(Tiểu luận) financial analysis report of masan group

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<b>BỘ GIÁO D</b>ỤC VÀ ĐÀO TẠ<b>O Trường Đại Học Mở Thành Phố Hồ Chí Minh </b>

<b>Khoa: Đào Tạo Đặc Biệt ... .. ... .. ... .. ... .. ... .. ... .. ... </b>

<b>FINANCIAL ANALYSIS REPORT OF MASAN GROUP LECTURER: Mrs. Angie Doan </b>

<b>MEMBERS: </b>

1. Trần Đặng Linh Nhi - 2054010518 2. Nguyễn Thị Thanh Ngân - 2054010439 3._{Hồ T n L}ấ ộc - 2054010355

4._{Phan Nguy n Thành Nhân -}ễ 2054010491

<b>CLASS: KT279-BA201E (QT20DBE01) </b>

December 2022

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HO CHI MINH CITY

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<b>TABLE OF CONTENTS: </b>

<b>I.INTRODUCTION: ... 4</b>

<b>1. Introduct to Masan Group: ... 4</b>

<b>II.ANALYSIS OF MASAN FINANCIAL STATEMENTS (Currency par value in VND) ... 7</b>

<b>1.Capital resources and use of capital: ... 7</b>

<b>4.TREND AND INDUSTRY ANALYSIS ... 12</b>

<b>a.Trend Analysis (2020-2021): ... 12</b>

a1. Capital resources and use of capital: ... 12

<b>2. FINANCIAL CAPACITY ANALYSIS ... 17</b>

a. Effect of total asset utilization (10.45) 2.01: ... 18

b. Effective use of loan capital: ... 18

<b>III.RISK OF MASAN ANALYSIS: ... 19</b>

<b>1.Investment risk: ... 19 </b>

a.Risks in the current retail market: ... 19

b.Risks of fierce competition in the consumer goods industry of Masan Consumer: . 20 c.When will Masan find the formula to operate Winmart profitably? ... 21

<b>2.MARKET RISK: ... 21</b>

a. Risks from mining: ... 21

b. Risks of commodity price fluctuations, affecting MHT's business results:22 <b>c.Dividend Distribution Policy: ... 23</b>

<b>IV.SWOT ANALYSIS: ...24</b>

a. Rights of shareholders of the company: ... 28

b. For shareholders or groups of shareholders: ... 28

<b>2.Dividend Policy: ... 29</b>

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a. So, can ESOPs buy stocks as a bargain? ... 30

<b>VI. CONCLUSION: ... 30</b>

<b>1. The potential of Masan Group: ... 31</b>

a. Consumer - retail segment: ... 31

c. Banking segment: ... 32

<b>2. Masan-VinEcommerce deal: ... 32</b>

a. WHY DID VINGROUP CHOOSE MASAN TO TRANSFER VCM? ... 32

a.Ability to generate sustainable cash flow ... 35

<b>VIII. REFERENCES: ... 36</b>

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<b>I.INTRODUCTION: </b>

<b>1 . Introduct to Masan Group: </b>

Masan Group Joint Stock Company was established in November 2004 under the name Masan Maritime Joint Stock Company. The company officially changed its name to Masan Group Joint Stock Company (the English name is Masan Group Corporation) in August 2009 and was successfully listed on the Ho Chi Minh City Stock Exchange. Ho Chi Minh City on November 5, 2009. The company also officially changed its name to Masan Group Joint Stock Company in July 2015. Although the company was officially established in 2004, it had already been established and operated. Masan Group has been operating since 1996. Along with Vietnam's economic growth, consumers and their needs are constantly developing. In addition to basic daily necessities, consumers also need to be served a variety of products and services, outstanding experiences, and products and services tailored to individual preferences and modern lifestyles. Technology and convenience are increasingly becoming top concerns and are favored by many people. Foreseeing this trend, in addition to the production and business of branded products, Masan Group has built an integrated technology-consumer ecosystem from offline to online.

