MBS Research | Industry report

December 30, 2024

Retail sector: Need more time for healing

▪ 2024 was the recovery time of the retail chains. Net profit of the ICT-CE retail
chains had the best recovery with the average growth reached 1.2x yoy, net profit
of the jewelry retail chains rose 10% yoy and the grocery retail chains moved from
net loss to get the positive net profit in 2H24.
▪ In 2025, pharmaceutical and grocery retail chains are projected to expand due to
rising consumer income spurred by broader production sector recovery, while ICT-
CE and jewelry retail chains will likely maintain their current number of outlets,
focusing instead on stimulating demand through targeted sales strategies.
▪ We prefer MWG in 2025 for the great expansion of Bach Hoa Xanh and the
stronger recovery of ICT-CE demand. Besides, we also prefer PNJ for the attractive
valuation.
2025 is the ideal time to grow the coverage for essential retail chains
We observe that after the profitable period for these two domestic retail chains
(BHX and WCM) in 2H24, 2025 will be the ideal time to scale up store networks
and expand the reach of major modern retailers when: (1) the consumer demand
may continue to recover, (2) the spread of manufacturing will be stronger than
2024 when the export is expected higher yoy. Based on MSN and MWG's plans,
total stores may rise 9% yoy in 2025F.
The net profit of ICT-CE retails chains may rise 22% in 2025F
The demand of consumer electronic may rise single-digit yoy, coupled with the
average selling price may rise 5% yoy helping total the revenue of some key
driver like MWG, FRT may rise ~13% yoy in 2025F. In 2025, we see the
restructuring process will be complete, with the total number of stores remaining
stable to maintain brand recognition for key drivers so that it may not have the
one-off expense in the near future. As a result, the net profit of ICT-CE retails
chains may rise 22% yoy in 2025F
The jewelry retail may get the better growth in 2025F thanks to the better
demand of jewelry
In 2025F-26F, thanks to the recovery of Vietnam’s economy, we expect that (1)
the demand may improve single-digit from the low base of 2024, (2) the selling
price may increase only ~2%, overall, revenue/store may increase 7%/7% yoy,
recording VND4.7bn/VND5.0bn. The difficult of gold material may disappear in
2025F thanks to the stable of gold market, which helping the net profit may rise
16% yoy in 2025F.
We prefer MWG, PNJ for the investment strategy in 2025
In 2025, we choose MWG for 2 main reasons, including (1) the demand of
consumer electronic may back to the normal like the pre-covid19 period helping
the net profit of TGDD and DMX's grow 21% yoy, (2) Bach Hoa Xanh chains
have net profit in 2025F-2026F as we estimated about 600bnVND. Besides, we Analyst (s)
see that PNJ still have the great potential when the net profit may rise 16% in
2025F, the P/E fw 25 is 13x, below the average P/E 3 years of 16.6.
Nguyễn Quỳnh Ly
[email protected]
Figure 1: Retail stock prices movement vs. VN-Index over the last 1 year
100%
80%

60%

40%

20%
0%

-20%

-40%
01/24 02/24 03/24 04/24 05/24 06/24 07/24 08/24 09/24 10/24 11/24 12/24

VN-INDEX MSN MWG FRT DGW PNJ

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Industry report | December 30, 2024

Recap 2024: The different recovery in retail sector’s picture when

consumers still tightened their wallet
The consumer demand had not truly recovered as consumers still tightened their
wallet

The manufacturing sector has only started to recover significantly from 2H24
when the PMI was above 50, making the income not really improve. As a result,
consumers still tightened their wallet when the overall consumer demand trend
is still being affected by weak economy from 2023. According to the consumer
survey of PwC 2024, Vietnamese consumers are still impacted by the rising
prices of food, energy, housing, and other essentials, which have had a
significant impact on consumer spending. 64% of respondent said that they still
spending the major for grocery, and 48% healthcare. In contrast, 33% of
participants said they would reduce spending on luxury items, and around 30%
would cut back on non-essential items.

In 11M24, the growth of total retail sale around 5.8% (excluding inflation), which
was slower than the pre-covid19 period (the average is 8-9%) showing that the
consumer demand is still in the low base.
Figure 2: The rising of retail sale was still in a low base, just around Figure 3: The rising of food is directly affected for consumer demand.
5%
600,000 20% 35.0% 7.0%
30.0%
6.0%
500,000 25.0%
15% 20.0% 5.0%
400,000 15.0% 4.0%
10.0%
300,000 10% 5.0% 3.0%
0.0% 2.0%
200,000 4.6%
-5.0%
5% 1.0%
100,000 -10.0%
-15.0% 0.0%
Q1-2019
Q2-2019
Q3-2019
Q4-2019
Q1-2020
Q2-2020
Q3-2020
Q4-2020
Q1-2021
Q2-2021
Q3-2021
Q4-2021
Q1-2022
Q2-2022
Q3-2022
Q4-2022
Q1-2023
Q2-2023
Q3-2023
Q4/2023
Q1/2024
Q2/2024
Q3/2024
0 0%

