- We maintain our BUY rating for SAB but cut our target price (TP) by 4% to VND70,000/share.

- Our lower TP is driven by an 11% reduction in our target P/E from 22.2x to 19.8x, partially offset by increases to our 2024/25F EPS forecasts and rolling our TP horizon forward to mid-2025.

- We lower our target P/E as we cut our 2024-2028F aggregate NPAT-MI forecast by 3% (respective changes of 1%/3%/-9%/-5%/-4% in 2024/25/26/27/28F), resulting in a lower projected 2023-2028F NPAT-MI CAGR of 5% from 6% previously, as we factor in an upward revision in the excise tax rate on beer from 65% to 75% from 2026F.

- We project 2024F NPAT-MI to grow 9% YoY, driven by 7% growth in beer sales volume and lower advertising & promotional (A&P) expenses/beer revenue.

- We forecast a 2023-2028F EPS CAGR of 5% due to (1) a gradual rebound in beer consumption amid challenges caused by the ongoing strict enforcement of drunk driving laws and the revision of the excise tax rate, and (2) operational and commercial optimization.

- SAB is a compelling defensive stock due to its solid financial position and cash flow. We expect SAB to maintain an attractive cash dividend of VND3,500/share (6% yield) in 2024-28F.

- SAB’s projected 2024F P/E is 16.9x vs a 10-year average peer median P/E of 26.5x.

- Downside risks: Weaker-than-expected beer consumption; higher A&P spending due to stiff competition; higher input material costs; higher excise tax rates.

Powered by Froala Editor