• Q1 2024: Net revenue jumped 26% YoY to VND5.0tn (USD199mn) and NPAT-MI grew 16% YoY to VND92bn (USD4mn), completing 23% and 20% of our respective 2024F forecasts. NPAT-MI fell slightly short of our expectation due to lower-than-expected GPM in Q1.
• Q1 segmental performance: DGW witnessed growth across several sectors, with outstanding performances in mobile phone revenue (+29% YoY, 49% of total sales in Q1) and office equipment (+48% YoY, 20% of total sales in Q1). Strong phone sales growth was mainly due to strong sales of Xiaomi’s new phone models, combined with sales increasing from a low base in Q1 2023. The surge in sales of office equipment was driven by the growing sales contribution from Achison¹. Additionally, laptops & tablets (23% of total sales in Q1) increased 4% YoY. Total sales of home appliances and consumer goods (8% of total sales) jumped 38% YoY due to the growing contribution from new brands.
• Profitability: EBIT margin came back to 2.4% in Q1 2024, which is relatively similar to the pre-COVID level (i.e., 2018-19), but tracked behind our expectation. While DGW’s gross profit margin improved by 120 bps YoY, its SG&A/sales increased 130 bps YoY - driven by (1) a 128% YoY jump in advertising & promotion expenses and (2) 37% YoY growth in labor costs due to a higher number of employees, both of which are in accordance with DGW’s portfolio expansion over the past year. 
• Our view: EBIT margin tracked behind our forecast as sales of laptops & tablets, which have high margins, fell short of our expectations in Q1. We see potential downside risk to our 2024F forecast, pending a fuller review.

Note: ¹DGW has increased its stake in Achison (an industrial consumables distributor) to 75% as end-June 2023 from 60% as end-March 2023. 

DGW’s Q1 2024 results

Source: DGW, Vietcap

Powered by Froala Editor