A. INTRODUCTION
I.
ABOUT THE SAIGON BEER - ALCOHOL - BEVERAGE CORPORATION
1. Overview
SABECO (Saigon Alcohol Beer and Beverage Joint Stock Corporation) is one of most
prominent Vietnamese beer manufacturers. Used to be formerly administered by the Ministry
of Trade and Industry of Vietnam, Sabeco is currently a ThaiBev subsidiary. Its two most
well-known brands are 333 Beer and Bia Saigon (Saigon Beer).
Vietnamese consumers are familiar with the brand: Saigon Beer (or Bia Saigon) of Saigon
Beer-Alcohol-Beverage Corporation (Sabeco). In 2017, Saigon Beer has been over 142-year
original history, 40-year brand building and development. Since that 142 milestone, the yellow
beer bubbles flow has continuously kept up the future way, always made Vietnamese proud
of their products.
With the slogan “Burst into internal strength before the games”, the unique taste of Saigon
Beer is the inspiring taste combined with the spirit of Saigonese’s generosity and the rich of
the Southern land, making it an in dispensable part of everyday life. With 2 bottle of 610 ml
Larue bottle and 330 ml bottle of beer in the first takeover period. Until now, Saigon beer has
developed 8 type of products such as Saigon Lager 450 bottle, Saigon Export Beer bottle,
Saigon Special bottle, Saigon Lager 355 bottle, 333 Premium, 333 beer can, Saigon Special
can, Saigon Lager can.
Over 145 years of establishment and development, with many difficulties and challenges; up
to now, although the market has appeared many famous beer brands in the world, Saigon Beer
and Beer 333 are still Vietnam's leading beer market in Vietnam, on the way to conquer the
markets such as Germany, the US, Japan, the Netherlands and so on.
SABECO is dedicated to raising the standards of the Vietnamese beverage sector while also
valuing the culture of Vietnamese cuisine. "We are not satisfied with the present and are
always dreaming of rising, learning, creating, and innovating to meet constantly changing
needs," reads their company's mission statement. Our guiding principles are constant learning,
innovation, and originality. The company guarantees to offer the necessary advantages to
shareholders, customers, partners, employees, and society while advancing life quality
through the provision of high quality, safe, and healthy beverage products.
2. History
Sabeco, or Saigon Beer-Alcohol-Beverage Corporation, has a rich history and development.
It was established in 1875 and later became known as Sabeco in 1977. Over the years, Sabeco
expanded and became a prominent player in Vietnam's beer market. In 2008, it underwent a
significant transformation when the Vietnamese government divested its shares, allowing
Sabeco to operate as a joint-stock company. The company introduced popular beer brands
such as Saigon Beer and 333 Beer. In 2017, Sabeco was acquired by Thai Beverage, opening
new opportunities for growth. Today, Sabeco remains a leading player in Vietnam's beer
industry, driven by its history, partnerships, and commitment to quality.
3. Vision – Mission – Core Values
a. Vision 2025
Develop SABECO to become the leading beverage group in Vietnam, having firm foothold
in regional and international markets.
b. Mission
 Develop Vietnam’s beverage industry to keep pace with the world.
 Promote the culinary culture of Vietnamese people.
 Improve the quality of life by providing high quality, safe and healthy beverages.
 Bring practical benefits to shareholders, customers, partners, employees and society.
 Satisfy and meet the needs of beverages under the international food safety standards
“Food hygiene and safety and environmental protection”.
 Fulfill obligations to the State on the basis of transparency in business.
 Actively participate in community activities.
 Ensure the development towards international integration.
c. Core Values
1- Traditional brand: The superiority of a traditional brand is built and confirmed over time.
Customers have many choices and be well taken care of the services. SABECO has
become a “top of mind” in the hearts of customers.
2- Social Responsibility: The development of social responsibility is the tradition of
SABECO. We provide the society safe and useful products, and we always wish to share
and take responsibility for social work and environmental protection with practical action.
3- Cooperation for Mutual Benefits: We build "mutually beneficial" partnerships as the basis
for sustainable development. We develop appropriate policies for long cooperation to
partner.
4- Sticking: Sticking to a friendly, sharing environment. Where people are empowered to
learn, create and contribute to the joy of success.
5- Continuous improvement: We are not satisfied with present and are always dreaming of
rising, learning, creating, and innovating to meet constantly changing needs. Continuous
learning, creativity and innovation is our style.
4. Organizational Chart
5. Awards
Sabeco, the Saigon Beer-Alcohol-Beverage Corporation, has been honored with numerous
significant awards, affirming its exceptional contributions to the beer industry. Quality of Bia
Saigon is recognized by prestigious organizations both local and international: The National
Brand status, Gold Medal at The International Brewing Awards 2019 (IBAs), Gold Prize at
Australian International Beer Award (AIBA) 2015, as well as many other awards… These
accolades serve as testaments to Sabeco's commitment to excellence, quality, and innovation.
Below are some notable awards that Sabeco has received:
In Ho Chi Minh City on 25th March 2019, Sabeco reached a significant milestone at The
International Brewing Awards 2019. SABECO won the gold prize in the Class 1 (Lager 2.9%
4.4% ABV) division of the International Smallpack Lager Competition, besting a sizable field
of competitors from nations all over the world and becoming The first Vietnamese brewery to
win this coveted prize. This esteemed recognition highlights SABECO's commitment to
brewing excellence and its position as a leading player in the global market. Winning one of
the top honors further solidifies SABECO's reputation for exceptional quality and innovation.
It is not only a source of national pride but also propels the company towards continued
success, setting a benchmark for excellence in the brewing industry and driving the growth of
Vietnam's beer market.
In 2021, Sabeco continued to becoming the first enterprise in the beverage industry to be
honored with the prestigious Vietnam Glory Award. This distinguished accolade recognizes
SABECO's fortitude and creativity in utilizing digital transformation to successfully overcome
COVID-19 challenges; achieved positive results in manufacturing and business operations,
adding value to the national economy and society; and contributed to the establishment of a
digital economy and society as outlined by the Party at the National Party Congress XIII.
II.
ABOUT VIETNAMESE BEER INDUSTRY
Vietnam's love affair with beer is evident in its annual consumption of over 3.8 million
kiloliters, which accounts for 2.20% of the global market share. This information, reaffirmed
by a 2022 report from Visual Capitalist, underscores the significant role beer plays in
Vietnamese culture. In fact, Vietnam ranks ninth among countries with the highest beer
consumption worldwide, solidifying its position as a nation that truly appreciates the beverage.
Within the Southeast Asia region, Vietnam proudly takes second place in terms of beer
consumption.
Figure 1. Beer consumption and consumption per capital (Vietnam Supply Chain, Ipsos BC
analysis)
For many years, the Vietnamese beer market has been dominated by a group of four major
brands, namely Sabeco, Heineken, Carlsberg, and Habeco. Each of these brands has
established a strong presence in different regions of the country. Sabeco, for example,
commands a major market share in the south, while Habeco holds a stronghold in the north.
Carlsberg, on the other hand, leads the middle market, primarily due to the strategic location
of its brewery in Thua Thien-Hue province. Recently, Heineken has been making strides in
expanding its distribution network across all provinces, with a particular focus on important
cities.
These four key players in the Vietnamese beer industry are projected to collectively account
for an impressive around 95% of domestic beer consumption. Their strong market presence,
brand recognition, and diverse distribution networks have solidified their positions as industry
leaders. This market landscape reflects the preferences and loyalty of Vietnamese consumers,
who have developed a strong affinity for these established beer brands over the years.
The dominance of these major brands in specific regions showcases their strategic approach
to capturing local markets and catering to regional preferences. It also highlights their ability
to adapt and resonate with consumers across diverse geographical areas within Vietnam.
