Written by | Fizi
Edited by | Senmiao
Source | Node Finance
Recently, Budweiser Asia Pacific announced its first annual report since its listing, but this financial report does not seem to be perfect.
financial report shows that in 2019, Budweiser Asia Pacific achieved revenue of US$6.546 billion, a year-on-year increase of 1.8%. After calculating the impact and scope of exchange rate, , a year-on-year decrease of 2.9%; achieved profit attributable to equity holders of US$898 million, a year-on-year decrease of 6.3%; total sales volume was 9.317 billion liters, a year-on-year decrease of 3.0%. Regarding the reasons for the decline in performance, Budweiser Asia Pacific said that it was mainly due to intensified competition in the South Korean market and the weakness of China's night economy in the second half of 2019.
Data source: Budweiser Asia Pacific past financial reports
Affected by this, many investment banks lowered the target price of Budweiser Asia Pacific . JPMorgan Chase lowered its target price by 3%, from HK$32 to HK$31; Credit Suisse lowered its profit forecast of Budweiser Asia Pacific by 2%-3%, and its target price from HK$26.2 to HK$25.5, maintaining its "neutral" rating; Morgan Chase lowered its profit forecast for Budweiser Asia Pacific this year and next two years, reducing its target price from HK$32 to HK$30, maintaining its "overweight" rating.
On September 30, 2019, Budweiser Asia Pacific was officially listed on the Hong Kong Stock Exchange, setting a high of HK$32.65 on October 9, with a total market value of HK$431 billion. As of the close of March 9, its share price closed at HK$23.45, down 28% from its highest point. The total market value of that day was about HK$310.5 billion, down more than HK$120 billion from the highest level.
/ 01 /
Performance changed face
Sales and net profit fell
On September 30 last year, Budweiser Asia Pacific was listed on the Hong Kong Stock Exchange, which is regarded as its key layout for increasing its investment in China and Asia Pacific markets.
According to the first annual report of Budweiser Asia Pacific , as of December 31, 2019, the gross profit of Budweiser Asia Pacific was US$3.488 billion, a year-on-year increase of 4.4%; the profit attributable to holders of Budweiser Asia Pacific was US$898 million, a year-on-year decrease of 6.26%; the final dividend is planned to be paid 2.63 cents per share.
Image source: Budweiser Asia Pacific Financial Report
Budweiser Asia Pacific Main sales areas The western region (China, India, Vietnam, etc.) had revenue of US$5.18 billion, and the exchange rate impact and range changes increased by 0.4%. Among them, sales in the Chinese market fell by 3% overall, and even fell by 6.6% in the fourth quarter.
In addition, the eastern region of Budweiser Asia Pacific (Korea, Japan and New Zealand ) performed poorly, with revenue of US$1.37 billion, and after calculating the impact of exchange rate and range changes, it fell by 13.6% year-on-year.
Regarding the decline in performance, Budweiser Asia Pacific said that it was mainly due to intensified competition in the South Korean market and the weak China's nightlife channels in the second half of 2019. In terms of sales volume of
, Budweiser Asia Pacific sold 9.317 billion liters in 2019, and achieved beer sales of 1.541 billion liters in the fourth quarter, a year-on-year decrease of 5.6%. Judging from the specific performance of each region, sales in the eastern region fell by 10.12% year-on-year, driving revenue and profit levels further declined year-on-year. In contrast, sales in the western region fell by only 2.01% year-on-year, and revenue and profit levels have also improved.
Affected by the annual report, many investment banks have lowered the target price of Budweiser Asia Pacific . MCO lowered its target price by 3%, from HK$32 to HK$31; Credit Suisse lowered its Budweiser Asia Pacific profit forecast by 2%-3%, and its target price dropped from HK$26.2 to HK$25.5, maintaining its "neutral" rating; MCO lowered its profit forecast for Budweiser Asia Pacific this year and next two years by 23% and 10%, respectively, lowering its target price of shares from HK$32 to HK$30, maintaining its "overweight" rating.
data shows that Budweiser Asia Pacific is a subsidiary of Budweiser InBev . InBev was founded in 1366 and is headquartered in Belgium. It is not only the world's largest beer production and brewing company, but also the second largest aluminum beer can manufacturing company in the United States. Budweiser Asia Pacific has factories in more than 30 countries around the world, and its products are sold in more than 130 countries. Its brands include more than 500 brands including Baker Beer, China Harbin Beer, Budweiser, Times Beer and Corona .
Chinese food industry analyst Zhu Danpeng said that Budweiser Asia Pacific focuses on high-end, but the overall product layout can actually cover 80% of consumers.However, in terms of channels, the layout of market breadth and channel depth is indeed not done properly. For example, in the area north of the Yangtze River, Budweiser's coverage is not enough. However, after Budweiser Asia Pacific is slightly exhausted, it will not further sink into the market, and will "fight closely" with China Resources and Qingdao , because Budweiser Asia Pacific is eager to repay the money.
The reason for "repaying money" starts from the beginning of its listing.
/ 02 /
Split listing In order to "pay debts for mothers"
In May 2019, Budweiser Asia Pacific submitted an application for prospecting to the Hong Kong Stock Exchange and launched a global offering on July 5 with an issue price of HK$40-47 per share, raising up to HK$76.47 billion.
Budweiser Asia Pacific once admitted during a roadshow on the listing that in this Hong Kong IPO, the "purpose of the proceeds" will still repay the parent company's debts - the net proceeds from the global offering will be used immediately to repay the loans to the subsidiary of Budweiser InBev . Specifically, on the one hand, it is used to fully repay South Korean debt receivables, Budweiser Asia Pacific 's debt to Mexbrew Investment SARL; on the other hand, it is used to repay part of the debt to AB InBev Investment Holding Company Limited under shareholder loans.
