Budweiser Brewing Company APAC Ltd (1876.HK): 2Q26 Call Takeaways: Challenges & Uncertainties Remain in 2H26

Research evidence excerpt

Budweiser Brewing Company APAC Ltd (1876.HK): 2Q26 Call Takeaways: Challenges & Uncertainties Remain in 2H26

ance cost for its baijiu acquisition) in 2023 as well as the short track record of this business,

we have given nil value to its baijiu business (despite management’s confidence to grow this business profitably).

Risks

Downside risks that could impede the shares from reaching our target price include: (1) weaker-than-expected beer industry

growth in China; (2) slower-than-expected consolidation of China’s beer market; (3) fierce competition from domestic and

foreign peers; (4) unfavorable weather conditions impacting peak consumption in summer; (5) higher-than-expected raw

material costs (including barley, packaging costs); and (6) execution risk in newly acquired companies.

Tsingtao Brewery

(0168.HK; HK$47.08; 1; 29 Jul 26; 16:10)

Valuation

Our target price for Tsingtao of HK$76.10 is based on a 2026E EV/EBITDA of 12x, set at the global peer group average. We use

EV/EBITDA metrics (rather than P/E) to value Chinese beer companies, as it can exclude the distortion of various capital

structures and different expansion strategies. EV/EBITDA can also eliminate the distortion of Tsingtao’s hefty government

subsidies (which we have adjusted to below the EBITDA line) in valuing its underlying operation.

Key upside risks that could impede the stock from reaching our target price include: 1) faster-than-expected recovery in high-

end on-trade channels (i.e. restaurants and catering services); 2) faster-than-expected growth in Tsingtao’s primary brand; 3)

any earnings-accretive M&As that fast-track consolidation; and 4) quicker-than-expected turnaround of Suntory. Key

downside risks include: 1) slower-than-expected recovery in high-end on-trade channels (i.e.