Vietnamese stocks, already the best-performing Southeast Asian shares in the past year, are set for another boost -- the listing of Saigon Beer Alcohol Beverage Corp. on the Ho Chi Minh City Stock Exchange Tuesday.

Sabeco, as the state-owned maker of Saigon Beer and 333 Beer, will be the second-largest consumer company after Vietnam Dairy Products JSC on the exchange and will round up the top five constituents with an indicative market value of $3.1 billion. It’s also the largest brewer in Vietnam, where beer sales rose about 40 percent in the five years through 2015.

The listing will expand Vietnam’s $77 billion stock market as it increases the size and liquidity of the benchmark VN-Index, which is poised for a fifth straight year of gains. For the government, the move is a gauge for how much it can command for its holdings in the company. The sale may be completed next year.

“Sabeco’s listing is a positive and important step for a country that is embracing and liberalizing it’s own corporations,” said Federico Parenti, a Milan-based fund manager at Sempione Sim Spa. “The listing will be successful because the market is hungry for these type of businesses.”

Seven companies including Heineken NV, Anheuser-Busch InBev NV and Asahi Group Holdings Ltd. have already registered to bid for Sabeco. The government, criticized for being slow in divesting assets, also plans to sell Hanoi Beer Alcohol Beverage Corp., or Habeco.

Sabeco will list about 641.3 million shares at an initial price of 110,000 dong ($4.80) on the Ho Chi Minh bourse. The stock is allowed to rise or fall as much as 20 percent on the first day. The listing follows a 2008 initial public offering, as the events are separate in Vietnam.

Beating Targets

Net income in 2016 is expected to rise 10 percent to about 3.76 trillion dong in 2016, Sabeco Chief Executive Officer Le Hong Xanh said in an interview in August. That’s twice as much as an earlier target.

“There is still room for growth in the beer market,and this will be the main driver for Sabeco,” Tran Trung, Ho Chi Minh City-based analyst at ACB Securities, wrote in a November 29 note to clients.

Vietnam’s thriving street-side cafe and bar culture, young population and rising middle class make it an attractive market for overseas brewers. Beer consumption in 2016 is forecast to rise 4.1 percent to about 4 billion liters from a year ago, the most in the Association of Southeast Asian Nations, according to Euromonitor International.

Economists predict Vietnam will be among the world’s fastest-growing economies in 2016, expanding about 6 percent, as it benefits from a manufacturing industry that’s grown in importance over the years. That and increased foreign-direct investment helped push the VN-Index to an eight-year high of 688.89 on Oct. 19. FLC Faros Construction JSC, up more than 840 percent since its Sept. 1 debut, is leading gains on the gauge.

The index, up 14 percent this year as of Monday, has topped a 3.4 percent decline in the MSCI Frontier Markets Index and 3.7 percent advance in MSCI South East Asia Index. That’s made Vietnamese shares expensive relative to peers, with a 12-month price-to-earnings ratio of 13.4, more than 10.5 for the frontier measure.

Source:
courtesy of BLOOMBERG

by Giang Nguyen

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