MWG update – BUY

MOBILE WORLD INVESTMENT CORP (MWG VN)

The company closed 2021 with decent growth despite the resurgence of COVID-19. Better momentum is expected for 2022 based on the assumption that operational interruption will not repeat. MWG will continue to enhance the existing businesses’ performance while testing new business chains to look for new growth drivers. Maintain BUY at target price of VND156k/shr. 

MWG generated 13.3% and 25% YoY growth in net revenue and EAT, to VND122,958bn and VND4,901bn (unaudited), respectively in 2021. This included a 17% decline in EAT in 3Q, when about 2,000 TGDD and DMX stores were temporarily closed or restricted in either offline or online channels for most of the time due to social distancing requirements amid the COVID-19 spike in Vietnam. However, a vibrant recovery in 4Q, on the back of its store network reopening, combined with strong performance in 1H2021 drove the company to exceed its full-year targets and our projections.

EAT margin climbed to 4.0% from 3.6% in 2020, attributed to a widened gross margin from 22.1% in 2020 to 22.5% in 2021 and an increase of 176% YoY in financial income (mostly thanks to interest income), despite an inflated SG&A expenses on net revenue ratio (17.7% in 2021 vs 17.3% in 2020).