- 2024-04-25T00:00:00
- Company Research
AGM Notes:
- Masan Consumer Corporation (UPCoM: MCH, MSC):
- Shareholders approved the plan to list the shares of MSC on the Ho Chi Minh City Stock Exchange (HOSE). MSN and/or its subsidiaries may consider various fund-raising opportunities, including an offering of debt or equity securities (e.g., an IPO on HOSE) or other transactions. In our current Sum-of-the-Parts valuation for MSN, we value MSC at USD5.7bn (implying a projected total stock return of 42% based on MSC’s last closing price). Our MSC valuation is equivalent to 2024F P/E of 20x vs the average of Asian peers’ 2024F P/E of 22x.
- To focus on (1) product premiumization and (2) expanding addressable markets for its current brands in key categories – seasonings (i.e., Chinsu) and convenience foods (i.e., Omachi). Regarding (1), MSC plans to enter the out-of-home market, offering premium products in home-meal-replacements and restaurant-meal-replacements. As for (2), MSC will continue its international expansion strategy (i.e., “Go Global”). In 2023, MSC’s seasonings exports to the US and South Korea grew 150% YoY and ~125% YoY, respectively.
- Expecting no M&A plans in the medium term; high dividend payment. MSC will focus on investing in its premiumization and “Go Global” strategy. Additionally, shareholders approved FY 2023 cash dividends of VND10,000/share, in which VND4,500/share was paid in 2023, and the remaining VND5,500/share is slated to be paid within 2024. During the AGM, the company also asked shareholders to approve the plan of an extraordinary dividend payment that uses FY 2023 undistributed NPAT to advance FY 2024 dividends. Shareholders at AGM approved this proposal. Per our estimate, if MSC were to pay out all of its FY 2023 undistributed NPAT as advance cash dividends, the additional dividends that MSC’s shareholders would receive would be ~VND17,000/share.
- WinCommerce (WCM):
- Guidance: Targets (1) positive NPAT in Q1 2025 and (2) 2028F revenue of USD2.4bn (double 2023’s number), 2028F NPM of 3-5% together with 8,000 stores (2.2x 2023’s number). Our latest forecast for WCM: 2025F NPAT of VND277bn (USD11mn) vs 2024F net loss of VND55bn (USD2.2mn), and 2028F revenue/NPM/store count of USD2.2bn/ 1.5%/7,158, respectively. As such, management’s 2028F targets are ahead of our expectations.
- To focus on competitive pricing strategy without sacrificing gross margin in 2024. Management believes this will be done via increasing private label sales’ contribution to WCM’s total sales, which is currently 8-10%. WCM plans to have 40 private labels by YE 2024. According to management, WCM’s private labels have GPMs that are 3-5 ppts higher than the equivalent products sold at WCM.
- Masan High-tech Materials (MHT): In 2024, MHT will focus on cost optimization activities, rationalizing its product portfolio, and exploring options for deleveraging.
Figure 1: 2024 management guidance
VND tn | MSN | MCH | WCM | PL | MML | MHT |
MSN’s net sales guidance | 84 – 90 | 32.5 - 36 | 32.5 – 34 | 1.8 – 2.2 | 7.1 – 7.8 | 15 – 15.8 |
Implied YoY sales growth | 7%-15% | 12% - 24% | 8% - 13% | 17% - 41% | 2% - 12% | 6% - 12% |
MSN’s NPAT guidance | 2.3 – 4.0 |
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Implied YoY NPAT growth | 20% - 115% |
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Vietcap’s net sales forecast | 84.8 | 31.5 | 37.8 | 1.8 | 7.2 | 15.0 |
Vietcap’s NPAT forecast | 3.6 |
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Source: MSN, Vietcap
Earnings Flash:
- Q1 2024: Revenue was VND18.9tn (+1% YoY) and NPAT-MI was VND104bn (-51% YoY), completing 22% and 8% of our respective full-year forecasts. NPAT-MI trailed behind our forecast due to the weaker-than-expected earnings performance of MHT. We see a potential downside risk to MHT’s earnings projections, pending a fuller review. Meanwhile, the combined EBIT of consumer-retail businesses (MSN’s EBIT exclusive of MHT) grew 86% YoY, completing 19% of our full-year forecast and is in line with our expectation.
- MasanConsumerHoldings Company Limited (MCH) 1: In Q1 2023, revenue increased 7% YoY and was mainly driven by convenience foods (+10% YoY), beverages (+23% YoY), and home personal care (+15% YoY). Excluding Masan Brewery’s sales (i.e., the beer segment) that declined 32% YoY, Masan Consumer Corporation’s (MSC) sales rose 9% YoY. Additionally, MCH’s EBITDA margin improved by 190 bps YoY to 25.3% in Q1 2024, which was primarily due to (i) revenue increasing by 7% and (ii) GPM improving by 4.1 ppts. MCH’s Q1 2024 NPAT-MI was not disclosed, while MSC’s grew 19% YoY.
