The world’s largest brewers lines up to buy stake of Sabeco

Late in September, the Ministry of Industry and Trade (MoIT) approved Sabeco's listing on the Ho Chi Minh City's exchange and requested that the beer producer selects a consulting firm to perform the listing procedures. However, the listing timetable, as well as the reference price for the first trading day remains unclear, but Sabeco expects to finalise these issues by the end of this month. Sabeco is known for its iconic Saigon and 333 brands,

The listing of local beer producer has attracted big investors' attention over the last two months after the Government urged equitised State-owned companies to list shares on the stock exchange.

Sabeco is the largest brewer in Vietnam with 34% market share by volume and 46% by revenue. The State now holds 89.6 percent of Sabeco's charter capital and it earlier planned to divest in two phases. The first phase of stake sale will be 53.6 percent of ownership and be conducted by the end of this year while the remaining 36 percent will be transferred next year. Besides the State, Dutch brewer Heineken is the second largest stockholder of Sabeco with 5% of the outstanding shares.

Sabeco’s revenues hit 21.8 trillion VND, an increase of 9 percent year-on-year in the first nine-month of 2016. In terms of sales structure, sales of beer made up 86 percent of Sabeco’s total sales, equivalent to 18.8 trillion VND.

Sabeco also announced that its after-tax profits reached nearly 3.7 trillion VND, of which the parent company earned 3.2 trillion VND, up 27 percent year-on-year and completing its target for the whole year. In 2015, the Sabeco’s revenue grew 10% for the year to 27.16 trillion VND, principally from beer sales while the net profit was 3.6 trillion VND, 28 percent higher than 2014.

The brewer expects net income to rise 10 percent to about 3.76 trillion VND in 2016, double its target growth rate for the year, according to Mr.Le Hong Xanh, Sabeco’s chief executive officer.

Sabeco's stock price is expected to be around 110,000 VND to 125,000 VND per share. With a total listing of 641 million shares, the company's market value is estimated at 70-80 trillion VND (3-3.6 billion USD). Shares of Sabeco are trading on the Over The Counter (OTC) Market at the price of over 130,000 VND per share, up 80 percent over the price recorded in August.

The listing of Sabeco is garnering interest from foreign beer brands attracted by Vietnam’s young population and rising middle class in one of the world’s fastest-growing economies. Beer consumption in Vietnam rose 6 percent in 2015 and is expected to keep growing until 2020, according to Euromonitor International. By contrast, key Asian markets such as China, Japan, Thailand, and the Philippines declined last year.

Mr.Le Hong Xanh said the world’s largest brewers from Europe to Asia are lining up for a chance to buy a stake inSabeco including Dutch brewer Heineken NV, Anheuser-Busch InBev NV and its merger partner SABMiller PLC, Japan’s Asahi Group Holdings Ltd and Kirin Holdings Co., Thailand’s Singha Asia Holding Pte and Thai Beverage PCL.

Sabeco prefers to have several major shareholders, and its auction could attract more domestic companies, some of which could form joint ventures to pool resources for their bids, Mr.Le Hong Xanh said.

Besides Sabeco, Hanoi Beer Alcohol and Beverage Joint Stock Corporation (Habeco) debuted its almost 232 million shares on the Unlisted Public Company Market (UPCoM), the concentrated market under the management of the Hanoi Stock Exchange on October 28, 2016. Habeco's stock prices have steadily risen from 39,000 VND (1.75 USD) per share on the first trading day to 125,900 VND on November 7.

Habeco with charter capital of over VNÐ2.3 trillion, is the third largest beer company in Vietnam with popular brands Hanoi Beer and TrcB?ch Beer. It owns 17 subsidiary and nine affiliated companies with total production capacity of over 800 million litres of beer a year.

The State now owns nearly 82 percent of Habeco’s charter capital while the strategic stakeholder, Carlsberg, holds 15.76 percent. The rest 1.86 percent belongs to Habeco employees.

Habeco reported total revenues of over 9.7 trillion VND and net profits of 951 billion VND in 2015. It has targeted product sales of 7.9 trillion VND with 525 million litres of beer, and profits of 848 billion VND in 2016.Dividend payment this year of Habeco is expected at 15 percent, up from 10 percent in 2015.