UEH UNIVERSITY

UEH COLLEGE OF BUSINESS

SCHOOL OF MANAGEMENT

ENTERPRISE RISK MANAGEMENT

MASAN GROUP

LECTUTER: Trần Thị Thanh Phương SUBJECT CODE:

23C1MAN50209802

Student Trương Thiện Phú Student ID number: 31211020616

name:

Student Nguyễn Tuấn Hưng Student ID number: 31211024440

name:

Student Võ Thị Thảo Hiền Student ID number: 31211024632

name:

Student Phạm Nguyễn Xuân Student ID number: 31211027015

name: Nga

Student Nguyễn Văn Trung Student ID number: 31211023001

name:

HO CHI MINH CITY, 2024

 STUDENTS’ EVALUATION FORM

Name of team members Students’ ID Contribution

Nguyễn Tuấn Hưng 31211024440 100%

Trương Thiện Phú 31211020616 100%

Nguyễn Văn Trung 31211023001 100%

Phạm Nguyễn Xuân Nga 31211027015 100%

Võ Thị Thảo Hiền 31211024632 100%

 TABLE OF CONTENTS
I. General introduction about the company
1. Basic information
2. History of formation and development
3. Company vision and mission
3.1. Vision
3.2. Mission
II. The current state of the business
III. Key risk scenarios
1. Strategy Risk
1.1 Risk Situation
1.2 Risk Components Analysis
1.3 Quantitative measurement of risk
2. Environmental Risk
2.1 Risk Situation
2.2 Risk Component Analysis
2.3 Quantitative measurement of risk
3. Food Hygiene Safety Risk
3.1 Risk Situation
3.2 Risk Component Analysis
3.3 Quantitative measurement of risk
4. Technology Risk
4.1 Risk Situation
4.2 Risk Component Analysis
4.3 Quantitative measurement of risk
5. Scenario Summary
6. Conclusion and Recommendation
6.1 Conclusion
6.2 Recommendations
REFERENCES
 I. General introduction about the company
1. Basic information
- Full name: MASAN GROUP CORP.
- Stock symbol: MSN
- Authorized capital: 11.746.832.460.000 VNĐ
- Headquarters: 8th Floor, Central Plaza Building, 17 Le Duan - Ben Nghe Ward
- District 1 - Ho Chi Minh City.
- Phone: 028-62563862
- Fax: 028-38274115
- Email: investorrelation@masangroup.com
- Website: http://www.masangroup.com/
- Business registration certificate and tax code: 0303576603

Ma San Group Joint Stock Company was established in November 2004 under the
name Ma San Marine Joint Stock Company. The company officially changed to Ma
San Group Joint Stock Company (English name is Ma San Group Corporation) in
August 2009. It was successfully listed on the City Stock Exchange. HCM on
November 5, 2009.
Alongside Vietnam's economic growth, consumers and their needs are continually
evolving. Technology and convenience have become increasingly prominent
concerns, favored by many. Anticipating this trend, alongside its manufacturing and
business activities for branded products, Masan Group has established a consumer-
technology ecosystem that seamlessly integrates offline and online experiences.
Masan is the leading consumer goods retail brand in Vietnam with familiar products
in every Vietnamese family's kitchen: Chinsu soy sauce, Omachi instant noodles, and
Nam Ngu fish sauce...

2. History of formation and development

- 2004: Established Ma San Maritime Joint Stock Company (MSC) with an initial
charter capital of 3.2 billion VND. MSC operates in the field of shipping.
- 2005: MSC increased capital from 3.2 billion VND to 32 billion VND through a
private placement to existing shareholders.
- 2009: MSC was completely transferred to Ma San Group Joint Stock Company.
MSC increased capital from VND 32 billion to VND 100 billion through a private
placement to Ma San Group Joint Stock Company.
- 2009: Ma San Group Joint Stock Company officially changed its name to Ma San
Joint Stock Company. Masan Group increased its capital to 4,764 billion and officially
became a public company.
- 2011: KKR, a leading global company specializing in investing in unlisted
companies, invested 159 million USD in Masan Consumer. J.P. Banks Morgan and
Standard Chartered gave Masan Consumer a loan of 108 million USD.
- 2012: The Company's charter capital was 6,872 billion VND.
- 2013: KKR continued to invest another 200 million USD in Masan Consumer.
Change of business registration, charter capital 7,349,113 billion VND.
- 2014: Masan group transferred all contributed capital, equivalent to 100% of the
charter capital of Masan Brewery company to Masan Consumer Holdings company
and sold Masan Agri company.

3. Company vision and mission

3.1. Vision

To be Vietnam’s pride by uplifting the material and spiritual lives of Vietnamese

consumers

3.2. Mission

“Our mission is to uplift the material and spiritual lives of 100 million Vietnamese
consumers.”

II. The current state of the business

Masan's consistent maintenance of a robust gross profit margin, fluctuating between

