PNJ’s outstanding results send stock soaring
PNJ’s outstanding results send stock soaring
With its price more than doubling since early last year and trading at around VND145,000 (US$6.38) now, the Phu Nhuan Jewelry Joint Stock Company’s share became one of the highest gainers on the Vietnamese stock market last year.
This was partly due to the strong growth of the stock market itself, but more importantly because of PNJ continuing to assert its leading position in the jewellery market with high growth in terms of revenues and brand value.
In a bulletin it has sent to investors, the HCM City Securities Corporation (HSC) continues to be bullish on the PNJ stock thanks to its outstanding business performance. PNJ has no notable competitors in the industry and will continue to expand its operations to retain its position as one of the best modern retail chains in Viet Nam.
The company has just announced its results for last year: sales topped VND10.97 trillion ($483.5 million), a year-on-year increase of 28 per cent, of which jewellery retail sales accounted for nearly VND5.78 trillion, up 39 per cent.
Thanks to the huge sales growth, its gross profit margin went up from 16.48 per cent in 2016 to 17.42 per cent last year.
Its gross profit last year was nearly VND1.91 trillion, up 36 per cent.
It reported a consolidated pre-tax profit of VND908.11 billion, a 54 per cent rise and 121 per cent of the target. Its after-tax profit increased sharply thanks to a significant decrease in expenses from previous years.
The results exceeded the expectations of many investors and analysts, and the price of the PNJ share rose dramatically. HSC believes that the fair value of the share is VND160,625, which is higher than the current value of VND145,000 and equivalent to a forward P/E of 20 times for this year.
It is known that the Viet Nam gold market involves the participation of many agents and retail stores, totally estimated at more than 10,000. Viet Nam has around 10 brands selling gold jewellery. Of them, PNJ ranks first with a 27 per cent of market share, far ahead of other competitors like SJC, Doji and Bao Tin Minh Chau (which have a market share of less than 10 per cent each).
In addition to its success in terms of finance, PNJ also marked a significant development through the expansion of its operations. Last year, the company expanded its retail network nation-wide by 50 stores, or 125 per cent of the initial plan, raising the number of its stores to 270.
Le Tri Thong, PNJ’s vice chairman, said the company would continue to open more stores this year and expects to hit the 300 mark by the time of its 30th anniversary on April 28 this year.
At the current growth rate, analysts forecast PNJ’s market share to rise to 28 per cent this year and 30.4 per cent by 2020. The 30 stores opened in 2016 are particularly expected to deliver steady returns. The stores opened in 2017 will also significantly contribute to overall growth. This will be the driving force for PNJ’s jewellery business in 2018-19.
The goal of reaching 300 stores by early 2018 indicates the company’s board’s great drive for development. The rapid development of its retail system, along with improvements in the supply chain, has given PNJ very positive results in the past few years and promises to do so in the foreseeable future.
Sharing the company’s plans for this year, Thong said it would set up new distribution channels including online so that young customers can have a tailor-made shopping experience.
PNJ will also carry out customer segmentation to offer tailor-made designs that meet the needs of every single customer, thereby offering them beautiful products and also enhancing their experience.
With the company’s outstanding performance last year and plans for this year, HSC expects PNJ’s net revenues as well as after-tax profit to grow by more than 30 per cent in fiscal 2018.
Its revenues and after-tax profit could top VND14.3 trillion and VND964 billion, equivalent to an EPS of VND8,032 per share this year.
According to analysts, the strong recovery in the economy will provide a boost to the jewellery industry.
With its strategy of constantly expanding its network combined with the clear targets for revenue growth for each store, PNJ is likely to maintain a high growth rate in terms of revenues and profits in the coming years.