According to the corporate financial report data disclosed by InBev , as of June 30, 2018, InBev net debt reached US$104.2 billion. In order to alleviate debt pressure, InBev.com has announced that dividends will be reduced by 50% in fiscal 2018, and the savings will be used to repay the huge debts currently undertaking by the company.
Strangely, 9 days after the global release was launched (July 14, 2019), Budweiser Asia Pacific suddenly announced that it will no longer promote global release and Hong Kong stock main board listing plan. China Merchants Securities Research Report pointed out that the uncertainty in the connection between Budweiser Asia Pacific and its parent company's debt is one of the reasons why it suspended its Hong Kong stock IPO.
At that time, investment banking institutions suggested that Budweiser Asia Pacific lower the share price to HK$38 per share to attract more institutional investors in order to successfully go public. However, Budweiser Asia Pacific was unwilling to reduce the stock market value (financing amount), so she rejected the suggestions of investment banking institutions, which eventually led to the cancellation of the first IPO listing arrangement in Hong Kong in July.
Finally, Budweiser Asia Pacific had to compromise. On September 18, 2019, Budweiser Asia Pacific restarted its global launch, and finally raised about HK$39.2 billion, a decrease of about half from the first release.
. Judging from the first annual report after its listing, Budweiser Asia Pacific 's performance is still in a state of deterioration. In the eastern Asia Pacific region, the company optimized the structure (increased high-priced products), sales declined significantly, reflecting the market's sensitivity to price, which is still relatively large; the Korean market in the western Asia Pacific region saw a decline in both volume and price, indicating that sales volume was not caused by structural optimization, which reflects that either the entire Korean beer market has entered a downturn, or the company's products have problems with pricing in South Korea.
Overall, the company's performance may continue to be under pressure in the short term.
/ 03 /
High-end beer chase
Three giants gathered in Hong Kong stocks
Budweiser Asia Pacific After the successful IPO, the top three beer brands in the Chinese market - China Resources, Qingdao and Budweiser gathered in Hong Kong stocks.
prospectus shows that among the more than 50 beer brands under Budweiser Asia Pacific , nearly 60% are high-end and ultra-high-end brands. Among the 8 billion high-end and ultra-high-end beers consumed in the Chinese market in 2018, Budweiser accounted for 46.6%, far exceeding 14.4% and 11.0% of Qingdao Beer and China Resources Snowflakes.
Guosen Securities previously reported that from 2013 to 2018, only the market share of Budweiser Asia Pacific in China's high-end and ultra-high-end beer markets has increased, and the shares of several other major participants, including Qingdao, China Resources Snowflake and Carlsberg , are shrinking.
Although Budweiser stands out in the high-end beer market, it is only in an oligopoly position in Heilongjiang, Jilin, Fujian and Jiangxi (market share is greater than 40%). At the same time, China Resources, Qingdao Beer, Carlsberg and Yanjing have 9, 5, 3 and 3 advantageous provincial markets respectively.Based on this, in the context of major players continuing to increase their efforts in their respective advantageous base markets, in the long-term perspective of the next 5-10 years, the situation of Budweiser in China's high-end beer market is gradually broken.
From the perspective of sales channels, the nightclub channel of Budweiser Asia Pacific company (sales account for about 20%) includes KTV, restaurant bar, bar, nightclub, etc., and the price increase rate of is about 10%; the price increase rate of catering channels (sales account for about 35%) mainly includes food streets, food stalls, Western food, etc., and the price increase rate of this type of channel is about 10%; the price increase rate of traditional channels (sales account for about 35%) mainly includes tobacco hotels and some supermarkets, and the price increase rate of this type of channel is within the range of 15%-20%; the price increase rate of modern channels (sales account for about 5%) mainly includes some supermarkets and convenience stores, and the price increase rate of this type of channel is within the range of 5%-15%; special channels mainly include e-commerce, and the sales account for about 5%.
Image source: Budweiser official website
In fact, except for Budweiser, China Resources and Qingdao are increasing their investment in high-end beer. For example, Qingdao Beer has always focused on the independent high-endization of domestic brands, and has successively developed products such as "Classic 1903, Whole Wheat White Beer, Raw Pulse, Pearson, Qingdao Beer IPA". China Resources Beer After acquiring Heineken, mid-to-high-end beer contributed a lot to its profit increase. In addition, China Resources also upgraded the Yongchuang Tianya series, launched the mid-range and above Super X to increase the price, and then launched the craftsmanship to create high-end beer. In the first half of 2019 report, the sales of mid-to-high-end beer of China Resources Beer increased by 7% year-on-year, causing the overall average selling price to rise by 4.5% compared with the same period last year.
In addition to beer industry giants, catering industry giants are also going to go to the high-end beer field. Haidilao, Aichen Ramen and others have successively announced the provision of craft beer in their own stores. It is understood that Haidilao's beer sales in 2019 may reach 432 million yuan, which is almost the same as that of small beer companies.
At present, the Chinese beer market has transitioned from a high degree of decentralization to a relative integration. The top five brewers China Resources Snow Beer, Qingdao Beer, InBev , Yanjing and Carlsberg accounted for 70.4% of the total beer market in 2018. Among them, China Resources, Qingdao and Budweiser have become the first echelon. In the situation of "three-legged" situation, it is not easy for anyone to gain more users from their opponents in the short term, and the further decline in Budweiser's market share may give the opponent new opportunities.
