MWG — Company update — Jan 2025

We retain our long-term positive view on MWG given the growth prospects of Vietnam’s modern retail industry. Vietnam’s penetration rate of modern trade is relatively low (33%) compared to regional peers’, implying ample room for modern retailers to continue growing in the years ahead.

We remain positive on BHX specifically. Following the past few years of restructuring, we expect BHX’s sales to post CAGR of 16% in 2023-2027E. In addition, we expect the chain to contribute nearly VND1.0tn to MWG’s consolidated pre-tax profits by 2027E (10% of the total).

However, we are more cautious regarding ICT&CE retail, especially the mobile phones/laptops/notebooks retail chain (i.e., TGDD) due to the high penetration rates of these products. But we are more constructive on consumer electronics retailing (i.e., DMX), as home appliance demand should be supported by the recovery of the property sector from 2H25.

Forecast revisions. We increase our revenue forecasts by 4%-9% for 2025E-2027E but cut our earnings forecasts by 3%-10% for the same period. Our increased sales assumptions are mostly driven by BHX (+12%-13% in 2025E-2027E revenues) while our reduced earnings forecasts are due to more conservative assumptions for ICT/CE retailing.

Yuanta vs. the Street.  Our 2024E-2026E earnings forecasts are now 4-5% lower than the Street’s, likely due to greater caution on the ICT/CE business.

We reiterate BUY and increase our target price by +29% to VND 76,600, implying +35% 12-m TSR. We have extended our FCFE cashflow model (60% weighting) out to 2030E (previous: 2026E) to incorporate the longer-term potential of the underlying business. We temper our DCF-based fair value estimate (which would present +41% TSR) by applying a regional peer multiple comparison (40% weighting) to derive our target price, which implies 21x 2025E PE and 17x 2026E PE.

Please see the link for more details: MWG – Company Update – Jan 2025