SAN MIGUEL HK's stock price soared 30%: profits back on the growth track, has the old Hong Kong brewery successfully broken the deadlock?

A notice of "double growth in revenue and profit" has brought Hong Kong San Miguel Brewery (00236), which is less "prominent" in the beer sector, into the spotlight of the secondary market.

On July 29, the stock price of Hong Kong San Miguel Brewery surged strongly in the morning session, rising over 38% at one point. The stock then needed to stabilize at a high level, and by the close, its price had increased by 30%, closing at HKD 1.3. For the long-low-profile Hong Kong San Miguel Brewery, this stock price movement undoubtedly attracts attention.

From the news perspective, the significant surge in the company's stock price is mainly attributed to the stimulus from the news of a substantial improvement in performance. On July 28, Hong Kong San Miguel Brewery disclosed its interim report for 2025, indicating that in the first half of the year, the company achieved revenue of approximately HKD 390 million, a year-on-year increase of 3.22%; the profit attributable to equity holders was HKD 49.644 million, a year-on-year increase of 31.97%. The announcement also stated that the company's total local sales in the first half of the year fell by 4%, which is comparable to the overall decline of 4% in the beer industry. However, benefiting from a significant increase in export sales, total sales rose by 14%.

So, what has Hong Kong San Miguel Brewery done right to emerge from the industry's downturn?

Turning Around the Downturn in 2024, Profitability Back on Growth Track

Comparing the performance in 2024, the positive feedback effect on the stock price from the double growth in revenue and profit for Hong Kong San Miguel Brewery is quite significant.

In 2024, Hong Kong San Miguel Brewery's performance was poor, with total revenue for the year at HKD 711 million, a year-on-year decrease of 4.1%, and gross profit of HKD 266 million, a year-on-year decline of 6.8%. Additionally, during the period, the company reported a comprehensive net loss of HKD 18.915 million (mainly due to a decline in export volume and profit margins in South China, coupled with a non-cash impairment loss of HKD 90 million).

From the business segment perspective, the overall Hong Kong beer industry declined by 3.3% in 2024, and Hong Kong San Miguel Brewery's total local sales in Hong Kong fell by 6%. However, benefiting from the growth in export sales, the overall sales of the Hong Kong business recorded a 2.9% increase. The domestic sales of San Miguel Guangdong slightly increased by 3.3%, but export sales decreased by 1.6%.

Compared to the downturn in performance in 2024, this interim report for 2025 has several significant positive highlights.

First, there is a structural breakthrough in sales, with export business becoming a new growth engine.

In the first half of 2025, although Hong Kong San Miguel Brewery faced pressure on local sales, with local sales in Hong Kong down by 4%, which is in line with the overall decline in the beer industry, the main reason being weak local consumption and demand diversion due to outbound tourism. However, through adjustments in export strategies (such as optimizing pricing and expanding into new markets), export profits significantly improved, offsetting the impact of declining local sales. During the reporting period, the company's export sales surged, driving total sales up by 14% year-on-year, thus making the export business the core engine of performance growth.

Second, brand marketing and product innovation are gradually taking effect.

In the first half of 2025, the company launched the "Strong Hong Kong San Miguel" television advertisement to strengthen local emotional connections and enhanced reach to young consumers through limited edition cans, KOL collaborations, and social media activities (such as San Miguel White Beer x Black Beer promotions). Compared to 2024, which relied solely on traditional channel promotions, the marketing strategy in 2025 is more comprehensive, helping to improve gross profit margins. During the period, the company's gross profit margin reached 39.9%, an increase of 3 percentage points from 36.9% in the same period of 2024, reflecting improvements in product structure and other characteristics In addition, in the first half of 2025, the cost control effectiveness of San Miguel HK further highlighted. During the reporting period, the company's fixed costs decreased and rental income increased, driving an expansion in profit margins. Compared to 2024, when operating costs led to stagnation in profits in South China, cost optimization in 2025 became a key support for profit growth.

Based on the above, with rising sales, improved export profits, reduced fixed costs, and increased rental income, the operating profits of San Miguel HK have seen a significant rise. In contrast to the performance downturn in 2024, this return to profit growth undoubtedly increased investor interest in its investments.

