Masan Group - Techcom Securities
Transcription
Masan Group - Techcom Securities
Techcom Securities 1 9 Dec 2014 Investment Analysis – Initial Report Dly T/O US$M Masan Group 0.51 MK 1Y Hi/Lo Target Foreign CAP Price % 108,000 Buy US$M 2,923 35 84,500 78,500 Sell TICKER Industry 63,900 Food Producers 86,500 12/9/2014 INVESTMENT PROPOSAL HOLD Group structure has been much simplified, MSN continues to clear any outstanding share dilution potential. Subsidiaries and affiliates perform well during 9M2014: MSC to refocus on consumer products development with extensive capital investment in expanding distribution channel and upcoming M&A (e.g. offered to buy 49% Cholimex). Nui Phao started to generate net gain from Q3/2014. However, project’s outlook should be remained skeptical as tungsten price has decreased since Dec 2013 (-15.8% y.o.y). Techcombank shows positive signs of recovery, with sharp increase in total assets, pre-tax income 9M2014; and lower NPL ratio. PRICE CHART IMPORTANT FINANCIAL INDICATORS P/E EV/EBITDA P/BV Dvd Yield ROE Net Profit Margin IB Debt/Equity IB Debt/EBITDA Interest Coverage Receivable Days Inventory Days Unit x x x % % % x x x days days 2009 149.07 88.30 13.04 0.00 8.75 10.53 0.28 2.02 7.10 5 28 2010 27.20 46.65 5.85 0.00 29.68 40.87 0.50 4.60 5.25 4 28 2011 31.47 34.80 3.91 0.00 14.89 27.96 0.44 5.29 5.19 7 41 2012 49.27 24.76 4.47 0.00 8.47 12.13 0.73 5.76 7.73 6 35 2013 137.63 23.73 4.30 0.00 3.19 3.78 0.80 7.15 5.10 7 43 2014 107.54 14.33 3.90 0.00 3.81 3.49 0.82 4.45 1.65 15 60 2015 73.76 11.13 3.34 0.00 4.88 4.23 0.66 3.11 1.95 15 60 2016 46.70 9.42 2.83 0.00 6.57 5.90 0.38 1.70 2.82 15 60 2017 35.36 8.32 2.36 0.00 7.28 6.98 0.34 1.53 5.16 15 60 2018 32.01 7.90 1.99 0.00 6.75 7.08 0.12 0.62 5.39 15 60 Source: TCBS Techcom Securities 2 9 Dec 2014 Investment Analysis – Initial Report GROUP STRUCTURE Vietnamese-French Cattle Feed JSC ("Proconco”) Established since 1991. Top 3 livestock & aqua feed manufacturer by volume (total capacity 1.2m tons/year). 2013: Revenue 12,000 VNDb, Net income 690 VNDb. 39.7% Masan Agri JSC Management advisory 51% Agriculture Financial 49% MASAN GROUP (“MSN”) TPG Growth FY2013: Paid-in Cap Owner’s Equity Net Revenue Net Income Mount Kellett 20% Masan Resources JSC (MR) Management advisory 2013: Owner’s equity 10,971 VNDb, Total assets: 21,198 VNDb. 74.1% Masan Horizon JSC Management advisory 100% F&B MasanConsumerHoldings One Member Ltd. Management advisory 100% Thai Nguyen Trading & Investment One Member Ltd (TNTI) Management advisory 2013: Owner’s equity ~ Total assets 719 VNDb. Nui Phao Mining Ltd (NPM) Owner and Operator of Nui Phao mine and factory. 2013: Owner’s equity 3,746 VNDb, Total assets 16,364 VNDb. 100% Masan Industrial One Member Ltd Sauces & noodles producer KKR 18.04% 100% Viet Tien Food Tech One Member Ltd Sauces producer 100% Minh Viet Packaging One Member Ltd Packaging, containers 100% Masan Brewery One Member Ltd. Brewery 94.5% Masan PQ JSC Sauces producer 100% Masan HD One Member Ltd Sauces producer 100% Masan Consumer JSC (MSC) 2013: Total assets 26,203 VNDb, Equity 15,945 VNDb, Revenue 11,943 VNDb Lamka One Member Ltd. 100% 100% Masan Beverage One Member Ltd Soft-drink producer & wholesaler Masan Food One Member Ltd Food producers 100% 100% 77.3% 15% 85% 7,349 VNDb 14,433 VNDb 11,943 VNDb 1,307 VNDb Resources 100% Masan Thai Nguyen Resources One Member Ltd (MRTN) Management advisory 2013: Owner’s equity 6,298 VNDb, Total assets 21,367 VNDb. 30,36% Techcombank Top 5 joint stock banks. 9M2014: Total assets 170,768 VNDb; Net income 902 VNDb. 53.2% Masan ĐN One Member Ltd. Noodles & soft-drink producer 99.99% 63.95% Vinacafe Bien Hoa JSC (VCF) Vinh Hao Mineral Water Instant coffee producer. JSC 2013 Revenue 2,299 VNDb, Mineral water Total assets 1,613 VNDb. producer Phu Yen Brewery JSC (PYBECO) Brewery 2013 Total asset: 270 VNDb Capacity: 50m litres/year. 63.94% Krongpha JSC Soft-drink producer Source: MSN, TCBS Techcom Securities 3 9 Dec 2014 Investment Analysis – Initial Report INTRODUCTION MSN is the largest conglomerate in Vietnam private sector, operates in diversified industries, including: food & beverage (F&B), natural resources, financial and agriculture. F&B contribute 100% of the group’s consolidated revenue until 2013. From 2014 onwards, MSN will have around 20% revenue from natural resources (Nui Phao project recorded revenue since Q2/2014). F&B segment MSN owns 77.3% Masan Foods, one of the largest food producer in Vietnam which has developed strong brands such as: Omachi, Kokomi, Tien Vua (instant noodles); Chin-su, Nam Ngu, Tam Thai