Are Masan Consumer shares a bargain?

Photo: Masan Consumer

On October 24, Masan Consumer released its Q3 financial statement for 2024, reporting solid results. The corporation achieved 10 per cent on-year net revenue growth in the third quarter, reaching $313.7 million, with after-tax profit up 14 per cent at $82.8 million.

This growth in revenue was largely attributed to increased demand for convenience foods and seasonings, alongside effective production cost control, which helped boost gross profit. Over the first nine months of 2024, Masan Consumer recorded $865.7 million in revenue, marking an 11.18 per cent rise on-year, while accumulated profit rose 13.79 per cent to $215.74 million. Reflecting these strong results, MCH stock prices climbed 17.2 per cent in Q3 and have surged over 200 per cent over the past year.

Masan Consumer, known for popular brands in Vietnamese households such as Chinsu, Nam Ngu, and Omachi, has developed a diverse portfolio of fast-moving consumer goods (FMCG) as part of its leadership strategy in Vietnam’s market while also pursuing international expansion.

The company operates across eight FMCG segments in Vietnam, with Kokomi, Omachi, Chinsu, Nam Ngu, and Wake-up 247 contributing around 80 per cent of its revenue, each generating between $150 million to $250 million annually. This robust product portfolio is distributed via one of the country’s most extensive networks, with around 300,000 points of sale and 2,700 sales staff under direct company control, ranking third in urban and second in rural coverage.

Having achieved a leading position in Vietnam’s food and beverage (F&B) market, Masan Consumer is advancing its “Go Global” strategy with a goal to drive 15 per cent of sales from international markets by 2027, up from the current 4 per cent.

With its scale and growth, Masan Consumer’s valuation requires a comparative lens alongside leading FMCG companies in nearby markets. Masan Consumer's compound annual growth rate (CAGR) of 11.2 per cent and a net profit compound annual growth rate (CAGR) of 15.4 per cent over 2019-2023 exceed those of other listed F&B companies in Vietnam. HSC’s recent report affirms that MCH is trading in a favourable zone when benchmarked against regional peers in terms of valuations, growth, and profitability.

Comparing some growth and valuation indicators among FMCG companies in the region

Source: CapitalIQ

Between 2017 and 2023, Masan Consumer reported average revenue growth of 13.5 per cent, nearly double the 6.4 per cent average of similar enterprises in neighbouring markets. Moreover, while regional enterprises posted an average after-tax profit margin of 11.6 per cent over this period, MCH’s profit margin reached 20.3 per cent. Despite these strengths, MCH shares currently trade at a trailing price-to-earnings (PE) ratio of 18.1x, approximately 40 per cent lower than the regional peer average of 29.1x, positioning MCH shares as attractively priced in terms of valuation and growth potential.

With a forward PE ratio of 16.6x, 40 per cent lower than the regional average of 27.7x, and a return on average equity of 45 per cent (compared to a regional average of 28 per cent), MCH is viewed as financially efficient and competitively positioned both locally and regionally.

Building sustainable competitive advantage

At its recent AGM, Masan Consumer’s board of directors announced plans to expand its FMCG model, targeting larger markets to drive revenue and sustain long-term growth. Previously, Masan Consumer introduced product lines serving diverse household needs–from the kitchen to the bathroom. The current FMCG market it serves is valued at $8 billion, while the total market size in Vietnam is estimated at $32 billion, meaning Masan Consumer’s market share is below 5 per cent. To broaden its reach, the company is venturing into the out-of-home market, beginning with self-heating hot pot and self-heating rice products under its Omachi brand.

Securities firm KBSV believes that with its experience and the support of the WinCommerce system, Masan Consumer is well-positioned to sustain growth domestically, pursuing strategies of product portfolio expansion, product premiumisation, and entry into new segments. Beyond Vietnam, the “Go Global” strategy aims to serve 8 billion global consumers, starting with the CHIN-SU line, which has seen success on major e-commerce platforms such as Amazon (US) and Coupang (South Korea), with an aim to achieve 10-20 per cent of revenue from international sales.

Masan Consumer’s competitive edge stems from its brand strength, the comprehensive Masan Group ecosystem (including the WinCommerce distribution network), and a sound financial base. MCH’s debt-to-asset ratio remains low and sustainable, showing resilience without reliance on leverage to drive growth. By the end of Q3 2024, the company’s total assets reached $1.8 billion, with cash and short-term investments at $324.6 million. High profit margins, often surpassing 40 per cent, are maintained through efficient inventory management, the WinCommerce network, product premiumisation, and export expansion.

On October 2, Masan Consumer’s board approved transferring MCH shares from the Unlisted Public Company Market to the Ho Chi Minh City Stock Exchange, anticipated for 2025. This strategic shift is expected to drive a surge in MCH stock value, with HSC rating MCH as a “buy” with a target price of $10.58 per share. At this target, the forward PE ratio for 2025 would be 22.8x, still below the regional average for companies in the same industry, underscoring MCH’s growth prospects, attractive valuation, and strong market position.

Masan Consumer shares sensory science insight at SPISE 2024 On July 27, Masan Consumer presented at SPISE 2024, sharing insights in sensory and consumer science.

Vietnam’s FMCG company wants to pay cash dividends after paying the cash dividend ratio of 268 per cent for 2023 Masan Consumer concluded a list of shareholders on September 26 that will receive additional cash dividends for 2023 of 168 per cent. The company recently announced the plan to pay 2024 dividend in cash

Masan Consumer reveals IPO roadmap On October 2, Masan Consumer (Stock code: MCH) announced Resolution of the Board of Directors approving the transfer of MCH shares from UPCoM to listing on the Ho Chi Minh City Stock Exchange (HoSE).