Summary of the 2020 results of Masan Consumer Corp. (MCH VN)
2020 results highlights:
- MCH’s business benefited from the COVID-19 outbreak as people dined in and stocked up food. Total revenue amounted to VND23,343bn, +26.3% y/y. The convenience food and seasonings segment, benefited the most from the outbreak, expanded by 38.5% y/y and 12.4% y/y, respectively. Energy drink product helped the non-alcoholic beverage segment grow by 5.0% y/y amidst reduced HORECA channel consumption. Processed meat and home care segments’ contribution to the total sale was still insignificant.
- The bottom line increased by 14.1% y/y, while net margin reduced by 120 bps y/y due to a higher effective tax rate as some factories no longer enjoy incentives.
- MCH’s financial position remained healthy. The leverage was moderate (D/E = 0.5x). Cash and cash equivalents accounted for 15.8% of total assets. Loans to the parent company, MSN, accounted for 34.4% of total assets.
- Overall, given that Vietnam’s government has an excellent track record of containing the spread, we expect the new wave to be over in Q1 2021. As a result, we expect the dining-in trend to continue during this period, which will benefit the seasoning and convenience food segment, before normalizing for the rest of 2021.
- We expect MCH to revert to its long-term trend in 2021 and 2022. The seasonings and convenience food segment are getting to a mature stage. The non-alcoholic beverage segment will face stiff competition in both energy drinks and the new nutrition drink category. The partnership with Jin-Ju will continue to bear fruit, enabling MCH to introduce new product variants continuously.
- As for FY2021, we estimate revenue to increase by only 3.9% y/y, due to the high base, reaching VND24,258bn. MCH will maintain its current SG&A structure. Net profit should reach VND4,787bn, +3.3% y/y, while its net margin will stay at 19.7%.
- For the FY2022, we forecast MCH’s revenue and net profit to rise by 4.3% y/y and 3.8%, respectively, and the net margin will be unchanged.
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