Tu (sauces & condiments). Besides self-develop brands, MSN also expands its market share in F&B through continued acquisition of leading consumer products companies, e.g. Vinacafe Bien Hoa (VCF), Vinh Hao Mineral Water, Phu Yen brewery. Natural resources segment MSN owns 74.1% Masan Resources, which operates Nui Phao project, the biggest tungsten mine in terms of ore reserve (excluding mines in China). Nui Phao is a poly-metallic mine. Other than tungsten, there are bismuth, fluorspar and copper. Tungsten revenue is projected to account for 50 – 60% of project’s total revenue. Nui Phao processing factory completed and ran ramp-up phase since 2013; started recording revenue since 2Q2014, and generated first net profit in 3Q/2014. Financial segment MSN has 30.36% economic interest in Techcombank, of which 19.99% is common equity with voting rights. The rest of effective interest is created by holding convertible bond issued by Techcombank. MSN has agreed to irrevocably and mandatorily convert those bonds into ordinary shares. Techcombank is among top 5 joint stock commercial banks in terms of total assets (up to 171 VNDtn) and operation network (over 300 branches and 7,000 employees countrywide). Agriculture segment MSN has 20.4% effective interest in Vietnamese-French Cattle Feed JSC (Proconco). The company ranks 3rd in terms of total capacity in Vietnam livestock and aqua feed market (after CP and Cargill), has over 590 points of sales throughout country. Proconco is estimated to have revenue and net income 2013 of 12,000 VNDb and 690 VNDb, respectively. MILESTONES 2002 - 2003: Minh Viet (a trading company) merged with Viet Tien (a sauces producer) to form Masan Trading, later renamed as Masan Food in 2008. Introduced Chinsu sauces. 2004: Established Masan Maritime company specialized in marine transportation. Introduced Tam Thai Tu & Nam Ngu sauces, Omach i noodles. 2009: Masan Maritime was renamed as Masan Group, listed on HOSE. MSN started operating as a holding company, with majority control over Masan Food (54.8%) and held 19.99% of Techcombank. 2010 - 2011: Increased its effective interest at Techcombank to over 30% by purchasing 4,800 VNDb convertible bond. Acquire majority interest of Nui Phao mine (from Dragon Capital and through acquiring TNTI). 2012 - 2013: Acquired majority stake at various leading consumer companies: Proconco, Vin h Hao mineral water, and Vinacafe Bien Hoa. 2014: Nui Phao project was put into operation, fi rst net profit in Q3/2014. MSN to acquire Phu Yen brewery. Techcom Securities 4 9 Dec 2014 Investment Analysis – Initial Report OWNERSHIP STRUCTURE MSN Group Ownership Structure (6/2014) Vietnam Enterprise Investments Limited 2% Mr. Ho Hung Anh 2% Ms. Nguyen Hoang Yen (Chairman's wife) 3% Others 28% Masan JSC 34% Chartered cap: 7.349 VNDb BI Private Equity New Market II K/S 6% Orchid Capital Investment Pte. Ltd 11% Sunflower One Member Ltd 14% Source: TCBS Dr. Nguyen Dang Quang (Mr. Chairman) indirectly controls MSN over his stake in Masan JSC (around 46%). Mr. Ho Hung Anh (Vice Chairman) also holds more than 10% interest in Masan JSC. Dec 2014 major shareholders’ announcement: Mr. Ho Hung Anh registered to sell all of his 15.77 mil shares (2.14% stake, worth 1,300 VNDb). His wife, Ms. Nguyen Thi Thanh Thuy, registered to buy 16 mil shares. Masan JSC registered to sell 7.5 mil shares. Ms. Nguyen Hoang Yen (Chairman’s wife) registered to buy 8 mil shares. RECENT HIGHLIGHTS Dec - 2014 MasanConsumerHoldings issued a 2,100 VNDb bond, fixed coupon rate of 8% for 10Y tenor. This is the first, non-sovereign bond in Vietnam guaranteed by CGIF, an investment trust of ADB. Nov - 2014 Masan Consumer registered to acquire 49% Cholimex Food, however, 2 major shareholders Cholimex (40.7%) and Nichirei Food (20%) have officially declined to sell their stake. Cholimex and Masan Food (Chin-su brand) are market leaders in chili sauce segment. Masan Consumer registered to purchase 18 mil treasury shares (equivalent to 3.39% total outstanding share) at 90,000 VND/share, implied market cap of 48 VNDtn. Jul – 2014 Private placement of 896,802 MSN stocks to IFC to clear a convertible bond worth 38.56 VNDb (i.e. conversion price at 43.000 VND/share, discount 47% to current market price). Aug – 2014 Acquired 100% Lamka One Member Ltd, which owns 99.99% Phu Yen Brewery (PYBECO). Late 2013 Complete coffee factory at Long Thanh, which tripled total capacity of Vinacafe Bien Hoa. MSC to introduce Sagami, instant noodles brand for middle-market (in addition to Omachi for premium market and economy brand such as: Kokomi, Tien Vua, Oh Ngon). Introduced B’fast, Komi instant congee, 2:1 Phinn coffee. MSN to issue 20 mil shares ESOP to key managements/employees (equivalent to 2.91% total outstanding shares). 