Billions of dollars regularly from the “Giant” of the beer industry
Specifically, Sabeco (SAB) has just announced the decision to pay cash dividends in 2025 after completing the consultation with the Board of Directors. Accordingly, the payment rate is 20% of par value, equivalent to VND 2,000 for each outstanding share. The payment source is taken from undistributed after-tax profits of previous years.
With nearly 1.3 billion SAB shares in circulation, the company is expected to need about VND2,565 billion to complete this advance payment, with the expected payment date in mid-February next year.
The largest shareholder is Vietnam Beverage Co., Ltd., a member of Thai Beverage Group, led by billionaire Charoen Sirivadhanabhakdi, which currently holds approximately 53.6% of Sabeco’s charter capital. Through the upcoming interim payment, Thai Beverage will receive an additional VND1,375 billion in dividends.
Since the acquisition of Sabeco at the end of 2017, shareholders from Thailand have continuously received dividends of thousands of billions of VND each year. Accumulated to this distribution period, the total cash they receive from Sabeco dividends will reach nearly 15,468 billion VND.
Capital recovery and debt burden
Thai Beverage spent about VND110,000 billion (equivalent to USD4.8 billion in 2017) to buy back 53.6% of SAB’s capital. Thus, just counting the cash flow from dividends, this enterprise has recovered about 14% of the total initial investment capital. Sabeco is famous for being one of the companies that has maintained a policy of paying cash dividends regularly and stably for many years, often around 35%, sometimes reaching 50%. This year, the Board of Directors plans to pay dividends at 50%, which means that shareholders will receive an additional 30% dividend in the next payment.
However, according to an analysis by Dragon Viet Securities (VDSC) published last month, the total amount of dividends that Thai Beverage receives up to 2024 may still not be enough to offset the huge interest costs that the group is currently bearing. It is known that Thai Beverage had to borrow an amount of 4.8 billion USD with an interest rate ranging from 2.4% to 3% per year to carry out the acquisition.
VDSC believes that the burden of paying principal and interest for 10 years (from 2017 to 2028) of the parent company is the major driving force for Sabeco to maintain its dividend payment policy at a high and stable level throughout the past time and in the coming years.
Business challenges in the new context
Although at the 2022 annual meeting, Thai Beverage affirmed that Sabeco is a “precious gem, a rare asset” among beer producers in the region, the business situation of Saigon Beer has faced many significant disadvantages since last year. The main reason comes from the authorities increasing penalties for traffic safety violations related to alcohol concentration, along with increased fierce competition in the beer industry, especially from international brands.
In the first 9 months of the year, Sabeco recorded a slight decrease in after-tax profit of 1%, reaching about 3,454 billion VND, mainly due to a 17% decrease in revenue to nearly 19,052 billion VND. However, this result helped the company complete more than 71% of the year’s profit plan. Notably, in the third quarter, Sabeco achieved the highest profit in 3 years, largely thanks to the controlled and reduced cost of goods sold.
VDSC forecasts that SAB’s beer revenue this year is likely to continue to decline due to the general decline in demand for alcoholic beverages in the market. It is estimated that the total beer industry’s consumption output in 2025 may decrease by about 3% compared to the same period. However, Sabeco is expected to benefit positively from the cooling of input material prices, especially after using up the inventory of raw materials locked at high prices in the period of 2023-2024.
Editor: Huong Giang
