Citi has issued a research report noting that Bud APAC (01876) announced it expects to record a total of US$82 million in internal restructuring withholding tax expenses and India receivable provisions in the third quarter of this year.

Citi forecasts that the group's third-quarter sales will decline 7% year-on-year (China down 8%; East Asia Pacific down 4%), with organic EBITDA falling 12% year-on-year (China down 15%; East Asia Pacific down 8%), and maintains a Buy rating on the stock with a target price of HK$10.80.

For the China business, Citi expects sales volume to fall 8% year-on-year, average selling price to rise 0.5% year-on-year, sales to decline approximately 8% year-on-year, gross profit to fall 11% year-on-year, and normalized organic EBITDA to drop 13% year-on-year.

For East Asia Pacific (primarily South Korea), Citi expects sales volume to decline 3% year-on-year, average selling price to fall 2% year-on-year, sales to drop 5% year-on-year, gross profit to decline 7% year-on-year, and normalized organic EBITDA to fall 9% year-on-year.

The bank also reiterated that its preferred stocks in China's beer industry, in order, are China Resources Beer (00291) > Bud APAC > Tsingtao Brewery (00168), all rated Buy; its sector preferences within China's domestic consumer staples, in order, are dairy > beverages > condiments > cosmetics > beer > baijiu > pet food.