9 Dec 2014 Techcom Securities 5 Investment Analysis – Initial Report SWOT ANALYSIS Masan Group Strength Solid management (CEO of each subsidiary has over 20 years of relevant working experiences). Experienced in raising fund from foreign investors, through various funding instruments (private equity, bond, promissory note, etc.) Established strong credit rating in the eyes of foreign investors/creditors. Opportunity Interest rate decreases, giving low cost funding for upcoming M&A of the Group. Upside potential for Techcombank and Masan Consumer to be listed in upcoming years as Vietnam banking sector is improving, and securities market is getting more dynamic with liquidity increasing. Masan Consumers Strength Huge distribution system for consumer products with over 180 distributors and 176,000 points of sales. Strong branding through self-development and acquisition of leading brand names in Vietnam consumer market. Opportunity Vietnam economy recovers. GDP per capita and consumption spending increase. MSN addressable market size could reach USD 4.5bn. Masan Resources Strength A low-cost producers of tungsten because Nui Phao (i) is a tungsten-polymetallic mine, which helps to save mining cost; and (ii) has economy of scale. Partnership with H.C.Starck, a leading manufacturer of technology metals and advanced ceramics. Opportunity Tungsten products are likely to continue enjoying preferential export tariff of 0% as Nui Phao produces high-grade tungsten products (above 65%) and the Government promotes deep processing mineral products. Weakness High interest burden due to huge debt funding for continued M&A. High depreciation of CAPEX and goodwill affected bottom-line of the Group’s consolidated P&L. Group structure still complex and not so easy to perceive for investors given its various financial instruments issued and cross holding. Threat Fierce competition in F&B segment and high volatility of tungsten price. Still has some exposure to share dilution risk as MSN has an outstanding convertible bond of Jade Dragon worth 568 VNDb, conversion price 65,000VND/share probably be converted to 9mil shares in 2015 (1.2% outstanding share YE2013). Weakness Some key product brands reach maturity stage and could hardly continue impressive growth as in the past (e.g. sauces & condiment 2013 revenue grew only 8%, compared to continuous growth rate over 20% during 2010 – 2012 period.) Threat Fierce competition in soft-drink market with both foreign and domestic players, e.g. Pepsico, Nestle, Kirin, URC, Tan Hiep Phat, etc. Weakness High logistic cost as mining site is far from Hai Phong port (most of product is to export). Threat Tungsten price exhibits high volatility as both demand and supply subject to China’s market movements. (China accounts for 83% production volume and 60% consumption volume of tungsten worldwide). Techcom Securities 6 9 Dec 2014 Investment Analysis – Initial Report BUSINESS PERFORMANCE MSN consolidated revenue (VNDb) & gross margin (%) 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 43% 31% 43% 41% 42% 9M2014 consolidated revenue break-down 50% 39% 35% 18% 40% 30% CAGR 32% MSN 9M2014 Revenue: 10.833 VNDb 20% 10% 82% 0% 2008 2009 2010 Masan Consumers 2011 2012 2013A 2014E Masan Resources Masan Consumers Gross margin Source: MSN, MSC, TCBS Masan Resources Source: MSN, MR, TCBS Until 2013, Masan Consumers contributes 100% revenue of MSN consolidated P&L (since Techcombank & Proconco are associates companies so their revenues are not consolidated; and Masan Resources only generates net sales from Q2/2014 onwards). Total revenue of Masan Consumer increases rapidly, CAGR of 32% for 2009 – 2013 period, because of (i) selfdeveloped brands (Omachi, Chin-su) grows sharply; and (ii) continuously consolidate revenue of subsidiaries through M&A (Vinacafe Bien Hoa, Vinh Hao). Masan Consumer holds 18.6% noodles; 43.6% sauces & condiments; and 32.6% coffee market share 2013 (according to Euromonitor). In noodles market, MSC focuses on premium brands (Omachi, Kokomi) which have profit margin much higher than economy brands (e.g. Hao Hao of Acecook). In sauces & condiment market, MSC dominates the market with both premium (Chin-su, Tam Thai Tu) and economy brands (Nam Ngu, Nam Ngu De Nhi). Noodles market 2013 Omach i, 9.0% Others, 29.9% Sauces & condiments market 2013 Tien Vua, 6. 