Xiaomo: Lowering the target price of Budweiser Asia Pacific (01876) to HK$6 to maintain a “neutral” rating

The Zhitong Finance App learned that J.P. Morgan Chase released a research report stating that it updated the forecast for the third quarter to reflect a more cautious view of the third quarter; organic revenue and EBITDA for the third quarter fell 11% and 19%, respectively, further deteriorated from 1% and 9% in the first half of the year, and lowered the target price from HK$6.5 to HK$6 to maintain a “neutral” rating.

On the business side, the bank believes that the Chinese market appears to be declining further, with limited demand recovery, typhoon disruptions, inventory removal, and continued promotion and marketing expenses, squeezing growth and profit margins; the market's organic revenue and EBITDA are expected to drop 15% and 22%, respectively. South Korea's sales performance was better than that of the industry, but profit margins faced upward pressure on products and distribution costs; organic revenue and EBITDA fell 4% and 12%, respectively.

According to the bank, both major markets dragged down EBITDA in the third quarter, and potential one-off projects may further damage profits. Net profit for the third quarter is expected to drop 78% year over year to 40 million US dollars. Meanwhile, the bank lowered its 2026 earnings per share forecast by 18% and the 2027-28 forecast by 10%.