Although Budweiser APAC (01876. HK) occupies an important position in the domestic beer market, but its performance in the secondary market does not seem to be sufficiently recognized. Since its listing, its stock price has not been able to show strong growth, and its performance has been relatively sluggish, becoming the target of public criticism.
On April 8, Budweiser APAC fell 5.7%, and its stock price hit a new low again.
The leading performance is like this, and China Resources Beer (00291. HK), Tsingtao Brewery Co., Ltd. (00168.HK) HK) also suffered losses on April 8, with only Hong Kong San Miguel Beer recording a flat close.
At the same time, Yanjing Beer and Chongqing Beer (600132. SH) and other concept stocks also recorded declines, and the stock price performance of sector companies during the year also fell more than rose.
In the face of the menacing downward trend, retail investors can only help by increasing their positions or waiting for a turnaround.
The beer industry is growing in profits, but Budweiser APAC is in decline
Looking back at 2023, according to the statistics of the China Liquor Association, in 2023, the total output of the national beer industry will be 37.89 million kiloliters, a year-on-year increase of 0.8%, the sales revenue will be 186.3 billion yuan, a year-on-year increase of 8.6%, and the total profit will be 26 billion yuan, a year-on-year increase of 15.1%.
However, although the total profit of the industry as a whole has increased, the "hot and cold" felt by companies in the industry are not the same.
Wind data shows that in 2023, among the beer stocks in Hong Kong and A, only Lanzhou Huanghe's revenue will record a year-on-year decline, and the rest will grow, but the growth rate of Budweiser APAC, Tsingtao Beer, and Chongqing Beer is only moderate.
On the profit side, the net profit attributable to the parent of most beer stocks in 2023 has also achieved a year-on-year increase, and only the net profit attributable to the parent company of Lanzhou Huanghe, *ST Xifa, and Budweiser APAC has suffered a year-on-year decline.
Specifically, the net profit attributable to the parent company of the industry leader Budweiser APAC in 2023 will be US$852 million, a year-on-year decrease of 6.68%.
Although there is a decline in earnings in 2023, it is more of a business problem. In contrast, what is more worrying is the situation in the first quarter of this year.
JPMorgan Chase & Co. recently released a report pointing out that Budweiser APAC's sales in China and South Korea are expected to decline in the first quarter due to tepid consumer sentiment. Specifically, the main risk for Budweiser China is the waning contribution from channel mix changes (more nightclubs will be converted to LiveHouse in the second half of 2023), while the South Korean market is being affected by the resurgence of Japanese brands, which are vying for market share lost during the 2019 trade war.
Macquarie forecasts that Budweiser APAC's sales in China and South Korea will decline by 7% and 4% year-on-year in the first quarter due to the high base effect.
Macquarie pointed out that the weak performance of the Chinese market in the fourth quarter of 2023 continued into the Lunar New Year, and the release of accumulated demand in March and April last year caused a high base effect. The sales volume of the beer industry in the Korean market also decreased year-on-year.
What do you think about the prospects for the industry?
It is worth noting that although the situation of Budweiser APAC in the first quarter was downbeat by some institutions, the overall outlook of the beer industry is still optimistic by some institutions as it approaches the peak season.
Guohai Securities recently released a research report saying that the beer industry continued to continue the trend of efficiency growth, and once again achieved a good development situation of "volume and price rise". With the warmer weather and the increase of outdoor sports scenes, the beverage and beer industries are expected to usher in a peak season catalysis.
Bank of China Securities said that beer production in 2023 will increase slightly by 0.8% year-on-year, and it is expected that the sales volume of the industry will remain stable or decline slightly in the future as the proportion of young consumers aged 20-40 will continue to decline. The upgrading of the product structure has promoted the rapid increase in profit margin, and it is expected that the structural upgrade and the downward resonance of raw material prices will continue to rise rapidly in 2024.
Guolian Securities issued a research report pointing out that in terms of population structure, the beer industry is supported by consumer groups, and the sales volume is expected to be stable; There is sufficient space for high-end beer enterprises in mainland China, and structural upgrading is still the main logic of the industry, but in the case of weak recovery of consumption, structural upgrading may be the main feature of the industry at this stage. At the same time, with the improvement of the cost side, the profitability of domestic leading beer companies may be further released, and it is expected to get out of the bottom of the valuation.
Author: Yan XIV