Top brewer Sabeco eyes acquisition of 2 loss-making firms

Vietnam’s top brewer Sabeco, owned by Bangkok-based ThaiBev, is looking to increase its ownership in two loss-making companies, namely Saigon Binh Tay Beer Group JSC (Sabibeco Group) and Saigon Packaging Group JSC.

After completing transactions per an in-principle proposal approved on Wednesday, Sabibeco Group and Saigon Packaging Group will become subsidiaries of Sabeco, listed on the Ho Chi Minh Stock Exchange (HoSE) as SAB. The transactions will raise SAB’s number of subsidiaries to 27.

As of December 31, 2022, SAB held a 21.8% stake in Sabibeco Group, according to the former’s consolidated financial report for Q4/2022.

The report also showed that SAB had made equity investments of VND50 billion ($2.12 million) at Saigon Packaging Group as of end-2022, while the latter’s registered capital was last raised to VND562 billion ($23.84 million) in 2018 from VND300 billion.

According to reports, Sabibeco Group made post-tax losses of VND107 billion ($4.54 million) and VND80 billion ($3.39 million) in 2020 and 2021, respectively, amid the Covid-19 pandemic peak.

The corresponding figures for Saigon Packaging Group were VND86 billion ($3.65 million) and VND130 billion ($5.51 million), respectively.

Sabeco posted an after-tax profit of nearly VND5.5 trillion ($234.6 million) in 2022, up 40% year-on-year and the highest level since it was acquired by the Thai group at the end of 2017.

ThaiBev, Thailand’s largest beverage maker, acquired a 53.59% stake in Sabeco from Vietnam's Ministry of Industry and Trade for $4.8 billion as it sought to dominate Southeast Asia’s beverage market.

The company, which holds about 40% of the beer market in Vietnam, recorded a net revenue of nearly VND35 trillion ($1.49 billion) last year, up 32%.

Sabeco said that in 2022 it spent more than VND3 trillion ($127.94 million) on advertising and promotions, up 40% compared to the previous year and double 2019.

The brewer now runs 26 factories in Vietnam with a capacity of 2.2 billion liters a year. Vietnam's beer output reached 6.12 billion liters in 2022, up 35.3% year-on-year, according to the General Statistics Office.

SAB shares ended down 2.27% to VND189,400 ($8.03) on Friday.

Sabeco is accelerating its phase-two business restructuring toward becoming an international brewer, Sabeco CEO Neo Bennett told an M&A forum in HCMC on November 23, 2022. The three-stage business restructuring toward such an international company would take 10-12 years.

The year 2021 ended the first phase of this transformation. Sabeco has been strengthening its competitiveness by implementing transformation initiatives across seven strategic pillars namely sales, branding, manufacturing, supply chain, costs, personnel, and governance.

“We are riding on the first phase’s success to carry on phase two with a positive outlook.

“By and large, the board of directors of a company in Vietnam is involved in corporate governance. In other countries, the BoD deals with long-term development strategies, while the executive team is in charge of daily business. This is the difference between Vietnam and the world,” he said.