MWG to approach BHX’s profitability

>> Will the MWG outweigh its drawbacks?

Business results improved

In 1Q24, MWG recorded revenue growth of 17% yoy to VND31,500bn, of which revenue from Dien May Xanh and The Gioi Di Dong increased by 10% yoy.

MWG does not share net profit, but MWG’s Board of Management said that thanks to efforts to save operating costs through restructuring policies, this company will record strong net profit growth in 1Q24, highlighted by BHX beginning to record profit in 1Q24.

FY24 earnings growth guidance

According to MWG’s Board of Management, purchasing power recovery will remain slow in 2024, thus this company will mainly focus on market share growth and cost optimization. In addition, the “price war” will not be as strong as in 2023 and selling prices will be more stable, which will improve FY24 revenue and profits.

In VNDirect’s views, investors should pay attention to MWG’s following activities:

First, MWG plans to open a maximum of 100 stores in 2024.

Second, MWG has no plan to open new stores in the next two to three years. The driving force will come from exploiting the remaining 40% of the market share (currently, the two chains account for 50–70% of the market share, depending on the industry) through finance solutions, delivery, or maintenance for customers.

>> MWG sees drops in revenue in November after closing about 150 stores

Third, MWG has no plan to open new stores with target revenue/store of VND550mn, An Khang's break-even point.

Fourth, currently, mini stores (standard store size, 300 m2) achieve revenue of about VND4.5bn/store/month, supermini stores (size 180 m2) achieve about VND2.5bn/store/month. This is just the breakeven level/store.

Fifth, online segment currently contributes 20% in total revenue.

Sixth, currently, BHX’s revenue and net profit are still on track and MWG is confident in approaching net profit in 2024. After the 5% BHX transaction, MWG has no need for additional capital for BHX in the future.

Cash dividend and share buyback plans

At the AGM, MWG announced it will pay a FY23 cash dividend of VND500 per share and the payment will be made in 2024. In addition, the company plans to buy back treasury shares with total capital of VND100bn.

MWG also plans to issue shares to the executive board based on FY24 business results (ESOP 2024). The ESOP issuance ratio is a maximum of 2% of total outstanding shares. The planned selling price of ESOP shares is VND10,000/share with expected issuance time in 2025. If the company’s after-tax profit is less than 110% of the business plan, the ESOP plan will not be implemented.