Citi: BUD APAC (01876) Expected to See Q3 Sales Fall 7% YoY; Company Expects to Book US$82 Million in Tax and Provisions

Citi released a research report stating that BUD APAC (01876) announced that it expects to record withholding tax expenses from internal restructuring and provisions for receivables in India totaling US$82 million in the third quarter of this year. Citi released a research report predicting that the group's third-quarter sales will fall 7% year-on-year (China down 8%; Eastern Asia Pacific markets down 4%), and the group's organic EBITDA will fall 12% year-on-year (China down 15%; Eastern Asia Pacific down 8%), while maintaining a "Buy" rating on the stock with a target price of HK$10.8. Regarding the China business, Citi expects sales volume to fall 8% year-on-year, average selling price to rise 0.5% year-on-year, sales to fall about 8% year-on-year, gross profit to fall 11% year-on-year, and normalized organic EBITDA to fall 13% year-on-year. In Eastern Asia Pacific (mainly South Korea), it expects sales volume to fall 3% year-on-year, average selling price to fall 2% year-on-year, sales to fall 5% year-on-year, gross profit to fall 7% year-on-year, and normalized organic EBITDA to fall 9% year-on-year. The bank also reiterated that its preferred stocks in China's beer industry, in order, are CHINA RES BEER (00291) > BUD APAC > TSINGTAO BREW (00168), all rated "Buy"; its preference order for domestic consumer staples subsectors is dairy > beverages > condiments > cosmetics > beer > baijiu > pet food.