MWG is well positioned to sustain top-line and bottom-line growth with a revenue and NPAT-MI FY24-FY28F CAGR of 3.87% and 10.79%, respectively with BHX as the main growth driver.

• We believe that MWG has established a solid foundation embarked on a comprehensive restructuring plan (1Q22-4Q23). For FY24F, MWG’s gross margin is projected to rise 215 bps y/y, back to its 5-yr average of 21.15% and a reduction of 131 bps y/y for SG&A margin as 2023 was an unsual year due to macro uncertainties and the price war between domestic retailers.
• With its cash-generation capability, we believe MWG will reduce exposure to a high interest rate environment by downsizing net debt.   

The Gioi Di Dong (TGDD) & Dien May Xanh (DMX) growth slow-down, forecasted FY24 NPAT-MI of VND3,843 billion, net margin of 4.4%.

• Skepticism remains for long-term growth prospects due to demand for Information Communication Technology (ICT) & Consumer Electronics (CE) sectors have weakened considerably.
• MWG’s management anticipates a recovery for ICT/CE sales in 2H24 and at the beginning of 2025, we project combined aggregate FY24F revenue for TGDD & DMX to stand at VND87,267 billion, an increase of 4.5% y/y.

Bach Hoa Xanh (BHX) is expected to post double-digit sales growth in the next 5 years, FY24-28F with a revenue CAGR of 9.16%.

• We project BHX to end FY24 with a revenue and NPAT-MI of VND39,959 billion and VND433 billion, respectively. BHX’s FY24F net margin of 1.1% is driven by (1) maintaining a healthy gross margin of 24.8% despite uncertainties in the economy and (2) SG&A margin reduction to 23.35% after cost-effective measurements taken during the restructuring phase.
• BHX’s same-store sales growth (SSSG) of 5.39%, with average monthly sales per store for FY24F reaching VND1.9 billion.

Valuation. We initiate coverage with a BUY rating, 12-mo based case target price of 76,350 VND/share for MWG on a 5-year forecasted period (FY24-28F) based on the following factors: (1) BHX expects double-digit sales growth with FY24-28F CAGR of 9.16%, in which, BHX’s FY24F SSSG of 5.39%, (2) MWG’s better than expected costs and margins, (3) Shift in consumer shopping behavior & preferences and market share concentration, (4) CAGR 7.7% for retail market.