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International buyers who search publicity to the Vietnam inventory market typically achieve this through ETFs or Closed Finish Funds (CEFs) that maintain the bigger and extra liquid corporations. Such corporations are normally outstanding constituents on varied Vietnam inventory indices such because the VN-Index, FTSE Vietnam Index, MSCI Vietnam Index and so forth.
On this weblog submit I shall talk about one such giant Vietnam inventory, the Cell World Group (HOSE:MWG). I assumed may be helpful to often present a broad overview of the shares you may see pop up in fund supervisor holdings. The aim is to not present purchase or promote suggestions. Nevertheless a fast abstract of key drivers for future efficiency would be the goal, and readers could make their very own thoughts up of whether or not Cell World is an efficient inventory to purchase?
AN OVERVIEW OF THE MOBILE WORLD (HOSE:MWG) BUSINESS
The principle operations of Cell World Group (MWG) encompass the next:
- Promoting cellphones and IT tools / equipment (and offering restore and upkeep companies for), below the model of The Gioi Di Dong.
- The extra business digital tools is traded below the model Dien Could Xanh.
- They commerce in meals, meats, greens and different groceries below the model Bach Hoa Xanh.
- A number of years in the past, they established the model Bluetronics, a retail chain on cell gadgets, equipment and telecommunication companies to rollout shops in Cambodia.
Above is an image of a “thegioididong” retailer. Personally, after I consider cell / IT retailer in Vietnam this model is the one which immediately springs to thoughts.
The image additionally exhibits the Dien Could Xanh retailer by aspect which is widespread. These shops additionally promote bigger objects comparable to TVs, fridges, washing machines, air conditioners and so forth.
That is essential to grasp as a result of these shops have already got established an enormous footprint in Vietnam. On one hand that offers them a dependable revenue stream and large scale to attain operational efficiencies. However, it makes it tougher to imagine enormous upside when it comes to future potential of accelerating their market share. That’s as a result of the start line is already from a dominant market share place.
Historical past / background / scale of Cell World Group.
In accordance with the 2020 MWG annual report, The Gioi Di Dong model has round 913 retailers all through Vietnam, and Dien Could Xanh had 1,427 shops. The share of the general market was about 50% and 55% respectively.
By way of The Gioi Di Dong model, it was based again in 2004 by Nguyen Duc Tai. He got here from a comparatively poor upbringing and remarked that “all people laughed at me” when he made his first makes an attempt to enter the cell phone market.
How issues have modified! He’s a really wealthy man now.
MWG already has a dominant market share through The Gioi Di Dong and Dien Could Xanh manufacturers when it comes to cellphones, equipment, shopper electronics and so forth.
Their place within the grocery market is far more early stage as compared. It was solely 2015 when the primary Bach Hoa Xanh retailer was established.
Actually, I keep in mind round that 12 months after I was seeing this retailer pop up close to the place I spent a major quantity of my time in Vietnam. It was good to lastly see a grocery market pop up in order that I might extra simply purchase a few of the stuff I appreciated again in Australia however generally couldn’t come throughout in Vietnam. (Often in Vietnam I hung out fairly a number of hours away from HCMC).
By 2020, it had 1,719 Bach Hoa Xanh shops situated in HCMC and 24 different provinces within the southern and south-central areas of Vietnam.
Again Hoa Xanh contributed to roughly 20% of MWG’s whole gross sales in 2020. It’s market share in its phase surpassed 10% in city areas and 20% in HCMC alone.
As mentioned earlier, the decrease market share factors it because it proper now in comparison with IT/electronics sides of the corporate, imply that the upper development potential sits right here with the grocery aspect of the corporate.
Progress potential of Cell World Group
The Vietnam urbanization development is one that gives development tailwinds to MWG.
For sure home goods that some components of the world would by no means ponder not proudly owning, there may be sill some room for development in Vietnam as we will see from the beneath graphic.
Supply: Cell World 2020 Annual Report
Beneath are a few of the components highlighting development potential in Bach Hoa Xanh.
Supply: Cell World 2020 Annual Report
FACTORS TO DECIDE ON WILL MOBILE WORLD SHARES KEEP RISING IN 2022?
