AB InBev IPO's Aisan subsidariary - what will that mean for Vietnam?

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source: Globaldata, via Ab Inbev prospectus

source: Globaldata, via Ab Inbev prospectus

The second biggest IPO in the world (after Uber, which is not looking so good these days) just happened in Hong Kong. AB InBev, the largest beer company in the world, sold a stake in its Asia-Pacific subsidiary, Budweiser Brewing Company APAC Ltd., raising USD5bn. The parent will use the money to lower its USD100bn in debt (on EBITDA of about USD19bn, ttm). It previously had announced it was selling its Australian business for more than USD11bn, again to lower debt. The balance sheet will still look stretched (about 4x EBITDA by my very rough calculations).

But what will this mean for Vietnam?

  • Vietnam is very much a beer market (we talked about this back on June 13 when we looked at the beer market).

  • And the market is growing. GlobalData, a data provider, expects beer volumes will rise 4% annually through 2023 and value will increase 9% annually. The premium market is growing even faster: volume at +9%, value at +14% annually for the next 5 years!

source: Globaldata, via Ab Inbev prospectus

source: Globaldata, via Ab Inbev prospectus

source: Globaldata, via Ab Inbev prospectus

source: Globaldata, via Ab Inbev prospectus

  • Unfortunately for Bud APAC (or whatever they are going to be called), their market share in Vietnam is very low - just 1% in terms of volume. Probably a bit more than that for value. Within the premium and super premium market, they are #2, which is good.

  • Consolidation is the name of the game. We could start to see acquisitions or mergers among the big Asian names. The subsidiary appears to have a fair amount of cash (USD1.0bn as of June 30) and less debt than that.

  • Some analysts, according to this report, believe that ThaiBev, which owns the #1 brewer in Vietnam, SABECO, could be one.

  • San Miguel of the Philippines, which is also on that list, recently said it would build a new brewery in HCMC, “as soon as market studies show good prospects.”

  • Carlsberg and HABECO already have a tie up, so within Vietnam, SABECO/ThaiBev is the best bet for Bud APAC.

  • SABECO’s stock price is up 20% yoy, but has not been doing that great since mid-July.

Should be fun to watch what happens with the beer segment in Vietnam. It’s important to note that the craft beer scene in Vietnam is “booming,” so there is going to be a lot of competition.