18 April 2024

Equities
Masan Group (MSN VN) Food Products

Buy: Potential Masan Consumer IPO, capital recycling Vietnam

◆ News articles and AGM documents suggest Masan Group is MAINTAIN BUY
exploring a listing of subsidiary Masan Consumer
◆ TARGET PRICE (VND) PREVIOUS TARGET (VND)
In this note, we examine these assets more closely and look
at how this could impact the capital structure of the group 98000.00 91000.00
◆ We increase TP from VND91k to VND98k after updating for SHARE PRICE (VND) UPSIDE/DOWNSIDE

the higher valuation at its Techcombank holding; keep Buy 66800.00 +46.7%
(as of 17 Apr 2024)

Masan Consumer may consider listing: According to Bloomberg News (17th April MARKET DATA
2024) and recently-released AGM documents, Masan Group’s subsidiary Masan Market cap (VNDb) 95,580 Free float 38%
Market cap (USDm) 3,762 BBG MSN VN
Consumer Corporation (MCH VN, Not Rated, VND138,900) is exploring a USD1.0-1.5bn 3m ADTV (USDm) 13 RIC [Link]
listing by early 2025. MCH currently has a listing on the UPCOM (Unlisted Public
Company Market), but this listing is illiquid (ADTV: USD0.2m) and a transfer to the FINANCIALS AND RATIOS (VND)
Year to 12/2023a 12/2024e 12/2025e 12/2026e
mainboard HOSE exchange would likely create a more liquid entity. In our view, these HSBC EPS 294 1,856 3,479 4,523
plans could have been prompted by the recent rally in MCH, with its market cap of HSBC EPS (prev) 294 1,856 3,479 4,523
Change (%) 0.0 0.0 0.0 0.0
USD4bn now above Masan’s own market cap of USD3.8bn. MCH’s 2023 EBITDA is 9% Consensus EPS 740 1,439 2,584 3,772
above the EBITDA of Masan’s FMCG division, as it excludes losses from its beer JV PE (x) 227.5 36.0 19.2 14.8
Dividend yield (%) 0.3 1.2 2.2 2.9
with Singha (unlisted) and processed meat JV with Jinju (unlisted). MCH has a strong EV/EBITDA (x) 20.6 14.9 10.1 8.2
ROE (%) 1.6 9.6 16.1 17.7
track record of high margins and consistent earnings growth, significantly ahead of its
FMCG and packaged food peers in the region (see figure 3 and 4). MCH’s five-year 52-WEEK PRICE (VND)
revenue and EPS CAGR was 10.7% and 15.4% respectively. 110000

Impact on capital recycling plans. Masan’s management initially targeted an IPO 81000
at The Crown X in 2024 or 2025 (Reuters, 24th April 2023). If the Masan Consumer
52000
listing is successful, we think that this could push back the timeline for a Crown X 04/23 10/23 04/24
Target price: 98000
IPO. Recall that the Crown X not only owns Masan Consumer but also a stake in its High: 89200 Low: 57800 Current: 66800

retail assets WinCommerce. This is an early-stage business with high capex needs to Source: Refinitiv IBES, HSBC estimates

open new stores and is just at the verge of breakeven in its net profits. As such, its
fair valuation would be very sensitive to future assumptions of steady-state margins. Shuo Han Tan*, CFA
Analyst, ASEAN Consumer and Internet
Hence, management could feel that monetising Masan Consumer, which already has The Hongkong and Shanghai Banking Corporation
very strong margins today, could be an easier sell to the market than WinCommerce. Limited, Singapore Branch
[Link]@[Link]
+65 6658 0624
Retain Buy with a new TP of VND 98k (from VND91k). While the average interest
rate of its VND debt (which represents two-thirds of total debt) is falling, the cost on
* Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is
its USD debt has risen after it hedged out its FX exposure. Hence, Masan’s interest not registered/ qualified pursuant to FINRA regulations
costs are likely to fall only gradually this year. After the pay-down in debt from the
Bain Capital investment (effective April), further deleveraging depends on selling a
stake at Masan High-Tech Materials (MSR VN, Not Rated, VND13,700, market cap
of USD0.6bn). Recall that Masan’s current gross debt is USD2.7bn, so a successful
listing of MCH plus a sell-down at MSR could help the company more than half its Institutional Investor Survey 2024
current leverage. As WinCommerce’s EBITDA margins rise, it is reaching free cash 2 – 26 April
flow neutral and will have lower cash needs going forward. So broadly, we think
Click to vote
financial pressure on the group is easing. Refer to page 5 for full valuation & risks.