23% and 32%, showcases its commendable profitability and effective cost control
mechanisms, outperforming the industry average of 23% to 29%. This aspect
positions Masan favorably against its competitors. However, a closer examination of
the financial landscape reveals nuanced challenges that warrant attention. The current
scenario unfolds a concerning trend of high cost of goods sold, constituting
approximately 70-73% of the total revenue, coupled with elevated financial expenses.
This suggests that Masan's financial leverage may not be optimally harnessed, and the
inefficiency in cost management and suboptimal utilization of input factors,
potentially amplified by the lingering effects of Covid-19, contribute to an observed
instability in the net profit margin from 2020 to 2022.
Further scrutiny of financial metrics brings to light a noteworthy declining trend in
Masan's return on assets (ROA) over an extended period. This trajectory raises red
flags about the company's ability to utilize its assets effectively and optimize available
resources. The diminishing ROA not only reflects operational inefficiency but also
prompts questions regarding the leadership's strategic decision-making and overall
management capabilities.
Adding to the narrative, Masan's return on capital employed (ROCE) significantly
lags behind the industry average, showcasing a discrepancy ranging from 3 to 13
times. This stark difference indicates a considerable inefficiency in the utilization of
capital and suggests a potential lack of profitability generation. More concerning is the
potential indication that the company might be misallocating funds, even in areas such
as capital distribution and investments.
In 2018, Masan exhibited a robust Return on Equity (ROE) of 16.50%, reflecting
effective equity utilization and the generation of 16.50 VND in net profit for every
100 VND of equity. This bolstered Masan's investment appeal, potentially attracting
additional equity for future expansion. Although there was a promising rebound to
14.17% in 2021, a slight dip in 2022 suggests persistent challenges, underscoring the
need for ongoing strategic equity management. Analyzing working capital efficiency,
the Cash Conversion Cycle (CCC) played a crucial role, with challenges in 2019
giving way to positive trends in 2020 and 2021. However, a noticeable uptick in 2022
signals potential issues, emphasizing the importance of effective working capital
management. The interest coverage ratio remained stable from 2018 to 2022,
fluctuating between 4.34 and 5.86, yet consistently below the industry average,
prompting a closer examination of operating income and interest expenses. Regarding
financial leverage, the Debt/Total Assets ratio, after reaching 78.37% in 2020,
moderated to 74.08% in 2022, indicating ongoing debt management efforts. Striking a
balance between debt and assets remains crucial for effective risk mitigation. While
the current ratio showed significant improvement in 2021 at 1.27, reflective of adept
management of current assets and liabilities, a subsequent drop in 2022 raises
concerns about short-term obligations, emphasizing the need for continuous
monitoring and adjustments to maintain liquidity and meet immediate financial
demands. In conclusion, Masan Group grapples with challenges in equity efficiency,
working capital management, and debt optimization, underscoring the imperative for
ongoing strategic focus on these financial components to ensure the enduring health
and resilience of the business.
In summary, while Masan excels in maintaining impressive gross profit margins, the
challenges posed by high costs, financial inefficiencies, and declining return metrics
underscore the need for a strategic review. Addressing these issues is crucial not only
for sustaining Masan's competitive edge in the industry but also for fortifying its
overall financial health and resilience in the face of evolving economic landscapes.

III. Key risk scenarios

1. Strategy Risk

1.1 Risk Situation

“We project a Compound Annual Growth Rate (CAGR) for Masan Consumer
Holdings (MCH) in the period 2023-2026 of 9%. We have adjusted the growth
forecast to 9% per year in the 2024-2025 period (compared to the previously
forecasted range of 11-12%) due to our anticipation of a slower recovery in consumer
demand. We anticipate maintaining a gross profit margin of approximately 45% for
the period 2024-2026, based on the elevated gross profit margin of 44% recorded
during the first nine months of 2023. Additionally, we project a Compound Annual
Growth Rate (CAGR) for Net Income After Tax attributable to shareholders of 15%
for MCH during the period 2023-2026” - According to Masan on VSSC

Despite Masan Consumer Holdings’s positive attitude on its marketing and product
innovation capabilities, the surge in inflation and escalating prices is fostering a
heightened sense of discernment among Vietnamese consumers, prompting them to
become more conscious of costs. Anticipating economic challenges and a prevailing
sense of uncertainty, they are envisaging modifying their expenditure pattern
(according to KinhTe & DoUong news). This demonstrates a threat to Masan's
positive projection.
In the updated World Economic Outlook report in October 2022, the International
Monetary Fund estimated the global economic growth this year at 3.2%, and 2.7% in
2023. Economic difficulties or even the possibility of global economic recession in
2023 are the common concern that takes center stage in current discussions around the
world.For an economy with high exposure like Vietnam’s, impacts from the global
economy are very strong. In reality, developments since the second half of the third
quarter have turned unfavorable, with enterprises decrying a sharp fall in export
orders. This obviously poses a threat to the availability of raw materials and may lead
to increased costs due to supply chain challenges, causing the failure for Masan to
achieve its EBIT target.
1.2 Risk Components Analysis

a. Risk
● Weak Consumption Demand in Vietnam: The surge in inflation and
escalating prices are prompting Vietnamese consumers to become more cost-
conscious. Economic challenges and uncertainty lead consumers to modify
their spending pattern
● Supply Chain Disruption: Unfavorable developments since the second half
of the third quarter, including a sharp fall in export orders, raise concerns
about the availability of raw materials and potential disruptions in the supply
chain.
b. Cause
● Global Economic Downturn: The global economic growth estimated at
3.2% in the current year and 2.7% in the following year, along with concerns
about a possible global economic recession in 2023, pose external challenges
for MCH, leading to supply chain challenges, impacting the availability of
raw materials and potentially increasing costs.
● Vietnam Economic Downturn: The high exposure of Vietnam's economy to
global economic conditions, combined with unfavorable developments, raises
concerns about a potential economic downturn. An economic downturn in
Vietnam could adversely affect consumer purchasing power, leading to
reduced demand for MCH products and impacting overall financial
performance.
c. Impact
Direct Impact:
● Financial Impact: Altered consumer spending patterns may result in
decreased demand for MCH products, affecting sales and overall financial
performance.Supply chain challenges can lead to increased costs, affecting the
gross profit margin and hindering the achievement of financial targets,
particularly the EBIT goal for Masan.
Indirect Impact:
● Stock Price Impact: VSSC have adjusted their target price downward by
14% but upgraded their recommendation from Neutral to Buy for Masan
Group Corporation (MSN) due to an approximately 18% decline in the stock
price over the past three months. However, the failure to meet Masan’s EBIT
target can make its stock unattractive on the stock market
● Company Reputation: The supply chain disruption can affect the company’s
reputation for providing quality products to Vietnamese consumers. As it will
seek low-quality suppliers to cut costs.

