Wheat prices rise sharply due to Russia tensions
Masan Consumer Joint Stock Company (Masan Consumer) is considered the “golden egg” of Masan Group when it contributes about 30.5% of revenue and 37.1% of income before tax, interest and depreciation. Hao (EBITDA) 2020. It can be said that this is an indispensable pillar in the Point of Life consumer ecosystem that billionaire Nguyen Dang Quang set out.
As a consumer goods company, how will Masan Consumer’s business activities in the context of continuously increasing commodity prices in the first period of 2022. A recent analysis report of VnDirect securities company has included comments on this issue.
In the view of VnDirect, the Russia-Ukraine conflict will continue to push up global food prices in the first half of 2022 because both Russia and Ukraine are major exporters of agricultural products. In 2021, wheat and corn exports from Russia and Ukraine will reach 207 million tons, accounting for about 29% of total global exports. Wheat and corn prices have increased by 21.1% and 8.4%, respectively, from pre-conflict levels.
Currently, the cost of imported raw materials accounts for about 70% of Masan Consumer’s total cost of raw materials, so This securities company believes that the increase in global agricultural product prices will put pressure on input costs of Masan Consumer in 2022.
However, this does not make it difficult for Masan Consumer to increase selling prices to offset the high cost of materials. The company’s gross profit margin has always remained at a high level of 42.5% as the increased contribution from premium products offsets higher input costs in the convenience food segment.
Why does Masan Consumer do this? VnDirect points out three reasons: Masan Consumer has a wide product brand recognition, leads a new consumer trend in the market, and a high-end brand positioning strategy.
Specifically, according to Kantar World Pannel, 98% of Vietnamese households will use at least one MCH product by 2021. Besides, Masan Consumer products always lead new consumption trends such as breakfast at breakfast. home with complete meal replacements during social distancing. The company’s products also have a unique taste compared to other competitors. For example, Ponnie sausage is the first cheese-filled sausage in Vietnam, selling for twice as much as other pasteurized sausage brands.
Therefore, VnDirect believes that Masan Consumer has the ability to increase selling prices faster than other competitors thanks to its large number of loyal customers and rich product portfolio.
In addition, Masan currently applies a product positioning strategy in each segment: mid-end and high-end, so customers in the high-end segment will be willing to pay higher prices for new high-end products.
Therefore, VnDirect expects Masan Consumer’s average selling price to increase by 8% y/y thanks to the launch of new high-end products, thereby offsetting higher material costs in 2022.
In addition, Masan Consumer also has the advantage of Masan Group’s ecosystem to increase production. In 2022, Wincommerce aims to open 500-1,400 Winmart+ and 10-40 Winmart supermarkets.
Currently, Masan Group is making the necessary preparations to quickly deploy mini-malls nationwide in 2022. Mini-malls will be the main channel to attract Masan customers in the coming years. In addition, the frequency of consumer interaction with Masan’s products and services such as grocery stores and coffee shops will also provide the company with a rich and diverse source of customer data. As a result, Masan Consumer can collect data on the history and consumption habits of customers to promptly improve products to suit the tastes of consumers in each period.
Gross profit margin slightly improved in 2022 thanks to the possibility of increasing selling price VnDirect believes that The ability to increase selling prices will be the main driving force for Masan Consumer’s revenue growth as well as maintaining stable gross profit margin in 2022-2023. In the past, Masan Consumer has had a relatively strong ability to raise prices and upscale products. The company increased the average selling price of its products through the launch of new premium products and improved the quality of its existing products to offset the sharp increase in global raw material prices due to the impact of the pandemic. Covid-19 in the last 6 months of 2021.
Therefore, VnDirect expects that the price increases and the combination of upgrades will boost Masan Consumer’s gross profit margin to 0.2 percentage points in 2022. From there, net profit growth will reach 12.2%/ 11.4% in the next 2 years.
By Business and Marketing
at Blogtuan.info – Source: cafebiz.vn – Read the original article here