Disclosures & Disclaimer Issuer of report: The Hongkong and Shanghai

Banking Corporation Limited, Singapore Branch
This report must be read with the disclosures and the analyst certifications in
the Disclosure appendix, and with the Disclaimer, which forms part of it. View HSBC Global Research at:
MCI (P) 061/09/2023 MCI (P) 073/10/2023 MCI (P) 007/10/2023 MCI (P) 008/01/2024 [Link]
 Equities ● Food Products
18 April 2024

Financials & valuation: Masan Group Buy

Financial statements Key forecast drivers

Year to 12/2023a 12/2024e 12/2025e 12/2026e Year to 12/2023a 12/2024e 12/2025e 12/2026e
Profit & loss summary (VNDb) Masan Consumer revenue growth 3 15 15 15
Revenue 78,252 87,103 100,633 116,619 Consumer Retail revenue growth 2 10 20 20
EBITDA 6,474 9,933 14,859 18,466 Masan MeatLife revenue growth 46 10 20 20
Depreciation & amortisation -4,124 -5,226 -6,038 -6,997 Masan Resources revenue growth -9 0 0 0
Operating profit/EBIT 2,350 4,707 8,821 11,469
Net interest -5,724 -4,000 -2,000 -2,000
PBT 2,563 4,707 8,821 11,469
HSBC PBT 2,563 4,707 8,821 11,469
Taxation -693 -941 -1,764 -2,294 Valuation data
Net profit 419 2,636 4,940 6,423 Year to 12/2023a 12/2024e 12/2025e 12/2026e
HSBC net profit 419 2,636 4,940 6,423 EV/sales 1.7 1.7 1.5 1.3
Cash flow summary (VNDb) EV/EBITDA 20.6 14.9 10.1 8.2
Cash flow from operations 500 5,133 7,063 10,097 EV/IC 2.1 1.8 1.7 1.6
Capex -2,211 -5,000 -5,000 -5,000 PE* 227.5 36.0 19.2 14.8
Cash flow from investment -7,824 -7,999 -7,999 -7,999 PB 3.6 3.4 2.9 2.4
Dividends -244 -1,130 -2,117 -2,753 FCF yield (%) -1.8 0.1 2.2 5.3
Change in net debt 2,308 3,995 3,052 654 Dividend yield (%) 0.3 1.2 2.2 2.9
FCF equity -1,711 133 2,063 5,097 * Based on HSBC EPS (diluted)
Balance sheet summary (VNDb)
Intangible fixed assets 16,479 19,070 19,070 19,070
Tangible fixed assets 53,921 58,635 63,830 67,537 ESG metrics
Current assets 43,763 35,651 36,574 40,764 Environmental Indicators 12/2023a Governance Indicators 12/2023a
Cash & others 10,125 6,130 3,077 2,423 GHG emission intensity* n/a No. of board members 6
Total assets 147,383 133,713 139,831 147,728
Energy intensity* n/a Average board tenure (years) n/a
Operating liabilities 39,574 26,855 28,034 29,508
CO2 reduction policy Yes Female board members (%) 16.7
Gross debt 69,572 69,572 69,572 69,572
Social Indicators 12/2023a Board members independence (%) 33.3
Net debt 59,448 63,443 66,495 67,149
Shareholders' funds 26,560 28,192 33,131 39,554 Employee costs as % of revenues n/a
Invested capital 64,465 80,371 88,363 95,439 Employee turnover (%) n/a
Diversity policy Yes
Source: Company data, HSBC
Ratio, growth and per share analysis * GHG intensity and energy intensity are measured in kg and kWh respectively against revenue in USD ‘000s
Year to 12/2023a 12/2024e 12/2025e 12/2026e
Y-o-y % change
Issuer information
Revenue 2.7 11.3 15.5 15.9
EBITDA -32.8 53.4 49.6 24.3 Share price (VND) 66800.00 Free float 38%
Operating profit -55.0 100.3 87.4 30.0 Target price (VND) 98000.00 Sector Food Products
PBT -50.2 83.7 87.4 30.0 RIC (Equity) [Link] Country/Region Vietnam
HSBC EPS -88.3 532.2 87.4 30.0 Bloomberg (Equity) MSN VN Analyst Shuo Han Tan, CFA
Ratios (%) Market cap (USDm) 3,762 Contact +65 6658 0624
Revenue/IC (x) 1.2 1.2 1.2 1.3
ROIC 2.7 5.2 8.4 10.0
ROE 1.6 9.6 16.1 17.7 Price relative
ROA 5.4 6.1 7.5 8.6
EBITDA margin 8.3 11.4 14.8 15.8
Operating profit margin 3.0 5.4 8.8 9.8 146000 146000
EBITDA/net interest (x) 1.1 2.5 7.4 9.2
Net debt/equity 155.5 170.2 157.5 138.0 126000 126000
Net debt/EBITDA (x) 9.2 6.4 4.5 3.6 106000 106000
CF from operations/net debt 0.8 8.1 10.6 15.0
Per share data (VND) 86000 86000