<b>2. Vison of Masan Group: </b>

Aiming to become the largest private enterprise in Vietnam in terms of scale, profitability, and shareholder return. To that end, MSN combines organic growth and investment in select M&A deals. MSN investors are all reputable corporations that support MSN Group financially, strategically, and technically. Some typical shareholders who are also subsidiaries of Masan are:

+ PENM Partners (a shareholder of MSN, holding 6% of the company) was established in 2006. Previously, this fund belonged to BankInvest Group. Currently, the fund operates three PENM funds with total assets of $400 million, including the PENM fund in Vietnam. + Dragon Capital (a MSN shareholder, holding 4%) was established in 1994. The fund currently manages $1.3 billion in assets owned by individuals and organizations around the world.

+ KKR (MSC shareholder, holding 18%): The Kohlberg Kravis Roberts (KKR) fund has been established since 1976, investing in diversified assets in North America, Europe, the Middle East, and Asia. KKR invested $159 million in Masan Consumer Corporation (MSC) in April 2011 and another $200 million in January 2013.

+ Mount Kellett (MSR shareholder, holding 20%) currently manages $4.1 billion in assets. In 2010, Mount Kellett invested $100 million to own 20% of Masan Resources (MSR).

<b>3. The proprty structure: </b>

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<b>a. THE CROWNX </b>

- The CrownX is a retail consumer platform that merges Masan s interests in ’ MCH and VCM. The CrownX is set up to realize the vision of becoming an integrated Point of Life from online to offline to serve the diverse needs of “ ” products and services for Vietnamese consumers.

<b>b. MASAN MEATLIFE </b>

- Masan MEATLife is Vietnam s largest player in the branded meat value chain ’ (applying the 3F model from farm to fork ), focusing on improving “ ” productivity in Vietnam s animal protein industry with The ultimate goal is to ’ provide consumers with meat products of clear origin, good quality, and reasonable prices. This is an industry with a market value of 10.2 billion USD.

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<b>c. MASAN HIGH-TECH MATERIALS </b>

- Masan High-Tech Materials (formerly known as Masan Resources) is one of the largest private mineral processing and resource companies in Vietnam’s private sector, currently operating the Nui polymetallic mine project. World-class cannon in the north. Masan High-Tech Materials is also a globally influential fluorite and bismuth manufacturer. Masan High-Tech Materials ’ goal is to show the world that a Vietnamese company can also lead change in the global tungsten market and explore strategic opportunities to become a processing business. Tungsten products have a global scale. This allows MHT to achieve strong and stable finances across commodity cycles.

<b>d. TECHCOMBANK </b>

- Techcombank is currently one of the largest commercial joint-stock banks in Vietnam in terms of operating income, total assets, credit, deposits, number of customers, and a network of branches and transaction offices. With a strategy of putting consumers at the center of the product ecosystem. Techcombank has built an industry-leading business network in personal deposits and credit for individuals and small and medium-sized enterprises.

<b>e. MASAN CONSUMER HOLDINGS </b>

- Masan Consumer Holdings was established as the main platform for the group to further invest in food and beverage and other related industries. Key players in MCH s portfolio include Masan Consumer and Masan ’ Brewery.Masan Consumer Holdings is one of the largest domestic FMCG companies in Vietnam. The company manufactures and distributes a wide range of food and beverage products, including soy sauce, fish sauce, dipping sauce, chili sauce, instant noodles, instant porridge, instant coffee, instant cereals, food-bottled drinks, and beer. The company has developed its product portfolio, sales team, and domestic distribution channels to establish a leading position in the Vietnamese branded food and beverage product market. Masan Consumer Holdings key brands include Chin-Su, Nam Ngu, Tam Thai Tu, ’ Omachi, Kokomi, Lovemi, Komi, Boo Boo, Ponnie, Vinacafé, Wake-up 247, Compact, Vinh Hao, Quang Hanh, Vivant, Faith, Red Ruby, and White Lion. With the completion of the public offer to buy Net Detergent Joint Stock Company, Masan Consumer has officially entered the household and personal care products category.

