Jefferies: Lowers BUD APAC (01876) target price to HK$7.5, third-quarter outlook faces challenges.

Jefferies issued a research report stating that it has lowered BUD APAC's (01876) net profit forecasts for each year from 2026 to 2028 by 15%, 12%, and 13% respectively, and its EBITDA forecasts by 8%, 8%, and 9% respectively. The target price has been cut from HK$8.4 to HK$7.5, while maintaining a "Buy" rating. BUD APAC's third-quarter outlook still faces challenges. Demand in China's beer market has further weakened, and the company's performance has lagged behind peers, leading to operating deleverage; the South Korean market is also trending weaker. India is currently the main growth driver, but the Telangana accounts receivable provision will put short-term pressure on earnings. The bank forecasts that BUD APAC's third-quarter adjusted EBITDA will fall 30% to US$306 million, with a decline of 33% expected on an organic basis. The bank expects BUD APAC's West region third-quarter sales volume to drop 14.5%, revenue to fall 14% on an organic basis, and EBITDA to decline 39%. China quarterly sales volume is expected to fall 16.5% year-on-year. The bank expects BUD APAC will need to make a provision of approximately US$10 million to US$20 million in the third quarter. East Asia Pacific sales volume is expected to drop 2%, revenue is expected to fall 3% on an organic basis, and EBITDA may decline 15%.