Citi Keeps Buy Rating on Bud APAC with HK$8.7 Target Price

Deep News10-31

Citi has released a research report maintaining its "Buy" rating and HK$8.7 target price for Bud APAC (01876).

The company's organic EBITDA fell 23% year-on-year in the third quarter, missing the bank's and market expectations by 12% each, mainly due to weaker-than-expected China sales volume and EBITDA margin, though revenue performance was broadly in line with expectations.

Citi noted that Bud APAC's organic sales volume declined 10% year-on-year in the third quarter, while group average selling price rose 2% year-on-year.

Third-quarter core net profit fell 28% year-on-year to US$147 million, which included a US$30 million provision for overdue receivables from India's Telangana State Beverages Corporation; reported net profit fell 50% year-on-year to US$92 million, also affected by a US$52 million non-recurring withholding tax related to the internal restructuring of its mainland subsidiaries.

Citi reiterated its relative preference ranking for Chinese beer stocks as China Resources Beer (00291) above Bud APAC, and Bud APAC above Tsingtao Brewery (00168).

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