Masan's (MSN) next wave consumer portfolio scaling-up

Masan's (MSN) next wave consumer portfolio scaling-up

“We are approaching the 2019 finish line, and I believe our strategic puzzle will be crystallised by year-end. The picture will be clear and you will understand why internally we are excited about 2020 and beyond. I want to reiterate: at Masan, we solely focus on explosive medium-term value creation for our consumers and shareholders, and are not managing quarters,” said chairman and CEO Nguyen Dang Quang.

Masan MEATLife (MML) reported that MEATDeli, MML’s chilled meat brand achieved 75 per cent of Vissan’s fresh meat revenue based on expected December 2019 run-rate revenue after one year of launch.

MEATDeli delivered VND69 billion ($3 million) net revenue in the third quarter, four times as much as in the second quarter. As of the end of September, monthly net revenue has increased by 31 per cent since June 2019. Management expects to deliver December 2019 net revenue of VND100 billion ($4.35 million), or an annualised net revenue of VND1.2 trillion ($52.17 million), achieving 20 per cent utilisation of the Hanam processing facility.

As of October 2019, MML has opened 320 successful cold chain points of sale in Hanoi and Ho Chi Minh City compared to 116 at the end of the previous quarter. Management expects cold chain points of sale to reach 650+ by the end of December 2019, only trailing Bach Hoa Xanh and VinMart.

MML has captured around 2.5 per cent market share in greater Hanoi and early consumer and market feedback in Ho Chi Minh City points to a similar success trend, as well as broader meat portfolio with chilled processed meat innovations in November 2019. Processed meat will be a key growth driver following the success of Masan Consumer’s processed meat category, which grew two times compared to 2018.

MML was listed on the Unlisted Public Company Market (UPCoM) in the fourth quarter. In October 2019, Masan successfully sold 1.8 million MML shares to local retail investors in a pre-listing tranche. Masan aims to deliver on its vision to become the #1 branded chilled meat player by 2023 and reward early investors who are backing this vision and MML’s execution capabilities.

Masan Consumer (MCH) reported that its beverage and value-added innovation portfolio tracked medium-term growth KPIs. Beverage reached 35.4 per cent growth in this third quarter over the one a year prior, backed by 41.4 per cent growth in energy drinks and 21.7 per cent growth in bottled water during the same period. Overall for the nine months of 2019, beverages delivered 29.4 per cent topline growth compared to the year prior.

Seasoning premium contributes 11 per cent as of the end of the third quarter of 2019 and is expected to increase to 12 per cent of contribution with the successful launch of Nam Ngu Phu Quoc. Strong market share gain in granules is expected to drive top-line growth in the seasonings category over the next 12 months. Convenience foods grew by 15 per cent for the first nin months compared to the previous year and overall category expected to deliver over 10 per cent topline growth for the 2019 financial year.

Masan Resources (MSR) announced the acquisition of H.C. Starck’s tungsten unit, which will enable MSR to generate strong and consistent cash flows across commodity cycles as it becomes a true midstream tungsten player. Midstream tungsten products command a premium of 30-50 per cent on average and the addressable market size is $4.6 billion, 3.5 times larger than APT.

Despite current commodity headwinds, MSR expects to end the year with $150 million in cash and equivalents as a result of an international arbitration settlement with Jacobs E&C Australia in the third quarter of 2019 and expected copper sales in the fourth quarter.

Masan Group’s consolidated net revenue went down by 0.9 per cent in the first nine months and by 2.2 per cent in the third quarter, respectively. Net revenue was VND26.378 trillion ($1.15 billion) in the nine months compared to VND26.63 trillion ($1.16 billion) in the corresponding period of 2018. The decline is driven by lower pig feed sales as the African swine fever resulted in a 20 per cent decline in Vietnam’s pig population, although it was offset by strong double-digit growth in poultry and aqua feed segment.

Reduced revenues at MSR come from depressed tungsten prices and no copper sales. Tungsten prices have climbed back up to $225-245 per MTU from the bottom of $180-195 per MTU and MSR expects to sell copper stock in the fourth quarter. MCH growth portfolio and SKUs are still scaling up to drive overall revenue growth.

In the first nine months, MML delivered VND10.104 trillion ($0.44 billion) in net revenue, up 0.7 per cent compared to VND10.035 trillion ($0.436 billion) of the past year. This excludes branded meat sales, which will be recognised in revenue from the fourth quarter onwards due to accounting rules on capitalising sales prior to commissioning.

MCH's net revenue grew by 5.7 per cent in the first nine months to VND12.589 trillion ($0.55 billion), and MSR achieved VND3.685 trillion ($0.16 billion) in net revenue, down 21.4 per cent.

vir