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MWG - Waiting for The Ability to Maintain Significant Growth

​“MWG continues to be the leader in the retail industry for mobile phones and consumer electronics. However, expansion for Thegioididong could experience a slowdown this year. Consequently, DienmayXanh will be the main growth momentum for MWG for the next 2 years. RongViet Research believes that MWG will face several obstacles to achieve its similar rapid growth of the past, due to the saturation of Vietnam’s market coupled with the emergence of increased competition.

In the long-term, BachhoaXanh will be the next trump card from MWG to expand its operations and search for new ways to deliver growth. This company is currently beginning its 2nd year of this experimental phase, with the aim to improve its profitability and business efficiency. With positive prospects from the retail industry and convenience store segment in Vietnam, BachhoaXanh has the potential to be a significant catalyst for MWG. In addition to this, the online shopping segment (Vuivui.com) is also another story that is worth following.

However, there are several issues that MWG is facing right now including expansion and boosting its revenue for existing store chains, its distribution center and inventory management for BachhoaXanh; it is also facing fierce competition in the convenience store segment. Therefore, Rongviet Research believes that BachhoaXanh will be more challenging than Thegioididong and DienmayXanh. Furthermore, ESOP needs to be calculated and recognized as it could affect the annual returns (especially considering the current price of the stock).

Even though we are keen on MWG’s core business activities coupled with the transparency from the Board and Managers, MWG’s stock could be overvalued at this moment. RongViet Research recommends investors to SELL in the INTERMEDIATE term.”