CGS International
June 16, 2025
Vietnam Defers Beer Excise Tax Hike: What It Means for Thai Beverage and Industry Peers
Introduction: Vietnam’s Tax Change Offers Relief to Beverage Sector
Vietnam’s National Assembly has approved a significant change to the proposed schedule for excise tax hikes on beer, offering much-needed breathing room to beverage companies operating in the country. This development has direct implications for Thai Beverage (THBEV), its subsidiary SABECO, and a broad array of regional and global peers in the spirits, beer, and non-alcoholic beverage segments.
Key Highlights
- The special consumption tax on beer in Vietnam will remain at 65% through 2026 and then increase by 5 percentage points annually, reaching 90% by 2031.
- This phased approach is more gradual than the Ministry of Finance’s earlier proposal, which aimed for an 80% rate by 2026 and 100% by 2030.
- THBEV is expected to pass most of the tax burden to consumers, resulting in estimated annual average selling price (ASP) increases of around 3% through 2031.
- A new 8% tax on sugary beverages (with more than 5g sugar per 100ml) will start from 2027, but THBEV’s exposure here is minimal.
- CGS International reiterates an Add rating on THBEV with a target price of S\$0.56, representing a 21.7% upside from the current price.
Vietnam’s Phased Excise Tax Hike: Gradual, Not Abrupt
- On June 14, 2025, the Vietnamese National Assembly approved a phased-in excise tax increase for beer, maintaining the current 65% rate in 2026 and raising it by 5 percentage points each year, reaching 90% by 2031.
- This approach is notably less aggressive than last year’s Ministry of Finance proposal, which targeted 80% in 2026 and 100% in 2030. The change aims to help consumers gradually adjust to higher prices.
Implications for THBEV and SABECO: Margin Management and Competitive Pricing
- THBEV’s Vietnam subsidiary, SABECO, is positioned to offset the tax increase by incrementally raising beer prices—about 3% annually through 2031, assuming full pass-through to consumers.
- This tax schedule is less disruptive than initially feared—previous projections saw a 9% front-loaded ASP impact by 2026, followed by a 3% CAGR in price increases from 2026 to 2030.
- The more gradual implementation grants SABECO flexibility in 2025 to respond to current downtrading trends with more competitive pricing.
- Updates on THBEV’s strategy are expected at its Annual Information Meeting on June 20, 2025.
- The new 8% tax on high-sugar beverages, effective from 2027, will have negligible impact on SABECO, as non-alcoholic beverages contributed less than 1% of FY24 revenue.
THBEV: Valuation, Financial Performance, and Outlook
- CGS International maintains an Add rating on THBEV, citing that current valuation (approximately 9.7x forward P/E) is the lowest in five years and more than 1.5 standard deviations below the five-year mean—even as the broker projects an 8% core EPS CAGR from FY25 to FY27.
- Potential re-rating catalysts include stronger margins from cost controls and volume increases from downtrading in Vietnam. Downside risks include prolonged macroeconomic weakness and higher SG&A expenses.
