Company Quarterly Earnings Update – MCH VN – 2020 9M

Summary of the 2020 9M results of Masan Consumer Corp. (MCH VN)

9M/2020 results highlights:
  • MCH’s business continued prospering, with revenue amounted to VND15,946bn, +29.4% y/y. The second wave of the COVID-19 outbreak also resulted in consumer’s preference for dining in, enabling the convenience food and seasonings segment to expand by 41.9% y/y and 14.3% y/y, respectively. The non-alcoholic beverage segment managed to grow by 8.8% y/y, thanks to energy products. Processed meat and home care segments’ contribution to the total sale was still insignificant, despite their strong growth during this period.
  • The bottom line increased by 21.7% y/y, while its net margin reduced to 19.2% from 20.5% in 9M/2019 due to a higher contribution of lower-margin products.
  • MCH’s financial position remained healthy. The leverage was moderate (D/E = 0.5x). Cash and cash equivalents accounted for 12.0% of total assets. Loans to parent company was VND8,557bn, reducing by ~VND3,000bn since the end of June, as MCH collected this amount through net-off with the dividend payable. However, loans to its parent company still accounted for 36.7% of total assets.
  • While the COVID-19 is well contained in Vietnam, we expect the preference for dining in will continue in Q4/2020 and Q1/2021 before normalizing for the rest of 2021. Therefore, the seasonings and convenience food segment will benefit from this, though both are getting to a mature stage. Non-alcoholic beverage segment will continue expanding on the back of the company’s extensive distribution network. The partnership with Jin-Ju will continue to bear fruit, enabling MCH to introduce new product variants continuously. The home & personal care segment’s success is unclear as multinational firms like Unilever dominate the market.
  • As for the FY2020, we estimate revenue and net profit will reach VND23,211bn (+25.6% y/y), and 4,581bn (+12.8% y/y), respectively.
  • Overall, for the FY2021, we expect MCH’s business will be normalized as 2020 is a high base. We expect revenue to increase by 6.6% y/y, reaching VND24,752bn. The bottom line should grow by 6.2% y/y, hitting VND4,867bn.

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