TSINGTAO Brewery is the second largest beer producer on the mainland, claiming about a 2.5 per cent share of the domestic market. Its main shareholder is the Qingdao State-owned Assets Administration Bureau. Brokerage Core Pacific-Yamaichi has placed a sell-rating on the stock, saying the counter has sacrificed profitability for short-term market share gains. 'Intense competition in the beer market can be attributed to overcapacity and more breweries coming on line, a situation likely to depress local market prices for some time,' the research house says. In the first half of this year, profit margins fell 7.03 per cent compared with the same period last year, as a cheaper beer came on line. Core Pacific-Yamaichi says cheaper products will trigger another round of price-cutting among Tsingtao Brewery's rivals, which include Beijing Yanjing and China Strategic group. The brokerage says Tsingtao's gearing has increased to 92 per cent. The brewery produced 236,000 tonnes of beer in the first half, 12 per cent more than the same period last year.