MSN [BUY +22.4%] - Consumer retail business poised to rise after 2022 - Update
  • 2022-08-31T00:00:00
  • Company Research

We lower our target price (TP) for MSN by 11% but reiterate our BUY rating.

Our lower TP is primarily driven by (1) a lower valuation for Masan Consumer Holdings (MCH) that is derived from our 8% lower projected aggregated EBIT for MCH in 2022-2024F, (2) higher net debt due to a lower cash balance, and (3) increasing our risk-free rate and cost of equity assumptions by 50 bps. These are partly offset by a higher contribution from Phuc Long Heritage (PL) to total equity value as a result of MSN raising its equity ownership in PL to 85% from 51%.

We remain bullish on the outlook for MSN’s leading and wide-ranging consumer businesses to benefit from Vietnam’s long-term consumption growth. However, we believe the prolonged impact from COVID-19 and the recent inflation in prices of FMCG goods on consumer spending power will undermine sales volumes and hurt margins of MSN’s consumer businesses in 2022.

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