Summary of the 2021 results of Sabeco JSC (SAB VN)
2021 results: Highlights
- Total net revenue was posted at VND26,374bn, down 5.7% y/y. For the beer sector, revenue declined by 6.5% y/y, lower than the F&B industry’s 11.9% drop thanks to (1) SAB gaining an est.0.5% market share from consumers switching to affordable products like mainstream beer due to lower income caused by the pandemic, (2) SAB constantly boosting marketing and advertising activities in both online and offline channels and expanding many points of sale (POS).
- Due to (1) a lower gross margin in 2021 because of a strong rise in input materials (malt, aluminum) costs and a decline in sales volumes during the prolonged lockdown, and (2) increased production costs caused by the “3 on-site” model adopted during the pandemic, 2021 net profit declined by 22.1% y/y to VND3,677bn, with a net margin of 13.9%, in line with our previous estimations.
- The COVID situation: most adults and children (12+ages) are fully vaccinated. Vietnam reopened to all businesses and welcomed international tourism.
- For 2022: total net revenue is estimated to grow by 23.3% y/y to reach VND32,523bn. Key drivers are: (1) the beer sales volume is expected to increase by 19.0% y/y to 1,690 mn liters thanks to a strong economic rebound, (2) consumers’ transition to mainstream beers, backed by a better SAB’s brand identity and dominant market share in this segment. We expect net profit of VND3,968bn (+7.9% y/y), 11.5% lower than our previous estimates as a net result of 1) higher input material prices, which are partially hedged; 2) an increase of 3-5% in selling prices; and 3) economies of scale due to beer’s recovery in sales volume.
- For 2023: net revenue is expected to reach VND37,570bn (+15.5% y/y) and the gross margin will return to 29.0%, driven by: (1) economies of scale in beer sales, (2) the possibility that input materials prices will drop as the war in Ukraine cools, (3) a higher contribution of premium products with better profitability like Saigon Chill, and (4) ThaiBev’s strong restructuring, highlighted by the Quang Ngai brewery’s upgrade in H2/2022, costs have been optimized in both operation and production. Thus, the net profit is predicted to jump by 31.6% y/y to VND5,220bn.
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