Masan (MSN) conglomerate posts impressive results, boosting its stock value
Masan (MSN) conglomerate posts impressive results, boosting its stock value
The CrownX (TCX) continues to deliver positive business results. As an integrated platform consolidating two leading companies in retail and fast-moving consumer goods (FMCG) – namely WinCommerce (WCM) and Masan Consumer Holdings (MCH) – TCX grew net revenues by 6.9 per cent to $2.55 billion on-year in 2021, thanks to strong synergies between its businesses.
Growth from synergies
MCH is one of the leading FMCG companies with a wide range of products including fish sauce, seasoning, instant noodles, instant coffee, and many more. The company achieved outstanding growth thanks to new innovations in modern trade.
Initiatives such as the 7-day CHIN-SU breakfast set led to the trend of modern consumption and contributed $117.8 million, or 9.3 per cent, to MCH’s revenues in 2021.
Thanks to the momentum with WCM, sales of MCH's products through its network grew 80 per cent in 2021 on-year. MCH's net revenues grew dramatically, especially in Q4/2021. Net revenues reached $443.95 million, equivalent to 32.3 per cent growth, helping net revenue of the whole year to reach $1.26 billion.
WCM is the leading retailer with about a 20 per cent share of the $7 billion modern grocery market, according to the Bank of America. WCM delivered $1.35 billion in net revenues in 2021 due to its network rationalisation.
The company put lots of effort into increasing profitability through better supplier terms, lower logistics costs, and improved distribution capabilities. Simultaneously, WCM also expanded new store formats, focusing on fresh products, private labels, and optimised assortment.
Masan set up Phuc Long kiosks at WinMart+ stores that serve a collection of best-selling items. In January, MSN acquired an additional 31 per cent stake in Phuc Long, increasing its ownership to 51 per cent.
Since MSN’s initial investment, Phuc Long has demonstrated strong synergies with MSN’s strategy, which can now be accelerated with Phuc Long as a consolidated subsidiary of MSN.
The group also launched a mini-mall model for their retail stores – WinMart+. Piloted since June, five mini-mall stores have proven their effectiveness by increasing foot traffic by 30 per cent while helping to reduce breakeven revenues required per day per location by 44 per cent.
At the end of last year, Masan announced a $350-million primary investment in The CrownX by a consortium of investors, completing the last round of fundraising into this ecosystem.
Nguyen Dang Quang, chairman of Masan Group, said that 2022 will be the year that Masan digitalises its platform into an integrated system including manufacturing, logistics, and distribution all the way up to 100 million consumers. The partnership with Lazada and the acquisition of mobile network Reddi are also strategic steps to accelerate this process.
Reddi is the core connecting piece of Masan’s loyalty programme, with co-branded customer acquisition schemes providing members with essentially no cost data plans as they shop across Masan’s ecosystem through cash back plans.
Consumers are offered to choose carriers with the most interesting content and value-added services. Masan plans to roll out Reddi nationwide and target up to 1 million subscribers in 2022.
This will drive 10 per cent operational cost efficiencies and, most importantly, combine Masan’s traditional consumer insights with AI and machine learning insights to better serve consumers products and services they truly desire.
In 2022, the group aims to open 2,000 mini-mall locations through five different formats based on catchment analysis in cities, suburban, and rural areas, in new and existing WCM stores.
This plan is expected to generate a net revenue within the range of $1.67-1.76 billion in 2022, up 23-29 per cent on-year. Better synergies between WCM and MCH, premiumisation, and growth of core categories will continue to be drivers for MCH to reach a net revenue of $40 trillion.
Positive outlook of the leading platform
TCX expects to deliver net revenues of up to $3.34 billion in 2022, improving by up to 85 per cent.
Masan’s strategy is highly appreciated by financial analysts. Masan's market capitalisation in 2021 has also increased significantly, rendering the group one of the largest consumer platforms by market capitalisation in Vietnam, surpassing Vinamilk in the dairy industry.
According to Bank of America, Masan Group is a top of ASEAN consumer picks. This financial institution also initiated the stock with a buy rating and public offering of $8.7.
The bank also expects Masan's return on equity to improve from 8 per cent in 2019 to 18 per cent in 2025. Besides this, securities companies such as VietCapital Securities, Japan Securities, PetroVietnam Securities, and HSBC also initiated MSN VN with a buy rating of around $8.79.
