MWG – Triple-digit net profit growth expected in 2024
- We suppose that MWG‘s performance will return to positive growth in 2024 on the back of economic recovery. In detail, we believe that BHX will be the driver of sales growth while TGDD/DMX‘sales will recover at a modest rate. Besides, we forecast that MWG’s investment highlight in 2024 to be profit margins expansion. 2024F sales and NPAT-MI of MWG are VND124,854 bn (or USD5,159 mn, +5.6% YoY) and VND1,729 bn (or USD71 mn, +931% YoY), respectively.
- For 2024, we forecast BHX’sales to grow by +24.5% YoY to VND39,316 bn (or USD1,625 mn), supported by increases in both average sales per store and number of stores. Equipped with cost optimization strategies, we predict that BHX will reach NPAT break-even point in 2024 after experiencing losses in the last 6 years.
- For 2024, we adjust up MWG's target price to VND58,500 from VND51,500 using the SoTP method, based on (1) Increase 2024 NPAT-MI to VND1,729 bn (+931% YoY); (2) Raise targeted P/S of BHX to 1.4x; and (3) Reduce WACC to 10.7%. Adding cash dividend of VND500, the 12-months expected return is +23% compared to the closing price on Mar 12th 2024. We believe that if BHX convinces investors about the ability to grow, MWG’stock price will attract abundant cash flow. In short, we recommend BUY this stock for the long term
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