Overall, the Vietnamese beer market is a dynamic and vibrant industry, fueled by the nation's
passion for beer consumption. With the major brands like Sabeco, Heineken, Carlsberg, and
Habeco leading the way, Vietnamese consumers can enjoy a wide variety of beer options,
each with its unique regional appeal and flavor profile.
Figure 2. Volume Market Share Structure of Vietnam’s Beer Industry (Company Disclosure
& VCSC)
B. FINANCIAL ANALYSIS
I.
COMMON-SIZE ANALYSIS
Common-size analysis evaluates financial statements by expressing each line item as a
percentage of a base amount for that period. In this report, common size analysis on Sabeco
Corporation's performance during 2017 - 2021 utilizes the same financial statements as the
prior analysis sections. We use both vertical common-size and horizontal common-size
analysis to indicate some certain tendencies in the business’s performance. Horizontal
approach is applied to identify the progressive effects of the firm’s relevant choices in finance
management over 5 executive years. The least recent year is selected as the base year for
comparisons, accounting for 100%. Each following year will be presented in percentage of
2017’s figures, describing changes in corresponding components. Vertical common-size
emphasizes composition and identifies what’s important in the balance sheet, income
statementand cash flow statement of the company.
1. Assets
YEAR
Current assets
2017
2018
2019
2020
2021
100%
107.34%
140.03%
142.58%
167.16%
104.64%
96.42%
63.86%
84.47%
115.02%
188.95%
221.79%
259.05%
107.13%
79.58%
82.66%
65.45%
Cash and cash
equivalents
100%
Short-term
investments
100%
Short-term
receivables
100%
Inventories
100%
90.52%
98.15%
72.21%
83.23%
Other current assets
100%
70.71%
85.71%
144.29%
102.14%
Non-current assets
100%
92.19%
93.65%
94.42%
91.39%
Fixed assets
100%
91.19%
93.55%
97.34%
87.90%
Investment properties
100%
Long-term
investments
100%
Total assets
100%
80.88%
85.29%
95.59%
60.29%
98.47%
100.51%
109.25%
98.75%
101.60%
122.48%
124.35%
138.49%
Current Assets
When looking at the assets, SABECO's total current assets significantly increased while its noncurrent assets gradually decreased over time. Current assets have grown generally at a high rate
over the period, increasing by 67.16% in 2021 compared to 2017. Lower liquidity was
experienced by SAB as a result of a decline in cash and cash equivalents during the COVID-19
pandemic. However, the amount significantly climbed by 20% by the end of 2021 as a result of a
business revival following the reopening of the southern provinces, which kept liquidity at a
steady level. In 2018, SABECO increased its short-term strategic investment, which increased by
15.02% and totaled VND 7,544 billion. The figure nearly tripled in 2021, greatly continuing the
rising trend.
Non-current Assets
On the other hand, Sabeco reported a substantial decline in non-current assets, which contrasted
with the growth of current assets, with three main statistics changing and finally reaching their
lowest point in the last year of the analyzed period. Fixed assets, representing long-term tangible
assets, exhibited considerable fluctuations. Starting at 91.19% in 2018, it declined to 87.90% in
2021, implying Sabeco's strategic adjustments in managing and optimizing its fixed asset base.
Another component of non-current assets, Investment properties, dropped even more rapidly,
from 80.88% in 2018 to 60.29% in 2021. Long-term investments demonstrated modest
fluctuations, ranging from 98.47% to 109.25% during five-year period. This category remained
relatively stable, expressing Sabeco's consistent approach to long-term investment decisions.
Conclusion
To conclude, Sabeco's current assets grew significantly, growing by 67.16% in 2021 compared
to 2017. Following the COVID-19 epidemic, the reopening of southern provinces resulted in a
recovery of business and an increase in cash and cash equivalents. Strategic investments also
aided in the expansion of present assets. Non-current assets, on the other hand, fell, particularly
investment properties. Overall, Sabeco concentrated on improving its short-term liquidity and
optimizing its asset base.
2. Liabilities and Equity
2017
2018
2019
2020
2021
Liabilities
100.00%
82.38%
90.69%
81.13%
103.94%
Short-term liabilities
100.00%
80.06%
82.25%
69.89%
98.05%
Long-term liabilities
100.00%
171.35%
415.63%
514.06%
330.21%
Owner’s equity
100.00%
111.73%
139.21%
147.11%
156.68%
Chapter capital
100.00%
100.00%
100.00%
100.00%
100.00%
Retained earnings
100.00%
128.33%
192.86%
212.47%
234.48%
100.00%
102.73%
122.54%
122.94%
132.41%
100.00%
101.6%
122.48%
124.35%
138.49%
YEAR
Non-controlling
interest
Total
equity
owner’s
and
liabilities
Liabilities
In terms of liabilities, all of the categories experienced a fluctuating pattern. Total liabilities
dropped to 82.38% and fluctuated utill saw a significant jump to 103.94%, surpassing the initial
value. Further dissecting the types of liabilities, short-term liabilities displayed a similar
fluctuating trend, which slowed down from 2017 to 2020 and then accelerated by 28.16% in 2021.
The subsequent decline in liabilities can be attributed to the economic impact of the COVID-19
pandemic. However, in 2021, there was a significant increase in liabilities due to the resumption
of business activities and the recovery of the economy from the pandemic-related downturn.
In contrast, long-term liabilities exhibited a more consistent upward trend. They witnessed a
significant increase to 171.35% in 2018. This proportion continued to rise dramatically, soaring
415.63% in 2019 and reaching to 514.06% next year. There was a continuation of the upward
trend in long-term liabilities in 2020. However, the rate of increase appeared to moderate
compared to the previous year. The economic uncertainty caused by the pandemic outbreak might
have influenced Sabeco's decision to exercise prudence in taking on additional long-term
liabilities. Although there was a decrease in 2021 to 330.21%, long-term liabilities remained
substantially higher compared to the base year.
Equity
Turning to the analysis of equity, the overall trend shows growth over the five-year period.
Retained earnings have increased significantly over time, reaching 234.48% at the conclusion of
the period. Retained earnings support positive equity growth and increase the company's overall
worth. The accumulation of retained earnings provides Sabeco with a stronger financial
foundation, enabling the company to allocate more operating cash flow towards strategic
investments or debt reduction. Non-controlling interest witnessed the same trend with retained
earnings, while chapter capital did not change much, demonstrating consistent growth and
reinforcing the company's financial stability.
Overall, Sabeco's total owner equity and liabilities exhibited a steady upward trajectory,
increasing by 38.49% over the span of five years. This growth reflects the company's ability to
generate profits, retain earnings, and effectively manage its financial resources. By strengthening
its owner equity and balancing its liabilities, Sabeco enhances its financial position, improves its
creditworthiness, and supports its long-term sustainability and growth objectives.
Conclusion
In summary, while the fluctuations in liabilities reflect Sabeco's dynamic approach to managing
its financial obligations and capturing growth opportunities, the continuous and constant growth
of equity demonstrates its ability to generate profits and effectively manage its financial
resources. This overall growth in owner equity and liabilities further strengthens the company's
financial position and provides a solid foundation for future investments and strategic decisionmaking.
