Citigroup: Initiated coverage of BUD APAC (01876) with a "buy" rating and a target price of 19.8 Hong Kong dollars.

Citibank releases a research report stating that based on the SOTP, the target price for BUD APAC (01876) is HK$19.8, with a rating of "buy". The report indicates that BUD APAC held a pre-earnings conference call before the Hong Kong stock silent period on January 17. Due to weaker than expected sales in the Mainland China market in the early fourth quarter, the bank expects pressure on the company's Mainland China gross margin due to soft average selling prices and weakening raw material cost trends. However, on a positive note, the bank expects sales in Korea to continue to grow year-on-year in the fourth quarter of 2024, with gross margins also expanding year-on-year. Management expects EBITDA to face pressure in the fourth quarter of 2024, primarily due to deleveraging operations in Mainland China. The bank believes that the operational weakness of Mainland China's beer companies in the fourth quarter is already in investors' expectations. In 2025, the bank expects the regional beer industry to continue to trend towards high-end products, especially in a situation where the competitive base is very low, and anticipates that investors' sentiment towards Mainland China beer companies will improve in the second quarter of 2025.