Masan Group stocks surge
If the "Vin" stock group was the main support for the market in yesterday's session, the Masan Group stock took on that role as the standout performer in this morning's session (May 15).
From the start of the morning session, the "Masan family" stocks—including MSN (Masan Group stock), MCH (Masan Consumer), MML (Masan MEATLife), and MSR (Masan High-Tech Materials)—demonstrated a remarkable breakthrough compared to the general market and the VN30 group.
By the close of the morning session, Masan Group stock had risen nearly 3% to 72,500 VND per share. This stock made the largest contribution to the overall index, adding more than 0.7 points. Additionally, trading activity was robust, with liquidity reaching over 4.5 million units, surpassing the matched volume of the entire trading session from the past three days.
Within the "Masan family," MCH shares rose 6.7% to 154,500 VND per share, MML shares increased slightly by 0.75% to 26,700 VND per share, and MSR shares surged by 15% to the ceiling price of 16,900 VND per share, with a ceiling buying volume exceeding 1.7 million units. A notable development for Masan is the restructuring of its tungsten segment with Mitsubishi, focusing on the core consumer retail business. On May 14, Masan High-Tech Materials announced that it had reached a framework agreement with Mitsubishi Materials Corporation Group (MMC Group), which is expected to purchase 100% of H.C. Starck Holding (HCS) from MHT.
Overall, Masan Group stock has shown quite positive developments recently. After bottoming out on October 27, 2023, at 57,800 VND per share, Masan Group stock entered an accumulation phase at the end of February 2024. Since then, they have attracted cash flow and accelerated with improved liquidity. Masan Group stock price has established a higher base than the previous accumulation zone, although it remains significantly lower than the peak of 105,000 VND per share reached at the end of 2022.
The driving force behind the price increase of Masan Group stock is attributed to the prospect of business growth returning. In the first quarter of 2024, Masan Group reported consolidated revenue growth of 18,855 billion VND. Net profit after allocation to minority shareholders doubled compared to the fourth quarter of 2023. Notably, Techcombank, an affiliated company of Masan, contributed 1,229 billion VND to the group's net revenue in the first three months of the year.
Indeed, within the consumer business sector, Masan Group stock stands out and is receiving high praise from numerous securities firms for its strong growth potential in the near term. Experts recommend purchasing MSN with a target price increase of 12% compared to the current price. According to surveys conducted at the analysis centers of three major securities firms, SSI Research predicts a 177.4% increase in Masan's profits, reaching 1,161 billion VND, while BSC Research forecasts a 204.1% increase, totaling 1,204 billion VND, and BVSC Research projects a 294.4% increase, amounting to 1,651 billion VND.
3 drivers for retail stock
Retail stocks have faced significant correction pressure lately, largely stemming from reports of unfavorable business results in the first quarter of 2023. However, the outlook for this sector is expected to improve in the near future, driven by three main factors.
The initial impetus stems from a series of policies aimed at bolstering consumption in the foreseeable future. Notably, the Government recently issued Resolution No. 59/NQ-CP dated April 23, 2023, outlining measures to support and alleviate challenges for borrowers in meeting their livelihood and consumption requirements. This resolution explicitly endorses the proposals outlined in Report No. 57/TTr-NHNN dated April 22, 2023, submitted by the State Bank of Vietnam, which focuses on strategies to aid borrowers in resuming their capacity to meet essential livelihood and consumption needs.
In accordance with its designated responsibilities and authority, the State Bank of Vietnam will promptly assess, determine, and expeditiously issue a Circular providing guidance for credit institutions' implementation. This guidance will prioritize appropriateness, precision, feasibility, efficiency, transparency, and compliance with legal regulations, while ensuring the safety of the credit institution system. Moreover, the State Bank will enhance inspection, oversight, and supervision of policy execution in accordance with the law, thereby mitigating risks and preventing any instances of misuse, exploitation, losses, or legal infringements.
The Governor of the State Bank of Vietnam, along with Ministers, Heads of ministerial-level agencies, relevant agencies, organizations, and individuals, bear responsibility for executing this Resolution.
Previously, the Ministry of Finance proposed several tax reduction measures for 2023. These include a 2% decrease in the Value Added Tax (VAT) rate for all goods and services currently taxed at 10% (to 8%), as well as a 20% reduction in the VAT calculation percentage for business establishments issuing invoices for such goods and services. Additionally, the Ministry of Finance suggested reducing approximately 35 fees and charges, with an effective period from July 1 to March 31, 2023.
On April 17, the Government Office forwarded an official dispatch to the Minister of Finance regarding the plan to exempt and reduce taxes, fees, and charges in 2023. Deputy Prime Minister Le Minh Khai agreed in principle that the Ministry of Finance should report to the Government for submission to the National Assembly and the National Assembly Standing Committee. This submission aims to seek consideration and approval to develop and promulgate the National Assembly's Resolution on VAT reduction through simplified procedures and protocols.
The second catalyst is the upward trend in retail sales of consumer goods observed in the first quarter of 2023. According to data from the General Statistics Office, total retail sales of goods and consumer service revenue in March reached an estimated 501.3 trillion VND, marking a 2.0% increase compared to the previous month and a significant 13.4% rise compared to the same period last year. Throughout the first quarter of 2023, total retail sales of goods and consumer service revenue are projected to reach 1,505.3 trillion VND, indicating a robust 13.9% increase over the corresponding period in the previous year (compared to a 5% increase during the same period in 2022). When excluding the price factor, this growth amounts to 10.3% (in contrast to a 2% increase during the same period in 2022).
Retail sales of goods in the first quarter of 2023 are projected to hit 1,187.2 trillion VND, marking an 11.4% surge compared to the same period last year (with an 8.4% increase when excluding the price factor). Notably, the food and food products group saw a 14.6% increase, garments rose by 12.3%, vehicles (except cars) by 4.5%, and household appliances, tools, and equipment by 3.9%. However, the cultural and educational items group experienced a slight decline of 2.7%.
With the implementation of tax and consumer lending policies, it is anticipated that consumption will experience a significant uptick in the second quarter of 2023.
Masan shares are currently undervalued and could reach 98,000 VND
HSBC assesses that financial pressure on Masan is alleviating due to factors like lower VND loan interest rates, the sale of shares in non-core businesses, and an increase in WinCommerce's EBITDA profit margin. These elements suggest promising financial prospects for Masan in the future.
As a result, HSBC's analysis team maintains its buy recommendation for Masan Group shares. The target price has been raised from 91,000 VND to 98,000 VND, representing a 46% increase over the current price.
Specifically, the valuation for WinCommerce (Win), Masan's convenience store chain, remains at 26,000 billion VND. The valuation for MCH is maintained at 120,000 billion VND, with a projected EV/EBITDA multiple of 15 times for 2024, which is 15% lower than the five-year industry average to account for Vietnam's frontier market status. HSBC also maintains the current market prices (as of April 17, 2024) for Masan MEATLife (MML), Masan High-Tech Materials (MSR), and Techcombank (TCB). Unlisted subsidiaries are valued as follows: Reddi at 6,000 billion VND, Phuc Long at 3,700 billion VND, and Trusting Social at 5,970 billion VND.
Sharing a similar outlook on MCH's growth and a buy recommendation for MSN shares, Vietcap Securities Joint Stock Company (HOSE: VCI) currently values MCH at 5.7 billion USD. They believe that this listing event could positively impact MCH's stock price. Consequently, Vietcap also recommends buying MSN shares, projecting the price could reach 89,700 VND.