Thailand & Vietnam: Forecast for ThaiBev’s profits trimmed down by 3% on Sabeco acquisition

UOB Kay Hian, a Singapore-based, global investment bank, trimmed down its forecast of Thai Beverage Public Company Limited's (ThaiBev) profits by 3% after its acquisition of a 53.59% stake in Saigon Beer - Alcohol - Beverage Joint Stock Corporation (Sabeco), the Singapore Business Review reported on February 4.

Local media previously reported that debt backs the majority of the acquisition. CIMB Research also said ThaiBev will be burdened by an additional debt load of $147.98 mln - 164.42 mln (THB3.6 bln - 4 bln).

According to UOB Kay Hian, ThaiBev secured six loan facilities totalling (THB164 bln), because it is difficult for ThaiBev's associate, Vietnam Beverage, to secure financing given the tight timeline of the offering.

UOB Kay Hian analyst Thai Wei Ying said, "ThaiBev with its financial strength and good relationship has agreed to secure the initial financing to fund the acquisition, with a plan to arrange for appropriate refinancing post-acquisition."

As a result, net gearing in 2018 is expected to rise from 0.2x to 1.5x. This takes into account the acquisitions of KFC and Grand Royal Myanmar.

However, repayment risk is limited, as the loans will be secured against Sabeco shares.

Vietnam Beverage's loans will also be repayable within a 12-month period.

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