Why does target price for MSN stock continue to be VNĐ200,000?

February, 16/2022 - 15:43
Despite the challenges posed by COVID-19 last year The CrownX delivered positive business results. An integrated platform that consolidates two leading companies in retail and FMCG, WinCommerce (WCM) and Masan Consumer Holdings (MCH), TCX grew net revenues by 6.9 per cent to VNĐ58 trillion (US$2.56) thanks to strong synergies between its various businesses.

 

Masan owns popular FMCG brands. — Photo courtesy of Masan

Despite the challenges posed by COVID-19 last year The CrownX delivered positive business results.

An integrated platform that consolidates two leading companies in retail and FMCG, WinCommerce (WCM) and Masan Consumer Holdings (MCH), TCX grew net revenues by 6.9 per cent to VNĐ58 trillion (US$2.56) thanks to strong synergies between its various businesses.

Growth from synergies

MCH is a leading FMCG company with a wide range of products like fish sauces, seasoning, instant noodles, instant coffees, and many more. It achieved outstanding growth thanks to new innovations and robust growth in modern trade.

Initiatives such as 7-day CHIN-SU breakfast set and CHIN-SU fish sauce Cá Cơm Biển Đông Salt Reduced lead the trend of modern consumption, and contributed VNĐ2.69 trillion ($118.24 million), or 9.3 per cent of MCH’s revenues.

Modern trade sales growth was 34 per cent.    

Thanks to synergies with WCM, sales of MCH products through the WCM network grew by 80 per cent in 2021.

MCH's net revenues were up dramatically, especially in the last quarter of 2021, when revenues grew by 32.3 per cent to VNĐ10.07 trillion ($443.8 million).

Revenues for the full year were worth VNĐ28.8 trillion ($1.27 billion).

WCM is a leading retailer with a 20 per cent share of the $7 billion modern grocery market, according to Bank of America. It delivered VNĐ30.9 trillion ($1.36 billion) in net revenues as it rationalised its network.

The company made great efforts to increase profitability through better supplier terms, lowering logistics costs and improving distribution capabilities.

 

People buy Phúc Long beverages at a WinMart+ store. Phúc Long has a customer base comprising young and modern people. — Photo courtesy of Masan

Simultaneously, it also expanded new format stores, focusing on fresh products, private labels and optimised SKU assortment.

Masan set up Phúc Long kiosks at WinMart+ stores and serves a collection of best-selling items.

In January 2022 MSN acquired a 31 per cent stake in Phúc Long to increase its ownership to 51 per cent. Since MSN’s initial investment, Phúc Long has demonstrated strong synergies with MSN’s POL strategy, which can now be accelerated with Phúc Long as a consolidated subsidiary of MSN. 

The conglomerate also launched the mini-mall model for its WinMart+ retail chain. Trialled since June 2021, the five mini-mall stores have proven effective, increasing footfall by 30 per cent and helping reduce breakeven point per day per location by 44 per cent.

2022: scaling up

 

A Winmart+ store with the integrated mini-mall concept. Masan aims to open 2,000 mini malls this year. — Photo courtesy of Masan

At the end of 2021 Masan announced the signing of a $350 million primary investment in The CrownX by a consortium of investors, completing the last round of fundraising for this ecosystem.

According to Nguyễn Đăng Quang, chairman of Masan Group, 2022 will be the year it digitises its platform into an integrated system for manufacturing, logistics and distribution for up to 100 million consumers.

This will drive 10 per cent operational cost efficiencies and, most importantly, combine Masan’s traditional consumer insights with AI and machine learning insights to offer consumers products and services they truly desire.

The partnership with Lazada and acquisition of mobile network Reddi are strategic steps for accelerating this process.

Reddi is the core connecting piece of Masan’s loyalty programme, with co-branded customer acquisition schemes providing members with essentially no-cost data plans as they shop across Masan’s ecosystem through cash back plans. Consumers are offered to choose carriers with the most interesting content and suitable value-added services.

Masan plans to roll out Reddi nationwide and targets signing up 500K - 1 million subscribers this year.

In 2022 it also aims to open 2,000 mini malls in five different formats based on catchment analyses in cities, suburban and rural areas at new and existing WCM stores.

This is expected to generate net revenues of VNĐ38-40 trillion ($1.67-1.76 billion), up 23 – 29 per cent from last year.

Better synergies between WCM and MCH, premiumisation and growth of core categories will continue to be drivers for MCH to achieve net revenues of $40 trillion.

Positive outlook of leading consumer – tech platform

TCX expects net revenues of VNĐ76 trillion ($3.35 billion) in 2022, with the contribution by consumer businesses (excluding feed segment and MHT) to increase to 85 per cent.

Masan’s strategy has been highly praised by financial analysts. Its market capitalisation increased significantly in 2021, making IT the largest consumer company by market capitalisation in Việt Nam surpassing dairy giant Vinamilk.

According to Bank of America, Masan Group is a top ASEAN consumer pick. The lender has a buy rating for the stock and a PO of VNĐ198,000 ($8.74). It also expects return on equity to improve from 8 per cent in 2019 to 18 per cent in 2025.

VietCapital Securities, Japan Securities, PetroVietnam Securities, and HSBC have also initiated a buy rating for MSN and a PO of around VNĐ200,000 ($8.79). VNS

 

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