Core Insights - Budweiser APAC reported Q3 2025 revenue of $1.555 billion, with an organic year-on-year decline of 8.4% [1] - Normalized EBITDA for Q3 2025 was $438 million, reflecting a year-on-year decrease of 6.9% [1] - Normalized net profit attributable to the parent company was $204 million, down 9.3% year-on-year [1] Revenue and Profitability - Q3 2025 sales volume reached 2.2512 million kiloliters, showing an organic year-on-year decline of 8.6% [1] - Revenue per hectoliter in Q3 2025 increased by 0.1% year-on-year [1] - Gross margin stood at 51.4%, with a slight year-on-year increase; normalized EBITDA margin was 28.2%, up 0.46 percentage points year-on-year, benefiting from commodity price advantages and cost management measures [1] Regional Performance - In the Western Asia-Pacific region, Q3 2025 revenue and normalized EBITDA saw organic declines of 12.0% and 11.9%, respectively, with sales volume down 9.9% year-on-year [1] - The Indian market showed strong performance with double-digit revenue growth in Q3 2025, contributing positively to EBITDA [1] - In the Eastern Asia-Pacific region, Q3 2025 revenue and normalized EBITDA increased by 3.9% and 8.7% year-on-year, respectively, with sales volume down 0.6% [1] - South Korea's sales volume remained stable, outperforming the overall market in both ready-to-drink and non-ready-to-drink channels, supported by effective revenue management and a favorable brand mix [1] China Market Dynamics - In Q3 2025, revenue and normalized EBITDA in China experienced organic declines of 15.1% and 17.9%, respectively, with sales volume down 11.4% year-on-year [2] - Revenue per hectoliter in China decreased by 4.0% year-on-year, attributed to increased investment in innovative products and brand promotion, as well as challenges in inventory management [2] - The company has optimized channel inventory, with significant reductions in inventory volume and turnover days, outperforming industry averages [2] - Future strategies include strengthening non-ready-to-drink channels and investing in premium brands like Budweiser and Corona to improve sales in China [2] Profit Forecast and Valuation - Due to weak beer demand in the Chinese market, the company has revised down its net profit forecasts for 2025-2027 to $589 million, $682 million, and $733 million, representing reductions of 15%, 7%, and 6%, respectively [3] - The current stock price corresponds to a PE ratio of 23x, 20x, and 19x for 2025-2027 [3] - The company maintains a positive outlook on its competitive advantage in the high-end and super high-end segments, sustaining a "buy" rating [3]

Core Viewpoint - Budweiser APAC reported Q3 2025 revenue of $1.555 billion, with a year-on-year decline of 8.4% in organic terms, and normalized EBITDA of $438 million, down 6.9% year-on-year, while normalized net profit attributable to the parent was $204 million, a decrease of 9.3% year-on-year [3]. Group 1: Performance Analysis - In Q3 2025, the company achieved a sales volume of 2.2512 million kiloliters, reflecting an organic year-on-year decline of 8.6% [4]. - Revenue per hectoliter in Q3 2025 increased by 0.1% year-on-year, with a gross margin of 51.4%, showing a slight increase year-on-year [4]. - Normalized EBITDA margin improved to 28.2%, with an organic year-on-year increase of 0.46 percentage points, primarily benefiting from favorable commodity prices and cost management measures [4]. Group 2: Regional Performance - In the Western Asia-Pacific region, Q3 2025 revenue and normalized EBITDA saw organic year-on-year declines of 12.0% and 11.9%, respectively, with sales volume down 9.9% and revenue per hectoliter down 2.4% year-on-year. Notably, the Indian market showed strong performance with double-digit revenue growth [4]. - In the Eastern Asia-Pacific region, Q3 2025 revenue and normalized EBITDA experienced organic year-on-year growth of 3.9% and 8.7%, respectively, with sales volume down 0.6% and revenue per hectoliter up 4.5% year-on-year. South Korea's performance was stable, with significant growth in non-alcoholic beer and RTD categories [4]. Group 3: China Market Dynamics - In Q3 2025, revenue and normalized EBITDA in China saw organic year-on-year declines of 15.1% and 17.9%, respectively, with sales volume down 11.4%, primarily due to business layout, weak on-the-go channels, and inventory management impacts [5]. - Revenue per hectoliter in China decreased by 4.0% year-on-year, attributed to increased investments in innovative products and brand promotion, as well as adverse brand mix effects during inventory management [5]. - The company has been optimizing channel inventory, with significant reductions in inventory levels and turnover days, outperforming industry averages. Future strategies will focus on enhancing non-on-the-go channels and investing in premium brands like Budweiser and Corona [5].

