Company Quarterly Earnings Update – SAB VN – Q1 2022

Summary of the Q1/2022 results of Sabeco JSC (SAB VN)

Q1/2022 results: Highlights

  • SAB’s revenue surged by 24.7% y/y to VND7,306bn, mostly driven by beer sector, making up 87.2% of the total. Beer’s revenue jumped 23.9% y/y to VND6,368bn thanks to: (1) a 13% rise in sales volumes to 342 mn liters outpacing a 5% growth of the industry owing to (i) consumers switching to affordable products like mainstream beers (dominated by SAB), (ii) a robust rebound in on-trade channels fueled by strong expansion of SAB’s point of sales across the country, (iii) more Saigon Chill (premium beer) sales in urban areas, and (2) an est.5-6% hike in average selling prices. Other revenue (soft drinks, alcohol, trading raw materials) was VND938bn (+29.9% y/y).
  • The gross margin was up 60bps to 29.8% thanks to (1) a double-digit growth in sales volumes, and (2) a higher contribution of Saigon Chill which has greater profit as well as raising average selling prices (ASPs). Meanwhile, SG&A expenses dipped 9.4% y/y from the high base from last year, when extensive marketing activities were run online and offline. As a result, net profit jumped by 27.1% y/y to VND1,171bn.

Outlook 2022-2023

  • For 2022: the strong growth momentum is expected to continue over the next few quarters thanks to (1) a full tourism reopening, a strong on-trade channels recovery (restaurants, bars) along with consumers switching to mainstream beers, (2) SAB’s stronger brand identity due to extensive marketing efforts, both offline and online, (3) last year’s low base of sales amid the lockdown. We maintain our forecast for beer’s sales volume of 1,692 mn liters, +19.1% y/y, resulting in est.0.5% rise in market share to 37.4%. Overall, net revenue is expected to jump 23.4% y/y to VND33,552bn.
  • There has been a downtrend of aluminum prices ~26.9% from its peak as per our expectations. Since the price is still high vs the average price of 2021, we retain our forecast of an 11% rise in SAB’s average input prices for 2022. We expect a net profit of VND4,060bn (+10.4% y/y), up 2.4% vs our latest estimates due to (1) higher input material prices, partially offset by SAB’s hedging activities and rise in ASP, (2) lower SG&A expenses as a percentage of sales due to higher growth in beer sales.
  • For 2023: We believe that SAB’s competitive advantages and profit margins will be enhanced thanks to their robust restructuring regarding operations & production. SAB is stabilizing its market share in mainstream beers, while raising its urban market share in the premium sector with new products and an aggressive advertising. Therefore, their beer sales volume is expected to reach 1,895 mn liters (+12.1% y/y), back to pre-COVID levels. 2023F net revenue and net profit are projected to grow 15.4% y/y and 31.1% y/y, respectively to VND37,570bn and VND5,324bn.


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