Decoding the potential of Masan Group share price as a leading enterprise in the consumer industry

Positive macro economy momentum for consumer – retail sector

According to Ho Chi Minh City data, personal income tax collection rebounded 11% y/y in 4M24 after dipping ~15% YoY in 2023. This was driven by stabilization in the property sector and a recovery in manufacturing jobs. This trend should continue over the next few months with strong Purchasing Manager’s Index (PMI) in developed markets suggesting manufacturing strength will persist. The early rebound in personal income has translated to firming consumption demand, with domestic imports jumping 20% YoY. This trend usually correlates with a rally in consumer stocks.

Besides, salary reform is also a near-term driver to boost the economy. Vietnam government’s plan is to raise salaries by ~30% for ~2 million public sector workers starting from July 2024. On aggregate, this would add ~US$2.9 bn, 1.3% of annualized GDP, of public sector salary reform in 2H24 - according to the government estimates. This action should have positive knock-on impact on consumption, as the salary adjustment would not only lift near-term spending power but also provide a wealth effect in the longer term.

Vietnams consumer scene is still at an early growth phase. Market share of modern grocery retailers (CVS, minimarts, supermarkets) was only c12% in 2023, significantly below the penetration rate of Thailand in the 2000s, despite similar urbanization rates. This suggests ample room for growth in the modern retail channel. With GDP growth expected to remain at 6.5% p.a. (by IMF) and middle class consumers expected to double during 2023-2027 (by Brookings Institution), the opportunities for Vietnam consumers stocks, such as Masan Group share price that could benefit from (1) premiumization, (2) modern retail penetration, and (3) increasing demand for discretionary products and services including travel and tourism.

Masan Group operates across a number of sectors such as retail, consumer goods manufacturing, livestock processing, telecommunications, and mining. Its core business is consumer – retail.

Attractive Masan Group share price for medium and long-term goals

Masan Group stock is listed on the HCM City Stock Exchange (HoSE) and is in the VN30 group of blue chips, representing a substantial portion of its market capitalisation and trading value. Expectations of profits recovering from the consumer market can help Masan Group share price to achieve positive results.

In November 2023, Masan Group (MSN) stock was at VND54,000, after that, the stock began its accumulating phase. By early March, Masan Group stock price gradually recovered, rising to VND81,000. The highlight is that in the March 5 session, MSN price rised and is among key stocks leading the increase of VN-Index. By April 12, Masan Group share price returned to the area of ​​ VND72,000. In early July 2024, the stock fluctuates around VND77,000.

Masan Group share price has received a thumbs-up from both domestic and international financial institutions in 2024.

MSN, which has a target price of VND102,000 in 2024, has been designated by J.P. Morgan as a top investment priority in the Vietnamese market. The company has considerable development potential.The evaluation is predicated on the company's robust presence in the retail sector and its strategic deployment of capital to the consumer and retail domains. HSBC has recommended buying the stock with a target Masan Group share price of VND98,000, while Vietcap Securities forecasts a target price of VND102,800.

By attracting foreign capital and seizing funding opportunities from the international investment market, Masan Group share price have positioned themselves as appealing investment options.

The faith in the Masan Group share price is demonstrated by the recent US$250 million equity investment from Bain Capital as well as earlier investments from a number of foreign institutions and companies, including KKR, SK Group, the Abu Dhabi Investment Authority, SeaTown Holdings, and Alibaba. 

Rong Viet Securities (VDSC) believes that MSN's recent upward momentum comes from the story of recovering purchasing sentiment, production gradually returning, low interest rates and supportive policies from the Government will be a significant support to stimulate spending. According to the latest report of BIDV Securities (BSC), the analyst team has made a strong buy recommendation for Masan Group share price with a medium-term target price of VND100,000 per share, with potential price increase of up to 32% compared to the closing price of MSN shares of VND75,800 on June 11, 2024.

In the first quarter of 2024, Masan's core business segment continued to record revenue growth of 6% over the same period and operating profit margin increased by 3.1%. Based on data for the period 2019-2023, BSC finds that Masan has built a diverse ecosystem in the consumer value chain including MCH, WCM, MML and PHL, recording CAGR from 2019-2023 is 20%.

In addition, Masan has restructured its business segments to focus on efficiency. This strategy continues to be affirmed by Masan's board of directors at the 2024 Annual General Meeting of Shareholders: "We will further boost the profits of WinCommerce, Masan MEATLife and Phuc Long to be on par with Masan Consumer. Profitability will be an important metric in the next 18 to 24 months to help maximize shareholder value.”

In a recent report, Vietcap maintained an optimistic view on the prospects of MSN's leading consumer segment with its wide range of operations. Masan will benefit from consumption growth in Vietnam in the long term. The securities company increased targeted Masan Group share price and recommended BUY MSN shares with a target price of VND102,800.

“We believe that MSN's diverse consumer businesses are well positioned for Vietnam's consumption growth. We forecast a compound annual growth rate of operating profit (CAGR EBIT) of 18% in the period 2023-28F for MSN's consumer retail segment," the report stated. Besides, Vietcap analysts also pointed out the reason why they raised the valuation of Masan Group share price: "Our higher target price is because we increased the valuation of Masan Consumer by 17%, mainly thanks to a 9% increase in total EBIT forecast from 2024F-28F of subsidiary Masan Consumer (UpCOM: MCH). Additionally, we will roll out our target price vision until mid-2025.”

In the latest update, HSBC also raised the targeted Masan Group share price to VND98,000 per share. In June, the market price of MSN shares reached VND75,800 per share. Thus, with HSBC's valuation, MSN shares have the potential to increase in price by up to 29%.

HSBC believes that Masan Group's business segments currently have positive development prospects. In particular, Masan Consumer is the pillar of Masan Group's consumer business, maintaining a high profit margin since 2018, with stable revenue growth and significantly surpassing other companies in the same industry.

Masan Group named in Fortune magazine’s first ever Fortune Southeast Asia 500 list

In June 2024, Masan Group Corporation (MSN) has been named in Fortune magazine’s first ever Fortune Southeast Asia 500 list. IMasan Group is #1 on the Fortune list for consumer goods and retail in Vietnam, with a revenue of $3.2 billion.

VietNam has 70 of the region's top enterprises based on sales in fiscal 2023. The list contains businesses from seven Southeast Asian countries: Indonesia, Thailand, Malaysia, Singapore, the Philippines, and Cambodia. Indonesia has the most companies, with 110, followed by Thailand (107), Malaysia (89), Singapore (84), Vietnam (70), the Philippines (38), and Cambodia (2).

The top 10 in it reported revenues of $650 billion, or a third of the 500 companies’ $1.8 trillion. With $460.8 million in revenue, it was the smallest on the list.At $590.7 billion, the oil sector was the top revenue earner. Banking accounted for the second largest sector, with $242 billion. Remarkably, nine banks were listed in the top 20 lucrative companies.

In 2023, the list's companies had a decline in their overall revenues and profits. However, this was obscured by the impressive growth stories in several other industries, which were brought on by poor energy markets.

Fortune, a multinational media firm, guarantees corporate accountability globally by evaluating corporate performance under strict benchmarks.