MWG – Earnings beat forecast due to better-than-expected margins - Earnings Flash
  • 2024-05-02T00:00:00
  • Company Research
  • Q1 2024: Net revenue was VND31.4tn (USD1.3bn; +16% YoY) and NPAT-MI was VND902bn (USD36mn; +42.4x YoY), fulfilling 25% and 40% of our respective full-year forecasts. While revenue was in line with our expectations, NPAT-MI beat our forecast mainly thanks to better-than-expected profitability of TGDD & DMX.
  • TGDD & DMX’s aggregate revenue increased 7% YoY in Q1 2024 despite operating 224 fewer stores compared to Q1 last year. This was mainly driven by double-digit sales growth of consumer electronics category, especially ~50%-YoY growth in air conditioner sales.
  • BHX’s monthly sales/store was maintained at approximately VND1.8bn (similar to the level achieved in Q4 2023) in Q1 2024. BHX’s total sales increased 43% YoY in Q1 2024 thanks to the low bases of average sales/store in Q1 last year (which was only VND1.3bn).
  • Profitability: Thanks to the growing contribution of consumer electronics products in total sales, TGDD & DMX’s GPM increased 2-3 ppts YoY to 19~20% (per our estimate) in Q1 2024. This coupled with cost cutting measures help TGDD & DMX’s EBIT margin improve by 2.5 ppts to 5.6%, which is close to the pre-COVID (i.e., 2018-19) level average of 6%. As for BHX, its EBIT margin (and also NPM) continued improving, reaching -1.2% in Q1 2024 (+4.4 ppts YoY; +70 bps QoQ on an normalized level, per our estimate).
  • Our view: BHX’s margin improvement is in line with our forecast. Nonetheless, TGDD & DMX’s profitability exceeded our expectations due to better-than-expected change in product mix towards higher GPM category - consumer electronics. We see upside potential to our 2024 forecast, pending a fuller review.

MWG’s Q1 2024 results

VND bn

Q1 2023

Q1 2024

YoY

2024F

Q1 2024 as % of 2024F

Net revenue

27,106

31,441

16%

125,016

25%

  • TGDD (including TopZone)

6,668

6,804

2%

29,007

23%

  • DMX

13,363

14,538

9%

55,118

26%

  • BHX

6,397

9,149

43%

38,385

24%

  • Others

678

950

40%

2,505

38%

Online sales 1

3,795

3,500

-8%

17,290

20%

 

 

 

 

 

 

Gross profit

5,214

6,713

29%

24,963

27%

SG&A expenses

-5,109

-5,690

11%

-22,283

26%

EBIT

105

1,023

873%

2,680

38%

  • TGDD & DMX 2

622

1,198

93%

2,815

43%

  • BHX 2

-354

-105

-70%

-280

38%

  • An Khang 2

-74

-70

-6%

-272

26%

  • Bluetronics 2

-89

0

N.M.

0

N.M.

Net financial income

63

210

3.3x

290

72%

Net other income/ loss

-9

-6

-34%

0

N.M

NPAT-MI

21

902

42.4x

2,263

40%

Gross margin

19.2%

21.3%

 

20.0%

 

SG&A/net sales

-18.8%

-18.1%

 

-17.8%

 

EBIT margin

0.4%

3.3%

 

2.1%

 

  • TGDD & DMX 2

3.1%

5.6%

 

3.3%

 

  • BHX 2

-5.5%

-1.2%

 

-0.7%

 

NPAT-MI margin

0.1%

2.9%

 

1.8%

 

Source: MWG, Vietcap (1 Online sales are included in segmental sales presented above; 2 Vietcap estimates)

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