Transition to extra of an Omni-Channel focus – Like many corporations all through the world since 2020, MWG improved their on-line gross sales capability. Round 9% of the group’s total gross sales have been on-line in 2020, 11% for the cell/electronics aspect versus 1% for grocery.
There isn’t a doubt loads of room for the corporate to get these charges increased.
Additional proof of enhancing margins – MWG skilled some spectacular margin efficiency in 2020 in the course of the pandemic. They have been in a position to optimize retailer sizes and mixes, revaluate their diversified product assortments, and negotiate properly with suppliers because of their enormous scale.
Going ahead it will likely be fascinating to look at how the Omni-Channel focus can also probably assist margins.
Momentum in grocery gross sales – How will the highest line development story develop of the Vietnamese doing extra of their buying at shops such because the BHX chain in contrast with conventional markets? There was clearly good momentum on this aspect of the corporate during the last 12 months or two. While this may be considerably tied into the fortunes of the nation as an entire and how briskly development emerges popping out of the pandemic, this space of the corporate ought to develop properly within the medium and long run.
Rollout of recent Bach Hoa Xanh shops – That is form of tied in with my level above. It simply highlights although that MWG can profit not solely from this development from a top-down macro perspective, but additionally from a bottom-up perspective when it comes to future retailer openings. There’s nonetheless loads of room for extra retailer rollouts and features in market share.
VIETNAM STOCK MARKET VALUATIONS – MOBILE WORLD PE RATIO, YIELD ETC.
Cell World PE Ratio – 22 occasions (2021)
Cell World dividend yield – 0.2%
* Supply: TIKR knowledge captured on March twenty fifth 2022
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MOBILE WORLD SIZE IN TERMS OF VIETNAM STOCK INDEX AND COMPONENTS
Cell World on the time of writing is concerning the sixteenth largest firm of my searched of Vietnam inventory record of the most important corporations. The market cap in USD is circa $4.3 billion.
IS MOBILE WORLD A GOOD UNDERVALUED VIETNAMESE STOCK TO BUY FOR 2022?
I’m a bit torn between the considerably mature market share place that the majority of their earnings come from, i.e. The Gioi Di Dong and Dien Could Xanh shops, versus the seemingly higher potential of earnings development within the grocery aspect with Bach Hoa Xanh.
There are different components that may help development potential comparable to higher efficiency in on-line gross sales and the chance in Cambodia for instance.
I’d additionally be aware that though I remarked concerning the extra mature market share beginning place for sure segments of the corporate, even simply slowly inching up that market share can nonetheless produce some good outcomes. I say that within the context of how the enterprise is tied to the fortunes of the general urbanization development in Vietnam.
One ought to control if the corporate tries to broaden too shortly exterior of its circle of competence, a attainable threat in an effort to develop exterior of their extra mature companies.
In abstract if one can decide up the inventory at a ahead P/E ratio of 15 occasions or much less it’s most likely a comparatively low threat play to profit from the long-term future development in Vietnam. Taking a look at how the inventory has typically traded up to now in 2022, and likewise what analysts are forecasting when it comes to EPS this 12 months, the inventory has been close to such ranges.
OTHER VIETNAM STOCK INDEX COMPONENTS REVIEWS
If you’re all in favour of comparable summaries and evaluation on different bigger Vietnam listed shares listed here are another hyperlinks to take a look at.
VIETNAM STOCK INDEX COMPONENTS REVIEW – VINAMILK (HOSE:VNM) – VIETNAM STOCK MARKET (vietnamesestockmarket.com)
VIETNAM STOCK INDEX COMPONENTS REVIEW – VINHOMES (HOSE:VHM) – VIETNAM STOCK MARKET (vietnamesestockmarket.com)
VIETNAM STOCK INDEX COMPONENTS REVIEW – AIRPORTS CORPORATION OF VIETNAM (UPCOM:ACV) – VIETNAM STOCK MARKET (vietnamesestockmarket.com)
And do you have to desire a very fast description of the most important 10 corporations listed on the Vietnam inventory alternate, make sure you go to the beneath weblog submit I made final 12 months.
VIETNAM LARGEST 10 COMPANIES ON STOCK MARKET
I summarize the most important Vietnam corporations by market cap:
VIETNAM LARGEST 10 COMPANIES ON STOCK MARKET
Is Vietnam a very good funding?
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