Habeco falling on hard times
Habeco falling on hard times
Hanoi Beer Alcohol and Beverage Joint Stock Corporation (Habeco)’s recently released financial report puts the company’s 2016 pre-tax consolidated profit at the bottom of the last seven years, while its fellow Sabeco has reported an all-time record.
Habeco’s 2016 profit before tax was only VND997 billion ($44 million) from a revenue of VND10.3 trillion ($461 million). By contrast, Sabeco has confirmed the new pre-tax profit record of VND5.707 trillion ($252 million) from a revenue of VND30.642 trillion ($1.352 trillion).
In recent years, Habeco has seen limited profit growth, despite the continuous growth of the Vietnamese beer market.
Habeco is losing its share of the beer market to strong competitors. Not only Sabeco, other famous international brands have appeared in Vietnam, luring away customers from Habeco.
Besides, Habeco focuses on the low-middle income segment, which leads to a low profit margin, while other brands, such as Sabeco, Heineken, and Carlsberg, focus on the middle-high income portions. The improving living standards resulted in higher demand for quality products, putting Habeco at a disadvantage.
In 2016, Habeco gained a huge, unexpected advantage from former US President Barack Obama who visited Vietnam and tasted Habeco’s beer. Instantly, “Habeco” became a hot keyword on all means of communication, but Habeco does not seem to have capitalised on this opportunity.
Headquartered at 183 Hoang Hoa Tham Street in Hanoi, Habeco has a chartered capital of VND2.3 trillion ($102.8 million). It produces and sells beer as well as alcoholic and soft drinks. Aside from foreign brands, Habeco’s chartered capital, total assets, and shareholders' equity is only second to Sabeco. In 2015, Habeco's return-on-equity targets were considered reasonable at 9.86 per cent, lower than Sabeco.
The Ministry of Industry and Trade currently holds a 81.79 per cent stake in Habeco, while Carlsberg holds 17.34 per cent, and Carlsberg Trading Co., Ltd. 0.15 per cent. Carlsberg’s investment was hoped to bring support in human resources, technology, equipment, market expansion, and business administration. However, Habeco’s recent results show that the deal might not have lived up to expectations.
At a press conference on August 31, 2016, Deputy Minister of Industry and Trade Do Thang Hai said the government was planning to sell the entirety of its stake in Habeco in 2016. However, the 81.79 per cent holding worth VND 9,000 trillion ($399 million) has yet to find a buyer.
Sources told VIR that many foreign and domestic investors are interested in Habeco’s shares, including Heineken, Japanese beverage company Suntory or Chaleo Yoovidhya company, the producer of energy drink Red Bull in Thailand, as well as a number of big Vietnamese real estate companies.
In addition, major Danish beer producer Carlsberg, which already holds 17 per cent of Habeco’s chartered capital, also hopes to increase its holding in Habeco, even to 80 per cent. It should be noted that while Habeco's BHN ticker on HoSE has been trading at between VND120,000 and 130,000 ($5.4-5.8), Carlsberg's representatives said Habeco should be priced at only VND48,000 ($2.13).
