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- 2023: Revenue was VND78.3tn (+3% YoY); and core NPAT was VND1.9tn (-51% YoY), completing 100% and 104% of our respective full-year forecasts. NPAT exceeded our expectations thanks to better-than-expected (1) results from MCH and (2) other income (which amounted to VND212bn vs our forecast of VND150bn in 2023). Nonetheless, operating profit trailed our forecast mainly due to the larger-than-expected loss of MHT in Q4, which is partly offset by MCH beating our forecast by 8% thanks to higher-than-expected sales and margins.
- Q4 2023: Net revenue edged up by 3% QoQ, which was mainly driven by 17% QoQ at Masan Consumer Holdings (MCH). Additionally, core NPAT improved 7% QoQ thanks to net financial loss reducing 51% QoQ owing to (1) QoQ increase in deposit income and gain from investment disposal, as well as (2) the reversal of VND287bn unrealized FX loss in Q4.
- MCH: In Q4 2023, LFL revenue increased 5% YoY and 17% QoQ and was mainly driven by seasonings (+18% YoY; 29% QoQ), beverages (+10% YoY; 37% QoQ, per our estimates) and convenience food (+9% YoY; -1.2% QoQ). In 2023, MCH’s sales growth was mainly driven by (1) seasonings (+19% YoY) and (2) home & personal care (+22% YoY). Additionally, MCH’s EBITDA margin improved by 150 bps YoY to 25.6% in 2023, which was primarily due to (1) revenue increasing by 9% and (2) GPM improving by 4.7 ppts.
- WCM: In Q4, operating margin improved to -0.2% in Q4 from -1.4% in 9M 2023, resulting in an operating loss of VND13bn in Q4 (exceeding our expectation of a VND4bn operating loss). In 2023, WCM’s revenue inched up 2% YoY on the back of 235 new stores in the year. Its GPM rose 90 bps YoY, while its EBITDA margin declined 40 bps YoY to 2.3%, which we attribute to costs from renovation activities during the year. At YE 2023, WCM’s store count was 3,633 (vs our expectation of 3,800 stores).
- PL: In 2023, PL opened 24 new standalone stores, while closing most of its loss-making kiosks. Its revenue dropped 3% YoY, but its EBITDA margin improved 4.3 ppts YoY.
- MML: In 2023, LFL sales increased by 11% YoY, which was mainly driven by YoY growth across segments, except for farmed chicken due to a lower price and volume YoY. On an LFL basis, MML’s EBIT margin dropped to -3.2% in 2023 (vs 2.2% in 2022), but this result exceeded our expectation of -4.2%.
- MHT: In 2023, revenue declined 9% YoY and its operating profit dropped 107% YoY to a loss of VND93bn, mainly due to the disruption of its blasting operation since April 2023, coupled with global weak demand. According to MHT, the suspension of its blasting unit was due to the company’s termination of its contract with a blasting service partner for Nui Phao Mining as the partner requires an increase in service prices. It is prerequisite for MSN’s new blasting partner to obtain a blasting license to operate the service, and this process has taken longer than MHT had previously anticipated. This disruption has adversely affected the production volume of fluorspar, bismuth, and tungsten (which are MHT’s main products), leading to weak sales and a higher fixed cost per sales unit. MHT has engaged a new blasting partner and has resumed normal blasting operations in Q1 2024.
- Net debt/EBITDA was 3.9x at YE 2023 vs 4.0x at end-Q3 2023. While the net debt balance slid 3% QoQ, EBITDA declined 15% QoQ. Additionally, MSN has hedged 100% long-term USD-debt exposure via cross currency swaps. USD950mn notional has been converted to VND at a rate of 23,937 and the interest rate is fixed at 8.93%/year. Interest rate swaps combined with FX forwards include: (1) USD45mn of principal payments in 2024 at an FX rate of 24,005; USD300mn has a fixed interest rate of 6.48%/year for 5 years with a 1-year FX at 23,790 to mitigate both currency and interest risks.
- Our view: The operating profit of most consumer-retail businesses (i.e., MCH, WCM, and MML) either exceeded or just slightly fell short of our expectations, except for PL (however, PL is still an insignificant earnings contributor). Additionally, MSN’s net debt was down by 1.5% YoY at YE 2023, and its net debt/EBITDA was relatively stable during the year, which is in line with our expectation. Nonetheless, MHT’s recent instability of its blasting operation amid its high operating leverage prompts a downside risk to our 2024F NPAT forecast for MSN, pending a fuller review. Based on MSN’s 2024 guidance (Figure 2), our latest sales forecast for MSN falls in the higher range of its target and our NPAT forecast is in the middle of the target.
