Highlights

• Bud APAC’s 3Q26 revenue was in line but EBITDA missed, impacted by cost escalation, operational deleverage and reduced other operating income.
   
• For China, management reiterated that its near-term priority is to stabilise volume and market share, while continuing to step up commercial investments. For South Korea, management expects the beer industry to remain slightly negative in 2027. In addition, management does not expect any further meaningful one-off impacts related to the provision in India.
   
• On shareholder returns, management states that if business performance continues to face pressure and does not improve, maintaining the current dividend level could become increasingly challenging. Maintain BUY and cut target price by 11% to HK$8.30.
   

Analysis

• 3Q26 normalised EBITDA missed. Budweiser APAC (Bud APAC) reported its 3Q26 results. In 3Q26, revenue was US$1,449m, down 8% yoy (organic growth, same as below), largely in line with VA consensus. This was mainly dragged by a 10% volume decline, mainly due to a performance drag by the China market, partially offset by growth in India, while ASP grew 2%, benefitting from a positive country mix. Normalised EBITDA was US$323m, down 23% yoy, 11% below VA consensus. Normalised EBITDA margin reached 22.3%, falling 446bp yoy, impacted by cost escalation, operational deleverage and reduced other operating income. Reported net profit was US$92m, down 50% yoy, further impacted by a US$52m non-underlying income tax charge from an internal restructuring in China.