3. Income Statement
2017
2018
2019
2020
2021
Net revenue
100.00%
100.00%
100.00%
100.00%
100.00%
Cost of goods sold
74.07%
77.51%
74.80%
69.60%
71.15%
Gross profit
25.93%
22.49%
25.20%
30.40%
28.85%
Financial income
1.48%
1.75%
2.35%
3.48%
4.25%
Financial expenses
-0.08%
0.21%
0.25%
0.38%
0.09%
Selling expenses
8.22%
7.60%
7.92%
10.22%
13.27%
YEAR
General and
2.74%
2.54%
2.77%
2.51%
2.27%
Operating profit
17.73%
14.88%
17.61%
21.73%
18.12%
Other profit
0.04%
0.11%
0.03%
0.13%
0.29%
Profit before tax
17.77%
14.99%
17.64%
21.86%
18.42%
Net profit after tax
14.47%
12.25%
14.17%
17.66%
14.90%
13.78%
11.62%
13.33%
16.89%
13.94%
20.22%
17.22%
19.73%
25.51%
20.86%
Administrative expenses
Profit after tax for
shareholders of the
parent company
Earnings
(VND)
per
share
Cost of goods sold (COGS), which made up roughly 80% of Sabeco's net sales from 2017 to
2021, was the main line item on the company's income statement. This suggests that Sabeco
struggled to successfully manage its prime or conversion costs, which led to a relatively high
COGS. The result was that the gross profit margin stayed approximately 20%. The gross profit
margin, which is calculated after removing the direct costs related to producing items, shows the
profitability of the company's fundamental operations. Sabeco can work to raise its gross profit
margin and improve its overall financial performance by regularly monitoring and resolving the
issues causing high COGS.
Financial income demonstrated consistent growth, indicating effective management of financial
investments. Meanwhile, financial expenses remained low and general and administrative
expenses were stable, showcasing Sabeco's prudent approach to managing financial obligations
and the focus on cost control. Although selling expenses increased steadily from 8.22% in 2017
rising to 13.27% in latest year possibly due to expanded marketing efforts and sales promotion
activities, the overall operating expenses were relatively low, compared to the cost of goods sold.
This shows the improvement in Sabeco’s capability of effective management of operational costs.
From 2017 to 2021, the profit after tax for shareholders of the parent company ranged from
11.62% to 16.89% of the net revenue, indicating the company's ability to generate profits and
deliver returns to its shareholders. Although consistently achieving a positive and upward profit
after tax, the proportion of it made up was still very small in the total of net revenue due to the
cost control issue. However, it is considered to be normal to have a high percentage of COGS and
expenses in the income statement for a manufacturing and distribution business.
In conclusion, the high percentage of cost of goods sold (COGS) relative to net sales indicates
challenges in managing prime costs and controlling expenses, which resulted in a low gross profit
margin and profit after tax for shareholders of the parent company although the proportion in
operational expenses remained small relatively. Overall, these findings highlight the need for
Sabeco to focus on improving cost management and optimizing profitability to drive financial
performance.
4. Cash Flow Statement
a. Cash flow from operating activities
2017
YEAR
2018
2019
2020
2021
Net Revenue
100.00% 100.00% 100.00% 100.00% 100.00%
Profit before tax
17.77%
14.99%
17.64%
21.86%
18.42%
Adjustments
Depreciation
1.83%
1.77%
1.71%
2.12%
2.11%
Allowance
0.24%
0.67%
0.94%
-0.15%
-0.24%
0.00%
0.00%
0.00%
0.04%
-0.09%
-1.49%
-1.75%
-2.27%
-3.34%
-4.07%
-1.20%
-0.99%
-1.00%
-0.96%
-0.66%
Interest expense
0.12%
0.10%
0.10%
0.23%
0.18%
Other adjustments
0.00%
0.08%
0.00%
0.00%
-0.28%
Foreign
exchange
differences revaluation at
the end fiscal year
Gain (loss) on sale of assets
Interest in associates and
jointly controlled entities
Profit
from
operating
activities before change in
17.27%
14.88%
17.12%
19.80%
15.38%
0.55%
0.33%
0.25%
0.25%
-0.20%
Change in inventories
0.15%
0.10%
-0.29%
2.05%
-0.85%
Change in accounts payable
-0.96%
0.90%
0.03%
-2.36%
2.50%
Change in prepaid expense
-0.05%
0.57%
0.58%
-0.16%
0.55%
Interest paid
-0.13%
-0.10%
-0.10%
-0.26%
-0.13%
Income tax paid
-0.86%
-3.17%
-3.69%
-3.71%
-3.48%
-1.14%
-0.95%
-0.70%
-0.85%
-0.42%
14.82%
12.56%
13.21%
14.77%
13.34%
working capital
Change
in
accounts
receivable
Other
expenses
from
operating activities
Cash flow from operating
activities (CFO)
In the vertical common-size analysis of Sabeco's cash flow from operating activities (CFO), some
of the categories stand out with significant variations over the five-year period. Firstly, the
percentage of profit before tax in relation to net revenue ranged from 14.99% to 21.86%,
reflecting fluctuations in the company's pre-tax profitability. Notably, 2020 marked a peak in
profitability, suggesting possible factors such as changes in sales, cost management, or prevailing
economic conditions.
Besides profit before tax, income tax paid is the factor that significantly alters profit before
working capital changes to cash flow from operating activities, which varied transparently across
the investigated time period, from -3.17% to -0.86% of net revenue. These variations show that
the business either received greater tax refunds or paid more taxes in certain years. These
differences were probably driven by variables like modifications to tax rules, financial
performance, and economic conditions.
Other categories in the data table made up a very small portion of net sales, which has a negligible
impact on operating cash flow. Over the examined period, cash flow from operating activities
showed substantial variances from 12.56% to 14.82% of net sales. To find opportunities for
improvement and make sure that cash flow is generated consistently, Sabeco must carefully
monitor the CFO's component parts so that they can increase financial stability, finance growth
projects, and easily fulfill its financial commitments.
b. Cash flow from investing activities
2017
2018
2019
2020
2021
100.00%
100.00%
100.00%
100.00%
100.00%
-0.44%
-0.81%
-0.71%
-1.31%
-1.25%
-21.28%
-30.21%
-37.63%
-58.11%
-68.86%
0.04%
0.01%
0.01%
0.01%
0.01%
11.39%
27.47%
24.75%
50.31%
59.55%
other
0.19%
0.08%
-
-
1.69%
Receipts of interests and
1.98%
2.60%
2.52%
3.66%
4.21%
-8.25%
-0.87%
-10.84%
-5.45%
-4.64%
YEAR
Net revenue
Payments for additions
to fixed assets
Placements of
term deposits at
banks
Proceeds from disposals
of fixed assets
Collection of
term deposits at
banks
Proceeds
divestment
from
in
entities
dividends
Net cash outflows from
investing activities
Moving on to cash flow from investing activities (CFI), the first thing that jumped out was
payments for additions to fixed assets, which ranged from -0.44% to -1.31% of net revenue. These
variances illustrate variations in the company's capital expenditures for purchasing or improving
fixed assets. Clearly, the biggest negative percentage for 2020 indicates a decline in fixed asset
investments, maybe as a result of strategic or economic decisions.
Another significant category is the placements of term deposits at banks, which showed a sharp
fall from -21.28% to -68.86% of net revenue. This suggests a large decrease in Sabeco's term
deposit holdings, presumably brought on by adjustments to investment plans or market
conditions. The amount of term deposits collected by banks also increased dramatically, from
11.39% to 59.55% of net revenue, implying a greater emphasis on cash inflows from maturing
term deposits or a reallocation of money.