<b>f. VCM/ WINCOMMERCE </b>

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- WinCommerce (formerly known as VinCommerce) is the modern retail platform with the largest coverage in Vietnam, with more than 122 WinMart supermarkets and 2,619 WinMart+ retail stores by the end of 2021. Its subsidiary, WinEco (formerly VinEco), owns a 14-farm system of high-tech agricultural production farms that produce products of international quality.

<b>II. ANALYSIS OF MASAN FINANCIAL STATEMENTS (Currency par value in VND) </b>

<b>1. Capital resources and use of capital: </b>

• Based on the balance sheet in 2021, we see that Masan's balance sheet is quite different from the previous year due to the impact of the Covid-19 pandemic. In terms of total capital of Masan in 2021, the increase is quite strong, in which:

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- Total capital in 2021 decreased by ≈ 4,031 billion. (7.8%) compared to the first quarter of 2021.

- Corporate liabilities decreased sharply in Q4 15.9% 2021 ≈4,400 billion, of which:

- For short-term debt reduced ≈ 905 billion (16.3%):

+ Other short-term payables decreased sharply = 2,003 billion (3.9%). + In addition, there were some short-term debts that increased due to the post-Covid-19 impact on business activities and the economy: Seller fee increased by ≈ 30 billion; Tax payable to the state ≈ 50 billion; Borrowing and issuing short-term bonds decreased by ≈ 1,400 billion (2.7%).

- For long-term debt reduced by ≈3,500 billion, (15.8%) of which:

+ Borrowing and issuing long-term bonds accounted for a high proportion of total long-term debt, reducing ≈3,500 billion (6.8%)

- Regarding equity of Masan Group, total equity increased by ≈380 billion (1.6%), of which:

- Profit accounts for a high proportion in equity:

+ Undistributed profit after tax increased = 310 billion (0.6%).

+ Undistributed profit after tax by the end of last year fell sharply ≈ 2,800 billion (5.4%).

+ Undistributed profit after tax this year (Last year's loss after tax) increased sharply ≈ 3,000 billion (5.9%).

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• Masan's use of capital for financial investment has slightly decreased in 2021, due to the impact of 2020 leading to many businesses going bankrupt, so the investment of businesses is also delayed. In there:

- For short-term financial investments held to maturity by enterprises, investment held to maturity by enterprises will increase by 5,000 billion (9.7%) in 2021.

- Regarding long-term financial investment, the proportion of long-term investment by enterprises has decreased by 11,000 billion (25.5%), of which:

+ Subsidiary investment fell by 1.800 billion (3.5%).

+ The capital contribution to other entities fell by 9,200 billion (18%).

<b>2. Business Result:</b>

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• Masan Group's business activities in 2020 will face many difficulties when faced with the threat of the COVID-19 epidemic, which greatly affects domestic and foreign businesses and economies. Based on the business results report for 2021 from Masan Group, we see that many business and financial activities have been overcome and increased sharply in 2021, specifically:

- Financial activity revenue increased significantly by 4,900 billion.Financial and interest expenses both increased by 1,400 billion and 1,000 billion,

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- Current increase in corporate income tax (CIT) = 256 billion.

- Profits and losses from CIT increased dramatically following the epidemic, reaching 3,050 billion.

<b>3. Comments on the revenue overview of 2021 compared to 2020: </b>

- Total net revenue of the Masan Group increased by 14.8% to VND 88,629 billion in 2021 from VND 77,218 billion in 2020; net revenue in 2021 increased by 16.6% compared to last year. This increase was mainly driven by strong double-digit growth at MCH (Masan Consumer Holdings); MML (Masan MEATLife); and WCM (WinCommerce) revenue, which fell 0.3%, mainly due to the influence of the COVID-19 pandemic.

- Financial income

+ Financial income increased by 375.3% to VND 6,800 billion in 2021 from VND 1,431 billion in 2020, mainly due to increased interest income from capital activities and a one-time profit from the discontinuation of the food business. MML's breeding stock and swap bond transfer in 2021.

- Total assets

+ Total assets increased by 8.9% to VND 126,093 billion as of December 31, 2021, compared to VND 115,736 billion as of December 31, 2020. This is mainly due to an increase in cash and cash equivalents, as well as long-term investments.

