PNJ — Express Note — Nov 2024

Nov revenues decreased YoY due to the high base effects from last year but Nov earnings improved impressively, driven by the efficient restructuring strategy.

Details

November revenues decreased by -9% MoM / -9% YoY compared to last year’s high base, reaching VND 2.8tn in Nov. 11M24 revenues was VND 35.2tn (+19% YoY).

The jewelry retail segment has re-emerged as key growth driver in Jul-Nov period. Its contribution to total sales increased to 74% in Jul – Nov period, higher than 1H24 period of 50%. Please see the table below for the sales growths of each segment in these two period.

Product portfolio restructuring efforts led to a substaintial increase in after-tax profits (PAT) last month. PNJ posted PAT of VND 276bn, surging by +27% MoM / +39% YoY in Nov. In 11M24, the company posted PAT of VND 1.9tn (+8% YoY).

Gross margin is thus improving in Jun-Nov period, as expected. In November, gross margin / net margin improved to 21.5% (+3.2ppt MoM /+4.2ppt YoY) / 9.7% (+2.8ppt MoM/+3.3ppt YoY). Jul-Nov average gross margin was 18.6%, +2.2ppt compared to that of 1H2024 period. In the meantime, the average net margin was 5.4%, which was +0.1ppt higher than that of 1H2024.

Store expansion continues with three new outlets added in November and a net 24 new outlets in 11M24. As such, PNJ now has 424 retail outlets (+6.5% YoY), including: 415 PNJ Gold, 3 CAO, 5 PNJ Style, and 1 wholesale center.

Our view

Reiterate BUY with target price of VND 125,200, implying +29.3% 12-month TSR. PNJ’s share price has been capped since March and we believe the downside risk is minor. In addition, PNJ is currently trading at a reasonable TTM PE level of 16.2x, slightly lower than its 5-year average level of 16.4x.

Fundamentally, we continue to like PNJ for its leading jewelry retail business – which has recently re-emerged as the key growth driver -and not as a “play” on gold. Facing a shortage of gold materials, PNJ states that it has proactively prepared sufficient inventories to serve the increased demand in the peak season of 1Q25.

Please see the link for more details: PNJ – Express note – Nov 2024