Vietnam retail stocks bounce back with business boost

Several retail stocks have gained strongly since November 2023 as commercial and service activities pick up to prepare for the holiday season.

The close of Friday’s trading session saw FRT of FPT Retail surpassing its previous peaks to close at VND119,000 ($4.89) per share; and PNJ of Phu Nhuan Jewelry up 27% since the beginning of November to VND91,900 ($3.77) per share, approaching its old peak of VND96,000 ($3.94) set in June 2022.

MWG of Mobile World went up 31% in three months to close Friday at VND47,400 ($1.95) per share, though this was a far cry from the historical peak it set in March-April 2022 at VND80,000 per share

In the last months of 2023, the demand for food, cultural items as well as education, accommodation, catering and travel services kept rising.

According to the General Statistics Office (GSO), Vietnam’s total retail sales of goods and consumer services in 2023 reached VND6,232 trillion ($256 billion), an increase of 9.6% compared to the previous year.

As a result, most retailers in Vietnam recorded year-on-year revenue growth in the last quarter of the year. Their profits improved compared to previous quarters but were still lower than the same period in 2022.

Revenue soars, profit plummets

In the fourth quarter of 2023, retail giant Mobile World, listed on the Ho Chi Minh Stock Exchange (HoSE) as MWG, achieved its highest revenue of the year at VND31,421 billion ($1.29 billion), up nearly 3% year-on-year.

However, increasing sales costs and falling margins saw its net profit plummet 85% to VND90 billion ($3.7 million), though this figure was also the year’s highest.

The revenues of Mobile World and Dien May Xanh chains (offering non-essential goods including phones, laptops, and electronics) saw a 7% decrease in Q4, an improvement compared to two-digit declines in the first three quarters. The largest contributor to MWG revenue was the Bach Hoa Xanh grocery chain. The chain’s revenue expanded 31% year-on-year.

MWG received some good news when the Bach Hoa Xanh chain reached its break-even point in December. The company is confident that the chain will earn a net profit this year, making it the first profitable year after seven years of operation.

In 2023, MWG posted VND118,280 billion ($4.85 billion) in net revenue and VND168 billion ($6.9 million) in net profit, down 11.3% and 96% year-on-year, respectively.

Pharma gains, electronics loses

FPT Retail (HoSE: FRT) reported Q4 revenues of VND8,690 billion ($356.95 million), the highest in the year and a slight increase from the same period in 2022.

Its bright spot was the FPT Long Chau pharmacy chain, whose revenue soared 60%, while FPT Shop saw revenues drop by 27% due to reduced purchasing power, especially with demand for iPhone 15 cooling down very quickly after the sale at the end of the third quarter.

FRT’s gross profit margin improved to 17.5%, the highest level of the year. But rising sales and management costs saw the firm incur a net loss of more than VND100 billion ($4.1 million).

In 2023, FRT earned record revenues of VND31,849 billion ($1.3 billion), up 6% year-on-year. FPT Long Chau gained 66% and contributed 50% of the revenue, while FPT Shop fell 22% and posted a net loss of VND345 billion ($14.17 million).

Amidst difficulties, most retail businesses narrowed operations and paused expansion, but FPT Retail still expanded its FPT Long Chau network, opening 560 new stores increasing the total number of pharmacies to 1,497 and maintaining the top position in the market. The average revenue per pharmacy per month was VND1.1 billion ($4,518) in 2023.

Record profit despite difficulties

Phu Nhuan Jewelry (HoSE: PNJ) reaped great success despite 2023 being a difficult economic year with fluctuating gold prices.

After its profit declined in the second and third quarters because of reduced purchasing power, PNJ achieved positive results in Q4 with revenues of VND9,760 billion ($400.9 million) and after-tax profits of VND632 billion ($25.96 million), up 17.6% and 34.4% year-on-year, respectively.

For the whole of 2023, it earned revenues of VND33,137 billion ($1.36 billion), down 2.2% compared to the previous year and fulfilling 93.1% of the yearly plan. However, its after-tax profit rose 9% year-on-year to VND1,971 billion ($80.96 million), up 9% compared to 2022 and exceeding the yearly target by 2%. This was a record profit for the gold jewelry retailer.