Company Quarterly Earnings Update – MWG VN – 2021 Q1

Summary of the 2021 Q1 results of Mobile World Group (MWG VN)

Q1/2021 results: highlights

  • MWG’s net revenue advanced slightly by 5.0% y/y to VND30.8tr in Q1/2021 thanks to an increase of 32.5% y/y in sales of the groceries chain (Bach Hoa Xanh – BHX). This increase is a result of their multiple store expansion. Sales from the mobile phone store chain (The Gioi Di Dong – TGDD) and from their electronic devices store chain (Dien May Xanh – DMX) remained nearly unchanged in the reported quarter. The same store sale growth (SSSG) was negative at 9% for TGDD and DMX and negative at 10% for BHX.
  • The gross margin improved by 1.8 percentage points to 22.8% in Q1/2021 thanks to a higher contribution from BHX stores. However, BHX has higher SG&A expenses as a percentage of sales, thus the operating margin was nearly unchanged at 5.5%. Net financial income improved thanks to a higher net cash position. All in all, the net margin increased slightly by 0.4 percentage points while its net profit grew by 18.2% y/y to VND1,338bn.
  • The number of stores reached 4,354 by the end March, +170 stores YTD, including 909 TGDD stores (-4), 1,553 DMX stores (+126), 1,767 BHX stores (+48).

Outlook

  • Given the current Covid-19 outbreak in Vietnam, MWG’s mobile phone and electronic device stores in some areas will be affected by the implementation of social distancing policies. More importantly, the resurgence of the virus is weakening consumers’ sentiment and buying power. However, we expect the economic situation to normalize from 2022.
  • As a result, we think SSSG for DMX will be modest at 1% for 2021, but will increase to 6% in 2022. As for BHX, we expect the SSSG will be zero in 2021 but can resume its organic growth of 2% from next year. Net profit is projected to grow by 22.1% y/y in 2021 thanks to the store expansion from BHX and DMX while 2022’s net profit will increase by 13.1% y/y as a result of the improvement seen in SSSG.

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