Investment Rating - The report maintains a "Buy" rating for Budweiser APAC (1876 HK) with a target price of HK$15.20, down from HK$16.52, reflecting an 8% decrease [1][4][10]. Core Insights - The report highlights that Budweiser APAC's revenue for Q2 2024 is expected to decline by 2.3% year-on-year, primarily due to weakness in the Chinese beer market, although this is partially offset by a recovery in the South Korean market [4][5]. - The normalized EBITDA for Q2 2024 is projected to grow by 4.5%, driven by cost efficiencies and effective marketing expense management [4][5]. - The report emphasizes the need for a recovery in consumer sentiment in China, as the company's performance is significantly impacted by the sluggish beer market in the region [4][5]. Financial Summary - Revenue projections for 2024E are set at US$6,864 million, with a slight decrease of 0.6% from previous estimates [9]. - Adjusted net profit for 2024E is forecasted at US$995 million, reflecting a minor reduction of 0.3% [9]. - The report provides a detailed financial outlook, including expected EPS of US$0.07 for 2024E, unchanged from previous estimates [6][9]. Market Performance - The current stock price is HK$9.20, indicating a potential upside of 65% to the target price [2]. - The market capitalization of Budweiser APAC is reported at US$15,606 million, with a three-month average daily trading volume of US$20 million [2][3]. Regional Insights - The report notes that Budweiser APAC's sales in the Chinese market are expected to decline, while the South Korean market is anticipated to show recovery, benefiting from previous price increases and a low base effect [5][4]. - The average selling price in the South Korean market is expected to rise due to effective pricing strategies implemented in Q4 2023 [5]. Valuation - The report values Budweiser APAC at a P/E ratio of 26.0x for 2024, which is lower than the previous estimate of 28.2x, indicating a more attractive valuation compared to historical averages [10].

Investment Rating - The report assigns a positive investment rating to Budweiser APAC, highlighting its effective product upgrade strategy and leading profitability and dividend performance in the beer industry [1]. Core Insights - The report emphasizes that Budweiser APAC is at the forefront of premiumization in the Chinese beer market, which is crucial for revenue and profit growth [1][5]. - The company has demonstrated strong financial performance, with a revenue of $6.86 billion in 2023, a year-on-year increase of 5.8%, and an adjusted net profit of $920 million, up 6.8% [1][7]. - Budweiser APAC's strategy focuses on high-end beer products, which has resulted in a higher average selling price and a significant market share in China [7][9]. Summary by Sections Company Overview - Budweiser APAC, a subsidiary of Anheuser-Busch InBev, was established in 2019 and operates in key beer markets across the Asia-Pacific region, including China, Korea, India, and Vietnam [1][2]. Market Position - The company holds a 19.5% market share in China, making it a significant player in a highly concentrated market where the top five companies control 92% of the market [4][5]. - Budweiser APAC's revenue from the Chinese market grew by 12.8% in 2023, with a notable increase in profitability [7]. Financial Performance - The company reported a gross margin of 50.4% in 2023, which is the highest among its peers, and maintained a strong adjusted net profit margin of 13% [9][10]. - In Q1 2024, the gross margin improved to 51%, reflecting effective cost management and pricing strategies [9]. Product Strategy - Budweiser APAC has successfully implemented a high-end product strategy, achieving a beer price of 5,235 RMB per ton, significantly higher than competitors [5][9]. - The company has introduced innovative products, contributing to a 10% increase in sales volume for new products in 2023 [7]. Shareholder Returns - The average dividend payout ratio for Budweiser APAC is 41.5%, with a remarkable 82.2% payout ratio in 2023, surpassing its competitors [20][22]. - The company has not engaged in stock buybacks since its listing, focusing instead on returning value to shareholders through dividends [22]. Valuation - Budweiser APAC's price-to-book (PB) ratio is currently at a historical low of approximately 1.7, influenced by the overall market conditions in the Hong Kong beer sector [23].

