- 2024-05-02T00:00:00
- Company Research
- 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
VND bn | Q1 2023 | Q1 2024 | YoY | 2024F | Q1 2024 as % of 2024F |
Net revenue | 3,960 | 4,985 | 26% | 21,493 | 23% |
| 1,094 | 1,139 | 4% | 6,319 | 18% |
| 1,899 | 2,442 | 29% | 8,574 | 28% |
| 682 | 1,010 | 48% | 4,639 | 22% |
| 165 | 210 | 27% | 946 | 22% |
| 120 | 184 | 53% | 1,014 | 18% |
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Gross profit | 261 | 388 | 49% | 1,861 | 21% |
SG&A expenses | -164 | -269 | 64% | -1,303 | 21% |
EBIT | 97 | 119 | 23% | 558 | 21% |
NPAT-MI | 79 | 92 | 16% | 459 | 20% |
Gross margin | 6.6% | 7.8% |
| 8.7% |
|
SG&A/net sales | 4.1% | 5.4% |
| 6.1% |
|
EBIT margin | 2.4% | 2.4% |
| 2.6% |
|
NPAT-MI margin | 2.0% | 1.9% |
| 2.1% |
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Source: DGW, Vietcap
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