We joined SAB's online investor briefing on May 17. The meeting focused on the company’s outlook and direction for 2023 and beyond, which were broadly in line with our expectation. 

Management expects revenue to face headwinds in 2023. Management sees top-line growth challenges due to weaker-than-expected consumer spending in Q1 2023, but it expects a recovery in H2 2023 and 2024. Management believes the recovery will be driven by (1) an improvement in consumer confidence, (2) a value-added tax (VAT) cut, and (3) increased tourism activities. In our view, the growth in H2 2023 could also come from the resumption of stocking activities. According SAB, its distributors are destocking due to weak demand in H1 2023 after stockpiling for the Tet Holiday. 

Management believes SAB’s gross margin will be resilient in 2023. Management maintains its view that SAB’s gross margin will be secured despite the impact of high input costs in 2023. SAB also expect input costs to soften in 2024 while gross margin will be supported by other cost optimizing activities. Furthermore, SAB will complete solar energy installation in nine additional breweries by the end of Q3 2023. The company has also continued to apply monthly reviews on material usage and wastage to optimize production costs. 

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