Core Viewpoint - CICC has downgraded Budweiser APAC's EBITDA forecasts for 2025 and 2026 by 6% to $1.679 billion and $1.771 billion respectively, due to weak demand in the China region [1] Group 1: Financial Performance - The company's 2Q25 performance met market expectations, with revenue, sales volume, average selling price (ASP), and EBITDA showing year-on-year changes of -3.9%, -6.2%, +2.4%, and -4.5% respectively [2] - In the China market, revenue, sales volume, ASP, and EBITDA experienced year-on-year declines of -6.4%, -7.4%, +1.1%, and -4.0% respectively [2] Group 2: Regional Insights - In the China region, sales volume decreased by 6.4% year-on-year, but the decline rate narrowed, attributed to inventory reduction and channel structure adjustments [3] - ASP in the China region increased by 1.1% year-on-year, benefiting from product mix optimization, with high-end and super high-end products gaining a larger share in non-immediate consumption channels [3] - The Indian market continued to show double-digit growth in revenue, while the Korean market faced pressure due to preemptive stocking and market weakness, leading to a decline in EBITDA margin [4] Group 3: Future Outlook - For 2H25, the company expects stabilization and gradual improvement, with a focus on dealer interests in the China region and low channel inventory [5] - The company plans to expand non-immediate consumption channels and invest in high-end products in Korea and India to enhance profitability [5] - Cost-wise, raw material prices are expected to remain low, which may support profit margin recovery [5]

Core Viewpoint - CICC has downgraded Budweiser APAC's EBITDA forecasts for 2025 and 2026 by 6% to $1.679 billion and $1.771 billion respectively, due to weak demand in the China region [1] Group 1: Financial Performance - 2Q25 results met market expectations with revenue, volume, ASP, and EBITDA showing year-on-year changes of -3.9%, -6.2%, +2.4%, and -4.5% respectively [2] - In China, revenue, volume, ASP, and EBITDA saw declines of -6.4%, -7.4%, +1.1%, and -4.0% year-on-year [2] Group 2: China Market Analysis - In 2Q25, China's sales volume decreased by 6.4% year-on-year, but the decline rate narrowed compared to previous quarters, attributed to inventory reduction and channel structure adjustments [3] - The ASP in China improved by 1.1% year-on-year due to product mix optimization, with high-end and super high-end products gaining a larger share in non-immediate consumption channels [3] Group 3: Regional Performance - The Indian market continued to show double-digit growth in 2Q25, while the Korean market faced challenges due to preemptive stocking and market weakness, leading to a decline in sales volume [4] - In the Asia-Pacific East region, revenue, volume, ASP, and EBITDA experienced year-on-year declines of -8.4%, -10.4%, +2.2%, and -26.5% respectively [4] Group 4: Outlook for 2H25 - The company expects stabilization and gradual improvement in performance, with a focus on dealer interests in China and low channel inventory levels [5] - The company plans to continue investing in high-end products in Korea and leverage high-end and super high-end products in India for growth [5] - Cost expectations for barley and other raw materials remain low, which may support profit margin recovery [5]

Core Viewpoint - Budweiser APAC is facing significant challenges as evidenced by declining sales, revenue, and net profit in both the first quarter of 2025 and the full year of 2024, indicating pressure on the company's growth strategy [1][4][5] Financial Performance Summary - In Q1 2025, total sales volume was approximately 1.974 billion liters, a decrease of 6.1% year-on-year; revenue was $1.461 billion, down 7.5%; gross profit was $745 million, also down 7.5%; and net profit was $234 million, reflecting an 18.47% decline [1] - For the full year 2024, revenue was $6.246 billion, a decline of 8.9%; net profit was $750 million, down 14.77%; and sales volume was 8.48 billion liters, a decrease of 8.8% [1] - The stock price of Budweiser APAC has dropped over 40% since 2024, currently trading just above 8 HKD [1] Market Dynamics - The Chinese market is crucial for Budweiser APAC, contributing over 75% of revenue in 2022, but has recently shown a "volume and price drop" due to weak domestic beer consumption [2] - In 2024, the Chinese market saw a sales volume and price decline of 11.8% and 1.4% respectively, with a market share decrease of 1.49 percentage points [2] - Conversely, the Indian market has shown strong growth, with revenue growth close to 20% in both 2024 and Q4, positioning it as one of the top four global markets for the company [2] Competitive Landscape - Budweiser APAC's high-end market share in China has declined from nearly 50% in 2015 to around 40% currently, as local brands gain market share [6] - The competition in the high-end beer segment has intensified, particularly in the 8 RMB price range, which has become a key battleground for market share [7][8] - The overall beer production in China decreased by 0.6% in 2024, while the high-end beer market is expected to reach 280 billion RMB, accounting for 40% of the total market [8] Strategic Adjustments - The new CEO, Cheng Yanjun, is focusing on strengthening the Budweiser and Harbin beer brands and optimizing supply chains while deepening local market engagement [6][10] - Budweiser APAC is shifting its strategy to include more competitive pricing in the 8-10 RMB range to enhance its market position [8][9] - Future strategies will likely involve product innovation, channel diversification, and enhanced supply chain efficiency to address the challenges posed by local brands and changing consumer trends [9][10]