Company Quarterly Earnings Update – MCH VN – 2019 Q4

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

2019 results: highlights
  • Sales grew by 8.7% y/y. MCH’s premiumization strategy enabled the seasoning and the convenience food segment to grow by 4.2% y/y and by 7.2% y/y respectively. Non-alcoholic beverages continued doing well, expanding by 27.2% y/y. Revenue of the coffee business fell by 12.8% y/y, mainly due to increased competition. The partnership with Jin-Ju and a low base effect helped doubling processed meat sales.
  • In 2019, MCH was able to optimize operational expenditure (OPEX), boosting its net margin to 22.0%.
  • MCH’s financial position stayed solid. Cash and cash equivalents accounted for 10.7% of total assets. However, we are still concerned about MCH’s significant size of outstanding loans to its parent company, amounting to 52.5% of total assets.
Other developments
  • In Q4/2019, the Masan Group (MSN) completed its transaction to buy VinCommerce that operates the largest chain of modern retail stores in Vietnam.
  • In Q4/2019, MCH announced a public tender offer to buy up to 60% of NET detergent JSC. This is part of the company’s plan to enter the homecare sector.
  • For the 2020-2021 period, we expect MCH to continue its premiumization strategy as the markets in the seasoning and the convenience food segments are maturing. We estimate the non-alcoholic beverage segment to grow solidly, benefiting from the company’s distribution network. However, the coffee business is expected to stagnate as a result of rising competition. As for the processed meat segment, we think the partnership with Jin-Ju will continue to bear fruit.
  • As for the FY2020, we estimate revenue to amount to VND19,857bn, +7.4% y/y. We expect net profit to reach VND4,359bn, +7.3% y/y.
  • As for the FY2021, we forecast revenue to increase by 5.9% y/y, reaching VND21,025bn. The bottom line should be higher by 6.9% y/y, hitting VND4,658bn.

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