Net profit of 3.19 billion in the first half! Budweiser APAC, the 80 billion beer leader, awaits market recovery.

The consumer market has not yet fully recovered, and the performance of beer companies is still slowly rebounding.

Previously, "the king of high-end beer," Budweiser APAC, released its H1 results. It is reported that this is also Cheng Yanjun's first complete H1 earnings report since taking the helm at Budweiser APAC a year ago.

According to public information, Cheng Yanjun is the first Chinese CEO of Budweiser APAC in recent years. He has been deeply involved in the beer industry, having worked at Budweiser APAC for 30 years, previously serving as CEO of Harbin Beer, a subsidiary of Anheuser-Busch InBev. Before leading Budweiser APAC, he was the Global Chief Supply Chain Operating Officer of Anheuser-Busch InBev.

Financial reports show that in H1 2026, Budweiser APAC achieved revenue of $3.171 billion (approximately RMB 21.38 billion), a slight year-on-year increase of 1.12%; shareholders' share of profit was $473 million (approximately RMB 3.19 billion), up 15.65% year-on-year; normalized EBITDA was $926 million, down 8.9% year-on-year, with an overall gross margin of 51.88%.

At the earnings conference call, Budweiser APAC CEO and Co-Chairman Cheng Yanjun stated that the group is continuously investing in flagship brands and innovative products, strengthening market execution capabilities, and expanding non-on-premise channel layouts. The company is building business momentum in the South Korean and Indian markets, leveraging strong local commercial execution and brand influence to drive continuous growth in market share in both regions.

Regarding the main reasons for pressure on Budweiser APAC's EBITDA, the company summarized three points:

First, declining sales volume in the Chinese market dragged down revenue;

Second, continued investment in brand placement and channel expansion led to increased sales and marketing expenses;

Third, shrinkage in other operating income, with multiple factors jointly suppressing profitability levels.

Affected by earnings expectations, Budweiser APAC's stock price has performed relatively poorly in recent years, falling 41.96% in full-year 2023, dropping over 50% in 2024, rebounding slightly by 8.17% in 2025, and falling over 10% year-to-date in 2026, giving back all gains from 2025.

Kan Jian Finance believes that affected by the sluggish domestic consumer market, Budweiser APAC's recent performance has fallen short of expectations. However, looking at a longer time horizon, the resilience of the domestic consumer market remains strong. Once the consumer market recovers, Budweiser APAC's performance is expected to see significant improvement.

A Standout "Report Card"

Although the current domestic consumer market is relatively weak, in the long run, we remain optimistic about the prospects for high-end beer consumption.

From market feedback, the pessimistic expectations regarding performance previously held by the market have already been fully reflected in the stock price.

Overall, Anheuser-Busch InBev owns more than 50 beer brands in the Asia-Pacific region, including well-known brands such as Budweiser, Corona, Hoegaarden, and Blue Moon, with core markets in China, Oceania, South Korea, India, and Vietnam.

In terms of regional division, Budweiser APAC's business is divided into two major regions: the Asia-Pacific Western region, which includes China and India, and the Asia-Pacific Eastern region, primarily focused on the South Korean and Japanese markets.

In H1 2026, total sales volume for Budweiser APAC was 4.262 billion liters, a year-on-year decline of 2.2%, with the drop mainly dragged down by the Chinese market.

Financial reports show that as of H1 2026, revenue for the Asia-Pacific Western region was $2.55 billion, accounting for 80.42% of total revenue; revenue for the Asia-Pacific Eastern region was $621 million, accounting for 19.58% of total revenue.

Regarding the South Korean market, in H1 2026, supported by the continuous expansion of market share in both on-premise and off-premise channels, the company's sales volume remained stable; Q2 sales volume saw low double-digit growth, and normalized EBITDA recorded double-digit growth.

Regarding the Indian market, Budweiser APAC stated that benefiting from continuous industry expansion and the company's increased commercial investment to drive product portfolio upgrades, the market share of its premium and above categories continued to expand, outpacing industry growth, driving double-digit revenue growth in both Q2 and H1 2026.

Regarding the Chinese market, in H1, the group's sales volume decreased by 6%, revenue decreased by 6.4%, and revenue per hectoliter decreased by 0.4%. Performance pressure was mainly influenced by increased investments in off-premise and emerging channels, partially offset by favorable brand product portfolios.

Specifically in Q2, Budweiser APAC's Chinese market sales volume decreased by 9.7%, and revenue decreased by 8.6%. Budweiser APAC attributed this to unfavorable weather in many regions during H1 suppressing outdoor and dining consumption, as well as the continued weak recovery pace of on-premise channels such as bars and restaurants.