1.3 Quantitative measurement of risk

Key Assumption

2023 2024

Revenue Growth 4,00% 6,00%

COGS ( % Revenue) 70,00% 69,00%

SGnA (% Revenue) 5,00% 5,00%

Others (% Revenue) 0,43% 0,43%

NOWC Growth 50,90% 50,90%

Tax 20% 20%

WACC 14,8% 14,8%

Long-run FCF Growth 6% 6%

Number of Share 1.222.207.743 1.222.207.743

2022 2023 2024

Net Revenue 76.189.225 79.236.794 83.991.002

 Cost Of Goods
Sold (55.154.201) (55.465.756) (57.953.791)

SG&A Expense (16.365.853) (12.170.417) (13.338.573)

Other Expense (355.299) (343.104) (363.691)

EBIT 4.313.872 11.257.516 12.334.947

NOPAT 3.451.098 9.006.013 9.867.958

Masan forecasted performance in the 2023-2024 period

In this scenario, Masan would not be able to achieve its 11-12% revenue target in the
2023-2024 period. The net revenue for 2024 is 83.991.002, falling short of the
targeted range. Despite the revenue shortfall, Masan managed to increase its EBIT and
NOPAT compared to the previous year. The deviation from the revenue target is
attributed to the weak demand of consumption which is affecting sales. And the
economic downturn creates challenges for managing cost effectively.
a. Firms Valuation

Phần 3: Firm Valuation

Free Cash Flow (2023 + ) (9.395.000)
Horizon Value of 2023 at 2022 (HV2022) (107.120.638)
PV at 2020 of HV2022 (93.334.656)

Calculation of Firm's Intrinsic Value

Sum of PVs of FCFs, 2021 & 2022 (13.151.171)
Total corporate value (106.485.827)
Less: market value of debt and preferred 39.385.199
Intrinsic value of common equity (145.871.026)
Intrinsic Value Per Share (102.457)
In this scenario, the firm valuation reveals a challenging financial outlook for the
company. The negative values in key components, such as Free Cash Flow ( -9,395
millions VND) and Total Corporate Value (-106 millions VND), suggest that the
company is encountering difficulties, possibly related to operational or market
challenges. The Horizon Value at 2022 and its present value at 2020 both being
negative indicate concerns about the firm's future growth prospects.
In summary, this firm valuation scenario points towards financial distress, and
strategic actions may be necessary to address the underlying issues and enhance the
company's overall financial health. Further analysis and adjustments in the company's
operational and financial strategies may be crucial to improve its intrinsic value and
market perception.
b. Sensitivity Analysis
● One-way Sensitivity Analysis

The sensitivity analysis underscores the vulnerability of the company to changes in

revenue growth rates. Negative values in Free Cash Flow and Total Corporate Value
indicate challenges in financial performance.
The declining trend in Intrinsic Value per Share as the growth rate increases suggests
that the market is particularly sensitive to revenue growth, and higher growth rates
lead to lower perceived intrinsic value per share.
The negative values indicate that, under different COGS/Revenue ratio scenarios, the
company is projecting a net cash outflow. This suggests challenges in generating
positive cash flows, particularly as the COGS/Revenue ratio increases.
 ● Two-way Sensitivity Analysis

COGS/Revenue

Revenue
Growth
Rate 67% 68% 69% 70% 71%
1% (111.300.034) (111.836.416) (112.372.799) (112.909.182) (113.445.564)
2% (109.142.983) (109.684.677) (110.226.370) (110.768.063) (111.309.757)
3% (106.985.933) (107.532.937) (108.079.941) (108.626.945) (109.173.949)
4% (104.828.883) (105.381.198) (105.933.512) (106.485.827) (107.038.142)
5% (102.671.832) (103.229.458) (103.787.083) (104.344.709) (104.902.334)
6% (100.514.782) (101.077.718) (101.640.655) (102.203.591) (102.766.527)
7% (98.357.732) (98.925.979) (99.494.226) (100.062.473) (100.630.719)
8% (96.200.681) (96.774.239) (97.347.797) (97.921.354) (98.494.912)
9% (94.043.631) (94.622.499) (95.201.368) (95.780.236) (96.359.105)
10% (91.886.581) (92.470.760) (93.054.939) (93.639.118) (94.223.297)

2. Environmental Risk

2.1 Risk Situation

“At Masan, we are always serious about environmental impact assessment. We make
sure our production facilities meet environmental standards but still ensure product
quality." - Quoting Masan Consumer's 2022 Annual Report. Before Masan was
seriously focused on environmental impact assessments, there were reports of some of
their production facilities polluting the environment as a result of violations of
environmental regulations.
The polluting Masan factory is located next to a residential area

In 2020, hundreds of households living in the urban area called for help because of the
condition of the Masan production plant on the ground causing smell pollution, and
long-running rockets.
According to the inhabitants, the scent comes from the wastewater treatment area and
the output site of the Masan plant located on the site. The reporter approached and
captured the discharge of the wastewater from the Masan plant without cover, the
discharging of the reservoir in the middle of the sky with a very unpleasant smell.
On August 12, 2020, the Department of Resources and Environment of Province
inspected, investigated, Masan Company producing foodstuffs of all kinds such as
sauce, juice, pasta, etc. The areas of the company close to the residential district
include: Spice manufacturing plant, wastewater treatment station.
The smell process arises, which is as follows: at the spice factory, the smell comes
from the spices factory; at the wastewater treatment station, the smell comes from the
waste water treatment area.
2.2 Risk Component Analysis