Total Saturation, Premiumization and "Going Global" as Key Breakthroughs?

Looking at the development history of the beer industry in recent years, combined with a review of volume and price, it is not difficult to find that the overall beer landscape has been established, and low-price competition cannot bring incremental growth or price increases (through price hikes). Premiumization is the long-term driving force for price increases in China's beer industry.

At the same time, as the premiumization process of beer enters a new "new stage"—the competition among beer companies for premiumization has become more intense, with the 8 yuan price point becoming the main battlefield.

According to data from the National Bureau of Statistics, in 2024, the cumulative beer production of large-scale enterprises in China's beer industry reached 35.213 million kiloliters, a year-on-year decrease of 0.6%. Among them, the market size of China's high-end beer continues to rise, expected to reach 280 billion yuan in 2024, accounting for 40% of the overall market. Meanwhile, as the high-end beer market gradually becomes the driving force for price increases in the industry, leading beer brands such as China Resources Beer and Tsingtao Brewery are intensifying their exploration in the premium market.

In contrast, the Hong Kong beer market also faces the same survival situation: the overall market is saturated, and the trend of premiumization is becoming increasingly evident.

According to previous financial reports, the overall scale of the Hong Kong beer market is showing a downward trend, with the overall sales of the Hong Kong beer industry recording a 3.3% decline in 2024. As a major local beer brand in Hong Kong, San Miguel Beer saw its total sales in Hong Kong decline by 6% in 2024, reflecting a shrinkage in overall demand in the Hong Kong beer market.

Among them, the characteristics of consumer demand for premiumization and personalization are becoming increasingly evident. Specifically, consumers' requirements for beer quality and taste are continuously increasing, with high-quality, distinctive, and innovative beer products becoming mainstream in the market. Craft beer is gradually gaining popularity, attracting many consumers with its pure taste and unique flavors, while low-alcohol and non-alcoholic beers are also becoming new market trends, drawing the attention of an increasing number of health-conscious consumers.

In addition, competition in the Hong Kong beer market is becoming increasingly fierce, with traditional beer giants such as China Resources Beer, Tsingtao Brewery, and Budweiser intensifying their focus on the premium market by launching new products, optimizing product structures, and enhancing brand influence to consolidate and expand market share. At the same time, emerging high-end beer brands, such as craft beer, are also becoming an important force in the market with their personalized characteristics.

Against this backdrop, San Miguel HK is also seeking new growth opportunities through local brand emotional recognition, differentiated product strategies, and export business capabilities Specifically, in terms of emotional identification with local brands, the company was founded in 1948 and is one of the historical symbols of Hong Kong. Sub-brands like "San Miguel Beer" have loyalty among the local middle-aged and elderly groups. In recent years, with the rise of "local sentiment" consumption in Hong Kong, it can strengthen local identity recognition through co-branding with time-honored brands and Hong Kong-style dining.

In terms of differentiated product strategy, the company focuses on Southeast Asian flavored beers like "San Miguel Light," creating a distinction from mainstream lagers; the craft line (such as "San Miguel White") attempts to attract younger customers. At the same time, the company can also cater to health trends by developing non-alcoholic beers and low-calorie products (as the Hong Kong government promotes a sugar reduction policy).

Additionally, since the main market for San Miguel Beer is concentrated in the Guangdong-Hong Kong region and Southeast Asian countries like the Philippines, the company can fully explore the potential of the Southeast Asian market. In recent years, the revenue contributions from Hong Kong and mainland China have both exceeded half of the total. However, due to the limitations of beer sales radius, San Miguel Beer, which focuses on the Guangdong-Hong Kong area, faces competitive pressure from leading companies like Pearl River Beer in the South China region. Therefore, San Miguel Hong Kong can leverage the channels of San Miguel Group in the Philippines to expand into Southeast Asia (where beer consumption is growing rapidly in Vietnam and Thailand), reducing its dependence on Hong Kong.

In summary, the significant improvement in the company's performance is clearly the "catalyst" for the surge in San Miguel Hong Kong's stock price. However, from a long-term perspective, it is necessary to observe the company's brand rejuvenation and progress in Southeast Asian expansion. If the transformation fails, the company may face further "marginalization" risks