DIGIWORLD CORPORATION

HOSE: DGW

May 2024

1
RMIT Classification: Trusted

Digiworld Corporation (HSX: DGW) Overview

Business Description Shareholding Structure

 Established in 1997, Digiworld is Vietnam leading distributor of technology and consumer

brands. Digiworld remarks as “Market Expansion Service” (MES) provider. Created Future Co Ltd

 Digiworld directly and indirectly owns 11 subsidiaries, with a whole value chain to Dkp Mtv Co. Ltd.
distribute 2 categories: Information & Communication Technology (ICT) and Consumer
Goods. DHV MTV Co. Ltd. 32.05%
TOHT MTV Co. Ltd. 47.52%
 In general, the company imports/buys products by exclusive contract or non-exclusive
contracts with ICT brands (such as Lenovo, HP, Apple, etc.) and consumer brands (Lotte, Capital Asset Management Co., Ltd.
ABInbev, etc.) and distribute to retail stores (Dien May Xanh, Nguyen Kim, etc.) or online
channels (Lazada, Shopee, etc.) ODIN Forvaltning AS
5.08%
 By 2023, Digiworld holds 40% of laptop marketshare, 18% of mobile phone, 10% of office BBL Asset Management Co., Ltd.
4.17%
machines. Moreover, their distribution channels reach 6,000 retail stores for ICT; 4,000
stores of pharma and healthcare products; as well as 6,000 traditional retail stores and Lion Global Investors Ltd.
1.56% 1.98% 2.21% 2.28% 3.14%
1,600 modern retail chains (Guardian, Bach Hoa Xanh, Vinmart, etc.)
Others
 Market Cap: VND 9,806 bn (as of 24 Apr 2024)

Products & Services

Note:
 You are expected to conduct several research about the company, in addition to
this briefing, in order to understand and form your own perspectives. Please
activate your critical thinking and research skills.

 You should ask yourself about company’s business, its position, its market-share,
its competitive advantages, as well as other necessary metrics and characteristics
of the industry. These are crucial to select catalyst and deliver accurate valuation.

 The following parts will consist of number of peer companies, please also research
about them to pick the most accurate and related peers.

 Also, you are encouraged to consider by the view of an investor, rather than just
completing “another assignment” of the program.

Source: company Confidential 2

RMIT Classification: Trusted

Financial Overview (1/2)

Income Statement Cash Flow Statement
USDmm, unless stated otherwise FY2019 FY2020 FY2021 FY2022 FY2023 USDmm, unless stated otherwise FY2019 FY2020 FY2021 FY2022 FY2023
Total Sales 360 532 900 941 789 Cash Flows from Operating Activities 12 35 6 -47 21

Cost of Sales 337 498 835 870 724 Net Profit 9 14 35 37 20

Depreciation, Depletion & Amortization -
Gross Profit 23 34 65 71 65 CF
0 0 0 0 2
Gross Margin 6.5 6.4 7.2 7.5 8.3 Provisions 1 0 0 7 -3
Selling, General and Administrative Gains from Investing Activities 0 0 -1 -2 -3
15 22 35 37 48
Expenses
Interest Expense 2 1 1 4 5
Selling Expenses 11 18 30 31 40 Changes in Accounts Receivable -1 -19 -33 14 -25
General and Administrative Expenses 4 4 5 6 8 Change In Inventories -6 27 -89 -21 13
Operating Profit 8 12 30 34 18 Change in Prepaid Assets 0 0 0 -1 -1
Operating Profit Margin 2.3 2.2 3.3 3.7 2.2 Change in Account Payables 10 18 102 -74 22
Total Non Operating Income (Expense) 0 0 0 0 0 Interest Paid - Operating CF -2 -1 -1 -4 -5
Non Operating Income 0 0 0 0 0 Tax Payed -2 -4 -8 -9 -4

Non Operating Expense 0 0 0 0 0 Other Cash Flows from Operating Activities 0 0 0 0 0

Financial income / expenses 0 2 6 3 2 Cash Flows from Investing Activities 0 -2 1 -12 -3

