Industry and Company * **Company**: Budweiser Brewing Company, AIPAC Ltd. * **Industry**: Beer and beverage industry, specifically focusing on premium and super-premium segments. Core Views and Arguments * **Performance Impact**: The first nine months of 2024 were impacted by industry weakness in China, partially offset by strong performance in South Korea and India. * **Market Share Gains**: Continued commercial momentum in South Korea and India drove sustained market share gains and revenue per hectolitre growth. * **Premiumization**: The company is leading the premiumization of the beer category, with premium and super-premium portfolio contributing approximately two-thirds of revenue. * **Innovation**: Volume and revenue contribution from innovations within the Budweiser family, including Supreme and Magnum, continue to increase. * **Channel Expansion**: Revenue contribution from the in-home channel grew as a result of ongoing efforts to premiumize the channel. * **Geographic Expansion**: The company's geographic expansion strategy for the Budweiser brands is on track. * **Sustainability**: The company has made progress in sustainability initiatives, maintaining a low-risk rating from Sustainalytics. Key Financials * **Total Volumes**: Decreased by 8.1% * **Revenue**: Decreased by 6.1% * **Revenue per Hectolitre**: Grew by 2.2% * **Normalized EBITDA**: Decreased by 6.2% * **Normalized EBITDA Margin**: Decreased by four basis points * **Gross Profit Margin**: Expanded by 108 basis points * **Cost of Sales**: Decreased by 8.1% China Market * **Performance**: Impacted by a soft industry, particularly from continued weakness in on-premise channels. * **Premiumization**: Leading the premiumization of the beer category, with premium and super-premium portfolio contributing approximately two-thirds of revenue. * **Innovation**: Volume and revenue contribution from innovations within the Budweiser family, including Supreme and Magnum, continue to increase. * **Channel Expansion**: Revenue contribution from the in-home channel grew as a result of ongoing efforts to premiumize the channel. * **Geographic Expansion**: The company's geographic expansion strategy for the Budweiser brands is on track. * **Sustainability**: The company has made progress in sustainability initiatives, maintaining a low-risk rating from Sustainalytics. South Korea Market * **Performance**: Revenues grew by mid-teens in the third quarter, driven by double-digit revenue per hectolitre increase and single-digit volume growth. * **Market Share**: Achieved a strong overall total market share gain, supported by share gains in both the on-premise and in-home channels, led by KAS. * **Innovation**: Further expanded Cast Light Zero Sugar in the third quarter with a campaign featuring South Korean Olympic fencing gold medalist Oh Sang-Wook. * **Geographic Expansion**: The company's geographic expansion strategy for the Budweiser brands is on track. * **Sustainability**: The company has made progress in sustainability initiatives, maintaining a low-risk rating from Sustainalytics. India Market * **Performance**: Business continued to outgrow the industry for the first nine months of the year, driven by double-digit net revenue growth within the premium and super-premium portfolio. * **Premiumization**: Premium and super-premium segments contributed more than two-thirds of revenue. * **Innovation**: The company has made progress in sustainability initiatives, maintaining a low-risk rating from Sustainalytics. Sustainability * **Sustainalytics Rating**: Maintained a low-risk rating from Sustainalytics, ranking 4th among 85 beer, wine and spirits companies and 7th out of 644 food products companies worldwide. * **Global Beer Responsible Day**: Kicked off campaigns across key markets to celebrate a Global Beer Responsible Day to promote smart drinking. * **Commitment**: A commitment the company has been championing for 17 years, in partnership with government and industry stakeholders. Future Outlook * **Premiumization**: The company remains committed to premiumization, with a focus on expanding its premium and super-premium portfolio. * **Geographic Expansion**: The company continues to expand its geographic footprint, targeting lower-tier cities and regions with high growth potential. * **Digitization**: The company is investing in digitization and system integration to improve processes and management visibility. * **Cost Management**: The company remains focused on cost management initiatives to improve efficiency and profitability.