EPS Rep (diluted) 294 1,856 3,479 4,523 66000 66000

HSBC EPS (diluted) 294 1,856 3,479 4,523
46000 46000
DPS 171 796 1,491 1,938
2022 2023 2024
Book value 18,625 19,853 23,332 27,855
Masan Group Rel to HANG SENG INDEX

Source: HSBC
Note: Priced at close of 17 Apr 2024

2
 Figure 1: Group Structure
Masan Group
(MSN VN)

100% 94.9% 20.0% 86.4%

12.3%
25.1%
T he Sherpa trustingsocial Masan MEATLife (MML VN) Techcombank (TCB VN) Masan High-tech Materials (MSR VN)

85.0% 51.0% 100%

72.7% Phúc Long
3F VIET H.C. Starck
70.0%
The CrownX Wintel (Reddi)

85.7% 84.3%

Masan Consumer Holdings WinCommerce

66.7% 75.0% 93.7%

Masan Brewery Masan Jinju Masan Consumer Corporation

(MCH VN)

98.8% 89.5% 52.3%

Vinacafe Vinh Hao (Mineral Water) Net Detergent

Source: Company

Equities ● Food Products

18 April 2024
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 Equities ● Food Products
18 April 2024

Figure 2: Masan Consumer’s historical financials

30,000

25,000

20,000

15,000

10,000

5,000

-
FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY20 FY21 FY22 FY23
Revenue (VNDbn) Net profit (VNDbn)
Source: Company

Figure 3: Masan Consumer’s EPS growth vs peers

20% 15.4%
13.2%
15%
10% 5.8%
5% 0.0%
0%
-5%
-10% -6.4%
-15% -12.0%
Masan Mayora Indah Universal Nestle Vinamilk (VNM Unilever
Consumer (MYOR IJ) Robina (URC Malaysia VN) Indonesia
(MCH VN) PM) (NESZ MK) (UNVR IJ)
EPS CAGR last 5y
Source: Company

