Credit Suisse, HSC, Mirae Asset raise target price of MSN share to over $5.63

Thursday, Jul 08, 2021 14:14

Customers buy MEATDeli chilled pure meat at a Vinmart+ store. — Photo courtesy of Masan

In a note on July 7, Credit Suisse raised the target price for the Masan Group share, MSN, to VND137,000 (US$5.93).

Earlier, the Ho Chi Minh Securities Corporation and Mirae Asset had also hiked target prices to VND134,000 ($5.81) and VND131,000 ($5.68).

On Wednesday, MSN rose to VND116,000 ($5.02).

The expected 2021 financial performance of VinCommerce (VCM) and the growth potential of the offline-to-online platform are said to be reasons for analysts to increase MSN's short-term target price.

On July 1, Masan Group announced the acquisition of The CrownX stakes from minority shareholders, increasing its direct and indirect ownership in it from 80.2 per cent to 84.9 per cent.

With The CrownX valued at around $7.3 billion, the transaction was estimated to be worth $343 million.

The Masan management believes this transaction has made optimal use of the company's cash because of its trust in the growth and profit trajectory of The CrownX.

Danny Le, chief executive officer of Masan Group, said: “We will hit a key milestone this year with VinCommerce becoming profitable. We are turning our focus on expansion to build the nation’s number one network while keeping our profit momentum intact. This turnaround gives us confidence to invest big to accelerate our offline-to-online strategy.”

Masan expects VCM’s profits to continue growing after it achieved breakeven earnings before interest and tax (EBIT) in June.

"The management has a path to deliver positive EBIT in the second half of 2021,” Le said.

By opening 300-500 VinMart+ minimarts by year end, Masan is aiming to expand the VCM store network back to 3,000, the number when Masan acquired it.

The new stores are projected to deliver breakeven EBITDA in six to 12 months due to a revamped and more efficient supply chain model, total commercial margin uplift and a winning assortment to drive consumer traffic.

Customers line at a Phuc Long kiosk at a VinMart+ store. — Photo courtesy of Masan

Besides, the store-in-store Phuc Long Kiosk has and will drive traffic and profitability for Vinmart+. By the end of June, around 50 VinMart+ stores have set up Phuc Long kiosks. They expected to generate VND5 million ($216.6) additional sales per day in which VCM has a 20 per cent revenue sharing arrangement.

VCM has a target of opening 1,100 Phuc Long kiosks across Vinmart+ locations by year-end.

The additional revenue per day is expected to enhance EBITDA margins by 4 per cent for each Vinmart+ store with one of them.

Masan's offline-to-online retail platform has also attracted a lot of investment from foreign investors.

In May 2021, a consortium led by Alibaba Group and Baring Private Equity Asia paid $400 million to acquire a 5.5 per cent stake in The CrownX.

Under the deal, VCM will be the grocery retailer of choice on Lazada in Viet Nam, Alibaba’s Southeast Asian e-commerce platform.

Vietnamese consumers will thus be served goods that meet ‘the very best of fresh standards" whether they shop online or at supermarkets/stores.

In April, Masan Group announced that South Korea’s SK Group acquired a 16.26 per cent stake in VCM for a cash consideration of $410 million. The transaction values VinCommerce at $2.5 billion.

The management plans to raise a further $300-400 million at The CrownX in the latter half of the year. — VNS

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