Investment Rating - The report maintains a "Buy" rating for Budweiser APAC (1876.HK) [4] Core Insights - Budweiser APAC reported a revenue of $5.104 billion for the first three quarters of 2024, with a year-on-year decline of 6.1% [1] - EBITDA for the same period was $1.579 billion, also reflecting a year-on-year decrease of 6.2% [1] - In Q3 2024, revenue was $1.705 billion, down 9.4% year-on-year, while EBITDA fell by 16.6% to $479 million [1] - The company experienced a decline in sales volume of 8.1% for the first three quarters and 11.4% in Q3 [1] - The average price per ton of beer increased by 2.2% year-on-year for both the first three quarters and Q3 [1] Regional Performance - In the Western region of Asia, Q3 revenue and EBITDA decreased by 15.1% and 25.9% year-on-year, respectively, with sales volume down 13.5% [1] - Conversely, the Eastern region of Asia saw revenue and EBITDA growth of 15.7% and 33.3% year-on-year in Q3, with sales volume up 3.9% [1] - In India, Budweiser's high-end and super high-end product lines achieved double-digit revenue growth, with high-end products accounting for over two-thirds of revenue [1] - In South Korea, Q3 sales volume grew in the single digits, contributing to a double-digit revenue increase for the first three quarters [1] Financial Forecasts and Valuation - The report lowers the net profit forecasts for 2024-2026 to $797 million, $907 million, and $996 million, representing reductions of 15%, 13%, and 13% respectively [2] - The current stock price corresponds to a PE ratio of 17x for 2024, 15x for 2025, and 14x for 2026 [2] - The company is expected to maintain a competitive advantage in the high-end and super high-end segments [2]

Investment Rating - The report maintains a "Buy" rating for Budweiser APAC (1876.HK) with a target price of HKD 9.85, indicating a potential upside of 21.5% from the current price of HKD 8.11 [4][21]. Core Views - Short-term performance is expected to be challenging due to a decline in consumer spending in the Chinese beer market, with a projected 9.4% year-on-year decrease in overall organic revenue for Q3 2024, driven by an 11.4% drop in sales volume [2][10]. - Despite short-term difficulties, the long-term outlook remains positive due to Budweiser APAC's strong product and brand mix in the premium and super-premium segments, which could provide significant earnings elasticity as consumer spending recovers [2][11]. - The company's current valuation is considered attractive, and its strong management capabilities and backing from AB InBev enhance its appeal to foreign investors [2][11]. Summary by Sections Financial Performance - For Q3 2024, Budweiser APAC reported a 9.4% decline in organic revenue, with sales volume down 11.4% and a slight average price increase of 2.2% [2][10]. - The normalized EBITDA decreased by 16.6% year-on-year, reflecting the negative operating leverage from the significant revenue drop [10][11]. - The company anticipates that the downward trend in revenue and EBITDA will likely continue into Q4 2024 [2][11]. Market Analysis - In the Chinese market, Q3 2024 sales volume fell by 14.2%, attributed to a higher proportion of on-premise sales channels, which were more adversely affected than off-premise channels [2][11]. - The management noted that there has been no significant impact from policy stimulus on beer demand in Q4 2024, suggesting continued pressure on sales and average pricing [2][11]. - Conversely, the South Korean market showed resilience with a double-digit year-on-year growth in organic revenue for Q3 2024, driven by price increases and improved product mix [12][11]. Financial Projections - Revenue projections for Budweiser APAC are expected to decline to USD 6.245 billion in 2024, a decrease of 8.9% year-on-year, with a gradual recovery anticipated in subsequent years [3][18]. - The net profit is projected to drop to USD 700 million in 2024, reflecting a significant year-on-year decline of 17.8% [3][18]. - The report highlights a low price-to-earnings (PE) ratio of 19.6x for 2024, which is expected to improve to 15.3x by 2025, indicating potential for valuation recovery [3][18].

Investment Rating - The report maintains a "Buy" rating for Budweiser APAC (01876.HK) with a target price of HKD 10, compared to the current price of HKD 8.11 [1][3]. Core Views - The company reported a total revenue of USD 5.104 billion and normalized EBITDA of USD 1.579 billion for the first three quarters of 2024, reflecting a year-on-year decline of 6.1% and 6.2% respectively. The normalized net profit attributable to the parent company was USD 777 million, showing a decline of 11.6% [1]. - In Q3 alone, the company achieved total revenue of USD 1.705 billion and normalized EBITDA of USD 479 million, with year-on-year declines of 9.4% and 16.6% respectively. The normalized net profit for Q3 was USD 225 million, down 25% [1]. - The report highlights the pressure on sales in the China region due to weak consumption in dining and nightlife, increased competition, and high base effects from the previous year. In contrast, the Indian market showed strong growth, particularly in high-end and super-premium product segments [1][3]. Summary by Sections Financial Performance - For the first three quarters of 2024, Budweiser APAC's total revenue was USD 5.104 billion, with a normalized EBITDA of USD 1.579 billion, both down 6.1% year-on-year. The normalized net profit was USD 777 million, down 11.6% [1]. - In Q3 2024, total revenue was USD 1.705 billion, with normalized EBITDA of USD 479 million, reflecting declines of 9.4% and 16.6% year-on-year respectively. The normalized net profit for Q3 was USD 225 million, down 25% [1][2]. Regional Performance - In the Asia-Pacific West region, sales were weak, with a year-on-year decline in volume and price of 14.2% and 2.1% respectively. The pressure was attributed to weak dining and nightlife consumption, intensified competition, and a high base from the previous year [1]. - Conversely, the Asia-Pacific East region saw a recovery in sales, with a year-on-year increase in volume of 3.9% and a price increase of 11.4%, driven by market investments and new product launches [1][3]. Strategic Adjustments - The company is actively adjusting its strategy in the China market by enhancing its presence in the non-retail beverage segment and increasing investments in the mid-range price segment. The report notes that the high-end potential in China remains significant, with expectations for gradual recovery in operations as policies take effect [1][3]. - In South Korea, the company plans to increase prices for high-end products starting November 1, which is expected to support profit growth in the coming year [1].

