Dr. Nguyen Dang Quang, Chairman of Masan Group

"We have solidified our offline mini-mall concept and are ready to expand nationwide, but the next wave is to transform The CrownX into a consumer-tech platform. 2022 will be the year we digitalize our platform into an integrated system from manufacturing, logistics, and distribution all the way up to 100 million consumers. This will drive 10% operational cost efficiencies and, most importantly, combine our traditional consumer insights with AI and machine learning insights to better serve consumers' products and services they truly desire. By doing so, we envision a consumer-tech platform that accelerates our growth potential and delivers strong profits." said Chairman Dr. Nguyen Dang Quang.

FY2021 Takeaways

The CrownX ("TCX"), Masan’s integrated consumer-retail platform that consolidates WinCommerce ("WCM") and Masan Consumer Holdings ("MCH"), grew net revenue year-over-year ("YoY") by 6.9% to VND58 trillion in FY2021, despite COVID-19 adversely impacting store expansion, innovation launches, and supply chain/production operations. Net revenue was up 12.6% in 4Q2021 YoY, signaling growth momentum heading into FY2022.

WCM delivered VND30,900 billion in net revenue for FY2021, down 0.3% compared to last year, despite a reduced number of store locations after 2020’s network rationalization, starting in 2021 with 668 fewer locations than at the start of 2020.

Like-for-Like ("LFL") stores (opened before 2020) revenue/m2 was up 15.0% for minimarkets in FY2021, and down 10.6% for supermarkets in the same period.

While COVID-19 limit ed store expansions, WCM was able to open 387 net new stores in 2021, giving confidence in store expansion plans and revenue growth for 2022.

MCH’s net revenue grew YoY by 20.0% and 32.3% in FY2021 and 4Q2021, respectively, to reach VND28,764 billion and VND10,070 billion, respectively.

TCX’s EBITDA in FY2021 was VND7.8 trillion, up 73% YoY.

WCM’s EBITDA improved by VND2,334 billion to reach VND1,100 billion in FY2021, versus an EBITDA loss of VND1,234 billion in FY2020. EBITDA margin in 2H2021 was 5.5% compared to 1.3% in 1H2021. Continuous EBITDA improvement throughout FY2021 led to positive net profit after tax post minority interest ("NPAT Post-MI") in 2H2021 and gives greater confidence in FY2022’s earnings outlook.

MCH delivered VND6,845 billion in EBITDA in FY2021, a YoY growth of 19.1%.

Building on the initial success of Phuc Long Kiosks in WCM locations, Masan has since advanced its Point of Life ("POL") strategy further by developing and piloting the "CVLife" store model, a mini-mall concept which aims to provide a greater array of daily essential products and services (e.g., groceries, pharmaceuticals, financial products, and entertainment/telecommunications offerings, altogether representing 60-80% of consumers’ wallet share) under an integrated offline to online ecosystem. With pilot stores showing positive results, Masan is confident that the CVLife concept can grow sales with increased foot traffic and lower breakeven sales targets to improve profitability.

Phuc Long Investment Update: In January 2022, MSN acquired an additional 31% stake in Phuc Long, increasing its ownership to 51%. At a purchase price of USD110 million, the implied equity valuation of Phuc Long was USD355 million, representing a mid-teens price-to-earnings ratio based on preliminary FY2022 profit estimates. Since MSN’s initial investment, Phuc Long has demonstrated strong synergies with MSN’s POL strategy, which can now be accelerated with Phuc Long as a consolidated subsidiary of MSN. 

Since acquiring control of Mobicast Joint Stock Company ("Mobicast"), a startup mobile virtual network operator ("MVNO"), Masan has piloted the launch of telecommunication data plans under the brand "Reddi" at selected WCM locations with the aim of going nationwide in 2022.  Mobicast is the core connecting piece of Masan’s loyalty program, with co-branded customer acquisition schemes providing members with essentially no cost data plans as they shop across Masan’s ecosystem through cash back plans.

Customers buy MEATDeli cool meat

Masan MEATLife’s ("MML"): meat segment achieved VND4.5 trillion in net revenue in FY2021, up 88.6% compared to VND2.4 trillion in FY2020. Branded pork EBITDA margins in 2H2021 were 12%, compared to (17)% in 1H2021. Current capacity utilization of pork processing plants is 20%. At 26% utilization, the segment becomes profitable, which is expected to occur in FY2022. Positive results delivered by MML’s meat segment in FY2021 validate the spin-off of the feed business to become a truly branded consumer business.

Masan High-Tech Materials ("MHT"): In FY2021, driven by strong demand and pricing for its products, MHT delivered a record net revenue of VND13,564 billion, EBITDA of VND3,070 billion, and NPAT Post-MI of VND196 billion. MHT’s results validate its decision to acquire H.C. Starck’s global tungsten business ("HCS") and its efforts to become a mid-stream hi-tech chemicals player. 4Q2021 NPAT Post-MI was VND466 billion, reflecting positive momentum going into FY2022.  