- Equity

+ Equity as of December 31, 2021, reached VND 42,337 billion, an increase of 69.2% compared to VND 25,030 billion as of December 31, 2020. Equity increased significantly in 2021, mainly due to higher profits in 2021 and the issuance of TCX shares to strategic partners.

- Fixed assets

+ As of December 31, 2021, fixed assets reached VND 42,654 billion, compared to VND 49,582 billion as of December 31, 2020. The decline was mainly due to the discontinuation of MML's feed business and fixed asset amortization and allocation costs.

- The loans

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+ As of December 31, 2021, short-term and long-term loans decreased by 6.2%, reaching VND 58,178 billion compared to VND 62,011 billion as of December 31, 2020, mainly due to the cessation of consolidation in the animal feed segment and the reduction of WCM's outstanding balance.

- Correspondingly, the year's consolidated EBITDA reached VND16,361 billion, up 58%. The CrownX is known to be the primary growth driver, with a 73% growth rate.

- After deducting expenses, net profit after tax allocation to shareholders of the company increased sharply by nearly 594%, reaching 8,563 billion VND compared to 1,234 billion VND in 2020. It was a turning point for strong development as well as a steppingstone for further development in 2022.

<b>4. TREND AND INDUSTRY ANALYSIS</b>

<b>a. Trend Analysis (2020-2021): </b>

a1. Capital resources and use of capital:

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- In 2021, Masan's total resources will show signs of decreasing compared to 2020 ($10,000 billion). Due to the gradual improvement of the economy after the impact of the COVID-19 epidemic, the company's capital structure is used for necessary activities to maintain the company's operations during the new normal, which is gradually improving. Therefore, the company's capital has changed to match the economic situation now. Masan has changed through: + For short-term debt, in 2020, Masan will not issue short-term bonds on the stock market due to the unstable economy, but in 2021, the economy will improve again, so Masan decided to continue to issue short-term bonds of the company, increase the proportion of loans, and issue short-term bonds in 2021, increasing by 1,400 billion (2.5%) compared to only short-term loans in 2020.

+ Furthermore, the company's equity is quite volatile, as the undistributed profit after tax by the end of the previous year of 2021 fell by 2,800 billion (5%) compared to the increase rate of 2020. Conversely, undistributed after-tax profit in 2021 (last year's post-tax loss) had an outstanding growth of 3,000 billion compared to the

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previous year, when the company's undistributed after-tax profit in 2020 (last year's post-tax loss) was -1.322 billion.

a2. Using capital for financial investment:

-The year 2020 is a tumultuous one for the globe. All economic activities were stagnated, severely affecting the world economy. Therefore, the use of capital in enterprises for business activities, specifically financial investments, is constantly fluctuating in 2020. For Masan, their financial investment plan for 2020 is reduced. sharp decline compared to the strong growth in 2021, in which:

- Short-term financial assets:

+ Trading securities were sold compared to the amount of 1,571 billion they had at the beginning of the year. By 2021, they will only get 45 billion from holding to maturity, maybe in 2021 Masan realizes that the economy is not really stable, so short-term investment in trading securities is not yet available. preferred by them when the company has many necessary business activities in 2021. In 2022, perhaps short-term investment in trading securities will return.

- Total long-term financial investment capital in 2020 of Masan increased sharply ≈ 20,400 billion. But in 2021, there are signs of a decrease of ≈ 11,000 billion due to many changes in the economic market, in which:

+ Investment in subsidiaries continuously decreased for 2 years ≈ 3,400 billion (2020) & ≈ 1,800 billion (2021). Due to the unstable economic situation in the country and in the world, it is still difficult to pour capital into subsidiaries, leading to two consecutive years of capital loss for the parent company.

+ The capital contribution investment in other entities increased sharply in the total long-term financial investment of 2020 ≈ 23,700 billion, but due to many economic

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factors, it led to the investment to contribute capital to other entities in 2021. Masan had a strong decrease of ≈ 8,000 billion.