Investment Rating - The report maintains a "Buy" rating for Budweiser APAC, with a target price of HKD 10, compared to the current price of HKD 8.11 [4][17]. Core Views - The company reported a total revenue of USD 5.104 billion and normalized EBITDA of USD 1.579 billion for the first three quarters of 2024, reflecting a year-on-year decline of 6.1% and 6.2% respectively. The normalized net profit attributable to the parent company was USD 777 million, down 11.6% year-on-year [1][2]. - In Q3 alone, the company achieved total revenue of USD 1.705 billion and normalized EBITDA of USD 479 million, with year-on-year declines of 9.4% and 16.6% respectively. The normalized net profit for Q3 was USD 225 million, down 25.0% year-on-year [1][2]. - The report highlights the ongoing pressure in the Chinese market due to weak sales and increased costs, while the Indian market continues to show strong growth, particularly in the premium segment [2][3]. Summary by Sections Financial Performance - For the first three quarters of 2024, Budweiser APAC's total revenue was USD 5.104 billion, with a normalized EBITDA of USD 1.579 billion, both showing a year-on-year decline of 6.1% and 6.2% respectively. The normalized net profit was USD 777 million, down 11.6% [1]. - In Q3 2024, the company reported total revenue of USD 1.705 billion and normalized EBITDA of USD 479 million, with year-on-year declines of 9.4% and 16.6% respectively. The normalized net profit for Q3 was USD 225 million, down 25.0% [1][2]. Regional Performance - In the Asia-Pacific West region, sales in China saw a year-on-year decline of 14.2% in volume and 2.1% in price, attributed to weak dining and nightlife consumption, increased competition, and a high base from the previous year. Conversely, India continued to show strong growth, particularly in high-end products [2]. - The Asia-Pacific East region experienced a recovery in sales, with a year-on-year increase of 3.9% in volume and an 11.4% increase in price, driven by increased market investment and new product launches [2]. Strategic Adjustments - The company is actively adjusting its strategy in the Chinese market by enhancing its presence in the home beverage segment and increasing investment in the mid-range price segment. The company aims to leverage its high-end brand potential, which currently has a sales share of about 17%, compared to 35% in many mature markets [2][3]. - In South Korea, the company plans to increase prices for high-end products by 8.1% starting November 1, which is expected to support profit growth in the coming year [2].

