Sabeco holds 40 percent of market share in terms of consumption

In 2016, Sabeco had VND6 trillion in pre-tax profit, half of the profit made by Heineken, while Sabeco’s market share doubled.

The state’s divestment of Sabeco has resulted in starting price of VND320,000 per share. The price is described as ‘unreasonably high’ considering the company’s business performance.

“Sabeco shares (SAB) are now too expensive,” said Akiyoshi Koji, chair and CEO of Asahi Group, one of the potential SAB buyers.

SAB price has increased by twofold compared with December 2016, when it entered the bourse. 

A report released by a securities company in September showed that Sabeco traded with a P/E of 35x, much higher than Asahi’s 16x, Carlsberg’s 21x and Heineken’s 20x.

However, analysts still believe the divestment would succeed because Vietnam is one of the most best beer markets in the world. 

Meanwhile, Sabeco is the leading company with 40 percent of the market share in terms of consumption.

Though holding the overwhelming market share which is nearly double that of Heineken’s, the No 2 in the Vietnamese market, Sabeco’s profit is lower than Heineken’s. 

According to the Vietnam Industry Research and Consultancy (VIRAC), Heineken Trading revenue was VND33.9 trillion, while Sabeco’s combined revenue was VND30.6 trillion, of which beer sales brought VND26.2 trillion, while the remaining came from packages and beverages.

Heineken Trading is in charge of distributing beer products for the entire Heineken group. The two key brewers of Heineken are Heineken Vietnam Brewery and Heineken Hanoi.

Heineken Vietnam, besides the major brewer located in district 12, HCMC, also owns four subsidiaries in Da Nang, Quang Nam, Tien Giang and Ba Ria-Vung Tau.

Heineken’s revenue is just a bit higher than Sabeco’s, but its profit is far higher.

Sabeco’s combined pre-tax profit in 2016 was VND5.7 trillion, less than half of the total profit made by Heineken group in Vietnam – VND11.6 trillion. The profit of Heineken Vietnam alone was much higher than Sabeco’s, at VND9.5 trillion.

An analyst commented that considering the business performance, Sabeco does not have the leading role in the beer market like VInamilk which is leading the dairy market. 

SAB is now traded at the P/E of nearly 50x, while Vinamilk shares are at 26x.

Other brewers lag far behind Sabeco and Heineken. AB Inbev, the world’s largest brewer, reported modest revenue of VND200 billion.

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Kim Chi