a. Risk
● Machinery, equipment and facilities are not guaranteed: The Masan
manufacturing plant's machinery, equipment and facilities were not properly
maintained and serviced. Equipment that does not work well and does not
ensure safety causes waste leakage and damage during the production process,
leading to the release of pollutants into the environment.
● Waste treatment control and management activities are not strict: Masan
factory's waste treatment control and management activities are not strict,
leading to the release of pollutants such as toxic chemicals, Industrial waste is
not treated properly, causing pollution to the air, water and land around the
factory.
b. Cause
● The environmental awareness of individuals within an organizational
context: Particularly the leadership and management of manufacturing
facilities, plays a significant role in shaping the approach to waste
management and pollution control. The perception of these individuals
regarding the impact of production activities on the surrounding environment
can influence the strategies employed in managing and addressing
environmental concerns. Insufficient awareness, coupled with a lack of
prioritization of environmental issues, has led to a lack of interest and
investment in advancements in technology and measures for waste treatment
and pollution control during the production processes.
● Production Environment within a Manufacturing Facility: Industrial
activities in the consumer goods sector typically involve the utilization of
natural resources and have the potential to generate emissions and waste. The
lack of strict management and control over environmental standards as well as
waste treatment processes can pose environmental risks.
c. Impact
Direct Impact:
 ● Financial impact:: Masan's production activities affect the environment and
human health resulting in the company facing legal fees and penalties, fines
and other sanctions for environmental violations from regulators, increasing
costs which and reducing company profits that may be a negative growth in
2023 with -7% following by a bit recovering in 2024 with 2% growth in
revenue.
● Damage to human health: Environmental pollution caused by the production
of the Masan plant has caused direct health problems for people living in the
surrounding area. Specifically, everyday people have to suffer from dirty
smells. There are old people and children who suffer from this odor that
causes choking, throat, burning, chest pain, headache, dizziness and
vomiting... very dangerous and toxic.
● Environmental impacts:Environmental pollution causes direct damage to
natural resources such as air, water, soil and biodiversity
● Production interruption: When there is a risk of environmental pollution,
the company may have to suspend or reduce production to remedy the
problem and comply with environmental regulations.
Indirect impact:
● Financial impact:: In order to meet the regulations and standards of the plant,
Masan has to invest substantially in waste management technology,
environmental management processes and monitoring. This requires cost and
constant updating to maintain compliance and improve production efficiency,
so our group assumes that Other expenses will increase around 6,9% in 2023
and 4% in 2024. However, this is considered an investment from Masan
because all of these expenses will be used to buy new assets like machines to
reduce pollution discharged into the environment.
● Affecting brand value and reputation: The company's lack of attention and
concern for environmental protection is a negative reaction from customers and
the community, which reduces the brand value of the company.
2.3 Quantitative measurement of risk

Key Assumption

2023 2024

Revenue Growth -7,0% 2,0%

COGS ( % Revenue) 70,0% 70%

SGnA (% Revenue) 20,0% 21,0%

Others (% Revenue) 6,9% 4,0%

Net fixed assets growth rate 6,9% 4,0%

NOWC Growth 51% 51%

Tax 20% 20%

WACC 14,8% 14,8%

Long-run FCF Growth 6% 6%

Number of Share 1.222.207.743 1.222.207.743

2023 2024

Net revenue 70.855.979 72.273.099

Cost of good sold (49.599.185) (50.591.169)

SG&A expense (12.170.417) (12.170.417)

Other expense (4.889.063) (2.890.924)

EBIT 4.197.314 6.620.588

NOPAT 3.357.851 5.296.471

Operating current assets 71.941.109 108.559.287

Operating current liabilities 37.290.993 56.272.188

NOWC 34.650.116 52.287.099

Net fixed assets 32.723.725 34.032.673

NOC 67.373.840 86.319.772

∆NOC = NOC1- NOC0 13.800.040 18.945.932

FCF = NOPAT - ∆NOC (10.442.189) (13.649.461)

PV of FCFs (9.098.323) (11.892.832)

In this case, Masan's rate of revenue growth for the 2023–2024 year would be
extremely low with -7% and 2% respectively. The net revenue for 2024 is 72.273.099,
which is less than the range that was intended. Masan increased their Net fixed assets
from the prior year despite the revenue gap. Additionally, the economic downturn
makes it more difficult for the company to successfully manage costs.
a. Firms Valuation

Phần 3: Firm Evaluation

Free Cash Flow (2023 + ) (12.606.402)

Horizon Value of 2023 at 2022 (HV2022) (143.736.645)

PV at 2020 of HV2022 (125.238.335)

Calculation of Firm's Intrinsic Value

Sum of PVs of FCFs, 2021 và 2022 (20.991.155)

Total corporate value (146.229.489)

Less: market value of debt and preferred 39.385.199

Intrinsic value of common equity (185.614.688)

Intrinsic Value Per Share (130.373)

It is shown that the company is under extreme situations represented in some
indicators. The Free cash flow in 2023 and 2024 is negative (-12.606.402 million
VND) and it affects the Total corporate value (-146.229.489 million VND) and
intrinsic value per share (-130.373 millions VND). This makes investors and
shareholders hesitate to invest in Masan.
 b. Sensitivity analysis
● One-way sensitivity:
Intrinsic Value
Free Cash Flow Total Corporate Value per share

Revenue Growth
Rate (12.606.402) (146.229.489) (130.373)

-10% (14.239.818) (163.997.621) (142.853)

-9% (14.103.700) (162.516.943) (141.813)

-8% (13.967.582) (161.036.265) (140.773)

-7% (13.831.464) (159.555.588) (139.733)

-6% (13.695.346) (158.074.910) -138.693

-5% (13.559.228) (156.594.233) -137.653

-4% (13.423.110) (155.113.555) -136.613

-3% (13.286.992) (153.632.877) -135.573

-2% (13.150.874) (152.152.200) -134.533

-1% (13.014.756) (150.671.522) -133.493

0% (12.878.638) (149.190.845) -132.453

1% (12.742.520) (147.710.167) -131.413

2% (12.606.402) (146.229.489) -130.373

3% (12.470.284) (144.748.812) -129.333

4% (12.334.166) (143.268.134) -128.293

This table shows that the company really needs to improve the Growth rate of revenue
and the general situation of the company requires innovation to overcome hard
situations.
Intrinsic Value
Free Cash Flow Total Corporate Value per share

Other expenses (12.606.402) (146.229.489) (130.373)

 1,00% -11.004.398 -128.803.053 -118.133

2,00% -11.538.399 -134.611.865 -122.213

3,00% -12.072.401 -140.420.677 -126.293

4,00% (12.606.402) (146.229.489) (130.373)

5,00% (13.140.403) (152.038.301) (134.453)

6,00% (13.674.405) (157.847.114) (138.533)

6,90% (14.155.006) (163.075.044) (142.205)

8,00% (14.742.407) (169.464.738) (146.693)

9,00% (15.276.408) (175.273.550) (150.773)

10,00% (15.810.410) (181.082.362) (154.853)

Other expenses of the company have increased significantly causing loss of more
money from the company, so the company has to reduce this ratio to the minimum.

