The Zhitong Finance App learned that UBS released a research report stating that it will lower the target price of Budweiser Asia Pacific (01876) from HK$8 to HK$6.8, maintaining a “buy” rating. The bank lowered the company's 2026-2028 profit forecast by 14% to 19%, mainly due to lowering sales volume and profit margin assumptions in the Chinese market and delaying the improvement period of the Chinese business until 2028. UBS anticipates that the company's profit in 2027 will still be pressured by weak sales, high aluminum costs, and increased brand and channel investment.
Budweiser Asia Pacific's revenue and normalized EBITDA for the third quarter of 2026 were US$1,449 million and US$323 million respectively. On a natural basis, the year-on-year decline was 8.4% and 22.9%, respectively. The decline in revenue was mainly dragged down by a 10.1% year-on-year drop in sales, while the average selling price increased 1.9% year over year. The profit margin on normalized EBITDA was 22.3%, a year-on-year decrease of 4.5 percentage points on a natural basis. The bank pointed out that sales in the Chinese market fell 16.8% year on year in the third quarter, and the company coped with the difficult environment by removing inventory. The average selling price remained flat year over year. On a natural basis, revenue fell 16.9% year over year, and normalized EBITDA fell 30.2% year over year.
Management anticipates that weak consumer demand in China will continue until the fourth quarter and 2027, and the company will prioritize stabilizing sales volume and market share through expansion of household channels, product innovation, and high-end technology. Aluminum cost pressure is expected to continue in the fourth quarter and 2027, but supply chain initiatives are expected to partially offset the impact. UBS anticipates that Budweiser Asia Pacific's profit decline will slow in 2027, and the cost outlook will improve from the second half of 2027.