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MASAN

MEMBER




Bùi Thi Diễm Thuý
Dương Thị Hiền Trang
Nguyễn Quỳnh Trang
Vũ Đức Trí
Bùi Thanh Xuân

5. INTRODUCTION RISK PROFILE COST OF CAPITAL OPTIMAL CAPITAL STRUCTURE DIVIDEND POLICY CONCLUSION . 6. 3. 4. 2.OUTLINE 1.

INTRODUCTION Nguyễn Quỳnh Trang .

The group launched on the Ho Chi Minh Stock Exchange on 5 November 2009 • Masan manufacture and distribute a range of food and beverage products. Nguyễn Quỳnh Trang . • Its subsidiaries include Masan Food (consumer staples).Techcombank (financial services) and Masan Resources (mining).Masan Group Corporation (HOSE: MSN) • was founded in 1996 and is headquartered in Ho Chi Minh city.

Risk Profile Vũ Đức Trí .

Probability: The current ratio (a liquidity ratio) that measures a company's ability to pay short-term and long-term obligations declined significantly from 345. pricing. goodwill. distribution systems and the diversity of products.26 in the period between 2011 and 2014. Moreover.9 to 139. Vũ Đức Trí . + Market risk . Masan Food also have trouble in building brand’s image. Impact: Competition may lead to an increase in advertising costs and promotion activities or policies made unfair price competition  These costs can be reduced margins and made negatively impact on the business activities. Probability: the company cannot guarantee to maintain the competitive advantages at the present and in the future because Masan Group will compete with some domestic and foreign companies in the same target with directly competitive strategies in the corporation and in each subsidiary. . .Risk Profile • Financial Risk: + Liquidity risk . Impact: The company’s ability to pay short-term debts is not stable  longterm strategies and financial position will be affected directly.

Hence the business results of these companies have a lot of interest rate risk. + Credit risk . In case of large-scale debt. Vũ Đức Trí . Probability: Masan Company and subsidiary have many long-term loans with mostly floating rate. Impact: Accounts receivable increase sharply. the cost of borrowing for the Masan Group (MSN) will rise significantly that means pre-tax profit of the Group will be reduced correspondingly. . and mainly arises from the account receivables and other receivables.907)  the Group must prepare allowance for doubtful debts for trade and other receivables  the Masan group and the Company manage this provision inappropriately. Impact: Interest rate and foreign exchange rate risk may cause Masan Group’s interest expense and financial expense increase which affect directly to the effectiveness of profit because interest rate and currency are not be able to predict in the future and these are potential risk can cause loss for the Group and the Company.5% (from 314. when interest rates rise.176. 15. . Probability: Credit risk is the risk of loss of principal or loss of a financial reward if a customer or counter party fails to repay a loan or does not meet contractual obligations to the Group and company.209 to 5.+ Interest rate risk .

Masan Food extend its market share through FMCG products (fish sauce.• Non-Financial risk + Business risk . Impact: Masan consumer run FMCG product. Masan consumer will face with the volatility of price and input cost leading to the increase in the price of product and packaging price  negative financial situation and revenue. but there have been a lot of foreign companies investing into FMCG. industry economic conditions affecting to the assumption in the analysis and valuation M&A. In addition. if Techcombank’s activities has problem. potential profitability as well as determine the weaknesses. Probability: The uncertainty in the assessment of value. it may cause negatively to Masan Group’s financial situation. power. + Strategic risk . soya sauce. Masan Food may face with the failure in strategic extension toVũ new market Đức Trí leading to the influence on revenues. unpredicted factors and legal responsibility of target companies. instant noodles etc). these companies are highly competitive price and cost. Unanticipated changes in business activities. The Masan Group’s strategy is M&A and the expansion the market shares through its subsidiaries. . so Techcombank’s activities is out of controlling to Masan Group. Impact: Techcombank is a joint company of Masan Group. Therefore. . risks. Probability: Business risk is the risk that relates to a characteristic activity of the Group and the Company. . Masan consumer has been core business of the Masan Group. business outcome and the company‘s prospect.

long-term. it will severely the Masan Group’s reputation. Certainly. In addition. In addition. the behaviors of employees indirectly happen. and litigation costs certainly arise leading to the reduction in Masan’s rate of return. joint venture partners or suppliers are also considered the primary factors that affect to the reputation of company. Probability: Reputation risk is the risk that threatens the Group and the Company’s fame. Reputational risk may occur in many ways such as the actions of the Group and the Company directly affect. . Impact: Masan food can be faced with customers’ accusations related to food safety hygiene problem. the Masan food’s business operation can be seriously affect from the information published publicly on industry reports or health research reports which contain negative information relating to Masan’s products. Vũ Đức Trí .+ Reputation risk . Such adverse information would reduce the consumption of Masan’s products in short-term.

COST OF CAPITAL Bùi Thị Diễm .

35%=7.19% -7%)= 8.9% Bùi Thị Diễm .06% x 6%+80.COST OF CAPITAL • Cost of equity : CAPM model Re= Rf + β*(Rm.94% x 8.07% • Cost of debt: Cost of debts=Percentages of loans (over total debt) × Rd1(borrowing)+Percentages of bonds(over total debt)×Rd2(bonds) =19.Rf) = 7% + 0.898*(8.

55%×8.07%+37.9%×1-25.COST OF CAPITAL • Cost of capital WACC= E/(D+E)×Re + D/(D+E)×Rd×(1-Tc) =63.3% -> the cost of capital would be used to discount future cash flow from potential projects and other opportunities -> should financing track to follow a combination of the debt and equity Bùi Thị Diễm .3%=7.45%×7.

