Citi: BUD APAC (01876) Q3 organic EBITDA 12% below expectations; maintains "Buy" rating and HK$8.7 target price

Citi issued a research report maintaining its "Buy" rating and HK$8.7 target price on BUD APAC (01876). The company's Q3 organic EBITDA fell 23% year-on-year, 12% below both the bank's and market expectations, mainly due to China sales volume and EBITDA margin both underperforming expectations, while revenue was broadly in line with expectations. The bank noted that BUD APAC's Q3 organic sales volume fell 10% year-on-year, while group average selling price rose 2% year-on-year. Q3 core net profit fell 28% year-on-year to US$147 million, including a US$30 million provision for overdue receivables from the state-owned beverage corporation in Telangana, India; reported net profit fell 50% year-on-year to US$92 million, additionally 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 RES BEER (00291) over BUD APAC, and BUD APAC over Tsingtao Brewery (00168).