Elevator Pitch
I assign a Neutral rating to Hong Kong-listed Asia Pacific brewer Budweiser Brewing Company APAC Limited (OTCPK:BDWBF) (OTCPK:BDWBY) [1876:HK] or Budweiser APAC.
Budweiser APAC is the largest beer company in Asia Pacific, and it is a play on the premumization trend in the region's beer markets. A potential re-rating catalyst for the stock will be the utilization of its $1.3 billion cash balance for future acquisitions, particularly in Southeast Asia.
However, the nightlife channel in China might take a longer-than-expected time to recover, and Budweiser APAC faces stiff competition from the second largest player Hite Jinro in Korea. Also, Budweiser APAC is valued by the market at a premium to its peers. Budweiser APAC trades at 37.0 times consensus forward FY 2021 P/E, and it offers a consensus forward FY 2021 dividend yield of 0.8%. As such, I see a Neutral rating for Budweiser APAC as justified.
Readers have the option of trading in Budweiser APAC shares listed either on the Over-The-Counter Bulletin Board/OTCBB as ADRs with the tickers BDWBF and BDWBY, or on the Hong Kong Stock Exchange with the ticker 1876:HK. For those shares listed as ADRs on the OTCBB, note that liquidity is low and bid/ask spreads are wide.
For those shares listed in Hong Kong, there are limited risks associated with buying or selling the shares in terms of trade execution, given that the Hong Kong Stock Exchange is one of the major stock exchanges that is internationally recognized, and there is sufficient trading liquidity. Average daily trading value for the past three months exceeds $30 million, and market capitalization is above $42 billion, which is comparable to the majority of stocks traded on the US stock exchanges.
Institutional investors which own Budweiser APAC shares listed in Hong Kong include Invesco Advisers, Vontobel Asset Management, The
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