Other services
Traveling service Net income of worker (mnVND, LHS) CPI (yoy, RHS)
Accommodation and catering service

Source: GSO, MBS Research Source: GSO, MBS Research

The different recovery landspace between essential and non-essential retail

chains

2024 showed that the different recovery landspace between essential and non-
essential retail chains. While electronic consumer retail chains (TGDD, DMX,
FPT shop) restructured, closing more stores have the underperforming results,
the grocery chains slightly opened stores when both Bach Hoa Xanh and WCM
had the net profit in 2Q24. Besides, the grocery chains improved about 15% yoy
thanks to the transition of traffic from the traditional. In the pharmaceutical retail
industry, we see a contrasting picture: while An Khang is trying to restructure
and find opportunities to break even, Long Châu has already established a
strong position in the industry.

The growth prospects for the jewelry, car, and ICT-CE retail sectors are unlikely
to be strong in 2025F-26F, as these markets are already quite saturated.
Meanwhile, due to the highly fragmented nature of the market, the
pharmaceutical sector still holds significant growth potential. The consumption

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Industry report | December 30, 2024

sector, on the other hand, remains stable with continued potential, driven by the
shifting consumer behaviors of the new generation.
Figure 4: Almost all of the retail chains rose at least 10% yoy in the Figure 5: Absolute growth in net profit of some modern retail chains.
revenue, expect for some retail chains trying to restructure to get the
better recovery…

25,000 80% 1,000

70%
800
20,000 60%
50%
600
40%
15,000
30%
400
20%
10,000
10% 200
0%
5,000 -10% -
-20%
0 -30% -200

-400
TGDD + BHX An KhangFPT Shop Long MSN PNJ
DMX Châu
1Q24 (bnVND, LHS) 2Q24 (bnVND, LHS) 3Q24 (bnVND, LHS)
1Q24 (yoy, RHS) 2Q24 (yoy, RHS) 3Q24 (yoy, RHS) 1Q24 2Q24 3Q24

Source: MWG, FRT, MSN, PNJ, MBS Research Source: MWG, FRT, MSN, PNJ, MBS Research

Grocery retail business in 2025: Time to expansion!

Two key drivers had succeeded in 2024F and will continue…

Both of the LFL’s revenue of MSN in urban and rural rose in 2024 thanks to the
stronger of consumer in minimart model. which helping WCM had net profit in
2Q24. The strategic is promote products from the Masan Consumer ecosystem
in the minimart model, which have the best LFL revenue’s growth in 9M24
(compared with the supermarket model)

In 2024, as consumers continue to prioritize spending on essential products

(grocery, healthcare,..), both WinCommerce and Bach Hoa Xanh (BHX) have
implemented effective business campaigns to attract more traffic from traditional
channels. For example, BHX increased its offering of fresh produce and adopted
a strong pricing strategy to boost daily transactions. As a result, revenue/stores
surpassed VND 2 bn/month, supporting them to get net profit in 2Q24.

Figure 6: WCM had net profit in 2Q24 and Figure 7: BHX had net profit in 2Q24 and Figure 8: While MSN is stronger in the north,
continue to recover in 3Q24… continue to expand in 4Q24. BHX holds an advantage in the south due to
its model aligning with consumer behavior.

3,800 15% 1,730 50%

3,700 10%
5% 1,720 40%
3,600
0% 1,710 30%
3,500
-5%
3,400 1,700 20%
-10%
3,300 -15%
1,690 10%
3,200 -20%
1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 1,680 0%
1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24
MSN's stores (store, LHS) Bach Hoa Xanh's stores (store, LHS)
MSN urban's LFL revenue (yoy, RHS)
MSN rural's LFL revenue (yoy, RHS)
Bach Hoa Xanh's revenue/store/month (yoy,
RHS)
Source: MSN, MBS Research Source: MWG, MBS Research Source: MSN, MWG, MBS Research

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Industry report | December 30, 2024

…..to expand in 2025 with the strength of modern grocery retail model.

(1) The grocery retail market is estimated to grow by 9% in 2025F-26F, driven

mainly by the expansion of modern grocery retail chain

Both MSN and BHX are successfully attracting traffic from traditional shopping
markets through a tailored product strategy, effectively capitalizing on changes
in consumer buying behavior. It is evident that both MSN and BHX have modern
grocery retail models that align with the consumer behavior of different regions.
With the growth of the industry, MSN and BHX still have the potential to expand
their coverage in their current areas and extend into new markets in the near
future.

