Masan (MSN) seeks to become leading retail-consumer conglomerate
Masan (MSN) seeks to become leading retail-consumer conglomerate
Masan Group Corporation (HOSE: MSN) targets net revenues of VND75-85 trillion (US$3.2-3.64 billion) this year, a year-on-year increase of 101- 128 per cent.
Net profit is expected to top VND1- 3 trillion (($42.9 – 128.7 million) as profitability increases in the second half of the year.
MSN and two of its key publicly listed subsidiaries (Masan Consumer (HNX_UpCoM: MCH) and Masan MEATLife (HNX_UpCoM: MML) jointly held their annual general meeting in HCM City on June 30 under a shared theme, ‘Our journey is the consumers’ journey, to mark the company’s next phase of transformation.
Of its subsidiaries, VinCommerce (VCM) is expected to deliver full-year earnings before interest, taxes, depreciation, and amortisation (EBITDA) of 3 per cent below breakeven but achieve breakeven in the second half of 2020.
MCH targets over 15 per cent revenue growth and double-digit profit growth.
Masan MEATLife expects its meat business to contribute 20 per cent of net consolidated revenues and build a processed meat platform to increase the value generated per pig.
The feed business is expected to grow moderately, with a potential upside if pig replenishment accelerates to match domestic demand.
Masan High-Tech Materials (formerly known as Masan Resources) will focus on the integration of H.C. Starck’s tungsten business and becoming a global value-added midstream processor to de-risk commodity price cycles in tungsten.
In 2020 Masan would continue to maximise its liquidity position to ensure there is adequate cash on hand to navigate the COVID-19 pandemic if it should persist longer than expected and be in a position to invest in strategic businesses organically or via M&A.
Addressing the AGM, Danny Le, MSN’s CEO, said with the VinCommerce merger Masan had taken a major step towards reinventing itself as a retail-led organisation and strengthening its ability to better serve the essential needs of consumers.
Today Masan operates in business sectors such as fast-moving consumer goods, fresh produce and financial services (through its significant interest in Techcombank), which together represent over 50 per cent of Vietnamese consumers’ wallet share, according to the CEO.
“However, Masan aims for a larger … wallet share by building a more complete consumer-centric platform that can better address additional essential needs such as healthcare, education, entertainment/social, and communication.”
Despite Viet Nam’s rapid economic development and rising middle class, consumers still overpaid for and were underserved in terms of their essential needs due to a lack of innovation and scale (specifically with regard to consumer infrastructure), he said.
“To address these large unmet needs, Masan aims to drive consolidation in categories and markets where it operates to deliver efficiencies across the value chain for the benefit of both consumers and suppliers.”
Masan has been able to drive change and achieve consolidation through innovation and building power brands, according to him. With the VCM merger, Masan is entering its next phase of transformation by owning and expanding both a physical and digital presence to directly reach consumers, with the consumer journey and experience becoming increasingly important.
If successful, Masan believes that by 2025 revenues could reach VND150-250 trillion ($6.45-10.7 billion) with operating margins of 14-15 per cent, driven by growth of its own branded consumer products, higher online sales, exclusive products at its retail locations, and expanded network coverage through its stores and future retail franchises.
To build an integrated retail platform to meet the evolving needs of Vietnamese consumers, Masan has established CrownX, a new subsidiary to own and operate its interests in MCH and VCM, leveraging the respective strengths of these businesses as a branded manufacturer and leading grocery retailer.
Truong Cong Thang, chairman of Masan Consumer, said the key priorities of CrownX are to develop a winning store network and supply chain across the country, develop VCM as a consumer-goods-like business led by power brands to become one of the top 50 retail brands in the world, develop an exclusive portfolio (up to 40 per cent) through strategic partnerships with suppliers, acquire household grocery spending data, and be one of the top 10 companies to work for in Viet Nam.
The meeting also approved a cash dividend of 10 per cent (VND1,000 per share) to be paid within six months to MSN shareholders and a dividend of 45 per cent (VND4,500 per share) for MCH shareholders.
