MSN – 9M NPAT-MI, consumer-retail EBIT exceed our forecast; Chairman’s daughter registers to buy 0.66% stake – Earnings Flash & News
  • 2024-10-24T00:00:00
  • Company Research

Earnings Flash:

  • 9M 2024: Revenue was VND60tn (USD2.4bn; +5% YoY) and NPAT-MI was VND1.3tn (USD52mn; +255% YoY), completing 71% and 106% of our respective 2024 forecasts (Figure 1). While the combined EBIT of consumer-retail businesses (i.e., Masan Consumer Corporation, WinCommerce, Phuc Long, and Masan MEATLife) grew 37% YoY (exceeding our forecasts), MSN’s EBIT trailed behind our expectation mainly due to MHT’s (Masan High-Tech Materials) lower-than-expected EBIT. Nonetheless, NPAT-MI exceeded our expectation mainly due to (1) better-than-expected shared profit from TCB and (2) lower-than-expected minority interests (which we attribute to MHT’s lower-than-expected earnings that hurt its minority interest). Overall, we see upside potential to our NPAT-MI forecast for MSN, pending a fuller review.
  • Q3 2024: Revenue grew 7% YoY and NPAT-MI surged 14.5x YoY to VND701bn (USD28mn). Revenue was mainly driven by (1) Masan Consumer Corporation (MCH UpCOM) and (2) WCM (WinCommerce). The surge in NPAT-MI was mainly driven by (1) a 40% YoY decline in net financial expense and (2) 24% YoY growth in the combined EBIT of consumer-retail businesses.
  • MCH UpCOM: 
    - Q3 2024: Revenue rose 10% YoY and NPAT-MI grew 15% YoY. Revenue growth was mainly driven by convenience foods (+11% YoY) and beverages (+19% YoY). MCH’s EBIT margin improved by ~110 bps YoY to 25%, which we partly attribute to GPM improving 20 bps YoY. In 9M 2024, MCH’s sales increased 11% YoY and its NPAT-MI grew 14% YoY.
  • WCM: 
    - Q3 2024: Sales increased 9% YoY due to (1) LFL growth of 8% YoY and (2) 146 net new stores YoY. Its EBIT margin turned positive at 1.0% in Q3 (vs -1.1% in Q2 2024), which we mainly attribute to higher operating leverage as sales improved 10% QoQ. As a result, WCM achieved NPAT of VND20bn in Q3 2024, equivalent to an NPAT margin of 0.2% (vs. -1.9% in Q3 2023).
    - 9M 2024: WCM’s sales grew 9% YoY (corresponding to a LFL growth of 7% YoY), and EBIT loss was reduced by 98% YoY to VND8bn – equivalent to EBIT margin of -0.03%.
    - Store expansion: WCM opened 60 WinMart+ (WMP) in Q3 2024, and 103 stores in 9M 2024 (behind our forecast of 300 new WMP in 2024). Meanwhile store count of WinMart supermarket (WMT) was stable at 129. As of Q3 2024, WCM operated 3,604 WMP and 129 WMT.
  • Masan MEATLife (MML): 
    - Q3 2024: Sales grew 2% YoY, mainly driven by (1) fresh meat sales (i.e., pork and chicken) growing 9% YoY and (2) processed meat increasing 19% YoY. This was partly offset by a 28% decrease in the sales of farm pig and chicken because MML restructured this business. MML’s EBIT margin improved by 220 bps YoY to 2%, which we partly attribute to (1) improved GPMs of both fresh meat and processed meat, as well as (2) the gradual increase in sales contributions from processed meat that has a relatively higher margin (37% in Q3 2024, from 31% in Q3 2023).
    - 9M 2024: MML delivered a positive EBIT of VND55bn, equivalent to an EBIT margin of 1%.
  • Phuc Long (PL): In Q3 2024, revenue increased 13% YoY, mainly driven by 21 net new stores. However, EBIT margin dropped 330 bps YoY to 9%, which we attribute to its GPM decreasing 170 bps YoY.
  • MHT: In Q3 2024, revenue increased +4% YoY in Q3 2024, supported by favorable market prices that were offset by lower sales volume YoY. Management attributes the reason for lower sales volume to (1) lower demand and (2) business disruptions caused by Typhoon Yagi. As a result, MHT’s EBIT dropped 67% YoY in Q3 2024.
  • Net debt/EBITDA was down to 3.4x as end-Q3 2024 compared to 3.9x at YE 2023. This was slightly higher than 3.3x at end-Q2 2024, which we attribute to a decreased cash balance as a result of MSN’s payment of VND5.1tn (USD204mn) to buy a 7.1% stake in WCM from SK Group.
  • Our view: As 9M 2024 NPAT-MI exceeded our expectation, we see potential upside to our NPAT-MI forecast, pending a fuller review. Regarding consumer-retail operating profit, MCH UpCOM’s EBIT, WCM’s EBIT, and MML’s EBIT exceed our expectations, while PL’s fell short of our expectation. Conversely, MHT’s EBIT did not meet our forecast.