We may see the retail industry still have a large potential in mid-long term due
to (1) the rising disposable incomes, (2) the increasing demand for higher-quality
lifestyles. Rapid urbanization will expand access to modern retail models – a
development trend in the grocery retail sector. Besides, utilizing AI and omni-
channel will help retailer unlocking significant potential in this market. The
consumer income may better than 2024F due to the stronger spillover from the
manufacturing sectors, which is expected to boost spending. Additionally, the
strength of warehousing and more diversity of product will help modern retail
chains (such as Bach Hoa Xanh, WCM) to more easily meet the needs of the
new generation of consumers. The recovery in consumption, along with the
expansion of modern retail chains in new regions, will help the grocery market
achieve an approximately 9% growth during the 2025F-26F

Figure 9: The value of grocery market is estimated having 9% in 2024F- Figure 10: With the expansion of total outlet may react 6% CAGR
26F
150,000 25% 10000 15%

20% 8000
100,000 10%
15% 6000

10% 4000
50,000 5%
5% 2000

0 0% 0 0%
2020 2021 2022 2023 2024F 2025F 2026F 2020 2021 2022 2023 2024F 2025F 2026F
Value sales (bnVND, LHS) Value sales (yoy, RHS)
Outlets (outlets, LHS) Outlets (yoy, RHS)

Source: Euromonitor, MBS Research Source: Euromonitor, MBS Research

Figure 11: ..So we expect the growth of the modern grocery retail’s penetrition will is the momentum for the grocery market

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2016 2018 2020 2023

Modern grocery trade Others

Source: Euromonitor, MBS Research

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Industry report | December 30, 2024

(2)…creating opportunities for businesses with market share advantage to

continue their coverage, with an estimated store expansion rate of 9% in 2025F-
26F.

Recently, the supermarket retail models of major players (Aeon Mall, Go!) as
well as minimart retail models like BHX and WCM+ have been successfully
capturing a significant shift from traditional market models due to their
competitive and effective sales strategies. We observe that after the profitable
period for these two domestic retail chains, 2025 will be the ideal time to scale
up store networks and expand the reach of major modern retailers when: (1) the
consumer demand may continue to recover, (2) the spread of manufacturing will
be stronger than 2024 when the export is expected higher yoy. Moreover, major
foreign retailers are also launching several large projects in Vietnam, highlighting
the strong appeal of the Vietnamese retail sector. It is expected that in 4Q24-
2025, approximately 8 large shopping malls will be operational.

Figure 12: After having net profit, we expect MSN and BHX will Figure 13: …With an average store expansion growth rate of about 9%
continue to expand in 2025F-26F.. in 2025F-26F.
4500 6,000 12%
4000 EBITDA > 0% NP > 0%
3500 5,000 10%
3000
4,000 8%
2500
2000 3,000 6%
1500
1000 2,000 4%
500
0 1,000 2%

0 0%
Bach Hoa Xanh MSN
Bach Hoa Xanh's store Wincommerce's store 2024F 2025F 2026F 2025F (yoy, RHS) 2026F (yoy, RHS)

Source: WCM, MSN, MBS Research Source: WCM, MSN, MBS Research

Figure 14: Some large mall will operate in 2025F

Projects Process

Go! Hà Nam Commenced construction in 7/23 and has been operational.

Go! Bạc Liêu Commenced construction in 12/23 and has been operational.

Go! Ninh Thuận Commenced construction in 12/23 and expected to open on December 24, 2024.

Go! Hưng Yên Commenced construction on 6/24, expected to be operational in 2025.

Go! Yên Bái Commenced construction in 10/24 and expected to open in 4Q25

Commenced construction in 12/24 and expected to open by 4Q25 - the first mallshop of MM
MM Mega Market Đà Nẵng
Mega Market.

Aeon mall Đồng Nai Commenced construction in 5/24 and expected to open in 2025.

Aeon mall Hạ Long Commenced construction in 12/24 and expected to open in early 2026.

Aeon mall Hải Dương Expected to commence construction in 1Q25 and become operational in 2026.

Aeon mall Thanh Hóa Expected to commence construction in 12/24 and expected to open in early 2026.

Source: FiinProX, MBS Research

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Industry report | December 30, 2024

Pharmaceutical retail businesses in 2025: Long Chau to be the

dominant
The coverage of pharmaceutical retail modern still low

The expansion of the modern drug retail chain model is a key factor contributing
to the market's revenue reaching a 7% CAGR in the period 2019-2024.

In 2019-2024F, the beauty and health market is projected to achieve a 7%

CAGR, with the pharmaceutical segment expected to grow at around 8% CAGR.
In 2020-2024, key players such as Pharmacity, Long Châu, and An Khang began
expanding rapidly, collectively opening approximately 2,500 drugstores. Long
Châu led this expansion with a remarkable 74% CAGR. This growth significantly
increased the coverage of modern pharmaceutical retail, rising from 2% in 2020
to an estimated 8% by 2024. The pharmaceutical retail sector continues to show
strong growth as modern pharmacy chains consistently expand their scale.

