Profit growth resumes – Budweiser APAC, a leading brewery and distributor focused on the Asia-Pacific market, reported 2Q26 normalized attributable profit of US$247mn (+5.6% YoY) and 1H26 normalized attributable profit of US$481mn (+1.5% YoY). The net profit growth is due to lower tax rate in 1H26 compared to 1H25. Normalized EBITDA fell by 8.9% on an organic basis, with the corresponding margin contracting by 236 basis points, reflecting continued weakness in beer consumption across the region.

China market remains weak – Despite the company's strong exposure to World Cup‑related promotional campaigns, China segment reported broad-based YoY deterioration across volumes, revenue, revenue per hectolitre, and normalized EBITDA in 2Q26 (-9.7%, -8.6%, +1.2%, and -15.9%, respectively), compared with the corresponding declines in 2Q25 (-7.4%, -6.4%, +1.1%, and -4.0%). For 1H26, volumes and revenue fell 6.0% and 6.4% YoY, respectively, while revenue per hectolitre edged down 0.4%. Although the company continues to expand its in‑home channel, persistent weakness in the on‑trade channel and unfavourable weather conditions continued to weigh on performance. On a more positive note, the online‑to‑offline (O2O) channel gained traction, delivering double‑digit growth in both 2Q and 1H, though its scale remains insufficient to drive overall growth.

Korea and India markets outperform – other major markets in the Asia‑Pacific region delivered more robust results. South Korea posted resilient performance, with normalized EBITDA growing at a strong double‑digit rate, supported by market share gains in both on‑premise and in‑home channels. India continued to be a bright spot, achieving double‑digit revenue growth in both 1H and 2Q, driven by favourable industry momentum, market share expansion, and strong performance in the premium‑and‑above portfolio.

Our view:

Budweiser APAC has been seeing YoY declines in key operating metrics for consecutive quarters since 1Q24, and the outlook from demand‑driven recovery remains uncertain. China market, the company's largest market, continues to face persistent pressure on both topline and margins, hindering the overall performance. Market sentiment in China remains fragile, contrasting with the more stable conditions seen in other key APAC markets.

The Mgt is prudent about its flagship brand investment, innovation, and in‑home channel expansion, and near‑term upside appears limited given the current demand environment. It is expected that the growth in Korea and India market is sustainable while China's performance will largely determine the group's earnings outlook. Longer‑term drivers include the company's proactive channel shift and its continued expansion in India. The stock is currently trading at 18x FY26E P/E. (Amelia Deng)