The overall cash flow from investing operations was less affected by other items, such as proceeds
from the sale of fixed assets, receipts of interest and dividends, and proceeds from the divestment
in other entities, which only showed modest fluctuations. Analyzing these outstanding categories
allows Sabeco to assess its investment decisions, cash allocation, and the effectiveness of its
investing activities. By closely monitoring and managing these components, Sabeco can optimize
its investing activities and achieve long-term financial objectives.
c. Cash flow from financing activities
YEAR
Net revenue
Proceeds from
2017
2018
2019
2020
2021
100.00%
100.00%
100.00%
100.00%
100.00%
0.104%
0.091%
0.085%
0.109%
0.113%
-0.118%
-0.094%
-0.088%
-0.118%
-0.125%
-0.029%
-0.108%
-0.030%
-0.134%
-0.042%
-0.042%
-0.111%
-0.033%
-0.143%
-0.054%
borrowings
Repayment from
borrowings
Dividend paid
Net cash outflows from
financing activities
When it comes to the net cash outflows from financing activities (CFF), the cash flow from
financing activities stands out with all negative figures over the five-year period, with the lowest
cashflow in 2020 at -0.143%. Among all of the items, the majority of the company's cash flow
comes from proceeds from borrowings and has a tendency to decline annually from 2017 to 2019,
until experienced a recovery up to 0.113% in the latest year. Dividend payments and repayment
from borrowings were very modest fractions of the cash flow from financing activities. However,
the variations in this figures in the investigated period still led to the uncertainty of this type of
cash flow.
Overall, the net cash outflows from financing activities display relatively small variations but also
very small percentage of net revenue, between -0.04% and -0.14%. This category represents the
overall impact of financing activities on the company's cash position. By closely monitoring and
managing the components within cash flow from financing activities, Sabeco can assess its ability
to access external funding, manage debt levels, and strike the right balance between meeting
financial obligations and allocating funds for growth and shareholder returns.
II.
FINANCIAL RATIOS ANALYSIS
1. Liquidity Ratios
Liquidity ratios
2017
2018
2019
2020
2021
Current ratio
1.85
2.48
3.15
3.77
3.15
Quick ratio
1.56
2.16
2.81
3.45
2.90
Cash ratio
1.46
2.03
2.71
3.34
2.84
The liquidity ratios provide insights into a company's ability to meet its short-term obligations
and the availability of liquid assets to cover immediate financial needs. SABECO’s liquidity
ratios, including the current ratio, quick ratio, and cash ratio, consistently demonstrated a strong
liquidity position throughout the years.
Current ratio
This ratio shows how frequently short-term assets exceed short-term liabilities and provides a
reasonably realistic picture of a company's capacity to meet its present obligations. With regard
to SABECO, it is clear that the present ratio has experienced a notable improvement over a span
of five years, as it surged by a remarkable 70%. SABECO's present assets can even pay its current
liabilities three times in 2019, not only showcasing its capacity to meet its immediate obligations
but also suggests that the company is well-positioned to navigate any potential financial
challenges that may arise in the foreseeable future. The challenges of COVID-19 pandemic
seemingly did not affect SABECO at all, as the upward trend in the current ratio implies improved
liquidity management over time.
Quick ratio
However, it is unlikely that users can fully rely on current ratio, especially when the company is
storing huge quantities of goods and having a possibility of slow moving. In this situation, quick
ratio—also referred to as acid test ratio—will be a more accurate statistic. This ratio measures an
organization's ability to immediately meet short-term obligations with cash on hand, accounts
receivable, and marketable securities. The progressive increase in SABECO's quick ratio over the
course of the survey, together with a little fluctuation toward the latest year, could be attributed
to COVID-19's long-lasting impediment. The fact that the acceleration is higher than the current
ratio is what makes this number more appealing to users. 2019 saw an 80% increase in the quick
ratio but just a 70% increase in the current ratio.
Cash ratio
The cash ratio is the most conservative liquidity measure as it considers only cash and cash
equivalents in relation to current liabilities. SABECO's cash ratio has followed a similar pattern
to the quick ratio, showing an increasing trend from 2017 to 2020, reaching a peak of 3.34 in
2020. This expresses that SABECO has had ample cash reserves to cover its short-term liabilities.
Its liquidity was outstanding, with little to no trouble repaying short-term debts with cash, and
cash and short-term investments accounted for the majority of current assets. However, in 2021,
the cash ratio decreased to 2.84, indicating a slight reduction in the company's cash position
relative to its current liabilities. It is critical to investigate the underlying causes of this reduction
in order to identify any potential risks or issues the company may have in managing its liquidity.
2. Solvency Ratios
Solvency ratios
2017
2018
2019
2020
2021
Debt to equity ratio
0.53
0.39
0.34
0.29
0.35
Debt to total asset
0.34
0.28
0.26
0.23
0.26
1.53
1.39
1.34
1.29
1.35
145.31
153.94
179.93
96.98
100.65
ratio
Financial leverage
Interest coverage ratio
Solvency ratios give the analyst information on the firm’s financial leverage and ability to meet
its longer-term obligation. SABECO's reduction of debt ratios and commitment to maintaining
ratios below 1 demonstrate diligent debt management, enhancing solvency and appealing to
investors. Prudent capital practices lay a solid foundation for long-term stability and growth.
Debt-equity ratio and Debt-total asset ratio
When assessing a company's solvency, it is crucial to consider key ratios such as the Debt to
Assets ratio and the Debt to Equity ratio, in addition to the Debt to Total Asset ratio. These ratios
provide insights into the proportion of debt within a company's financial structure and its
corresponding balance. Generally, higher ratios indicate a weaker solvency position, as excessive
debt can pose risks to a company's financial stability. However, SABECO's performance deviates
from this pattern as the company has managed to consistently lower these ratios over time.
SABECO has successfully decreased its debt to equity and debt to total asset ratio throughout the
five-year period, down to only 0.35 and 0.26 in 2021, respectively. Besides, the company strived
to maintain all values of these two ratios below 1, which signifies that the company's assets are
primarily funded by equity leading to a healthier capital structure that is more favorable to
investors.
Financial leverage ratio
Next, let's examine the financial leverage ratio, also known as the leverage ratio or equity
multiplier, which assesses the level of total assets backed by each unit of equity. In 2021,
SABECO had a financial leverage ratio of 1.35, meaning that each unit of equity supported 1.35
units of assets. This ratio fell within an acceptable range, indicating that SABECO maintains a
reasonable level of financial independence. By having assets well-supported by equity, SABECO
has maintained a consistent balance between debt and equity in its capital structure, neither
excessively relying on debt nor overemphasizing equity financing. The stable Financial Leverage
ratio further supports the notion of SABECO's sound solvency position, ensures that the company
avoids an excessive debt burden while maintaining a healthy level of leverage.
Interest coverage ratio
We can further reinforce this assessment by looking at the interest coverage ratio, which
demonstrates the company's ability to pay off its interest expenses with its current earnings before
interest and taxes (EBIT) in the event of no future profitability. SABECO's interest coverage
ratios of 145 times, 154 times, and 180 times in 2017, 2018, and 2019, respectively, are
exceptional indicators when evaluating the company's solvency. These high ratios signify that the
corporation has a significant margin of safety and robust cash flow to comfortably cover its
interest obligations. Such strong interest coverage ratios provide a strong foundation for the
company's financial stability and underscore its ability to handle potential challenges in meeting
its interest payments. However, the company has experienced a noticable fall in the next two
years, might be due to severe aftereffect of the COVID-19 pandemic.
3. Activity Ratios
Activity ratios
2017
Receivable turnover
37.88
Days
of
2018
48.54
2019
56.77
2020
2021
48.20
49.80
sales
outstanding
Inventory turnover
9.63 days
12.26
7.51 days
14.59
6.42 days
14.99
7.57 days
11.4
7.32 days
12.04
Days of inventory
on hand
Payables turnover
29.75 days
12.49
25 days
13.67
24.34 days 32.01 days 30.29 days
12.79
9.28
9.37
Number of days of
payables
29.22 days 26.68 days
Total asset turnover
2.80
Fixed asset turnover
4.06
2.53
4.49
28.52 days 39.30 days 38.94 days
2.23
4.89
1.44
1.24
3.57
3.40
1.95
1.69
Working capital
turnover
5.60
4.22
2.90
The activity ratios provide insights into the efficiency of the company's operations and its ability
to manage its assets, inventory, receivables, and payables. The fluctuations receivable and
inventory turnover as well as the declines in asset turnover and working capital turnover request
SABECO to focus on enhancing operational efficiency, optimizing inventory management, and
reviewing asset utilization strategies to improve overall activity ratios and drive sustainable
growth in the future.
