According to ESValue’s assessment, although revenue from the ICT sector has significantly improved, reaching 75%, its share of total revenue may decrease in the future due to faster growth rates from other sectors.
In ESValue’s analysis report on Digiworld Joint Stock Company (stock code: DGW), the forecast for 2024 is optimistic, especially for the ICT sector, thanks to the cycle of electronic device renewal. ESValue points out that in the second quarter of 2024, revenue from mobile phones and laptops/tablets for Digiworld increased by 1% and 17%, respectively, compared to the same period last year, even before entering the peak season.
Benefiting from the new product replacement cycle, particularly for laptops, along with increased consumption momentum as the school season approaches, ICT products have recorded significant growth. ESValue also notes that purchasing power will improve significantly in the last two quarters of the year, with new technology products launching and the Lunar New Year occurring earlier than usual, stimulating consumer spending.
With these clear growth drivers, ESValue forecasts positive revenue growth for Digiworld’s ICT sector until the end of 2024.
According to ESValue, in the second quarter of 2024, Digiworld’s ICT sector recorded significant growth, making up 75% of total revenue thanks to positive supporting factors for these items this year.
However, ESValue forecasts that revenue from the ICT sector may decline in the near future, as other sectors such as personal protective equipment, household appliances, and fast-moving consumer goods are showing exceptional growth rates.
ESValue notes that the decrease in the proportion of the ICT sector does not reflect a lack of potential but is due to the strong breakthrough of other business areas.
The contribution of the ICT sector is gradually decreasing; what results has the M&A strategy brought to Digiworld?
In the context of the ICT sector gradually becoming saturated and facing challenges in maintaining strong growth rates in the coming years, Digiworld (DGW) has proactively implemented a series of M&A deals and diversified its product portfolio to expand profit sources.
At a recent investor meeting, Digiworld’s leadership shared the latest updates on M&A activities. Although a potential M&A deal in the office equipment sector did not reach an agreement, the company has significant opportunities to finalize a deal in the consumer sector by 2025.
Recently, Digiworld completed a notable M&A transaction by acquiring Achison to expand its product portfolio into personal protective equipment. However, in the first six months of 2024, Achison’s sales performance fell short of the leadership’s expectations due to production activities not achieving the anticipated efficiency.
Mr. Đoan Hong Viet, chairman of Digiworld, stated that Achison currently holds a 10% market share, which is not very high.
According to Mr. Viet, with Achison, the revenue contribution plan is set at 1 trillion VND and a post-tax profit of 50 billion VND, corresponding to a higher profit margin than DGW.
“When compared to much larger markets from Asian brands, Achison has yet to reach its full potential. Vietnam becoming a manufacturing hub for the region and the world will create long-term growth opportunities with high speed in this sector,” Mr. Viet remarked.
Additionally, Digiworld aims to complete 2-3 M&A transactions each year, as the leadership believes that M&A will help DGW accelerate its growth, leveraging its market knowledge and solid back-end infrastructure.
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