Summary of the 2021 H1 results of Masan Consumer Corp. (MCH VN)
H1/2021 results: Highlights
- Revenue was VND11,021bn, an increase of 9.9% y/y. This growth rate is exceptionally robust, given the high base of H1/2020, when growth was 28.4% y/y. MCH’s business has actually benefited from the COVID-19 movement restriction measures as more people than usual are staying at home consuming convenience food. In addition, the strong growth of processed meats (mostly sausages) from a low base and consolidation of the home and personal care (HPC) segment further boosted the company’s total revenue.
- Net profit increased by 7.0% to VND1,963bn. The gross margin was somewhat lowered (40.9% in H1/2021 vs. 41.1 in H1/2020), mostly due to the slight shift in segment contribution. HPC and processed meats, which grew faster than the 3 major categories (seasoning, convenience foods, and beverage) have lower gross margins. The price of wheat, a major raw material used in the production of instant noodles, surged almost 40% y/y. Nevertheless, thanks to a premiumization strategy as well as the surge in its selling volume, the margin of convenience foods was somewhat protected.
- Their financial position remained healthy (D/E ratio of 0.65x, D/A ratio of 0.40x).
Outlook
- For 2021 we expect that H2’s growth will decelerate from H1’s due to 1) the high base in Q3/2020 when there was a severe flood in Central Vietnam, leading to a higher purchase of convenience foods for aid. This factor is however offset somewhat thanks to higher consumption in Q3/2021 because of the current COVID-19 lockdown; and 2) a lower consumption of energy drinks during Q3 during the lockdown period. Of note, there has been no disruption to MCH’s operations during the current lockdown. As a result, we retain our previous forecast’s revenue of VND24,792bn (+6.2% y/y) and net profit of VND4,655bn (+0.4% y/y).
- From 2022, growth drivers go back to 1) product innovation; 2) improved efficiency and scale up of the recently acquired product category ‘Home and Personal Care’. With 2021’s high base somewhat softening growth, we estimate revenue and profit increases to be 6.8% and 5.3% respectively.
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