Summary of the H1/2019 results of Masan Consumer Corp. (MCH VN)
H1/2019 results: highlights
- For H1/2019 net revenue went up by 6,4% y/y. Though the seasonings business, which contributed the largest share (40%) of the total revenue, delivered the lowest growth. Convenience food and non-alcoholic beverages are the two major growth drivers, contributed 27.3% and 19.9% of the total sales respectively. Other businesses, including coffee, processed meat collectively contributed ~12.9% to the company’s revenue.
- Though MCH’s gross margin was lower than previous year, its effort to reduce the operating expenses(as a % sale) helped to keep its net margin at 21.0%.
- MCH still maintain a strong financial position with a high cash level and a moderate leverage. However, loans/receivables due from the parent company remain high, at 48.0% of total assets. This loan started picking up again since 2016.
- We forecast the revenue to grow by a CAGR of 8.0% between 2018-2023. In which, the seasonings and convenience food segment is forecasted to grow by a CAGR of 7.4% and 2.8% respectively because of the maturity of these two markets. We believe MCH will face an increasingly competitive market in both non-alcoholic beverages and coffee segment. Whilst the former one is forecasted to grow by a CAGR of 12.2%, the latter is forecasted to shrunk by a CAGR of 1.7% during this period. For the processed meat segment, we believe that the partnership with Jin-Ju has started to materialize and we forecast this segment to grow by a CAGR of 24.0% between 2018-2023.
- We forecast the net profit to grow by a CAGR of 9.0% between 2018-2023. We believe MCH will still be able to control its operation expenses at around 23.0% of its net revenue thanks to the economies of scale. Therefore, the company will be able to maintain its net margin at ~20% within the next 5 years.
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