Key Points Company and Industry Information 1. **Company Name**: Budweiser Brewing Company APAC Limited 2. **Date of Results Announcement**: 31st March 2024 3. **Hosts of the Call**: Mr. Jan Kraps, Chief Executive Officer and Co-Chair of the Board; Mr. Ignacio Larris, Chief Financial Officer 4. **Availability of Results**: Press release published earlier today, available on the Hong Kong Stock Exchange's Budweiser APAC's websites [1]. Core Views and Arguments 1. **Overall Performance**: The call will discuss the financial results for the first quarter of 2024, including revenue, earnings, and other key metrics [1]. 2. **Market Trends**: The discussion will likely cover market trends and consumer behavior in the beer industry in the APAC region [1]. 3. **Strategic Initiatives**: The company's strategic initiatives and future plans will be highlighted, including expansion into new markets and product innovation [1]. Other Important Content 1. **Press Release**: The full details of the financial results can be found in the press release published earlier today [1]. 2. **Industry Comparison**: The call may include comparisons with industry benchmarks and competitors [1]. 3. **Investor Queries**: The call will likely address investor queries and concerns regarding the company's performance and future prospects [1].

Investment Rating - The report maintains a "Buy" rating for Budweiser APAC (1876.HK) [3] Core Views - The company reported Q1 2024 revenue of $1.643 billion, with a year-on-year decline of 0.4% in organic terms; normalized EBITDA was $572 million, reflecting a 4.2% increase year-on-year; net profit attributable to shareholders was $287 million, down 3.4% year-on-year [1][2] - Revenue growth was impacted by a high base and weather conditions in the Chinese market, but the company continues to successfully implement its premiumization strategy [2] - The company expects a continued decline in costs throughout the year, driven by lower raw material prices [1] Summary by Sections Financial Performance - Q1 2024 sales volume was 2.1115 million kiloliters, down 4.8% year-on-year; average price per ton of beer increased by 4.6% [1] - Gross margin for Q1 2024 was 51.5%, up 2.06 percentage points year-on-year, primarily due to lower barley prices [1] - Normalized EBITDA margin increased by 1.53 percentage points year-on-year [1] Regional Performance - Western Asia: Q1 2024 revenue and normalized EBITDA decreased by 1.5% and increased by 2.0% year-on-year, respectively; sales volume down 4.9% [1] - Eastern Asia: Q1 2024 revenue and normalized EBITDA increased by 5.2% and 18.7% year-on-year, respectively; sales volume down 4.0% [1] Future Outlook - The company forecasts net profit for 2024-2026 to be $1.040 billion, $1.176 billion, and $1.317 billion, respectively, with corresponding EPS of 0.56, 0.63, and 0.71 RMB [2] - The current stock price corresponds to a P/E ratio of 18x, 16x, and 14x for 2024-2026 [2]

Investment Rating - The report maintains a "Buy" rating for Budweiser Brewing APAC (1876 HK) with a target price of HKD 15.60, indicating a potential upside of 36.6% from the current closing price of HKD 11.42 [1][10]. Core Insights - In Q1 2024, Budweiser experienced a decline in sales volume but an increase in average selling price (ASP), leading to better-than-expected margin expansion. Revenue showed a slight year-on-year decline of 0.4%, while ASP increased by 4.6% [1]. - The EBITDA margin improved by 153 basis points to 34.8%, driven by a 206 basis point increase in gross margin to 51.5% [1]. - The company reported a 6% decline in sales volume in the Chinese market, attributed to high base effects from the previous year and adverse weather conditions in March [1]. - South Korea emerged as a highlight with a 9.6% increase in ASP, resulting in a 5.2% increase in sales revenue and an 18.7% increase in EBITDA [1]. Financial Overview - For the fiscal year ending December 31, 2024, the projected revenue is USD 7.478 billion, reflecting a year-on-year growth of 9.1% [2][11]. - The net profit for 2024 is estimated at USD 1.105 billion, with an expected earnings per share (EPS) of USD 0.08, representing a significant growth of 29.7% compared to the previous year [2][11]. - The report highlights a consistent increase in the dividend yield, projected to reach 4.3% in 2024 [2]. Regional Performance - The Asia-Pacific regions showed a decline in sales volume, with East Asia down 4.0% and West Asia down 4.9%, but high-end product sales continued to grow, contributing positively to EBITDA [1]. - The company plans to expand its geographic footprint, increasing the number of cities covered by its brands and its B2B management platform, BEES [1]. Stock Performance - The stock has seen a significant fluctuation, with a 52-week high of HKD 22.20 and a low of HKD 9.88, indicating volatility in market performance [4].

