Chongqing Brewery: Top-Line Growth Slows but Outperforms Industry; Retain Fair Value Estimate

Narrow-moat Chongqing Brewery’s first-half revenue and net profit both grew 4.2% year on year. While revenue growth was slightly below our expectation, net profit growth was better than expected. The net profit beat was mainly due to a higher-than-expected gross margin, thanks to lower input costs in the period. We increased our 2024 net profit estimate by 1.5% to factor in the improvement but kept our outer-year forecasts largely unchanged. We remain constructive on the company’s long-term growth outlook.