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[Long's View] Half Year 2018 Earning +29.9% ( MWG ) 17.08.2018 (DELAYED)

Summary

Stocks globally had a broad rally, helped by news that China and the U.S. will resume trade talks as early as next week after a two-month tension.

MWG Mobile World (118.1 -0.7%, market capital USD 1,5 billion, Foreigner own: 49%) Our analyst forecasts that sales and net profit after tax of MWG in 2018 will reach VND89,782.

720 companies listed in HSX and HNX (have announced their report), 625 records a gain in P&L in the first 6 months of 2018. Profit after tax grows 28.5%.

(1) There is a big gap between Top 20 stocks and the rest 700. If we exclude top 20 (count for 65% of the market’s PAT), the rest dont look like they have any growth at all.(2) There is a big gap between HSX and HNX’s companies’ performance (HSX’s stocks PAT rise 29.9% vs HNX’s +16.5%) Which always make sense as most big stocks listed in HSX.

Next week (1) 23/08 US tariff on $16 billion goods from China; (2) the VND/USD and exchange rate and (3) the potential of new stocks to be inclusive in this Q3 ETF review.

Dear Value Clients and partners;

Stocks globally had a broad rally, helped by news that China and the U.S. will resume trade talks as early as next week after a two-month tension. Vnindex open strongly but end the section with just slight gain. Top performers are IT (+1.1%), Utilities (+0.91%) while Finance, energy, healthcare and consumer discretionary all end in light red (from -1.55% to -0.68%). Rumor seem just enough to keep few big bankers closed higher despite stronger profit taking at trading section closing.

Today’s Markets

· Indexes : VN-Index 0.48%, HNX-Index 0.09%, Upcom 0.16%

· Active : CTG, GEX, VCB, BID, HPG HNX: ACB, PVS, SHB, VGC, AAV

· Index movers : Leader: VCB, BID, GAS, VHM, BVH Laggard: VPB, HDB, MBB, CTG, PLX

· Foreigner, Buy: VCB, SBT, HPG, BID, VJC Sell: VHM, SSI, NVL, HDB, GEX

· Notice stocks : GEX, VHM, SBT, IDI, OGC, TTB, BVH, VGC, AAV, VCS

· Trading volume : ~ 197.8 million shares

· Trading value : VND 4,214 bil ~ 184.8 USD mil

· Foreigner transaction Net: 4.3 mil USD Sell 24.3 USD million and Buy 28.6 USD million

· Derivative market : Total contracts: 99,038 contracts; Trading value ~ USD 412.9 million;

· Futures: VN30F1808@ 947; VN30F1809@ 948.3; VN30F1812@ 944.3; VN30F1903@ 947

Corporate update:

· MWG Mobile World (118.1 -0.7%, market capital USD 1,5 billion, Foreigner own: 49%) Our analyst forecasts that sales and net profit after tax of MWG in 2018 will reach VND89,782 billion (+ 32.6% YoY) and VND2,921 billion (+ 32% YoY) respectively, EPS of 2018F is VND9,215 based on assumptions (1) The number of DMX store in 2018 is 64 stores, including 21 stores converted from TGDD, BHX is 64 stores, TGDD will not open new stores. (2) The same store sales growth (SSSG) of TGDĐ and ĐMX is 8%, (3) The Selling and administrative expenses to revenue is 12.89%. We recommend BUY on MWG with the target price of VND 162,200/share, upside 39.8% under the PE and FCFF method.

o Mobile World (The gioi di dong ‘s chains) -The room for growth was limited because (1) TGDĐ’s market share in 1H2018 reached 45%, increased by 5%yoy and (2) MWG continue to convert TGDD stores to mini-DMX in order to maximize their performance. By the end of Q2 / 2018, the total number of TGDĐ stores reached 1,058 stores, decreased by 13 stores compared to the end of 2017.

o Consumer electronic (Dien May Xanh) continues to play a key role in MWG's business growth in the period of 2019-2020, along with DMX’s market share increased from 27% in 1H2017 to 35% in 1H2018. Up to the end of Q2 2018, 724 stores, up 56 stores compared to the end of 2017. MWG believe that they still have a room for growth of its segment by gaining more market share from a mom-n-pop shop with around 40% market share.

o Grocery chain (Bach Hoa Xanh) was in the process of finding formula. MWG is taking a firm step towards EBITDA’s break-even point by the end of 2018. As of August/2018, the number of BHX chain stores reached 400, up 117 units compared to the end of 2017. MWG plans to increase the number of its stores by the end of 2018 to 600 stores. Thanks to the change in store-location strategy, we realized that the revenue has started to improve positively. As of June/2018, BHX's average revenue per store which operated over 30 days reached approximately VND 928 million per month. Gross profit margin currently is 16%, improving from 14% at the end of 2017. BHX will reach the break-even point on EBITDA when once month sales per its store hit VND 1 bn and the gross margin is 18%. The ratio of BHX stores by the end of June 2018 reached a break-even EBITDA was about 20%.

Comments:

· Half year 2018 earning +29.9%. Among 720 companies listed in HSX and HNX (have announced their report), 625 records a gain in P&L in the first 6 months of 2018. Profit after tax grows 28.5% vs the first haft of 2017. 1/3 of the company fulfil more than 50% of their PAT plan for 2018. There are some other interesting points to note:

(1) There is a big gap between Top 20 stocks and the rest 700. If we exclude top 20 (count for 65% of the market’s PAT), the rest dont look like they have any growth at all.

(2) There is a big gap between HSX and HNX’s companies’ performance (HSX’s stocks PAT rise 29.9% vs HNX’s +16.5%) Which always make sense as most big stocks listed in HSX.

· Next week, market participants should keep their eyes on (1) 23/08 US tariff on $16 billion goods from China; (2) the VND/USD and exchange rate and (3) the potential of new stocks to be inclusive in this Q3 ETF review.

· More on BSC’s macro and market report Vietnamese; English and Sectors Outlook report Q3.2018 Vietnamese; English

Graph of the day: what top 32 stocks consensus from Securities tell us about Vnindex

Source: BSC

Have a nice weekend

Cheers,Tran Thang Long (Mr.)

Cheers,Tran Thang Long (Mr.)