Chongqing Brewery 2Q26 Preview: Weak demand weighs on revenue and net profit, while gross margin improves slightly

Overview

This report is Jefferies' preview of Chongqing Brewery's 2Q26 results. The core view is that near-term demand remains weak, with revenue and net profit expected to decline slightly year on year; however, product mix, the instant retail channel, and raw material price hedging should support gross margin. The company is Carlsberg's sole platform for its beer business in China, with a brand portfolio covering international and local brands including 1664, Carlsberg, Tuborg, Wusu, ChongQing, and Dali.

Core views

Jefferies expects Chongqing Brewery's 2Q26 revenue to be RMB4.4bn, down 2% year on year, and net profit to be RMB379m, down 3%. Volume is expected to decline by low single digits, while ASP remains flat. Mainstream brands are more affected by weak on-premise consumption, whereas premium brands are performing relatively better in off-premise channels, especially instant retail. The company continues to capture consumption trends through innovations such as 1-liter packages, low-alcohol fruit flavors, and tea flavors. For example, it launched three 1-liter Wusu fruit-flavored craft wheat beers in April.

Analysis framework

The report uses an earnings preview and segment-driver analysis framework, focusing on volume, ASP, channel mix, product innovation, gross margin, raw material costs, and selling expenses. The valuation uses a DCF approach and separately considers the value of minority interests in Chongqing Jiabrew.

Methodology notes

• Valuation methodDCF

  Discounted cash flow valuation

  Jefferies values Chongqing Brewery based on DCF, assuming a risk-free rate of 3.9%, an equity risk premium of 5.6%, a beta of 0.9x, a target D/DE ratio of 0%, and a perpetual growth rate of 2%.

• Valuation adjustmentPB valuation

  Minority interest valuation

  As the company holds a 51.42% stake in Chongqing Jiabrew and minority interests are substantial, the report calculates the equity value of minority interests using 6x PB, consistent with the industry average.

• Earnings forecastSegment operating-driver analysis

  Breakdown of volume, price, costs, and expenses

  The report separately assesses a low-single-digit volume decline, flat ASP, and a 0.3 percentage-point year-on-year increase in gross margin to 51.5%, while factoring in higher selling expenses from football-related marketing investments.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Chongqing Brewery Co., Ltd. (600132 CH)

  Covered company; A-share beer company and Carlsberg's beer business platform in China

  Strengths

  Brand portfolio covering international and local brands; relatively high exposure to instant retail; premium brands performing relatively better in off-premise channels; most annual raw material requirements hedged or price-locked.

  Weaknesses

  Weak consumer sentiment, soft on-premise demand, and no clear recovery in dining and entertainment channels; 2Q26 revenue and net profit are expected to decline year on year.

  Comparison

  The report states that premium brands are outperforming mainstream brands; the company's instant retail channel mix is higher than the industry average and it has a first-mover advantage.

  Risks

  Intensifying competition, higher-than-expected raw material costs, food safety issues, epidemics, or other shocks to consumption scenarios.

• Carlsberg

  Parent group and relevant reference; Chongqing Brewery is Carlsberg's sole platform for its beer business in China

  Strengths

  Provides Chongqing Brewery with an international brand portfolio and the positioning of a beer asset platform in China.

  Weaknesses

  The report does not separately assess Carlsberg's fundamentals.

  Comparison

  Carlsberg plans to announce its 2Q26 results on August 19, providing a subsequent observation point for the industry and group level.

  Risks

  Group-level results or strategy changes could affect the market's assessment of the value of the Chongqing Brewery platform.

Key data

• Estimated 2Q26 revenueRMB4.4bn, -2% YoYJefferies forecast.
• Estimated 2Q26 net profitRMB379m, -3% YoYJefferies forecast.
• Estimated 2Q26 gross margin51.5%, +0.3ppt YoYSupported by a slight decline in costs per ton, although the savings are smaller than the approximately 3% year-on-year decline in 1Q26.
• Current priceRmb41.92Closing price as of July 8, 2026, the previous trading day.
• Target priceRmb57.20Implying 36% upside to the target price.
• 2026E revenueRMB15,011mFull-year income statement forecast.
• 2026E net profitRMB1,272mFull-year income statement forecast.
• Market capitalizationRMB20.3B / $3.0BDisclosed in the report table.

Impact & implications

The report suggests that Chongqing Brewery's near-term fundamentals remain weighed down by weak macro consumer sentiment and insufficient recovery in dining and entertainment scenarios, while channel structure and product innovation provide some resilience. If instant retail and premium brands continue to outperform, combined with locked-in raw material costs, profitability could remain more stable than revenue; conversely, if demand in mainstream channels continues to weaken or marketing expenses exceed expectations, net profit recovery will remain under pressure.

Risks

• Wusu sales growth falls below expectations.
• Raw material prices exceed expectations, especially with aluminum prices rising more than 40% year on year in 2Q26.
• Intensifying market competition.
• New product launches underperform expectations.
• Food safety issues.
• Epidemics or other public health events impacting consumption scenarios.

What to watch

• Whether Chongqing Brewery's actual 2Q26 revenue, net profit, and gross margin reach the forecasts of RMB4.4bn, RMB379m, and 51.5%, respectively.
• Whether on-premise, dining, and entertainment channels show a substantive recovery.
• Whether the instant retail channel and premium brands continue to outperform mainstream brands.
• Sales performance of 1-liter packages, low-alcohol fruit flavors, and tea-flavored products.
• The actual impact of football-related promotions and local event sponsorships on the selling expense ratio and volume.
• Trends in raw material prices, including aluminum, glass, and imported barley, and the effectiveness of the company's price-locking arrangements.
• Carlsberg's 2Q26 results, to be announced on August 19, 2026.