MWG — Express note — May 2024

Key Highlights

MWG’s May revenues decreased by -3.4% MoM but increased by +8.8% YoY to reach VND 11.2tn.

5M24 total sales growth thus came in at +15.8% YoY (compared to 16.8% YoY growth in 4M24) to reach VND 54tn. MWG has achieved 43% of our full-year revenue forecast and guidance for 2024E, with all business segments posting revenue expansion in 5M24.

BHX remains the key growth driver. BHX’s posted May sales of VND 3.4tn (+6.1% MoM / +39.6% YoY) and 5M24 sales of VND15.8tn (+42.4% YoY), accounting for 29% of consolidated revenues. Sales-per-store exceeded VND 2.0bn (+6% MoM / +40% YoY) in May driven by the FMCG and fresh product lines. This is a very solid growth result, especially considering the closure of 6 outlets in the past 12 months. BHX’s footprint is flat YTD at 1,968 outlets.

DMX’s sales declined with the temperature to reach VND5.2tn in May (-12.4% MoM / -3.2% YoY). Sales of A/C products softened as hot weather gave way to the rainy season. This was partially offset by increased TV demand for football season. DMX’s 5M24 sales were still up by +7.8% YoY VND25.7tn.

TGDD’s sales remained soft in May, with monthly sales of VND2.2tn (up by +4.4% but down by -1.1% YoY). 5M24 sales of VND11.1tn remained flat (+0.4% YoY). As a result, total sales of the ICT&CE retail segment improved slightly, by +5.4% YoY, in 5M24.

Sales at the other retail chains jumped by +45.1% YoY in 5M24. Ava Kids and An Khang Pharmacy account for just c.3% of MWG’s 5M24 total revenues, but we are nonetheless impressed by their very solid sales growth momentum.

Reminder: MWG will pay a cash dividend of VND500 on July 10. The date-of-record for this dividend is June 28.

Our View

We continue to believe that MWG is on track to meet or exceed its guidance as well as our forecasts for 2024E based on the strong YTD results. We expect MWG’s solid operational momentum to continue in the context of BHX’s continued recovery, while the beleaguered ICT segment should get a tailwind from back-to-school demand (e.g., for laptops) in July-August.

We have a BUY recommendation on MWG, but the stock has now exceeded our target price. MWG’s share price has increased by +44% since our initiation in January. At this point, the stock’s valuation has reached 22.9x 2024E PE, which is two standard deviations above its 5-year historical mean.

MWG is unlikely to be immune to a broad market correction, and we suggest waiting for weakness to add to positions.

Please see the link for more details: MWG — Express note — May results (2)