San Miguel Corp., the country’s biggest beer maker, plans to bid for Saigon Alcohol Beer and Beverages Corp., Vietnam’s leading beer producer.
“At the moment, we are evaluating the deals and we will definitely join the public bidding of Vietnamese government for the sale of Saigon Brewery,” San Miguel president and chief operating officer Ramon Ang said over the weekend.
San Miguel will likely bid alone in the privatization of Sabeco, which currently remains 89.59-percent owned by the Vietnamese government.
The Vietnamese government announced in September last year its plan to sell its entire 89.59-percent stake in Sabeco for $1.8 billion and its 82-percent stake in Hanoi Beer Alcohol Beverage Corp. for $404 million.
Vietnam started the sale process for Sabeco, which has around 40-percent market share, in December and announced plan to pursue the privatization this year.
Aside from San Miguel, earlier reports listed Kirin Holdings, Asahi Group Holdings, Thai Beverage Plc, Heineken and Anheuser Busch Inbev SA. Among those interested in the sale of Sabeco and Habeco.
Sabeco reported net profit of $205 million in 2016, up 33 percent from 2015. Sabeco’s shares are listed in the Ho Chi Minh Stock Exchange.
Vietnam may provide an anchor to increase its brewery business as consumption in the country is growing at an annual rate of at least 10 percent, five times that in the Philippines, Ang said.
“The businesses we ventured into have matured, such that the company is in a very stable position,” Ang said, citing compounded annual 20-percent growth in recurring profit and a near fourfold increase in assets since 2008 following San Miguel’s diversification from food and drinks into non-allied industries such as toll roads and resources. Excluding one-off items, profit will rise at least 20 percent to about P60 billion ($1.2 billion) this year, he said.
Profit at the company that started as a brewer more than a century ago rose 80 percent to P52.2 billion last year, boosted by higher sales at its oil, beer and food units. An P11.8 billion one-time gain from the sale of its telecommunication assets helped offset a P9 billion foreign exchange loss.
San Miguel Corp. also plans to invest $34 billion in an oil refinery, an integrated steel complex and an ocean-tide power plant as the Philippines’ largest company by sales expands amid forecasts for robust economic growth in the country, according to Ang.
“Ang is trying to ride on the wave of Philippine economic growth,” said Astro del Castillo, managing director at investment advisory company First Grade Holdings Inc. “Like its previous infrastructure and industrial bets, these won’t make a quick buck, so it will take time for the stock to appreciate. San Miguel is for investors with a long-term view.”
San Miguel plans to build an oil refinery complex with a capacity of 250,000 barrels a day and an integrated steel plant, which will entail investments of $15 billion each. An ocean-tide energy project with initial capacity of 1,200 megawatts and costing $3.6 billion is also in the pipeline.
The oil refinery, which will also produce aromatics and petrochemicals, and the steel plant are under study and construction could take three-and-a-half years, while the power project may be completed in five, Ang said.
San Miguel-owned Petron Corp., the nation’s largest oil refiner and retailer, said in January it’s seeking partners for a refinery it will build in southern Philippines.
Ang said he was confident the conglomerate would post at least P60 billion in recurring net income this year, up from P49.3 billion recurring net income in 2016.
“I think conservatively, we should be hitting P60 billion recurring profit,” Ang said. With Bloomberg