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Sabeco (SAB) continues to increase market share in the context of weak overall consumer demand 

 Friday, October 6,2023

AsemconnectVietnam - Thanks to implementing the strategy of promoting advertising and promotions, Saigon Beer - Alcohol - Beverage Corporation (Sabeco, code SAB - HOSE) has been gaining market share from Tet to the present.

Prioritize market share in the context of weak consumer demand
In the context of slow economic growth, affected by many declining sectors from real estate, import and export of seafood, textiles..., to many supporting industries in the real estate sector such as construction, construction materials... have affected economic growth. In addition, the strict implementation of Decree 100 has caused the total demand for beer to decline.
In the context of overall decline in beer consumption demand, Saigon Beer - Alcohol - Beverage Corporation has decided to prioritize market share over growth, at the same time as gaining market share from competitors, this will be the basis for the Company to continue growing from 2024, when the economy enters a period of widespread recovery.
In particular, in the second quarter of 2023 alone, Sabeco's advertising and promotion costs increased by 5.6% over the same period and accounted for 9% of total revenue (the same period accounted for 7.8% of total revenue in the second quarter/ 2022), this is an effort to protect market share, as well as gain market share from competitors.
However, Sabeco's Board of Directors shares that it is expected that advertising and promotion costs per total revenue will return to normal levels in 2024 when consumption output improves, and the economy enters a recovery period.
Thanks to efforts to gain market share in the context of weak overall demand, this has helped Sabeco have superior consumption results compared to competitors. In particular, according to SSI Securities, in the first half of 2023, Sabeco's consumption output only decreased by 11% over the same period, while that of its competitors decreased by up to 25%.
Sabeco's Board of Directors added that thanks to the early implementation of advertising and promotion strategies, the Company has begun to regain market share after the Tet holiday until now and is expected to continue to gain more market share. part in the late 2023 period.
“As the leading company in the popular segment with the Saigon Lager brand, we believe that the overall gap between two competitors, Sabeco and Heineken, has narrowed when the popular product line recorded outperformed results compared with the high-end segment in the past year", SSI Securities commented on the positive prospects of Sabeco's popular segment in the context of overall decline in consumer demand.
Growth expected from 2024
Regarding business forecast, in 2023, SSI Securities forecasts that Sabeco's business results may go backwards, starting to grow positively from the fourth quarter of 2023. In particular, entering 2024, Sabeco will enter a new growth momentum with an estimated revenue of VND36,181 billion, an increase of 9.2% compared to the estimate made in 2023 and an estimated net profit of VND5,725 billion, an increase of 16.5% compared to estimates made in 2023.
In particular, with an estimated net profit of VND5,725 billion in 2024, this is estimated to be a record profit level in recent years that the Company can achieve.
Sharing the same opinion with SSI Securities, Shinhan Vietnam Securities also expects Sabeco to enter growth momentum from 2024. In particular, in 2024, expected revenue is VND37,479 billion, an increase of 16.2%, net profit estimated VND5,815 billion, an increase of 17.3%; In 2025, estimated revenue is VND38,153 billion, an increase of 1.8%, estimated net profit is VND6,031 billion, an increase of 3.7%; In 2016, estimated revenue reached VND42,884 billion, an increase of 12.6%, net profit reached VND7,039 billion, an increase of 16.7%.
Shinhan Vietnam Securities assumes Sabeco's growth momentum from 2024 based on the expectation of tourism recovery, contributing to boosting Sabeco's revenue because about 45% of tourists come from China and Japan – 2 countries in the top 10 beer consumption in the world. In addition, tourism will boost employment and service industry income, indirectly boosting spending on non-essential items such as beer; and football is also one of the factors promoting beer consumption in Vietnam when two football tournaments, the AFF Cup and UEFA, taking place in 2024, can help beer consumption flourish.
If you look at the long term, Vietnam with its young population structure and the increase of the middle class will contribute to promoting beer consumption in the long term.
It is known that Sabeco is a rare enterprise on the stock exchange when it continuously maintains attractive annual cash dividends from 3,500 - 5,000 VND/share, with a cash dividend payout ratio of 60 - 80% over 3 years. via. In particular, the Company has not yet invested in new projects, so it is expected that the Company will continue to maintain attractive dividends for investors.
Source: VITIC/Tinnhanhchungkhoan


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