Additionally, in 2023-24, we have seen several pharmaceutical retail chains

established or invested in by foreign corporations: Trung Sơn Pharma was
acquired by Dongwha Pharma with a 51% stake, and Phượng Hoàng was
founded by the former Pharmacity founder. This demonstrates the significant
appeal of the current pharmaceutical retail market in Vietnam. This indicates a
sustained growth trend in the mid-long term.

Figure 15: The pharmacy modern retail chains has the growth of stores reaching 56% CAGR in 2019-24

4000

3500

3000

2500

2000

1500

1000

500

0
2018 2019 2020 2021 2022 2023 4Q24

Long Châu An Khang Pharmacity Medicare Trung Sơn Pharma

Source: Euromonitor, FRT, MWG, Trung Sơn Pharma website, MBS Research

We estimate that the store growth rate will likely slow down in the period 2025-
26.

With the rapid growth of store expansion, the penetration rate of modern
pharmacy chains remains relatively low (<10%), indicating significant growth
potential. Traditional pharmacies are gradually losing ground to the strengths of
modern pharmacy chains, which include (1) a comprehensive product range with
more consistent pricing, (2) better product quality control, and (3) professional
and systematic customer service. We anticipate that 2025 will continue to be a
year of strong expansion for modern pharmacy chains, with Long Châu planning
to open up to 3,000 stores and Trung Sơn Pharma aiming for 500 new stores in
2025.

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Industry report | December 30, 2024

Figure 16: The modern retail chains still have the low coverage rate, Figure 17: The coverage of Long Chau may over 5% follow by FRT’s
below 10% plan.

12.0% 2500

10.0%
2000
8.0%
1500
6.0%

4.0% 1000

2.0% 500

0.0%
2019 2023 2024 2025F 0
Long Châu An Khang Trung Sơn Pharma

2024F 2025F 2026F

Source: Drugbank, MBS Research ước tính Source: FRT, MWG, Trung Sơn Pharma, MBS Research
Vietnam remains a country with significant spending on healthcare, as health-
related expenditures continue to increase. The new generation of consumers,
Gen Z, is showing a growing interest in health and wellness, actively
incorporating dietary supplements such as vitamins and minerals to support their
health. Expenditure on healthcare has increased 10% in 2019-24 is expected to
rise by approximately 10% by 2029, particularly for sports supplements and
vitamins. Growth in spending will be a strong supporting factor for the growth of
the pharmaceutical and functional market in Vietnam.

Figure 18: The beauty and health market is estimated having CAGR Figure 19: The growth performance of the OTC and functional drug
4% in 2024F-26F market’s market

400000 11%
10%
350000 9%
8%
300000
7%
6%
250000
5%
200000 4%
3%
150000 2%
2020 2021 2022 2023 2024F 2025F 2026F

Value sales (bnVND, LHS) Value sales (yoy, RHS)

Source: Euromonitor, MBS Research Source: Euromonitor, MBS Research

Long Châu has the key in the industry and will continue to lead the
pharmaceutical retail market in the future

The largest scale helps Long Chau’s coverage rate reach 5% in 2024F

Due to (1) the great portfolio product which is suitable with consumer’s demand,
(2) The strengths of leveraging technology in warehouse management and
customer service, Long Châu successfully opened 357 new drugstores in 2024
(as of 12/24), bringing the total number of stores to 1,849, with a revenue/store
of bn1.2VND/month. According to the financial statement, Long Châu has
contributed approximately bn130VND to FRT in 2024 to offset the losses from

7 | MBS RESEARCH
Industry report | December 30, 2024

the ICT-CE segment. Currently, Long Chau has the best coverage in Vietnam
with a fairly widespread presence across the country.

On the other side, in 2024, An Khang and Pharmacity have reduced the number
of stores, implemented restructuring, and changed their product portfolio to
move towards the goal of breaking even in 2025F.

We observe that Long Chau is gradually establishing a solid position in the

industry by (1) leading with 1,896 pharmacies and maintaining revenue/store of
bn1.2VND/month, (2) having a strong technological advantage and
implementing AI in the Long Châu app to assist customers and enhance
customer care through prescription information, and (3) leveraging the potential
of the healthcare model, increasing customer touchpoints with A-Z care services,
offering a new experience.

Figure 20: Long Chau is the one of the Figure 21: Net/loss profit of Long Chau Figure 22: Long Châu has a fairly
market which have “the key of expansion” and An Khang widespread presence across the country.

