Vietnam retail majors reap rewards for persistence, perseverance

By My Ha, Minh Hue
Sun, September 1, 2024 | 3:30 pm GMT+7

After years of making losses, the significant investments made by major retailers like Masan Group, Mobile World Investment and FPT Retail are coming good.

They are beginning to see substantial returns from their consumer goods and pharmaceutical retail chains.

The reward for their perseverance amidst evolving market trends has come in the form of entrenched consumer bases for retail chains WinMart/WinMart+, Bach Hoa Xanh and Co.opmart/Co.opfood in consumer goods and fresh food; and Long Chau, Pharmacity and An Khang in pharmaceuticals.

 A Long Chau pharmacy. Photo courtesy of the company.

A Long Chau pharmacy. Photo courtesy of the company.

To build such extensive retail networks, investors have had to pour in large sums of money, accept long-term losses to establish their brands, and make strenuous efforts to find out optimal operation methods.

At the end of Q2 this year, these major investors have reported positive outcomes from their flagship retail chains.

Masan Group, listed on the Ho Chi Minh Stock Exchange (HoSE) as MSN, announced that its retail chain, WinMart/WinMart+, operated by WinCommerce (WCM), was showing signs of sustainable profitability after a prolonged period of losses.

In December 2019, Masan Group made headlines with its acquisition of VinCommerce (now WinCommerce) from private conglomerate Vingroup, which owned the VinMart and VinMart+ chain (now WinMart and WinMart+).

Before the acquisition, VinMart and VinMart+ had around 3,000 outlets, making it the largest consumer goods chain in Vietnam. However, the chain had not reached break-even point when it was sold. A Vingroup report showed that retail operations contributed significant annual losses to the parent company.

Following restructuring efforts that involved closing numerous stores and optimizing services, WinCommerce began reporting positive earnings before interest, taxes, depreciation and amortization (EBITDA) in Q4/2020, albeit modestly at VND16 billion ($643,345).

In the next three years (2021-2023), it generated hundreds of billions of VND in EBITDA for the group (VND1,100 billion or $44.22 million in 2021, VND804 billion in 2022, and VND694 billion in 2023), though it did not achieve net profitability.

In the first half of this year, the retail chain reported total revenues of VND15.8 trillion ($635.2 million), an 8.8% increase year-over-year, and an EBITDA of VND421 billion ($16.92 million), up 88%.

Notably, WinCommerce recorded positive net income in June. Masan Group sees this as an indication of sustainable profitability in the near future.

Ten years on

Like Masan, Mobile World, listed on the HoSE as MWG, is beginning to reap gains from its flagship Bach Hoa Xanh consumer goods chain.

Since investing in the chain in 2015, MWG saw cumulative losses reach VND8.76 trillion ($352.2 million) by the end of Q1/2024.

However, after persistent efforts to restructure, optimize the system and upgrade services, Bach Hoa Xanh reported profits of VND6.9 billion ($277,386) in Q2/2024, marking the “beginning of a journey bringing money to the parent company”.

MWG chairman Nguyen Duc Tai noted that with average revenues of VND1.8 billion ($72,362) per store per month, the chain has reached its break-even point after deducting all costs.

From December 2023, the chain has recorded average monthly revenues of VND1.8 billion per store, which increased to VN2.1 billion this June.

The chain earned H1/2024 revenues of VND19.4 trillion ($779.9 million), up 42% year-on-year. In June along, it earned VND3.6 trillion ($144.72 million), up nearly 5% over the previous month. The growth was primarily driven by fresh produce and FMCG (fast-moving consumer goods) segments

Successful operational model

In the pharmaceutical sector, FPT Long Chau stands out as the only chain with a successful operational model, delivering profits to its parent company, FPT Retail (HoSE: FRT), while Pharmacity and An Khang are still reporting losses.

In the first half of the year, FPT Retail's technology business, FPT Shop, saw declining revenue and incurred a loss of about VND113 billion ($4.54 million). In contrast, FPT Long Chau recorded a 67% surge in revenue to VND11.52 trillion ($463,117) and a profit of over VND200 billion ($8.04 billion).

With this success, FPT Retail saw a 22% rise in revenue to VND18.28 trillion ($734.9 million) and a net profit of VND109 billion ($4.38 million), a significant improvement from a loss of VND213 billion in the same period last year.

Expansion plans, IPOs

With the retail chains turning profitable, the focus is shifting to their expansion plans and potential initial public offerings (IPOs) or stock exchange listings.

