MWG [BUY +28.4%] - Grocery business poised to become new growth engine - Update

We reiterate our BUY rating for MWG and increase our target price (TP) by 2%. Our increased TP is primarily driven by our 4% higher valuation for grocery chain BHX due to our increased aggregate 2022-2031F net income forecast, which is partly offset by our higher risk-free rate and therefore cost of equity assumption by 50 bps.

We are more convinced of a potential improvement in BHX’s operations under the direct leadership of MWG’s chairman, whom we believe will lead the chain’s monthly sales/store to increase from ~VND950mn in Q1 2022 to VND1.5bn by YE2022 and lead to accelerated profitability improvement. We remain bullish on the outlook for further market share gains in the mobile phone and consumer electronics segments thanks to MWG’s store expansion.

Our TP puts MWG’s 2022F/2023F P/E at 24.7x/15.6x, respectively.