MWG – A bull year ahead – Update

• MWG posted VND108,546bn (+6.2% yoy) in FY20 revenue and VND3,918bn (+2.2% yoy) in FY20 net profit, in line with our expectation.
• We expect a strong rebound in FY21 with 23.4% and 37.7% growth in revenue and NP, respectively.
• We reiterate our Add call with a higher TP of VND173,000.

FY20’s results in line with our projections

MWG’s 4Q20 revenue grew 7% yoy to VND27,913bn, driven by 71% yoy growth in Bach Hoa Xanh (BHX)’s revenue, which contributed 22.5% to 4Q20 total revenue. MWG’s 4Q20 NP grew 9.6% yoy to VND941.8bn. MWG’s FY20 revenue rose 6.2% yoy to VND108,546bn and NP grew 2.2% yoy to VND3,918bn, in line with our expectations

Dien May Xanh supermini (DMS) to drive growth of MWG’s CE segment

DMS, a new small-sized model of consumer electronic (CE) chain, located in communes, wards and towns in remote areas, has marked a good rollout in FY20 with 302 nationwide stores (12.9% of total CE stores at end-2020). We believe DMS will be MWG’s new driving force to maintain the growth of CE business and expect the number of DMS stores to reach 902/1,302 by the end of FY21F/22F, with respective revenues of VND7,428bn/VND14,104bn, contributing 7.4%/11.8% to CE revenue in FY21F/22F.

MWG targets 2-digit growth in FY21F NP

For FY21, MWG’s guidance of revenue and net profit are VND125,000bn and VND4,750bn, up 15.1% yoy and 21.2% yoy, respectively. We believe MWG can beat their guidance with FY21F top line and bottom line reaching VND134,024bn/VND5,392bn, or 7.2%/13.5% higher than the company’s guidance. This is on the back of 1) BHX revenue continues to grow strongly by 56.5% yoy in FY21F and 2) MWG’s CE segment will rebound with 2-digit growth rate at 15.4% yoy thanks to larger market share, the success of Dien May Xanh model to drive growth of MWG’s CE revenue in the context of risky market where Covid-19 is still present.

Reiterate our Add call with a higher TP of VND173,000/share

We lift our SOP-based TP by 14.4% to VND173,000 to reflect 1) a rollover to FY21F, 2) a 12% increase in 10-year EBITDA of BHX chain, and 3) lower RFR (3% vs 4% in previous report). Key downside risks are: 1) lower-than-expected GPM due to lower bargaining power with suppliers or higher spoilage and shrinkage rate, and 2) another nationwide social distancing period due to new Covid-19 outbreak, especially in the business hubs of Hanoi and HCMC.

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