Securities companies see bright prospects, raise MSN share target price

August 19, 2021 - 12:33
Masan Group's consumer-retail business line has seen strong growth momentum this year, given higher demand amid the ongoing COVID lockdown and consumers shifting to shop through modern trade channels instead of traditional markets.


Shoppers buy MEATDeli products at a VinMart store in HCM City. — Photo courtesy of Masan

HCM CITY — Masan Group's consumer-retail business line has seen strong growth momentum this year, given higher demand amid the ongoing COVID lockdown and consumers shifting to shop through modern trade channels instead of traditional markets.

In their reports recently, securities companies assessed Masan Group’s share as having high growth prospects, raising its target price of by 15-29 per cent from the current range.  

In a report on August 16, Viet Capital Securities Joint Stock Company (VCSC) recommended a buy on the share and raised the target price to VNĐ172,000 (US$7.6), 21 per cent higher than the last target price (VNĐ 142,500) and up 29 per cent from the current price (VNĐ133,500).

“We reiterate a buy and raise our target price by 21 per cent due to a 6 per cent increase in our aggregate 2021F-2023F EBIT mainly attributed to stronger projected sales/store for VinCommerce (VCM) and higher average selling price assumptions for Masan High-Tech Materials (MHT) and our removal of a 15 per cent conglomerate discount to our SoTP (sum of the parts) valuation,” VCSC said in its report.

“We remain bullish on MSN’s ability to capture Việt Nam’s long-term consumption growth on the back of its wide-ranging, leading consumer businesses (FMCG, branded meat and grocery retailing).”

Previously, in its equity research published on August 10, Credit Suisse hiked MSN's target price to VNĐ162,000 ($7.1) based on upbeat management guidance for Q3 and a higher margins outlook over the medium term.

MSN has witnessed robust retail sales growth in July, given higher demand amid the lockdown, with same-store sales growth in July up over 11 per cent month-on-month.

This trend is expected to continue in the near term, amid increasing shift from wet markets to modern trade, which would strongly benefit VCM's sales growth, according to Credit Suisse.

MSN plans to further improve VCM's gross profit margin in H2, driven by better negotiations with suppliers. From the beginning of the year, VCM has rolled out of new store formats with higher fresh portfolio.

Integrating Phúc Long kiosks into Vinmart+ stores, with the target of 1,000 by year end intact, will also support further margin lifts for VCM and expand its young customer base.

Masan is aiming to expand VinMart+ system to 3,001 points of sale by year-end.

Bảo Việt Securities Joint Stock Company (BVSC) set MSN’s target price at VNĐ160,000, emphasising Masan’s all-round improvement in consumer goods segments.

Seasonings, packaged foods and beverages recorded growth and gained market share.

“We believe Masan Consumer Holdings (MCH) has benefited from its strategy focusing on premiumisation, diversification and convenience as consumers, while temporarily cutting spending, are paying more attention on health-safety issues, and are thus looking for quality convenience products to consume at home.”

As for Masan’s other business lines, BVSC believes its EBITDA margin in the animal feed segment will revert to the 12 per cent level of 2020 from the single digits in the first half of this year.

Meanwhile, Masan aims to increase the capacity of its meat processing plants from 11 per cent to 25-30 per cent in the fourth quarter.

Masan MEATLife (MML) is currently integrating well with VCM in the latter's strategy of focusing on fresh foods. MEATDeli meat can also reach consumers easily through the VinMart/VinMart+ store chains.

Rising tungsten prices coupled with the sales of copper could boost MHT’s earnings in H2. The company targets 2021 EBITDA to more than double from last year.

According to the Ho Chi Minh Securities Corporation (HSC), the Masan management has a positive outlook for Q3. Masan's consolidated sales are expected to grow by 30 per cent year-on-year, with expectations for strong sales growth in all business lines.

MCH sales are projected to grow by 30 per cent during the quarter, VCM’s by 15 per cent, MML’s by 50 per cent, and MHT’s by 34 per cent.

HSC said Masan’s H2 business outlook would be more positive than in H1 partly driven by changing consumption trends due to COVID-19, and also by the fact its products meet the needs of modern consumers.

According to Kantar World Panel, packaged food sales increased by 35 per cent in the first two weeks of July as people stocked up on food as shops and restaurants shut down. Masan’s processed meat products and instant noodles have seen higher demand.

Masan joins hand in fight against COVID


Masan Group donates high-flow CARESCAPE R860 ventilator to HCM City’s Tù Dũ Hospital. — Photo courtesy of Masan

Masan had so far donated medical equipment, necessities and money worth a total of VNĐ250 billion ($10.97 million) to support frontline forces in the fight against COVID-19 and localities hit by the pandemic.

It donated VNĐ50 billion ($2.2 million) worth of medical equipment and supplies to frontline hospitals in HCM City in July and August.

On August 16  and 17 it donated two high-flow CARESCAPE R860 ventilators to the Từ Dũ Hospital and Hùng Vương Hospital and five Bellavista high-function ventilators to the Hospital for Tropical Diseases, Bình Tân Hospital and Gò Vấp Hospital.

“This was very practical support by Masan Group at this time," a Từ Dũ Hospital representative said at the handover ceremony.

“Currently the hospital has only four R860 series ventilators and only for severe cases. The support of Masan as well as from the community will help the medical team have more favourable conditions for medical examination and treatment.”

Between July 9 and August 13 the company donated tens of thousands of medical protective suits and test kits each and more than 40 high-flow ventilators to health departments in Bình Dương, Hậu Giang, Long An, and Hải Dương provinces and E Hospital in Hà Nội.

It also donated VNĐ1 billion in cash to the HCM City Police force, VNĐ500 million to the HCM City Command and VNĐ300 million to the Fatherland Front Committee in Thái Nguyên Province.

Its largesse further extended to border-guard posts, epidemic control checkpoints, quarantine areas, and hospitals to whom it donated essential products such as OMACHI noodles, KOKOMI and MEATDeli meat. VNS

Amid the unpredictability of the pandemic, Masan has taken drastic preventive solutions itself and proposed them to authorities to both strengthen the fight against the epidemic and keep the economy humming.

It has called on the Government and local administrations to create "buffer zones" around factories by converting schools, vocational schools, warehouses, stadiums, and unused arenas for workers to eat, rest and fulfil other personal needs while ensuring full compliance with pandemic prevention and containment regulations.

Masan Group has suggested prioritising vaccination for sales staff at supermarkets and stores and workers at factories producing essential goods against COVID-19 to ensure shoppers’ safety and safeguard the workers too.

More than 10,000 of its employees have so far been vaccinated.