Credit Suisse raised its target price for Budweiser Brewing (BUD APAC)(01876) to HK$26 from HK$22.8 and maintained its "neutral" rating.
The research house said BUD APAC sales declined 10.2% on normalised EBITDA drop of 17.2% in 2Q, which is improving from sales/EBITDA fall of 39%/68% in 1Q. The positive surprise mainly comes from China operation, thanks to (1) operating leverage, (2) efficient cost
savings, and (3) super-premium segments retaining double-digit growth.
Looking ahead, Credit Suisse believes the strong momentum will continue on the back of (1) healthy channel inventory level, (2) sequential recovery of nightlife channel, and (3) easy comparable base of 2H 2019.
Credit Suisse lifted its 2020/21 EBITDA forecasts by 5-7% assuming higher-margin backed
by cost in and local production.
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