DGW - Earnings slightly trail our forecast due to higher-than-expected net financial expense - Earnings Flash
  • 2024-07-31T00:00:00
  • Company Research
  • H1 2024: Net revenue was VND10tn (+17% YoY) and NPAT-MI was VND182bn (+12% YoY), completing 45% and 39% of our respective 2024F forecasts. NPAT-MI slightly fell short of our expectation due to a higher-than-expected net financial expense.
  • Q2 2024: Net revenue grew 9% YoY and NPAT-MI increased by 8% YoY. Sales growth was mainly fueled by laptop & tablet sales (31% of total sales in Q2) as it increased 17% YoY (+38% QoQ), which we attribute to the accelerated release of AI-enabled laptops 1 in Vietnam in Q2 2024 stimulating early stocking demand from retailers. Office equipment sales (17% of total sales) and home appliances sales (4% of total revenue) respectively increased 18% YoY and 20% YoY. On the other hand, phone sales (44% of total sales in Q2) were muted (+1% YoY) and consumer goods (3% of total revenue) declined 5% YoY.
  • Profitability: The EBIT margin was relatively stable at 2.3% in Q2 2024, relatively similar to the pre-COVID level (i.e., 2018-19), aligning with our expectation of 2.5% as we expect DGW’s EBIT margin to ramp up towards the year-end due to the high seasonality of laptops and iPhones. The NPM of 1.8% in Q2 was slightly behind our forecast due to a higher-than-expected net financial expense.
  • Our view: While EBIT was in line with our forecast, NPAT-MI slightly fell short of our expectation. We are awaiting management’s comment on the movement of the company’s net financial expense. We see potential downside risk to our 2024F forecast, pending a fuller review.

Note: 1 AI-enabled laptop is a laptop equipped with specialized hardware designed to optimize AI & ML tasks that helps improve user experience, according to our research.

DGW’s Q2 and H1 2024 results

VND bn

Q2 2023

Q2 2024

YoY

H1 2023

H1 2024

YoY

2024F

H1 2024 as % of 2024F

Net revenue

4,596

5,008

9%

8,556

9,993

17%

22,405

45%

  • Laptop & tablets

1,342

1,568

17%

2,436

2,707

11%

6,201

44%

  • Mobile phones

2,190

2,221

1%

4,089

4,663

14%

9,604

49%

  • Office equipment

728

858

18%

1,410

1,868

32%

4,639

40%

  • Home appliances

166

199

20%

331

409

24%

946

43%

  • Consumer goods

170

162

-5%

290

346

19%

1,014

34%

 

 

 

 

 

 

 

 

 

Gross profit

393

458

16%

654

846

29%

1,917

44%

SG&A expenses

-281

-344

22%

-445

-613

38%

-1,358

45%

EBIT

111

114

2%

208

233

12%

559

42%

Net financial income/ loss

-1

-10

1004%

10

-8

N.M.

49

N.M.

  • Financial income

45

38

-15%

82

62

-24%

167

37%

  • Financial loss

-46

-48

6%

-72

-70

-3%

-118

59%

NPAT-MI

83

89

8%

162

182

12%

463

39%

Gross margin

8.6%

9.1%

 

7.6%

8.5%

 

8.6%

 

SG&A/net sales

6.1%

6.9%

 

5.2%

6.1%

 

6.1%

 

EBIT margin

2.4%

2.3%

 

2.4%

2.3%

 

2.5%

 

NPAT-MI margin

1.8%

1.8%

 

1.9%

1.8%

 

2.1%

 

Source: DGW, Vietcap

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