Jefferies has released a research report stating that it has cut its net profit forecasts for Bud APAC (01876) for each year from 2026 to 2028 by 15%, 12%, and 13% respectively, and reduced its EBITDA forecasts by 8%, 8%, and 9% respectively. The price target has been lowered from HK$8.4 to HK$7.5, while the "Buy" rating is maintained.

The outlook for Bud APAC in the third quarter remains challenging. Demand in China's beer market has weakened further, and the company's performance has lagged behind its peers, leading to operating deleverage. The South Korean market is also trending weaker. Currently, India is the main growth driver, but accounts receivable provisions in Telangana will put short-term pressure on earnings.

The bank forecasts that Bud APAC's adjusted EBITDA in the third quarter will fall 30% to US$306 million, with a decline of 33% expected on an organic basis. The bank expects third-quarter sales volume in West Bud APAC to drop 14.5%, revenue to fall 14% on an organic basis, and EBITDA to decline 39%. Quarterly sales volume in China is expected to fall 16.5% year-on-year.

The bank anticipates that Bud APAC will need to make provisions of approximately US$10 million to US$20 million in the third quarter. Sales volume in East Bud APAC is expected to drop 2%, revenue is expected to fall 3% on an organic basis, and EBITDA may decline 15%.