According to MBS's calculations, the recovery of Mobile World Investment's business results in the first half of 2024 could increase MWG's TTM P/E, reaching a level that may be just enough to satisfy the P/E criteria.
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The Ho Chi Minh City Stock Exchange (HoSE) has just officially removed it from the VN Diamond Index basket in April 2024 due to not meeting the P/E ratio requirements. However, the opportunity to return at the portfolio restructuring (review) in October may be open for the stock of this retail giant.
According to a newly published analysis report, MB Securities Joint Stock Company (MBS) expressed the view that MWG shares of Mobile World Investment Joint Stock Company are likely to be returned to the VNDiamond index basket in the review period in October 2024. This securities company believes that MWG's business results have recovered in the first half of 2024.
“MWG’s TTM P/E, the coefficient reflecting the relationship between stock price and net income per share (EPS), is currently at 46.x, which is a level that may be sufficient to satisfy the P/E criteria. In addition, the foreign investor (FOL) holding ratio is at 95.6%, so MWG’s FOL satisfaction criterion of over 95% at the review period is also likely to be met,” MBS forecasted.
MBS's report also stated that in the second half of 2024, this enterprise will continue its strong growth trend and forecast net profit to reach VND 4,571 billion in 2024 (up 2,621% over the same period) and VND 5,238 billion in 2025 (up 14.6%). The reserve P/E for 2024 - 2025 is 22.3x/19.5x respectively, higher than the average of 15.6 times in the period 2017-2021 due to strong momentum from Bach Hoa Xanh.
After 2024, in addition to the steady growth of ICT-CE (laptop, tablet, phone, air conditioner, refrigerator, washing machine, TV segment, etc.), MBS sees that this company has potential opportunities in the modern retail sector of the grocery industry, which will help the company achieve a higher valuation in the long term.
According to Statista, the grocery market value is about 50 billion USD, of which Bach Hoa Xanh only accounts for nearly 2% of the market, showing that there is still a lot of potential for expansion. In addition, modern grocery retail models like Bach Hoa Xanh also have potential opportunities, because the market penetration rate of this model is still relatively low at 15%, while in other developed countries, this rate exceeds 34%.
Of course, the removal and inclusion of stocks in the basket must comply with the criteria. Recently, the Ho Chi Minh City Stock Exchange issued the Rules for Building and Managing the Vietnam Diamond Stock Index (VNDiamond Index) version 3.0 to improve the index. This version replaces the rules version 2.1 issued on September 30, 2022, which mainly updates the criteria related to liquidity conditions and conditions for selecting stocks into the basket.
Version 3.0 has added some new definitions of after-tax profit per share in the regulations on P/E ratio in Section 3.6.1. At the same time, some parameters and scales in the index calculation formula have been adjusted when adding a new parameter wS in the price index calculation formula, capping; adjusting the wFOL scale in the index calculation formula, adding a new parameter wS in the TRI index calculation formula...
MWG shares often attract investors' cash flow with high liquidity. Recently, Mr. Nguyen Duc Tai, Chairman of the Board of Directors of the company, registered to sell 1 million MWG shares. The transaction is expected to take place from September 9 to October 8, by negotiation or order matching on the stock exchange. If the transaction is successful, Mr. Tai will reduce his ownership in Mobile World from 33.44 million shares, equivalent to 2.287%, to nearly 32.44 million shares, equivalent to 2.219% of charter capital. This is the third time this Chairman has sold shares since the beginning of the year. Previously, in June 2024, Mr. Tai successfully sold 2 million MWG shares.
On the other hand, at the 2024 Annual General Meeting of Shareholders held earlier this year, shareholders approved the use of up to VND 100 billion to buy back outstanding shares, reduce charter capital, and reduce the number of outstanding shares, expected to be implemented in 2024. In particular, the company will authorize the Board of Directors to decide the timing, purchase price... in accordance with legal regulations and market conditions.
Explaining the stock buyback, Chairman Nguyen Duc Tai shared: “Buying treasury stocks is to increase ownership ratio, increase value for shareholders, not to push up stock prices. Whether the price fluctuates high or low, we will still do it. For example, this year, if we make a profit of 2,400 billion, we will use about 20% to buy stocks worth 500 billion, regardless of how the stock price goes up next year.”
On the stock market, MWG shares are trading at around 68,000 - 69,000 VND/share, an increase of over 60% compared to the beginning of the year.
Source: https://baodautu.vn/co-phieu-mwg-se-som-tro-lai-ro-vndiamond-d224083.html
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