Masan Group Corporation owns many popular brands. MSN has decided to distribute more than VND1.1 trillion (over US$47.7 million) worth of profits in advance as dividends to shareholders for this year. — Photo courtesy of the company

Based on its excellent results for the first half of 2021, Masan Group Corporation has decided to distribute more than VND 1.1 trillion (over US$47.7 million) worth of profits in advance as dividends to shareholders for this year.

On May 31 it had announced it would make advance payment of the 2021 dividend at a rate of 10 per cent as approved by shareholders at the annual general meeting.

It will first pay 9.5 per cent with the record date and payment date decided by the board of directors based on cash flows and business plans.

The decision to advance dividend payment was made earlier this year. The company decided not to pay dividends for 2020 to focus resources on the consumer-retail segment, including accelerating building the Point of Life foundation to serve consumers’ everyday needs, both offline or online.

Masan Group paid dividends of 10 per cent in 2019 and 30 per cent in 2016, including 11 per cent in cash and 19 per cent in stock.

The company currently has a charter capital of more than VND11.746 trillion ($509.26 million), equivalent to more than 1.17 billion outstanding shares. Each share will get VND950 in dividends, meaning the company will distribute a total of VND 1.1 trillion for the first advance dividend payment.

Recently Masan Group announced stake sales worth more than $810 million.

It included the sale of a 16.26 per cent stake in VinCommerce to SK Group (South Korea) for a total cash value of $410 million.

A consortium of investors, including Alibaba Group, bought a 5.5 per cent stake in The CrownX, Masan’s integrated consumer retail arm that consolidates its interests in Masan Consumer Holdings (MCH) and VinCommerce (VCM), for a cash consideration of $400 million.

The transaction implied a valuation of $6.9 billion for The CrownX.

The company also revealed that another transaction worth $300-400 million is in the works and is expected to be completed this year.

Thus an estimated more than $1 billion will flow into Masan this year, ensuring its cash flows are abundant.

This could be the basis for Masan advancing the dividend payment to compensate for 2020 when shareholders did not get dividends.

The money flowing in from these transactions will also generally help improve its financial health.

At the end of last year its consolidated net debts were 4.6 times its earnings before interest, taxes, depreciation, and amortization (EBITDA) (excluding the consolidation of VinCommerce).

Masan seeks to bring this ratio down to 2.5-3 this year by reducing the debts of its subsidiaries and improving EBITDA across all business segments.

In the first quarter of the year revenues grew by 13.3 per cent to VND19.977 trillion ($869.09 million).

Revenues were up 18.8 per cent at Masan Consumer, 38.5 per cent at MEATLife and 178.2 per cent at Masan High-Tech Materials, making up for a decline in revenues at VinCommerce (VCM) due to the closure of 700 stores to improve profitability.

Masan’s EBITDA margin was 15.7 per cent in Q1, 2021, compared to 11 per cent in Q1, 2020.

It improved to 1.8 per cent at VinCommerce, while remaining steady at Masan Consumer Holdings and Masan MEATLife. Masan High-Tech Materials saw lower EBIDTA as a result of the consolidation of H.C. Starck (HCS) and the lag effect of the recent price recovery which is expected to be realised in the following quarters.

On the stock market, the strategy of integrating VinCommerce with Masan's current business segments and, especially, information about M&A transactions with SK Group and Alibaba Group attracted particular interest in the MSN stock.

The average daily liquidity of the stock in the last two months exceeded two million shares.

Its price is currently hovering at around VND106,000, up 30 per cent since the beginning of the year.

But in an updated note, Viet Capital Securities Company has rerated the stock and set a fair value of VND142,000 for it.

This is based on the expectations of VinCommerce improving its profitability thanks to VCM’s plans to cooperate with Phuc Long to open around 1,000 kiosks this year and increase its online sales through the proposed cooperation with Lazada as part of the deal between MSN and Alibaba Group.

MSN's valuation is also boosted by the cash flows from the transactions with SK Group and Alibaba Group, which will bring in around $650 million this year, and a 20 contribution from Techcombank, whose market capitalisation has increased by 60 per cent this year thanks to its positive business outlook. — VNS