Summary of the 9M 2018 results of Masan Consumer Corp. (MCH VN)
9M/2018 results: highlights
- Revenue increased strongly by 32.6% yoy. The growth drivers were: 1) the low base in 2017 due to the destocking initiative; 2) the increased contribution from high-value products; 3) the extended distribution of the energy drink Wakeup 247, which MCH now sells nationwide; 4) new products such as the energy drink Compact, the mineral water Vivant, and the mashed potato Omachi.
- Net profit surged by 91% yoy thanks to strong revenue growth, the improved use of economies of scale and substantially lower commissions to distributors as a result of the shift from the PUSH to the PULL sales strategy.
- MCH’s financial position was reasonably sound: at the end of Q3, 18% of total assets were liquid, and the leverage was moderate (D/E and D/A of 0.36x and of 0.21x respectively). Net receivables from the parent group increasing only slightly from the end of Q2, but still making up 33% of total assets.
Outlook
- We continue to be confident that MCH will grow faster than the dynamic and innovative Fast – Moving – Consumer Goods (FMCG) sector (according to Kantar World Panel, this sector should grow by 5% in 2018 and also by 5% during the next 5 years). Constant innovation and product development, a sound marketing strategy and an excellent distribution network are MCH’s main growth drivers. Having said that, the exceptional growth of 9M/2018 is unlikely to be repeated as the company’s results will start to normalize from the favorable base effect of 2017.
- We expect net profit to reach VND 3,227 bn (+43.7% yoy) in 2018 and VND 3,544 bn (+9.8% yoy) in 2019.
Recommendation
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