In fact, from the perspective of overall revenue structure, whether Budweiser APAC's performance can recover depends fundamentally on the progress of the Chinese market's recovery, which is constrained by macroeconomic cycles. However, "innovation-driven growth" is a direction that enterprises can actively grasp and is key to breaking through.

CFO Bernardo Novick pointed out that as a global enterprise, the company can observe and compare development trends in South Korea and other mature markets, learning from them. In mature markets, relying on innovation to drive growth is crucial, especially in the "balanced choice" track of the industry.

Kan Jian Finance believes that in the short term, although overall performance growth is sluggish, there are not without highlights. The high growth in the South Korean and Indian markets provides Budweiser APAC with a replicable recovery strategy. From a long-term perspective, we continue to be optimistic about the domestic consumer market and equally optimistic about the long-term value of Budweiser APAC.

Waiting for Market Recovery

In fact, last year Budweiser APAC completed a management team changeover, and the market placed high hopes on the newly appointed Cheng Yanjun.

Observing the report card handed in currently, the decline in Budweiser APAC's sales volume and performance has begun to narrow, but the pressures faced by the domestic consumer market cannot be resolved solely through management adjustments.

To boost performance, Budweiser APAC continues to increase marketing investments. Financial reports show that in H1 2026, the company's sales and marketing expenses were $584 million, an increase of approximately $60 million year-on-year, representing an increase of about 11.45%.

During the earnings communication meeting, an investor asked if the company sees positive business feedback from the significant brand marketing resources invested around the World Cup, and how long it will take for these investments to translate into operational performance in the Chinese market?

Budweiser APAC management responded that the return cycle for brand investment is long, and such investments belong to normalized long-term layouts. They also emphasized that the core goal of this round of marketing in the Chinese market is not to drive short-term sales volume, but to consolidate brand assets; even though sales volume faced pressure in H1, the fundamental aspects of the brand remain robust. The group will persist in long-term investment, as the brand remains the company's most important core asset.

After the release of Budweiser APAC's earnings, Citigroup issued a research report stating that due to the underperformance of Chinese business in Q2, it lowered its core net profit forecast for 2026-2028 by 2% and adjusted dividend assumptions to a 100% payout ratio. The institution believes that despite short-term operational pressure, the company still possesses industry-leading status and premium advantages, thus lowering Budweiser APAC's target price from HKD 10.9 to HKD 10.8, maintaining a "Buy" rating.

A research report from CLSA pointed out that Budweiser APAC's Q2 revenue slightly exceeded expectations, with tonnage prices in the China region rising slightly but facing sales pressure. Pure profit significantly exceeded expectations due to non-operating income and lower tax rates. Combining valuation of East and West Asia business segments (East 10x, West 8.5x EV/EBITDA), the institution recognized its brand advantages and product portfolio premiums, continuing to monitor macro policies and household consumption channel developments, setting a target price of HKD 9 and maintaining an "Outperform" rating.

Nomura Securities mentioned in a research report that Budweiser APAC's Q2 performance roughly met expectations, with organic revenue down 2.1% year-on-year to $1.68 billion.

On the profitability front, Budweiser APAC's Q2 EBITDA fell 9.7% year-on-year to $463 million, with an EBITDA margin of 27.6%, a year-on-year decline of 2.29 percentage points, mainly due to increased marketing and channel expenses and weakening capacity leverage. Regarding Chinese business, Q2 sales volume declined 9.7% year-on-year, while average selling price rose 1.2% year-on-year. The institution lowered its target price from HKD 9.2 to HKD 8.6, maintaining a "Buy" rating for Budweiser APAC.

Daiwa Securities published a research report stating that Budweiser APAC's Q2 organic revenue fell 2.1% year-on-year, and adjusted EBITDA fell 9.7% year-on-year to $463 million, broadly in line with market expectations. Management expressed cautious expectations for Q3 Chinese market sales volume, noting no significant improvement in the dining channel in July. Daiwa lowered its EPS forecast for 2026-2027 by 16%-18% to reflect the latest sales recovery pace and downgraded Budweiser APAC's rating from "Buy" to "Hold".

Kan Jian Finance believes that in the short term, although the growth trends in the South Korean and Indian markets are impressive, the company's overall performance remains under pressure due to the drag from the sluggish Chinese market. From a long-term perspective, we are optimistic about the consumption growth potential of the Chinese market, judging that Budweiser APAC's medium-to-long-term performance has gradually bottomed out, requiring only patience for the consumer market to recover.