PNJ - Sustainable Growth from the Fragmented Jewelry Market
At the current price, PNJ's forward PE of 2018 is about 16x, not too cheap compared to the average P/E of the jewelry industry. However, with a strong leadership position in the industry along with high growth expectation in the coming years from the core business, we believe that PNJ is a worthy investment. Negative news from Dong A Bank , if any, will only have short-term psychological effects and will not affect long-term prospects of PNJ.
We combine a DCF valuation and average P/E valuation of large jewelry firms, mainly in Asia, due to their high similarity to the Vietnamese market. Accordingly, the 12-month target price for PNJ shares is VND 126,000, plus VND 1,800 cash dividend, and the expected return is 34% over the closing price on 11/26/2018. We have a BUY on this stock.
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.
Viet Dragon Securities belongs to top 20 biggest securities companies in terms of chartered capital in Vietnam. With a qualified, dedicated and professional team, a widespread network, advanced technology, diversified products and services, and good relationship with local and foreign institutions, we provide a wide range of services and products to our clients both individuals and institutions, both local and foreign. We commit to provide our clients with promising investment opportunities and a comprehensive and professional financial investment services.
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