When comparing Vietnam to China and Thailand before 2010, J.P. Morgan is of the opinion that Vietnam's consumer market is currently experiencing a "golden moment" in modern commercial development and holds substantial valuation potential for the future. With its prominent standing, Masan Group stock price (“MSN”) are projected to achieve a value of VND 102,000 per share by the conclusion of 2024.

In a recently issued report, J.P. Morgan underlined: "Vietnam represents the most captivating and remarkable growth narrative for consumption in Asia" and offered a positive perspective on Vietnamese consumer stocks within the upcoming 12 months. In accordance with the assessment provided by the organization, Vietnam's consumer retail market is poised for robust expansion due to a rapidly growing economy, the expansion of the middle class, and the increasing pace of urbanization. J.P. Morgan predicts that Vietnam is on track to become a prominent growth driver in consumption across the region.

Vietnam - An Intriguing Tale of Consumption Growth

J.P. Morgan reports that Vietnam boasts an almost 100 million-strong population, with around half of its citizens being under the age of 32. Remarkably, the nation has achieved an impressive Compound Annual Growth Rate (CAGR) of 7.1% in GDP per capita since 2017, reaching over $4,000 USD in 2022. This figure stands as the highest among ASEAN/EM nations. The government has established ambitious goals of elevating the GDP per capita to $7,500 by 2030 and $10,000 by 2035.

GDP per capita ($) (Source: IMF)

Anticipating the shift towards higher value-added sectors, J.P. Morgan envisions a substantial segment of the Vietnamese population transitioning to the middle class within the upcoming years. Furthermore, with GDP per capita and urbanization rates akin to those observed in China and Thailand prior to 2010, Vietnam has embarked on a growth trajectory in modern trade. This trajectory opens avenues for industrial consumer goods companies to bolster their valuations over an extended period. Notably, the surge in consumption within the middle-class bracket is poised to center on offerings like electronic appliances, automobiles, and travel services.
The emergence of this novel middle class is poised to fuel the expansion of earnings within the consumer goods sector. According to J.P. Morgan, this trend is expected to persist over the course of the subsequent five to ten years.

Urban population on total population (Source: World Bank)

Vietnam has been and is an attractive destination for tourists from China and Korea. This is supported by the government relaxing visa requirements, building airports and relaxing regulations for FDI in the tourism and hospitality businesses. In addition, this support also brings a CAGR of 18% in tourist arrivals to Vietnam in the period 2014-19. The government extended visa waiver programs to more countries in 2019 (Russia, Japan, Denmark, Norway, Sweden, Finland and Belarus). However, the flow of tourism has been disrupted due to the COVID-19 closure. According to the report, J.P. Morgan thinks growth will return in 2023-24 and continue over the next five to 10 years. This will also boost the growth of consumer stocks like Masan group stock price in Vietnam.

Strong growth in international tourist visits to Vietnam before Covid (Source: CEIC data)

What attributes led J.P. Morgan to assign a value of 102,000 VND to Masan Group stock price of the Masan Group?

Furthermore, as outlined in this report, utilizing the SOTP (sum-of-the-parts) approach, J.P. Morgan assessed Masan group stock price to be valued at 102,000 Vietnamese dong per share, marking a 26% increase from the price of 80,500 dong per share observed on July 18. The SOTP method involves valuing each subsidiary or business division of a company independently, subsequently aggregating these valuations to determine the overall company value.

In terms of projections, a target P/E (price-to-earnings) ratio for 2024 stands at 34x, indicating a valuation roughly 40% higher than similar companies in the region. This projection is supported by an anticipated year-over-year EPS (earnings per share) growth of 36% from 2023 to 2025.

In essence, the valuation of Masan stock price at 102,000 VND/share by J.P. Morgan is underpinned by these factors.

As per the report, J.P. Morgan acknowledges the commendable approach of Masan group stock price to fostering growth through distinct strategies tailored to various phases of the business cycle. Within the consumer goods realm, the company adeptly manages consistent profitability by striking a balance between enhancing profits in established sectors and simultaneously investing in broadening its portfolio and introducing novel products. In the case of emerging subsidiaries like Masan MEATLife and WinCommerce, the company places a near-term emphasis on driving revenue over immediate profit (e.g., offering discounts on meat products to expand market share). This focus on revenue enhancement will ultimately yield amplified profits through future economies of scale (cost improvements).

Masan's recent strategic allocation of capital serves to redefine its identity as a consumer-centric enterprise. By orchestrating consumer-oriented mergers and acquisitions and divesting the animal feed business in 2021, the company has augmented its endeavors and assets tied to the consumer ecosystem, escalating from approximately 30% in 2015 to 44% in 2022. From a revenue standpoint, the consumer-centric business segment has surged from comprising 43% in 2015 to contributing 94% of the total revenue in 2022.

Masan Group asset structure (Source: Masan Group)

Masan Group revenue structure (Source: Masan Group)

Since assuming control from Vingroup in 2019, MSN has expanded its market share by 7% within the modern retail sector (surpassing Co-op, an unlisted company) while concurrently enhancing profit margins, resulting in a 10% rise in EBITDA profit.

