PNJ – Demand for gold bar is expected to drive positive sales growth in Q4 2023
- In Oct-2023, PNJ posted revenue and net profit of VND3,007 bn (+33.6% MoM; +1.6% YoY) and VND193 bn (+108% MoM; +31% YoY), respectively. Although the Retail and Wholesales segments continued to decrease YoY, the declining growth rate is the lowest in the last 9 months. The gross margin improved, supported by higher contribution from the retail business.
- Based on the performance of PNJ’s gold bar segment in 10M2023, we predict that it will continue to be the growth driver for Q4 2023 sales as well as the whole year of 2023. In Q4 2023 and 2023, net sales is expected to reach VND8,516 bn (+23.1% QoQ; +2.6% YoY) and VND31,893 bn (-5.9% YoY), respectively. Correspondingly, Q4 2023 and 2023 net profit will be VND452 bn (+78.7% QoQ; -3.0% YoY) and VND1,792 bn (-0.8% YoY), respectively. The equivalent 2023 EPS is VND 5,461.
- We downgrade the expected 2024 SSSG (same-store sales growth) rate to -2% YoY as we believe that Vietnamese people disposable income will still not be positive in 2024, limiting their spending on jewelry products. As a result, 2024 revenue is adjusted down to VND33,818 bn (+6% YoY). Similarly, the net profit and EPS are reduced to VND1,982 bn (+11% YoY) and VND5,705 (+4.5% YoY), respectively.
- Based on the combination of FCFF valuation model (50%) and multiple comparison (50%), with an applied 2024 P/E of 15.0x, our new target price is VND86,200 which is 2% lower than the latest target price (VND88,000) in Jul-2023. Adding a cash dividend of VND2,000/share, the 12-month expected return is +10.3% compared to the closing price on Dec 11th 2023, equivalent to an ACCUMULATE recommendation
Phu Nhuan Jewelry Joint Stock Company is a Vietnam-based company engaged in the jewelry sector. It manufactures and markets jewelry pieces, stamped gold bars, and jewelry products made of gold and silver. It also trades gemstones and precious metals as materials for jewelry manufacturing. The Company operates jewelry stores under various brand names, such as PNJ Gold, PNJ Silver, CAO Fine Jewelry, and is involved in wholesale trade of stamped gold bars branded Phuong Hoang PNJ - DongA Bank. In addition, the Company provides jewelry evaluation and testing services. It is engaged in the trading of liquefied petroleum gas (LPG), real estate operations and seafood processing through its subsidiaries and affiliates.
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