Why financial institutions are optimistic on Masan Group share price?

The current Masan Group share price is said not to reflect the true intrinsic value of the business. This is because the total capitalization of just two assets, Masan Consumer and Techcombank, has surpassed the value of MSN.

Specifically, as of June 7, Masan's capitalization reached VND116,821 billion and the total capitalization of ownership at Masan Consumer and Techcombank was VND118,508 billion (net debt on separate financial statements has been deducted). These numbers reflect that the capitalization value of just Masan's member companies and affiliated companies, Masan Consumer and Techcombank, is equal to or even exceeds Masan's capitalization value. This also implies that shareholders who own MSN shares at the current price range will receive a premium of other valuable assets such as Masan MEATLife (MML), Masan High-Tech Materials (MSR), WinCommerce (WCM), Phuc Long Heritage, ect. Besides, the growth potential of two assets Masan Consumer and Techcombank is also promising this year, contributing to further boosting Masan Group share price.

Masan Consumer, top 10 most valuable companies on the stock exchange

According to information in the recent 2024 annual general meeting of shareholders, Masan Consumer plans to list all of the company's 717,504,156 outstanding shares HOSE. As of June 21, 2024, MCH is trading on UPCoM with a closing price of VND202,500, equivalent to a market capitalization of more than VND158,000 billion (USD6.2 billion). Masan currently owns 68% of MCH's equity capital.

In the near future, with a current capitalization of more than VND158,000 billion, when MCH is listed on HOSE, this business will be in the top 10 companies with the highest market capitalization on the stock exchange and will have great potential.

For example, with a similar capitalization, VPB shares of Vietnam Prosperity Joint Stock Commercial Bank currently account for 6% of the portfolio of the DCVFMVVN30 fund, the VN30 index simulation fund, and 8.5% in VEIL fund respectively, one of the largest foreign funds investing in the Vietnamese stock market with a net asset value of more than USD1.8 billion. Both of these funds belong to Dragon Capital fund management company. With the above potential, MCH's valuation still has a lot of room for growth when the company's shares are listed on HOSE and are purchased by funds.

Recently, Masan Consumer announced that it will pay a 55% cash dividend in the upcoming July and asked for shareholders' opinions to advance dividends in 2024. This reveals that the business will continue to pay a dividend this year after the previous decision to pay 100% dividend.

According to the latest report of HSC securities, MCH is valued at USD7.3 billion. With its current capitalization value, MCH still has the potential to grow up to 18%.

In terms of capitalization, Masan Consumer's current share price has surpassed Masan Group share price. With key ownership at MCH, Masan Group stock price is reflecting the fact that the intrinsic value of the business is not fully reflected.

Receive more than VND1,000 billion from Techcombank

On May 2, Techcombank’s Board of Directors issued a Decision to deploy cash dividends and bonus shares. Specifically, the last registration date to exercise the right to receive cash dividends is May 22, 2024. The implementation rate is 15% per share, meaning 1 share receives VND1,500, dividend payment date is June 5, 2024. Owning 19.9% of economic interests in TCB, Masan is expected to receive more than VND1,000 billion, helping the company facilitate the work of reducing financial leverage.

In the first quarter of 2024, Techcombank (TCB) recorded impressive business results with profit after tax increasing sharply by 38.3% over the same period last year, reaching VND6,277 billion. According to the latest report of Vietcap securities, TCB expects to record positive business results thanks to improved NIM. "We expect NIM to improve slightly by 8 basis points in 2024 compared to 2023, and increase by 12-13 basis points/year in 2025 and 2026," the report stated. In addition, Vietcap also adjusted to reduce the average credit cost for the period 2024-2028 from 1.0% to 0.8% due to a more optimistic view on the recovery of the real estate industry. TCB's positive outlook will also positively contribute to Masan's overall profits and Masan Group share price.

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

“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.

