Citigroup: Initiates Coverage on BUD APAC (01876) with a "Buy" Rating, Target Price of 16.2 Hong Kong Dollars.

Citi released a research report on BUD APAC (01876), giving it a "buy" rating with a target price of 16.2 Hong Kong dollars. The bank stated that there were two positive factors in BUD APAC's performance, the first being that one-third of the decline in China's sales in the fourth quarter of last year was due to the company actively reducing inventory through channels, laying the foundation for a fresh start this year; the second being that the dividend payout ratio based on core net profit last year increased by 20 percentage points year-on-year to 96%, increasing cash returns to shareholders. The Citi report pointed out that BUD APAC's core net profit fell by 15% year-on-year last year, which was in line with the bank's and market forecasts. The bank believes that investors' expectations were effectively managed before the company announced its fourth quarter results last year. Despite achieving 8% organic sales growth and 9% organic volume growth in the Asia Pacific East region in the fourth quarter last year, business in China was weak, with organic sales dropping by 20% year-on-year, leading to a 17% year-on-year decline in organic revenue and volume in the Asia Pacific West region.