Company Quarterly Earnings Update – MCH VN – 2019 Q3

Summary of the 9M/2019 results of Masan Consumer Corp. (MCH VN) 

9M/2019 results: highlights
  • Revenue increased by 5.7% y/y. Among business lines, seasoning stagnated, whereas convenience foods grew by 5% y/y. Non-alcoholic beverages however was the major growth driver with an expansion of 29.0% y/y, contributing 20% to MCH’s total revenue. The coffee business struggled among increased competition. Its sales fell by 16.4% y/y. The processed meat segment thrived as a result of the partnership with Jin-Ju. Its sale doubled in the 9M 2019.
  • In 9M 2019, the company’s overall gross margin fell to 42.1% as the less profitable beverage products contributed more to the company’s total sales. However, MCH optimized its OPEX. As a result, it managed to keep its bottom line stable.
  • By the end of Q3/2019, MCH’s financial position stayed solid. Cash equivalents accounted for 11.1% of total assets. Meanwhile, the company’s leverage remained moderate with a D/E and a D/A of 0.43x and of 0.24x respectively. However, we are still concerned with MCH’s outstanding loans/receivables to its parent company (MSN), which amounted to VND9,700bn (50% of total assets)
  • As for 2019, we estimate revenue of VND18,202bn, +7.0% y/y, and net profit of VND3,549bn, +5.4% y/y.
  • From 2020 until 2023, we forecast MCH’s revenue to rise by a CAGR of 6.8%. It will continue its premiumization strategy for both the seasoning and the convenience foods segment. But the results are likely to be different: We forecast the two to grow by a CAGR of 7.6% and of 0.6% respectively. For the non-alcoholic beverages segment, we estimate a CAGR of 7.7% as the low base effect is likely to abate.  We expect the coffee business to stagnate as the result of increasing competition. As for the processed meat segment, the partnership with Jin-Ju should continue to bear fruit, and we forecast a CAGR of 16.1% between 2020-2023.
  • We forecast MCH’s bottom line to increase by a CAGR of 8.4% between 2020-2023. The company is likely to be able to control its operation expenses at ~23.0% of total sales, and, as a result, it should maintain a net margin at 20.0%

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