[BSC Vietnam] Billion Dollar Baby (SAB) 18.12.2017 (DELAYED)

|Includes: VanEck Vectors Vietnam ETF (VNM)

Summary

  • In term of sectors, it is hard to find a clear leader today, as 9/10 sectors end in the green.
  • SAB (VND 309,200, +0%, USD 8.5 billion). We estimate that net income of SAB’s parent company in 2017 would be VND 4,759 billion (+ 6.28% yoy), EPS 2017 = VND 6,902.
  • It is an eventful Monday.  From an ex CEO of ACB become new chief of strategy at HAGL, to estimated business result of GAS and the new drug chain store of MWG.
  • SAB’s Divestment which will make Vietnam on the M&A headline again with the USD 5 billion deal. On 18 Dec 2017, the Ministry of Industry and Trade officially auctioned over 343.66 million shares of SAB (SABECO) with the starting price of VND 320,000/share and average winning price is VND 320,000/share.
  • After this deal, Vietnam Beverage Co. Ltd  (related to Thaibev), will own 53.59% total shares of SAB. “growth potential of the Vietnam market and has genuine interest in exploring investment opportunities in the country,” How is about you ?

Dear Valued clients and partners

·         In term of sectors, it is hard to find a clear leader today, as 9/10 sectors end in the green. On top of the board are Utilities (+3.78%), Consumer staple (+3.36%), Real estate (+2.96%), Finance and material (both ~+2%) thanks to the strong jumps of blue chips such as VNM, SAB, VCB, and GAS…

Today’s Markets:

·         Indexes : VN-Index 2.45%, HNX-Index 1.88%,  Upcom -0.19%

·         Active : HOSE: FLC, HPG, HAG, FCN.   HNX: PVS, KLF, VCS, PVB.

·         Foreigner, Buy : HPG, CII, VRE, VNM, FLC.  Sell: SSI, VND, KDC, HSG, KBC.

·         Notice stocks : FLC, HAG, MBB, PNJ, PXS, FCN, VHG, PVB, PVS, VCS, PVC, QNS

·         Trading volume : ~ 326 million shares

·         Trading value : VND 6635.4 bil ~ 292.3 USD mil

·         Foreigner transaction Net: 9.15 mil USD Sell 24.62 USD million and Buy 33.77 USD million

·         Derivative market  Trading value: 65.95 million;  VN30F1712 @  958;  VN30F1801 @  971;  VN30F1803 @  987.9 and VN30F1806 @  998.9

Corporate update:

 

·         SAB (VND 309,200, +0%, USD 8.5 billion). We estimate that net income of SAB’s parent company in 2017 would be VND 4,759 billion (+ 6.28% yoy), EPS 2017 = VND 6,902 (assuming 7% of bonus and welfare fund).

Company update in 9M2017: No significant improvement in comparison to the same period in 2016. 9M2017 net revenue of SAB reached VND 23,698 billion (+9.22% yoy), market share was as stable as that in 2016 of above 40%, in which 21% in the Northern region, 40% in the Middle Region and 53% in the Southern region.

Gross Profit margin was 27.05%, slightly decreased from 27.19% in 9M2016. The proportion of selling and administrative expenses over Net revenue were respectively 8.19% and 2.31%,  higher than their respective proportions in 9M2016 (7.64% and 2.25%). As a result, the core business PBT margin of 9M2017 was 19.13%, lower than the same period of 2016 (20.71%). EAT of parent company for 9M2017 was VND 3,540 billion (-0.21% yoy), EPS of 9M2017 = VND 5,219/share.

SAB is entering the premium segment: At present, SAB has five product lines, of which, if considering the proportion of revenue in 2016, Saigon Lager was leading with 40% of total revenue, followed by Saigon Export with 26%, Saigon Special was 19% and 333 accounted for 14%. In September 2017, SAB launched a new product, Saigon Gold, in the high-end segment, which is available only at selected locations in major cities. SAB expects to launch two to three new high-end products in the coming years.

 

Comments:  

 

·         It is an eventful Monday.  VN market open the week full of news. From an ex CEO of ACB become new chief of strategy at HAGL, to estimated business result of GAS and the new drug chain store of MWG. But the true star of the day is SAB’s Divestment which will make Vietnam on the M&A headline again with the USD 5 billion deal (link). Moreover, that inflow will help the state bank to further increase the reserve to USD 50 billion

·         Billion dollar baby. Divestment investment themes marked with USD 5 Billion deal of SAB (don’t forget the standby deal of VCG, FPT, BMP, NTP, and DMC). On 18 Dec 2017, the Ministry of Industry and Trade officially auctioned over 343.66 million shares of SAB (SABECO) with the starting price of VND 320,000/share and average winning price is VND 320,000/share. After this deal, Vietnam Beverage Co. Ltd  (related to Thaibev), will own 53.59% total shares of SAB. As of 18/12/2017, SAB auction winning price was VND 320,000/share ($14.09) , equivalent to PE 2017 = ~45x; more than double the trading multiples for global peers.

Despite the high valuation multiple, the buyer said they has confidence in the “growth potential of the Vietnam market and has genuine interest in exploring investment opportunities in the country,” How is about you ?

P/S: My email has some technical problem. In the meantime, please contact me via my personal email until it is fixed. Thank you

Picture of the day: Billion dollar baby Cheers



Source: BSC

 

 

Cheers

 

Long Tran

Best regards

Tran Thang Long (Mr.)

Head of Research

anhso-164551_image001
———————————————–
BIDV Securities Company (NYSE:BSC)

Alpha southeast Asia “Best Investment Bank Vietnam 2014” 

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