Mobile World Investment : shares in high demand by foreign institutional buyers

MWG shares is bucking the trend with a 13-percent increase in October and 6-percent rise in the latest 7 sessions while the Vietnamese stock market experiences serious falls.

The market is very active recently with buying and selling transactions of large blocks of MWG shares among foreign investors.

Mekong Enterprise Fund II has entered into agreements to sell a total of 2.8 million shares at expected prices ranging at 30-37% higher than the trading price on the order-matching market then. After the transactions, Mekong Enterprise Fund II will have reduced its ownership at MWG to 8 million shares which equivalent to a 5.46% stake.

Another two affiliated foreign organizations, CDH Electric and BEE Limited, have announced their registration to sell a total of three million MWG shares of MWG on the put-through market. The transactions will be carried out from October 11 to November 9 at agreed prices which are forecast to be quite higher compared to the trading price on the stock market. Before those transactions, CDH Electric and BEE owned a combined 7.72 million MWG shares, about 5.27% of Mobile World's issued shares.

Many local investors show concerns over the constant divestment of Mekong and CDH from Mobile World which may pose certain impact on its share price in the order-matching market. The facts, however, are proving the opposite situation. Most of the shares offered were bought in large blocks by other foreign funds who are buyers at premiums of up to 37% to the price at which the shares are trading in the stock market. Therefore, demand significantly exceeds supply of MWG shares among foreign institutional investors. There will be no foreign investors accepting such a high price as that if they do not have trust in the long-term growth momentum of the firm. This also means MWG shares are in fact highly appreciated by foreign investors.

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MWG's price last month

Besides, the transactions between foreign funds always take place on the put-through market at an agreed price, which results in no impact made on share prices on order-matching market. MWG shares have advanced a combined of 13% in the third quarter of this year, contributing to a 77% increase of the shares since the beginning of 2016. Also in Q3, MWG reached its record peak of 157,000 dong per share. Currently at a price of around VND145.000, MWG shares trade at a 2016(e) P/E ratio of around 12x.

About a year ago, Mobile World attracted much market attention when running several retail stores named Bach Hoa Xanh. Managers at the firm then were quite careful about the future of the stores. CEO Tran Kinh Doanh recently, however, has affirmed that Bach hoa Xanh will develop to become one of the core future growth of the firm beside two existing retail chains Thegioididong and DienmayXanh.

'We are sure to continue developing Bach Hoa Xanh. The problem is just when to expand it,' Doanh said.

The Mobile World currently has announced its business results in the first nine months of this year with a 76-percent jump in revenue from a year earlier to 30.8 trillion dong while net profit also climbed 64 percent y/y to 1.2 trillion dong. The firm has launched 419 more supermarkets across the country within the period.

Doanh said the firm would plan to expand further normal DienmayXanh to additional 30-40 store until the third quarter of 2017 while also focus on boosting the DienmayXanh mini model next year with 15-20 new stores opened every month.

These numbers have shown that next year will be another busy year for the Mobile World with its familiar task of opening new retail stores.

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