| Sep-25F | Sep-26F | Sep-27F | |
|---|---|---|---|
| Net Profit (THBm) | 26,476 | 29,875 | 30,920 |
| Core EPS (THB) | 1.05 | 1.19 | 1.23 |
| Core EPS Growth | -2.7% | 12.8% | 3.5% |
| FD Core P/E (x) | 11.02 | 9.77 | 9.44 |
| Recurring ROE | 17.2% | 18.0% | 17.2% |
| P/BV (x) | 1.83 | 1.69 | 1.56 |
| DPS (THB) | 0.65 | 0.65 | 0.65 |
| Dividend Yield | 5.60% | 5.60% | 5.60% |
Peer Comparison: Spirits, Beer, and Non-Alcoholic Beverage Companies
Spirits Companies
| Company | Ticker | Rec | Price (lcl curr) | Target Price (lcl curr) | Market Cap (US\$ m) | P/BV (CY25F) | ROE (CY25F) | Dividend Yield (CY25F) | EV/EBITDA (CY25F) | P/E (CY25F) |
|---|---|---|---|---|---|---|---|---|---|---|
| Thai Beverage | THBEV SP | Add | 0.46 | 0.56 | 9,006 | 1.79 | 17.6% | 5.6% | 7.5 | 10.7 |
| Jiangsu King’s Luck Brewery | 603369 CH | Add | 39.28 | 51 | 6,819 | 2.8 | 22.1% | 3.3% | 8.8 | 13.4 |
| Jiangsu Yanghe Brewery | 002304 CH | Hold | 63.83 | 66 | 13,388 | 1.9 | 11.0% | 7.3% | 8.9 | 17.2 |
| Kweichow Moutai | 600519 CH | Add | 1426.95 | 1862 | 249,569 | 6.8 | 38.3% | 4.0% | 12.7 | 18.9 |
| Luzhou Laojiao | 000568 CH | Hold | 109.08 | 122 | 22,354 | 3.1 | 28.0% | 6.0% | 6.9 | 11.6 |
| Shanxi Xinghuacun Fen Wine | 600809 CH | Add | 171.1 | 234 | 29,062 | 5.1 | 35.1% | 3.8% | 11.1 | 15.8 |
| Wuliangye Yibin | 000858 CH | Hold | 119.12 | 141.5 | 64,376 | 3.1 | 23.9% | 5.2% | 7.0 | 13.4 |
| Brown-Forman Corp | BF/B US | NR | 26.44 | NA | 12,527 | 2.9 | 20.2% | 3.5% | 12.7 | 14.4 |
| Davide Campari-Milano NV | CPR IM | NR | 5.632 | NA | 8,013 | 1.7 | 9.0% | 1.2% | 12.3 | 19.2 |
| Diageo PLC | DGE LN | NR | 1950 | NA | 58,993 | 4.9 | 33.3% | 3.9% | 13.3 | 16.0 |
| Pernod Ricard SA | RI FP | NR | 89.7 | NA | 26,147 | 1.4 | 10.7% | 5.9% | 11.1 | 13.3 |
| Remy Cointreau SA | RCO FP | NR | 50.9 | NA | 3,068 | 1.3 | 5.8% | 2.8% | 12.6 | 21.6 |
Simple average (Spirits): 15.9x P/E CY25F, 21.6% ROE, 4.2% dividend yield
Beer Companies
| Company | Ticker | Rec | Price | Target Price | Market Cap (US\$ m) | P/BV (CY25F) | ROE (CY25F) | Dividend Yield (CY25F) | P/E (CY25F) |
|---|---|---|---|---|---|---|---|---|---|
| Carlsberg Brewery (M) | CAB MK | Add | 19.58 | 23.5 | 1,410 | 18.4 | 120.4% | 6.1% | 16.4 |
| Heineken Malaysia Bhd | HEIM MK | Add | 27.32 | 31.9 | 1,944 | 15.3 | 89.5% | 5.8% | 17.1 |
| Tsingtao Brewery | 168 HK | Add | 51.05 | 66.1 | 11,139 | 2.5 | 18.2% | 5.1% | 12.8 |
| Ambev SA | ABEV3 BZ | NR | 13.64 | NA | 38,778 | 2.2 | 16.0% | 6.6% | 13.8 |
| Anheuser-Busch InBev SA/NV | ABI BB | NR | 61.96 | NA | 144,567 | 1.7 | 9.3% | 1.7% | 19.5 |
| Asahi Group Holdings Ltd | 2502 JP | NR | 1,882 | NA | 19,868 | 1.0 | 7.1% | 2.7% | 14.5 |
| Budweiser Brewing Co APAC Ltd | 1876 HK | NR | 7.94 | NA | 13,396 | 1.3 | 7.6% | 5.7% | 17.0 |
| Heineken NV | HEIA NA | NR | 78.10 | NA | 51,981 | 2.2 | 13.5% | 2.5% | 16.1 |
| Kirin Holdings Co Ltd | 2503 JP | NR | 2,051 | NA | 13,015 | 1.3 | 11.5% | 3.6% | 11.1 |
| Saigon Beer Alcohol Beverage C (SABECO) | SAB VN | NR | 49,100 | NA | 2,415 | 3.0 | 19.4% | 7.7% | 14.7 |
| Sapporo Holdings Ltd | 2501 JP | NR | 7,311 | NA | 3,999 | 2.9 | 6.2% | 0.8% | 46.0 |
