Asahi President Says Vietnam's Sabeco Valuation 'Very High'

By Steve Wynne-Jones
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Asahi President Says Vietnam's Sabeco Valuation 'Very High'

Saigon Beer Alcohol Beverage Corp. is expensive at its current valuation, according to Asahi Group Holdings Ltd., a potential bidder for Vietnam’s biggest brewery whose market capitalization has soared to $7.5 billion after the government put its stake on the block.

“The valuation is very high. Sabeco’s stock hasn’t gone down at all,” Asahi President and Chief Operating Officer Akiyoshi Koji said in an interview Thursday, declining to comment on its interest acquiring a stake of the Vietnamese company. “Compared with our deals in Europe, the multiples for a Sabeco deal would be very high.”

Looking To Bid

The Japanese brewer was among about a half dozen foreign companies that registered last year to bid for a stake in Sabeco in what would be Vietnam’s biggest offering. Vietnam, whose Communist government has embarked on a plan to divest from some of the country’s biggest companies, is an attractive investment destination for Japan Inc. with its young demographics and growing middle class.

Shares of Sabeco, as Saigon Beer Alcohol is called, have doubled since it started trading in December. The stock fell 2.9 percent to 265,000 dong Thursday in Ho Chi Minh City.

The shares currently trade at about 35 times 12-month estimated earnings, compared with 16 times for Asahi, 21 times for Carlsberg A/S and 20 times for Heineken NV. Asahi paid about 14 times the earnings before interest tax depreciation and amortization for its acquisitions in Europe in the past year, Koji said.


For potential investments, Koji said Asahi looks for targets that meet four key criteria: high profitability, strong brand value, manufacturing efficiency and advanced brewing technology, and skilled top management.

“If the company isn’t competitive enough or doesn’t have a strong global premium brand, we won’t invest in it," Koji said.

Fierce Competition

Sabeco posted revenue of about 31 trillion dong ($1.4 billion) in 2016, while Carlsberg had revenue of almost 63 billion kroner ($10 billion) in the same period.

Vietnam said this month it plans to sell a 54 percent holding in Sabeco, without providing a time frame. The bidding, which Anheuser-Busch InBev NV and Heineken NV also registered to participate in, will likely be fierce as beer sales continue to be either flat or declining in Japan, Western Europe and North America, according to a report last month from Bloomberg Intelligence.


Strong demand for Sabeco’s Saigon Beer and 333 Beer brands have helped it capture about 40 percent of Vietnam’s $6.5 billion lager market, according to Bloomberg Intelligence.

News by Bloomberg, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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