PNJ - The bottom has not arrived yet
The pandemic is raising a huge concern over PNJ’s growth prospect as its main profit driver – retail jewelries is suffering severely (gold retail jewelries contributed almost 90% of the company’s gross profit in 2019). Even after the pandemic ends, the negative impact on consumer’s disposable income will continue hurting jewelries sales.
We believed PNJ will be able to overcome the abovementioned challenges thanks to its healthy balance sheet and improvement in operation as new ERP rolled out last year. The long-term outlook remains bright as PNJ maintains its undisputed leading position in Vietnam’s jewelry industry and potential from the rising middle class is abundant. We issue a BUY recommendation on PNJ with at target price of VND 73,000/share, which is 25% lower than our previous TP due to the impact of Covid-19. PNJ will also maintain a dividend payment of VND 1,800 per share in 2020, thus implying a total upside of 25% from the closing price of June 18th 2020.
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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