0% Kokom i, 1.9% Oh Ngon, 0.9% Sagami Market size: 1.04 USDb Aceco , 0.3% ok B'Fast, Vietna 0.5% m Jsc,… Source: Euromonitor, TCBS Nam Ngu, 2 3.1% Nam Ngu II, 9.0 Tam% Thai Rong Tu, 5.8 ChinViet, 0. % su, 5.5 2% % Source: Euromonitor, TCBS Market size: Other, 805 USDm 56.4% Instant coffee market 2013 Trung Nguye n, 18.1 Vinaca % fe (VCF), Market size: 32.6% 381 USDm Nestcaf e (Netsle ), 31.1 % Source: Euromonitor, TCBS With regards to natural resources segment, Nui Phao started generating revenue since Q2/2014. Nui Phao factory was completed since Mar 2013 and ran in ramp-up phase for 1 year. Any sales arising in ramp-up phase was not recorded in financial statement but to directly clear with capital expenditure of the project. The Company’s just started recording accounting revenue since Q2/2014. 9M2014 revenue reached only 1.953 VNDb, due to the decrease in tungsten market price. In financial segment, Techcombank shows positive signs: 9M2014 pre-tax income reached 1,163 VNDb, achieved 98.5% FY2014 plan; total assets reached 171 VNDtn, increase 7.5% from YE2013; NPL decrease to 2.96%. Techcom Securities 7 9 Dec 2014 Investment Analysis – Initial Report BUSINESS PROSPECT MSN shall consolidate substantial revenue from Nui Phao project from 2014 onwards. However, F&B segment continues to be the main sources of revenue, accounted for over 75% total group’s revenue. Masan Consumer sales is expected to grow fast during 2014 – 2018 period (CAGR 12%) thanks to the bright outlook of domestic consumption demand. MSN consolidated revenue forecast 2014 – 2018 (VNDb) 30,000 42% 42% 46% 45% 45% 6,320 5,081 15,000 10,000 5,000 11,943 4% 13,250 21,074 603 14,835 10,000 15% 3% 4% 7% 7% 4,041 2,648 8,899 2,270 4,716 5,509 5,766 6,326 2013A 2014F Sauces & condiments 2015F 5,255 5% 0% 6,450 7,616 8,357 2016F 2017F Meal solution 2018F 6,941 Instant coffee (VCF) Net margin Mineral water (Vinh Hao) Source: TCBS 7,568 - 2013A 2014E 2015F 2016F 2017F 2018F Masan Consumers Masan Resources Gross margin 2,102 3,089 2,860 2,452 5,000 10% 0 498 453 20% 6% 548 15,000 30% 25% 16,642 3,290 663 35% 18,707 730 CAGR 12% 20,000 40% 6,462 5,899 20,000 25,000 50% 45% 39% 25,000 Masan Consumer revenue forecast 2014 - 2018 (VNDb) Source: TCBS Masan Resources shall exhibit a high sales growth (CAGR of 18%) in 2014 – 2018 period. Tungsten market price should increase in long-term as it is a strategic metal that cannot be replaced without substantial replacement cost. It is expected that the percentage of price realization (*) for Nui Phao’s tungsten product shall increase as their branding becomes more solid in worldwide market. The percentage of tungsten sale volume/capacity is expected to reach 90% by 2018 given the increasing demand for tungsten and branding of Nui Phao product will be widely accepted. (*): Since Nui Phao produces tungsten concentrate (grade 65%) while common product traded in global market is tungsten APT (grade ~ 88.5%), Nui Phao needs a ratio to calculate its selling price from quoted tungsten APT price. Such ratio is called percentage of price realization. Nui Phao forecasted revenue 2014 – 2018 (USDm) 350 44% 37% 280 44 48% 47% 50% 51 47 40% 53 51 69 66 Tungsten 210 27% 23 31 45 140 17 26 47 74 74 113 118 135 137 2015 2016 2017 2018 70 67 2014 Nui Phao operating cost 2014 forecast 30% Fluorspar 20% Copper 10% Bismuth 0% EBITDA margin Source: TCBS Mining cost, 20 % Operating cost 2014F: 90 USDm Others, 22% Mainten ance cost, 15 % Processi ng cost, 43 % Source: TCBS Techcombank could maintain its positive trend along with the growth of Vietnam banking sector. Total assets of banking system achieved 6,175 VNDtn (increased 7.3% YTD) as of Oct 2014 because of higher credit growth (increased 8.6% YTD). Consumer lending will be the key driving force for retail banking growth of TCB in upcoming years. Techcombank’s credit quality control continues improving (NPL as of 9M2014 decreased to 2.96% from 3.65% as at YE2013). Techcom Securities 8 9 Dec 2014 Investment Analysis – Initial Report FINANCIAL PROSPECT Total assets continuously increase year over year, reached 46.5 VNDtn as at YE2013 (+20% since YE2012) mostly because of MSN’s various acquisitions in F&B segment, investments to Nui Phao, and high CAPEX for expanding distribution channel. In 2014, MSN has raised 8,900 VNDb long-term debts, including 6,800 VNDb from TNTI bond and 2,100 VNDb from MasanConsumerHolding (MCH) bond. The amount funding from TNTI bond is for refinancing existing loan and funding for working capital, while MCH bond amount is funding for future capital expenditure. In 2015, we expect MSN shall not raise substantial capital, given