Figure 4: Masan Consumer’s profitability vs peers

30%
24.5%
25% 20.4% 19.7%
20%
14.2%
15% 11.1% 10.4%
10%
5%
0%
Masan Vinamilk (VNM Unilever Nestle Universal Mayora Indah
Consumer VN) Indonesia Malaysia Robina (URC (MYOR IJ)
(MCH VN) (UNVR IJ) (NESZ MK) PM)
OPM last 5y average
Source: Company Vinamilk (VMN, VND64,200, Buy), Unilever Indonesia (UNVR IJ, IDR2,390, Not rated), Nestle Malaysia (NESZ MK, MYR123, Not rated), Universal Robina
(URC PM, PHP93.00, Hold), Mayora Indah (MYOR IJ, IDR2,360, Buy)

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 Equities ● Food Products
18 April 2024

Valuation & risks:

We raise our TP from VND91,000 to VND98,000 as we update the market values of listed
companies. This implies an upside of c47% from the current level and therefore we reiterate our
Buy rating on the stock.
◆ Our value for WinCommerce remains at VND26tn. We use an unchanged 20x FY24e
EV/EBITDA multiple, pegged to the five-year historical multiple average of its ASEAN
convenience store peers. We choose 2024 as the base year to reflect normalised EBITDA
margins. Given its early stage of growth, our fair value here remains very sensitive to future
margin estimates.
◆ Our fair value of Masan Consumer remains at VND120tn. We continue to use 15x FY24e
EV/EBITDA multiple, a 15% discount to the five-year historical multiple average of its Asian
food sauce peers to reflect Vietnam’s frontier market status.
◆ We continue to use MeatLife (MML VN, CMP VND28,500, Not Rated), Masan Materials
MSR VN, CMP VND18,500, Not Rated), and Techcombank’s (TCB VN, CMP VND33,400,
Not Rated) current market prices (as of 17 Apr 2024) as fair value.
◆ We value Reddi (unlisted) at VND6tn, using a 5x 2025e EV/Sales multiple, the midpoint of
Asian telecommunications multiple (3x EV/Sales) and our payment sector multiple (7x
EV/Sales). We use 2025 as the base year to reflect its early development stage, then
discount the value back at a 10% cost of equity (a risk-free rate of 3.5%, an equity premium
of 6.5%, and an equity beta of 1.0).
◆ We keep our valuation for Phuc Long at VND3.7tn, using an unchanged 2x FY24e
EV/Sales multiple, the five-year historical multiples of food retail peer Jollibee (JFC PM,
PHP228.80, Not Rated). We use a sales multiple as the business is still scaling up hence its
net margins are extremely volatile.
◆ We include Trusting Social (unlisted) at its last-raise valuation of USD260m, or
VND5,970bn (unchanged).
◆ We subtract parent-level net debt (as subsidiary-level debt has been accounted for at each
subsidiary’s equity value) and then apply a 0% conglomerate discount to the SOTP value to
reflect synergies across its ecosystem.

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 Equities ● Food Products
18 April 2024

SOTP valuation
Method Valuation (VND bn) % Masan Value to Masan % of SOTP
Ownership (VND bn)
WinCommerce 20x 2024e 26,448 68% 18,011 11.1%
EV/EBITDA
Masan Consumer 15x 2024e 120,333 70% 83,872 51.7%
EV/EBITDA
MEATLife Market price 8,840 88% 7,771 4.8%
Masan Materials Market price 15,058 86% 13,010 8.0%
Techcombank Market price 157,985 20% 31,597 19.5%
Reddi 5x 2025e EV/sales 6,388 70% 4,472 2.8%
(discounted at 10%)
Phuc Long 2x 2024e EV/sales 3,684 51% 1,879 1.2%
Trusting Social Last raise 5,970 25% 1,493 0.9%
Parent net debt Balance Sheet (23,300) 100% (23,300)

