powerballwinnerstonight| CICC: Maintain Budweiser's Asia Pacific "Outperform Industry" rating target price of HK$16.15

CICC released a research report sayingPowerballwinnerstonightTo maintain Budweiser Asia Pacific (01876) "outperform industry" rating, profit forecast for 2024 / 25 unchanged, target price 16Powerballwinnerstonight.15 Hong Kong dollars Company 1Q24 revenue / sales / ASP/ ton cost / EBITDA (the following text is the endogenous growth rate) respectively year-on-year-0.4 Maximi 4.8 /

+ 4.6 EBITDA "0.4 2.06/+1.53ppt" 4.2%, gross profit margin / 2.06/+1.53ppt rate year-on-year. 1Q24's performance is in line with expectations.

The main points of CICC are as follows:

Asia-Pacific West: China's high base volume reduction and price rise, the trend of high-end upgrading continues.

Volume: under the influence of the high base and weather, the sales volume is-6.2% compared with the same period last year. At present, the night show channel, which accounts for a relatively high proportion of the company's sales, is still in the process of gradual recovery. At the end of 2023, the company cooperates with Swire to strengthen the retail channel layout, and the bank is expected to contribute to the total. Price: revenue from high-end and above products continued to grow from a high base, and 1Q24 sales accounted for a year-on-year increase in 2.5ppt. Among them, revenue from innovative products such as Jinzun and Black Gold increased by double digits compared with the same period last year, and structural upgrading continued to support an increase of 3.7% in ASP in 1Q24 China. In addition, the Indian market has maintained double-digit growth in volume and income, while high-end and ultra-high-end products have also achieved double-digit growth and increased share.

East Asia-Pacific region: the improvement of the market structure in South Korea leads to the repair of profitability in the eastern Asia-Pacific region.

Driven by revenue management measures, 1Q24 Korea achieved year-on-year mid-unit growth / medium-unit decline / high-unit growth in revenue / sales / ASP respectively, relying on product portfolio advantages to increase its share, among which Kay Lion, HANMAC and time brands all increased their market share in retail and catering.

The structural upgrading superimposed the downward cost, and the profitability improved significantly.

The cost of 1Q24 increased by 0.4% per ton, and the procurement cost decreased, but the cost increased slightly because of the high-end. Under the resonance of structure upgrade, cost downward, cost reduction and efficiency improvement, the company's 1Q24 gross profit margin increases 2.06ppt, EBITDA rate increases 1.53ppt, and China EBITDA rate increases 1.45ppt.

Outlook for the whole year: nationalization of high-end products, superimposed downward prices of raw materials, is expected to maintain the growth trend.

1) on the revenue side, continue to promote high-end and national expansion, digital support companies to strengthen channel control and cultivate consumer groups, BEES dealer and customer interaction platform 1Q24 increased by 45 cities to 265. The company to Budweiser, Blue Girl, Corona, Harbin Beer and other brands to expand sports, concerts, entertainment and other scenes, continue to improve the brand influence. 2) on the cost side, the downward price of barley and other raw materials in 2024 is gradually reflected in the statement side, and the superimposed company continues to increase efficiency, which is expected to support the further improvement of the company's profitability.

Risks: China's market recovery is not as expected, high-end is not as expected, competition is intensified, costs are rising, and price increases are not smooth.