Vietnam: Sabeco could continue to be a drag on its owner Thai Beverage - analysts

Saigon Beer-Alcohol-Beverage Corp (Sabeco), which is a subsidiary of Thai Beverage (ThaiBev), could continue to be a drag on the latter, according to Phillip Securities.

This comes as the regulatory ban on drink driving continues to curb beer consumption in Vietnam, the brokerage warns.

In 3Q, ThaiBev’s beer volumes contracted almost 20% due to Sabeco’s underperformance.

Thankfully, ThaiBev’s domestic beer volume declined only marginally in Thailand and its market share is at a record high, Phillip Securities notes.

“Beer sales in Sabeco remains a concern, as the impact from regulation will weigh on consumption in the medium term,” Phillip Securities’ head of research Paul Chew writes in a note dated August 18.

Still, Phillip Securities has maintained its “buy” call for the stock with an unchanged target price of 82 cents.

The brokerage points out that ThaiBev has coped well with the lockdown and ban in alcohol sales with significant cost controls over advertising and marketing costs.

Moreover, shares of the company are attractively priced at 14 times FY21 earnings, compared to a historical average of 18 times earnings.