Summary of the 2021 H1 results of Sabeco JSC (SAB VN)
H1/2021 results: highlights
- SAB’s net revenue of was VND13,088bn, +8.7% y/y, primarily driven by a beer sales growth of 8.3% y/y (higher than the FMCG’s growth of 4.9% y/y according to GSO) which dominated 88.7% of their total revenue. Specifically, (1) an increase of 5.2% y/y of the beer sales volume, (2) the average selling price of beer surged by about 3% y/y. The remaining revenue was stable such as trading raw materials and others rose by 12.1% y/y and 1.3% y/y, respectively.
- Net profit was recorded at VND2,057bn, +6.4% y/y. Gross margin was 30.4%, an improvement of 81 bps y/y thanks to (1) the revenue growth of beer which has a higher gross margin than other products, (2) monthly hedging of materials and a roughly 3% increase in beer’s sale price to offset high input materials costs, and (3) applying digital systems to achieve high-efficiency production.
- Financial health is strong (cash and deposits are VND18,441bn or 64.6% of total assets), with a low leverage (D/E and D/A ratios of 0.04x and 0.03x, respectively).
- For 2021: during the current 4th wave of the Covid-19, SAB was able to respond promptly and adapt to preserve safe production (finalized ingredient contracts, hiked sales prices in H1/2021, boosted sales in modern trade channels in which online FMCG grew by 43% y/y in 5M/2021 based on Kantar Worldpanel). Nevertheless, Q3’s on-trade sales will be hit by the strict mobility restrictions which may last until mid-September. Q4 sales will recover, although are still likely to be weak because of the expected lower income of consumers. As a result, the 2021F net revenue will rise slightly by 4.6% y/y to VND29,235bn, and net profit will be flat at VND4,945bn, with a net margin of 16.9%.
- For 2022: we forecast net revenue and net profit to grow by 15.7% and 18.8%, respectively. The key growth drivers are: (1) a recovery in beer volume, especially in the mid-priced and economy sectors (SAB’s strong portfolio) and on-trade channels, (2) efficiency improvement by BOD’s thorough restructuring, and (3) significant investment in brand marketing and product innovations.
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