Goldman Sachs cuts Bud APAC (01876) target price to HK$6.9 as continued weakness in China market weighs on EBITDA

Stock News
Sep 29

Goldman Sachs has released a research report stating that Bud APAC (01876) will announce its third-quarter results by the end of October. The bank forecasts that weak industry demand, unfavorable weather conditions, and ongoing inventory destocking will continue to weigh on sales volume in the China market, with performance potentially lagging behind the industry.

The bank has lowered its recurring net profit forecasts for Bud APAC for 2026 to 2028 by 7% to 12%, and cut its target price from HK$7.3 to HK$6.9, while maintaining a "Buy" rating.

Goldman Sachs expects that in the third quarter, Bud APAC's China EBITDA pressure will be greater than that on revenue and gross profit, mainly due to more pronounced operating deleverage, rising selling and marketing expense ratios driven by new channel and new product promotions, as well as increased delivery expenses resulting from a higher proportion of at-home and O2O sales and rising oil prices.

The bank currently forecasts that on an organic basis, the group's third-quarter revenue and EBITDA will decline by 10% and 18.1%, respectively. In US dollar terms, third-quarter reported net profit is expected to reach US$101 million, with recurring net profit at US$142 million, representing year-on-year declines of 45.4% and 30.4%, respectively.

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