⇒ From that, we can see that not only Masan but other companies also have many changes in capital and business activities to maintain and improve the business when facing difficulties. All activities of enterprises in difficult economic times are always focused and focused in making decisions on business activities to avoid bringing enterprises into the worst situation. At the same time, businesses need to set out appropriate plans and trends according to the current situation of the economy to help them get out of the difficult situation at that time.

<b>a3. Industry analysis: </b>

- Based on the ownership structure of the group, Masan Group is currently investing in four main industries: chain of retail consumer goods (81.66%); meat consumer goods (87.78%); mineral resources and processing industry (86.36%); banking system (14.9%). In particular, the retail chain of consumer goods (The CrownX) holds a high market share in the group's four main business lines. Specifically, Masan Consumer Holdings and Win-Commerce are two high-revenue subsidiaries in the group's "Crownx" system.

retail system, accounting for 85.71% of The Crown.Since its establishment, Masan Consumer Holdings has been established as the main platform for the group to further invest in the food and beverage industries and other related industries. The MCH portfolio's main companies, including Masan Consumer and Masan Brewery, have built a diverse product portfolio that has resonated with Masan Group's large distribution network with a wide range of industries and products... on the Vietnamese market.In there:

+ Condiments and sauces have a high total market value, with fish sauce playing an important role: Masan continues to be the market leader and plays a role in setting the overall trend. Condiments, sauces, and salad dressings are the mainstay of Masan Consumer, which is also a large and profitable industry for Masan. In 2020, net sales of the spice industry reached VND 8,147 billion (+12.4% YoY). The main products of this industry group can be mentioned as: Nam Ngu fish sauce, Tam Thai tom, Chin-su chili sauce, etc.

+ Convenience food industry: The convenience food industry trades in instant products, contributing VND 6,882 billion in revenue in 2020. In 2020, Omachi noodles will have a 45% market share in the high-end segment. become the best-selling brand in the supermarket channel. Meanwhile, in the mid-end segment, Kokomi noodles also outperformed in 2020 (up 42.8% year over year).

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+ Beverage sector: This sector includes sub-sectors such as bottled beverages (energy drinks, bottled water), coffee, Among beverage products, the most prominent is Wake-up 247, a coffee-flavored energy drink, which holds 10% of the national market share after being introduced to the market in 2015.

+ Processed meat and personal and home care (HPC) Masan has also built popular — products such as Cowboy Pork and Ponnie, which are distributed nationwide. Starting from 2018, Masan Consumer's subsidiary officially entered into a strategic partnership with Jinju Ham Company, the industry leader in the field of processed meat production in Korea. Masan recently entered the Home & Personal Care (HPC) market with the acquisition of NET Detergent Joint Stock Company in early 2020. In 2020, this industry will contribute $1,265 billion in revenue to Masan Consumer.

<b>- About Win-commerce: </b>

+ In 2020, VCM's modern retail strategy and operations have been adjusted with the goal of achieving profitability, creating the premise for sustainable growth and long-term transformation. VinMart supermarket chain saw net revenue in 2020 decrease by 6.7% compared to the same period last year, mainly due to the decrease in net revenue from supermarkets in Vincom Retail ("VRE") shopping centers when the number of customers did not remain the same amid concerns about COVID-19, especially during the period of social distancing. More than 95% of the sales decline of the VinMart supermarket system came from VinMart supermarkets inside the commercial centers of VRE.

+ Although the Win-commerce chain (Vin-commerce) will experience a significant decrease in 2020 due to the COVID-19 pandemic, Masan Group is still working to create all of the conditions for the chain's development in the coming year. According to the fact that VCM has recruited a series of talented people with executive experience in the modern essential retail industry, the trend of reducing human resources is increasing at this time, but Masan still conducts recruitment to strengthen and try to develop the management team of this retail chain next year. With a more efficient organizational structure, VCM expects to be better prepared to address the following key priorities in 2021: expanding the minimart network; consolidating the supermarket model; and continuing to improve. commercial profits through coordination with suppliers, optimizing logistics to reduce costs and improve product availability, and successfully piloting an online model to build a leading on- -offline integrated business. to

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<b>2. FINANCIAL CAPACITY ANALYSIS </b>

