Summary of the 2018 results of Masan Consumer Corp. (MCH VN)
2018 results: highlights
- Net revenue went up by 28.7% yoy thanks to 1) 2017’s low base for comparison; 2) premiumization of seasoning and convenience foods; 3) considerably extended distribution for its energy drink Wakeup 247. MCH’s operating expenses increased less than net revenue thanks to economies of scale and fewer commissions for distributors. Net profit surged by 51.3% yoy.
- The company’s financial position is still strong with a high cash level and a moderate leverage. However, loans/receivables due from the parent company remain fairly high at 48% of total assets.
- MCH’s 2018 results were slightly better than our expectations (net revenue 3.1% and net profit 5.3% above our estimates). Although we are confident that MCH can achieve higher than average industry growth rates, the exceptionally strong growth of 2018 is unlikely to be repeated as it was to a large extent due to the base effect.
- We expect the 2019-2023 revenue CAGR to reach 11.8%. Kantar World Panel projects Vietnam’s Fast – Moving – Consumer Goods (FMCG) sector to grow by 5% annually in the next 5 years. Product innovations, an efficient marketing strategy and a vast distribution network are the key drivers of MCH’s expected above average growth.
- We estimate the 2019-2023 net profit CAGR to reach at 10.0%, slightly below the projected revenue expansion. This is because the combined gross margin is likely to decline somewhat due to the higher revenue contribution from the
beverage segment, which has a lower margin than the major product group, seasoning.
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