● Two-way sensitivity:
Revenue
Growth Rate Other expenses
(146.229.489) 3,00% 4,00% 5,00% 6,00% 6,90% 8,00%

-10% (158.872.198) (163.997.621) (169.123.043) (174.248.465) (178.861.346) (184.499.310)

-9% (157.334.571) (162.516.943) (167.699.315) (172.881.686) (177.545.821) (183.246.429)

-8% (155.796.945) (161.036.265) (166.275.586) (171.514.907) (176.230.295) (181.993.548)

-7% (154.259.318) (159.555.588) (164.851.858) (170.148.128) (174.914.770) (180.740.667)

-6% (152.721.691) (158.074.910) (163.428.129) (168.781.348) (173.599.245) (179.487.786)

-5% (151.184.064) (156.594.233) (162.004.401) (167.414.569) (172.283.720) (178.234.905)

-4% (149.646.438) (155.113.555) (160.580.672) (166.047.790) (170.968.195) (176.982.024)

-3% (148.108.811) (153.632.877) (159.156.944) (164.681.010) (169.652.670) (175.729.143)

-2% (146.571.184) (152.152.200) (157.733.215) (163.314.231) (168.337.145) (174.476.262)

-1% (145.033.557) (150.671.522) (156.309.487) (161.947.452) (167.021.620) (173.223.381)

0% (143.495.931) (149.190.845) (154.885.758) (160.580.672) (165.706.095) (171.970.500)

1% (141.958.304) (147.710.167) (153.462.030) (159.213.893) (164.390.570) (170.717.619)

2% (140.420.677) (146.229.489) (152.038.301) (157.847.114) (163.075.045) (169.464.738)

3% (138.883.051) (144.748.812) (150.614.573) (156.480.334) (161.759.519) (168.211.857)

4% (137.345.424) (143.268.134) (149.190.845) (155.113.555) (160.443.994) (166.958.976)

This table shows the change in growth rate and other expenses. Under different
scenarios, the growth rate tends to be worse. So this suggests the company must
reduce expenses and improve the Growth rate.

3. Food Hygiene Safety Risk

3.1 Risk Situation

Case 1: On August 23, 2022, the website of the Taiwan Food and Drug
Administration (TFDA) posted information about the product Omachi noodles Spicy
and sour shrimp sauce produced by Qianyu Co., Ltd. (Thien Du). ) imported from
Vietnam were returned for destruction because they did not conform to Taiwan market
standards. Specifically, the batch of instant noodles mentioned above contained the
plant-protection substance ethylene oxide, which has not been licensed for use in
Taiwan (a content of 0.195 mg/kg was detected in the seasoning package). The total
volume of Omachi instant noodles containing the banned substance ethylene oxide is
1,440 kg (equivalent to 600 boxes of 30 noodles, each packet 80 grams). Masan
Consumer representative informed. "Immediately after receiving information about
the incident, Masan Consumer took the necessary verification steps. We are
coordinating with the Ministry of Industry and Trade, the Ministry of Health, and
competent state agencies to verify and handle cases according to current legal
regulations".
Omachi instant noodles products imported from Vietnam by Qianyu Co., Ltd. were
recalled by Taiwan for destruction (source: https://baotainguyenmoitruong.vn/)

Case 2: On April 2, 2019, the Japanese Health Promotion and Hygiene Agency
announced that Chinsu chili sauce products imported from Vietnam were recalled due
to containing food additives (benzoic acid, sorbic acid... ) has not been tested for use
in Japan, violating Article 11, Clause 2 of the Food Hygiene Law. The law clearly
states that Benzoic Acid(E210) is not approved for use in chili sauce in Japan. This
information page said that on March 8, 2019, the TOKYO Department of Public
Health inspected chili sauce products imported from Vietnam because of suspicion of
violating the law on food hygiene and safety issued by the Japanese Government. .
The experiment was conducted at the Tokyo Food Hygiene Association and the Tokyo
Food Technology Research Institute. When analyzing the shipment imported on
December 7, they discovered that the content of Benzoic Acid and Sorbic Acid
exceeded the allowable limit. After receiving the analysis results, the director of the
Osaka City Public Health Center ordered the importer to recall all products. Regarding
the infringing goods, the Osaka city information page clearly states: "Product name:
Chinsu chili sauce, origin: Masan Vietnam, expiry date: June 10, 2019, June 17, 2019,
July 6/ 2019".
According to analysis results of the Tokyo Food Hygiene Association of the Tokyo
Food Technology Research Institute, the benzoic acid content in Chinsu chili sauce
recalled in Japan is 0.41g/kg for bottles with an expiration date of June 10. /2019,
0.44g/kg with an expiration date June 17, 2019 and 0.45g/kg with expiration date July
6, 2019.

Image of Chinsu chili sauce forced to be recalled by the Osaka city government
(source: Osaka City)

3.2 Risk Component Analysis

a. Risk
● Human Error: Inherent risks in the consumer industry where not all
processing processes are fully automated, leading to a high probability of
human error and food safety violations.
● Ineffective Supply Chain Management: Varied food safety regulatory
standards in different countries, and challenges in controlling product
distribution, leading to non-compliance with safety regulations and recalls.
 ● Cognitive Environment: human resources are not highly trained, input
materials lack quality control, and errors in production are difficult to
recognize.
● Legal Environment: Differences in food safety and quality regulations across
countries, make compliance challenging.
● Operating Environment in Production and Business: Dependency on
external sources for input materials.
b. Cause
● Lack of automation in processing increases the risk of oversight and mistakes.
● Inability to control product distribution, resulting in violations of food safety
regulations.
● Insufficiently trained workforce, lack of strict quality control, and difficulty in
identifying errors in production.
● Varied legal requirements for food safety and quality.
c. Impacts
Direct Loss:
● Financial Damage: Significant financial damage due to legal penalties,
product recalls, and potential stock price decline.
● Threat to Human Health: Serious health risks, especially considering Masan's
products cater to all age groups.
Indirect Loss:
● Brand Damage: Damage to brand reputation, increased competition, and
potential market share loss.

