Vietnam’s 'legendary' instant noodle Miliket sees market share drop to 2% from 20% before 2006

The iconic “two-shrimp” noodle brand, which once held a 20% share of Vietnam’s instant noodle market, now accounts for just 2%.

Facing mounting pressure to innovate, Colusa-Miliket Foodstuff JSC (UPCoM: CMN) has slashed its 2024 dividend to 13%, the lowest in its history, as it prioritizes exports and operational restructuring.

At its AGM on June 20, shareholders raised concerns about the company’s domestic performance, sales strategy, investment direction, and the surprising decision to cut dividends in half this year.

Record-low dividend as capital is retained for factory investment

The meeting approved a 2024 cash dividend of just 13% (VND1,300 or $0.05 per share), amounting to VND6.24 billion ($239,126 - half of the previous 26% plan and the lowest since CMN’s listing on UPCoM.

In 2022 and 2023, the company had consistently paid a stable dividend of VND2,600 ($0.1) per share and maintained a payout ratio between 17% and 33% since its 2017 listing.

The management explained that the dividend cut was necessary to retain earnings for equipment upgrades and to meet surging export orders, as well as to prepare for a new factory development.

According to CMN chairwoman Luu Thi Tuyet Mai, the current dividend rate still exceeds interest rates on bank deposits amid intensifying domestic competition.

“Before equitization (2006), the company held about 20% market share. Today, it’s just 2%. Without bold investment, there’s no path to future growth,” Mai emphasized.

CMN expects to restore the dividend to 26% in 2025 if it meets its business targets, including a revenue goal of nearly VND869 billion ($33.3 million), up 14% year-over-year. However, pre-tax profit is projected at just VND29 billion ($1.11 million), a slight 0.7% decline.

Operational challenges and shareholder concerns

Shareholders also expressed frustration over long delivery times - some customers waiting seven days for goods - as well as outdated machinery, cramped warehouses, and production that is consistently at full capacity.

The management admitted that current capacity is maxed out, with some orders either turned down or delayed by up to two weeks. Vice chairman and general director Tran Hoang Ngan announced that CMN is implementing a range of measures to improve efficiency.

These include workforce restructuring, investing in new machinery for its northern production facility, phasing out its labor-intensive and less profitable Mi Ky noodle line, and reducing operating costs across multiple departments. Some newer products, such as mixed kraft noodles, are being promoted on social media without incurring traditional marketing expenses.

Mi Ky with "Ky" meaning "kilogram" in Vietnamese is sold by the kilogram, with 16 portions of noodles in each package/each kilogram.

The company is also rebuilding its sales team and re-evaluating its entire domestic business strategy. For now, a stable export market has helped sustain CMN’s cash flow and dividend payouts.

Capital constraints, aging workforce, and governance issues

CMN’s charter capital remains unchanged at VND48 billion ($1.83 million). As of year-end 2024, total assets were valued at over VND300 billion ($11.49 million), with equity of approximately VND160 billion ($6.1 million).

The workforce has grown to 786 employees, up by more than 130 people in the past year - many of whom are older, placing additional strain on manual operations and overall management.

Chairwoman Mai acknowledged that CMN’s inability to build a new factory stems from challenges in raising capital. The company has two major state-owned shareholders, making capital expansion difficult without consensus.

“If we had received stronger backing from state shareholders earlier, Miliket could already have a new factory, a new office, and revenues exceeding VND1 trillion ($38.3 million),” she said.

Shareholder structure and stock performance

CMN’s ownership is highly concentrated, with five major shareholders controlling 86% of the company. These include Vinafood 2 (30.72%), Vinataba (20%), Mesa Service and Trading Co. (20.8%), Trinh Viet Dung (9.71%), and Thien Hai Investment and Trading Co. (5.53%). Notably, Mesa, which distributes Miliket products, is affiliated with chairwoman Mai.

At the meeting, shareholders elected Truong To Nga, representing Vinataba, to the board of supervisors for the 2023-2028 term, replacing Pham Nguyen Binh, who resigned earlier.

Despite its legacy, CMN shares see minimal trading activity on UPCoM, averaging just 36 shares per session. The stock currently trades at VND55,100 ($2.1) per share, down 20% over the past three months and nearly 38% below its February 2022 peak of VND89,000 ($3.4).