Company Quarterly Earnings Update – PNJ VN – 2020

Summary of the 2020 results of Phu Nhuan Jewelry (PNJ VN)

2020 results: highlights

  • The Vietnam gold jewelry demand dropped significantly by 37.9% y/y to 10.7 tons in 2020 (according to World Gold Council), being nearly the lowest level since 2010. Local jewelry demand was affected by the combination of the global pandemic and record-high gold prices at a time of economic slowdown.
  • PNJ reported its net revenue to increase slightly by 3.0% to VND17,511bn in 2020. Jewelry retail sales, which contributed by 59.9% net revenue, led the upturn as it achieved a growth of 11.1% y/y. Such development indicated that the company gained more market share in 2020. The gross margin declined by 0.8 percentage points to 19.6%, mainly due to a lower jewelry retail’s margin. SG&A as a percentage of sales was nearly flat. Net profit declined by 10.4% y/y to VND1,069bn in 2020.
  • By the end of 2020, PNJ had 339 retail stores (-7 stores vs 2019). PNJ reported the same-store sales growth (SSSG) was at a single positive percentage in 2020. Cash and cash equivalent was VND422bn (5.0% of total assets). Inventory amounted to VND6,545bn (77% total assets) with mostly highly liquid assets, such as finished products and precious materials. Financial leverage was low with D/E of 0.4x and D/A of 0.2x.


  • We maintain our view that the jewelry industry in Vietnam will grow at around 2.0% p.a in the next ten years, which is slightly lower than the last ten years (2.9% p.a). PNJ’s outlook will be driven by the increasing jewelry demand of the whole industry. As a market leader, PNJ can grow faster than the industry by opening new stores in tier 2 and 3 cities in Vietnam, gaining more market share, mostly from unbranded stores.
  • We project PNJ’s net profit will grow by 26.2% y/y to VND1,350bn in 2021 and by 20.4% y/y to VND1,625bn in 2022. From 2022 to 2024, we forecast net profit to grow with a CAGR of 10.3% based on two main assumptions that SSSG will be 2.0% p.a, and the company will add about 15 new gold stores annually.

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