News:

  • MSN announced a transaction involving a related party to an insider: Ms. Nguyen Yen Linh, daughter of Mr. Nguyen Dang Quang (Chairman of the Board of Directors of MSN, currently holding 0% of MSN’s charter capital) and Mrs. Nguyen Hoang Yen (Member of the Board of Directors of MSN, currently holding 3.36% of MSN’s charter capital), has registered to purchase 10mn MSN shares. After the transaction, Ms. Linh is expected to increase her ownership to 0.66% of MSN's charter capital, up from 0%. The transaction will be carried out via put-through/order matching, with the expected execution period from October 29, 2024, to November 18, 2024.

Figure 1: MSN’s Q3 and 9M 2024 results

VND bn

Q3 2023

Q3 2024

YoY

9M 2023

9M 2024

YoY

2024F

9M 2024 as % of 2024F

Net revenue 1

20,155

21,487

7%

57,470

60,476

5%

85,185

71%

  • MCH UpCOM

7,233

7,987

10%

19,748

21,955

11%

31,425

70%

  • WCM

7,884

8,603

9%

22,401

24,404

9%

33,838

72%

  • PL

377

425

13%

1,160

1,203

4%

1,772

68%

  • MML

1,903

1,936

2%

5,207

5,446

5%

6,952

78%

  • MHT

3,590

3,727

4%

10,905

10,468

-4%

15,026

70%

 

 

 

 

 

 

 

 

 

EBIT

1,360

1,613

19%

3,261

3,622

11%

6,064

60%

  • MCH UpCOM

1,729

1,997

16%

4,319

5,149

19%

7,601

68%

  • WCM

-30

86

N.M.

-310

-8

-98%

45

N.M.

  • PL

47

39

-17%

70

107

53%

185

58%

  • MML

1

44

71.1x

-205

55

N.M.

25

224%

  • MHT

174

57

-67%

500

-101

-120%

352

N.M.

 

 

 

 

 

 

 

 

 

TCB’s contribution

1,045

1,136

9%

2,898

3,601

24%

4,335

83%

Net financial income

-1,965

-1,178

-40%

-4,754

-3,907

-18%

-4,743

82%

Financial income

421

855

103%

1,761

2,076

18%

2,854

73%

Financial expense

-2,386

-2,032

-15%

-6,515

-5,983

-8%

-7,597

79%

 

 

 

 

 

 

 

 

 

NPAT

486

1,301

168%

1,353

2,726

101%

4,609

59%

NPAT-MI

48

701

14.5x

369

1,308

255%

1,237

106%

EBIT margin

6.7%

7.5%

 

5.7%

6.0%

 

7.1%

 

  • MCH UpCOM

23.9%

25.0%

 

21.9%

23.5%

 

23.2%

 

  • WCM

-0.4%

1.0%

 

-1.4%

-0.03%

 

0.1%

 

  • PL

12.5%

9.2%

 

6.0%

8.9%

 

10.5%

 

  • MML 

0.0%

2.3%

 

-3.9%

1.0%

 

0.4%

 

  • MHT

4.8%

1.5%

 

4.6%

-1.0%

 

2.3%

 

 

 

 

 

 

 

 

 

 

EBITDA 2 margin

18.6%

19.7%

 

17.7%

18.8%

 

16.4%

 

  • MCH UpCOM

26.4%

27.3%

 

25.7%

26.1%

 

 

 

  • WCM

2.9%

3.8%

 

2.0%

3.1%

 

 

 

  • PL

20.7%

16.2%

 

17.8%

16.7%

 

 

 

  • MML 

6.5%

8.6%

 

3.3%

7.6%

 

 

 

  • MHT

15.4%

12.5%

 

15.6%

11.1%

 

 

 

 

 

 

 

 

 

 

 

 

NPAT-MI margin

0.2%

3.3%

 

0.6%

2.2%

 

2.4%

 

Net debt/EBITDA 2

4.0x

3.4x

 

 

 

 

3.4x

 

Source: MSN, Vietcap

1 Consolidated revenue is lower than the sum of its subsidiaries’ revenue due to intercompany transactions.

2 EBITDA includes TCB’s contribution.

Powered by Froala Editor