Modern trade market share (Source: Euromonitor)

Revenue and EBIT margin of BJC's consumer goods division before and after being aquired by BigC (Source: Company's data)

Furthermore, J.P. Morgan holds the viewpoint that the incorporation of WinCommerce's retail operations has seamlessly finalized the distribution channel for Masan Consumer's products. The synergy between Masan Consumer's product manufacturing and WinCommerce's product distribution has proven highly effective.
To substantiate this assertion, J.P. Morgan cites the case of Berli Jucker (BJC TB) acquiring BigC (BIGC TB, although now delisted). Subsequent to the acquisition, a noteworthy advancement was observed in BJC's consumer goods division, marked by heightened market share in pivotal product categories, along with amplified sales and profits across its proprietary brands.

11th consecutive recognition in Forbes' prestigious "Top 50 Best Listed Companies."

Masan Group, a prominent player in Vietnam's consumer and retail sector, boasts over 26 years of establishment and continuous growth. Presently, the company operates an extensive network of over 3,500 high-quality sales outlets, addressing essential consumer needs. The group further champions inventive strategies and technological investments, fostering the creation of diverse, top-tier products to meet domestic demands and facilitate exports to key markets including the United States, Japan, Australia, Korea, and Canada…

In the first half of 2023, Masan reported total assets amounting to approximately VND 140,858 billion, with total equity reaching VND 37,524 billion. Notably, the company held cash and cash equivalents totaling VND 13,452 billion. Moreover, during the second quarter of 2023, Masan demonstrated a consistent improvement in its free cash flow, surging to VND 1,665 billion compared to a modest VND 162 billion for the same period in 2022.

In a noteworthy achievement, Masan Group  was honored in Ho Chi Minh City on August 17 during the unveiling event of the "2023's Top 50 Listed Companies," hosted by Forbes Magazine. This recognition underscores Masan's enduring presence in this prestigious list for the 11th consecutive year.

To secure a place on this esteemed roster, listed companies are required to satisfy the following prerequisites: demonstrate profitability in 2022, and maintain a minimum revenue and capitalization of VND 500 billion. Furthermore, companies undergo a quantitative evaluation based on five key criteria: compound growth rates encompassing revenue, profit, ROE, ROC, and EPS expansion during the 2018 - 2022 timeframe. Forbes Vietnam conducts a thorough analytical assessment, which delves into the sustainable advancements of enterprises. This assessment takes into account various factors, including industry standing, profit sources, the effectiveness of corporate governance, and industry prospects.

Despite challenges such as a stagnant real estate market and subdued domestic consumption, Masan's remarkable growth and inclusion in the "Top 50 Best Listed Companies" demonstrate the enduring strength of its core consumer-focused business segment and its robust financial foundation. This achievement serves as a testament to the resilience and sustainability of Masan's operations in the face of economic challenges.

Continuously placing the well-being of shareholders and investors at the forefront of its priorities.

Since its listing on HOSE in 2009, Masan Group's MSN stock has consistently attracted significant attention from both domestic and international shareholders and investors. The company's Board of Directors places a strong emphasis on its Investor Relations (IR) function, which is highly regarded and dedicated to ensuring transparent and accessible information exchange. The aim is to provide equitable opportunities for all investors.

Masan's commitment to transparency is evident in the quality of its reports and the establishment of an autonomous audit committee that collaborates with reputable international audit firms. This dedication underscores Masan's commitment to promptly and comprehensively disseminating information, strengthening its connections with shareholders and investors. In the 2023 IR Award poll hosted by Vietstock, Masan Group achieved recognition by securing a place among the top 45 premier listed companies, advancing to the final round of voting.

Top Destinations for Employment in Asia

Since 2022, in the midst of elevated global inflation and considerable economic fluctuations, Masan has consistently pursued strategic initiatives spanning its business spectrum, bolstering its position. These dedicated endeavors have not gone unnoticed, earning Masan international recognition and prestigious accolades.

In the business realm, human resources consistently emerge as the most invaluable asset, serving as the driving force behind growth and the attainment of corporate objectives. Annually, HR Asia Magazine conducts a comprehensive survey across Asia, celebrating companies unwaveringly committed to enhancing employee satisfaction, well-being, and career advancement.

This extensive survey included nearly 650 companies in Vietnam and engaged nearly 50,000 employees, ranging from entry-level staff to senior executives and human resources directors. This year, Masan Group received two prestigious awards: "Best Companies to Work for in Asia" and special recognition in the category of "Diversity, Equity, and Inclusion."

Masan has achieved remarkable success by winning the special award category "Diversity, Equity, and Inclusion,". This recognition signifies a significant milestone in Masan's ongoing journey to establish an outstanding workplace that promotes principles of equity, diversity, and inclusivity.

Starting from the second quarter of 2023, several positive macroeconomic indicators have emerged. Initiatives such as the State Bank of Vietnam's interest rate reduction, VAT reduction, and interest rate support schemes for manufacturing companies have been set in motion. These developments hold the potential to yield favorable outcomes for businesses across Vietnam, including Masan. The implementation of these measures is anticipated to serve as a constructive driver for the projected performance of Masan group stock price as envisioned by J.P. Morgan.