Red River Delta

2000 1.6 150
1.4 100
1500 1.2 50 Midlands and
1 - Northern
1000 0.8 Mountains
-50
0.6
500 0.4 -100 North Central
-150 and Central
0.2
Coastal
0 0 -200
4Q21
1Q21
2Q21
3Q21

1Q22
2Q22
3Q22
4Q22
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
3Q24

-250 Central
Highlands
-300
-350
An Khang's store (LHS, stores) Southeastern
4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 Region
Long Chau's store (LHS, stores)

Long Chau's revenue/store (RHS, bnVND) Mekong Delta

An Khang Long Châu
An Khang's revenue/store (RHS, bnVND)

An Khang's revenue/store (RHS, bnVND)

Source: MWG, FRT, MBS Research Source: MWG, FRT, MBS Research Source: FRT, MBS Research

The healthcare will support the pharmaceutical chains get more customer-
point-touch.

Long Châu has leveraged its technological strengths and the strategic location
of its pharmacies to rapidly expand its Long Châu vaccination chain – the first
link in its "healthcare" system. Within just a year, Long Châu successfully opened
121 new vaccination centers, bringing the total number to 125. During the same
period, VNVC opened around 60 new centers, increasing its total to 206. Thanks
to the strong network of Long Châu pharmacies, the coverage of its vaccination
centers is nearly nationwide, similar to VNVC. In terms of the business model,
Long Châu's vaccination centers have a smaller area, which allows for deeper
product discounts compared to VNVC.

We believe that by utilizing its strengths in pharmacy chains and cold storage for
vaccines, Long Châu will continue to expand rapidly in 2025-26, potentially
attracting more new customer segments and increasing vaccine coverage
nationwide (currently around 4%, compared to the regional average of 10-15%).

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Industry report | December 30, 2024

Figure 23: Long Châu's comprehensive healthcare model is a first-of-its-kind in Vietnam.

Source: FRT, MBS Research

ICT-CE retail businesses: The demand for non-essential goods is

expected to improve significantly in 2025F
The restructuring of physical retail stores is strongly focused on in 2024 when
the demand slightly decreased yoy
In 2024, the demand for consumer electronics has not significantly improved,
along with changes in consumer shopping behavior, leading consumer
electronics retail chains (TGDD&DMX, FPT Shop) to restructure and close most
of their underperforming stores. As a result, the total number of stores decreased
yoy, but profits improved due to (1) raising product prices above the low baseline,
(2) implementing appropriate demand-stimulating shopping policies, and (3)
optimizing operating costs. As a result, revenue/store/month slightly up by about
20% compared to 1Q24.

Figure 24: MWG closed stores with poor Figure 25: FRT did the same, but with a Figure 26: The recovery of MWG and FRT’s
business performance… stronger scale of store closures net profit.
compared to MWG.
850 3.0
2500 4.0 1,400
3.5 800
2000 1,200
3.0 750 2.5
1,000
1500 2.5 700 800
2.0 2.0
1000 650 600
1.5
500 1.0 600 400
1.5
550 200
0
500 1.0
-200
TGDD's store (store, LHS)
-400
DMX's store (store, LHS) FPT shop's stores (stores, LHS) 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24

TGDD's revenue/store/month (bnVND, RHS) FPT shop's revenue/store/month

(bnVND, RHS) TGDD&DMX FPT Shop
DMX's revenue/store/month (bnVND, RHS)

Source: MWG, MBS Research Source: FRT, MBS Research Source: MWG, FRT, MBS Research

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Industry report | December 30, 2024

Based on the low base of 2023, most companies reported a strong profit
recovery in 2024, mainly due to the increase in selling prices following the
intense price war in 2023. In 2024, large businesses continued to restructure
and reduce physical stores with poor performance to optimize costs. The price
increase, coupled with stable demand in the ICT-CE sector, is expected to drive
overall market revenue growth by ~5% in 2024.

We forecast that by 2025, businesses will no longer be aggressively closing

physical stores. Instead, they will focus on programs to stimulate consumer e-
commerce spending. This comes as consumer spending is projected to continue
improving yoy, driven by the positive impact of Vietnam's macroeconomic
factors.

Consumer demand is likely to return to pre-pandemic levels, and the

restructuring process is expected to conclude by 2025-26.

(1)The gradual return of consumer demand is expected to drive a 9% growth in

the consumer electronics market in 2025.

In 2025-26, the proportion of smartphones supporting AI in the total smartphone

export volume is expected to increase by 14% compared to 2024. The price of
new smartphones is forecasted to be at least 5% higher than previous models
due to the integration of AI in the products, leading to higher costs. With the
growing popularity of 5G and AI-enabled smartphones in Vietnam, we expect
smartphone demand to experience double-digit growth from a low base,
resulting in a 9% yoy increase in total smartphone revenue in 2025-26.

