Will MWG fail to reach the 2021 revenue target?

The Gioi Di Dong and Dien May Xanh store chains have been closed due to social distancing.

Completing 59% of the profit target

In the first 7 months of 2021, MWG recorded net revenue of VND 71,986 billion, up 12% YoY. In July 2021, net revenue reached approximately VND 9,500 billion (10%YoY), driven by revenue from the BHX chain, while revenue from the two chains The Gioi Di Dong (TGDD) and Dien May Xanh (DMX) dropped sharply because about 2,000 stores (accounting for 70% of total system-wide store-count) have been temporarily closed or limit  ed the number of store-visited customers in the second half of July. MWG’s gross profit margin remained at approximately 23%. Its profit after tax reached VND 2,784 billion, up 18% YoY. Therefore, this company completed 58% of the revenue target and 59% of the profit target.

Negative growth in Q3/2021

In July 2021, the revenue of two chains TGDD and DMX reached VND 5,220 billion, down 33% from the previous month and 24% from the same period last year due to most stores were temporarily closed or restricted in operation in the context of the outbreak of Covid-19. PHS said that MWG would every opportunity to sell products online, focused on pushing sales in areas that were less affected by this new wave of Covid-19 and DMX Supermini (DMS) store chains. Specifically, online channel revenue grew by 61%YoY (reaching 1,000 billion VND); and the DMS chain contributed VND 500 billion in revenue, accounting for 13% of DMX’s revenue. 

At the end of July 2021, DMS had 589 stores, of which 23 were newly opened. The estimated business results of the two chains TGDD and DMX in the last 2 months of Q3/2021 could be the weakest performance, with revenue of only VND 6,300 billion (-47%YoY) due to the Government's strict social distancing regulations at many localities (especially HCMC and Hanoi).

Main growth driver in 2H2021

BHX hit the new record of almost VND 4,240 billion in July, soared by 55% MoM, and rocketed by 133% YoY. The average revenue of each store is more than VND 2.1 billion. Moreover, BHX hit a record of delivered orders, with more than 315 thousand successful transactions, 1.5 times higher than the average level before the new Covid-19 wave. 

PHS said that BHX would continue to be the main growth driver in 2H2021, estimated to grow at approximately 75%YoY thanks to (1) Benefiting from a strong increase in people's need to stock up on essential food in Q3 and the closure of traditional markets; (2) Attracting customers compared to competitors through efforts to find sources of supply at reasonable prices; (3) Committed to prioritizing all resources for increasing the supply volumes and putting goods on shelves as quickly as possible to serve consumer, even though employees headcounts was reduced more than 50% compared to the normal condition.

MWG is facing some risks: First, the mobile phone market has been saturated. Second, Covid-19 has negatively affected the electronics and electronics segments. Third, MWG has faced fierce competition from Vinmart, and Co food.

PHS lowered MWG’s forecast revenue from VND 130,836 billion to VND 117,540 billion in 2021 due to the strong outbreak of the Covid-19 pandemic and its spread across the country at the end of Q2 and extending to the end of Q3. Net profit in 2021 is estimated at VND 5,183 billion (32%YoY) assuming gross margin improves at 23%.