Investment Rating - The report maintains a "Buy" rating for Budweiser APAC (1876.HK) [4] Core Views - Budweiser APAC reported Q3 2025 revenue of $1.555 billion, with a year-on-year decline of 8.4% [1] - Normalized EBITDA for the same period was $438 million, down 6.9% year-on-year, while normalized net profit attributable to shareholders was $204 million, a decrease of 9.3% [1] - The company is focusing on high-end and super high-end segments to leverage competitive advantages despite a weak beer demand in the Chinese market [4] Summary by Sections Overall Performance - Q3 2025 sales volume was 2.2512 million kiloliters, reflecting a year-on-year decline of 8.6% [1] - Revenue per hectoliter increased by 0.1% year-on-year, with a gross margin of 51.4%, showing a slight increase [1] Regional Performance - Western Asia-Pacific region saw revenue and normalized EBITDA decline by 12.0% and 11.9% year-on-year, respectively, with sales volume down 9.9% [2] - The Indian market performed well with double-digit revenue growth, positively impacting EBITDA [2] - Eastern Asia-Pacific region experienced revenue and normalized EBITDA growth of 3.9% and 8.7% year-on-year, respectively, despite a slight decline in sales volume [2] China Market Insights - In Q3 2025, revenue and normalized EBITDA in China fell by 15.1% and 17.9% year-on-year, respectively, with sales volume down 11.4% [3] - The decline was attributed to inventory management and weak on-the-go channel performance [3] - The company is focusing on optimizing channel inventory and enhancing contributions from non-on-the-go channels [3] Financial Forecasts - The report revises down the net profit forecasts for 2025-2027 to $589 million, $682 million, and $733 million, representing reductions of 15%, 7%, and 6% respectively [4] - The current stock price corresponds to a PE ratio of 23x for 2025, 20x for 2026, and 19x for 2027 [4]

Financial Data and Key Metrics Changes - In the first nine months of 2025, total volumes decreased by 7%, revenue decreased by 6.6%, while revenue per hectoliter increased by 0.4% [6] - Normalized EBITDA decreased by 7.7%, and the normalized EBITDA margin contracted by 37 basis points [6] - In the third quarter, total volumes and revenue decreased by 8.6% and 8.4%, respectively, with normalized EBITDA decreasing by 6.9% but the normalized EBITDA margin expanding by 46 basis points [6][10] Business Line Data and Key Metrics Changes - In APAC West, volumes and revenue decreased by 7.9% and 8.7%, respectively, while normalized EBITDA decreased by 9.7% [7] - In China, volumes in the third quarter decreased by 11.4%, and revenue decreased by 15.1%, with a normalized EBITDA decrease of 17.4% [7] - In APAC East, volumes decreased by 0.5%, while revenue and revenue per hectoliter increased by 1.8% and 2.3%, respectively [11] Market Data and Key Metrics Changes - In India, the company delivered double-digit revenue growth in the third quarter, with the Budweiser brand growing ahead of the industry [10] - In South Korea, volumes were flattish, with revenue and revenue per hectoliter growing by mid-single digits [11] - The contribution of the in-home channel to total volumes and revenue has continued to increase, with premium and super premium segments outpacing traditional channels [35] Company Strategy and Development Direction - The company is focused on improving top-line performance by enhancing route-to-market strategies, increasing investments in mega brands, and leading innovation in packaging and product offerings [8][10] - There is a clear priority to reignite growth and rebuild market share momentum, particularly in China [4][5] - The company aims to expand its footprint through targeted geographic expansion and restore excellence in execution [8] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in China due to a soft economic cycle but emphasized opportunities for improvement in inventory management and resource allocation [4][29] - The company remains optimistic about growth in India and South Korea, with a focus on premiumization and innovation to capture market share [10][12] - Management highlighted the importance of maintaining investments in both on-trade and off-trade channels to support brand building and consumer engagement [46][68] Other Important Information - The company is actively managing inventory levels, with current inventories lower than the previous year, and is focused on optimizing its route-to-market [29] - The company is committed to upholding compliance standards amid ongoing customs disputes in South Korea and Taiwan [72][74] Q&A Session Summary Question: Brand performance in China and mega brands' trends - Management discussed the impact of in-home consumption trends and innovations in product offerings, particularly for Budweiser and Corona [16][17] Question: Demand trends in South Korea - Management noted that while the industry remains soft, there are pockets of growth in non-alcoholic and flavored beers, with a strong performance from the core