Summary of the Q1/2022 results of Mobile World Group (MWG VN)
Q1/2022 results: highlights
- MWG’s sales grew 18.3% y/y, reaching VND36.5tr in Q1/2022 thanks to a strong sales growth of 21.0% from TGDD and DMX stores. The pent-up demand of electronic devices and home appliances post lockdown may be the catalyst for this strong growth. Besides, grocery store sales (BHX) inched up slightly by 1.5% y/y. MWG has a total of 2,127 BHX stores, an increase of 21 stores Ytd and 360 more stores y/y. The average sales per BHX store was only VND0.9mn per store per month, versus VND1.1bn per store in Q1/2021 and an average of VND1.2bn per store in 2021.
- The gross margin declined slightly to 22.3% due to a lower sales contribution from BHX stores. Accordingly, the operating margin reduced from 5.5% to 5.1%. Operating profit increased by 9.3% y/y to VND1,849bn. All in all, net profit advanced by 8.0% y/y to VND1,444bn in Q1/2022.
- We believe the demand from electronics devices will increase strongly in 2022, following the recovery of the economy. As a result, we maintain our forecast for the SSSG of DMX stores at 7% in 2022 and 5% in 2023. Regarding TGDD stores, due to the high sales of mobile phones, tablets, and laptops in 2021, we believe that its SSSG will be negative by 5% in 2022 before returning to the long-term rate of 0% in 2023. Such assumptions are unchanged from our last presentation. On the other hand, although Topzone stores will be the main revenue growth driver for the mobile store chain, its new store opening has been behind the company’s target. As a result, we expect MWG will open 100 new Topzone stores in 2022 and another 100 stores in 2023, instead of 200 stores in 2022 and none in 2023 as per our last report. As for BHX, its sales per store of VND0.9bn/month in Q1/2022 was very low. Based on the company’s 5month business report, the sales per store improved to VND1.1bn/month which is still weak compared to its performance in the past (2019: VND1.3bn; 2020: VND1.2bn; 2021: VND1.2bn). Thus, we revise down its SSSG from 2% in our last report to -5%.
- Accordingly, compared to our last forecast, we revise 2022’s net profit down by 7.1% to VND5,542bn (+13.1% y/y) and 2023’s net profit by 2.8% to VND6,222bn (+12.3% y/y) mostly due to weak sales in BHX stores.
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