Hot growth now a distant reality for MWG

In the first nine months this year, the company (MWG) saw a drop of $17 million on-year in its financial earnings, falling to just VND300 million ($13,000), accounting for 0.01 per cent of the company’s total pretax profits.

Of note, albeit the company’s total debt volume during the period shed 7.4 per cent on-year to about $992.3 million, making 37.2 per cent of total capital sources, its financial expenses rose 106 per cent, reaching $43.5 million compared to early this year.

MWG has been struggling

Soaring borrowing costs during the period have led to a plunge in the company’s financial earnings.

The interest rate in the domestic market has tended to go up in recent times following global trends, and it is expected to linger in the context the US Federal Reserve looking likely to further raise the basic rate.

The company’s big debt volume will exacerbate its financial burden in the future.

In its latest report released on November 11, SSI Research forecasted MWG’s financial expenses would swell further in the fourth quarter this year due to higher interest rates, debt rescheduling in the longer term, and the VND losing value.

SSI Research predicted that MWG’s full-year profit would reduce by 6 per cent falling to $224.3 million in 2022 compared to earlier forecasts, yet it is still surging by 7 per cent.

In 2023, MWG’s full-year profit would approximate $254.7 million, showing a 14 per cent jump on-year, according to the report.

The report also noted that inflation would push up MWG’s expenses, negatively affecting consumer purchasing power.

It is proving hard for MWG to raise the selling price to cover rising expenses, and rising inflation could continue for several quarters more, thus slowing the revenue growth of MWG’s diverse store chains, including Dien May Xanh, The Gioi Di Dong, and Topzone.

MWG has been well-known for its capacity to maintain a hot-paced growth exceeding 50 per cent in many consecutive years.

From 2011 to 2019, its revenue growth averaged 50.8 per cent, and post-tax profit growth averaged 55.3 per cent annually.

In 2020-2021 due to the pandemic, the company’s revenue growth averaged 9.8 per cent, and profit growth was 13.6 per cent.

In the first nine months this year, MWG’s revenue reached $4.47 billion, and profit amounted to $151.4 million, up 18.4 per cent and 4.3 per cent on-year, respectively.

After a period of speedy growth from 2011 to 2019, MWG growth has been slowing down, mainly due to saturation. The Bach Hoa Xanh store chain, deemed a new driver of the company’s growth, has been facing numerous difficulties and closed many shops.

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