Investment Rating - The report maintains a "Recommend" rating for Budweiser APAC (01876 HK) with a target price of HKD 15 5 [1] Core Views - Budweiser APAC faced volume pressure in Q1 2024 but benefited from price increases and cost efficiencies leading to improved profitability [1] - The company achieved a normalized EBITDA of USD 572 million up 1 4% YoY and normalized net profit attributable to shareholders of USD 297 million down 1 0% YoY [1] - In the Asia Pacific West region China experienced a 4 9% YoY decline in volume due to high base effects and unfavorable weather but saw a 3 6% YoY increase in price per ton driven by premiumization [1] - The Asia Pacific East region saw a 4 0% YoY decline in volume but a significant 9 6% YoY increase in price per ton due to price hikes in South Korea and other markets leading to an 18 7% YoY increase in normalized EBITDA [1] - Overall the company's price per ton increased by 4 6% YoY and gross margin improved by 2 1 percentage points to 51 5% [1] - The report expects sales growth to improve as base effects normalize and profitability to continue rising due to premiumization and cost efficiencies [1] Financial Performance Summary - Q1 2024 revenue was USD 1 643 billion down 3 5% YoY [1] - Normalized EBITDA margin increased by 1 5 percentage points YoY to 34 8% [1] - The company's gross margin improved to 51 5% up 2 1 percentage points YoY [1] - Sales general and administrative expenses as a percentage of revenue increased slightly by 0 8 percentage points to 28 2% [1] Regional Performance - **Asia Pacific West**: Volume declined by 4 9% YoY but price per ton increased by 3 6% YoY with EBITDA margin up 1 45 percentage points YoY [1] - **Asia Pacific East**: Volume declined by 4 0% YoY but price per ton surged by 9 6% YoY with EBITDA margin up 3 34 percentage points YoY [1] Future Outlook - The report forecasts a gradual improvement in sales growth as base effects normalize and competitive positioning strengthens in South Korea [1] - Continued premiumization and cost efficiencies are expected to drive further profitability improvements [1] - The 2024-2026 net profit forecasts are adjusted to USD 1 03 billion USD 1 17 billion and USD 1 29 billion respectively with corresponding PE ratios of 18x 16x and 15x [1] Financial Projections - Revenue is projected to grow from USD 7 235 billion in 2024E to USD 7 947 billion in 2026E with a CAGR of 4 3% [2] - Net profit attributable to shareholders is expected to grow from USD 1 03 billion in 2024E to USD 1 288 billion in 2026E with a CAGR of 9 8% [2] - The PE ratio is forecasted to decline from 18 1x in 2024E to 14 5x in 2026E [2]

Investment Rating - The report maintains a "Buy" rating for Budweiser APAC (1876.HK) with a target price of HKD 14.0, representing a potential upside of 27.3% from the current price of HKD 11.0 [4][5][22]. Core Views - Despite a weaker-than-expected EBITDA growth in Q1 2024, the report expresses optimism for a double-digit growth in organic EBITDA for the full year 2024, driven by strong product mix improvements in China, stable unit costs, and potential growth in South Korea [3][4]. - The report highlights that the increase in expense ratio in Q1 2024 is primarily due to marketing timing and base effects, and expects the expense ratio to remain stable year-on-year for the full year [3][4]. - The report notes that Budweiser's brand continues to drive product mix improvements in China, with a 3.7% increase in average selling price despite a 6.2% decline in volume [3][4]. Summary by Sections Financial Performance - Q1 2024 revenue decreased by 0.4% year-on-year, with a 4.8% decline in volume but a 4.6% increase in average selling price [3][18]. - The report projects 2024 revenue of USD 7.18 billion, reflecting a 4.7% year-on-year growth [12][13]. - The net profit for 2024 is estimated at USD 1.099 billion, representing a 28.9% year-on-year increase [12][13]. Market Dynamics - The report indicates that the Chinese market is experiencing a shift towards premium and super-premium products, which is expected to continue driving revenue growth [3][4]. - In South Korea, price increases from the previous year are expected to support significant EBITDA growth in the coming quarters, despite a slight decline in volume [3][4]. Valuation - Budweiser APAC's current EV/EBITDA is 6.8x, which is significantly lower than industry peers, suggesting a high valuation discount [3][4]. - The report estimates a target price of HKD 14.0 based on a sum-of-the-parts valuation, with a focus on the East Asia and West Asia segments [19][22].

