Everbright Securities released a research report stating that maintaining Budweiser Asia Pacific (01876)'s “gain” rating, the net profit forecast for 2024-2026 was 10.4/11.76/1,317 billion US dollars, respectively, equivalent to the 2024-2026 EPS of 0.56/0.63/0.71 yuan, respectively. Continue to be optimistic about the company's competitive advantage in high-end and ultra-high-end fields. Budweiser Asia Pacific released its 2024 quarterly report. In 24Q1, it achieved revenue of US$1,643 million, endogenous -0.4%; normalized EBITDA of US$572 million, endogenous +4.2% YoY; and net profit to mother of US$287 million, or -3.4% YoY.
The main views of Everbright Securities are as follows:
The volume of price increases fell, and the western region dragged down revenue growth.
Looking at volume and price breakdown, 1) volume: the company achieved sales volume of 2.1115 million kiloliters in 24Q1, -4.8% year over year; 2) price: 24Q1 ton of alcohol price +4.6% year over year. The company continues to promote a high-end development strategy, and the price of alcohol per ton has increased in all major markets. The gross margin for 24Q1 was 51.5%, +2.06pcts compared to the previous year. It is mainly affected by the decline in the price of raw materials such as barley, and the cost is expected to continue to decline throughout the year. The 24q1 normalized EBITDA rate was +1.53 pcts year over year. The cost rate for the 24q1 period was +0.80pcts to 28.18% year over year, and the net profit margin was +0.02pcts year over year to 17.47%.
By region, 1) Western Asia: 24Q1 revenue and normalized EBITDA -1.5%/+2.0%, sales volume -4.9%, and tonne price +3.6%; among them, 24Q1 sales volume and tonne price were -6.2%/+3.7%, respectively, resulting in revenue -2.7% YoY and normalized EBITDA +1.0% YoY; India's overall sales volume and revenue in 24Q1 achieved double-digit growth, and revenue from the high-end and ultra-high-end product portfolio also achieved double-digit growth. 2) Eastern Asia: 24Q1 revenue and normalized EBITDA +5.2%/+18.7%, sales volume -4.0%, tonne price +9.6%; 24Q1 sales volume in the Korean market fell, and the price of a ton of alcohol increased in high units (in addition to structural upgrades, it was also related to price increases, such as the company raised prices for core brands in October '23), thus achieving an increase in the number of units in revenue. The share of large single products Kaisi, HANMAC and Shidai Beer both increased in retail and catering channels.
The high base and the effects of rain and weather put pressure on sales in the Chinese market in 24Q1.
Sales in China declined in 24Q1 due to last year's high base and the impact of rainy weather in March. However, high-end products are still progressing smoothly. Under a high base, revenue from the high-end and above product portfolios continues to grow, and revenue from Budweiser's innovative products such as Jinzun and Black Gold achieved double-digit growth; high-end and above products accounted for +2.5 pcts year-on-year in sales. Looking ahead to 24Q2, sales volume and revenue in China are still on a high base. Coupled with the impact of recent continuous rain and rain in the south, sales growth in China is expected to be under some pressure. However, in the medium to long term, there is still plenty of room for improvement in the channel coverage of the company's ultra-high-end brands in China (currently the distribution rate of ultra-high-end brands is less than 10%, and only one-third of the sales outlets distribute Budweiser brands), which will drive the company to achieve growth.
Risk warning: Channel control weakens; market competition intensifies; raw materials rise above expectations.