3.3 Quantitative measurement of risk

Key Assumptions

2023 2024

Revenue Growth -5,00% 3,00%

COGS ( % Revenue) 73,74% 73,74%

SGnA (% Revenue) 18,65% 19,07%

Others (% Revenue) 1,50% 1,00%

Net fixed assets growth rate 7,32% 7,32%

NOWC Growth 50,90% 50,90%

Tax

WACC

Long-run FCF Growth

Number of Share 1.222.207.743 1.222.207.743

2023 2024

Net revenue 72.379.764 74.551.157

Cost of good sold (53.372.735) (54.973.917)

SG&A expense (9.954.552) (10.481.429)

Other expense (149.318) (104.814)

EBIT 8.903.158 8.990.996

NOPAT 7.122.526 7.192.797

Operating current assets 71.941.109 108.559.287

Operating current liabilities 37.290.993 52.287.099

NOWC 34.650.116 52.287.099

Net fixed assets 32.851.014 35.254.336

NOC 67.501.130 87.541.434

∆NOC = NOC1- NOC0 13.927.330 20.040.304

FCF = NOPAT - ∆NOC (6.804.803) (12.847.507)

PV of FCFs (5.929.053) (12.847.507)
Masan's financial data for 2023-2024 reveals both challenges and opportunities. The
revenue growth, though negative in 2023, shows signs of recovery with a projected
3.00% growth in 2024. A decline in 2023 was expected based on a report by URC
Group (Philippines) said that revenue in Vietnam has decreased significantly since
incidents occurred with the Red Dragon and C2 Green Tea brands. The influence of
the Vietnamese market caused URC to reduce the group's revenue expectations to less
than 5% from the planned figure set out at the beginning of the year of 9% growth.
a. Firms Valuation

Phần 3: Firm Evaluation

Free Cash Flow (2023 + ) (13.618.358)

Horizon Value of 2023 at 2022 (HV2022) (260.413.436)

PV at 2020 of HV2022 (226.899.306)

Calculation of Firm's Intrinsic Value

Sum of PVs of FCFs, 2021 và 2022 (18.776.561)

Total corporate value (245.675.867)

Less: market value of debt and preferred 39.385.199

Intrinsic value of common equity (285.061.066)

Intrinsic Value Per Share (200.222)

The negative FCF of (13.618.358) suggests that the firm is currently generating less
cash than it needs to cover its operating and capital expenses. This might indicate
financial challenges or investment activities that are temporarily consuming cash.
Moreover, the negative HV and PV values imply uncertainty and risk in projecting
future cash flows, potentially influenced by external factors. Navigating these
challenges requires a strategic approach, focusing on financial management, risk
mitigation, and transparent communication with stakeholders.
 b. Sensitivity analysis
● One - way sensitivity:
Total Corprate Intrinsic Value
Free Cash Flow Value per share
Revenue
Growth Rate (13.618.358) (245.675.867) (200.222)
-5% -13.618.358 -245.675.867 -200.222
-4% -13.538.101 -244.197.653 -199.184
-3% -13.457.845 -242.719.438 -198.145
-2% -13.377.588 -241.241.224 -197.107
-1% -13.297.332 -239.763.009 -196.069
0% -13.217.075 -238.284.795 -195.031
1% -13.136.819 -236.806.580 -193.992
2% -13.056.562 -235.328.366 -192.954
3% -12.976.306 -233.850.151 -191.916
4% -12.896.050 -232.371.937 -190.878

Total
Corporate Intrinsic Value
Free Cash Flow Value per share
Other Expenses (13.618.358) (245.675.867) (200.222)
1% -13.618.358 -245.675.867 -200.222
1,5% -13.662.799 -246.458.241 -200.772
2% -13.707.240 -247.240.615 -201.321
2,5% -13.751.682 -248.022.989 -201.871
3% -13.796.123 -248.805.363 -202.420
The negative values indicate a reduction in the company's financial metrics with
declining revenue growth. The company's value is highly sensitive to changes in
revenue growth. Negative or lower growth rates result in reduced financial
performance across key metrics. Strategies to stimulate and maintain robust revenue
growth are crucial.

● Two - way sensitivity:

Revenue
Growth Rate Other Expenses
-245.675.867 1% 1,5% 2% 2,5% 3%
-5% (245.641.173) (245.675.867) (245.710.561) (245.745.255) (245.779.949)

-4% (244.162.594) (244.197.653) (244.232.712) (244.267.771) (244.302.830)

-3% (242.684.014) (242.719.438) (242.754.862) (242.790.286) (242.825.711)

-2% (241.205.434) (241.241.224) (241.277.013) (241.312.802) (241.348.592)

-1% (239.726.855) (239.763.009) (239.799.164) (239.835.318) (239.871.473)

0% (238.248.275) (238.284.795) (238.321.314) (238.357.834) (238.394.354)

1% (236.769.695) (236.806.580) (236.843.465) (236.880.350) (236.917.235)

2% (235.291.115) (235.328.366) (235.365.616) (235.402.866) (235.440.116)

3% (233.812.536) (233.850.151) (233.887.766) (233.925.382) (233.962.997)

4% (232.333.956) (232.371.937) (232.409.917) (232.447.898) (232.485.878)

The analysis clearly shows the sensitivity of Total Corporate Value to changes in
Revenue Growth Rate. Lower growth rates result in decreased Total Corporate Value,
emphasizing the importance of sustaining or enhancing revenue growth for overall
corporate value. It also highlights the interplay between Revenue Growth Rate and
Other Expenses. Effective cost management becomes crucial, as higher expenses can
exacerbate the impact of lower revenue growth on Total Corporate Value.
4. Technology Risk

4.1 Risk Situation

In recent years, Masan has made notable strides and exerted efforts toward realizing
its "Point of Life" dream. According to the Chairman of Masan Group's Board of
Directors, Nguyen Dang Quang, in 2022, Masan strengthened its integrated retail
consumer platform with the introduction of WIN stores. Looking ahead to 2023 and
beyond, Masan anticipates that its next decisive innovations will involve the
digitization of the entire consumer infrastructure, spanning from production to retail,
while concurrently developing an integrated platform bridging modern and traditional
commerce

Indeed, Masan's confidence in embarking on digital transformation is evident,

positioning itself as the "Amazon Go'' of Vietnam. The company envisions explosive
years for The Crown X, the unified consumer retail platform of WCM and MCH, with
projected revenue growth ranging from 18% to 31% from 2023 onward, despite the
economic constraints that may still see a growth rate of 10% to 15%. However, one
cannot overlook the technological risks and how they might impact the business.
Masan's revenue primarily stems from two main sources: The Crown X (constituting
74% of the total revenue in 2022) and Masan High-Tech Material (making up
approximately 20% of the revenue in 2022). Both of these business segments heavily
rely on advanced and modern technologies. Therefore, any technological risks that
may arise could pose significant challenges to Masan's revenue and profitability.