Simple average (Beer): 18.1x P/E CY25F, 29.0% ROE, 4.4% dividend yield
Non-Alcoholic Beverage Companies
| Company | Ticker | Rec | Price | Target Price | Market Cap (US\$ m) | P/BV (CY25F) | ROE (CY25F) | Dividend Yield (CY25F) | P/E (CY25F) |
|---|---|---|---|---|---|---|---|---|---|
| Carabao Group | CBG TB | Add | 53.00 | 81.00 | 1,635 | 3.5 | 23.8% | 3.6% | 15.4 |
| Fraser & Neave Holdings | FNH MK | Add | 28.32 | 36.50 | 2,446 | 2.6 | 15.6% | 3.0% | 17.8 |
| Nestle (Malaysia) | NESZ MK | Reduce | 73.82 | 78.00 | 4,077 | 29.5 | 96.7% | 3.0% | 31.4 |
| Osotspa | OSP TB | Hold | 15.40 | 16.40 | 1,427 | 2.7 | 19.8% | 6.5% | 14.2 |
| Ito En Ltd | 2593 JP | NR | 3,246 | NA | 1,920 | 1.8 | 9.1% | 1.4% | 27.6 |
| Lifedrink Co Inc | 2585 JP | NR | 2,014 | NA | 731 | 6.2 | 26.6% | 0.7% | 31.0 |
| Suntory Beverage & Food Ltd | 2587 JP | NR | 4,646 | NA | 9,967 | 1.2 | 7.6% | 2.6% | 15.5 |
Simple average (Non-Alcoholic Beverages): 21.8x P/E CY25F, 28.5% ROE, 3.0% dividend yield
THBEV: By the Numbers—Financials and Key Ratios
| Sep-24A | Sep-25F | Sep-26F | Sep-27F | |
|---|---|---|---|---|
| Total Net Revenues | 340,289 | 350,970 | 365,663 | 377,725 |
| Gross Profit | 103,208 | 107,244 | 112,282 | 115,546 |
| Operating EBITDA | 61,650 | 61,288 | 65,817 | 67,514 |
| Net Profit | 27,216 | 26,476 | 29,875 | 30,920 |
| Sep-24A | Sep-25F | Sep-26F | Sep-27F | |
|---|---|---|---|---|
| Revenue Growth | 2.2% | 3.1% | 4.2% | 3.3% |
| Operating EBITDA Margin | 18.1% | 17.5% | 18.0% | 17.9% |
| Return on Average Assets | 7.03% | 7.35% | 7.79% | 7.86% |
| ROIC (%) | 11.2% | 11.3% | 12.3% | 12.7% |
| Dividend Yield | 5.60% | 5.60% | 5.60% | 5.60% |
THBEV Key Volumes
- Spirit volume (m litres): 637.8 (Sep-24A), 637.8 (Sep-25F), 647.4 (Sep-26F), 653.8 (Sep-27F)
- Beer volume (m litres): 2,314.1 (Sep-24A), 2,418.3 (Sep-25F), 2,519.4 (Sep-26F), 2,584.8 (Sep-27F)
- Non-alcoholic beverage volume (m litres): 3,218.9 (Sep-24A), 3,380.1 (Sep-25F), 3,534.7 (Sep-26F), 3,650.1 (Sep-27F)
Shareholder Information and Market Performance
- Major shareholders: Sriwana Co Ltd (56.8%), Maxtop Management Corp (7.1%), Capital Group Companies (5.0%)
- Market cap: US\$9,006m / S\$11,560m
- Free float: 29.3%
- Current price: S\$0.46, Target price: S\$0.56, Upside: 21.7%, Dividend yield: 5.6%
- 1M/3M/12M Price Performance: -7.1% / -9.8% / -4.2% (absolute); -8.8% / -14.0% / -33.6% (relative)
Conclusion: Outlook for THBEV and Sector Peers
The delayed and phased excise tax increase in Vietnam represents a material positive for THBEV and its Vietnam subsidiary SABECO, providing the company with operational flexibility and time to adapt pricing strategies. With its current valuation at multi-year lows, strong dividend yield, and resilient profit outlook, THBEV stands out as an attractive play in the Asia-Pacific beverage sector. Peer analysis reveals a diverse landscape, with THBEV’s fundamentals holding up well against both regional giants and global competitors in spirits, beer, and non-alcoholic beverages. Investors should watch for updates following THBEV’s upcoming Annual Information Meeting for further clarity on management’s response and growth strategies.
