(Reuters) - Tsingtao Brewery Co Ltd (>> Tsingtao Brewery Co Ltd)<0168.HK> , China's second-biggest brewer by volume, saw 2013 net profit rise 12.2 percent, lagging market estimates as an oversupply and stiff competition weighed on the country's beer sector.

Tsingtao, which is one-fifth owned by Japan's Asahi Breweries Ltd (>> Asahi Group Holdings Ltd), said net profit rose to 1.97 billion yuan ($318.32 million) in the year ended December, up from 1.76 billion yuan profit in 2012.

Asia has become the main battleground for the big four global brewers - Anheuser-Busch InBev SA (>> ANHEUSER-BUSCH INBEV), SABMiller (>> SABMiller plc), Heineken (>> HEINEKEN) and Carlsberg (>> Carlsberg A/S), as they face flagging sales in Europe and the United States. China is also the world's biggest beer market by volume.

"The beer sector is a highly competitive traditional industry. Competition among big players is expected to intensify as more global names enter the domestic market," Tsingtao said in a filing on the Shanghai stock exchange.

Tsingtao's profit was slightly lower than an estimate of 2.1 billion yuan from 10 analysts polled by Thomson Reuters, but marked a bounce from anaemic growth of 1.2 percent last year, which was the slowest since 1999.

China's beer industry, estimated at 451 billion yuan in 2013 according to Euromonitor, is consolidating, which should support earnings for market leaders such as Tsingtao.

Tsingtao said in its results statement its market share in China rose 1.07 percentage points to 17.2 percent in 2013.

Tsingtao posted a fourth-quarter loss of 191.6 million yuan in the three months ended December, compared with an 80 million yuan profit the same period a year earlier, according to Reuters calculations.

The firm, which competes with SABMiller-backed Snow beer, AB InBev and Beijing Yanjing Brewery Co Ltd (>> Beijing Yanjing Brewery Co., Ltd.), saw 2013 revenues rise 9.7 percent to 28.3 billion yuan against 2012. Denmark's Carlsberg is also mounting a challenge, upping its stake in local brewer Chongqing Brewery (>> Chongqing Brewery Co., Ltd) last year.

Tsingtao's Shanghai-listed shares ended up 0.23 percent on Tuesday, compared to the 0.1 percent fall in the benchmark CSI 300 Index <.CSI300>.

Its Hong Kong stock ended up 0.44 percent, outperforming the main Hang Seng Index's <.HSI> 0.5 percent fall.

(Reporting by Adam Jourdan in BEIJING and Lee Chyen Yee in SINGAPORE; Editing by Matt Driskill and Louise Heavens)