[Performance Summary](index=2&type=section&id=Performance%20Summary) [Q1 2024 Key Financial Metrics](index=2&type=section&id=Q1%202024%20Key%20Financial%20Metrics) Despite a 4.8% volume decrease and 0.4% revenue decline in Q1 2024, Budweiser APAC achieved 4.2% organic Normalized EBITDA growth and a 153 basis point margin expansion to 34.8% through premiumization and cost control Q1 2024 Key Performance Indicators | Metric | Q1 2024 | YoY Change (Organic) | | :--- | :--- | :--- | | Total Volume (hundred thousand liters) | 21,115 | -4.8% | | Revenue (USD million) | 1,643 | -0.4% | | Revenue Per HL Growth | N/A | +4.6% | | Normalized EBITDA (USD million) | 572 | +4.2% | | Normalized EBITDA Margin | 34.8% | +153 basis points | | Normalized Profit (USD million) | 297 | -1.0% | | Normalized EPS (cents) | 2.26 | -0.4% | - CEO Jan Craps stated that despite mild industry performance, the company achieved **EBITDA growth and margin expansion**, primarily driven by **brand premiumization and revenue management** across key markets, boosting **net revenue per hectoliter**[4](index=4&type=chunk) [Management Commentary and Consolidated Results](index=3&type=section&id=Management%20Commentary%20and%20Consolidated%20Results) [Management Commentary](index=3&type=section&id=Management%20Commentary) Management emphasized profit margin improvement in China, market share gains and strong EBITDA growth in South Korea, and double-digit revenue growth in India, driven by premiumization and effective revenue management - Management noted positive progress in key markets like China, South Korea, and India, particularly excelling in **premiumization, market share, and profit margins**[9](index=9&type=chunk) [Consolidated Results](index=3&type=section&id=Consolidated%20Results) Consolidated results indicate a 4.8% volume decrease but only a 0.4% revenue decline due to 4.6% revenue per hectoliter growth, with gross profit up 3.8% organically and Normalized EBITDA up 4.2%, expanding its margin to 34.8% Table 1. Consolidated Results (USD million) | Metric | Q1 2024 | Q1 2023 | Organic Growth | | :--- | :--- | :--- | :--- | | Total Volume (hundred thousand liters) | 21,115 | 22,075 | -4.8% | | Revenue | 1,643 | 1,702 | -0.4% | | Gross Profit | 846 | 854 | 3.8% | | Gross Margin | 51.5% | 50.2% | +206 basis points | | Normalized EBITDA | 572 | 580 | 4.2% | | Normalized EBITDA Margin | 34.8% | 34.1% | +153 basis points | | Normalized Profit Attributable to Equity Holders of Budweiser APAC | 297 | 300 | N/A | | Normalized Basic EPS (cents) | 2.26 | 2.27 | N/A | [Business Review](index=4&type=section&id=Business%20Review) [APAC West](index=4&type=section&id=APAC%20West) APAC West saw a 4.9% volume decrease and 1.5% revenue decline, yet product premiumization drove a 3.6% increase in revenue per hectoliter, leading to 2.0% Normalized EBITDA growth, with strong India market performance offsetting China's impact APAC West Performance | Metric | Organic Growth Rate | | :--- | :--- | | Volume | -4.9% | | Revenue | -1.5% | | Revenue Per HL | +3.6% | | Normalized EBITDA | +2.0% | [China Market](index=4&type=section&id=China%20Market) China market volume and revenue declined by 6.2% and 2.7% respectively due to a high base and unfavorable weather, yet premium product growth drove a 3.7% increase in revenue per hectoliter, 1.0% Normalized EBITDA growth, and a 145 basis point margin expansion, with BEES expanding to over 265 cities - Premiumization strategy yielded significant results: the combined volume share of premium and super-premium products increased by **2.5 percentage points**, with innovative products like Budweiser Gold and Black achieving **double-digit growth**[13](index=13&type=chunk) - Brand activities and innovation: plans include launching **Budweiser 0.0**, **Corona non-alcoholic** and **low-calorie beers**, and strategic partnerships with **NBA** and **Trip.com** to connect with consumers and drive growth[13](index=13&type=chunk)[15](index=15&type=chunk) - Digital transformation: The B2B platform **BEES** has expanded its coverage to over **265 cities**, with the company focusing on leveraging technology to enhance commercial capabilities[13](index=13&type=chunk) [India