Receivable turnover and Days of sales outstanding
The receivable turnover ratio quantifies how efficiently SABECO is in collecting receivables
from its clients. Overall, SABECO’s receivable turnover ratio has shown a generally increasing
trend over the five-year period, indicating that the company is collecting its receivables at a faster
pace. It is clear that in 2019 the corporation did the best in collecting debts among five reported
years at 56.77, although it has experienced a slight decline in the next 2 years, Sabeco was still
performing very well in terms of handling its unpaid sales. The corresponding Days of Sales
Outstanding, which measures the average number of days it takes to collect receivables, has
generally decreased from approximately 10 days to around 7 days, implying that SABECO has
been able to reduce the time it takes to convert sales into cash, resulting in efficiently managing
its credit sales and collecting payments from customers in a timely manner. This might be because
the company has a high proportion of quality customers who pay their debts quickly or
conservative credit policies for creditors.
Inventory turnover and Days of inventory on hand
The inventory turnover ratio shows the number of times that SABECO Corp has sold and replaced
inventory during a fiscal year, giving a measurement about how efficiently it manages its
inventory. According to the data table, inventory turnover shared a similar pattern with receivable
turnover, with a relatively high and upward trend ratio from 2017 to 2019 despite the COVID-19.
The increased turnover signals strong sales, which is even greater considering the corporation
going through a post-pandemic period. Nevertheless, the ratio decreased gradually after and 2020
saw the worst performance, at 11.4. The corresponding Days of inventory on hand indicates the
average number of days that SABECO takes to turn its inventory into sales, determining the
efficiency of sales. On average, it took the corporation approximately a month to sell and replace
goods, much longer period in comparison with days of sales outstanding, which could impact
negatively its liquidity and cash flow.
Payables turnover and Number of days of payables
The payables turnover ratio measures how quickly the company pays its suppliers or in other
words, to inform analysts if the company is encountering financial difficulties. The ratio has
shown a slight decline over the years, signaling a slightly slower payment cycle. The average
number of days it takes SABECO to pay its payables has climbed from 26.68 days in 2018 to
38.94 days in 2021, according to the Days of Payables. This shows that the business has taken
longer to settle its payables. However, this issue was expected given the commercial slowness
caused by COVID-19, as well as the implementation of Decree 100 concerning the punishment
for inebriated drivers. Furthermore, according to the examination of Sabeco's liquidity ratios and
solvency ratios, the company had absolutely no difficulty servicing its liabilities, implying that it
may have opted to prioritize other financial and investment operations above liability payments.
Fixed asset turnover
Fixed assets have a high proportion in the total asset for a manufacturing company like SABECO,
which means that the fixed assets turnover is a highly relevant ratio, is constructed to reflect how
efficiently a company, or more specifically, the company's management team, has used these
significant assets to generate revenue for the firm. SABECO's management team is doing a
excellent job when the firm has a brilliant performance in terms of utilizing and optimizing its
fixed assets to create income, and they even improved it in 2019, up to 4.89. After that, the ratio
has shown a gradual decline, suggesting that the company’s fixed assets have been less productive
in generating sales. It is important for SABECO to review its asset utilization strategies to boost
efficiency and optimize its sales performance.
Total asset turnover
The total asset turnover ratio measures the efficiency of the company in utilizing its total assets
to generate sales. The corporation’s total asset turnover was substantially lower as compared to
fixed asset turnover and witnessed a downward trend. The most typical cause of this might be
unsold inventory or long outstanding receivables. SABECO, on the other hand, has never faced a
challenge like this. The explanation for SABECO's low total asset turnover is that the company
maintains a strong balance of short-term financial investment, which even outnumbers fixed
assets. Although this amount can help to strengthen the firm's liquidity, SABECO should still
consider cutting back on this investment because it is far too large and the rate of return on shortterm investment is unlikely to be higher than the rate of return on capital expenditure.
Working capital turnover
Working capital turnover measures the efficiency with which a company earns income using its
working capital. It also depicts the relationship between the funds utilized to finance a company's
operations and the revenues generated as a result of those operations. In the case of SABECO,
the working capital in 2017 was 5.60, which was satisfactory and referred to by investors. Then
it has dropped dramatically down to only 1.69 in 2021, indicating that the company appears to be
having issues with working capital management. SABECO must assess and optimize its working
capital management in order to improve operational efficiency and boost revenue generation.
4. Profitability Ratios
2017
2018
2019
2020
2021
Net profit margin
14.47%
12.25%
14.17%
17.66%
14.90%
Gross profit margin
25.93%
22.49%
25.20%
30.40%
28.85%
margin
17.73%
14.88%
17.61%
21.73%
18.12%
ROA
22.48%
19.69%
19.92%
18.03%
12.89%
ROE
34.32%
27.33%
26.75%
23.27%
17.39%
Profitability ratios
Operating profit
Overall, SABECO's profitability is rather consistent in this period. Although the company had
faced a downturn in 2018, it managed to recover quickly the following year. The main reason for
the drop in 2018 was noted in the income statement analysis, which was due to an increase in the
cost of raw materials this year. And it appears that every organization in this industry had to deal
with this difficulty in 2018. Apart from the margin reduction in 2018, SABECO's profitability
remains satisfactory when compared to its competitors.
Net profit margin
The net profit margin represents the percentage of each dollar of revenue that translates into net
profit. SABECO’s net profit margin has shown some fluctuations over the years, with a peak of
17.66% in 2020 and a low of 12.25% in 2018. However, it has generally remained within a
reasonable range, indicating that SABECO has maintained profitability in relation to its sales.
The declining margin in 2018 could be attributed to an increase in raw material prices or as a
result of implementing new technologies and renovations when the new foreign Board of
Directors took its roles. The consistent profitability suggests effective cost management and
revenue generation strategies.
Gross profit margin
The gross profit margin measures the percentage of revenue remaining after deducting the cost of
goods sold in order to evaluate the profitability of a company's key operations. SABECO's gross
profit margin shared the similar pattern with net profit margin as shown the best performance in
2020, reaching 30.40%. The significant decline in net revenues in 2020 was due to lower volume
that was partially off-set by the increase of selling price in the period. However SABECO strived
to keep their margin ratios quite high at the end of 2020 by refusing to dip its earnings and
lowering as much expense as feasible. This proves that SABECO has been able to improve its
profitability at the gross level by effectively controlling its production and procurement costs,
leading to efficient management of the production process and favorable pricing strategies.
Operating profit margin
The operating profit margin represents the percentage of earnings before interest and taxes that
remains after deducting both the cost of goods sold and operating expenses. The operating profit
margin has experienced fluctuations over the years, but it has generally remained stable within a
reasonable range, ranging from 14.88 in 2018 to 21.73 in 2020. Effective cost management,
particularly with regard to operating expenses, is critical in keeping these ratios from spiking, and
the ratio 2021 may indicate that SABECO was willing invest more in operating expenses,
demonstrating their optimism for industry recovery, making the value in 2021 a bit lower than
that of 2020. SABECO's ability to maintain a steady operating profit margin indicates effective
control over its operating costs and efficient utilization of resources in generating operating
profits.
