ANTD.VN - On October 30, 2023, Masan Group Corporation (HOSE: MSN, “Masan” or “Company”) announced its unaudited financial statements for the first 9 months of 2023.
Business results highlights:
Masan Group's net revenue for the first 9 months of 2023 reached VND57,470 billion, up 3.5% year-on-year, with pre-tax profit before distribution to minority shareholders (NPAT Pre-MI) of VND1,353 billion. Masan's consolidated cash balance, including cash and cash equivalents, was VND14,258 billion at the end of Q3/2023. In addition, free cash flow has been continuously improved over many quarters, reaching VND2,202 billion in Q3/2023 compared to only VND125 billion in Q3/2022.
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Masan and the journey to serve consumers |
Dr. Nguyen Dang Quang, Chairman of Masan Group shared. “ In a time of global challenges and uncertainties, our mission to serve consumers has become more important than ever. The philosophy of “doing well by doing good” has guided us through many challenging times and this time is no exception.”
Masan's consumer business segment, including WinCommerce (WCM), Masan Consumer Holdings (MCH), Masan MEATLife (MML) and Phuc Long Heritage (PLH), recorded earnings before interest and tax (EBIT) growth of 45.5% in the first 9 months of 2023 and 47.3% in the third quarter of 2023 compared to the same period.
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Customers shopping at WinMart supermarket |
The CrownX (the merged company of MCH and WCM) achieved revenue of VND41,704 billion in the first 9 months of 2023 and VND14,869 billion in the third quarter of 2023, up 2.4% and 1.2% respectively over the same period. The CrownX's EBITDA reached VND5,622 billion in the first 9 months of 2023 and VND2,116 billion in the third quarter of 2023, up 11.4% and 13.6% respectively over the same period.
WinCommerce is close to reaching its first EBIT break-even point since Covid-19. Net revenue increased 2.1% in the first 9 months of 2023 and 3.3% in the third quarter of 2023 compared to the same period due to new store openings. WCM opened 245 new mini supermarkets (WinMart+) and 2 supermarkets (WinMart) in the first 9 months of 2023. As of the end of September 2023, the WinCommerce chain had 3,586 points of sale nationwide. In the second quarter of 2023, WCM shared plans to renovate existing WinMart+ stores in urban and rural areas. These stores will be renovated according to the new WIN “All That You Need” model in urban areas and WinMart+ Rural in rural areas. As a key LFL growth driver, this renovation completed ahead of schedule, achieving ~45% and ~95% of the 2H renovation plan for WIN and WinMart+ Rural stores, respectively.
The renovated stores delivered expected revenue growth: in Q3/2023, LFL growth compared to the same period of WIN and WinMart+ stores was 4.8% and -3.5%, respectively, compared to a decrease of -8% for other WinMart+ stores. The LFL mini-supermarket group – accounting for 70% of all mini-supermarkets – recorded a 2.2% net profit margin in Q3/2023, the second consecutive quarter of positive net profit. This is an important milestone that gives management confidence in the roadmap to reach the net profit break-even point of the entire network in 2024.
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Masan Consumer participates in Ho Chi Minh City export fair |
In the first 9 months of 2023, Masan Consumer Holdings' net revenue reached VND20,376 billion, up 10.5% year-on-year. MCH's LFL[1] revenue grew 10.5%, achieving a gross profit margin of 44.3% in the first 9 months of 2023, up 430 basis points year-on-year. The product lines with outstanding business results were Spices, Convenience Foods, and Personal and Family Care Products.
These categories recorded growth of 21.0%, 8.3% and 39.4% respectively in the first 9 months of 2023 compared to the same period last year. In 3Q23, gross profit margin recorded an all-time high of 45.6%, helping to boost EBITDA margin to 26%. The superior growth in gross profit margin was the result of high selling prices underpinned by strong brands, high-margin product portfolio, ability to secure low raw material costs, and optimized supply-demand planning to improve production conversion costs.
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Consumers buy MEATdeli chilled meat |
Masan MEATLife's revenue increased by 61.1% in 9M2023 and 47.5% in 3Q23 yoy, driven by stronger sales growth across most product segments, especially processed meat with outstanding growth of 35.9% in 9M2023 and 23.1% in 3Q23 yoy. In addition, in 3Q23, gross profit margin was 18.6%, up 260 basis points from 16.0% in 3Q22. Higher profit margin in 3Q23 compared to 9M23 was driven by significantly improved gross profit margins of farm pigs and farm chicken compared to the previous quarter.