Market](index=5&type=section&id=India%20Market) India's business continued to outperform peers, with both volume and revenue achieving double-digit growth, and premium and super-premium product portfolio revenue also recording double-digit growth, indicating strong momentum - India's business volume, revenue, and premium and super-premium product portfolio revenue all achieved **double-digit growth**, consistently outperforming the industry[16](index=16&type=chunk) [APAC East](index=5&type=section&id=APAC%20East) APAC East volume decreased by 4.0%, but effective revenue management drove a significant 9.6% increase in revenue per hectoliter, leading to a 5.2% total revenue growth and a strong 18.7% Normalized EBITDA growth, with margin expanding by 334 basis points APAC East Performance | Metric | Organic Growth Rate | | :--- | :--- | | Volume | -4.0% | | Revenue | +5.2% | | Revenue Per HL | +9.6% | | Normalized EBITDA | +18.7% | [South Korea Market](index=5&type=section&id=South%20Korea%20Market) South Korea market volume saw a mid-single-digit decline due to mild industry performance; however, effective revenue management led to high-single-digit revenue per hectoliter growth and mid-single-digit total revenue growth, with the company's overall market share increasing, including brands like Cass, HANMAC, and Stella Artois gaining share in retail and on-premise channels - Market share growth: Despite industry weakness, the company achieved an increase in its **total market share** in South Korea[17](index=17&type=chunk) - Product innovation: To cater to health trends, the company launched **'Zero Sugar' Cass low-calorie beer** and permanently added the limited-edition **Cass Lemon Squeeze** to its product portfolio[17](index=17&type=chunk) [Consolidated Financial Data Analysis](index=6&type=section&id=Consolidated%20Financial%20Data%20Analysis) [Consolidated Income Statement](index=6&type=section&id=Consolidated%20Income%20Statement) The Q1 2024 consolidated income statement shows revenue of **USD 1,643 million**, a slight decrease, with gross profit at **USD 846 million** (3.8% organic growth), normalized operating profit at **USD 408 million** (3.9% organic growth), and profit attributable to equity holders at **USD 287 million** Table 2. Budweiser APAC Consolidated Income Statement (USD million) | Item | Q1 2024 | Q1 2023 | Organic Growth | | :--- | :--- | :--- | :--- | | Revenue | 1,643 | 1,702 | -0.4% | | Cost of Sales | (797) | (848) | 4.4% | | Gross Profit | 846 | 854 | 3.8% | | Normalized Operating Profit | 408 | 418 | 3.9% | | Profit for the Period | 293 | 305 | N/A | | Profit Attributable to Equity Holders of Budweiser APAC | 287 | 297 | N/A | [Key Financial Items Analysis](index=6&type=section&id=Key%20Financial%20Items%20Analysis) This quarter saw a 4.8% volume decrease, partially offset by a 4.6% increase in revenue per hectoliter, mitigating the impact on total revenue; cost of sales decreased by 4.4% due to productivity gains and cost efficiency, while selling, general and administrative expenses rose by 3.0% due to increased commercial investments - Volume decreased by **4.8%**, primarily due to mild industry performance in the China and South Korea markets[19](index=19&type=chunk) - Revenue decreased by **0.4%**, but revenue per hectoliter grew by **4.6%** driven by premiumization[19](index=19&type=chunk) - Cost of sales decreased by **4.4%**, benefiting from productivity improvements, cost efficiency management, and favorable commodity prices[20](index=20&type=chunk) - Selling, general and administrative expenses increased by **3.0%**, primarily attributed to increased commercial investments[21](index=21&type=chunk) [Profit and Earnings Per Share](index=7&type=section&id=Profit%20and%20Earnings%20Per%20Share) Profit attributable to equity holders of Budweiser APAC decreased from **USD 297 million** to **USD 287 million**; after adjusting for non-underlying items, normalized profit attributable was **USD 297 million**, slightly below **USD 300 million** last year; basic EPS was **2.18 cents**, and normalized basic EPS was **2.26 cents**, largely flat compared to **2.27 cents** last year Table 