Vietnam remains a country with a low IoT connectivity rate per person (0.2
connections per person), and the strong technology adoption trend among the
new generation of consumers is a driving force for the growth of the IoT-
integrated consumer product market in the next phase. Additionally, the strong
penetration of brands with mid-range priced IoT products, such as Xiaomi and
Huawei, will align with the affordability and consumption needs of Vietnamese
consumers. Therefore, the smart home appliance market is forecast to grow by
11% during the 2024-2026 period.

Figure 27: Forecast of smartphone’s market Figure 28: PC AI-capable may have the Figure 29: The forecast for the smart home
in 2025F-26F 44% CAGR in 2024-28F appliance market in Vietnam (in million
USD) is driven by the upcoming 5G trend
and the growth of mid-range products in
Vietnam
10% 10% 250
250 80%
8% 70%
5% 200 200
6% 60%
4% 150 50%
0% 40%
2% 150
100 30%
0%
-5% 20%
-2% 50
10% 100
-10% -4% 0 0%
-6% 2024F 2025F 2026F 2027F 2028F
50
-15% -8%
Global AI-capable PCs shipments
2020 2021 2022 2023 2024F 2025F2026F
(millions, LHS) 0
The volume of smartphone (yoy, LHS) 2021 2022 2023 2024F 2025F 2026F
AI-capable share of total PC shipments
The total value of smartphone (yoy, RHS) (%, RHS)

Source: Euromonitor, MBS Research Source: Canalys, MBS Research Source: Euromonitor, MBS Research

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Industry report | December 30, 2024

(2) The end of the restructure in 2025F-26F

After a long period of expansion with the advantage of rental price in 2021-22,
the number of stores was restructured in 2023-24 and has since stabilized since
4Q24. We believe that the current number of stores of the ICT-CE chains is
appropriate to (1) maintain retail market share, and (2) sustain brand recognition
and coverage across provinces.

Therefore, in 2025-26, the recovery of the economy, which will positively impact
consumer demand, is expected to drive double-digit revenue growth.

Figure 30: We expect the restructuring to be completed in 2024... Figure 31: …and the revenue growth in 2025 will be better than in 2024
due to the strengthened sales campaigns, as consumers have become
more confident in spending on non-essential products.
500 4 25%
400 20%
4
300 15%
3
200 10%
3 5%
100
2 0%
0
-5%
(100) 2
-10%
(200) 1
-15%
-20%
-25%
Δ TGDD's stores (LHS, stores) 2022 2023 2024F 2025F
Δ FPT Shop's stores (LHS, stores)
TGDD's revenue/store/month (RHS, bnVND) MWG FRT DGW
FPT Shop's revenue/store/month (RHS, bnVND)

Source: GSO, MBS Research Source: MBS Research’s compilation

The consumer electronics market is projected to experience a 9% growth rate in

2025F-26F

We observe that the consumer electronics retail market has reached saturation
and is struggling to find new growth drivers. With changing consumer behavior
and the rapid development of e-commerce, the scale of physical stores is being
reduced to help businesses optimize costs and support profit recovery. This
translation conveys the key points about market saturation and the adjustments
businesses are making in response to new consumer behavior and e-commerce
growth. The consumer electronics market is projected to grow by 9% driven by
(1) the anticipated strong recovery of consumer demand for consumer
electronics products in 2025F, and (2) the estimated stable growth of 1% in the
total number of physical stores. With the future trend of e-commerce, physical
stores are projected to have a CAGR of 1% during the period 24F-29F

11 | MBS RESEARCH
Industry report | December 30, 2024

Figure 32: The electronic consumer’s market may increase 9% Figure 33: The growth of total outlets may remain stable at 1% in 24F-
mainly thank to the increasing of selling price and consumer’s 29F due to the e-commerce growth
demand.
300000 15.0% 12000 10.0%
9.0%
250000 10.0% 10000 8.0%
5.0% 7.0%
200000 8000
6.0%
0.0%
150000 6000 5.0%
-5.0% 4.0%
100000 4000 3.0%
-10.0%
2000 2.0%
50000 -15.0% 1.0%
0 -20.0% 0 0.0%
2020 2021 2022 2023 2024F 2025F 2026F 2020 2021 2022 2023 2024F 2025F 2026F
Value sales (bnVND, LHS) Value sales (yoy, RHS) Outlets (outlets, LHS) Outlets (yoy, RHS)

Source: GSO, MBS Research Source: MBS Research’s compilation

Jewelry retail business: Focus on the new generation

We observe that jewelry demand in 2024F is less than 2022-23 period due to
slow recovery of Vietnam’s economy. The demand may improve in the 2025F-
26F thanks to higher income when Vietnam manufacturing sector recovers.
Overall, the value of jewelry market is expected to grow 4% in 24F-26F.