Sales Volume Correction - Total sales volume for the nine months ended September 30, 2024, is corrected to 7,119.8 million liters, not 7,719.8 million liters as previously stated[1] - The percentage change in organic sales volume remains accurate and unchanged in the announcement[1]

Revenue and Volume Performance - Revenue decreased by 6.1% to $5,104 million in the first nine months of 2024, with per hectoliter revenue increasing by 2.2%[3] - Total volume decreased by 8.1% to 71,198 million liters, primarily impacted by weak performance in China[6] - In Q3 2024, total volume and revenue decreased by 11.4% and 9.4%, respectively, driven by weak performance in China[11] - Revenue declined by 6.1% in the first nine months of 2024, with revenue per hectoliter increasing by 2.2%, driven by revenue management measures in the Eastern Asia-Pacific region and favorable product mix across the region, partially offset by high base and unfavorable channel mix in China[24] - Total sales volume decreased by 8.1% in the first nine months of 2024 and by 11.4% in Q3 2024, primarily due to a slowdown in China, partially offset by strong performance in Korea[23] - Total volume for the first nine months of 2024 decreased by 8.1% to 71,198 million liters compared to 77,100 million liters in the same period of 2023[38] - Revenue for the first nine months of 2024 declined by 6.1% to $5,104 million from $5,563 million in 2023[38] - Volume in the Asia Pacific West region (including China, India, and Southeast Asia) dropped by 9.4% to 62,054 million liters in the first nine months of 2024[40] - Revenue in the Asia Pacific West region decreased by 10.2% to $4,074 million in the first nine months of 2024[40] - Volume in China for the first nine months of 2024 decreased by 10.6% year-over-year[41] - Revenue in China for the first nine months of 2024 declined by 11.6% year-over-year[41] Profitability and Margins - Normalized EBITDA declined by 6.2% to $1,579 million, with the EBITDA margin decreasing by 4 basis points to 30.9%[4] - Net profit attributable to equity holders decreased to $742 million from $875 million in the same period last year[5] - Normalized EPS decreased to 5.89 cents from 6.65 cents in the first nine months of 2023[8] - Gross margin improved by 108 basis points to 51.4%, driven by revenue and cost management measures[10] - Normalized EBITDA in Q3 2024 decreased by 16.6%, with the EBITDA margin declining by 241 basis points[11] - Normalized operating profit (normalized EBIT) decreased by 9.7% in the first nine months of 2024 and by 23.0% in Q3 2024[21] - Normalized EBITDA decreased by 6.2% in the first nine months of 2024 and by 16.6% in Q3 2024[21] - Normalized EBITDA for the first nine months of 2024 fell by 6.2% to $1,579 million from $1,757 million in 2023[38] - Normalized EBITDA margin for the first nine months of 2024 decreased by 4 basis points to 30.9% from 31.6% in 2023[38] - Normalized EBITDA in the Asia Pacific West region declined by 13.3% to $1,265 million in the first nine months of 2024[40] - Normalized EBITDA in China for the first nine months of 2024 fell by 12.4% year-over-year[41] Cost Management - Cost of sales decreased by 8.1% to $2,478 million, with per hectoliter cost of sales down by 0.1%[7] - Sales cost decreased by 8.1% in the first nine months of 2024, with cost per hectoliter decreasing by 0.1%, while in Q3 2024, sales cost decreased by 10.8%, with cost per hectoliter increasing by 0.7%, driven by cost management measures and favorable commodity prices, partially offset by additional operating costs[25] Regional Performance - South Korea and India continued to show strong performance, with double-digit revenue growth in premium and super-premium categories[9] - In India, Budweiser APAC's premium and super-premium product portfolio achieved double-digit net revenue growth in Q3 2024, contributing to over two-thirds of the company's revenue[18] - In the Asia Pacific East region, Q3 2024 sales volume increased by 3.9%, with revenue and revenue per hectoliter rising by 15.7% and 11.4%, respectively. Normalized EBITDA grew by 33.3%[19] - In South Korea, Budweiser APAC's sales volume increased by mid-single digits in Q3 2024, with revenue growing by mid-teens, driven by strong market share gains in both on-premise and off-premise channels[20] - In South Korea, Budweiser APAC sold over 1.3 million cups of HANMAC Extra Creamy Draft since its launch in May 2024, with Stella Artois achieving double-digit sales growth[20] Product Portfolio and Innovation - Budweiser APAC's premium and super-premium product portfolio contributed approximately two-thirds of the company's revenue in the first nine months of 2024[17] - Budweiser APAC's zero-sugar Harbin Ice Pure draft saw near-doubled sales growth in the first nine months of 2024, expanding its reach and engagement among the legal drinking age (LDA) generation in China[15] Financial Metrics and Reporting - Normalized EBITDA is a key financial metric monitored by management for performance, capital, and funding structure management, standing at $1,579 million in the first nine months of 2024, down from $1,757 million in 2023[31] - Budweiser APAC's financial data is analyzed