Positive signal from the 7 billion USD system
Masan Group - Masan Group (MSN), chaired by Mr. Nguyen Dang Quang, has just announced its business results for 2023, with net revenue increasing slightly by 2,7% compared to the previous year, to nearly 78.300 billion VND. Profit after tax is at 1.900 billion VND.
This is quite a positive result after a year of declining consumer demand across the country, as well as around the world. Many manufacturers and retailers in the domestic market have to rush into a "bloody" price lowering race.
The most prominent point is that the core consumer production and business segment continues to record sustainable growth, while the retail business segment shows signs of achieving good profits in the medium term.
Thus, for the first time after the Covid-19 period, the WinCommerce retail system (WCM) nearly reached the EBIT breakeven point (profit before interest and taxes). This is an important milestone for Masan on the roadmap to reach the break-even point of profit after tax for the entire network in 2024.
WinCommerce (formerly named VinCommerce – VCM), owner of the VinMart system, VinMart+ was acquired by Masan from Vingroup Corporation (VIC) of billionaire Pham Nhat Vuong. This system was later changed to WinMart.
VinCommerce used to be the great ambition of Vietnam's richest billionaire in the battle with foreign giants in the domestic retail market. Over the past 5 years, Mr. Vuong has focused his efforts on the VinFast electric vehicle segment and expanded into international markets.
Up to now, there is no complete information about the total amount of money that Mr. Nguyen Dang Quang's business spent to buy this retail system, but there are some numbers showing the huge scale of the deal.
In the 2020 audited consolidated financial report, there is notable information, a transaction worth 1 billion USD with Vingroup. In June and August 6, Masan spent nearly 8 billion VND to buy an additional 2020% of The CrownX's equity from Vingroup and increase its ownership rate to 23.700%. Previously, Masan spent a lot of money to build a retail and consumer empire for the group. In 14,8, Masan used up to VND 84,8 billion in undistributed after-tax profits to spend on the VinCommerce merger deal.
The CrownX is a company established by Masan and Vingroup to hold capital in VinCommerce Development and Trading Services Joint Stock Company and Masan Consumer Holdings (MCH - the company that owns the consumer goods manufacturing sector of Masan Group).
With subsequent transactions, CrownX was valued at 7 billion USD, higher than many corporations such as Hoa Phat (6,6 billion USD) of billionaire Tran Dinh Long or than Masan itself (3,8 billion USD, calculated to February 7).
Continue writing the retail dream with a retail-consumer empire
The M&A deal to merge a giant in the retail-consumer industry is considered a bright spot for Vietnamese retail after the previous decade of being dominated by Korean, Thai and Japanese retailers recently. It also shows the desire to conquer the peak and reach out to the world of Vietnamese businessmen.
Dr. Nguyen Dang Quang said that WinCommerce is on track to reap sustainable profits in 2024. Masan Consumer Holdings is returning to the growth trajectory.
According to Mr. Quang, Masan's core consumer business continues to record EBIT operating profit growth at 40,1% in 2023 over the same period thanks to record profits of Masan Consumer Holdings (MCH). ) and WinCommerce's sustained profitability despite weak consumption influenced by micro and macro economic conditions.
The CrownX (TCX) retail-consumer platform recorded revenue growth of 2,6% to nearly 57.700 billion VND in 2023. Particularly in the fourth quarter of 2023, revenue reached nearly 16.000 billion VND, an increase of 3,1 billion VND. XNUMX% over the same period.
WCM continued its EBIT growth momentum and recorded a positive profit after tax for the grocery product group in the fourth quarter of 2023. This is an important milestone for WCM's roadmap to reaching break-even profit after tax for the whole year. In 2023, WCM records revenue of more than 30.000 billion VND, an increase of 2,3% compared to the previous year. In the fourth quarter of 2023, revenue reached VND 7.653 billion, an increase of 3% over the same period.
Since Vingroup's retail segment was transferred to Masan, WCM has continued to open new stores while converting and upgrading the store model.
In 2023, WCM prioritizes renovating and upgrading stores with models suitable for consumers in rural and urban areas (Win and WinMart+ rural stores). By the end of 2023, WCM will have 3.633 stores and supermarkets nationwide. Of these, a total of 1.615 stores were upgraded.
In fact, without the Covid-19 pandemic, Masan's retail segment could have had stable profit growth. Immediately after being owned by billionaire Nguyen Dang Quang, the giant retail system began to make a profit. By the end of 2020, VinCommerce officially completed the first phase of the transformation process, recording a positive EBITDA (income before interest, taxes, depreciation and amortization) of 0,2% with an absolute value of 16 billion VND. copper.
Recently, Masan has also accelerated its journey to become a leading online-offline integrated retail consumer group. According to the 2023 financial report (unaudited), Masan's global fast-moving consumer goods (FMCG) platform has shown positive results when Chinsu chili sauce is in the top 8 best-selling products on Amazon.
On the contrary, operating in many fields also makes multi-industry corporations like Masan encounter difficulties in the context of current high world interest rates and geopolitical instability in many parts of the world, affecting to input costs.
Recently, sharing on Nikkei Asia, Masan Group CEO Danny Le said that the WinMart supermarket chain is one of Masan's expansion steps and the group will create conditions for new businesses to achieve good profits in the future. Mid-term.
According to Mr. Danny Le, the era of cheap money and suffering losses to gain market share has ended. The period of international investors accepting losses at a company worth billions of dollars is over, in the context of today's high capital costs.
In 2023, Masan's cash flow signal is also quite good. Bain Capital has invested capital in Masan. Masan can increase investment from Bain and potential investors to $500 million. Korea's SK Group also commits to continuing its long-term companionship and is a long-term partner of Masan.
Mr. Quang's business recorded strong growth in free cash flow, and its cash position was quite large, reaching more than 14.000 billion VND.
