Lyon: Downgraded BUD APAC (01876) target price to HKD 8.7, maintaining "Outperform" rating.
The company continues to prioritize sales in China and increase investments; however, overall macroeconomic and weather conditions have not shown any positive signs. Following the performance, the stock price experienced significant fluctuations, possibly due to earnings exceeding expectations, but management's tone regarding the outlook for the third quarter and dividend plans is relatively conservative.
Lyon released a research report stating that BUD APAC (01876) is still facing pressures in the recovery of its sales in the Chinese market, but the improvement in revenue per hectoliter and brand mix has exceeded expectations. The company continues to prioritize sales in China and increase investment, yet overall macroeconomic conditions and weather have not shown any favorable signs. The stock price has significantly fluctuated after the earnings report, possibly due to profits exceeding expectations, but management's tone regarding the outlook for the third quarter and dividend plans is relatively cautious. The bank has adjusted its profit forecast, lowering the target price from HKD 9 to HKD 8.7 while maintaining an "Outperform" rating. Revenue in the second quarter increased by 0.2% year-on-year to USD 1.678 billion, with organic growth declining by 2.1%, which was 5.2% above expectations. Net profit decreased by 0.2% year-on-year to USD 256 million, exceeding both the bank's and market expectations by 34%. Sales in China fell by 9.7% year-on-year, however, revenue per hectoliter experienced organic growth of 7.2%. Sales in South Korea remained flat year-on-year. The bank has reduced its revenue forecast for 2026 to 2027 by 0.2% to 1%, while increasing its net profit forecast for 2026 to 2028 by 7% to 9%.
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