Singapore’s GIC National Investment Fund is hoping to purchase Mobile World Investment Joint Stock Company’s 20% share in Bach Hoa Xanh supermarket stores. A $1.7 billion valuation of Bach Hoa Xanh is possible with this share transaction. Thai companies also offered to purchase Bach Hoa Xanh shares.

A million-dollar deal

Investor expectations for MWG’s supermarket division were quickly reflected in its stock price. MWG wanted to sell up to 20% of Bach Hoa Xanh shares last year, but market conditions prevented it. Bach Hoa Xanh’s spokesman merely said: “We have executed information security agreements with potential investors for a private placement transaction. Thus, we do not provide more information. The business will alert investors following the acquisition.”Note that Bach Hoa Xanh’s business status had improved when this deal was announced. Since May 2023, Bach Hoa Xanh has outperformed Mobile World in revenue, according to the August update report. Bach Hoa Xanh’s eight-month 2023 revenue is 25.4%, whereas The Gioi Di Dong chain is usually 23.6%.Bach Hoa Xanh’s income rose to VND 2,900 billion in August 2023, up marginally from July 2023 and 20% from the previous year. Store revenue averaged VND 1.65 billion in August. Revenue for the business rose 10% to VND 19,400 billion in the first eight months. Purchase invoices and fresh food goods drive Bach Hoa Xanh chain expansion. Purchase invoices rose 4% and fresh product sales rose 10% in August compared to July.Mr. Pham Van Trong, General Director of Bach Hoa Xanh, assessed: “The improvement of the chain is sustainable and comes from Bach Hoa Xanh’s own capacity rather than the resilience of the market.” This raises the Company’s projections for breaking even in 2023 and contributing to MWG’s 2024 profit. Mr. Trong expects Bach Hoa Xanh’s revenue/store to rise. Expects to increase 10% every month in the last months of the year and achieve VND 2 billion in revenue/store by December 2023.

Motivation from the recovering market 

Since 2015, Bach Hoa Xanh has opened almost 1,700 outlets. Despite strong sales growth, Bach Hoa Xanh estimates a 10% annual revenue loss due to investment constraints. Over VND 8,053 billion have been stolen by this network since 2016.Bach Hoa Xanh is confident about retail’s revival. SSI Securities Company (SSI) forecasts retail earnings to rise from the fourth quarter of 2023 to 2024. Bach Hoa Xanh and WinMart retain consistent income in the contemporary grocery market, although decreased trading affects them. When shopping cart size increases again and Bach Hoa Xanh and WinMart transaction traffic rises, these chains’ revenue will rise.In addition, the value-added tax (VAT) was reduced from 10% to 8% for many essential items like dry food, beverages, confectionery, and household goods, synchronized from import, production, processing, and consumption. This allows consumers to buy cheaper goods, helping businesses increase revenue.Bach Hoa Xanh sells fresh and dry items to customers and households. This retail chain thinks it’s successful in dry goods. The business is using consumer app data to alter its product assortment and improve fresh food quality to attract new customers and boost sales and profitability.Increasing the fresh product portfolio is the proper break-even strategy. According to SSI Research, people may opt to purchase in conventional markets during times of low income, making it harder to meet the grocery segment profit objective this year. Therefore, the department store category is predicted to break even (1.7 billion VND/month revenue/store) in 2024 and have a positive net profit in 2025.