October 30, 2023
MSN’s consumer businesses deliver 45.5% EBIT YoY growth for 9M202
Ho Chi Minh City, 30 October 2023 – Masan Group Corporation (HOSE: MSN, “Masan” or the “Company”, today released its unaudited management accounts for the first 9 months of 2023 (“9M2023”).
“In a time of such global sensitivity, uncertainty, and calamity, our mission to serve consumers their basic, daily life necessities has never been more important. Our DNA of doing well by doing good has guided us across each challenging period. It is no different this time around” said Dr. Nguyen Dang Quang, Chairman of Masan Group.
The CrownX (“TCX”)’s recorded revenue of VND41,704 billion in 9M2023 and VND14,869 billion in 3Q2023, up 2.4% YoY and 1.2% YoY, respectively. TCX’s posted EBITDA of VND5,622 billion in 9M2023 and VND2,116 billion in 3Q2023, up 11.4% YoY and 13.6% YoY, respectively.
MCH increased topline by 10.5% YoY in 9M2023. On a LFL basis, MCH net revenue registered 10.5% YoY growth to VND20,376 billion in 9M2023. MCH was able to deliver gross margin of 44.3% in 9M2023, an increase of 430 bps from 40.0% in 9M2022 (LFL). Seasonings, Convenience Foods, and HPC grew by 21.0% YoY, 8.3% YoY, and 39.4% YoY, respectively, in 9M2023. In 3Q2023, these categories reported revenue growth rates of 16.6% YoY, 10.8% YoY, and 24.5% YoY, respectively. In 3Q2023, gross margin reached an all-time high of 45.6% resulting in ~26% EBITDA margin for this quarter. This exceptional gross margin is attributable to several factors, including sustained higher price due to its brand powers, higher margin product mix, ability to secure low raw material costs, and optimized demand & supply planning to improve manufacturing conversion cost.
PLH improved profitability by rationalizing kiosk footprints. EBITDA margin improved to 20.8% in 3Q2023 compared to 17.0% in 2Q2023 due to the rationalization of the kiosk footprints (PLH stores inside WCM). In 3Q202, PLH opened 6 new locations. PLH stores outside WCM experienced slight growth in revenue, reaching VND876 billion in 9M2023.
There are no hedging structures or stock borrow of MSN shares as part of the equity investment that would result in MSN shares needing to be sold in the open market at the date of the issuance. Bain Capital and potential follow-on investors are fully aligned with current MSN shareholders.
Masan has fully repaid its debt obligations maturing in 2023.
Bond obligations maturing in 2024 of ~VND6 trillion is significantly lower than the Company’s current cash and equivalents of VND14 trillion and 12-month trailing EBITDA of ~VND14 trillion. Pro forma cash and cash equivalents are expected to increase by approximately VND4,900 billion to VND12,250 billion after the Bain Capital-led equity investment.
Free cash flow (“FCF”) showed a consistent improvement, with 3Q2023 FCF reaching VND2,202 billion, a significant increase compared to VND125 billion in 3Q2022 driven by more effective working capital management.
To continue its sustainable growth rates and deliver improved profitability, Masan will focus on the below initiatives:
- MCH continues to focus on innovation for beverages, HPC and convenience food products to drive 4Q2023 growth and act as a significant growth driver for 2024.
- PLH aims to open 11 new stores in 4Q2023 and improve sales per store to get closer to the 4Q2022 levels.
- MML expects to improve daily sales in WCM from VND1.6 million to VND2 million per store by focusing on dynamic pricing strategy to improve sales of slow-moving items and integrated planning with WCM to deliver the right assortment to the right store. Furthermore, MML will continue to enhance brand experience as a Meat destination in WCM outlets, by rolling out Meat Corners in select locations, enhancing visibility and experience for MEATDeli products. MML will also control costs strictly to adapt to the new market environment.
- MHT aims to increase volume of sold materials by proactively building up customer demand book as the global economy slowly recovers and selling down copper inventory (18,000 dmt targeted in 4Q2023). MHT will also continue to execute cost optimization activities in operations and procurement, explore strategic alternatives to deleverage as well as resolve blasting issues with contractor.
- Balance sheet: Masan will continue to actively explore alternatives in the capital market to extend its debt maturities, improve interest rates, and unlock earnings via deleveraging. At the same time, the Company will continue to invest in initiatives that unlock thes ecosystem synergy such as membership program and shared logistics system to materialize the consumer – tech strategy.
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