For over a year, Bach Hoa Xanh’s leadership has concentrated on optimizing operations and improving service quality rather than expanding its store count. In the first half of this year, the chain added just three outlets, bringing the total to 1,701.

Pham Van Trong, CEO of Bach Hoa Xanh, said the primary goal for this year was to increase revenue per store. Plans for expansion into central and northern Vietnam will be considered at the year-end, he added.

Last year, MWG established a new entity, Bach Hoa Xanh Technology and Investment JSC, to operate the chain. In April, the corporation completed the sale of a 5% stake in this new company to CDH Investments, a Chinese asset management firm.

Nguyen Duc Tai, chairman of MWG, said they had no plans for additional fundraising beyond the 5% stake sale. The company was focusing instead on growing to a scale sufficient to list on the stock exchange, as promised to shareholders and the Chinese investor, he said.

Meanwhile, FPT Retail chairwoman Nguyen Bach Diep has announced a plan to raise up to 10% in charter capital through a private placement to support expansion of FPT Long Chau’s reach from provision of medicines to meeting all healthcare needs including preventive medicine (vaccination) diagnostics, treatment, homecare and insurance.

FPT Long Chau has already made major strides in preventive healthcare with the development of Long Chau immunization centers and pharmacies. Upcoming services will include LC247 for homecare and drug guarantee services in collaboration with major insurers like Bao Viet and PVI.

To facilitate the fundraising, FPT Retail has decided to establish a wholly-owned subsidiary that will manage its investment in FPT Long Chau.

Masan Group is also pushing forward with expansion plans for the WinMart/WinMart+ chain. In the first half of this year, the chain added 40 new stores, bringing the total to 3,673.

The group plans to accelerate store openings in the second half, aiming for approximately 100 new stores per quarter, with particular focus on expanding the WinMart+ Rural model in rural areas.

Strategically, the group intends to make an IPO of CrownX, which manages its food, beverage, retail and agriculture segments. With the retail chain turning profitable, CrownX’s valuation is expected to become more attractive, expediting the IPO process.

Comments (0)
  • Read More
Central Vietnam province reviews investment proposal for thermal power project after Thai EGATi pullout

Central Vietnam province reviews investment proposal for thermal power project after Thai EGATi pullout

Authorities in the central province of Quang Tri are evaluating a proposal from Power Generation JSC 1 (EVNGENCO 1), a subsidiary of state utility Vietnam Electricity (EVN), to take over the Quang Tri thermal power plant project, following the withdrawal of Thai investor EGATi.

Energy - Tue, September 16, 2025 | 1:44 pm GMT+7

Amata to sell stakes worth $46 mln in Vietnam units to Novaland-tied buyers

Amata to sell stakes worth $46 mln in Vietnam units to Novaland-tied buyers

Amata VN, the Vietnam arm of Thailand’s leading industrial park developer Amata, has approved a plan for its subsidiary Amata City Long Thanh Urban JSC (ACLT) to sell its remaining 51% stakes in two entities to local developer Novaland-linked buyers.

Real Estate - Tue, September 16, 2025 | 12:19 pm GMT+7

Vietnam already meets FTSE's criteria for stock market status upgrade: Finance Minister

Vietnam already meets FTSE's criteria for stock market status upgrade: Finance Minister

Vietnam has fulfilled the criteria for a stock market status upgrade by FTSE Russell through reforms aimed at facilitating foreign investment inflows into its market, said Minister of Finance Nguyen Van Thang.

Economy - Tue, September 16, 2025 | 9:36 am GMT+7

Banks should be allowed to distribute, invest in mutual fund certificates: Vietnam's finance ministry

Banks should be allowed to distribute, invest in mutual fund certificates: Vietnam's finance ministry

The Ministry of Finance is proposing a key reform that would allow commercial banks to invest in and distribute mutual fund certificates, as part of a broader plan to restructure the investor base and foster the development of Vietnam’s fund management industry.

Finance - Tue, September 16, 2025 | 8:00 am GMT+7

E-commerce boom a major driver of Vietnam's packaging paper industry growth

E-commerce boom a major driver of Vietnam's packaging paper industry growth

Vietnam's paper packaging industry is entering a period of strong growth, with an average annual growth rate forecasted at 10% until 2030.

Companies - Mon, September 15, 2025 | 10:20 pm GMT+7

Vietnam needs support from UK in developing international financial center: Deputy PM

Vietnam needs support from UK in developing international financial center: Deputy PM

Permanent Deputy Prime Minister Nguyen Hoa Binh has called on the UK and the City of London to continue supporting and accompanying Vietnam in promoting and introducing its international financial center (IFC).

