article | AI Finance and Economics Society Zhang Zexiang
edited | Liang Ye
This article is originally produced by AI Finance and Economics Society. Please do not reprint any channel or platform without permission. Violators will be prosecuted.
Hong Kong investors' dream of "smoking and drinking" is shattered.
According to the original plan, the subsidiary of beer giant InBev , Budweiser Asia Pacific , will be available on the Hong Kong Stock Exchange on July 19. But on July 12, Budweiser-Buss InBev announced on its official website that it will no longer promote its subsidiary Budweiser Asia Pacific 's in Hong Kong, China.
According to the prospectus of Budweiser Asia Pacific , Budweiser Asia Pacific plans to issue 1.627 billion shares, with the IPO price range of HK$40 to HK$47 per share, and the fundraising target is approximately US$8.335 billion to US$9.782 billion. This means that Budweiser Asia Pacific is expected to surpass Uber and become the world's largest IPO so far in 2019.
When China Tobacco was listed in Hong Kong, the explosive market that surged 54% in two trading days was still vivid in my mind. The reappearance of Budweiser Asia gave Hong Kong investors enough confidence, but with the end of the listing process, their longings all turned into bubbles.
is too high in valuation and is bearish by fund investors
In a statement released on the official website, the parent company InBev Anheuser-Busch InBev said that due to various factors, including the current market conditions, the company has not promoted the transaction again. The company will closely monitor the market situation and continuously evaluate options to improve shareholder value, optimize business, drive long-term growth, while adhering to strict financial discipline.
htmlOn the evening of July 14, Budweiser Asia Pacific also issued an announcement on the Hong Kong Stock Exchange to confirm with investors the termination of the IPO.announced that, based on consideration of a number of factors, including the current market conditions, the company has decided to make a global offering and its plan to list on the main board of the Hong Kong Stock Exchange after consultation with the joint representative. The international underwriting agreement for international offerings will not be signed, and the Hong Kong underwriting agreement for public offerings in Hong Kong will not become unconditional.
It is reported that on the first day of the public offering of Budweiser Asia Pacific IPO on July 5, it had recorded HK$7.54 billion in margin (margin), and the next day it recorded HK$9.2 billion in margin subscription amount. According to the announcement of Budweiser Asia Pacific , these funds will be fully returned regardless of interest.
The Hong Kong Economic Daily pointed out that the excessive valuation and management's refusal to lower prices may be the reason for the termination of this IPO process.
According to the prospectus, Budweiser Asia Pacific has very considerable revenue and profits. In 2017, 2018 and the first quarter of 2019, Budweiser Asia Pacific achieved revenue of 53.44 billion yuan, 58.029 billion yuan and 13.672 billion yuan respectively; net profits were 7.388 billion yuan, 9.666 billion yuan and 2.408 billion yuan respectively. The two giants of domestic beer, China Resources Snowflake and Qingdao Beer , have not had an annual revenue of more than 50 billion yuan.
prospectus disclosed that the price-earnings ratio of Budweiser Asia Pacific is about 38.5 times to 45.3 times, which is much higher than the 34 times PE of Qingdao Beer , a competitive company listed in Hong Kong. Many fund investors admitted that Budweiser's valuation is relatively expensive and its stock price is relatively high. However, the management of Budweiser Asia Pacific generally believes that although the market has fluctuated significantly recently, it is not satisfied with the price reduction.
Therefore, the Securities Times quoted people familiar with the matter as saying in the report that July 12 is the Budweiser Asia Pacific pricing day, and the issuance of shares at the lowest IPO price, and the amount of orders placed by institutional investors is still far from enough. Previously, Budweiser Asia Pacific believed that the pricing and valuation were reasonable, so it did not introduce cornerstone investors. The final issuance failed, and Budweiser Asia Pacific chose to terminate the IPO.
0htmlHow to repay the huge debt of 3 trillion yuan?
Budweiser Asia Pacific termination of the IPO will undoubtedly put greater pressure on the parent company Budweiser InBev . Previously, in the prospectus, Budweiser Asia Pacific disclosed that "the company will repay the net proceeds from the global offering to the loans owed to the subsidiary of Budweiser Group to complete the restructuring." Therefore, the market generally believes that Budweiser Asia Pacific is listed for "mother's debt and son repayment."
In the series of mergers and acquisitions initiated by previous companies, InBev InBev not only gained a very high market share, but also gained high debts.The prospectus shows that as of 2018, the debt of InBev InBev reached US$102.5 billion.
is subject to high debts, and rating agencies have successively lowered their ratings on InBev InBev . In March 2019, global rating agency Standard & Poor's (SP), took the lead in downgrading its rating, and another rating agency, Moody's , also followed closely behind the credit rating of InBev InBev from A3 to Baa1.
huge debts are pressing down, forcing InBev to seek new funders. Due to the weak growth of the European and American markets, emerging markets from Asia have become the driving force for Budweiser's growth, and the listing of Budweiser Asia-Pacific is imminent.
data shows that as of 2018, the Asia-Pacific region was not only one of the fastest growing regions in beer consumption, but also became the world's largest beer consumption market. The dividend of the population of
makes the Chinese market the leader in the Asian market. At this stage, the Chinese market has accounted for 25% of global beer consumption. The beer industry generally believes that "those who win China win Asia", and Budweiser Asia Pacific has been deployed in the Chinese market for a long time. By market share, Budweiser Asia Pacific ranked third in the Chinese beer market, with a market share of approximately 16.4% in 2018.
Since 2006, Budweiser-Buss InBev has successively acquired domestic beer brands such as Harbin Beer, Xuejin, Shuanglu, Jinling, Santai, and Mudanjiang in the domestic market. In 2016, it also acquired SAB Miller for 679.1 billion yuan, monopolizing one-third of the global beer market. It is worth mentioning that SAB Miller also holds 49% of the equity of China Resources Snowflake. It can be said that in the Chinese market, Budweiser-Buss InBev has formed a siege against Qingdao Beer .
Budweiser Asia's rapid growth has gradually exposed hidden worries. The prospectus shows that Budweiser Asia's goodwill of up to US$13.2 billion has exceeded 51% of its total assets.
The pressure on the domestic beer industry has also attracted the attention of securities companies. In its research report released by CITIC Lyon on July 15, it also showed a more cautious attitude towards the entire domestic beer industry on the grounds that Budweiser Asia Pacific was suspended from listing.
Research report believes that due to the weather, domestic beer production data showed a decline in April and May this year. At the same time, some nightclubs and karaokes have been banned or shortened due to local supervision. Relevant factors will inevitably affect the beer industry, especially high-end brands such as Budweiser.
For Budweiser's competitors, CITIC Lyon reiterated the "under-market" rating to China Resources Beer in its research report, with a target price of HK$34. In addition, it also lowered the net profit forecast of Qingdao Beer (00168.HK) from 2019 to 21 by 1%, reiterated the "selling" rating, with a target price of HK$42.
