Nomura Maintains Buy Rating on Budweiser APAC, Target HK$9.20

Overview

This report analyzes Budweiser APAC’s Q1 2026 results and assesses its growth prospects and profitability over the coming quarters. While sales rebounded in Q1, the company is expected to face continued sales pressure and margin challenges in Q2. The report maintains a buy rating with a HK$9.20 target, representing 16% potential upside.

Core views

Nomura Securities notes that Budweiser APAC posted a modest 0.1% y/y sales growth in Q1 2026, reversing prior declines. In China, the decline narrowed to -1.5% (from -3.9% and -9.2% in previous periods), while Korea saw mid-single-digit sales declines, though ASPs edged up slightly. However, intensified price competition and channel-expansion initiatives drove overall ASP down 0.8% y/y. Looking ahead, Nomura expects further sales pressure in Q2 2026, driven by: 1. Adverse weather conditions weighing on April sales; 2. Limited sales uplift from the World Cup; and 3. Continued investment to defend market share, which may weigh on margins. Nevertheless, Nomura believes that starting in H2, aided by a low base effect, sales should gradually recover, potentially keeping full-year revenue roughly flat year-over-year.

Analysis framework

The report employs the following analytical methods: 1. Comparing sales changes across Budweiser APAC’s regions to assess regional performance differentials; 2. Analyzing historical data to track trends in sales and ASPs; 3. Using an EV/EBITDA valuation framework to benchmark Budweiser APAC against peers and derive a target price. These approaches lead to the conclusion that the company will face near-term sales pressures, but its long-term valuation remains attractive.

Methodology notes

• Industry/Industrial Analysis FrameworkSupply-demand framework

  Assessing market demand and competitive dynamics through changes in sales and ASP

  The report uses shifts in sales and ASP to gauge market demand and pricing power—standard practice in the beer industry. Sales growth signals improving demand, while ASP movements reflect competitive intensity and product-mix upgrades.

• Valuation MethodologyEV/EBITDA valuation

  Relative valuation based on EV/EBITDA multiples

  The report derives the target price by comparing Budweiser APAC’s EV/EBITDA multiple to those of peers, adjusting for differences in growth and profitability. This is a common approach for valuing mature-sector companies.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• 1876.HK

  Benefits from valuation reversion and long-term growth potential

  Strengths

  Attractive valuation and leading market position

  Weaknesses

  Short-term sales pressure and margin challenges

  Comparison

  Trades at a higher discount to China Resources Beer, but with slightly lower growth prospects

  Risks

  Slower-than-expected sales growth, rising raw material costs, and higher SG&A expenses

Key data

• Q1 2026 Sales Growth Rate0.1%Ended a streak of declines, posting slight positive growth
• China Sales Growth Rate-1.5%Decline has narrowed significantly from prior levels
• ASP Change Rate-0.8%Affected by price competition and channel-expansion strategies
• Target PriceHK$9.20Based on an 8.0x EV/EBITDA valuation
• Current Stock PriceHK$7.93Implies 16% upside potential

Impact & implications

For Budweiser APAC, while Q1 2026 sales have recovered, near-term sales pressure and margin challenges remain. The company must continue to optimize its product mix and control costs to navigate competitive pressures and macroeconomic uncertainty. From a valuation standpoint, the current share price offers an attractive entry point for long-term investors.

Risks

• Weaker-than-expected sales growth
• Sharp increases in raw material costs
• Higher-than-expected SG&A expenses

What to watch

• Sales recovery in H2 2026
• Price-competition dynamics
• Cost-control effectiveness