FREE

MWG - A bright spot from the recovery in ICTCE retailing market share

Q1-FY25: Profit surged, driven by a recovery in ICTCE retailing market share and reduced operating/depreciation costs in the ICTCE retail segment.
• MWG's Q1-2025 results exceeded our expectations, with net revenue reaching VND 36.1 tn (+14.8% YoY) and NPAT-MI at VND 1.55 tn (+71.3% YoY), driven by a notable recovery in ICTCE retailing market share through a leaner store network with lower operating and depreciation costs. Two key strategies behind this success include: (1) Strengthening partnerships with strategic brand ("familyship"), (2) Rebuilding customer engagement with a dual focus on value-for-money initiatives (e.g. 0% installment plans, deeper discounts) and enhanced after-sales service quality.
• Meanwhile, BHX’s “central expansion” strategy has yet to deliver meaningful profit contribution, with net margin at just 0.2% (vs. 1.0% in the previous two quarters). This is due to a large number of new stores being opened in the central region—where demand is weaker than in the south—and aggressive discounting/pricing strategies were required to enter the market.
FY25 outlook: Profit growth is expected to remain strong, supported by the solid momentum of the two electronics retail chains and improved returns from financial investments. BHX is set to enhance operational efficiency and gradually contribute more meaningfully to MWG’s results over the coming quarters.
• In 2025, MWG is poised to “reap profit gains” from (1) A well-executed market share strategy against e-commerce platforms and other ICTCE retail chains, combined with the optimization of the TGDD & DMX store network—an effort ongoing for the past 1.5 years, (2) A robust short-term financial investment portfolio, reaching the size of VND 32.4 tn in Q1-2025 (+32.0% YoY), yielding attractive interest rates of 8–9%, thereby boosting finance income.
• Accordingly, MWG’s business performance maintained a robust level in Q2-2025, with NPAT-MI reaching VND 1,397 bn, reflecting a decline of 9.6% QoQ but a notable increase of 19.2% YoY.
• Following a period of “temporary instability” due to aggressive store expansion in H1-2025, BHX will shift focus to improving sales per store and profit margins from H2-2025 onwards. Notably, BHX’s Q1-2025 net margin remains well below WCM’s (0.7%) and the industry average (2–3%).
• We forecast MWG’s net sales to reach VND 147.5 tn (+9.8% YoY), with NPAT and EPS estimated at VND 5.22 tn (+40% YoY) and VND 3,532, respectively.
Outlook and recommendation
We apply a 50:50 weighting between the short-term sum-of-the-parts (SoTP) and long-term discounted cash flow (DCF) valuation methods for MWG. Our 12-month target price is VND 67,900/share, implying a 2025F P/E of 19.2x. Based on the closing price on 06/06/2025, we recommend ACCUMULATE for MWG.
We advise investors to closely monitor BHX’s key performance indicators in the upcoming quarters, particularly the potential improvement in monthly sales per store (from VND 1.8 bn to above VND 2.0 bn) or net margin (from 0.2% to 0.5-1.0%). A favorable or underwhelming BHX performance in the coming quarters could enhance or diminish short-term stock return expectations for MWG’s stock price among investors, thereby increasing or decreasing the weighting of the short-term SoTP methodology (50%) in MWG’s overall valuation, potentially unlocking greater or lesser profit upside.