4.2 Risk Component Analysis

a. Risk
● Data Security Breaches: All businesses that rely on technology always focus
on their data security, preventing the assessment of unauthorized individuals or
entities from sensitive or confidential information stored in a system, network,
or database.
● System Downtime: It is a state where the system is offline or unavailable, and
users are unable to access its services. System downtime can occur for various
reasons, and it often has significant consequences for Masan.
● Lack of Redundancy: Masan may face some lack of redundancy. It refers to a
situation where critical systems or components within a technological
infrastructure do not have backup or redundant counterparts. In other words,
there is a single point of failure without any failover mechanisms.

b. Cause
● Cyber-attacks: Malicious activities, such as hacking or denial-of-service
attacks, can disrupt Masan’s system operations.
● Software Bugs or Issues: Think of it as little gremlins in the software causing
trouble. When Masan's software has bugs or issues, it's like having tiny glitches
in the code that make the system act unpredictably, leading to instability.
● Disruption of Operations: The disruption in operating activities is a common
cause of technology risks. Masan would not be able to finish the operating
activities on-time when their systems are in trouble.
 ● Maintenance Activities: When some technology risks occur, Masan must
spend time, resources on maintenance or upgrades that temporarily take the
system offline.

c. Impact
Direct Impact:
● Financial Losses: Technological failures and business disruptions will cause
Masan's revenue to shrink. Besides, the company also has to spend more
resources to complete a job, which could raise the COGS and SG&A expenses.
Indirect Impact:
● Financial Losses: Masan is required to allocate substantial funds for the
maintenance and enhancement of its technological infrastructure. Furthermore,
contingent upon the gravity of any incidents, enterprises may find themselves
obligated to compensate customers who have been adversely affected for any
resulting damages.
● Stock Price Damage: As soon as technological problems occur, investors will
immediately perceive negativity, causing Masan's market capitalization to
decrease significantly.
● Brand Damage: Experiencing a technological error significantly impacts
Masan's reputation. Masan has earned renown as a company distinguished for
its outstanding Research and Development (R&D) department, consistently
ranked among the top in Vietnam. Nonetheless, the occurrence of a
technological error would considerably compromise the business's standing and
credibility.

4.3 Quantitative measurement of risk

Key Assumptions

2023 2024

Revenue Growth -10% -5%

COGS ( % Revenue) 75% 72,77%

SGnA (% Revenue) 22% 19%

Others (% Revenue) 1,5% 0,43%

Tax 20% 20%

WACC 14,8% 14,8%

Long-run FCF Growth 6% 6%

Number of Share 1.222.207.743 1.222.207.743

2023 2024
Net revenue 68.570.303 65.141.787

Cost of good sold (51.427.727) (47.403.181)

SG&A Expense (15.085.467) (12.149.599)

Other expense (1.028.555) (282.071)

EBIT 1.028.555 5.306.936

NOPAT= EBIT * (1-t%) 822.844 4.245.549

Operating current assets 71.941.109 108.559.287

Operating current liabilities 37.290.993 56.272.188

NOWC 34.650.116 52.287.099

Net fixed assets 32.851.014 35.254.336

NOC 67.501.130 87.541.434

∆NOC = NOC1- NOC0 13.927.330 20.040.304

FCF = NOPAT - ∆NOC (13.104.486) (15.794.756)

PV of FCFs (11.417.993) (13.762.036)
Based on historical events of Masans, in 2018, net revenue of the corporation noted a
decline of nearly 2.2%. This is the result of disruption which was caused by
technology failure. Addition to the current revenue structure, which The Crown X and
Masan High-Tech Material account for 75% and 20% respectively, we forecast that
technology risk will make the revenue growth rate decline by 10%. Besides, some
expenses would occur such as maintenance and repair expenses, which would cause
the SG&A raise by 22%. COGS and other expenses also rise to 75% and 1,5%
respectively due to the procrastination. This makes the COGS decline to 47.403.181
million VND in the year of 2024. These changes have led to the decrease in Net
revenue in 2023 and 2024 which is 68.570.303 million VND and 65.141.787 million
respectively.
a. Sensitive analysis
● One way sensitivity:
Corporate
EBIT value Intrinsic value

Net revenue
growth rate 1,028,555 (129,378,304) (0,119)

-12.00% 1,005,698 (130,098,838) (0,119)

-11.00% 1,017,126 (129,738,571) (0,119)

-10.00% 1,028,555 (129,378,304) (0,119)

-9.00% 1,039,983 (129,018,036) (0,118)

-8.00% 1,051,411 (128,657,769) (0,118)

-7.00% 1,062,840 (128,297,501) (0,118)

-6.00% 1,074,268 (127,937,234) (0,118)

-5.00% 1,085,696 (127,576,967) (0,117)

-4.00% 1,097,125 (127,216,699) (0,117)

-3.00% 1,108,553 (126,856,432) (0,117)

 EBIT Corporate value Intrinsic value

SG&A Expense 1,028,555 (129,378,304) (0,119)

23% 342,852 (129,856,268) (0,119)

22.00% 1,028,555 (129,378,304) (0,119)

21.00% 1,714,258 (128,900,339) (0,118)

20.00% 2,399,961 (128,422,374) (0,118)

19.00% 3,085,664 (127,944,410) (0,118)

18.00% 3,771,367 (127,466,445) (0,117)

17.00% 4,457,070 (126,988,480) (0,117)