based on organic growth and normalized figures, excluding currency conversion and scope changes[34] - Normalized EBITDA and EBIT are not accounting measures under IFRS and should not be used as substitutes for profit or cash flow metrics[34] - All performance metrics (EBITDA, EBIT, profit, tax rate, EPS) are presented on a normalized basis, excluding non-underlying items[34] - Financial data is presented in millions of USD, except for volume (hundred thousand liters), organic growth (in % or basis points), and normalized EBITDA margin (%)[37] - Organic growth analysis excludes impacts from acquisitions, divestitures, business creation or termination, and inter-segment transfers[37] Operational Highlights - Budweiser APAC maintained a "low risk" rating from Sustainalytics, ranking 4th among 85 global beer, wine, and spirits companies and 7th among 644 food companies[13] - Budweiser APAC's B2B platform BEES expanded to 306 cities in China, accounting for approximately 70% of the company's net revenue in September 2024[17] - Budweiser APAC operates 47 breweries and employs approximately 24,000 employees across the Asia-Pacific region[35] - The company manages a portfolio of over 50 beer brands, including Budweiser, Corona, and Harbin[35] Non-Recurring Items and Other Income - Other operating income remained flat in the first nine months of 2024 but decreased by 22.2% in Q3 2024 due to reduced government subsidies and incentives[27] - Non-recurring items impacting EBIT included a write-off of historical assets in India and restructuring costs, totaling $39 million in the first nine months of 2024[28] - Normalized profit attributable to equity holders of Budweiser APAC decreased to $777 million in the first nine months of 2024 from $879 million in the same period in 2023[29] - Basic earnings per share (EPS) decreased to 5.62 cents in the first nine months of 2024 from 6.62 cents in the same period in 2023, with normalized basic EPS at 5.89 cents[30]

Financial Performance - Total sales volume decreased by 6.2% to 4,657.3 million liters in the first half of 2024 compared to the same period in 2023[7] - Revenue declined by 4.3% to $3,399 million in H1 2024, with a gross margin improvement of 127 basis points to 51.5%[7] - Normalized EBITDA decreased by 1.0% to $1,100 million, with EBITDA margin expanding by 109 basis points to 32.4%[7] - Normalized profit attributable to equity holders of Budweiser APAC decreased to $552 million in H1 2024[7] - Normalized EPS decreased to 4.19 cents in H1 2024 from 4.38 cents in H1 2023[7] - Total volume decreased by 6.2% in the first half of 2024, with revenue down by 4.3%, primarily due to high base effects in China and industry slowdown[8][17] - Normalized EBITDA declined by 1.0% in H1 2024, while EBITDA margin expanded by 109 basis points to 32.4%[8] - Net profit attributable to equity holders decreased from $575 million in H1 2023 to $541 million in H1 2024[21] - Normalized EBIT decreased by 3.2% in H1 2024[20] - Revenue for the six months ended June 30, 2024, was $3.399 billion, a decrease of 7.3% compared to $3.666 billion in the same period in 2023[112] - Gross profit for the period was $1.751 billion, down 6.2% from $1.867 billion in 2023[112] - Operating profit before non-underlying items was $776 million, a decrease of 8.7% from $850 million in the previous year[112] - Net profit attributable to equity holders of Budweiser APAC was $541 million, down 5.9% from $575 million in 2023[112] - Basic earnings per share decreased to 4.10 cents from 4.35 cents in the prior year[112] - Total comprehensive income for the period was $179 million, compared to $93 million in 2023[113] - Net profit for the period was $553 million, compared to $590 million in the same period last year[116] - Total revenue for the first half of 2024 was $3.399 billion, a decrease from $3.666 billion in the same period of 2023[140] - Normalized EBITDA for the first half of 2024 was $1.100 billion, down from $1.173 billion in 2023, with a normalized EBITDA margin of 32.4% compared to 32.0% in 2023[140] - Volume sales in the first half of 2024 were 46.573 million hectoliters, a decline from 49.456 million hectoliters in 2023[140] - The company reported a net profit of $553 million for the first half of 2024, compared to $590 million in 2023[140] - Total income tax expense for the six months ended June 30, 2024, was $242 million, compared to $273 million in the same period in 2023, with an effective tax rate of 31.0% in 2024 and 32.2% in 2023[144] - Basic earnings per share decreased from 4.35 cents to 4.10 cents, while diluted earnings per share decreased from 4.33 cents to 4.07 cents[174] - Normalized basic earnings per share decreased slightly from 4.38 cents to 4.19 cents, and normalized diluted earnings per share decreased from 4.36 cents to 4.16 cents[175] Regional Performance - In China, Budweiser 0.0 was launched nationwide, and the "SPORTS, NOW IS OUR PARTY" summer campaign drove growth[4] - In South Korea, market share growth and cost efficiency measures led to double-digit revenue and profit growth[4] - In India, the premium and super-premium portfolio achieved double-digit growth, accounting for over two-thirds of