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Marico - (MRCO, 125, BUY)
n Acquisition of International consumer products (ICP) - entry into Vietnam
Marico acquired International Consumer Products (ICP) which marks its entry in Vietnam.
The acquisition is funded mostly by external borrowing. As per the management post
acquisition, mostly funded by debt, the D:E will be ~0.5. ICP achieved sales of USD 25
mn in CY10 and has zero debt on its books. ICP has significant presence across personal
care, beauty cosmetics and sauces/condiments. Main brands include X-Men (35% market
share in men’s shampoo category extended its presence into other categories like
deodorants and shower gel for men), L’ovite (ranks amongst top 5 premium cosmetic
brand in Vietnam), Thuan Phat (rapidly growing sauces/condiments category). Dr Cong
(current promoter and founding member) will continue to lead ICP as its CEO. Dr Cong
will continue to hold 15% of its equity for next 3 yrs. As per the management the
acquisition was cheaper than recent Indian acquisition but at reasonable valuation,
however the company did not disclose the acquisition cost. Marico will start consolidating
ICP’s nos . from the next quarter viz. Q4FY11.
n Vietnam- the next growth engine
Vietnam with population of 90 mn has the second youngest population in South East
Asia. The country is showing buoyancy and GDP is growing at 6.5% with FMCG market in
Vietnam growing at 18-20%. This makes Vietnam market extremely exciting for FMCG
firms (like Marico) which are growth focused.
n Marico’s Strategy
The deal rationale is: (a) fast growing FMCG market of Vietnam (ICP’s three year CAGR
was 23%); (b) Operating margins are similar to International business at ~10%; (c) to
rapidly grow in Southeast Asia in Men’s grooming segment (acquired code 10 in Malaysia
in January 2010).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Marico - (MRCO, 125, BUY)
n Acquisition of International consumer products (ICP) - entry into Vietnam
Marico acquired International Consumer Products (ICP) which marks its entry in Vietnam.
The acquisition is funded mostly by external borrowing. As per the management post
acquisition, mostly funded by debt, the D:E will be ~0.5. ICP achieved sales of USD 25
mn in CY10 and has zero debt on its books. ICP has significant presence across personal
care, beauty cosmetics and sauces/condiments. Main brands include X-Men (35% market
share in men’s shampoo category extended its presence into other categories like
deodorants and shower gel for men), L’ovite (ranks amongst top 5 premium cosmetic
brand in Vietnam), Thuan Phat (rapidly growing sauces/condiments category). Dr Cong
(current promoter and founding member) will continue to lead ICP as its CEO. Dr Cong
will continue to hold 15% of its equity for next 3 yrs. As per the management the
acquisition was cheaper than recent Indian acquisition but at reasonable valuation,
however the company did not disclose the acquisition cost. Marico will start consolidating
ICP’s nos . from the next quarter viz. Q4FY11.
n Vietnam- the next growth engine
Vietnam with population of 90 mn has the second youngest population in South East
Asia. The country is showing buoyancy and GDP is growing at 6.5% with FMCG market in
Vietnam growing at 18-20%. This makes Vietnam market extremely exciting for FMCG
firms (like Marico) which are growth focused.
n Marico’s Strategy
The deal rationale is: (a) fast growing FMCG market of Vietnam (ICP’s three year CAGR
was 23%); (b) Operating margins are similar to International business at ~10%; (c) to
rapidly grow in Southeast Asia in Men’s grooming segment (acquired code 10 in Malaysia
in January 2010).
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