External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

Budweiser Brewing  APAC  / Equity Bottom-Up

<ul><li>Stripping off mainly the US$66mn tax provision, Bud APAC 4Q results came in c.3%/6% below us/consensus.</li><li>Operations in South Korea (esp. home channel) looked increasingly challenging upon the return of Japanese brands, with volume consecutively edging down by MSD% since 3Q23 (1H23: +LSD%).</li><li>In our view, the headwind could mean hiccups to further price optimisation initiatives, and any upcoming EBITDA margin expansion would predominantly rely on cost reduction (beyond mix change).</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Stripping off mainly the US$66mn tax provision, Bud APAC 4Q results came in c.3%/6% below us/consensus.Operations in South Korea (esp. home channel) looked increasingly challenging upon the return of Japanese brands, with volume consecutively edging down by MSD% since 3Q23 (1H23: +LSD%).In our view, the headwind could mean hiccups to further price optimisation initiatives, and any upcoming EBITDA margin expansion would predominantly rely on cost reduction (beyond mix change).Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Budweiser APAC (1876 HK) - 4Q23 a Slight Miss; S. Korea Undershoot

<ul><li>In line with ours but likely below what the market expected, Bud APAC shares retreated another 4% upon its 3Q results, in which revenue/net profit grew/declined by +2.0%/-1.5% YoY.</li><li>In our view, while the market has stubbornly laser-focused on the weak S.Korea performance (sales/EBITDA - 5%/-21%), it seemed to have overlooked the solid APAC West performance.</li><li>For instance, the company’s China sales looked no worse than its major peers, considering a HSD% ASP uptick (vs Tsingtao/CR Beer: 8%/LSD%) and a flattish shipment (vs Tsingtao/CR Beer: -11%/-LSD%). </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

In line with ours but likely below what the market expected, Bud APAC shares retreated another 4% upon its 3Q results, in which revenue/net profit grew/declined by +2.0%/-1.5% YoY.In our view, while the market has stubbornly laser-focused on the weak S.Korea performance (sales/EBITDA - 5%/-21%), it seemed to have overlooked the solid APAC West performance.For instance, the company’s China sales looked no worse than its major peers, considering a HSD% ASP uptick (vs Tsingtao/CR Beer: 8%/LSD%) and a flattish shipment (vs Tsingtao/CR Beer: -11%/-LSD%). Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Budweiser APAC (1876 HK) – 3Q Rev/NP +2%/-1%; S.Korea Disappointed

<ul><li>Bud APAC’s core net profit of US$279mn was slightly below us, owing to 1) a weak S.Korea performance which consisted of a 7% revenue decline and a 30% slip in normalised EBITDA, 2) a normalising effective tax base subsequent to a provision reversal in India, and 3) currency erosion driven by a weak RMB and KRW to USD.</li><li>Excluding the latter, Bud APAC reported an organic 14.9% sales growth for the quarter (vs 7.9% as on reported basis), with the help of the continuous strength in China that consisted of an 11.0% volume growth and a 7.8% ASP uptick.</li><li>While we assert that there is no quick fix to the operational landscape in S.Korea (though transient, per management), we think market might have overlooked the robust China momentum that looks to be parallel to our sector picks such as CR Beer (291HK, Buy) and Tsingtao (168HK, Buy). </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Bud APAC’s core net profit of US$279mn was slightly below us, owing to 1) a weak S.Korea performance which consisted of a 7% revenue decline and a 30% slip in normalised EBITDA, 2) a normalising effective tax base subsequent to a provision reversal in India, and 3) currency erosion driven by a weak RMB and KRW to USD.Excluding the latter, Bud APAC reported an organic 14.9% sales growth for the quarter (vs 7.9% as on reported basis), with the help of the continuous strength in China that consisted of an 11.0% volume growth and a 7.8% ASP uptick.While we assert that there is no quick fix to the operational landscape in S.Korea (though transient, per management), we think market might have overlooked the robust China momentum that looks to be parallel to our sector picks such as CR Beer (291HK, Buy) and Tsingtao (168HK, Buy). Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Budweiser APAC (1876 HK) – 2Q Organic Sales +15%

Thematic (Sector/Industry)

<ul><li>We had diverging takeaways from our distributor chancel check after the Dragon Boat Festival holiday, with beer being the only segment with positive momentum over 2Q.</li><li>Considering the price gap between beer and other alcoholic drinks, and also the growing preference of low alcoholic content, in our view, breweries still offer a multi-year story that looks to be sustainable in the next 4-5 years.</li><li>In the contrary, we continue to see near-term drags in baijiu, dairies and condiments that not only led to a lacklustre 2Q but also a possible slow 2H. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We had diverging takeaways from our distributor chancel check after the Dragon Boat Festival holiday, with beer being the only segment with positive momentum over 2Q.Considering the price gap between beer and other alcoholic drinks, and also the growing preference of low alcoholic content, in our view, breweries still offer a multi-year story that looks to be sustainable in the next 4-5 years.In the contrary, we continue to see near-term drags in baijiu, dairies and condiments that not only led to a lacklustre 2Q but also a possible slow 2H. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Consumer Staples – Divergence continues

<ul><li>We untangle the “household excess saving” enigma.</li><li>Instead of a silver bullet, we consider it a status-quo in which consumers are confident enough to spend (or invest) beyond their pre-pandemic budgets by tapping into their savings accumulated during the pandemic, after they first normalize their spending to prepandemic level.</li><li>In other words, we believe the use of “excess saving” would predominantly kick-in upon a full-fledged consumption recovery. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We untangle the “household excess saving” enigma.Instead of a silver bullet, we consider it a status-quo in which consumers are confident enough to spend (or invest) beyond their pre-pandemic budgets by tapping into their savings accumulated during the pandemic, after they first normalize their spending to prepandemic level.In other words, we believe the use of “excess saving” would predominantly kick-in upon a full-fledged consumption recovery. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Consumer – From Reopening to Recovery

China

Budweiser Brewing Company APAC Limited is a company principally engaged in the brewing and distribution of beer. The Company produces, imports, markets, distributes over 50 brands including Budweiser, Stella Artois, Corona, Hoegaarden, Cass, and Harbin. The principal markets include China, South Korea, India and Vietnam.

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Budweiser Brewing APAC (1876 HK)

Budweiser APAC (1876 HK) - 4Q23 a Slight Miss; S. Korea Undershoot

Operations in South Korea (esp. home channel) looked increasingly challenging upon the return of Japanese brands, with volume consecutively edging...

CMB International

Budweiser APAC (1876 HK) – 3Q Rev/NP +2%/-1%; S.Korea Disappointed

In line with ours but likely below what the market expected, Bud APAC shares retreated another 4% upon its 3Q results, in which revenue/net profit...

CMB International

Budweiser APAC (1876 HK) – 2Q Organic Sales +15%

Bud APAC’s core net profit of US$279mn was slightly below us, owing to 1) a weak S.Korea performance which consisted of a 7% revenue decline and a...

CMB International

China Consumer Staples – Divergence continues

We had diverging takeaways from our distributor chancel check after the Dragon Boat Festival holiday, with beer being the only segment with...

CMB International

China Consumer – From Reopening to Recovery

In other words, we believe the use of “excess saving” would predominantly kick-in upon a full-fledged consumption recovery.

CMB International

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