Interest Received 0 0 2 2 3
Financial income 3 4 8 9 8
Capital Expenditure 0 -1 -1 0 -1
Financial expenses 2 1 2 6 6
Loans Given and Purchases of Debt
Pretax Profit 9 14 35 37 20 0 0 -1 -1
Instruments of Other Entities
Pretax Profit Margin 2.5 2.7 3.9 3.9 2.5 Recovery of Loans Given and Purchases of
0 0 2
Debt Instruments of Other Entities
Income Taxes 2 3 7 8 5
Purchase of Investment -2 0 -13 -5
Income Taxes - Current 3 4 10 7 4
Cash Flows from Financial Activities -10 -1 20 31 8
Income Taxes - Deferred 1 1 2 0 -1 Proceeds from Issuance of Stock 1 1 1 1 2
Net Profit 7 11 28 29 15 Stock Purchase, Ret, Conv, Redeem 0 0
Net Profit Margin (Attribute to parent Proceeds from Borrowings 165 163 211 425 444
1.9 2.1 3.1 3.1 1.9
company shareholders)
Repayments of Borrowings -174 -162 -190 -391 -431
(Supplemental Data)
Cash Dividends Paid - Total -1 -2 -2 -4 -7
EBITDA 9 12 30 35 19
Changes in Cash Flow 3 32 27 -28 26
EBITDA Margin 2.4 2.3 3.3 3.7 2.4
Cash & Cash Equivalent - Beginning 3 6 38 64 35

Source: audited financial reports, Speeda Confidential 3

RMIT Classification: Trusted

Financial Overview (2/2)

USDmm, unless stated otherwise FY2019 FY2020 FY2021 FY2022 FY2023
Total Assets 102 131 287 269 307
Total Current Assets 97 122 275 245 280
Cash/Cash Equivalents & Short-term Investments 6 38 66 35 60
Trade receivables 23 47 74 63 82
Accounts Receivable 23 47 74 63 82
Inventories 62 35 127 138 124
Total Inventories 62 36 128 146 130
Provision for Devaluation in Inventories -1 -1 -1 -8 -5
Advance Payments 0 1 4 2 4
Other Debtors, Deposits & Prepayments 3 2 3 3 4
Other Short-term Assets 5 1 4 5 7
Allowance for Doubtful Accounts - Assets -2 -2 -2 -2 -2
Total Non-current Asset 5 9 13 24 27
Property, Plant & Equipment (PPE) 1 1 1 1 2
Gross Property, Plant & Equipment 2 2 3 3 3
Acumulative Depreciation -1 -1 -1 -2 -2
Goodwill & Intangibles 3 3 3 14 18
Construction in Progress 0 0 0 0 1
Long-term Receivables 0 0 1 1 1
Long-term Financial Investments 0 3 3 3 1
Other Non-current Assets 1 2 5 5 5
Total Liabilities 63 82 209 166 199
Total Current Liabilities 63 82 209 164 198
Trade Payable 30 40 125 51 63
Accounts Payable 30 40 125 51 63
Total Short-term Debt 26 27 49 81 96
Advances Received 0 3 3 4 6
Taxes Payable 1 1 3 2 1
Payables to Employees 1 1 1 1 1
Accrued Expenses 4 9 27 13 10
Other Current Liabilities 0 1 1 12 22
Total Non-current Liabilities 0 0 0 2 1
Total Shareholders' Equity 39 50 78 101 107
Share Capital 18 18 39 69 69
Additional Paid in Capital 3 3 3 3 3
Retained Earnings 19 29 37 30 36

Source: audited financial reports, Speeda

Confidential 4
RMIT Classification: Trusted

Valuation methodologies

Public comparables Precedent transactions Discounted cash flow/dividend

Overview  Comparison with similar companies  Comparison with similar M&A transactions  Discounting future stream of
(“comps“) in the industry (“precedents") cash/dividends to the present the
theoretically intrinsic value of the
 Relative valuation based on key  Relative valuation based on key multiples, company
multiples, most commonly EV/EBITDA most commonly EV/EBITDA and P/E
and P/E  Based on unlevered free cash flow (DCF) or
future dividend (DDM)

