MWG_OUTPERFORM_Post-Covid-19 Recovery

Valuation  

§  Compared to the latest BUY recommendation report on 10/09/2021 (Link), MWG's share price has recorded positive growth, approaching the previous valuation of VND 140,400.  

§  BSC recommends a POSITIVE and raised its 2022 target price to 154,400VND (upside +11.4% compared to the price on November 22, 2021) based on the two models P/E (50%) and DCF (50%).

Forecast Business Results

§  2021: BSC estimates revenue and profit after tax are VND 118,404 billion (+7.9% YoY) and VND 4,604 billion (+17% YoY). EPS FW 2020 = VND 6,459, PE FW 2021 = 21.5x.

§  2022: Net revenue and profit after tax are estimated at VND 143,121 billion (+21.2% YoY) and VND 6,164 billion (+34% YoY). EPS FW 2020 = VND 8,647, PE FW 2021 = 16.0x.

Investment Thesis

§  Dien May Xanh Supermini model will be the key to solving the market share growth problem and becoming the main growth driver in 2022 after covid-19.

§  Bach Xanh continues to gradually move towards breakeven and is expected to reach breakeven in the second half of 2022.

§  MWG will re-value trading at a higher PE level when BHX reaches breakeven.

Risks

§  Risks of purchasing recovery after Covid-19

§  The slow revenue growth rate for provincial stores and the ability to optimize costs has not reached expectations.

Business Updates

§  1H2021 – Recorded positive business results in the context of the epidemic still affected. MWG revenue and profit reached VND 63,139 billion (+12% YoY) and VND 2,208 billion (+26% YoY, respectively).

§  The impact of covid-19 on Q3/2021 business results however, the silver lining from BHX.