With $7.8 bln market capitalization, Masan becomes Vietnam’s largest consumer platform

The 2nd place belongs to Vinamilk with a market capitalization of VND171 trillion ($7.5 billion) thanks to strong synergies between businesses in Masan’s consumer-retail ecosystem.

Viet Capital Securities (VCSC) and HSBC have forecasted MSN with a target price of VND186,000 and VND200,000 respectively, 37% higher than the current market price. Previously, Bank of America (BofA) has initiated MSN with a Buy rating and PO of VND198,000.

Synergies from a unique consumer–retail ecosystem

In 2021, Masan has achieved many outstanding results, includes but not limited to revenue growth, profit growth, business model innovation and retail expansion. Masan Group's consolidated revenue reached VND88,629 billion, up 14.8% versus VND77,218 billion in 2020.

Growth driver mainly comes from The CrownX (TCX), the consumer-retail platform that delivered a net revenue of more than VND58,000 billion in the past year.

Currently, Masan is the only integrated off-to-online retail consumer ecosystem in Vietnam that owns manufacturing facilities for FMCG products (Masan Consumer Holdings, Masan MEATLife), distribute directly to consumers via WinCommerce (WCM), owns the largest retail system with largest points of sale, expands into the F&B and telecommunications sectors through controlling stakes in Phuc Long and Mobicast.

WinMart+ store follows the mini-mall model. Photo: Masan

Thanks to Masan’s presence in many essential consumer sectors the group has a huge-scale customer base with 98% of Vietnamese households using at least 1 Masan product, 9 million loyal customers at WCM, nearly 5 million affluent customers from Techcombank, young, digital-savvy customers with urban lifestyle from Phuc Long. The group is also able to reach millions of consumers from strategic O2O partners, including Lazada.

In 2021, revenue contribution from only consumer businesses (excluding feed and high-tech materials segment) was 68%, which is expected to increase to 85% in 2022. Net profit after tax in core business (Core NPAT) is estimated to be within the range of VND 5 – 7 trillion, up 32% – 84% from VND 3.8 trillion in 2021.

Accelerating Point of Life strategy, capturing 80% of Vietnamese consumer’s wallet share

Following the initial success of Phuc Long kiosks at WinMart+ stores, Masan advanced its Point of Life (PoL) strategy further by building and piloting mini-mall concept, a model that 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 mini-mall concept can grow sales with increased foot traffic and lower breakeven sales targets to improve profitability. Mini-mall pilot stores running in 5 locations during FY2021 led to 30% increase in foot traffic compared to pre mini-mall model. This format also helped to reduce breakeven revenue required per day per location by 44%.

Masan is the leading consumer company in terms of market capitalization today in Vietnam. Photo: Masan

Expectations towards TCX also come synegies between different services, from groceries, pharmaceuticals, F&B (Phuc Long), financial services (from Masan’s partner - Techcombank) and telecommunication services (Reddi). The model follows the "Point of Life" strategy introduced by Masan earlier, almost fully integrated into an omni-channel platform, providing a myriad of services to consumers.

In FY2022, aim to open 2,000 mini-mall locations through 5 different formats based on catchment analysis in cities, sub-urban and rural areas, in new and existing WCM stores.

Chairman of Masan Group, Mr. Nguyen Dang Quang said: “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, 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.”

HSBC Global Research even called Masan's transformation "a journey of a retail giant to a super app". This integration will help improve sales/m2, thereby driving future profitability.

For example, in the telecommunications segment, the growth potential is still very large. After owning the Reddi mobile network, Masan has piloted the launch of telecommunication data plans under the brand “Reddi” at supermarkets and mini-marts WinMart+. This network service is expected to be rolled out nationwide in 2022 with the aim of reaching 500,000 - 1,000,000 subscribers.

Reddi is 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.

Order Phuc Long tea and coffee via mobile application and have it delivered to your door. Photo: Masan

This is the difference and significant advantage of Reddi compared to other mobile carriers in the market. With the participation from Reddi, consumers will have more choices regarding telco service providers.

Besides, Reddi may expand into payment field and target unbanked users, given that mobile money has just been licensed. According to HSBC, if Reddi reaches 1% of the mobile market share in Vietnam by 2025, its revenue contribution to Masan Group will account for 1%. In addition to Reddi's user growth, new digital partnerships (such as payments, entertainment) will also be an important growth driver for TCX.

In January 2022, MSN acquired an additional 31% stake in Phuc Long, increasing its ownership to 51%. 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. 

VCSC believes that this transaction will bring accumulated value to Masan because Phuc Long is a leading brand, has extensive growth headroom and strong synergies with Masan's consumer ecosystem, especially with WCM.