Tech shares ramp up appeal despite lackluster business

From May 24 to September 14, shares in Mobile World Investment Corporation (MWG), Vietnam's leading consumer electronics retailer shot up 52.4 per cent, surging from $1.58 to $2.41 apiece.

Likewise, that of another big name, FPT Retail (FRT) soared 57.8 per cent growing from $2.25 to $3.56 apiece.

From March 30 to September 14, Petrosetco (PET) spiked 62.6 per cent, growing from $0.79 to $1.28 apiece, and that of Digiworld (DGW) spiked 107.3 per cent, growing from $1.2 to $2.51 apiece.

Amid a sharp rise in the ticker price, according to iBoard data from SSI Securities, based on the price-to -earnings (P/E) ratio, the group of listed retailers-distributors of tech items like MWG, PET or DGW is trading at their peak of many years.

In mid-September, MWG ticker traded at 53.61 times of its valuation, compared to its historical peak at 19.77 times posted in 2021.

Similarly, PET is traded at 36.43 times of its valuation compared to its peak at 18.53 times in 2021, and DGW traded at 19.56 times against 16.55 times in 2021.

For FRT ticker alone, valuation based on P/E ratio does apply to this ticker as the company incurred losses in its fourth recent quarters with losses approximating $1.85 million.

In recent months, retailer tickers have made it into the list of leading sectors bringing money into the stock market, leveraging the expectation that the retail sector has passed its most turbulent time to enter a new growth cycle.

Despite their stellar ticker performance, these firms eyed gloomy business outcomes in the year to date.

In the first half of H1, MWG’s revenue shed 20 per cent falling to $2.38 billion and profits took a nosedive of 98.5 per cent falling to just $1.63 million. In which, its net profit margin shed from 3.64 per cent to just 0.07 per cent, a record low for many years.

In the same vein, in H1, FRT incurred around $9 million losses compared to counting $9.1 million in profit one year ago, despite posting a 6.6 per cent hike in revenue during the same period.

A source from FRT revealed that its subsidiary Long Chau Pharmacy had made a remarkable contribution to its parent company’s revenue growth, yet its profit was not big enough to help the parent company to offset for the loss-making segment with tech items trading.

In its report about, the retail sector released in early August, Bao Viet Securities made a forecast that this year MWG would count about $52 million in net profit, equal to a 70 per cent fall on-year, and FRT’s profit would plunge around 80 per cent, falling to $3.38 million.

In 2024-2025, retailers are expected to reboot operations in which MWG’s profit is forecast to soar 131 per cent, reaching $120.5 million in 2024, then further surging 34.3 per cent to touch $162 million in 2025.

Also, according to the report, FRT's profit is expected to soar 427 per cent in 2024 to $17.83 million, then further surge 22.1 per cent in 2025 to $21.76 million.

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