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Vietnam. Why are investors attracted to Sabeco?

ThaiBev, the conglomerate owned by Thai billionaire Charoen Sirivadhanabhakdi, has been chasing Sabeco’s stakes for a few years. More than 10 investors have registered to buy Sabeco’s shares. Why are investors so interested in the Vietnamese beer manufacturer?

It is the largest brewery in the Vietnamese market, dominating the middle-class beer market segment.

Sabeco has been a joint stock company for eight years, after equitization. However, the state now still holds 89.95 percent of shares, while Heineken holds 5 percent.

Therefore, the joint stock company, by nature, is still a state-owned enterprise. The chairs of the company’s board of directors and other key positions are appointed by the Ministry of Industry and Trade (MOIT).

Sabeco’s managers suggested selling stakes in two campaigns, about 20-30 percent of stakes each. The second campaign will come one year after the first.

Meanwhile, MOIT has recently submitted to the government the plan to sell Sabeco stakes, to reduce the state’s ownership ratio from 89.59 percent to 36 percent.

This means that the new investors will have opportunities to hold controlling stakes in the company.

However, to many people’s surprise, the plan to withdraw the state’s capital and list shares on the bourse was not put into discussion at Sabeco’s shareholders’ meeting held on May 27.

Answering shareholders, Vo Thanh Ha, chair of Sabeco, said Sabeco could not make a decision on the issue and only the state can determine the capital withdrawal process and how much to sell.

As such, Sabeco still does not intend to list its shares, while investors have become impatient. Since equitization, Sabeco has changed its chair of the board of directors twice, but has not fulfilled the promise to list shares.

Some sources said Sabeco doesn’t want to list shares on the bourse at this moment because the brewery fears it may be swallowed by foreign investors. The drink market is a fertile soil which brought VND3-4.5 trillion worth of pre-tax profit every year in the last five years. Its major task in the immediate time is to preserve its strong brand.

Commenting about Sabeco’s value, the Vietnam Association of Financial Investors (VAFI) said 10 years ago, Sabeco, the nation’s leading brewery, was much larger than Vinamilk, the nation’s leading dairy producer with its profit double that of Vinamilk. But nowadays, Vinamilk’s profit is three times higher than Sabeco.

Sabeco’s financial report showed that in 2015, the holding company could create VND8 trillion worth of revenue, or 30 percent of Sabeco’s total revenue, while the remaining was brought by associated businesses and joint ventures.

1 Jun. 2016

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