Return on asset
The ability of a corporation to earn profits in relation to its total assets is measured by ROA. The
ROA of SABECO has experienced a substantial downward trend, from 22.48% in 2017 to 12.89%
in 2021, suggesting that SABECO's profitability as a percentage of total assets has declined over
time. The decreased ROA could be due to a larger asset base or reduced net earnings. It is also
because of the fact that the net revenues of this corporation remained quite stable over the fiveyear analyzed period while the average total assets upsurged overtime. To improve its return on
assets, the corporation should focus on enhancing asset utilization and increasing profitability
through strategies such as optimizing efficiency, reducing costs, and pursuing revenue growth
opportunities.
Return on equity
ROE assesses a company's ability to create profits in relation to the equity of its shareholders. A
higher ROE means that equity capital is being used more effectively and that shareholders are
profiting more. The ROE of SABECO has similarly been deteriorating in comparison with ROA,
falling dramatically from 34.32% in 2017 to 17.39% in 2021. The reason behind the unexpected
drop in ROE was also nearly identical to ROA, attributed to a larger equity base and relatively
stable net revenues. Because of that cause, SABECO's profitability as a percentage of its
shareholders' equity has declined over time and also denotes a deterioration in the profitability of
the company's investments as well as the overall return to shareholders. To increase its return on
equity, SABECO should concentrate on increasing its net profit and efficiently utilizing
shareholders' money.
5. Valuation Ratios
Valuation ratios
2017
2018
2019
2020
2021
33.93
41.06
28.93
26.47
26.33
10.09
10.65
7.28
5.89
4.29
Price to earnings
ratio
Price-to-book
ratio
Valuation ratios are used in comparing the relative valuation of companies. The valuation ratios
of SABECO provide important insights into how the market values the corporation’s stock in
relation to its earnings and book value. SABECO's valuation ratios, including the P/E ratio and
P/B ratio, have exhibited fluctuations over the analyzed period.
Price-to-earnings ratio
The price-to-earnings ratio reflects the market's expectations for SABECO's future earnings
growthv through the relationship between price per share and earnings per share. Over the
analyzed period, SABECO's P/E ratio has shown some fluctuations, after peaking at 41.06 in
2018 then plunge dramatically in the next 3 years, almost halved in 2021. The noticable
performance in 2018 might be due to the side effect of the merger and acquisition case happened
in the same year. An overall decreasing P/E ratio indicates that investors may have become less
willing to pay a premium for SABECO's earnings, which could be influenced by factors such as
changes in market sentiment, industry conditions, or the company's financial performance.
Price-to-book ratio
The P/B ratio compares the market price of a company's stock to its book value per share and
often interpreted as an indicator of market judgement about the relationship between a company’s
required rate of return and its actual rate of return. SABECO's P/B ratio has followed a downward
pattern, declining from 10.09 in 2017 to 4.29 in 2021. However, all figures in 5 years were above
1, suggesting that the future profitability of the company is expected to exceed the required rate
of return. On the other hand in some cases, a P/B ratio below 1 implies that the market values the
company at a discount to its book value, which could be an attractive proposition for value
investors. Therefore, it is crucial to analyze valuation ratios in conjunction with other financial
and non-financial factors to gain a comprehensive understanding of SABECO's investment
potential.
III.
FINANCIAL
HEINEKEN
COMPARISON
BETWEEN
SABECO,
HABECO
AND
From 2017 to 2021, we chose the year 2019 as the base year for the financial comparison of three
beer corporations: Saigon Beer-Alcohol-Beverage Corporation (SABECO), Hanoi Beer Alcohol
and Beverage Joint Stock Corporation (HABECO), and HEINEKEN N.V.
The Covid-19 pandemic outbreak in 2019 has had a significant impact on consumption channels,
particularly onsite channels like as restaurants and bars. However, this difficulty presents
potential for expansion through e-commerce channels, which thrive during the pandemic and with
which many buyers are familiar. This is claimed to be a new site for businesses to establish in
order to lessen the impact of the epidemic.
As a result, seizing the opportunity in these severe difficulties, SABECO has focused on
increasing its presence and product availability at leading e-commerce sites in order to limit losses
from the local consumption channel as well as reach more consumers, making 2019 the best year
of revenue and net income for SABECO, with revenue of 38,133 billion VND and net income of
5,370 billion VND.
Vietnam's economy is among the fastest-growing in the world this year, with rising GDP and per
capita income, as well as significant urbanization (Tổng Cục Thống Kê, 2019). These are the
aspects that will assist fuel demand and support the Vietnamese beer market's future growth.
Furthermore, SABECO invests continuously in marketing initiatives to improve the brand's
profile and value in the context of a long-term sustainable development plan. SABECO had
numerous spectacular results and honors from that point on in this unforgettable year.
1. Liquidity Ratios
Liquidity Ratios
SABECO
HABECO
HEINEKEN
Current ratio
3.15
1.80
0.68
Quick ratio
2.81
1.53
0.50
Cash ratio
2.71
0.56
0.15
If viewed from the angle of liquidity ratios alone, the challenges of the COVID-19 pandemic
seemingly did not affect SABECO and HABECO at all, as its current ratio and quick ratio were
both above 1, implying that it had a great ability to use its quick liquid assets to satisfy its current
liabilities immediately despite the impact of the pandemic. In 2019, SABECO showcased the
highest current ratio among its rivals, standing at 3.15, proving that SABECO was well-equipped
to meet its short-term financial obligations. Although HABECO had sufficient current assets to
cover its current liabilities, it lagged behind SABECO. Contrastly, HEINEKEN had the lowest
current ratio of 0.68, indicating a relatively weaker liquidity position. With a ratio below 1,
HEINEKEN had potentially raised concerns about its ability to meet immediate financial
commitments.
The quick ratio, commonly known as the acid-test ratio, which assesses a company's capacity to
pay short-term obligations without using inventories, has experienced the similar pattern with
current ratio. SABECO has the greatest quick ratio in 2019 at 2.81, following by HABECO, which
demonstrates their strong capacity to satisfy immediate financial commitments with a significant
proportion of liquid assets readily available. However, that was not the case for HEINEKEN, in
which the quick ratio of the company was noticably lower than other two competitors, at
approximately 0.5, implying a substantially poorer liquidity position.
The cash ratio evaluates a company's ability to pay down short-term obligations only using cash
reserves. SABECO still remained as the front-runner for covering and paying off its short-term
obligations since it had a considerable amount of cash accessible. In contrast, the cash amount of
HABECO and HEINEKEN was seriouly hampered by the severe effects from the global outbreak
of COVID-19 pandemic, leading to shockingly low cash ratios of only 0.56 and 0.15, respectively.
Overall the cash ratios of these two corporations were both less than 1, which suggests that they
need much more than just their cash reserves to pay off their current debt or potentially reflecting
a greater reliance on other liquid assets or external financing possibilities.
To sum up, SABECO had the best liquidity situation of the three beer businesses in Vietnam in
2019, with superior current, quick, and cash ratios. HABECO came in second with reasonably
moderate liquidity ratios, whereas HEINEKEN had remained in a comparably weaker liquidity
position, with the lowest ratios across all categories.
2. Solvency Ratios
Solvency Ratios
SABECO
HABECO
HEINEKEN
Debt-equity ratio
0.34
0.50
0.88
Debt-total asset ratio
0.26
0.33
0.33
Financial leverage
1.34
1.50
2.69
179.93
22.54
7.71
Interest coverage ratio
The debt-total asset ratio reflects the proportion of a company's assets that are financed by debt.
It indicates the extent to which a company's assets are leveraged. Debt quantities of SABECO
accounted for the lowest proportion of its assets in 2019, accounting for only 0.34, indicating a
relatively lower level of leverage, with a smaller proportion of its assets financed by debt.
However, the total debt ratio was still lower than two other companies, implying that SABECO
was on better financial footing and less financial risk. HABECO and HEINEKEN shared the same
debt-total asset ratio of 0.33, meaning that approximately one-third of their assets were financed
by debt. This suggests a moderate level of leverage for both companies.
