Q is an important quarter for beer consumption, as the quarter’s restocking momentum typically provides a good gauge to peak season demand, and therefore any earnings upside for Tsingtao. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Tsingtao Brewery (168 HK) – Stronger ahead

<ul><li>Our channel checks indicated Tsingtao’s 3Q sales likely stand at 10%+, driven not only by hot weather but also festive demand in which its canned products were perceived as ideal gifts during the mid-autumn festival.</li><li>Of note, the product has been seeing strong demand growth thanks to stay- home consumption amid the pandemic over 1H.</li><li>Interestingly, a seemingly weakening spending propensity has nonetheless facilitated consumption rotation from baijiu to beer over dinners and other social gatherings.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Our channel checks indicated Tsingtao’s 3Q sales likely stand at 10%+, driven not only by hot weather but also festive demand in which its canned products were perceived as ideal gifts during the mid-autumn festival.Of note, the product has been seeing strong demand growth thanks to stay- home consumption amid the pandemic over 1H.Interestingly, a seemingly weakening spending propensity has nonetheless facilitated consumption rotation from baijiu to beer over dinners and other social gatherings.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Tsingtao Brewery (168 HK) – A Potentially Strong 3Q

China

Tsingtao Brewery Co., Ltd. is a major Chinese brewery engaged in the production and distribution of beer products, including its flagship Tsingtao Beer, Laoshan Beer, and other varieties. It is one of the earliest breweries in China, founded in 1903, and is currently the sixth largest brewer in the world. The company is headquartered in Qingdao, Shandong, China.

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Tsingtao Brewery (168 HK)