Masan Group: VinMart + franchise since 2021, paying 1 billion USD in cash to buy 15% CrownX

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On the morning of June 30, Masan Group (Masan Group, HoSE: MSN) and its two member companies, Masan Consumer (UPCoM: MCH) and Masan MEATLife (UPCoM: MML)) organized the Annual General Meeting of Shareholders with the owner “Our Journey is The Consumer’s Journey – The Way we Go”. The highlight is to build a strategy, the road called CrownX.

According to the financial report from the end of 2019 and previous analyst meetings, Masan Group will hold 70% and issue options for VCM sellers holding a total of 30% in CrownX. The sellers here include Vingroup (64.3%) and other investors 19.44%.

To build an integrated retail platform, Masan Group established The CrownX (CrownX) to take advantage of being the leading branded manufacturers and retailers of both companies. The Crown owns 83.74% of VCM – the company owns VinMart, VinMart + and VinEco systems and 85.71% of the stake in Masan Consumer Holdings (MCH) – the company that manages the entire business segment. Masan Consumer consumer goods.

The Board of Directors of Masan Group passed a resolution to buy an additional 15% of the shares of The CrownX. Transactions under consideration to be carried out in cash with a value of up to USD 1 billion are expected to be completed in the second and third quarters.

General Director Danny Le shared that if he wants to dominate the retail industry, he must build the right combination model. VinCommerce with the strength of necessity portfolio, expertise in retail operation, scale will integrate with MCH to accelerate modernization of traditional retail channels along with leading service brands.

The Group will implement an innovation strategy with the goal for CrownX by 2025 to serve 35-50 million customers, the number of reaching 10,000 stores and 20,000 franchise stores in a good scenario. Currently CrownX has more than 3,000 stores and serves 9 million consumers.

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When combined with VinComerce from 2020 onwards, the Group will consolidate its strengths to exploit the potential market of US $ 100 billion and the expected revenue of Masan Group to 2025 is about US $ 5-10 billion.

The main strategic priorities of The CrownX are developing store and supply chain network, forming Vietnam’s leading consumer goods business model, developing exclusive product portfolio (up to 40%) with strategic partners and suppliers, owning household spending data

Regarding Masan Group, the revenue plan ranges from VND 75,000 to VND 85,000 billion, nearly double the level in 2019. Profit after tax allocated to shareholders is from VND 1,000 to 3,000 billion, down at least 46%.

The revenue plan increases while the drop in profit might come from the combination of VinMart, VinMart +, which has high revenue but still has a loss.

According to the plan, Masan Group expects VCM to achieve more than VND 42,000 billion in revenue this year, an increase of 64% compared to 2019. Expectations of EBITDA of VinMart and VinMart + systems by the end of 2020 will decrease to -3%, even Official breakeven.

Last year, Masan Group recorded a profit after tax for shareholders of nearly 5,558 billion, up 13%. Accordingly, the enterprise expects to pay dividends in cash in 2019 at a rate of 10%.

In addition, Masan Goup also plans to increase capital from a private offering and issue ESOP. Specifically, the group plans to offer a maximum of 9.99% of total outstanding shares (based on the current charter capital of nearly 117 million new shares) to no more than 5 institutional investors and not a subsidiary; is not a company but shares a parent company with the Company.

ESOP issuance plan is expected to be implemented in 2020 or before May 2021. The maximum number of issued shares is 0.5% of total outstanding shares (equivalent to more than 5.8 million shares). Expected price is 10,000 dong / share.

The Group recently decided to appoint Mr. Danny Le to hold the position of General Director for a 5-year term from June 19. The position of CEO of Masan Group has been concurrently held by Mr. Nguyen Dang Quang for many years.

Discussion

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Mr. Truong Cong Thang said he will franchise Vinmart + from 2021. Photo: MSN

Masan Group

How does the BOD see the impact of VCM consolidation?

General Director Danny Le: We realize that the consolidation has a positive impact on MSN shares. Major shareholders also support this deal, which is not a short-term investment but an investment for future growth

Why do stock prices fall?

Mr. Danny Le: We do not trade stocks every day and look at the long term. Falling stock prices are also affected by short-term epidemics outside the world. The CrownX has a 10-year vision and when it proves valuable, MSN’s stock price may go up.

