Budweiser Asia Pacific is the leading beer manufacturer in the Asia-Pacific region. In the six months ending June 30, 2022, total sales fell 1.4% year-on-year to about 4,523 billion litres. Although sales were dragged down by the domestic pandemic, the Korean and Indian markets performed strongly. Revenue increased 2.7% year over year to $3.453 billion; earnings before normalized tax depreciation and amortization increased 0.4% year over year to $1,139 million; normalized profit attributable to equity holders was $575 million, up 10.6% year over year; and normalized earnings per share was 4.35 cents.

The high-end and revenue management strategies have been very effective. Budweiser Asia Pacific's overall revenue per 100 litres recorded a 4.2% year-on-year increase in the first half of 2022. In the Chinese market, revenue per 100 litres increased 2.4% year-on-year in the first half of the year, and the share of sales of Budweiser and its ultra-premium product portfolio continued to increase. Sales of Budweiser and ultra-high-end products recorded double-digit growth in expanded regions other than those affected by the pandemic. Along with the recovery in consumption, sales recovered and recorded high single-digit growth in June, while the high-end and ultra-high-end product portfolios rose to double-digit growth. In the Korean market, the business environment continued to improve in the first half of the year. The company's market share in both catering channels and retail channels increased, supporting a steady rise in total market share. Revenue per 100 litres recorded high single-digit growth, which led to double-digit revenue growth. Profit before interest, tax, depreciation, and amortization also recorded double-digit growth. On the Indian market side, as the industry recovered further, the first half of the year achieved strong revenue growth and earnings before depreciation, depreciation, and amortization of taxes. The combined sales volume of high-end and ultra-high-end products on a low base doubled compared to last year.

The impact of cost pressure is relatively manageable. Budweiser Asia Pacific's gross margin reached 50.7% in the first half of 2022, down 227 basis points from endogenous; normalized earnings before tax depreciation, depreciation and amortization reached 33.0%, down 74 basis points from endogenous. In the second quarter, due to factors such as pressure on raw material costs, deleveraging of China's operations and other decline in operating income, earnings before normalized tax depreciation and amortization before depreciation and amortization before normalized tax depreciation declined by 5.6% and 309 basis points, respectively. As the domestic epidemic stabilizes, the company takes effective cost control measures. Although future profit margins are still under pressure, they are expected to be relatively manageable.

Investment advice: Despite facing challenges such as the pandemic and rising raw material prices, the company achieved a 3.7% year-on-year increase in revenue in the second quarter, and revenue per 100 litres increased 4.1% year-on-year.

I am optimistic about the company's continuing high-end strategy and multi-market layout. The arrival of the peak season and the easing of the epidemic will help beer consumption recover, so I recommend buying it.