{"id":45131,"date":"2020-01-10T19:07:30","date_gmt":"2020-01-10T12:07:30","guid":{"rendered":"https:\/\/yuanta.com.vn\/?post_type=phan-tich&#038;p=45131"},"modified":"2020-01-10T19:07:30","modified_gmt":"2020-01-10T12:07:30","slug":"msn-vcm-deal-conference-call-takeaways","status":"publish","type":"phan-tich","link":"https:\/\/yuanta-uat.ysvn.com.vn\/en\/analysis\/msn-vcm-deal-conference-call-takeaways","title":{"rendered":"MSN: VCM deal &#8211; Conference call takeaways"},"content":{"rendered":"<p><strong>Hold-Outperform<\/strong><\/p>\n<p><strong>Target price: VND 84,100<\/strong><\/p>\n<p><strong>Upside: 49%<\/strong><\/p>\n<p><span style=\"font-size: 14pt\"><strong>Event<\/strong><\/span><\/p>\n<p>MSN held a conference call to discuss the VinCommerce deal.<\/p>\n<p><span style=\"font-size: 14pt\"><strong>Key Takeaways<\/strong><\/span><\/p>\n<p><strong>The new entity holds 83.7% of VinCommerce-VCM<\/strong> and 85.7% of Masan Consumer Holding<strong>. <\/strong>Masan Group will hold 70% of the new entity and Vin Group (VIC \u2013 not rated) will hold the other 30%. The 2020 action plan comprises three strategies to turn around the acquired business: footprint, traffic, and profitability.<\/p>\n<p><strong>For the footprint strategy<\/strong>, VCM will increase its coverage in Hanoi, where its stores are performing well, but will be selective in HCMC. For example, management plans to close down 150-300 VinMart+ stores with poor performance and low chance of improvement.<\/p>\n<p><strong>For the traffic strategy<\/strong>, VCM plans to focus on product localization and strengthening the fresh portfolio. MEATDeli and VinEco will be positioned as core products in Vinmart+, contributing up to 35% of total sales (up from 30% in 2019), according to MSN.<\/p>\n<p><strong>For profitability<\/strong>, management targets -3% to 0% EBITDA margin in 2020E (vs the -7.5% EBITDA margin in 2019). Increasing sales \/ m2, optimizing costs, and logistics and warehousing are key areas where MSN believes it can improve the acquired business.<\/p>\n<p><strong>Our view: <\/strong>We believe MSN\u2019s post-merger net profit will be reduced by two factors: (1) pre-tax losses from VCM and reduced profit from its core consumer business (fish sauce, noodles, etc), because MSN\u2019s net ownership in MCH VN will decline from 86% to 60%.<\/p>\n<p>If we (unfairly) extrapolate VCM\u2019s 2019E EBITDA loss of VND2.1 trillion into 2020E, our back-of-the-envelope calculation suggests a 52% reduction in MSN\u2019s 2020E consolidated PBT. This is likely too bearish, but our forecasts for MSN (which do not incorporate the deal) now appear optimistic and are under review.<\/p>\n<p><strong>\u00a0<\/strong><\/p>\n<p><strong>Please access the link for our complete report: <a href=\"http:\/\/yuanta-uat.ysvn.com.vn\/wp-content\/uploads\/2020\/01\/MSN-Vincommerce_MA.pdf\">MSN Vincommerce_MA<\/a><\/strong><\/p>\n<p><em>Analyst: Quang Vo,\u00a0<\/em><a href=\"mailto:quang.vo@yuanta.com.vn\"><em>quang.vo@yuanta.com.vn<\/em><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Hold-Outperform Target price: VND 84,100 Upside: 49% Event MSN held a conference call to discuss the VinCommerce deal. Key Takeaways The new entity holds 83.7% of VinCommerce-VCM and 85.7% of Masan Consumer Holding. Masan Group will hold 70% of the new entity and Vin Group (VIC \u2013 not rated) will hold the other 30%. The&#8230;<\/p>\n","protected":false},"author":10,"featured_media":0,"template":"","class_list":["post-45131","phan-tich","type-phan-tich","status-publish","hentry","analysis-category-company-update","analysis-category-consumer-staples"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.3 (Yoast SEO v23.4) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>MSN: VCM deal - Conference call takeaways | Yuanta Vietnam<\/title>\n<meta name=\"description\" content=\"Hold-Outperform Target price: VND 84,100 Upside: 49% Event MSN held a conference call to discuss the VinCommerce deal. 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