MSN & MCH - Well-prepared for growth amid uncertainties - Analyst Meeting Notes

MCH: 

• Management emphasized that despite the current market turbulence following the announcement of US reciprocal tariffs, MCH is still on track to prepare for a potential listing by YE2025, and reaffirms there have been no delays.
• Regarding the recent rights issuance at MCH, management explained that it was designed to improve share liquidity, particularly for retail investors. Despite this, MSN aims to maintain over 65% ownership in MCH.

• MCH is confident in its ability to maintain a 60% cash dividend payout ratio for the coming years, due to its strong financial capability.
• 2025 drivers for sales growth target of 8-15% YoY: around 5–7% YoY come from new product launchwa, and approximately 3–4% YoY is driven by price increases. The remainder is from volume growth.

• Premium segments: In Q1 2025, fish sauce, which accounts for 60% of MCH’s seasoning revenue, grew by 11.4% YoY. The growth was mainly driven by value through premium products. The company successfully launched campaigns in the Mekong Delta region (southern Vietnam), encouraging consumers to move from the economy segment to the mainstream segment. Omachi – a convenience food premium brand – grew 20% YoY in Q1 2025.
• Kokomi – a convenience food mass-market brand - faced more challenges due to mass consumption weakness. In Q2 2025, the brand engaged in marketing efforts targeting young consumers – a group that is willing to spend and loves trying new products.
• MCH sees a trend of declining input material prices and is locking in material prices at current levels for production until YE2025, which it expects to enhance GPM in H2 2025.

WCM:

• WCM is now focused on profitable growth. Key strategies include strong like-for-like sales growth and aggressive store expansion, with a target of 800–1,000 new stores for 2025.
• Minimart expansion will mainly focus in northern and central Vietnam, while continuing the optimization of operational efficency in the south. For supermarkets, the company plans to renovate 40 stores in 2025, differentiating between urban (fresh, product-focused, family-friendly) and rural (varied and price-competitive) formats. Management views this as a key driver for enhancing supermarket profitability. Year-to-date, 12 stores have been renovated. 
• Rural expansion strategy: Rapid expasion with a focus on the offering of 100 key value items priced lower than competitors to attract store traffic. Management also emphasized that if macro conditions worsen, it will reassess this expansion strategy. Currently, no major negative impact has been observed.
• In premium retail formats, the company is focusing on a higher proportion of fresh products to strengthen its competitive edge. Efforts are underway to revamp the supply chain, minimize shortages, and increase fresh product output, which is crucial for differentiating premium offerings.

MHT:

• MHT is in ongoing discussions to explore strategic partnerships, especially with companies seeking non-Chinese supply sources. The goal is to finalize and announce a partnership by YE2025.
• Regarding profitability, despite the benefit of rising selling prices, MHT is facing challenges as its mining operations are in a less productive phase, resulting in lower output compared to previous years.

Phuc Long: 

• Phuc Long has recently appointed a new CEO with a focus on brand repositioning through product revamping, store experience improvements, and employee training.
• Management recognized that while Phuc Long has traditionally appealed to consumers aged 30–40, future growth will depend on attracting younger demographics, such as high school and college students. A brand relaunch targeting this segment is in the early stages.

Others:

• The ~VND300bn booked as "other expenses" in Q1 2025 mainly included write-offs related to WinEco’s long-term assets. These expenses will not recur in the future.
• The high minority interest over the past one year is due to MSN owning ~66% of MCH, its fastest-growing business. As MCH grows, the non-owned ~34% minority interest proportionally increases. Management expects stronger profit contributions from wholly or majority-owned subsidiaries like WCM and MML to mitigate the impact of minority interest.
• MSN foresees minimal direct impacts from the reciprocal US tariffs, as the US accounts for less than 1% of MCH’s revenue, and MHT's products are exempt from reciprocal tariffs. However, MSN is preparing for indirect impacts through real-time pricing flexibility and product portfolio management. Management believes consumer staples will perform well during economic downturns as people shift to in-home consumption. The retail strategy will focus on daily essentials, private-label brands, and targeted promotions via its membership program to maintain sales during tough times.
• Mr. Philippe Jean Broianigo has recently joined as Deputy CEO of TCX to drive synergies between MSN’s offline and online initiatives, with a focus on digitizing the supply chain, optimizing product assortment, and developing the workforce for greater operational scale over the next 5–7 years.
• 2025 capex plan: Estimated between VND3tn to 3.5tn, with MCH and WCM each receiving about VND1–1.5tn, while the remainder will go to other businesses.

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