Mobile World (MWG) stock plunges 29%, chairman only dares to buy 11%

MWG shares plunged 29%, Chairman Nguyen Duc Tai only dared to buy 11% of the registered amount.

Recently, as a move to reassure shareholders when foreign investors continuously "dumped" shares of Mobile World Investment Corporation (Code MWG), Chairman of the Board of Directors Nguyen Duc Tai registered to buy 1 million shares. The transaction period is from November 8, 2023 to December 7, 2023.

However, in reality, Mr. Tai only registered to buy 110,000 MWG shares, corresponding to a successful purchase rate of 11%. After the transaction, Mr. Tai increased his ownership ratio from 2.4% to 2.41% of charter capital. The reason given by Mr. Tai was that the price movement in the market was not suitable.

Mobile World MWG has 29 shares, Chairman only dares to buy 11 shares, Register image 1 — Mobile World (MWG) stock plunged 29%, Chairman Tai only dared to buy 11% of the registered amount (Photo TL)

Regarding MWG stock price movements, on September 14, 2023, the stock peaked at VND57,300/share. However, after that, MWG continuously plummeted and lost value with foreign investors continuously "dumping" shares. As of the trading session on December 8, 2023, MWG shares are trading at VND40,900/share, down nearly 29% from the peak in September.

MWG's series of consecutive losing sessions is considered to be due to the continuous "dumping" of foreign funds in recent times. Specifically, Arisaig Asia Fund from April to November continuously sold millions of MWG shares, reducing its ownership ratio to only 4.997% and is no longer a major shareholder of Mobile World.

Dragon Capital Fund Group also continuously divested from MWG with the largest transaction taking place on November 1, 2023, selling 4.1 million shares. Dragon Capital Fund then reduced its ownership ratio from 7.19% to only 6.91%.

Business is sluggish, MWG closes 200 stores

Foreign investors' net selling and MWG's unsatisfactory business results have partly reflected in the stock price movements.

In the October business results report, MWG recorded revenue of VND11,190 billion, a slight increase over the same period. Cumulative revenue in the first 10 months of the year reached VND98,046 billion, down 14%. Compared to the 2023 plan, MWG has only completed 73% of the original target. The company also continued to not announce monthly profits as in previous reports.

In fact, MWG's poor business situation was recognized from the previous Q3 business results report. The company recorded Q3 net revenue of VND30,287.7 billion, down 5.4% year-on-year. Q3 after-tax profit was only VND38.8 billion, down 95.7% year-on-year.

MWG's accumulated revenue in the first 9 months of the year reached VND86,858.3 billion, down 15.5%. Accumulated profit after tax of VND77.5 billion is equivalent to completing only 1.8% of the annual profit plan. With such declining business results, it is not surprising that MWG has had to stop announcing monthly profit results.

MWG has also just announced that the company is considering closing 200 stores in the fourth quarter of 2023. This is not a very positive sign for the business operations of a retailer like Mobile World.

Short-term debt increased by 6,300 billion in just the first 9 months of the year

Not only business results, MWG's capital structure also shows changes. At the end of the third quarter, MWG's total assets reached VND58,644.8 billion, up 5% compared to the beginning of the year. Of which, cash and cash equivalents decreased by half, to only VND2,351.9 billion. However, short-term deposits at banks still account for VND20,901.9 billion.

Inventory tends to decrease from VND25,969.1 billion to VND22,853.5 billion, equivalent to a decrease of 11%. The company is making a provision for inventory devaluation of VND226.8 billion. Notably, MWG's fixed asset index decreased by 24.2% to only VND7,370.8 billion.

Noting that in the company's capital structure, payables still account for a large proportion of 60.3% equivalent to 35,374.6 billion VND. In which, the main part is short-term debt with 29,475.3 billion VND.

One point to note is that in the first 9 months of 2023, MWG tended to increase short-term debt. The short-term loan index increased from VND 10,688.1 billion to VND 17,026.6 billion, equivalent to an increase of nearly 60%. This means that in just the first 9 months of the year, MWG's short-term debt increased by more than VND 6,300 billion.

Meanwhile, equity as of the end of the third quarter accounted for VND23,270.2 billion, and undistributed profit after tax was relatively large. Undistributed profit after tax accounted for VND8,070.1 billion.

Source