Cathay Pacific Junan revised EPS earnings forecast for 2024 and 25 for Budweiser Asia Pacific to 0.45 or 0.51 yuan.
The Zhitong Finance App learned that Guotai Junan released a research report stating that it maintained the “gain” rating of Budweiser Asia Pacific (01876), lowered the assumptions for sales volume and tonnage increases in China based on changes in the consumption environment, and lowered the 2024 and 25 profit forecasts to 0.45 or 0.51 yuan. The original value was 0.650.74 yuan, and the 2026 EPS was 0.56 yuan. The company's China region was under pressure, volume and prices fell sharply, and profits fell by double digits; strong performance in South Korea and India gave a positive boost to overall performance.
Guotai Junan's main views are as follows:
3Q24 overall performance:
Budweiser Asia Pacific's total volume fell -8.1% in January-September, and revenue fell -6.1% and revenue increased +2.2% per 100 liter, mainly due to the benefits brought by Korea's revenue management plan and brand portfolio, which were partially offset by an unfavorable channel mix. Gross margin was +108 bps, down -0.1% per 100 litre, and standardized EBITDA decreased by -6.2%. Cost outlook: As of October data, barley continues to decline compared to the previous year. The decline is slowing down, and aluminum prices are expected to rise in units.
Business in China:
3Q24 sales in the Chinese market fell -14.2% year on year, revenue fell -16.1%, and revenue per 100 liter fell -2.1%, mainly affected by the weakness of the Chinese consumer market. Benefiting from lower prices of raw materials such as barley, the cost per 100 liter declined; investment in sports and music festival marketing increased in the third quarter, and marketing rates increased. EBITDA fell -20% year on year, and net profit fell -16.4% year on year. In terms of structure, Core++ (that is, the 8 yuan price range) products performed best, but in-store channels continued to weaken, which had a disproportionate impact on the business. As of 3Q24, the high-end and ultra-high-end product portfolios still contributed two-thirds of China's revenue.
Korea and India business:
3Q24 sales in the Korean market increased by mid-single digits, revenue +15% tonnage price+double digits. The Korean region achieved strong market share growth, thanks to increased share of in-store and home channels led by Cass; sales in the Asia-Pacific region from January to September were +2.2%, revenue +14.3%, tonnage price +11.8%; standardized EBITDA grew 39.3%. The Indian market continued to surpass the industry in January-September, thanks to double-digit net revenue growth in the high-end and ultra-high-end product portfolio.
Risk warning: Costs fluctuate and the consumption environment deteriorates.
