- 2024-01-31T00:00:00
- Company Research
- 2023: Net revenue declined 15% YoY to VND19tn, and NPAT-MI plunged 48% YoY to VND354bn, completing 98% and 93% of our respective full-year forecasts. NPAT-MI fell short of our expectation due to higher-than-expected SG&A expenses in Q4.
- Q4 2023: Net revenue declined 10% QoQ due to laptop & tablet sales (22% of total sales in Q4) plunging 55% QoQ after its peak season in Q3. Conversely, both mobile phone sales (45% of total sales) and office equipment sales (23% of total sales) advanced 24% QoQ. Additionally, total sales of home appliances and consumer goods (9% of total revenue) increased 34% QoQ. However, advertising & promotion expenses surged 93% QoQ to stimulate sales, hence weakening EBIT margin QoQ.
- Profitability: DGW’s gross profit margin improved by ~80 bps YoY, but EBIT margin dropped 140 bps YoY in 2023. In 2023, the product mix trended towards higher-GPM categories as combined sales from office equipment, home appliances, and consumer goods amounted to 26% of total sales (vs 19% in 2022). However, EBIT margin weakened YoY in 2023 as SG&A expenses advanced 33% YoY. Specifically, advertising & promotion expenses increased 31% YoY to stimulate ICT sales, and labor costs rose 35% YoY as DGW’s total number of employees increased 29% YoY to 815 as of YE 2023.
- Our view: After the release of DGW's ICT results (coupled with data from retailers MWG and FRT), it seems to us that demand for electronics products in Vietnam remains weak despite the ongoing shopping season. As mobile phones, laptops, and tablets still contribute significantly to DGW's earnings in the short term, we see a potential downside risk to our 2024F forecast, pending a fuller review.
DGW’s Q4 & 2023 results
VND bn | Q4 2022 | Q4 2023 | YoY | 2022A | 2023A | YoY | 2023F | 2023A as % of 2023F |
Net revenue | 4,075 | 4,849 | 19% | 22,059 | 18,817 | -15% | 19,192 | 98% |
| 1,189 | 1,072 | -10% | 7,028 | 5,906 | -16% | 6,513 | 91% |
| 1,777 | 2,204 | 24% | 10,759 | 8,067 | -25% | 7,956 | 101% |
| 794 | 1,124 | 42% | 3,320 | 3,441 | 4% | 3,405 | 101% |
| 179 | 234 | 31% | 556 | 728 | 31% | 665 | 109% |
| 137 | 215 | 57% | 397 | 676 | 70% | 653 | 104% |
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Gross profit | 470 | 521 | 11% | 1,662 | 1,559 | -6% | 1,459 | 107% |
SG&A expenses | -263 | -435 | 65% | -858 | -1,142 | 33% | -995 | 115% |
EBIT | 206 | 86 | -58% | 805 | 417 | -48% | 464 | 90% |
NPAT-MI | 156 | 90 | -43% | 684 | 354 | -48% | 382 | 93% |
Gross margin | 11.5% | 10.7% |
| 7.5% | 8.3% |
| 7.6% |
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SG&A/net sales | 6.5% | 9.0% |
| 3.9% | 6.1% |
| 5.2% |
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EBIT margin | 5.1% | 1.8% |
| 3.6% | 2.2% |
| 2.4% |
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NPAT-MI margin | 3.8% | 1.8% |
| 3.1% | 1.9% |
| 2.0% |
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Source: DGW, Vietcap
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