Considerations  Important to select peers that are  Important to select precedents where the  Important to sense check your assumptions
comparable to DGW in terms of target companies were comparable to DGW against macro environment, industry
business model, scale, geographical in terms of business model, scale, trends
reach, operational, and financial geographical reach, operational, and and norms, business stage, etc.
performance financial performance
 Run sensitivity analysis to get a sense of
how sensitive certain key assumptions to
your valuation
For CAPM in WACC, the risk free rate and
market risk premium should be obtained
from reputable sources, while beta can be
calculated two ways:
i ) based on the the variance & covariance
formula
ii) based on peers average beta

Confidential 5
RMIT Classification: Trusted

Public Comparables
Select 6 public companies comparable to DGW from the below list
Market Cap Enterprise Value(EV) Enterprise Value/Sales EV/EBITDA P/E Total Revenue EBITDA

$USDmm $USDmm x x x $USDmm $USDmm

FY2023 FY2023 FY2023 FY2023 FY2023 FY2023 FY2023

Shenzhen Aisidi Co., Ltd. (SZSE:002416) 1,978.8 2,044.1 0.159 14.2 35.6 13,256.0 157.1

PT Metrodata Electronics Tbk (IDX:MTDL) 437.7 459.4 0.322 5.74 14.3 1,432.9 79.1

Mitachi Co., Ltd. (TSE:3321) 57.9 43.3 0.171 3.83 8.86 309.7 19.2

HYPER Inc. (TSE:3054) 18.6 9.06 0.123 6.41 37.2 80.9 1.55

SNS Network Technology Berhad (KLSE:SNS) 126.6 114.5 0.448 9.18 23.2 269.8 10.6

WPG Holdings Limited (TWSE:3702) 4,442.1 7,671.3 0.373 20.6 38.7 21,929.9 356.5

VSTECS Berhad (KLSE:VSTECS) 189.6 165.9 0.288 9.17 17.4 594.5 17.5

EDOM Technology Co., Ltd. (TWSE:3048) 190.0 385.5 0.117 7.75 155.0 3,498.8 51.6

Macnica Galaxy Inc. (TPEX:6227) 155.2 211.2 0.517 10.8 21.2 435.8 19.9

Interlink Communication Public Company Ltd (SET:ILINK) 99.1 258.7 1.38 6.62 9.7 202.6 40.7

Metro Systems Corporation Public Company Ltd (SET:MSC) 78.7 72.2 0.284 6.23 13.2 275.7 12.2

Ban Leong Technologies Limited (SGX:B26) 27.9 17.8 0.113 3.08 9.16 153.2 5.25

Source: Speeda Confidential 6

RMIT Classification: Trusted

Precedent transactions (1/2)

Select 5 precedent transactions from the below list
Implied Implied
Transaction Value % Implied EV
Target/Issuer Headquarters Business [Target/Issuer] Buyers/Investors Target Industry Buyer Type EV/Rev EV/EBIT
($USDmm) Sought ($USDmm)
(x) DA (x)
Willas-Array Hong Kong Willas-Array Electronics (Holdings) Limited is a Hong Texin (Hongkong) Technology Strategic Buyer
Electronics Kong-based investment holding company principally Electronics Co. Limited 130.04 Distributors
(Holdings) Limited engaged in the trading of electronic components. The 181.93 (Primary)
(SGX:BDR) Company operates through two segments. Trading of 17.12 0.436 12.33
Electronic Components segment is engaged in the
trading of electronic components. This segment
operates businesses in Southern China, Northern China
and Taiwan. Trading and Designing Integrated Circuits
segment is engaged in the design and trading of
integrated circuits. The Company’s products include
telecommunications products, automotive products,
security products, audio and video products, home
appliance products, industrial products and lighting
products, among others.
Ryosan Company, Japan Ryosan Company, Limited is an electronics trading Ryoyo Electro Technology Strategic Buyer
Limited company that sells devices such as semiconductors Corporation 120.17 Distributors
and electronic components and provides solutions. 784.64 (Primary)
From its headquarters in Tokyo, Ryosan operates over 18.71 0.319 7.08
20 sales offices globally. Ryosan adopts the "Ryosan
spirit" as an identity which is the sense of value that
defines and gives direction to its corporate ventures and
activities, and will continue to be a corporate group that
meets the expectations of society by further boosting its
functions as a public institution.