SOTP (VNDbn) 138,804

% parent co discount 0%
Fair value (VNDbn) 138,804
No. of shares (bn) 1.42
Fair value per share 98,000
(VND)
Source: HSBC estimates

SOTP breakdown
Phuc Long Trusting Social
Reddi 1% 1%
3%
WinCommerce
11%
Techcombank
19%

Masan Materials
8%

MEATLife
5% Masan Consumer
52%

Source: HSBC estimates

Key downside risks:

◆ Slower improvement in profit margins than expected owing to store opening costs
◆ Inability to service or pay down debt if profit recovery is slower than expected
◆ Profit volatility at banking and commodities divisions could negatively impact profits
◆ Rising commodity input costs could pressure margins
◆ Failure to integrate new acquisitions may result in higher-than-expected costs

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 Equities ● Food Products
18 April 2024

Disclosure appendix
Analyst Certification
The following analyst(s), economist(s), or strategist(s) who is(are) primarily responsible for this report, including any analyst(s)
whose name(s) appear(s) as author of an individual section or sections of the report and any analyst(s) named as the covering
analyst(s) of a subsidiary company in a sum-of-the-parts valuation certifies(y) that the opinion(s) on the subject security(ies) or
issuer(s), any views or forecasts expressed in the section(s) of which such individual(s) is(are) named as author(s), and any other
views or forecasts expressed herein, including any views expressed on the back page of the research report, accurately reflect
their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific
recommendation(s) or views contained in this research report: Shuo Han Tan, CFA

Important disclosures
Equities: Stock ratings and basis for financial analysis
HSBC and its affiliates, including the issuer of this report (“HSBC”) believes an investor's decision to buy or sell a stock should
depend on individual circumstances such as the investor's existing holdings, risk tolerance and other considerations and that
investors utilise various disciplines and investment horizons when making investment decisions. Ratings should not be used or
relied on in isolation as investment advice. Different securities firms use a variety of ratings terms as well as different rating
systems to describe their recommendations and therefore investors should carefully read the definitions of the ratings used in
each research report. Further, investors should carefully read the entire research report and not infer its contents from the rating
because research reports contain more complete information concerning the analysts' views and the basis for the rating.

From 23rd March 2015 HSBC has assigned ratings on the following basis:
The target price is based on the analyst’s assessment of the stock’s actual current value, although we expect it to take six to 12
months for the market price to reflect this. When the target price is more than 20% above the current share price, the stock will
be classified as a Buy; when it is between 5% and 20% above the current share price, the stock may be classified as a Buy or a
Hold; when it is between 5% below and 5% above the current share price, the stock will be classified as a Hold; when it is between
5% and 20% below the current share price, the stock may be classified as a Hold or a Reduce; and when it is more than 20%
below the current share price, the stock will be classified as a Reduce.

Our ratings are re-calibrated against these bands at the time of any 'material change' (initiation or resumption of coverage, change
in target price or estimates).

Upside/Downside is the percentage difference between the target price and the share price.

Prior to this date, HSBC’s rating structure was applied on the following basis:
For each stock we set a required rate of return calculated from the cost of equity for that stock’s domestic or, as appropriate,
regional market established by our strategy team. The target price for a stock represented the value the analyst expected the
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forecast dividend yield when indicated, had to exceed the required return by at least 5 percentage points over the succeeding 12
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expected to underperform its required return by at least 5 percentage points over the succeeding 12 months (or 10 percentage
points for a stock classified as Volatile*). Stocks between these bands were classified as Neutral.

*A stock was classified as volatile if its historical volatility had exceeded 40%, if the stock had been listed for less than 12 months
(unless it was in an industry or sector where volatility is low) or if the analyst expected significant volatility. However, stocks which
we did not consider volatile may in fact also have behaved in such a way. Historical volatility was defined as the past month's
average of the daily 365-day moving average volatilities. In order to avoid misleadingly frequent changes in rating, however,
volatility had to move 2.5 percentage points past the 40% benchmark in either direction for a stock's status to change.