In order to increase the stock price, we have to depend on upcoming strategies, in the short term we cannot predict. We will have the technology platform for development. Investing in technology that caters to consumers can be rewarded in the long run.

Is the company planning to IPO The CrownX?

Masan Consumer Chairman Truong Cong Thang: In the coming time, the shareholders will decide, there is currently no plan.

The CrownX’s profit target for 2025?

Mr. Truong Cong Thang: The company aims to profit margin of 12-15% of revenue, this is also a relatively high proportion compared to the average of 4-5%.

Why was the number of people shopping in Covid-19 but VCM still lost?

Mr. Danny Le: Last year the EBITDA margin was negative 10% now minus 4-5%. In the fourth quarter of last year, the company opened many new stores, so it took time to attract customers. Particularly, Hanoi market actually broke even. And the South still has good growth stores. We firmly can break even for VinMart this year, then there will be growth.

Does CrownX plan to sell more to shareholders? Purchase of additional shares of CrownX

Mr. Danny Le: Masan will always take control of this company. When looking for partners, we will select partners with certain background and achievements in the retail segment.

MSN has passed a resolution of the Board to buy an additional 15% stake, which is expected to be completed in the third quarter

Does Masan Group consider changing VinMart’s name? What is the competitive strategy?

Mr. Truong Cong Thang: We believe that innovation is always the driving force of growth, every day. In the retail market, there are many trends to develop. VinMart is also not out of the way of Masan Group is to change and find ways to develop to serve customers.

Does Masan Group have an M&A plan?

Mr. Danny Le: Masan Group will have its own development strategy and some M&A for further expansion. The answer is that there will be M&A in the future.

Masan Consumer

In 2020, Masan Consumer targets revenue growth of over 15% and profit growth at double digits. The company also focuses on resonating with the personal and family care platform of newly acquired NET Detergent.

According to Mr. Truong Cong Thang, exclusive products are the key in establishing a list of goods. Looking abroad, this strategy has been successful when collaborating on innovation with suppliers, not on production orders.

A clear future for The CrownX, such as digitization, enables consumers to participate in the home-based points system through each of Masan’s products in kitchens, rather than accumulating points at Selling point as at present. In 2021, VinMart + will start a franchise model on a large scale, aiming at 30-50 million direct interactions with Vietnamese consumers daily.

Does the company intend to develop the beauty care business?

Chairman Truong Cong Thang: We will do it but do not act like other companies but go to markets with great needs of Vietnamese people only. We will do it our way.

How much is VCM turnover in MCH?

Mr. Truong Cong Thang: Currently VCM contributes 1% of MCH sales. The fundamental problem is that operations are not sales.

Masan MEATLife

In the meat and livestock industry, Masan MEATLife aims to contribute 20% of total revenue to the consolidated net revenue and build a platform of processed meat products to create added value. Animal feed is expected to grow at a moderate pace and has the potential to increase sharply if the re-herd is accelerated to meet domestic consumption demand.

Masan MEATLife General Manager shared the integration of MEAT Deli and retailer Vinmart, which helped double the volume at a number of selling points. The upcoming work will bring the product to all processing points, followed by diversifying the product portfolio. Mr. Lam is considering expanding the product besides pork, beef, chicken, etc but in the way of MEAT Deli’s cool meat product.

In the second half of this year, MML will have a new processing factory in Long An come into operation, helping to increase the production of Meadeli cool meat and more favorable in serving southern consumers.

Meat output of Masan MEATLife?

General Director Pham Trung Lam: Other cool meats and hams can now meet consumer demand, the output of the months has grown well. After 10 years, the share of meat lost from China increased from 0% to 35-40%, I believe Vietnam market can achieve this.

How much does Anco output account for in overall company output? Food strategy?

Mr. Pham Trung Lam: Anco currently accounts for 30% and 70% from Proconco. The main strategies are to link farms, maintain the current dealer network, focus on the development of poultry feed and accompany the fish farm system.

MML gross profit margin?

Mr. Pham Trung Lam: Currently reaching 32-35% for both cool and processed meats. The animal feed business with these 4 strategies can help us achieve our annual plan in a feasible manner.

The congress of all 3 companies approved all reports.

Source: ndh.vn