MWG [OUTPERFORM +12.8%] - Raising projections for ICT margins, BHX’s future profits

- We raise our target price (TP) by 19% but maintain our OUTPERFORM rating for MWG as the stock has rallied 16% over the past three months.

- Our higher TP stems from (1) a 27% increase in our valuation for BHX and a 13% increase in our valuation for TGDD & DMX. For BHX, we raise our aggregate 2024-32F net income forecast by 25% due to its better-than-expected improvements in sales/store and operational efficiency in H1 2024. For TGDD & DMX, we increase our aggregate 2024-28F net income forecast by 22%, reflecting (1) its better-than-expected GPM in H1 2024 and (2) our expectation for further EBIT margin enhancement following its closure of underperforming stores in H1 2024.

- We increase our 2024/25/26F forecasts for MWG’s NPAT-MI by 37%/31%/27%, respectively, as we increase our aggregate 2024-26F NPAT-MI for BHX by 67% and for TGDD & DMX by 25%.