We downgrade Carlsberg to Neutral (from Outperform) With this report we downgrade our rating on Carlsberg from Outperform to Neutral. Given that the shares are cheap and China sentiment is already very low, we suspect some may question the timing of our rec. change. We explain our reasoning. The shares are cheap on P/E but less so on EV-metrics Carlsberg is a cheap stock on P/E (c.13.4x CY25e) but this is arguably in large part driven by balance sheet leverage (via the Britvic acquisition). Carlsberg is less cheap on EV-metrics and trades at a premium to Heineken and ABInBev. It is also the best performing alcohol stock in EU Bevs YTD. We expect organic volume and EBIT growth to underwhelm in 2025 Held back by the loss of the UK San Miguel license we don''t expect LFL volume / EBIT growth to enthuse both in an absolute sense and relative to consensus. We forecast flat LFL volumes (co. cons. +0.4%) and +1.4% LFL EBIT growth (co. cons. +4.8%). Evidence of recovery in China is unlikely to come until H225 We believe a meaningful recovery in Carlsberg''s valuation multiple is predicated on the market becoming comfortable that the China business (est c.25% of EBIT) will return to mid-term volume growth. While we believe it will, evidence is unlikely to be seen till H225e given the phasing of comps. More of a 2026 story We believe there could be a lot to like about Carlsberg in 2026 (deleverage, China recovery, Britvic synergies, Kazakhstan Pepsi bottling sales entering organic growth) however we struggle to envisage a material re-rating this year. We therefore downgrade Carlsberg to Neutral (TP to DKK795 from DKK980).