According to the General Department of Taxation, there are currently 12,516

businesses involved in the trading and manufacturing of gold (as of 2023). As of
May-2024, only 5,835 gold and silver trading stores have implemented electronic
invoices generated from cash registers. Based on this data, with Vietnamese
jewelry chains accounting for only 5% of the total gold and jewelry market, it
highlights the significant expansion potential for modern jewelry chain in mid and
long term. We observe that each jewelry and gold chain has its own strengths
and customer preferences. A strong focus on jewelry can help a business
capture market share and maintain better profit growth. Additionally, businesses
targeting new consumer segments (such as Gen Z) that have advantages in
production (skilled craftsmanship, diverse designs, modern styles, high-capacity
factories) and high-quality raw materials will have a significant advantage in the
mid to long term.

Figure 34: The jewelry market is expected to Figure 35: The coverage of Vietnam’s Figure 36: Strengths in manufacturing,
grow 4% in 24F-26F (Unit: USD bn ) jewelry brand on number of stores still in design, and retail scale help PNJ to
a low base. achieve exceptional net margins.

7%
1.4

1.2 6%

1 5%

0.8 4%
0.6
3%
0.4
2%
0.2
1%
0
0%
Vietnam jewelry brand stores Others DOJI PNJ SJC

12 | MBS RESEARCH
Industry report | December 30, 2024

The demand will be better in FY25-26

We note that demand for luxury goods is weaker yoy, reflecting a slow economic
recovery and a consumer retail growth rate of only around 5% (below the
preCOVID-19 average). Moreover, demand for jewelry has also slowed as
recent fluctuations in gold prices have led to a surge in demand for trading in
gold bars and gold rings.

We expect the demand for jewelry to remain stable in the last months of 2024.
Additionally, due to difficulties with the cost of raw materials, PNJ may continue
to increase product prices by around 5-7% yoy in 2024F. Overall, the average
revenue/store 2024F will be VND4.4bn/month (+4.5% yoy). With its marketing
strategy, design and production capabilities, we expect PNJ's retail growth rate
to outperform that of its industry peers. In 2025F-26F, thanks to the recovery of
Vietnam’s economy, we expect that (1) the demand may improve single-digit
from the low base of 2024, (2) the selling price may increase only 2%, overall,
revenue/store may increase 7%/7% yoy, recording VND4.7bn/VND5.0bn

Figure 37: The gold price fluctuations in recent times

95

90

85

80

75

70

65

60
02/22

10/22

06/23
01/22

03/22
04/22
05/22
06/22
07/22
08/22
09/22

11/22
12/22
01/23
02/23
03/23
04/23
05/23

07/23
08/23
09/23
10/23
11/23
12/23
01/24
02/24
03/24
04/24
05/24
06/24
07/24
08/24
09/24
10/24
11/24
12/24
SJC - giá mua vào SJC - giá bán ra

Source: FiinProX, MBS Research

Figure 38: Estimated the revenue/store/month Figure 39: We expect PNJ to continue expanding at a rate of 5%
during FY24-26F, leveraging its manufacturing strengths and
the PNJ NEXT store model.

6.0 6 500 12.0%

450 10.0%
5.0 5
8.0%
4.0 4 400 6.0%
350 4.0%
3.0 3
300 2.0%
2.0 2 0.0%
250 -2.0%
1.0 1
200 -4.0%
- 0
Q1/2021
Q2/2021
Q3/2021
Q4/2021
Q1/2022
Q2/2022
Q3/2022
Q4/2022
Q1/2023
Q2/2023
Q3/2023
Q4/2023
Q1/2024
Q2/2024
Q3/2024
Q4/2024
Q1/2025
Q2/2025
Q3/2025
Q4/2025
Q1/2026
Q2/2026
Q3/2026
Q4/2026

PNJ's stores (store, LHS)

Retail revenue/stores/month (VNDbn, LHS)
PNJ's stores (yoy, RHS)
Average revenue/store/month (VNDbn, RHS)

Source: PNJ, MBS Research Source: PNJ, MBS Research

13 | MBS RESEARCH
Industry report | December 30, 2024

Investment strategy: We prefer MWG and PNJ

Figure 40: Projected results for some retail and wholesale companies
Target price
Ticker Recommend Comments
(VND/share)

