Masan Resources (MSR) Shareholders’ Meeting: Name change and announcement of the strategy of Going Global

On June 29 2020, Masan Resources Corporation (HNX: MSR) commenced the “Series of General Meetings” of Masan Group and its subsidiaries for two consecutive days comprising of Masan Group (MSN), Masan Consumer (UpCom: MCH) and MeatDeli (UpCom: MML).

Precisely, there is also another member of Masan, Bien Hoa Vinacafe (Hose: VCF), held its shareholders’ meeting on June 16.

MSR - Masan Resources is a “special” member of Masan Group by its operations in mining, a specialized industry which is differential from other members operating in consumer goods and distribution.

Despite the difference in business industries, MSR’s General Meeting was organized under Masan Group’s “tradition” which is showcasing of business performance with ambitious plans given by their senior leaders.

This year, MSR has consulted its shareholders and officially had its name changed to Masan High-Tech Material, delivering its strategy of Going Global.

The highlight of this plan being introduced to the shareholders during this year’s MSR Shareholders’ Meeting is the acquisition of the Tungsten business of H.C. Starck GmbH which was announced on June 10. This transaction shall provide MSR with advanced manufacturing centers in each of the key market geographies of NAFTA, EU and APAC, with production sites in Germany, Canada and China.

This is also a world-class recycling technology platform that can be expanded and multiplied into various production sites for MSR to be well-placed by its business profits from increasing future demand for its products such as high-tech materials that support technological advances and deliver into industrial infrastructure demand of rapid urbanization in many developed countries.

The acquisition has opened up new plans for MSR to improve its business performance in the coming years.

According to MSR’s leaders, 2019 was a struggling and challenging year for the mineral business environment, reflecting in MSR’s net revenue of VND 4,706 billion, down 31% compared to the net revenue in 2018.

Weakening global demand and a slowdown in global manufacturing, strongly compounded by the trade war between China and the United States resulted in a year of lower prices for all MSR’s commodities. Tungsten and Bismuth were further impacted by the Chinese Government sale during September 2019 of significant inventories held in the Fanya Exchange Stockpile.

Average price for the year were down by 22%, 3%, 8% and 32% for Tungsten, Fluorspar, Copper and Bismuth respectively.

To overcome difficulties in the general market in 2019, MSR maintained stable operating performance at the lowest cost. The Company maintained its throughput in the Nui Phao Mineral Processing facility at 3.78 million tonnes, down by 2.8% on 2018’s record throughput of 3.89 million tonnes. The Company were able to offset some of the impact of the lower prices and volumes through focus on cost control, achieving a 12% reduction in cash costs year on year, equivalent to approximately US$ 14 million.

During the year the Company also finally settled the long running arbitration with Jacobs E&C Australia Pty Ltd.

According to MSR’s 2019 financial statement, the Company achieved the Earnings before interest, taxes, depreciation and amortization (EBITDA) of VND 1,881 billion, 44% decreased compared to VND 3,331 billion of 2018. Distributed net income for shareholders was VND 352 billion, decreased by 47% compared to the last year.

Danny Le, Chairman of MSR’ Board of Directors said: “We realize that 2020 is probably a year with variety of difficulties ahead. While this shareholders’ meeting is taking place, the whole world is undergoing the Covid-19 pandemic. This is an extremely challenging period for global Governments, businesses and communities”.

“At Masan High-Tech Materials, we have well-prepared and established business continuity plans which enhance the competency of driving the Company through this global crisis”.

Regarding the 2020 plans, based on the Company’s current business performance and financial profile as well as the V-shaped recovery momentum of the global markets in the half end of 2020, MSR estimates a reasonable profit forecast as follows: Net revenue of VND 8,000 billion (low scenario), and VND 9,000 billion (high scenario); equivalent to the net profit after taxes to be distributed to the shareholders of VND 200 billion and VND 500 billion respectively.

During the Meeting, the shareholders have approved the plan of selling individual shares, with the total issue shares of no more than 9.99% of MSR’s total shares outstanding for no more than 5 investors. The time of issuance shall be within 2020 or prior to the 2021 Shareholders’ Meeting with the issue price of no less than the latest audited value.

Also, the shareholders have passed the proposal on 2019 dividend distribution that the dividend shall not be distributed. Therefore, MSR’s undistributed earnings is still over VND 2,700 billion.

During the meeting, MSR’s shareholders have also approved the resignation of Dr. Nguyen Dang Quang (Chairman of the Board of Directors of Masan Group) from Masan Resource’s Board of Directors.

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