Company Quarterly Earnings Update – MWG VN – Q3 2022

Summary of the Q3/2022 results and outlook of Mobile World Group (MWG VN)

  • Net revenue advanced by 18.4% y/y, reaching VND102,816bn. The Gioi Di Dong (TGDD) and Dien May Xanh (DMX) were the main contributors (78.8% share) with net revenues of VND27,000bn and VND54,000bn, up 31.8% and 24.4% y/y respectively. This growth can be traced back to pent-up post-Covid demand, as well as Q3/2021’s low base due to the lockdown. On the other hand, Bach Hoa Xanh (BHX) earned VND19,950bn in net revenue, -11.6% y/y due to its restructuring. BHX’s sales per store have improved considerably from VND0.95bn in Q1/2022 to VND1.38bn in Q3/2022.
  • Net profit increased by 4.3% to VND3,481bn. The operating margin increased 0.8 percentage points y/y to hit 5.5% due to a smaller sales contribution from BHX, which has lower profitability than TGDD and DMX. Thus, operating profit advanced 39.1% y/y. However, its net margin fell from 3.8% to 3.4% as the company recorded a loss of ~VND500bn related to asset liquidation from the closure of BHX stores.
  • The balance sheet structure remained at a healthy level. Cash and cash equivalents were VND7,065bn, 11.5% of total assets. Meanwhile, D/E and D/A ratios were 0.98x and 0.37x respectively, down from 1.21x and 0.39x at the end of 2021.
  • MWG will experience a low y/y sales growth rate in Q4/2022 due to the high base of Q4/2021 and supply shortage of the iPhone 14. Higher interest rates in 2023 (after rate hikes in Sep and Oct 2022) will decelerate consumer spending on discretionary products. The consumer electronics demand will still grow, albeit at a slower pace. Modern grocery stores will be less affected thanks to a small basket value. 2022’s net revenue and net profit will reach VND140,570bn and VND4,737bn, +14.3% y/y and -3.3% y/y respectively. As for 2023, net revenue and net profit will reach VND145,913bn and VND5,291bn, +3.8% y/y and +11.7% y/y respectively. Compared to our last forecast, we revise 2022 net profit down by 15.4% and 2023 net profit down by 17.9% due to the one-off restructuring costs of BHX in 2022 and lower-than-expected demand for ICT and CA products in 2023. We maintain our long-term view of limited growth drivers for MWG based on the mature mobile phone market, difficulties regarding further expansion into the electronics market and the small contribution of BHX and others. Net profit will grow 7.6% p.a. from 2024-2027.

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