Masan Group (HSX: MSN) and its subsidiary, The CrownX (TCX) today (July 1) announced the acquisition of TCX shares from minority shareholders, increasing its direct and indirect stakes in TCX from 80.2 to 84.9 per cent.
|Danny Le, CEO of Masan Group announcing the group's increased interest in The CrownX |
Masan Group’s management believes the transaction is an optimal use of the company’s cash and believes in the growth and profit trajectory of The CrownX.
“We will hit a key milestone this year with VinCommerce becoming profitable. We are turning our focus on expansion to build the nation’s No.1 network while keeping our profit momentum intact. This turnaround gives us confidence to invest big to accelerate our offline-to-online strategy. We believe The CrownX is undervalued based on its expected 2021 financial performance and its current valuation does not price in the upside of our off-to-online platform,” said Danny Le, CEO of Masan Group.
Turning profit: based on achieving break-even earnings before interest and taxes (EBIT) for the month of June, management sees a path to deliver positive EBIT in 2H2021 which is inclusive of headquarter costs.
Expanding store network back to 3,000+: like-for-like growth posted in 1H2021 to be supplemented by opening 300-500 VinMart+ minimarts by year-end. New stores projected to deliver break-even EBITDA in 6-12 months due to a revamped and more efficient supply chain model, total commercial margin uplift, and a winning assortment to drive consumer traffic.
Phuc Long Kiosk, store-in-store, driving traffic and profitability for VinMart+: 50 pilot stores to be operational by the end of June 2021, expected to generate VND5 million ($220) additional sales per day in which VinCommerce has a 20 per cent revenue sharing arrangement. Management forecasts 1,100 kiosks will be operational across VinaMart+ locations by year-end. The additional VND1 million ($45) revenue per day (20 per cent of VND5 millionper day per kiosk) is expected to enhance EBITDA margins by 4 per cent for each VinMart+ store that has a Phuc Long Kiosk.
Online Channel: Management expects to ramp-up online partnership with Lazada to drive grocery as a daily online use case. The initial pilot of four-hour express delivery from 14 VinMart supermarkets in Ho Chi Minh City and Hanoi with a winning portfolio of 2,000 pre-selected stock keeping units, where fresh products acts as a differentiator, has delivered strong initial results.
Masan Consumer Holdings
Outperforming the fast-moving consumer goods market (FMCG): posted double-digit top and bottom-line growth in 1H2021, despite overall FMCG market de-growing in 1H2021.
Innovations driving the way: growth continues to be driven by innovations launched over the past eight quarters and management preparing for big innovations as the FMCG market recovers in the back half of the year.
Alibaba Group and Baring Private Equity Asia did not sell its shares as a part of the transaction of TCX shares. Management still plans to raise an additional $300-400 million at The CrownX in 2H2021. Further details will be made available as part of Masan Group’s second-quarter earnings release, scheduled for July 30, 2021.