SAB has set business goals for 2024 that improve both sales and profit over 2023 outcomes, however they are lower than the 2023 aims.

Persistent Policy Impact

According to SAB, the Vietnamese beer industry has faced numerous challenges as a result of the severe impact of the COVID-19 pandemic, as well as the effects of various policy mechanisms such as the Law on the Prevention of Alcohol Harms, Decree 100/2019/ND-CP, which have resulted in business outcomes that do not meet expectations. Furthermore, tightened consumer spending and rising expectations for packaging design and quality are exerting pressure on businesses, necessitating major expenditures in advertising and promotional efforts to improve competitiveness and increase consumption.

SAB believes that as long as the aforementioned policies continue to have a significant impact on the beer industry, the Ministry of Finance's proposal to adjust excise tax rates on health-damaging goods, such as alcohol and beer, will continue to put significant pressure on industry enterprises, including increased financial costs. Furthermore, heated competition remains among beer makers vying for a larger market share.

Benefits Amidst Uncertainty

In the last five years, SAB has worked hard to consolidate its sales and profit peaks. This is demonstrated by SAB's successes following the 2018 reform process and Decree 100/2019, which went into force in 2020. As a result, SAB's annual revenue and after-tax profit were recorded as follows: VND 38,000 billion and VND 5,370 billion in 2019; VND 34,979 billion and VND 4,937 billion in 2020; VND 26,374 billion and VND 3,929 billion in 2021; VND 34,979 billion and VND 5,500 billion in 2022; VND 30,4610 billion and VND 4,255 billion in 2023.

In each period of profit increase or decrease, SAB has provided different explanations, but it seems difficult to repeat the milestone of VND 38,000 billion in revenue. Notably, in 2023, SAB set a revenue target of over VND 40,272 billion and a profit target of VND 5,775 billion. However, actual performance achieved only 76% and 74% of the plans, respectively.

Perhaps for this reason, this year, SAB is more cautious, setting a net revenue target of VND 34,397 billion and an after-tax profit of VND 4,580 billion, increasing by nearly 13% and 8%, respectively, compared to 2023.

It is noteworthy that the company still maintains a high dividend payout ratio (35%). Accordingly, Vietnam Beverage LLC (under Thai Beverage), which holds 53.59% of the charter capital, will receive more than VND 2,200 billion in dividends, despite the effectiveness of the adaptation policy to Decree 100/2019 and the transformation strategy.

According to Shinhan Securities Vietnam, with expectations of improved profit margins, stable raw material costs, and considering (1) policy risks; (2) raw material price increase risks; (3) weak consumption demand risks, the revenue and profit projections for SAB by 2026 are not expected to significantly reach the targets set for 2023. Specifically, SAB's after-tax profit for 2024 is projected to reach VND 4,375 billion, an increase of 2.8% compared to 2023.