- As of the end of the fourth quarter of 2021, MSN's short-term assets were enough to cover short-term debts with a short-term debt solvency ratio of 1.26 showing high solvency and no risk factor. However, considering the short-term solvency ratio (0.03) and the immediate solvency ratio (0.89), MSN's ability to convert assets into cash to cover liabilities is similar. relatively low, indicating extremely risky liquidity. However, it is extremely positive when In the first quarter of 2021, MSN achieved VND 64,801 billion in net revenue, fulfilling 70% of the low net revenue target for 2021 of VND 92,000 billion. Net profit reached 2,126 billion dong, fulfilling 85% of the low target of 2,500 billion dong.. Both are above 50% of average target result.

- Analysis of production and business efficiency is a content in corporate financial management. Vietnamese companies are now autonomous business units, self-responsible for their production and business activities.

- In the context of the modern economy, companies face many complex problems such as the constant volatility of the market, the fierce competition between domestic and foreign companies. Therefore, the analysis of production and business efficiency in order to assess the financial status of the company so as to make appropriate decisions becomes one of the vital issues for the company.

- Masan Group Joint Stock Company, although its business is still profitable, is still limited in some production and business activities in recent times, causing a significant decrease in profit, I think the company needs to pay more attention to. The analysis of production and business efficiency and the use and application of the above recommendations are completely feasible for the company in order to improve financial analysis, thereby improving operational efficiency. financial performance and business performance of the company.

- In 2021, Masan's consolidated net revenue reached VND 88,629 billion, up 14.8% compared to VND 77,218 billion in 2020. Net revenue of Q4/2021 reached VND 23,828 billion, up 10.3% YoY . Excluding the revenue of the animal feed segment in December 2020 on a comparable basis, net revenue in the fiscal year 2021 and Q4/2021 grew by 16.6% and 17% respectively. Specifically, the group reached VND 88,629 billion, up 14.8% from 77,218 billion in 2020. The growth driver mainly came from The CrownX (TCX) consumer and retail platform, with net revenue of more than 58,000 Billion.

- EBITDA: Consolidated EBITDA for the fiscal year 2021 reached VND 16,361 billion, up 58.1% YoY while EBITDA margin reached 18.5% compared to 13.4% in 2020.

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Growth engine mainly comes from EBITDA The CrownX grows 72.9% YoY: Masan's strong profit growth momentum, reflected in EBITDA margin of 21.1% in Q4/2021, 330 basis points higher than Q4/2020.

- Net profit after tax allocated to Shareholders of the Company (NPAT Post-MI) in 2021 increased by 593.9%, reaching VND 8,563 billion compared to VND 1,234 billion in 2020.

- Return on assets and equity is higher than ROA: as Masan improves profitability across all business segments, especially The CrownX, return on assets and capital - Owners of the Company increased by 704 and 3,096 basis points to 8.4% and 35.1%, respectively.

a. Effect of total asset utilization (10.45) 2.01:

+ Effect of total assets/equity (2,17 %) Delta ROE (20.23%) 44.93: Source: Figures are calculated from Masan Group ROE financial statements of the company in recent time this is always at a high level, averaging over 18.2%.

+ However, the analysis according to the Dupont model shows that there is a change in the 3 components of ROE and reached the highest level in 2010 with 1 dong of equity generating 24.75 dong of profit, and then tends to decrease over the years, this is due to the influence of 3 factors in the Dupont model, namely: First of all, the effect of the profitability ratio on sales on ROE, which can be found that ROS tends to increase and reaches 9.66% in 2021, which has the effect of reducing the return on equity (ROR) by 9.31%, or a dollar of equity in 2020 has generated more profit dong compared to 2020. Theoretically, when the profitability of equity decreases, the reputation of the business will decrease.

➔ The influence of the enterprise's ability to manage assets on the efficiency of using equity

b. Effective use of loan capital:

- We know that the financial debt burdens a company faces depends to a large extent on its ability to generate cash flow to repay its debt on an annual basis. Interest is a financial obligation and is guaranteed to be paid from pre-tax and interest income.

- Working capital affects the company's operations

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