The similar pattern was also applied to the debt-equity ratio, which indicates the proportion of
debt and equity financing used by a company. A lower ratio indicates that the company is less
reliant on debt and has a stronger equity position. SABECO again had the lowest ratio among
three businesses at 0.34, proving that this corporation was a healthy firm, relatively independent
of debtm and that the most of investment did not come from the shareholders but the equity
funding. Following by SABECO is HABECO in the second place, then HEINEKEN has the
highest debt-equity ratio of 0.88, showing a substantially higher reliance on debt financing and,
possibly, a higher financial risk.
The financial leverage ratio compares a company's total assets to its equity capital, providing
insight into the amount of debt used to finance a company's assets. A greater reliance on debt
funding is indicated by a larger financial leverage ratio. HEINEKEN has exhibited the highest
financial leverage ratio in 2019 at 2.69, almost doubled that of SABECO, implying the greatest
amount of debt in its capital structure compared to other two opponents. HABECO followed with
a moderate level of debt usage of 1.50. Besides, SABECO appeared again as the corporation that
was the least dependent on financial leverage and had a tendency to come after a more
conservative financial framework.
On the contrary, the interest coverage ratio of SABECO, which assesses the company's capacity
to satisfy its interest commitments on the basis of its earnings, was ranked first out of three firms
at 179.93 almost eight times higher than the figure of HABECO, showing the strongest capacity
of meeting and covering its interest payments. HABECO came in second place with an interest
coverage ratio of 22.54, indicating a moderate ability to satisfy interest commitments.
HEINEKEN has the lowest interest coverage ratio of 7.71, reflecting a substantially weaker
ability to meet interest charges and maybe potentially indicating a higher chance of defaulting on
interest payments.
In summary, SABECO demonstrated a relatively conservative financial structure, with lower debt
ratios and higher solvency ratios, expressing a stronger ability to satisfy long-term obligations.
HABECO had intermediate solvency ratios, whereas HEINEKEN had a larger debt reliance and
lower solvency ratios, thus signaling a higher danger of financial pressure.
3. Activity Ratios
Activity Ratios
SABECO
HABECO
HEINEKEN
56.77
25.11
74.20
6.42 days
14.53 days
4.92 days
14.99
10.77
6.51
24.34 days
33.89 days
56.07 days
Total asset turnover
2.23
1.21
0.51
Fixed asset turnover
4.89
3.26
0.80
Working capital turnover
2.90
5.03
-6.15
Receivable turnover
Days of sales outstanding
Inventory turnover
Days of inventory on hand
According to the above data table, in terms of receivables management, we can easily see that
HEINEKEN has performed the best in collecting receivables from its clients among its
competitors with the greatest receivable turnover ratio of 74.20. This could be due to the
company's high proportion of quality clients who pay their payments on time, or to creditors'
conservative credit rules. SABECO placed second with a ratio of 56.77, while HABECO has
showed the worst performance, implying a slower rate of collecting accounts receivable.
HEINEKEN did best in controlling debts, leading to the shortest days of sales outstanding of only
5 days managing the credit that they extended to their customers. SABECO was close behind
with around 7 days, indicating an efficient collection technique. HABECO spent almost half of a
month to finish credit collection, signifying the hardship it encountered to recover payment from
clients due to the negative impact of pandemic.
The inventory turnover ratio measures how efficiently a company manages its inventory by
calculating how many times inventory is sold and replaced during a fiscal year. It is obvious that
in 2019 SABECO’s inventory turnover ratio was ranked top again out of three companies, almost
three times higher than that of HEINEKEN, signaling strong sales and the efficiency of using its
inventory, which is even more impressive given the corporation's post-pandemic situation.
HABECO stayed in the middle of the pack, indicating a comparatively slower sales cycle. Along
with the inventory turnover ratio, we can analyze the days of inventory on hand simultaneously.
It is clear that it only took Disney less than 25 days to sell and replace goods despite many
problems of COVID-19 pandemic. HEINEKEN’s days of inventory on hand was much higher
than SABECO’s ratio, almost doubled the figure of the latter, showing a poor situation of the
company’s selling speed.
The total asset turnover ratio and the fixed asset turnover ratio both evaluates a company’s
efficiency in utilizing its total assets and fixed assets to generate sales and revenues. In both types
of ratio, SABECO continued to become the winner as exhibiting the greatest ratios at 2.23 and
4.89, respectively, showing the best effective management in its assets in generating profits.
HABECO’s ratios has fell behind a little bit in comparison with SABECO’s and was in the second
position, although they both still remained above 1, giving higher returns on asset investments.
HEINEKEN had the lowest asset turnover ratios, implying a lower level of efficiency in
generating sales from its overall assets. This suggests that SABECO and HABECO were more
successful in utilizing their assets to generate revenue compared to HEINEKEN.
Turning to the next turnover ratio, the working capital turnover ratio assesses how effectively a
company employs its working capital to produce revenues and support growth. It is clearly
observed that the most surprising and notable information here is the negative working capital
turnover of HEINEKEN since current liabilities far outnumbered current assets in this year. This
ratio below zero could be explained by investing an aggressive amount of inventories and
receivables to support sales, leading to an excessive amount of bad debts and obsolete inventory,
which is understandable in the first year of COVID-19 pandemic. In the contrary, HABECO
seemed to not be affected by the pandemic by showing the most desirable working capital
turnover ratio, almost two-fold SABECO’s ratio, at 5.03. This might be because the company had
successfully managed to use its short-term assets and liabilities for assisting the sales.
In short, by comparing these ratios, it becomes apparent that SABECO generally demonstrated
higher efficiency and effectiveness in terms of inventory management, receivable collection, asset
utilization, and working capital utilization, while HEINEKEN often lagged behind in these areas.
4. Profitability Ratios
Profitability Ratios
SABECO
HABECO
HEINEKEN
Profit margin
14.17%
5.60%
8.85%
ROA
19.92%
6.36%
5.41%
ROE
26.75%
10.68%
14.54%
In terms of profit margin, which calculates the percentage of each sales dollar that is converted
into profit, SABECO led the race with the highest net profit margin of 14.17% in the analyzed
year. This value means that for every dollar of sales, SABECO generated a profit of
approximately 14.17 VND. HEINEKEN came in second place with a profit margin of 8.85%,
while HABECO had a profit margin of only 5.60%. SABECO's larger net profit margin suggests
that the company was more efficient in managing expenses and generating revenues from its sales
in comparison to HABECO and HEINEKEN. This might be attributed to numbers of various
factors such as effective pricing strategies, cost – cutting efforts, or product differentiation.
When it comes to the return on assets (ROA), which quantifies the profitability of a company's
assets by measuring the percentage of net income generated relative to its total assets, SABECO
once again had the greatest return on assets (ROA) ratio among the three corporations in 2019.
SABECO earned a ROA of 19.92%, which expresses that the company generated approximately
19.92 VND of net income for every dollar of assets. HABECO was ranked as the second with a
ROA of 6.36%, followed by HEINEKEN with a ROA of 5.41%. With the figure almost tripled
these other two ratios, SABECO proved that it made the maximum use of its resources and total
assets to optimize the profits.
SABECO has once again emerged as the market leader when the similar pattern was applied to
in terms of return on equity (ROE), computing the proportion of net income earned relative to a
company's shareholders' equity to determine the profitability of its shareholders' equity.
SABECO had a ROE of 26.75%, which shows that for every dollar of shareholder equity, the
company had a net income return of around 27 VND. Following SABECO’s was HABECO, with
a return on equity of 10.68%, and HEINEKEN came in third with a ROE of 14.54%. As opposed
to HABECO and HEINEKEN, SABECO's more desirable and satisfactory return on equity
demonstrates that the company generated better earnings in response to the investment made by
its shareholders. This confirms that SABECO used its capital and resources successfully to
generate profits for its stockholders.