revenue[4] - China's volume decreased by 8.5% in H1 2024 due to high base effects, industry slowdown, and adverse weather, but EBITDA margin returned to pre-pandemic levels[9][12] - South Korea outperformed the industry with double-digit revenue and profit growth, driven by market share gains and cost efficiency measures[9][16] - India's premium and super-premium portfolio achieved double-digit growth, contributing over two-thirds of revenue[9][14] - APAC East region saw a 43.1% increase in normalized EBITDA in H1 2024, with EBITDA margin expanding by 633 basis points[15] - The Asia Pacific East region (primarily Korea, Japan, and New Zealand) reported revenue of $649 million in 2024, up from $593 million in 2023, with a normalized EBITDA margin increase to 30.7% from 24.3%[140] - The Asia Pacific West region (including China, India, Vietnam, and export markets) saw revenue decline to $2.750 billion in 2024 from $3.073 billion in 2023, with a normalized EBITDA margin of 32.8% compared to 33.5% in 2023[140] Sustainability and Environmental Efforts - The company reduced water usage in beer production to 1.86 hectoliters per hectoliter, a 38% reduction from the 2017 baseline[5] - The company was included in the S&P Global Sustainability Yearbook (China Edition) 2024 for its sustainability efforts[5] Financial Position and Cash Flow - Net cash position stood at $2.4 billion as of June 30, 2024, reflecting strong financial discipline[10] - Cash and cash equivalents decreased from $3,141 million as of December 31, 2023, to $2,406 million as of June 30, 2024[27] - Cash flow from operating activities decreased significantly from $762 million in H1 2023 to $223 million in H1 2024, mainly due to reduced operating cash and changes in working capital[27] - Cash flow used in investing activities increased to $250 million in H1 2024 from $223 million in H1 2023, driven by higher cash pool deposits to the Budweiser Group[28] - Cash flow used in financing activities increased by $175 million to $645 million in H1 2024, primarily due to higher dividend payments[29] - Total debt increased to $432 million as of June 30, 2024, from $351 million as of December 31, 2023, with $344 million due within one year[31][32] - Cash (net of debt) to normalized EBITDA ratio increased from 1.8x in H1 2023 to 1.9x in H1 2024, driven by a decrease in normalized EBITDA from $1,173 million to $1,100 million[34] - The company's net current liabilities stood at $344 million, reflecting its operational cash flow management strategy[123] - Operating cash flow for the six months ended June 30, 2024, was $223 million, supporting the company's liquidity needs[123] - Available committed and uncommitted financing facilities totaled $500 million and $599 million, respectively, as of June 30, 2024[123] - Cash (net of debt) decreased to $2,084 million from $2,835 million at the end of 2023, with a debt-to-equity ratio of -25.2%[126][127] - The company's total equity was $10,357 million as of June 30, 2024, compared to $10,850 million at the end of 2023[127] - Capital expenditures and investments in subsidiaries remain key cash requirements for the company[123] - The company paid a final dividend of 5.29 cents per share for the 2023 fiscal year, totaling $698 million, representing 82% of the profit attributable to equity holders[155] - Total comprehensive loss as of June 30, 2024 was $1,499 million, compared to $1,390 million in the same period last year[157] - Total interest-bearing loans and borrowings were $323 million as of June 30, 2024, down from $331 million as of December 31, 2023[159] - The company received $15 million in loan proceeds in the first half of 2024, compared to $80 million in the same period last year[159] - Trade payables and accruals decreased to $1,861 million as of June 30, 2024, from $1,997 million as of December 31, 2023[164] - Payables to Anheuser-Busch InBev decreased to $80 million as of June 30, 2024, from $104 million as of December 31, 2023[165] - Trade receivables and payables to Budweiser Group decreased from $2,101 million to $1,941 million, with overdue amounts showing a significant reduction, especially in the over 90 days category from $31 million to $11 million[166] - Contract liabilities decreased from $1,096 million to $730 million, while entrusted packaging increased from $360 million to $400 million, resulting in a combined decrease from $1,456 million to $1,130 million[167] - Collateral provided for own liabilities decreased slightly from $120 million to $115 million, while commitments for purchasing property, plant, and equipment increased from $116 million to $139 million[169] - Sales of finished goods to Budweiser Group increased significantly from $4 million to $20 million, while purchases remained stable at $17 million[170] - Cash pool deposits with Budweiser Group increased from $25 million to $89 million, and cash pool loans from Budweiser Group were $88 million as of June 30, 2024[171] - Provisions decreased from $167 million to $103 million, with $56 million related to a tax assessment in Korea being paid in January 2024[173] Shareholder and Compensation Plans - The company’s compensation structure includes performance-based