Company Quarterly Earnings Update – MWG VN – 2021 9M

Summary of the 2021 9M results of Mobile World Group (MWG VN)

9M/2021 results: highlights
▪ Q3/2021’s net revenue declined by 5.4% due to COVID-19 related strict lockdown measures in the south of Vietnam, which significantly affected the sales from MWG’s mobile phone store chain (The Gioi Di Dong – TGDD) and from their electronic devices store chain (Dien May Xanh – DMX) as many such stores had to close and online sales and delivery activities were also restricted. TGDD and DMX’s sales declined by 35.1% y/y and 19.4% y/y respectively in Q3. On the other hand, the groceries chain (Bach Hoa Xanh – BHX) has benefited from the closure of traditional markets as its sales jumped by 62.2% y/y.

▪ For 9M/2021, MWG’s net revenue advanced by 6.7% y/y to VND86,819bn, primarily due to strong increase of BHX’s sales while TGDD and DMX’s sales experienced mildly negative growths. The operating margin was lower at 4.6% due to a higher contribution from BHX’s sales. Net profit grew by 12.1% y/y to reach VND3,336bn.

Outlook
▪ MWG has opened all its TGDD and DMX stores since October and reported exceptionally positive sales, which were in fact the company’s highest ever monthly sales. It is apparent that customer buying power remains strong, with many people having just delayed their demand during the lockdown period. On the other hand, BHX reported some negative growth after the lockdown restrictions were lifted due to the return of traditional wet markets. MWG has just launched its Topzone store chain, a small version of Apple Stores, which we believe will create good growth over the coming years.

▪ We maintain a nearly unchanged the top line while the bottom line is revised up by 17.8% to VND4,775bn (+21.9 %y/y) mainly thanks to the positive sales of TGDD and DMX after re-opening, cutting leasing expenses causing lower SG&A expenses and because customer demand remains solid. As for 2022, we adjust up net profit for 2022 up by 8.9% to VND5,701bn (+19.4% y/y) mainly thanks to strong sales from TGDD and DMX, the contribution from Topzone stores and lower SG&A expenses.

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