Mekong Capital posts upbeat portfolio assessment

The company’s in which Mekong Capital invests showed strong profit growth in 2013 and ranged in fields from retail to agriculture and pharmaceutical. What does this mean to you?

Our investments did well in 2013. They included MobileWorld, Golden Gate, An Giang, Traphaco, Asia Chemical and several others. This shows that well-managed companies open to learning and applying best practices can excel in any environment. MobileWorld is one of our best examples. It saw profit growth of more than 100 per cent last year and we anticipate similar growth again this year.

In our portfolio, the companies that grow the fastest are typically those that are open to best practices. They learn from international examples and build strong management teams. For example, besides MobileWorld, Golden Gate, VAS, Asia Chemical Corp and Phu Nhuan Jewellery all hired outside experts in 2013 to strengthen their operations.

As you said before, MobileWorld saw strong net profit growth of more than 100 per cent on-year. In your opinion, what made the retailer so successful in a year when purchasing power has slowed?

The key to MobileWorld’s strong performance is its robust management team. They are disciplined and set their sights directly on executing their strategy. Another reason was a customer-centric company culture, as evidenced by the layout of their stores, the value-added services offered to customers, product return or exchange policies and staff training.

A third factor is the board of directors and management team are very open-minded and always seeking beset practices. For example, they visited leading mobile device retailers in the US, the UK and Indonesia. Finally, they focus on core values like integrity. A strong culture is essential for an organisation to be effective on a large-scale and the company has made considerable investments into developing its company culture over the last four years.

MobileWorld stores achieved same-store sales growth of 25 per cent in 2013 due to stronger demand for smartphones and improved customer experience. At the same time, the company reduced operating costs as a percentage of total net sales from 13.3 per cent to 11.2 per cent thanks to tight cost controls and realising the advantages of economy of scale as the largest mobile device retailer in Vietnam.

What are your expectations of the firm after its listing on the VN-Index?

We expect MobileWorld to be a flagship on the local bourses in terms of management capability, profit performance, growth prospects, and corporate governance standards. MobileWorld will be a first-choice for many investors, foreign and local, who are interested in Vietnam’s retail sector. The listing is also a way to reward many of its loyal long-term employees who have contributed so much to the success of the company. It has more than 3,000 employee shareholders, including 40 managers. Employees as a group own around 11.5 per cent of the company, not including the shares held by the five co-founders.

It seems Mekong Capital is moving in the right direction by focusing on consumer sectors. What is your forecast for growth of the consumer sector in Vietnam this year?

The consumer sector has seen steady growth in recent years and this is expected to continue. But Vietnam still has a long way to go in catching up with other countries in Asia in terms of per capita consumption of most products. I think there will be increased spending on education, healthcare and entertainment over the next few years as economic growth makes a comeback.