San Miguel Brewery Hong Kong Limited Announces Strong Turnaround in 2025 Annual Results

Key Financial Highlights

• Net Profit Reversal: The Group reported a consolidated net profit of HK\$78.4 million for 2025, a dramatic turnaround from the net loss of HK\$18.9 million in 2024. This improvement is especially notable given the HK\$90 million one-time impairment charge and HK\$14.9 million deferred tax impact recorded in 2024. Excluding the impairment, the 2025 profit still represents a significant 39% improvement over 2024.
• Revenue Growth: Consolidated revenue rose 3.7% to HK\$737.3 million, up from HK\$711.2 million in 2024.
• Gross Profit Surge: Gross profit climbed 11.1% to HK\$295.6 million from HK\$266.1 million in the prior year, reflecting improved product costs and prudent expense management.
• Healthy Cash Position: Cash and bank balances increased to HK\$285.7 million as of 31 December 2025, from HK\$216.5 million in 2024.
• Balance Sheet Strength: Net assets rose to HK\$696.6 million, up from HK\$634.8 million. The loan-to-equity ratio remains low at 0.01, indicating minimal leverage.
• Dividend Increase: The Board has proposed a final dividend of HK\$0.06 per share, up from HK\$0.05 previously, subject to shareholder approval at the annual general meeting.
• Earnings Per Share: Basic earnings per share recovered to 20 cents, compared to a loss of 5 cents per share in 2024.
• Major Customer Concentration: 58% of revenue (HK\$425.3 million) derives from the largest customer, indicating significant concentration risk but also stable sales.

Operational Review

Hong Kong Operations

• Market Decline: Hong Kong’s beer market contracted by 3%, and the Company’s domestic sales volumes mirrored this decline.
• Export Growth: Despite local softness, total sales volumes rose 11% on robust export performance.
• Brand Highlights:
  • San Mig Light (SML): Achieved 3% volume growth, outperforming the industry. Success attributed to brand campaigns, targeted retail activations, limited-edition launches, and strong on-trade presence.
  • San Miguel Pale Pilsen (SMPP): Continued brand reinforcement through high-visibility campaigns and market-wide promotions.
  • San Miguel Cerveza Blanca & Negra: Enhanced premium positioning via collaborations, digital activations, and limited-edition partnerships.
  • Blue Ice Beer & Kirin: Sustained consumer engagement through packaging innovation and targeted promotions.
• Leasing Income: Rental income from investment properties contributed HK\$54.3 million, underpinning profitability.

South China Operations

• Economic Resilience: China’s economy remained robust, aiding local performance.
• Volume and Profit Growth: San Miguel (Guangdong) Brewery saw domestic volume rise 4%, with San Miguel brands up 6%. Operating profit surged 23% to RMB27.5 million.
• Brand Building: Initiatives included pricing adjustments, enhanced merchandising, e-commerce expansion, and KOL campaigns.
• Product Innovation: Launches such as Dragon Yue X 500ml cans and Red Horse 12-pack expanded offerings, supported by consumer promotions and trade incentives.

Corporate Actions and Governance

• Director Changes: Mr. Yoshinori Inazumi resigned as Non-Executive Director, replaced by Mr. Tatsuya Nagafuji, effective 1 September 2025.
• Compliance: The Company continues to adhere to the Corporate Governance Code and Listing Rules of the Hong Kong Stock Exchange.
• No Share Transactions: The Company did not purchase, sell, or redeem any listed securities during the year.

Shareholder Information and Price-Sensitive Matters

• Dividend Record Dates:
  • Register closure for AGM: 17–22 April 2026
  • Register closure for dividend: 28–30 April 2026
  • Dividend record date: 30 April 2026
• Strong Turnaround: The return to profit and increased dividend are likely to be price-sensitive, with potential for positive share price movement.
• Concentration Risk: Heavy reliance on a single customer for over half of revenue is a risk factor investors should monitor.
• Cash Position: Robust cash reserves support future growth and dividend sustainability.
• Impairment Reversal: The absence of impairment charges in 2025 boosts profits compared to 2024, making results appear especially strong.

Future Outlook and Strategic Initiatives

• Hong Kong: Focus on profitable volume growth, brand-building, and expanding specialty and economy segment brands. Enhanced wholesaler channel management and on-trade programs are planned.
• South China: Strengthening dealer and wholesaler networks, driving growth in modern trade and e-commerce, and fast-tracking Red Horse expansion. Continued investment in premium brand positioning and channel equity building.
• Balanced Portfolio Growth: Targeted communications for flagship brands, innovative marketing campaigns, and product launches to drive segment expansion.
• Cautious Optimism: The Company remains positive about 2026 prospects but is mindful of geopolitical and trade uncertainties.
• Agile Strategy: Management will closely monitor market conditions, focusing on volume growth, cost management, and operational efficiency.

ESG and Human Resources

• ESG Commitment: The Company continues to publish an ESG report, demonstrating dedication to social responsibility, environmental stewardship, and community engagement.
• Employee Welfare: Ongoing investments in training, wellness, and competitive remuneration are prioritized for staff development and satisfaction.

Other Information

• Annual Report Availability: The 2025 annual report will be published on both the Stock Exchange and Company websites.
• Audit Status: Figures have been agreed by KPMG, but this does not constitute an assurance engagement.

Potential Share Price Drivers

• Return to profit and dividend increase after a year of loss and impairment will likely attract investor attention and could positively impact share price.
• Strong cash position and balance sheet resilience provide confidence in future dividend payments and growth capability.
• Growth in export volumes and continued brand innovation suggest underlying strength in the business despite local market contraction.
• Major customer reliance is a risk and should be monitored for any shifts in relationship or sales volumes.
• Strategic outlook for 2026 demonstrates management’s commitment to growth, efficiency, and market leadership.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors are urged to review the official annual report, regulatory disclosures, and consult with financial advisors before making investment decisions. All information is based on the Company’s published results and announcements. The Company’s future performance is subject to risks including market conditions, customer concentration, and geopolitical developments.

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