4. Normalized Profit Reconciliation (USD million) | Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Profit Attributable to Equity Holders of Budweiser APAC | 287 | 297 | | Add: Non-underlying Items (after tax) | 10 | 3 | | Normalized Profit Attributable to Equity Holders of Budweiser APAC | 297 | 300 | Table 5a. Basic Earnings Per Share (cents) | Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Basic Earnings Per Share | 2.18 | 2.25 | | Normalized Basic Earnings Per Share | 2.26 | 2.27 | [Reconciliation of Non-IFRS Measures](index=8&type=section&id=Reconciliation%20of%20Non-IFRS%20Measures) [Normalized EBITDA Reconciliation](index=8&type=section&id=Normalized%20EBITDA%20Reconciliation) This section details the reconciliation from IFRS-based 'Profit Attributable to Equity Holders of Budweiser APAC' to 'Normalized EBITDA', a key management performance metric; in Q1 2024, Normalized EBITDA was **USD 572 million**, adjusted from **USD 287 million** profit by adding income tax, finance costs, depreciation, and amortization Table 6. Normalized EBITDA and Profit Attributable Reconciliation (USD million) | Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Profit Attributable to Equity Holders of Budweiser APAC | 287 | 297 | | Add: Non-controlling Interests | 6 | 8 | | Add: Income Tax Expense | 117 | 115 | | Less: Net Finance Income | (14) | (2) | | Add: Profit Before Tax Plus Non-underlying Items | 13 | 4 | | **Normalized Profit Before Tax** | **408** | **418** | | Add: Depreciation, Amortization and Impairment | 164 | 162 | | **Normalized EBITDA** | **572** | **580** | [Appendices](index=12&type=section&id=Appendices) [Appendix I: Organic Growth Calculation](index=12&type=section&id=Appendix%20I%3A%20Organic%20Growth%20Calculation) This appendix illustrates how organic growth data, used for performance analysis, is calculated from Q1 2023 reported results by excluding scope changes and currency translation impacts; in Q1 2024, currency translation had a **USD 63 million** negative impact on revenue and a **USD 24 million** negative impact on Normalized EBITDA Organic Growth Calculation (USD million) | Item | Q1 2023 Reported | Scope | Currency Translation | Organic Growth | Q1 2024 Reported | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 1,702 | 10 | (63) | (6) | 1,643 | | Normalized EBITDA | 580 | (8) | (24) | 24 | 572 | [Appendix II: Segment Information](index=13&type=section&id=Appendix%20II%3A%20Segment%20Information) This appendix presents key financial data by geographic segment (APAC East and West); APAC West is the primary revenue and profit source, contributing **USD 1,352 million** in revenue and **USD 486 million** in Normalized EBITDA in Q1 2024, while APAC East's Normalized EBITDA margin improved from **26.1%** to **29.6%** Segment Performance (Q1 2024) | Item (USD million) | APAC East | APAC West | Total | | :--- | :--- | :--- | :--- | | Revenue | 291 | 1,352 | 1,643 | | Normalized EBITDA | 86 | 486 | 572 | | Normalized EBITDA Margin | 29.6% | 35.9% | 34.8% | [Appendix III: Organic and Reported Growth Figures](index=14&type=section&id=Appendix%20III%3A%20Organic%20and%20Reported%20Growth%20Figures) This appendix compares organic and reported growth rates, visually demonstrating the impact of currency fluctuations on various metrics; for instance, Budweiser APAC's total revenue had an organic growth rate of **-0.4%**, while its reported growth rate, considering exchange rate impacts, was **-3.5%** Q1 2024 Growth Rate Comparison | Metric | Budweiser APAC (Organic) | Budweiser APAC (Reported) | China (Organic) | China (Reported) | | :--- | :--- | :--- | :--- | :--- | | Volume | -4.8% | -4.3% | -6.2% | -6.2% | | Revenue | -0.4% | -3.5% | -2.7% | -6.5% | | Normalized EBITDA | 4.2% | -1.4% | 1.0% | -3.2% | [Other Information](index=4&type=section&id=Other%20Information) [Sustainability](index=4&type=section&id=Sustainability) The company made significant sustainability progress, achieving over **25% carbon reduction** across its entire value chain in China, two years ahead of its 2025 climate action target, and showcased efforts in eco-friendly packaging and supplier low-carbon transition as an official partner of Shanghai