that: (i) Nui Phao started generate profit (estimated 2015 EBIT of over 1,300 VNDb); and (ii) total cash need for 2015 CAPEX is around 2,000 VND (proposed acquisition of Cholimex 357 VNDb and purchase of MSC treasury share 1,620 VNDb) which is already funded by MCH bond issuance. In upcoming years D/E is expected to be reduced gradually (D/E as at YE2013 was 0.8x), due to: (i) Nui Phao project is completed, no need for another substantial long-term debts; and (ii) Jade Dragon convertible bond is likely to be converted since conversion price (65,000 VND/share) is preferable compared to current market price (84,500 VND/share as at 9 Dec 2014). Masan Group Consolidated Debt Summary (9M2014) MSN DEBT SUMMARY (VNDbn) Total Short-term debts Bank loan 1 (secured; VND; 4.5% - 10.74%) Bank loan 2 (secured; USD; 4.5% - 9.91%) Bank loan 3 (secured; EUR: 5%) Bank loan 4 (unsecured; VND; 5.5% - 7.5%) Promissory notes (VND; 0%) Current portion of LT debts Total Long-term debts A. Normal loans Bank loan 1 (secured; VND; 9.6% - 14.5% M: 2020) Bank loan 2 (secured; VND; 9.6% - 14.5% M: 2020) Bank loan 3.1 (secured; VND; 9.6% - 14.5% M: 2020) Bank loan 3.2 (secured; USD; 8% - 10.5%; M: 2020) SCB (secured; USD; 8% - 10.5%; M: 2014 - 2020) J.P.Morgan 1 (secured; USD; LIBOR + 4%; M: 2016; bullet payment) J.P.Morgan 2 (unsecured; USD; LIBOR + 5%; M: 2016; bullet payment) B. Convertible bonds & convertible loans IFC 1 (convertible; VND; 20.4%; M: 2016) IFC 2 (non-convertible; VND; 20.4%; M: 2016) Jade Dragon (Mauritius) Ltd (USD; 6%; M: 2015) C. Secured bond Secured bond 1 (VND; 15%; M: 2016) Secured bond 2 (VND; benchmark + 3%; M: 2016) Secured bond 3 (VND; benchmark + 1%; M: 2016) Secured bond 4 (VND; 12.5%, benchmark + 4%; M: 2016) Other bond D. Financial lease (VND; 15%; M: 2018) Current portion of LT debts TOTAL IB DEBTS 9M2014 3,343 n.a 23 n.a n.a 363 16,113 3,972 n.a n.a n.a 950 382 568 11,500 600 900 700 2,500 6,800 54 (363) 19,455 YE2013 6,636 2,089 969 1 288 899 2,390 12,067 8,519 390 871 1,413 470 1,686 Comment Issued to Dragon Cap, were already paid after YE2013 Collateral: MSN's fixed assets & short-term deposits Collateral: NP assets & license + 68,5 mil TCB shares SCB loan is prepaid after TNTI bond issued 3,162 Collateral: MSC's invt in affiliate. Guaranteed by MIGA 527 Not guaranteed by MIGA 1,177 39 570 568 4,700 600 900 700 2,500 62 (2,390) 18,703 Conversion price is 43k/stock --> exercised in 7/2014 Collateral: 2,8 mil MSC shares. Guaranteed by MSC Conversion price is 65k/stock --> probably exercise Increase by 6,8 VNDtn from TNTI bond Collateral: 22,3 mil TCB convertible bonds Collateral: 125 mil MSC shares Techcom Securities 9 9 Dec 2014 Investment Analysis – Initial Report Debt schedule MSN DEBT SCHEDULE (VNDbn) ASSUMPTIONS Benchmark rate (assumed average of 4 SOCBs) LIBOR LONG-TERM DEBTS Opening Balance Add: New Issued Less: Repayments Closing Balance Interest expenses Annual interest rate A. Normal Loans Opening Balance Add: New Issued Less: Repayments Closing Balance Interest expenses Annual interest rate B. Convertible bonds & convertible loans Opening Balance Add: New Issued Less: Repayments Closing Balance Interest expenses Annual interest rate C. Secured bonds Opening Balance Add: New Issued Less: Repayments Closing Balance Interest expenses Annual interest rate D. Financial lease Opening Balance Add: New Issued Less: Repayments Closing Balance Interest expenses Annual interest rate SHORT-TERM DEBTS Opening Balance Add: New Issued Less: Repayments Closing Balance Interest expenses Annual interest rate TOTAL DEBTS Total interest expenses Total interest expenses/Total IB debts 2013 2014 2015 2016 2017 2018 7.00% 0.53% 7.00% 0.53% 6.50% 0.53% 6.50% 0.53% 6.50% 0.53% 14,457 - 14,457 8,900 (5,689) 17,630 (1,155) 8.0% 17,630 (1,719) 15,343 (1,743) 9.9% 15,343 (6,419) 8,925 (1,489) 9.7% 8,925 (12) 8,912 (885) 9.9% 8,912 (6,812) 2,100 (884) 9.9% 8,519 - 8,519 (5,487) 3,033 (453) 5.3% 3,033 (1,516) 1,516 (160) 5.3% 1,516 (1,516) (73) 4.8% 1,177 - 1,177 (190) 948 (158) 13.4% 948 (190) 190 (112) 11.8% 190 (190) (39) 20.4% 4,700 - 4,700 8,900 13,600 (536) 11.4% 13,600 13,600 (1,465) 10.8% 13,600 (4,700) 8,900 (1,373) 10.1% 8,900.0 8,900.0 (882.0) 9.9% 8,900 (6,800) 2,100 (882) 9.9% 61.6 - 61.6 (12.3) 49.3 (8.0) 13.0% 49.3 (12.3) 37.0 (6.4) 13.0% 37.0 (12.3) 24.6 (4.8) 13.0% 24.6 (12.3) 12.3 (3.2) 13.0% 12.3 (12.3) (1.6) 13.0% 4,246 1,654 (4,246) 1,654 (340) 8.0% 19,284 (1,495) 8% 1,654 1,992 (1,654) 1,992 (132) 8.0% 17,335 (1,875) 10% 1,992 2,254 (1,992) 2,254 (149) 7.5% 11,179 (1,638) 9% 2,254 2,517 (2,254) 2,517 (169) 7.5% 11,429 (1,054) 9% 2,517 2,739 (2,517) 2,739 (189) 7.5% 4,839 (1,072) 9% 4,246 18,703 Source: TCBS Techcom Securities 10 9 Dec 2014 Investment Analysis – Initial Report M&A pipeline done in the past Deal Acquired 99.99% PYBECO Acquired 53.2% Vinacafe Bien Hoa (VCF) Acquired 40% Proconco Acquired 63.95% Vinh Hao Mineral Water Acquired 1.9% Techcombank Acquired 9.0% Techcombank Acquired 16% Masan Consumer Acquired 15% Nui Phao Acquired 65% Nui Phao Acquired 19.9% Techcombank Acquired 72.8% Masan Consumer Total Size (USDm) Time Note 12 56 96 21 44 187 334 57 Aug-14 2012 Jul-12 2012 Jan-11 Dec-10 Dec-10 Oct-10 Acquired 100% Lamka, which owns 99,99% PYBECO. 