16.00% 5,142,773 (126,510,515) (0,117)

15.00% 5,828,476 (126,032,551) (0,116)

14.00% 6,514,179 (125,554,586) (0,116)

● Two way sensitivity:

Revenue growth SG&A Expense/ Revenue

1,028,555 20.00% 21% 22.00% 23.00%

-12.00% 2,346,628 1,676,163 1,005,698 335,233

-11.00% 2,373,294 1,695,210 1,017,126 339,042

-10.00% 2,399,961 1,714,258 1,028,555 342,852

-9.00% 2,426,627 1,733,305 1,039,983 346,661

-8.00% 2,453,293 1,752,352 1,051,411 350,47

-7.00% 2,479,959 1,771,399 1,062,840 354,28

-6.00% 2,506,626 1,790,447 1,074,268 358,089

-5.00% 2,533,292 1,809,494 1,085,696 361,899

-4.00% 2,559,958 1,828,541 1,097,125 365,708

-3.00% 2,586,624 1,847,589 1,108,553 369,518

This table shows that the company’s SG&A expenses and Revenue growth changes
leading to the change of EBIT of Masan.

5. Scenario Summary

Food
Hygiene
Current Environme Strategy and Safety Technology
Scenario Summary Values: ntal Risk risk risk Risk

Changing Cells:

Revenue Growth Rate

(2023) 10.00% -7.00% 4.00% -5.00% -10.00%

Revenue Growth Rate

(2024) 11.00% 2.00% 6.00% 3.00% -5.00%

COGS (2023) 72.77% 70.00% 70.00% 72.77% 75.00%

COGS (2024) 72.77% 70.00% 69.00% 72.77% 72.77%

SG&A (2023) 19% 20% 19% 19% 22%

SG&A (2024) 19% 21% 19% 19% 19%

Other expense (2023) 0.43% 6.90% 0.43% 1.50% 1.50%

Other expense (2024) 0.43% 4.00% 0.43% 1.00% 0.43%

Result Cells:

EBIT (2023) 6,827,637 2,196,535 8,649,474 5,124,311 1,028,555

EBIT (2024) 7,192,448 3,613,655 10,008,353 5,341,276 5,036,481

FCF (2023) (8,465,221) (12,042,812) (7,007,750) (9,827,881) (13,104,486)

FCF (2024) (14,286,346) (16,055,008) (12,033,622) (15,767,283) (16,011,120)

Total corporate value (150,905,497) (171,791,770) (127,003,303) (166,971,230) (172,275,883)

Intrinsic value per share (0,13) (0,15) (0,12) (0,15) (0,15)

Corporate
Net change value (20,886,273) 23,902,194 (16,065,733) (21,370,386)
 Intrinsic
value per
share (0.01) 0.02 (0.01) (0.02)
Among the four scenarios presented, Technology Risk emerges as the most impactful
factor negatively affecting corporate value, with Environmental Risk following
closely behind. These particular risks are pervasive and pose significant challenges for
a wide array of businesses. In the event of their occurrence, businesses would
necessitate substantial financial investments and allocation of resources to effectively
address and mitigate the associated challenges.
Besides, Masan must also cared about the risk of food hygiene and safety, as well as
strategy risk:
In relation to food safety, Masan must exercise utmost caution. While the likelihood
of incidents may be minimal, their occurrence could have enduring repercussions on
the company's reputation and financial performance, casting an unfavorable
impression upon customers, as presented above.
Concerning strategic risk, Masan demonstrates a broad and forward-looking vision.
Nevertheless, it is imperative for them to engage in careful calculation and
consideration, avoiding undue confidence in their forecasts and steering clear of
ineffective investment decisions. In this scenario, we assume that their forecast will
not be true by reducing the revenue growth rate and examine the NOC to judge their
investment efficiency. Wrong forecasts will lead Masan to harm the cash free flow to
the customer, causing many negative impacts to the company.

6. Conclusion and Recommendation

6.1 Conclusion

In light of the comprehensive analysis conducted on Masan Group , it is evident that

the organization is confronted with multifaceted risks across various domains, namely
Technology, Strategy, Food Safety, and Environmental aspects. The Strategy Risk, as
highlighted by the updated growth projections and economic uncertainties, poses a
significant challenge to Masan's ambitious targets. The threat of weak consumption
demand in Vietnam, coupled with potential disruptions in the supply chain,
compounds the risks associated with the global and Vietnamese economic downturns.
The impact of these risks is manifold, ranging from direct financial implications due
to altered consumer spending patterns and increased costs from supply chain
disruptions, to indirect consequences such as stock price fluctuations and potential
damage to the company's reputation. The quantitative measurement of risk, supported
by financial forecasts, indicates a potential deviation from Masan's revenue target and
raises concerns about the firm's intrinsic value and overall financial health.

6.2 Recommendations

● Risk Mitigation Strategies: Masan should proactively implement risk

mitigation strategies, including diversifying its supply chain, revisiting cost
structures, and exploring avenues for maintaining consumer demand amidst
economic challenges. Robust risk management frameworks should be instituted
to navigate the uncertainties effectively.
● Operational Efficiency: Given the challenges in revenue growth and potential
supply chain disruptions, Masan should focus on enhancing operational
efficiency. Streamlining processes, optimizing costs, and exploring
technological solutions can contribute to maintaining profitability in the face of
adverse economic conditions.
● Financial Restructuring: The negative values in Free Cash Flow and Total
Corporate Value underscore the need for financial restructuring. Masan should
consider evaluating its capital structure, exploring financing options, and
optimizing debt levels to improve the firm's financial outlook.
● Continuous Monitoring and Adaptation: In a dynamic economic
environment, continuous monitoring of external factors and prompt adaptation
to market changes are essential. Regularly updating financial forecasts and
adjusting strategies accordingly will enable Masan to stay resilient and
responsive to emerging challenges.
In summary, Masan Groups faces a complex array of risks that necessitate a strategic
and proactive approach to safeguard its financial performance and long-term
sustainability. Implementing the recommended measures will empower the company
to navigate uncertainties and strengthen its position in the VietNam market.
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