bonuses tied to financial (e.g., EBITDA, net revenue) and non-financial (e.g., sustainability, compliance) KPIs[44] - The company’s share incentive plans, including the Long-Term Incentive Plan and Restricted Share Unit Plan, hold 55,559,035 shares in trust as of June 30, 2024[45] - The company’s share incentive plans aim to align employee interests with shareholders and retain top talent in the Asia-Pacific region[45] - The company’s compensation committee reviews and sets performance targets for senior management, including financial and non-financial KPIs[44] - The long-term incentive plan will be effective for a period of ten years starting from May 8, 2023, unless terminated earlier by the company[52] - The restricted share unit plan will also be effective for a period of ten years starting from May 8, 2023, unless terminated earlier by the company[58] - The employee betting plan will be effective for a period of ten years starting from May 8, 2023, unless terminated earlier by the company[64] - The exercise price of stock options under the long-term incentive plan is determined by the board and will not be lower than the highest of: (i) the closing price on the grant date, (ii) the average closing price over the five trading days prior to the grant date, or (iii) the par value of the shares[51] - The purchase price of restricted share units under the restricted share unit plan is determined by the board and will not be lower than the highest of: (i) the closing price on the grant date, (ii) the average closing price over the five trading days prior to the grant date, or (iii) the par value of the shares[57] - The purchase price of restricted share units or restricted shares under the employee betting plan is determined by the board and will not be lower than the highest of: (i) the closing price on the grant date, (ii) the average closing price over the five trading days prior to the grant date, or (iii) the par value of the shares[63] - No payment is required at the time of application or acceptance of stock options under the long-term incentive plan, and there are no specified deadlines for payment or repayment of loans used for such purposes[50] - No payment is required at the time of application or acceptance of restricted share units under the restricted share unit plan, and there are no specified deadlines for payment or repayment of loans used for such purposes[56] - No payment is required at the time of application or acceptance of restricted share units or restricted shares under the employee betting plan, and there are no specified deadlines for payment or repayment of loans used for such purposes[62] - The share-based compensation plan allows participants to receive bonuses in the form of cash, restricted shares, or a combination of both, with additional "matching" restricted share units provided as an incentive[65] - The company's share-based compensation plan allows vested restricted share units and issued shares to be traded at any time within the applicable period determined by the Board, subject to certain restrictions and terms[68] - The purchase price for restricted share units or restricted shares under the share-based compensation plan is determined by the Board and will not be lower than the highest of: (i) the closing price on the grant date, (ii) the average closing price over the five trading days preceding the grant date, or (iii) the nominal value of the shares[70] - The share-based compensation plan will remain effective for ten years starting from May 8, 2023, unless terminated earlier by the company[71] - The new restricted share unit plan allows the Board to grant restricted share units to employees and directors who have contributed or will contribute to the group[72] - The maximum number of shares each participant can receive under the new restricted share unit plan is subject to any limits set by the amended and effective listing rules[73] - Vested restricted share units under the new plan can be traded at any time within the applicable period determined by the Board, subject to certain restrictions and terms[74] - The purchase price for restricted share units under the new plan is determined by the Board and will not be lower than the highest of: (i) the closing price on the grant date, (ii) the average closing price over the five trading days preceding the grant date, or (iii) the nominal value of the shares[76] - The new restricted share unit plan will remain effective for ten years starting from May 8, 2023, unless terminated earlier by the company[77] - As of June 30, 2024, Mr. Yang Ke holds 15,289,898 unexercised share options, and the five highest-paid individuals hold a total of 31,226,484 unexercised share options[79] - 508,297 share options held by other eligible employees were canceled during the six months ended June 30, 2024, with exercise prices of HK$23.2 and HK$28.34[79] - Yang Ke holds 7,462,588 restricted share units under the Restricted Share Unit Plan as of January 1, 2024, with an additional 350,063 units granted by June 30, 2024, totaling 7,812,651 units[81] - Yang Ke also holds 4,370,603 restricted share units under the New Restricted Share Unit Plan, with an additional 