136 227 164 1,334 Sep-10 Dec-09 Aug-09 Non-cash, issued promissory note to Dragon Capital Cash, paid to Prudential Fund & PCS International Fund Purchased convertible bond worth 928 VNDb Purchased convertible bond worth 4,800 VNDb Through acquisition of TNTI which owns 15% Nui Phao Source: Macquarie, TCBS Fund raising Investor/Creditor Size (USDm) Time Various creditors Various creditors TPG Growth Fund J.P. Morgan KKR Mount Kellett Standard Chartered Bank 100 324 50 175 200 100 80 Dec-14 Jun-14 Jul-14 Jul-13 Apr-13 Aug-12 Mar-12 Mount Kellett\MRG Richard Chandler\Kairos J.P. Morgan KKR Vietcombank Vietnam Development Bank Goldman Sachs\Jade Dragon 30 50 108 159 90 115 30 2012 2012 Aug-11 Apr-11 Mar-11 Feb-11 2010 20 30 40 9 1,710 Dec-09 2009 2009 2009 House Foods Corporation TPG Capital IFC Mekong Capital Total Note MCH bond guaranteed by VDB TNTI bond Acquired 49% Masan Agri Loan to Masan Industrial (subsidiary of MSC) Acquired 8.1% Masan Consumers Acquired 20% Nui Phao Syndicated loan funding for Nui Phao. Has been cleared by TNTI bond Convertible loan to MSN. Converted, clear Convertible loan to MSN. Converted, clear Loan to Masan Industrial (subsidiary of MSC) Acquired 10% Masan Consumers Loan to MR funding for Nui Phao Loan to MR funding for Nui Phao Bought MSN convertible bond. Probably be converted in 2015 (conversion @65,000/share) Acquired 1.85% MSN (9 mil @40,000 VND/share) Bought MSN convertible bond. Converted, clear Bought MSN convertible bond. Converted, clear Acquired Masan Food Source: TCBS Techcom Securities 11 9 Dec 2014 Investment Analysis – Initial Report Forecasted F&B Revenue – Masan Consumers Net revenue 2009 3,958 105.9% 2,321 % Growth Sauces & condiments % Growth % Adjusment 70.0% Nam Ngu 1,483 % Growth Nam Ngu II 92 % Growth Tam Thai Tu 419 % Growth Chin-su 312 % Growth Rong Viet 14 % Growth Meal solution 1,221 % Growth 648.9% Noodles - Omachi 354 % Growth Noodles - Tiến Vua 867 % Growth Noodles - Kokomi % Growth Noodles - Oh Ngon % Growth Noodles - Sagami % Growth Congee - B'Fast % Growth Instant coffee (VCF) 1,021 % Growth 18.3% Mineral water (Vinh Hao) % Growth 2010 5,586 41.1% 3,204 38.1% 70.0% 1,742 17.4% 559 505.5% 476 13.8% 411 31.5% 16 15.8% 1,702 39.5% 750 111.9% 808 -6.8% - 2011 7,057 26.3% 3,980 24.2% 70.0% 2,124 22.0% 769 37.7% 558 17.0% 509 24.0% 19 17.0% 2,429 42.7% 1,095 45.9% 941 16.5% 240 130 - 154 18.6% - 2012 10,389 47.2% 4,865 22.2% 69.5% 2,577 21.3% 1,004 30.6% 647 16.1% 614 20.5% 22 16.1% 3,465 42.6% 1,607 46.8% 1,145 21.7% 382 59.3% 181 17.4% - - - - 1,302 27.5% 1,586 21.8% 2,060 29.9% - 2013A 11,943 14.9% 5,255 8.0% 71.3% 2,784 8.0% 1,085 8.0% 699 8.0% 663 8.0% 24 8.0% 4,041 16.6% 1,958 21.8% 1,305 14.0% 413 8.3% 196 8.3% 65 109 2,102 2.1% 453 2014F 13,250 10.9% 5,766 9.7% 2015F 14,835 12.0% 6,326 9.7% 2016F 16,642 12.2% 6,941 9.7% 2017F 18,707 12.4% 7,616 9.7% 2018F 21,074 12.7% 8,357 9.7% 3,063 10.0% 1,193 10.0% 755 8.0% 729 10.0% 25 5.0% 4,716 16.7% 2,385 21.8% 1,488 14.0% 448 8.3% 212 8.3% 69 5.0% 114 5.0% 2,270 8.0% 498 10.0% 3,369 10.0% 1,313 10.0% 815 8.0% 802 10.0% 27 5.0% 5,509 16.8% 2,906 21.8% 1,696 14.0% 485 8.3% 230 8.3% 72 5.0% 120 5.0% 2,452 8.0% 548 10.0% 3,706 10.0% 1,444 10.0% 881 8.0% 882 10.0% 28 5.0% 6,450 17.1% 3,541 21.8% 1,934 14.0% 525 8.3% 249 8.3% 76 5.0% 126 5.0% 2,648 8.0% 603 10.0% 4,076 10.0% 1,588 10.0% 951 8.0% 971 10.0% 29 5.0% 7,568 17.3% 4,314 21.8% 2,205 14.0% 569 8.3% 269 8.3% 79 5.0% 132 5.0% 2,860 8.0% 663 10.0% 4,484 10.0% 1,747 10.0% 1,027 8.0% 1,068 10.0% 31 5.0% 8,899 17.6% 5,256 21.8% 2,513 14.0% 616 8.3% 292 8.3% 83 5.0% 139 5.0% 3,089 8.0% 730 10.0% Source: TCBS Techcom Securities 12 9 Dec 2014 Investment Analysis – Initial Report Forecasted P&L of Nui Phao project – Masan Resources Projected Revenue 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Tungsten 1,409 2,378 2,485 2,836 2,874 2,838 2,867 2,698 3,008 3,215 3,140 3,063 2,912 2,757 2,785 Fluorspar 978 1,559 1,559 1,446 1,388 