The main reason for this growth comes from higher pork and broiler prices in Q3/2023 compared to H1/2023. Also in this quarter, the farm pig segment recorded a gross profit margin of 30.8% (compared to 11.6% in H1/2023) and farm chicken achieved a gross profit margin of 14.4% (compared to -17.1% in H1/2023).
For the processed meat segment, revenue increased by 35.9% to VND1,714 billion in the first 9 months of 2023, mainly due to increased output. For the branded chilled pork segment, MML has successfully narrowed the price gap with traditional markets through the exclusive price program for WIN Members, helping to increase daily revenue of MML products at WCM stores by 30%.
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Customers experience Phuc Long products |
Phuc Long Heritage (PLH) has improved profitability by rationalizing the number of kiosks. EBITDA margin improved to 20.8% in 3Q23 compared to 17.0% in 2Q23 due to the reallocation of Phuc Long kiosks at WinMart/WinMart+. In 3Q23, Phuc Long Heritage opened 6 new points of sale. PLH stores outside WCM had a slight growth in revenue, reaching VND876 billion in the first 9 months of 2023.
Strategic activities:
In the context of economic difficulties, Masan is a rare company in the market that has successfully attracted foreign investment capital recently. Bain Capital's equity investment in Masan Group may increase to 500 million USD. The proceeds from this transaction will help reduce financial leverage, optimizing the Company's balance sheet.
Masan aims to achieve a Net Debt to EBITDA ratio of ≤ 3.5x. This is a purely equity investment transaction, without any price hedging or borrowing of MSN shares, resulting in the sale of MSN shares to the market on the issuance date. The structure of the above investment is designed to ensure the interests of MSN's existing shareholders.
Similarly, SK Group is a long-term partner of Masan Group. In that spirit, for SK Group’s equity stake in Masan, the two parties have agreed to work together to implement a multi-year roadmap to maximize value for shareholders of both companies.
Masan has fully paid its debt obligations due in 2023. In 2024, the total amount of bonds due will only be around VND6,000 billion, much lower than the Company's current cash and cash equivalents of over VND14,000 billion and EBITDA for the last 12 months of ~VND14,000 billion. Cash and cash equivalents are expected to increase by approximately VND4,900 billion to VND12,250 billion after the equity investment led by Bain Capital. Free cash flow (“FCF”) shows continued improvement, with FCF in Q3/2023 reaching VND2,202 billion, a significant increase from VND125 billion in Q3/2022 thanks to effective working capital management.
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Vietnam's leading consumer ecosystem |
Business plan for the fourth quarter of 2023:
In Q4/2023, to continue maintaining sustainable growth and improving profitability, Masan will focus on the following innovations:
- The CrownX:
+ WCM plans to increase sales productivity, improve LFL growth to achieve revenue per store at Q4/2022 level and target to achieve positive EBIT in Q4/2023.
+ MCH continues to focus on improving and innovating beverage, HPC and convenience food products to drive growth in Q4/2023, serving as a strong growth driver for 2024.
- PLH aims to open 11 new stores in Q4/2023 and improve sales per store to the same level in Q4/2022.
- MML expects to improve daily sales at each WCM point of sale from VND1.6 million to VND2 million by focusing on a flexible pricing strategy to improve sales of slow-moving items, planning integration with WCM to distribute the right product types to the right stores. In addition, MML will continue to enhance the brand experience - as a meat destination at WCM points of sale by deploying Meat Corner counters at some locations, helping to enhance visibility and customer experience for MEATDeli products. MML will closely control costs to adapt to market conditions.
- Masan High-Tech Materials (MHT) aims to increase sales volume by proactively building customer demand as the global economy gradually recovers and will sell off copper inventories (targeted to sell 18,000 dmt in Q4/2023). MHT will also continue to carry out cost optimization activities in operations and procurement, seek various strategic solutions to reduce debt as well as resolve issues related to blasting activities with contractors.
- Balance sheet : Masan will continue to actively seek various solutions in the capital market to extend debt maturity, improve interest rates and increase profitability through financial deleveraging. In parallel, to realize the consumer technology strategy, the Company will continue to invest in innovations based on the strengths of the comprehensive retail consumer ecosystem such as membership programs and logistics systems.
[1] When referring to MCH, LFL excludes the contribution of processed meat segment in 2022.
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