Event: Budweiser Brewing Company APAC Limited released the 2022 annual performance report, with an operating income of US $6.478 billion in 2022, an endogenous year-on-year of + 2.4% and an endogenous EBITDA of US $1.932 billion, and an endogenous year-on-year of-5.2%. Of this total, 22Q4 achieved operating income of US $1.165 billion, endogenous EBITDA of-4.8% was US $200 million, and Endogenous EBITDA was-34.7%.
22Q4 markets in South Korea and India remained strong, with rising commodity prices weighing on profits.
In terms of weight price, volume: the company's annual sales volume of 884.91 kL / Q4 in 2022 was 1.57.76 million liters, with endogenous sales of + 0.7% and 2.2% compared with the same period last year; price: 2022 / Q4 tons of wine price + 1.7% Accord 2.6% year on year. The company continues to promote high-end development strategy, the major market tons of wine prices have increased, 2022 / Q4 gross profit margin of 50.0% / Q4 45.8%, endogenous year-on-year-2.79/-4.17Pcts EBITDA for the whole year / Q4 endogenous year-on-year-5.2% CPMI 34.7%. The decline in profit is mainly due to higher raw materials and packaging costs. For the whole of 2022, the cost of sales per 100 litres increased by 7.7% compared with the same period last year. The company expects commodity prices to rise slightly in 2023.
From a regional point of view, 1) Western Asia: 22Q4 revenue and EBITDA endogenous year-on-year-9.6% picul 45.1%, sales endogenous year-on-year-3.6%, ton wine price endogenous year-on-year-6.2%. Among them, the 22-year revenue of high-end and ultra-high-end products in India nearly doubled compared with 21 years, the revenue of the Indian beer market has exceeded the pre-epidemic level, and Budweiser outperformed its peers in the Indian market. 2) Eastern Asia: 22Q4 revenue and EBITDA endogenous year-on-year + 13.8% pedigree 3.8%, sales volume + 5.3%, ton wine price + 8.1%. Among them, South Korea 22Q4 achieved median sales growth, ton wine price high single-digit growth, 22-year market share increased 1.5pcts, market share exceeded the pre-epidemic (2019) level.
The 22Q4 epidemic has led to the poor performance of the Chinese market, waiting for the recovery of the consumption scene after the epidemic.
The repeated outbreak of 22Q4 in China has led to a significant decline in the number of customers in catering and night channels, which has greatly affected the company's performance, especially the sales of high-end and ultra-high-end products, and double-digit decline in revenue from 22Q4's high-end and ultra-high-end products. For the whole of 22 years, the company has seized the time when the impact of the epidemic is small to actively promote high-end, 22-year revenue from high-end and ultra-high-end products is still higher than before the epidemic (2019). In more than half of the expanded cities, Budweiser and high-end product portfolio sales achieved double-digit growth. The company continues to expand its craft beer layout in China, with 22Q4 adding three new craft pubs and partnering with British craft beer brand Brewdog to continuously enrich the craft beer product matrix. On the whole, 22Q4 China achieved revenue and EBITDA endogenous year-on-year-15.0% torque 44.1%; ton wine price-8.6% year-on-year, sales volume-7.0% year-on-year, market share decreased 0.44pcts.
In February 23, the company's performance in China recovered strongly, with sales growing by more than 20% year-on-year, and the catering and night show channels were almost completely reopened by the end of February. With the gradual recovery of passenger flow in the instant drink channel after the epidemic, the company's high-end and above products are expected to have better performance. We are still optimistic about the development of Budweiser brand, which supports the company's sales revenue. Future growth comes from three parts: 1) further expansion of the number of cities covered: only 201 cities will be covered in 2022 (184 in 2021), and it is expected to exceed 250 cities in 2025. 2) expansion of usage scenarios: products include Budweiser Black Gold for elite men, Budweiser Xin Blue focusing on young customers, and so on.
3) Channel expansion: the company will go out of the night channel and increase the penetration of other channels.
Earnings forecast, valuation and rating: taking into account the increased competition in high-end beer after the epidemic, the net profit of homing in 2023-2024 will be reduced to US $1.69 billion (5% lower than the previous one), and the net profit in 2025 is forecast to be US $1.562 billion. The current share price corresponds to the PE of 23-25 36x/30x/27x. We continue to value the company's competitive advantage in high-end and ultra-high-end areas and maintain its "overweight" rating.
Risk tips: the channel control is weakened; the market competition is intensified; the rise of raw materials is higher than expected.