1,399 1,460 1,501 1,499 1,486 1,498 1,499 1,470 1,459 1,459 Cooper 537 655 941 1,118 1,072 945 858 1,062 1,091 1,014 926 789 702 672 672 Bismuth 366 490 914 1,062 986 848 828 1,104 1,144 1,065 946 769 670 631 631 Total revenue 3,290 5,081 5,899 6,462 6,320 6,030 6,012 6,365 6,742 6,779 6,510 6,121 5,754 5,520 5,548 Depreciation 1,350 1,350 1,350 1,350 1,350 1,350 1,350 1,350 1,350 1,350 1,350 1,350 1,350 1,350 1,350 Other COGS 1,003 1,454 1,452 1,452 1,452 1,452 1,452 1,452 1,452 1,452 1,452 1,452 1,452 1,452 1,452 Total COGS 2,353 2,805 2,803 2,803 2,803 2,803 2,803 2,803 2,803 2,803 2,803 2,803 2,803 2,803 2,803 Gross Profit 937 2,277 3,096 3,660 3,517 3,228 3,209 3,563 3,939 3,977 3,707 3,318 2,952 2,717 2,745 Selling expense 26 25 25 25 25 25 25 25 25 25 25 25 25 25 25 G&A expenses 861 877 881 873 859 862 866 867 841 836 835 823 823 820 540 Operating profit Interest expenses Pre-tax income 50 1,374 2,190 2,762 2,634 2,340 2,318 2,671 3,073 3,116 2,847 2,470 2,103 1,872 2,180 748 816 816 816 816 0 0 0 0 0 0 0 0 0 0 -698 558 1,374 1,946 1,818 2,340 2,318 2,671 3,073 3,116 2,847 2,470 2,103 1,872 2,180 Source: TCBS Techcom Securities 13 9 Dec 2014 Investment Analysis – Initial Report APPENDIX FINANCIAL STATEMENTS No. Of Shares at YE (m) Cum.Adj. Factor P&L Net Sales Cost of Good Sold Gross Profit Operating Exp. - Selling Operating Exp. - G&A Other Operating Exp. Total Operating Exp. Operating Profit Interest Income Interest Expenses Investment Income Gain/Loss from Disposals Other Non Operating Income Net Non-Operating Income Other Income/Expenses Pre Tax Profit B4 XO Income Taxes Net Profit B4 XO & MI Minority Interest (PL) Net Profit after Taxes after MI Extraordinary Items Net Profit Unadjusted DPS Balance Sheet Cash and Cash Equivalent Short Term Investments Accounts Receivables Inventories Other Current Assets Total Current Assets Long Term Investments Net Fixed Assets Other LT Assets Total Assets Accounts Payable Short Term Debt Other Current Liabilities Current Liabilities Long Term Debt Other LT Liabilities Total Liabilities Minority Interest (Liab.) Paid-in Capital Capital Surplus Retained Earning & Reserves Other Shareholder Equity Total Shareholder Equity Cash Flow Depreciation and Amortization Capital Expenditure (CAPEX) Free Cash Flow EBITDA 2009 485.4 0.7 VNDb 3,958 2,584 1,374 637 105 0 742 632 102 89 49 0 38 101 0 733 53 680 263 417 0 417 0 VNDb 1,850 50 57 199 336 2,442 3,920 610 46 7,017 267 687 257 1,211 735 2 1,948 307 4,854 1,422 434 4,329 4,762 VNDb 71 412 843 703 2010 515.3 0.7 2011 515.3 0.7 2012 687.3 0.9 2013 734.9 1.0 2014 735.8 1.0 2015 744.5 1.0 2016 744.5 1.0 2017 744.5 1.0 2018 744.5 1.0 5,586 3,195 2,392 951 214 0 1,165 1,227 357 234 161 0 1,235 1,519 0 2,746 117 2,629 346 2,283 0 2,283 0 7,057 3,998 3,059 1,010 406 0 1,417 1,642 1,125 316 393 0 25 1,226 0 2,869 373 2,496 523 1,973 0 1,973 0 10,389 6,179 4,210 1,325 728 0 2,053 2,158 761 279 -309 0 158 331 0 2,489 526 1,963 702 1,261 0 1,261 0 11,943 6,943 4,999 1,982 890 0 2,871 2,128 392 417 -193 0 104 -115 0 2,013 706 1,307 856 451 0 451 0 16,540 10,092 6,448 2,744 1,232 0 3,976 2,472 465 1,495 641 0 -78 -467 0 2,005 561 1,444 866 577 0 577 0 19,916 11,463 8,453 3,305 1,484 0 4,788 3,665 478 1,875 654 0 -78 -821 0 2,844 740 2,105 1,263 842 0 842 0 22,540 12,498 10,042 3,740 1,679 0 5,419 4,623 582 1,638 667 0 -78 -467 0 4,156 831 3,325 1,995 1,330 0 1,330 0 25,169 13,675 11,494 4,176 1,875 0 6,051 5,443 497 1,054 680 0 -78 45 0 5,488 1,098 4,390 2,634 1,756 0 1,756 0 27,394 15,023 12,371 4,545 2,041 0 6,586 5,785 734 1,072 694 0 -78 277 0 6,063 1,213 4,850 2,910 1,940 0 1,940 0 3,885 0 64 290 388 4,627 8,100 8,266 137 21,130 444 1,125 1,657 3,225 5,001 756 8,981 1,525 5,153 2,166 -6,350 16,974 10,624 10,423 373 194 613 1,312 12,541 9,321 11,565 145 33,573 423 2,032 1,171 3,626 7,410 982 12,018 5,679 5,153 2,166 -1,890 17,766 15,876 7,559 0 121 564 977 9,221 11,314 17,977 187 38,699 974 1,793 1,981 4,748 12,647 1,599 18,995 5,821 6,873 7,999 -2,694 16,578 13,884 8,986 0 351 1,070 791 11,199 10,761 23,558 984 46,502 942 6,636 2,206 9,784 12,067 1,390 23,241 8,829 7,349 9,602 6,357 8,076 14,433 9,235 0 1,024 2,275 1,180 13,714 11,403 23,582 602 49,301 1,659 3,373 2,789 7,821 15,911 1,925 25,657 7,729 7,358 9,631 7,801 8,114 15,915 11,236 0 632 1,525 1,421 14,814 12,056 22,679 784 50,333 808 8,410 3,556 12,774 8,925 2,317 24,016 7,729 7,445 10,112 9,906 8,682 18,588 9,596 0 1,242 2,618 1,609 15,065 12,724 21,436 992 50,216 2,322 2,266 4,452 9,040 8,912 2,623 20,575 7,729 7,445 10,112 13,230 8,682 21,913 14,174 0 851 1,915 1,796 18,735 13,404 