The beer industry is still not all difficult, Sabeco sets a profit target of 5,289 billion VND

COVID-19 pandemic and strict regulations of the Government will continue to have a great impact on the beer industry in general and Sabeco in particular this year.

Saigon Beer – Alcohol – Beverage Corporation (Sabeco – Code: SAB) has announced the annual document of the Annual General Meeting of Shareholders (AGM) 2021.

In 2021, Sabeco sets a target of 33,491 billion dong of net revenue, 5,289 billion dong of profit after tax; increase 20% and 7% respectively compared to the implementation in 2020.

The beer industry is still not all difficult, Sabeco sets a profit target of 5,289 billion VNDSource: Compiled from Sabeco’s audited consolidated financial statements over the years

Commenting on the beer market this year, Sabeco said that the beer industry is heavily influenced by two unprecedented issues, COVID-19 pandemic and strict government regulations.

COVID-19 has had a serious impact on the tourism industry with travel restrictions, disruption of supply chains and business activities, and delays in socioeconomic activities including preventive measures. Blocking the spread like closing pubs, karaoke and nightclubs in many provinces.

Diseases also affect consumers’ income and impact sales in 2021.

The corporation said the beer industry will likely continue to face the risk of falling beer consumption if the epidemic is not completely controlled this year along with raw material price increases.

In addition, the beer market continues to face difficulties due to Decree 100 and 24 which imposes strict regulations on the marketing and advertising of beer as well as imposing heavier penalties when participating in driving a vehicle while drinking alcohol.

Competition among beer companies is getting fiercer and Sabeco forecasts that the trend of consuming low-end beer brands will continue to grow in the long-term.

In a mid-February report by SSI Research, Sabeco’s management continued to affirm that the company has pegged raw material prices for longer term, and expects shipping cost savings to continue in 2021.

Therefore, despite the recent uptrend in raw material prices, management believes that Sabeco’s margins may not be affected immediately and drastically in the short term.

Regarding selling expenses and the ratio of selling expenses to revenue, SSI Research is estimated at 10.5% in 2021, higher than the level of 7.6% – 10.2% in the period 2015 – 2020.

While the costs for on-promise advertising campaigns are lower than after COVID-19, SSI Research believes that Sabeco is likely to incur higher costs due to the company’s increased coverage on the off- promises, this is where rival companies have thrived.

The report of SSI estimates that the compound growth rate of Sabeco’s after tax profit will be 11.2% in the period 2020 – 2025.

In 2020, Sabeco recorded revenue of VND 27,961 billion, profit after tax of VND 4,937 billion, down 26% and 8% respectively compared to implementation in 2019. With the above results, the corporation paid dividends to shareholders at the rate of 35% / face value (VND 3,500 / share) in the previous two installments.

Source: vietnambiz.vn – Translated by fintel.vn

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