Mobile World Investment Group (MWG): CE Segment: key top-line growth driver in 2017

Analyst: Kien Trung Nguyen, CFA, [e-mail]

Rating: BUY (unchanged)

Target price: VND 180,000

Upside: +26%

Share price (26-August-16): VND 143,000

In 2Q16, MWG posted revenue of VND10,023bn (+87% YoY) and net profit of VND417bn (+88.4% YoY). Different from the last 2 years, where 2Q revenue had usually been slightly below 1Q as demand for phones and CE (consumer electronics) is high before the Tet holidays, revenue in 2Q16 rose 4.1% QoQ due to aggressive expansion in shop footprint.

In 1H16, MWG recorded net sales of VND19,650bn (+81% YoY) and net profit and VND835bn (+83% YoY), achieving 58% and 60% of respective full-year targets for revenue and net profit.

MWG: 1H16 revenue and earnings

(VNDbn)	1H16	YoY	% target
Mobile phone shops (thegioididong.com)	14,063	55%
CE stores (dienmayxanh.com)	5,587	216%
Net profit	835	83%	60%
Online sales	1,306	93%	40%

Source: MWG

In 1H16, MWG opened 263 mobile shops and 42 CE stores, increasing the total footprint to 827 shops and 111 stores, respectively. According to management, SSSG for mobile stores was about 10% in 1H16. Therefore, most of the top-line growth came from newly opened shops.

After the strong 1H16 and our meeting with management, we raise our 2016-17E EPS by 20-34%. Our new 12-month TP of VND180,000 (from VND97,500) is now based on a PER of 13.3x (5% discount to market PER of 14x) on our average 2016-17E EPS (from 11x 2016E PER). Our higher target PER is due to our greater conviction level in MWG's long-term earnings growth from its expansion in the CE segment and fresh food chain. Risk: overhang from the 5% ESOP in December 2016.

Please open the link for our full report: MWG VN_Company Update_CE Segment: key top-line growth driver in 2017_20160826

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