20,199 1,272 53,610 665 9,329 4,555 14,550 2,100 2,929 19,579 7,729 7,445 10,112 17,621 8,682 26,303 14,317 0 1,427 3,065 1,955 20,764 14,098 18,967 1,166 54,995 3,059 2,739 5,027 10,825 2,100 3,188 16,113 7,729 7,445 10,112 22,471 8,682 31,153 105 851 3,483 1,331 142 2,208 -805 1,785 350 5,785 -1,807 2,508 489 3,840 -2,132 2,617 1,861 1,884 1,531 4,333 1,916 1,013 5,212 5,581 1,968 725 6,397 6,591 2,018 782 5,825 7,461 2,074 842 7,921 7,860 Source: TCBS Techcom Securities 14 9 Dec 2014 Investment Analysis – Initial Report RATIO ANALYSIS # of Shares O/S P/E EV/EBITDA P/BV P/Op. Profit P/FCF P/Sales Dvd Yield EPS b4 XO % Change Op. Profit PS % Change FCF PS % Change RevPS % Change EBITDA PS % Change BVPS % Change ROE ROA Gross Profit Margin Operating Margin Pre tax Margin Net Profit Margin IB Debt/Equity IB Debt/Assets IB Debt/EBITDA Interest Coverage Leverage Ratio (A/E) Cash/Equity Current Ratio Quick Ratio Cash Ratio Receivable Days Inventory Days Payable Days Cash Conversion Cycle Net WC Ratio WC Turnover Total Asset Turnover Fixed Asset Turnover Unit m x x x x x x % VND % VND % VND % VND % VND % VND % % % % % % % x x x x x % x x x days days days days % x x x 2009 485.4 149.1 88.3 13.0 98.3 73.7 15.7 0.0 567 DUPONT ANALYSIS Unit x x % x % x % Net Income/Pretax Income Pretax Income/EBIT EBIT/Net sales Net Sales/Assets ROA Assets/Equity ROE 8.7 5.9 34.7 16.0 18.5 10.5 0.3 0.2 2.0 7.1 1.5 38.8 2.0 1.9 1.5 5 28 38 -4 17.5 3.2 0.6 6.5 2010 515.3 27.2 46.6 5.8 50.6 17.8 11.1 0.0 3,107 448% 1,669 94% 4,739 313% 7,601 41% 1,811 89% 14,456 123% 29.7 16.2 42.8 22.0 49.2 40.9 0.5 0.3 4.6 5.3 1.8 36.6 1.4 1.3 1.2 4 28 39 -8 6.6 4.2 0.4 1.3 2009 0.6 1.2 16.0 0.6 5.9 1.5 8.7 2010 0.8 2.2 22.0 0.4 16.2 1.8 29.7 860 1,147 5,385 957 6,480 2011 515.3 31.5 34.8 3.9 37.8 neg 8.8 0.0 2,685 -14% 2,235 34% -1,095 9,602 26% 2,428 34% 21,602 49% 14.9 7.2 43.3 23.3 40.6 28.0 0.4 0.3 5.3 5.2 2.1 65.7 3.5 3.3 2.9 7 41 37 11 26.6 1.4 0.3 0.7 2012 687.3 49.3 24.8 4.5 28.8 neg 6.0 0.0 1,715 -36% 2,936 31% -2,459 -55% 14,137 47% 3,412 41% 18,892 -13% 8.5 3.5 40.5 20.8 24.0 12.1 0.7 0.4 5.8 7.7 2.4 54.4 1.9 1.8 1.6 6 35 42 -1 11.6 1.6 0.3 0.7 2013 734.9 137.6 23.7 4.3 29.2 neg 5.2 0.0 614 -64% 2,896 -1% -2,900 -15% 16,250 15% 3,561 4% 19,639 4% 3.2 1.1 41.9 17.8 16.9 3.8 0.8 0.4 7.1 5.1 3.0 62.3 1.1 1.0 0.9 7 43 47 3 3.0 4.1 0.3 0.6 2011 0.7 1.7 23.3 0.3 7.2 2.1 14.9 2012 0.5 1.2 20.8 0.3 3.5 2.4 8.5 2013 0.2 0.9 17.8 0.3 1.1 3.0 3.2 2014 735.8 107.5 14.3 3.9 25.1 40.6 3.8 0.0 786 28% 3,363 16% 2,083 22,506 38% 5,896 66% 21,656 10% 3.8 1.2 39.0 14.9 12.1 3.5 0.8 0.4 4.5 1.7 3.2 58.0 1.8 1.5 1.2 15 60 42 34 12.0 4.5 0.3 0.7 2015 744.5 73.8 11.1 3.3 16.9 11.9 3.1 0.0 1,146 46% 4,988 48% 7,092 240% 27,100 20% 7,595 29% 25,293 17% 4.9 1.7 42.4 18.4 14.3 4.2 0.7 0.3 3.1 2.0 2.9 60.4 1.2 1.0 0.9 15 60 42 34 4.1 5.0 0.4 0.9 2016 744.5 46.7 9.4 2.8 13.4 9.7 2.8 0.0 1,810 58% 6,291 26% 8,705 23% 30,671 13% 8,968 18% 29,817 18% 6.6 2.6 44.6 20.5 18.4 5.9 0.4 0.2 1.7 2.8 2.5 43.8 1.7 1.4 1.1 15 60 42 34 12.0 5.6 0.4 1.0 2017 744.5 35.4 8.3 2.4 11.4 10.7 2.5 0.0 2,390 32% 7,407 18% 7,925 -9% 34,248 12% 10,153 13% 35,791 20% 7.3 3.4 45.7 21.6 21.8 7.0 0.3 0.2 1.5 5.2 2.2 53.9 1.3 1.2 1.0 15 60 42 34 7.8 4.9 0.5 1.2 2018 744.5 32.0 7.9 2.0 10.7 7.8 2.3 0.0 2,640 10% 7,872 6% 10,778 36% 37,275 9% 10,695 5% 42,390 18% 6.8 3.6 45.2 21.1 22.1 7.1 0.1 0.1 0.6 5.4 1.9 46.0 1.9 1.6 1.3 15 60 42 34 18.1 3.9 0.5 1.4 2014 0.3 0.8 14.9 0.3 1.2 3.2 3.8 2015 0.3 0.8 18.4 0.4 1.7 2.9 4.9 2016 0.3 0.9 20.5 0.4 2.6 2.5 6.6 2017 0.3 1.0 21.6 0.5 3.4 2.2 7.3 2018 0.3 1.0 21.1 0.5 3.6 1.9 6.8 Source: TCBS Techcom Securities 15 9 Dec 2014 Investment Analysis – Initial Report Nui Phao mineral products price movement Tungsten APT (USD/mtu) Copper (USD/metric ton) 500.0 12,000 317.5 400.0 9,000 6,515.0 300.0 200.0 6,000 100.0 3,000 0 Source: LME Exchange Source: Metal Bulletin Bismuth (USD/pound) Fluorspar (USD/metric ton) 20.0 15.0 750 600 11.4 10.0 450 505 300 5.0 150 - 0 Source: Metal Bulletin Source: Industrial Minerals magazine (London) 9 Dec 2014 Techcom Securities 16 Investment Analysis – Initial Report Contact: Techcom Securities Address: 4+5th Floor, 9 To Hien Thanh Street, Hai Ba Trung District, Hanoi Telephone: (84 – 4) 2220 1039 Fax: (84 – 4) 2220 1032 Website: www.tcbs.com.vn Email: [email protected] IMPORTANT DISCLAIMER: This report and any forecasts, figures, opinions, or investment techniques and strategies presented herein are for information purposes only and based on certain assumptions and current market conditions. 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