With favorable business prospects and ample liquidity from its investment deal with Bain Capital, Mitsubishi Materials Corporation acquired 100% of H.C. Starck Holding. As a result, Masan Group stock (MSN – HOSE) were appraised and recommended as a BUY by both domestic and international financial institutions, bolstered by dividends from Techcombank.
Abundant Liquidity and Strong Finances
On May 30, Masan High-Tech Materials, a subsidiary of Masan Group, announced the signing of a sales contract with Mitsubishi Materials Corporation. As part of this agreement, Mitsubishi Materials Corporation will acquire 100% of H.C. Starck Holding (Germany) GmbH from MHT for $134.5 million. The proceeds from this transaction are expected to help reduce MHT's debt and support Masan Group's objective of lowering its Net Debt to EBITDA ratio to ≤ 3.5x. Masan anticipates recording a one-time profit of about $40 million from this sale and expects an increase in net profit after tax by $20-30 million in the long term.
Earlier, on April 23, Masan announced the successful raising of $250 million in equity capital from Bain Capital, a leading private investment fund with approximately $180 billion in assets under management. This capital, converted at 25,356 VND, resulted in Masan receiving 6,228 billion VND (after deducting transaction fees), significantly strengthening the company's balance sheet.
Additionally, on May 2, the Board of Directors of the Techcombank (TCB) approved a decision to distribute cash dividends and bonus shares. Specifically, the last registration date to qualify for the cash dividends is May 22, 2024. The dividend rate is set at 15% per share, meaning each share will receive 1,500 VND. With a 19.9% economic interest in TCB, Masan is expected to receive over 1,000 billion VND in cash within the next six months, aiding the company in reducing financial leverage.
The positive impact of the Masan Consumer
In 2024, Masan Group projects its revenue to range between 84,000 billion VND and 90,000 billion VND, reflecting an increase of 7.3% to 15%. Profit after tax is anticipated to be between 2,250 billion VND and 4,020 billion VND, marking an increase of 31% to 115% compared to 2023. Masan's leadership has emphasized the development of Masan Consumer (MCH), the "heirloom diamond," as part of their Go Global strategy, aiming to become a culinary ambassador to 8 billion consumers worldwide with strong brands. The goal is to elevate Vietnamese brands on the global stage, with Masan Consumer targeting 10% to 20% of its revenue from international markets.
Masan Consumer has successfully developed robust brands generating annual revenues between $150 million and $250 million, accounting for 80% of total revenue growth. The company is now poised to embark on its journey as a "Vietnamese culinary ambassador" with the vision: "Every Vietnamese family, every Masan product. Every family in the world, at least one Masan product."
A prime example is CHIN-SU, a brand under Masan Consumer, which became a billion-dollar brand by enhancing its quality and positioning. CHIN-SU serves over 65% of Vietnam's fish sauce consumption. Since 2007, it has continuously improved by upgrading its flavor, packaging, and offering value-added products, positioning itself in the premium seasoning category. The initial successes of Masan's "Go Global" strategy, aiming to introduce Vietnamese cuisine to 8 billion global consumers, include CHIN-SU achieving the top position on South Korea's Coupang e-commerce platform and ranking in the top 10 on Amazon in 2023.
From 2017 to 2023, Masan Consumer grew at 2.2 times the pace of the overall market. A recent report by HSBC highlighted Masan Consumer's high profit margins, stable revenue growth, and significant outperformance compared to its peers in the FMCG and packaged food sectors in the region.
In 2023, the company set a new record by achieving a profit after tax of 7,195 billion VND, a 30% increase compared to 2022. Earnings per share (EPS) in 2023 reached 9,888 VND, a notable rise from 7,612 VND in 2022.
For 2024, Masan Consumer projects net revenue between 32,500 billion VND and 36,000 billion VND. Beyond its key products and businesses, the company is focusing on developing innovative capabilities and processes to enhance its future FMCG portfolio. With its sustained growth momentum over the years, Masan Consumer is expected to positively impact Masan's overall business performance and contribute to the appreciation of the group's MSN stock price.
Attractive Pricing for Medium and Long-Term Investments
According to the latest report from BIDV Securities (BSC), the analyst team has issued a strong buy recommendation for Masan Group stock (MSN), setting a medium-term target price of 100,000 VND per share. This represents a potential price increase of 29.5% compared to the closing price on May 30, 2024 of Masan Group share price.
The report highlights that in the first quarter, MSN's core business segment saw a revenue growth of 6% year-over-year, with an operating profit margin increase of 3.1 percentage points. From 2019 to 2023, BSC observed that MSN has developed a comprehensive ecosystem in the consumer value chain, including MCH, WCM, MML, and PHL, achieving a compound annual growth rate (CAGR) in revenue of 20% over this period.
Additionally, MSN has restructured its business segments to prioritize efficiency, reducing the number of segments while enhancing their quality. This strategy was reaffirmed by MSN'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 match Masan Consumer. Profitability will be an important metric in the next 18 to 24 months to help maximize shareholder value," the report stated.
In a recent report, Vietcap maintained an optimistic outlook on the prospects of Masan Group's (MSN) leading consumer segment, highlighting its extensive operations. Masan is expected to benefit from long-term consumption growth in Vietnam. Consequently, Vietcap increased the target for Masan Group share price to 102,800 VND and recommended a BUY rating.
“We believe that MSN's diverse consumer businesses are well positioned for Vietnam's consumption growth. We forecast an EBIT CAGR of 18% for MSN's consumer retail segment from 2023 to 2028,” the report stated. Additionally, Vietcap analysts explained their rationale for the higher valuation of MSN shares: "Our increased target price is due to a 17% valuation rise in Masan Consumer Holdings Company Limited (MCH Ltd.), mainly driven by a 9% increase in the total EBIT forecast for subsidiary Masan Consumer (UpCOM: MCH) from 2024 to 2028. We have also extended our target price outlook to mid-2025.”
In a recent update, international financial group HSBC also raised the target price for MSN shares to 98,000 VND. As of May 30, Masan Group share price were trading at 77,200 VND, suggesting a potential upside of nearly 27% based on HSBC's valuation.
HSBC believes that Masan Group's business segments currently show positive development prospects. Specifically, Masan Consumer stands out as the cornerstone of Masan Group's consumer business, maintaining high profit margins since 2018, with stable revenue growth and significantly outperforming other companies in the FMCG and packaged food sectors in Southeast Asia. Last year, Masan Consumer set a new record profit, reaching 7,195 billion VND, a 30% increase compared to 2022. This achievement led to a substantial improvement in MCH stock's EPS, rising to 9,888 VND per share from 7,612 VND per share in 2022.