Our view: The discussion during MCH’s analyst meeting reinforces our positive view on the company’s growth trajectory and is in line with our expectation. For categories where MCH holds a substantial volume market share, such as in fish sauce (70%), we believe MCH will focus on achieving GDP-aligned growth through premiumization efforts. In other seasoning segments, like granules and chili sauce, as well as in convenience foods, where MCH is not yet a market leader, MCH aims for double-digit sales growth through product innovation and broader international reach. Innovation is also a key for MCH in categories like energy drinks, coffee, and tea, as it focuses on developing new technology that enhances the taste of its products. Additionally, in home & personal care, MCH’s strategy centers on optimizing channels and pricing to strengthen its market presence.

9M 2024: Revenue increased 11% YoY to VND22.0tn (USD878mn) and NPAT-MI grew 14% YoY to VND5.5tn (USD219mn). MCH’s revenue growth was mainly driven by convenience foods (13% YoY) and beverages (+18% YoY), with seasonings also seeing steady growth at 7% YoY. Innovation ¹ revenue increased 47% YoY in 9M 2024, contributing 7% of MCH’s total revenue. Management expects double-digit revenue growth in Q4 2024 and for 2024 NPAT to meet its full-year guidance.

¹ Innovation revenue is sales derived from 125 newly launched SKUs in the past one year ended September 2024.

Segment details:

- Revenue rose 11% in Q3 and 13% in 9M 2024, led by the premium-market Omachi brand (+24% YoY in Q3; +18% in 9M). Omachi has increased its contribution to the total product mix as it accounted for 47% of 9M segment sales and 49% in Q3.

- GPM improved by 420 bps YoY to 42% in 9M, driven by outperforming volume growth of Omachi brands, as well as improved GPM of Kokomi brands (currently at 35% GPM in Q3) which target the mass market, particularly in northern Vietnam.

- Revenue grew 19% in Q3 and 18% in 9M, bolstered by an expanded customer base for Wake-Up 247 (covering blue-collar workers, young people, and office workers) and an increasing contribution of its new RTD tea product (10% of segment sales in Q3).

- GPM, however, declined 20 bps in 9M to 48%, due to higher material costs for Wake-Up 247 and margin pressures during the initial investment phase of the new RTD tea product.

- Revenue rose 7% in Q3 and in 9M. In Q3, seasonings’ growth showed a slight deceleration as key products like fish sauce and chili sauce faced slower growth, primarily due to the medium-term impacts of reduced trade promotions. In Q3, MCH reduced trade promotions at distributors and shifted those expenses towards (1) smaller GT retailers selling products directly to consumers, (2) e-commerce for promoting new products, and (3) on-trade channels, which management believes will be beneficial to long-term growth.

- GPM grew 110 bps YoY to 54% in 9M, driven by premiumization.

- Home & personal care: Chanté liquid detergent saw 58% YoY growth in 9M, making up 79% of HPC sales. Rising material costs, however, impacted GPM.

- Coffee: The Wake-Up 247 product gained popularity in the Mekong Delta, although raw material costs weighed on GPM.

Business outlook:

 - Premiumization: MCH plans to upgrade its portfolio to higher-quality products, encouraging consumer “up-trading.”

- Channel development: MCH is transitioning its focus from trade promotions to channel development, enhancing its GT network, e-commerce, rural presence, and visibility in on-channel locations like restaurants and kiosks.

- Innovation: MCH is set to launch innovative products in convenience foods, seasonings, and beverages.

- Global expansion: MCH’s international market penetration spans Japan, South Korea, the US, and Europe, with a focus on promoting Vietnamese cuisine abroad.

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