Procurri Corporation Singapore Procurri Corporation Limited provides enterprise data Declout Limited Technology Strategic Buyer
Limited (SGX:BVQ) center equipment and lifecycle services to clients in 57.52 Distributors
Singapore and internationally. It offers IT distribution 80.0 (Primary)
services, including hardware resale and supply chain 46.95 0.457 16.12
management, and lifecycle services, such as
independent maintenance, Hardware-as-a-Service, and
IT asset disposition.
Procurri Corporation Singapore Procurri Corporation Limited provides enterprise data Novo Tellus Capital Technology Financial Buyer
Limited (SGX:BVQ) center equipment and lifecycle services to clients in Partners; University of 19.93 Distributors
Singapore and internationally. It offers IT distribution Pittsburgh – Of the 76.5 (Primary)
services, including hardware resale and supply chain Commonwealth System 8.55 0.422 17.09
management, and lifecycle services, such as of Higher Education;
independent maintenance, Hardware-as-a-Service, and Compass Private
IT asset disposition. Investments 2017
Master LP
Grand-Flo Spritvest Malaysia GRAND-FLO SPRITVEST, a subsidiary company of Radiant Globaltech Technology Strategic Buyer
Sdn Bhd Radiant Globaltech Berhad that specialised in design, Berhad 3.2 Distributors
development and implementation of its proprietary (KLSE:RGTECH) 3.34 (Primary)
Automatic Identification and Data Capture (AIDC) 80.0 0.26 5.84
Confidential 7
solutions. With over 20 years of industry experience, the
company has been establishing successful data
RMIT Classification: Trusted

Precedent transactions (2/2)

Implied Implied
Transaction Value Implied EV
Target/Issuer Headquarters Business [Target/Issuer] Buyers/Investors % Sought Target Industry Buyer Type EV/Rev EV/EBIT
($USDmm) ($USDmm)
(x) DA (x)
Beijing Oriental China Beijing Oriental Jicheng Co., Ltd. (BOJ) distributes Dalian Financial Technology Strategic Buyer
Jicheng Co., Ltd. electronic testing and measurement products. The Industry Investment 110.09 Distributors
(SZSE:002819) Company offers consultations on the value-added sales, Group Co., Ltd. 445.71 (Primary)
system integration, technical rental, equipment testing, 23.85 3.04 29.34
maintenance and repair, and outsourcing management
of scientific assets. BOJ serves customers in China.
Ryoyo Electro Japan RYOYO ELECTRO CORPORATION is a wholesaler of Restar Corporation Technology Strategic Buyer
Corporation electronic components including semiconductors. The (TSE:3156) 98.18 Distributors
Company sells workstations, personal computers, and 387.62 (Primary)
printers. Ryoyo Electro operates offices in Singapore 20.0 0.429 25.67
and Hong Kong. The Company trades large amount of
semiconductors from Mitsubishi Electric.
Excelpoint Singapore Excelpoint Technology Ltd., an investment holding WT Semiconductor Pte. 286.26 255.87 Technology Strategic Buyer
Technology Ltd. company is involved in the trading of electronic Ltd. 100.0 Distributors 0.156 7.85
components; and provision of marketing and technical (Primary)
support services.

EDOM Technology Taiwan EDOM Technology Co., Ltd. engages in the distribution WPG Holdings Limited 30.4 541.46 Technology Strategic Buyer
Co., Ltd. of electronic components, computer hardware, software, (TWSE:3702) 9.27 Distributors 0.142 9.03
(TWSE:3048) and equipment in Taiwan. (Primary)

DMOA Co., Ltd South Korea DMOA Co., Ltd engages in the distribution of software Vivien Corporation 46.41 148.61 Technology Strategic Buyer
(KOSDAQ:A016670) and hardware products in South Korea. (KOSE:A002070) 26.14 Distributors 7.73 16.1
(Primary)

PT Mitra Komunikasi Indonesia PT Mitra Komunikasi Nusantara Tbk distributes, trades, Pt Monjess Investama 21.17 40.97 Technology Strategic Buyer
Nusantara Tbk and sells telecommunication products in Indonesia. 51.0 Distributors 0.749 91.78
(IDX:MKNT) (Primary)

Bestcom Infotech Taiwan BestCom Infotech Corporation distributes IT products in Synnex Technology 61.81 82.99 Technology Strategic Buyer
Corp. Taiwan. International 55.41 Distributors 0.23 11.32
Corporation (Primary)
(TWSE:2347)

