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CASTLE MALTING NEWS in partnership with www.e-malt.com Italian
30 August, 2006



Brewing news China: Tsingtao Brewery profits increased by 22.5% in 1H 2006

Tsingtao Brewery, the largest beer maker in China, posted a 22.5 percent rise in first-half earnings August 28 as surging sales in the fast-growing mainland market helped offset fierce competition, Reuters acknowledged the same day.

Tsingtao, which is 27 percent-owned by top U.S. beer maker Anheuser-Busch Cos. Inc., is relying on growth of its flagship brand to help lift prices and margins in a country where a 640 ml bottle - just over a pint - can cost only 12 U.S. cents.

China's beer market is the world's largest by volume and is growing at an annual rate of 7 percent to 10 percent as incomes rise, attracting a flood of investment from global players such as SABMiller, Heineken and Carlsberg, driving up valuations despite narrow profit margins.

Tsingtao, which has battled higher costs for power, transport and raw materials, said its net income for the six months through June 30 totalled CNY212.74 million (US$26.69 million), compared with CNY173.64 million a year earlier.

That beat a forecast for a roughly 11 percent increase in first-half earnings by consulting company KGI.

Turnover at Tsingtao rose 15.9 percent from a year earlier to CNY5.77 billion in the January to June period.

Founded more than 100 years ago by German investors in the port city of Qingdao, Tsingtao controls about 13 percent of the fragmented Chinese market and operates more than 40 breweries.

Tsingtao has long been among the most expensive Chinese stocks traded in Hong Kong as investors seek exposure to the country's consumption boom. Tsingtao's forward price-to-earnings ratio is about 33 times. Smaller Chinese rival Kingway Brewery Holdings and Anheuser-Busch both trade at around 19 times forward earnings.

Tsingtao's Hong Kong-listed shares rose 6 percent in the first half, lagging a 27 percent jump in the index of Chinese companies listed in Hong Kong.

Tsingtao shares slid 0.66 percent August 28 to close at HK$9.00 before the results announcement.





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