Climate Week - The company achieved its 2025 climate action target in China **two years ahead of schedule**, with over **25% carbon reduction** across its entire value chain[12](index=12&type=chunk) [About the Company & Conference Call](index=11&type=section&id=About%20the%20Company%20%26%20Conference%20Call) Budweiser APAC is the largest beer company in the Asia Pacific region, leading in premium and super-premium beer with over 50 brands including Budweiser, Stella Artois, and Corona; a conference call to discuss quarterly results is scheduled for May 8, 2024, at 11:30 AM HKT - The company is the **largest beer company in the Asia Pacific region**, operating in key markets including China, South Korea, and India, and listed on the **Hong Kong Stock Exchange (Stock Code: 1876)**[34](index=34&type=chunk) - The earnings conference call is scheduled for **Wednesday, May 8, 2024, at 11:30 AM HKT**[33](index=33&type=chunk)

Investment Rating - The report maintains an "Outperform" rating for Budweiser APAC, indicating an expected price increase of 10-20% in the next six months [2]. Core Insights - The company reported a revenue of USD 6.856 billion in 2023, reflecting a year-on-year growth of 11.1% on an organic basis, while net profit decreased by 7% to USD 852 million [4]. - The report highlights the strong growth potential in the high-end product segment in the Chinese market, driven by a structural upgrade, while the Korean market faces competitive pressures [4][5]. - The forecast for net profit from 2024 to 2026 is adjusted to USD 1.028 billion, USD 1.165 billion, and USD 1.293 billion, respectively, with expected growth rates of 21%, 13%, and 11% [4]. Financial Performance Summary - In 2023, Budweiser APAC achieved a beer sales volume of 9.2767 million tons, a 4.6% increase year-on-year, with revenue per ton rising to USD 739, up 6.2% [4]. - The EBITDA for 2023 was USD 2.023 billion, a 4.7% increase, with an EBITDA margin of 29.5%, slightly down by 0.3 percentage points [4]. - The company plans to continue expanding its distribution of high-end products, with a total of 220 cities in China and 63 cities for ultra-premium products by the end of 2023 [4].

Investment Rating - The report maintains a "Buy" rating for Budweiser APAC (1876 HK) with a target price of HK$18.90, indicating a potential upside of 73% from the current price of HK$10.94 [1][2]. Core Insights - The report highlights that high sales base from 1Q23 in the China and Korea markets may pressure Budweiser APAC's sales performance in 1H24, but the overall outlook for the year remains unchanged [4][5]. - Management expects a high single-digit growth in average selling prices in 1Q24, which will drive further gross margin expansion and maintain normalized EBITDA margin year-on-year [4][5]. - The report emphasizes that despite potential short-term challenges, the company's product upgrade strategy remains intact, and net profit is expected to accelerate in the second half of 2024 [5][6]. Financial Summary - Revenue projections for 2024E are set at US$7,116 million, with a year-on-year growth of 3.8%, while 2025E revenue is projected at US$7,631 million, reflecting a 7.2% increase [6][8]. - The expected EPS for 2024E is US$0.08, with a growth forecast to US$0.09 in 2025E and US$0.10 in 2026E [1][6]. - The report provides a detailed financial outlook, including a projected EBITDA of US$1,525 million for 2024E, increasing to US$1,758 million in 2025E [6][7]. Market Performance - The report notes that Budweiser APAC's stock has a current market capitalization of US$18,502 million, with a three-month average daily trading volume of US$28 million [2][4]. - The stock's price-to-earnings (P/E) ratio is projected at 30.1 times for 2024, which is lower than the historical average P/E over the past three years [5][6]. Sales Performance - The report anticipates a 3% year-on-year decline in sales volume for 1Q24, primarily due to the high sales base from 1Q23, with specific declines of 4.4% in Eastern Asia and 2.9% in Western Asia [4][5]. - The average selling price is expected to increase by 6.2% in 1Q24, contributing to a gross margin expansion of 0.9 percentage points [5][6].