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PNJ - Flexibly navigating amid the slow recovery of purchasing power

Q2-FY25: Despite a decline in net revenue due to tightening 24K gold segment, retail & wholesale sales increased slightly, and profit margin improved amid weak purchasing power
• In Q2-FY25, PNJ recorded a modest performance, net revenue reached VND 7,583 billion (-20.3% YoY, -21.3% QoQ due to the tight supply of gold materials. The 24K gold segment focused on purchasing while limiting sales activities, leading to 24K gold revenue recording VND 1,890 billion (-52.9% YoY). Retail and wholesale jewelry segments are bright spots with slight growth in revenue, reaching VND 4,701 billion (+2.6% YoY, -30.2% QoQ) and VND 882 billion (+3.4% YoY, -24.5% QoQ) respectively despite weak purchasing power in the 1H2025 for non-essential items and the industry entering a low period of the year.
• NPAT-MI reached VND442 billion (-4% YoY), net margin improved slightly to 6.5% (+1.2 pps YoY), in line with our expectations. Notably, this result was relatively positive, but did not come from cutting operating costs, but from significantly expanding the GPM (+6 pps YoY) by taking advantage of scale and brand advantages to optimize the value of acquired goods and effectively allocate production resources. Meanwhile, SG&A expenses/revenue +4 pps YoY due to heavy spending on retail activities to reach more customers in the off-peak season.
Q3 and 2025 outlook: Entering the off-peak season in Q3 in terms of jewelry demand and slow recovery in purchasing power, PNJ needs greater efforts to achieve the target in 2H2025
• Store opening: In Q2, store number -1 (open 06, close 07), redistributed due to low traffic in some locations. We assume that the new net stores in 2025 will reach 10-15 (instead of 25) and will cover areas where PNJ stores/population indicator is low (see Figure 7).
• Avg. revenue/store/month in 2025 is estimated to increase slightly by 3% YoY as we observed that the demand for PNJ's products remains relatively consistent despite weak market demand. The proactive approach in phasing out outdated designs and focusing on products made with lower gold content helps support revenue.
• GPM improved thanks to: (1) Reducing 24K gold segment; (2) Promoting sales of products with higher margins (such as PNJ's gold bullion) and (3) Improving recovered products’ value
• Continue the prudent strategy of inventory management to ensure enough material reservation (including gold) for production and finished products for 2025. In addition, taking advantage of the brand name and factory capacity, labor resources to maintain wholesale revenue in the context of the market tightening the issue of product traceability.
Thus, we forecast PNJ's Q3-FY25 results with net revenue of VND 6,737.6 bn (-5.5 YoY, -11.1% QoQ) and NPAT-MI of VND 258.5 bn (-19.8% YoY, -41.5% YoY). In addition, we revised forecast for PNJ’s 2025 revenue to higher result than the previous estimate when we noticed that the 24K gold segment recorded revenue exceeding expectation. Specifically, net revenue was estimated at VND 32,810.5 bn (-13.3% YoY), NPAT-MI/EPS reached VND 2,091.1 bn (-1.0% YoY) and VND 6,075.
Valuation and recommendations
We believe that PNJ will continue to demonstrate resilience in the face of “dual headwinds”, backed by its leading position in the industry, strong brand name, and adaptive management strategy tailored to each market context.
We give OBSERVE recommendation for PNJ stock and provide additional valuation information under different risk scenarios for investor reference.