Finance - Mon, September 15, 2025 | 10:12 pm GMT+7

Vietnam enforces 8% capital adequacy ratio for banks from Sept 15

Vietnam enforces 8% capital adequacy ratio for banks from Sept 15

Commercial banks and foreign bank branches in Vietnam must maintain a minimum capital adequacy ratio (CAR) of 8%, including at least 4.5% in Tier 1 core capital and 6% in Tier 1 capital, starting from September 15.

Banking - Mon, September 15, 2025 | 10:04 pm GMT+7

Tool for wood traceability management debuts in Vietnam

Tool for wood traceability management debuts in Vietnam

The Vn-WoodID application has been officially launched in Vietnam, becoming a key tool contributing to wood traceability.

Companies - Mon, September 15, 2025 | 10:00 pm GMT+7

Sun Group, US Embassy foster aviation-hospitality cooperation

Sun Group, US Embassy foster aviation-hospitality cooperation

Sun Group, in collaboration with the US Embassy in Vietnam, hosted the US – Vietnam Aviation Partnership Roundtable on September 12, bringing together 15 leading American corporations in aviation, technology, and financial services, opening up opportunities to position Phu Quoc as a new aviation and tourism hub in the region.

Companies - Mon, September 15, 2025 | 9:54 pm GMT+7

Vietnam tops Thai giant SCG’s overseas markets with 9% revenue contribution in H1

Vietnam tops Thai giant SCG’s overseas markets with 9% revenue contribution in H1

Vietnam remained the largest overseas market for Thailand’s Siam Cement Group (SCG) in the first half of 2025, contributing 9% of consolidated sales.

Companies - Mon, September 15, 2025 | 8:10 pm GMT+7

Central Vietnam to have new airport Mang Den

Central Vietnam to have new airport Mang Den

Procedures to adjust Vietnam's airport system planning, including the addition of Mang Den Airport in central Vietnam, are being proceeded, according to the Ministry of Construction.

Infrastructure - Mon, September 15, 2025 | 5:16 pm GMT+7

Vietnam's government seeks to position country as 'regulated hub for digital assets in Asia': Dragon Capital

Vietnam's government seeks to position country as 'regulated hub for digital assets in Asia': Dragon Capital

The Vietnamese Government has advanced the regulation of digital assets, with a resolution launching a five-year pilot framework for issuance and trading. This framework signals the Government’s intent to position the country as a regulated hub for digital assets in Asia, which could attract new capital inflows, write Dragon Capital analysts.

Economy - Mon, September 15, 2025 | 2:20 pm GMT+7

Agribank introduces sizable $4.17 bln preferential credit package

Agribank introduces sizable $4.17 bln preferential credit package

Right from the beginning of 2025, Agribank launched a substantial preferential credit package worth VND110 trillion ($4.17 billion) to support individual customers.

Companies - Mon, September 15, 2025 | 1:32 pm GMT+7

'Precious space' in Vietnam's monetary policy

'Precious space' in Vietnam's monetary policy

The Federal Reserve's continued cuts in 2025, with the most recent in September, are considered a valuable policy "space" for the State Bank of Vietnam (SBV) to maintain low interest rates to support growth without having to worry too much about exchange rates.

Economy - Mon, September 15, 2025 | 10:15 am GMT+7

Vietnam’s central bank sells $1.5 bln to stabilize currency: broker MBS

Vietnam’s central bank sells $1.5 bln to stabilize currency: broker MBS

The State Bank of Vietnam (SBV) intervened in the foreign exchange market by selling approximately $1.5 billion via 180-day cancelable forward contracts from August 25-26, in an effort to ease pressure on the Vietnamese dong, according to a recent report by MB Securities (MBS).

Banking - Mon, September 15, 2025 | 8:04 am GMT+7

Hanoi aims to break ground on $11.4 bln Red River Boulevard & Landscape project by Jan 2026

Hanoi aims to break ground on $11.4 bln Red River Boulevard & Landscape project by Jan 2026

A consortium of “tunnel king” Deo Ca Group and real estate developer Van Phu Invest has been assigned by the Hanoi People’s Committe to prepare an investment proposal for the VND300 trillion ($11.37 billion) Red River Boulevard & Landscape project.

Real Estate - Mon, September 15, 2025 | 7:55 am GMT+7