UBS has reduced its rating on Tsingtao to "neutral" from "buy".

In a research note, the investment bank said that China's largest brewer had reached its target price following a recent price rally.

The bank's analysts are maintaining their target price of HK$8.50 for the company's stock, despite the fact shares are currently trading at around HK$8.65.

UBS also warned that Tsingtao faced rising merger and acquisition costs in the future and the problems associated with trimming its workforce.