▪ MWG is a leading ICT-CE retail corp with more than 3,000 stores, accounting for about 60% ICT market
share and 50% CE (consumer eletronic) market share. When the ICT-CE demand started recovering,
MWG will get more advantage with their leader position. TGDD&DMX chain store may have a strong
recovery from 2024F mainly thanks to the increase of selling price. In 2025F, we expect MWG will stop
closing stores, focus on sales strategy when the ICT-CE demand will recover more clearly.
MWG 80,500 ADD
▪ MWG recorded positive net earnings in Q2 and Q3/24 and successfully penetrated the Central
market in 4Q24. The company's streamlined minimart format is projected to divert customer traffic
from traditional retail outlets, thereby helping BHX's revenue growth by 21%/16% in the FY25-
26F.
▪ The net profit may rise 28%/30% in FY25-26F.
▪ Long Chau is the best growth driver for FRT with the largest retail store coverage nationwide. Given
the relatively low penetration of modern drugstore chains, In a context where the coverage of modern
drugstore chains is still very low, we expect FRT to open 200/100 additional pharmacies in FY25-26F,
leveraging its strengths in (1) applying technology to customer care and inventory management, and
(2) its solid position in the industry.
FRT 199,000 HOLD
▪ We expect that the completion of FPT Shop's restructuring will eliminate one-time costs in 2025, while
the recovery of consumer demand will drive a double-digit increase in FPT Shop's total revenue in
FY25-26F.
▪ The net profit may rise 72%/44% in FY25-26F
▪ PNJ is Vietnam’s leading jewelry brand, with 405 stores across all 58 provinces and cities. Leveraging
its strong financial position and substantial brand mvalue, we project a 5%/6%/5% growth rate in new
store openings for 2024F-25F, bringing the total number of stores to 420/445/467, respectively.
▪ We estimate that the jewelry market will recover 5% yoy, as demand is expected to improve better in
4Q24. Additionally, cost optimization will help increase net profit by 10% in 2024, reaching
VND2,161bn. In 2025F-26F, with the better conditions including (1) the demand is expected to recover
PNJ 115,400 ADD more strongly as the economic outlook improves compared to 2024, (2) the opening stores in new
cities/provinces will help PNJ attract new potential customers, net profit is expected to grow by
16%/15% yoy, reaching 2,505/2,868 VNDbn.
▪ Net profit may rise 10%/16%/14% yoy in 2024F-26F thanks to the recovery of jewelry demand and
PNJ’s potential for opening new stores. the P/E fw 25 is 13x, below the average P/E 3 years is 16.6.
▪ In the mid-long term, we see significant potential for PNJ to expand its stores and boost its jewelry
market share, as the market coverage of jewelry brands remains quite low (<10%).
▪ In the ICT-CE wholesale’s market, DGW holds a strong position thanks to its abundant customers (over
6,000 retail stores) and solid financial health. Additionally, DGW has a great advantage which is its
ability to develop the market and manage sales channels for new brands entering the Vietnamese
market.
▪ Vietnam remains a country with a golden demographic structure and a trong preference for spending
DGW 49,200 ADD on technology products. With the view that the demand of consumer electronic and smartphone, laptop
will have the better recovery in 2H24-2026F, we expect that the revenue of smartphones, laptop &
tablet may rise 12% yoy in 2024F-26F. Besides, the AI’s trend will help the office equipment’s sector
has the great growth, DGW’s net profit may rise 27%/28%/24% in 2024F-26F
▪ We see that DGW has discovered a new growth driver in the field of supplying person protective
equipment (PPE).

Source: MBS Research’s projection

14 | MBS RESEARCH
Industry report | December 30, 2024

Figure 41: Projected results for some retail and wholesale companies

Source: MBS Research’s projection

Figure 42: Peer comparison

Source: MBS Research’s projection

15 | MBS RESEARCH
 Industry report | December 30, 2024

DISCLAIMER
This report has been written and distributed by MBS Research Center, MBS Securities JSC (MBS). It is based on
information obtained from Sources believed to be reliable, but MBS does not make any representation or warranty,
express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions
expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation
contained herein does not have regard to the specific investment objectives, financial situation and the particular needs
of any specific addressee. This report and all of its content belongs to MBS. No part of this report may be copied or
reproduced in any form or redistributed in whole or in part, for any purpose without the prior written consent of MBS.

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Stock rating
Our investment recommendations are based on the expected profitability of the stock, calculated as the sum of (i) the
percentage difference between target price and market price at the time of publication, and (ii) expected dividend yield.
Unless otherwise stated in the report, investment recommendations have an investment horizon of 12 months.

ADD The stock can generate a profitability of 15% or more

HOLD The stock can generate a profitability of between -15% and 15%
REDUCE The stock can generate a loss of 15% or more
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MBS RESEARCH TEAM

Director, Head of Research Deputy Head of Equity Research

Hien Tran Dzung Nguyen

Macro & Market Strategy Banking – Financial Services Real Estate

Cuong Nghiem Luyen Dinh Duc Nguyen
Hung Ngo Hao Nguyen Thanh Le
Anh Dinh
Anh Vo
Energy - Industrials Consumer - Retail
Tung Nguyen Ly Nguyen
Huyen Pham Associate: Anh Nguyen

16 | MBS RESEARCH