PC Direct, Inc. South Korea PC Direct, Inc. distributes IT components in South USR Co.,Ltd 1.32 22.54 Technology Strategic Buyer
(KOSDAQ:A051380) Korea and internationally. 6.5 Distributors 0.138 39.51
(Primary)
Source: CapitalIQ Confidential 8
RMIT Classification: Trusted

Beta based on peer’s average beta

Levered Market Cap Short-Term Long-Term D/E Marginal
1. Find public comparables and source each company‘s levered beta β Debt Debt Ratio Tax Rate
(typically through Bloomberg)
USD Million USD Million USD Million x %
2. Unlevered each comp‘s levered beta at each company‘s debt/equity
ratio to neutralize impact of leverage Shenzhen Aisidi Co., Ltd. (SZSE:002416) 0.479 1,978.8 801 5 1.0 25

PT Metrodata Electronics Tbk (IDX:MTDL) 0.542 437.7 19 6 0.11 22

Mitachi Co., Ltd. (TSE:3321) 0.990 57.9 11 2 0.13 23.2

HYPER Inc. (TSE:3054) 0.486 18.6 5 2 0.38 23.2

SNS Network Technology Berhad (KLSE:SNS) 0.244 126.6 7 1 0.32 24

3. Calculate the average or median unlevered beta of the comp set
WPG Holdings Limited (TWSE:3702) 0.071 4,442.1 2,956 663 1.26 20
4. Relevered such average or median from step 3 at an
appropriate/“optimal“ capital structure to arrive at DGW‘s beta VSTECS Berhad (KLSE:VSTECS) 0.402 189.6 7 1 0.09 24

EDOM Technology Co., Ltd. (TWSE:3048) 0.317 190.0 214 27 1.49 20

Macnica Galaxy Inc. (TPEX:6227) 0.380 155.2 23 2 0.33 20

Notes:
Interlink Communication Public Company Ltd (SET:ILINK) 0.622 99.1 95 18 1.16 20
Appropriate/“optimal“ capital structure can be chosen between i)
company‘s current capital structure, ii) comp set‘s average or median, Metro Systems Corporation Public Company Ltd (SET:MSC) 0.187 78.7 1 1 0.03 20

iii) a commonly accepted level based on industry understanding

Ban Leong Technologies Limited (SGX:B26) -0.006 27.9 2 0 0.08 17

T, or Marginal Tax Rate, is provided on the table on the right hand side –
peer‘s tax rate for step 2), and DGW‘s tax rate for step 4)

Source: Reuters, Speeda

Confidential 9
RMIT Classification: Trusted

Assignment questions
1. Forecast DGW’s revenue, COGS, SG&A, and Net Income for the next 5 years. Provide assumptions and explanation for your projections
2. Calculate the Weighted Average Cost of Capital ("WACC") to be used as the discount rate for DGW. Justify and explain your selection of
the variables that go into your WACC calculation Beta should be calculated two ways –i) based on the variance & covariance formula and
ii) based on peers average beta
3. Provide a valuation of DGW based on the three valuation methodologies comps, precedents, and DDM. The results should include
Enterprise Value, Equity Value, and Share Price, as appropriate
 Select 6 comps and 5 precedents for the relative valuation approach
 Value DGW based on DDM for the intrinsic valuation approach
4. Prepare a risk-return analysis of an investment into DGW. Would you invest in DGW now based on your analysis?
5. What strategic initiatives that DGW’s Board and senior management have focused on in the past 5 years and what is your assessment of
such initiatives (strategic direction, planning, execution, results, etc.)?
6. What strategic direction and business initiatives should DGW’s Board and management focus on in the next 5 years, considering an
increasing challenging macro environment, increased competition in DGW’s industry, and the proliferation of digitalization and powerful
analytics tools such as AI? Is there any preference of success cases in other countries regarding to “Market Expansion Service” business?
7. Provide an assessment of DGW’s environmental, social, and governance (“ESG”) efforts. You are required to use RMITV Generative AI
(https://val.rmit.edu.au/) to support your answers to this question and write a 300-word reflection on (1) how Generative AI supports
your answers and (2) critically evaluate the use of AI with examples.
Confidential 10
DGW
May 2024

11