Figure 1: MSN’s Q4 and 2023 results
VND bn | Q4 2022 | Q4 2023 | YoY | 2022A | 2023A | YoY | 2023F | 2023A as % of 2023F |
Net revenue 1 | 20,643 | 20,782 | 1% | 76,189 | 78,252 | 3% | 78,377 | 100% |
| 8,243 | 8,691 | 5% | 26,677 | 29,066 | 9% | 28,232 | 103% |
| 7,433 | 7,653 | 3% | 29,369 | 30,054 | 2% | 30,708 | 98% |
| 436 | 374 | -14% | 1,579 | 1,535 | -3% | 1,520 | 101% |
| 1,807 | 1,778 | -2% | 6,300 | 6,984 | 11% | 7,105 | 98% |
| 3,898 | 3,188 | -18% | 15,550 | 14,093 | -9% | 14,925 | 94% |
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EBIT | 1,381 | 920 | -33% | 4,669 | 4,179 | -10% | 4,271 | 98% |
| 1,778 | 2,143 | 21% | 5,000 | 6,521 | 30% | 6,022 | 108% |
| -54 | -13 | -76% | -471 | -324 | -31% | -313 | 104% |
| -16 | 35 | -319% | 103 | 85 | -17% | 119 | 71% |
| 23 | -19 | -183% | 138 | -224 | -262% | -300 | 75% |
| 153 | -593 | -488% | 1,336 | -93 | -107% | 673 | -14% |
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TCB’s contribution | 749 | 928 | 24% | 4,310 | 3,826 | -11% | 3,947 | 97% |
Others 3 | -136 | -393 | 189% | -630 | -679 | 8% | 1,266 | N.M. |
Net financial income | -1,168 | -971 | -17% | -3,786 | -5,725 | 51% | -5,811 | 99% |
Financial income | 655 | 644 | -2% | 2,576 | 2,405 | -7% | 2,276 | 106% |
Financial expense | -1,823 | -1,615 | -11% | -6,362 | -8,130 | 28% | -8,088 | 101% |
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NPAT | 804 | 517 | -36% | 4,754 | 1,870 | -61% | 1,806 | 104% |
NPAT-MI | 447 | 50 | -89% | 3,567 | 419 | -88% | 486 | 86% |
Core NPAT 4 | 942 | 517 | -45% | 3,852 | 1,870 | -51% | 1,806 | 104% |
Core NPAT-MI 4 | 524 | 50 | -90% | 2,629 | 419 | -84% | 486 | 86% |
EBITDA margin | 17.5% | 15.3% |
| 18.9% | 17.1% |
| 18.3% |
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| 25.0% | 27.5% |
| 24.0% | 25.6% |
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| 3.2% | 3.2% |
| 2.7% | 2.3% |
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| -0.9% | 13.1% |
| 12.3% | 16.6% |
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| 2.5% | 5.7% |
| 2.3% | 3.8% |
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| 16.8% | -4.6% |
| 20.6% | 11.0% |
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EBIT margin | 6.7% | 4.4% |
| 6.1% | 5.3% |
| 5.4% |
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NPAT-MI margin | 2.5% | 0.2% |
| 3.5% | 0.5% |
| 0.6% |
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Source: MSN, Vietcap
1 Consolidated revenue is lower than the sum of its subsidiaries’ revenue due to intercompany transactions.
2 MML consolidated Masan Jinju (MSJ) — MCH’s former processed meat subsidiary — in November 2022. Like-for-like (LFL) revenue and growth was adjusted by moving MSJ from MCH’s 2022 results to MML’s for a like-for-like comparison.
3 Overhead expenses at the holdco level and other items.
4 2022 core NPAT-MI excludes one-off financial income.
Figure 2: 2024 management guidance
VND tn | MSN | MCH | WCM | PL | MML | MHT |
MSN’s net sales guidance | 84 – 90 | 32.5 - 36 | 32.5 – 34 | 1.8 – 2.2 | 7.1 – 7.8 | 15 – 15.8 |
Implied YoY sales growth | 7%-15% | 12% - 24% | 8% - 13% | 17% - 41% | 2% - 12% | 6% - 12% |
MSN’s NPAT guidance | 2.3 – 4.0 |
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Implied YoY NPAT growth | 22% - 115% |
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Vietcap’s net sales forecast | 88.8 | 30.7 | 37.8 | 1.7 | 7.6 | 15.8 |
Vietcap’s NPAT forecast | 3.3 |
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Source: MSN, Vietcap
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