Budweiser APAC and Tsingtao Brewery: Long-Term Outlooks Unchanged Despite Near-Term Challenges

We maintain our 2024 earnings forecasts for both narrow-moat Budweiser APAC and Tsingtao Brewery ahead of results announcements, as we have already factored in the challenging fourth quarter given seasonality and headwinds in the on-trade channels. Our fair value estimates remain intact at HKD 17 per share for Budweiser APAC and HKD 71 per share (CNY 65 per A-share) for Tsingtao Brewery. We reiterate our view that the short-term headwinds do not impair the long-term competitive advantages of the companies, which lie in their distribution strength. We continue to prefer Budweiser APAC, given its ability to monetize the digitalization of the distribution channel and the strong premium beer portfolio that could benefit from the long-term premiumization trend in China’s beer market.