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CHINA: Tsingato brand drives company profits up

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Tsingtao Brewery, China's biggest brewer and Anheuser-Busch partner, has seen its first half profits leap 64%, in line with market expectations.

The company's interim net profit of ¥113.32m (US$13.68 million) was consistent with its recent guidance that unaudited first half profits rose more than 50%. A strong performance by the eponymous flagship brand, which was up 40%, was attributed with the success.
 
Despite turnover also being up 30.5% to ¥3.16 billio, there are still fears about cost savings from Tsingtao's recent acquisition drive.

The company now owns more than 40 breweries, many of them loss-making, it has acquired since 1997.

"They really need time to consolidate all the fragmented plants around the country," said Sun Hung Kai Research analyst Maggie Choi, who has a "sell" rating on the stock.

Reports in the Chinese press have suggested that the US brewing giant, Anheuser-Busch, is poised to raise its stake in the Chinese brewery, Tsingtao, from 5% to 27%.

According to the reports, Anheuser-Busch is expected to pay around HK$1.2 billion to purchase the additional shares, based on an offer price of HK$4.20 per share, representing around a HK$1 premium to the current trading price. If the deal goes through it would make Anheuser-Busch the largest shareholder in the Chinese company after the state-run Tsingtao State-Owned Assets Management Bureau.


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