6,090 units granted by June 30, 2024, totaling 4,376,693 units[81] - The five highest-paid individuals collectively hold 29,038,658 restricted share units as of January 1, 2024, with an additional 3,086,968 units granted by June 30, 2024, totaling 31,891,760 units[81] - Other eligible employees hold 62,117,170 restricted share units as of January 1, 2024, with an additional 6,661,634 units granted by June 30, 2024, totaling 68,467,512 units[81] - The restricted share units granted under the Restricted Share Unit Plan, New Restricted Share Unit Plan, Share-based Compensation Plan, and Employee Betting Plan have a purchase price of zero[82] - Restricted share units granted under the Restricted Share Unit Plan will vest on the third and/or fifth anniversary of the grant date[82] - Restricted share units granted under the New Restricted Share Unit Plan will vest on the third and/or fifth anniversary of the grant date[82] - Restricted share units granted under the Share-based Compensation Plan will vest on the third and/or fifth anniversary of the grant date[82] - Restricted share units granted under the Employee Betting Plan will vest on the fifth anniversary of the grant date[82] - The company has made adjustments and forfeitures to the number of share awards held by employees due to updates in internal record-keeping mechanisms and procedures[83] - The maximum number of shares that can be granted under the long-term incentive plan, restricted share unit plan, new restricted share unit plan, employee betting plan, and share-based compensation plan is 10% of the total issued shares of the company as of the listing date or the date of approval of the updated limit (1,324,339,700 shares as of May 8, 2023)[85] - As of January 1, 2024, the total number of share awards that can be granted under the share incentive plan is 1,168,469,631 shares, representing 8.82% of the company's issued share capital[85] - As of June 30, 2024, the total number of share awards that can be granted under the share incentive plan is 1,164,758,826 shares, representing approximately 8.80% of the company's issued share capital[85] - The total number of shares that can be issued upon the exercise or vesting of all outstanding share awards under the share incentive plan is 159,580,874 shares, representing 1.20% of the company's issued share capital as of June 30, 2024[85] - Mr. Yang Ke, a director and senior executive, holds 1,209,277 shares of the company, with 1,028,665 shares being restricted shares under the relevant share incentive plan[87] - Mr. Yang Ke holds 42,344 shares of Budweiser Group (an associated company), with 2,331 shares being restricted shares under the relevant plan of Budweiser Group[89] - Mr. Yang Ke holds 365,009 shares of Ambev (an associated company), with 347,103 shares being conditional stock options that may be delivered upon exercise[90] - The Securities and Futures Commission has granted partial exemptions to non-executive directors from strict compliance with certain disclosure

食品饮料 上 市 公 司 2024 年 08 月 08 日 百威亚太 (01876) ——中国市场表现疲软 成本下降改善盈利能力 报告原因：有业绩公布需要点评 | --- | --- | |------------------------|---------------------| | 市场数据： | 2024 年 08 月 08 日 | | 收盘价（港币） | 9.58 | | 恒生中国企业指数 | 5941.47 | | 52 周最高/最低（港币） | 18.30/8.68 | | H 股市值（亿港币） | 1,268.72 | | 流通 H 股（百万股） | 13,243.40 | | 汇率（人民币/港币） | 1.0901 | 一年内股价与基准指数对比走势： -49% -29% -9% 11% HSCEI 百威亚太 资料来源：Bloomberg 证券分析师 吕昌 A0230516010001 lvchang@swsresearch.com 周缘 A0230519090004 zhouyuan@swsresearch.com 联系人 严泽楠 (8621)23297818× yanzn@swsresea ...

Investment Rating - Maintain NEUTRAL rating with a target price of HK$10.10 [3] Core Views - H1 revenue declined by 4.3% YoY, primarily due to weak Q2 sales in China [4] - Volume and revenue per hl in South Korea and India showed growth, contributing to margin expansion [4] - Cost reductions and premiumization strategies are expected to sustain margin improvements [4] Financial Performance - H1 sales volume decreased by 6.2% YoY to 46.6 million hl, with revenue down 7.3% YoY to $3.39bn [4] - Normalized EBITDA fell by 6.2% YoY to $1.10bn, with a margin improvement of 1.1pct to 32.4% [4] - Q2 sales volume dropped by 7.0% YoY to 25.5 million hl, with revenue down 10.6% YoY to $1.76bn [4] Regional Performance - APAC West (China): Q2 sales volume and revenue per hl declined by 10.3% and 5.4% YoY, respectively, due to industry weakness and adverse weather conditions [4] - APAC East (South Korea): Q2 revenue and profit grew by double digits, with market share recovering to 2018 levels [4] - India: Premium and above products achieved double-digit growth, capturing 2/3 of the premium market share [4] Cost and Margin Trends - Cost per hl decreased by 0.6% YoY, driven by lower commodity prices, contributing to a gross margin increase of 0.6pct to 51.5% [4] - SG&A expense ratio rose by 1.2pct YoY to 30.3%, due to declining revenue [4] Earnings Forecast - EPS forecasts for 2024-26 were revised downward to HK$0.53, HK$0.56, and HK$0.60, respectively [4] - The company is expected to benefit from continued premiumization in the Asia-Pacific region [4] Valuation - The target price of HK$10.10 is based on a 19x PE multiple for 2024, down from the previous 22x [4]