In the context of the ICT industry facing many difficulties in 2023, MWG has adopted a price reduction strategy to retain customers, which means sacrificing profit margins. As a result, gross profit margin decreased by 4 percentage points to 19%, leading to a 27% decrease in gross profit to over 22.5 billion VND. This is also one of the main reasons for the 96% decrease in net profit, to just under 168 billion VND. Since its listing in 2014, this is the lowest net profit level that MWG has ever had.
“In 2024, MWG will no longer aim to lead the price war,” said Mr. Hieu Em. He also noted that last year, the market began to understand the price messages that MWG implemented, and the absence of price competition tension will help MWG maintain its gross profit.
When asked about the prospects of the information and communication technology and consumer electronics industry in 2024, the CEO shared that if there are no major macroeconomic fluctuations in the world, purchasing power may recover in the second half of this year, but not as quickly and as strongly as after COVID-19.
MWG currently holds about 50% market share in the mobile phone segment, depending on the brand, with some brands reaching 60-70%. For the home appliance segment, high-value installation items also account for about 50%, depending on the brand. The household goods category has a lot of growth potential in 2024.
The gioi di dong (Mobile World) and Dien may Xanh (Dienmay Xanh) chains will strive to maintain and increase revenue due to the “water flows to the lowest point” effect, meaning that resources for serving customers will focus on The gioi di dong and Dien may Xanh chains. Some important tasks such as having abundant and diverse inventory, well-prepared promotional programs, after-sales services, and installation are the advantages of the company.
In addition, another factor mentioned by Mr. Hieu Em is the support of installment sales activities, in the context of credit becoming easier and the income of affected people increasing, leading to an increase in demand for installment purchases.
Mr. Hieu Em is also confident that the profit of The gioi di dong and Dien may Xanh will improve in 2024, coming from the cooling down of price competition, in addition to MWG’s comprehensive restructuring process that helps the company’s business results not depend heavily on market fluctuations. Additionally, MWG also does not rule out considering closing a certain number of inefficient shops in 2024 in order to bring long-term benefits.
Mr. Doan Van Hieu Em
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Mr. Nguyen Duc Tai – Chairman of MWG’s Board of Directors said: “The difference between 2024 and 2023 is that MWG has gone through a relatively long restructuring process, which helps the operating capability of MWG to be robust and orderly regardless of market fluctuations. Most costs now are variable costs, so even if revenue decreases, costs will closely follow the revenue development, thereby ensuring stable profitability.”
According to Mr. Tai, the profit target of 2,400 billion VND in 2024 is entirely within reach. The gioi di dong and Dien may Xanh chains will contribute significantly to the Group’s profitability, even in an unfavorable market.
Regarding the recent business performance of these two chains, Ms. Le Thi Thu Trang – MWG’s Director of Investment and Shareholder Relations, said that according to preliminary calculations, The gioi di dong and Dien may Xanh chains still maintain revenue compared to the previous Lunar New Year, even though the number of stores has decreased.
Recently, on January 31, MWG’s Board of Directors approved the business plan for 2024 to submit to the Annual General Meeting of Shareholders. The plan is expected to bring hope for recovery, with net revenue of VND 125 trillion and after-tax profit of VND 2.4 trillion, increasing by 6% and 14 times compared to the actual performance in 2023, respectively.
In the plan, The gioi di dong (including Topzone) and Dien may Xanh chains are expected to remain pillars by contributing about 65% of revenue and generating the majority of profits. Meanwhile, Bach Hoa Xanh contributes about 30% of revenue, with double-digit growth, increasing market share, and starting to generate profits from 2024.
