Social resurgence pointing to auspicious outlook for SABECO’s (SAB) profit margins
Social resurgence pointing to auspicious outlook for SABECO’s (SAB) profit margins
The financial prospects for Saigon Beer-Alcohol-Beverage Company (SABECO) appear brighter as 2022 approaches, despite prolonged social distancing measures in Vietnam producing a difficult year for all.
To seize the opportunities of the reopening economy, SABECO has released a new set of limited Saigon Lager across the country, expecting to boost sales across all channels. The company is enhancing its coverage on social media and expanding its promotion and marketing campaigns to increase market share and strengthen its reputation.
On the local stock market, SABECO (code SAB) shares recovered strongly by 21.8 per cent to around $7.40 per share last week, from the previous bottom of $6.10 on August 23.
The bullish trend of SABECO stocks is based on the investors’ expectations on the economic recovery and the numerous measures carried out by the government to support businesses and individuals.
Leading securities companies are forecasting positive developments for the company, expecting that its stocks could climb to $8.7 apiece. Specifically, the Ho Chi Minh City Stock Exchange set a target of $8.5, while the SSI Securities Corporation (SSI) estimates $8.20 and Viet Capital Securities targets $7.8.
In addition to the demand on increasing consumption, the driving force of accelerating SABECO shares comes from its new products and marketing campaigns. The beermaker is also implementing initiatives to improve profit margins through saving production costs and reducing electricity consumption.
According to the SSI, in the third quarter SABECO continued to expand its market share thanks to a widened distribution network across the country, including in rural areas that were not as heavily affected by the pandemic compared to the major cities.
The company’s performance remains positive with continuing cash flows over recent years. However, last month it revealed that post-tax profits plunged by 68 per cent on-year in Q3 to $20.7 million, in which profits fell by 25.7 per cent to $110 million and sales decreased by 13.6 per cent to $755.2 million.
“The tough coronavirus pandemic in the summer with lockdowns and strict social distancing measures imposed in Vietnam, as well as extended curfews in Ho Chi Minh City and the southern provinces, affected the group’s business performance during the third quarter. As a result, the group reported lower profit achievements compared to the same time last year,” explained a company statement.
SABECO has been working on saving costs in administrative procedures since the pandemic emerged, with expenses sitting at $18.5 million over the first nine months of 2021 – nearly $6 million lower than the same period last year. Salaries for employees continue to be the largest expenditure in corporate governance.
SABECO is the leading beer producer across the country with 26 factories and a total annual capacity of two billion litres. It is targeting revenues of $1.33 billion and net profits of $208 million for 2021 as a whole, reflecting increases of 20 and 7 per cent on-year, respectively.