Techcombank ("TCB"): Masan’s associated company, delivered profit before tax growth of 47% YoY to reach VND23.2 trillion in FY2021.

Consolidated net revenue totaled VND88,629 billion in FY2021

Net Revenue: Masan’s consolidated net revenue reached VND88,629 billion in FY2021, a growth of 14.8% versus VND77,218 billion in FY2020. Net revenue in 4Q2021 was VND23,828 billion, up 10.3% year on year.Excluding December 2020 feed revenue for a like-for-like [1] comparison, net revenue grew YoY by 16.6% and 17.0% in FY2021 and 4Q2021, respectively.

EBITDA: FY2021 consolidated EBITDA grew by 58.1% YoY to VND16,361 billion as EBITDA margin reached 18.5% versus 13.4% in FY2020, primarily driven by TCX increasing EBITDA by 72.9% YoY:

Masan's profitability momentum was demonstrated with EBITDA margin in 4Q2021 reaching 21.1%, 330 bps higher versus 4Q2020.

Reported NPAT Post-MI grew by 593.9% in FY2021 to VND8,563 billion, compared to VND1,234 billion in FY2020.

Balance Sheet Highlights: Net Debt to LTM (Last 12 Months) EBITDA Reached 2.2x at end of FY2021 compared to 5.2x at the end of FY2020, driven by 58.1% YoY EBITDA growth and an ending cash and cash equivalent balance of VND22.6 trillion.

At the end of FY2021, MSN’s consolidated gross debt reached VND58,178 billion, a decline of VND3,833 billion compared to the end of FY2020.

Free Cash Flow ("FCF") reached VND3,407 billion, up 75% versus VND1,943 billion last year. Cash and cash equivalent balances reached VND22,638 billion, a growth of VND14,469 billion compared to the end of FY2020.

Capital Expenditure ("Capex") in FY2021 was VND2,805 billion, 24% lower than VND3,678 billion in FY2020.

Higher Return on Assets and Equity: Due to improved profitability across Masan’s businesses, particularly The CrownX, the Company’s return on assets and equity improved by 704 bps and 3,096 bps to 8.4% and 35.1%, respectively.

With Masan's initial investment, Phuc Long has shown strong synergy with the Point of Life strategy.

Preliminary FY2022 forecast: Consolidated net revenue of VND100 trillion

On a preliminary basis, subject to change and customary corporate approvals, Masan’s FY2022 financial forecast expects consolidated net revenue to be VND100 trillion, representing a growth of 22% and 36%, compared to VND74.2 trillion (excluding feed segment revenue) in FY2021. In FY2021, revenue contribution from only consumer businesses (excluding feed and MHT) was 68%, which is expected to improve to 85% in FY2022. Core NPAT Pre-MI (excluding one-time gains/losses and the feed segment) is expected to be between VND5 trillion and VND7 trillion, representing a 32% to 84% increase over VND3.8 trillion in FY2021.

The Crown X expects to deliver net revenue within the range of VND68 trillion and VND76 trillion in FY2022, up 17% to 31% compared to FY2021.

WCM is expected to deliver net revenue within the range of VND38 to 40 trillion in FY2022, up 23% to 29% YoY driven by revenue growth in existing stores and expansion of store count. The expansion of new formats, focus on fresh products, private label, and expansion of the CVLife model will provide further growth drivers. Target aims to increase profitability through better supplier terms, lower logistics costs, and improved distribution capabilities.

MCH’s net revenue is expected to reach between VND34 and 40 trillion in FY2022, up 18 to 39% versus FY2021, driven by premiumization, growth of core categories, innovations, and expanded availability at WCM’s locations and other modern trade retailers. 

MML expects to deliver net revenue of between VND5 and 6.5 trillion, up 11 to 45% YoY (excluding feed segment), driven by expanded branded pork and chicken product portfolio and increased distribution through WCM’s locations. Profitability is expected to improve with higher utilization rates and growth in processed meat sales.

MHT expects to deliver net revenue of between VND14.5 and 15 trillion, up 7 to 11% on the back of continued improvement in tungsten market fundamentals in 2022 and strength in commodity markets in general.

TCB: Masan believes the bank will be able to deliver consistent earnings growth and has reflected this view in its preliminary forecast for FY2022. 

New Businesses:

Phuc Long: Revenue is expected to reach between VND2.5 and 3 trillion in FY2022, driven by the expansion of the network through own stores and WCM kiosks, and product portfolio expansion in the tea and coffee categories.

Mobicast/Reddi: 500K-1 million subscribers are expected in FY2022.