International financial institutions, such as J.P.Morgan also stay positive in Vietnam consumption market and leading consumer companies like Masan Group. According to J.P.Morgan’s report, VN-Index has rebounded by 4.7% MTD and returned near the previous high in March. That said, political uncertainties and soaring US bond yield continued to weigh on sentiment, leading to c. USD500 million of foreign outflows in May (USD1 billion outflows YTD). However, beneath this volatility lies a strengthening consumption story, driven by a recovery in manufacturing jobs and government salary reform - which should add c1.3% of annualized GDP in 2H24. In the longer term, income growth and middle class expansion should help the consumer sector deliver multi-year growth as various products and the retail channel remain under penetrated. The institution stays OW Consumer Discretionary within Vietnam and prefers Masan Group (MSN VN) as a key play for modern trade penetration. Masan Group share price obviously might take advantage due to recovered consumer market, modern trade penetration and the position as a leading consumer – retail platform.

The VN Allshare Consumer Discretionary index has rallied 33% YTD vs VN-Index up by 12% YTD. That said, the index remains ~15% lower than the peak in 2022 and earnings of Consumer Discretionary stocks should deliver multi-year growth on the back of economic development. Masans recovery was on track in 1Q24 with continued strength in the Consumer business; the company’s retail arm WinCommerce saw LFL growth of 6% y/y in 1Q24, a positive sign of consumption recovery. These factors will contribute positively to Masan Group share price.

Masan Group honoured in Fortune’s Southeast Asia 500 rankings

Recently, Masan Group has made its way into Fortune’s Southeast Asia 500 rankings for 2024 thanks to its impressive business performance and strategy. In the field of consumer goods and retail in Vietnam, Masan Group ranks first on the Fortune list with a revenue of USD3.2 billion. Fortune has published the Southeast Asia 500 rankings for 2024, a first-ever list of the region's 500 top firms ranked by revenue. Fortune's attention on the region comes as Southeast Asia grows in importance in the global economy as a result of shifting supply chains and rapid economic development.

“The Fortune Southeast Asia 500 reflects a dynamic and fast-changing region–one whose core economies are growing notably faster than those of Europe or the US,” said Clay Chandler, executive editor of Fortune in Asia.

Companies from seven Southeast Asian countries are included in the inaugural rankings: Indonesia, Thailand, Malaysia, Singapore, Vietnam, the Philippines, and Cambodia. The top ten businesses on the list have USD 650 billion in revenue. The ten largest companies on the list reported revenues of USD650 billion. All Southeast Asia 500 Companies reported total revenues of USD1.8 trillion for fiscal year 2023. The minimum revenue threshold to be included on the list was USD460.8 million. Vietnam is home to 70 companies on the list.

In the consumer goods and retail segment, two subsidiaries, Masan Consumer (MCH) and WinCommerce (WCM), account for 80 per cent of Masan’s revenue. Among these, MCH's products are popular among Vietnamese consumers in a variety of living environments. MCH is found in the corners of kitchens, inside refrigerators, living rooms, and restrooms. MCH boasts five large brands with revenues ranging from USD150 to USD250 million, including CHIN-SU, Nam Ngu, Omachi, Kokomi, and Cafe Wakeup 247. The company aims to build six brands with revenues reaching USD1 billion, including CHIN-SU, Omachi, Cafe Wakeup 247, Vinacafe, Chanté, and BUPNONTea 365.

The FMCG segments Masan is serving are worth up to USD8 billion. Meanwhile, the entire market size in Vietnam could reach USD32 billion. As a result, Masan has decided to establish a new FMCG model with a strategy to build six major brands worth billions of dollars, introducing huge brands and Vietnamese cuisine to the globe and becoming the pride of Vietnam. In the future, Masan aims to have at least one product in every household globally.

In the retail segment, WCM boasts Vietnam’s largest modern retail chain covering WinMart supermarkets, WinMart+ stores, and WiN stores. WCM posted a revenue of VND30 billion (USD1.2 million) in 2023, which is expected to increase to VND33 billion (USD1.3 million) in 2024. In particular, its mini mart chain, which accounts for 75 percent of revenue, doubled its sales growth from 2019-2023. More than 2,000 stores were profitable in terms of earnings before interest, taxes, depreciation, and amortisation (nearly 10 times the 2019 figure).

Since the end of 2023, WCM has adjusted its pricing strategy and price marketing to customers through its in-store staff as well as promoting communications on digital platforms about products found at WCM. In addition, the retail company also ensures competitive pricing compared with the market, bringing products with good prices to customers in both rural and urban areas. These elements are expected to further boost on Masan Group share price.