UOB Kay Hian
August 1, 2025

Budweiser Brewing Company APAC: 2Q25 Results, Outlook, and Investment Case—Why This Asia Beer Giant Remains a Buy

Overview: Largest Beer Company in Asia Pacific

Budweiser Brewing Company APAC Limited (Bud APAC) stands as the dominant beer player in the Asia Pacific region. As a subsidiary of global brewing giant Anheuser-Busch InBev, Bud APAC manages a diverse portfolio of over 50 brands, including Budweiser, Stella Artois, Corona, Harbin, Hoegaarden, and Cass. Its core markets encompass China, South Korea, India, and Vietnam.

• Share Price: HK\$8.26
• Target Price: HK\$12.00 (implying 45.3% upside)
• Market Cap: HK\$109.39bn (US\$13.94bn)
• 3-Month Avg Daily Turnover: US\$22.1m
• Major Shareholder: AB InBev Brewing Company Limited (87.22%)
• Sector: Consumer Staples
• Ticker: 1876 HK

Stock Performance Snapshot

• 52-week high/low: HK\$11.00 / HK\$6.84
• Performance: 1mth +6.3%, 3mth +0.5%, 6mth +16.3%, 1yr -10.3%, YTD +10.3%

2Q25 and 1H25 Results: Key Figures and Trends

Bud APAC reported its second quarter 2025 results broadly in line with market expectations, although some headwinds remain, especially in China. Below is a snapshot of the latest financials:

Operational Metrics and Segment Performance

China: Volume Down, Margins Resilient

• 2Q25 beer sales volume in China dropped 7% YoY due to ongoing weakness in restaurant channels and destocking.
• ASP (average selling price) in China rose 1% YoY, supported by premium brand mix.
• Restaurant channel slowdown, attributed to the anti-extravagance policy, is expected to persist through 3Q25, with improvement likely in 4Q25 due to a low base.
• Inventory days and absolute levels are below last year and industry averages, following proactive destocking since 3Q24.

South Korea: Margin Expansion Remains a Focus

• Beer sales volume declined by high single digits, mainly due to shipment phasing.
• ASP grew by low single digits, thanks to robust revenue management.
• Management expects further EBITDA margin expansion, aided by an April 2025 price hike (+2.9% on core brands), cost management, product mix optimization, and innovation in non-alcoholic offerings.

Segmental Performance: Revenue, EBITDA, Shipments, and ASP

Financial Forecasts and Valuation

Valuation: The stock is currently trading at 6.4x 2025 EV/EBITDA and 6.0x 2026 EV/EBITDA, with a DCF-based target price of HK\$12.00 (implying 10.1x 2025 and 9.5x 2026 EV/EBITDA). Dividend yields are forecast to rise from 5.4% in 2024 to 6.5% in 2027.

Cash Flow and Balance Sheet Strength

Key Metrics for Investors

• Profitability: EBITDA margin to improve from 28.9% (2024) to 31.6% (2027).
• Net margin: 11.6% (2024) to 13.7% (2027).
• ROE: 6.9% (2024) to 8.5% (2027).
• Debt/Equity: Remains low, with net cash position sustained throughout the forecast period.

Investment Recommendation and Risks

• Recommendation: Maintain BUY with an unchanged target price of HK\$12.00.
• Rationale: Attractive valuation, resilient margins in China despite volume headwinds, margin expansion potential in South Korea, and solid balance sheet with healthy cash flow and dividend yield.
• Risks: Prolonged weakness in the restaurant channel in China due to anti-extravagance policy, inventory adjustment uncertainties, and macroeconomic headwinds in key markets.
• No earnings revision at this time, but ongoing monitoring of China and South Korea remains warranted.

Conclusion: Well-Positioned for Recovery and Growth

Despite short-term pressure on volumes, especially in China, Budweiser Brewing Company APAC demonstrates robust fundamentals, a strong brand portfolio, and a disciplined approach to cost and margin management. The company’s proactive inventory strategies, focus on premiumization, and innovation in non-alcoholic products underpin its long-term growth potential. With a substantial upside to the target price and a healthy dividend outlook, Bud APAC remains an attractive proposition for investors seeking exposure to the Asian consumer beverage sector.