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 Equities ● Food Products
18 April 2024

Rating distribution for long-term investment opportunities

As of 31 March 2024, the distribution of all independent ratings published by HSBC is as follows:
Buy 55% (12% of these provided with Investment Banking Services in the past 12 months)
Hold 38% (15% of these provided with Investment Banking Services in the past 12 months)
Sell 7% (10% of these provided with Investment Banking Services in the past 12 months)
For the purposes of the distribution above the following mapping structure is used during the transition from the previous to current rating
models: under our previous model, Overweight = Buy, Neutral = Hold and Underweight = Sell; under our current model Buy = Buy, Hold
= Hold and Reduce = Sell. For rating definitions under both models, please see “Stock ratings and basis for financial analysis” above.

For the distribution of non-independent ratings published by HSBC, please see the disclosure page available at
[Link]

Share price and rating changes for long-term investment opportunities

Masan Group ([Link]) share price performance VND Rating & target price history
Vs HSBC rating history
From To Date Analyst
N/A Buy 06 Jan 2022 Shuo Han Tan
Target price Value Date Analyst
160833
Price 1 166667 06 Jan 2022 Shuo Han Tan
140833 Price 2 161000 04 May 2022 Shuo Han Tan
Price 3 149000 02 Aug 2022 Shuo Han Tan
120833
Price 4 115000 02 Nov 2022 Shuo Han Tan
100833 Price 5 107000 02 Feb 2023 Shuo Han Tan
Price 6 98500 28 Apr 2023 Shuo Han Tan
80833 Price 7 101500 04 Jul 2023 Shuo Han Tan
Price 8 91000 02 Feb 2024 Shuo Han Tan
60833 Source: HSBC

40833
Apr-19

Apr-20

Apr-21

Apr-22

Apr-23

Apr-24

Source: HSBC

To view a list of all the independent fundamental ratings disseminated by HSBC during the preceding 12-month period, please
use the following links to access the disclosure page:

Clients of HSBC Private Banking: [Link]/Disclosures

All other clients: [Link]/A/Disclosures

HSBC & Analyst disclosures

Disclosure checklist
Company Ticker Recent price Price date Disclosure
MASAN GROUP [Link] 66800.00 17 Apr 2024 5, 7
Source: HSBC

1 HSBC has managed or co-managed a public offering of securities for this company within the past 12 months.
2 HSBC expects to receive or intends to seek compensation for investment banking services from this company in the next 3
months.
3 At the time of publication of this report, HSBC Securities (USA) Inc. is a Market Maker in securities issued by this company.
4 As of 31 March 2024, HSBC beneficially owned 1% or more of a class of common equity securities of this company.
5 As of 29 February 2024, this company was a client of HSBC or had during the preceding 12 month period been a client of
and/or paid compensation to HSBC in respect of investment banking services.
6 As of 29 February 2024, this company was a client of HSBC or had during the preceding 12 month period been a client of
and/or paid compensation to HSBC in respect of non-investment banking securities-related services.
7 As of 29 February 2024, this company was a client of HSBC or had during the preceding 12 month period been a client of
and/or paid compensation to HSBC in respect of non-securities services.

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 Equities ● Food Products
18 April 2024

8 A covering analyst/s has received compensation from this company in the past 12 months.
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detailed below.
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capital, calculated according to the SSR methodology.
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capital, calculated according to the SSR methodology.
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Additional disclosures
1 This report is dated as at 18 April 2024.
2 All market data included in this report are dated as at close 17 April 2024, unless a different date and/or a specific time of
day is indicated in the report.
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Production & distribution disclosures

1. This report was produced and signed off by the author on 18 Apr 2024 12:30 GMT.

2. In order to see when this report was first disseminated please see the disclosure page available at
[Link]

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 Equities ● Food Products
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