* Our view:

- The key takeaways from the analyst meeting reinforce our expectation for SAB’s accelerated earnings recovery in 2025 due to (1) a continued recovery of beer sales volume and (2) realization of lower-cost malt in 2025. We do not see significant risks to our forecasts.

* 9M 2024 performance:

- SAB gained market share in 9M 2024, which was driven by rural areas (especially in the north) with an increased number of points of distribution and sales per point of distribution.

- SAB has observed several early positive signals from launching 333 Pilsner, including (1) meeting its internal distribution target, (2) receiving some reorders from distributors, and (3) gaining widespread market acceptance.

* Guidance & outlook:

- Beer sales volume growth: Vietnam’s beer market showed signs of recovery in Q3 2024, which SAB attributes to economic recovery and improved consumer spending. Looking ahead, management is optimistic about beer sales volume during Q4 2024-Q1 2025, particularly ahead of the Lunar New Year in late January 2025.

- Raw material prices: Management expects to use up its over-hedged high-cost malt in the first few weeks of 2025. After that, SAB should benefit from realizing the lower-cost malt. Additionally, management anticipates a slight increase in prices of aluminum cans YoY in 2025.

- Advertising & promotional (A&P) activities:

+ SAB has strictly controlled its A&P spending by shifting its spending towards less costly communication means (i.e., social media and e-commerce). In addition, SAB targets to maintain strict control of its A&P spending going forward.

+ Since early October 2024, SAB has launched several A&P activities across its entire portfolio for the 2025 Lunar New Year. Early sales for this holiday are slightly better than last year; however, the company has prepared defensive activities to mitigate potential negative impacts on its mainstream beer offerings due to customer preference for premium beer during the gift-giving season.

* The acquisition of Saigon Binh Tay Beer Group JSC (Sabibeco, UPCoM: SBB, SAB’s 22.7%-stake associate):

- Management expects to finish this acquisition to increase SAB’s stake in Sabibeco from 22.7% to 65.9% in January 2025.

- After the consolidation, SAB expects to (1) realize immediate financial benefits (which we understand to be positive impacts on beer GPM as SAB should fully realize gross profit from the volume purchased from Sabibeco) and (2) tap into Sabibeco’s spare capacity. In addition, realizing cost synergies from the acquisition may take some time.

* We currently have a BUY rating for SAB with a target price of VND73,000/share.

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