A recent report from VietCap Securities shows that during a meeting with investors in early February 2024, the leadership of Saigon Beer-Alcohol-Beverage Corporation (Sabeco, stock code SAB) cautiously optimistic about the recovery of beer sales volume in 2024. This is driven by the expected acceleration in Vietnam’s economic growth in 2024. Additionally, the leadership believes that Sabeco will continue to strengthen its market position. In 2023, Sabeco was the number one beer brand in Vietnam in terms of volume, according to third-party market research.
Sabeco expects the entire inventory of high-cost malt due to risk mitigation measures implemented since 2023 to be utilized in 2024. Furthermore, the gross profit margin in 2024 is also expected to be supported by the accumulation of cans at favorable prices by the end of 2023.
In addition, Sabeco expects improvements in operational and commercial efficiency and more effective advertising and promotion (A&P) spending to continue to support margin improvement. The leadership does not plan to increase A&P spending (as a percentage of revenue) in 2024, but will spend on more effective A&P activities.
Sabeco’s consolidated financial report for 2023 showed advertising and promotion expenses of VND 2,814 billion, a decrease of VND 254 billion compared to the previous year. The advertising and promotion expense-to-revenue ratio for 2023 was 9.1%, up from 8.7% in the previous year.
Although the enforcement of Decree 100 has negatively impacted beer sales volume, the leadership does not expect a significant change in the per capita beer consumption pattern in the medium and long term. Sabeco is expected to see a shift in consumer channels from on-trade to off-trade while remaining relatively strong in the off-trade channel.
Sabeco started selling its products on e-commerce platforms in November 2023. Although a small volume of beer was sold through these platforms in 2023, the company hopes to achieve higher sales through this channel in 2024.
Sabeco’s store on Shopee Mall
The leadership mentioned that the process of increasing Sabeco’s ownership ratio in Saigon Beer Corporation Binh Tay (Sabibeco, UPCoM: SBB) from 22% (end of 2023) to over 50% is on track to be completed in the second quarter of 2024.
The leadership expressed a positive outlook on the long-term prospects due to Vietnam’s young and dynamic market. Furthermore, Vietnam remains a beer-consuming market. Additionally, Sabeco has not observed a significant shift in consumer behavior from beer to alternative alcohol products such as spirits and non-alcoholic beer.
In the fourth quarter of 2023, Sabeco recorded net revenue of VND 8,520 billion, a 15% decrease compared to the same period. Higher expenses combined with lower profits from joint venture and associate companies resulted in Sabeco’s after-tax profit reaching VND 967 billion, a 10% decrease compared to the same period. This is also the lowest quarterly profit for the Vietnamese beer giant in the past two years.
For the full year 2023, Sabeco’s net revenue reached VND 30,461 billion, a 13% decrease compared to the previous year. Net profit reached VND 4,118 billion, a 21% decrease. According to the explanation, intense competition, consumer demand, domestic economic downturn, and strict enforcement of Decree 100 have led to decreased revenue and impacted profitability. Sabeco achieved only 76% of its revenue target and 74% of its profit target for the year compared to the set plan.
