DGW – Deconsolidation of Viet Money; NPAT-MI grows 15% YoY - AGM Note & Earnings Flash

AGM Notes:

• Deconsolidation of Viet Money: On January 13, 2025, DGW restructured its investment structure by separating Digiworld Venture - holding its 72.8% stake in Viet Money - into a standalone entity, while transferring Digiworld Venture’s other investments (e.g., Achison, C.L, and Dai Tin Pharma, among others) into a newly established company named Nexta Capital. On March 31, DGW sold 81% of its shares in Digiworld Venture to an individual, reducing its ownership to 19%. As a result, DGW’s economic interest in Viet Money fell to 13.8%, down from 79.1% at YE 2024. The reason for this action is DGW's difficulty in scaling up Viet Money’s business model and no longer sees it fitting with DGW.
• Company outlook: Management said that Vietnam's phone market was flat YoY, while laptops declined YoY in 4M 2025. DGW is still seeing growth as it gains market share and benefits from the trend of premiumization. DGW expects its phone and laptop sales to maintain single-digit growth over the next five years, mainly supported by the premiumization trend. However, to achieve a double-digit CAGR over the next decade, DGW will need to expand its brand portfolio in higher-margin segments such as office equipment, home appliances, and FMCG. DGW plans to enter a new product category related to the automotive sector, though specific details have not yet been disclosed.
• Achison: The company is seeing a decline in demand as its key clients like Intel and Samsung scale back due to weak demand. Achison is trying to diversify its product offerings and expand its customer base beyond high-end clients to include mid-tier customers.
• FX risk: DGW's strong cash position gives it leverage to negotiate early payment discounts. If DGW pays early, it can pay in VND. The company also actively manages FX risk by purchasing USD in advance or coordinating with suppliers to lock in an exchange rate. DGW generates 50% of its revenue with the cost of sales being paid 50% in VND and the rest in USD.

Earnings Flash:

• Q1 2025: Net revenue grew 11% YoY to VND5.5tn (USD212mn) and NPAT-MI grew 15% YoY to VND106bn (USD4mn), completing 23% and 20% of our respective 2025F forecasts. NPAT-MI fell slightly short of our expectations due to higher-than-expected financial expenses.
• Q1 2025 segmental performance: The 11% YoY revenue increase was supported by robust growth in office equipment (+26% YoY, 23% of total sales in Q1), home appliances (+91% YoY, 7% of total sales in Q1), and laptops & tablets (+22% YoY, 25% of total sales in Q1). Key drivers included strong PC client/IoT sales in office equipment, seasonal demand (Tet holiday) and the Philips brand’s contribution in home appliances, and sustained performance, plus new brands (MSI, Gigabyte) in laptops. Additionally, consumer goods grew 20% YoY (4% of total sales in Q1), driven by the contribution from the new ABInbev distribution channel (ontrade). However, mobile phones sales (40% of total Q1 revenue) contracted by 8% YoY.
• Profitability: EBIT margin improved by 100 bps YoY to 3.4% in Q1 2025. GPM expanded by 90 bps YoY to 8.7%. However, NPM remained flat YoY at 1.9% due to higher-than-expected financial expenses (+377% YoY).

DGW’s Q1 2025 results

Source: DGW, Vietcap

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