Masan stock enjoys growth outlook
Securities companies have placed high expectations on the growth of Masan stock, based on big value creation of Masan redefining the retail space.
In a report released on Aug. 16, Viet Capital Securities JSC (VCSC) continued to recommend buying MSN shares and raised its target price to VND172,000 per share, 29 percent higher than its market price (VND133,500 per share), and 21 percent higher than the previous recommended price (VND142,500 per share). VCSC placed high expectations on MSN’s ability to seize opportunities from long-term growth in Vietnam. The group owns leading large-scale consumer businesses including branded meat products and retail essentials. Previously, Credit Suisse’s report on Aug. 10 forecast the MSN stock price at VND162,000, based on third-quarter business results and profit margin with the prospect of increasing in the medium-term.
Masan’s retail sector saw significant growth in July due to high consumer demand. Sales per physical store increased 11 percent month-over-month.
Credit Suisse stated consumers tend to switch from traditional markets to modern retail channels, yielding positive results for VinCommerce (VCM), a subsidiary of Masan Group which runs VinMart and VinMart + retail chain. Profit is also improved thanks to more beneficial deals with suppliers. From the beginning of the year, VCM had changed the store layout and increased the percentage of fresh goods. Phuc Long kiosks are expected to be set up at 1,000 VinMart+ stores by the end of the year, contributing to an increase in revenue, profit margin as well as expanding the young customer base. Masan also aims to expand VinMart+ system to 3,001 points of sale by the end of 2021.
A report by Bao Viet Securities (BVSC) set MSN’s target price of VND160,000 per share, highlighting Masan’s comprehensive improvement in the consumer goods sectors. Spices, packaged foods, and beverages still recorded growth. Bao Viet believes Masan consumers have benefited from the strategy of focusing on high-end brands, diversification, and convenience. Despite spending reduction, customers are focusing more on high-quality health products for use at home. For other business segments, VCSC believes feed margins are on the rise again to 12 percent in 2021, compared to single-digit levels in the first half of this year.
Masan also plans to increase the capacity of its meat processing plants from 11 percent to 25-30 percent in the sixth quarter. Masan MEATLife (MML) and VCM resonate well in focusing on fresh food. In addition, MEATDeli meat can also easily reach consumers through the VinMart/VinMart+ chain. For Masan High-Tech Materials, increase in tungsten prices and copper sales realization would likely boost sales in the second half of the year. The target of EBITDA (earnings before interest, taxes, and amortization) in 2021 doubled compared to last year.
Ho Chi Minh City Securities Corporation (HSC) updated the management board of Masan’s view on the positive business outlook in the third quarter. Masan Group’s consolidated revenue is expected to increase 30 percent year-on-year thanks to strong growth potential across all business segments. Masan Consumer (MCH), VCM, MML and MHT’s sales are expected to increase by 45 percent, 15 percent, 50 percent and 34 percent respectively. HSC stated Masan’s business outlook for the second half of 2021 would be more positive than in the first half, partly due to the changing consumption trends during the Covid-19 pandemic, and how the company’s products meet modern needs.
According to Kantar Worldpanel, packaged food sales increased 35 percent in the first two weeks of July as people stocked up on food while shops were closed. Masan’s processed meat products and instant noodles saw consumption growth. Masan has implemented extreme measures to prevent Covid-19 and proposed ideas to both strengthen anti-pandemic initiatives and maintain production. Masan’s representative proposed to the prime minister and local leaders to allow the establishment of a “buffer zone” around its factories. This “buffer zone” can be a school, a vocational training center, a warehouse, a stadium, a gymnasium…, where workers can both eat and rest, and distance themselves in compliance with pandemic prevention regulations. The group also recommends prioritizing vaccination for retail employees and consumer goods production teams to provide a safe shopping space for the community and working environment. Currently, more than 10,000 Masan employees have been vaccinated.