portfolio [21][24] Question: Outlook for the China market - Management confirmed proactive inventory management and expressed cautious optimism for a rebound in selling performance [28][30] Question: In-home channel penetration and expansion plans - Management indicated that the in-home channel currently accounts for about 60% of the industry, with plans to increase penetration closer to industry averages [31][32] Question: Strategies for low alcohol beer market - Management highlighted ongoing innovations in non-alcoholic and low-alcohol products, particularly in South Korea, where consumer interest is growing [52][55] Question: Update on Korean customs tax dispute and Taiwan anti-dumping duties - Management provided updates on ongoing customs disputes and adjustments in tariff rates in Taiwan, emphasizing the importance of market access [72][74]

Financial Data and Key Metrics Changes - In the first nine months of 2025, total volumes decreased by 7%, revenue decreased by 6.6%, while revenue per hectoliter increased by 0.4% [8] - Normalized EBITDA decreased by 7.7%, and the normalized EBITDA margin contracted by 37 basis points [8] - In Q3 2025, total volumes and revenue decreased by 8.6% and 8.4%, respectively, with normalized EBITDA decreasing by 6.9% but the normalized EBITDA margin expanding by 46 basis points [8][9] Business Line Data and Key Metrics Changes - In APAC West, volumes and revenue decreased by 7.9% and 8.7%, respectively, with normalized EBITDA decreasing by 9.7% [10] - In China, volumes in Q3 decreased by 11.4%, revenue decreased by 15.1%, and revenue per hectoliter decreased by 4.1% [10] - In APAC East, volumes decreased by 0.5%, while revenue and revenue per hectoliter increased by 1.8% and 2.3%, respectively [14] Market Data and Key Metrics Changes - In India, the company delivered double-digit revenue growth in Q3, with the Budweiser brand growing ahead of the industry [13] - In South Korea, volumes were flattish, with revenue and revenue per hectoliter growing by mid-single digits [14] - The contribution of the in-home channel to total volume and revenue has continued to increase, with premium and super premium segments outpacing contributions from Chinese restaurants [42] Company Strategy and Development Direction - The company is focused on improving top-line performance through strengthening route-to-market, increasing investment in mega brands, leading innovation, and expanding geographic footprint [11] - The strategy includes enhancing the in-home channel and premiumizing the product offerings to capture growth opportunities [11][12] - The company is committed to leveraging technology to enhance commercial capabilities and optimize route-to-market [13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in China due to a soft economic cycle but emphasized a clear view of improvement opportunities [6] - The company remains optimistic about growth in India and South Korea, with a focus on premiumization and innovation [13][30] - Management highlighted the importance of maintaining investments in both on-trade and off-trade channels despite current pressures [56] Other Important Information - The company is actively managing inventory levels, with current inventories lower than the previous year [35] - There are ongoing customs tax disputes in South Korea, with non-underlying charges related to these claims amounting to $84 million [82] - In Taiwan, a provisional tariff was slightly adjusted down to 31.3% [84] Q&A Session Summary Question: Can you provide more details on brand performance in China, particularly for mega brands? - Management discussed the impact of the in-home channel and innovations like larger packaging formats to improve brand performance [21][22] Question: What is the outlook for the South Korean market given the weak industry demand? - Management noted that while the industry remains soft, there are pockets of growth in non-alcoholic and flavored beers, and the company continues to gain market share [30][31] Question: What is the current penetration level of the in-home channel in China? - Management indicated that the in-home channel accounts for about 60% of the industry but only over 50% of the company's channel mix, highlighting significant growth opportunities [38] Question: How does the company allocate resources between on-trade and off-trade channels? - Management stated that while investments in on-trade channels are maintained for brand building, a larger proportion of spending is directed towards in-home channels [77] Question: What are the strategies for low alcohol beer products? - Management emphasized ongoing innovation in non-alcoholic and low-alcohol beers, with a focus on consumer needs and market maturity [64][66] Question: Can you provide updates on the Korean customs tax dispute and Taiwan's anti-dumping duties? - Management confirmed the ongoing customs tax dispute and the slight adjustment in Taiwan's tariff rate, emphasizing the importance of maintaining market access [82][84]