- 2024-10-29T00:00:00
- Company Research
- 9M 2024: Net revenue was VND16.2tn (USD649mn; +16% YoY) and NPAT-MI was VND304bn (USD12mn; +15% YoY), completing 73% and 71% of our respective 2024F forecasts. NPAT-MI fell slightly short of our expectation due to higher-than-expected selling expenses.
- Q3 2024: Net revenue grew 15% YoY and NPAT-MI increased by 19% YoY. Sales growth was mainly driven by smartphone sales (36% of total sales in Q3) as this segment increased 26% YoY (flat QoQ), mainly driven by DGW’s double-digit YoY growth of Xiaomi and iPhone smartphones. Office equipment sales (18% of total sales) and home appliances sales (4% of total revenue) respectively increased 27% YoY and 35% YoY. Consumer goods (3% of total revenue) grew 15% YoY. Conversely, laptop sales (39% of total sales in Q3) were muted as this segment grew 1% YoY, which we attribute to Vietnam’s weak consumption that has limited demand for laptop replacements. In 8M 2024, Vietnam’s laptop sales value from offline channels declined by a high-single-digit YoY, according to Gfk.
- Profitability: EBIT margin dropped to 1.7% (-50bps YoY) in Q3 2024 and was lower than our expectation, compared to 2.3% in H1 2024. We mainly attribute this to a 129% YoY jump in advertising & promotion expenses in Q3 2024, which management attributed to its efforts to boost Xiaomi’s sales growth. In Q3 2024, its sales of Xiaomi phones grew by high double-digits YoY, outperforming YoY growth of its Iphone sales in Q3. As a result, DGW’s EBIT decreased by 12% YoY in Q3 2024, though this decline was fully offset by a 5.8x YoY increase in net financial income, primarily driven by foreign exchange gains.
- Our view: While sales broadly aligned with our expectations, NPAT-MI fell slightly short of our forecast. We see potential downside risk to our 2024F forecast, pending a fuller review.
DGW’s Q3 and 9M 2024 results
VND bn | Q3 2023 | Q3 2024 | YoY | 9M 2023 | 9M 2024 | YoY | 2024F | 9M 2024 as % of 2024F |
Net revenue | 5,413 | 6,226 | 15% | 13,968 | 16,219 | 16% | 22,222 | 73% |
| 2,398 | 2,428 | 1% | 4,834 | 5,135 | 6% | 6,497 | 79% |
| 1,774 | 2,230 | 26% | 5,863 | 6,893 | 18% | 9,671 | 71% |
| 907 | 1,151 | 27% | 2,317 | 3,019 | 30% | 4,299 | 70% |
| 163 | 220 | 35% | 494 | 629 | 27% | 910 | 69% |
| 171 | 197 | 15% | 461 | 543 | 18% | 845 | 64% |
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Gross profit | 385 | 602 | 56% | 1,039 | 1,448 | 39% | 1,860 | 78% |
SG&A expenses | -262 | -494 | 89% | -707 | -1,108 | 57% | -1,314 | 84% |
EBIT | 123 | 108 | -12% | 331 | 340 | 3% | 546 | 62% |
Net financial income/ loss | 8 | 48 | 5.8x | 18 | 40 | 123% | 18 | 220% |
| 47 | 74 | 58% | 128 | 136 | 6% | 136 | 100% |
| -38 | -26 | -32% | -111 | -96 | -13% | -118 | 82% |
NPAT-MI | 102 | 122 | 19% | 265 | 304 | 15% | 430 | 71% |
Gross margin | 7.1% | 9.7% |
| 7.4% | 8.9% |
| 8.4% |
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SG&A/net sales | 4.8% | 7.9% |
| 5.1% | 6.8% |
| 5.9% |
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EBIT margin | 2.3% | 1.7% |
| 2.4% | 2.1% |
| 2.5% |
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NPAT-MI margin | 1.9% | 2.0% |
| 1.9% | 1.9% |
| 1.9% |
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Source: DGW, Vietcap
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