Company Quarterly Earnings Update – MCH VN – 2020 H1

Summary of the 2020 H1 results of Masan Consumer Corp. (MCH VN)

H1/2020 results highlights:
  • Revenue grew by 28.4% y/y, reaching VND10,029bn. Overall, MCH thrived during the COVID-19 outbreak. The convenience food and seasonings segment benefited from the home eating trend during the outbreak, expanding by 49.6% y/y, and 8.2% y/y. The non-alcoholic beverage segment, which was driven by energy products, managed to grow by 10.1% y/y. Processed meat and home care segment recorded solid growth, though their contribution to the total sale was still insignificant.
  • The bottom line increased by 15.0% y/y, while its net margin reduced to 19% from 21% in H1/2019 due to a higher contribution of lower-margin products.
  • MCH’s financial position remained solid. The leverage was moderate (D/E = 0.5x). Cash and cash equivalents accounted for 7.1% of total assets. However, we are still concerned about MCH’s significant size of outstanding loans to its parent company, amounting to 47.0% of total assets.
  • Payment date for FY2019 dividend of VND4,500/share will be on 24 August 2020.
  • We expect MCH’s main businesses, i.e. the seasoning and convenience food segment, to benefit from the 2nd wave of COVID-19 outbreak in Q3/2020. However, we maintain our view that both are getting to a mature stage. In contrast, the non-alcoholic beverage will continue to expand, benefiting from the company’s extensive distribution network. The partnership with Jin-Ju will continue to bear fruit, enabling MCH to continuously introduce new product variants. The home & personal care segment will gain some early traction however its success is unclear as the market is dominated by multinational firms like Unilever and P&G
  • Less tax incentives will cause MCH’s effective tax rate to reach 15% from 2020.
  • As for the FY2020, we estimate revenue to amount to VND22,544bn, +21.9% y/y. We expect net profit to reach VND4,348bn, +7.1% y/y.
  • As for the FY2021, we expect revenue to increase by 6.1% y/y, reaching VND23,925bn. The bottom line should grow by 7.5% y/y, hitting VND4,676bn

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