2020 has been a bad year for the economy and all business fields, which can be seen in the VN Index performance. Nhip Cau Dau Tu in mid-March reported that the VN Index had decreased by 155 points, or 16 percent. The sharpest fall was seen in the first days of March, when COVID-19 patient No 17 was discovered.

Shares with big capitalization value have seen prices decrease sharply, including Sabeco (SAB, HCM City Stock Exchange – HOSE). SAB price has dropped by 32 percent and the capitalization value has decreased to $4.2 billion, or VND97.4 trillion.

In 2017, ThaiBev accepted to buy Sabeco at a relatively high price of nearly $5 billion. Also according to Nhip Cau Dau Tu, half of the investment value has ‘evaporated’, dropping to $2.3 billion if referring to SAB closing price and the exchange rate of VND23,150 per dollar.

In 2017, ThaiBev accepted to buy Sabeco at a relatively high price of nearly $5 billion. Also according to Nhip Cau Dau Tu, half of the investment value has ‘evaporated’, dropping to $2.3 billion if referring to SAB closing price and the exchange rate of VND23,150 per dollar.

Prior to 2020, Sabeco was the goose that laid the golden eggs for ThaiBev. The SAB acquisition helped increase its revenue from beer production to $4 billion, an increase of 27 percent over the year before, while the profit increased by 50 percent to $104 million.

However, beer consumption has been declining because of a series of newly released regulations, including Decree 100 which took effect in early January 2020 which imposes heavy sanctions on drunk drivers, a decree on advertisements about alcohol products which took effect in February 2020, and the spread of coronavirus.

In the scenario for the brewery industry, Ban Viet Securities (VCSC) predicted that the sharpest decrease of beer consumption would be seen in Q1 2010 and the situation would improve in following quarters, provided that Covid-19 would ease in Q2. VCSC also assumes that the participants in the beer market, including consumers, will gradually adapt to Decree 100.

The firm predicted that in 2020 Sabeco’s revenue would decrease by 14.7 percent compared with 2019, while the gross profit margin is expected to reach 28 percent, a 2.8 percentage point compared with 2019.

The lower input material costs and the moves to restructure business activities are expected to help Sabeco increase the gross profit margin. SAB’s profit growth would also be supported by an increase in profits from deposit interest.

Meanwhile, SSI has shown three scenarios for Sabeco, with beer output decreasing by 12 percent, 15 percent and 20 percent if the epidemic is contained by the middle, end and after Q2, respectively. If so, Sabeco’s net turnover would decrease by 12 percent, 14 percent and 19 percent, respectively.

Chi Mai 

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