MWG - Finding Opportunities in New Businesses

Projected 2021F/ 22F revenue to come at VND119 trillion (+10% YoY; USD5.2 bn)/ VND150 trillion (+26% YoY; USD6.6 bn). For TGDD & DMX, we expect a positive SSSG of 10% for 2022F from the low base in 2021F on the back of a gradual recovery in purchasing power and initiatives to increase sales per store including rollouts of the new Topzone format while piloting fashion accessories shop-in-shop format named BlueJi, and sporting goods chain named BlueSport will offer potential upside. While other chains that are rumored to be piloted are fashion  and mom-and-kid format, we believe DMS will be the main format to be opened in 2022F. Meanwhile, we expect BHX to post a SSSG of 5% in 2022F from the high base in 2021F.

We forecast that 2021F/22F net profit will grow by 20% YoY/45% YoY to VND4.7 trillion (+20% YoY; USD206 mn)/VND6.8 trillion (+45% YoY; USD298 mn) with BHX’s improved profitability will contribute the most to 2022F profit growth. Accordingly, we expect BHX to post a net profit of VND50 bn (USD2.2 mn) in 2022F, after a projected loss of VND1.4 trillion (USD60 mn) in 2021F, mainly on the back of better optimized staff expenses and DC utilization. For TGDD & DMX, we project NPAT to advance 11% YoY to VND6.7tn (USD296 mn) in 2022F.

We believe MWG’s flexible business execution to deal with softer consumer electronics demand, and BHX’s profitability will bolster system-wide operating efficiency and drive earnings growth post-2021. Our projected NPAT’s 3Y CAGR of 35% during 2021F-24F makes the current 2022F P/E of 14.8x appealing. We lift our TP by 10% to VND163,500 per share, which is based on the sum-of-the-parts approach, due to our upward revision of 2021F-24F NPAT, and a rollover of our valuation to 2022F. We reiterate our BUY recommendation on MWG  with a total return of 24%, as of the closing price on Dec 07^th, 2021.