Optimal capital structure MASAN GROUP Bùi Thanh Xuân .

Bùi Thanh Xuân .Tax rate • The company effective tax rate in 2015 is 25. These products are essential for human life and therefore its sector is does not have high tax.3%.6% of total revenue in 2015. with a lot of products from food and beverage. The amount of tax expense just equal 2. Masan is belonged to consumer goods.

27% Equity 64. the proportion of debts in total capital is double equity.23% 38.69% 58. In 2015.20% 42.60% 62.77% 61. they begin to add more debts. It will give more supervisors to the company performance.31% 41. wasteful activities more Bùi Thanh Xuân .80% 57.40% 37.Added discipline   2011 2012 2013 2014 2015 Debts 35.73% Masan is on the way to restructuring their capital. Increasing in debt will reduce the ability of manager to pursue effectively than dividend increase.

015.1 52.849.398.717 5. 7 34.554. 71.502.Bankruptcy costs   Administrative cost Long live 2011 2012 2013 406.699.529 889.5 12.664.57 55.35 2015 1.44 7.8 14.98 16.24 12.476 equivalent Bùi Thanh Xuân .563 5.572.003 Revenue 9 9 6 5 Cash and assets cash 9.239.324.51 8 28.965.622.346.2 46.105.415 8.654.580 10.2 2014 1.573.6 38.374 727.048.718.575.166. TOTAL   ASSET 2011 2012 2013 2014 2015 19 56 41 100 700 10. 79 48 83 911 499 33.593 5.698.721.

nearly 612%.696 7.239 863.798.672 1.001. the intangible asset increase from 983.516 1.288. High agency costs also mean that company should borrow less. Bùi Thanh Xuân . It implies that there is high probability of agency costs since lenders will have a tougher time monitoring how the money is used.239 to 7.665. especially in 2015.665 Intangible assets increased suddenly from 2011 to 2015. Compared to 2011.001.Agency costs   Intangible asset 2011 2012 2013 2014 2015 983.

Animal feed makers is decreasing now since more farmer apply closed process to naturally create food for animal.Financial Flexibility The main product of Masan is food and beverage (soy sauce. Bùi Thanh Xuân . That’s why the company must develop new products to promote the sales of this sector. instant noodle …) currently stand in maturity stage of business cycle. the company future is quite uncertain. Masan should value financing flexibility more and borrow less. Therefore.

Dividend Policy MASAN GROUP Dương Thị Hiền Trang .

which is reinvested in other M&A projects. Masan issued 12 million ESOP shares.63% of outstanding shares of the company.Dividend Policy History of Masan Dividend Policy • Masan Group (MSN) has not pay dividend to shareholders although average undistributed profit was about 6. • Shareholders and investors agreed with Masan reasons. equivalent to 1. • In 2015. Dương Thị Hiền Trang .000 billion. • With unpaid dividend policy from MSN shares but business activities work efficiently. the M&A projects still implemented steadily and stable stock.

3% share of Masan Dương Thị Hiền Trang Brewery. • Agricultural industry • Masan was expanded in 2011 by buying 40% of shares of livestock food company (Proconco. Moreover. and $50 million to acquire 33. In 2013. • Beverage industry • Masan purchased 50. .3% of Vinacafe's shares in 2011.9% shares of Vinh Hao Mineral Water (63. Masan continued to buy 24. the most notable activities of Masan is signed strategic partnership agreement with Singha Asia. holds about 10% market share in the country. • In 2015. Singha signed $ 1. Some qualitative factors affect dividend policy Investment Opportunities • Masan group used the entire amount of capital and undistributed profits to reinvest and make more of a merger and acquisition (M&A). 94 million USD)➞the second largest in the livestock food industry.05 billion investment to acquire 25% share of Masan Consumer Holdings (MCH).5% of ownership).

the growth rate of 20.3% compared with 1939 billion in 2014). • EBITDA of Masan in 2015 reached 6. because of the launch of new products applied by Bio-ceramic technology ➞ the top of highest gross profit margin in domestic market. Masan’s EBITDA margin reached 46.624 billion in EBITDA. • Nutri-Science Masan contributed 1. Some qualitative factors affect dividend policy Stability of Earning • The business of food and beverage sector grew by 4. • Pro forma net income reached 2.6%).992 billion in 2015 (the growth rate of 54.7% in 2015. • After accounting 612 billion amortization of goodwill related to M&A Dương Thị Hiền Tran .687 billion (the growth rate of 70.5% due to cost reductions and improved mineral recovery rates.5% from Vinacafe and beer business grew more than three times in 2015.

Orchid Capital Investments Pte. of which 1.76%. Sunflower Construction Company Limited (13.66%. • On the basis of domestic and foreign shareholders: As of 31 December 2015.695 shares representing 68.37%).999 individual shareholders holding 129.131. representing 31.498. Dương Thị Hiền Trang . and 146 are institutional shareholders holding617.219.34%. representing 82. • On the basis of institutional and individual shareholders: Masan Group has 2.24%.775 shares representing 17.53%). Private Equity New Markets II K/S (5. and 331 foreign shareholders holding 237.586.086 shares. Ltd (6.814 domestic shareholders holding 509.76%).145 shareholders. Some qualitative factors affect dividend policy Stockholder Characteristics • Major shareholders include: Masan Corporation (32.40%).166 shares. Masan Group has 1.

Q&A .