- WCM: In Q1 2024, sales increased 8% YoY due to (1) 225 net new stores YoY and (2) LFL growth of 6% YoY. Its operating margin improved to -0.1% in Q1 2024 from -1.1% in 2023, equivalent to an operating loss of VND10bn (USD400,000) in Q1 2024. Its EBITDA margin advanced 210 bps YoY, driven by a 200-bps-YoY improvement in GPM. At end-Q1 2024, WCM’s store count was 3,667 (+34 new stores vs YE 2023).
- PL: Its revenue dropped 6% YoY, while its EBITDA margin stayed flat YoY at 15.8%.
- MML: In Q1 2024, sales increased by 8% YoY, mainly driven by 23% YoY growth of branded pork and pork farm sales, while partly offset by a 30% YoY decline in chicken farm sales. MML’s EBIT margin improved to 0.2% in Q1 2024 from -3.2% in 2023.
- MHT: In Q1 2024, revenue declined 18% YoY and its operating profit dropped 186% YoY to a loss of VND312bn due to the prolonged delay of blasting activities in Q1. On the other hand, the Q1 operating loss was reduced by 47% QoQ. MHT has engaged a new blasting partner and resumed normal blasting operations from March 19, 2024.
- Net debt/EBITDA was 4.2x as end-Q1 2024 compared to 3.9x at YE 2023. This was due to the decline in the cash & cash equivalent balance, which was driven by interest paid, payments for working capital, and other movements in Q1 2024. MSN targets net debt/EBITDA of <3.5x in the next 12 – 18 months. Considering the recent equity raising proceeds of VND6.2tn (USD250mn) from Bain Capital on April 23, management expects MSN’s pro-forma net debt/EBITDA to lower to 3.7x.
Note: 1 MasanConsumerHoldings Company Limited (“MCH”) currently owns (1) 93.6% of Masan Consumer Corporation (“MSC”, UPCoM: MCH)’s total outstanding shares and (2) 66.7% of Masan Brewery Company Limited’s.
Figure 2: MSN’s Q1 2024 results
VND bn | Q1 2023 | Q1 2024 | YoY | 2024F | Q1 2024 as % of 2024F |
Net revenue 1 | 18,706 | 18,855 | 1% | 84,765 | 22% |
| 6,265 | 6,727 | 7% | 31,547 | 21% |
| 7,335 | 7,957 | 8% | 33,971 | 23% |
| 411 | 387 | -6% | 1,772 | 22% |
| 1,600 | 1,720 | 8% | 7,173 | 24% |
| 3,787 | 3,089 | -18% | 15,026 | 21% |
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EBIT | 908 | 704 | -22% | 6,285 | 11% |
| 1,202 | 1,474 | 23% | 7,149 | 21% |
| -183 | -10 | -95% | 144 | -7% |
| 7 | 28 | 300% | 253 | 11% |
| -99 | 4 | N.M. | -156 | -3% |
| 363 | -312 | -186% | 918 | -34% |
| -382 | -480 | 26% | -2,024 | 24% |
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TCB’s contribution | 961 | 1,229 | 28% | 4,072 | 30% |
Net financial income | -1340 | -1,325 | -1% | -5,826 | 23% |
Financial income | 649 | 574 | -12% | 1,647 | 35% |
Financial expense | -1,989 | -1,899 | -5% | -7,473 | 25% |
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NPAT | 439 | 479 | 10% | 3,551 | 13% |
NPAT-MI | 215 | 104 | -51% | 1,236 | 8% |
EBITDA 3 margin | 17.5% | 17.4% |
| 18.8% |
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| 23.4% | 25.3% |
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| 1.0% | 3.1% |
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| 15.7% | 15.8% |
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| 1.7% | 7.2% |
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| 20.8% | 3.8% |
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EBIT margin | 4.9% | 3.7% |
| 7.4% |
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NPAT-MI margin | 1.1% | 0.6% |
| 1.5% |
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Net debt/EBITDA 3 | 4.2x | 3.9x |
| 3.4x |
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Source: MSN, Vietcap
1 Consolidated revenue is lower than the sum of its subsidiaries’ revenue due to inter-company transactions.
2 MasanConsumerHoldings Company Limited (“MCH”) currently owns (1) 93.6% of Masan Consumer Corporation (“MSC”, UPCoM: MCH)’s total outstanding shares and (2) 66.7% of Masan Brewery Company Limited’s.
3 EBITDA includes TCB’s contribution.
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