In conclusion, SABECO's consistent performance as the company with the strongest ability to
generate returns in relation to equity, total assets, and expense demonstrates that this corporation
was in a favorable position among the three beer companies studied in terms of profitability and
financial performance in 2019.
5. Valuation Ratios
Valuation Ratios
SABECO
HABECO
HEINEKEN
Price-to-earnings ratio
28.93
32.44
26.60
Price-to-book ratio
7.28
3.38
3.40
When comparing the price-to-earnings ratios among the three beer companies in Vietnam in 2019,
which expresses the relationship between the price per share and the amount of earnings
attributable to a single share, P/E ratio of HABECO in 2019 was especially high at 32.44 times,
suggesting that the company eventually deserved of market’s high expectation by its rapid growth
in operating profit in the future or it could mean that stock’s price is high relative to earnings and
possibly overvalued, partly due to exceptionally low profits through 2019. This ratio of SABECO
was a bit lower but definitely more desirable than that of HABECO, at 28.93 times, which
reflected that the corporation was doing exceptionally well relative to its past trends. The ratio
was still higher than HEINEKEN’s, meaning that an investor in common stock is willing to pay
more per dollar of current earnings to SABECO compared to HEINEKEN.
The price-to-book ratio compares a company's market value per share to its book value per share,
or in other words, this ratio is often interpreted as an indicator of market judment about the
relationship between a company’s required rate of return and its actual rate of return. SABECO
came back in first position with a P/B ratio of 7.28 in 2019, meaning that investors were prepared
to pay around 7.28 times the company's book value per share to acquire its stock. When compared
to SABECO, HABECO had a smaller P/B ratio of 3.38 almost half of that of SABECO, implying
a lower market valuation. HEINEKEN has showed the lowest expectations of the investors and
shareholders through its lowest P/B ratio, indicating that the company has not been successful
overall in creating value for its stockholders. This shows that, in the market's opinion, SABECO
was comparatively more highly valued based on its book value in 2019 than both HABECO and
HEINEKEN. The market placed a bigger premium on SABECO's book value, presumably
reflecting positive perceptions of the company's financial position and assets.
In brief, the comparability of valuation ratios among 3 beer corporations in Vietnam in 2019
reveals that SABECO generally had a higher valuation as opposed to HABECO and HEINEKEN.
The market perceived SABECO as having a higher growth potential and an optimistic prospect
in the future or a better financial position, leading to a higher P/E and P/B ratio.
6. Conclusion
A conclusion that can be drawn from this entire part of this report, including common-size
analysis of financial statements and relevant financial ratios, is that Saigon Alcohol Beer and
Beverage Joint Stock Corporation has been growing throughout the examined year, especially in
the memorable year 2019. Although there were some fluctuations observed, SABECO is still one
of the leading enterprises in the beverages industry.
All through this section, we compared the financial ratios of SABECO with its other two
significant competitors in the same industry, which are HABECO and HEINEKEN. In general,
SABECO has performed significantly well despite the serious consequences from the global
outbreak of COVID-19 pandemic, although it still showed some signs of lower efficiency in some
ratios such as receivable turnover and P/E ratio. The survival and debt payment capacity were
really strong, and the earning potential of the company was higher than the industry average,
showing a positive future performance and healthy future projections.
All in all, it is strongly believed that SABECO is one of the most successful and competitive
businesses in the beverages industry based on numerous accomplishments from the past and in
the most recent years.
IV.
THE POSITION OF THE ENTERPRISE IN THE BEVERAGES INDUSTRY
The Vietnamese beverages industry has experienced remarkable growth in recent years, and
amidst this thriving landscape, SABECO (Saigon Beer Alcohol Beverage Corporation) has
emerged as a dominant force in the beer and alcohol segment. With its strong market share,
extensive production capacity, acclaimed brand portfolio, and international recognition,
SABECO has firmly established itself as the leader in the Vietnamese beverages industry. Sabeco
still currently continues to hold the highest market share in Vietnam's beer business, with more
than 40%, while Habeco ranks third with 18%. According to corporate officials, the company's
share of the situation has greatly improved as a result of the 70% growth compared to the first
quarter, and the company believes it will regain growth momentum as the market recovers from
the pandemic.
Market Dominance and Production Capacity:
SABECO's position in the Vietnamese beer industry is one of undeniable dominance. In 2019,
the company held approximately 40% of the market share and peaked at No.21 among the world's
largest beer manufacturing conglomerations, making it the largest beer producer in Vietnam at
that time. SAB products are distributed in 63 Vietnamese cities and 38 countries, including the
United States, Canada, Chile, Panama, Australia, New Zealand, China, Japan, and Taiwan. SAB
presently includes 26 subsidiaries, as well as 18 associates and joint ventures. This market
leadership speaks volumes about SABECO's ability to capture the hearts and palates of
Vietnamese consumers. To support its market dominance, SABECO has strategically positioned
multiple state-of-the-art breweries across the country. These facilities not only cater to the
growing domestic demand but also serve as a strong foundation for the company's export
activities.
Diverse Brand Portfolio:
One of the key factors contributing to SABECO's success is its diverse range of highly recognized
beer brands. Saigon Beer, 333 Beer, and Bia Saigon Special are just a few examples of the
company's iconic offerings. To be more specific, Sabeco maintained its dominance in total
volume beer in 2019 and even increased its share somewhat because to its well-known Saigon
Export, 333 Premium Export, and Saigon Lager brands. Furthermore, the organization has a wide
distribution network that reaches both rural and urban locations. SABECO has skillfully crafted
each brand to cater to different consumer preferences, thereby establishing a wide consumer base.
Saigon Beer, the flagship brand, holds a special place in the hearts of Vietnamese consumers. It
embodies the essence of Vietnamese brewing traditions and has become synonymous with
celebration and social gatherings across the country. This diversified brand portfolio has not only
allowed SABECO to dominate the local market but has also positioned the company favorably in
the international arena.
International Recognition:
SABECO's commitment to excellence extends beyond the borders of Vietnam. Bia Saigon
continues the path to elevate the Vietnamese brand, following the historical heritage value of
nearly 150 years, from "Vietnamese beer taste" to "golden" marks at world quality contests. Its
beers have received international recognition and accolades at prestigious beer competitions.
SABECO's commitment to open innovation is beginning to bear fruit after 147 years of making
the Vietnamese people happy with its products. For example, Bia Saigon was honored at the Asia
Beer Championship 2022 for its outstanding products and customer-satisfying innovation. For
several years, respected local and international organizations, such as the Vietnam Value
programme, have continuously recognized flagship brands Bia Saigon and Bia 333 for
extraodinary quality. In addition, the brewery was awarded numerous significant honors such as
a gold medal at the International Brewing Awards 2019, a gold, silver, and bronze medal at the
International Beer Cup 2019, a gold and silver medal at the Australia International Brewing
Award 2020, and a gold and silver medal at the Monde Selection Awards 2021. These
international accolades highlight SABECO's dedication to producing beers of exceptional quality
that meet and exceed global standards.
Conclusion:
In conclusion, SABECO's dominant position in the Vietnamese beverages industry is a result of
its market leadership, extensive production capacity, diverse brand portfolio, and international
recognition. As the largest beer manufacturer in Vietnam, SABECO continues to captivate
consumers with its popular brands, maintaining a stronghold in the industry. Through its
commitment to quality and innovation, SABECO has not only achieved significant success in the
domestic market but has also positioned itself as a notable player in the global beverages industry.
As the industry evolves, SABECO's ability to adapt and innovate will be crucial in maintaining
its position and continuing to meet the evolving needs and preferences of consumers.