Chongqing Brewery (600132)

Equity Research 20 August 2026 | 12:04AM HKT

Chongqing Brewery (600132.SS): 2Q26 Review: Volume/OPM miss on adverse weather/weak on-trade against more active investment; Expect

Chongqing reported 2Q26 results on Aug 19, with 1H26 sales of Rmb8,576mn, down Leaf Liu | 3.0% yoy, and net profit at Rmb796mn, down 8.0% yoy. Recurring NP declined 8.3% Goldman Sachs (Asia) L.L.C.

yoy to Rmb784mn. 2Q26 sales came in at Rmb4,226mn, down 5.8% yoy and 2.0% Christina Liu | below GSe of Rmb4,310mn, while recurring NP was Rmb350mn (down 9.7% yoy), Goldman Sachs (Asia) L.L.C.

with recurring NPM at 8.3% vs. GSe 8.6%. Core OP declined 16% yoy with OPM Valerie Zhou | contracting 2.7ppt to 21.3%, mainly reflecting GPM contraction of 0.5ppt to Goldman Sachs (Asia) L.L.C. 50.7% and higher selling/admin expense ratios (+2.1ppt/+0.3ppt yoy). 2Q volume fell 6.0% yoy to 863k KL, while ASP was broadly flat yoy, implying topline pressure remained predominantly volume-driven due to adverse weather, weak on-trade and competition.

Key surprises: 1) Premium mix remained relatively resilient despite weaker volume. By segment, 2Q26 premium/mainstream/economy sales declined 5%/8%/rose 3% yoy, respectively, with premium mix broadly stable at 61%, mainly supported by resilient volume growth from Tuborg (GSe up LSD% in 1H26) and Carlsberg brands (GSe up DD%) offsetting weakness in premium Wusu. On a 1H basis, premium/mainstream/economy revenue was -1.5%/-5.7%/+3.2% yoy. 2) Margin lower-than-expected due to raw material costs pressure on deleveraging as well as increased selling expense ratio. Unit COGS increased 1.3% yoy in 2Q, driving the 0.5ppt GPM contraction, while selling expense remained elevated (+5.7% yoy) despite weaker sales, resulting in meaningful operating deleverage. 3) Regional weakness was concentrated in Central China. 1H26 sales in Northwest/Central/South China were +0.7%/-7.5%/-0.3% yoy, respectively, implying Central China remained the key drag. 2Q distributor count increased modestly by 15 QoQ to 3,295.

We attended the analyst briefing at 7pm HKT on Aug 19. The key takeaway are: 1) Demand outlook remains cautious amid weak on-trade: 1H26 volume/revenue declined 2.9%/3.0% yoy, with 2Q seeing greater pressure from weak on-trade consumption and unfavorable weather. Mgmt remains cautious on the 3Q recovery given still soft consumption sentiment, particularly for catering/social drinking occasions, and expects the weakness to take time to recover. The company will continue to pursue its premiumization and big-city strategy, while be more agile on investment and leverage more targeted investment to drive key products/channel growth (i.e., 1L pack/O2O channels) with saving in general branding/advertising; 2) Premiumization remains the key strategy despite near-term pressure: Premium mix continued to improve. Within premium, Carlsberg and Tuborg showed relatively

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Goldman Sachs Chongqing Brewery (600132.SS)

resilient growth, while local brands faced greater pressure in some high-share markets amid intensified competition. The company will continue to expand 1L large-format/craft-style products and flavored SKUs, which remain small in scale but are intended to capture new consumption occasions and support mix upgrade. 3) New channels remain a key growth focus to offset on-trade weakness: O2O maintained solid growth, with the company’s market share in instant retail higher than other channels, partially offsetting the weak traditional on-trade channel. Mgmt sees instant retail as a structural channel shift rather than purely cannibalization and will continue to increase investment, alongside expansion into other emerging channels.…